------------------------------------------------------- | Index of Prices at the | Farm in Principal | Produce States ----------------------------- | A P | | | | | l r | | | W | C Department of Labor | l o | H | C | h | o Wholesale Index of | d | o | o | e | t All Commodities | F u | g | r | a | t | a c | s | n | t | o | r e | | | | n | m | | | | ------------------------------------------------------- Pre-war | 100 | 100 | 100 | 100 | 100 | 100 First Quarter 1918 | 187 | 200 | 213 | 224 | 254 | 246 Last Quarter 1918 | 206 | 204 | 223 | 220 | 258 | 246 First Quarter 1919 | 200 | 202 | 225 | 228 | 264 | 215 Last Quarter 1919 | 230 | 206 | 178 | 216 | 277 | 268 ------------------------------------------------------- For the moment, what I wish to establish is only that the farmer's prices are not based upon any conception of the cost of production, but upon forces in which he has no voice. He can never organize to put his industry in a "cost plus" basis as industrial producers do, and remedy must be found elsewhere. THE TWO MARGINS As stated, the margin between the farmer and consumer falls into two divisions--one of which predominantly affects the farmer and the other the consumer. It is really the wholesale prices that govern the farmer, rather than retail prices, for it is in wholesale prices that the farmer competes with the world. As the prices paid by the wholesaler are mostly fixed by overseas trade at the datum point on the Atlantic seaboard or in Europe, then if the margins between the wholesaler and the farmer are unduly large, or increase, it is mostly to the farmer's detriment. For instance, as the price of the farmer's wheat in normal times is made in Liverpool, any increase in handling comes out of the farmer's price. Likewise, as the wholesale price of butter is made by the import of Danish butter into New York, any increase in the numbers or charges between our farmer and the wholesale buyer comes, to a considerable degree, out of the farmer. As the datum point of determining prices is at the wholesaler, the accretion by the charges for distribution from that point forward to the consumer's door will not affect the farmer, but will affect the consumer. When competition decreases through shortage the consumer pays the added profits of these trades.