ough gradual
recuperation in world production. Second, by compulsory reduction of
consumption in Europe through their inability to pay us by commodities,
gold or credits. This latter has been very evident through the drop in
exchange and engagements for export during the past few weeks.

THE THREE DIVISIONS OF THE PRICE

The cost of food to the consumer is divided among the farmers on one
hand and storage, manufacture, jobbers, wholesalers, retailers and
transportation on the other. I believe these charges between the farmer
and consumer fall into two distinct groups--the charges comprising the
margin between the farmer and wholesaler which mainly concern the
farmer, and charges between the wholesaler and consumer, which mainly
concern the consumer. To establish this division, it is necessary to
analyze shortly the datum point by which price is determined.

The diet of the American people from a nutritional (not financial)
standpoint comprises the following articles and proportion:

Wheat and Rye 29.5% Pork Products 15.7% Dairy Products 15.3% Beef
Products 5.3% Corn Products 7.0% Sugar Products 13.2% Vegetable Oils
3.6% 89.6% All other, including potatoes 10.4%------ 100.0%

The wholesale price of about 90 per cent of our food in normal times is
only remotely determined by the cost of production, but mostly by world
conditions. We export a surplus of most commodities among the 90 per
cent and the prices of exports are determined by competition with other
world supplies in the European wholesale markets. Those items in this 90
per cent that we do not export are influenced by the same forces,
because in normal times we import them on any considerable variation in
price and the wholesaler naturally buys in the cheapest market. Even
milk is to a considerable degree controlled by butter imports in normal
times. When we import butter it releases more milk in competition. This
cannot be said to such extent of most of the odd 10 per cent, because
they are largely perishables that do not stand overseas transport and
consequently rise and fall more nearly directly upon local supply and
demand. Some economists will at once argue that if prices are
unprofitable to the farmer the situation will correct itself by
diminished production and, consequently, a general rise in the world
level of prices. In the abstract, this is true, but as a matter of fact
the surplus which our farmers contribute for export is only a small
portion