THE PRICE OF WHEAT 237 



denominator are in determining the value of a frac- 

 tion. Historically, demand came first, while produc- 

 tion followed and grew to such proportions as was 

 warranted by the demand. In modern times of enter- 

 prise, however, the chain of causation may be reversed, for by 

 decreasing the cost of production a larger supply at a lower 

 price can be placed upon the market, and in consequence of 

 the lower price demand increases and more wheat is consumed. 



Communication and Transportation become an important fac- 

 tor in the price of wheat wherever the market has developed 

 beyond the most limited local conditions. Prices that were 

 formerly awaited for 2 or 3 months are now flashed by elec- 

 tricity over the whole world during the same day on which 

 they are made. A favorable location is no longer an advantage 

 in determining prices, for all markets are affected simultane- 

 ously by a change in either supply or demand. All improvements 

 in communication and transportation resulting in a decrease of 

 charges tend to lower the cost and increase the amount of 

 production permanently, and hence they enable the producer to 

 compete more successfully in the world's markets. If two 

 countries have surplus wheat for export, a few cents more or 

 less per bushel on the whole cost of moving may determine 

 which country can sell at a price that will secure the trade. 

 Ideally, the only difference of price which should exist between 

 any two markets, or between what the producer receives for 

 his wheat and what the consumer pays, is that resulting from 

 transportation and commercial charges, and the cost of such 

 manufacturing processes as the wheat may be put through. 

 These are the only variations that should occur in the world 

 price of wheat. 



Competition and Price. Competition is a powerful factor 

 in determining the specific price paid for wheat, especially that 

 paid to the producer. By means of competition, all charges 

 incidental to moving wheat are kept at a minimum, while the 

 price paid for the grain is kept at a maximum. For example, 

 at Milton, North Dakota, a non-competitive point, 2 cents less 

 was paid per bushel for wheat than at competitive points only 

 6 miles distant. When the local elevator systems combine 

 against the interests of the farmer, the only effective remedy is 



