Squirrels

Last week, U. S. grocers had the surprise of their business careers. One morning before they had had time to sweep out the stores, sugar was going out the front doors in 100-pound orders. Customers who for years had bought from day to day and trundled purchases away in baby's perambulator carted away canned goods by the case, flour by the 50 lb. sack. The squirrel instinct was at work. With a strange reversion to the memories of World War I, U. S. housewives were building up hoards against a winter which they thought would bring high prices and short food supplies.

After a second day of this run on commodities retailers rubbed their hands. By close of business on the third day, they did not think it was fun. They roared orders at wholesalers for more sugar, flour, canned goods. Wholesalers, caught flat-footed by the rush of business, found themselves short of delivery trucks, soon found their stocks of sugar and flour near exhaustion.

As spontaneously and unreasonably as buying had spurted, prices mounted. Sugar prices advanced from one to three cents a pound. Lard went up three cents, flour almost a cent. Meat wholesalers took advantage of the spurt in business by advancing veal, pork and beef prices from two to ten cents a pound. California canners upped canned fruit prices 5 to 30-c- a dozen.

Many a grocer sold himself out of sugar, first on the hoarders' lists, before the buying rush had got well under way, then found that his wholesaler was unable to deliver more until refineries produced it. Others limited customers to small orders and a few refused to sell any unless it went along with a big food order. From every big city between New York and San Francisco went up the cry, "Stop the profiteers!" Said one Washington (D. C.) wholesaler, "The people are behaving like a bunch of damned fools."

Comedy of Ignorance. Bewildered was Secretary of Agriculture Henry Agard Wallace. He knew that no pipsqueak hoarding could clean out the much greater involuntary hoards of farm commodities which he has long tried to dispose of. At week's end, after columnists and editorial writers had failed to shout down the buying rush, he slouched up to the microphone and over a nationwide network called a halt: "Since last Monday," he said, "housewives have been conducting runs on grocery stores in the same manner as depositors used to conduct runs on banks. >>

This run was a comedy of ignorance. World wheat granaries were bulging with 5,300,000,000 bushels of grain, of which the U. S. held 3,500,000,000. Two and a half million tons of sugar were on hand, the U. S. beet and cane crop was estimated at 2,100,000 more and in overproducing Cuba a crop of 3,500,000 was in prospect --all ample to meet U. S. needs (annual consumption: 6,600,000 tons) with plenty left over for the perennial Cuban surplus. For the fall killing there were a bumper pig crop, ample supplies of other meats except lamb, in which the 1939 crop is short, and Chicago packers were passing up orders from abroad because the British had fixed their prices below the level to which last week's speculative boom had pushed domestic prices.

While housewives behaved like squirrels, speculators behaved like blind dogs in a packing house, biting at anything that seemed to smell even faintly of the red meat of war profits. Commodity markets went mad. For several days there was virtually no trading in Chicago's wheat pit. Reason: a rule which forbade wheat prices to rise (or fall) more than 5-c- a bushel in one day. Every day the upper limit was reached almost before trading began. Then the limit was raised to 10-c- and trading finally ran away. Corn had a similar experience. Even cotton had a boom although it is no war commodity for its increased war use is more than offset by decreased civilian use.

All this made little more sense than the housewives' buying spree. At week's end, with prices at their highest levels in 18 months, Canada announced its estimate for the 1939 crop, a bumper total of 449,000,000 bushels. With a carryover of nearly 100,000,000 bushels, Canada sententiously added, it would be enough to feed the United Kingdom for almost two years. Good crops in Argentina and Australia further promised that it would be a long time before war made a dent on the U. S. wheat surplus. Before the week was out the Department of Agriculture revised its cotton crop estimate upward to a total of 12,380,000 bales. With a record U. S. surplus of 14,000,000 bales, this means that some 26,000,000 bales of U. S. cotton (almost equal to total world consumption in 1938) will soon be available.

After three days of frenzied commodity speculation eleven-year-old Moody's spot commodity index hit 169.1 (record high, 249.4 m April 1928), up 22.2 points from the previous week. By week's end the madness began to pass and it fell to 167.5. Nor were any records of World War I broken.

The week's spot price record for the three leading crops :

World War I

Sept. 2 Top Sept. 9 Top

Wheat 78 3/4-c- 92-c- 85-c- $2.24 Corn 51 1/4-c- 65-c- 58 1/2-c- 2.36 Cotton 8.87-c- 10-c- 9.35-c- 35.09-c-

Out of Hock? Last week President Edward Asbury O'Neal III of the American Farm Bureau Federation warned farmers they would have to foot the bill if they took the acreage lid off. "Lots of us," he said, "haven't forgotten the World War and its aftermath. ..." This was a timely reminder, for many a farmer only got out of hock for the land he bought in World War I by going through bankruptcy.

But last week's commodity boom if it threatened to get farmers in again was very useful in getting the U. S. Government out. Last March the Government was $119,000,000 in the red on loans it had made to farmers on 11,400,000 bales of cotton, 235,000,000 bushels of corn, 80,000,000 bushels of wheat, 19,757,000 Ibs. of tobacco, 11,051,000 Ibs. of wool and mohair, 111,212 tons of dried prunes and raisins. Last week the Department of Agriculture announced with joy that the value of this collateral had increased $100,000,000 and it looked as if the Government might be bailed out.

Equally pleasing was the fact that some producers had already paid off their loans and taken 400,000 bales out of hock with the Government. If cotton prices hold up to 8 1/2-c- the Government will also be relieved of making loans on this year's crop.

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