22 BULLETIN 999, U. S. DEPARTMENT OF AGRICULTURE. 



pound and 61 per acre harvested. This is the lowest since 1894. 



Since December 1 the price of cotton has continued to drop, so that 



now (1921) the purchasing power of an acre of cotton is the lowest 



ever reported. Unless there is more reserve capital or credit it 



would appear that at no time since records have been kept could 



cotton farmers buy so little. 



The 1920 corn crop was a very large crop and its purchasing power 



at December 1 prices was 60 per bushel and 73 per acre. Both have 



dropped since that time. Even at December 1 prices there has not 



been a time in 20 years when an acre of corn or wheat would sell 



for so little. 



EFFECTS ON INDUSTRY. 



The Nation is not only confronted with the most violent drop in 

 prices that it has ever experienced, but agricultural prices have 

 dropped so much more than other prices that we have a severe 

 agricultural panic on top of a severe general depression. 



At first thought the city consumer of farm things is likely to 

 delight in low prices of farm products and high prices for city prod- 

 ucts. The farm consumer of city things is equally likely to delight 

 in low prices of city goods and high prices of farm products. But 

 neither can long prosper at the expense of the other. 



Even allowing for the drop in wholesale prices, farmers can now 

 (1921) buy only about two-thirds their usual amount. In very 

 large areas at centers of production their buying power is not half 

 of the normal. If farmers can not buy, cities can not sell, and 

 unemployment results. Neither industry nor agriculture can pro- 

 gress in a normal way until the relative prices become adjusted at 

 some comparatively stable price level. This would occur if all prices 

 and wages went to prewar levels, which farm products have nearly 

 reached. The adjustment which seems more likely to occur and the 

 one that would appear to cause the least injustice is to have the very 

 low prices rise and some of the very high prices drop so that adjust- 

 ment is made at a price level considerably above the prewar price. 



WHAT CAN BE DONE? 



The primary purpose of this bulletin is to present basic statistics, 

 not to give an extended discussion of causes or of remedies. 



The general depression is practically world-wide, but in the coun- 

 tries with an agricultural surplus farm products have dropped in 

 price more than other products. In the countries with an agricul- 

 tural shortage farm products have dropped in price less than other 

 commodities. 



The credit expansion and unusual demands caused the great rise in 

 prices. Very large production, the breakdown in the buying power of 

 European countries, and the fact that the credit limits of our banking 

 system were reached all helped in causing the industrial depression. 



