( 161 ) 



same forces that cause the world price structure to move up- 

 ward and downward (figure 2). If a certain combination of 

 forces causes the whole world price structure to sweep up- 

 ward or move downward, these forces in turn will cause 

 comparable changes within a nation's price structure, and 

 the food prices of a country will fluctuate with the move- 

 ment of all prices in that country. Contrary to popular opin- 

 ion, the generating forces do not begin with the nation's food 

 prices and then proceed to a nation's price level and finally 

 to world prices. 



FIGURE 2. INDEX NUMBERS OF THE WORLD AND UNITED 



STATES PRICE LEVELS, 1870 TO 1942 



1910_14 = 100 



1870 1880 1830 1300 19/0 1920 /930 1940 



For three quarters of a century commodity prices in the United 

 States have followed the world price level. 



Local Factors Affect Food Prices 



The price of any individual farm product may be high or 

 low relative to the level of farm products in a given country 

 or in the world. At any particular time the price of wheat 

 may be low relative to the general level of world food prices 

 because the world supply of wheat is large. 



