6.2 McDougall and Keynes
After the war, the Anglo-American winners decided to dismantle the IIA and transfer its assets to the FAO of the United Nations, which had been created during the war. The mission of the two organisations differed greatly. While the defence of agriculturalists’ income had been a major concern for the Institute, the paramount mission of the FAO was:
raising levels of nutrition and standards of living of the peoples under their respective jurisdictions; securing improvements in the efficiency of the production and distribution of all food and agricultural products; bettering the condition of rural populations; and thus contributing towards an expanding world economy and ensuring humanity’s freedom from hunger.
1 FAO constitution in Basic Texts of the Food and Agriculture Organization of the United Nations, I (Rome: FAO, 2001), 3.Nutrition, standards of living and hunger were never mentioned in the founding treaty of the International Institute, and this was not merely a consequence of the progress of nutrition studies during the first half of the twentieth century.
The Institute was finally dismantled in 1948, but its enduring legacy was not limited to the decision to move the FAO to Rome. The new organisation inherited the statistical tasks of the Institute, its library and archives, and part of its personnel. For instance, Giuseppe Ugo Papi, who had been the Institute’s last Secretary General, headed the Italian delegation to the FAO, while Valentino Dore, the chief of the Bureau of Statistics, remained at FAO to lead the transition.
2 D’Onofrio and Mignemi, ‘The International Institute of Agriculture and the Information Infrastructure of World Trade’. When the FAO launched its agricultural census, it counted it as its Second World Agricultural Census, thus continuing the series inaugurated by the IIA in 1929. The new organisation, though, was also inspired by ideas that had been foreshadowed at some of the Institute’s meetings in the 1930s. Frank Lidgett McDougall, for instance, had been the permanent delegate of Australia to the IIA, before becoming one of the key personalities behind the creation of the FAO.
3 He was member of the permanent committee of the IIA between 1934 and 1940, as is reflected in the proceedings of the various General assemblies of the IIA held during this period. His involvement with the activities of the IIA is apparent in Wendy Way, A New Idea Each Morning: How Food and Agriculture Came Together In One International Organisation (Canberra, ACT: ANU E Press, 2013).McDougall’s turn to nutrition science as early as the 1930s is well-known to historians.
4 Way, A New Idea Each Morning, 153; Sean Turnell, ‘FL McDougall: Eminence Grise of Australian Economic Diplomacy’, Australian Economic History Review 40 (2000), 51–70; John B. O’Brien, ‘FL McDougall and the Origins of the FAO’, Australian J. Politics and History 46 (2000), 164–74. His reports to the General Assembly of the IIA stand out for the novelty of his approach, although nutrition science had already been making inroads into the realm of policy. The food relief interventions in the wake of the First World War, such as Herbert Hoover’s American Relief Administration, had sought collaboration from nutritionists, and by the early 1930s, the League of Nations Health Organisation had begun developing nutrition standards with the help of experts such as W. R. Aykroyd and John B. Orr. The League had already produced internationally agreed dietary requirements in 1935.
5 Paul Weindling, ‘The Role of International Organizations in Setting Nutritional Standards in the 1920s and 1930s’, in The Science and Culture of Nutrition, 1840–1940, Harmke Kamminga and Andrew Cunningham (eds) (Amsterdam: Brill, 1995), 319–32. The studies showed that humans required not merely a certain intake of energy (that was fixed at 3,000 calories a day for a working man), but also ‘protective’ food and vitamins.
6 Frank Lidget McDougall, ‘Alimentation et agriculture: rapport présenté au nom du comité permanent à la XIIème assemblée générale’, in Institut International d’Agriculture, Actes de la treizième Assemblée Générale 5–10 Octobre 1936 (Rome: Imprimerie de l’Institute International d’Agriculture, 1937), 500–9. In particular, Orr, a medical doctor with broad experience in animal nutrition, had tried to calculate not just the average quantity of food consumed by Britons but the quality of the British diet. With the support of the government, he had surveyed six randomly selected groups of people, showing how the diet changed as income increased. On average, the consumption of fresh milk, butter, meat, fish, eggs, fruit and vegetables correlated positively with income, which suggested that poverty was the main cause of malnutrition. Orr also tried to assess whether the diets within each group were adequate in terms of calories and nutrients and how the health of the poorest was affected by the lack of basic nutrients. His results were published in a widely discussed report in 1936.
7 J. B. Orr, Food, Health and Income: A Report on a Survey of Adequacy of Diet in Relation to Income (London: MacMillan, 1936).McDougall built on this work, and in particular on the enquiries of British consumption carried out by Orr, to argue in favour of a complete reorganisation of markets for agricultural commodities at a world level. According to him, the world needed more rather than less food at affordable prices. His report, addressed to the 1936 General Assembly of the IIA, started from premises that were diametrically opposed to those of Ernst Laur. Instead of underlining the fall in agriculturalists’ income and their eroded margins, instead of stressing the gap between prices and costs – as Laur had done – he concentrated on the lack of food to satisfy the consumption needs of the population. Agriculture should be in the service of consumers. Since nutrition science, as it was being developed at the international level, stressed the need to increase the availability of ‘protective’ foodstuff, including liquid milk, meat, fruit and vegetables, world production should be reorganised accordingly. In particular, agriculturalists in the most densely populated countries (essentially in Western Europe) should concentrate on dairy products, while allowing countries with lower production costs to provide them with cereals and sugar. In this way, international trade would restart and farmers in agricultural countries would improve their living standards. McDougall imagined that, in the near future, Europe should produce only 75 per cent rather than 95 per cent of the wheat that it consumed.
8 McDougall, ‘Alimentation et agriculture’, 506. For dairy, in particular, he envisaged a complete turnaround of the policies adopted to resist the depression. According to him, subsidies to producers should be turned into subsidies to consumers, and milk could be provided at a lowered cost by governments.
Laur and McDougall shared a concern for structural agricultural surpluses that affected large parts of the world, ‘with the exception of Russia and probably most of Asia’.
9 McDougall, McDougall Memoranda, 2. Where they differed was on how to tackle this problem. Laur insisted on the necessity of raising prices through state monopolies on cereals and lowering costs through subsidies (especially for credit) and commercial organisations. He was not ready to accept that European farmers could move away from cereals and did not believe that this could be either a realistic or a desirable outcome, at least in the foreseeable future. McDougall, instead, focused on demand: rather than reduce production, governments should subsidise consumption.
McDougall’s idea of subsidising consumption also echoed John Maynard Keynes’ emphasis on aggregate demand as paramount for ending the broader economic crisis.
10 Way, A New Idea Each Morning, 178. Keynes knew commodity markets very well. He had already engaged extensively with stocks of raw materials for his reporting at the London and Cambridge Economic Service since 1923, and a main focus for him and his colleagues at the Economic Service throughout the 1920s had been the (lack of) adjustment of supply and demand. Buffer stocks such as those of the wheat pools created in this period seemed to guarantee price stability and, by June 1924, Keynes had concluded that ‘it seems as if relative prices could be kept a good deal steadier if the organisation for carrying stocks at a moderate cost were on a larger scale’.
11 John Maynard Keynes, ‘Special Memorandum 6’, in The Collected Writings of John Maynard Keynes, XII, Economic Articles and Correspondence: Investment and Editorial, Donald Moggridge and Elizabeth Johnson (eds) (Cambridge: Royal Economic Society, 1978), 315. He continued developing his idea of buffer stocks to stabilise international demand even after the Great Depression, when accumulating stocks of raw materials and commodities proved an aggravating rather than alleviating factor for world prices.
12 Scepticism on the function of stocks was expressed by Ezekiel, ‘Problem of Agricultural Surpluses’, 80–1. By 1938, Keynes was openly suggesting a government-sponsored system of storage for foodstuffs and raw materials to stabilise prices.
13 John Maynard Keynes, ‘The Policy of Government Storage of Food-Stuffs and Raw Materials’, Economic J. 48 (1938), 449–60. He compared two methods for stabilising prices: a monopoly or restrictions on output. Just like McDougall, Keynes believed that output restrictions were hardly a good idea, given the levels of undernourishment. Instead, governments should step in and, since no government, not even Britain, was big enough to stabilise prices on its own, a world organisation was needed.
While continental Europeans, such as Laur or Hermes, reasoned essentially in terms of the interests of their constituencies and the producers’ organisations they represented, McDougall and Keynes reflected a rather technocratic attitude, but also a global perspective. Their proposals originated in their reflection on the relationship between the different parts of Britain’s global empire. Way claims that, in the negotiations of the 1930s, McDougall felt he represented the world outside Europe. In fact, he projected onto the world what he experienced in the Empire, with an industrially strong centre, endowed with a small, specialised agriculture, importing from overseas territories the bulk of its needs in agricultural commodities. These ideas had been relatively minoritarian in the Institute, but were key to the funding of the FAO.