FACTORS ATFECTIInG THE PEICE OF HOGS 6 
The second fanner kept about the same number of sows each 
vear and fed out about the same number of hogs. He carried over 
good supplies of corn from the years of heavy crops, and bought corn 
when necessary. 
The third farmer changed his production from year to year in 
response to current and past price relations. Generally the years 
when he reduced his number of hogs were the years when the first 
farmer increased his. Five years out of seven the third farmer had 
fewer hogs to sell when hogs were high in price, and many to sell 
when hogs were cheap. Most hog farmers vary their hog production 
in much the same way that this third farmer did. They decide what 
to do on the basis of" the current or past prices, paying no attention 
to the way such conditions have worked out in previous years. 3 
It is evident that the first farmer, in terms of individual profit, was 
producing more effectively than either of the others. Fuller com- 
prehension of what are the factors affecting hog prices should enable 
farmers to make a more rational control of their production, instead 
of changing, as so many of them do, blindly, and usually at the 
wrong time. 
Ultimate value of full knowledge and understanding of the cir- 
cumstances and forces from which prices arise does not lie, however, 
in merely aiding some few individual producers to outguess the mass 
of farmers and so secure individual gains. As more and more men 
come to base their actions not on what current prices are, but on 
what current prices mean, production as a whole will be more and 
more smoothly coordinated with what it should be to give the largest 
net income to both producers and consumers. As a result, much of 
the wastes which now ensue when either too large or too small a 
proportion of economic resources are devoted to hog production will 
be prevented, and the hog industry, m common with similar develop- 
ments in other industries, will do its part in affording a constantly 
increasing level of general well-being. 
PREVIOUS STUDIES OF HOG PRICES 
The fact that hog prices tend to move in recurring cycles has long 
been recognized. Fifty years ago Benner (1) pointed out the regu- 
larly recurring short cycles in hog prices. He also thought there was 
a longer 11-year cycle. What was more remarkable for that early 
time, he seemed to recognize some relationship between pig-iron pro- 
duction and hog prices. More recently, Warren (29, pp. 87-88; 
30, pp. 7-9) in pointing out the tendency toward a regularity in the 
hog-production cycle, stressed the effect of an unusual corn crop in 
advancing or retarding the movement. 
Wallace (28) was apparently the first s to apply exact statistical 
method to the analysis of hog prices. He pointed out the significance 
of the relation of corn prices to future hog prices, and made multiple 
correlation studies of the relation of supplies and business activity 
to hog prices (with a multiple correlation of 0.70 for the pre-war 
period). He did not, however, attempt to forecast supplies or prices 
from the corn-hog price relationship as such. 
3 These illustrations are available through the courtesy of H. W. Hawthorne. A full description of the 
area and type of farming they represent is given in reference (15). All of the difference in income on these 
three farms should not be ascribed to the differences shown in the management of the hog enterprise, as 
there are many other things in farm operation in this area which play an important part in affecting farm 
returns, 
