These conditions remain unchanged today in respect to those forms of preserved food whose character is evident either because of their change of form or because of a popular knowledge that the articles, though indistinguishable from fresh products, must have been held from a crop harvested long ago. But the development of preservation by effective artificial control of temperature has brought some new elements into the situation.
Cold storage has enlarged the number of food products preservable in their original condition and created a new industry; it has largely removed the function of this class of food preservation from the scattered individual producers to large central establishments and thrown the business of accumulating and conserving surplus more fully into the hands of tradesmen. It has permitted the preservation of flesh foods in a raw state which were never before so preservable; and it has so improved the quality of stored products whose current production never ceases entirely that in many cases the held goods cannot be distinguished from the fresh production.
These facts have led to a popular apprehension that cold storage, being utilized largely by nonproducers and necessarily upon a speculative basis, is made a tool for extortion or unjust profits; also that deception is practiced, in respect to foods whose production never ceases entirely, by the substitution of stored food for fresh; and exaggerated statements as to the length of time foods are held in storage have brought in question their wholesomeness and created a popular prejudice.
It is important to know the facts in these particulars so that the true function of cold storage in the preservation of food may be understood, especially because legislative restriction of the industry has been effected in some States and is under consideration in others, as well as in the Federal Congress, in the enactment of which mistaken views have resulted and may further result in public injury.
COLD STORAGE ECONOMICS.
It is a self-evident proposition that, in respect to foods the production of which is seasonal, the ability to preserve a part of the yield to the period of nonproduction lessens waste and permits a material increase of production, thus increasing the available food supply. It is also evident that, supposing all the food produced to be marketed and consumed, an increase in the supply of food tends to a lowering of its average price. Apart from inevitable variations due to climatic conditions the production of particular foods increases or diminishes according to the relative profit realized from that production; and it is evident that a profit sufficient to induce production can be realized upon a much greater output if the period during which consumption is possible can be extended. A maximum production of any food can be realized only when the period of its availability for consumption is constant; and it follows that the maximum production of foods whose yield or greatest yield is seasonal, can be realized only by preservation of a part of the production for use during the season of natural dearth or deficiency which ends only with the beginning of the following period of maximum production.
Upon these simple truths rests the economic utility of cold storage preservation. Practically its benefits in the conservation of food, and in the encouragement of maximum production, are to be gained only through the opportunity for profit, and while the business of carrying foods from seasons of abundance to natural scarcity is open to all it is naturally conducted chiefly by the tradesmen who are permanently engaged in food distribution, and who are most familiar with trade conditions and the varying relations of supply and demand.
An important fact bearing upon the practical use of cold storage preservation as a feature of the distributing business is that no profit can be expected by holding products beyond the succeeding period of maximum production, when prices naturally fall to the lowest point. The variations in selling prices at that period are never sufficient to cover the cost of carriage of goods from a previous season and the lessened value of long stored products in comparison with fresh. There are occasional market conditions which have induced the holding of perishable foods in cold storage beyond twelve months in the effort to lessen a loss, but they are rare and exceptional, so much so that a legal restriction of the period of permissible holding to twelve months would have very little effect upon the inducement to utilize cold storage from a commercial standpoint. But so far as the purely economic interests of consumers are concerned it would appear that no restriction of the period of permissible holding of food in cold storage is either necessary or desirable. The inducement to hold is profit, and profit can be realized only by selling into final consumption. And when goods can be carried to a later date and sold at a higher price it is evidence that the relative scarcity which results in that higher price would have been more stringent had the goods not been so carried. In respect to the time of selling stored foods, therefore, the interests of consumers (as a whole) and of owners of the food, would seem to be identical; for it is the increased public need which results in the higher price, and profit, considering storage operations as a whole, depends upon a correct judgment as to that need.
There seems, therefore, no means by which tradesmen dealing in raw foods can utilize cold storage preservation for their own benefit at the cost of a public injury, but that, on the contrary, the profitableness of holding surplus depends upon the performance of a public service.
The ideal function of cold storage preservation is to carry just such amount of surplus from the time of greatest yield as can be consumed during the later period of relative scarcity at just sufficient advance in value as will cover the cost of carriage and afford a maximum satisfactory profit for the conduct of the business and the necessary investment of capital. But it is impossible that this ideal can be uniformly realized. Even if the operations of storage accumulation and withdrawal for market were uniformly governed in the light of the fullest possible knowledge and with the best of judgment, it would be impossible always to determine the quantity to be stored and the normal price thereof so that later deficiency at corresponding prices would be exactly offset. For the extent of later shortage can never be certainly known and the extent of demand at any particular prices is variable and uncertain. As a matter of fact, these operations of storage accumulation and later output, being carried on by thousands of individual and independent dealers, in the dim light of imperfect knowledge, even as to important statistical facts that might be known, can never result in ideal effects. Sometimes the quantity of certain foods stored at the prices paid proves to be excessive and a part of the surplus, toward the approach of the next flush season, has to be thrown upon the markets at heavy losses; sometimes the quantity put away is insufficient to offset the later scarcity and a part of the surplus, carried late, realizes for larger profits than normal. But these conditions are, to a large extent, inevitable, and while they show that the ideal function of cold storage preservation can not always be realized, they do not materially lessen its value. When a series of years is considered it will be found that the average profits are comparatively small in relation to the risks and the investment involved. And even when, during the flush season of accumulation, prices are sustained above the normal level by an amount of accumulation that later proves excessive, consumers get the surplus later at correspondingly lower prices. The reverse is also true, that when the quantity held is deficient, leading to relatively high prices in a part of the season of natural scarcity, a greater previous accumulation, sufficient to prevent so much advance, would have resulted in higher prices during the previous flush season.