Generating Cycles of Products and Prices 17 



'' While a difficulty of this character seems to ba en- 

 countered in most branches of business it is likely to 

 become pecidiarly acute in those manufacturing in- 

 dustries ivhich use animal and farm products as their 

 leading raw materials. For, following up a suggestion 

 of Sombart's, we have found that these classes of 

 products are more erratic m their price fluctuations 

 than are the products of mines and forests. Hence 

 an uncommonly large .speculative risk must be borne, 

 or insured against, in such branches of trade as meat 

 packing, flour milling, cotton spinning, woollen 

 weaving, tanning, etc. Of course this risk exists 

 during all phases of the business cycle, but it is aug- 

 mented in prosperity by the necessity of carrying 

 larger stocks of raw materials. The census indicates 

 that more than three-fourths of all the 'materials pur- 

 chased in the raw state' by American factories in 1900 

 belonged to this class which is pecidiarly unstable in 

 priced ^ 



Now may it not be that the physical yield of the 

 farms, which supplied more than three-fourths of all the 

 raw materials of American factories in 1900, is itself a 



1 W. C. Mitchell, Business Cycles, pp. 481, 482. To the above state- 

 ment Professor Mitchell appends the following note, p. 482, note 10. 

 "The sources of raw materials are given as follows: 



From farms $1,941,000,000 



" forests 119,000,000 



" mines 320,000,000 



" the sea 10,000,000 



" all sources $2,490,000,000 



Twelfth Census of the United States, Manufactures, Part I, p. cxxxv." 



There is a slight error in the above value "from all sources." The 

 aggregate sum is .S2, 390,000,000, and this would make the proportion 

 contributed by the farms 81.2 per cent. 



