all
those links put up a resistance to a curtailment of the margin which the
farmer is unable, except by absolute exhaustion, to put against
reduction of his price levels. If rapid falls in food prices occur, the
farmer, at least in the first instance, has to stand most of the fall
because he cannot quit. The farmer's costs of production relate to a
period long prior to the fall. Thus, if wages are due to fall as a
result of a fall in food prices, the farmer is always selling on the old
basis of his costs. The farmer has but one turn-over in the year. The
middleman has several and can thus adjust himself quickly.

Second, the custom of many of these businesses is to operate upon a
percentage of profit on the value of the commodities handled, even after
deducting all their increased costs, interest or other charges. When we
have rising prices, therefore, a doubling of prices, for instance, tends
to double profits on the same volume of commodities handled. In a rising
market, competitive pressures are much diminished and the dealer can
assess his own profits to greater degree than usual. While the packers
make a profit of, say, two cents on the dollar value of commodities, it
represents double the profit per pound over pre-war, even after
allowing such items as interest on the larger capital involved.

REDUCTIONS OF THE MARGINS

Aside from the necessary rise in the margin that has grown out of the
rise in cost of labor, rent, etc., from inflation and world shortage,
there are some causes which have accumulated to increase the margins
between the farmer and the wholesaler and the wholesaler and consumer
that could be greatly mitigated.

BETTER TAX DISTRIBUTION

During the war, in order to restrain wild greed and profiteering in the
then existing unlimited demand, margins between purchase and sale in the
different manufacturing and handling trades were fixed in all the great
commodities--iron, steel, cement, lumber, coal and foodstuffs. The first
task of the war was to secure production, and the margins were therefore
fixed at such breadth as would allow the smaller high cost manufacturer
and the smaller dealer to live. Otherwise, the smaller competitors would
have been extinguished, production would have been lost, and, worse yet,
the larger low-cost operator would have been left with much inflated
monopoly. The excess profits tax was levied as a sequent corrective to
this necessary first step, so as to take the