35 



prices and margins of profit. True to the rule that one extreme Induces 

 the opposite, a revulsion set in. The feeling on the part of the farmers 

 that something was wrong and that they were being held up remained in 

 the background as long as the price of farm products remained high and 

 limestone seemed a good investment at any price, but when, in the late 

 summer and fall of 1920, the price of farm products began to rapidly fall 

 and at about the same time the heavy general advance in freight rates took 

 place, the agricultural limestone situation became impossible and broke. 

 Farmers quit buying. Direct pulverization was discontinued. Byproduct 

 screenings began to accumulate at the plants of producers. The producers 

 themselves were reluctant to believe that the situation could last and it was 

 not until well along in 1921 that they began to realize the full seriousness 

 of the situation and a number of them made big reductions in their prices. 

 Not yet, has the demand been restored and a number of the factors in the 

 situation must be relieved before it can be. Of course, a most potent and 

 vital factor is the farmer's financial inability to buy and the righting of 

 the present distressful situation in this respect lies, of course, outside of 

 the limestone problem and is not the subject of this discussion. 



GOVEBNING FACTORS IN LIMESTONE SUPPLY. 



In studying the problem of a satisfactory and adequate limestone supply 

 for the future, let us eliminate the present unfortunate financial condition 

 of the farmer, which we hope is but temporary, and confine our consider- 

 ation to those factors which, under normal times, of necessity must control 

 if the production of, traffic in, and use of agricultural limestone are to be 

 stabilized and developed as they should be. As I see it, these are: 



First, efficient and adequate production; 



Second, reasonable profit to the producer; 



Third, efficient distribution and availability of supply; 



Fourth, realization by the farmer of the price basis and conditions upon 

 which he can, with both profit and fairness to himself and the producer, 

 make free use of this material. 



Let us consider each of these factors in some detail. 



Efficient and adequate production implies a sufficient number of plants 

 of comparatively large, though not unwieldly or inflexible output ability, 

 located upon deposits of good quality which can be quarried with reasonable 

 overhead and operating cost and are adjacent to some satisfactory railroad 

 connection. There must be also an adequate and economical supply of fuel, 

 labor, etc. The management must be experienced and good, including the 

 financing, engineering, employment and commercial branches. The oper- 

 ation, in order to be truly efficient, must be as uniform as possible and cover 

 a reasonably long season or portion of the year. 



The second factor is that of a reasonable profit to the producer. The 

 selling price of the product must be placed at the point where it will cover 

 cost of efficient production and include a reasonable profit. In other words, 

 it must be low enough to penalize inefficiency and to preclude unreasonably 

 large profits, while at the same time rewarding efficient production with a 

 profit large enough to encourage continued production and good service to 

 meet the demand as the latter may grow. Too low a price destroys supply. 

 Too high a price destroys demand. As long as the tonnage of the traffic 

 hovers around the limit of by-product production of screenings, we are bound 

 to have the bad pendulum effect of action and reaction or what I may de- 

 scribe in other words as being a vicious circle of low prices stimulating the 

 demand beyond the point of the by-product supply, causing much higher 

 prices, which discourage demand to a point below the by-product supply 

 and once again low prices. Not until the farmers generally understand 

 the difference between the factors which control the by-product and those 

 that control a prime product can they realize what a perpetuating and ag- 

 gravating effect this distinction has upon the vicious circle, or be able to 



