( 148 ) 



seller. Similarly, the whole subject of prices is controversial. 

 Much of the present difficulty regarding farm and retail 

 prices of food comes about because the farmer cannot see 

 the viewpoint of the consumer, who in turn cannot under- 

 stand the position of the farmer. Neither of them under- 

 stands the fundamental forces which establish food prices, 

 either on the farm or in the city. To this confusion is added 

 the political maneuverings of farmers, laborers, and many 

 other pressure groups, and the contradictory price policies 

 of numerous government agencies. 



Prices Are Related to One Another 



The price problem is not marked by utter confusion, as 

 one might think from reading the papers. The general level 

 of prices is an understandable sort of thing ; it is an average 

 of all prices, which are related to one another. Everyone has 

 seen a swarm of gnats hanging stationary in the air, while 

 the individuals within the swarm constantly change places 

 with respect to one another. The relationship of the posi- 

 tion of individual gnats to one another and to the swarm re- 

 sembles the relationship of individual commodity prices to 

 one another and to an average of all prices when the general 

 level of prices is unchanged. 



Frequently, however, the whole swarm of gnats moves up 

 or down. The individuals continue to change positions rela- 

 tive to one another within the swarm, but in addition the 

 entire swarm changes its position. Such is the relationship 

 of commodity prices to one another and to an average of all 

 prices when the general level of prices itself is changed. 



Rising Farm Prices Are a Result of Inflation, Not a Cause 



It is generally believed that rising farm prices cause in- 

 flation. It would be as correct to say that a rising ther- 

 mometer causes a warm day. What has happened is that 



