CHART NO. 6
Fluctuation of prices of wheat, corn and oats in New York, 1878 to 1896.
Explanation.—This chart exhibits the average price of each of these three staples in September, December and May of each year. These months are chosen as giving without too great complication the widest range with reference to a particular season. September gives usually the price of the first of the new crop; December shows usually the fullest marketing of crops; May marks the month of largest speculation with reference to the incoming crop. Corn is less distinctly affected by these peculiarities, being subject to different conditions of the weather as well as of marketing. But the correspondence in price to a certain extent is easily perceived at a glance. The reason for this correspondence is partly in the uniform effect of seasons, as shown in Chart No. [5], and partly in the fact that either of the crops may supplement, in certain respects, a deficiency in either of the others.
Wheat prices.—With reference to wheat, No. 1 in the chart, further particulars as to prices are shown. The horizontal line in [pg 088] each year gives the average price of the year; the diagonal line gives the extremes of prices, highest and lowest, within the twelve months from September to September again. The dot within the circle gives the estimated average of farm prices on the first of December, as given by the Department of Agriculture. The relation of this, somewhat constant, to the New York price for December, as given in the line directly above it, may be of interest as showing the average actual expense of bringing wheat from all over the United States to the New York market. Where the difference of the two prices is more than an average, a speculative turn in the market during December is indicated, the farm price being fixed on the first day of December. The same fact of speculation is also shown in years where the diagonal line is longer than usual.
Special variations.—At the top of the chart is shown the world's visible supply of wheat for each year, each horizontal line indicating 500,000,000 bushels. The shaded portion gives the amount exported by the United States and the part above the shaded portion indicates the amount consumed or stored within the country. Thus, in the year 1894-5 the total wheat crop of the world was 2,672,000,000 bushels, of which the United States furnished 460,000,000, 144,000,000 of this amount being exported. This year marked the lowest price of wheat in the record, together with the largest crop in the world, though not in the United States. A proportionally small amount exported explains the falling out of the bottom of the wheat market. By reference to Chart No. [5], it will be seen that while the wheat crop of that year was considerably above the average, the corn crop and oat crop were far below the average. This explains the fact appearing in Chart No. [6], that the price of wheat was lower than the price of corn at the beginning of that year. It is probable that the use of wheat as a substitute for corn in feeding stock actually saved the wheat from a still lower price. The crop of 1891, the largest on record in the United States, was accompanied by a moderate crop in the rest of the world following two other moderate crops, indeed two short crops, for the entire world. The large amount of wheat exported explains the reason why the fall of prices was not greater in this [pg 090] country. That the price did not fall faster was due to the fact, remembered by many, that farmers, as well as speculators, held to the crop with the expectation of larger demand from abroad. When the crop of 1892 was felt to be still larger throughout the world, the price fell rapidly, in spite of a smaller crop in the United States. But when the prospect of an inferior crop in this country for 1893 was felt in the spring, the price rose a trifle. Yet as soon as the harvests of the world showed an enormous crop outside the United States, the price dropped again. The crop of 1889 was a short one in the world, and apparently should have affected the price of wheat in this country more than appears; but when the total amount exported is seen to leave more than an average crop in store, it is easy to see why the price in this country did not rise. The explanation of this small exportation is in the fact that the greater part of the shortage in yield was in countries like Russia, from which no demand was felt, because the people simply went without. The starvation of people in such countries affected the demand for wheat in this country only so far as our benevolence enlarged the market. The peculiar shape of the line of wheat prices in 1889 without any correspondence in prices of corn and oats is due to a speculative movement for December wheat in Chicago. The attempted corner in wheat failed suddenly, or it might have produced a line similar to that of 1897-8, due to the famous long-continued Leiter corner.
Sources of information.—The object of this chart, taken altogether, is to show the general law of market prices as governed by supply and demand from the actual facts in the market for wheat. The facts are taken from the best records available. The prices are from the daily record of the Produce Exchange of New York. The average price for the year and the fluctuations within the year are given for the period from September 1, when the new crop appears, to the August following, this being the period actually corresponding in market with a year represented by the crop figures. The estimate of the world's crop since 1885 is taken from carefully prepared statistics in the United States Department of Agriculture. The estimates prior to that date do not include the entire world, because no statistics can be reached, but they do [pg 091] include the most careful estimates of all countries whose product entered into the world's market. No effort has been made, for fear of complicating the chart, to show a similar correspondence between supply and price in reference to corn and oats. The tables following, however, give data for such comparison with reference to this country alone. The export of corn and oats has been too limited to play any great part in modifying prices.
Table of production—wheat, corn, oats, 1878 to 1897. (Figures give millions of bushels)
CHART NO. 7