cost and estimating classes organized. Nevertheless, even at the time of greatest organization, not more than 250 standard cost systems were in operation. As before, a broader educational campaign to reach printers without cost systems was needed as well as cost-finding education. Frequent discussions of competition and price-cutting occurred, in which every effort was made to discourage price competition. After each wage increase notices were sent out suggesting the price increase needed to cover the greater costs. Special groups, organized to consider their problems, in some cases adopted minimum scales of prices. From 1919 to 1921, the Franklin-Typothetae itself issued lists of recommended selling prices for standard operations, based on average hour costs. No penalties were exacted for violations, but with the aid of prosperity and the active organization the lists were helpful in standardizing prices. In 1921, however, because of the complaint of the Federal Trade Commission against the United Typothetae of America, it was decided to publish only average hour costs.24

Other types of activities gave service to members during these years. Work on credits and collections, a bookkeeping service, an appraisal service, and the adjustment of problems in the relations of printers to the supply-houses, all were useful. In the meantime the two labor divisions carried on their activities with a minimum of friction. It appeared after five years' experience that a satisfactory way had been found to secure general support for educational work on management problems in an industry divided by labor policy into two opposing camps.

The test of the difficult years beginning in 1921, however, proved too great for this structure. The services of the association to its members were not so vital but that in depression the need for financial retrenchments brought many resignations. In addition, a situation strained by depression, overequipment, and

“Minutes, Franklin-Typothetae of Chicago (1915-1921). The Federal Trade Commission complaint in 1910 was directed chiefly against the publication of the U. T. A. Standard Guide, or price list, and in the fall of 1923 a cease and desist order was issued. The United Typothetae of America, however, had discontinued its publication of prices in 1922. The publication of average hour costs was not affected by the order of the Commission, and was continued (Typothetae Bulletin, August 11, 1024, p. 105).

is bad. He has his land and equipment and his own labor as well as that of the family. All of these factors may be said to be overhead expenses. If he does not utilize these factors, he suffers a dead loss. It is better to get something out of these factors than nothing, since he has them on his hands anyway. Moreover, the product from his individual farm is so small that he cannot hope to influence the total supply appreciably by curtailment of production. Thus in the severe depression of 1921, per capita agricultural production (including cereals, hay, live stock, and dairy products) was 99 per cent of the pre-war average, while manufacturing production was only 80 per cent normal.'

While the farmers thus continue to produce the normal supply of the raw materials of industry, even in the period of depression, other factors rigidly control the supply. In a period of depression, wage-earners do not go out on a program of selling all their labor at whatever price it will fetch. They prefer unemployment to a precipitate decline in wages. Entrepreneurs curtail production in the face of a falling market. This curtailment checks the extent of the decline in the selling price of the manufactured goods. The farmers, however, totally unable to control supply, find themselves in the position of residual claimants. Throwing their commodity on the market in undiminished volume while other groups are curtailing supply, they suffer an adverse purchasing-power ratio. It would be interesting to know how low wage rates would have fallen in 1921 if wage-earners had insisted on selling their full labor supply at whatever rates it might fetch.

It is sometimes argued that high wage rates in the depression period are favorable to farmers, for it is thought that the high wage rates will enable the wage-earners to furnish a good market for farm products. But unfortunately, high wage rates do not

1 Similarly, farmers cannot readily increase production, as manufacturers do, in periods of prosperity. From 1916 to 1920 the per capita production of cereals, hay, live stock, and dairy products (weighted average) was less than 4 per cent above the pre-war average for 1909-13. Cf. E. E. Day's indices of production in the Harvard Review of Economic Statistics, on which these figures are based.

This argument can, however, easily be overstressed. Probably the failure to control supply is not as important a factor as the collapse of demand for raw materials, both agricultural and mineral. This point is discussed more fully later.

help an unemployed man to buy commodities. It is the widespread unemployment that causes low purchasing power despite high real wage rates in the depression period. Now labor is no doubt justified from a long-run point of view in resisting wage reductions at all costs, but it cannot be claimed, as we see it, that these high wage rates are favorable to farmers. Labor and the raw materials of farms constitute the chief prime costs of industry. They share in the value of the product according to the relative supply of each. If labor curtails its supply (chooses to remain unemployed rather than accept lower wages) while farmers throw the full supply of their commodity on the market, the share that goes to the farmer will be inordinately low. Thus we find that in each period of heavily falling prices, the purchasing power of wages rises, while the purchasing power of farm products falls.

Let us examine the various periods of falling general prices in detail. The first period of rapidly falling prices (beginning with 1814) does not run quite true to form. The purchasing power of farm products at first rose rapidly, and did not begin to fall until 1817. But it will be remembered that immediately upon the close of the War of 1812 and the Napoleonic Wars in Europe, England unloaded huge quantities of manufactured goods in the United States, causing a precipitate decline in the prices of these commodities. Hence for the time being the purchasing-power ratio was favorable to farm products. After 1817, when general prices again fell precipitately, this factor had ceased to operate, and then the decline in the purchasing power of farm products, which normally would be expected in a period when general prices were heavily falling, came into evidence.

In the next period (1839) the purchasing power of farm products behaved normally. The curve started downward after 1838, one year before the fall in general prices. This is the normal relationship. Prices of producers' goods antedate in their movements the prices of consumers' goods, and raw materials antedate finished products. Farm products fall in the class of raw materials on the one hand and producers' goods on the other. The price movements of these commodities therefore precede the general price movement. The prices of producers' goods and of raw materials

precede because the crisis first shows itself in the industries farthest removed from the consumer. This is due to the increasing violence in the fluctuations in demand the farther the market is removed from the consumer back to the retailer, the wholesaler, the manufacturer of finished products, the manufacturer of semifinished and raw materials. The farther the market is removed from the consumer, the greater the overstocking. It is these heavily overstocked markets that first experience the price decline. Thus changes in the prices of farm products, the raw materials of manufacture, precede changes in the general price level.

Other periods that behaved normally are 1883 and 1920. Minor movements that behaved normally occurred in 1903 and 1913. The effect of minor business-cycle movements on the purchasing power of farm products is frequently completely counteracted by other factors, such as the fluctuations in agricultural production. Thus, the short crops of 1907 and 1908 prevented the decline that might otherwise be expected in the purchasing power of farm products.

In 1857 the simple average index of the purchasing power of seven farm products fell simultaneously with the general price level. Our weighted average did not decline until after 1859. This was due to the abnormal behavior of corn, which rose to a high point in 1859. The other commodities behaved quite normally.

The irregular and violent fluctuations in the sixties were probably due largely to the industrial disturbances caused by the Civil War. The purchasing-power index perhaps exaggerates these irregularities, owing to the fact that cotton is included in the farm-price indices from 1867 on, but excluded from 1861 to 1866.

Following the panic of 1873, the purchasing power of farm products rose, owing to a short crop, and did not decline until 1875, when the decline in general prices became intensified. The purchasing power of farm products ruled low during the deep depression of the late seventies.

There remains only the period of the early nineties. Here the general price level turned down after 1889 and again after 1893. The purchasing power of farm products started downward in 1891

capacity. As a practical matter, it appears better to most proprietors to keep plants running and cover overhead and other costs if possible than to refrain from taking jobs unless they pay the full cost-plus-profit price. This being the case, detailed cost knowledge appears useless, or at best not worth its price, to the large numbers of printers who expect to sell "at the market" rather than at prices based on their own costs.

Whether the printer who cuts prices in slack times or the Code of Ethics that decries any price-cutting is wiser from the standpoint of the industry depends upon the elasticity of demand for printing. It is generally held in the industry that the volume of printing at any time depends in much greater degree upon the activity of general business than it does upon printing prices, and that the volume of commercial printing shows little response to price changes. To the extent that this is true, lowering of prices for printing does not naturally increase the amount of printing sold, and for the industry as a whole nothing is gained in slack times by reducing prices to unprofitable levels.

The validity under all circumstances of the standard set up by the industry for fair prices may be questioned. Nevertheless, the theory that knowledge by every printer of his costs would improve competitive conditions is valid. Knowledge of costs promotes more responsible competition, in addition to directing attention to reduction of costs as a possible means of competition. The mass of printers, however, have not adopted the uniform cost system nor accepted in practice the theory of fair prices.

Experience that showed the impossibility of securing study of costs by every plant led to the third program for education in the industry, to make available to the entire industry, as a basis for responsible price policy, the experience of those plants which keep careful records of costs and production. In furtherance of such programs, the Chicago associations have carried on a variety of activities, all in attempts to build up public opinion among the employing printers in favor of maintaining prices at the level considered reasonable, that which affords a profit above cost.

At each period when such campaigns of general education were carried on in Chicago by an active trade association, they