8 MISC. PUBLICATION 604, U. S. DEPT. OF ACRICULTURE 
of potatoes as the first product for which grades were to be established, was a 
fortunate one. The 1917 crop was large and the Federal Reserve Board 
authorized its member banks to accept warehouse receipts as collateral security 
for loans for potatoes that had been properly packed, stored, and insured. 
The Board notified the United States Food Administration that since potatoes 
constitute a readily marketable nonperishable staple, they came within the 
regulation relating to commodity paper. Following this action of the Federal 
Reserve Board, the United States Department of Agriculture, and the United 
States Food Administration jointly recommended United States grades for 
potatoes, the use of which became mandatory on January 31, 1918, as far as the 
licensees of the latter organization were concerned. This ruling was not lifted 
until after the signing of the armistice. 
AUTHORITY GRANTED TO ESTABLISH A TERMINAL-MARKET 
INSPECTION SERVICE 
It was about this time that Congress considered the establishment of a 
terminal-market inspection service. In an emergency act passed on August 
10, Ig17, to provide, among other things, for the national security and defense 
by stimulating the distribution of agricultural products, authority was granted 
to the Secretary of Agriculture to investigate and certify to shippers the con- 
dition as to soundness of fruits, vegetables, and other food products when re- 
ceived at important central markets. Immediately following this action, the 
Bureau of Markets, which grew out of the Office of Markets, established 
inspection offices in 34 of the larger markets, and by June 30, 1918, a total of 
6,069 inspections had been made. 
The following year Congress granted authority to make inspections in the 
markets, both for quality and condition, for receivers and other financially 
interested parties, as well as shippers, and to charge fees to defray the expenses 
of such services. 
The establishment of an inspection service produced an urgent need for 
standards, and specialists in the field continued their investigations in order to 
fulfill this need as soon as possible. In 1918, the standardization investiga- 
tions for strawberries and Bermuda onions were completed and grades were 
accordingly recommended. No new grades were issued in the following year, 
but in 1920 grades for northern-grown onions and sweetpotatoes were an- 
nounced. Grades for cabbage and white Spanish peanuts were released in 1921. 
INSPECTION EXTENDED TO SHIPPING POINTS 
In 1922 another important step was taken by Congress which stimulated the 
need for national standards. In the agricultural appropriation bill for the fiscal 
year 1923, authority was given the Department of Agriculture to certify quality 
and condition of fruits and vegetables at shipping points. 
With the passage of this act in 1922, the Department now had authority 
to establish voluntary standards for fruits and vegetables and to conduct an in- 
spection service, both at shipping points and in the terminal markets. This, 
in fact, was all the authority required for the gradual expansion of a greatly 
needed system of national standardization. 
The Department of Agriculture had anticipated that it might be called upon 
to make inspections at shipping points; even before the passage of the act in 
1922, trained supervisors had been loaned to a number of Western States, which, 
by this time, were deeply involved in State inspection problems. Shipping- 
