DUPL







UNITED STATES Food ADMINISTRATION,
- Washington, August, 1918.
AL INDEX NUMBERS OF FOOD PRICES ON A
NUTRITIVE VALUE BASE.
ND PEARL, Chief of the Statistical Division of the United States Food
Administration.
TABLE OF CONTENTS.
Page.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1.
mmodities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
s’ prices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
3 prices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ion of prices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - 3.
s’ prices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . * - - - - - - - - - - - - - - - - - - - - - - - - - 3
3 prices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
tors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
bles: -
> º description, and sources of commodities (with 4.
68) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ----------------
: II.-Figures used as a basis for calculations of weighting factors
producers’ index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
: III.-Figures used as a basis for calculations of weighting factors
index of wholesale prices of food. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
IV.-Producers’ price index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
! W.-Wholesale price index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
VI-Relative producers’ index... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
VII.-Relative wholesale index: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
INTRODUCTION.
g a judgment of the general trend of commodity prices
It has long been a common practice among economists to
* device of price indices. An index number is formed by
by one or another mathematical method the separate
e commodities which are to be studied as a group. The
ure is frequently a pure number, not expressed in dollars
Its purpose obviously is to show trends, not absolute
ficance in a philosophical sense of price index figures de-
ºrily on the adequacy of the mathematical reasoning used
ge from the absolute individual-commodity prices to the
The accuracy of an index number is, of course, de-
on the accuracy of the price data used. Various methods
mployed in the calculation of index numbers, leading to
rees of significance in the end result.*
ºplete and thorough review of the history of index numbers cf., Mitchell, Wºº, C.,
3º º in the United States and Foreign Countries. Bulletin U. S. Bur.
- pp. 1- - 9 5.
–1
2
It is clear that the real desideratum in an index number would be
8, final figure which would include in its make-up a just and equitable
Weighting of the several individual component prices in proportion
to the relative significance of the commodities themselves in the life
of the nation. For example, to take the case of food, it plainly is
of much less consequence to the nation to have the price of eggs
advance 20 º cent than it is to have the price of wheat advance
1 per cent, for the simple reason that wheat means so vastly much
more than do eggs in keeping the nation adequately nourished.
Working on this principle we have devised two new general price
indices, one indicating trend of prices received by the producer of the
basic food staples for his products, the other indicating the trend of
wholesale prices. -
The general plan followed in calculating these indices is to weight
the quoted prices of each commodity by a factor proportional to the
nutritive value of the normal production or crop of that commodity,
the total energy content as measured in calories being taken as the
measure of nutritive value. Starting from this basic point further
allowances have to be made, of course, for the differences in units
in which different commodity prices are quoted, and for secondary
(animal) production.
A first approximation to a nutritive base price index was published
some months ago in a preliminary way." The present paper is a
careful revision of the whole matter, with detailed data as to methods,
weighting, etc. -
NUMBER OF COMMODITIES.
We shall deal here with two general price indices, as follows:
(1) Based on the prices received by producers in the United States,
and (2) based on wholesale prices of food.
There are 20 commodities in the list used for the index of pro-
ducer's prices and 26 in the list used for the index of wholesale prices.
The lists follow.
Producer's prices are from Monthly Crop Reports of United States
Department of Agriculture, quoted on the first of each month except
in the case of live stock, sweet potatoes, Onions, cabbage, milk,
º peanuts, and beans, which are quoted on the fifteenth of
the month.
Wheat. Potatoes. Chickens.
Corn. Sweet potatoes. Hogs.
Oats. Buckwheat. Beef cattle.
Rye. Apples. Sheep.
Barley. Butter. Peanuts.
Cabbage. Eggs. Beans.
Onions. Milk, fresh.
Prices (previous to January, 1918) on wheat, corn, oats, rye,
barley, cabbage, Onions, potatoes, sweet potatoes, buckwheat, and
beans from the United States Department of Agriculture Monthly
Crop Report for December, 1917, volume 3, No. 12, pages 129 and 130.
Prices (previous to January, 1918) on hogs, cattle, and sheep from
Monthly 8. Reports for January, 1917, volume 3, No. 1, pages 5,
6, and 7, and for February, 1918, volume 4, No. 2, pages 13, 14,
and 15.
1 Pearl, R. A New Price Index. U. S. Food Administration, April, 1918, pp. 1–7.
3
Prices on butter, eggs, chickens, milk, and apples from manuscript
furnished by Department of Agriculture.
Prices on peanuts from Monthly Crop Reports for 1917, volume 3,
Nos. 8–12; for 1918, volume 4, Nos. 1–6, and manuscript.
Current prices on all commodities from Monthly Crop Reports for
1918, volume 4.
Wholesale prices are those in the weekly report on wholesale
prices of the United States Food Administration. The descrip-
; and sources of the commodities used for the index follow in
able 1. -
º THE COMPUTATION OF PRICES.
Producer's prices.—These prices are published monthly by the
United States Department of Agriculture and are for the 1st of the
month and in some cases the 15th. In grouping these, the quota-
tions for the 1st of the current month and the 15th of the previous
month were used together, e. g., quotations for May 1 and April 15
were called April prices.
Wholesale prices.—A weekly range of prices has been obtained for
all the commodities on the list from the sources as previously tabled.
In most cases the Saturday quotations have been used, because the
majority of the weekly trade papers close their columns on Saturday,
and for the sake of uniformity quotations from the dailies were also
taken on Saturday.
The weekly quotations on each commodity are averaged for each
month.
In most cases prices are quoted from the same source and for the
same grade of commodity throughout the entire period. In a few
cases where it was impossible to get a consecutive story on any desired
grade, several quotations were spliced. This was done, however,
only with the advice and approval of the commodity experts in the
Food Administration having to do with the commodities cor-
cerned. These changes are noted in connection with the table of
descriptions and sources. In a few cases, also, the particular grade
of commodity was out of the market for one month or perhaps two.
In such an instance the quotations (1) immediately preceding and (2)
following the gap were averaged. A careful inspection of the trend
of prices at the time and at corresponding periods of other years
shows this to be fairly accurate, so that in each month we have the
same number of commodities. -
weighTING FACTORs.
The distinguishing characteristic of these price indices lies in the
weighting factors used. These factors are based on food value.
The base period is for three fiscal years before the war (except in
a few cases where crop years were used). The food value of the aver-
age production of each commodity during that period is expressed in
calories and the value of wheat so expressed taken as 100. The
value of the other commodities is each in turn related to the value
of wheat. The resulting relative figures were divided by the number
1 This report is issued in manuscript to certain members of the Food Administration, but is not pub -
lished.
4
of pounds in the unit used for price quotations, e. g., wheat flour is
quoted by the barrel, so the relative figure 61.69 was divided by 196.
The absolute wholesale index number for any month was obtained
by the following formula:
I_ (a, Xbi)+ (dºxº)+. . . . . .H (an Xbm).
b, + b, + ba + . . . . . -- bo
where I is the absolute wholesale index number, an is the quoted
wholesale price, in whatever unit given, of a commodity denoted by
the subscript 1, and b, is the weighting factor (as given in the last
column of Table III) for the same commodity 1. In other words,
the absolute wholesale index number is the weighted average price
per pound of the several commodities entering into the index, when
the weighting of each quoted commodity price is in proportion to the
food sº expressed in calories, of the average production of that
commodity in the three years preceding the war. The technical
student in examining these indices critically should not forget that
the necessary adjustment for differences in the units on which prices
of different commodities are quoted (e. g., barrel, bushel, hundred-
weight, pound, etc.) is incorporated in the weighting factor, to the
end of simplicity in computation. This accounts for the differences
in the numerical values of weighting factors which at first glance
might seem to be without sense or reason. For example, the weight-
ing factor for peanuts is 1.5396 (Table III) while that for wheat flour
is 0.3147. Before one concludes that 5 times the weight is given to
the peanut crop as to the flour output he should recall that the quoted
price of flour is on a unit (the barrel) 196 times as large as that on
which the price of peanuts (the pound) is quoted.
The absolute producers' index number was obtained by the same
formula as the wholesale, with, of course, appropriate substitutions
* the producers’ prices and weighting factors in place of the whole-
S8,163.
Most of the food values used are taken from “The Chemical Com-
position of American Food Materials,” by W. O. Atwater and A. P.
Bryant. Food values for the grains are from “Feeds and Feeding,”
by Henry and Morrison. -
The list of the production figures and weighting factors with the
source of the information follows in Tables TT and ITT.
TABLE I.—Quotations, descriptions, and sources of prices.

Commodity. Description.] Price. Taken. Source. Unit. Calculations.
Wheat flour. 100 per cent Mill price f. o. b. Saturday...| Northwestern Bbl. - Weekly quota-
Spring, in 98- Minneapolis. Miller. tions averaged
pound cot- for the month.
t;OnS.2 g
Rye flour....| Injute, car lots. Jobber's price f. . . . do... . . . . . . . . . do----------- Bbl. . DO.
O. O. e W.
York,
Oatmeal. . . . . Carload lots, in Jobber's price to Saturday | New York Com- Cwt. . DO.
barrels. retailer f. O. b. issue. mercial.
New York.
Cornmeal . . . White, in bulk. Mill price f. o. b. Saturday... Furnished by Cwt.. DO.
Terro Eſaulte. the mill.
Sugar. . . . . . . Granulated, re- Refiner’s price, |...do. . . . . . . Weekly Statis- Cwt..] Weekly quota-
fined in 100- net, ſ. O. b. tical Sugar tions averaged
pould bags. Now York. Trade.Journal. for the month;
current price
fixed. -
1 All descriptions as written are for current quotations.
2 Quotations were taken on “standard patent” until issue of Jan. 2, 1918; on “standard war flour”
until issue of Mar. 27, 1918, and standard 100 per cent subsequently.
5
TABLE I.—Quotations, descriptions, and sources of prices—Continued.

Commodity. Description. Price. Taken. Source. Unit. Calculations.
Potatoes, White, bulk or | Wholesaler’s | Saturday | Journal of Com- Cwt. . Average of New
U n i t e d sacked. price f. o. b. issue. IſlerCQ and York and Chi-
St a t e S New York and Daily Trade cago weekly
average. Chicago.1 Bulletin. quotations av-
eraged for the
- month.
Onions. . . . . . Yellow, bulk or . . . . . do". . . . . . . . . . . . do. . . . . . . . Producer’s Price Cwt. . DO.
sacked. ' Current and
Daily Trade
Bulletin. -
Beans, navy | Michigan. . . . . . . Jobber's price f. Saturday. . . Furnished by Cwt... Weekly quota-
Or pea. o. b. Michigan. bean jobbers. tions averaged
for the month.
Peanuts. . . . . No. 1 and No. F. o. b. Norfolk. ...do. . . . . . . . Virginian Pilot...| Lb. . . Weekly average
2.2 of range of No.
1 and No. 2 av-
eraged for the
- month.
Rice. . . . . . . . EI on du r a s - | New Orleans. . . . . . . . do. New Orleans | Lb. . . Weekly quota-
cleaned do- |B O a r d O f tions averaged
mestic. - Trade. for the month.
Milk, evap- || In 48–16 ounce | Manufacturer’s |...do. . . . . . . Furnished by Case . DO.
orated. tins. price delivered the manufac-
New York. turer.3
Milk, con- | Sweetened, in . . . . . do.... . . . . . . . -do-------|----- do----------- Case - DO.
densed. 48–14 Ounce -
- tins.
Eggs. . . . . . . . Fresh, firsts. . . .] Wholesaler’s Saturday | Pro du c e r 's Doz. ... Taken from Ur
price f. o. b. issue. Price Current ner-Barry Sta-
New York.1 (Urner - Bar- tistical Review
ry). of New York
Market.
Butter. . . . . . Eresh, 92 score... . . . . . do.". . . . . . . . . --do-------|--|-- do----------- Lb. . . DO.
Cheese - - - - - - Fresh, flats, av- . . . . . do... . . . . . . . . --do-------|----- do. . . . . . . . . . . Lb. . . Weekly quota-
erage Tun. tions averaged
for the month.
Margarine. ...| Standard high- || Manufacturer’s | Saturday... I'urnished by Lb. . . T)0.
grade in 60– price, net, f. the manufac-
pound tubs. O. b. Chicago. turer.
Lard. ------- Leaf, in 100- Packer’s price f. [...do. . . . . . National Provi- Cwt. DO.
pound cans. o. b. Chicago Sioner.
or b r a n ch
house.
Ham-------- Loose----------|----- do---------- Saturday Daily Trade Bul- Cwt. DO.
issue. letin (Howard,
Bartels).
Bacon. . . . . . Bºast, loose [..... do---------- --do------|----- do---------- Lb. DO.
OTS.
Carcass beef. Good native ... . . . do---------- Saturday..] National Provi- Lb. Do.
SteerS. sioner.
Mutton. . . . . Legs-----------|----- 0- - - - - - - - - - - - 0 - - - - - - - - - - - 0 - - - - - - - - - - Lb. Do.
Fowl-....... Fresh, western | Whole saler’s Saturday | Producer’s Price Lb. Taken from Urn-
Cornfed. rice f. O. b. issue. Current (Urn- er—Barry Sta-
ew York.1 er—Barry). tistical Review
of New York
Market.
Peas, canned Standard Ear- | Canner's price Saturday - Canning Trade... Doz. Weekly quota-
ly June No. f. O. b. Balti- tions averaged
2, in Case. IſlòI'ê for the month.4
Tomatoes. ... Standard No. 3, . . . . . do---------- --do------|----- do. . . - - -] Doz DO.4
in Case.
Salmon. . . . . Alaska P in k | Canner’s price |...do. . . . . . . . . . . do---------- DOZ DO.4
Tall No. 1, in f. o. b. coast. -
C2S6.
Sardines. ...| Oil Keyless 100, Canner’s price ... do. . . . . . New York Jour- | DOZ DO.4
* # in case. . f. O. b. East- nal of Com-
port. Iſle I'Ce.
.1 Wholesaler, i.e., the receiver of the country produce.
2 Previous to Jan. 25, 1913, peanuts No. 1 and No. 2 grades were called “strictly prime” and “prime,”
respectively.
3 Current prices fixed on competitive market conditions.
4 Based on the views of the
tion’s valuation of reasonable crop-hazard insurance. U.
No. 38
ederal Trade Commission of reasonable profit and the Food Administra-
S. F. A. Canned Goods Division.
Bulletin
6
TABLE II.-Figures used as basis for calculations of weighting factors for producers' indeſc.

re: 32: is 35
g •- ro & P. do H
E *— Q 92 | g :- C
2 c is º: § 5 ºft| 5
Prewar º T. = * | *šá á
Commodity. average Source of production figure. 3. co C 3 |& a *l ºf
production. ran – 3 § | P: E| £
.St. cº º ... & E; E | F.
8 + 3 # |###| 3p
"3 o St. *: P. & 5. 3
C H ſº |C) t
Whcat... . . . . . . b11shel 704,995,000 Yearbook of United States | 1,644 69,540,707|100.00 60 |1. 6667
Department of Agricul-
ture for 1915, p. 421.
Corn------------. do.... 2,701,074,000 Yearbook of United States | 1,706258,049,799,371.08. 56 (6, 6264
Department of Agricul-
ture for 1915, p. 412.
Oats.------------- do....] 1,154,134,000 Yearbook of United States | 1,525, 56,321,739, 80.99 32 2.5310
Department of Agricul- -
ture for 1915, p. 432.
Rye-------------- do.. 36,721,000 Yearbook of United States | 1,657, 3,407,415 4.90 56 |. 0875
Department of Agricul- -
ture for 1915, p. 447.
Barley. . . . . . . . . . . do. 187,418,000 Year book of United States | 1,601 14,402,698. 20.71| 48 .4315
Department of Agricul-
ture for 1915, p. 440.
Cabbage. . . . . . . . . . tons 500,000 Estimate on basis of pro- 141 141,000 . 20 100 .0020
- duction for later years
from Monthly Crop Re-
port, Nov. 13, 1915, p. 73;
September, 1916, p. 92;
December, 1917, p. 132.
Onions........ bushels-- 14,343,000 See Table III. . . . . . . . . . . . . . 205 167,598 .24 57 | .0042
Potatoes......... ... - 348,303,000 Yearbook of United States 310, 6,478,436 9.32 60 | . 1553
Department of Agricul-
ture for 1915, p. 456.
Sweet potatoes...do.... 56,358,000 Yearbook of United States 460. 1,399,933 2.01 54 |.0373
Department of Agricul-
ture for 1915, p. 460.
Buckwheat. . . ... do.... 16,877,000 Yearbook of United States | 1,463| 1,037,024 1.49 42 0355
Department of Agricul-
ture for 1915, p. 451.
Apples.---------. do. 198,217,000 Yearbook of United States 220 2,093,172. 3.01. 48 0627
Department of Agricul-
ture for 1916, p. 635.
Butter. . . . . . . . pounds...| 994,650,610 See Table III. . . . . . . . . . . . . . 3,545 3,526,036 5.07| 1 |5,0705
Eggs.---------- dozen. - 1,875,000,000. -- - - do--------------------- 635. 1,786,875 2.57| 1.51. 7130
Milk. --------- pounds...[34,730,640,000 See Table III, note (6), for 325 11,287,458 16.23 8.61.8874
Calculations.
Chickens. . . . . . . . . do.... 1,465,405,000 See Table III. . . . . . . . . . . . . . 775 1,135,689| 1.63| 1 |1.6331
Hogs.------------ do... - 8,943,428,000. . . . . do--------------------- 2,465 22,045,551 31.70 100 .3170
Beef cattle - - - - - - - do.... 6,595,839,400|- - - - - do--------------------- 935, 6,167, 100 8.87 100 | .0887
©ep- - - - - - - - - - - - do. . . . 744,610,887. . . . . do--------------------- 1,255 934,487| 1 34 100 ||. 0134
Peanuts....... bushels.. 22,000,000|... . . do--------------------- 2,212 1,070,674 1.54| 22 |1. 5396
Beans------------ do---- 11,251, 160|- - - - - do--------------------- 1,605 1,083,487| 1.56 60 |.0260
7
TABLE III.—Figures used as bas
is for calculation of weighting factors for
sale prices of food.
indea of whole-

re; % .
£ #5 º
# 5; É
Prewar $—! Tº H :
Commodity. average Source of production figure. g. co C $3
production. to –3 cº)
..? as C. *
5 ~ 3 §
": o 5. Tº
C 3– £d
Flour, wheat...barrels... 132,658,500 Yearbook of United States | 1,650. 42,901,759, 61.69
Department of Agricul-
*g ture for 1915, p. 421.1
Flour, rye. . . . . . . . do... 1,775,286 Census of Manufactures | 1,630 567, 168 . 82
for 1914, p. 47.2
Oatmeal.... . . . pounds...| 336,000,000 Questionnaire sent to oat | 1,860 624,960 . 90
millers by the Statistical
Division of Food Admin-
istration.
Cornmeal. . . . . . barrels. . 21,527,000 Census of Manufactures | 1,545 6,508,172 9.36
for 1914, p. 47.2
Sugar 3. . . . . . . . pounds...| 7,913,706,000 Weekly Statistical Sugar | 1,860 14,719,493. 21. 17
Trade Journal, Willet &
* Gray, for Jan. 3, 1918.
Potatoes - - - - - - bushels...| 348,303,000 Yearbook of United States 310) 6,478,436 9.32
Department of Agricul-
& ture for 1915, p. 456.
Onions. . . . . . . . . . . do 4 14,343,000 Cºs of 1910, Vol. V, p. 205 167,598 . 24
Beans, navy..... -do--- 4 11,251, 160 cºs of 1910, Vol. V, p. 1,605 1,083,487; 1.56
Peanuts. . . . . . . . . . do. . . . 22,000,000 Cº. of 1910, Vol. V, p. 2,212| 1,070,674 1.54
.5
It ice, H on duras, 683,240,000 Yearbook of United States | 1,630, 1,113,681 1.60
pounds. Department of Agricul-
& ture for 1915, p. 485.
Milk, evaporated.do. . . 475,000,000 cº Of Manufactures for 780 370, 500 . 53
914, p. 33. º -
Milk, condensed'..do.... 250,000,000 Census of Manufactures for 1, 520 380,000 . 55
1914, p. 33.
Eggs, fresh . . . . . . dozen. . 41,875,000,000 Estimate on basis of Census 635| 1,786,875|| 2.57
of 1910, Vol. V, p. 507.
Butter. . . . . . . . pounds. - 994, 650,610 (9) - - - - - - - - - - - - - - - - - - - - - - - - - 3, 545 3,526,036 5.07
Cheese. . . . . . . . . . . do. . . . . .356,000,000 Census of Manufactures for 1,950 694,200; 1.00
1914, p. 33.
Oleomargarine . . . do. . . . 136, 344, 188! Tax paid withdrawals, In- || 3, 525 480, 613| . 69
ternal Revenue report
Lard. . . . . . . . . . . . . do 1,200,000,000 Census of Manufactures for 4, 220 5,064,000 7. 28
1914, p. 36.
Iſam. . . . . . . . . . . . . do 1,252,000,000 º of 1910, Vol. X, p. 1,644 2,058,288 2.96
346.7
Bacon... . . . . . . . . . d 1, 163,000,000 . . . . . do."-------------------- 2,685 3, 122,655 4.49
Carcass beef. . . . . . do 6,595,839,400 Census of 1910, Vol. X, p. 935, 6,167, 100 8.87
343.7
Mutton legs. . . . . . do. . . . 744,610,887|- - - - - 0."-------------------- 1,255 934,487; 1.34
Fowls, fresh. . . . . . do. . . . 1,465,405,000 Cº of 1910, Vol. V, p. 775|| 1, 135,689| 1.63
8.8
Canned peas. . . . . CàSéS - - 8,826,284 Census of Manufactures for 255 67,521 - 10
1914, p. 42.
Canned tomatoes.do. . . . 16, 200, 302; . . . . . do--------------------- 105 S6,753| . 13
Canned Salmon...do. . . . 5,569,953 Census of Manufactures for 680 181,803 . 26
1914, p. 40.
Canned sardines. .do. . . . 5, 012, 199|- . . . . do--------------------- 950 47,616| . 07
|
|
1
9
6
196] .
100
196
100
60
100
100
48
42
1
5
15
25.5
12
20.3
------------|
0
3
1
4
7
0
0
4
2
, 0090
, 0.936
, 2117
. 0932
. 0024
. 0156
1. 5396
1. 6015
. ()111
. 01:30
1, 7130
5. 0705
. 9983
. 6911
. 0728
, 0.296
4. 4904
8, 8683
1. 3438
1.6331
.0065
. 0049
. 0218
. 0034
1 From the average total production of wheat for 1911, 1912, and 1913, the amount needed for seed was Sub-
tracted, also 5 per cent of the remainder for waste in storage and transit.
flour—4.5 bushels of wheat required to produce 1 barrel of ſlour.
* Obtained by interpolation from the production for 1909 and 1914 in Census of Manufactures for 1914.
* Consumption figures including imports from, Iſawaii, Porto Rico, Philippines, Cuba, and foreign
COuntries.
This was reduced to barrels of
4 Production figures are for calendar year 1909. All others, except where explanation is given in footnote,
are average for 1911, 1912, 1913 (fiscal year).
5 Obtained by estimate from 1899 and 1909 figures in census 1910 and from 1916 figures from Department
of Agriculture.
6 Estimated from number of milch cows in the country, 1911, 1912, 1913, as published by the United States
Department of Agriculture in Monthly Crop Report for February, 1918, Vol. IV, No. 2, p. 9. Estimated
quantity of milk to be obtained from these cows was used as a basis for calculations as to amount of butter
produced, i. e., about 60 per cent of butter fat in milk produced in census year went into making of butter.
The latter figures were obtained from abstract of census for 1910, p. 344. Milk used in making butter was
deducted in deriving the weighting factor for milk.
7 Production figures for meat were obtained from the inspections for slaughter, the ratio of total to in-
Spected slaughter being taken as the same as in the census year.
as being the same percentage of total pork and lard as in 1909.
8 Fowls: Number on farms in 1910 census, on basis of 3 pounds dressed weight per fowl.
Production of ham and bacon was taken
8
TABLE IV.--Absolute producer’s price inder.
Months. 1911 | 1912 || 1913 | 1914 || 1915 1916 || 1917 | 1918
January-------------------. . . . . . . . . . . 47. 2 53.0 || 46.2 54.2 59.0 55.4 || 76.3 | 111.1
February. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.6 53. 4 || 47.2 54.3 || 59.2 55.4 80.4 112. 1
Margh-------------------------------- 45. 2 || 54.8 47.9 54.3 58.5 58.3 | 87.9 111.9
April--------------------------------- 45. 1 || 59.4 || 49.0 | 54.5 | 60. 1 || 58. 7 || 107.7 | 112.4
May---------------------------------- 45. 4 || 60. 1 || 49.3 55.0 | 59.6 56. 7 || 110.9 111.8
June. -------------------------------- 47.0 | 58. 2 50.6 54.3 || 56.8 || 58.1 | 108.8 . . . . . . . .
July---------------------------------. 49.6 || 55.8 || 51.9 54.9 57.3 60.6 ſ 117.4 . . . . . . . .
August------------------------------- 51.0 | 54.6 55.4 59.1 | 55.0 | 64.8 110.2 - - - - - - - -
September. . . . . . . . . . . . . . . . . . . . . . . . || 51. 7 || 53. () 56. 1 || 58.6 || 52.9 | 66.6 112.4 . . . . . . . .
October----. . . . . . . . . . . . . . . . . . . . . . . . . . 51. 5 || 50.6 || 54.6 55.6 || 51.9 || 69.7 105.5 - - - - - - - -
November. . . . . . . . . . . . . . . . . . . . . . . . . . . 51.2 46.8 54.8 54.3 50.2 72.9 || 100.8 . . . . . . . . .
December. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51. 5 || 46.4 54.6 55.3 52.4 || 72.5 104.8 - - - - - - - -
TABLE W.—-Absolute wholesale price index.
Months. 1911 1912 1913 | 1914 | 1915 | 1916 1917 | 1918
January-----------------------. . . . . . . 29. 7 32.6 31.4 30. 9 34.7 35. 1 44. 7 58. 3
February. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.4 31.5 31.0 30.3 35.0 35.0 46.7 58.4
Margh.--------------. . . . . . . . . . . . . . . . . 27. 5 31, 2 30.9 29.7 || 33.6 || 35. 7 || 48.2 54.6
April--------------------------------- 26. 8 || 31.9 30.8 28.9 || 34.1 || 36.8 54.9 55.3
May---------------------------------- 27. () || 31.8 || 30.0 29.3 34.1 || 36.8 59.2 54. 9
June. -------------------------------- 27.4 31. 0 || 30.2 29.9 || 32.6 36. 1 || 56.8 . . . . . . . .
July---------------------------------. 28.6 30.5 || 30.4 30.5 ! 32.6 || 36.9 || 54.4 | . . . . . . . .
August...I.I.I.I.I.I.I.I.I.I.I., 36.6 36.5 || 30.6 || 34.1 || 31.3 || 38.8 56.6 ||.......
September. . . . . . . . . . . . . . . . . . . . . . . . . . . 31. 1 31.6 || 31.3 || 35.7 30.4 40.5 57.6 |........
October. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.9 32.2 30.9 || 34.4 || 32. 1 || 43.8 || 57.6 | . . . . . . . .
November. . . . . . . . . . . . . . . . . . . . . . . . . . . 32. 3 || 32.3 || 31.8 34.8 || 33.5 || 45.6 57. 7 | . . . . . . . .
December. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.6 || 32.5 31.6 34.2 35.0 || 44.2 58.4 | . . . . . . . .
TABLE VI.-Relative producer’s price index.
MOnths 1911 | 1912 || 1913 | 1914 | 1915 1916 || 1917 | 1918
January------------------------------ 92 103 90 106 115 108 149 217
February. . . . . . . . . . . . . . . . . . . . . . . . . . . . - 89 104 92 106 115 108 157 218
Margh.------------------------------- 88 107 93 106 114 114 171 218
April--------------------------------- | 88 116 96 106 117 114 210 219
May---------------------------------- 88 117 96 || 107 116 || 110 || 216 218
June. -------------------------------- { 92 113 99 106 111 113 212 - - - - - - - -
July---------------------------------- | 97 109 101 107 112 118 229 - - - - - - - -
August------------------------------- | 99 106 108 115 107 126 215 | . . . . . . . .
September. . . . . . . . . . . . . . . . . . . . . . . . . . . | 101 103 109 114 103 130 219 | . . . . . . . .
October ---------. . . . . . . . . . . . . . . . . . . . . | ió0 99 106 108 101 136 206 | . . . . . . . .
November. . . . . . . . . . . . . . . . . . . . . . . . . . . | 100 91 107 106 98 142 196 | . . . . . . . .
December. . . . . . . . . . . . . . . . . . . . . . . . . . . . ióð 90 || 106 || 108 || 102 || 141 | 204 | . . . . . . . .
TABLE VII.--Relative wholesale price inder.
Month.S. 1911 || 1912 | 1913 1914 | 1915 | 1916 | 1917 | 1918
January------------------------------ 97 106 102 101 113 114 146 190
February. . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 103 101 99 114 114 152 191
Margh-------------------------------- 90 102 101 97 109 116 157 178
April--------------------------------- 87 104 101 94 111 120 179 180
May---------------------------------- 88 104 98 96 111 120 193 179
June. -------------------------------- 89 101 98 97 106 118 185 | - - - - - - - -
July---------------------------------- 93 99 99 99 106 120 177 . . . . . . . .
August------------------------------- 98 100 100 111 102 127 184 | . . . . . . . .
September. . . . . . . . . . . . . . . . . . . . . . . . . . . 101 103 102 116 99 132 188 . . . . . . . .
October -----. . . . . . . . . . . . . . . . . . . . . . . . . 104 105 101 112 105 143 188 . . . . . . . .
November. . . . . . . . . . . . . . . . . . . . . . . . . . . 105 105 104 113 109 149 188 | . . . . . . . .
December. . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 106 103 112 114 144 191 | . . . . . . . .

9
In order to facilitate comparison between producers' and wholesale
indices, the absolute figures for both have been changed to relative
figures in Tables VI and VII. The base for the transposition has been
taken as the prewar three-year average of the absolute figures (1911,
1912, and 1913). The average absolute producers’ index for these
three years, which is 51.3, is taken as the base 100 for the relative
producers' index figures, and each month's absolute producers' index
is reduced to this base in Table VI, being larger or smaller than 100,
according as the absolute figure for the same month is greater or less
than 51.3. In the same way the absolute wholesale index figures are
reduced to relative on the basis of the three-year prewar average
(1911-1913, inclusive) wholesale index. The average absolute whole-
sale index for these three years is 30.66, and that figure is taken as
the base 100 for the relative wholesale index figures given in Table VII.
From these relative figures one can read off percentage changes in
the producers' or wholesale price level directly. They show in each
case the percentage change which has occurred in the price level
relative to its own prewar base, which is taken as 100. If one wishes
to read percentage changes, he need only mentally take the difference
between the figure in Table VI or VII and 100. For example, one
might ask, How much higher were producers' prices in May, 1917,
than they were before the war'. The May, 1917, relative producers'
index (Table VII) was 216; therefore the general level of producers'
prices was 116 per cent higher in that month than it averaged to be
during the three years preceding the war.
The relative indices given in Tables VI and VII are shown graphi-
cally in figure 1. *.
The discussion of this diagram and the figures on which it is based
will follow in the next section of the paper. There is, however, one
point which should be explained here as preliminary to the detailed
discussion. To many persons not accustomed to dealing with rela-
tive figures, it will be perplexing to see that at various times in the
period covered by the diagram the producers' line lies above the
wholesale line. The immediate inclination of the mind is to the
thought that wholesale prices must always be higher than producers'
Fº and that consequently it is absurd to show the producers'
ine higher than the wholesale. It is, of course, true that wholesale
prices are always higher than producers’ prices, but the conclusion
as to the absurdity of the diagram or the index figures on which it is
based does not follow at all. The point is that we are now dealing
with relative price index figures, not with absolute prices in dollars and
cents. They show, on the one hand, how the price level of the pro-
ducers' returns has changed, in proportion to the prices he was getting
on the average for three years before the war, and, on the other hand,
they show how the wholesale price has changed in comparison with
what it was before the war. Now, it is not only easily conceivable,
but is the fact, that producers' prices might have gone up above what
they were before the war more than wholesale prices have increased
as compared with what they were before the war. For example, sup-
pose wheat to have brought the farmer $1 per bushel before the war
and $2 now. The increase is 100 per cent. Suppose flour to have
sold at wholesale for $6 per barrel before the war and at $10 per barrel
now. The price increase would be 663 per cent. Or, on these figures,
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FIG. 1.-Relative producers' (solid line) and wholesale (dash line) price indices weighted on the basis of the nutritive value of commodities. The diagram is not extended to base
zero (on the y axis), for the reason that in plotting relative figures, such as these, the true and correct base is 100, not zero. To facilitate reading percentage changes directly, there
has been put on the right-hand margin a scale in which 100 is taken as zero, and percentage deviations, plus or minus, from that base may be read directly, without the necessity

of mentally taking the difference between the plotted figure and 100.
|
which are used merely by way of illustration and are not the actual
prices; the farmer's price on wheat would have increased relatively
33% per cent more over the prewar price than the wholesale price of
flour did. But this would not mean that the price of flour was less
now, in dollars and cents, than the price of wheat.
DISCUSSION.
In the price indices presented in this paper two novel points are
involved. In the first place, we have here general price indices in
which the raw prices are weighted in forming the index numbers On
what is essentially a physiological basis. In food price index num-
bers hitherto devised weighting has either been lacking entirely or
has been based upon some sort of commercial factor, such as, for
example, the amounts of the several commodities entering into trade
or exchange. This latter method is the one by which the whole-
sale price index of the Bureau of Labor Statistics is weighted."
Here the basis of the weighting is the relative physiological signifi-
cance of the several food commodities in the nutrition of the na-
tion. It is obviously a matter of great economic and social concern
to a nation if an inordinate rise occurs in the price of some staple
food commodity which, in a physiological sense, is one of the main-
stays of its continued existence as a nation. Such an event will
at once mean that large portions of the population will surely be
undernourished, because of economic inability to buy freely of that
commodity which forms an essential and basic portion of their
dietary. On the other hand, it does not particularly matter either
socially or economically if there is a considerable rise in the price of
some food material that contributes only an insignificant amount to
the total nutritional intake of the nation. In the physiological price
indices here presented we have a picture, worked out with critical
attention to the soundness of each step taken, of the changes in the
price level of the principal foodstuffs over a period of years, from the
point of view of the contribution of each of these foods to our national
physiological needs. The nutritional significance of each commodity
is assumed to be sufficiently represented by its energy content meas-
ured in calories. If one must take a single figure as an index of nutri-
tional worth, the energy content is unquestionably the best one to
use. Everyone, of course, understands that it does not tell the whole
story, but as a general indicator of relative nutritional worth of the
different foodstuffs it is obviously better than either the protein con-
tent, or the fat content, or the carbohydrate content.
The second point of novelty in the present paper is that we have
for the first time general index numbers of producer's prices on the
One hand and wholesale prices on the other hand weighted on; the
same basis and on that account strictly comparable with one another.
We have hitherto lacked data for comparisons at once exact and gen-
eral between farmers’ prices and middlemen’s prices. The physio-
logical basis of weighting here used supplies the needed common
denominator. It would appear that one of the chief advantages
brought out by the present index numbers is that by the use of this
1. Cf. the account of this index by Meeker, R., in Bulletin U. S. Bureau Labor Stat. No. 181, pp. 239–
256, and also Mitchell, W. C., loc. cit.
12
system of weighting one can put all food prices, whether producer's,
jobber's, wholesaler's, retailer's, or consumer's, into indices which
will be strictly comparable one with another.
Turning now to the discussion of the results as set forth in Tables
VI and VII and graphically in figure 1, the thing which strikes one
first is the relatively greater stability of wholesale as compared with
producer's food prices prior to 1916. The fluctuations of the whole-
sale price index during the years 1911 to 1915, inclusive, are plainly
less violent in character than those in the producer's price index.
This difference is probably to be regarded as a very fair measure of
the effect upon prices not of competition in the distributing trades,
but of a factor essentially diametrically opposite to competition,
namely, organization. The jobbing and wholesale trades are to a
considerable extent organized, and to just that extent operate as
units in the general economic scheme of things. In comparison with
those trades the farmer is almost completely lacking any organization
in an economic sense. The natural and logical result is that his
º price level fluctuates considerably more than does the whole-
saler's.
It is commonly asserted that this lack of organization works to the
economic disadvantage of the farmer as a class. The results of this
study do not give that large and unequivocal degree of support to
such a point of view as might have been expected. It is true that
when the general level of prices goes down the producer's prices may,
because of lack of effective organization, go relatively lower than the
wholesaler's, but this is more than compensated for in the long run
by the fact that when the general trend of the curve is upward the
farmer's prices tend to go a great deal higher relatively. The chief
disadvantage so far as concerns prices that the farmer appears to
labor under from lack of economic organization is in respect of the time
factor. He is noticeably slower in getting under way in any general
change of price levels. Thus when the general rise in the level of
food prices incident to the war began in the latter part of 1915 the
farmer was two months later in getting off the mark than the whole-
Saler (cf. fig. 1). But the lack of alacrity in starting was more than
compensated for by the vigor and persistence of the climb once it
was under way. -
A detailed analysis of what has occurred in food price levels since
May, 1917, is of particular interest, because in that month Mr. Herbert
Hoover came to Washington at the request of the President to take
charge of the food situation. One of the chief reasons which prompted
the request was obviously the inordinately high levels which food
prices had reached and the absence of any indication that, failing
adequate organization and control of the matter, prices would not
continue to advance for an indefinite future period or at least So long
as the war lasted. Immediately upon his arrival in May, 1917, Mr.
Hoover began, without specific Alſº of legislation, but with the
support and approval of the President, the attack on the problem of
food prices. What has been the result -
The first and most obvious result was that the rise in the prices
of staple foodstuffs which had been continuous and at an ever in-
creasing rate since the late autumn of 1915 came abruptly to an
end so far as wholesale prices are concerned. In the case of pro-
ducers' prices this rise has, to be sure, continued with some fluctua-
13
º but at a generally much less rapid rate than prevailed in 1916
and 1917.
During the 12 months from May, 1917, to May, 1918, there were
fluctuations in both producer's and wholesale index numbers. As in
prewar times these fluctuations were more violent in the producer's
index than in the wholesale. The highest point reached by the
wholesale index number was 193 (relative figure) in May, 1917. In
May, 1918, the wholesale index number was 179, a decline of 14
points. This means that the general level of wholesale prices of
foods is 14 points lower now than it was a year ago when the work
of the United States Food Administration began. Taking the same
months of comparison the general level of producers' received prices
was 2 points higher in May, 1918, than in May, 1917. It has been
during the past year considerably higher than this in particular
months.
These percentage changes are somewhat smaller than those shown
in Our first preliminary report on these physiological price index num-
bers. The differences are due simply to the fact that on the present
more critical and thorough basis a considerable refinement of the
weighting factors has been effected. In particular there has been
eliminated double weighting of a raw and derivative product. It
should of course be understood that the values of the index numbers
here given are definitive and should replace those of the preliminary
report.
We see in the history of producers’ and wholesale prices during the
past year an occurrence which would in normal times be regarded as
an economic miracle. The wholesale prices of foodstuffs have been
significantly lowered while the price level for the basic food raw
materials on the farm was going higher. This result has been accom-
plished by the elimination to a very large degree of wasteful prac-
tices and profiteering in the food distributing and manufacturing
industries. The net result shows with great clearness one phase of
the economic benefit which the consumer has derived from the activi-
ties of the Food Administration, without economic detriment to the
farmer.
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