THREE PRICE-MAKING FORCES 



Solid line shows exports from U. S. Dotted line, 

 ocean freights from New York to Liverpool. Ocean 

 freights are low in summer when exports are low, and 

 high in the fall when exports are heavy. 



tremendously in de- 

 fiance of any math- 

 ematical expression 

 of supply and de- 

 mand. 



There is a strat- 

 egy to the timing of 

 a determined price 

 drive. All farmers 

 know that such a 

 drive may be ex- 

 pected in the fall of 

 the year. A drive 

 in the fall is partly 

 normal as a result 

 of the increased supply at that time, but oftentimes strategic. In 

 the fall of 1865, following the Civil war, there was a determined 

 price drive, roughly corresponding to the price drive initiated in 

 August of 1919. In both cases, strategic factors were apparently 

 paramount. Certainly, no mathematical formulation of the law 

 of supply and demand could account for the price changes which 

 took place in 1865 and 1919. 



Farmers have discovered since 1914 that such disturbances as 

 foot-and-mouth disease, interrupted railroad service, and falling 

 foreign exchange may influence prices without changing either 

 potential supply or potential demand. They have suspected the 

 "interests" of manipulating foreign exchange in the fall of the 



year to make lower price for 

 farm products. They have known 

 that ocean freights have gener- 

 ally advanced in the fall of the 

 year, to the detriment of farm- 

 product prices in the United 

 States, and they have suspected 

 that part of this advance in 

 ocean freight rates was due to 

 England trying to get a large re- 

 turn on her shipping and at the 

 same time buy her food more 

 cheaply. 

 solid line. u. s. exports; dotted line, The two charts presented 



British exchange in U. S. Dotted line i , -4.1, J* !. 4/U,, -,! caa 



is inverted to show how heavy exports herewith indicate the normal sea- 



and weak exchange go together. Chart CrtT , l f^onrlo rlurinrr flip 



is based on 1903-1913 conditions. sonal trends, during tne 



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