years, yet the mill cost of flour for this district was $8.43 per barrel, or $0.02 higher than for the southwestern district. The southwestern district had next to the lowest wheat cost but had lower operating costs and a larger feed credit than the mountain and coast district, which resulted in its having a lower flour cost. The northwestern district had the highest wheat cost for the period, $9.38, which was $0.16 higher than for the southeastern district, but its flour cost was only $0.08 higher, or $9.10 per barrel. The operating costs in the southeastern district were greater than similar costs in the northwestern district, but the feed credit more than sufficed to offset the larger operating costs.

Labor cost averaged $0.25 per barrel for the period and there was little variation between the districts, except in the case of the mountain and coast district, where it was $0.36, or $0.11 per barrel higher than in any other district. The labor cost in this district was at least 8 cents higher than any other district in every year, and in 1921 it was $0.19 higher. It ranged from $0.31 per barrel in 1919 to $0.45 in 1921, a difference of $0.14. The variation in the central and eastern district, however, was nearly as great, being $0.13, varying from $0.17 in 1922 to $0.30 in 1920, yet this district had the lowest average labor cost for the period, $0.22 per barrel. The least variation was in the southwestern district, which varied only $0.05 per barrel, being $0.21 in both 1919 and 1922 and $0.26 in the other two years.

The item of other milling expense showed considerable variation, the central and eastern district being the lowest in each year, ranging from $0.12 per barrel in 1922 to $0.15 in 1920 and averaging $0.13. The highest district in each year was the mountain and coast district, which fluctuated from $0.19 per barrel in 1922 to $0.22 in the other three years, with an average of $0.21 per barrel. The other districts averaged a little lower.

Depreciation was not adjusted by the commission but was accepted as charged by the companies. Naturally this resulted in considerable variation by districts, yet the average for all districts. combined for the four-year period is 3 cents a barrel, which is what the United States Food Administration allowed the millers to charge during the war period. The northwestern and central and eastern districts each averaged 2 cents per barrel, which is practically what they charged in each year of the period. The southeastern district, however, had the high average charge for depreciation of $0.07 per barrel, charging $0.06 per barrel in 1919 and 1920 and $0.09 in the other two years. The mountain and coast and southwestern districts averaged $0.06 and $0.05 per barrel, respectively.

The largest element of manufacturing cost apart from the wheat itself is the cost of packages. The most striking feature is the high cost in the southeastern district, particularly in 1920, when it was $0.74 per barrel, or $0.19 higher than for any other district. For the entire four-year period it had the highest average, $0.52 per barrel, which was $0.07 higher than the mountain and coast average. The northwestern district had the lowest average cost of packages with a cost of $0.39 per barrel, which was 1 cent lower than for the southwestern and for all districts combined. By years

these districts were almost the same, except in 1921, when the southwestern was $0.10 higher.

General expense showed great variations, both the southeastern and southwestern districts being high. The southeastern district was highest in each year and averaged $0.34 per barrel, while the southwestern, which was next to the highest in each year, averaged $0.28 per barrel. The northwestern district had the lowest general expense in two years and the lowest for the period with $0.19 per barrel. The other two districts averaged $0.02 per barrel higher. The average for the period for all districts per barrel was $0.22.

The credit for feed fluctuates with the cost of wheat. It averaged $1.25 per barrel of flour produced for the four-year period, varying from $1.03 in the mountain and coast district to $1.56 in the southeastern district. In fact, the mountain and coast district had the smallest feed credit in all but one year, whereas the southeastern had the largest in each year. The highest wheat cost was in 1920, which resulted in the highest feed credits, varying from $1.35 in the mountain and coast district to $2.14 in the southeastern. The lowest wheat cost was in 1922, which resulted in the lowest feed credit, ranging from $0.60 in the mountain and coast district to $1.15 in the southeastern. The maximum variation in the average feed credit for the other three districts for the period was $0.13, ranging from $1.18 in the central and eastern to $1.31 in the northwestern district.

The average net mill cost for the period showed a variation of $0.69 per barrel, ranging from $8.41 in the southwestern district to $9.10 in the northwestern district. The cost of the mountain and coast district was only a trifle higher than the southwestern district in this respect, while the other two districts were nearly as high as the northwestern.

Section 6. Comparison of cost per barrel by companies.

During each year of the period 1919-1922 there was a wide range in the per-barrel cost of producing flour for individual companies. It has already been shown that the largest item in the cost of a barrel of flour is the cost of the wheat. The price of wheat varies widely in different sections of the country, chiefly due to the kind of wheat, its quality, and proximity to market. There was also considerable difference in elements of milling cost for individual companies. For the four-year period the milling costs ranged from a maximum of $13.99 per barrel in 1920 to a minimum of $4.87 per barrel in 1922. Appendix Table 7 shows the cost by individual companies arranged from the lowest to the highest. To facilitate a study of costs the companies have been arranged in cost groups, each covering a range of $1 in cost, as is shown in the following table:

TABLE 23.-Number of companies, average production per company, and proportion of wheat flour produced at specified cost groups, 1919–1922

The above table shows that in 1920 the majority of companies had high costs; 56 companies producing 43 per cent of the wheat flour had a cost of $11 or more per barrel. In 1922 the majority of companies had low costs; 56 companies producing about 59 per cent of the total had costs of less than $6 per barrel. Only one company in one other year had a cost below $6 per barrel. In two years, however, there were other companies with costs in excess of $11 per barrel, six in 1919, and five in 1921.

In 1919 the cost averaged $9.96 per barrel and ranged from $8.67 to $11.42. Only one company had a cost below $9 while for six the costs were above $11. More than half of the companies with over 43 per cent of the production had costs ranging between $9 and $10 per barrel, while 41 companies producing nearly 55 per cent of the total had costs ranging from $10 to $11 per barrel.

In 1920, the year of highest costs and highest returns, the costs averaged $10.98 per barrel and ranged from $8.61 to $13.99. No single cost group as shown in the table contained a majority of the companies or of the production, but the greatest number was in the $11 to $12 group with over 30 per cent of the total output, while 32 companies with costs ranging from $10 to $11 per barrel produced nearly 40 per cent of the total.

In 1921 the costs averaged $8.43 per barrel and ranged from $4.90 per barrel for one company, which was the only company below $6, to $11.69, there being five companies above $11. Only about onefourth of the companies appeared in any one group, 29 of them producing about 64 per cent of the total, having a cost of from $8 to $9 per barrel.

In 1922 the costs averaged $5.97 per barrel and ranged from $4.87, the lowest of the entire four-year period, to $8.12. There were, however, four companies with a cost below $5 per barrel. More than half of the companies producing 53 per cent of the total output had a cost between $5 and $6 per barrel.

In general the table also shows that for each year excepting 1922 the largest companies as a class had intermediate costs and that certain small companies had the lowest costs, while other small companies had the maximum costs. In 1922 one of the largest companies was in the low-cost group. In 1921 the range in cost for the large companies was from $8 to $9 per barrel, and 29 companies in that group with an average annual production of over 1,000,000 barrels, produced nearly 64 per cent of the total output of the 107 companies. Section 7. Graphic presentation of individual costs.

Chart 2 (opposite) shows in graphic form the principal ele ments of the cost of producing a barrel of flour by companies, while the data upon which the chart is based are given in Appendix Table 8, page 113. The year 1922 was selected partly because it was the most recent one and partly because it appears to have been an average year. In 1922 the average rate of return for the milling business for all companies covered was 10.9 per cent, while the average for the four-year period, including both profitable and unprofitable years, was 10.6 per cent.

The principal elements of the mill cost of producing a barrel of wheat flour, in the order of their importance are (1) wheat, (2) packages, (3) labor, and (4) general expense. The amount of depreciation charged in flour milling costs is very small, and all other milling costs constitute only a small proportion of the total. Chart 2 shows separately the wheat, package, and labor costs, while the general expense, depreciation, repairs, and other expenses are included in "Other costs."

The mill cost of producing a barrel of wheat flour for each company is shown by the height of the column above the zero line, while the portion below the zero line represents the amount of receipts from by-products (i. e., bran, shorts, middlings, etc.), which was credited to the total cost of producing flour and feed. The total length of the black portion of the column both above and below the zero line represents the total or gross cost of the wheat used by each company in producing a barrel of flour and the by-products made in connection therewith.

The relative importance of each company's production in 1920 is indicated by the width of each column. Three groups are designated, the widest column being used for the largest production group; these groups are (1) companies producing 1,000,000 barrels or over, (2) companies producing from 300,000 to 1,000,000 barrels, and (3) companies producing under 300,000 barrels in 1922..

The chart shows that the bulk of the cost of a barrel of flour is the cost of the wheat, while for most companies the next most important item is the cost of packages. The item of packages differed greatly for individual companies, depending upon differences in method of sales. One company, for example, which sold most of its flour in bulk had a very low package cost. The chart also shows that the labor and other costs, including general expense and depreciation, varied greatly for individual companies.