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John Kirkland.

Three centuries of prices of wheat, flour and bread. War prices and their causes online

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ministers should have come to the conclusion that the German Divinity,
whom the former is so fond of quoting, had at last delivered their British
foes into their hands. The prospect of civil war in Ireland undoubtedly
helped not a little to precipitate Europe into war.

The unexpected and unknown has always special terrors. The man
in the street, and on the market, was taken completely by surprise. The



APPRECIATION OF WAR PRICES, WHEAT, ETC. 45

declaration of war against Germany, came, it will be remembered in the
form of a verbal statement by our Ambassador at Berlin to the Chancellor
of the German Empire that in the event of any attack on Belgium
his realm might consider itself at war with this country as from the night of
August 4th. It may be noted that the first serious warning that Europe
might suddenly find itself landed in a wide reaching war had been
sounded on Monday, July 27th. It was rumoured on that day that
Austria had presented an ultimatum to Serbia, which might contain the
seeds of war. But British merchants are not pubhcists, and though sellers
of Manitoba wheat asked for an advance of is. to is. 6d. c.i.f. on No. i
Northern for August shipment on the strength of the gathering clouds on
the European horizon, buyers at the advance were not very easy to find.
The Exchange did not yet believe in war. It should be noted however
t hat the market, after remaining in a quiescent state for about six months,
had begun to harden towards the middle and end of July. That was due
to the prevalence of unfavourable reports concerning the Russian and
Roumanian crops. In the Russian spring wheat districts drought and
parching hot winds had done mischief, while the winter wheat harvest
was being delayed by heavy rains. The Roumanian harvest was
threatened by excessive moisture. In normal times Russia is
a hberal exporter of wheat, and this news had a bulHsh effect [on a
market which had been in a bearish mood for fully six months. A sharper
edge was put on the Russian and Roumanian reports by the knowledge
that Hungary had a short crop, and would need to import between
3,000,000 and 4,000,000 qrs., while much the same conditions were reported
from Italy. Then France, an enormous consumer of bread, was known
to be likely to need imports during the coming cereal year of 8,000,000
to possibly 10,000,000 qrs. This would have created in July, 1914, an
extremely bullish situation but for the remarkably weak statistical position
of wheat in the United States, which had secured a record winter wheat
crop, that must have exceeded 80,000,000 qrs., at an unusually early
period in the season, and had harvested it in very good condition. The
prospects for the American spring wheat crop were also good, while the
Canadian outlook for spring wheat, if a trifle chequered, owing to drought
in parts of Southern Alberta and South Saskatchewan, was not unfavour-
able in the main. With regard to the American winter wheat crop,
which as already remarked had beaten all records, milhons of quarters are
said to have been sold for shipment early in July ; a good deal of this



40 THREE HUNDRED YEARS PRICES.

wheat had found purchasers in Germany. It is easy to see from this
summary of crop conditions in Europe and North America in July, 1914,
that on the eve of the outbreak of the great war, the statistical position
of wheat, if not exactly buUish, was still distinctly strong owing to the
comparative failure of the wheat crops in several important Europeans
lands. Of course this survey has left out of account the lands of the
Southern Hemisphere including Argentina, Austraha and India, wliich in
good seasons are not unimportant exporters of wheat to the importing
lands of Europe. The Argentine harvest is gathered normally in Novem-
ber and December, the very earliest districts beginning about the middle
of November, while the Australian crops should be got in during the
same period. The Indian wheat harvest commences in the earhest ripening
parts of the Peninsula in February and extends, over a vast area, well into
April. The shipping of Argentine wheat may in a good season commence
in January, while the same is true of Australian wheat, but the latter has
further to travel before reaching our shores ; March for "Argentine, and April
for Australian wheats are approximate dates of first arrivals in this
country. Indian wheat reaches our ports in June and July. It may be
noted that, fortunately for this country, the British crop in 1914 turned
out very well, giving a yield of about 8,000,000 qrs., of which fully 95 per
cent was sound miUing wheat. The first mutterings of the European
storm fell in Mark Lane, as we have seen, on somewhat deaf ears*
The idea that all Europe was to be convulsed in war because Austria had
presented an ultimatum to the little state of Serbia, seemed preposterous.
As a matter of fact the American option markets took serious alarm
before the Corn Exchanges of Europe, Chicago rising 8^ to 9 J cents, equal
to 2s. 9d. to 3s. id. per qr. of 480 lbs. as soon as the presentation of
the ultimatum became public property. By Wednesday, July 29th,
Mark Lane, influenced to some extent no doubt by the sharp advance
in America, began to move upwards. On that day the shilling rise in
c.i.f. wheat was quickly advanced to 3s., while oversea flour, which had
been hard to move on Monday, now ran up several shillings. The excite-
ment was intensified on the following day though, this not being a market
day in Mark Lane, prices had less scope for advance. But by Friday,
July 31st, the European horizon looked black indeed, and the upward
current of the previous Wednesday had developed into a whirlwind which
sent wheat, flour and coarse grains prices flying into the sky. The
advance in c.i.f. wheat from the previous Friday, July 24th, was quite



APPRECIATION OF WAR PRICES, WHEAT. ETC. 47

7s. to 8s. For parcels of No. i Northern Manitoba, needy buyers were giving
as much as 45s. in the ex-quay and also in the ex-ship position. In this
time of wild excitement the normal distinctions between one position
and another were obliterated.

It is remarkable how in times of great excitement, when men's ner\ es
are on the rack, the firm willed are apt to be steeled in resolve while
those of the softer mould become still more yielding. On this and other da} s
during the short period of distraction that followed the outbreak of war a
difference of as much as 2s. was observed between the price paid on the same
day for the same article. Saturday, August i, and Sunday, August 2,
provided two days of much needed rest for jaded nerves. Then came
Monday, August 3, which, as a Bank Holiday, should have been free
from business. But the Baltic, the greatest grain market and shipping
exchange in Europe, was kept open, though no business was transacted,
and though Mark Lane Exchange was closed, yet the Subscription
Room was open for the first time in its history, so far as Bank Holidays are
concerned. On the afternoon of that day Sir Edward Grey, as he was
then, let the House of Commons know war with Germany was inevitable.
Our Ambassador in Berlin had been instructed to let the Chancellor of the
German Empire know, frankly and unreservedly, that if the neutrality of
Belgium were infringed, Germany might consider herself at war with us
as from midnight, Tuesday, August 4, By Wednesday, August 5, the
die had been cast, but this fact instead of stiUing the excitement in the
market, increased it. The reason for this was because the United King-
dom, being dependent on sea-borne breadstuffs and coarse grains for an
overwhelming proportion of its needed suppUes, panic reigned as to
what might happen if the Navy were to prove unequal to the task of
keeping the seas clear for our world-wide commerce, This panic was a
poor compliment to our incomparable Navy, but panic is the only word
which will adequately describe the situation in the grain trade during the
first fortnight after the war broke out, not that the panic was confined
to the markets. From one end of the country to the other many people
took alarm at the idea of short commons in the event of the British Isles
being effectively blockaded, and for ten days of so, rich and poor were
besieging provision shops with the idea of laying in stocks against the
evil days that were supposed to be in store. On country roads motor cars
stopped at mill doors to know if there was any flour for sale, carrying



4^ THREE HUNDRED YEARS PRICES.

off as many bags as the miller would part with, and the car could accom-
modate. One country miller disposed inthis way of five sacks to a party
of " food hogs," as these panic-stricken foragers were appropriately christ-
ened, at 60s. per sack, a price 150 per cent, in advance of the figure he
would have been pleased to accept ten days before. A miller in the
neigbourhood of the Metropolis, with a somewhat keen sense of public
duty, gave strict orders that but one sack should be sold to any private
customer, who had to show that he was the head of a family ; a sack
was supposed to represent a year's consumption of flour for one household.
The price was fixed at 40s. A Metropolitan miller was rung up one morning
by an unknown voice, and was asked to quote for his top Patent. The
quotation deUvered, an order for ten sacks was promptly given, with
the intimation that a cheque for the amount would be forthcoming on
immediately delivery at a given \^''est End address. The order was
executed, when it was found that the new customer was a wealthy stock-
broker.

A few days later the ten sacks were resold in Mark Lane. These little
incidents, which might be mulitplied a hundredfold, will give some idea
of the extreme tension which prevailed throughout the country for a full
fortnight after the outbreak of war hostilities. One lion in the path
of the importer was the exorbitant figure asked for marine insurance, or.
to be accurate, the extraordinary premium demanded by underwriters
for covering the war risk. The Government of that day must be given
due credit for grasping this nettle quickly and firmly. A way out of
this difficulty was found by the State undertaking to reinsure all marine
war risks to the extent of 80 per cent. This restored confidence to the
marine insurance market, as is proved by the fact that within about five
weeks of the opening of the National Insurance Bureau the war risk
dropped from five guineas per cent, to anywhere between three guineas
and 20S. or less. At that time the submarine peril had not developed,
and was considered almost ncg'igible, though in certain oceans the
presence of German cruisers was the cause of much uneasiness. The ex-
ploits will long be remembered of the " Emden," a swift armoured cruiser
that escaped from the harbour of Kiauchau, in China, and destroyed
four million pounds worth of British property before it was brought to
book at Cocos Islands, on November nth, 1914. During the meteoric
career of that modern imitator of the "Alabama " the rate of insurance in



APPRECIATION OF WAR PRICES, WHEAT, ETC. 49

the Indian Ocean was about three guineas per cent. But simultaneously
the rate on the well poUced North Atlantic route was but 7s. 6d. per cent,
and for a brief while fell, if we mistake not, to 5s. per cent. From 7s. 6d.
however, it jumped one fine morning to 15s. per cent., when news came
through that mines had been mysteriously laid off the Irish Coast, with the
result that the Manchester Commerce was lost and some other vessels
placed in great peril. Since then the war risk has fluctuated, reaching some-
where about 20s. per cent, at or about the time that the first submarine
campaign was inaugurated by the Germans in February, 1915. The
rate went up and down in about even ratio to the deadly effect of the sub-
marines, or to the degree of success achieved by our Admiralty in coping
with this special danger of the seas. Towards the middle of 1915 it
seemed as if the British Navy had solved this arduous problem, but as fast
as her U boats were destroyed Germany built others, ever endeavouring
to improve on the original design, and certainly succeeded in making larger
and apparently more seaworthy vessels, which can not only carry more
torpedoes but also more guns and especially shells. It must not be left
out of sight that the success of the submarine campaign, such as it has
been, regarded as an agent for the destruction of oversea supplies of food,
munitions and raw materials to this country andits allies, has been achieved
not so much through the use of torpedoes, as of shells вАФ on unarmed vessels .
One story of an armed mail boat's encounter with a U boat on the route
between the New World and this country will abundantly illustrate this
point. Suddenly a periscope appeared, and a torpedo was almost simulta-
neously launched against the liner, but missed its mark. Promptly
the gunner fired at the periscope, though without success, as about half
an hour later the periscope, with this time a portion of the submarine's
conning tower, reappeared above the water and like a flash of lightning a
torpedo came for the ship, but again missed its mark. As soon as the
conning tower was seen a shell was aimed at it, which may or may not
have gone home. Certain it is that the visible portions of the U boat
disappeared with remarkable celerity, and were seen no more by the
mail boat's crew or passengers. Whatever happened to that submarine
it is clear that, without its gun, the mail boat would have been doomed,
as the U boat could have knocked it to pieces at leisure with its shells.
As it was the submarine wasted two torpedoes, for which storage
room on the biggest submarine is Umited. The so-called " sharpening "
of the submarine campaign in February, 19 17, just two years after the

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50 THREE HUNDRED YEARS PRICES.

inauguration of practically an unrestricted submarine campaign on all
vessels bound for, or having cleared from, a British or Allied port was
merely a question of degree. There is no doubt that the German Admiralty
had been building a number of U boats for launching all at once with the
idea of destroying enough British, Allied and Neutral shipping at one fell
swoop to scare away tonnage from our ports, and in this way to strangle
us. The scheme was a failure so far as its main purpose was concerned-
The British hold on the enemy had not up to the middle of June been there-
by relaxed in the least, while the weekly arrivals and clearances averaged
roughly 4,700 per week. The number of British vessels of 1,600 tons (gross ,
or over, sunk by mine and submarine each week ran from 17 to 19, though
those figures, in the absence of the actual tonnage destroyed, were not
very illuminating. From the middle of April the campaign increased in
intensity, but again yielded to the British counter ofiensi\e. The
number of vessels under 1,600 tons sunk each week varied somewhat,
but was not infrequently as high as 9 or 10. As far as the writer
is aware, the percentage of boats carrying either wheat, othei grain or
flour that have been sunk during the whole U boat campaign is insignifi-
cant compared with the immense quantities of foodstuffs and coarse
grains that have been brought to our shores from all parts of the woild-
In the month of April, 1917, unless rumour was an unusually lying jade, the
chief ports of the United Kingdom were full of wheat. Of course, the
Wheat Commission and the Food Controller could say with some reason,
that while the state of stocks might be considered satisfactory for the time
being no one could guarantee that the submarine peril, already su fficiently
formidable, might not grow still more dangerous in the days lying right
ahead of us, when the weather was likely to be more settled and therefore*
more favourable to the submarines, which would also have an advantage in
the longer days and shorter nights. It might also be urged that with the
poor native crop gathered in 1916, probably not much, if at all in excess
of 7,000,000 qrs., of which a very sensible proportion was of inferior milling
quality, and with bad prospects for the 1917 crop, due to bad weather in
the fall of 1916 and the spring of 1917, the utmost economy in breadstuffs
was incumbent on the people of these islands. The serious nature of the
submarine campaign arose not so much out of the actual depredations
of the U boats as out of the anomalous position in which we, an essentially
insular nation, have been placed by the necessities of this war. Bismarck
once said, in referring to war threatening between this country and



APPRECIATION OF WAR PRICES, WHEAT, ETC. 51

Russia that such a war would be hke a fight between a whale and an
elephant. There was this truth in that cynical remark, because Great
Britain, the Island Kingdom, with an oversea Empire as wide as the globe,
cannot hve except by an all powerful navy' and an immense merchant fleet.
Had we not been compelled to tie up the bulk of our merchant tonnage
as troopships, tenders to our vessels of war, hospital ships and
carriers of all sorts of warlike stores, the German submarine campaign
would have had much less significance.

In the autumn of 1916, Mr. Arthur Balfour, then First Lord of the
Admiralty, admitted in Parliament that over 50 per cent, of our merchant
marine had been taken by the Admiralty for war work, while another
10 per cent, that had been alloted to our Allies, France and Italy, as it
was understood. The proportion of our merchant ships immobilised for
their proper work, is only too likely to have increased since then. Asked
in the House of Commons in September, 1916, what proportion of the
British mercantile fleet had fallen victims to submarines and mines, an
Admiralty official repHed that this loss, from the beginning of the war
stood at approximately 3 per cent. A reassuring statement, in a way
but those figures represented losses as balanced by gains, in shipbuilding,
and possibly from captures from the enemy. Whatever the reason, cei tain
it is that our merchant ship construction has not kept pace with
our needs for fresh shipping. The world wide campaign in which we
are engaged and the whirligigs of politics have led us into oversea
campaigns in Salonika, in Palestine, in Mesopotamia, which have
made, especially as regards the first and the last, very heavy demands
on our tonnage. The abortive but very costly Dardanelles ex-
pedition, which lasted about twelve months, and convulsed the corn
markets of Europe and America, being finally abandoned in December,
19 15, tied up a great deal of valuable tonnage that might have
been more advantageously employed. Owing to the ever-increasing
needs of our army in France and elsewhere, the amount of tonnage
monopolised for military or naval purposes, is ever on the increase
and it is not surprising that the latest phases, at the time of writing
these hnes, should have sent the war risk, even on the Atlantic, up to
three guineas per cent. The shipping problem has in a sense been the key
to the position in the corn market tliroughout the war. We have seen how,
on the outbreak of war, the war risk threatened to place maritime

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52 THREE HUNDRED YEARS PRICES.

insurance absolutely out of the corn merchant's reach, and we also know
how this danger was conjured away. But that was not the only thorn in the
path of the wheat or flour importer. The moratorium, a well conceived
measure in many respects, which helped not a little to avert a threatening
fmancial panic, had not a good effect on our import trade. It was in force
till October, 1916, but long after then the credit of British merchants
was sorely impaired in the United States and, to some extent, even in
Canada. It seems far-fetched, but nevertheless it is absoutely true, that
the banks on the other side of the Atlantic refused point blank for a time
to negotiate the bills needed for carrying American wheat and flour to
our side. The American financiers said, in effect, " If you cannot trust
yourselves why should you ask us to trust you ?" A British corn merchant
said in the troubled days of September, 1914, and with some truth, " To
get wheat here I have to export gold across the Atlantic. Gradually some
confidence was restored, but right through the war business with the
United States was largely being done on " ready money basis," though
ostensibly c.i.f. terms. That is to say, the consignee, instead of getting
about two months credit as was the case before the war, had to pay foj-
his goods, either by a sight draft, or by a three days bill of exchange
which, with the three days of grace, meant cash in six days. No review of
the breadstufis markets during the great war would be complete, however
summary, without some reference to the great disproportion between
the prices of wheat and flour and the actual supplies, either on spot or in
sight. We have seen how the prices of wheat and flour soared into the sky
on the outbreak of war. Those figures, though exaggerated, are intelhgible
enough, because at that crisis, and for some weeks longer, no one knew
whether the wheat or flour, or maize, or barley, or oats, he had bought
overseas, and probably paid for, would ever arrive. But when things
had settled down somewhat, owing to the assumption by the State of
the bulk of the war risk in maritime insurance, and wheat began to
enter our ports freely, the level of wheat still continued very high as
judged by the pre-war standard, and the general statistical position.
From the week ending July 31st to September 4th, 1914, arrivals of wheat
in the Port of London were no less than 943,125 [qrs., or at the rate of
157,167 qrs. per week. Moreover wheat receipts in this port continued
on the same huge scale right into November, with the exception of one
week in September and two weeks in October when the arrivals were
more moderate. Such supplies in time of peace would, in corn merchants'



APPRECIATION OF WAR PRICES, WHEAT. ETC. 53

speech, have knocked the bottom out of the market. It should of course
not be left out of sight that when the war broke out British millers, all
the Kingdom over, were badly found in wheat, the natural effect of
slack purchases during the preceding six months, or more.

It so happened that the sale of bread had been distinctly slow
though all this period, a phase of the bread trade attributed by bakers
to the general prosperity, that is to good wages and low-priced meat.
Whatever the actual cause of the poor demand for bread in the first six
months of 1914, the effect of stale bread on bakers' shelves could only
be to take the edge of demand off flour, and further to render bakers less
keen on taking in the deliveries due to them on contracts. It is easy to
understand, therefore, that even when wheat began to arrive freely in
our ports, millers should have proved themselves eager bidders for it,
and so have helped to keep up prices beyond the level that its great
abundance would have indicated as justified. It should be mentioned
that this abnormal plenty of wheat was partly due to the many captures
by British cruisers in the Atlantic of vessels loaded with winter wheat
bought by German firms, and consigned to enemy ports. The price of
No. I Northern Manitoba on August loth, on ex-quay terms, was 50s.
per quarter of 496 lb. The value of old-crop English delivered up in
London on that day was about 48s. to 50s. per quarter of 504 lb. ; in the
country a little new wheat was sold on rail at 45s. The " Gazette "
average for English wheat for the preceding week was 34s. gd., the
apparent discrepancy between the figures being due doubtless to the
presence of chicken and inferior wheat ; allowance must also be made
for the statutory quarter ; this is 480 lbs. as compared with 504 lb., which
may be called the standard farmer's quarter. By September 28th,
the ex-quay price of No. i Northern Manitoba wheat was about 48s.,
while English wheat had slipped down to about 40s. to 41s. delivered
up. The relatively high price of No. i Manitoba was partly due to the
scarcity of No. i as compared with the lower grades. If we take the
Liverpool markets during the last six months of 1914, we shall find that
the average monthly price of No. 2 Hard Winter, based on two market
days per week rose from 34s. gd. in July to 46s. 9d. in December, without
a single break, an advance of 12s. per quarter, that was certainly not due
to any shortage of supply. It must not be left out of sight, of course,
that the closing of the Dardanelles in the autumn of 1914, through the



54 THREE HUNDRED YEARS PRICES.

entry of the Turks into the war on the side of the Central Empires,


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Online LibraryJohn KirklandThree centuries of prices of wheat, flour and bread. War prices and their causes → online text (page 5 of 6)