Chart 3-COMPARISON OF THE ANNUAL AND 10 YEAR AVERAGE MILL COST and principal items of Cost of Wheat Flour, per barrel, for 28 representative lo rada Flour Milling Companies 1913-1922. 10 Year $ Average 10 Year Average 2 for 28 identical companies combined for the 10-year period 1913-1922. The data upon which this chart is based are shown in Appendix Table 12, p. 120. The total annual average mill cost of producing a barrel of wheat flour 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 were 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 in producing a barrel of flour and the by-products made in connection therewith. The outstanding features shown by the chart are (1) the large proportion of the total cost of a barrel of flour which is represented by the wheat cost, and (2) the small proportion due to labor. For every year, excepting 1922, and for the 10-year period the cost of packages was the second largest single item. CHAPTER VI WHEAT-FLOUR PRICES Section 1. Method of distribution. The sections of the country where a surplus of wheat is produced and the bulk of the flour is manufactured, as shown in the preceding chapters, include the northwestern and southwestern districts. The principal milling centers in these districts are Minneapolis and Kansas City. From these and other milling centers the product is distributed by rail and water routes to domestic markets or goes into the export trade. The jobbing trade is important, especially in eastern markets, but there is a considerable direct trade with retail grocers and bakers. The grocery store is the chief source of local flour supply for the inhabitants in the cities, small towns, and villages throughout the United States. In the larger cities especially the bakers are also important purchasers of flour, generally buying in carload lots. Bakers often purchase their supplies directly from the flour millers, but more frequently various types of middlemen, such as brokers, jobbers, or wholesalers, intervene and really form the connecting link between the producers and the larger consumers. Some of the larger mills maintain branch houses at populous distributing points throughout the country and supply the retail and bakery trade directly in this way. A considerable portion of the population purchase their supplies of flour directly from the local flour mills, which are found in many sections of the country, especially in the wheatgrowing areas where suitable sources of water power are available. The local demand for feed, such as bran and middlings, for domestic animals is also an important factor leading to the establishment of these mills. In the distribution of flour, bags of cotton, jute, or paper, or barrels of wood are used, varying in contents from a minimum of 2 pounds to a maximum of 196 pounds. Comparatively little flour is now distributed in wooden packages, because wooden containers are more expensive and packages of smaller size facilitate handling and sale. Domestic prices are quoted on the basis of a barrel of 196 pounds packed in 98-pound cotton bags, while in the foreign trade a jute bag containing 140 pounds or a sack of 280 pounds is chiefly used as a basis for price quotation, especially in English-speaking countries. In shipments to Latin countries in Europe and South America price quotations are frequently made on the basis of 100 kilograms or 220.5 pounds, while for Cuba the usual price quotation is for a 200pound unit. The legal regulations and requirements regarding the weight of flour packages in domestic trade are discussed in the following chapter. Section 2. Prices of wheat flour reported by millers, 1919-1922. In order to secure more exact information with respect to flour prices, the principal flour-milling companies were requested to furnish their price quotations to the trade for first-grade family patent flour, with dates of change for the period 1919-1922. From these data monthly average prices were computed which are shown in the table below. These averages were computed by multiplying each price by the number of days that it was in effect, and dividing by the number of days in each month. During 1919, while wheat prices were still under Government control, flour prices were stable, but in 1920, 1921, and 1922, when there were rapid fluctuations in the market price of wheat, millers made frequent changes in their quotations. In many cases, especially in 1920 and 1921, there were more than 20 changes in the price quotations during a month, and in a number of instances some mills reported two changes in a single day. The following table shows the monthly average wheat flour prices, based upon quotations secured from flour-milling companies, for the northwestern and southwestern wheat flour-producing districts for the period 1919-1922. TABLE 30.-Monthly average price quotations per barrel for first-grade family patent wheat flour, reported by millers by districts, 1919–1922 1 Monthly average prices computed from price changes reported by various flour-milling companies. 'January, 1919-100. According to the table there was a rapid increase in wheat-flour price quotations in the northwestern district from an average of $10.31 per barrel in January, 1919, to the maximum of $15.66 per barrel in May, 1920. This advance was very sharp from September to May, during which time there was a rapid advance in wheat prices. The unprecedented price decline in wheat, which began in June, 1920, led to a precipitate decline in flour prices, which fell to an average of $9.39 per barrel in December, a decrease of $6.27 per barrel in seven months. Prices fluctuated somewhat during the first half of 1921, but beginning in July a decline set in which continued through January, 1922. During the following six months the tendency was toward a slightly higher level, the average being about $1 barrel higher than for January. Beginning in August there was a sharp decline, which culminated in the lowest monthly average price for the four-year period, $6.88 per barrel in September, after which there was a moderate advance to an average of $7.20 in December. per The monthly average price quotations in the southwestern district were considerably lower than for the northwestern district, with the single exception of November, 1920. The maximum difference in the monthly average prices was $2.50 per barrel in April, 1920. During the year 1919 the spread between the two districts increased from $0.23 per barrel to $2.40 per barrel, while after the price decline set in this difference gradually lessened." The monthly average with minor fluctuations ranged from $10.08 per barrel in January, 1919, to the peak price of $13.32 in May, 1920, after which a sharp decline set in which continued through December, when the average was $8.91 per barrel. During 1921 and 1922 prices in the southwestern district generally followed the same trend as the northwestern district, until the minimum average price of only $5.79 per barrel was shown for September, 1922, which was followed by an advance to an average of $6.21 per barrel in December. Section 3. Quoted market prices of wheat flour, 1913-1923. The course of wheat-flour prices during the four and one-half year period, 1919-1923, is discussed in this report, and also for the preceding six-year period, 1913–1918, in order that a proper perspective may be obtained. The unusual conditions affecting all prices during the World War, including abnormal demand, comparatively limited production, lack of transportation facilities, the extraordinary increase in the hazards of ocean transportation, and the various price fixing and other regulations adopted by all the belligerents had the effect of disorganizing all the markets and the channels of distribution. The United States Food Administration, which was established August 10, 1917, continued to function until May, 1919, although certain activities were discontinued December 20, 1918, shortly after the armistice on November 11, 1918. The United States Grain Corporation, on the other hand, continued to operate until May, 1920, and thus indirectly, but in an important way, the production and prices of flour were affected by its activities. Furthermore, prior to the declaration of war by the United States on April 7, 1917, the World War had continued for about three years, during which time this country as a neutral nation was forced to contend with many difficulties in attempting to maintain the usual channels of foreign trade, particularly with other neutral countries located in the vicinity of the warring nations. Consequently, in order to begin with a more normal period when the usual competitive conditions controlled the commerce of the world, the tabulation of the prices was extended backward to include 1913. PRICE QUOTATIONS AT MINNEAPOLIS.-The location of Minneapolis in the immediate vicinity of the great spring wheat growing area with many flour mills operating in that neighborhood indicated the selection of the flour prices at this market for the |