UNIVERSITY OF CALIFORNIA AGRICULTURAL EXPERIMENT STATION COLLEGE OF AGRICULTURE BENJ '° E WHEELER ' '""'«•" THOMAS FORSYTH HUNT, Dean and Director BERKELEY H. C. VAN NORMAN, Vice-Director and Dean University Farm School CIRCULAR No. 175 October, 1917 PROGRESS REPORT ON THE PRODUCTION AND DISTRIBUTION OF MILK By ELWOOD MEAD INTRODUCTION During the past year the aid and advice of this division has been frequently sought by producers and consumers of milk in the San Francisco Bay cities. Dairymen stated that they were producing milk at a loss and have sought advice about changing this condition of affairs. Consumers have asked for co-operation in an effort to lower the price of milk, or at least to prevent an increase. They pointed out that a few years ago milk retailed at six cents a quart ; that since then it has risen successively and rapidly to eight, nine, and ten cents, and that there were rumors that still higher prices were likely to be charged. They stated that existing prices are restricting the use of this wholesome article of food in the families of many wage-earners and that any increase would threaten to make it a luxury which they could not afford. It is not, therefore, a matter of money so much as of the health and proper nourishment of the rising generation which make milk prices of such importance. In dealing- with this matter it was felt that there was need of more definite facts. Money for the employment of experts to make independent cost-accounting surveys was not available, nor was it regarded as necessary at this time. Conversations with dairymen and milk distributors showed that they had a definite understanding of the details of their business. They knew what they were making and what they spent. Some were satisfied with conditions as they are; others, who were discontented, believed they knew what was wrong. The best way to proceed, therefore, seemed to be to secure the interest and co-operation of dairymen and distributors, to whom the reasons for the inquiry were explained and who were asked to give information regarding expenses which would show the causes of present prices, in the belief that it might relieve the anxiety of consumers and possibly point the way to more satisfactory conditions in the future. From the producers there was an immediate and cordial response. The distributors hesitated at first about supplying information con- cerning their business, which they regarded as a private matter, but as the inquiry has progressed this has in large measure disappeared. In all cases it was understood that none of the details of the business of any individual thus furnished would be disclosed without his con- sent. It is for this reason that only summaries are published. Little attention has been paid in the inquiry to production and distribution of certified milk, as its price did not greatly concern the class to whom this matter is of most vital importance. Besides, the great bulk of the milk supply is rendered wholesome by pasteurization, and it was to conditions affecting the cost of pasteurized milk that most attention has been paid. FIELD INQUIRIES The greater part of the data included in this report has been gathered by S. H. Dadisman. Early in June he made a trip through southern and central California interviewing dairymen and milk dis- tributors for the purpose of ascertaining how prices in other cities, like Los Angeles and Fresno, compared with the prices in the bay cities. Questionnaires were mailed to two hundred producers in different parts of the state, and about one hundred replies were received. The information given in thirty-six of these replies from dairymen who furnish milk to the bay cities has been compiled in table 1. These give conditions as they existed in June, 1917. Two answers, Nos. 6 and 8, were corrected late in July. A sample ques- tionnaire, showing the nature of the inquiry, with the replies of one of the dairymen, together with a summary of the thirty-six replies, is given later. A large amount of information relative to the cost of pasteurizing plants, the most economical size for such plants, and of the cost of equipment for distributing milk, has been gathered but is not included in this report. MILK SUPPLY OF THE BAY CITIES About 32,000 gallons of milk are used daily in San Francisco and from 20,000 to 24,000 gallons in Oakland, Berkeley, Alameda, and Richmond. This supply comes mainly from within a radius of 100 miles, a few supplies coming 120 miles. The average distance for the rail shipments is between 60 and 80 miles. Of this supply the Asso- ciated Milk Producers' Association of San Francisco handles from 22,000 to 24,000 gallons a day, or about 70 per cent of the whole supply. An association of producers which supplies Oakland and the east bay cities handles about an equal percentage of the total supply of these cities. The greater part of the milk handled by the producers' associations is sold to distributors' associations. The percentage handled has changed somewhat in the last few months, but at the time this investi- gation began the distributors were handling between 60 and 70 per cent of the total quantity. About 6000 gallons in San Francisco were sold direct by producers to consumers ; that is, the dairymen retailed their own milk, and about 15 per cent of the milk supplied to other bay cities is furnished direct by the dairymen. As has been said before, these percentages are constantly changing and this represents the situation only at the time of the inquiry last June. The price paid by distributors is for milk delibered f.o.b San Francisco, or east bay cities, the dairymen paying the freight, and is based upon the butter-fat content of the milk. If the milk contains less than 3.6 per cent butter fat, there is a deduction of 14 of 1 cent for each % per cent loss in butter-fat content and an increase of 14 of 1 cent for each y 10 per cent of butter-fat content up to 4.2 per cent : that is, if the price were 18 cents a gallon for 3.6 per cent milk, the price would be 19 cents a gallon for milk carrying 4 per cent butter fat. When this inquiry began the San Francisco producers' associa- tion paid 16% cents a gallon to their members and sold at 18 cents. Later on, the price to distributors was raised to an average of 19 cents. The difference between the 16y 2 cents paid and the 18 or 19 cents for which the milk sold paid the expenses of the producers' association and for losses sustained where more milk was shipped into the city than could be taken by the distributors. This loss at times was a considerable item and in order to induce people to join the producers' association it had to take their entire supply, and as that fluctuates it frequently happens there is consider- able surplus. This surplus the San Francisco Producers' Association converts into cheese and butter, which brings less than the price at which the whole milk is sold. If the loss sustained and this surplus do not absorb the difference between the price paid producers and that received from distributors then this surplus is paid to the producers as a bonus. Sample Questionnaire Dear Sir: The College of Agriculture is studying the serious situation of the milk pro- ducers, who are confronted by higher cost in every direction, with little or no increase in the selling price of milk. This is leading to such reduction in the number of dairy cattle and in the quantity of milk produced as to threaten the supply of one of the most important food products. It is in the interest of all that the public should have full and accurate information regarding the existing situation. To this end your help is solicited. Will you please send us the following information about the facts which affect the cost of produc- ing milk and the ability of dairy farmers to maintain their herds under existing conditions. 1. Q. How many cows in your herd? A. 130 cows, 60 young heifers. 2. Q. How many are you now milking? A. 110. Expenses : 3. Q. What is the land worth, or what rent do you pay? A. 140 alfalfa, 20 a. corn, 100 a. grain' and hay, 60 a. pasture. 4. Q. Whatis the land worth, or what rent do you pay? A. $25 for alfalfa; $20 for corn; $6 for hay, grain, and pasture. 5. Q. How much food do you purchase? a. Hay? A. None. b. Bran or shorts? A. 20 tons. c. Other feed? A. 40 tons beet pulp (dry). 6. Q. Give present prices: A. a b. Market price, c. Market price. 7. Q. How much help do you employ? A. 4 milkers, 1 feeder, 2 field men, 1 chore boy, 1 cook, 1 helper, 2 owners and managers. 8. Q. What wages are paid? A. $75 milkers and field men, $50 chore boy, $60 cook, $40 helper, $125 owner and manager. 9. Q. What are the working hours? A. 7 a.m. to 12 m.; 1 p.m. to 6 p.m. 10. Q. What are your total expenses per month? A. $925 wages; $250 interest and depreciation; $640 rent and feed; $25 light and power; total $1850. 11. Q. How do you dispose of your milk? a. Do you sell to a distributor? A. Columbia Dairy, Oakland. b. Do you retail your milk to consumers? A. No. 12. Q. How many gallons of milk do you sell per day? A. 290. 13. Q. What per cent of butter fat does the milk contain? A. 3.6 per cent. Receipts : 14. Q. What prices do you receive for the milk? A. f.o.b. 18% cents for July, 22 cents for August. 15. Q. What are the average shipping charges per can or per gallon from your dairy to the place of delivery? A. 1% cents per gallon, or 17% cents per can. 19. Q. What is the cost of producing a gallon of milk in your dairy at the present time. A. 21% cents. 20. Q. What did it cost you a year ago? A. 16 cents. 21. Q. What do you consider a fair price per gallon for milk at present? A. 22% to 23 cents. 22. Q. What do you consider your most serious milk problem? A. Labor; high cost of equipment; disease (abortion and tuberculosis). TABLE 1 Summary of Replies from Thirty-six Dairymen Supplying Milk to the Bay Cities of California 1916 1917 S T o. Number cows in herd Number of cows milked Gallons of milk Gallons A Cost per gallon delivered Cents Price per gallon received Cents A Cost per gallon delivered Cents ^ Price per gallon received Cents Per cent of butter fat Per cent Price wanted Cents 1 225 160 309 16.5 17.0 17.5 3.6 22 2 300 200 500 14 16.5 25.0 16.0 3.75 25 3 280 240 740 18 16.0 22.0 18.5 3.9 25 4 375 240 600 16.5 16.5 3.75 22% 5 560 420 1100 18 16.5 25.0 17.8 3.7 27% 6 270 216 500 17 16.5 28.0 17.5 3.6 291/2 7 149 129 285 19 19.7 17.0 3.6 25 8 210 171 430 12% 16.5 26.0 16.1 3.5 20 9 120 90 205 16.5 19.0 18.5 3.75 24 10 175 120 400 15 16.0 20.0 18.0 3.5 24 11 140 108 230 16.0 18.0 19.0 3.5 24 12 140 120 300 16.5 17.2 18.0 3.6 25 13 180 120 320 171/2 17.0 21.0 17.5 3.8 25 14 130 110 290 16 21.0 20.5 3.6 23 15 140 100 225 151/2 16.0 22.5 16.0 3.6 221/2 16 165 145 400 13 19.0 21.0 4.0 20 17 120 100 170 20.0 16.0 3.7 23 18 220 180 480 16 16.0 17.0 19.5 3.6 21 19 124 108 313 16.5 21.6 20.0 3.6 20 140 120 280 18 16.0 25.0 17.5 3.6 25 21 90 74 200 16.0 21.5 19.0 3.6 221/2 22 120 60 80 15.0 20.0 15.0 21 y 2 23 75 60 160 16.0 16.5 3.8 21 24 65 54 140 18 16.5 23.3 17.5 3.7 28 25 80 70 240 18 17.0 23.8 retail 3.6 271/2 26 75 60 140 17.0 19.0 3.8 25 27 96 66 200 16.0 18.5 17.5 3.8 22 28 100 82 200 i7y 4 16.2 20.0 21.5 3.8 25 29 55 48 140 i5y 2 16.0 16.0 16.0 4.1 23 30 24 19 45 16 23.4 retail 3.7 221/2 31 40 23 75 10 16.5 16.0 19.0 3.5 22 32 125 85 200 17 16.0 22.0 19.0 3.8 25 33 40 38 35 17 16.0 25.0 17.5 3.6 25 34 70 45 90 16.5 19.0 17.5 3.6 221/2 35 21 18 40 16.0 24.0 18.0 3.6 25 36 6 6 20 17 17.0 22.0 20.0 3.8 23 Average 146 111 305.05 16.23 16.4 22.7 19.0 3.68 23.74 Notes A comparison of the production per cow of the dairies included in table 1 shows that they are considerably in excess of the average for the state. Thus the yearly production per cow in table 1 is 759 gallons, as against 500 gallons average for the state. The yearly pro- duction of butter fat is 223 pounds, as against an average of 150 for the state. The figures in table 1 agree closely with those obtained in comprehensive cost-inquiry surveys in the East. The average milk production per cow given in table 1 is somewhat above the averages of the records of dairy herds investigated by Cornell University, and below the averages of those included in the Tri-State Inquiry. As the milk delivered to consumers has only to contain 3.25 per cent butter fat, while the average butter-fat content of the milk bought is 3.68 per cent, the distributor who handles large quantities has a large margin for reduction. It will be seen from the table that the average cost of milk has risen from 16.4 cents a gallon in 1916 to 22.7 cents in July, 1917, while the price received by producers has risen from an average of 16.4 cents per gallon in 1916 to 19 cents in July, 1917. In both cases the figures show that milk has been produced at a loss. SOME OF THE CAUSES OF THE INCREASED COST OF PRODUCING MILK One of the factors in increasing the cost of milk is the higher price of foodstuffs which dairymen purchase. The quotations of prices of food products ordinarily used by dairymen secured from seven of the leading dealers and given in table 2, show that in twelve months there has been an average increase of about 38.2 per cent in their prices. Other factors which have increased the cost of producing milk are the higher wages paid men employed as milkers and the higher rents paid for land. Prices being obtained for wheat, cotton, hay, and potatoes afford such profits on production that landowners are taking advantage of it and increasing rents. In one instance, furnished while this inquiry was in progress, the rent was increased from $15 to $30 per acre. Another factor is the increasing cost of complying with sanitary regulations. These involve expenses for the testing of dairy herds, for the loss of animals affected with tuberculosis or other diseases, and for maintaining barns and milking sheds in proper sanitary condition. It has not been possible to obtain any figures as to the progressive increases in cost due to these items,/but considerable data regarding different items of the cost of producing milk in 1917 are given in table 3. ft p. 3 o ST H3 3 OS Ol rf^ co to h 8LSL CD 5* P M- «H > > > ►> t> > - <1 P O o O PJ & Bg i_, ^ qq qq qq crq qq y-i «o to to co to co ro oo "*» -i '• CO h -> Ol © 00 "- 1 CD B' «ft i ■6* - 1 1— ' 1— I a *t cd go ^ i oo to : CO (J\ CO CD to £> •€ft to 1 : b b : to © y. f to to to to tO M O to i— i to CO CO CO t-b -eft- to © CO b © © bi St W Ore CO c-f- GO o © o o ^ bi ^ CD CO cd o eft -eft- ^d ^ H rf^ co co to CO M c ts to CO Ol g t— ' CO a 00 CO © -eft -ee- a. h- 1 Ot Ol oi rf* o< M _ — 1 <£> >S, ?o "^ tf* — . JO M bo b o © © §51. -1 00 © © ■m- -£«• to co to oo to CO CO M JO o JO M O co -eft bo © b o to b Cr* o to o o Ol © QO ^1 -eft ■eft 3- rf^ Co CO rf*. £> 4- ^ M M CO -1 M rfa- 4- ^ CO OS b f— 1 b © © §- -1 o o o © © TABLE 3 Wages and Other Expenses as Reported by Thirty-six Producers No. 1 2 3 4 r> 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Price of land $309 150-250 350; 550 700 Valley 300 Hill 7.50 500-700 40- 50 200 300 up None for cows Price /— ■ Rent of Milk- per acre hay ers $21.30 $55 10.00 $18.50 50 17.30 75 50 6.00 20.00 20.00 30.00 18.00 55 50 ' 16.00 50 17.00 50 16.00 3.81 18.00 50 18 00 18.00 50 25; 20; 6 75 22.50 80 20.00 15.00 ;... 367 a. $4000 17.85 a year $10.90 28.50 45 20.00 45 18.75 45 16.40 19.00 50 10.00 20.00 55 10; 6 19.00 70- board 65 70 Wages $35 per acre 200 150 140 100; 20 No land No land 20.00 20.00 17.50 20.00 5.00 20.00 450.00 20.00 18.00 18.00 20.00 55 55 65 80 60 55 Farm hands Cook .... $40 $65 30 50 80 35 55 45 45 40 50 50 75 60 45 40 40 50 65 65 55 45 40 80 45 20 50 60 30 40 40 25 30 30 >, Hours Other Fore- worked help man per day 8 $45 $100 9 45 75 91/2-IO 12 12 10 25 80 11 30 10 75 7-10 50 10 40, 75 125 100 10, 11 100 10 7, 8 10 125 10 40 9y 2 40 10 12 8 40 12 60 11 55 100 11, 14 45 11 80 8-10 10 14 11 11 COST OF DISTRIBUTION Eighty-one letters of inquiry containing the following questions were mailed to distributors of milk in the bay cities, but owing to the reluctance of many to disclose the nature of their business, the infor- mation regarding costs of distribution is limited to ten distributors in Oakland and Berkeley. Questions 1. Average number of gallons of milk purchased daily? 2. Average number of galons distributed daily? 3. Average daily losses from pasteurization and from other sources? 4. Daily variations in demand? 5. Percentage of customers who take one quart or more daily? 6. Percentage of customers who take less than one quart daily? 7. Cost of pasteurizing milk when done by distributor? 8. Capacity of pasteurizing plant in gallons? Cost of pasteurizing plant? 9. Number of men employed in pasteurizing plant and in all work except that of distribution? 10. Number of milk routes, and number of drivers employed? 11. Wages paid drivers and other employes? 12. Average number of gallons of milk distributed daily by each driver? 13. Average number of miles traveled each day by each distributing wagon? 14. Are horses or motor vehicles used in distribution? Which is considered the most economical? 15. How is surplus milk disposed of? Your opinions are desired as to the feasibility and economy of the following modifications of present methods: 1. Would there be any economy or advantage in having all the milk of each of the larger California cities pasteurized at one municipal plant located so as to be conveniently and cheaply reached by the producer? 2. Would there be any advantage in having one pasteurizing plant oper- ated by a co-operative association of producers or distributors? 3. Some cities have unified the distribution of milk, thus eliminating the heavy expense of several delivery wagons traversing the same route. Is such a plan feasible or desirable? If it is entirely convenient and agreeable, a representative of this depart- ment would like to call on you at a date to be arranged, to discuss these matters. Please let me hear from you regarding this. A majority of the replies stated that the distributors would be glad to confer with a representative of the division, and the informa- tion contained in table 4 was obtained from personal interviews with distributors by the representative of the division. 10 TABLE 4 Cost per Gallon of Distributing Milk in Oakland and Berkeley, June 30, 1917§ No 1 2 3 4* 5 6 7 9 10 Routes 5 5 1 2 4 1 5 1 1 1 Gallons of milk 400 300 45 120 900 70 300f 60 15 8 Number of customers 1712 1720 108 400 1300 275 1200 175 60 23 Cost of distribution per gal. Cents 12.26 14.25 17.00 12.12 9.19 9.76 11.93 19.6 20.1 12.5 Cost of distribution including bad debts Cents 19.60 21.86 17.16 12.14 9 96 10.5 14.9 20.38* 22.3 16.53 Average 12.75 * Buys milk pasteurized and bottled. t Retails 2700 gallons of milk per day. X Certified milk. § Additional costs of distribution in table 6. PRICES CHARGED CONSUMERS In 1916 the prevailing prices charged consumers were 5 cents per pint and 9 cents per quart. This was raised in the latter part of 1916 to 6 cents per pint and 10 cents per quart. This price has been further increased at a recent conference of distributors and producers to 7 cents per pint and 12 cents per quart. According to the statements of producers represented in table 1, it costs 22.7 cents per gallon to produce and deliver milk to San Francisco, and according to the statements of distributors in table 4, it costs them on an average 16.53 cents to distribute milk in Oakland and Berkeley, of which 3.78 cents was due to bad debts, making a total for production and distribution of 39.23 cents. This would seem to show that 40 cents a gallon, or 10 cents a quart, was a sufficient price under the conditions existing in June last, and that what was needed was not an increased price to the consumer, but a readjustment of charges between the producer and the distributer, as the producer was apparently getting too little and the distributor too much. In a con- versation with one of the large producers, who is also a distributor, he stated that what he lost on production he more than made up in profits of distribution and that this enabled him to carry on the combined business with satisfactory results. 11 . The foregoing data can be regarded only as showing approximately the actual situation. The cost data of dairymen were obtained in June; those for feed products in July and August. It has been a period of shifting and usually advancing prices, for which allowance has to be made. The results would be more valuable if more dis- tributors were represented in table 4. The data, however, have been compared with those of elaborate cost-accounting investigations carried on by public authorities in eastern cities, and the result is believed to be as close an approximation to the truth as is possible in a period of rapidly-shifting costs of labor and equipment and feed for dairy herds. "Where all predictions are hazardous, there are reasons for believing that all figures given represent maximum costs for the present. The regulations on prices of farm products by the Federal Food Administration are likely to lead to lower rather than to higher prices of feed for dairy herds. The unsatisfactory returns from dairying have lowered the price of cows. The universal protest against the inefficiency and high costs of distribution ought to lead to improve- ment here and elsewhere. DISTRIBUTION NOT ECONOMICAL Entirely apart from the reasonableness of distributors' charges for the service they render, it is evident that this service at present is badly organized, and that there is in many cases a serious waste of labor and money which ought to be corrected. One driver who delivers 60 gallons of milk a day leaves the creamery twice in the morning and once in the afternoon, and travels during the day a little over 40 miles to deliver milk to 231 customers ; 110 of these take pints and 121 take quarts. Some take more than one bottle at a time and are content with one delivery a day ; others want deliveries made twice a day. In this way he travels over some streets as much as eight times in the day. His route has on an average from one to six customers in a block and averages less than two to the block. In one case he has to travel outside of his regular route a distance of three-quarters of a mile to deliver milk to one customer. Such deliveries involve direct loss; they are continued only because of wasteful competition. If he sup- plied milk to every family on a part of his route he could deliver all the milk he supplies in less than four blocks, or a saving of over 35 miles' travel. In one block in Berkeley where the situation was in- vestigated, a dweller could get milk from eighteen different dis- tributors. In another block on which there are fifty-eight houses, pight different dairies make deliveries of milk. In another part of , 12 Berkeley, which is sparsely settled, five wagons traveled past one of the blocks where observations were being made. In Oakland eight distributors deliver milk in the same apartment house each day. Everywhere that this matter has been studied there is great duplica- tion in milk routes. The duplication of pasteurizing plants is a needless addition to distribution cost. There are in San Francisco twenty-five plants; in Oakland and Berkeley there are twelve additional plants. Here is a large investment of money from which, in many instances, no adequate return is received. One of these pasteurizing plants is operated only two and a half hours a day. It could easily pasteurize five times the amount of milk that it now treats with very little increase in investment or operating expenses. The wages paid drivers of milk wagons, compared with the wages paid laborers and milkers on dairy farms, are high. The drivers are paid $97.50 for twenty-six days' work, in which they work eight hours a day. Measured by the hours worked, this is far more than the rate paid milkers on the dairy farms. For the four days that the regular driver does not work an extra driver is employed, who is paid $105 for a month of twenty-six days. The amount added to the cost of distributing milk for bad debts seems excessive, and it is unjust to saddle this on those who meet their obligations. This and the charges for loss of bottles are largely due to competition. The struggle to secure exclusive control of ter- ritory and to hold customers causes those who are poor pay and those who are careless about the return of bottles to be retained as customers where under sound business considerations they would be dropped. Information furnished by producers and distributors in Los Angeles, Fresno, and smaller places, seems to indicate that milk is more expensive in the bay cities than in either the central or southern part of the state. Table 5 gives the summary of the results obtained in other sections. 13 TABLE 5 r of Production and Distribution in Southern and Centrai i Califori to. Date Cost of Locality production Cents Cost of distribution Cents Total cost per gallon Cents 1 May 28 Fresno 16 13 29 2 May 28 Fresno 16% 13 29% 3 May 29 Bakersfield 17 (4% milk) 11* 28 4 May 29 Bakersfield 16 5f 21 5 June 1 Pomona 19 18 37 6 June 2 Los Angeles 21 (4% milk) 17% 38% 7 June 14 Santa Cruz 15 Wio 28fi 8 June 17 Santa Cruz 19 12 31 9 July 2 Los Angeles 20 18 38 * Not pasteurized. f Wholesale. GENEEAL DISCUSSION The rise in the price of milk and the controversies between pro- ducers, distributors, and consumers indicate that something besides the unorganized and unco-ordinated efforts of individuals, to meet the needs of large cities, must soon be provided. Milk is an article of food of such universal use that a cheap and wholesome supply, especi- ally for children, is a necessity. The individual dairyman and dis- tributor can, without comprehensive plans or concerted action, meet that need in small cities and towns, but it is being proved that this will not answer for cities like San Francisco, Oakland, or Los Angeles. In small towns the individual can provide his own water supply through wells or cisterns. Unpaved dirt roads meet the requirements of transportation, as people walk to their business. Each family looks after its own lighting and sanitation and can, if it chooses, keep a cow. In large cities, however, individual action is hopelessly inadequate. It is not possible to leave provision for matters affecting the general wel- fare either to individuals or voluntary combinations of individuals. A water system owned by the public or under public control has to be provided, streets have to be paved, and provision made for street-car transportation ; sanitation and matters affecting public health have to be placed under public control. This may seem like a trite state- ment of obvious facts, but the present expensive and inadequate methods of supplying cities with milk and other farm produce show that their significance is not realized. It now has become a question whether, in large cities, comprehensive action by the public authorities should not be taken to secure a 14 wholesome and cheap milk supply and to provide public markets and abattoirs for cheapening the cost and distribution of essential articles of food. It cannot be exepcted that individual dairymen or individual distributors will be greatly concerned about the general welfare of the city where they sell their products. Jones, the dairyman, conducts the business for what he can make out of it for Jones. Brown, the distributor, is moved by the same impulse. Each occupies a restricted field. He has no power to control the general result, whatever his public spirit may be. Furthermore, there is a continuous and powerful incentive on distributors to enter on a cut-throat competition to secure exclusive fields, and where this has been accomplished, to exploit the separate and unorganized producer. It is an economic warfare in which the third party, the milk buyer is sooner or later the victim. It is a primitive method of meeting a universal and vital need of all large cities which our civilization has outgrown. No nagging or producers or distributors, no negative action, will give to mothers and children of wage-earners the relief needed. What is needed is comprehensive and expert public oversight that will study the needs of a city as a whole and coordinate the work of producers and consumers so as to eliminate inefficiency and waste, and insure prices based on the value of the services rendered. Provision for the feeding of the people of great cities is the most neglected feature of our economic and political organization, and the situation in the bay cities naturally grows out of this. In San Francisco there has been for several years an association of distributors seeking to secure enlarged or monopoly control. They have almost eliminated the small dairyman who retailed the product of his herd. In the eastern bay cities the same kind of struggle for exclusive control is being carried on by a similar association of dis- tributors and there, also, the small retail dairyman is being forced out of business. Most of them already have retired. Self-protection also forced the producers to organize, and two producers' associations now almost control enough of the supply to be able to dictate prices. So long as these organizations of producers and distributors do not use their power to increase prices unduly and thus exploit the public they are a public good. They are a necessary step toward co-ordinated effort and economic efficiency. Ultimately, they will eliminate duplication, the inefficient pasteurizing plants, and those methods which result in a heavy percentage of losses through destruc- tion of milk bottles and bad debts. In the meantime, however, a costly struggle is going on to determine which of the distributors 15 shall survive and the respective shares of what the consumer pays that the distributor and producer shall have. It has to be kept in mind, also, that so long as there is no public oversight to protect the rights of the consumer, the tendency of these organizations will be to raise prices. They have not been formed for the purpose of lowering them. The object is to get control, and with control comes the temptation to make all out of it that the traffic will bear. That is human nature and is only what should be expected. The tendency of producers' and distributors' organizations is also to protect their members, to fix prices so that the inefficient can survive, to base them on the least profitable plants rather than on the efficient ones, and where control of prices is established, the great incentive to efficiency on the part of both producer and distributor is removed. If the service costs more, it is passed on to the consumer. That the consumer pays more than he should is not a matter of theory. It has been shown by the legislative investigations recently completed in New York and elsewhere. The conditions controlling milk supplies and milk prices in all large eastern cities show that, aside from price, the consuming public cannot stand aside and be indifferent to the conflict going on between pro- ducers and distributors. Results show that the distributor, on the whole, has the advantage and he has used this advantage in the ter- ritory contiguous to cities like Chicago and New York to depress prices paid dairymen so as to destroy or cripple the dairying industry over large areas which, under normal conditions, ought to be prosperous. The New York legislative investigation of 1917 was based on the following resolution : Whereas, It is alleged that the distribution of milk and butter, eggs, poultry, and live-stock produced in this state is controlled by combination and monopoly of dealers and manipulation of prices to such an extent as to reduce production and in such manner as to impair the quality and unduly enhance the prices to con- sumers; and Whereas, It is further alleged that such practices are becoming more and more aggravated and result in discouraging agriculture, reducing production, depressing the value of farm land, and in increasing the cost while lowering the standard of living; After testimony which showed that one company had expended nearly $200,000 during the year to stifle competition, the committee reaches the following conclusion : 16 Under the present competitive system it takes almost as many men to bring the dairyman's milk to the consumer as there are dairymen engaged in the production of milk with all their em- ployees. This is the result of the purely competitive basis upon which the business is handled. It is believed by the Committee that a State Department equipped with all the power permitted by our laws should be created, having the capacity to thoroughly analyze and comprehend the present situation, and having realized and comprehended it, to provide ways and means to consolidate this service not only in New York but in every city in the state. What is needed in the San Francisco Bay cities is the creation of some expert authority to study whether the present location of our dairying districts makes possible provision of a milk supply as cheaply as it could be furnished from some other district or districts where land is cheaper even if farther removed. It may well be true that a dairying district 150 miles from San Francisco, where herds could be fed on irrigated land and where an express train could bring its product directly to the city, could supply milk more cheaply than is now being done. The economics of distribution should be studied, not to determine in what direction present distributors have failed, but what could be saved by a carefully planned distributing system which would elimi- nate duplication of routes, needless pasteurizing plants, and overhead charges. Nothing will be gained by investigations which stop with criticism of methods and practices of those now engaged in business. Considering the limitations under which they have worked, they have done as well as could be expected, and exactly what was expected. The essential thing to be recognized is that leaving this complex problem wholly to private enterprise is an economic mistake which, sooner or later, will have to be corrected. If any investigation is undertaken it should be undertaken with a view to determining what the new system shall be. There are certain public agencies whose services might well be utilized in this study. They are the State Market Director, the State Agricultural College, and representatives of San Francisco and east bay governments.