quire
concrete solution, and the employment relation is one of them.

APPENDIX IV

SOME NOTES ON AGRICULTURAL READJUSTMENT AND THE HIGH COST OF LIVING[2]

BY HERBERT HOOVER

The high cost of living is a temporary economic problem, surrounded by
high emotions. The agricultural industry is a permanent economic
problem, surrounded by many dangers. We are now entering into our
regular four-year period of large promises to sufferers of all kinds.
Except to demagogues and to the fellows who farm the farmer, there are
no easy formulas; nevertheless, there are constructive forces that can
be put in motion--and these are good times to get them talked about.

As bearing upon some suggestion of constructive solution, I wish to
establish and analyze certain propositions. Amongst other things they
involve a clear understanding of the bearings of different segments of
the total price of food between the different links in the chain of
production and distribution. These propositions are:

First: That the high cost of living is due largely to inflation and
shortage in world production; speculation is an incident of these
forces, not the cause.

Second: That the farmer's prices are fixed by the impact of world
wholesale prices; that such prices bear only a remote relation to his
costs of production.

Third: That any increase or decrease in the cost of placing the farmer's
products into the hands of the wholesaler is a deduction from or
addition to the farmer's prices; that is, an expansion or contraction of
the margin between the farm and wholesale prices makes an increase or
decrease in the farmer's return.

Fourth: That increase or decrease in the cost of distributing food from
the wholesaler to the door of the ultimate consumer is a deduction or
addition predominantly to the consumer's cost; that is, the margin
between the wholesaler and consumer in its increases or decreases is
largely an addition or subtraction from the consumer's price.

Fifth: That these two margins in most of our commodities except grain
were, before the war, the largest in the world; that they have grown
abnormally during the war, except during the year of food control.

Sixth: That analysis of the character of the margin between the farmer
and wholesaler will show that decreases in price find immediate
reflection on the farmer, while immediate increases in price are
absorbed by the trades between and the farmer gets but a lagging
increase