To investigate claims and negotiate settlements with the European contractors the A. E. F. created its Board of Contracts and Adjustments, which for several months served as the liquidating agency for the war business. Later the unsettled cases were turned over for final disposal by the United States Liquidation Commission.
The termination of the foreign production for the A. E. F. was not nearly so puzzling a problem as the disposition of the excess military stores with the expedition. We had shipped from the United States to the A. E. F. over 6,000,000 tons of military supplies, and those shipments now crowded the warehouses in the American areas. After the armistice the first step looking to the disposition of these stocks was a rough, but fairly comprehensive, inventory of all military property stored in our bases and depots. This inventory gave basis for an estimate of a surplus valued at $1,500,000,000 over and above what the diminishing forces abroad could possibly use. Nearly half these excess stores were quartermaster supplies, therefore goods more or less perishable. Long before the American cargo ships could transport these supplies back to America they would have lost value to the amount of untold millions of dollars. The Government faced an enormous loss. Whatever was to be done about it had to be done quickly. The one way out was to sell the surplus in Europe, but it was a grave question whether that could be done successfully at all.
In the first place, all our army supplies had been placed in France without the payment of any import duties. So long as these supplies were being consumed by the American soldiers, well and good; but, when it was proposed to sell them to private purchasers outside the A. E. F., the French Government insisted upon its right to collect import taxes upon such supplies as were to be sold. When the United States was not ready to concede this point, then the French Government offered the alternative of permitting the United States to sell its surplus in France without payment of import duties, provided the sales were made exclusively to the French Government itself. The United States felt obliged to accept this condition.
Thus, in selling our surplus in France we were limited to a single customer; and when you can sell your product to only one buyer you must prepare to accept the buyer’s scale of prices. Of course, the inhibition upon sales did not apply to sales to other foreign governments; for in that event the American goods were regarded as being in France in bond, and it was not incumbent upon the United States to pay the French import duties upon them. On the other hand, a physical reason operated against the sale of stores to European countries outside France—the run-down and almost wrecked condition of the French railroads. The delivery of locomotives and cars by the Germans under the armistice terms virtually rehabilitated the rolling stock of the French railways, but the trackage had deteriorated during the war, and the incursions of military conscription had left the operating personnel poor in quality and deficient in quantity. It was next to impossible to ship anything out of France. During the early months after the armistice America sold surplus supplies to various countries of Europe outside France—particularly to Belgium and the liberated nations of southeastern Europe—to the value of many millions; but, up to August 1, 1919, it had been able to deliver less than one-fifth of these supplies.
Another advantage accruing to France as the principal buyer of the American surplus was that the A. E. F. was making what amounted to a forced sale. If anything was evident in the attitude of the French people after the armistice, it was that they earnestly desired to speed their departing military guests out of France. The American troops no less ardently wished to go, and it was the policy of the American Government to repatriate them as rapidly as the shipping could be provided. The disposal of the supplies was a secondary consideration. If the Americans had attempted to hold out for favorable markets and good prices for their surpluses in piecemeal sales, they would have had to keep from 20,000 to 30,000 troops in France for several years to guard the unsold stocks. The alternative of hiring civilian guards was out of the question, from the standpoint of expense alone. There was nothing else to do except sell out quickly for the best prices obtainable under the circumstances.
These obvious advantages to the French in striking a bargain price for the bulk of the American surplus property in France was largely counterbalanced by the fact that, of the American quartermaster stores for sale, nearly half consisted of food supplies, and the highest-quality food then in Europe. There was no oversupply of food in Europe, but the very contrary. England had surplus army property estimated to be worth more than $3,000,000,000; France herself had almost as much to dispose of; and Italy was to be a heavy seller; but the food stocks in all these Allied surpluses were not enough to satisfy the hunger of the undernourished or actually famine-stricken populations of Europe. The much-desired food was used by the American authorities to induce the French not only to pay good prices for materials they did not need, and of which indeed they had surpluses of their own, but also to accept responsibility for such liabilities as the American stores of unstable and dangerous ammunition and our accumulations of junk.
Such were some of the conditions surrounding the bulk sale of A. E. F. surplus property to the French Government in the summer of 1919. This sale, as we have said, was consummated by the United States Liquidation Commission, the activities of which are to be discussed in greater detail farther on. Meanwhile a sporadic and piecemeal sale of A. E. F. property in Europe had been going on under the direction of the General Sales Agent and General Sales Board of the A. E. F. The General Sales Agent took up his work on January 1, 1919. He was assisted by the General Sales Board, which was made up of representatives of all the army organizations that had anything to sell. Under this organization the sales of surplus materials reached a total of approximately $175,000,000 by the end of July, 1919, just before the general bulk sale was closed. Of these receipts the sales of quartermaster supplies accounted for $122,000,000. The supplies were sold almost exclusively to governments and relief and welfare commissions. The sales to commercial firms and individuals were insignificant.
Almost as soon as the armistice was signed the needy nations of Europe opened negotiations for the purchase of excess quartermaster supplies of the A. E. F., particularly food. Semi-starvation was chronic in most of the newly liberated countries of southeastern Europe. The Poles were still fighting and needed supplies for their soldiers. Belgium and northern France were impoverished by the German occupation. Austria was in the grip of actual famine, and the hungry mobs were rioting in Vienna. In fact, some of the first surplus A. E. F. food to be sold was shipped into Austria. It was a situation which demanded scientific study, since, no matter how much the American officials individually might sympathize with the European civilians, their first duty was to safeguard the interests of the taxpayers of the United States; and that meant to discover what ones of the needy were willing and able to pay the best prices. Consequently the General Sales Board of the A. E. F. created its information bureau, which investigated the conditions throughout Europe and reported to the Board. These investigations enabled the A. E. F. to distribute its surpluses intelligently.
Before the general sales organization took hold, the Quartermaster Corps itself in France had been disposing of surplus stores during the first weeks of the armistice. Many of these early sales were made to Mr. Herbert Hoover for the Belgian Relief Commission. When, in January, 1919, Congress appropriated $100,000,000 for the relief of starving Europe, Mr. Hoover, who had the spending of the money, was urged to make use of the excess A. E. F. supplies as much as possible. The largest single sale of A. E. F. surplus food was made to the Belgian Relief Commission. About $30,000,000 changed hands in the transaction, and the food sold included such items as 60,000,000 pounds of army issue bacon, 122,000,000 pounds of flour, 6,000,000 pounds of rice, and 600,000,000 cans of evaporated milk. All this time, too, the General Sales Board was selling directly to the Belgian Government; and the Relief Commission coöperated with the Army to make sure that Belgium, through these two channels of supply, did not receive an undue portion of the army stores. There was always danger that Belgian speculators might acquire stocks of such surplus products as fats and soap and sell them into Germany at famine prices. Twice this coöperation was able to checkmate the plans of cold-blooded profiteers. Next to making advantageous sales, the chief concern of the General Sales Board was to distribute its products fairly among the countries in direst need.
The Government of Portugal bought a large number of American army shoes. Czecho-Slovakia took 10,000 army overcoats, much other clothing, and several hundred tons of food supplies. The Polish Relief Corporation bought quartermaster supplies to the value of $1,500,000. Roumania took a consignment of food and clothing at $7,150,000. Portugal took a shipload of potatoes f. o. b. Ireland. These nations, Serbia, Esthonia, and several others, were constantly in the market for American supplies. Esthonia bought 3,000 tons of army bacon. The French Government, too, was a large purchaser during this piecemeal selling, on one occasion buying American suspenders to the value of $22,000, as well as large quantities of food and clothing.