574 IOWA DEPARTMENT OF AGRICULTURE 



certain extent disregard those world price levels; but that, it seems to 

 me, is something that we cannot afford to disregard. I can illustrate 

 the world price level by reference to the wheat crop. Wheat is one 

 commodity, together with cotton, that has a world price level. For ex- 

 ample, on the Atlantic ocean today there are about 40-million bushels 

 afloat — it varies from thirty to fifty million at different times. Most of that 

 wheat is either consigned to ports in Europe, or it is sent on orders — 

 usually from one-third to one-half under orders — which means that it is 

 not consigned to any one in Europe, but when it reaches its port it will 

 be consigned. Now, by means of wireless a couple of those boats can be 

 consigned to any port in the world. If any wheat market in the world 

 gets out of line three or four cents, whether it is London or Paris or 

 Hamburg, or one of the Mediterranean ports, it at once draws wheat — 

 one or a half dozen cargoes can be diverted there within three or four 

 hours. Now, that practice, you can see, keeps the world price level on 

 both sides of the Atlantic about level. The port prices are about level, 

 minus the difference of transportation. When you get into the interior, 

 price changes according to the cost of transportation and handling, and 

 so it is that we have in wheat, for example, the highest price at Liver- 

 pool, on the average. Then as you come to the Altantic ports it is lower, 

 and as you go to the farthest point where wheat is delivered to Liver- 

 pool, which is Australia, it is still less. From Liverpool eastward wheat 

 decreases in price until it reaches about the middle of Germany, and in 

 middle Germany it meets the wheat that comes from Russia, and Russia 

 is another country of low price levels. That is, before the war when 

 conditions were normal. 



That is the way the world price level is maintained. Now those 

 currents move up and down according to world supply and world de- 

 mand. In the meat business, of course, it is not so violent, for a large 

 part of our meat is used at home, and it is home supply and home de- 

 mand which has more effect on meat prices than the home supply and 

 demand on wheat prices. 



Now, a very important thing in the making of prices is demand, and 

 that is what I want to speak of in regard to the present agricultural situ- 

 ation, with reference to the foreign markets. I want to advert a little 

 bit later very briefly to a plan that I have had in mind for a long while 

 for developing a foreign market news service, but I want to point out a 

 little bit before that some reasons why I think we need a world market 

 news service that will keep us informed both as to supply and as to 

 demand. 



Supply and Demand. 



We have heard that old phrase "supply and demand." The price of a 

 certain commodity, we say, is fixed mostly by demand. That is what we 

 call effective demand, which means the price somebody will pay for a 

 thing. In Europe, for example, today we have an enormous demand for 

 foodstuffs and clothing, but a very poor effective demand, because they 

 cannot pay for very much, and that is the thing that has affected our 

 world market today more than anything else. 



