Mail Tribune 100
March 22, 1918
A SACK OF FLOUR
Price regulation has placed wheat upon an entirely different economic basis. The chain of speculators for the producer to the consumer has been eliminated. Each who assists in the process of manufacture and marketing secures a reasonable compensation under regulations of the food administration, and every profit is limited to what is earned.
A comparison of the old method and that enforced by Mr. Hoover explains largely the source of the many vicious attacks upon the food administration. They are instigated by those who formerly unduly profited in the various transactions. As a result, the price of flour has been lowered.
The money paid for a sack of lour is now scientifically distributed. If the 24-pound sack cost $1.51, the money is thus distributed: Farmer, $1.1016; elevator charges, $0.0216; commission on sale, $0.0054; freight to mill, $0.0961; millers’ operating cost, $0.0404; millers’ profit (limited to 25 cents a barrel), $0.0366; store profit, $0.2143.
The sack of flour is made from 32 pounds of wheat — the government requires every miller to use no more than 264 pounds of wheat to make a barrel, or 196 pounds, insuring the use of 74 percent of the wheat for flour. In addition, the miller also made a profit on bran and middlings, but the flour purchaser does not pay for that — a profit limited to 50 cents per ton.
The store buys directly from the mill and thus absorbs the jobber and wholesaler’s cost of operation and profits; and their local freights. The store itself paid the following costs: Drayage, advertising, selling cost, buying cost, rent, taxes, insurance, storage, and took the retailer’s profit.
The food administration regulates jobbers’ and wholesaler’s profits by confining them to their pre-war average, and all retailers doing over $100,000 worth of business are also regulated directly, and their profits are also limited to the pre-war basis.
Before Hoover, there was speculation from the time the wheat left the farm in nearly every operation. The wheat changed hands several times, a profit being added each time. There was also the speculation in the finished product and the chain of brokers and jobbers each adding his mite. The consumer paid more and the producer received less.
For more stories like this, check out “The Archive,” a weekly podcast series at mailtribune.com/podcasts