Data from U. S. Bureau of Labor Statistics, Bulletins 99, 113, 114, 149.

wholesale prices rise and fall together rather closely. This of course is due to the fact that the market is well organized in New York City where the retailer, jobber, and wholesale dealer, through whom the forces of competition can very sensitively vibrate, are in close touch with one another.

Another fact that becomes more apparent when relative prices are charted, is that wholesale prices rise and fall as a rule before the retail prices. This happens of course because the wholesale dealer takes the initiative in raising or lowering prices. Diagram V., on which relative retail prices for the North Atlantic Division and relative wholesale prices for New York City are charted, shows this fact.

THE DIVISION OF THE CONSUMER'S PRICE

Between the price paid to the farmer for the butter fat and the price paid by the consumer for fresh creamery butter there is a margin of about $0.09. It may be more or less than this amount depending upon transportation charges and temporary conditions in the trade. This margin represents the cost of production at the creamery, the freight charges, local delivery charges, and the amounts taken by the wholesale dealers, jobbers, and retailers for receiving and passing the commodity to the consumer.

The United States Bureau of Labor Statistics has made an investigation of the division of butter prices paid by consumers, the results of which are published in Bulletin no. 164. Table no. 18 gives the average amounts of all the margins as well as the average price received by the farmer and the retailer during June and December for the years 1904, 1910, and 1911, of butter shipped from the North Central states to Cleveland, Pittsburgh, Cincinnati, and Philadelphia.

The average margin of the creamery for the year accord

ing to the table is $0.0258. This is considerably less than the margin of the first creameries. For instance, in 1880, the coöperative creamery at Hatfield, Me., made a contract with the operator to make butter for the succeeding year at 31⁄2 cents per pound. The maker paid all expenses, including interest on stock.1 The introduction of improved ma

TABLE XVIII

AMOUNT AND PER CENT OF ITEMS COMPOSING THE AVERAGE RETAIL PRICES
OF BUTTER IN THE 3 JUNES AND 3 DECEMBERS, 1904, 1910,
AND 1911, COMBINED

(From Bulletin 164, Bureau of Labor Statistics, U. S. Department of Labor.)

chinery and scientific methods and the increase of the overrun, made it possible to manufacture at lower cost, and the keen competition in the dairy industry has narrowed the creamery margin, so that the share of the small creamery is probably only little more than the cost of production.

The table does not show any margin for the jobber who

1 Report of Board of Agriculture of Maine for 1881, p. 16.

is usually an important middleman in all big cities. According to this study the average total margin received by the dealers in the city is $0.0616. This of course is an average for June and December in three years. The dealer's margin is frequently larger and very often smaller. Large lots of butter are sometimes sold at a profit of a small fraction of a cent. Obstructions in the movement of freight sometimes cause a decided shrinkage in the receipts of butter for a week during which the price may rise, and the dealers having butter on hand at such a time can increase their margin considerably. Table no. 19 shows how the dealers' margin fluctuates.

The retail butter price is the price paid by the consumer, while the wholesale price is the amount paid by the wholesale dealer to the producer. The shipper, as a rule, unless he is a member of the Elgin Board of Trade, prepays transportation charges. The difference therefore between the retail and wholesale prices represents the dealers' margin. It must be remembered that a great deal of the butter is bought at a premium or at a price slightly higher than wholesale prices. This has the effect of reducing the wholesale dealers' margin. The total average of $0.067 shown in table no. 19 as the dealers' share is therefore too high. Assuming that $0.0616 is approximately the average total compensation received by the middlemen, the margins of the wholesale dealer, jobber, and retailer are probably very nearly $0.0125, $0.0150 and $0.0335 respectively.

SEASONAL PRICE FLUCTUATIONS

Seasonal fluctuations are very pronounced in the price of butter due to seasonal variations in the amounts produced. The period of greatest production is during the months of May, June, and July. This is the time during which grass is at its best. The cows are turned into the