The high cost of living is a temporary economic problem, surrounded by high emotions. The agricultural industry is a permanent economic problem, surrounded by many dangers. We are now entering into our regular four-year period of large promises to sufferers of all kinds. Except to demagogues and to the fellows who farm the farmer, there are no easy formulas; nevertheless, there are constructive forces that can be put in motion—and these are good times to get them talked about.
As bearing upon some suggestion of constructive solution, I wish to establish and analyze certain propositions. Amongst other things they involve a clear understanding of the bearings of different segments of the total
price of food between the different links in the chain of production and distribution. These propositions are:
First: That the high cost of living is due largely to inflation and shortage in world production; speculation is an incident of these forces, not the cause.
Second: That the farmer's prices are fixed by the impact of world wholesale prices; that such prices bear only a remote relation to his costs of production.
Third: That any increase or decrease in the cost of placing the farmer's products into the hands of the wholesaler is a deduction from or addition to the farmer's prices; that is, an expansion or contraction of the margin between the farm and wholesale prices makes an increase or decrease in the farmer's return.
Fourth: That increase or decrease in the cost of distributing food from the wholesaler to the door of the ultimate consumer is a deduction or addition predominantly to the consumer's cost; that is, the margin between the wholesaler and consumer in its increases or decreases is largely an addition or subtraction from the consumer's price.
Fifth: That these two margins in most of our commodities except grain were, before the war, the largest in the world; that they have grown
abnormally during the war, except during the year of food control.
Sixth: That analysis of the character of the margin between the farmer and wholesaler will show that decreases in price find immediate reflection on the farmer, while immediate increases in price are absorbed by the trades between and the farmer gets but a lagging increase.