Limitations of the Ratio Method 61 



inable. In the case of fixing crop prices by ratio, it is imaginable 

 that land values would constantly increase, and this would increase 

 the price of crops, which again will be reflected back into land, and 

 so on in a never-ending cycle. Economists like to dwell on situa- 

 tions of this kind. They are to a large extent purely imaginary. 

 To stop a vicious rise under the ratio system, a rise which would 

 bring about an over-production, all that would be necessary would 

 be to very slightly lower the standard ratio. In the case of hogs, 

 for example, it might be necessary to lower the ratio from 11.5 

 bushels to 11.2 bushels. 



However, in all that is said concerning the ratio method of 

 judging prices, there is no intention to prescribe any definite meth- 

 od of using the system. The chief function of ratios will doubt- 

 less continue to be educational. It is hoped that a knowledge of 

 standard ratios by large numbers of people will suffice to stabilize 

 prices at more nearly cost of production and to stabilize produc- 

 tion at a point more nearl}' identical with normal demand. 



