-2- 

 ^ anticipated curtailment in production and deterioration in quality of 

 both corn and soybeans, but particularly of soybeans. As soon as the 

 sun started shining again, there was more of a tendency to discount 

 the previous reports of damage by wet weather. The previous rises in 

 prices of corn and soybeans were not accompanied by significant rises in 

 the sensitive commodity price index. 



The war situation . Inasmuch as the development of the war 

 situation will have an important bearing upon agricultural prices in 

 the months and years ahead, this factor should receive continuous 

 attention. At present the G-erman army seems to be almost stopped in 

 northern and central Russia, but is steadily pressing toward the oil 

 fields of the Caucasus both by way of the Crimean Peninsula and around 

 the northern edge of the Black Sea. If Germany is defeated, it will be 

 because of a lack of motor fuel. The longer and more intensive the 

 Russian War, the more G-ermany is obliged to draw upon her reserve. The 

 Caucasian oil supply would be of considerable help as would that farther 

 south in Iran. Undoubtedly the British army will assist Russia in 

 keeping G-ermany away from these vital supplies. If the oil can be kept 

 from Germany, the increased output of airplanes by Britain and the 

 United States may become more and more effective in obtaining air 

 supremacy, in destroying G-erman refineries and munition works, and 

 finally, the morale of the G-erman people. This may take a long time, 

 but seems to be the present method of procedure. 



Japan finds herself in a very serious predicament. She 

 surely knows the United States will not desert China or Russia, expose 

 the Philippines to Japanese conquest and destroy our access to vital 

 raw materials in the East Indies and China. On the one hand it would 

 be difficult for Japan to give up her conquest of China. Undoubtedly 

 she has no thought of doing that. On the other hand if she goes to war 



