TRANSPORTATION AND STORAGE FACILITIES 6ll 



mont, Massachusetts, New Hampshire actually attempted to import 

 butter from Canada, paying five cents duty per pound. But dealers 

 discovered a more convenient way of fighting high prices; they 

 imported cream and churned butter on this side of the fence, the duty 

 on cream amounting to only fifty cents duty on thirty-five pounds 

 of butter. All creameries on Prince Edward Island, for instance, 

 closed their cheese factories in 1909-10 and shipped their cream to 

 Boston. 



To conclude, the maximum price for butter is firmly determined 

 on one side by the fact that the total yearly output must be consumed 

 within one season and on the other by the possibility of imports and 

 increased use of substitutes accompanied by a decreasing demand for 

 butter. The difficulty in the years 1908-10 was that, owing to over- 

 speculation and an unwarranted trade optimism, business men simply 

 ignored the economic principles underlying the price mechanism. 

 When, in January, 1911, reports came that the total amount of butter 

 in storage houses exceeded the previous year's storage provision by 

 eighteen million pounds, a crisis became inevitable. This was pre- 

 cipitated by the actions of speculators and the storage houses. The 

 former, not having a definite retail trade to rely upon in disposing of 

 a certain amount of their holdings, were the first to swamp the market. 

 Outsiders to the trade, they cared little for stability and steadying 

 measures which would have been adopted had the butter been in the 

 hands of dealers. The latter would drop the price steadily, increasing 

 consumption and thus avoiding trade demoralization. With the fall 

 of prices, cold storages began to demand additional collateral from 

 the dealers. One morning in January every dealer in Boston received 

 a demand note from the Quincy Storage House to put up $2 per tub. 

 They refused in a body to do this, the popular opinion being that the 

 storages must stand by the dealers in a panic after having enriched 

 themselves in the fat years. But the wave could not be stemmed 

 any longer. Failure followed failure. The storage houses left with 

 butter on hand began to throw their holdings upon the overloaded 

 market. Dealers releasing butter at the rate of $16 per tub were 

 glad to sell it at $12. It became evident that it would be impossible 

 to dispose of the supply before new butter should commence coming 

 in. Thus all the profits made within the preceding five years were 

 wiped out only because dealers ceased consulting economics and were 

 carried off their ground by the possibility of sudden fortunes. 



