RATIO METHOD OF DETERMINING COST oi? PRODUCING HOGS 33 



163.9 cents, 170.7 cents, 200 cents, 197.2 cents, 208.6 cents, 199.2 

 cents, 201 cents, 173.2 cents, 180.6 cents, 174.5 cents, and 172.3 

 cents. Weighting these on the basis indicated, we get a composite 

 value of corn of 182.5 cents. 



The historical ratio for the month of April is 12.7 bushels of 

 such composite corn. Multiply 182.5 cents by 12.7, and we secure 

 $23.18 as the cost of producing hogs for the Chicago market in 

 April of 1918, under the ten-year ratio method. The actual price 

 was $17.45, or a loss of $5.73 per hundredweight. The chart 

 which is published herewith illustrates graphically results secured 

 in the same manner for every month during the ten-year period 

 beginning 1907. 



Ordinarily, Chicago No. 2 corn measures very accurately the 

 changes in corn value on the farm, the corn out of which hogs are 

 actually made. During part of the winter of 19171918, Chicago 

 No. 2 corn ceased to be quite such an accurate measure as usual, 

 for the reason that the quality of the crop was so poor that only a 

 small amount of corn graded No. 2, and for the further reason that 

 there were severe transportation difficulties. 



Some people have urged not using Chicago No. 2 corn values, 

 but corn values on farms as reported to the United States Depart- 

 ment of Agriculture, monthly, by crop reporters. This price is 

 no doubt compiled with considerable accuracy, but is open to ob- 

 jection for the reason that it does not represent a uniform grade. 

 In soft corn years, a bushel of corn as valued by crop reporters 

 on farms is poor stuff. In such years, there is always a wider 

 spread between the farm value of corn and the Chicago No. 2 value 

 than in years when the quality is good. It might do fairly well 

 to take farm values of corn and farm values of hogs if definite 

 grades could be established. If they can not be, it is probably best 

 to take Chicago values of No. 2 corn and heavy hogs as a basis, 

 making allowance occasionally when exceptional conditions arise 

 in the way of artificial prices temporarily created by transporta- 

 tion difficulties, and remembering always that the true point at 

 issue is to apply a ratio between certain grades of actual feed on 

 the one hand and a certain grade of hogs on the other. This is a 

 technical matter which really can not be decided by lawyers or 

 business men, however competent such men may be to run a food 

 administration or a department of agriculture, or by farmers, 

 however competent such men may be to feed hogs. It is a matter 

 which must be handled by men who understand markets and who 

 have had sufficient economic training so that they understand a 

 little something of the making of index numbers, and who have 



