The Iron Ration: Three Years in Warring Central Europe

by George Abel Schreiner

Let me show you how the food shark operated. The case I quote is Austrian, but I could name hundreds of similar instances in Germany. I have selected this case because I knew the man by sight and attended several sessions of his trial. First I will briefly outline what law he had violated.

To lay low what was known as chain trade throughout Central Europe, Kettenhandel, the governments had decreed that foodstuffs could be distributed only in this manner: The producer could sell to a commission-man, but the commission-man could sell only to the wholesaler, and the wholesaler only to the retailer.

That appears rational enough. But neither commission-man nor wholesaler liked to adhere to the scheme. Despite the law, they would pass the same thing from one to another, and every temporary owner of the article would add a profit, and no small one. To establish the needed control the retailer was to demand from the wholesaler the bill of sale by which the goods had passed into his hands, while the wholesaler could make the commission-man produce documentary evidence showing how much he had paid the producer. Under the scheme a mill, or other establishment where commodities were collected, was a producer.

Mr. B. had bought of the Fiume Rice Mills Company a car-load of best rice, the car-load in Central Europe being generally ten tons. He had brought the rice to Vienna and there was an eager market for it, as may be imagined. But he wanted to make a large profit, and that was impossible if he went about the sale of the rice in the manner prescribed by the government. The wholesaler or retailer to whom he sold might wish to see the bill of sale, and then he was sure to report him to the authorities if the profit were greater than the maximum which the government had provided. To overcome all this he did what many others were doing, and in that manner made on the single car of rice which he sold to a hunger-ridden community the neat little profit of thirty-five hundred crowns.

Something went wrong, however. Mr. B. was arrested and tried on the charge of price-boosting by means of chain trade. When the rice got to Vienna he had sold it to a dummy. The dummy sold it to another dummy, and Mr. B. bought it again from the second dummy. In this manner he secured the necessary figures on the bill of sale and imposed them on the wholesaler. The court was lenient in his case. He was fined five thousand crowns, was given six weeks in jail, and lost his license to trade. Preistreiberei—to wit—price-boosting did not pay in this instance.

After all, that sort of work was extremely crude when compared with some other specimens, though the more refined varieties of piracy needed usually the connivance of some public official, generally a man connected with the railroad management. Many of these officials were poorly paid when the war began and the government could not see its way clear to paying them more. The keen desire of keeping up the shabby gentility that goes with Central European officialdom, and very often actual want, caused these men to fall by the roadside.

There was a little case that affected three hundred cars of wheat flour. Though Hungary and Austria had then no wheat flour to spare for export, the flour was actually exported through Switzerland into Italy, though that country was then at war with the Dual Monarchy! Thirty-two men were arrested, and two of them committed suicide before the law laid hands on them. The odd part of it was that the flour had crossed the Austro-Hungarian border at Marchegg, where the shipment had been examined by the military border police. It had then gone across Austria as a shipment of "cement in bags," had passed as such into Switzerland, and there the agents of the food sharks in Budapest had turned it over to an Italian buyer. Nobody would have been the wiser had it not been that a shipment of some thirty cars was wrecked. Lo and behold, the cement was flour!

They had some similar cases in Germany, though most of them involved chain trading in textiles. The unmerciful application of the law did not deter the profiteer at all, any more than capital punishment has ever succeeded in totally eradicating murder. There was always somebody who would take a chance, and it was the leakage rather than the general scheme of distribution that did all the damage. Whatever necessity and commodity had once passed out of the channel of legitimate business had to stay out of it if those responsible for the deflection were not to come in conflict with the law, and there were always those who were only too glad to buy such stores. The wholesaler received more than the maximum price he could have asked of the retailer, and the consumer was glad to get the merchandise at almost any price so that he could increase his hoard.

But the governments were loth to put the brake on too much of the economic machinery. They depended on that machinery for money to carry on the war, and large numbers of men would be needed to supervise a system of distribution that thwarted the middleman's greed effectively. These men were not available.

The minimum-maximum price scheme had shown itself defective, moreover. In theory this was all very well, but in food regulation it is often a question of: The government proposes and the individual disposes. The minimum price was the limit which any would-be buyer could offer the seller. In the case of the farmer it meant that for a kilogram (2.205 pounds) of potatoes he would get, let us say, five cents. Nobody could offer him less. The maximum price was to protect the consumer, who for the same potatoes was supposed to pay no more than six and one-half cents. The middlemen were to fit into this scheme as best they could. The one and one-half cents had to cover freight charges, operation cost, and profit. The margin was ample in a farm-warehouse-store-kitchen scheme of distribution. But it left nothing for the speculator, being intended to stimulate production and ease the burden which the consumer was bearing. Not the least purpose of the scheme was to keep the money out of the hands of food-dealers, who would hoard their ill-gotten gain. The government needed an active flow of currency.