PRICES OF FARM PRODUCTS. 19 
PURCHASING POWER OF FARM PRODUCTS. 
The index number of wholesale prices of "all commodities" pre- 
pared by the Bureau of Labor Statistics is taken as a measure of the 
general price level. These index numbers converted to a five-year 
base are given in Tables I and II. 
In June, 1921, the index number was 151 as compared with the 
five-year average for June, 1909 to 1914. The general average of all 
commodities, including farm products, was therefore 51 per cent above 
the prewar average. If farm products were omitted the average 
would be higher . 
In June, 1921, the price of corn was 92 per cent of its prewar aver- 
age. Since the general price level was 151 per cent of the prewar 
average the relation of corn to the general price level was 61 per cent. 
If a bushel of corn was sold in 1921 at the average price paid to farmers 
and the money used to buy commodities of all kinds at the whole- 
sale prices of 1921, the quantity purchased would have been 61 per 
cent of the average amount that could have been purchased as a 
five-year average before the war. Manifestly the sellers of corn could 
not buy the usual quantity of other things. 
At the average prices paid to farmers in June, 1921, a bale of cotton 
would have sold for 77 per cent of as many dollars as it would have 
brought as a five-year average before the war. If the money had 
been used to buy other things at the wholesale prices for June the 
quantity purchased would have been 51 per cent as much as the 
five-year average before the war. 
Similarly the purchasing power on June 1 for other farm products 
was as follows: Corn 61, oats 60, barley 53, wheat 93, rye 101, buck- 
wheat 101, flaxseed 55, beans 81, corn 56, cotton 51, cottonseed 52, 
hay 68, cabbage 111, onions 73, potatoes 64, sweet potatoes 89, 
peanuts 48, apples 91, chickens 116, eggs 77, butter 83, milch cows 
80, beef cattle 69, veal calves 73, sheep 66, lambs 79, wool 58, hogs 
67, horses 45. Practically nothing that the farmer sells can be 
exchanged for the usual quantity of other things. It is physically 
impossible for farmers to absorb the products of factories. 
The weighted average purchasing power of 31 farm products in 
June, 1921, was 70 per cent of the five-year average before the war 
The yield per acre for some crops was above the average so that the 
buying power of the crops would be higher than this figure would 
indicate. Offsetting factors are the fact that retail prices lag behind 
wholesale prices. The farmer usually buys at retail so that he buys 
on a higher market than the index number of wholesale prices indi- 
cates. Also the portion of the income that must go to pay debts 
and taxes is much greater when prices drop suddenly. Even if 
prices of all things dropped evenly the buying power would still be 
reduced. 
