A business panic may come on, as in October of 1907, and as a result the demand for meats of all kinds may shrink. Corn prices, the cost of producing hogs, may stay up, as was the case in 1907–1908, but hog prices nevertheless are reduced. A study of the hog market for many years past reveals the fact that the immediate price-making force is “supply and demand,” and that “cost of production” has no influence whatever on prices except in the long swings. The supply-and-demand theory of prices is well understood by nearly every one. Supposedly, actual prices at any given moment represent an equilibrium of supply and demand. The next day larger supplies come in, and the demand remains unchanged; naturally the price declines to a point where supply and demand are again equal. There is a presumption in the minds of many people that supply and demand interact with almost mathematical accuracy to determine prices. In the long run, possibly this is true. The day-by-day price, however, is as much a matter of psychology as mathematics. This brings us to a consideration of those more intangible price forces which may be grouped together under the head of strategy. In January and in August of 1919, we had excellent examples of the use of strategy as a price-making force. In both months, certain powerful interests worked in conjunction with the newspapers to modify public psychology in the interests of lower prices. Day after day, the lower price bombardment was directed against the farmers by the daily press and the politicians. Prices declined in spite of the fact that the supply was greatly curtailed and the potential demand was as great as ever. In the corn market, receipts were exceedingly light at Chicago during both price raids. Hog receipts in August of 1919, when prices dropped $5 per hundredweight, were the smallest of the year. But government officials constantly talked about the vast army supply of bacon. As a matter of fact, the quantity of pork products put on the market by the government was not enough to account for much of a drop in hog prices. But the publicity which went with the government announcements, combined with determined pressure on the speculative markets in this country and abroad, sufficed to lower prices tremendously in defiance of any mathematical expression of supply and demand. [Illustration: Solid line shows exports from U. S. Dotted line, ocean freights from New York to Liverpool. Ocean freights are low in summer when exports are low, and high in the fall when exports are heavy. ]