PREFACE
This book is written for all those who may be interested in the matter of prices of agricultural products, but more especially for the farmers of the corn belt states, students of agricultural colleges, county agricultural agents, and leaders of farm organizations. Its purpose is to promote a better understanding of the factors which influence prices of farm products and stimulate an intelligent interest in statistical economics.
Aside from a rather small number of specialists at the larger terminal markets, few of the people who buy or sell farm products have any very definite ideas concerning the legitimate price-making forces. A better understanding of such forces by farmers generally should in itself gradually bring about prices which will approach more nearly cost of production, and tend to reduce the violent fluctuations above and below the compensatory average.
A careful study of the facts herein set forth should aid leaders of farm organizations to avoid costly mistakes which too often result from hasty and ill-considered action.
While not written primarily for economists, I trust many of them may find something of practical value in the matter herein. They may, perhaps, feel that at times I have not been as respectful as they would like toward many of the ideas of the classical school, but I have no apologies to offer on this score. In anticipation of possible criticism of my treatment of cost of production, I shall ask them to remember that I use “cost of production” as a ratio concept (if need be, a shifting ratio) and not as a cost-accounting concept. I may say, also, that I hold to no particular philosophy of economics unless a very firm belief in the utility of thoro mathematical price studies might be considered as constituting the basis of a philosophy.
While the book is frankly written from the farmer’s point of view, there is no bias whatsoever to the mathematics used, and it is believed that so far as it may influence opinion and practice, the results will in the long run benefit both farm producer and city consumer.
Students who may take up this book for serious study will get the greatest good from it by following prices of agricultural products from day to day and month to month, and noting when the relationship is normal and when abnormal. In this way they will acquire habits of intelligent observation of price trends that should prove of very great value to them when they get into business for themselves.
If this book is used as a college text, it is hoped that it will be by classes which are especially concerned in applying statistical laws to agricultural prices. Such classes should have free access to calculating machines, multiplying tables, etc., and should make a serious effort to work out various ratios and also to work out supply and demand laws for various farm products by means of correlation coefficients, lines of regression, etc. The tables given in the appendix should be of some value as a source of raw material. For further material, it is suggested that the Year Books of the United States Department of Agriculture, the Monthly Crop Reporters of the Bureau of Crop Estimates, and the Reports of the Chicago Board of Trade be consulted. A good book on correlation coefficients, etc., is Yule’s Theory of Statistics. The teacher of the suggested class in agricultural price statistics should simplify the mathematics to mere method, not concerning himself or his pupils with the theory back of it all. Wherever possible, the teacher should study very carefully the January and April, 1919, volumes of The Review of Economic Statistics, published by the Harvard University Press. The methods as exemplified in these volumes can very profitably be applied to the field of agricultural prices.
Acknowledgement is made to Professors J. M. Evvard and E. G. Nourse, of the Iowa State College, and to Professor F. A. Pearson, of the University of Illinois, for criticisms and helpful suggestions.