MINUTES OF EVIDENCE. 



101 



13 August, 1919.] 



SIR WILLIAM H. BEVERIDGE, K.C.B. 



[Continued. 



steady the price. It is very difficult to follow these 

 economic arguments as rapidly as the questions are 

 put, but that is what occurs to me. 



2451. I am suggesting that the effect of the State's 

 subsidy would be to make you grow a larger propor- 

 tion of your total supply under given climatic con- 

 ditions, "and that these climatic conditions would 

 cause greater changes in the total bulk of the world's 

 harvest because they would have influence over a 

 larger proportion of them, and therefore the range 

 of world prices would vary more from, one year to 

 another? I do not follow that, because the process 

 of putting in the guaranteed price puts in a governor 

 upon the fluctuation. You take your fluctuation off 

 in the amount of your subsidy and not in the price. 



2452. You mean guaranteed minimum prices, such 

 as those of the Corn Production Act? Yes. 1 think 

 even on a guaranteed minimum you might get large 

 fluctuations in the subsidy rather than in the price. 

 I cannot express a considered opinion ; I am merely 

 guarding myself from assenting. 



2453. Yes, but I think it works out as I suggest. If 

 it did cause these fluctuations it would mean, would 

 it not, that guaranteed cereal prices being fixed above 

 the normal world prices, would not only put a burden 

 on the urban population, among others, in the way 

 of taxation, but also cause loss to working people in 

 towns by way of loss of employment or short time? 

 I think on the whole the fluctuation of prices would 

 be one of the causes of the fluctuation of employ- 

 ment. 



2454. When you speak, as you have in answer to 

 several members of the Commission, of your Depart- 

 ment fixing prices, you mean maximum prices, I sup- 

 |MIM>? Not altogether. I must answer just a little 

 at length. Theoretically they are maximum prices, 

 that is to say, in most cases. But, if you take meat, 

 when we fix a price that is not a maximum price, 

 that is a price that the farmer will get in the market 

 by grading, that is really a guaranteed price for the 

 cattle. In the case of wheat, in effect, although it has 

 been a maximum price under the order, it has been 

 guaranteed by an instruction to the flour mills which 

 urn- under our control, to pay the maximum price. 

 That question arose, and ultimately it was settled in 

 that way. In the case of milk, there is no direct 

 guarantee; and I have no doubt some farmers have 

 got less than the maximum, but not many this sum- 

 miT. because there is an indirect guarantee by our 

 being prepared to take cheese at a fixed price. We 

 control the home-grown cheese, and we pay a fixed 

 price for all the home-grown which comes into our 

 clu-ese pool; so that if the farmer finds he is not 

 getting his price as milk, he can get his equivalent 

 price as cheese. If you take potatoes, that has been 

 an absoultely guaranteed price this last year. 



2455. As well as a maximum? As well as a maxi- 

 mum a fixed price. I think, broadly speaking, our 

 agricultural prices, in one way or another, have 

 become fixed prices and not maximum prices. 



2456. You mean not only maximum prices? Not 

 only maximum prices. I did not say minimum; I 

 said become definitely fixed prices. 



2457. They are maximum prices, but many of them 

 are also minimum prices? In effect most of them 

 arc. The only real exception I can think of is in 

 the case of fruit. In 1917 we had a maximum 

 price for plums but the market broke, and the 

 actual price was much below. It does not apply to 

 things like fruit. 



2l.">H. But practically all these prices are a maxi- 

 mum price, above which the producer is not allowed 

 to reap the benefits of any movement of prices? 

 hey are all maximum prices. 



2I~>9. A guaranteed price such as that under the 

 Corn Production Act, I suppose might give the farmer 

 a satisfactory measure of security without being 

 nearly HO high as maximum prices such as you have 

 been tpefcking of. Under a guaranteed minimum 

 price. ;i farmer would bo secured against the effects 

 of 11 large f;ill in prices, but would be able to reap 

 the advantage of high prices when prices were high? 

 That is so. 



2KX). S<> that it might give a satisfactory measure 

 of security without being so high aa a guaranteed 



maxmum prce 



Yes. 



2461. Mr. I'rosser Jones : Do you think that the 

 prices fixed by your Department are such as to in- 

 duce the producer to increase production? Yes. 



2462. Did you say that the climatic conditions in 

 this country are equally as good as in other coun- 

 tries? I said I had no reason for thinking that they 

 were on the whole more variable than those of other 

 countries. I confess I have not studied that sub- 

 ject. 



2463. Mr. Thomas Henderson: In paragraph 4 of 

 your Evidence-in-Chief you say the price of agricul- 

 tural produce has been fixed in the light of such 

 statistical data as were available. Could you let 

 us have those? I can let you have a selection. I 

 mean, there are all sorts and kinds. 



2464. I mean such as would be useful to us? I will 

 collect whatever I think will be useful to you without 

 overburdening you. 



2465. In paragraph 9, Section (d), you say: Dis- 

 agreement on principles of costing, e.g., whether home 

 grown feeding stuffs (hay, barley, oats, roots) should 

 be taken at market or at production prices." Could 

 you express any opinion for the guidance of this Com- 

 mission upon which basis it should be taken? I 

 believe ultimately you have to compromise between 

 the two for this reason. I think you cannot take the 

 market price of, we will say hay, in estimating the 

 cost of production of milk, because the market price 

 of hay is the price assuming that most do not sell 

 their hay, and therefore it is a relatively high 

 scarcity price. If everybody proceeded to sell his 

 hay, that price would come down. Now, you do not 

 want to fix your price of milk so that everybody 

 that has milk gets not only the ondinary profit on 

 his milk, but the excessive profit of a scarcity price 

 for his hay. That is my criticism of the market 

 price. If, however, you take a purely " cost of pro- 

 duction " price, which in itself I think is the fairest 

 looking thing, you get the risk that if the market 

 price is materially above the cost of production price, 

 people will start selling their hay instead of using 

 it for milk making, and thus you will lose your milk 

 production. At a certain point in selling their 

 hay they will find that they bring down. the price 

 of hay ; and that is why I say ultimately 1 beleive 

 you may have to compromise. 



2466. You have not considered the matter your- 

 self in any more detail than that, have you? I think 

 so, certainly. 



2467. Could you give us a memorandum upon that 

 particular point, because it seems to me to be of some 

 importance. 



2468. Chairman: It would be very useful for us for 

 you to give a considered opinion on that point? I 

 hope I have said enough to show that I think it is an 

 exceedingly thorny question ; and I just want to add 

 this, that one of the reasons which make me rather 

 like the plan of fixing prices by simply seeing how 

 items of production have gone up as against what they 

 wero before the war, is that you get too much the 

 same result, whether you take cost of production 

 prices or market prices. I think if I can evade that 

 thorny question, I have done a very good thing. 



2469. Mr. Thomas Ilenderson: On paragraph 4 

 again, clause (b), you say that prices were fixed on 

 general considerations as distinguished from bargain- 

 ing. Could you give us any development of that 

 theme? What are the general considerations other 

 than the bargaining process? A general considera- 

 tion, taking the case of cereals, is the price that is 

 being fixed in America. I believe if you came to look 

 at the principle upon which we fixed our wheat prices, 

 you would find that underlying all the rubble of sub- 

 sequent discussions was a comparison with the price 

 which was fixed in America to the producer. That 

 i.s a general consideration. 



2470. Are there any others? Then your estimates 

 of the costs of production, feeding stuffs, labour, and 

 so on. 



2171. As apart from your definite statistical data? 

 Yes; estimates of yield, which, of course, are never 

 definite until you have had the crop. 



2472. I think you said in answer to someone else, 

 that you were in favour of "guaranteeing the price of 



Gl 



