W. F. HANDSCHIN, Professor of Farm Organization and Management 



N DISCUSSING the economic phases of farming, the ques- 

 tion of prices received for farm products and prices which 

 must be paid by the farmer for the goods and services which 

 he wishes to buy is of primary importance. It is important 

 to pay somewhat special attention to the question of prices 

 at this time because of the fact that all of our price rela- 

 tionships have been entirely upset during the past five or six years. 

 Unless we analyze the situation with some care we are likely to mis- 

 take an emergency, even tho a somewhat prolonged emergency, for the 

 usual state of affairs. 



READJUSTMENT OF PRICES 



The farmer is suffering just now, more than from any other 

 cause, from a maladjustment of prices between his products and the 

 products of other industries. To be sure, other factors have con- 

 tributed to his difficulty, but the wide disparity between the price of 

 farm products and the price of the goods and services which the 

 farmer usually buys, constitutes in my judgment the principal cause of 

 the farmer's present difficult situation. 



While farming has been practically the only important industry 

 which has maintained normal production during the year 1921, the 

 price of farm products has fallen, without a corresponding reduction 

 of prices in other industries, to a point which leaves the farmer with 

 scarcely more than seventy per cent of his pre-war purchasing power. 

 This in turn has reacted on business in general through a reduction in 

 the demand for the products of city industries, and has been one of 

 the chief factors contributing to the widespread unemployment and 

 general business depression which has obtained during the past twelve 

 months. 



As a result of this maladjustment of prices between farming and 

 other industries, we find ourselves in the anomalous position in which 

 the manufacturer and merchandiser have been able to maintain sat- 

 isfactory prices; and at the same time "business is rotten," profits are 

 practically unknown, and prosperity is still just around the corner. 

 The laboring man is still enjoying a good wage scale, in the main, but 

 a third of his fellows are out of employment, many more are working 



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