wrought by floods, or (particularly in the case of potatoes, apples, and similar products) the inroads of insects or fungus enemies of the stored goods, extraordinary heat or cold, and the like. It may be lowered by the advent of some depressing influence upon demand, such as the decreased purchasing power of some important section of the consuming public, due perhaps to unemployment or the lowering of wages. On the other hand, its level may be advanced by the education of the public concerning the merits of the given commodity, or even through the changes of fashion or the spread of a food fad.

The war has given us an unusually lively appreciation of the effect of such influences upon both the supply and the demand side of our price adjustment problems. All that need be said here is that the price which is normal today becomes abnormal in terms of the equation of tomorrow's altered supply to the predicted demand or of this known supply to a suddenly expanded or contracted demand. Obviously the force of such changes cannot be instantly transmitted to every local trading center, but it must be the test of an adequate market organization that the fluidity of both supply and demand be kept at the highest possible point, so that the sudden increase of demand at one point be met by the. prompt drawing of supplies from other places in proportion as their supply-demand ratio has given them a lower level of price; and that any relatively plethoric supply, instead of exerting its depressing influence wholly upon the local market, shall be so redistributed as to dissipate its force in the lowering of the price level of all markets uniformly. Evidently, the action of shrewd traders or efficient marketing organizations and the effect of such a market news service as that being developed by the United States Department of Agri

culture are potent forces operating in this direction, but with a notable difference in their effects. The private agency seeks to derive the maximum personal profit from its operations, and whatever corrective readjustment takes place is incidental, whereas the public intelligence service aims primarily at forestalling that abnormality of price out of which the professional trader would otherwise extract a profit-surplus.1

In summary, then, all prices may be represented as constituting a price body of three dimensions, its length connoting the time phase and its cross section embracing all prices for the given article at a moment. All these are actual or market prices, effected by the equating of some units of supply with an equal volume of effective demand. But every such price is to be appraised ideally as to the degree of its normality measured in terms of a perfectly functioning economic process. This critical examination in practice does and in theory should concern itself with two matters, not merely the proper adjustment of production for the market, but likewise with the proper adjustment of distribution in the market. Market adjustment normality demands that upon any cross section we shall have prices at a moment so adjusted to each other, rationally and consistently (in view of market charges necessary with existing equipment) that all supply and all demand units shall count each for its proper weight in the price equilibrium.

For intervals of time within which conditions of supply are fixed, the distribution-normal demands that time differences shall not be greater than those necessitated

In the absence of such informational service, the consuming public is likely to be held up to a high level of price on the justification of local scarcity, at the same time that the producing section which has enjoyed a good growing season is being held down to as low a level as possible on the basis of that local abundance. The quick dissemination of thorough and accurate knowledge concerning market conditions which sometimes change rapidly and radically is necessary if prices are to be kept anywhere near their distribution-normal.

by carrying charges or justified by changes which have come about through the loss of part of the stock or through modifications in the demand. For agricultural products, the "season's normal" predicates the correct discounting of such conditions over the market distribution period until the next harvest but, where new factors are introduced during that time, the prompt revision of price schedules. In this longitudinal section are revealed also the alignment and realignment of prices with costs of production, whenever opportunity offers to increase the profitable or decrease the unprofitable line of production. Marshall has pointed out three phases of the production-adjustment normal of price, viz., short-time, long-time, and secular movements. A similar threefold division might also be made of the distribution-normal concept, as follows:

I. Prices normal in the sense of being the best equilibration of supply and demand possible with the imperfect market equipment of the present.

II. Prices normalized through adjustment by a market mechanism remodeled in the light of a previously unsatisfactory price situation. The improvements of storage and transportation facilities, better financial arrangements, and more efficient commercial organization of trading agencies exemplify this phase clearly in the case of agricultural products during the last few decades.

III. Prices readjusted through slow-moving changes in the market attitude of both producers and consumers, such as the education of sellers in the fundamental principles in accordance with which the price-making system operates and, more concretely, the character of demand in those places to which they look for a market; or changes in the standard of living, the rovings of taste and custom, and the education of buyers as to the in

trinsic qualities of the goods which they consume. The study of the marketing of farm products, the teaching of home economics, and the Food Administration have contributed to our understanding of this third phase in recent years.

In II and III there is revealed a distinct rapprochement between the market-distribution and the production-adjustment concepts of normal price. We are well aware that readjustments in production react upon the distributing machinery, while every modification of the exchange process exerts a reciprocal influence upon the productive organization. Thus, defects in our marketing system may so depress the price of a given commodity at some points as to cause returns to fall below the cost-of-production normal, thus forcing certain of the less favored producers out of the field, at the same time that the normal equilibrium of existing supply and demand would set the price at a point high enough to continue them in the business on a prosperous basis. Or, on the other hand, an abnormal exchange situation might so inflate prices as to retain producing units whose withdrawal would be indicated, were the normalizing influence of profit-seeking adjustment on a cost-of-production basis not obscured by this abnormal market situation. Each change in production creates a new market problem; each readjustment of the exchange mechanism alters in some measure the terms of the producer's problem.

There should be no discontinuity in our concept of the normalizing process, from the most local and ephemeral adjustment of even one unit of supply to one unit of demand, up through the harmonizing of the single value estimate so struck with others elsewhere, so that the whole stock may be valued in exchange upon a consistent basis; from this to the yet remoter idea of mak

ing this level of values fit harmoniously into the whole scheme of market values by being made (through the checking or acceleration of the rate of supply) to correspond with the market prices of their component cost goods. So to complement the cost-of-production with the analagous market-distribution normal is not to present merely an engaging abstraction for the theorist to toy with but, on the contrary, to enunciate the value principles which must govern the practical endeavors of business men in adjusting our machinery of market production and exchange. It expresses the essential truth which, sometimes crudely and of course intuitively, the farmer has had in mind when demanding relief from the erratic fluctuations of the markets in which his products are sold. It has lain back of the efforts of the Food Administration and other agencies to "stabilize" values during the war period. Likewise, it must underlie whatever truly sound work shall be done in the future toward improving the conditions of our agricultural organization, through equalization of shipments, dissemination of complete market news, intelligent proportioning of producers' efforts and outlays, upon which a truly healthy development of the industry must depend.

It is a highly practical proposition because it is sound economic theory.

IOWA STATE COLLEGE.

E. G. NOURSE.