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the general level of all prices has risen, and farm prices have 

 risen with them in exactly the same manner that the indi- 

 vidual gnat rose when the whole swarm of gnats rose. Rising 

 farm prices have not caused inflation any more than one 

 gnat, by himself, caused the swarm to rise. 



Inflation is an upward movement of prices in general. It is 

 merely another way of saying that goods and services are 

 now more valuable relative to dollars than formerly. In war- 

 time we have greater use for goods and services than we 

 formerly had, and it is not surprising that their prices should 

 rise. 



Those who contend that rising farm prices cause infla- 

 tion note that since the outbreak of the war, farm prices of 

 food have risen 96 per cent, while retail prices of food 

 have risen only 40 per cent. It is concluded that farm prices 

 have somehow shot up of their own volition and have 

 dragged the more reluctant and patriotic retail food prices 

 up with them. It is not unusual that farm prices should re- 

 spond more violently to a general price change than do re- 

 tail prices. During the depression, farm prices of food fell 

 68 per cent, and retail prices fell only 46 per cent. 



The fact that the tip of a whip cracks sharply with a slight 

 movement of the butt does not mean that the tip of the 

 whip is responsible for the motion. Similarly, the fact that 

 farm prices fluctuate more violently than retail prices does 

 not mean that they cause the changes in the retail prices. 

 The farmer, like the man in the back seat of a roller coaster, 

 gets more of a ride for his money than anyone else. 



Farm Prices Are Largely Made over Retail Counters 



When prices in the retail trade strengthen for whatever 

 reason, the retailer is willing to pay the wholesaler more in 

 order to get his supplies. The wholesaler is willing to pay 

 the commission man more, who in turn raises the price to 



