FLUID MILK PRICE CONTROL IN WORLD WAR II: OPA-REGION 5

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University Micrdrilms International 300 N. ZEEB RD.. ANN A R B O R . Ml 4 8 106

8204389

S ee l y e , A l f r e d L .

FLUID MILK PRICE CONTROL IN WORLD WAR II:

Indiana University, Graduate School o f Business

University M icrofilm s International

300 N. Zeeb Road. Ann Arbor, MI 48106

OPA-REGION 5

D.C.S. 1950

FLUID Li ILK PRICE CONTROL IN WORLD Y/AR I I :

OPA-REGION 5

3Y ALFRED L. SEELYE

A D i s s e r t a t i o n S u b m itte d in P a r t i a l F u lf ill m e n t o f t h e R eq u irem en ts f o r t h e D eg ree o f D o c to r o f Com m ercial S c ie n c e i n t h e S c h o o l o f B u s in e s s o f In d ia n a U n iv e r s it y

INDIANA UNIVERSITY 1950

ACCEPTANCE

T h is D i s s e r t a t i o n h a s b een a c c e p te d i n p a r t i a l f u l ­ f i l l m e n t o f th e r e q u ir e m e n ts f o r t h e D eg ree o f D o cto r o f Com m ercial S c ie n c e i n t h e S c h o o l o f B u s in e s s o f In d ia n a U n i v e r s it y .

D a te

l

L( j i f & C l

D e a n /S ic h o o l o f B u s in e s s

Chairman

Member

Member

r

Member

PREFACE

T h is d i s s e r t a t i o n i s t h e r e s u l t o f a r e s e a r c h p r o j e c t u n d e r ta k e n from November 1946 t o May 1 9 4 7 , on b e h a lf o f t h e f e d e r a l g o v ern m en t.

At t h a t tim e t h e a u th o r was com m ission ed

t o w r it e t h e o f f i c i a l h i s t o r y o f f l u i d m ilk p r i c e c o n t r o l d u r in g World War I I i n OPA-Region 5*

The fu n d s made a v a i l a b l e

a t t h a t tim e e n a b le d t h e a u th o r t o r e v ie w p r i v a t e in t e r n a l r e c o r d s o f t h e O f f i c e o f P r ic e A d m in is tr a tio n i n D a l l a s , T exas and W ash in gton , D. C.

T h is r e s e a r c h t a s k to o k a p p ro x im a tely

t h r e e m onths and, a lth o u g h much p e r t in e n t I n fo r m a tio n was ob­ t a i n e d , many im p o rta n t t y p e w r it t e n p o l i c y memoranda had by t h a t tim e b een l o s t o r d e s tr o y e d . W ithout t h e b e n e f i t o f t h e a u t h o r 's e x p e r ie n c e i n t h e D a l l a s R e g io n a l O f f i c e o f t h e O f f i c e o f P r ic e A d m in is tr a tio n (from 1942 t o F ebruary 1 9 4 6 ) where h e s e r v e d i n v a r io u s ad­ m in is tr a tiv e p o s itio n s

( f o r t h e l a s t two y e a r s a s head o f t h e

P r ic e D e te r m in a tio n , Econom ic A n a ly s is and Survey S e c t i o n ) , and t h e i n s i g h t he g a in e d w h ile s e r v in g a s a c o n s u lt a n t

(1 9 4 6 -

19^7) t o t h e W ash in gton , D. C ., o f f i c e o f t h e O f f i c e o f P r ic e A d m in is tr a tio n and i t s

s u c c e s s o r a g e n c y , t h e O f f ic e o f Tempo­

ra ry C o n t r o ls , t h e stu d y f o r t h e H i s t o r i c a l R ep o r ts on War A d m in is tr a tio n and t h i s d i s s e r t a t i o n would n o t h ave b een p o s s ib le .

The a u t h o r 's monograph e n t i t l e d , F lu id M ilk P r ic e

C o n tr o l i n R eg io n

(81 p a g e s ) i s now i n t h e N a tio n a l A r c h iv e s ,

W ash in gton , D. C.

The p r e s e n t d i s s e r t a t i o n i s a c o n s id e r a b le

e x p a n sio n and d ev elo p m en t o f t h e o r i g i n a l s tu d y .

The o r i g i n a l

stu d y was a s t r a ig h t fo r w a r d f a c t u a l and h i s t o r i c a l acco u n t w ith l i t t l e

e v a lu a t io n or recom m endation f o r f u t u r e p o l i c y i n

e v e n t o f econom ic war m o b iliz a t io n ; t h i s d i s s e r t a t i o n s t r e s s e s th e se fa c to r s . D u rin g t h e c o u r s e o f t h e a u t h o r 's work on th e o r i g i n a l m a n u s c r ip t, he r e c e iv e d a s s i s t a n c e from many form er o f f i c i a l s in t h e D a ll a s and W ashington o f f i c e s o f th e O f f i c e o f P r ic e A d m in is tr a tio n who had b een co n cern ed Y/ith f l u i d m ilk p o l i c y . T h e ir r e c o l l e c t i o n o f s p e c i f i c i s s u e s and p o l i c y d e c i s i o n s was o f c o n s id e r a b le a s s i s t a n c e i n a c h ie v in g o b j e c t i v i t y in t h e o r i g i n a l s tu d y , and i s , d is s e r ta tio n .

They in c lu d e :

o f c o u r s e , r e f l e c t e d in t h i s D r. W. H. I r o n s , fo rm erly D a lla s

R e g io n a l O f f i c e P r ic e E con om ist and now V ic e P r e s id e n t , D a lla s F e d e r a l R e se r v e Bank; D r. Emmette S . R ed fo rd , fo rm erly D a lla s R egion al. A s s i s t a n t P r ic e E x e c u tiv e and now P r o f e s s o r o f Governm ent, U n iv e r s it y o f T ex a s; Mr. T. E. F r o s s a r d , fo r m e r ly D a lla s R e g io n a l P r ic e A tto r n e y and now p r a c t i c i n g law i n D a l la s , T ex a s; Mr. Frank H. Weber, fo rm erly D a l la s R e g io n a l M ilk S p e c i a l i s t ; Mr. Max B e a l, fo r m erly C h ie f E co n o m ist, D airy B ranch, W ashington O f f i c e , and now e co n o m ist w ith t h e D ep a rt­ ment o f A g r ic u lt u r e , W ashin gton, D. C .; Mr. M ilt o n ’Q u in t, fo r m e r ly C h ie f C o u n se l, Food D i v i s i o n , W ashington O f f ic e ; D r. R ich a rd H e fe lb o w er , fo r m e rly Economic A d v iso r t o t h e P r ic e

iv

D ep artm en t, W ashington O f f i c e , and now eco n o m ist w ith t h e B ro o k in g s I n s t i t u t e . D r. Emmette S . R ed fo rd , Mr. M ilto n Q u in t, and D r. Harvey C. M a n s fie ld , fo r m er ly C h ie f , P o l i c y A n a ly s is B ranch, W ashington O f f i c e and now P r o f e s s o r and Chairm an, Government D ep a rtm en t, Ohio S t a t e U n i v e r s it y , rea d t h e o r i g i n a l m a n u scrip t (p rep a red f o r t h e N a tio n a l A r c h iv e s ) and o f f e r e d v a lu a b le com m ents, c r i t i c i s m s and s u g g e s t io n s .

G reat b e n e f i t h as b e e n

d e r iv e d from t h e i r c a r e f u l r e a d in g o f t h e o r i g i n a l m a n u s c r ip t. The w r it e r w is h e s t o e x p r e s s h i s a p p r e c ia t io n f o r t h e g u id a n c e p r o v id e d by h i s d o c t o r a l com m ittee i n t h e d e v e lo p ­ ment and p r e p a r a t io n o f t h i s d i s s e r t a t i o n .

D r. A lb e r t H a rin g ,

D r. Law rence L. W a ters, D r. J o se p h A. B a t c h e lo r , D r. James E. M o ffa t, P r o f e s s o r John F . Mee and Dean A rthur M. Welmer g a v e h e l p f u l a s s i s t a n c e and g u id a n c e .

The w r it e r a ck n ow led ges a

p a r t i c u l a r d eb t o f g r a t i t u d e t o D r. H a rin g , Com m ittee Chairman and D r. W a ters, Sub-C hairm an.

T h e ir c a r e f u l r e a d in g o f t h e

m a n u scrip t was m ost b e n e f i c i a l , and t h e i r encouragem ent a c o n s ta n t s o u r c e o f s t i m u la t i o n . A lf r e d L. S e e ly e S ep tem b er, 1950

v

TABLE OF CONTENTS Page LIST OF TABLES........................................................................................ LIST OF ILLUSTRATIONS..............................................................

v iii x

Chapt er I.

INTRODUCTION.....................................................................

1

N a tu r e , S cop e and O b j e c t iv e s o f T h e s is M ethodology Employed G en eral O r g a n iz a tio n s OPA-Reglon 5 P r ic e D i v i s i o n : OPA-Reglon 5 II.

STATUTORY AUTHORITY: OFFICE OF PRICE ADMINISTRATION................................................................

14

Emergency P r ic e C o n tr o l A c t: 1942 S t a b i l i z a t i o n A c t : 1942 O f f i c e o f Econom ic S t a b i l i z a t i o n III.

THE DAIRY INDUSTRY: STRUCTURE AND ECONOMY.................................................................................

21

S p e c ia l C h a r a c te r is tic s IV.

FLUID MILK PRICE CONTROL: INITIAL PROBLEMS..............................................................................

29

The G en eral Maximum P r ic e R e g u la t io n R egion -W id e F lu id M ilk Survey Econom ic B a s i s : Amendment 89 t o S u p p lem en tary R e g u la t io n 1 4 o f t h e G en era l Maximum P r ic e R e g u la t io n Some S p e c i f i c A s p e c ts o f t h e F i r s t D a lla s R e g io n a l F lu id M ilk Regu­ la tio n Summary - F i r s t D a lla s R e g io n a l F lu id M ilk R e g u la t io n V.

INITIAL PROBLEMS UNDER THE FIRST DALLAS REGIONAL FLUID MILK REGULATION........................... Summary:

I n i t i a l P roblem s

vi

99

P age

C h ap ter V I.

THE SECOND DALLAS REGIONAL FLUID MILK REGU­ LATION...................................................................................

111

The Second D a lla s R e g io n a l F lu id M ilk R e g u la t io n F lu id M ilk P roblem s i n 1943 S u b seq u en t t o t h e Second D a ll a s R egional. F lu id M ilk R e g u la t io n Summary V I I.

FLUID MILK PRICE CONTROL: OCTOBER 1 9 4 3 JUNE 1 9 4 6 ............................................................................

137

O f f i c e o f Econom ic S t a b i l i z a t i o n : D i r e c t i v e No. 114 V III.

EVALUATION AMD CONCLUSIONS,

161

E v a lu a tio n : D a lla s R e g io n a l F lu id M ilk Program Summary E v a lu a t io n : B a s ic S ta tu t o r y A u th o r ity and N a tio n a l P o lic y Summary R ecom m endations APPENDIX___

224

BIBLIOGRAPHY

237

v ii

LIST OF TABLES T a b le 1.

Page A verage P r ic e P a id f o r M ilk U t i l i z e d in M a n u fa c tu r in g ......................................

69

P r ic e s P a id f o r F lu id M ilk P e r Hundred­ w e ig h t , Four P e r C ent M ilk ........................................

74

3«

P e r Quart W h o le sa le G ross M a r g i n s . . . . .

79

4.

S c h e d u le o f W h o le sa le and R e t a i l P r ic e s E s t a b lis h e d i n F i r s t D a lla s R e g io n a l F lu id M ilk R e g u la t io n ..................... ............................................

85

5.

P r ic e s o f S e l e c t e d Farm P r o d u c t s . ...................

88

6.

In d ex o f S e l e c t e d F eed P r i c e s . . . . . . . . . . . . . .

89

7.

S c h e d u le o f W h o le sa le and R e t a i l F lu id M ilk P r ic e s in t h e Second D a lla s R e g io n a l F lu id M ilk R e g u l a t i o n . . . . .....................

122

8.

D a ir y S u b sid y P a y m en ts..................................................

134

9.

P e r Quart P r i c e s June 3 0 , 1946 and O ctob er 1 , 1 9 4 6 , Amount o f P r ic e I n c r e a s e , and I n c r e a s e i n E x c e ss o f S u b sid y P aym en ts, f o r S e l e c t e d K ansas C i t i e s ................

152

P er Quart P r ic e s June 3 0 , 1946 and O cto b er 1 , 1 9 4 6 , Amount o f P r ic e I n c r e a s e , and I n c r e a s e i n E x c e ss o f S u b sid y P aym en ts, f o r S e l e c t e d M is s o u r i C i t i e s ...................................

153

P e r Quart P r i c e s June 3 0 , 1946 and O cto b er 1 , 1 9 4 6 , Amount o f P r ic e I n c r e a s e , and I n c r e a s e i n E x c e ss o f S u b sid y P aym en ts, f o r S e l e c t e d L o u is ia n a C i t i e s ...................

155

P e r Quart P r ic e s June 3 0 , 1946 and O ctob er 1 , 1 9 4 6 , Amount o f P r ic e I n c r e a s e , and I n c r e a s e i n E x c e ss o f S u b sid y P aym en ts, f o r S e l e c t e d A rk an sas C i t i e s ...................

156

P er Quart P r i c e s June 3 0 , 1946 and O ctob er 1 , 1 9 4 6 , Amount o f P r ic e I n c r e a s e , and I n c r e a s e i n E x c e ss o f S u b sid y P aym ents, f o r S e l e c t e d Oklahoma C i t i e s ...................

157

2.

10.

11.

12.

13*

viii

T a b le 14.

P age P e r Quart P r ic e s June 30, 1946 and O ctober 1 , 1 9 4 6 , Amount o f P r ic e I n c r e a s e , and I n c r e a s e i n E x c e ss o f S u b sid y P aym en ts, f o r S e l e c t e d T exas C i t i e s . . . . .

158

15*

K ansas:

181

16.

M is s o u r i: M onthly M ilk P r o d u c tio n on Farm s...................................................................

182

Oklahoma: M onthly M ilk P r o d u c tio n on Farm s........................................... ....... ........................

183

18.

T ex a s:

184

19«

T o ta l A m erican C h eese Produced A n n u a lly : 1 9 3 8 -1 9 4 5 .......................................................................................

17*

20. 21. 22. 23.

M onthly M ilk P r o d u c tio n on F a r m s..

M onthly M ilk P r o d u c tio n on F a r m s ...

186

P r o d u c tio n o f E vap orated Whole M ilk — C ase Goods: 1 9 3 8 -1 9 4 5 .............................................................

187

P r ic e s R e c e iv e d by Farm ers f o r M ilk a s P e r c e n ta g e s o f P a r it y : 1 9 4 2 - 1 9 4 6 ..........

198

T o ta l S upply and U t i l i z a t i o n o f M ilk in t h e U n ite d S t a t e s 1 9 3 9 , and. 1 9 4 2 - 1 9 4 6 . . . . . .

211

M ilit a r y and C i v i l i a n C onsum ption: S e l e c t e d M anufactured D a iry P r o d u c ts and F lu id M ilk and Cream: 1 9 3 6 -1 9 4 6 ...........................

ix

214

LIST OF ILLUSTRATIONS

F ig u r e 1. 2.

P age G en eral O r g a n iz a tio n a l S t r u c t u r e : OPA-Region 5 ........................................................................... O r g a n iz a tio n a l S t r u c t u r e : OPA-Region 5 ............

x

8

P r ic e D i v i s i o n 11

CHAPTER I INTRODUCTION

D u rin g World War I I and f o r a s h o r t tim e t h e r e a f t e r t h e economy o f t h e U n ite d S t a t e s was s u b j e c t e d t o a l a r g e m easure o f Government r e g u l a t io n and c o n t r o l .

The u n p re­

c e d e n te d m agn itu d e o f t h e s t r u g g l e , t h e u r g e n t n eed t o m obi­ l i z e q u ic k ly and e f f e c t i v e l y c a l l e d f o r a c o m p le te sy n c h r o ­ n i z a t i o n o f our i n d u s t r i a l r e s o u r c e s and econom ic l i f e h e r e ­ t o f o r e unknown i n t h e U n ite d S t a t e s .

I n t h i s t o t a l war t h e

f e d e r a l g overn m en t, th r o u g h t h e e x e r c i s e o f i t s

em ergency

war p o w er s, c o n t r o l le d and r e g u la t e d i t s c i t i z e n s i n n e a r ly a l l a sp e c ts o f t h e ir d a ily l i f e .

M onetary and f i s c a l p o l i ­

c i e s , manpower and wage r e g u l a t i o n s , m andatory r e s t r i c t i o n or c o m p le te c u r t a ilm e n t o f some consum er g o o d s, a l l o c a t i o n o f g ood s t o in d u s t r y , s p e c i f i c m andatory r e q u e s t s f o r p r o ­ d u c t io n o f c e r t a i n n eed ed it e m s , p r i c e c o n t r o l and r a t i o n i n g w ere t h e m a n ifo ld r e g u la t o r y m easu res u t i l i z e d by t h e f e d e r a l governm ent t o m axim ize t h e e f f e c t i v e n e s s o f our econom ic p o te n tia l.

N a tu re, S cop e and O b j e c t iv e s o f T h e s is I t i s t h e p u r p o se o f t h i s t h e s i s t o i n v e s t i g a t e and a n a ly z e one a r e a o f our econom ic m o b iliz a t io n : o f f l u i d m ilk .

p r ic e c o n tr o l

T h is i n v e s t i g a t i o n and a n a l y s i s i s c o n f in e d

t o t h e m eth o d s, p r o c e d u r e s , and t e c h n iq u e s d e v e lo p e d i n t h e 1

2 O f f ic e o f P r ic e A d m in is tr a tio n R eg io n 5 , c o n s i s t i n g o f t h e s t a t e s o f K an sas, Oklahoma, T e x a s, M is s o u r i, A rk a n sa s, and L o u is ia n a .

T h is p a r t i c u l a r a r e a was s e l e c t e d f o r t h e f o llo w ­

in g r e a s o n s : 1 . I t was t h e c o n c e n su s o f O f f ic e o f P r ic e A dm inis­ t r a t i o n o f f i c i a l s i n W ashington t h a t f l u i d m ilk p r i c e c o n t r o l p rob lem s w ere more e f f e c t i v e l y h a n d led i n OPA-Region 5 , th a n i n any o th e r p a r t o f th e c o u n tr y . 2 . The o r i g i n a l m eth o d s, p r o c e d u r e s , and t e c h n iq u e s d e v e lo p e d i n OPA-Region 5 had an im p o rta n t in f lu e n c e i n W ashington on n a t io n a l f l u i d m ilk p r i c e c o n t r o l p o lic ie s . 3 . The s o u t h e a s t e r n s e c t i o n o f t h e U n ite d S t a t e s s u b s e q u e n tly f o llo w e d t h e OPA-Region 5 p la n o f p r i c e c o n t r o l f o r f l u i d m ilk . I n a d d it io n t o t h e t h r e e r e a s o n s g iv e n ab ove f o r s e ­ l e c t i n g OPA-Region 5 a s t h e a r e a o f i n v e s t i g a t i o n and a n a l y s i s , f u r th e r f a c t o r s i n f l u e n c i n g t h e s e l e c t i o n o f t h e com m odity, f l u i d m ilk , a s t h e s u b j e c t o f t h i s t h e s i s a r e : 1 . F lu id m ilk p r e s e n te d many u n iq u e p r i c e c o n t r o l p r o b lem s. 2 . F lu id m ilk p r i c e c o n t r o l p rob lem s r e v e a le d b a s ic s t a t u t o r y l i m i t a t i o n s on t h e a u t h o r it y and Judgment o f t h o s e empowered w ith t h e a u t h o r it y t o c o n t r o l p r ic e s .

3

3 . F lu id m ilk p r i c e c o n t r o l r e v e a le d t h e problem s o f c o n t r o l l i n g p r i c e s when p r o d u c e r s o f t h e com­ m od ity had a l t e r n a t i v e m a r k e ts, i .

e .,

f l u i d m ilk

m a r k e ts, m a n u fa c tu r in g m ilk m a r k e ts. 4 . F lu id m ilk p r i c e c o n t r o l r e v e a le d in h e r e n t d i f f i ­ c u l t i e s i n c o n t r o l l i n g t h e p r i c e i n one m arket ( f l u i d m ilk ) and n o t i n an a l t e r n a t i v e m arket (m a n u fa c tu r in g ). 5» F lu id m ilk p r i c e c o n t r o l r e v e a le d t h e problem o f r i g i d l y c o n t r o l l i n g p r i c e o f end p ro d u ct ( f l u i d m ilk ) and n o t r i g i d l y c o n t r o l l i n g i t s m ost im p ortan t c o s t c o n s titu e n t

(fe e d ).

S in c e to d a y i s a p e r io d when t h e p o s s i b i l i t i e s o f war i n t h e n ea r f u tu r e ca n n o t b e u n d e r e s tim a te d , t h e need f o r i n v e s t i g a t i o n and a n a l y s i s o f a l l econom ic m easu res u se d i n World War I I , w ith a v ie w o f f in d in g and s u g g e s t in g im prove­ m e n ts, becom es p e r t i n e n t .

I t i s t h e a u t h o r ’ s hope t h a t t h i s

I n v e s t i g a t i o n and a n a l y s i s o f f l u i d m ilk p r i c e c o n t r o l i n OPAR e g io n 5 w i l l sh ed some l i g h t on a com plex s u b j e c t , and p e r ­ h ap s a f f o r d a b a s i s f o r more e f f e c t i v e and e q u it a b le c o n t r o l o f t h i s im p o r ta n t com m odity, i f e v e r a g a in t h i s co u n try i s c a l l e d on t o m o b iliz e i t s econom ic f o r c e s i n t o t a l w ar.

M eth od ology Employed As s t a t e d i n t h e P r e f a c e , t h i s stu d y was made p o s s i b l e by a g r a n t o f fu n d s from t h e f e d e r a l g o v ern m en t.

W ithout t h i s

f i n a n c i a l su p p o rt a stu d y o f t h i s ty p e would h ave b een

4 I m p o s s ib le , s i n c e I t was n e c e s s a r y t o spend c o n s id e r a b le tim e i n W a sh in g to n , D . 0 . , and D a l l a s , T e x a s .

I n t h e s e c i t i e s con ­

s u l t a t i o n w ith form er o f f i c i a l s o f t h e O f f i c e o f P r ic e A dm inis­ t r a t i o n , who g a v e f r e e l y o f t h e i r t im e , was e x tr e m e ly h e l p f u l 1 and much in fo r m a tio n was o b ta in e d i n t h i s m anner. A ll a v a il­ a b le r e c o r d s , su c h a s p o l i c y memoranda, econom ic d a t a , e t c . w ere a l s o exa m in ed .

One o f t h e g r e a t d i f f i c u l t i e s i n a tte m p t­

in g a stu d y o f t h i s t y p e i s th e ephem eral n a tu r e o f much p e r t i n e n t i n t e r n a l r e s e a r c h d a ta o f t h e n a t io n a l war a g e n c ie s . W ith t h e t e r m in a t io n o f t h e O f f i c e o f P r ic e A d m in is t r a t io n 's a c t i v i t i e s , a l a r g e q u a n tit y o f t y p e w r it t e n m a te r ia l was l o s t or d e s t r o y e d .

The N a tio n a l A r c h iv e s to o k o v e r and h ave

a v a i l a b l e a l l o f t h e p r in t e d r e g u la t io n s and some o f t h e Im p ortan t t y p e w r i t t e n m a t e r i a l s .

U n fo r tu n a te ly f o r t h e r e ­

s e a r c h e r , t h e r e g u l a t i o n s t e l l o n ly "what was done" and t h e im p o r ta n t p o l i c y d e c i s i o n s r e g a r d in g "why and on what grounds i t was d one"— t h e b a s i c r e s e a r c h b eh in d t h e r e g u l a t io n h a s , i n many i n s t a n c e s , b e e n i r r e t r i e v a b l y l o s t .

A lth ou gh a l l

a v a i l a b l e docum entary e v id e n c e h a s b e e n exam ined ( i n t h e N a tio n a l A r c h iv e s ) , d i s c u s s i o n s w ith form er h ig h o f f i c i a l s i n t h e O f f i c e o f P r ic e A d m in is tr a tio n have b e e n o f in e s t im a b le v a lu e .

W ithout r e c e i p t o f t h e i r e x t e n s iv e k n o w led g e, t h e

c o n te n t o f t h i s t h e s i s w ould have s u f f e r e d a d i s t i n c t l o s s i n o b j e c t i v i t y and d e t a i l . 1 . S ee P r e f a c e f o r f u l l ack now ledgm ent.

5

T h is t h e s i s t a k e s up t h e s u b j e c t o f f l u i d m ilk p r i c e c o n t r o l i n t h e c h r o n o lo g ic a l o r d e r o f e v e n t s .

C hapter I I

r e v ie w s t h e s t a t u t o r y a u t h o r it y g r a n te d t o t h e O f f ic e o f P r ic e A d m in is tr a tio n by C o n g r e s s .

P a r t i c u l a r em phasis and r e f e r e n c e

i s g iv e n t o t h e s p e c i a l c r i t e r i a , ; e s t a b l i s h e d i n t h e Emergency P r ic e C o n tr o l Abt o f 194-2 (and subsequent:, amendments) r e g a r d ­ in g maximum p r i c e s on a g r i c u l t u r a l c o m m o d itie s.

S in c e s t a t u ­

t o r y p rob lem s w ere o f su ch p rim e im p ortan ce i n p r ic i n g a l l a g r i c u l t u r a l p r o d u c t s , in c lu d in g f l u i d m ilk , kn ow led ge o f t h e i r im p act on p r i c i n g must b e f u l l y u n d e r sto o d i n o r d e r t o a p p r e c ia t e and e v a lu a t e t h e m ethods u se d t o c o n t r o l f l u i d m ilk p r i c e s . The s p e c i a l c h a r a c t e r i s t i c s o f t h e d a ir y in d u s tr y a r e t h e s u b j e c t o f C h ap ter I I I . .

T h ese c h a r a c t e r i s t i c s , . su c h a s

s m a ll volum e o f p r o d u c tio n from ea ch p r o d u c e r , s e a s o n a l v a r i ­ a t i o n i n p r o d u c t io n , hom ogeneous p r o d u c t, two t y p e s o f m ilk m a r k e ts:

f l u i d and m a n u fa c tu r in g , norm al p r i c e r e la t io n s h ip s

b e tw e e n t h e two t y p e s o f m ilk m a r k e ts, demand e l a s t i c i t y

in

t h e tw o m ilk m a r k e ts, p r i c i n g m eth o d s, and o t h e r s c o m p lic a te d t h e t a s k o f e f f e c t i v e - f l u i d m ilk p r i c e c o n t r o l . C h ap ter I V ,d e a ls w ith t h e i n i t i a l prob lem s b ro u g h t, ab ou t by t h e f a c t t h a t f l u i d m ilk was f i r s t p la c e d u n d e r .p r ic e c o n t r o l a t t h e r e t a i l l e v e l o n ly .

M ala d ju stm en ts i n t h e m ilk

p r i c e ; s t r u c t u r e w h ich r e s u l t e d from t h i s a c t i o n a r e d i s c u s s e d , in c lu d in g :

(1 ) d i v e r s i o n o f f l u i d m ilk from lo w c e i l i n g p r i c e

co m m u n ities t o co m m u n ities w ith h ig h e r c e l l i n g p r ic e s ;;

6

(2 )

d i v e r s i o n o f f l u i d m ilk t o m a n u fa ctu rin g p u rp o ses;: (3 )

d i v e r s i o n o f cows t o g e o g r a p h ic a r e a s h a v in g h ig h e r c e i l i n g p r ic e s .

The in c r e a s e d c o s t o f p r o d u c tio n and t h e r e a s o n s f o r

t h i s a r e a l s o e v a lu a t e d .

The t y p e and m ethod o f r e s e a r c h

w h ich r e s u l t e d i n t h e f i r s t d o l l a r s - a n d - c e n t s t y p e r e g u l a t i o n f o r f l u i d m ilk u n d er t h e p r i c e c o n t r o l program , and i t s e c o ­ nom ic b a s i s i s in c lu d e d i n C h ap ter IV ..

The f a c t o r s J e o p a r d iz ­

in g t h e s u c c e s s o f t h i s r e g u l a t i o n a r e e v a lu a t e d . C h ap ter V in c lu d e s t h e e x p e r ie n c e w ith t h e new t y p e f l u i d m ilk r e g u l a t i o n from January 194-3 t o March 194-3.

Con­

t i n u i n g p rob lem s a r e d i s c u s s e d . I n C h ap ter V I. t h e r e a s o n s f o r and t h e e f f e c t s o f t h e e s ta b lis h m e n t o f c e i l i n g p r i c e s w h ich m ilk d i s t r i b u t o r s c o u ld pay t o p r o d u c e r s f o r f l u i d m ilk a r e e v a lu a t e d .

The f a c t t h a t

m ilk p r i c e s i n t h e m a n u fa ctu red d a ir y p ro d u ct m arket w ere s t i l l u n c o n t r o lle d and t h e c o n t in u in g p r i c e m a la d ju stm en ts r e s u l t i n g from t h i s c a u s e a r e a n a ly z e d .

I n c lu d e d i s a d i s ­

c u s s io n o f t h e d ev elo p m en t o f t h e s u b s id y payment p la n t o p r o d u c e r s o f m ilk .

T h is c h a p te r c o v e r s a l l a c t i v i t i e s i n

f l u i d m ilk p r i c e c o n t r o l from March 194-3 t o O cto b er 1 9 4 3 . C h ap ter V II r e l a t e s t h e c o n t in u in g p rob lem s and a t ­ tem p ted s o l u t i o n s from O cto b er 1943 t o t h e e x p ir a t io n o f f l u i d m ilk p r i c e c o n t r o l i n June 1 9 4 6 .

The c o n c lu d in g c h a p te r (V I I I )

e v a lu a t e s t h e m ethods u se d i n OPA-Region 5 f o r c o n t r o l l i n g t h e p r i c e o f f l u i d m ilk w it h in t h e framework o f e x i s t i n g s t a t u t o r y

7 a u t h o r it y .

R ecom m endations a r e p r e s e n te d f o r fu tu r e c o n t r o l ,

i f and when t h e need a r i s e s .

T hese recom m endations embrace

t h e e n t i r e d a ir y in d u s t r y , n ot f l u i d m ilk a lo n e , f o r i t ap­ p e a r s c o n c lu s iv e from t h e e x p e r ie n c e d u r in g World War I I t h a t p r i c e c o n t r o l must be c o o r d in a te d and in t e g r a t e d th rou gh ou t t h e s t r u c t u r e o f t h e d a ir y in d u s tr y i f t h e e v e r p r e s e n t m al­ a d ju stm e n ts and a c u te p rob lem s r e s u l t i n g from t h e p a s t p i e c e ­ m eal p o l i c y approach a r e t o be overcom e.

G en era l O r g a n iz a tio n :

OPA-Region 5

The o r g a n iz a t io n a l s t r u c t u r e o f th e O f f ic e o f P r ic e A d m in is tr a tio n , as m ight be e x p e c te d , underw ent many ch an ges w ith t h e r a p id e x p a n sio n o f t h e a g e n c y ’ s f u n c t io n s and p e r s o n ­ n e l.

B eca u se o f t h e u n c h a r te d c o u r s e i t by n e c e s s i t y had t o

f o ll o w , t r i a l and e r r o r was c o n s p ic u o u s i n t h e f i r s t y e a r o f t h e d e v e lo p in g o r g a n iz a t io n a l s t r u c t u r e .

The s t r u c t u r e d e ­

s c r ib e d i s t h e r e s u l t o f t h i s e v o lu tio n a r y p r o c e s s .

B a s ic a lly ,

t h e e i g h t R e g io n a l O f f i c e s o f t h e O f f ic e o f P r ic e A dm inis­ t r a t i o n w ere o r g a n iz e d i n t h e same manner as t h e W ashington, D. C ., N a tio n a l O f f i c e , t h e prim ary d i f f e r e n c e b e in g one o f 2 s iz e . As in d ic a t e d in F ig u r e I , t h e D a lla s R e g io n a l O f f ic e (OPA-Reglon 5) was headed by a R e g io n a l A d m in is tr a to r who e x e r c is e d g e n e r a l s u p e r v is io n o v er t h e e ig h t d i v i s i o n s 2. A d e t a i l e d d e s c r i p t i o n o f t h e N a tio n a l O f f ic e o r g a n iz a ­ t i o n o f t h e O f f i c e o f P r ic e A d m in is tr a tio n i s g iv e n in : V i r g i l B . Zimmermann, P roblem s i n P r ic e C o n t r o l: N a tio n a l O f f ic e O r g a n iz a tio n and Management (W ash ington . D. C ., U. S . Govern­ ment P r in t in g O f f i c e , 1 9 4 7 ) .

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80 The d e c i s i o n t o e s t a b l i s h t h e d i s t r i b u t o r ' s w h o le s a le m argin a t A. 98 c e n t s p e r q u a rt was b ased on t h e b e l i e f t h a t t h i s m argin w ould be g e n e r a lly f a i r and e q u it a b le and s u f ­ f i c i e n t t o c o v e r t h e d i s t r i b u t i v e and p r o c e s s in g f u n c t io n s p erform ed by t h e d i s t r i b u t o r .

T h is c o n c lu s io n was p r e d ic a t e d

on t h e f o ll o w i n g b a s i s a s w e ll a s t h e fo r e g o in g a n a l y s i s o f d i s t r i b u t o r s ' p a s t h i s t o r i c a l m a rg in s: 1 . The m argin s p r e s e n te d i n t a b u la r form i n T a b le 3 d id n ot r e f l e c t d is c o u n t s a t w h o le s a le w hich w ere o f f e r e d by many d i s t r i b u t o r s i n t h e s i x s t a t e s . For ex a m p le, i n D a l l a s , T e x a s , a " g r o ss margin" o f 5 .5 5 c e n t s i n O cto b er 19A2, a c t u a ll y r e s u lt e d o n ly i n a m argin o f a p p r o x im a te ly A .35 c e n t s when a l ­ lo w a n ce i s made f o r a 10 p e r c e n t d is c o u n t t o la r g e r e t a il s to r e s , r e sta u r a n ts, in s t it u t io n s ,

e tc.

On

t h e o th e r hand, t h e m argin o f A. 98 c e n t s was "net" s i n c e t h e " d isc o u n t m ain ten an ce" p r a c t i c e e s t a b li s h e d i n t h e G en eral Maximum P r i c e R e g u la tio n was n ot r e 3A q u lr e d i n t h e new r e g u l a t io n . 2 . An in c r e a s e i n t h e p r i c e o f m ilk s o ld i n g a l l o n c o n t a in e r s a s w e ll a s t h e e li m in a t io n o f d is c o u n t s on r e t a i l s a l e s o f f e r e d t h e d i s t r i b u t o r a m easure 3A. The G en era l Maximum P r ic e R e g u la t io n r e q u ir e d a l l s e l l e r s t o m a in ta in d is c o u n t s i n e f f e c t i n March 19A2. T h is s e c t i o n o f t h e G en eral Maximum P r ic e R e g u la t io n rea d a s f o ll o w s : "No s e l l e r s h a l l change h i s custom ary a llo w a n c e s , d is c o u n t s o r o t h e r p r i c e d i f f e r e n t i a l s u n le s s su c h change r e s u l t s i n a lo w e r p r i c e ."

81 o f r e l i e f f o r any m argin r e d u c t io n t o w h ich he 35 m ight b e s u b j e c t e d . 3 . The I n c r e a s e In t h e volum e o f f l u i d m ilk s o ld b etw een O ctob er 194-1 and O ctober 1942 I n d ic a t e d t h a t an i n c r e a s e i n volum e r e s u lt e d i n econ om ies i n o p e r a t io n w hich w ould f u r th e r te n d t o p erm it p r o f i t a b l e o p e r a t io n on a s l i g h t l y s m a lle r m argin . 4 . Econom ies i n o p e r a t io n r e s u l t i n g from t h e e l i m i ­ n a t io n o f u n n e c e s sa r y m erch a n d isin g f r i l l s , d e liv e r ie s ,

few er

and l e s s c o m p e t it iv e p r i c i n g b e c a u se

o f t h e a b i l i t y t o s e l l a l l a v a i l a b l e s u p p lie s o f m ilk r e a d i l y , w ould f u r th e r r e l i e v e t h e d i s t r i b u ­ t o r 's p o s itio n . D a ta o b ta in e d by t h e R e g io n a l A cc o u n tin g D i v i s i o n from v a r io u s r e p r e s e n t a t i v e f l u i d m ilk d i s t r i b u t o r s th ro u g h o u t t h e R e g io n r e v e a le d t h a t , i n O cto b er 1 9 4 1 , t h e c o s t o f m ilk r e p r e ­ s e n te d from 51 t o 56 p e r c e n t o f s a l e s and, i n O ctober 1 9 4 2 , had in c r e a s e d t o 54 t o 60 p e r c e n t o f s a l e s .

T h e r e fo r e , a s ­

sum ing a d i s t r i b u t o r was p a y in g p ro d u c e r s $3»50 p e r hundred­ w e ig h t , t h e d i s t r i b u t o r ' s p r i c e s , w hich w ould r e f l e c t c o s t o f m ilk b etw een 54 and 60 p e r c e n t o f s a l e s , w ould b e 12f- and 14 c e n t s p e r q u art a t w h o le s a le and r e t a i l r e s p e c t i v e l y .

As­

sum ing a w h o le s a le volum e o f 6 0 p e r c e n t and a r e t a i l volum e 35. Some d i s t r i b u t o r s i n c i t i e s where g a l l o n c o n t a in e r s w ere s o ld a t b o th w h o le s a le and r e t a i l w ere f r o z e n w ith v ery lo w g a l l o n p r i c e s (due t o c o m p e t it iv e c o n d it io n s ) in r e l a t i o n t o t h e i r p e r q u art p r i c e s .

82 o f 40 p e r c e n t , t h i s w ould r e p r e s e n t a payment o f a p p ro x im a tely 57 p e r c e n t o f ea ch s a l e s d o l l a r t o t h e p r o d u c e r .

T h is f ig u r e

was w it h in t h e ra n g e o f paym ents r e v e a le d by a c c o u n tin g s t u d i e s o f t h e m ilk d i s t r i b u t o r s and a l s o r e p r e s e n te d a p p r o x i­ m a te ly t h e p e r c e n t a g e r e c o g n iz e d by t h e in d u s tr y and by t h o s e 36 c o n v e r s a n t w ith In d u s tr y o p e r a t in g c o n d i t i o n s . The n e x t s t e p a f t e r t h e e s ta b lis h m e n t o f d i s t r i b u t o r s ' w h o le s a le m a rg in s was t h e d evelop m ent o f r e t a i l m a r g in s.

T h is

p ro v ed a m ost d i f f i c u l t t a s k , f o r r e t a i l m a rg in s were found t o v a ry c o n s id e r a b ly th r o u g h o u t OPA-Region 5»

R e ta il s a le s

o f b o t t l e d m ilk w ere made by m ilk d i s t r i b u t o r s t o con su m ers' homes a s w e l l a s by r e t a i l s t o r e s .

In some a r e a s i t was found

t h a t d i s t r i b u t o r s m aking home d e l i v e r i e s had c u s to m a r ily s e ­ cu red a one c e n t d i f f e r e n t i a l o v er th e r e t a i l s t o r e p r i c e . In o th e r a r e a s t h i s d i f f e r e n t i a l d id n ot e x i s t .

F u r th e r , I t

was found t h a t r e t a i l s t o r e m argin s d i f f e r e d e v e n w it h in t h e same c i t y .

I n many a r e a s i t was found t h a t some r e t a i l s t o r e s

w ere s e l l i n g m ilk on a g r o s s m argin o f one c e n t p e r q u a r t, w h ereas o th e r s t o r e s i n t h e same g e n e r a l a r e a w ere o b t a in in g a g r o s s m argin o f two c e n t s p e r q u a r t.

I f t h e r e g u l a t io n

p r o v id e d a tw o c e n t s p er q u art r e t a i l m a rg in , i t would have in c r e a s e d s u b s t a n t i a l l y

( p e r c e n t a g e - w is e ) t h e m argin o b ta in e d

on r e t a i l s a l e s a s w e ll a s t h e p r i c e t o co n su m ers.

I t was

36. M e e tin g s o f t h e D a lla s R e g io n a l O f f i c e s t a f f w ith g rou p s o f f l u i d m ilk d i s t r i b u t o r s i n some o f t h e p r in c ip a l c i t i e s o f t h e R eg io n co n firm ed t h e sp o t s t u d i e s made by t h e A c c o u n tin g D i v i s i o n .

83 t h e r e f o r e d e c id e d t o s p l i t t h e on e and two c e n t m argin f ig u r e and e s t a b l i s h one and o n e - h a lf c e n t s a s t h e r e t a i l m argin . The D a l l a s R e g io n a l O f f i c e r e c o g n iz e d th a t t h e s e l e c t i o n o f one and o n e - h a lf c e n t s a s t h e p e r q u art r e t a i l m argin was n o t s u b s t a n t ia t e d by t h e su r v e y d a t a , nor was i t r e p r e s e n t a t iv e o f a c t u a l r e t a i l m argin s o r h i s t o r i c a l r e l a t i o n s h i p s .

The

r e t a i l m argin e s t a b l i s h e d was a c t u a l l y a com prom ise w h ich had t h e e f f e c t o f d i s t r i b u t i n g t h e b u rd en o f in c r e a s e d p ro d u cer p r i c e s b etw een d i s t r i b u t o r s , r e t a i l s t o r e s , and con su m ers. T h is was a t y p i c a l exam ple o f a fu nd am en tal problem o f t e n en ­ c o u n te r e d i n a tte m p tin g t o e s t a b l i s h d o l l a r s - a n d - c e n t s p r i c e s when t h e d a ta in d ic a t e d t h a t no a v e r a g e or modal m argin (or p r ic e ) e x is t e d . fo u n d .

I n t h i s c a s e a b i-m o d a l d i s t r i b u t i o n was

The o n ly f e a s i b l e a l t e r n a t i v e , i f u n ifo rm m argins

w ere t o b e e s t a b l i s h e d , was t h e s e l e c t i o n o f t h e m id -p o in t, ev e n th o u g h t h i s p o in t was u n r e p r e s e n t a t iv e o f t h e g ro u p . The s e l e c t i o n o f t h e h ig h m argin would h ave g iv e n some d i s ­ t r i b u t o r s and r e t a i l e r s w in d f a ll p r o f i t s an d , o f c o u r s e , h ig h e r p r i c e s t o co n su m ers.

On t h e o th e r han d, t h e s e l e c t i o n

o f t h e low m argin would h ave red u ced ( i n t h e c a s e i n q u e s t io n ) some d i s t r i b u t o r s 1 and r e t a i l e r s ' m argins by f i f t y p e r c e n t . The com prom ise r e t a i l m argin s e l e c t e d was c o n s id e r e d by t h e D a l l a s R e g io n a l O f f i c e a s more e q u it a b le t o a l l co n cern ed : d i s t r i b u t o r s , r e t a i l e r s , con su m ers, and c o n s is t e n t w ith t h e o b je c tiv e s o f p r ic e c o n tr o l l e g i s l a t i o n . The f i n a l s t e p s i n t h e e v o lu t io n o f t h e w h o le s a le and r e t a i l p r i c e o f f l u i d m ilk w ere t h e e s ta b lis h m e n t by a r e a s o f

84 t h e "base p ro d u cer p r i c e ,

37

f o llo w e d by t h e a d d it io n o f t h e

w h o le s a le and r e t a i l m a r g in s.

The w h o le s a le and r e t a i l p r i c e s

e s t a b l i s h e d in t h e F i r s t D a lla s R e g io n a l F lu id M ilk R e g u la t io n a r e s e t f o r t h i n T a b le 4 . The w h o le s a le and r e t a i l p r i c e s a s s e t f o r t h i n T a b le 4 r e v e a l a one c e n t p e r q u a rt w h o le s a le and r e t a i l d i f f e r e n t i a l by c l a s s e s i n ea ch Zone.

The one c e n t d i f f e r e n t i a l r e p r e s e n te d

40 c e n t s p e r h u n d red w eigh t t o t h e p r o d u c e r .

For exam p le, t h e

c e l l i n g p r i c e p e r q u a rt o f 1 > | c e n t s w h o le s a le and 1 5 c e n t s r e t a i l i n Zone I , C la s s 1 c i t i e s ,

sh o u ld r e p r e s e n t t h e d i s ­

t r i b u t o r ' s a b i l i t y t o pay p r o d u c e r s $3*90 p e r h un dredw eight d e liv e r e d a t th e d is t r ib u t o r 's p la n t.

P r ic e s o f 12-§- c e n t s

w h o le s a le and 1 4 c e n t s r e t a i l i n Zone I , C la s s 2 c i t i e s , r e p r e s e n t a payment o f |3 « 5 0 t o p r o d u c e r s , and p r ic e B o f 11-| c e n t s w h o le s a le and 13 c e n t s r e t a i l .

I n Zone I , C la s s 3 a r e a s

(s m a ll tow n and r u r a l a r e a s ) w ere th o u g h t t o be s e r v ic e d o n ly 38 by p r o d u c e r - d is t r i b u t o r s . I n e s t a b l i s h i n g t h e v a r io u s p r i c e a r e a s c o n s id e r a t io n was a l s o g iv e n t o t h e p r o x im ity o f v a r io u s m ilk sh e d s t o ea ch 37* B ase p r i c e s t o be p a id by d i s t r i b u t o r s t o p r o d u cers f o r f l u i d m ilk w ere n o t a c t u a l l y e s t a b l i s h e d i n t h e r e g u ­ l a t i o n s i n c e a t t h a t tim e b o th t h e N a tio n a l O f f ic e and p a r t i c u l a r l y t h e D epartm ent o f A g r ic u lt u r e w ere opposed t o t h e i r e s t a b lis h m e n t . The c o n c e p t i n t h e r e g u l a t io n was t h a t t h e e s ta b lis h m e n t o f d i f f e r e n t w h o le s a le and r e t a i l f l u i d m ilk p r i c e s by a r e a s would p e r m it d i s t r i b u t o r s t o pay p r o ­ d u c e r s a p p r o x im a te ly c e r t a i n am ounts f o r t h e i r f l u i d m ilk . 38. T h is tu r n e d out t o b e an erro n eo u s a ssu m p tio n . The p ro b lem s r e s u l t i n g from t h i s f a l s e a ssu m p tio n a r e d is c u s s e d i n t h e n ex t C h a p te r.

85 TABLE 4

SCHEDULE OF WHOLESALE AND RETAIL PRICES ESTABLISHED IN FIRST DALLAS REGIONAL FLUID MILK REGULATION (C en ts P er U n it)

Zone I C o n ta in e r C la s s 1 s iz e

C la s s 2

Zone I I C la s s 3

C la s s 1

C la s s 2

C la s s 3

R e t a i l P r ic e s S to r e o r Home D e liv e r e d G a llo n G a llo n Quart P in t

56 29 15

n

48 25 13 6i

52 27 14 7

52 27 14 7

48 25 13 6-!

44 23 12 6

48 25 12i

44 23 11* 5f 4 3i

40 21 10* 5t 3 2 /3 3

W h o le sa le P r ic e s G a llo n * G a llo n Quart P in t 1 / 3 Quart i P in t

Source:

52 27 13* 6f 4 2 /3 31-

48 25 12-!

4

4 1 /3 3*

43 23 H i­ st 4 3*

4

4 1 /3

Amendment 89 t o S u p p lem entary R e g u la t io n 14 o f t h e G en era l Maximum P r ic e R e g u la t io n . F e d e r a l R e g i s t e r . January 1 9 4 3 , p . 1 1 3 9 .

86 o t h e r so t h a t t h e h ig h e s t p r i c e a r e a s w ere g e n e r a l ly n o t con ­ t ig u o u s t o t h e lo w e s t p r ic e d a r e a s .

T h is w as, o f c o u r s e ,

n e c e s s a r y in o rd er t o p r e v e n t d i v e r s i o n o f f l u i d m ilk from t h e lo w p r ic e d a r e a t o t h e h ig h e r p r ic e d a r e a .

I n g e n e r a l,

■because o f t h e t r a n s p o r t a t i o n c o s t s in v o lv e d , m ilk from a lo w e r p r ic e d a r e a c o u ld n o t b e d iv e r t e d t o t h e n e x t h ig h e r p r ic e d a r e a .

I f , h ow ever, p r i c e s had b een e s t a b l i s h e d i n

two c o n tig u o u s a r e a s a t more th a n one p r i c e c l a s s i f i c a t i o n a p a r t (more th a n one c e n t a t w h o le s a le and r e t a i l ) , t h e h ig h e r p r i c e a r e a c o u ld h a v e d i v e r t e d t h e m ilk from t h e lo w er p r i c e a r e a i f t h e t r a n s p o r t a t i o n c o s t d id n ot e x c e e d t h e a p p r o x i­ m ate d i f f e r e n c e i n p r i c e s p a id t o t h e p r o d u cers i n t h e two areas• A lth o u g h b a s i c a l l y t h e f l u i d m ilk p r i c e was d e r iv e d from t h e p r i c e b e in g p a id f o r m a n u fa ctu rin g m ilk , t h e r e ­ l a t i o n o f fe e d c o s t s t o m ilk p r o d u c tio n c o s t s was ta k e n in t o c o n s id e r a t i o n . Feed c o s t s a r e g e n e r a lly r e c o g n iz e d a s c o n s t i t u t i n g from 45 t o 55 p e r c e n t o f t h e t o t a l a v e r a g e an nu al c o s t o f p r o d u c in g m ilk ; v a r ia n c e w it h in t h e s e l i m i t s a r e u s u a lly i n a c c o r d a n c e w ith g e o g r a p h ic l o c a t i o n , s i z e o f h e r d , f e e d in g m eth o d s, e t c .

W ith in OPA-Region 5 , K ansas C ity was r e g a r d e d

a s t h e g r e a t c e n t r a l m arket f o r m i l l f e e d s t u f f s and s e r v e d m ost o f OPA-Region 5*

The t r e n d o f fe e d s t u f f s i n t h e K ansas

C ity m arket was r e f l e c t e d i n l o c a l fe e d p r i c e s th ro u g h o u t t h e s t a t e s o f T e x a s, Oklahoma, A rk a n sa s, L o u is ia n a , K ansas and

87 M is s o u r i.

L o c a l f e e d p r i c e s v a r ie d from t h e c e n t r a l m arket

p r i c e by t h e amount o f t h e t r a n s p o r t a t io n d i f f e r e n t i a l w h ich rem ained f a i r l y c o n s t a n t .

M onthly a v e r a g e c a s h p r i c e s o f

t w e lv e im p ortan t f e e d s t u f f s i n t h e K ansas C ity m arket f o r 194-0, 194-1, and 194-2 (th r o u g h November) were co m p iled from t h e D a iry G rain Market R ev iew , p u b lis h e d i n K ansas C ity and u se d by g r a in and fe e d d e a l e r s th ro u g h o u t OPA-Region 5 . On a s im p le a v e r a g e b a s i s , p r i c e s o f t h e s e t w e lv e f e e d s in c r e a s e d 11 p e r c e n t from O ctober 1941 t o O ctob er 194-2. H owever, su b seq u en t t o O ctob er 194-2, a sharp p r i c e r i s e had o c c u r r e d and a s o f Decem ber 1 7 , 194-2, an in c r e a s e o f 24- p er c e n t o v e r O ctober 194-1 had t a k e n p l a c e .

S ee T a b le s 5 and 6

f o r f u r t h e r d a ta on fe e d c o s t i n c r e a s e s . A lth o u g h f e e d c o s t s in c r e a s e d a p p r o x im a te ly 1 5 p en c e n t from O ctob er 1941 t o November 1 9 4 2 , p r i c e s p a id f o r f l u i d m ilk in c r e a s e d by 21 p e r c e n t d u r in g t h e same p e r io d .

The a v e r a g e

p r i c e p a id f o r f l u i d m ilk (4 p er c e n t b u t t e r f a t ) , th ro u g h o u t OPA-Region 5 d u r in g O ctob er 1 9 4 1 , was $ 2 .4 6 p e r h u n d red w eig h t, w h er ea s, d u r in g November 1 9 4 2 , t h i s p r i c e had in c r e a s e d t o $ 2 .9 8 .

The l a r g e s t in c r e a s e i n f l u i d m ilk p r i c e s p a id t o

p ro d u c e r s from O ctob er 1941 t o November 1942 o c c u r r e d i n M is s o u r i w here t h e a v e r a g e p r i c e r o s e from $ 2 .2 5 t o $ 2 .9 0 p er h u n d red w eig h t;

T h is was an in c r e a s e In t h e p r i c e p a id t o p ro ­

d u c e r s o f 2 9 p e r c e n t , compared w ith an a v e r a g e in c r e a s e o f f e e d c o s t s d u r in g t h e same p e r io d o f 15 p e r c e n t .

P r ic e s

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t h e o f f i c i a l s i n ch a rg e o f

R e g io n a l f l u i d m ilk p o l i c y r e c o g n iz e d t h r e e fu ndam en tal f a c t o r s t h a t p r e s a g e d f u tu r e i n s t a b i l i t y R e g lo n 5 . s ta b ility

o f t h e d a ir y in d u s tr y in OPA-

The f a c t o r s t h a t c a u sed c o n c e r n r e g a r d in g t h e f u tu r e o f t h e b a la n c e d p r i c e r e l a t i o n s h i p s a t t a in e d i n t h e

f i r s t r e g u l a t i o n t o c o n t r o l f l u i d m ilk w ere:

171 1 . T here was no c e i l i n g p r i c e on t h e amount d i s ­ t r i b u t o r s c o u ld pay p ro d u c e r s f o r f l u i d m ilk . 2 . T here was no c e i l i n g p r i c e on t h e amount manu­ f a c t u r e r s o f d a ir y p r o d u c ts c o u ld pay f o r m ilk u tiliz e d

f o r m a n u fa c tu rin g p u r p o s e s .

3 . Feed and la b o r c o s t s were l a r g e l y u n c o n t r o lle d . A l l o f t h e s e f a c t o r s were beyond t h e s c o p e o f R e g io n a l O f f i c e a u t h o r it y .

B e c a u se o f th e r e s t r i c t i v e g r a n t o f au 6 t h o r i t y i n t h e Emergency P r ic e C o n tr o l A ct o f 194-2, and t h e 7 S t a b i l i z a t i o n A ct o f 1 9 4 2 , t h e N a tio n a l O f f i c e had b een p o w e r le s s t o t a k e any a c t i o n w it h r e g a r d t o t h e s e im p ortan t e le m e n ts .

Under t h e Emergency P r ic e C o n tr o l A ct o f 1 9 4 2 ,

p r i c e c o n t r o l c o u ld n ot be i n s t i t u t e d on p r o d u c e r s ' m ilk p r i c e s u n t i l t h e y re a c h e d 110 p er c e n t o f p a r i t y .

In O ctober

1 9 4 2 , t h e S t a b i l i z a t i o n A ct lo w ered t h e s t a t u t o r y sta n d a rd t o 100 p er c e n t o f p a r i t y .

P r ic e s p a id t o p r o d u c e r s f o r m ilk

d id n o t r e a c h 100 p e r c e n t o f p a r i t y u n t i l Decem ber o f 1 9 4 2 , and i n January 1943 th e y I n c r e a s e d t o 105 p e r c e n t o f p a r i t y . E a r ly i n February 1 9 4 3 , t h e O f f i c e o f P r ic e A d m in is tr a tio n a c te d t o b r in g t h e p r i c e s p a id t o p r o d u c e r s f o r f l u i d m ilk u nder c o n t r o l .

P r ic e s p a id t o p ro d u c e r s f o r m ilk u sed f o r

m a n u fa ctu red d a ir y p r o d u c ts w ere n o t b rou gh t u n d er c o n t r o l due t o t h e o b j e c t i o n s o f t h e D epartm ent o f A g r ic u lt u r e . 6. Pub. L . No. 4 2 1 , 7 7 t h C o n g r e ss, 2nd S e s s io n ( 1 9 4 2 ). 7 . 56 S t a t . 7 6 5 ; U .S .C . App. S e c s . 9 6 1 -9 7 1 .

172 S t a tu t o r y l i m i t a t i o n s p rev en ted , t h e im p o s it io n o f c o n t r o l a t 8 t h a t tim e f o r m ost o f t h e im p ortan t d a ir y f e e d s . I n t h e l i g h t o f t h i s s i t u a t i o n , i t a p p ea rs t h a t t h e D a lla s R e g io n a l O f f i c e had done e v e r y t h in g p o s s i b l e t o tem po­ r a r i l y s t a b i l i z e t h e f l u i d m ilk s i t u a t i o n .

The O f f i c e f u l l y

r e c o g n iz e d t h a t i t had r e a l l y is s u e d a s to p -g a p r e g u l a t io n — t h a t w ould s u b s e q u e n tly have t o b e r e v is e d i n r e l a t i o n t o ch a n g in g econom ic c o n d i t i o n s .

U n doubtedly no one i n t h e D a lla s

R e g io n a l O f f ic e e x o e c te d t h a t t h e need f o r ch an ge would a r r iv e 9 s o q u ic k ly . The S econ d D a lla s R e g io n a l F lu id M ilk R e g u la t io n was i s s u e d e a r ly i n March 194-3• h a l f t o one c e n t p e r q u a r t.

I t in c r e a s e d p r i c e s from o n e-

As had b een f o r e s e e n , t h i s i n ­

c r e a s e was n e c e s s i t a t e d by t h e in c r e a s e d p r i c e o f m an u factu r­ in g m ilk ( s t i l l u n c o n t r o l l e d ) , t h e in c r e a s e d p r i c e o f f e e d s ( s t i l l l a r g e l y u n c o n t r o ll e d ) , and in c r e a s e d farm la b o r c o s t s . Two o t h e r im p o rta n t f a c t o r s w ere:

e x p e r ie n c e p roved t h e e s ­

t a b l i s h e d r e t a i l m argin was in a d e q u a te , and t h e 40 c e n t s p e r h u n d red w eigh t d i f f e r e n t i a l b etw een a r e a s was t o o l a r g e t o p r e ­ v e n t some s m a l l - s c a l e g e o g r a p h ic a l d i v e r s i o n ,. As a r e s u l t o f t h e e x p e r ie n c e g a in e d from t h e a d m in is­ t r a t i o n o f t h e o r i g i n a l f l u i d m ilk r e g u l a t io n , t h e Second R e g u la t io n was from a t e c h n i c a l v ie w p o in t a s u p e r io r i n s t r u ­ ment o f p r i c e c o n t r o l .

The b a s ic th e o r y and p rem ise o f t h e

6. T h is s u b j e c t i s d is c u s s e d i n d e t a i l i n a l a t e r s e c t i o n o f t h i s C h a p ter. 9» Amendment 133 t o S u p plem entary R e g u la t io n No. 1 4 t o t h e G en era l Maximum P r ic e R e g u la t io n . F e d e r a l R e g i s t e r , March 1943, p . 3185.

173 o r i g i n a l r e g u l a t io n w ere r e t a i n e d .

The p r e s e r v a t io n o f

d i f f e r e n t i a l s b etw een t h e p r i c e p a id f o r f l u i d m ilk and t h e p r i c e p a id f o r m a n u fa c tu rin g m ilk i n o r d e r t o p r e v e n t d i v e r s i o n on t h e b a s i s o f u t i l i z a t i o n and t h e c o n tin u e d e s ta b lis h m e n t o f d i f f e r e n t i a l f l u i d m ilk p r i c e s by a r e a s t o p r e v e n t g e o ­ g r a p h ic d i v e r s i o n w ere an i n t e g r a l p a r t o f t h e Second Regu­ l a t i o n a s th e y were i n t h e o r i g i n a l . One t e c h n i c a l im provem ent w it h in t h e b a s ic c o n c e p tu a l framework was t h e ch an ge from a 4 0 c e n t s p e r h u nd red w eight d i f f e r e n t i a l by a r e a s

(one c e n t p e r q u art a t w h o l e s a l e - r e t a i l )

t o a 20 c e n t s d i f f e r e n t i a l r e ta il).

( o n e - h a lf c e n t p er q u art w h o le s a le -

The s u c c e s s o f t h e s m a lle r d i f f e r e n t i a l i n m ain­

t a i n i n g a b a la n c e d p r i c e r e l a t i o n s h i p b etw een g e o g r a p h ic a l a r e a s may be ju d g ed by t h e f a c t t h a t from t h e d a t e o f is s u a n c e o f t h e S econd D a lla s R e g io n a l F lu id M ilk R e g u la t io n (March 1 2 , 194 3 ) u n t i l t h e end o f t h e o r i c e c o n t r o l program f o r f l u i d 10

m ilk (June 3 0 , 19 4 6 ) o n ly s i x p r i c e a d ju stm e n ts w ere made. T h is r e c o r d was u n e q u a lle d i n any o th e r R e g io n a l O f f i c e a r e a . The o t h e r t e c h n i c a l improvement was t h e change from t h e one and o n e - h a lf c e n t s p e r q u a rt r e t a i l m argin t o two c e n ts.

E x p e r ie n c e had p r o v en t h a t t h e form er r e t a i l m argin

was in a d e q u a te t o p erform t h e r e t a i l d i s t r i b u t i v e f u n c t io n . The two c e n t s p e r q u art r e t a i l m argin was su b s e q u e n tly r e ­ t a in e d th r o u g h o u t t h e p e r io d o f p r i c e c o n t r o l on f l u i d m ilk . 10. F iv e p r i c e a d ju stm e n ts w ere i n com m u n ities o f l e s s th a n 5 ,0 0 0 p o p u la t io n . The o t h e r , t h e West T exas a d ju stm e n t, was t h e r e s u l t o f s e v e r e d rau gh t c o n d i t i o n s .

174 C r i t i c i s m may w e ll be l e v e l e d a t t h e R e g io n a l O f f ic e f o r t h e o r i g i n a l e s ta b lis h m e n t o f t h e r e t a i l m a rg in .

Y et t h e c r i t i ­

c ism m ust b e e v a lu a te d and tem p ered i n term s o f t h e c o m p le x ity o f t h e problem and a v a i l a b l e a l t e r n a t i v e s .

As was p o in te d out

i n C h ap ter IV, t h e d a t a r e v e a le d a b i-m o d a l d i s t r i b u t i o n , a l ­ th o u g h tw o c e n t s p e r q u a rt was th e more p r e v a le n t m argin .

The

R e g io n a l O f f i c e s e l e c t e d one and o n e - h a lf c e n t s p e r q uart a s t h e r e t a i l m argin on somewhat o f a t r i a l b a s i s — " l e t ' s w a it and s e e how i t w orks o u t."

I f n e c e s s a r y ch a n g es c o u ld be

made a t t h e tim e t h e m argin had p roved in a d e q u a te .

P r ic e

c o n t r o l l e r s , when t h e d a ta i s not c o n c l u s i v e , s h o u ld n o t b e condemned f o r e x e r c i s i n g c a u t io n and r e s t r a i n t i n h o ld in g p r i c e in c r e a s e s t o t h e minimum— p a r t i c u l a r l y when th e y s ta n d read y t o make su b seq u e n t a d ju s tm e n ts i f l a t e r e v e n t s p ro v e t h e need f o r ch a n g e. One f e a t u r e o f t h e D a l l a s R e g io n a l F lu id M ilk Regu­ l a t i o n s t h a t was b i t t e r l y a t ta c k e d and r e s e n t e d by t h e d a ir y in d u s t r y c o n ce rn ed premium m ilk .

B oth t h e " g ra n d fa th er" p r o .11 v i s i o n and t h e volu m e l i m i t a t i o n w ere so u n d ly d en ou n ced . I n v ie w o f t h e s ta n d t a k e n by t h e d a ir y in d u s tr y on t h i s sub ­ je c t, it is

f i t t i n g l y t h e o b j e c t o f a n a l y s i s and e v a lu a t io n .

Under t h e p o l i c y o f t h e D a l l a s R e g io n a l O f f i c e , d i s t r i b u t o r s who d id n o t s e l l premium m ilk d u r in g Decem ber 1 9 4 2 , w ere p r o ­ h i b i t e d from s e l l i n g t h i s t y p e o f p ro d u c t th ro u g h o u t t h e p e r io d o f p r ic e c o n tr o l.

D i s t r i b u t o r s who d id s e l l premium m ilk

11. S ee C h a p ter IV f o r a f u l l d e s c r i p t i o n o f t h e premium m ilk p r o v i s i o n .

175 ( a l s o sta n d a r d m ilk ) i n December 1942 were p e r m itte d t o con ­ t in u e t h e p r a c t i c e .

H owever, th e y w ere not a llo w e d t o i n ­

c r e a s e t h e volum e o f su ch premium m ilk i n any c a le n d a r month i n e x c e s s o f f i v e p e r c e n t ab ove t h e volum e o f such m ilk s o ld i n Decem ber 1 9 4 2 . I n d u str y r e p r e s e n t a t i v e s co n ten d ed t h a t p r o h ib it in g a d i s t r i b u t o r from s e l l i n g premium m ilk sim p ly b e c a u s e h e had not done so a t some p a s t tim e (December 1942 i n t h i s in s t a n c e ) was n ot p r i c e c o n t r o l b u t a r b it r a r y c o n t r o l o v e r what a b u s i ­ n e s s c o u ld p ro d u ce and s e l l . t a t i o n in t h e same l i g h t .

They v ie w e d t h e volum e l i m i ­

D a iry r e p r e s e n t a t i v e s con ten d ed

t h a t i t was n o t i n t h e p u b lic i n t e r e s t t o d is c o u r a g e t h e o u t­ put o f " su p e rio r" f l u i d m ilk .

F u r th e r , t h e volum e r e s t r i c t i o n

li m i t e d t h e d i s t r i b u t o r ' s freedom o f a c t i o n and conduct o f h i s b u s in e s s w hich had no r e l a t i o n t o p r i c e c o n t r o l a s s u c h . o f t h e s e argum ents a r e p u re S o p h l s t i y .

A ll

T ru e, t h e r e g u l a t io n

a f f e c t e d t h e d i s t r i b u t o r ' s con d u ct o f h i s b u s i n e s s .

T ru e, i t

o n ly a llo w e d t h o s e s e l l e r s o f sta n d a rd m ilk t o s e l l premium m ilk i f th e y had f o llo w e d t h i s b u s in e s s p r a c t i c e i n r e l a t i o n to th e p a s t.

T ru e, i t

f r o z e s e l l e r s ' b u s in e s s p r a c t i c e s and

r e s t r i c t e d s a l e s volum e o f premium m ilk as o f a p a s t d a t e . A d m ittin g t h e v a l i d i t y o f a l l t h e s e c o n t e n t i o n s , t h e p o l i c y o f t h e D a l l a s R e g io n a l O f f i c e was t h e o n ly f e a s i b l e s o l u t i o n c o n s i s t e n t w ith sound p r i c e c o n t r o l a d m in is t r a t io n . In t h e a b se n c e o f some method o f r e s t r a i n i n g d i s t r i b u ­ t o r s from in tr o d u c in g premium m ilk and some m ethod o f l i m i t i n g

176 t h e s a l e s volum e o f t h e d i s t r i b u t o r s who had h i s t o r i c a l l y s o ld su ch m ilk , s i g n i f i c a n t s h i f t s i n o u tp u t c o u ld and un­ d o u b te d ly w ould h a v e ta k e n p l a c e .

T h is i s an exam ple o f "end

p rod u ct" d i v e r s i o n d i s c u s s e d e a r l i e r i n t h i s C h a p ter.

S e lle r s

who had n o t p r e v io u s ly s o ld premium m ilk w ould h ave s h i f t e d p a r t o f t h e i r p r o d u c tio n t o su ch p r o d u c t s , s i n c e t h e s e p r o d u c ts s o ld a t h ig h e r p r i c e s and u s u a lly r e tu r n e d a h ig h e r p e r c e n t o f p r o fit.

S e l l e r s who had h i s t o r i c a l l y s o ld b o th sta n d a rd

and premium m ilk w ou ld , i n t h e a b se n c e o f a volum e r e s t r i c t i o n , in c r e a s e t h e i r p r o d u c tio n o f premium m ilk a t t h e ex p en se o f sta n d a r d m ilk .

T h is c o u ld be done i n a w a r-tim e economy, f o r

in m ost f l u i d m ilk m ark ets demand ex ce e d e d su p p ly a t t h e co n ­ t r o lle d p r ic e .

H en ce, t h e d i s t r i b u t o r s c o u ld f o r c e t h e s a l e

o f t h e h ig h e r p r ic e d commodity e v e n th o u g h consum ers m ight p r e f e r t h e sta n d a r d p r o d u c t.

The R e g u la t io n d id p erm it d i s ­

t r i b u t o r s t o f o l l o w t h e i r h i s t o r i c a l b u s in e s s p r a c t i c e s w ith r e g a r d t o premium m ilk s a l e s , but d id n ot a llo w d e v i a t i o n . The r e s t r i c t i o n was n e c e s s a r y f o r t h e e f f e c t i v e c o n t r o l o f f l u i d m ilk p r i c e s .

P r ic e c o n t r o l i s a m e a n in g le s s in stru m en t

if

s e l l e r s can s h i f t t o h ig h e r p r ic e d premium p r o d u c ts and 12 c u r t a i l p r o d u c tio n o f t h e sta n d a rd or lo w e r p r ic e d ite m . I t i s s m a ll s a t i s f a c t i o n t o t h e consum er f o r p r i c e c o n t r o l

o f f i c i a l s t o say t h a t p r i c e s h ave in c r e a s e d v e r y l i t t l e

fo r

12. The r e s t r i c t i o n s on premium m ilk s a l e s a l s o had t h e e f f e c t o f c o n s e r v in g b u t t e r f a t — so t h a t more f l u i d m ilk was a v a i l a b l e . Most premium m ilk s c o n t a in a h ig h e r p e r c e n ta g e o f b u tte r fa t.

177 a g iv e n com m odity, when p ro d u c e r s h ave s h i f t e d t o th e h ig h e r p r ic e d lo n g p r o f i t it e m s , and con su m ers' freedom o f c h o ic e becom es s e v e r e ly l i m i t e d .

P r ic e s t o t h e consum er, i n t h e s e

i n s t a n c e s , have b e e n a c t u a l l y in c r e a s e d i n t h e g u is e o f 13 " q u a lity " or "premium" g o o d s.

G en era l C r i t e r i a The f i n a l e v a l u a t i o n o f t h e p o l i c i e s o f t h e D a lla s R e g io n a l O f f i c e w ith r e g a r d t o f l u i d m ilk p r ic e c o n t r o l w i l l b e u n d e r ta k e n on t h e b a s i s o f t h e s i x c r i t e r i a s e t f o r t h in an e a r l i e r s e c t i o n o f t h i s C h a p ter. 1 . How much w ere p r i c e s i n c r e a s e d ?

T h is i s a q u e s t io n t h a t

i s im p o s s ib le t o answ er c a t e g o r i c a l l y .

S t a t i s t i c a l d a ta i s

n o t a v a i l a b l e f o r an e x a c t m easurem ent o f t h e w e ig h te d a v e r a g e (th e b e s t c r i t e r i o n ) p r i c e in c r e a s e — n or i s in fo r m a tio n a v a i l a b l e t h a t would g i v e t h e s im p le a r it h m e t ic in c r e a s e .. However, t h e a p p ro x im a te p r i c e in c r e a s e ca n be a s c e r t a in e d . The c o n c e n su s o f o p in io n o f R e g io n a l O f f i c e p e r s o n n e l con ­ c e r n e d w ith f l u i d m ilk p o l i c y was t h a t t h e F i r s t D a lla s R e g io n a l F lu id M ilk R e g u la t io n (January 194-3) in c r e a s e d p r i c e s a p p r o x im a te ly one and o n e - h a lf c e n t s p e r q u a r t.

T h is e s t im a t e

o f in c r e a s e d p r i c e s was p r e d ic a t e d on t h e March 194-2 p r i c e s 13. T h is was a s e r i o u s problem i n t h e p r i c i n g o f t e x t i l e s and c l o t h i n g . Low p r ic e d l i n e s d is a p p e a r e d from t h e m ark et, a lth o u g h h ig h p r ic e d l i n e s w ere u s u a ll y a v a i l a b l e in q u a n t it y . A v a ila b le raw m a t e r ia ls w ere ch a n n e le d i n t o h ig h e r p r ic e d , lo n g m argin it e m s . S e e : B enjam in C ap lan , e d . , Problem s I n P r ic e C o n tr o l: Chanreinp; P r o d u c tio n P a t t e r n s . (W ashington: U. S . Government P r in t i n g O f f i c e , 1 9 ^ 7 ), P a r ts I I and I I I .

178 e s t a b l i s h e d by t h e G en era l Maximum P r ic e R e g u la t io n .

The

S econ d D a lla s R e g io n a l F lu id M ilk R e g u la t io n r a i s e d p r i c e s from o n e - h a lf t o one c e n t p e r q u art in March 1943*

From March

1 9 ^ 3 , u n t i l June 7 , 1 9 4 6 , no g e n e r a l p r i c e in c r e a s e was 14 g r a n te d . On June 7 , j u s t 23 d a y s p r io r t o t h e e x p ir a t io n o f p r i c e c o n t r o l on f l u i d m ilk , t h e O f f ic e o f P r ic e A d m inis­ t r a t i o n r a i s e d f l u i d m ilk p r i c e s th ro u g h o u t t h e co u n try one 15 c e n t p er q u a r t. T o t a l p r i c e in c r e a s e s from March 1 9 4 2 , t o June 1 9 4 6 , amounted t o a p p r o x im a te ly t h r e e and o n e -q u a r te r c e n t s p er q u art i n OPA-Region 5 .

A l l o f t h e in c r e a s e s g r a n te d

w ere l a r g e l y t h e r e s u l t o f t h e a g r i c u l t u r a l s ta n d a r d s p r o ­ v i s i o n i n t h e s t a t u t e s l e g a l i z i n g p r i c e c o n t r o l o r , and t o a 16 l e s s e r e x t e n t , N a tio n a l O f f i c e p o l i c y . The need f o r p r ic e i n c r e a s e s and s u b s id y paym ents w ere a l l a t t r i b u t a b l e t o ( 1 ) I n c r e a s e d fe e d c o s t s ,

( 2 ) in c r e a s e d farm la b o r c o s t s ,

( 3 ) in c r e a s e d p r i c e o f m ilk u se d f o r m an ufactu red d a ir y p ro d u cts.

None o f t h e s e f a c t o r s w ere w it h in t h e a u t h o r it y o f

t h e R e g io n a l O f f i c e — t h e O f f i c e had t o o p e r a te i t s

f l u i d m ilk

r e g u l a t i o n s w it h in t h e sc o p e o f l e g i s l a t i v e a u t h o r it y and N a t io n a l O f f i c e p o l i c y . 2 . D id t h e r e g u l a t io n o b t a in s u b s t a n t i a l co m p lia n c e o f a l l s e l l e r s c o v e r e d o r was v i o l a t i o n w id e- s p r e a d ?

The l e g a l p r ic e

l4 . S u b sid y paym ents w ere i n i t i a t e d i n O ctober 1 9 4 3 , on a n a t io n - w id e b a s i s . W ithout t h e s e p aym en ts, p r i c e s o f f l u i d m ilk would h a v e b een in c r e a s e d . 15* T h is was t h e r e s u l t o f a change i n p o l i c y w ith reg a rd t o fe e d p r i c e s and la c k o f a d eq u a te su b sid y fu n d s . S ee C h a p ter V I I. 16. T h is s u b j e c t i s d i s c u s s e d in d e t a i l in a su b seq u en t s e c t i o n o f t h i s C h a p ter.

179 o f a commodity i s a m e a n in g le s s m easure o f accom p lish m ent i f 17 p r i c e v i o l a t i o n i s w id e -s p r e a d . D u rin g t h e e n t i r e h is t o r y o f f l u i d m ilk p r i c e c o n t r o l i n OPA-Region 5 co m p lia n ce was o u t s t a n d in g .

Only one c a s e o f d e l i b e r a t e v i o l a t i o n on t h e

p a r t o f a d i s t r i b u t o r was r e p o r t e d .

When l e g a l en forcem en t

a c t i o n was t h r e a te n e d t h e d i s t r i b u t o r i n v i o l a t i o n r e tu r n e d t o t h e l e g a l c e i l i n g p r i c e s e s t a b l i s h e d in t h e R e g u la t io n . 3 . Was t h e r e g u l a t i o n e a s i l y u n d e r sto o d — c o u ld b u y ers and

s e l l e r s e a s i l y d e te r m in e t h e maximum p r i c e ?

The u s e o f t h e

d o l l a r s - a n d - c e n t s p r i c i n g method en a b led a l l s e l l e r s and b u y er s e a s i l y and r e a d i l y t o d e te r m in e t h e a p p lic a b le maximum p r ic e .

S in c e d o l l a r s - a n d - c e n t s p r i c e s w ere e s t a b l i s h e d by

g e o g r a p h ic a l a r e a s i n s t e a d o f d i f f e r e n t i a l p r i c e s a p p ly in g t o i n d i v i d u a l s e l l e r s , consum ers c o u ld be r e a d i l y Inform ed o f th e p r ic e in t h e ir a r e a .

When t h e v a r io u s s e l l e r s i n a

g iv e n g e o g r a p h ic a l a r e a had d i f f e r e n t p r i c e s , c o m p le te con ­ sumer k n ow led ge o f t h e c e i l i n g p r i c e s was d i f f i c u l t t o a c h ie v e . 4 . Was t h e r e g u l a t i o n e a s i l y p o in t?

e n f o r c e a b le from t h e l e g a l v ie w ­

S in c e t h e r e g u l a t io n e s t a b l i s h e d d o l l a r s - a n d - c e n t s

p r i c e s f o r a l l s i z e c o n t a in e r s and f o r s p e c i f i c g e o g r a p h ic a l a r e a s , v i o l a t i o n c o u ld b e e a s i l y d e t e c t e d and l e g a l e n f o r c e ­ ment was r e l a t i v e l y sim p le^

T here w ere no com plex p r i c i n g

m ethods in v o l v i n g c o s t , m a rg in , e t c . , co m p u ta tio n s w hich m igh t b e s u s c e p t i b l e t o v a r io u s i n t e r p r e t a t i o n s . 17. In t h e c a s e o f m eat, t h e l e g a l p r ic e was o f t e n a f i c t i o n . P r ic e v i o l a t i o n s w ere fr e q u e n t and w id e -sp r e a d a t a l l l e v e l s o f d is tr ib u tio n .

180 5 . In what manner d id t h e r e t a l ia t io n a f f e c t su p p ly o f t h e commodity i n q u e s t io n and r e l a t e d c o m m o d itie s?

A ll a v a i l a b l e

e v id e n c e i n d i c a t e s t h a t t h e c e i l i n g p r i c e s fo r f l u i d m ilk d id n o t h ave a d e l e t o r l o u s a f f e c t on p r o d u c t io n .

The Bureau o f

A g r ic u lt u r a l E conom ics d o e s n ot m a in ta in s e p a r a t e d a ta by s t a t e s f o r f l u i d m ilk and m ilk u se d f o r m an u factu red d a ir y p ro d u cts.

The Bureau d o e s h ave d a t a on t o t a l m ilk p r o d u c tio n

f o r fo u r o f t h e s i x s t a t e s w hich com p rised OPA-Region 5»

S ee

T a b le s 15 th r o u g h 1 8 f o r t o t a l m onthly p r o d u c tio n o f m ilk on farm s (1936 th r o u g h 194-6) f o r t h e S t a t e s o f K an sas, M is s o u r i, Oklahoma, and T e x a s .

F or K ansas t o t a l m ilk p r o d u c tio n f o r

t h e y e a r s 1942 th r o u g h 194-5 i n c l u s i v e , ex ce e d e d in ea ch y e a r t h e t o t a l y e a r ly m ilk p r o d u c t io n o f t h e p r e - c o n t r o l y e a r s 1936 18 th r o u g h 1 9 4 1 . T o t a l p r o d u c tio n i n 1946 ( t h e r e was o n ly s i x m onths o f p r i c e c o n t r o l i n 19 46) d e c lin e d s l i g h t l y , b ut s t i l l exceeded a l l p r e -c o n tr o l y ea rs

(1 9 3 6 -1 9 4 1 ) e x c e p t o n e .

In M is s o u r i t o t a l , m ilk p r o d u c tio n i n ea ch o f t h e p r ic e c o n t r o l y e a r s e x c e e d e d t h e h ig h e s t l e v e l o f p r o d u c tio n a t t a in e d i n any p r e - c o n t r o l y e a r , 1936 th ro u g h 1 9 4 1 .

The d a ta f o r t h e

S t a t e o f Oklahoma r e v e a l s t h a t t o t a l m ilk p r o d u c tio n f o r 1942 th r o u g h 1945 i n ea c h y e a r ex c e e d e d t h e h ig h e s t l e v e l o f p ro ­ d u c t io n f o r any y e a r 1936 th r o u g h 1 9 4 1 . p r o d u c tio n f o r t h e f i v e

In T exas t o t a l m ilk

(1 9 4 2 -1 9 4 6 ) p r i c e c o n t r o l y e a r s a v era g ed

4 ,3 0 1 m i l l i o n pounds a y e a r .

In com p arison t h e y e a r ly a v era g e

18. P r ic e c o n t r o l o f f l u i d m ilk was i n s t i t u t e d i n March 1942 and e x p ir e d on June 3 0 , 1 9 4 6 .

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213 m ilk w ere u se d i n 194-6. p r o d u c tio n i n c r e a s e .

Dry w hole m ilk showed a phenom enal

In 1939 t h i s p ro d u ct u se d 185 m i l l i o n

pounds o f m ilk ; i n 194-3 i t u sed 1 ,0 5 2 m i l l i o n pounds; i n 194-5, t h e a l l - t i m e h ig h , dry w h ole m ilk u t i l i z e d 1 ,6 5 0 m il l i o n p o u n d s.

M ilk u se d f o r f l u i d p u r p o ses (m ilk and cream) a l s o

in c r e a s e d g r e a t l y d u r in g t h e war y e a r s .

In 1939 f l u i d m ilk

a c c o u n te d f o r 3 3 ,0 5 6 m i l l i o n pounds; i n 194-2, 3 7 ,6 5 0 m i l l i o n p ounds; 4 1 ,0 0 0 m i l l i o n i n 19 4 3; 4 3 ,0 0 0 m i l l i o n i n 1944, w ith an in c r e a s e t o 4 6 ,0 0 0 m i l l i o n pounds in 1945*

The a l l - t i m e

h ig h was r e a ch ed i n 1946 when 4 7 ,0 0 0 m i l l i o n pounds were u se d 55 f o r f l u i d m ilk and cream . W ith t h e e x c e p t io n o f b u t t e r , c i v i l i a n p e r c a p it a con ­ su m p tio n o f m an u factu red d a ir y p r o d u c ts and f l u i d m ilk e x ­ ceed ed p r e-w a r l e v e l s .

S ee T ab le 23*

P er c a p i t a c i v i l i a n

co n su m p tio n o f f l u i d m ilk and cream in c r e a s e d from 343 pounds i n 1 9 4 0 , t o 371 pounds i n 1 9 4 2 , t o 394 pounds i n 1943,,.to 411 pounds i n 1 9 4 4 , t o 432 pounds i n 1 9 4 6 .

S o - c a ll e d s h o r ta g e s

o f m an u factu red d a ir y p r o d u c ts and f l u i d m ilk d u r in g t h e p e r io d o f p r i c e c o n t r o l w ere n ot s h o r ta g e s in t h e s e n s e o f (e x c e p t f o r b u t t e r ) red u ced s u p p ly .

The s h o r ta g e was r e l a t i v e ,

i n r e l a t i o n t o th e g r e a t l y in c r e a s e d consum er demand f o r such p r o d u c t s , ca u se d by t h e l a r g e in c r e a s e i n consum er in co m e s. In c o n c lu s io n , on t h e su p p ly q u e s t io n — t h e r e i s i r ­ r e f u t a b l e e v id e n c e t h a t t h e sy stem o f p r i c e c o n t r o ls and 55• The d a ta on f l u i d m ilk and cream d o es n o t in c lu d e m ilk and cream consumed on farm s where p ro d u ced .

214 TABLE 23 MILITARY AND CIVILIAN CONSUMPTION:

SELECTED MANUFACTURED

DAIRY PRODUCTS AND FLUID MILK AND CREAM

Y ear

B u tte r 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946

M ilit a r y ( M illio n Pounds)

C iv ilia n ( M illio n Pounds)

1 9 3 6 -1 9 4 6

C iv ilia n , p er c a p i t a (Pounds)

70 124 266 321 222 54

2 ,1 1 4 2 ,1 1 9 2 ,1 4 8 2 ,2 7 6 2 ,2 4 4 2 ,1 1 6 2 ,0 9 2 1 ,5 2 5 1 ,5 3 2 1,4-15 1 ,4 5 9

1 6 .4 1 6 .4 1 6 .4 1 7 .3 1 6 .9 1 6 .0 1 5 .8 1 1 .8 1 1 .9 1 0 .9 1 0 .5

11 56 128 212 31 8

688 712 759 775 791 780 843 637 624 861 930

5 .3 5 .5 5 .8 5 .9 6 .0 5 .9 6 .4 4 .9 4 .8 6 .6 6 .7

E v a p o ra ted m ilk 1936 1937 1938 1939 1940 1941 165 1942 432 661 1943 1944 1 ,2 1 8 816 1945 1946 51

1 ,8 1 0 1 ,9 3 0 2 ,0 2 9 2 ,1 3 2 2 ,3 1 5 2 ,2 1 8 2 ,1 7 3 2 ,2 1 0 1 ,7 7 0 2 ,1 0 5 2 ,3 6 6

1 4 .0 1 4 .9 1 5 .5 1 6 .2 1 7 .4 1 6 .7 1 6 .3 1 7 .1 1 3 .7 1 6 .2 17 »o

C h eese# 19361 1937 1938 1939 1940 1941 1942 194-3 1944 1945 1946

215 TABLE 23 C o n t'd .

Yean

M ilit a r y ( M i ll i o n P ounds)

Dry w h ole m ilk 1956 1937 1938 1939 194-0 1941 1942 1943 1944 1945 1946

C iv ilia n ( M illio n Pounds)

8 20 34 76 60 7

18 14 15 17 19 21 26 50 44 48 71

N o n fa t dry m illc s o lid s 1936 1937 1938 1939 1940 1941 7 1942 17 1943 31 1944 104 1945 243 19 4 6 41

226 244 275 285 295 325 335 273 193 248 451

T o ta l m ilk and f l u i d m ilk & cream 1936 1937 1938 1939 1940 1941 244 1942 438 1943 1 ,5 2 8 1944 1 ,6 4 7 1945 1 ,6 0 0 19 4 6 375

4 3 ,9 2 5 4 4 ,2 5 3 4 4 ,3 5 8 4 5 ,2 2 3 4 5 ,5 8 2 4 6 ,6 3 9 4 9 ,0 6 8 5 1 ,0 8 7 5 3 ,0 3 8 5 6 ,0 7 1 5 8 ,9 4 3

C iv ilia n , p er c a p it a (Pounds)

.1 4 .11 .11

.1 3 .1 4 .1 6 .20 .3 9 .3 4 .3 7 .5 1

1.8 1 .9 2.1 2.2 2.2 2 .5 2 .5 2.1 1 .5 1 .9 3 .2

341 341 339 343 343 352 371 394 411 432 423

* A l l c h e e s e e x c e p t f u l l skim , c o t t a g e , p o t and b a k e r ’ s, Source:

The D a iry S i t u a t i o n . U. S . D epartm ent o f A g r ic u lt u r e , W ashin gton , D. C ., May 1 9 5 0 . C om piled from d a ta on pp. 5 7 , 5 8 , 6 0 , 6 1 , 6 2 , and 6 4 .

216 s u b s id y oaym ents d id n o t rem ove t h e i n c e n t i v e f o r in c r e a s e d 56 o u tp u t. F u r th e r , s u c c e s s a tte n d e d t h e a tte m p t t o ch a n n el in c r e a s e d m ilk p r o d u c tio n i n t o p r o d u c ts need ed f o r t h e war e f f o r t and a h ig h h e a l t h sta n d a r d f o r th e c i v i l i a n p o p u la t io n .

O f f i c e Of P r ic e A d m in is tr a tio n — D epartm ent o f A g r ic u lt u r e 57 R e la t io n s The Emergency P r ic e C o n tr o l A ct o f 194-2, and su b seq u en t p r i c e c o n t r o l l e g i s l a t i o n p r o v id e d t h a t t h e O f f ic e o f P r ic e A d m in is tr a tio n c o u ld n o t t a k e any p r i c e a c t i o n w ith r e g a r d t o a g r i c u l t u r a l co m m o d ities w ith o u t t h e p r io r a p p ro v a l o f t h e S e c r e t a r y o f A g r ic u lt u r e .

S u b s e q u e n tly , t h e O f f ic e o f Econom ic

S t a b i l i z a t i o n was a u th o r iz e d t o s e t t l e d is p u t e s b etw een t h e two a g e n c i e s . The D epartm ent o f A g r ic u lt u r e o b ta in e d h ig h e r p r i c e s , w e l l above t h e l e g a l minimum, th a n s u g g e s t e d by t h e O f f ic e 58 o f P r ic e A d m in is tr a tio n f o r m an u factu red d a ir y p r o d u c t s . P r e v io u s ly d is c u s s e d was t h e r e j e c t i o n by t h e D epartm ent o f 5 6 . B u t t e r was p u r p o s e ly h a n d led so as n ot t o in c r e a s e o u tp u t. I t was not in te n d e d h ow ever, t o d e c r e a s e i t s o u tp u t b e lo w p r e-w a r l e v e l s . As i t tu r n e d o u t , d i f f e r e n t i a l p ay­ m ents t o farm ers f o r b u t t e r f a t w ere su ch a s t o d is c o u r a g e farm s e p a r a te d cream — h e n c e , b u t t e r p r o d u c tio n d e c l i n e d . 57* The s u b j e c t o f t h e r e l a t i o n b etw een t h e s e two a g e n c ie s i s d i s c u s s e d b r i e f l y i n o r d e r t o show some o f t h e prob lem s in v o lv e d i n d a ir y p r o d u c ts and f l u i d m ilk p r i c e c o n t r o l . For an e x c e l l e n t tr e a tm e n t o f t h e c o n f l i c t s b etw een them on p r i c e c o n t r o l m a tte r s s e e : B enjam in C ap lan , e d . , op,, c i t . , P a r t V, a l s o P e t e r G. F ran ck , e d . , o p . c i t . , Ch. V and P a r t I I . 5 8 . B enjam in C ap lan , e d . , o p . c i t . , pp. 3 9 5 -3 9 7 .

217 c e l l i n g p r i c e s on m a n u fa c tu r in g m ilk .

In g e n e r a l, t h e D e p a r t­

ment o f A g r ic u lt u r e was a s tr o n g f o r c e i n e f f e c t i n g h ig h e r p r i c e s f o r a g r i c u l t u r a l co m m o d itie s, and i n s u b s t i t u t i n g 59 d i r e c t p r i c e i n c r e a s e s f o r s u b s id y p aym en ts, and by i t s a c t i o n i n f e d e r a l m ilk m ark ets was an im p o rta n t in f lu e n c e on t h e f l u i d m ilk p r i c e s t r u c t u r e i n some a r e a s .

On m ost m a tte r s

o f p o l i c y and p r i c e l e v e l s f o r f l u i d m ilk and m an ufactured d a ir y p r o d u c ts , t h e D epartm ent and t h e O f f ic e o f P r ic e Ad­ m i n i s t r a t i o n w ere seldom i n a g reem en t.

Many exam ples c o u ld

be g iv e n , but t h e f o llo w in g i s i n d i c a t i v e o f th e d i f f e r e n c e s 60 o f o p in io n w h ich e x i s t e d . On January 2 , 194-6, t h e S e c r e ­ t a r y o f A g r ic u lt u r e recommended t h a t t h e p r i c e o f b u t t e r be in c r e a s e d s i x c e n t s p e r pound.

B e fo r e t h e i s s u e had. b een

d e c id e d and w h ile d i s c u s s i o n on t h e s u b j e c t was i n p r o g r e s s b etw een r e p r e s e n t a t i v e s o f t h e O f f i c e o f P r ic e A d m in is tr a tio n , t h e D epartm ent o f A g r ic u lt u r e , and t h e O f f i c e o f Economic S t a b i l i z a t i o n , t h e S e c r e ta r y o f A g r ic u lt u r e i n a p u b lic sp e e c h s t a t e d he approved an 18 c e n t s p e r pound i n c r e a s e .

T w elve

c e n t s o f t h e in c r e a s e was t o r e s u l t from t h e rem oval o f t h e s u b s id y payment and s i x c e n t s was an a b s o lu t e in c r e a s e .

The

P r ic e A d m in is tr a to r t h e n p u b l i c l y announced t h a t t h e p r i c e o f b u t t e r would n o t be in c r e a s e d .

As a r e s u l t o f t h i s p u b lic

argum ent, an im p o rta n t i s s u e was n ot s e t t l e d f o r m onths. 5 9 . P e t e r G. F ra n ck , e d . , 6 0 . B enjam in C a p la n , e d .,

op . c i t . . P a r t I I . op . c i t . , p . 4 5 2 .

218 The r e c o r d shows t h a t t h e Departm ent o f A g r ic u lt u r e w it h i t s r e s p o n s i b i l i t y f o r s u p p ly , and t h e O f f ic e o f P r ic e A d m in is tr a tio n w ith i t s r e s p o n s i b i l i t y f o r s t a b i l i z i n g p r i c e s , d id n o t work w e l l t o g e t h e r .

R ig h t ly d id t h e su p p ly agency

e v id e n c e i n t e r e s t i n t h e l e v e l o f a g r i c u l t u r a l p r i c e s , f o r as p r i c e c o n t r o l h i s t o r y h a s shown, p r i c e i s an im p ortan t i n ­ c e n t i v e t o p r o d u c tio n .

I t may w e ll b e t h a t b o th t h e D ep a rt­

ment o f A g r ic u lt u r e and t h e O f f ic e o f P r ic e A d m in is tr a tio n w ere o v er z e a lo u s o f t h e i r p e r o g a t i v e s . its

The D ep artm ent, i n

a n x ie ty t o in c r e a s e s u p p ly , may h ave in f lu e n c e d p r i c e s

on t h e h ig h s i d e — h ig h e r th a n r e q u ir e d t o o b t a in t h e need ed q u a n titie s .

H ig h er p r i c e was t h e D ep a r tm e n t's answ er t o most

su p p ly p ro b le m s.

On t h e o th e r s i d e , t h e O f f ic e o f P r ic e Ad­

m i n i s t r a t i o n may w e ll h ave e x h i b i t e d , a t t im e s , extrem e r e 61 lu c t a n c e t o in c r e a s e p r i c e s f o r su p p ly r e a s o n s . The De­ p artm en t o f A g r i c u l t u r e ' s r o l e as t h e p r o t e c t o r and b e n e f a c t o r o f t h e farm er, and i t s c o n s ta n t e f f o r t s o v er t h e y e a r s t o i n ­ c r e a s e farm p r i c e s and fa r m e r s' p r o p o r t io n a t e sh a r e o f t h e n a t io n a l in com e, p o o r ly eq u ip p ed t h i s D epartm ent t o c o n t r o l farm p r i c e s or s h a r e i n t h e i r c o n t r o l d u r in g a war em ergen cy.

Summary The h i s t o r y o f f l u i d m ilk p r i c e c o n t r o l i n t h e D a lla s R e g io n a f f o r d s am ple exam p les o f t h e p rob lem s in v o lv e d .

The

m ethods and t e c h n iq u e s d e v e lo p e d i n t h e D a lla s R eg io n appear 61. B u tter.

219 t o p o in t t h e way t o e q u it a b le and a d m in i s t r a t i v e ly f e a s i b l e c o n t r o l o f f l u i d m ilk i n any f u tu r e w a r-tim e economy w hich c a l l s f o r a n a t io n a l s t a b i l i z a t i o n program . S t a tu t o r y sta n d a r d s f o r a g r i c u l t u r a l p r o d u c ts p r e v e n te d t h e d ev elo p m en t o f a c o o r d in a te d b a la n c e d p r i c e program . L e g i s l a t i v e r e q u ir e m e n ts t h a t a l l a g r i c u l t u r a l com m od ities be p r ic e d i n t h e same g e n e r a l r e l a t i o n s h i p t h a t o b ta in e d 30 y e a r s ago n u l l i f i e d t o a l a r g e e x t e n t t h e u s e o f p r i c e t o d i r e c t p r o d u c tio n i n t o t h e c h a n n e ls r e q u ir e d by a war econom y. T h is meant t h a t some a g r i c u l t u r a l p r o d u c ts had t o be p r ic e d c o n s id e r a b ly above t h e s t a t u t o r y sta n d a rd i n o rd er t o o b t a in t h e r e q u ir e d s u p p ly . o b t a in t h i s o b j e c t i v e .

In some c a s e s , s u b s i d i e s w ere u se d t o I n t h e a b se n c e o f t h e s t a t u t o r y r e ­

q u ir e m e n t, e x p e n d itu r e s f o r s u b s i d i e s would h ave b een much s m a lle r .

P r ic e c o n t r o l a t p a r i t y

(w ith o u t s u b s i d i e s ) f o r a l l

a g r i c u l t u r a l co m m o d ities i s im p o s s ib le i f n eed ed supx^lies o f a g iv e n commodity a r e t o be a c h ie v e d . A sta n d a r d f o r p r i c i n g a g r i c u l t u r a l com m od ities w hich v/ould overcom e many o f t h e o b j e c t io n s t o t h e p a r it y sta n d a rd and would im prove t h e p o s s i b i l i t y o f a t t a i n i n g a g r e a t e r d e ­ g r e e o f s t a b i l i z a t i o n o f farm com m od ities would b e:

t h e m in i­

mum l e g a l p r i c e f o r a g r i c u l t u r a l c o m m o d itie s •would b e t h e p e r c e n t a g e o f p a r i t y ea c h commodity had a t t a in e d on some b a se d a te .

T h is sta n d a r d w ould h ave two im p o rta n t a d v a n ta g e s:

(1 ) t h e p r i c e r e l a t i o n s h i p s b etw een com m od ities would b e i n a p p r o x im a te ly t h e c o r r e c t b a la n c e , and (2) p r i c e s c o u ld s t i l l

220 advance as p a r i t y in c r e a s e d , but t h e r e l a t i o n s h i p o f p r i c e s would rem ain c o n s t a n t .

S u b s id ie s , i f n e c e s s a r y , c o u ld be

u se d t o s t im u la t e p r o d u c tio n i n commodity a r e a s where n eeded. P o l i t i c a l l y , t h e a d o p tio n o f a p r i c i n g sta n d a rd f o r a g r i c u l t u r a l co m m o d ities o th e r th a n p a r it y i s p ro b a b ly im­ p o s s ib le .

The l e g i s l a t i v e h i s t o r y o f p r i c e c o n t r o l d u r in g

World War I I d o e s n o t p r o v id e much hope f o r im provem ent. Farm o r g a n iz a t io n s , and t h e s o l i d a r i t y o f t h e s o - c a l l e d farm b lo c C ongressm en who c o n t in u a l ly t r i e d t o change t h e p r i c i n g s ta n d a r d s upward, p r e s a g e sm a ll h ope t h a t econom ic c o n s id e r 62 a t io n s w i l l be t h e f i n a l d e te r m in a n t o f l e g i s l a t i v e a c t i o n . I n c o n c lu s io n , a lth o u g h t h e a g r i c u l t u r a l p r ic i n g sta n d a r d s c o n t r ib u t e d t o in c r e a s e d p r i c e s o f t h e s e p r o d u c ts 6 2 . For a d e t a i l e d a n a l y s i s o f t h e l e g i s l a t i v e h is t o r y o f p r i c e c o n t r o l la w s d u r in g World War I I s e e : James B. E c k e r t, e d . , P roblem s i n P r ic e C o n t r o l: P r ic in g S ta n d a r d s . ( O f f ic e o f P r ic e A d m in is tr a tio n , O f f i c e o f Temporary C o n t r o ls , U. S . Government P r in t i n g O f f i c e , W ashin gton , D. C ., 194-7) C h ap ters IV, VI; P e t e r G. F ran ck , e d . , otj. c i t . , C h a p ters V, V I II th ro u g h XVI. Each y e a r a s t h e p r i c e c o n t r o l e x t e n s io n b i l l came up i n C o n g r e ss, farm o r g a n iz a t io n s and farm b lo c C o n g ress­ men t r i e d , and som etim es s u c c e e d e d i n r e l a x i n g p r ic e c o n t r o l sta n d a r d s f o r a g r i c u l t u r a l c o m m o d itie s. S e v e r a l a tte m p ts w ere made t o g i v e t h e S e c r e t a r y o f A g r ic u lt u r e c o m p le te con ­ t r o l o v e r t h e p r i c i n g o f a g r i c u l t u r a l c o m m o d itie s. In t h e 194-6 e x t e n s io n o f t h e Emergency P r ic e C o n tr o l A c t, t h i s was a c t u a l l y a c c o m p lish e d . The P r ic e A d m in is tr a to r was r e q u ir e d w it h in t e n d a y s o f r e c e i p t o f n o t i c e from t h e S e c r e ta r y o f A g r ic u lt u r e t h a t a p ro d u ct was i n s h o r t s u p p ly , t o in c r e a s e th e p r i c e o f t h e commodity by t h e amount r e q u e s te d by t h e S e c r e t a r y . The d e s i r e o f farm o r g a n iz a t io n s and C ongressm en (who w ere i n t e r e s t e d i n h ig h e r p r i c e s ) t o g i v e c o n t r o l o v er a g r i c u l t u r a l co m m o d ities t o t h e S e c r e ta r y o f A g r ic u lt u r e ap p ears t o co n fir m t h e b e l i e f t h a t t h e D epartm ent o f A g r i­ c u lt u r e would g i v e them more " fa v o r a b le tr e a tm e n t."

221 d u r in g World War I I , a r e a s o n a b ly a d eq u a te program was a c h ie v e d . Supply o f m an ufactu red d a ir y p r o d u c ts and f l u i d m ilk was more th a n a d e q u a te .

In v ie w o f s t a t u t o r y r e s t r i c t i o n s and t h e

p o s i t i o n o f t h e D epartm ent o f A g r ic u lt u r e , p r i c e s on t h e w hole w ere p ro b a b ly m a in ta in e d a t minimum l e v e l s .

R ecom m endations I f once a g a in t h e U n ite d S t a t e s i s f o r c e d t o e s t a b l i s h p r i c e c o n t r o l s , e x p e r ie n c e d u r in g World War I I i n d i c a t e s t h a t c a r e f u l c o n s id e r a t io n s h o u ld be g iv e n t h e f o llo w in g e le m e n ts in c r e a t i n g an e f f e c t i v e c o n t r o l f o r f l u i d m ilk and manu­ f a c tu r e d d a ir y p r o d u c ts : L e g is la tiv e 1.

L e g a l minimum p r i c e s f o r a g r i c u l t u r a l co m m o d ities,

and p r o d u c ts p r o c e s s e d from them , sh o u ld be t h e p e r c e n ta g e o f p a r i t y each commodity had a t t a in e d upon some s p e c i f i c r e c e n t b a se d a t e . (For ex am p le, i f p r i c e c o n t r o l were i n i t i a t e d on J a n ­ uary 1 , 1 9 5 1 , a r e c e n t b a s e d a te s h o u ld be s e l e c t e d , December 1 , 1 9 5 0 .

su ch as

I f commodity "A" w ere a t 150 p er c e n t o f

p a r i t y on December 1 , 1 9 5 0 , and commodity "b" a t 90 p e r c e n t o f p a r i t y on t h a t d a t e , t h e i r minimum p r i c e s sh o u ld f o ll o w t h i s 9 0 -1 3 0 r e l a t i o n s h i p b e c a u s e i t r e p r e s e n t s t h e im m ediate p r e - r e g u l a t i o n m arket e v a lu a t io n o f "A" and mB."

I f b o th

have minimum p r i c e s o f 100 p er c e n t o f p a r i t y , no s t a b i l i t y can r e s u l t ;

i f "A" were f l u i d m ilk and "B" w ere f e e d ,

fe e d

222 p r ic e 3 would, h ave t o r i s e from 90 p er c e n t o f p a r it y t o 100 p e r c e n t b e f o r e p r i c e s c o u ld b e c o n t r o l l e d , w h ile f l u i d m ilk a t 13 0 p e r c e n t o f p a r i t y w ould im m ed ia tely be p r ic e con ­ t r o l l e d ; w ith th e new in c r e a s e d p r i c e o f f e e d ,

f l u i d m ilk

p r i c e s c o u ld h a r d ly be k ep t from r i s i n g even un d er l e g a l con ­ tr o ls . ) 2 . A u th o r ity t o u s e su b sid y paym ents sh o u ld be e n a c te d . S u b sid y paym ents make i t p o s s i b l e t o s t a b i l i z e t h e c o s t - o f l i v i n g w h ile a l s o c r e a t i n g an i n c e n t i v e t o p rod u ce th e la r g e r q u a n tit y o f s p e c i f i c a g r i c u l t u r a l com m od ities r e q u ir e d by a war econom y. 3 . One c e n t r a l i z e d agen cy s h o u ld have a u t h o r it y o v er p r i c e s , r a t i o n i n g , r e s t r i c t i o n o f b u s in e s s p r a c t i c e s , and a l l o th e r d e t a i l s p e r t a i n i n g t o t h e r e g u l a t io n o f a g r i c u l t u r a l p r o d u c ts (and p r o d u c ts p r o c e s s e d from a g r i c u l t u r a l p r o d u c t s ) . ( H i s t o r i c a l l y , t h e D epartm ent o f A g r ic u lt u r e h a s worked c o n s i s t e n t l y i n b e h a lf o f g r e a t e r b e n e f i t s , p a r t ic u l a r l y econom ic b e n e f i t s ,

f o r t h e fa rm er.

f u n c t io n f o r t h e D ep a rtm en t.

T h is h a s b een a p ro p er

Yihere p r i c e s must b e s e t b o th

from t h e v ie w p o in t o f t h e c i v i l i a n consum ers a s w e ll a s t h e fa rm er, d o e s t h i s b a s i c p h ilo s o p h y d i s q u a l i f y t h e D epartm ent o f A g r ic u lt u r e from s e r i o u s c o n s id e r a t io n as t h e c o n t r o l a u t h o r it y f o r a g r i c u l t u r a l p r o d u c ts? ) P o lic y 1.

S p e c i f i c d o l l a r s - a n d - c e n t s p r i c e s sh o u ld be e s ­

t a b l i s h e d a t a l l l e v e l s o f p r o d u c tio n and d i s t r i b u t i o n f o r

223 f l u i d m ilk , m an u factu red d a ir y p r o d u c ts and f e e d s .

(Farm

la b o r c o s t s must a l s o be c o n t r o l le d by t h e a p p r o p r ia te s t a b i ­ l i z a t i o n a g e n c y , o r r e g u la t e d m ilk p r i c e s w i l l be c o n t in u a lly fo r c e d upwards by h ig h e r la b o r c o s t . ) 2 . P r ic e s f o r m ilk sh o u ld b e s e t f o r b o th i t s f l u i d and m a n u fa c tu rin g u s a g e s and i n p ro p er r e l a t i o n s h i p .

To a v o id

u n d e s ir a b le d i v e r s i o n , c o s t and p r i c e d i f f e r e n t i a l s must be e v a lu a te d by b o th u sa g e and g e o g r a p h ic a r e a . 3 . Feed c o s t c o n t r o l must c o n s id e r v a r io u s a n im a ls ( c a t t l e , h o g s, c h ic k e n s , m ilk cow s, e t c . ) and t h e i r o u tp u t (m ilk , e g g s , e t c . ) .

To s t a b i l i z e p r i c e s and t o a c h ie v e

su p p ly o b j e c t i v e s r e q u ir e c a r e f u l a n a l y s i s o f com plex r e ­ la tio n s h ip s . 4 . The t e c h n iq u e s and m ethods u se d by t h e D a lla s R e g io n a l O f f i c e o f th e O f f i c e o f P r ic e A d m in is tr a tio n t o con ­ t r o l m ilk p r i c e s d u r in g World War I I w ere h ig h ly e f f e c t i v e and sh o u ld b e c a r e f u l l y c o n s id e r e d f o r n a tio n -w id e u s e in any com parable f u tu r e em ergen cy.

A P P E N D

IX

225 APPENDIX A

INCLUSION OF FLUID MILK IN THE BIG FREEZE

The F lu id M ilk P r ic e S tan d ard The l i m i t a t i o n s t o p r i c e a c t io n c o n ta in e d i n S e c t io n 3 o f t h e Emergency P r ic e C o n tr o l Act c o n s i s t o f t h e h ig h e s t o f fo u r p r i c e s 'd e te rm in ed and p u b lis h e d by t h e S e c r e ta r y o f A g r i c u l t u r e . ' Only two o f t h e s e fo u r p r i c e s h ave b een so d ete rm in e d and p u b lis h e d f o r f l u i d m ilk ; t h e s e a r e t h e O ct­ ob er 1 , 194-1 p r i c e and t h e December 1 5 , 194-1 p r i c e . The S e c r e ta r y o f A g r ic u lt u r e h as p u b lis h e d no p a r it y p r ic e nor t h e 1 9 1 9 -2 9 a v e r a g e p r i c e o f f l u i d m ilk . U sin g t h i s s ta n d a r d , t h e r e f o r e , March f l u i d m ilk p r i c e s a r e above t h o s e S e c t io n 3 l i m i t a t i o n s w hich a r e o p e r a t i v e . The March 194-2 p r ic e was $ 2 .7 5 p e r c w t. compared w ith p r i c e s on O ctob er 1 , 194-1 and Decem ber 1 5 , 194-1 o f $ 2 .5 6 and $ 2 .7 0 r e s p e c t i v e l y . S u f f i c i e n t d a ta a r e a v a i l a b l e t o compute an a v era g e p r i c e o f f l u i d m ilk i n c i t y m arkets d u r in g t h e t e n y e a r s J u ly 1 9 1 9 -J u n e 1929* T h is a v e r a g e p r i c e i s $ 2 .7 9 , or $.04- p e r c w t. g r e a t e r th a n t h e March 194-2 p r i c e . T h is a v e r a g e , how ever, was com puted by t h i s o f f i c e r a t h e r th a n by t h e S e c r e ta r y o f A g r ic u lt u r e and h as n o t b e e n p u b lis h e d . M oreover, t h e d a ta from w h ich t h i s a v e r a g e p r i c e was com puted a r e s c a t t e r e d f o r some p e r io d s and a r e n o t s t r i c t l y com parable w ith c u r r e n t p r ic e s . (For exam p le, b e f o r e 1 9 2 1 , t h e p r i c e r e p o r te d was f o r m ilk o f b a s ic f a t t e s t ; s in c e t h a t tim e i t i s a p r i c e ad­ j u s t e d t o a 3*5 b a s i s . B e fo r e 1 9 2 1 , p r i c e s w ere l a r g e l y f . o . b . d e a le r s p l a n t s , s i n c e t h a t tim e f r e i g h t d e d u c tio n s have b een made f o r t h e l a r g e r m a r k e ts .) T h is la c k o f compa­ r a b i l i t y i s a c c e n tu a te d by t h e f a c t t h a t t h e d a ta r e p r e s e n t u n w eig h te d a v e r a g e s o f p r i c e s i n v a r io u s c i t y m a rk ets. P r ic e s vary w id e ly a s b etw een m a r k e ts, ru n n in g c o n s id e r a b ly h ig h e r in a r e a s t a k in g t h e l a r g e s t volu m e. For exam p le, th e a v era g e p r i c e f o r March, 194-2, w e ig h te d by p o p u la t io n i s $ 3 . 2 7 , com­ p ared w ith an u n w eig h ted a v e r a g e o f $ 2 .7 5 * ( D if f e r e n c e in w e ig h t in g d o e s not a cco u n t f o r a l l o f t h i s d i f f e r e n c e . ) The $ 2 .7 5 f i g u r e i s b a se d on 3 *5 $ m ilk w ith f r e i g h t d e d u c tio n made from t h e p r i c e in t h e l a r g e r m a r k e ts. The $3*27 f ig u r e i s f o r m ilk a t b a s i c f a t t e s t and in c lu d e s no f r e i g h t d e ­ d u c t io n s . The W h o le sa le M ilk P r ic e S tand ard F lu id m ilk i s o b ta in e d from " w h o le s a le m ilk ." That p a r t o f th e w h o le s a le m ilk w hich i s n ot s o ld a s f l u i d m ilk

226 and cream i s u se d in t h e m a n u factu re o f c h e e s e , ev a p o r a te d m ilk , b u t t e r , and o th e r d a ir y p r o d u c ts . No d a ta a re a v a i l a b l e a s to t h e u t i l i z a t i o n o f w h o le s a le m ilk as b etw een t h e s e p r o d u c t s , a lth o u g h i t h a s b een e s tim a te d ro u g h ly t h a t an a v e r a g e o f 60 p e r c e n t o f w h o le s a le m ilk i s s o ld i n f l u i d form . M oreover, i t i s im p o s s ib le t o i s o l a t e t h e s e p a r a te c o s t s o f t h e w h o le s a le m ilk e n t e r in g in t o ea ch o f t h e j o in t p r o d u c t s . However, some d i s c u s s i o n o f S e c t io n 3 l i m i t a t i o n s , u s in g w h o le s a le m ilk p r i c e s as t h e s ta n d a r d , may b e u s e f u l . Of t h e fo u r p r i c e l i m i t a t i o n s enum erated i n S e c t io n 3 (a) t h e S e c r e ta r y o f A g r ic u lt u r e h as p u b lis h e d a l l e x c e p t t h e 110% p a r it y p r i c e . T h is O f f i c e h a s com puted p a r it y p r i c e s u s in g 1 9 1 0 -1 4 as t h e b a s e . The December 1 5 , 1941 p r i c e , how ever, i s c o n t r o l l i n g a t $>2.66 p e r c w t. The March 1 5 , 1942 p r i c e i s # 2 .5 0 p e r c w t ., a drop o f $ . 1 6 . T h is drop was due e n t i r e l y t o t h e d e c l i n e in th e p r i c e s o f p r o d u c ts o th e r th a n f l u i d m ilk made from w h o le s a le m ilk , p r i c e s p a id by c o n d e n s e r ie s and c h e e s e f a c t o r i e s d e c l i n i n g by from 10 t o 15 p e r c e n t . P r e c i s e d a ta f o r March a r e n o t y e t a v a i l a b l e . The M ilk E q u iv a le n t P r ic e S tand ard The o n ly p e r t in e n t p r i c e s e r i e s f o r w hich t h e S e c r e ta r y h as d eter m in ed and p u b lis h e d p a r it y p r i c e s under S e c t i o n 3 i s t h e m ilk e q u iv a le n t p r i c e . T h is i s th e a v e r a g e p r i c e r e ­ c e iv e d by th e farm er f o r a l l m ilk and m ilk p r o d u c ts e x c e p t m ilk s o ld by t h e farm er a t r e t a i l . The c o n t r o l l i n g l i m i t a t i o n f o r t h e m ilk e q u iv a le n t p r i c e i s $ 2 .1 3 p er c w t ., w hich r e p r e ­ s e n t s -110 p e r c e n t o f p a r i t y i n March, 1 9 4 2 . T h is f ig u r e h appens t o b e t h e same a s t h e J u ly 1 9 1 9 -J u n e 1929 a v e r a g e . The a c t u a l p r i c e f o r t h e m ilk e q u iv a le n t i n March, 1942 i s # 1 .9 3 p e r c w t. o r $ .2 0 u n d er th e l i m i t a t i o n . T h is d e f i c i e n c y , h ow ever, i s due e n t i r e l y t o t h e r e l a t i v e l y low p r ic e s r e ­ c e iv e d by fa rm ers f o r farm b u t t e r and f o r b u t t e r f a t . I f th e p r i c e s o f t h e s e co m m o d ities were a t t h e i r a p p r o p r ia te l e v e l s un d er S e c t i o n 3 (1 9 1 9 -2 9 i s c o n t r o l l i n g ) and farm ers w ere r e ­ c e i v i n g March p r i c e s f o r w h o le s a le m ilk , t h e m ilk e q u iv a le n t p r i c e f o r March, 1942 w ould be $ 2 .1 3 , eq u a l t o t h e c o n t r o l l i n g l i m i t a t i o n u nder S e c t i o n 3» U sin g th e sta n d a r d , t h e r e f o r e , i t w ould appear t h a t w h o le s a le m ilk i s c o n t r ib u t in g i t s p ro p er p r o p o r t io n t o t h e fa r m e r s' r e t u r n f o r a l l m ilk . I t sh o u ld be n o te d t h a t t h i s c o n c lu s io n i s n ot e n t i r e l y c o n s i s t e n t w ith t h e d a ta shown i n T ab le 1 , where t h e p r i c e o f w h o le s a le m ilk i s in d ic a t e d t o b e o n ly 1 06 p e r c e n t o f p a r i t y . The d is c r e p a n c y , h ow ever, i s o n ly 4 p e r c e n t and c o u ld e a s i l y b e e x p la in e d by d i f f e r e n c e s i n t h e r e l a t i v e w e ig h ts o f t h e v a r io u s m ilk p r o d u c ts a t d i f f e r e n t p e r io d s o f t im e .

227 R e t a i l M ilk P r ic e s The g e n e r a l c o n c lu s io n s drawn above a r e su p p o rted by t h e h i s t o r y o f r e t a i l m ilk p r i c e s . The r e t a i l p r i c e o f f l u i d m ilk i n 51 l a r g e c i t i e s a s p u b lis h e d by t h e Bureau o f Labor S t a t i s t i c s was 15*1 c e n t s p er q u art in March, 1 9 4 2 , compared w ith O ctob er 1 9 4 1 , and Decem ber 1 9 4 1 , p r i c e s o f 1 4 .5 c e n t s and 1 4 .8 c e n t s r e s p e c t i v e l y . The a v e r a g e p r i c e d u r in g t h e y e a r s 1 9 1 9 -2 9 was 1 4 .4 c e n t s p er q u a r t. M oreover, p r i c e s r e ­ c e iv e d by fa rm ers f o r m ilk s o ld a t r e t a i l i n March w ere h ig h e r th a n any o f t h e l e v e l s a p p r o p r ia te under S e c t i o n 3 o f t h e P r ic e C o n tr o l A c t. The March 15» 1942 p r i c e was 1 1 .6 c e n t s p e r q u a r t, compared w ith a c o n t r o l l i n g p r i c e (December 1 5 , 19 4 1 ) o f 1 1 .4 c e n t s . The 1 9 1 9 -2 9 a v e r a g e p r i c e was 1 1 .3 c e n ts. Farm P r ic e o f M ilk C ould I n c r e a s e Under C e i l i n g A c o n s id e r a b le i n c r e a s e i n farm p r i c e s f o r m ilk c o u ld t a k e p la c e u nder f r o z e n r e t a i l f l u i d m ilk p r i c e s . D i s t r i ­ b u t io n m argin s h a v e shown a marked I n c r e a s e o v e r prew ar l e v e l s , t h e a v e r a g e m argin in 38 c i t i e s h a v in g r i s e n from $3*24 p e r c w t. o f f l u i d m ilk in 1 9 3 6 -3 9 t o an a v era g e o f $3*49 i n 1940 and t o $3*72 in March 1 9 4 1 . I f d i s t r i b u t o r s ' m argins were red u ced t o t h e i r p rew ar l e v e l s , farm ers c o u ld r e c e i v e a s much a s 48 c e n t s p e r c w t. more f o r t h e i r m ilk g o in g i n t o f l u i d u s e . T h is i n i t s e l f w ould p e r m it an in c r e a s e o f about 29 c e n t s p er c w t. i n t h e p r i c e s r e c e iv e d f o r w h o le s a le m ilk and about 13 c e n t s p er c w t. i n t h e p r i c e s r e c e iv e d by fa rm ers f o r t h e a l l m ilk e q u i v a l e n t . In t h e c a s e o f w h o le s a le m ilk t h i s in c r e a s e c o u ld b r in g t h e p r i c e s u b s t a n t i a l l y above S e c t i o n 3 l e v e l s and i n t h e c a s e o f t h e m ilk e q u iv a le n t , t o o n ly 7 c e n t s b elow t h e # 2 .1 3 c o n t r o l l i n g l e v e l . Even i f d i s t r i b u t o r s ' m argin s w ere red u ced o n ly t o 1941 a v e r a g e l e v e l s , t h e p r i c e o f w h o le­ s a l e m ilk c o u ld in c r e a s e ab ou t 1 4 c e n t s p er c w t. t o $ 2 .6 4 compared w ith a c o n t r o l l i n g l e v e l o f $ 2 . 6 6 . Farm p r i c e s o f m ilk c o u ld in c r e a s e n o t o n ly s u f f i c i e n t l y t o b r in g d i s t r i b u t o r s ' m argin s down t o t h e i r prew ar l e v e l s , bu t i n a d d i t i o n c e r t a i n eco n o m ies a r e i n p r o s p e c t w hich w i l l r e d u ce c o s t s o f d i s t r i b u t i o n . One o f t h e m ost s i g n i f i c a n t o f t h e s e econ om ies w ould r e s u l t from t h e s t r in g e n t c u r ta ilm e n t o f home d e l i v e r y a r i s i n g o u t o f t h e s h o r ta g e i n rubber and t r u c k s . Such c o s t r e d u c t io n s would p erm it a d d it io n a l in c r e a s e s i n t h e farm p r i c e o f m ilk u nder maximum r e t a i l p r i c e s .

(Economic b r i e f , s e c t i o n e n t i t l e d , I n d u s io n of F l u i d M ilk i n t h e B ig F r e e z e , f i l e s o f t h e Food P r i c e D i v i s i o n , O f f i c e of P r i c e A d m i n i s t r a t i o n , W ash i n g t o n , D. G. P r e s e n t l o c a t i o n unknown.)

228

APPENDIX B FIELD PRICE INSTRUCTION ACCOMPANYING- AMENDMENT 33 TO THE GENERAL MAXIMUM PRICE REGULATION

I n d iv id u a l m arket a d ju stm e n ts sh o u ld be made o n ly in c r i t i c a l s i t u a t i o n s r e q u ir in g im m ediate a t t e n t i o n . I t i s ad­ m i n i s t r a t i v e l y im p r a c t ic a l t o c o n tin u e m aking I n d iv id u a l ad­ ju stm e n ts i n d e f i n i t e l y and i t h as becom e e v id e n t t h a t d e f i n i t e f l u i d m ilk and cream p r i c e s c h e d u le s must b e e s t a b l i s h e d w hich w i l l encom pass w ide a r e a s . The is s u a n c e o f such s c h e d u le s must be b orn e i n mind when making n e c e s s a r y m arket a d ju stm e n ts in o rd er t h a t su ch in d i v i d u a l a d ju stm e n ts w i l l conform t o t h e r e g io n a l p a t t e r n when f i n a l l y c o m p le te d . I t i s n o t in te n d e d t h a t p r ic e a d ju stm e n ts made in a cc o rd a n c e w ith Amendment 33 s h a l l be g e n e r a lly u se d as a means o f p r o v id in g p r i c e i n c e n t i v e f o r t h e m a in ten a n ce or s t i m u la t i o n o f m ilk p r o d u c t io n . P r ic e a d ju s tm e n ts may be made in o rd er t o m a in ta in m ilk p r o d u c tio n i n any g iv e n m arket o r a r e a when i n t h e o p in io n o f t h e r e s p o n s i b le r e g io n a l o f f i c i a l f a i l u r e t o make su ch a d ju stm e n ts w ould d e p r iv e co n ­ sum ers o f a n e c e s s a r y su p p ly o f m ilk f o r f l u i d u s e . G en eral u s e o f p r i c e a d ju stm en t a s a means o f s t im u la t in g or even m a in ta in in g t h e r e c e n t h ig h l e v e l o f m ilk p r o d u c tio n in t h e f a c e o f i n e v i t a b l e s h o r ta g e s o f farm la b o r , and t h e a t t r a c t i v e a l t e r n a t i v e e n t e r p r i s e s open t o d a ir y fa r m e r s, would be i n ­ f la t io n a r y . I t f o ll o w s t h a t many m ilk m ark ets a r e f a c in g th e d isa p p e a r a n c e o f cu stom ary in s p e c t e d cream s u p p li e s and custom ary s u p p l i e s o f s u r p lu s m ilk . I t f o llo w s a l s o t h a t many l o c a l H e a lth D ep artm en ts must b e c a l l e d upon t o a c c e p t m ilk f o r f l u i d u s e a f t e r p a s t e u r i z a t i o n w hich i n normal t im e s w ould b e r e j e c t e d , a s f a i l i n g t o m eet t h e custom ary e s t a b l i s h e d s a n it a r y r e g u l a t io n s g o v e r n in g t h e p r o d u c tio n and h a n d lin g o f m ilk . The d e t e r m in a t io n and is s u a n c e o f a r e a m ilk p r i c e s c h e d u le s sh o u ld p r o c e e d tow ard t h e g o a l o f e s t a b l i s h i n g d e f i n i t e s c h e d u le s f o r t h e e n t i r e r e g io n w it h in t h e j u r i s ­ d i c t i o n o f t h e R e g io n a l O f f i c e . The number o f a r e a s n e c e s s a r y w it h in t h e r e g io n and t h e m arket p r i c e l e v e l s w it h in such a r e a s w i l l b e d e ter m in ed by t h e R e g io n a l O f f i c e . T h ese a r e a s sh o u ld in c lu d e m a rk ets w hich e x h i b i t g e n e r a lly s im i l a r p r i c e p a t t e r n s and p r o d u c tio n c o n d i t i o n s . I t i s r e c o g n iz e d t h a t c e r t a i n m o d if ic a t io n s o f e x i s t i n g p r i c e s w it h in su ch a r e a s w i l l be n ecessary. I t i s f u r t h e r r e c o g n iz e d t h a t r i g i d r u l e s g o v e r n ­ in g t h e e s ta b lis h m e n t o f a r e a or zon e p r i c e s can n ot be formu­ la te d . The p ro c ed u r e s u g g e s t e d t h e r e f o r e i s f l e x i b l e .

229 In v ie w o f t h e g r e a t v a r i e t y o f p r o d u c tio n and m arket­ in g c o n d it io n s w h ich a r e in v o lv e d , t h e f o llo w in g s u g g e s t io n s may b e c o n s id e r e d a s a g e n e r a l g u id e i n e s t a b l i s h i n g a r e a p r ic e s : ( 1 ) s i n c e t h e f . o . b . c i t y c o s t o f raw m ilk t o d i s ­ t r i b u t o r s w i l l b e g r e a t e r , o th e r f a c t o r s rem a in in g t h e sam e, a s t h e s i z e o f t h e m arket i n c r e a s e s and s i n c e t h e d i s t r i b u t i o n c o s t p er u n i t i s g e n e r a lly h ig h e r i n l a r g e m a r k ets, t h e s i z e o f t h e m arket may be u se d a s an a p p ro x im ate d e te r m in e n t o f t h e p r ic e l e v e l w it h in a g iv e n a r e a , (2 ) i t may b e p o s s i b l e f o r c e r t a i n R e g io n a l O f f ic e s t o e s t a b l i s h a r e a s ea ch o f w hich c o n t a in a la r g e or prim ary m arket and s e v e r a l seco n d a ry m a rk ets, ( 3 ) when p o p u la t io n i s d e n se and b o th p o p u la tio n and m ilk p r o d u c tio n a r e u n ifo r m ly d i s t r i b u t e d , l a r g e a r e a s may be e s t a b l i s h e d w hich c o n t a in a number o f la r g e and s m a ll m a rk ets, (4 ) i n s p a r s e ly p o p u la te d a r e a s where m ilk p ro ­ d u c t io n i s l i g h t or u n e v e n ly d i s t r i b u t e d , i t i s n o t p o s s i b l e t o s e t f o r t h any r i g i d s p e c i f i c a t i o n s f o r g u id a n c e , ( 5 ) w here su p p ly s h o r ta g e s e x i s t th ro u g h o u t an e n t i r e a r e a , r e s a l e p r i c e s sh o u ld b e e s t a b l i s h e d w hich w i l l p e rm it a g e n e r a lly u n iform p r i c e t o be p a id p r o d u c e r s by v a r io u s m arkets co m p etin g f o r t h e s u p p ly . In g e n e r a l t h i s w i l l mean t h a t t h e l a r g e r m ark ets h a v in g h ig h e r t r a n s p o r t a t io n and d i s t r i b u t i o n c o s t s w i l l h ave a h ig h e r r e s a l e p r ic e th a n t h e seco n d a ry m a rk ets, ( 6 ) i n e s t a b l i s h i n g p r i c e s f o r a r e a s w h ich are a d ja c e n t t o s i m i l a r a r e a s where p r i c e s a r e e s ­ t a b l i s h e d by o th e r R e g io n a l O f f i c e s , t h e a f f e c t e d o f f i c e s sh o u ld c o l l a b o r a t e b e f o r e a c t i o n i s ta k e n . F or p r a c t i c a l p u r p o se s t h e e s ta b lis h m e n t o f a r e a p r i c e s ca n be v iew ed as th e in c o r p o r a t io n o f r e l a t e d in d iv id u a l m ark ets w it h in t h e p r o v i s i o n s o f t h e a r e a p r i c e s c h e d u le s . P r ic e r e l a t i o n s h i p s b etw een a r e a s sh o u ld b e s c r u t i n i z e d in t h e l i g h t o f t h e a p p l i c a b l e p r i n c i p l e s and c r i t e r i a u se d i n m aking in d iv id u a l m arket a d ju s tm e n ts . P r ic e a d ju stm e n ts made i n t h e c o u r s e o f e s t a b l i s h i n g a r e a p r i c e s c h e d u le s w i l l in c lu d e two g e n e r a l t y p e s o f c a s e s :

2 30

(a) s h o r ta g e c a u se d by d i v e r s i o n o f a f l u i d m ilk m a r k e t's su p p ly t o n e ig h b o r in g f l u i d m ilk m a rk ets, (b) s h o r ta g e s c a u se d by d iv e r s i o n o f a m ilk m a r k e t's su p p ly from f l u i d m ilk c h a n n e ls t o m a n u fa ctu rin g u s e s , su ch as b u t t e r , c h e e s e , ev a p o r a te d m ilk , or m ilk pow der, due t o i n c r e a s e s i n t h e p r i c e s p a id t o m ilk p r o d u c e r s by su ch m a n u fa ctu rin g o u t l e t s s in c e March 194-2. In g e n e r a l t h e p r i c e s e s t a b l i s h e d w it h in any g iv e n a r e a s h o u ld (a ) p r o t e c t ea ch f l u i d m ilk m arket in t h e a r e a from s h o r ta g e c a u se d by d i v e r s i o n o f m ilk t o m an u factu r­ in g p l a n t s , (b) e q u it a b ly a l l o c a t e among co m p etin g m ilk m ark ets t h e t o t a l a v a i l a b l e su p p ly o f m ilk i n th e a rea w hich can be u se d f o r f l u i d m ilk p u r p o s e s .

231

APPENDIX C MEMORANDUM OF UNDERSTANDING BETWEEN THE DEPARTMENT OF AGRICULTURE AND THE OFFICE OF PRICE ADMINISTRATION RELATIVE TO FARM AMD FOOD PRICES

I n o rd er t o a s s u r e a c l o s e w orking r e l a t i o n s h i p b e ­ tw een t h e D epartm ent o f A g r ic u lt u r e and t h e O f f i c e o f P r ic e A d m in is tr a tio n on a l l m a tte r s a f f e c t i n g farm and food p r i c e s , t h e f o llo w in g p r o c e d u r e i s a g reed t o by b o th a g e n c ie s : 1 . The O f f i c e o f P r ic e A d m in is tr a tio n w i l l s e c u r e t h e s ig n a ­ t u r e o f t h e S e c r e t a r y o f A g r ic u lt u r e t o a l l r e g u la t io n s w h ich r e l a t e t o t h e e s ta b lis h m e n t o f p r ic e c e i l i n g s on a g r i c u l t u r a l c o m m o d itie s, a s p r o v id e d in t h e Emergency P r ic e C o n tr o l A ct o f 194-2, t h e A ct o f O ctob er 2 , 1942 (Pub* Law 7 2 9 , 7 7 t h C o n g .), and E x e c u tiv e Order No. 9520, O ctober 3 , 1942. 2 . The O f f i c e o f P r ic e A d m in is tr a tio n may c o n s u lt w ith t h e t e c h n i c a l s t a f f o f t h e D epartm ent o f A g r ic u lt u r e w ith r e ­ gard t o p rop osed p r i c e c e i l i n g s on p r o c e s s e d co m m o d itie s. The O f f i c e o f P r ic e A d m in is tr a tio n w i l l a l s o n o t if y a d e s ig n a t e d r e p r e s e n t a t i v e o f t h e S e c r e ta r y o f A g r ic u lt u r e o f any c o n te m p la te d c e i l i n g w hich t h e P r ic e A d m in is tr a to r h a s r e a s o n t o b e l i e v e w i l l d i r e c t l y and s u b s t a n t i a l l y a f f e c t t h e p ro cu rem en t, p r o d u c t io n , o r s u b s id y o p e r a tio n s o f t h e D epartm ent o f A g r ic u lt u r e . U n le s s t h e S e c r e ta r y o f A g r ic u lt u r e e n t e r s an o b j e c t i o n , t h e O f f ic e o f P r ic e Ad­ m i n i s t r a t i o n may p r o c e e d a s u s u a l. I f , h ow ever, t h e S e c r e ­ ta r y e n t e r s an o b j e c t i o n t o t h e is s u a n c e o f t h e p ro p o sed c e l l i n g , t h e m a tte r s h a l l b e r e f e r r e d t o t h e Economic S t a b iliz a t io n D ir e c to r . I f , on t h e o th e r hand, t h e O f f i c e o f P r ic e A d m in is tr a tio n i s o f t h e o p in io n t h a t t h e r e i s no r e a s o n t o b e l i e v e t h a t t h e c o n te m p la te d c e i l i n g w i l l d i r e c t l y and s u b s t a n t i a l l y a f f e c t t h e p ro cu rem en t, p r o d u c tio n or s u b s id y o p e r a t io n s o f t h e D epartm ent o f A g r ic u lt u r e , i t s d o c k e t s h a l l c o n t a in a s ta te m e n t t o t h a t e f f e c t . 3 . The Departm ent o f A g r ic u lt u r e may c o n s u lt w ith t h e t e c h n i ­ c a l s t a f f o f t h e O f f i c e o f P r ic e A d m in is tr a tio n i n co n ­ n e c t i o n w ith i t s m a rk etin g a g r e em en ts, o r d e r s and su p p o rt p r i c e program . The D epartm ent o f A g r ic u lt u r e w i l l a l s o n o t i f y a d e s ig n a t e d r e p r e s e n t a t iv e o f t h e P r ic e A dm inis­ t r a t o r o f any co n te m p la te d agreem en t, o rd er o r su p p ort p r i c e program w hich i t h as r e a s o n t o b e l i e v e w i l l r e q u ir e

232 a p r i c e c e i l i n g a d ju s tm e n t. U n le s s t h e P r ic e A d m in is tr a to r e n t e r s an o b j e c t i o n t o t h e p ro p o sed a c t i o n , t h e Departm ent o f A g r ic u lt u r e w i l l p r o c e e d a s u s u a l. I f t h e P r ic e A dm inis­ t r a t o r e n t e r s an o b j e c t i o n t o t h e p ro p o sed a c t i o n , t h e m a tte r s h a l l be r e f e r r e d t o t h e Econom ic S t a b i l i z a t i o n D i­ r e c to r . I f , on t h e o t h e r hand, t h e D epartm ent o f A g r i­ c u l t u r e i s o f t h e o p in io n t h a t t h e r e i s no r e a s o n t o b e ­ l i e v e t h a t i t s p r o p o se d a c t io n w i l l r e q u ir e a p r ic e c e i l ­ in g a d ju stm e n t, a s ta te m e n t t o t h a t e f f e c t s h a l l be con ­ t a in e d in t h e D epartm ent o f A g r ic u lt u r e 's d o c k e t . Whenever t h e r e i s r e a s o n t o b e l i e v e a p r i c e c e i l i n g a d ju stm en t w i l l b e r e q u ir e d and t h e P r ic e A d m in is tr a to r n e v e r t h e le s s a g r e e s t o t h e p ro p o sed c e i l i n g , t h e d o ck et w i l l c o n t a in a s t a t e ­ ment o f su ch a g r e e m e n t. 4 . A l l m a tte r s r e f e r r e d t o i n 1 , 2 and 3 above w i l l , i n s o f a r a s p r a c t i c a b l e , b e su b m itte d by t h e i n i t i a t i n g agency t o t h e a p p r o v in g agen cy in s u f f i c i e n t tim e t o p erm it t h e t e c h n i c a l s t a f f o f t h e a p p ro v in g agency c a r e f u l l y t o ana­ l y z e su c h m a tt e r s . 5 . I f any program r e f e r r e d t o in 1 , 2 o r 3 w i l l , i n t h e o p in io n o f t h e agen cy w hich i n i t i a t e s su ch program , n e c e s s i ­ t a t e a su b sid y i n o r d er t o m a in ta in a th e n e x i s t i n g or con ­ te m p la te d p r i c e c e i l i n g , t h e n a tu r e and amount o f su ch sub­ s id y v / i l l b e a g re ed upon by t h e S e c r e ta r y o f A g r ic u lt u r e and t h e P r ic e A d m in is tr a to r b e f o r e t h e a c t i o n n e c e s s i t a t i n g t h e su b sid y i s t a k e n . However, i f t h e agency w hich i n i t i ­ a t e s su ch program i s o f t h e o p in io n t h a t t h e program must b e p u t in t o e f f e c t p r o m p tly , i t may p r o c e e d w ith su ch p r o ­ gram, u n l e s s t h e o th e r agency o b j e c t s , in w hich c a s e t h e m a tte r s h a l l be r e f e r r e d t o t h e Economic S t a b i l i z a t i o n D i­ r e c t o r . A ll s u b s id y program s s h a l l b e approved by t h e Econom ic S t a b i l i z a t i o n D ir e c t o r b e fo r e th e y become e f f e c t i v e . 6 . W ith r e s p e c t t o p r o d u c e r s ' p r i c e s f o r f l u i d m ilk , und er t h e A g r ic u lt u r a l m a rk etin g Agreem ent Act o f 1 9 3 7 , i t i s t h e d u ty o f t h e S e c r e ta r y o f A g r ic u lt u r e o n ly t o f i x p r o d u c e r s' p r i c e s , and a s a r e s u l t , t h e Departm ent d o e s n ot r e c e i v e d e t a i l e d e v id e n c e o f h a n d le r s ' m argins a t h e a r in g s con ­ d u c te d u nder t h e A c t. M ilk p r o d u c e r s' p r i c e s so f ix e d may d i r e c t l y and s u b s t a n t i a l l y a f f e c t p r i c e c e i l i n g s on w h o le­ s a l e and r e t a i l f l u i d m ilk and cream . Where t h i s i s s o , t h e D e p a r tm e n t's h e a r in g s w ith r e s p e c t t o p r o d u c e r s ' p r i c e s may b e f o llo w e d im m ed ia te ly by h e a r in g s co n d u cted by t h e A c t . M ilk p r o d u c e r s ' p r i c e s so f ix e d may d i r e c t l y and s u b s t a n t i a l l y a f f e c t p r i c e c e i l i n g s on w h o le s a le and r e t a i l f l u i d m ilk and cream . Where t h i s i s s o , t h e D ep a rtm en t's h e a r in g s w ith r e s p e c t t o p r o d u c e r s ' p r i c e s may be fo llo w e d im m ed ia tely by h e a r in g s co n d u cted by t h e O f f ic e o f P r ic e A d m in is tr a tio n f o r t h e p u rp o se o f d e te r m in in g t h e e x t e n t t o w h ich h a n d le r s ' m argin s a re a f f e c t e d and some form o f a c t io n i s r e q u ir e d . The t e c h n i c a l s t a f f o f t h e D ep artm ent, in s o f a r

233 a s p r a c t i c a b l e , w i l l b e a v a i l a b l e t o a s s i s t i n g a t h e r in g in fo r m a tio n and i n a n a ly z in g t h e e v id e n c e r e c e iv e d a t such OPA h e a r in g s . B e fo r e any change i s announced i n p r o d u c e r s ' p r i c e s under a F e d e r a l m ilk -m a r lc etin g o r d e r , t h e S e c r e ta r y and t h e P r ic e A d m in is tr a to r w i l l a g r e e a s t o t h e e f f e c t o f su c h o rd er on h a n d le r s ' m argins and as t o w h eth er a s u b s id y , a d j u s t e d p r i c e c e i l i n g s or some o th e r form o f a c t io n i s r e q u ir e d . 7 . A lth o u g h ev ery e f f o r t w i l l be made by t h e S e c r e ta r y and th e P r ic e A d m in is tr a to r t o s o l v e t h e s e p rob lem s j o i n t l y a f f e c t ­ in g t h e i r a g e n c ie s w ith o u t t h e n e c e s s i t y o f r e f e r e n c e t o t h e Econom ic S t a b i l i z a t i o n D i r e c t o r , i t i s r e c o g n iz e d t h a t agreem ent may n ot a lw a y s b e p o s s i b l e . In c a s e o f d i s a g r e e ­ m ent, t h e S e c r e t a r y and t h e P r ic e A d m in is tr a to r w i l l subm it t h e i r v ie w s i n w r i t i n g t o t h e Econom ic S t a b i l i z a t i o n D i­ r e c t o r , s e n d in g c o p ie s t o ea ch o t h e r . The d e c i s i o n o f t h e Econom ic S t a b i l i z a t i o n D ir e c t o r w ith r e s p e c t t o such d i s ­ agreem ent s h a l l b e f i n a l .

/ s / C laude R. W lckard________ S e c r e ta r y o f A g r ic u lt u r e / s / Leon H enderson A d m in is tr a to r , O f f ic e o f P r ic e A d m in istr a t io n APPROVED: / s / James F. B yrn es James F . B y r n e s, D i r e c t o r , O f f i c e o f Econom ic S t a b i l i z a t i o n

Decem ber 1 1 . 1942 D a te

234 APPENDIX D EXECUTIVE ORDER WO. 9328 ISSUED BY THE PRESIDENT APRIL 8 , 1943

By v i r t u e o f t h e a u t h o r it y v e s t e d i n me by t h e Con­ s t i t u t i o n and t h e s t a t u t e s , and p a r t i c u l a r l y by t h e F i r s t War Pow ers A c t, 1 9 4 1 , and t h e A ct o f O ctob er 2 , 1 9 4 2 , e n t i t l e d "An Act t o amend t h e Emergency P r ic e C o n tr o l A ct o f 1 9 4 2 , t o a id i n P r e v e n tin g I n f l a t i o n , and f o r O ther P u r p o se s," as P r e s id e n t o f t h e U n ite d S t a t e s and Commander i n C h ie f o f t h e Army and Navy, and i n o rd er t o s a fe g u a r d t h e s t a b i l i z a t i o n o f p r i c e s , w ages and s a l a r i e s , a f f e c t i n g t h e c o s t o f l i v i n g on t h e b a s i s o f l e v e l s e x i s t i n g on Septem ber 1 5 , 1 9 4 2 , as a u th o r iz e d and d i r e c t e d by s a id A ct o f C on gress o f O ctober 2 , 1 9 4 2 , and E x e c u tiv e Order No. 9250 o f O ctober 3» 1 9 4 2 , and t o p r e v e n t i n c r e a s e s in w a g es, s a l a r i e s , p r i c e s and p r o f i t s , w h ich , how ever j u s t i f i a b l e i f v iew ed a p a rt from t h e i r e f f e c t upon t h e econom y, te n d t o underm ine t h e b a s i s o f s t a b i l i z a t i o n , and t o p r o v id e su c h r e g u l a t io n s w ith r e s p e c t t o t h e c o n t r o l o f p r i c e , wage and s a la r y I n c r e a s e s a s a re n e c e s s a r y t o m ain­ t a i n s t a b i l i z a t i o n , i t i s h ereb y o rd ered a s f o ll o w s : 1. In t h e c a s e o f a g r i c u l t u r a l com m od ities t h e P r ic e Ad­ m in i s t r a t o r and t h e A d m in is tr a to r o f Food P r o d u c tio n and D i s ­ t r i b u t i o n ( h e r e i n a f t e r r e f e r r e d t o a s t h e Food A d m in is tr a to r ) a r e d i r e c t e d , and i n th e c a s e o f o th e r com m od ities t h e P r ic e A d m in is tr a to r i s d i r e c t e d t o ta k e im m ediate s t e p s t o p la c e c e i l i n g p r i c e s on a l l co m m o d ities a f f e c t i n g t h e c o s t o f l i v i n g . Each o f them i s d i r e c t e d t o a u t h o r iz e no f u r t h e r i n c r e a s e s i n c e i l i n g p r i c e s e x c e p t t o t h e minimum e x t e n t r e q u ir e d by la w . Each o f them i s f u r t h e r d i r e c t e d im m ed ia tely t o u s e a l l d i s c r e t i o n a r y pow ers v e s t e d in them by law t o p r e v e n t f u r t h e r p r ic e In c rea ses d ir e c t or in d ir e c t , to p reven t p r o f it e e r in g and t o r e d u ce p r i c e s w hich a r e e x c e s s i v e l y h ig h , u n f a ir or in e q u ita b le . N o th in g h e r e i n , h ow ever, s h a l l b e c o n s tr u e d t o p r e v e n t t h e Food A d m in is tr a to r and t h e P r ic e A d m in is tr a to r , s u b j e c t t o t h e g e n e r a l p o l i c y d i r e c t i v e s o f t h e Economic S t a b i l i z a t i o n D ir e c t o r , from m aking su ch r e a d ju stm e n ts i n p r i c e r e l a t i o n s h i p s a p p r o p r ia te f o r v a r io u s co m m o d itie s, or c la s s e s , q u a lit ie s or grades th e r e o f or fo r sea so n a l v a r i­ a t io n s o r f o r v a r io u s m a rk etin g a r e a s , o r from a u t h o r iz in g su c h su p p o rt p r i c e s , s u b s i d i e s o r o th e r in d u cem en ts a s may be a u th o r iz e d by la w and deemed n e c e s s a r y t o m a in ta in or i n ­ c r e a s e p r o d u c tio n , p r o v id e d t h a t su ch a c t io n d o e s not in c r e a s e th e c o st o f l i v in g . The pow er, f u n c t io n s and d u t i e s c o n fe r r e d on t h e S e c r e ta r y o f A g r ic u lt u r e under g 3 o f t h e Emergency P r ic e C o n tr o l A ct o f 1942 (P u b lic Law 4 2 1 , 7 7 t h C on g.) and u n d er g 3 o f t h e Act o f O ctob er 2 , 1942 (P u b lic Law 7 2 9 , 7 7 th

235 C on g.) a re h ereb y t r a n s f e r r e d t o , and s h a l l be e x e r c is e d by t h e Food A d m in is tr a to r . 2 . The N a tio n a l War Labor B oard, th e C om m issioner o f In ­ t e r n a l Revenue and o th e r a g e n c ie s e x e r c i s i n g a u t h o r it y co n ­ f e r r e d by E x e c u tiv e Order No. 9250 o r E x e c u tiv e Order No. 9299 and t h e r e g u l a t io n s is s u e d p u rsu an t t h e r e t o o v e r wage or s a la r y in c r e a s e s a r e d i r e c t e d t o a u t h o r iz e no f u r t h e r in c r e a s e in wages or s a l a r i e s e x c e p t su ch as a r e c l e a r l y n e c e s s a r y t o c o r r e c t su b sta n d a r d s o f l i v i n g , p r o v id e d t h a t n o th in g h e r e in s h a l l b e c o n s tr u e d t o p r e v e n t su ch a g e n c ie s from making su ch wage or s a la r y r e a d ju stm e n ts a s may be deemed a p p r o p r ia te and may n o t have h e r e t o f o r e b een made t o co m p en sa te, i n a cco rd a n ce w ith t h e L i t t l e S t e e l Form ula a s h e r e t o f o r e d e f in e d by t h e N a tio n a l War Labor B oard , f o r t h e r i s e i n t h e c o s t o f l i v i n g b etw een January 1 , 194-1 and May 1 , 194-2. Nor s h a l l a n y th in g h e r e in be c o n s tr u e d t o p r e v e n t su ch a g e n c ie s , s u b j e c t t o t h e g e n e r a l p o l i c i e s and d i r e c t i v e s o f t h e Econom ic S t a b i l i z a t i o n D ir e c t o r , from a u t h o r iz in g r e a s o n a b le a d ju stm e n ts o f wages and s a l a r i e s i n c a s e o f p r o m o tio n s, r e c l a s s i f i c a t i o n s , m e r it i n c r e a s e s , i n c e n t i v e w ages or t h e l i k e , p r o v id e d t h a t su ch a d ju stm e n ts do n o t in c r e a s e t h e l e v e l o f p r o d u c tio n c o s t s a p p r e c ia b ly or f u r n is h t h e b a s i s e i t h e r t o I n c r e a s e p r i c e s o r t o r e s i s t o th e r w is e j u s t i f i a b l e r e d u c t io n s i n p r i c e s . 3 . The Chairman o f t h e War Manpower C om m ission i s a u th o r iz e d t o f o r b id t h e employment by any em p loyer o f any new em ployee or t h e a c c e p ta n c e o f employment by a new em p loyee e x c e p t as a u th o r iz e d i n a c co rd a n ce w it h r e g u la t io n s w hich may be is s u e d by t h e Chairman o f t h e War Manpower C om m ission, w ith t h e a p p ro v a l o f t h e Econom ic S t a b i l i z a t i o n D i r e c t o r , f o r t h e p u r­ p o s e o f p r e v e n t in g su c h employment a t a wage o r s a la r y h ig h e r th a n t h a t r e c e iv e d by su c h new em p loyee In h i s l a s t em ploy­ ment u n l e s s t h e ch an ge o f employment w ould a id i n t h e e f f e c t i v e p r o s e c u t io n o f t h e w ar. 4 . The a t t e n t i o n o f a l l a g e n c ie s o f t h e F e d e r a l G overnm ent, and o f a l l S t a t e and m u n ic ip a l a u t h o r i t i e s , co n cern ed w ith t h e r a t e s o f common c a r r i e r s or o th e r p u b lic u t i l i t i e s , i s d i r e c t e d t o t h e s t a b i l i z a t i o n program o f w h ich t h i s o rd er i s a p a r t so t h a t r a t e in c r e a s e s w i l l be d isa p p r o v e d and r a t e r e d u c t io n s e f f e c t e d , c o n s i s t e n t l y w ith t h e A ct o f O ctober 2 , 1 9 4 2 , and o t h e r a p p lic a b le f e d e r a l , s t a t e o r m u n ic ip a l la w , i n o rd er t o keep down t h e c o s t o f l i v i n g and e f f e c t u a t e t h e p u r p o se s o f t h e s t a b i l i z a t i o n program . 5 . To p r o v id e f o r t h e c o n s i s t e n t a d m in is t r a t io n o f t h i s o r d e r and E x e c u tiv e Order No. 925 0 , and o th e r o r d e r s and r e g u ­ l a t i o n s o f s i m i l a r Import and f o r t h e e f f e c t u a t i o n o f t h e pu r­ p o s e s o f t h e Act o f O ctober 2 , 1 9 4 2 , t h e Econom ic S t a b i l i z a t i o n D ir e c t o r i s a u th o r iz e d t o e x e r c i s e a l l pow ers and d u t i e s co n ­ f e r r e d upon t h e P r e s id e n t by t h a t A c t, and t h e Economic

236 S t a b i l i z a t i o n D ir e c t o r i s a u th o r iz e d and d i r e c t e d t o t a k e su c h a c t i o n and t o i s s u e su ch d i r e c t i v e s under t h e a u t h o r it y o f t h a t Act as he deems n e c e s s a r y t o s t a b i l i z e t h e n a t io n a l econom y, t o m a in ta in and I n c r e a s e p r o d u c tio n and t o a id i n t h e e f f e c t i v e p r o s e c u t io n o f t h e w ar. E xcept in s o f a r as th e y a r e i n c o n s i s t e n t w ith t h i s o r d e r o r e x c e p t i n s o f a r a s t h e D i r e c t o r s h a l l o th e r w is e d i r e c t , pow ers and d u t i e s c o n fe r r e d upon t h e P r e s id e n t by t h e s a id Act and h e r e t o f o r e d e v o lv e d upon a g e n c ie s or p e r s o n s o th e r th a n t h e D ir e c t o r s h a l l c o n tin u e t o be e x e r c is e d and p erform ed by su ch a g e n c ie s and p e r s o n s . 6. E xcept i n s o f a r a s th e y a r e in c o n s i s t e n t w ith t h i s o r d e r , E x e c u t iv e Order 9230 and t h e r e g u la t io n s is s u e d p u rsu an t t h e r e t o s h a l l rem ain i n f u l l f o r c e and e f f e c t . FRANKLIN D ROOSEVELT THE WHITE HOUSE A p r il 8 , 19^ 3.

B I E L I O G R A P H Y

238 BIBLIOGRAPHY

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M a lo tt, Deane W., and M a rtin , Boyce F . A g r ic u lt u r a l I n d u s t r i e s . New Y ork: M cG raw-H ill Book Company, I n c . , 1939* M i l l s , F r e d e r ic k C. P r ic e s In a War Economy. New York: N a tio n a l Bureau o f Econom ic R e se a r c h , I n c . , 194-3* M orten son , W. P . Economic C o n s id e r a tio n s i n M ark etin g F lu id M ilk . E xperim ent S t a t i o n , R esea rch B u l l e t i n 1 2 5 , U n iv e r s it y o f W isc o n sin , 1934-. N ath an son , N a th a n ie l L ., and L e v e n th a l, H a ro ld . Problem s i n P r ic e C o n t r o l: L e g a l P h a s e s . W ashington: U n ite d S t a t e s Government P r in t i n g O f f i c e , 1947* Q uarterl.y R e p o r t s : o f t h e O f f i c e o f P r ic e A d m ln ls tr a tio n . W ashin gton : U n ite d S t a t e s Government P r in t in g O f f ic e . I s s u e d q u a r t e r ly d u r in g t h e l i f e o f t h e a g e n c y . Q u in tu s, P a u l E . , and S t i t t s , T. G. C o o p e r a tiv e F lu id M ilk A s s o c i a t i o n s i n Iow a. Farm C r e d it A d m in is tr a tio n , 1937* C ir . 105* S h ep h erd , G e o ffr e y S . A g r ic u lt u r a l P r ic e A n a l y s i s . Iow a: Iowa S t a t e C o lle g e P r e s s , 194-1.

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240 Zimmermann, V i r g i l B. P roblem s i n P r ic e C o n tr o l: N a tio n a l O f f i c e O r g a n iz a tio n and M anagement. W ashington: U n ite d S t a t e s Government P r in t i n g O f f i c e , 1947*

STABILIZATION REGULATIONS AND DIRECTIVES The G en era l Maximum P r ic e R e g u la t io n , F e d e r a l R e g i s t e r . A p r il 1942, p. 3153. Amendment 21 t o t h e G en eral Maximum P r ic e R e g u la t io n , F e d e r a l R e g i s t e r . A ugust 4 , 1 9 4 2 , p . 6007» Amendment 34 t o S u p p lem en tary R e g u la t io n 14 t o t h e G en eral Maximum P r ic e R e g u la t io n , F e d e r a l R e g i s t e r . Septem ber 2 9 , 1942, p . 7671. Temporary Maximum P r ic e R e g u la t io n No. 2 2 , F e d e r a l R e g i s t e r , O ctob er 6 , 1 9 4 2 , p . 7 9 1 4 . Amendment 33 t o t h e G en eral Maximum P r ic e R e g u la t io n , F e d e r a l R e g i s t e r . November 4 , 194-2, p . 8 9 4 2 . F i e l d P r ic e I n s t r u c t i o n s f o r Amendment 33 t o t h e G en eral Maximum P r ic e R e g u la t io n . F i le d w ith t h e F e d e r a l R e g is t e r November 4 , 1 9 4 2 . Maximum P r ic e R e g u la t io n 2 8 0 , F e d e r a l R e g i s t e r , December 3, 1 9 4 2 , p . 1 0 ,1 5 3 . Maximum P r ic e R e g u la t io n 2 8 9 , F e d e r a l R e g i s t e r . December 2 9 , 1 9 4 2 , p . 1 0 ,9 9 6 . Amendment 8 9 t o S u p p lem en tary R e g u la t io n 14 t o t h e G en era l Maximum P r ic e R e g u la t io n , F e d e r a l R e g i s t e r . January 1 9 4 3 , p . 11 3 9 Order No. 1 u nder Amendment 8 9 t o S up plem entary R e g u la t io n 14 t o t h e G en era l Maximum P r ic e R e g u la t io n . I s s u e d a t D a lla s January 1 9 , 1943* F i l e d w ith t h e F e d e r a l R e g i s t e r . Food D i s t r i b u t i o n O rder No. 1 1 , F e d e r a l R e g i s t e r . January 2 1 , 194-3, P» 1 0 9 0 . T h is Order was renamed War Food O rder No. 1 1 . Maximum P r ic e R e g u la t io n 3 2 9 , F e d e r a l R e g i s t e r . February 1 9 4 3 , p. 2038. G en eral O rder No. 1 , u n d er Maximum P r ic e R e g u la t io n 329* I s s u e d a t D a lla s February 1 8 , 1 9 4 3 . F i l e d w ith t h e F e d e r a l R e g is te r .

241 Amendment 133 t o S u p p lem en tary R e g u la t io n 14 t o t h e G-eneral Maximum P r ic e R e g u la t io n , F e d e r a l R e g i s t e r . March 1943» p . 3185. G-eneral Order No. 2 u nder Maximum P r ic e R e g u la t io n 329* I s s u e d a t D a lla s March 1 2 , 1 9 4 3 . F i l e d w ith t h e F e d e r a l R e g is te r . P r e s i d e n t i a l E x e c u t iv e Order No. 932 8 , F e d e r a l R e g i s t e r . A p r il 1943, p. 4681. Amendment No. 1 t o G-eneral Order No. 2 un der Maximum P r ic e R e g u la t io n 329* I s s u e d a t D a lla s J u ly 1 3 , 1943* F i l e d w ith t h e F e d e r a l R e g i s t e r . Amendment 59 t o t h e G-eneral Maximum P r ic e R e g u la t io n , F e d e r a l R e g i s t e r . O ctob er 4 , 1943* Amendment 12 t o S u p p lem en tary R e g u la t io n 15 t o t h e G-eneral Maximum P r ic e R e g u la t io n , F e d e r a l R e g i s t e r . O ctober 7 , 1 9 4 3 , p . 1 3 ,7 2 4 . Amendment 14 t o Maximum P r ic e R e g u la t io n 3 2 9 , F e d e r a l R e g i s t e r . O cto b er 7 , 1 9 4 3 , p . 1 3 ,7 2 1 . R e v ise d G-eneral Order No. 2 under Maximum P r ic e R e g u la t io n 329* I s s u e d a t D a lla s O ctob er 2 9 , 1943* F ile d w ith th e F e d e r a l R e g is te r . Order G -5 under Maximum P r ic e R e g u la t io n 3 2 9 , F e d e r a l R e g i s t e r . January 2 4 , 1 9 4 6 , p . 9 2 6 . O f f ic e o f Econom ic S t a b i l i z a t i o n , D i r e c t i v e No. 1 1 4 , F e d e r a l R e g i s t e r . June 1 , 1 9 4 6 , p . 5 9 5 5 . Order No. 163 un d er S u p plem entary R e g u la t io n 14A t o t h e G-eneral Maximum P r ic e R e g u la t io n , F e d e r a l R e g i s t e r . June 5, 1946, p . 6079. Amendment 21 t o Maximum P r ic e R e g u la t io n 3 2 9 , F e d e r a l R e g i s t e r , June 1 1 , 1 9 4 6 , p . 6 3 6 4 . Order No. 16 4 u n d er S u p p lem en tary R e g u la t io n 14A t o t h e G en era l Maximum P r ic e R e g u la t io n , F e d e r a l R e g i s t e r . June 1 1 , 1946, p . 6301. Maximum P r ic e R e g u la t io n 6 1 2 , F e d e r a l R e g i s t e r . June 1 9 , 1 9 4 6 , p . 6764. P r ic e D e c o n tr o l B oard, D i r e c t i v e No. 1 , F e d e r a l R e g i s t e r . A ugust 2 2 , 1 9 4 6 , p . 9 1 3 8 .

242 ARTICLES Law and Contem porary P r o b le m s. "The Emergency P r ic e C o n tro l A c t," S c h o o l o f Law, Duke U n i v e r s i t y , V o l. IX, W inter 1942. S c h u lt z , T. W. " T r a n s itio n R eadju stm en t In A g r ic u lt u r e ," J o u r n a l o f Farm E co n o m ics. V o l. XXVI, (February 1 9 4 4 ), p. 83.

PRICE CONTROL LEGISLATION S t a b i l i z a t i o n A ct o f 1 9 4 2 , 56 S t a t . 7 6 5 ; U .S .C . App. S e c s . 9 6 1 -9 7 1 . S t e a g a l l Amendment, P u b l i c a t i o n L. No. 1 4 7 , 7 7 th C o n g ress, 1 s t S e s s i o n , J u ly 1 , 1 9 4 1 . The Emergency P r ic e C o n tr o l Act o f 1 9 4 2 , Pub. L. No. 4 2 1 , 7 7 th C o n g r e ss, 2nd S e s s i o n ( 1 9 4 2 ).

GOVERNMENT STATISTICAL PUBLICATIONS Farm Income S i t u a t i o n . W ashington: o f A g r ic u lt u r e , Sep tem b er 1 9 4 2 .

U n ite d S t a t e s D epartm ent

Farm P r o d u c tio n . D i s p o s i t i o n , and Income from M ilk . 1948- 4 9 * W ashington: U n ite d S t a t e s D epartm ent o f A g r ic u lt u r e , A p r il 1 9 5 0 , p . 2 . Ind ex o f Farm W ages. W ashington: o f A g r ic u lt u r e , 1 9 1 0 -1 9 1 4 .

U n ite d S t a t e s Departm ent

P r o d u c tio n o f M anufactured D a iry P r o d u c t s . 1 9 4 5 . W ashington: U n ite d S t a t e s D epartm ent o f A g r ic u lt u r e , 1 9 4 7 , pp* 4-8 and 55. Rat io n s Fed t o M ilk Cows. W ashington: U n ite d S t a t e s D e p a r t­ ment o f A g r ic u lt u r e , 1 9 4 2 , 1 9 4 3 , 1947 ( I s s u e d a n n u a lly ) . The A g r ic u lt u r a l S i t u a t i o n . W ashington: U n ite d S t a t e s De­ p artm ent o f A g r ic u lt u r e , A p r il 1942 th ro u g h March 1 9 4 3 , and November 1943*

243 The D a iry S i t u a t i o n . W ashington: U n ite d S t a t e s Departm ent o f A g r ic u lt u r e , February 1 9 5 0 , p . 1 5 ; May 1 9 5 0 , pp. 5 7 , 5 8 , 6 0 , 6 1 , 6 2 , and 6 4 . The Feed S i t u a t i o n . W ashington: U n ite d S t a t e s D epartm ent o f A g r ic u lt u r e , J u n e, S ep tem b er, Decem ber 1942 and February 1943 i s s u e s .

UNPUBLISHED MATERIAL C a r r o ll, J ea n F . , D i r e c t o r , Food P r ic e D i v i s i o n , memorandum t o H en d rick so n , Roy P . , D ir e c t o r , Food D i s t r i b u t io n Ad­ m i n i s t r a t i o n , War Food A d m in is tr a tio n , d a te d November 3 0 , 1943. " i n c lu s i o n o f F lu id M ilk i n t h e B ig F r e e z e ." Economic b r i e f from f i l e s o f t h e Food P r ic e D i v i s i o n , O f f ic e o f P r ic e A d m in is tr a tio n , W ashin gton, D. C. I r o n s , W. H ., R e g io n a l O f f i c e , memorandum t o D airy B ranch, W ashin gton , D. C ., d a te d January 4 , 1943* Memorandum t o D a iry 3 r a n c h , N a tio n a l O f f i c e , d a te d Septem ber 1 7 , 1943* J o n e s , M arvin, A d m in is tr a to r , War Food A d m in is tr a tio n , memo­ randum t o B o w le s, C h e s te r , A d m in is tr a to r , O f f ic e o f P r ic e A d m in is tr a tio n , d a te d January 2 2 , 1 9 4 4 . N ic h o ls , C. W. Memorandum t o t h e D a iry P r o d u c ts B ranch, W ashington, D. C ., d a te d O ctober 3 and 9 , 1 9 4 2 . R alp h , E a r l. "The M ilk Program in R eg io n V I I I ." N a tio n a l A r c h iv e s .

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R ed fo rd , E. S . , and S e e l y e , A. L. Memorandum t o t h e D airy P r o d u c ts B ranch, W ashin gton, D. C ., d a te d A ugust 15 and 22, 1942. . S e e l y e , A lfr e d L. " F lu id M ilk P r ic e C o n tr o l i n R eg io n V," W ashington: N a tio n a l A r c h iv e s . S h o v e, C la r e . "M ilk P r ic e P roblem s in R eg io n V II." to n : N a tio n a l A r c h iv e s . S m ith , M ild red B. "M ilk P r ic in g i n New E nglan d ." N a tio n a l A r c h iv e s .

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S ta tem e n t o f C o n s id e r a t io n s , G en eral Maximum P r ic e R e g u la t io n .

244 T a y lo r , B ayard. " H isto r y o f P r ic e D i v i s i o n i n R eg io n V I." Two v o lu m e s, P a r t I I . W ashington: R a tio n a l A r c h iv e s . U hr, G arl G. " C on clu d in g P h ase o f t h e Ivlilk P r ic e Program i n R eg io n V I I I ." P art I I . W ashington: N a tio n a l A r c h iv e s . U n ite d S t a t e s Bureau o f Labor S t a t i s t i c s . Memorandum p r e ­ p ared f o r t h e N a tio n a l War Labor B oard, d a te d January 1 9 4 3 . W e lle r , D o ro th y . "M ilk P roblem s i n R eg io n I I . " N a tio n a l A r c h iv e s .

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