s. The public should distinguish between a rise
in prices and profiteering, for with increasing prices to the
farmer--who is himself paying higher wages and cost--and with higher
wages and transport, prices simply must rise. An example of what this
may come to can be shown in the matter of flour. The increased cost of
transportation from the wheat-producing regions to New York City amounts
to about forty cents per barrel. The increased cost of cotton bags
during the last fourteen months amounts to thirty cents per barrel of
flour. The increase in wholesalers' costs of drayage, rents, etc.,
amounts to ten cents, or a total of eighty cents without including the
increased costs of the miller or retailer.

Such changes do not come under the category of profiteering. They are
the necessary changes involved by the economic differences in the
situation. We cannot "have our cake and eat it." In other words, we
cannot raise wages, railway rates, expand our credits and currency, and
hope to maintain the same level of prices of foods. All that the Food
Administration can do is to see as far as is humanly possible that these
alterations take place without speculation or profiteering, and that
such readjustments are conducted in an orderly manner. Even though it
were in the power of the Food Administration to repress prices, the
effect of maintaining the same price level in the face of such increases
in costs of manufacture, transportation and distribution, would be
ultimately to curtail production itself. We are in a period of inflation
and we cannot avoid the results.

We have had a large measure of voluntary cooeperation both from
producers, manufacturers and wholesalers, in suppression of profiteering
and speculation. There are cases that have required stern measures, and
some millions of dollars have been refunded in one way or another to
the public. The number of firms penalized is proportionately not large
to the total firms engaged.

In the matter of voluntary control of retailers we have had more
difficulty, but in the publication from week to week in every town in
the country of "fair prices" based upon wholesale costs and type of
service, there has been a considerable check made upon overcharges. The
Food Administration continues through the armistice until legal peace
and there will be no relaxation of efforts to keep down profiteering and
speculation to the last moment.

APPENDIX II

ADDRESS OF MR. HOOVER AT