24 A<;iUl t I.TfltAI. i'ltlCES 



constant factor. The supply of corn was the price-making force. 



Since the war, corn prices have not been the result of "supply 

 and demand" in the sense that they were before the war. During 

 1919, price often came first in the corn market, and supply and 

 demand followed afterward. For example, in January and Feb- 

 ruary, 1919, corn prices broke 20 cents a bushel, in spite of the 

 fact that receipts at central markets were decidedly below their 

 customary level. Influential people had postulated the theory 

 that the war was over, and that supply and demand, if given an 

 opportunity, would operate to bring about a lower price level. 

 They set a lower price level, but supply and demand refused to 

 operate on the new level. The lower corn prices which prevailed 

 during the spring of 1919, however, probably had a very material 

 effect on the acreage planted. At any rate, there was about four 

 per cent less corn planted in 1919 than in 1918. 



According to the customary view, when the supply is smaller 

 than usual, the price should be greater than usual, and vice versa. 

 In the hog market this does not necessarily hold true. In Novem- 

 ber of 1907, hog prices were dropped with a terrific jerk, as a 

 result of certain unusual conditions. The drop was so great that 

 farmers refused to market their hogs, and receipts of hogs in 

 November of 1907 were about one-third smaller than in the ordi- 

 nary November. The price of hogs was lower than customary by 

 about one-fourth, and the supply of hogs marketed was less by 

 about one-third. A similar situation prevailed in August of 1919. 

 Prices dropped about $5 per hundredweight, or faster than ever 

 before in history. Receipts also dropped, and much fewer hogs 

 were received than in the ordinary August. 



In both 1907 and 1919, the packers figured that the business 

 world was so upset that to be on the safe side they would best buy 

 their hogs cheaper than they had been buying them. Farmers 

 were slow to realize just how great the disturbances had been in the 

 business w T orld, and failed to understand that in a situation of this 

 sort the packers could put thru their program for lower prices, in 

 spite of reduced hog receipts for a month or two. It is in the very 

 nature of things that the packers can outlast the farmers at such 

 a game. The packers know more accurately than the farmers the 

 supply-and-demand conditions, and they know that after a hog 

 reaches two hundred pounds, it is only a question of weeks till the 

 farmer will let him go, no matter what the price. It will take an 

 extraordinarily able farmers' organization to beat the packers at 

 this game, an organization which holds as its trump card "ultimate 

 supply and demand." 



