less than 60 per cent of their capacity as reported by the mills, as shown by the following table:

TABLE 19.-Annual capacity of flour mills in the United States compared with annual production of companies reporting cost of production to the commission by districts for the year 1922

The annual capacity in the above table was computed on the basis of 300 operating days to the year, yet the production of the five districts in 1922 was only 56.7 per cent of the capacity of those same companies. There was comparatively little variation in the relation of production to capacity except in the case of the southeastern district, where the production was only 41.1 per cent of the capacity. In the other four districts the production ranged from 54.9 per cent of the rated capacity in the mountain and coast district to 63.8 per cent in the central and eastern district.

As already stated (see p. 43), information covering the company investment, earnings, and rate of return on investment was presented for a larger proportion of the industry. For example, the annual capacity of the above mills represented about 27 per cent of the wheatflour milling capacity of the entire country, while the capacity of mills covered for the company investment and profits included about 37 per cent of that capacity.

Section 2. Quantity of wheat consumed per barrel of flour produced, by districts.

When only the quantity of wheat consumed or flour produced were given in the reports submitted by the company the commission in compiling its statements estimated that 41⁄2 bushels of wheat were used to produce a barrel of flour, in accordance with the rough estimates made by the millers themselves. That this figure is approximately correct is shown by the fact that for the four-year period the average number of bushels used per barrel of flour for all districts combined was 4.56 bushels.

The following table shows the number of bushels of wheat used, barrels of flour produced, and bushels used per barrel of flour produced, by districts:

TABLE 20.-Bushels of wheat used per barrel of flour produced, by districts, 1919-1922

The above table shows that the northwestern district used the greatest quantity of wheat per barrel of flour in all four years, varying from 4.5 bushels in 1919 to 4.74 in 1920, and averaging 4.63. The mountain and coast district used the smallest quantity of wheat for the four-year period, 4.42 bushels per barrel of flour. It was the lowest in all four years, except 1919, when it was 0.01 of a bushel above the central and eastern district, which used next to the smallest quantity of wheat for the period. The southwestern and southeastern districts averaged the same consumption for the period, with 4.52 bushels, and differed little in any year except 1922. Except in the case of the mountain and coast district, every district used the smallest number of bushels in 1919 and the greatest number in 1920. The quality of the 1920 spring wheat crop was inferior, which accounts for the larger number of bushels required to produce a barrel of flour in the northwestern district in that year.

Section 3. Method of computing costs.

The schedules sent out to the flour milling industry called for an analysis of costs, but not in any great detail. These costs, as reported, have been tabulated to show the following items: Wheat cost (including options, i. e., gains and losses on hedges in futures, and self-rising ingredients), labor, other milling expenses, depreciation, packages, feed credit (credit of value of feed by-products to cost of flour), and general expenses. A number of milling concerns do not hedge in the grain futures markets. In some cases it was necessary to estimate the proportion of package costs which should be assigned to flour milling and the proportion which should be deducted from the value of feed. In other cases it was necessary to estimate the value of the feed itself as the value of sales included the value of both flour and feed sold. Such estimates were all based upon the best figures obtainable, either the results of some mill in the immediate vicinity or an average figure for the mills in that district being applied.

Section 4. Total cost and cost per barrel, by districts.

As has already been shown, the cost statements tabulated by the commission cover over 40 per cent of the production of wheat flour in the United States during the four-year period under review. They show a total production for the period of nearly 200,000,000 barrels of flour at a total cost of almost a billion and three-quarters dollars, or an average of $8.85 per barrel.

The following table shows the total number of barrels of wheat flour produced, the total mill cost, and the cost per barrel, by districts:

TABLE 21.-Barrels of flour produced, total mill cost, and cost per barrel, by districts, 1919-1922

TABLE 21.-Barrels of flour produced, total mill cost, and cost per barrel, by districts, 1919-1922-Continued

The

The above table shows that the southwestern district had the lowest average cost of production for the period, $8.41 per barrel, although it had the lowest cost in only one year out of the four. The mountain and coast district, on the other hand, which had the lowest cost in two years out of the four, had the second lowest cost for the period, $8.43, or 2 cents per barrel higher than the southwestern district. These two districts produced about one-third of the flour produced by all the companies covered for costs. great northwestern district, which produced nearly one-half of the flour, had the highest average cost for the period, $9.10 per barrel, and was also highest in two out of the four years. The other two districts were almost as high for the period, as the cost in the southeastern district was only 8 cents lower, or $9.02 per barrel, while the cost in the central and eastern district was nearly as high at $8.99 per barrel.

Section 5. Principal elements of cost per barrel, by districts.

The most striking feature disclosed by a study of the different elements of cost making up the total mill cost is that the cost of producing flour for the four-year period was $0.16 per barrel less than the cost of the wheat ground. This was due to the fact that the cost of converting the wheat into flour, including depreciation and general expenses, was less than the value of the by-productfeed-obtained during the process, of manufacture for two of the years and for the whole period. When wheat costs were high the mill cost of the flour was less than the cost of the wheat, but when wheat costs were on a lower level the mill cost of the flour was greater than the cost of the wheat.

Appendix Table 6 shows the quantities and amounts while the table following gives the per barrel cost of wheat, value of feed, and the principal elements of the cost of producing a barrel of flour, by districts, 1919-1922.

103879°-S. Doc. 130-68-1†—5

TABLE 22.-Principal elements in the cost of producing wheat flour, by districts,

1919-1922

In the four years covered by the table the average cost of the wheat used per barrel of flour manufactured constituted from 87 to 90 per cent of the gross mill costs. From this it is obvious that any material change in wheat prices must have a great effect upon the cost of producing a barrel of flour, but the selling price of flour does not with any accuracy reflect these variations. It may be that the variation is shunted off in feed prices.

The above table shows that the average cost of the wheat used for the four-year period was $9.01 per barrel of flour produced, whereas the cost of the flour itself was only $8.85, or $0.16 per barrel less. That is, the cost of milling the wheat, which amounted to $1.09 per barrel of flour produced, was more than offset by the amount received for the feed produced, which amounted to $1.25 per barrel. The mountain and coast district had the lowest cost of wheat for the period, $8.17 per barrel of flour produced, and also for three out of the four