Agricultural pricesWallace, Henry A. (Henry Agard)
Science
Agricultural prices
Wallace, Henry A. (Henry Agard)
Agriculture -- Statistics; Farm produce; Prices
In the main, however, Table 2 is fairly accurate as it stands. It will
be noted that with the exception of hog products, wheat and potatoes,
retail prices in September of 1919 tended to be lower than their normal
ratio to Dun’s index number.
Possibly a consumers’ attack on the price of pork products, wheat and
potatoes was warranted in September of 1919. It must be remembered,
however, that there was supposedly a world need for hog products and
wheat at that time, and that potatoes were unduly high on account of a
short crop.
Consumers should be educated in the use of index numbers and to an
understanding of normal ratios between index numbers and the various
commodities which they buy. In times of violent price fluctuations they
should know just what is the index price of the commodities whose prices
are acting in a questionable way. At the same time they should realize
that the index price is not necessarily the just price. However, the
index price gives a basis upon which the consumer may work. He may then
inquire why it is that the actual price departs from the index price. In
May of 1918, for instance, the index price of corn in Chicago was $1.25,
whereas the actual price was $1.60. The actual price was above the index
price partly because of a poor quality corn crop in 1917, but
particularly because of an unprecedented demand for breadstuffs.
Nevertheless, everything considered, the consumer may have had some
basis for resentment against the high price of corn and corn products,
whereas if he had studied the milk and butter situation, he would have
seen that the dairy products were being sold at a real bargain. Strange
to say, consumers kicked vigorously against milk prices, but had nothing
to say about corn prices. Consumers are always concerned with
superficial appearances, never with fundamental causes. And this
characteristic of city consumers, combined with an unscrupulous,
ignorant city press, is a grave menace to our civilization.
TECHNIQUE OF THE RATIO METHOD
The fundamental idea of the ratio method is that the price of every
product is determined in the long run by the price of some other product
or products. The price of hogs is determined in the long run by the
price of corn. The price of corn is determined in the long run by the
price of land, labor, farm machinery and horse feed.[5]
Public-domain text, read in full here on John Shaqi.
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