In the middle of July, just before the war, the price of No. 2 Hard Winter wheat 

 at Liverpool was about $1.07 a bushel. Its cash price at New York was then about 92 

 cents a bushel — a difference of 15 cents a bushel. At that date the cost of freight from 

 New York to Liverpool was 534 cents a bushel, and of insurance about Y% cent a bushel, 

 making the cost of freight and insurance about 6 cents a bushel, and leaving 9 cents a 

 bushel to cover other charges and profit. On 6th January, 1916, the price of Choice 

 Hard Winter in Liverpool was $1.90 per bushel and the cash price of No. 2 Red Winter 

 in New York was $1.42 per bushel, a difference of nearly 48 cents per bushel. The 

 cost of freight on that date from New York to Liverpool was 40 cents a bushel and the 

 cost of insurance about 2 cents a bushel — a total of 42 cents, leaving 6 cents a bushel 

 to cover other charges and profit. The increase of 33 cents in the difference between 

 Liverpool and New York prices is thus accounted for by the rise in the cost of freight and 

 insurance of 36 cents a bushel. 



On the average of the ten years before the war the price of wheat imported into 

 the United Kingdom was $1.08 a bushel and the price of wheat exported from the 

 Argentine was 94 cents a bushel, a difference of 14 cents a bushel. The average rate 

 of freight from the River Plate down river to the United Kingdom was for the five 

 years before the war 8}4 cents per bushel. According to Broomhall on 6th January, 

 when Baril wheat was selling at Liverpool at $1.95 a bushel, the price of wheat at 

 Buenos Aires was $1.08 a bushel, a difference of 87 cents a bushel. The cost of freight 

 from Buenos Aires to Liverpool had risen on that date to 91 cents a bushel, an increase 

 of 83 cents above what it was before the war. This increase in the cost of freight 

 is more than enough in itself to account for the increase in the difference between the 

 prices at Liverpool and Buenos Aires. 



What is responsible for this extraordinary increase in ocean freight rates? The 

 "Australian Age" of November 9, 1915, is probably correct when it summarizes the 

 situation as follows: — 



"Some 25% of the world's tonnage is either locked up in enemy ports or at the 

 bottom of the sea. Another 20% has been requisitioned by the Admiralty for transport 

 and war purposes. The British Admiralty, so we are informed, has 800 steamers, 

 not including trawlers, and is requisitioning more every day. The enemy submarine 



campaign, although it has suffered a severe check, still is to be reckoned with" 



"Even when freight is chartered, no one can say definitely, as in normal times, 



that so much freight will be available; it may be sunk or it may be requisitioned." 



A proper conception of the extent of the rise in ocean freight as compared with 

 the rise in prices was given by Broomhall in the "Corn Trade News" of January 18, 

 1916, in the following statement: — 



"The difference between the C.I.F. price now and in January, 1914, of Canadian, 

 Australian and Argentine wheat is 30s. 6d. per quarter (92 cents a bushel), a rise of 

 roundly 90%; whilst freights have advanced from 3s. 6d. to 20s. 6d. per quarter (10>£ 

 to 62 cents per bushel), a rise of nearly 500%." 



Past and Present Prices of Wheat 



In previous wars the prices of wheat have been relatively higher and have fluctuated 

 widely. In the case of many wars the high level of prices has often continued for some 

 time after the declaration of peace. The course of prices during the present conflict, 

 as we shall see later, seems so far to confirm this general tendency. 



A remarkable chart prepared by Mr. Geo. Broomhall, and published recently, 

 (sold by Broomhall's "Corn Trade News" of Liverpool at the modest price of 2s. 6d. a 

 copy) enables us to give as follows a table in which are presented official average prices 

 of home grown wheat in the United Kingdom for 115 years. We have given only the 

 typical years in the first half of the 19th century up to 1842; but from this date we have 



158 



