The Washington herald., 1921-08-05
Index Of Farm Price, Isis-issi.

The cost Of farm production had
not risen seriously until 1917, and
the margin of profit in that year
was, therefore, wider than At any
period before or since. The steady
increase liz the cost of general COM
modities which farmers must buy
through ls17-1S and - constantly
narrowed the farmers margin, how
ever, and the peak of high cost
came just before the great drop in
prices. The drop of 1920 came after
crops had been planted and 1t was
too late 20 prevent loss by any ad-
justment.
The period of greatest decline
was from June 1 to December IN
1920. During this period the shrink
age in value Of the farmers produce
was the greatest ever noted in a
similar period in history. The aver
age price received by producers de-
clined as follows for somS of the
leading crops: Wheat from sass per
bushel in June, to $1.44 in Decem-
ber: corn. s1.S5 to 81: oats. S1.02 to
Al; potatoes. s4.21 to S1.l6: wool,
so cents to 81 cents.
What this decline Of selling price
has meant in loss in value to farm
ers has been carefully estimated by
the Department of Agriculture to
amount to S1,43o.00o. 900 on livestock
and wool, and $7.1Ss, ,000, 900 on crops
or total Of ss,619,000.ooo. This
amount more than wiped out the
total net income OF the annual pro-
duction Of the farms of the whole
nation.
The significance Of this to busi-
ness lies in the fact that the farm
industry involves over $4,000, 900
men employed, over 100000 per-
sons. and approximately $4,000
100000 of the national investmen,
in earning enterprises. When the
purchasing margin of half of our
total population was practically
wiped out the loss in trade showed
Immediately in every line.
The history OF price declines fol-
lowing previous wars shows that IN
no case did food prices decline at
such rapid rate. Following the
civil war II was several years be-
fore food prices came down to what
they were before the war. Metals
and clothing declined even more
slowly than foods. and II was near
established.
There is no general index to
farm profits that will show how
farmers were doing in 1919 when
livestock prices were declining and
crop prices going up. 1t is likely
that the margin In farming taken
as whole was less than generally
supposed. Certainly the high price
nf wheat IAd fha
that the farmer was doin. we'll. It
is unusual for livestock prices to
swing away from the general. line
OF farm prices as they did last year
and this NAV be responsible for the
ract that TIE matter did not attract
more attention than It did.
overproducion was to some extent
cause Of the price decline, but the
farmer was not responsible for that
Through 1918 and well into 1919 he
was led to think that Europe would
need all we could spare, and tina,
means would be found to get II over
to them. The crop year was SO
favorable that the total yield was
above the need. With a normal rate
Of consumption this would not have
been So serious
The cause of the decline in farm,
prices was a combination Of the ef.
fects of accumulated stocks, large
| production. increased imports. re.
duced consumption, reduced exports
increased freight rates. forced sales
by farmers due to credit limitations
\ and a general lack OF appreciation
that a rapid decline in farm prices
would be reflected in general bust.
ness to such a large extent. The
year has demonstrated more clearly
than ever that agriculture Is tn,
basic industry OF commerce, trad.
| and manufactures.