( 162 ) 



The price of wheat in a given country may be a little high 

 relative to world prices of wheat and relative to food prices in 

 that country because of unusual changes in local supplies. 

 Such a condition could exist in a country that had less than 

 normal supplies at a time when the world had more than 

 normal supplies. A drought in China might result in a trebling 

 of the price of rice and other foods in the interior of China 

 and not affect the price of food in the United States. Our 

 droughts of 1934 and 1936 did not affect food prices in Eu- 

 rope as much as in the United States. 



Every Tom, Dick, and Harry knows that a big crop of corn 

 sells for a low price. Since few know that world forces also 

 affect the price of corn, they jump to the conclusion that the 

 only force affecting the price of corn is a big crop in their 

 community. 



Prices are therefore affected by world-wide forces affect- 

 ing all prices, world-wide forces affecting food prices, and 

 local forces affecting the price of an individual product. 



Changes in the price of an individual commodity in a par- 

 ticular country are a good deal like a water-skipper on the 

 ocean. His activities produce only a whirl on a wave on a tide. 

 This insect is immodestly and unduly impressed by the rip- 

 ples that he creates and can see. He does not realize the im- 

 portance of the other forces even though he is almost 

 drowned by a tidal wave. 



Price Affects Production, Consumption, and Distribution 



Prices are both a cause and a result. Food prices in the 

 United States are largely a result of world forces, but changes 

 in our food prices cause all manner of changes in the produc- 

 tion, distribution, and consumption of various foods in this 

 country. 



