Thorstein Veblen
A SCHEDULE OF PRICES FOR THE STAPLE FOODSTUFFS
(Memorandum, originally written in 1918 for the Statistical 
Division of the Food Administration).

The Southwestern Social Science Quarterly, Vol. 13, (Mar., 1933), pp. 372-377.
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Price control appears to be the only practical means of regulating the 
supply of foodstuffs in America. Admonition and advice are likely to be 
less and less effective for this purpose as time goes on; and no direct 
coercive control of production would be practicable in this country. At the 
same time it is desirable to limit the control of prices to as few items as 
may be, and to adopt a consistent scheme of regulation for the items whose 
supply it seems necessary to control.
The underlying purpose of any such regulation is the more effectual 
prosecution of the war; and the first consideration, therefore, is the 
supply of foodstuffs to the European Allies. Any practical schedule of 
prices will accordingly have to be drawn with a view primarily to this 
requirement. The price control will aim to take care of the main staples 
required by the Allies, and regulate the prices of other articles only so 
far as may be unavoidable in taking care of these main staples. This will 
mean that prices are to be regulated with a view to the supply of grain and 
meat; and of the grains and meat products, wheat and pork will come in for 
the chief consideration; wheat because it is the largest and most urgently 
needed item of the food supply; pork because it can be produced at a lower 
cost and handled more expeditiously and with less waste than any other 
available provision of meat and fat.
Hence a price schedule for the control of the American food supply will be 
based on the requirement of wheat and pork, and will be so drawn as to 
favor the production and conservation of these two staples. With this 
primary requirement in mind, it seems expedient to set up a schedule of 
prices covering three main classes of items: (a) the main staple farm 
products - to include Wheat, Corn, Barley, Rye, Oats, Potatoes, Pork, Beef, 
Mutton, Eggs, Butter, Cotton, and Tobacco; (b) staple articles of import 
which compete with these domestic products - to include Sugar, Fruits, and 
Edible Oils and Fats; (c) the main staple articles of use on the farms - to 
include certain standard items of Farm Machinery and Vehicles, Lumber, 
Fence Wire, Nails, Binder Twine, and perhaps Soft Coal and Gasoline.
Minor staples of import or of domestic production - as, e.g., Rubber, 
Resins, Hides, Truckfarm Products, Milk, Flax, Peanuts, and the like-may 
call for regulation on other grounds; but for the Food Administration 
articles of this general class are of secondary interest and had best be 
left out of control; partly to afford a free market by observation of which 
the general level of prices for the main staples can be intelligently 
readjusted from time to time, and partly to afford a fluctuating margin of 
employment for such lands and farm work as are not altogether suitable for 
use in the production of the main staples. There is also the practical 
reason for leaving such an unregulated margin of minor staples, that it 
would be extremely difficult to control so scattered and variable a volume 
of items in any satisfactory way.
Of the three classes of items named above, as being properly subject to 
regulation for the purposes of the Food Administration, only the first 
named - the main staple farm products - come directly under the 
jurisdiction of the Food Administration; the other two are under the 
surveillance of other branches of the government, and the Food 
Administration can influence their control only by way of criticism and 
advice. In effect, the Food Administration will at best be able to set up 
and carry out a systematic control of the main agricultural staples only, 
and will have to adjust its control of these staples to the circumstances 
of the case; prominent among these conditioning circumstances being the 
dealings of these other organs of government with the other staple items 
whose competition in the market affects the prices of the agricultural 
staples. The immediate care of the Food Administration, accordingly, will 
be the staple farm products, but with a constant regard for the course of 
prices in those lines that come into relation with the staple foodstuffs, 
whether on the side of their production or on that of their sale.
It is evident that no rigid and invariable schedule of prices can be 
adopted, once for all. The seasons vary greatly, and their variation never 
affects all crops equally. Any schedule will necessarily be subject to 
revision from time to time to meet the varying conditions of demand and 
supply. It follows that, in effect, any practicable schedule will take the 
form of a schedule of price ratios covering the items to be brought under 
control, drawn with reference to a chosen base and subject to revision as 
the changing conditions of production may require.
Concretely, to meet these requirements, it is here proposed that the price 
of wheat during the pre-war years 1911-1914 be taken as a base and reckoned 
as 100, while the prices of the other staple farm products already named 
will fall into a series of relative prices taken from the same period and 
reckoned in percentages of the price of wheat; so giving a series of price 
ratios or index numbers, to serve as a normal level from which variations 
will be made to meet special conditions. The general advance of prices that 
has taken effect during the period of the war will be met by using the 
ascertained ratio of this general advance as a coefficient to be multiplied 
into each of the several ratios or index numbers included in the schedule; 
so raising the general level of prices for farm products by a uniform 
increase throughout the list. Special disturbances, affecting any given 
item, such as seasonal variations of supply or demand, will be offset by 
individually weighting such items in the list as may require it. While 
special inducements to an increased production of articles that are 
urgently needed, as, e.g., wheat or beef, may be brought to bear by means 
of a similar weighting of the corresponding index numbers of the schedule.
It will be seen that this schedule of relative prices is designed to serve 
as a basis for the continual readjustment of prices to meet varying 
conditions, rather than a rigid scale to be adhered to in the face of 
changing conditions. The schedule will also vary from one place to another, 
by a system of differentials designed to cover differences of nearness to 
the market, and similar factors that effect the supply; very much after the 
fashion of the differentials now in use in regulating the price of wheat in 
different markets under the direction of the Grain Corporation. The result 
will be a series of price schedules for different markets, but all related 
to each other through being derived from one base-the schedule of price 
ratios first spoken of above. Whenever it is desired to change the level of 
price for any given item - as, e.g., wheat or pork - to encourage or 
discourage its production or consumption, relatively to the other 
foodstuffs, these several scales of prices in the local markets can 
accordingly all be altered at the same time and with a uniform effect by 
changing the coefficient assigned to the given item in the underlying 
schedule of price ratios on which the several local schedules are based. 
The effect of any such change in the underlying schedule of ratios will run 
uniformly through the entire range of special price schedules, and so 
maintain an effectual equality of prices throughout the various markets 
that are to be kept under control.
In so varying the price of any or all of the foodstuffs included in the 
schedule, there are other circumstances to be taken account of, besides the 
variations of the seasons and the changes in the export demand; notably 
changes in the general level of prices, on the one hand, and changes which 
specially affect the cost of production of the crops, on the other hand. 
The general price level for the staple foodstuffs will be kept by means of 
a running reference to (a) the current prices of the uncontrolled 
foodstuffs, as shown in the price bulletins of the Food Administration's 
Statistical Division, and (b) the current price reports of the War 
Industries Board; while the main variations in cost of production 
specifically bearing on the production of staple foodstuffs are similarly 
shown (a) in the bulletins of farm-wages published by the Department of 
Labor, and (b) in the price-lists of manufacturers of farm machinery, as 
well as in the bulletins of the Federal Trade Commission covering farm 
machinery.
What has been said above bears on the running adjustment of the prices of 
staple foodstuffs to the current conditions of demand and supply; and the 
data underlying the argument so far are shown in the subjoined Tables with 
accompanying Charts.(1*) But in addition to such a running adjustment, it 
will also be incumbent on those who have charge of this price regulation to 
take care that a sufficient supply of the staples is produced. To this end 
the farmers should be relieved of the risk of loss due to crop failures or 
to unforeseen losses of livestock due to drought, hard weather, or disease. 
As far as practicable the risk of loss should be borne by the nation as a 
whole-on the well-known principle of mutual insurance. The crop failure in 
North Dakota in 1917, and the extent to which that misfortune has crippled 
the farm industry of that state for the current season of 1918, goes to 
show how serious a mistake it is in the present emergency to let the risk 
be carried by the individual farmers rather than by the community at large. 
In the present emergency the production of foodstuffs is quite unmistakably 
a joint enterprise for the prosecution of the war, and it is imperative 
that the enterprise should be managed on that basis.
To remedy mischiefs of the class shown by the case of North Dakota, and to 
offset the discouragement which such a risk of loss always gives rise to, 
it is necessary to provide beforehand for shifting such risk from the 
individual producer to the community at large. So far as concerns the main 
staple foodstuffs this can be done in a passable fashion by guaranteeing 
the farmers a suitable minimum return per acre of the crops planted, and 
perhaps a similar insurance per head of livestock in hand at the opening of 
the season. As is well known the cost of production of the staple crops in 
American farming is much more nearly proportioned to the acreage than to 
the total yield; whereas the market value is proportioned to the total 
yield. The details of any scheme for crop insurance on the basis of acreage 
will vary somewhat from one place to another, but the general principle 
will be much the same. As in the case of the market price of the grains, so 
here it is proposed that a basis on which to compute a practicable minimum 
per acre may best be found in the value per acre of the various crops in 
the various localities concerned, during the three years preceding the war. 
In this connection it may be noted that the three-year average - 1911-1914 
- coincides closely with the longer, ninne-year average, 1909-1917.
For the staple grains, therefore, it should be advisable to set up a 
schedule of guaranteed minimum returns per acre, to vary from place to 
place to correspond with the varying conditions of production, but 
sufficient to relieve the producers of the hazard of loss. Details of 
method in adjusting such a schedule of guaranteed returns are a matter for 
advisement between those who will have charge; so also questions of what 
items are to be counted in as elements of necessary cost, to be covered by 
the guarantee. So, e.g., the question will come up: How far, if at all, is 
the rental value of the land to be counted as an item of cost for this 
purpose?
In like manner the production of the staple meats should be covered with a 
suitable guarantee against unforeseen loss. This may prove a more delicate 
matter to arrange. But with the help of the Bureau of Animal Industry a 
sufficiently effective method of procedure can doubtless be devised. It is 
suggested that the control at this point should best proceed on a census of 
the livestock population to be taken at the beginning of the crop year.
At this point comes in the close relation which always subsists between the 
American production of Pork and Beef and the Corn Crop. Much of the pork 
and beef supply, but more particularly the marginal portion of this supply, 
comes as a virtual conversion of corn into meat and fat-somewhat at the 
discretion of the farmer. So much so, that men of experience in this matter 
- as, e.g., in the Bureau of Animal Induustry - have been at pains to work 
out coefficients, or ratios, governing the proportion between a given 
increase in the supply of pork or beef and the increased consumption of 
corn necessary to such increased production. At this point, therefore, the 
price schedules for the grains and the meats come into necessary 
correlation; so that the supply of the staple meats comes to be a prime 
consideration in adjusting the price of corn and fitting it into the price 
schedule of the staple grains.
NOTES:
1) These charts have not included here (Text reprinted from 'Essays in our 
changing order', 1934)
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