of the price, as the law of supply and demand, applied to cotton alone, would lead us to expect. It brought a decrease of over onehalf of the price.

The annual averages of the prices of all commodities did not change as extremely as the foregoing monthly index numbers. The average of all prices for the crop year 1919-20 was 227 (Chart I). This fell to 142 for the crop year 1921-22, a fall of 37 per cent. But the fall in the average farm price of cotton from 35 to 17 cents for the crop year was a fall of 52 per cent. Hence, measured, not in gold but in other commodities, the average value of a pound of cotton fell, not 52 per cent., but only 23 per cent.; and, since the crop itself had fallen off 28 per cent., the total commodity value of the world's cotton crop-the total quantity of other commodities which the total crop would purchase-had fallen 44 per cent.

A reverse effect appeared in 1924. The world's cotton crop had increased to 24,900,000 bales, an increase of 62 per cent. over 1921-22. Notwithstanding this increase of supply, which would lead us to expect a fall in the price, the price rose to 23 cents, an increase of 35 per cent. over the price, 17 cents, in 1921-22. Meanwhile the general price level of all commodities had risen to 155 for the crop year 1924-25, an increase of 9 per cent. over the 142 of 1921-22. So that the value of a pound of cotton, in terms of other commodities, had risen 23 per cent. But since the world's crop had also risen 62 per cent, the commodity value of the total crop had risen 99 per cent. in 1924-25 above its value in 1921-22.

Something similar, but not so extreme, occurred with wheat. The average American farm price of wheat in 1919-20 was $2.19 a bushel, when the world's crop was about 2,800,000,000 bushels (excluding Russia and China). It had fallen in 1923-24 to 92 cents, when the world's crop had risen to nearly 3,600,000,000 bushels. The fall in price was 58 per cent., accompanying an increase in crop of 26 per cent. But since the average price level of all commodities had fallen from 227 in 1919-20 to 150 in 192324, a fall of 34 per cent., the value of a bushel of wheat had fallen in 1923-24, not 58 per cent. measured in gold, but only 35 per cent. measured by the average of the prices of all commodities.

On the other side, since the world's crop had increased 26 per cent. above 1919-20, the total value of that increased crop in 1923-24-measured by the total quantity of all commodities it would purchase-had fallen 19 per cent., although the gold price per unit had fallen 58 per cent.

The reverse occurred in 1924-25. The general price level of all commodities for the crop year rose about 3 per cent. in 1924–25 above the level of 1923-24 (from 150 to 155), but the price of wheat rose 38 per cent. in 1924-25 and 58 per cent. in 1925-26 above its price of 1923-24. Converting this into the prices of other commodities, the commodity value of a bushel of wheat rose 34 per cent. in the crop year of 1924-25 and 52 per cent. in 1925-26 over 1923-24. But, at the same time, the world crop fell from 3,600,000,000 bushels in 1923-24 to 3,100,000,000 bushels in 1924-25, a decrease of 11 per cent. below 1923-24. So that the total value of the world short crop of 1924-25-the quantity of all commodities it would purchase-had increased only 22 per cent. in 1924 over the value of the larger world crop of 1923, although the price per bushel had increased 38 per cent.; and the total commodity value of the crop for the following year, 1925-26, increased 45 per cent. over the larger crop of 1923–24, although the price per bushel had increased 58 per cent. over the 1923 price.

The foregoing figures are, of course, only approximations and averages, but they indicate fairly well the magnitude of the shifting of wealth that has been going on in the matter of farmers' crops, due to both the changing value of gold and the changing size of crops. (Chart II.)

While farmers' gold prices have been moving in this erratic way, the gold prices of manufactured products and of non-agricultural raw materials have been relatively stabilized. Non-agricultural prices in general fell 41 per cent. in 1921 (from 250 in May, 1920, to 147 in January, 1922), but agricultural wholesale prices fell 52 per cent. in the same period (from 248 in May, 1920, to 120 in January, 1922). Again, while non-agricultural prices rose 8 per cent. in 1924-25 (from 150 in June, 1924, to 162 in February, 1925), agricultural prices rose 21 per cent. in the same time (from 137 in June, 1924, to 166 in March, 1925). Again in

1925-26, when agricultural prices were falling 23 per cent. (from 166 in March, 1925, to 128 in November, 1926), industrial prices were falling only 4 per cent. (from 162 in February, 1925, to 155 in December, 1926). In 1927, however, agricultural prices came up 4 per cent. (from 128 in November, 1926, to 133 in May, 1927), while non-agricultural prices fell 4 per cent. (from 155 in December, 1926, to 149 in May, 1927).

These differences between the fluctuations in agricultural and non-agricultural prices are explained in part by the fact that manufacturers have been learning, during the past twenty years and especially since the war, how to stabilize their prices and thus partly to counteract changes in the value of gold. They are learning to manufacture only after orders are received, as merchants have learned to buy "from hand to mouth", so that they do not pile up inventory in either finished goods or raw material. The farmer, however, starts producing six months or more ahead of his date of sale, and he has but little warehouse room of his own to hold the crop until orders arrive from consumers. Manufacturers, too, can lay off their workers and shut down their plants when prices fall, and take them on again and start up their plants when prices rise; and they have learned to accumulate reserves to pay interest and dividends when their plants are idle. But the farmer must keep his family going. He cannot stop feeding his live stock and thus retain former savings for reserves.

Manufacturers have also learned the ethical device "follow your leader" and "live-and-let-live". Formerly their competition was cut-throat, like that of the farmers at present. The large manufacturers would cut prices, destroy competitors and enlarge their business by taking over their competitors' customers and workers. Now they do not cut prices nor overproduce, unless the small competitor invokes discipline by cutting prices and overproducing. Competition displays itself in the arts of salesmanship without cutting prices. The consumer pays, the competitor lives. This is the live-and-let-live policy of modern business. It would not be practicable without a protective tariff, which shuts out the cut-price goods of foreign manufacturers-a barrier which does not equally assist the farmer. While the farmer sells the bulk of his staples in a world market of unregu