R. J. Hammond

“ If the market were not remain disturbed and uneasy, the trade must be reassured; and for this purpose the bald statement in the Chancellor of the Exchequer's budget speech [11] that the Government had acquired reserves of wheat, whale oil and sugar was hardly sufficient. Early in May, therefore, meetings of grain trade and milling representatives were held at which the way in which the scheme would work was confidentially explained. The milling concerns, who would do the work without remuneration, had been chosen because they alone could turn over the wheat without a second market transaction. ”

“ The Food (Defence Plans) Department did its best to discourage them; it pointed out that the Cooperative Wholesale Society, and probably the other millers, would refuse to work the storage scheme if the Government gave way to the grain trader's demand that future purchases on Government account should be made on the open market through the trade; on the other hand, the trade could not be expected to bring forward wheat for the country's normal needs if it were completely uncertain whether the Government would not at any time enter into competition with it. ”

“ What was wanted was dispersed inland storage of foodstuffs equivalent, say, to a year's supply of wheat; but there was no need to have the stocks as wheat, or ingeniously balanced between one commodity and another. Sugar, which was cheap and stored better than wheat, would be especially suitable for security stocks, and since ships were completely interchangeable between wheat and sugar, having the one was equivalent to have the other. Besides the technical arguments for a security stock, there was one strong political argument, namely that they could not provoke a competitive armaments race. ”

“ When, in 1923–24, the possibility of a wheat storage scheme was again canvassed at the Committee of Imperial Defence, it was turned down just as firmly as before. The Admiralty—it was reported—were confident that by the end of the first three months of a major war the submarine menace would be under control; normal wheat stocks were likely to amount to least ten weeks’ supplies at any time; a storage scheme would ‘handicap the smooth and cheap distribution of wheat,’ and be ‘extremely difficult to provide and unpalatable to the public’. ”

“ In March, proposals were approved for building silos to hold 250,000 tons of wheat, for a further purchase of 200,000 tons to be put in them when built, and for a subsidy scheme to encourage bakers to hold an extra week’s supply of flour in their premises. Early in April the Department secured assent in principle for a reserve of 400,000 tons of oil seeds—included in the original proposals but dropped for reasons of finance; and for no less than 1,500,000 tons of fodder grains, to tide over the animal population until the first war harvest should become available. ”

“ The experts of the corn and milling trade, disagree thought they might on everything else, were unanimous in declaring that for the Government to enter the wheat market, even under the cloak of some well-established trade organisation, would be liable to send prices sky-high. The only workable scheme Sir Ernest Gowers could suggest was to bypass the market and purchase secretly and directly from the Canadian Wheat Board a large block of ‘May futures’, i.e., options on wheat to be delivered in May 1937 ”

“ The Cabinet put off a decision in principle until the ways and means had been more fully explored; meantime, in order to make the announcement of a food storage policy more palatable, the Minister of Agriculture, at his own suggestion, was authorised to prepare proposals ‘for increasing the productivity of our own soil with a view to ensuring increased food production in time of war’. ”

“ By February 1937 four detailed schemes for the storage of a balanced group of foodstuffs were ready, ranging from Plan I, an emergency scheme for feeding London for month, to Plan IV which would provide together with normal trade stocks, for months’ supply of wheat, four months’ supply of oilseeds, three months’ supply of sugar, a large supply of whale oil (for cooking fat and margarine) and quantities of canned meat, canned milk and cheese, together with no less than six months’ supply of feeding grains for animals. ”

“ The highly rationalised milling industry was dominated by three large enterprises, the privately owned firms of Ranks and Spillers, and their natural enemy, the Cooperative Movement, which was outside the millers’ trade association and which on principle did not use the services of the specialist grain importers and brokers who operated on the terminal markets of London and Liverpool. These in their turn were concerned lest they be squeezed out of business by direct purchase by millers in the country of origin—the policy of the Cooperative Movement and to some extent of Ranks also. ”

“ At the time they were laid down it seems fairly clear that they were intended to assess no more than the resultant, so to speak, of the various forces affecting wartime food imports. The effect of war, they said, would be in the short run to dislocate food imports, or to interrupt them altogether; over the long run to reduce them, as compared with normal, by one-quarter. ”

“ A storage plan that would command the agreement of so many conflicting interests would clearly be difficult to find. Moreover, the existing state of the wheat market was unfavourable to a large-scale Government operation; four successive short crops in the United States and Canada, a crop failure in the Argentine, and two years of large imports into the United States, normally an exporter of wheat, had reduced world wheat stocks to normal proportions, and produced a seller’s market in wheat for the first time since 1927. ”

“ Wheat, he suggested, might not keep; if we lost command of the seas we should lose the war, storage or no storage.
This seeming firmness concealed, for the Government as a whole, a very real perplexity; for their expert counsellors were unable to provide firm guidance upon the need for storage. Broadly speaking, the naval and air staffs agreed that unrestricted air and sea attacks on shipping must be expected; but they disagreed about the likely effects of such attacks. The Admiralty were confident that convoys and improvements in undersea detection could deal with the submarine menace ”

“ The majority of traders and civil servants, though they might consider themselves very different sorts of person, were alike in having a long-standing, often cultivated, tendency to improvise policy, even where they would not dream of improvising machinery ”

“ Members of the trade concerned should build up and turn over the extra stocks required, ‘buying, holding and selling as Government agents parcels earmarked as the Government’s’; or alternatively, they might be subsidised to maintain their stocks at the required level. The Government would have to take powers requiring participants in the scheme to make returns of their stocks. ”

“ The Minister for Coordination of Defence and his advisers, so far from accepting the need for ambitious schemes of this kind, had in fact agreed to scale down the proposed capital expenditure from £20 millions to £10–12 millions before putting it up to the Cabinet again. For this purpose the original Plan II (described at the time as a ‘minimum’) was reduced to a simple plan to buy 400,000 tons of wheat, 150,000 tons of sugar, and 100,000 tons of whale oil. [9] The chief economy was at the expense of oilseeds ”

“ They urged it as an alternative to an uneconomic fostering of home production which, they argued, would actually weaken the country in wartime by reducing foreign trade and hence the merchant shipping and ship-building industries. Instead, they suggested storing a year's supply of wheat, at an estimated cost of £40 millions. In April 1936, The Times expressed alarm at the low stocks of wheat in public granaries at the ports—some 200,000 tons—compared with storage capacity estimated at seven times that amount. ”

“ This proposal was first mooted in July 1938, and was backed strongly by the Foreign Office and the Government's Chief Economic Adviser. The millers did not want Roumanian wheat; they had already covered their requirements of soft wheat months ahead at lower prices than the Roumanians were asking. The wheat was not suitable for the security stock, since it had indifferent keeping qualities, and anyway (the Department pointed out) there was insufficient money to buy more wheat and nowhere to put it except on the east coast, which was considered vulnerable. ”

“ W. S. Morrison, Chancellor of the Duchy of Lancaster, had been made responsible for food defence in March 1939.↑ Not the broker who had the 1938 purchases.↑ It ran out a the weekend—just when the Norwegians showed signs of coming to terms—and had to be renewed after hasty consultations with the Treasury and the Foreign Secretary himself on the following Monday morning. As with the 1938 wheat deal, all the preliminary negotiations were carried out, on the Government side, by Sir Henry French, single-handed and in secret. ”

“ The Treasury, whose insistence on financial economy had half-strangled the original storage schemes, cooperated readily in this and other proposals for increasing food reserves that the Department put up during 1939 ”

“ The cost of such a purchase of, say, 50 million bushels (1,300,000 tons) was put at £16 million initially, and £1 million annually thereafter.
The risk of upsetting the market might have had to be taken if the case for acquiring a wheat reserve immediately had been overwhelming. ”