Full text of "Problems arising from public regulation of milk prices with special reference to Pennsylvania [microform] : a thesis"

Author: Anderson, Ellen F.

Title: Problems arising from public regulation of milk prices

with special reference to Pennsylvania

Place of Publication:

Master Negative Storage Number: MNS# PSt SNPaAg027.10

<241720>**OCLC*Form:manuscriptitem2 lnput:LRG EditFMD

008 ENT: 971013 TYP: s DTI: 1938 DT2: LAN: eng

035 (OCoLC)37765488

037 PSt SNPaAg027.10 $bPreservation Office, The Pennsylvania State

University, Pattee Library, University Park, PA 16802-1805
090 20 Thesis 1938m $bAnder,EF $cst*21 705021 $cax+(Archival)
090 20 Microfilm D244 reel 27.10 $cmc+(service copy, print master, archival

master)
100 1 Anderson, Ellen F.
245 10 Problems arising from public regulation of milk prices with special

reference to Pennsylvania $ba thesis $cby Ellen F. Anderson.
260 $c1938.

300 [8], 92, XV leaves $bill. $c28 cm.
502 Thesis (M.S.)-Pennsylvania State College.
533 Microfilm $bUniversity Park, Pa. : $cPennsylvania State University

$d1997. $e1 microfilm reel ; 35 mm. $f(USAIN state and local literature

preservation project. Pennsylvania) $f(Pennsylvania agricultural

literature on microfilm).
590 This item is temporarily out of the library during the filming process.

If you wish to be notified when it returns, please fill out a Personal

Resen/e slip. The slips are available in the Rare Books Room, in the

Microforms Room, and at the Circulation desk.
590 Archival master stored at National Agricultural Library, Beltsville, MD

: print master stored at remote facility.
830 USAIN state and local literature preservation project. $pPennsylvania.
830 Pennsylvania agricultural literature on microfilm.

Water Damage
, June 1993

THE PENNSYLVAUIi STATE COLLEGE
The Grfiduate School
Department of Agricultiiral Economics

PEDBLflvIS ARISING FFjDK PUBLIC REGULATION
OF MILK PRICES- WITH SPECIAL P^F^KENCE TO

PENNSYLVANIA

A Thesis

ELLEH ^. ^iHPEP-SON

Submitted in partial fulfillment
for the degree of

OF SCIENCE

Jure 1938

APPROVED

^/ /?^F

/(^'^y^

Profesiior of Afff iculturtu. Economicc

APPROVED

■ II I Ml ■ S> I "* !<" ' " ,1 "~ — **^

Acting Head of Department

ACKNOV^EDGMHITS

The v/riter wishes to express her apx^reciation to those
members of the Departraent of Agricultural Fcomomics, F. F.
Lininger, W. V. Decnis and F. ?. Weaver, who have counseled and
assisted her in the preparation of this thesis. The cooperation
of Howard G. Fdsaman, Chairman of the Pennsylvania Milk Control
Commission and many of the employees of the Commission is grate-
fiaiy acknowledged, especially tiie time and assistance given by
Miss Margaret Young and John Pfautz*

194G44

CONTENTS

Page

INTRODUCTION 1

FEDERAL CONTROL • • . 2

MILK CONTROL IN OTHER STATES ...•..•••• 9

MILK CONTROL IN PENNSYI.VANIA • U

The Legal Basis ♦••• 14-

!• Operation of Milk Price Control

Under the First Law •♦..•... 17

2* Operation of Milk Price Control

Under the Second Lav; • 23

3* Operation of Milk Price Control

Under the Present Lav/ ...•• • 30

4.. The Court Decisions •••♦•••*•••«.•*.• 34-

The Problems Arising from Milk Price Control 36

1. The Development of the Order 37

2* Area »«»•»•••«• ,•♦•••••♦••«•» 4-*-

3. The Problem of Fixing Prices , • . . • • 52

Milk Prices and Other Prices 57

Differentials for Fluid Uses ,.•*.♦..*.. 62

Prices and Interstate Movements 69

4. Special Grades ••••••• •.#•• 76

5. Production Control • 79

6. The Costs Argument 84-

SUfilMARY * ^

CONCLUSIONS 91

APPENDIX

Table

1 -

2 -

4 -

5 -

7
8

9 -

10 --

11 ^

12 -

13 -

TABLES

Page

Markets Arranged According to Milk

Classifications, January 1, 1938 6

Markets Operating Under the Three Types

of Pools Authorized by Federal Orders,

January 1, 1938 . • 8

Length of Time Intervening Between Date of

Hearing and Effective Date of Subsequent

Order, for the First Eighteen Orders Issued

by the Milk Control Commission A-O

Dealers^ Buying Price for 3»5 Per Cent
Grade «B" Milk f •o.b. in the Major Classi-
fications at Three Markets Since the
Inauguration of Milk Control 4-8

Pittsburgh Class 1 Prices in Dollars Per

Hundredweight 3.5 Per Cent Grade "B^^ Milk, 1928-1937 • • • . 59

Differentials for Milk in Fluid Uses - Philadelphia • . • . 67

Differentials for Milk in Fluid Uses - Pittsburgh 68

A Comparison of the Volume of Surplus Milk

in the Pittsburgh Market and the Differentials

for Class 1 Milk Over Milk Used to Produce

Creaia or Butter, 1934-1937 69

Percentage of Receipts of Fluid Milk at

Philadelphia Metropolitan Area, Originating

in Pennsylvania, 1935-1937 72

Percentage of Total Crea^n Receipts at Phila-
delphia by State of Origin, 1933-1937 72

Percentage of Total Cream Receipts at Phila-
delphia from Pennsylvania Sources by Months,
1933-1937 72

Net Differences in Market Price of 1^0 Per Cent
Cream at Philadelphia and the Price Paid Penn-
sylvania Producers for Milk Used as Cream
Compared with the Per Cent of Out-of-State
Receipts, 1935 and 1936 75

Percentage of Receipts of Milk and Cream at

New York and Metropolitan Area Originating

in Pennsylvania .•••••• • ••• 76

Table

L4 - Extent of Seasonal Variation of Milk
Receipts from Producers in the Three
Major Milk Sheds of Pennsylvania, 1930-1936

Page

Appendix

1 - Weighted Composite Index Numbers of 20 Farm
Products in Pennsylvania, 1922-1937 ♦ . . •

2 - Index Numbers of Prices of a 20 Per Cent

Dairy Feed

««»t>4>tJC«»*«

• • • • •

• • •

3 - Index Numbers of Pennsylvania Prices of Milk
Containing 4- Per Cent Butterfat ..•*..

4, - Pounds of Milk Required to Buy a Ton of
20 Per Cent Dairy Feed .

« « « • •

iii

»« *•••••• ••«•••

FIOaHES

Figure

1 - Milk Marketing Agreements Under the Agricultural

Adjustjnent Administration in Effect January 1, 1938 • • • •

2 -' States Providing for Some Type of State Control

of the Production and Distribution of Milk,
January 1, 1933 •

» • *

» * • « » «

• • •

Page

• •

3 - Location of Farms in Centre County From Which
Milk Was Sold to Various Markets, 1931-1935

• * «

• • • •

4.6

4, - Dealers^ Spreads Betv/een the Buying Price of
Class 1 and the Retail Price Per Quart of
4 Per Cent Milk in Philadelphia, Pittsburgh and
the State-wide Areas Since April 1934-

«•«»«••

* «

5 - Dealers* Spreads Between the Buying Price of the
Amount of Milk Needed for One-Half Pint of Light
Cream and the Retail Price ?er Plalf Pint of Light
Cream in Philadelphia, Pittsburgh and the State-wide
Areas Since April 1934-

• «•«»•••»

• «««!«

» « -»

6 -

Index Numbers of the Price of Dairy Feed in
Pennsylvania and the Price of Fluid Milk at
Pitt?l>argh, 1923-1937 . .

«> * ♦# ft «••■*•{•* I T e ♦» ♦

7 -

a -

9 -

Pounds of Milk Required to Buy a Ton of Dairy Feed
in Pennsylvania, 1922«1937* (Line graph shows
yearly average. Vertical bars show range from the
highest to the lov^est months of each year*) • * . .

Index Numbers of the Price of 4- Per Cent Milk and
the Composite Index of the Prices of 20 Farm
Commodities in Pennsylvania, 1922-1937r •*•»#•

Index Numbers of the Price of Milk in Pennsylvania
and the United States Index of ViJhoIevSale Pr ices j,
1922--1937

• « • •

<? «

« • *

• *«•#»«»••*••*«••«•*«

10 '- Tne Differentials Betweei) Class Prices and the
Incroane in vSnrplus in the Pittsburgh Market,
1934-1937 . ., .

*» •*w«-r •

«•«#>•••

11 - Percentage of Receipts of Cream at Philadelphia
Originating in Pennsylvmiia, 1933-1937 • • • ♦ .

■♦ •

m fl!

Appendix

Figure

1 - Milk Marketing Areas Defined by the Pennsylvania
Milk Control Board, April 2, 1934^

« « • •

2 - Milk Marketing Areas Defined by the Pennsylvania
Milk Control Board, June 1, 1934 • •

Milk Marketing Areas Defined by the Pennsylvania
Milk Control Board, August 7^ 1934

4. •- Milk Marketing Areas Defined by the Pennsylvania
Milk Control Board, October 1, 1934

«»«••«

5 - Milk Marketing Areas Defined by the Pennsylvania
Milk Control Board, Novernber 16, 1934 •

« « « * «

6 - Milk Marketing Areas Defined by the Pennsylvania
Milk Control Board, January 16, 1936

7 - Milk Iferketing Areas Defined by the Pemisylvania
Milk Control Board, vTune 16, 1936 .

# • ♦ ♦ «

9 - Milk Marketing Arear Defined b^^^ the Pennsylvenia
Milk Control Board, January 1, 193? •' • « .

10 « Milk Pterketing Areas Defined by tlie Pennsylvania
Milk Control Coinjniseion, June 2, 1937 •

11 •- Milk Marketing Areas Defined by the Pennsylvania
Milk Control Commission, July 1, 1937 »#♦••.

Page

• «•»««

• •

• • •

viii

« « •

♦ ••« «•«•••«

<■ <1 • 'S C •

8 - Milk Marketing Areas Defined by the Pennsylvania

Milk Control Board, October 11, 1936 ••«•«..«««« xii

««•**<*•#

xiii

«•««•«( «•«

XXV

EXPLANATION OF TERMS

As the terms are used in this thesis they will have the

follo^vlng meanings:

Price control means any determination of price by other than
free competitive forces.

^ federal order is an order issued by the Secretary of Agri-
culture reg^xlating the handling of milk in the current of interstate or
foreign com^nerce*

Classification of milk refers to the listing of milk on the

■■—i ii—i^_ m '■ ^ u I ml If I --i - ■ - ■! II ir -I II -IT ■ !■ I Iff- — tti - - ^"^

basis of how it is used for the purpose of setting up a price schedule,

8nrplus milk is that supply of milk which reaches the market
over the amount required for fluid milk consumption.

A market pool is a method for paying producers whereby they
receive an average or blended price for all classes of milk sold on
that market.

Spread is the dealer's margin between the price he pays the
farmer and the price he receives from the consumer for milk or cream.

Under the base-sunJLag plan of payment for milk the producer
receives a higher price for his base (or normal) production than for

any amount in excess of the base.

A store differential is the amount by which the store price
is less than the price for v;agon~delivered milk.

Sales quantity control refers to control of seasonal varia-
tions in production*

Standardizing^ refers to the dealers' practice of adding cream
or skifmned milk to milk purclmsed from producers in order to offer

bottles of uniform milk for sale.

The principal grades of milk offered for sale for human
consumption are "A" and "B"» "A" is produced according to more strict
sanitary requirements and usually has a higher butterfat content than

INTRODUCTION

The crash in the niiid milk industry which occurred in 1933
came at a time when government regulation was being proposed and
adopted as a remedy for depression His* Codes and commissions had
been established in other enterprises. It is not strange that polit-
ical leaders promised the distressed dairy farmers some government aid
in righting the industry* Dairy farmers were clamoring for help fully
as loudly as other groups* It is not the purpose of this paper to
suggest other possible steps which might liave been taken but rather to
present an accurate account of facts relating to the government con-
trol of milk prices* In the words of Howard G* Fdsaman, Chairman of
the Pennsylvania Milk Control Commission,

"It is perfectly clear and perceivable to one who realizes
the very recent origin of milk control in this country just irtiy we
are today confronted with so many perplexities and baffling problems-^ •"

The early mistakes in price fixing can be attrituted to and excused in

part on this theory that they were experimental* It is well, however,

to record these errors as a warning and to note any successes which

may form useful precedents*

"Address before the National Association of Milk Control Boards,
Portland, Oregon, 1937.

FEDERAL CONTROL

There was agitation for control of milk prices when the dairy-
farmers were hit by the downward turn of the purchasing power of milk
cows in the years 1915 to 1918^ • The New York farmers* milk strike in
1916, the Boston upheaval and the two milk strikes in the Chicago area
in 1917 ai'e evidence of the unsettled conditions* Editorial comment
at that time suggested governmental control of milk prices*

Price control on a national plan was authorized by the
omnibus Act of May 12, 1933 which, among other things, established the
Agricultural Adjustment Administration. Under the General Powers
assigned to the Secretary of Agriculture was included the power "to
enter into marketing agreements with processors, associations of pro-
ducers and others engaged in the handling in the current of interstate
or foreign commerce of any agricultural commodity or product thereof,
after due notice and opportunity for hearing to interested parties".

The legality of such marketing agreements was not impaired
hy the Supreme Court when it declared in 1936 that the processing taxes
were unconstitutional.

Representatives from the unsettled Chicago market requested
assistance under the act immediately upon its adoption. The early
formulators of the A.A.A. dairy policies were Dr. Clyde L. King, on
leave from the University of Pennsylvania, and a group of younger
economists headed by Dr. Edwin A. Gaumnitz who had been an economist
in the Bureau of Agricultural Economics. Dr. King had been active in

^iniuger, F. F* Dairy Products Under the Agrioatural Adjustment
Administration. The Brookings Institution. Page 3#

bargaining efforts on the part of producers • cooperative organizations

and dealer groups in several eastern and mid- west markets •

The pix>blems which arose in the Chicago case covered the

major issues for other areas* The principal features of the market

agreements have been summarized by Dr* F, F. Lininger for The Brookings

Institution^^ He lists:

^Definition of terms and delineation of the milkshed and
sales area#

«Estahlishment of the interstate character of the market.

Fairness of provisions as to prices to producers for Class I,
Class II and Class III milk. The basis of purchase, the plan for
equalizing payments between comparable producers, such as the pooling
systems or other adjustment plans, and the plans for equalizing be-
tween distributors and the so-called surplus, or excess of fluid milk
receipts over fluid milk sales.

"Production control provisions, if any.

"Provisions for check-offs to the producers^ association,
the dairy council (if any), the adjustment fund, or any other service
charges. Definite limitations on these check-offs were considered
desirable.

"Provisions for handling non-members of the association,
new producers in the market, or others.

"Reasonableness of distributors margins and relationship
between margins on various products or quantities.

"Place of producer-distributor in the market.

"Store prices: margins, relationship to wagon delivery
prices and change from present status.

"Reasonableness of prices to consumers of milk and cream of
various percentages of butterfat; of raw pasteurized and special milk;
of quarts, pints, and other units; of by-products such as buttermilk,
skim milk, chocolate milk, and cottage cheese.

ability.

"Health and qualitj' standards.

"Schedule of fair practices - reasonableness and enforce-

^Lininger, F. F. Op. Cit. Page 33.

"Organization or plan for carrying out the various provisions
of the agreement, such as allotment of producer bases, handling of the
adjustment fund, and equalizing distributer s • surplus burden.

"Equitableness of representation on any committee, boai^s, or
councils that were provided for in the agreement.

"Probable relative and actual benefits from the agreement to
producers and distributors, and probable burden and benefit, if any,
to consumers.

"Relationship of prices to producers and consumers to those
prevailing in the base period (August 1909 - July 1914) $ with due con-
sideration for changes in other prices and in production and distribu-
tion.

"Any other provisions in the agreement irtiich mi^t in any
manner affect the market, or various agencies in the market, or the
public in general."

The Agricultural Adjustment Administration was hampered at
first by the uncertainty concerning the constitutionality of the act
but the point ifas cleared by the Nebbia case which tested the New York
State law. An iinportant contribution at the outset and since its in-
auguration has been the fund of information collected by the Dairy
Section of the Agricultural Adjustment Administration for markets for
which federal orders fixing milk prices have been written and for many
other markets in vihich agreement has been reached without the order

process

There were on January 1, 1938, 23 federal orders effective in

markets of the east and the west. A great majority of the orders were
for markets in the Central Plateau area, figure 1. The exceptions were
three Massachusetts cities, Denver, Colorado, and San Diego, California,

The general procedure in the establishment of the orders has
been similar. There is some indication of an attempt to make orders
adapted to the particular needs of the market. For example, the clas-
sification principle on which milk prices are based is universal but

5*
6*

7.
8.

IC.

11.
12.

Battle Creek
Boston
Denver
Des Moines
Dubuque
Fall River
Fort Wayne
KalajT;ezoo
Kansas City,

Kansas
Kansas City,

Missouri
La Porte
Leavenworth

Lincoln

Louisville

New Bedford

Omaha

Quad Cities

St. Louis

San Diego

Sioux City

Topeka

Twin Cities

Wichita

«s

FIGU hii 1 -. Milk Marketing Agreemcntw^: Under the Agricultural Adjustment Administration in Effect January 1, 1938.

Vil

definitions and number of classes vary.

The most common classification was Class I, Class II and
Class III although five areas have also a Class IV and four markets
were set up with only two classes, table 1#

Table 1 - Markets Arranged According to Milk Classifications,

January 1, 1938 •*

Classes
I and II

Boston
Fall River
New Bedford
Twin Cities

Classes
I, II and III

Battle Creek

Des Moines

Dubuque

Kalamazoo

Kansas City, Kansas

Kansas City, Missouri

Leavenworth

Louisville

Omaha, Council Bluffs

St. Louis, Missouri

Sioux City

Topeka

Wichita

Laporte

Classes
I, II, III and IV

Denver
Fort Wayne
Lincoln
Quad Cities
San Diego

*Letter from Dr. Edwin F* Gaumnitz of October 12, 1937 and news re-
leases of the Agricultural Adjustment Administration.

In seven cities^ the Class I price was expressed in pounds
of butterfat. Other Class I prices were given for hundredweight of
milk testing 3.5, 3*7, 3*8 or 4.0 per cent butterfat. The surplus
classes are all different. The majority are based on some percentage
of the butter market. The Massachusetts Class II is based on the
Boston cream price and the Louisville and Wichita prices are a fixed
amount per hundredweight.

The following description of classes was given by Dr. Gaumnitz

^Denver, Leavenworth, Lincoln, San Diego, Sioux City, Topeka, Wichita.

in a letter of October 12, 1937:

"In the Battle Creek, Denver, Des Moines, Detroit, Dubuque,
Kalamazoo, Kansas City, Lincoln, Louisville, Omaha, Quad Cities, Rich-
mond, San Diego, Sioux City and Wichita markets Class I milk means all
milk sold or distributed by distributors as whole milk for consianption
or use in the Sales area^ In Fall River and New Bedford all milk sold
or distributed as milk, chocolate milk or flavored milk drinks and
milk which is not established as Class II shall be Class I milk. In
Fort Wayne and Leavenworth Class I means all milk sold as milk and all
milk used to produce cream for consumption as cream* In the St* I'ouis
market Class I means all milk sold as milk, containing not less than
one-half of one per cent butterfat* In the Topeka market Class I
means all milk used as milk, flavored milk drinks, chocolate milk,
creamed cottage cheese and creamed buttermilk, and all milk not speci-
fically reported as Class II or Class III* In the Twin Cities area
Class I means all milk purchased from producers except surplus milk.

"In the Battle Creek, Denver, Des Moines, Detroit, Dubuque,
Kalamazoo, Lincoln, Omaha, Quad Cities, Richmond, Topeka, San Diego
and Sioux City markets Class II means all milk used to produce cream
for consumption as cream. In the Fall River market milk specifically
accounted for as being used other than milk, chocolate milk or flavored
t yn'ik drinks or as actual plant shrinkage vdthin reasonable limits shall
be Class II • In the Leavenworth market Class II means all milk used to
produce flavored milk, creamed cottage cheese and creamed buttermilkj
provided that the milk from r^hich only the skimmed milk is used in the
production of the above products shall not be included in Class II
milk. In the Kansas City, Louisville, and Wichita areas Class II means
all milk used to pix>duce cream for consumption as cream, flavored milk,
creamed cottage cheese and creamed buttermilkj provided that the milk
from which only the skimmed milk is used shall not be included in Class
II. In the New Bedford and St. Louis areas Class II means the milk iin
excess of Class I. In the Fort Wayne area all milk sold as or for the
manufacture of condensed milk, evaporated milk, powdered milk, cream
for the manufacture of ice cream mix and cheese, except cottage cheese
shall be Class II milk. In the Twin Cities area Class II is surplus
milk.

"In the Battle Creek, Denver, Des Moines, Detroit, Kalamazoo,
Kansas City, Leavenworth, Lincoln, Louisville, Omaha, Richmond, Topeka,
Sioux City and Wichita markets Class III means all milk purchased, sold,
used, or distributed in excess of Class I and Class II milk. In the
Quad Cities area Class III means all milk used to produce evaporated
milk and for ice cream mix* In the San Diego area Class III means all
milk used to produce ice cream and for ice cream mix, creamed butter-
milk, creamed cottage cheese and flavored milk drinks; provided that
the milk from which only the skimmed milk is used shall not be included
in Class III. In the Fort Wayne area all milk specifically accounted
for (a) as being sold, distributed or disposed of other than as Class I
or Class II milk, and (b) as actual plant shrinkage not to exceed 3 per
cent shall be Class III milk. In the Dubuque area Class III means all
milk specifically accounted for (a) as sold, distributed, or disposed

of other than as milk or cream for consumption as cream, (b) as manu-
facturing loss, and (c) as general plant shrinkage within reasonable
limits •

»«In the Quad Cities and San Diego markets Class IV means all
milk in excess of Class I, Class II and Class III milk.^

The market type of pool, with or without base rating was most
common, table 2#

Table 2 - Markets Operating Under the Three Types of Pools Authorized

by Federal Orders, January 1, 1938.

Market pool

Dealer pool

base rating

Boston

Battle Creek

Dubuque

Des Moines

Kalamazoo

Laporte

Denver

Fall River

St. Louis, Missouri

Fort Wayne

Kansas City, Kansas

Lincoln

Kansas City, Missouri

San Diego

Leavenworth

Sioux City

Louisville

Topeka

Hew Bedford

Twin Cities

Omaha, Council Bluffs
Quad Cities

Wichita

The federal orders are intended to cover markets which cannot
be regulated by one state. Federal orders appeared to be equally com-
mon to areas within states where state control laws operated and where
there was no state control.

BULK CONTROL IN OTHER STATES 5

New York led the way in establishing a governmental milk
price control agency* Her law was effective one month before the
authority for federal control was enacted* Eight other states passed
laws setting up milk price control in 1933 • In 193A five more states
passed control acts and seven followed in 1935* No states adopted con-
trol measures in 1936# Georgia joined the control group in 1937.

Ohio, Maryland and Washington are the only states to adopt
control of milk prices and not to continue control to this date. The
emergency act expired in Ohio July 1, 1935^ and although milk legisla-
tion has been voted upon at every session of the legislature since
then, no act has passed* The Maryland act was passed in 1935* Al-
though no funds were appropriated for salaries or operating expenses,
the commission operated for a short time before the act was declared
unconstitutional. It was held tlmt the act was in restraint of trade
since it set both the price that a milk processor shoixld pay for milk
and also the price that he should receive for the sale of it.

The 19 states operating under some type of state control of
milk prices on January 1, 1938 are shown in figure 2. The New England
and the Middle Atlantic groups were unanimous in the acceptance of con-
trol. There are two chief reasons for this. In this northeast section
of the United States the concentration of population accounts for a
great demand for milk and milk products. Consumers suffer during milk
strikes and political leaders emphasize this point in the description

^The data on milk price control agencies in otlier states were obtained
by mailed questionnaires sent to Economists of the Agricultural Ex-
periment Stations in every state.

nCUFE

^ —

states Providing for Soir.e Tj^^e of State Control of the Production and Distribution of Milk,
January 1, 1938.

H
O

of a control platform. The producers of fluid milk (milk for sale in
bottled form) outnumber the producers of milk for manufacturing in
those areas adjoining a center of concentrated population. These fluid
milk producers hope to maintain their advantage over producers of sur-
plus milk. Government regulation is the method advocated^.

This theory that control has been adopted and continues in
areas of concentrated population appears to be nullified by the Chicago
situation. The densely populated state of Illinois does not have state
or federal regulation. On the other hand, Indiana and Wisconsin, defin-
itely surplus areas, have enacted state laws. The explsjiation may lie
in the fact that the Chicago market differs from the northeastern mar-
kets in that it is very close to the important surplus areas. In a
later discussion will be brought out the difficulty with which differ-
ences between prices of Class 1 and surplus milk are maintedned in a
section where there is normally a large surplus close to market. It
is likely that thivS difficulty has made control of the Chicago market
more of a problem.

In 7 of the 19 states now under regulation, milk price con-
trol was set up as an emergency measure with fixed expiration dates. In
Massachusetts the law expires in 1938, in New Jersey, Alabama, Indiana,
Florida and Wisconsin in 1939 and in Georgia in 1941* The others are
permanently under control until such time as the legislatures declare
the emergency at an end. The length of the emergency in Virginia may
be determined either by the governor or by the legislature.

^f government fixed prices do not maintain the status quo they are
open to adverse court decisions based on the constitutional precept
of confiscation of property.

The most common agent of administration was a coEimission or
board* Two states exercised control through the State Departments of
Agriculture and Markets; two called for producer distributor agreements
sanctioned by the State Department of Agriculturej one had a Board of
which trie commissioner of agriculture was ex officio chairman, and one
placed control in tlie hands of an administrator. Control was admin-
istered as follows:

Milk Control Board: New Jersey, Rhode Island, Vermont,
Pennsylvania, Virginia, Alabama, Indiana, Florida, New Hampshire,
Massachusetts, Georgia, Maine, Oregon, Montana*

State Department of Agriculture: Wisconsin, California,

Producer Distributor agreement sanctioned by trie Department
of Agriculture: Hew York, Utah,

Administrator: Connecticut,

The fixing of prices to producers is mentioned in all 19
laws but consumer prices are not to be set under the New York law.
Price fixing is mandatory in New Jersey, Vermont''^, Pennsylvania,
Alabama^, California, Florida^, Utah^, Massachusetts^O, Maine^, and

Oregon.

State Control laws fall into two major groups which for lack

of better names are called the Pennsylvania type and the New York
type • This designation makes possible the classification of states

Kl ■ r-^MMiafc

^When public health is likely to be impaired,

%n markets where the board has jurisdiction.

9 As tlie emergency requires.

^^Only fixing prices to producers,

-^^-The grouping is according to the present New York law. The Penn-
sylvania act was modeled after the original New York law.

according to the general pattern followed in effecting control.

In Pennsylvania the control covers the whole state and the
initiative lies with the commission, ^ile in New York control need not
cover the entire area of the state and application for control must
come from the industry^ An agreement acceptable to a fixed percentage
of the producers and/or distributors in the market is enforced against
the entire industry under the New York plan*

According to this distinction the states may be grouped as:
Pennsylvania type: Pennsylvania, New Jersey, Connecticut,
Rhode Island, Vermont, Virginia, Florida, New Hampshire, Massachusetts,
Montana »

Hew York type: New York, California, Alabama, Utah, Georgia,
Maine, Wisconsin.

Indiana's law is characteristic of botla types. Producers'
prices are set on the Board's initiative but resale price setting shall
come only by petition from the industry*

MILK CONTROL IN PENNSYLVANIA

The business of producing or of distributing milk in some
parts of Pennsylvania was not a fair game for any man in 1933* The
federal agencies under the authority of the Act of May 12 had tried to
bring order to the Philadelphia market but their lack of success was
widely recognized^ The dairy farmers were objecting to prices which
netted them as low as 65 cents per hundred pounds for their milk.

The Legal Basis

The Republican administration in possession of the law making
agency of the state at that time offered a plan for the control of
prices through a state board* There was no opposition on the part of
Democratic legislators and with the signature of Governor Gifford
Pinchot the bill became a law on January 2, 193A*

The Act created a Milk Control Board of ttiree members who
exercised final price-fixing autiority* The law obligated the Board
to set minimum prices to be paid the producer and minimum resale prices
to be charged the consumer and empowered it to set maximum pii.ces» The
privilege of fixing maximum limits has never been exercised. Section
13D excepted milk used solely in manufacturing from mandatory minimum
price fixing. The Act specifically outlawed rebate practices by which

dealers avoid compliance with orders •

The official prices were to be declared to the trade by
orders of the Board. The Board was permitted at any time, to "alter,
revise or amend" orders with respect to prices to be charged for milk.
Such revision as well as the original order was to be preceded by a
hearing at irtiich all interested parties might appear.

The control of the milk industry was to be insured by the re-
quirement that milk dealers operate under license • In addition to the
authority of revocation of license, the Board might force compliance
with orders under threat of fine or imprisonment. License fees were
graduated in proportion to volume of milk handled. License fees, to-
gether with an appropriation by the legislature, provided the funds for
the administration of milk price control. The appropriation from the
General Fund for the aidministration of the act was $100,000 for the
duration of the act. The act expired April 30, 1935*

The act contained specific approval of conferences for the
dissemination of information among dealers • and producers' organiza-
tions. Inter-change of information mi^t be made between individuals
or organizations or it mi^t be fostered by a common agent.

The Democratic party, in control of the law-making processes
in 1935, rode in on a platform including the approval of state con-
trolled milk prices. When Act 37 expired April 30, 1935, the new Act
number 43 was approved.

The new Act repeated the purpose of the first law and also

provided for

^....♦.oxtending the provisions of the Act for a further
period of time, prohibiting the sale of milk in certain cases; en-
larging and modifying the definition of milk to include ice cream mix,
powdered whole milk and powdered skimmed milk; changing, adding to, and
increasing license fees and further prescribing the method of comput-
ing such fees; requiring all licensees to file bonds or collateral
without any exceptions; providing for a supersedeas in certain cases of
appeal; conferring certain powers upon the Governor; conferring upon
the board certain additional powers over cooperative agricultural asso-
ciations or corporations, also over milk prices; and authority to es-
tablish marketing area enforcement committees; providing new and chang-
ing existing notices and penalties; and making an appropriationl^^w

Act Number 43 • Statement of purpose

It was made obligatory on the part of the Board to "file at
its office, with each order issued, a statement in writing of the find-
ings of fact in support of or the reasons for such order". This pro-
vision was inserted to meet the criticism of the industry that orders
did not reflect ttie facts presented in hearings. Act 4-3 limited the
price-fixing authority of the Board by requiring the governor ^s signa-
ture to all orders with price-fixing clauses. In Section 18, that part
which deals with price setting, the phrase "with the approval of the
governor" was inserted six times. In this manner Governor Earle
carried out his promise to "personally" supervise the milk industiy of
the state. The duration of the Act was set at two years and the ap-
propriation from the General Fund for the period amounted to $225^000.
License fees paid by dealers were also available.

The major difference between Act 105, approved by Governor
Earle April 28, 1937, under which the Milk Control Commission is now
operating and the two former laws, is the pei^nanency of the later act.
Act 105 makes no mention of an emergency period but recites those pre-
mises on which tine first laws were enacted and declares that any
lessening of the rigidity of the interpretation of the act would be
detrimental* Under the new Act the Milk Control Board took on a new
name. Milk Control Commission. The authority of the new body differs
little from the old but its members are appointed for six-year terms,
with a new appointee every two years. A schedule of license fees,
bonding provisions and fines for non-compliance is a part of Act 105.
The permanent act requires each milk sta.tion to exhibit a permit for
weighing and measuring issued by the Commission. Milk dealers are not
permitted to buy milk at any station not certified for weighing and

measuilng such milk» These pennits relate to suitable apparatus as
well as to the requirement that weighing and testing be done by persons
certified by the Commission. The Commission took over from the Board
of Health the granting of certification to testers* The law states
specifically that cooperative organizations may blend their prices to
members providing bargains with dealers are made according to the price
schedule set by the Milk Commission. The Act limits the amount which
new cooperatives may deduct from returns to producers for expenses.
The appropriation of $300,000 covering the period from June 1, 1937
to May 3li 1939 supplements the receipts from license fees. Act 105
was the child of Governor Earle's administration. It rival in the
legislature was a regulatory measure not having as wide authority in
fixing prices. The administration bill had the better chance to win
even if contested but it was handled without much publicity and passed
the House when its advocates outnumbered its enemies in attendance.

1. Operation of Milk Price Control Under the First Law
Governor Pinchot appointed the first Milk Control Board on
January 24, 1934.* He chose as chairman Edward A. Stanford, superin-
tendent of George D. Widener's Erdenheiin Farms since 1920. Mr. Stan-
ford had been president and was at the time a director of the Pennsyl-
vania Jersey Cattle Club. John C. Barney, president of the Erie Co-
operative Producers Association at the time of his appointeient was
named a member. The third member, Howard C. Reynolds, had experienced
a colorful career. He was associated with the Allied Dairy Farmers
Association and was the guiding star in a "rmapti organi2;ation which had
broken away from tlie Holstein-Friesian Association^

Dissatisfaction was evident on several sides ^en the an-
nouncement of appointments was made* The attitude of the Holstein-
Friesian Association is clearly brought forth in the following excerpt
from an editorial, "Pennsylvania's Milk Muddle," which appeared in the
February 10, 1934 issue of the Holstein-Friesian World.

"Greatly disturbed are many Pennsylvania dairymen over the
personnel of the Milk Control Board just appointed by Governor Pinchot
under authority of the new law adopted by the state legislature*
• ••••• ••••Governor Pinchot named two of the three members from the

actual ranks of the Allied Dairy Farmers Association and a third from
the western part of the state. Edward A* Stanford, chairman, is super-
intendent of George D^ Widener's Erdenheim Farms, a Jersey breeding
establishment* Mr^ Widener is iinderstood to have made a substantial
cash advance to promote the organization of the Allied Dairy Farmers
Association. The second member is none other than Howard C. (Doc.)
Reynolds, of Harrisburg, whose very name is anathema to thousands of
Pennsylvania Holstein breeders, and whose espousal of the Allied Dairy
Farmers Association cause through his "organ" was rewarded with a
directorship. The third member is John C. Barney, agricultural editor
of the Erie Disi>atch Herald."

It is possible that the personnel of the Board was more im-
portant in shaping the first orders than was the testimony presented

at the hearings.

The first hearing under Act Jl was held at Erie, February 13,
1934» Chairman Stanford in his opening statement spoke of the contro-
versies at similar meetings in otlier states and emphasized the informa-
tion-seeking phase of the hearing as most important. There were in-
quiries concerning the costs of production and the attitude toward the
base surplus plan. Some questions were designed to determine the
number of farmers represented by tlie producers • cooperative speakers.
Prices reported for 3.5 per cent milk ranged from 65 cents to |1.46^

During the progress of the hearings in the first quarter of
193ii the testimony did not show marked opposition to the basic surplus
plan except in the statements of representatives of the Allied Dairy

Fanners Association* The Inter-State Milk Producers Association and
the Erie Cooperative Producers Association appeared to favor the con-
trol of seasonal surplus by the establishment of bases* The orders
proiaulgated by the Board as a result of these hearings set up different
prices for milk used in various classes. The percentage which a pro-
ducer might sell in the fluid class was limited by General Order No* 6,
the first general order*

At the Philadelphia hearing the battle for and against a base
surplus arrangement was waged between the Inter-State and the Allied
Dairy Farmers Association* Costs data presented at this hearing and at
the Erie hearing were based on the figures of cow testing associations
sponsored by The Pennsylvania State College*

Hearings were also held in Pittsburgh and in Harrisburg be-
fore the first general order was framed* That Order, No. 6, regulated
all prices to be paid beginning April 2, 1934. Order No* 3 had pre-
viously set prices for the Erie area. Three price schedules were set
up by Order No. 6* These prices applied to tiie Philadelphia milk mar-
keting area, the Western Pennsylvania milk marketing area, and the
area not included in these two* The General Order defined four classes

of milk J Class 1, tlrnt milk used in fluid form; Class 2, milk used as
fluid cream, ice cream, homogenized mixtures, milk chocolate, candies,
soups and other manufactured dairy products except those included in
Classes 3 and /^; Class 3y pov/dered milkj Class A^ milk made into butter
or American cheese* Maximum hauling charges were established. Grade
"A" milk was defined and both producer and consumer prices set. Mini-
mum prices to be charged by distributors for fluid milk, fluid cream
and buttermilk were fixed*

A store differential of one cent was permitted in those
nninicipali ties in ishicli during the month of February I934. there had
been a store dif f erential ♦

The retail price schedules for cities on or near the border
of the state were to conform with the prices in the adjoining state.
Dealers in rural communities were allowed to sell milk at prices lower
than those fixed by the Control Board after they had obtained permits
from the Bo€ird.

The order required that producers be paid at least monthly
and not later than the fifteenth of the month following delivery of
their milk*

Milk dealers were instructed to keep records of milk bought
and sold with butterfat tests, prices and classification in which milk
was sold* A number of unfair trade practices were declared illegal.

Tlie order set down rules for sales quantity control by desig-
nating the period on which sale bases should be calculated and pro-
mulgated rules for the establishment and transfer of bases.

Amplification of the requirements for licenses and the
definition of bonding collateral was the subject of Order 7.

Tlie second all state general order was No. 3, dated May 24,
193^9 and effective June 1, 1934. The boundaries of the Philadelphia
milk marketing area were revised and a new schedule of milk classes was
established. This time seven classes of milk were defined. Class 1
still represented milk sold in fluid form. The Class 2 definition was
broadened to include milk used for sweet cream butter as well as fluid
sweet and fluid sour cream. A new class, 2A, was established for milk
utilized in the manufacture of milk chocolate, candy and confection-

erles. Class 2B included all milk used in making ice cream, homogen-
ized mixtures, soups, condensed or concentrated milk, powdered whole
milk and soft cheeses^ Plant loss due to waste and spillage up to
2 per cent could be classed as 2B. Milk used in the manufacture of
farmers* pressed cheese or cream cheese was called 2C. Milk that went
into butter, except sweet cream butter, was Class 3 and milk made into
American cheese was 3A# The Class 1 price was a fixed amount deter-
mined by the Board • One price was set for the Philadelphia area and
another for the rest of the state* All other prices except 3A in each
area were formula prices determined for the month on the basis of the
price of 92 score New York butter. The 3A price was regulated by three
principal cheese price quotations. The section applicable to Grade "A"
contained stipulations as to bonuses to be paid for high butterfat per-
centages and low bacteria count. The resale price schedule was similar
to the previous order. It was provided that a 10 per cent discount
might be allowed on relief sales. Under the tenns of payment. Order 8
required that dealers' payments to producers should be accompanied by
a complete statement "showing the producer's basic quantity, the total
amount of milk received, the amount utilized in each class, the per-
centage of butterfat, and the nature and amount of all deductions
made". Order No. 3 repeated the specifications of No. 6 with respect
to dealers* records, trade practices and sales quantity control.

Order No. 13 effective July 18, 1934 differs conspicuously
only in the omission of the paragraph entitled "Sales Quantity Con-
trol." No essential difference was made in the classification or
method of computation of prices for "B" milk. The producers' premiums
for Grade "A" milk were linked to the spread between the retail prices

for "A" and ^B^. Order No^ 13 was official until August 16, 1935, when
Order No* 3 was reinstated by Order No* 16 for all areas except Pitts-
burgh. The first order bearing H. B. Steele's signature was Order No*
16* Mr* Steele, secretary for the Pittsburgh cooperative, the Dairy-
men's Cooperative Sales Association, had been appointed August 6, 1934.
to fill a vacancy caused by the forced resignation of H. C. Reynolds on
July 26, 193A.

The seven classes designated in Order No* 17 were defined in
substantially the same terms as in Orders 8 and 13* Producer price
schedules were made up in three sets, one for the Philadelphia market-
ing area, one for the Pittsburgh marketing area and another for the
rest of the state* Consumer prices were fixed in four groups, Phila-
delphia, Pittsburgh and Scran ton areas, and all other areas in the
state* The section relating to sales quantity control appeared again
in Order 17 but the method of calculating the base was newl3^

•Pennsylvania Milk Control Board General Order Number 17*
Sec. 30* Sales Quantity Control for Philadelphia Marketing Area -
Starting October 1, 1934-, the basic quantity of fluid milk for each
producer shall be the higher quantity of:

(a) His present 1934 basic quantity as determined by the previous
orders of the Pennsylvania Milk Control Board; or

(b) An amount equal to the average monthly quantity of fluid milk
which was produced by his herd and sold in fluid form during
the eight months from January 1 to August 31, 1934-*

Should the present total basic quantities of all producers selling
to any milk dealer be increased by this method, then the new basic
quantity for each producer shall be reduced by the same percentage
that the milk dealer *s total basic quantities have been increased by
the above method, so tliat the total basic quantities of all pro-
ducers selling to any milk dealer shall not be increased hereby*

Sec. 31* Sales Quantity Control Anywhere in Pennsylvania Except
Philadelphia Milk Marketing Area - The basic quantity of fluid milk
for each producer selling anywhere in Pennsylvania except in the
Philadelphia milk marketing area, shall be the higher quantity of:
(a) The amount equal to the average monthly quantity of fluid milk

2. Operation of Milk Price Control Under the Second Law

The Pinchot appointed members of the Board resigned in Janu-
ary 1935 after the inauguration of George H» Earle as Governor of
Pennsylvania* Official General Order No. 23 was signed by the Pinchot
Board on January 15, 1935* Although the next effective order v/as dated
January 6, 1936, an order was TTritten in September 1935 but it was re-
called because of general dissatisfaction. During that period the act
prolonging the emergency control uras passed. Governor Earle had ap-
pointed Paul 0. Sunday of Cujnberland County, A. C, Marburger of Butler
County, and Charles T. Carpenter of Chester County, all producers, to
the Board on February 2, 1935. Mr. Carpenter resigned on April 30,
the day Act 37 expired. Mr. Sunday's and Mr. Marburger* s terms also
ended automatically on that day. These two, however, continued to
discharge their duties until reappointed \mder the new la«, June 2As
1935c Three days later tliey were discharged on complaint that they had
accepted salaries for the period during which they v/ere not officially
appointed. James S. Pates, the third to be appointed on June 24., was
the only member on the Board until July 1 when Charles T. Carpenter
and Howard C. Peynolds were reappointed. Mr. Pates was chosen to re-
present the conmimer's interest. This shifting scene may explain why

13 (Continued)

which was produced by his herd and was sold in fluid form dur-
ing the two calendar years previous to January 1, 1934» If >
however, a producer can show that his established base was at
least 20 per cent lower the second year of this period, then he
may add one-half of this difference to a second base year for
computing his basic quantity of milk to be governed by this

Order; or
(b) The 1934 established monthly basic as now on file with any
distributor and/or cooperative dairy marketing organization
operating in the Commonwealth of Pennsylvania.

the year 1935 passed ivith little action on tlie part of the Board.

An order was issued on August 2, 1935, with the stipulation
that it become effective September 1. Before that time dealers had
registered such opposition that the order was indefinitely postponed.
Principal features of the order. No. 24^ in original form, were reduc-
tions in receiving station and transportation charges, a flat price for
Class 2 in place of the formula tied to New York butter, end a total
disregard of any production control pleji. Three more milk marketing
areas were established, thereby making a more detailed division of
territorial economic interest •

Upon the posting of the order, dealers immediately threat-
ened pointed opposition vSuch as closing their receiving stations and
hauling milk direct to market. Since no method of production control
was permitted, they proposed to instruct producers to limit their
supply offered or keep one day's milk home each week. The difficulty
in keeping a fixed price for cream in line with the market price was
recognized and tlie possible loss of the market to Pennsylvania sliippers

was considered.

The proposed method of ccilculating the Grade "A" price em-
bodied material changes. The premium for "A" milk was set at a fixed
amount for each one cent by which the "A« retail price exceeded the "B»'
retail price. The bacteria bonus was removed and the butterfat differ-
ential reduced from six to four cents for one-tenth per cent butterfat

above 3*5 per cent*

In the months following tlae recall of Order 2Mr hearings were
held several days a week in an effort to remedy the faults and make the
order acceptable to tlie industry* During this period a group of

.. \.

dealers in the Pittsburgh district paid farmers a price lower than that
set by the Control Board* The dealers justified their position by re-
ferring to the tardy attention of the Board and for the same reason
producers did not object strenuously* A revised order was sent out to
interested persons on December 19 and at the same time notice was given
that there would be a hearing to discuss the order on December 23 • The
object was to permit recommendations before the effective date. There
was plenty of opposition to the order as it was written, both from
dealers and producers. Dealers were unanimous in their condemnation
but the producers were divided. Those opposed contended that some fea-
tures were ''economically impractical."

The provisions around which contention centered were the
classification of fluid cream with fluid milk into Class 1, a price for
cream out of line i/ilth market prices, an increase in consumer cream
prices, and a reduction of 10 cents per hundred in the price of direct
shipped milk in the Philadelphia Area.

Order No. 2U as amended became effective January 16, 1936.
k few of the points of difference were ironed out before the order was
finally raade effective. There were several classification changes,
milk for ice cream was taken out of Class 2B and made Class 2, while
fluid cream which had been in Class 2 was designated as Class lA. The
classification names for milk used in butter and in American cheese
were changed. Some persons felt that the schedule should have been
limited to three or four classes. The reduction of the Philadelphia
f.G.b. price and the increase in receiving station prices were strongly
contested but they became part of the order. The disparity in the
wholesale price between market cream and Pennsylvania cream purchased

from producers remained in the final fonn. There iras also an increase
in resale prices of cream ♦ Retail prices of Grade "B" were divided on
tlie basis of butterfat contentj milk over 4. per cent was to sell for
12 cents per qiiart while that 1^ per cent or irnder was set at 11 cents*
Order No. 24, divided the state into nine areas.

The next change of order came in June of 1936. The general
phases of Order 24 were not modified by Order No. 25. Area 8 was re-
defined to include area 9 and there was a slight change in the defini-
tion of the Southwestern marketing area. The order increased prices of
milk to producers and in some instances to consumers.

Two supplementary^ orders were written during this period.
Order No. 26, effective April 23, 1936, was a definition of the types
of bonds acceptable as surety in connection Y.ath applications for milk
dealers^ licenses. The adjustment of bulk cream and ice cream mix
prices semi-monthly was provided by Order 27.

The terms of appointment of the Board members expired August
6, 1936 and there was no Board until August 20 when Ctovemor Earle re-
appointed Howard C. Reynolds. Howard G. Flsaman of Erie County was
named chairman and John J. Snyder the third member. Mr. Fisaman had
been director of the Pennsylvania Farm Show and Mr. Snyder was a
producer-distributor and former sheriff of Nortiiampton County. Mr.
Reynolds had been a member of the Board for a short time under the
Pinchot regime.

The new Board sent out notices of hearings to be held during
August and September. They met at Harrisbin-g August 27j Philadelphia,
August 31; Pittsburgh, September 3; Pottsville, September H; Easton,
September 15j Scranton, September 16j Johnstown, September 18; Erie,

September 21 •

In October 1936, the general prograan for milk price control
in the entire state was set forth in two orders. No. 28 and No. 2^.
Order No* 2B was applicable to all the areas except Pittsburgh. The
provisions for the Pittsburgh area were included in a separate order.

No. 29*

The number of areas was increased again by Order 28 for the

purpose of subdividing the existing areas. Both farmer and retail
prices were increased. The Scran ton and Johnstown areas were put on a
13 cents per quart market with a ^2.88 per hundredweight price to pro-
ducers for 3*5 per cent Class 1 milk. The Philadelphia producers'
Class 1 price was also $2.88 but the retail figure was only 12 cents.
A 12 cent market prevailed in southwestern Pennsylvania, Schuylkill
County, Erie and Harrisburg and tiie price to farmers was fixed at $2.75.

The price in the state-wide area was advanced to 11 cents re-
tail and $2.38 to farmers. These prices appeared to meet the demands
of producers but there was some criticism that the increase was unjusti-
fiably tardy. As far back as June 1936 the Inter-State Milk Producers
Review had carried the headlines, •'Price Increase Is Over-Due —
Inter-State Asks For Rise In Mid-Summer".

In the Pittsburgh area the Dairymen's Cooperative Sales Asso-
ciation acted to raise the price of milk in the area without waiting
for the Control Board action. The Dairymen's Cooi>erative Sales Asso-
ciation prices as adopted July 16, 1936 were not legalized by a Board
order until October. The Pittsburgh group also took the cream situa-
tion into its own hands. Out-of-state cream ims jeopardizing the
market and the Association asked the Board for an adjustment of prices.

•*The conditions facing our cream outlets were laid before the
chairman of the Milk Control Board and also before the entire Milk
Board at a hearing in Pittsburgh two months ago* We were assured that
a revised order would be issued on May 8. This order failed to materi-
alize. In order to save the Association's market for bottling cream
and ice cream, the directors called a conference with producers at
Pittsburgh and placed before this group the situation in the market. An
analysis of the market's requirements for ice cream supplies and for
bottling cream revealed that the Association producers were getting
only about one-half of this business. Western cream suppliers deliver-
ed carloads of their product into our markets^."

The f .c.b. prices fixed by Order 29 for the Pittsburgh area
were a ratification of tiie prices prevailing in the market, those set
by the Dairymen's Cooperative Sales Association on July 16. The Milk
Board lowered the country receiving station differentials on Classes 1
and lA. This meant a slight increase in the country station price.

The retail price was set at 12 cents per quart for Grade "B"
milk and a 1 cent per quart store differential was approved.

In October 1936 the Dairymen's Cooperative Sales Association
again took Uie initiative in fostering a price change, this time a rise,
The Board took action in December. Order Ho. 33 was approved by Gover-
nor Earle December 1^ to become effective on the 21st. The request was
based on a brief setting forth the increase in feed prices due to short
crops and the general improvement in business conditions. The Grade
"B" Class 1 price was raised from $2.65 per hundredweight to f3*03f and
the retail price was advanced to 13 cents per quart. It was argued
that the elimination of the store differential made the higher price
possible. The price for half pints of light cream was raised 1 cent on
the basis that dealers had not been recompensed for the advance in
Class 2 prices which took place on July 16. The classification of

•^Dairymen's Price Reporter, May 1936.

bottled cream was reduced to two classes, '•li^t" and "whipping". It
had formerly been listed as "light," "medixim," and "heavy".

An order governing "A" milk was to have been effective on
December 21 and a new order for Philadelphia, No* 32, was to have been
in force January 1 but both orders were suspended before the effective
dates and Order No. 28 remained the basis for payments* Much dissatis-^
faction was voiced concerning the state control of the Philadelphia
market during the Fall of 1936* The United States Department of Agri~
culture made a study of the interstate problem but no further action
was taken xrntil a federal hearing was called on March 17, 1938 •

Orders No. 3U and No. 35 for the Johns town-Altoona and
Schuylkill and Scranton areas became effective December 21, 1936. Both
areas remained on a 13 cents per quart market and Grade "B" Class 1
milk was to be paid for at the rate of $2.88 per hundredweight, 3.5

per cent.

Order No. 36 v/as isritten to meet tlie demands for new prices

in the Southwestern milk marketing area, the Leliigji marketing ai*ea and
the Harrisburg area. This order became effective Januarj^ 1^ 1937. A
new order governing the production and marketing of Grade "A" milk was
among those made effective December 21. The order was suspended for
the Philadelphia area but remained in force throughout the rest of the

state.

A new order. No. 38, dated December 23, 1937 separated the

Central milk marketing area, the Lancaster area and the York area from
the state-wide area. That order never became effective.

A new measure governing prices and quality premiums for Grade
"A" milk became effective Februaiy 15.

Order No. 28 in the Philadelphia milk marketing area was
superseded February 15, 1937 by Order No. ^0. No change was made in
the f#c.b. Class 1 price but the new method of calculating the receiv-
ing station charges made some changes in prices at receiving stations;
some were increased and some decreased. The retail price remained 12
cents per quart, but Grade "B« milk testing over k per cent butterfat
was to be sold at 13 cents* With "A" milk, too, the grade was divided
on butterfat content, and 1 cent more was charged for milk testing over
4.»3 per cent*

In the Pittsburgh area Order 33 was amended by No. ^2 on
April 1, 1937* The amended sections reduced Class 2 and Class 3 prices
and the minimum wholesale prices for fluid cream and ice cream sold in
bulk*

3. Operation of Milk Price Control Under the Present Law
Tne terms of the Milk Board members terminated with the ex-

piration of Act ^3, April 30, 1937. Governor Earle announced th

e ao—

pointments to tlie Milk Control Commission May 4., 1937. Howard G. Eisa-
man and John J. Snyder were reappointed and Robert E. Pattison, Jr. of
Chester County replaced Mr. Reynolds. Mr. Pattison^ s attitude was ex-
pected to reflect the consumers* interest in the price-fixing macliinery.

The effective orders written under Act i^J were continued
until the new commission prepared a set of orders. Of the nine super-
seding orders which became effective June 2, 1937, six were special
orders applying to specific areas; the other three were general orders
covering the whole state. The order governing prices and bacteria
bonuses for Grade "A" milk, A-7, is an exact copy of the last order

which the prerious Board had phrased to govern ^A" milk.

The general rules for the conduct of business in every area
of the state were contained in one order, B-1. This order stipulated
that all milk not accounted for in milk dealers* records should be pre-
sumed to be Class 1 and producers should be paid at that rate* It pro-
hibited transportation charges in excess of the rates set by tiie Public
Utility Commission of Pennsylvania or the Interstate Commerce Com-
mission or the actual cost paid by the dealer ♦ There appear vS to be no
recognition of the difficulty involved in determining such actual cost*
The minimuin charge which one dealer must collect vfhen selling bulk un-
pasteurized milk to anotlier dealer \ms set at 16 cents per hundred
pounds. Conditions were described whereby bulk sales of milk might be
made in case of an emergency which might leave a dealer with a large

volume of milk on his hands.

By the same order dealers were required to accompany whole-
sale sales vdth sales invoices. Section 6 prescribed the rate of pay-
ment to be made for milk to be resold in other sta.tes. The paragraph
is not enforceable. Butterfat content was made the basis on which the
percentage of utilisation in each class should be calculated. Milk in
inter^lealer sales is considered Class 1 unless its ultimate use in
some other form cmi be proved. Wiien a dealer receives part of his milk
from producers and part from other dealers the milk received from pro-
ducers must be given precedence in the better priced classes. In like
manner, milk purchased from producers in Pennsylvania must be given
precedence over ?nilk received from producers outside the state.

The order states the terms of dealer payments to farmers.
Producers must be paid t^/dce monthly witli not more than 15 days ensuing

between the last day of delivery and the date of payment. Each dealer
is instructed to make a complete account of all milk purchased and to
render such a statement to all producers supplying riim. Records which
dealers shall keep are listed and acts which constitute fair and unfair
trade practices are defined,

The Commission set forth rules for the conduct of Milk Mar-
keting Committees in this order* A Committee is a voluntary coopera-
tive group which has united to present the farmers' case at hearings
and t<3 assist in the enforcement of orders,

A second general order, B-2, deals with thie subject of milk
dealers* financial and statistical reports. The order contains re-
quirements for annual and monthly reports to be submitted to the Com-
mission* This section has been violated flagrantly. It has been im-
possible to obtain complete or consecutive reports.

The prices set under the Commission's first orders for speci-
fic areas were all based on 4- per cent railk. Class 1 prices were
changed in some secondary markets but for the most part they remained
the same^ The formula for Class 2 milk was modified so that the price
increases gradually after the price of 92 score New York butter passes
33-.1/3 cents per pound. The Class 3 price in all areas was lowered 10
cents per hundredweight, A new marketing area was established in
Centre, Clearfield and Huntingdon Counties.

The Commission called a hearing for June 16, 1937 at which
the subject of discussion was limited to prices for classev*^ other than
Class 1, The orders arising out of Uiis hearing advanced the price for
Class 2 by 25 cents per hundred pounds. The order was nullified before
it was to become effective. However, a subsequent order effective

?>3

July 16 raised the price 22 cents. These orders did not apply to the
Pittsburgh market.

During the last half of 1937 attention in the Philadelphia
market was diverted from state control to federal control. Leaders of
the Inter-^tate Milk Producers Cooperative turned to the possibility of
a federal order under the Dairy Section of the Agricultural Adjustment
Administration to solve the problem of the varying price schedules in
the st8.tes adjacent to Philadelphia.

During this period the Commission encountered difficulties in
the Pittsburgh market. A hearing was called on August 17 at the re-
quest of the dealers in that area. The distribut<-^rs claimed that their
margin on fluid milk was too lov/, especially since their costs had been
increased by a forced increase in milk men*s wages and social security
taxes. An increased margin could have been obtained by an increase in
the price to consumers or by a decrease in the price to producers. The
producers objected strenuously to a loT^ering of their price and the
dealers replied that they would be forced to purchase tank milk from
other sources. The Commission took action in the form of an order
effective October 1, 1937 which reduced the Class 1 price by 6 cents.
This was not at all what the dealers demanded. The findings of fact
issued with the order stated that the Commission's study of milk
dealers' operations contradicted evidence presented at the Pittsburgh
hearing. According to the Commission's study of 50 dealers in the
Pittsburgh area engaged in fluid milk and milk manufacturing business
in 1936, the average earnings on unadjusted investment were 6.9 per
cent. The Commission attempted to discourage ttie purchase of tank milk
by raising the price 21 cents per hundred pounds over that for direct

deliveries from within the area* Dealers had found it more profitable
to bay the actual supply needed in tanks from small producers' coopera-
tives rather than to purchase it in small lots from farmers close at

hand*

The dealers were not satisfied with this order and 30 Pitts-
bargii dealers appealed from tlie order to the Dauphin County court on
October 20, 1937. The court granted the petition and issued a super-
sedeas on November 26 retroactive to October 1, fixing the price at
$2.92 per hundred pounds, 27 cents under the Commission order.

On December 17, the Milk Control Commission opened a hearing
in Pittsburgh and the hearing continued int3 the new year with recesses
for the holidays* During this period dealers were for the most part
pajdng at the §2.92 rate and making provision by bond to cover a re-
versal of the decision*

U* The Court Decisions
The legal pattern of milk price control has been described
bat that pattern has been snipped and patched by court caprice* The
volumes of written words are but a small part of the law. Words may
be interpreted by judges to mean tie direct antithesis of their ori-
ginal thought*

In the case of Rohrer^s Med-0-Farms Dairy versus the Milk
Control Board the judgment of the lov/er court was that the Milk Control
Act was constitutional. The decision was reversed in the Superior
Court where the majority of the judges declared the law violated the
^Dae Process" clause and the first section of the Bill of Rights of the
State Constitution* In his dissenting opinion Judge Keller states:

''To say that the "Due Process" clause in our Bill of Rights,
or the declaration that all men have certain inherent and indefeasible
rights, among them those of acquiring, possessing and protecting
property, prevents the state from dealing with a situation of this
nature, with consequences so fraught with harm and danger to the
general public, is carrying its meaning far beyond what anyone contem-
plated when it was first promulgated, or even when last adopted as part
of our present Constitution."

The Supreme Court upheld the opinion of the minority of the
Superior Court bench* The law was declared constitutional by the high-
est test witiiin the state. The constitutionality of the law had al-
ready been proved with respect to the Federal Constitution when a simi-
lar act by New York State was upheld.

In the case of the Milk Control Commission versus Eisenberg

Farm Products, a Pennsylvania corporation, the practices which become

a part of interstate commerce are defined:

"Conclusions of Law"

"1. All of the transactions of the defendant including the
purchase of milk from the Pennsylvania farmer-producers, within the
Commonwealth of Pennsylvania, constitute interstate commerce.

"2. T>ie regulations sought to be imposed upon tie defendant
by the plaintiff, including the taking out of a license as provided
by the Act of April 26, 1937, posting a bond conditioned for the pay-
ment of all amounts due to farmers under the Act and under orders of
the Milk Control Commission, and to pay such milk prices to the far-
mers as is required by the Commission would constitute a regulation of
and a burden upon interstate commerce.

"3» The defendant, is not subject to the jurisdiction or

control of the Milk Control Commission of the Commonwealth of Penn-
sylvania in the matters complained of by the plaintiff."

This decision of the court of Common Pleas of Dauphin County

handed down in 1936 may not fix the law for all time. Mr. Harry

Polikoff, Deputy Attorney General, mentioned the probability of an

appeal .

The effectiveness of the act was severely hampered in 1937

by an adverse decision of the Daupliin County court* The court declared
the price which a Commission order required dealers to pay farmers was
"confiscatory" • The court set aside that price and determined one on
its own judgment. At a later period the court changed its fixed price.
These operations of the court appear to be an usurpation of authority
assigned to the Milk Control Commission.

The Problems Arising From Milk Price Control
There are fundamental questions which may be asked concerning
the advisability of adopting a measure of social control. However,
v/hen a control program has been accepted and inaugurated there are
still problems of method and purpose to be considered.

Dr. Joseph S. Davis, Director of the Food Institute Research
at Stanford University, has outlined the criteria on which the judgment
of a control program may be based^5. He would ask first if the correct
amiiysis had been made of the situation to be met, then whether the
underlying assumptions of the policy were correct. In observing the
program once it had been set up he would ask how far the intended re-
sults had been achieved, whether tlie secondary results were welcome or
tolerable, and whether tlie net resu lt was wortli the cost^^.

The following pages which are devoted to specific problems
of milk control have been developed with these appraisal criteria in
mind. The mechanics of consti'ucting an order, the division of the
state into areas, the study of prices fixed and the recognition of

Davis, Joseph S. Observations on Agricultural Policy.
Farm Economics, November 193'7. Page 861.

Journal of

Emphasis added by the author.

production control features by the Board will be examined*

1* The Development of an Order
The order has been designated as the legal organ which the
Control Commission shall use to convey its commands to the milk In-
dus try. The routine by wliich an order is conceived, written and made
effective is a problem in itself.

The law provides for hearings at which interested parties may
present their cases. Such hearings must precede the formulation of an
order. The Commission may act on its own initiative to start the mach-
inery of a new order, or the hearing may be the outcome of a petition
on the part of producers or distributors. The Commission is not re-
quired to hold a hearing even though requested to do so by petition.
The necessity for a hearing is judged by the Commission.

Notices of hearings are released to the Associated Press and
to International News Service. Interested persons are infonned direct-
ly. The hearing is opened by a member of the Commission and all who
wish to testify indicate their intention on fora cards. Hearings are
open to anyone who cares to speak and tlie length of address is not
limited, although ttie chairman may specify some particular questions
for consideration arid restrict discussion to these questions only. All
testimony is recorded by a stenographer employed by the Commission and
is on file at the Harrisburg office. Witnesses must swear to testimony
which is to become a part of the record.

Relevant testimony and reasons for action must be prepared
for a document called "Findings of Fact". "Findings of Fact" must be
certified by each member of the Commission present at the hearing and

must be filed for public reference. If the hearing brings forth facts
calling for action, an order is framed by the Commission members with
the advice of their legal counsel. Orders must be posted six days be-
fore the effective date and must be mailed to dealers three days in
advance of the effective date.

The smooth machinery of the law has slipped a cog now and
then. Chairman Stanford emphasized the information-seeking phase of
the hearing at the first meeting at Erie, February I3, 193J^, He cited
cases of hearings by other agencies which had added pepper to the milk
stew. This purpose was forgotten, it seems, at the first Philadelphia
hearing when the principal item of business was hurling accusations of
one sort or another.

There is no arranganent for agreements between producers and
distributors outside iiie hearings, but testimony presented at the
Harrisburg hearing on February 18, I937 Indicated that some compromise
had been attempted. Representatives of producers and dealers and the
Board members appeared to favor these preliminary efforts^'^.

The Commission interprets its responsibility for obtaining
information as more than listening at hearings. According to Chairman
Eisaman, the Board does not sit as a board of jurors restricted to the

MilK Control Board of the Commonwealth of Pennsylvania. Harrisburg
hearing, February 18, I937. Mr. Stewart Senft, representing farmers
of York County, reported that he had tried to get the dealers to
confer and draw up a tentative order to be presented to the Board
for approval. The dealers refused to cooperate. Mr. Snyder (of the
Board) brought out the fact that the Board had had similar difficulty
in requesting producer organizations to confer. Mr. James Sutcliffe,
representing dealers, admitted that some request had been made for a
conference but he said he did not consider tlie invitation official.
Mr. Sutcliffe spoke in favor of such a conference.

immediate testimony in the formation of orders • For example, at the
hearing prior to issuing Pittsbargh Order A«-13, the facts presented
by dealers were not considered representative since the dealers'
costs used represented two of the most inefficient dealers in the area.
The Commission proceeded to check the facts through their own figures,
and the order was based on the records the Commission obtained*

Dealers at this Pittsburgh hearing asked for immediate action
because they insisted they were losing money each day the order was de-
layed. The Inter'-State Milk Producers Review carried several articles
during the summer of 1936 in which the Board was criticized for delayed
action. It has been possible to trace the lapse of time between hear-
ings and the subsequent orders for each of the orders promulgated under
the permanent act, table 3.

If the purpose of the hearing is to obtain timely information
for the determination of just prices, it is altogether possible that
the means defeat the purpose. Timely information in March may indicate
a movement of prices contrary to what is needed in June. The compara-
tive celerity witti which orders have been issued since July suggests a
recognition of the necessity for quicker action. The six day notice
required before effectiveness is partly responsible for the delay. It
is not probable that this period of notice could be decreased.

Complete understanding of the local situation should not be
saci-ificed for speed. A new order which does not help the situation is
no improvement. The efficiency of the Commission could be materially
increased by a reorganization of personnel. First, the functions car-
ried out by the Commission members themselves should be limited to re-
viewing and administering orders. The compilation of evidence and the

Table 3 - Length of Time Intervening Between Date of Hearing and

Effective Date of Subsequent Order, for the First Eighteen
Orders Issued by the Milk Control Coniraission.

Days elapsed

Order number

Effective date

between hearing

and effective date*

A-1

June 2, 1937

A-2

June 2, 1937

A-3

June 2, 1937

- lOA

k-A

June 2, 1937

- 103

k-5

June 2, 1937

A-6

June 2, 1937

- 103

A-7

June 2, 1937

- 104

B-1

June 2, 1937

- 104.

B-2

Jiine 2, 1937

- 104

A-8

June 2, 1937

- 103

A-9

Never effective

«»

A-10

July 16, 1937

A-n

July 1, 1937

A-12

July 1, 1937

A-13

July 1, 1937

A-l<4

July 1, 1937

A"15

July 16, 1937

A-16

July 16, 1937

A-17

July 16, 1937

A-18

October 1, 1937

yjhen more than one hearing Kas hel rl for an order the time elapsed is
expressed by range •

framing of orders should be handled by a corps of technical workers
under the supervision of a milk marketing specialist. This specialist
in milk marketing of course should be chosen on merit and his discharge
for anything but incompetency forbidden. He would be resx>onsible for
interpreting policies and for coordinating the many orders to fit the
genercj policy.

Another cl^^ange needed ic the definition and adherence to some
generel policy. All through the development of the law In the form of
orders there has been lacking a guiding sense of direction. New fea-
tures have been added vathout consideration of tlie repercussions or the

long time effect.

No great advances in efficiency and type of administration
can be expected as long as tiie Comralssion is hampered hy the incompe-
tency of employees who rei)resent political patronage. The accomplish-
ments of the Commission to date in the fields of audits and litigation
can be directly attributed to the superior personnel in these depart-
ments*

2« ^rea

The 14,7,629 Pennsylvaiiia farms on \7hich cows were milked in
1934 cannot be dealt vdth as a single class* There are fund^onental
differences ?;hich divide the types of farms that make up the fifteen
and a half million acres of farm land in Pennsylvania. Differences in
topograxAy, soil, climate, location of markets and established market-^
ing routes form areas of vastJ.y varied production and marketing prob-
lems. In determination of milk prices each area vdUi its ovm char-
acteristics should be dealt vdth as a separate unit.

Numerous tjnpes of farming are practiced in this state. The
differences are a result of variations in topography, soil and growing
season. "The elevation varies from nearly sea level in the southeast
to peaks of over 3,000 feet in the south central part^^." The south-
eastern level tract, the Allegheny plateau, the valley fanris of the
central and northern sections and the nortimestern level areas cause
basic differences in famdng r^ractices.

The northwestern and the southeastern lovdands enjoy compara-
tively long growing seasons. The climate is tempered in both cav^es by

Tlie Pennsylvania Agricultural Experiment SUition Bulletin No. 305,
page 5.

the proximity of large bodies of water. The plateau and mountain re-
gions have shorter growing seasons. Rainfall and soil characteristics
also vary throughout the state* In addition to these natural factors
of difference the availability of market outlets is important in de-
termining the type of farming.

The state has been divided into 25 "type of farming" areas by
Emil Rauchenstein and F. P. Weaver^9^ It would not be logical for a
price control agency to group the Philadelphia Truck Crop area with the
Allegheny Mountain Self-sufficing area. The Northeastern Dairy section
has its oY/n problems; tlie Anthracite Coal area its unique features.

The marketing routes in Pennsylvania lead to tliree primary
centers of consumption, Philadelphia, Pittsburgh and New York, and to
numerous secondary markets. The small markets are important. "Nearly
60 per cent of the non-^farm population live in 102 incorporated places
each having a population of 10,000 or more'^^." These three city mar-
kets are supplied both hy direct shipped milk and by milk concentrated
at receiving stations. The country plant areas supplying these cities
overlap each other^.

In addition to the fluid outlets there is a manufacturing
outlet for Pennsylvania milk. Dealers who manufactured the greater
part of the milk they purchased handled 19 per cent of all, milk bought
by Pennsylvania dealers in April 1934.^^»

f-M >

The Pennsylvania Agricultural Experiment Station Bulletin No. 305.

The Pennsylvania Agricultural Experiment Station Bulletin No. 327,
page 6.

Idem* Page 9»
Idem. Page 12.

The cost of inspection of milk when producers are located far
from the consuming center is a limiting factor in the determination of
a milk shed* It is possible that the extra cost of inspection at a
distance is more than offset by high land values and increasing labor
costs near consuming centers ♦

The factors heretofore mentioned have been those which deter-
mine whether a fanner can profitebly engage In milk production and what
market he supplies • A control agency must also recognize underlying
differences which make it necessarj^ for a dealer in one area to absorb
more spread than in another. The purchasing power of the consumer is
also an influential item.

Dr* Leland Spencer has done the most comprehensive published
work in costs of distribution^^. He found tliat dealers' operating
costs expressed as a per cent of sales were lower in up-state New York
cities than in the City of New York. The largest single item of ex-
pense is that of delivering and selling. It is to that item then that
most attention should be turned in an effort to increase efficiency.
Physical barriers to delivery, the unionization of labor and the keen-
ness of competition give rise to variations in selling and deliverv

costs.

For very definite reasons consumption per capita and total

consumption wxy within the state. Milk consumption is closely related
to income per family. Although the differences are not great v.lthin
the higher income groups, there artt marked differences betY/een the per
capita consumption of the poor income groups and that of the middle or

-^Spencer, Leland. Cornell University. Report to the New York Stete
Milk Control Board. March 24, 1934.

well-to-do groups. Nationality is another factor which affects milk
consumption. The per capita consumption of milk by Jews in Philadelphia
in 1929 was higher than that of native whites or of Italians and color-
ed races* Both the Italians and colored races reported very little use
of milk^^-. In determining a retail price these factors are important
and the area liudts must be set with the description of the market in
mind. In the Philadelphia metropolitan market the demand for Grade "A"
milk is far greater than in any othier part of the state.

Tlie Pennsylvenia Milk Control Board and the Milk Commission
have recognized these difficulties and thie shifting of boundaries that
were first set up shows that they have discovered faults in the loca--
tion of some of trie boundaries. The areas described by every order of
the Board and of the Commission are shown on maps on pages v to xv of
the Appendix. The areas were determined in accordance vdth testimony

presented at hearings.

The importance of considering a number of determinants in the
definition of areas for fixing milk prices has been outlined in the
preceding pages. But principles and theories are not the most practi-
cal guides for setting up usable boundary areas. It appears necessary
for the purpose of administration that the boundaries of political
units be followed. The township unit, while not perfect, appears to be
the only usable unit. The dissimilarities within one county will be
described in the ensuing paragraphs. Centre County has been chosen to
illustrate this point, partly because it supplies so many markets and
partly because the data are readily available.

Pennsylvania Agricultural Experiment Station Bulletin No. 245 •

The eastern townships of Centre County belong in the Appala-
chian Valley Dairy section • The v^estern and northern tomiships are a
part of the Allegheny Mountain Part-time and Self-sufficing areas. The
best interests of the farmers or of the consumers cannot be satisfied
by grouping these townships into one administrative area. The dairy
problem to the farmer who keeps a cow to fill the family milk bucket
is far different from the problem wliich faces the farmer who depends
upon his herd for a cash income.

Figure 3 gives some indication of marketing eireas witliin the
county. The producers are considered a fair sample for the purpose of
showing usual movements of milk. The lack of date, for the western and
northwestern tovmships is representative for the reason that the area
is not favorable to daiiy farming. The lines connect producers* farms
and the plants to v/hich milk was delivered. County and township bound-
aries are shown for the purpose of illustrating how easy it is for milk
routes to cross political barriers. Farmers in Ferguson Township sold
to Supplee-Wills-- Jones at Huntingdon, to Sheffield Farms plant at
Belief onte, to a Tyrone dealer, and to local dealers in State College.
Producers selling over county boundaries linked Centre County with
Clinton, Blair and Huntingdon Counties.

In Centre County there is not ordy the problem of country
plant and local retail milk producer" on adjoining farms but the country
plant milk is routed to two primarj^ markets as well as to secondarj^
markets. The eastern half of the county is definitely a part of the
New York shed, but in the southwestern townships the New York market
competes with the Philadelphia and Altoona markets. For the purpose of
justifying producer prices it seems necessary to make some division of

• New York

O Philadelphi

A Tyrone or Altoona

A Local Wholesale

9 Local Retail

Altoona ^^

Figure 3 - Location of Farms in Centre

From 7/hich Milk Was Sold to
Markets, 1931-1935

County
Various

^"S, Huntingdon

the county into two areas, one affected by the New York market and the
other influenced by the Philadelphia and Altoona buyers* The boundary
appears to be the Tussey mountain ridge in Ferguson Township and the
township boundarA'^ between Fatten and Benner, and Huston and Union Town-

ships

Centre County does not illustrate the problems of a metro-

politan consxamers* market. The local markets are all under 5>OCX3 popu-
lation and are served by producer-distriUitors or distrilnitors who pur-
chase from less than a dozen producers ♦ However, the fact that the
consumer is so close to the producer makes a problem of another type*
Can there ever be satisfaction among fanners when one enjoys the pri-
vilege of the local market while the other must accept manufacturing
or country plant prices? This is perhaps the greatest point of con-
tention in the confusion of price arguments* It Vv^ould seem that the
perfect di 'vision of the sta.te into areas affected by similar economic
interests is impossible* Township boundaries present a better working
basis than the county* A detailed study of areas would be helpful to
the Commission*

In conclusion to these statements setting forth some differ-
ences in area it seems fitting to describe the manner in which the
Control Boards have interpreted these differences. They have set up
price schedules for the various areas in the state. Tlie Philadelphia,
Pittsburgh and State-wide areas ai'e compared in table l^. The price for
fluid milk in the State-u^ide area is consistently lower than in either
of the metropolit<'An areas. As between the two cities there seems to
have been a reversal of opinion* Up to 1937 the price for fluid milk
in Philadelphia was higher than the Pittsburgh price, but consistently

TABLE ^ - Dealers* Buying Price for 3.5 Per Cent Grade ''B" Milk f.e.b. in the Major Classifications at Three

Markets Since the Inaugurf^tion of Milk Control, (In Dollars ^oer Hundred Pounds)*

-«-^«u~4t — mkJtma^t^^^l^mt^ '^^"%fciiWii.,^'^--^^^^3Wtfc<ir' % m m»

Fluid Milk

Fluid cream

Butter

Philadelphia

Pittsburgh

State- wide

Philadelphia

Pittsburgh

State-Td.de

Philadel]

phla Pittsburgh

State- wide

193^

April

$2.60

$2.] 5

♦2.33

$1.70

ei.7C

.99

e .93

$ .99

May

2.60

2.3 5

2.33

1.7C

1.70

1.G3

.96

1.03

June

2.60

2.2A

2.24

i.a

1.41

I.a

.«7

.87

July

2.55

2.2A

2*4c-4

1.39

.86

August

2.55

2.36

2.24

1.51

1.6«

1.51

-o6

.96

September

2.60

2.4-8

2.24

1.35

1.68

1.35

.90

.95

.90

October

2.60

2.^8

2.24

1.14

1.68

1.39

.94

November

2.^0

2.^8

2.24

1.23

1.78

1.48

1.03

1.C3

1.03

Deccinber

2.60

■ 2.4.S

2.24

1.32

1.85

1.53

1.08

1.C8

1.08

1935

Janucry

2,^

2.48

2.24

1.50

1.99

1.65

1.20

February

2.60

2.48

2.24

1.57

2.07

1.72

1.27

March

2.60

2.43

2«24.

I.a

1,88

1.56

1.11

April

2.60

2.48

2.24

1.51

2.00

1.66

1.21

May

2.60

2.48

2.24

1.26

1.70

1.41

.96

June

2.60

2.48

2.24

1.15

1.57

1.30

.85

.25

.85

July

2.60

2.48

2.24

1.34

1.55

1.29

.84

August

2.60

2.48

2.24

1.17

1.60

1.32

.87

Septeaber

2.60

2.48

2.24

1.22

1.65

1.37

.92

October

2.60

2.48

2.24

1.28

1.73

1.43

.98

November

2.60

2.48

2.24

1.43

l.oo

1.58

1.13

December

2.60

2.43

2.24

1.49

1,98

1.64

1.19

4^-

'^m^^^iSA

TABLE ^ - (Continued) Dealers' Buying Price for 3.5 Per Cent Grade "B" Milk f.c.b. in the Major Classifications

at Three Markets Since the Inauguration of Milk Control, (in Dollars per Hundred Pounds)

Milk ^ped

Fluid milk

Fluid cr aa
La Pittsburgh State-^lde

Butter

•

Philadelphia Pittsburgh State-wide

Philadelph:

Philadelphia

Pittsburgh

State-ride

1936

Jana:-iy

^2,55

♦2.^3

#2.22

$1.66

^1.90

$1.73

$1.21

February

2.50

2.38

2.19

1.80

1.29

March

2.50

2.28

2.19

1.20

1.80

1.13

April

2.50

2.28

2.19

1.80

1.80 ■

1.08

May

2.50

2.38

2.19

1.80

.96

June

2.50

2.38

2.19

1.80

l.OA

l.CA

1.04

July

2.50

2.38

2,19

1.80

1.20

1.17

August

2.50

2.38

2.19

1.80

i.ai

1.2.;

1.24

September

2.50

2.38

2.19

1.80

1.30

1.80

1.22

October

2.69

O CO

2.28

1.76

1.92

1.76

1.27

1.26

1.27

November

2.28

2.65

2.38

1.76

2.02

1.76

i.a

1.41

December

2.88

2.25

2.38

1.79

2.02

1.79

i.u

1.40

1.^4

1937

January

2.88

3.05

2.38

1.79

2.02

1.79

l.U

1.40

1.44-

February

2.88

3.05

2.38

1.79

2.02

1.79

i.-u

1.40

1.44

March

2.88

3.05

2.38

1.25

2.02

1.85

1.50

1.45

1.50

April

2.28

3.05

2.38

1.73

2,02

1.73

1.38

1.35

1.38

May

2.28

3.05

2.38

1.71

2.02

1.71

1.36

1.23

1.36

June

2.88

3.05

2.38

UAA

2.02

l.iW

1.14

July

2.28

3.05

2.38

1.58

2.02

2,00

1.17

August

2.88

3.05

2.38

1.7-4

2.02

2.00

1.21

September

2.88

3.05

2.38

1.25

2.02

2.00

1.30

October

2.28

2.99

2.38

1.90

2.02

2.00

1.3A

1.34

November

2.88

2.99

2.38

2.00

2.02

2.00

l.-i2

1.42

December

2.88

2.99

2.38

2,QA

2.02

1.97

1.A6

1.46

lit

during 1937 the Pittsburgh price was the higher. In the period before
milk control was adopted the retail price had been consistently higher
in Pittsburgh than in Philadelphia.

Prices to farmers for milk used as fluid cream have been
lower in the Philadelphia market than in any of the others during the
period of control* This is undoubtedly due to the great demand for
cream in that city and to the fact that western shipments ai-e waybill ed
to Philadelphia. It is Yery likely that the Pittsburgh market will re-
ceive a greater proportion of cream shipments if the discrepancy in
area prices is continued*

The price paid to farmers for milk used in Initter was almost
uniform for the entire state during this same period. The greatest
spread betv,/een areas was four cents per 100 pounds.

In a free market the spread between the dealer's buying and
his selling price is determined by three principal factors, the bar-
gaining power of the producer, the bargaining power of the consumer and
the bargaining power of the distributer. The main force behind bar-
gaining power is the condition of supply and demand. However, in an
economy hampered in its free movement as the dair^/- industr^^ is in this
state, unnatural bargaining power may give undue weight to other than
economic forces.

In most cases when the Class 1 price to farmers has been in-
creased the retail price has also been raised, but there does not ap-
pear to be an absolute relationship between the increavSe in price to
the producer and the increase in price to the consumer, figure 4.. In
the three areas, Philadelphia, Pittsburgh, and State-wide, the spread
on Class 1 milk has not been lowered since October 193A* This is im-

portant to note in considering claims of the political leaders that
milk price control has continued to curb the profits of milk dealers.
Careful attention should be given the use of the word "spread". By
spread on fluid milk is meant the difference between tiie f .c.b. price
paid fanners and the retail price of Grade "B" in quart bottles. The
increased spread does not necessarily mean a liigher profit to distri-
butors but the increasing breadth must be considered in its relation to
production and consumption regardless of whether the spread is due to
increased costs or to increased profits.

The spread25 on fliiid cream was consistently less in Pitts-
burgh than in other areas until recent!.y, figiu-e 5. The lower spread
may be an adjustment to the higher price demanded by farmers in the
Pittsburgh area and to the ability to handle the product at some
profit. This might not be a net profit because costs could be made up
on the fliiic. milk market v;here the spread was v/ider.

3. The Problem of Fixing Prices
The greatest problem of milk control arises from its price-
fixing authority. lir. J. M. Tinley of the Giannini Foundation has
pointed out the difficulties of price fixing and has expressed a very
important conviction .« He writes:

"The difficulties of administering price-fixing laws are
great* In an economy characterized by continual expansion of price
fixing into more and more fields of economic activity, however, such
legislation for individual industries seems inevitable^^.ti

^^Spread on fluid cream as used here means the difference between the
f.c.b* price paid farmers for Class 2 and the retail price of 20
per cent cream in half-pint bottles^

^^Tinley, J» M. Economic Considerations in Fixing Resale Prices of
Milk. Giannini Foundation of Agricultural Economics. Mimeographed
Report No. 57. Page 9-

mmmmmmfmmmi^mm^fmmmmmmmKtKHKttflKKlt

IPMPMiillWIIiM.'iijn ..«i . m

The following evaluation of price-fixing experiments and suggestions
for futxire action will be founded on this vievvpoint of the inevit-
ability of regulation. The citizens of Pennsylvania have elected to
set up a permanent price-fixing agency in this state. Unless there is

radical change in thought, tiiere is little reason to look for a re-

peal. 7^1 th this recognition of the permanency of some type of control,
it becomes increasingly important to evolve some T/orkable standards for
establishing prices.

The fact that milk and milk products have different elasti-
cities of demand should be recognized by any agency regulating prices.
It is generally conceded that the demand for butter is elastic, the de-
maxid for cream slightly less elastic and the demand for milk less elas-
tic than the demand for either of the other two. However, to say that
fluid milk consumption is less elastic in comparing it with other dairy
products does not mean that it is inelastic. Reliable evidence con-
cerning the effect of an increased price of bottled milk on the con-
sumption is not available. It may be suggested by figures showing
consumption of substitute products. The common substitute for fresh
milk is, of course, canned evaporated or condensed milk. The sub-
stitution is not entirely for fluid milk.. Canned milk may take the
place of cream or it may represent additional consumption. For that
reason the fluctuations in the consumption of canned milk do not serve
as a reliable indication of the demand for fluid milk.

Even though the degree of elasticity in the demand for fluid
milk cannot be exactly determined it may be recognized, and a close
check on the effects of price changes should be made by the Commission,
Assuming that the consumption of milk is very inelastic, tliat the same

amount will be consumed at any price, it ?R3uld seem wise from tlie view-
point of Pennsylvania dairymen to maintain the fluid milk price at a
much higher price tlian that charged for milk used as fluid cream or for
the manufacture of batter. It is possible that if the price were made
too high, ou-t-of-state sources of fluid milk would supplant Pennsyl-
vania milk.

The more probable assumption is that the consumption of milk
is elastic to a degree^ but that it is not as elastic as the demand for
other dairy products. In that case an increase in the fluid milk price
can increase returns to farmers only as long as the price increase is
not great enough to drive any buyers off the market. If the consump-
tion of fluid milk is decreased the proportion used in other classes
will increase and the combined price to farmers will decrease. The
price of milk used in cream and butter must be maintained at the econ-
omic level reached by the xvorld supply and demand.

It may be tliat a lower Class 1 price would enable Pennsyl-
vania dairymen to sell more milk in this class and thereby receive a
greater net return. The lower Class 1 price would be higher than the
price for the alternative outlets in Class 2 or 3, Any agency fixing
prices should recognize the effects of either of these policies both in
relation to producers and to consumers.

In the development of milk pricing policy tlie more elaborate
price-fixing schedules have been constricted for areas adjoining con-
sumption centers* The legal argument which forms the basis of orice
fixing is the plea that a safe supply of bottled milk must be guaran-
teed tue city populace. The period of control has coincided with that
period of the cycle reprosenU^d by ample supplies, Tlie problem has

been one of preventing the abundant supplies from disrupting the market.

Costs of inspection and transportation tend to keep milk from
nufacturing areas oat of the fluid market. These costs, however, are
gradually changing, and with shifting differentials between the markets
for manufacturing and for fluid milk, the price becomes the balance
which evens the flow into the different channels. /Ictuy-lly, the power
of interests fighting to maintain a limited market has been a potent
factor in the attempt to hold nearby prices at a premium.

A price regulating body is confronted with the task of set-
ting up not one price schedule but many. Both producer and consumer
prices vary in different areas of the state, according to use, with
variations in quality and batterfat content, and with varying costs of
distribution.

"Perliaps the most fundamental difficulty in pricing milk to
distributors on a flat-price basis is found in the fact that distri-
butors tend t v) vary widely as regards the proportion of milk sold in
each use, coupled with the additional fact that, in a market suffi-
ciently large, differences in transportation costs per unit of milk
and tiie product equivalent of such unit of milk operate so that the
market tends to be zoned and milk used for fluid milk must command a
price sufficiently higher than tliat of the creajn equivalent jf a unit
of milk tx) cover the higher cost of transporting milk in fluid form
rather tlrian as cream or other product form^^.w

Price differentials which reflect the variations necessary
in a price schedule are second in importa.nce only to the problem of

he general level. In the follo?/ing pages, some effects and com-

parisons Ydll be presented to show how prices set by the Pennsylvania
Milk Commission have been established and changed ^vith too little
recognition of the economic facts involved.

•Qaumnitz, E. W. and Reed, 0. M, Some Problems Involved in Estab-
lishing Milk Prices. Page 29.

MILK PRICES AND OTHER PRICES ~ It is not difficult to forget
the general picture of a complex program when it becomes necessary to
deal with a practical problem. The general picture is none the less
important and oxxj decision of a pi^ctical nature is in no sense prac-
tical if it is not formulated vilth the broad viewpoint in mind*

One of the reasons for establishing a milk control agency

was the desire to correct the disparity between the farm price of milk

and other prices. This purpose is expressly stated in Acts 37 and 4.3*

"VJhereas, the present acute economic emergency being in part
the consequence of a severe and increasing disparity between the prices
of milk and other commodities, which disparity has largely destroyed
the purchasing power of milk producers for industrial products, has
broken down the orderly production and marketing of milk, and has
seriously impaired the agricultural assets supporting the credit struc-
ture of the Commonv/ealth and its local governmental subdivisionj • . . . ."

The achievement of this purpose is assumed in the present
Act No. 105 and the intention to continue such purpose is embodied in
the law.

"f •».. .public control of the milk industry in recent years is
stabilizing the conditions therein and a relaxation of control will
cause a return to the unliealthiful, uneconomic, deceptive and destruc-
tive practices of the past vdth respect to this paramount industry
upon wliich the heal.th and welfare of tiie Commonwealth largely de-
pends; ••..•"

An examination of the movements in milk prices and other
prices affecting the farmer does not show any lessening of this dis-
parity. The prices paid farmers for Class 1 milk direct shipped to
Pittsburgh are compared v/lth the index of Pennsylvania farm prices of
feed in figure 6, table 5# The period from 1928 to March 1934 shows
some lag in adjuL^tment of milk prices to the price of feed, but the lag
is more marked during the period of control. There is a feeling that
the control agency is producer minded and is anxious to raise the price

3 ,

•- T ■ -I -

-I — i.

i-^r-

1:1- til

i-j'fX 4-
► t-4 i

-t-i-

+— T

i-i

FIGUEE 6 - Index Numbers of the Price of Dairy ?eed in PenrisylVaras' arid the Price of Fluid Milk at

Pittsburgh. 392d-19;

f— r"'-l'-'M---i-'-'i 1---^

4— H h

r ' ' ' j' ' ' I ' I

-1

-tri

i_Lj.

I I I I I I ' I

■rnt=

■f— ■4i...i---f -H-

4T-rt:n

-t-1-*-

-U

— r

t—r-

»-i-

-•4

T-t-r

I ii I >i

■t

i . 1

4U.'

|-'-'

.-,-i-,-i

trtTThTTTton:

I 1 . _..-- ^14-4-;-

I ; M !

-t-t t-r-rr

i-44-

J.j^

-t"

tmm-mimmmmMi

,_,„. ,T.--rlWW^;*

TABLE 5 - Pittsburgh Class 1 Prices in Dollars Per Hundredweight 3-5 Per Cent Grade '^B" Milk, 1928-193?^

Januai'y

FebFuarj'

March

April

May

June

Jvily

August

September

October

November

December

1928

3.90

3.50

3.10

3^A5

3.45

3.?5

3.85

1929

3.S5

3.85

3.A5

3.^5

3.>i5

3.45

3.50

3.45

1930

3.40

3.00

3.20

3.40

3.05

1931

3.05

2.65

2.68

2,68

2.68

2,68

2.68

2.25

1,70

1932

1.70

1,70

1.70

1.83

1.95

1.30

1.70

1933

1.30

1.55

1.90

193a

1.90

2.15

2.24

2,36

2.48

2,48

2.48

1935**

2.43

2.48

2.48
2.30

r?t48

2.30

^.48
2.30

2.4S
2.30

^.4S

2.30

1936**

2,38

2.36

2,38

2.38

2.65

2»3S
2.65

2,3?
2.65

2.65

2.85

1937**

3.05

2,?9

2.72

2.99
2.72

2.99
2,72

-w-Prices reix^rted by the Dairymen's Cooperative Sales Association for the Direct Shipped area.

^Hfvrnere two orices are indie- ted for one nontli the price obove the line is the price set by the Control Board
and the price belov; the line is the actual raarket price reported by Dairymen *s Cooperative Sales Associci tion^

fanners at every opportunity. If that is the case, this disparity
will prove even greater during a period of falling prices. In fact,
such an event is portended in the reluctance to drop the price of milk
during tiie recession which started in September 1937^

It is probable that the disparity of prices would have been
less if the price of milk had not been controlled by a state agency.
Tie liave proof that a local bargaining agency was able to interpret the
correct movement several months before the state board took action. In
August 1935 trie Pittsburgh market broke away from the legal price* The
reduction was partly adjusted by the Control Board six months later*
In JuH^y 1936 a price rise was Instigated by the market and tbj-ee months
later the Control Board adopted t!:iat same price for the area. Unusual-
ly lov/ feed costs and declining business activity in the Fall of 1937
evidently were not adequately taken into account in the determination
of a price to farmers. The dealers in the Pittsburglri market again
broke away from the legal price. The court of Dauphin County upheld
the dealers and declared that the price fixed by the Comrdssion was
confiscatory.

Tlie ratio of pounds of milk to pounds of daii^' feed is a com-
mon method of associating these two factors. In figure 7 is shown the
average pounds of milk requii*ed to buy a ton of dairy feed in Pennsyl-
vania by years from 1922 through 1937. With the average is plotted the
high and the low average months. The range in 1937 v;as greater than
for any other year shown. This is further evidence that prices of milk
and feed liave shov,ii little relation dux*ing the period of artificially

set prices.

How doGwS the price for milk received by farmers compare with

«p

mmmmmmm

wAexr .*• -J. m. •

IB!Bpp!«|BP»a»»'«np5>«*>fTgi»*,

9'?^?«r'^«ft«5^n'5^sii|:w-

M,wii.iii miM^mm^*^^"^^^

T~n

j-^

rr-t

— f

:-^^

22<^

<2^Z'^

/^^tf

/6aa

i-^ |.. .1

/-y^^

t— I

/2(^tf

/(J<?^>

^<50

t T

t-+

r I , I I f ' '

■f-4 '

-i—k.

!-ir--r- :|- -4 -

i_l

r— *■

trri

i : -^ I

+^^

-4-

:!.M;'l:.:^ i

:|:l .■,-;_L-^4ii!:i4.j-:|. :...:!

^:H-

-=^-G:

1 , 1 '

-t--l--

rrritt

•--I- I ^i--i4^-^4-^V-^^-^^j- A-

M^I--|-4--:-

H"4---^-4— ^-i^

I ! 1 1 ;_} ! ; M ; ; ; ; j I ! .; i

— r

r-+-

Mi4ai,\..-.^\^.i

I |...if-^-.|.:^

I :i4 .4,...i.,..!|j,u4...J,:..i.!| .:.|:.-.4:-..44-.4l-.4. -

-TXtt

nrn- =:Tf=r-+xnT^r-rf-q^—

I .

-.-!-- - — J .-:. I :-„^. 1^,^.-.- : I . ^-.4-,^^-|..:„-.-]

---t-M-^-:-TJ^-|-^4-

-, 1-^

rtzt

-i-T-+-

nCKJRi: 7 - Pounds of Milk Reqiiiix^d to Buy' a Ton' of Dairy Feed in Penn5yl%^nia, 1922-1937/ (line grajl;

shows yearly average. Vertical bars show range from the highest to the lovif est months of
each year.)

:l:-|

T— r~r

~f-

^— -^

-^^tt

I ; i

-^ ^-1 ^.--

-X.

4-1 1 1 1 1 w

»_i-

■'4

prices received for all farm products? The indexes of these prices on
a pre«v.^ar base are shown in figure 8» The relation is not noticeably
greater after April 1934 than before that time*

The average price paid Pennsylvania fanners for milk is com--
pared ydth the United States index of ?jholesale prices in figure 9*
Here the milk price does appear to be held closer to the v/l^iolesale
index tlian it was before control was instituted. The rise in milk
prices compared vdth the wholesale index had begun before the function-
ing of control of milk prices* It is possible that tlie advent of con-
trol prevented the svdng from rising to former heights and widening the
difference between the milk prices and other wholesale commodities*

Now that the facts have been presented which tend to show
that milk prices have not achieved a close relationship to other prices,
we must examine the struo

P H

Ti vAvo r^ ON to )| cd 'H I

o 0^

% &

I o

I Q)
1 Q

0)
CO

V <
It

t! s

!! «

I! s

t i

^ f^ 11

0) ON I
Ph H *'

\
■vt Cv^ CV C<^ C^ It

CV vO CNi t

H c<^ c-N »'

C^ CV -^ tOi crx ff

c\i\0 c^ '<j- c^ ♦'

c^ CV -Nt O^ f
u^ c^ m ->4-

O to rjo O^ to It
O^ C^ rH -sf cr\

to cr- 1« to

H O^ iH -4-

QNtX) C^

(M C^ CN2 ^ -^

to in o o

CV Cv^ -4' -nJ" "

!>• CV C^ O O

cv -Nt c\^ c^ tr\

-3- <^ o3

to T

"^1

-cttO C^ rH
CV -4- C^\ CNi

C\t f
lA

Q a CN2 -<(■
CrS c\ cnJ '>t

c^ -^ ir\ vo t>

C^ r<-\ (^ Cr^ (r>^

ON O C^ O O'^

r^ r~i r—{ r-^

•ttXPK*-'

T— r

P<^rCe/7t

-x^

izn

•1— r

Br-

L.-,._i_:-:-

iir

1 .

1933

If 3^

I93S

/936

/9J7

t— rr

T~-r~-\":

FIGURE 11 - Percentage of Receiptc of Cream at Pliiladelphia Originating in Pennsylvania, 1933-1937

^T^

4-1

' ^- 1

I 1 M

.<■ ■■■■■fa-

1* It Mil

l^^-Nf|M-l4fMHH4-l

the cheaper cream from the outside, has been examined, table 12» The
movements do not follov/ a similar pattern and the logical conclusion is
that the relationship, if it exists, is not one of prime importance.
There has been a definite increase in sanitary restrictions on fluid
cream offered for sale in Pennsylvania « This overshadows any influence
which price relationships might exert in a less restricted market*

The same restrictions which limit the volume of milk received
at Pliiladelphia from other states appear t-o affect receipts at New York
from Pennsylvania, table 13 . The proportion of receipts from Pennsyl-
vania increased from 1933 to 1935 and tlien decreased until the 1937
figure nearly equalled the 1933 percentage. The proportion of cream
receipts from Pennsylvania at Nevi? York has decreased from 13 per cent
to 9 per cent*

No milk was shipped from Pennsylvania to Boston during this
period and no cream was shipped in 1935, 1936 or 1937» Small amounts
of Pennsylvania cream were sold at Boston in 1933 and 1934.*

The trend appears to be for less milk and cream to pass over
state boundaries. The explanation may lie in the sincere desire of
each state to provide a sanitary supply of milk which has been in--
spected by its own Board of Health. Hov/evor, it is likely that the
restrictions are used to protect local milk and cream from interstate
competition. To the extent that restrictions are set u^) to regulate
the interstate shipments for purely economic protection, they cannot
be justified. The barriers decrease the productive capacity of all
states. In so far as the barriers are for the purpose of insuring a
safe supx^ly of milk they might be reduced by Interstate cooperation on
the part of health departments. Recognition of inspection by another

TABLE 12 - Net Difforences in Market Price of 40 Per Cent CreaiD at

Philadelphia (Pennsylvania Approved Quality) and the
Price Paid Pennsylvania Producers for Milk Used as Cream,
Compared with the Per Cent of Out-Of-State Receipts,
1935 and 1936##

Net difference

Percentage of total

(dollars per

receipts from other

40 quart can)

states

1935

January

.0576

February

1«4464

March

2.1376

April

.8448

May

1.8624

June

3.0048

July

.6720

August

.1472

September

1,0528

October

.0848

November

1.9904

December

•4720

1936

January

1.4251

February

1.5968

March

1.5072

April

1.4464

May

2.6368

June

2.8160

July

.5760

August

«2528

September

.0544

October

.4112

November

.4928

December

1.7888

'^Differences are calculated on mean average prices

Table 13 -

Percentage of Receipts of Milk and Cream at New York and
Metropolitan Area Originating in Pennsylvania*

Percentage of receip ts from PennBylvania

^— Pi— i^pw— I I ■!■ • ■ II m ill ■» » n i ■ ■ * " '■■ ""■ ' ' ' ' '" ' " I "" '

Milk Cream

1933
1934

1935
1936
1937

19
18

13
12
11
10

*i^ X —>-

-^ ^t Mi* ■ ■■ '

state would remove the artificial barrier of inspection.

4.* Special Grades

Under tiie regalations, milk sold in fluid form for human con-
sumption must be purchased from the producer as Class 1. It may be
sold to the consumer under one of several names. Resale prices vary
with quality, butterfat content and distinguishing characteristics of
flavor and appearance.

The first general order effective in April 1934 fixed a

quality differential of 3 cents between Grade "A" milk and Grade "B"

milk not exceeding 3.3 per cent butterfat. The price to farmers was

the price of Grade ^B^ 3.7 per cent plus a differential of 6 cents for

each one- tenth point of butterfat above 3*7 per cent butterfat content.

Grade "A" milk was defined as:

".•....milk which conforms in quality and is produced under
the Rules and Regulations promulgated by the Department of Health of
the Commonwealth of Pennsylv^inia in accordance with Section 4 of the
Act 428, Approved May 2, 1929.

"Grade '•A" milk shall contain not less than 4 per cent
batterfat content as shown by the average monthly computed test. The
bacteria count of all Grade "A" milk as delivered in the terminal mar-
ket shall not exceed 200,000 bacteria per cubic centimeter^^.^

30^,lilk Control Board, Commonweal tli of Pennsylvdnia. Official General
Order No. 6, Section 6.

Specific requirements concerning premiums allowed for low
bacteria counts were a part of Order 8, effective June 1, 193^- A
minimura of five bacteria counts per month were required of "A" milk
producers • The order stated that Grade "A" milk that in quality falls
below the bacteria bonus requirements, and for v/hich the producer is
not paid a bacteria bonus, shall not be sold to consumers as Grade "A"
milk* The definition of Glass 1 was extended by Order No. S to in-
clude chocolate or flavored milk or cream buttermilk. The schedules
of premiums for lov. bacteria counts were discontinued with tiie approval
of Order 13, effective July 13, 1934, but were adopted again by the re-
instatement of Order No. 8 in August.

The requirements for Grade "A" and the schedule of bacteria
bonuses established by Order No. 17 effective October 1, 1934 remained
in force until Febraary 15, 1937, when a new schedule was set up by
Order 39. That order differentiated between markets when it set up the
butterfat differential to be paid producers. The markets where the
spread was only two cents between "A" and "B" milk had a lo?fer butter-
fat differential. In both Orders 17 and 39 the premiums and quality
standards v;ere lower for Pittsbargh than for the Philadelphia area.

There has been a gradual decrease in the differentials paid
producers for special grades and an increase in the specifications for
production. Tlie producers of Grade "A" milk have protested against the

lower premrims.

It is intaresting to note that skim milk is excluded from

Class 1 by the order of October 1, 1934. Later developments caused a

change of classification. Skim milk was relegated to Class 1 because

some dealers used skim milk in standardizing the butterfat test of

their bottled milk,

Homogeni7.ed milk was included in the definition of Class 1
by the order effective January 15, 1936. In Orders 28 and 29 written
in the Fall of 1936 the words "and milk drink" were added to the class.
Milk drink would seem to include any beverage made with some proportion
of fluid milk.

Tne first set of orders written by the new Commission in
June, 1937 specifically defines certified, inspected raw. Vitamin "D"
and skim milk. Resale price schedules were set up for each type.

The tendency has been to enlarge the definition of Class 1
milk to include all milk purchased from producers whicli is sold to
consumers in the semblance of bottled whole milk. The increasing
divisions in the resale schedule are in part a recognition of varia-
tions in quality but they are primarily a blow to individual dealer ad-
vertising. In the case of homogenization, dealers who do not homogen-
ize complain that this is a different type of milk and must be sold at
a higher rate* The de^ilors who process their milk in this wajr argue
that it does not change the quality of the milk^ that it is merely
Seles t^ilk*

Dealers may hesitate to advertise quality features of their
products if they do not increase their sales by such methods. The com-
plaint of one dealer against another dealer^s sales practices arises
from the struggle for sales on the miirket. The curb on selling milk
advertised for special features at the price of Grade "B" tends to
lessen the possibility of improvement.

r'n

$• Production Control

There are cert^iin characteristics of the production and con-
sumption of farm products to which may be attributed many of the com-
plaintc^ of farmers. The farmer is unlike the button manufacturer who
makes his buttons all year round and sells them the year round as well.
He is unlike the hat maker v.ho can make his hats to fit the income of
the buyer and v/ho can often induce the customer to buy a second hat
when the farmer is unable to sell him another potato.

The production of farm products is an extended process and
demand anticipated at planting time may be far different when the crop
is harvested. Crop yields are dependent on weather and the farmer may
be disappointed by a small crop or by a crop so large that it sells at
a loss. A large proportion of the expense of prodvicticr of livestock
products is made up of fixed expenses, - the cov/, the barn^ the milk-
ing equipment and the facilities for taking care of milk. It is not
the cow«s nature nor the farmer ^s wish to turn off the milk flow when
the price goes down.

There Is a peak in production of milk in the spring months
and a low point in the fall. Demand also tends to be higher in the
late spring and summer months, but the demand peak comes later than
the production peak and it does not rise so hi^i. This inability on
the part of the farmer to adjust production to demand causes a surplus
of milk over fluid requirements in some months. The surplus must be
sold for manufactured uses and brings a lower price* The price for
fluid milk has vcried little ^tiLth tlie seasons since tlie prices have
been fixed on a clessification base.

The dealer is interested In an adequate supj>ly to meet the

demand of his customers during the vdnte^r as well ac during the summer.
The usual procedure is to contract to buy a producer's entire supply
the year around. If the seasonal variation ii^ very great the price
paid in the summer v/ill be considerably lovjer than the average price
because of the greater proportion of the milk vjhich must be sold for
manufticturing.

There have been attempts to control this seasonal swing to
some extent. One of the simplest plans offered is a flat price which
would reflect the seasonal conditions of supply and demand. Tl-.e
assumption is that farmers vdll plan production to get the greatest
possible volume when prices are high.

One plan that v.as successful in controlling seasonal varia-
tion was the basic-surplus plan used for several years by the Inter-
State Milk Producers Association in the Philadelphia milk shed. A base
plan was inaugurated in 1923 in the Pittsl^urgh shed but the results
were not so successful. The length of time it was in operation may
have been too short to show marked results. No plan for payments on a
base surplus arrejigement has been adopted by producers in the New York
milk shed.

The differences in seasonal variations is expressed by range
for the three major sheds in table 1^;. Tlie data In this table were
calculated by F. F. Llninger and C. W. Pierce for their study of the
"Seasonal Changes in Market Milk Production in Pennsylvania^-^.*'

Tlie lower range in seasonal variation in the Philadelphia
milk shed during the period when the production plan was administered

^-^Pennsylvania Agricultural Experiment Station Bulletin No. 3^B.

Table 14. - Extent of Seasonal Variation of f^lk Receipts from Producers

in the Three Major Milk Sheds of Pennsylvy.nia, 1930-1936*

Phil

Extent

of seasonal

varis"

tion^

New York^HHf^

Year

a del phi a**
27

Pittsburgh***

1930

1931

1932

1933

193-4

1935

1936

^Seasonal variation by monttis wa^s calculated on the basis of the
variation of dail> receipts from the daily average for each year.
Extent here is the difference betv.een the index of the month of
greatest receipts and the index of the month of lowest receipts •

"^^Based on purchases of three large distributors in Philadelphia,

'^^'^^Based on pui*chases of distributors buying from Dairymen's Coopera-
tive Sales Association*

Based on production by members of Dairymen *s League delivering to
League plants.

•>o-:

is fairly conclusive proof that the plan was effective.

Seasonal production control has been one of the points of
contention at hearings and among Board members. Some of the differ-
encev^' arose from the producers^ attitude toward tlio plan of payment.
The advantage tliat any system of bases offers tlie established pro-
ducers is aly/ays greater than the advantage to new producers entering
the market. For this reason the plan does not injoy univei-sal ap-

proval.

Proposals for the recognition of base-surplus pl^ns for

payment to be adopted by the Milk Control Commission v>ere promoted by
the Philadelphia producers^ group and by some ottiers in 1937. Tiie Com-
mission members became interested and lielc a hearing for the purpose of
discussing such plans. The industry and the Commission requested the

etudy of seasonal variationB in the major milk sheds made by Mr.
Lininger and Mr, Pierce. The principle of seasonal production control
is rather generally accepted but the method for establishing bases is
more difficiilt» No plan acceptable to a majority of both producers
and dealers has been promoted*

These efforts at control have all been directed toward the
regulation of seai3onal surpluses. There is another production problem
caused by cyclical surplus. The production of milk forms peaks and
troughs every seven or eight years. These peaks and troughs are caused
by farmers* reactions tonvard current prices and their inability to
foretell futiire prices. VJhen the price of milk is high farmers save
heifer calves and build up their herds so that they may get a greater
supply of milk to sell. It talies some time for the heifers to reach
milking age and meanvrhile other farmers have been raising heifers. The
supply of milk is greatl.y increased and the price goes dovm. The pro-
cess reverses* Farmers sell cull cattle and calves because they are
not mailing profits. When the supply has been diminished the price goes

up again

Price has a marked effect upon farmers' decisions. This re-

flection of price upon production may be felt in varjring degrees by
producers for the fluid outlets and for the manufacturing use. This is
caused by the relative reluctance v.ith which the fluid milk price is
adjusted to the production. When the price of fluid milk goes up not
only the producers of fluid milk are induced to expand production but
producers who have been selling to manufacturing dealers now find it
advantageous to sell fluid milk*

Control in Pennsylvania has been exercised chiefly to main-

^ i

I I

tain the advantage of the producer of fluid milk. At least that seems
to have been the aim* T^Tiether the prices of the Control Board have
achieved that goal is a matter for questioning. It is possible that
the Class 1 price may have been maintained at a level too far above
the other classes. If the Class 1 price has been too high increased
production on the part of producers who supply the fluid market vdll be
noted. In so far as this increased supply can be sold as Class 1 milk
these farmers have gained, but the consumption of milk would be affect-
ed by the price and v/ould be likely to decrease.

If a certain farmer sells 10,000 pounds of milk to a dealer
who utilises 8,000 pounds as Class 1 and 2,000 pounds as surplus, and
receives payment at the rate of $2.50 per hxindred for the Class 1 and
$1.50 per hundred for the surplus, he v/ould be paid $230.00 or ^2.30
per hundred pounds of milk. If the price of Class 1 milk is increased
to $2^60 he and all other producers supplying the dealer will increase
their production* When he gets his milk check he finds that he has
been paid $208.00 for 8,000 pounds of Class 1 and ,^^^5.00 for the 3,000
pounds of surplus. The total check is $253*00 but the per hundred
price is still |;2.30. Whether or not the farmer has made a profit %111
depend upon the kidded cost of the 1,000 pounds. It is possible that
the rate of return to all Pennsylvania f^^rmers has been reduced by tliis

policy of high Class 1 prices.

Bef ore price rise

Farmer sells:

8,000 pounds Class 1

@ $2*50, $200*00
2,000 pounds surplus

@ 1*50, _JQXO

$230.00

f^230 7 10,000 - $2.30
per hundred pounds

After price rise

Farmer sells:

8,000 pounds Class 1

•§ $2.60, $208.00
3,000 pounds surplus

® 1*50, ii5>0C

$253*00

$253 T 11,000 = $2.30
per hundred pounds

Since production is an effect as well as a cause of price,
a price which may be out of normal adjustment to supply and demand
exerts its influence on production and may exaggerate the maladjustment.
If a price is set too high it encourages production and the added pro-
duction cannot be sold at the higher price. If the price is too low
the desired supplies vdll not be forthcoming and dealers vdll bid
higher for milk. Any agency for the control of prices must take this
pressure into account in setting prices.

It was assumed that the farmer could sell the same volume of
milk for fluid use at $2.60 per hundred pounds as he had sold at $2.50.
It is more probable that the increased price would have resulted in a
decreased volume of Class 1 sales. Then the farmer ^s price would be
lower because he would not only be selling a lower proportion as fluid
milk but he Y/ould be selling a smaller amount at the higher price.

6# The Costs Argument
In any approach to some public regulation of prices the cost
argument has been a major issue in the determination of such prices.
Cost of production has been adopted as the basis for fixing public
utility rates. Cost of production is the chief item of testimony on
the part of farmers, and cost of distribution is the main theme of

dealers • briefs.

No one method of calculating costs has been adopted either

for the cost of production or the cost of distribution. The cost
figures vary of course, T\lth the different methods used. The wide
range of testimony in regard to cost is probably responsible for the
lack of regard given to it when orders have been written. It wo\ild
appear from the volume of testimony showing costs that they form tlie
basis of Control Comiaission prices. The Commission recognized the in--
adequacy of available costs figures in 193?. The auditors of the Com-
mission made a study of Pittsburgh milk dealers' accounts. The Com-
mission also encouraged the Department of Agricultural Economics of
The Pennsylvania State College to malce a study of producers' costs.
Cost figures are more difficult to obtain for the milk industry than
for those industries v/hose units of production are larger. The range
in costs is very great.

The attitude toward costs miglit be exyjected to change with a
new position in the dair^^ cycle. TlThen supplies are great a price based
on cost of production would defer the normal adjust^nent to a lower
level. On the otlier hand, when supplies are small the cost of pro-
duction price may not be high enough to encourage the necessar^'^ ex-
pansion of the production. The recognition of the proper use of cost
figures in the determination of a price is just as essential as the
necessity of having correct figures to analyze.

SUMMARY

Government regulation of the fliiid milk industry was inaugu-
rated by the New York state and by the federal laws passed in the first
half of 1933* The administrators of these early acts were involved in
many court cases testing the constitutionality of the laws* The
federal government is permitted to regulate some markets under its
power to regulate interstate commerce, and a state may devise laws to
control markets entirely ?dthin its boundaries under the state's right
to regulate internal affairs for the good of its citizens • Acts passed
by the legislatures of Maryland and Washington were the only state laws
declared unconstitutional* It is possible that if the method of con-
trol had been modified these laws might have stood the court test*

There v/ere 23 federal orders effective in markets of the east
and of the west on January 1, 1938 « On that same date some type of
state control of milk prices was operated in 19 of the states. There
was a concentration of federal orders in areas of the Plateau States
while the densely populated areas of the Mer.^ England and the Middle
Atlantic States represented a section completely under sta^te regulation
of milk prices*

The original state laws were emergency measures. Lav;s passed
in the last year show a tendency to replace emergency laws with legis-
lation for permanent stste control of milk prices*

The first Pennsylvania act setting up a Control Board for the
administration of regulated milk prices was approved by Governor Gifford
Pinchot January 2, 1934* Tlie Act created a Milk Control Board of tlu^ee
members who exercised final price- fixing authority. Minimum price fix-

ing v/as mandate rj^ and maxiinum price fixing vms permissive. To insure
compliance on the part of milk dealers they were required to operate
under license. The administration of the act was financed by license
fees and by an appropriation from the generrJL fund.

The general provisions y/ere essentially the same in the
second act passed at the expiration of the original law in 1935* In
addition to the extension of previous pov^r^ers the Board was authorized
to establish marketing area enforcement committees. The Board* s power
was limited by the requirement that price-fixing orders bear tlie
Governor's signature. This provision was the Governor's method of
carrying out his campaign pledge to serve on the Milk Board.

The present law. Act 105, differs from the two former lav/s
in that it sets up a permanent agency for the control of milk prices.
This agency is known as the Milk Control Commission and like the former
Boards consists of three members. However, the Commission members are
appointed not for an emergency but for successive six year terms. Act
105 adds to ttie powers of the Milk Commission the responsibility of
certifying stations for weighing and testing.

Tlie first general order setting forth schedules of prices for
the entire state became effective April 2, 1934- Prices to fanners
were based on a schedule of four classes according to the final utili-
zation of the milk. Resale prices to be charged for fluid milk, fluid
cream and buttermilk were fixed. Grades ^A*^ and "B" were defined and
price differentials were established. The order also established store
differentials and maximum hauling ciiarges, defined fair trade practices
and sales quantity control, and required that milk dealers keep records

of accounts.

J" ■:

The definitions of classes of milk and the area limits were
modified by succeeding orders* Sales quantity control was dropped and
the attitude toward store differentials changed* These years of ex-
perimentation vdth milk control in Pennsylvania have been marked by a
trial and error philosophy - many trials and many errors. The chang-
ing policies and the lack of an established policy may be attributed
in part to the many changes in the personnel of the Board* This may
also partly explain the complaints of producers and distributors that
price changes have not been forthcoming as quickly as they were needed,

A major duty of the Milk Control Commission has been to
justify itself and its orders in the courts* The constitutionality of
the state control of milk prices v/as established by the decision of
the Pennsylvania Supreme Court in the Rohrer^s Med-^-Fr rras Daii-j- case*
The legal counsel of the Commission has been busy testing the right to
require dealers to be bonded, and recently the price-fixing authority
has been questioned on the grounds that certain prices were confisca-
tory*

Problems of milk control arise from inherent difficulties of
price fixing and also from the impedimenta of political caprice and
patronage* Tlie length of time taken to develop an order reflects both
of the latter obstacles. So-called arbitrary prices can be effective
in a democracy only when the interested persons are in subvStantial
agreement* It takes some time to reach this agreement, if in fact it
can be reached at all, and meanwhile the old prices prevail* Once the
facts were assembled by the Commission it required from 15 to IO4, days
for the execution of an order* This tardiness can be blamed on the
poorly equipped staff of a Commission weighed dovm by political ap-

poiritees v/ho are not familiar ^dth tlie problems involved.

The price schedules are established on an area basis. Tliese
areas are intended to define localities of similar economic structure
Ydth reference to the production and consumption of milk. Boundaries
for tiie most part follov^ county lines although in a fev/ Instances
tovmshio boundaries have been used. Price differentials between areas
have not remained constant. In some cases the differentials have been
reversed and a city which formerly had a lo?/er price schedule than its
neighbor now has a higher schedule.

The fixing of milk prices by a governmental agency presumably
has been placed on a permanent basis in Pennsylvania. There are two
general policies from v/hlch a control agency may choose its plan of
procedure. Either (l) the price for fluid milk may be maintained at
an unnaturally high level and the amount which cannot be sold as fluid
milk converted to other classes or (2) the price for Class 1 may be
lower and a greater volume may be absorbed in this higher priced class
with proportionally less in the surplus classes. The former policy has
been adopted by the Pennsylvania Milk Control Commission.

In spite of the expressed purpose of the act to correct the
disparity in prices paid farmers for milk and prices of other com-
modities, the evidence points toward slightly greater disparity since
milk control Y,/as inaugurated.

Prices for the different classes van^^ according to the use
to which the milk is put. Milk in the fluid classes returns a higher
price to farmers because the cost of transporting fluid milk is greater
than the cost of vshipping manufactured dairy products. The difference
in price is also due to the added cost of producing milk in more

sanitary surroundings* From a study of the differentials for fluid
uses in Philadelphia and Pittstrurgh it appears that the differentials
do not remain constant for either city over a period of tiiae nor Is
there any semblance of constancy in the ratio by which the differ-
entials in one o±tj exceed those in the other city*

The volume of milk moving in interstate commerce has decreas-
ed since the advent of milk price control by the government* It is
likely that this decrease is due to the more stringent inspection re-
quirements rather than to price differentials*

The number of special grades under which milk is sold has
been increasing since the first Control Board Order. Premiums paid
producers have been decreasing and specifications for sanitary produe-
tion have increased*

The lJK.lk Control Commission has come to recognize the impor-
tance of some plan for the control of sea^^onal production of milk,
Hov/ever, they have as yet given no consideration to the more important
problem of cyclical swings in the number of cows on farms. Tlie present
price policies are being carried out with little or no regard for
future supplies*

Cost data are inadequate and eiflpliasis on costs at hearings
appears to be out of proportion to its place in price fixing* Better
cost figures and the correct analysis of them are needed.

CONCLUSIONS

Milk Control experience in Pennsylvania has little to recom-
mend it., Nevertheless, it is a part of the philosophy of the time and
we must expect to live with it, at least until this philosophy of regu-»
lation consunes itself.

Immediate attention should be directed toward ref onus in the
administration of controlled prices. The establishment of prices is
not an appropriate field for busying politicians. The person in charge
of policies should not be bound by vote strings* Although complete
separation of the Commission from political movements is impossible,
such a goal might be the aim in reform.

The free play of price-making forces is not likely to return
nor is it desirable in the case of milk prices. Ho^vever, the Indus tr^^
itself has exercised some control in the past and might be expected to
do the same in the future if the price-fixing autiiority were returned
to those most able to exercise it. A board with permission rather than
with mandatory powers of price fixing would in any case seem a more
gradual and evolutionary procedure than the abrupt revolutionary pro-
gram of rigid price fixing.

Milk Control was inaugurated ostensibly to improve the pro-
ducer's economic position. It is argued by some that the real motives
for farm legislation have been consumers* interests. Are consumers
concerned with improving the farmers' position in order to secure an
adequate supply of cheap food or are they more concerned with building
up the farmers' purchasing power? As long as emphasis on the pro-
ducer's purchasing power is foremost in the public mind the producer

may expect to get favorable decisions. When the consumers become con-
scioiis of high costs of living their viewpoint inevitably clashes m,th
the farmers* interests. In Pennsylvania consomers exert the more pov;er--
ful political pressure and the politically appointed Commission may be
expected to reflect the attitude of the larger group of constituents*

APPENDIX

Table 1 - TIeighted Composite Index Numbers of 20 Farm Products in Pennsylvaxiia, 1922-1937*

(1910-14=100)

Year

Jan.

Feb.

Mar.

April

May

June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Year

average

1922

151

130

120

130

127

126

134

139

149

135

1923

146

141

142

146

150

144

157

163

159

150

149

1924

146

140

137

142

141

145

143

146

154

144

1925

154

153

146

149

155

159

161

155

165

137

173

160

1926

173

170

163

170

159

155

156

151

158

161

177

166

164

1927

164

15B

153

15s

158

157

152

159

169

171

162

160

1923

164

159

156

163

165

166

159

157

155

162

161

1929

155

157

160

162

167

165

162

177

192

183

168

167

1930

163

156

147

155

14s

140

137

135

144

153

143

130

147

1931

125

117

123

114

109

108

102

103

1932

1933

102

108

104

1934

100

104

102

101

100

1935

101

107

103

109

114

110

103

104

102

100

108

115

107

1936

109

113

111

113

115

120

126

127

131

129

122

119

1937

124

125

129

125

123

127

12/,

120

112

115

122

*Data for years before 1934 may be found on page 6 of Pennsylvania Agricultijral Experiment Station
Bulletin No. 309.

mmmmmmm^^

mmmm

MMI

Table 2 - Index Numbers of Prices of a 20 Per Cent Dairy Fee*^'

(1910~U=100)

Year

Jan.

Feb.

Mar.

AprU

May

June

Jxily

Aug.

Sept.

Oct.

Nov,

Dec.

Year
average

192S

162

168

17-4

173

171

150

138

153

157

158

1929

157

158

161

151

155

153

154

151

1930

136

138

135

130

132

127

123

124

133

1931

119

113

114

106

101

1932

1933

113

101

193^

103

101

IDA

106

112

116

124

128

132

110

1935

136

123

121

115

110

103

112

1936

122

128

125

130

134

112

1937

l/,n

135

151

130

108

100

103

—

Data for years before 1934 may be found on page 18 of Pennsylvania Agricultujral Ex-oeriment Station
Bulletin No. 309.

r'o F^ ■ ^j I PST^ii S m S! ^^^ ^ ■^

■MMMHIHiail

IMpii'il '-',.< "WIBWII"

H ! |pil,|l ! ) l l l ll J U||| | W |l . i .tHJH I , l .|l

Table 3 - Index Numbers of Penns/lvania Prices of Milk Containing L, Per Cent Biitterfat*.

(I9i0-U=100)

Year

1922
1923
192^

1925
1926
1927
1923

1929
1930

1931
1932

1933
1934
1935
1936
1937

Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec,

U5
173
167
16A
167

179
132

185
164
134
99
71
106

124
124
133

170
161
167
166
181
177
185
162

134

109

126

127
135

129
163

159
169
16$
132
172
139
161
131
96
71
107

124

123

133

130

165
172
166
181
170
137
165
132

95
80

115
129
127
133

173

171

161

133
176

185
165
130

91
88

119
122
126

133

135

176

154
172

162

132

176

185

162

123

99
119
117
128
130

141

181

153
171
165

179
173

183
162
132

103
120

116

134
139

145
173

153
169
169

175
131

181

169
130

83
108
123
119
137
141

148
130

154
166

171

179
179
182

168
122
87
109
115
112

131
141

160
179
151
164
169
130
180
133
162

113
83
106
112
113
129
138

167
170

155
164
175
179
132
176
150
109
76

105
115
120
127
139

175
167
162
163
177
180
182

169
137
97
72
102
116
119
129
127

Year
average

146

174
157
167
163
180

179
132
161

124

93
115
120

129
135

Data for years before 1934 mfiy be found on page 50 of Pennsylvania Agricultural Exijeriment Station
Bulletin No. 309.

mmmmm

I ILDH IIIII I, ip i ll BliepWPW

Table A - Pounds of Milk Required to Buy a Ton of 20 Per Cent Dairy Fee-d^.

Year

Jan.

Feb.

Mar.

April

May

June

July

Aug.

Sept,

Oct.

Nov.

Dec.

Year

average

1922

1/JO

1552

1730

1365

1979

1937

1721

1497

1395

1349

1312

1284

1590

1923

1383

U73

1504

U64

1535

1550

1477

U63

1449

1378

1399

1385

1459

1924

l/t28

U34

15U

1521

1775

1743

1806

1872

1788

1754

1605

1566

1655

1925

1649

1614

1595

1570

1723

1316

1732

1670

1527

1342

1295

1296

1569

1926

1386

1359

1339

U3A

1564

1549

U54

1380

1279

1186

1133

1125

1349

1927

1170

1235

1243

1300

1U6

1534

1503

1499

1434

1321

1270

1301

1355

1923

1361

H55

I64O

1306

1959

1954

1828

1602

1436

1422

1329

1363

1596

1929

ia5

1472

1430

U74

1510

1523

1547

1521

1492

1403

1373

U34

1470

1930

1515

U95

U65

1562

1651

I64I

1524

1509

141 8

1299

1443

U85

1931

U74

U65

1517

1531

1620

1580

1419

1252

1187

1131

1271

1376

1410

1932

134^

1322

1399

U97

1604

1583

1519

1533

1451

1389

U37

U93

1464

1933

1598

1535

1731

1705

1S43

1677

2079

1806

1592

1462

i/./.n

1465

1665

1934

1503

1554

1657

1597

1599

1734

1689

1747

1872

1303

1716

1829

1692

1935

1332

1750

1719

1663

1954

1957

1789

1649

1524

1515

13U

1322

1666

1936

1307

1265

13a

1333

1478

1497

1717

1797

1777

1684

1680

1713

1553

1937

1829

1730

1752

1994

2097

2299

1771

1/,,^

1315

1247

1130

Data for years before 1934 may be found on page 21 of Pennsylvania Agricultural Experiinent Station
Bulletin No. 309.

■A

wmmmmmm

mmm

mmmmmmmmmmimflllllt

mmm

«l»^»YXV40n»

fi 3 10 II i-?

■■B 59 yc- y a?*^ 33 M 3? 36 77 36 ^"^

3* -W)

Philadelphia

Ea Western

Figure 1. Milk Marketing Areas Defined by the Pennsylvania Milk Control Board, April 2, 1934»

;»' i,^5vT i'4- I

?0 ?' ?2 ?•< 7 4. 2^^ 3^ .'■' JS Pv'

N ! DJD^K// ^

r ?• 3 7'' ?3 3A 3? 36 37 M^W io

Philadelphia

Figure 2.

Mil< Marketing Areas Defined by the Pennsylvania Milk Control Board, June 1,1934-

»« •• N ■ - 1 . ■ N

Philadelphia

23 Pittw^burgh

Figure 3* Milk Marketing Areas Defined by the Pennsylvania Milk Control Board, August 7, 1934 •

mwp-iiii i i !i

^■"s^fvttir"^ ^*,'*,

Niiiiiijjiii-ijiumgpipp

"-ift^" " . "^

»»NNrV\.V4N.»

Philadelphia

W Pittsburgh

DDD Scranton

Figure 4-. Milk Marketing Areas Defined by the Pennsylvania Milk Control Board, October 1, 1934..

Philadelphia

BaPittsbiu-gh

m Scran ton

Figtire 5# Milk Marketing Areas Defined by the Pennsylvania Milk Control Board, November 16, 1934. •

ni Scranton
CS Lehigh

CZlErie

CD State-wide

Philadelphia B Sou thwes tern
E2 Pittsburgh fflS Schuylkill

Figure 6. Milk Marketing Areas Defined by the Pennsylvania Milk Control Board, January 16, 1936,

f MK$yiv4«i'«

Philadelphia
^Pittsburgh

Southwestern
pffl Schuylkill

PP Scran ton
1^ Lehigh

jTlErie
-n State-wide

Figure ?• Milk Marketing Areas Defined^ by the Pennsylvania Milk Control Board, June l6,.1936*

r«MN5VlViN'»

_ ^.^ 7" ^ 1

2 3 4

,7''" 3 il 15 :? r^ >a

Philadelphia

Pittsburgh

Southwestern

Schuylkill

CEl Scran ton
^ Lehigh

EI Erie
CZ] Harrisburg

LiJ Johnstown
I I State-wide

Figure 8. Milk Marketing Areas Defined by the Pennsylvania Milk Control Board, October 11, 1936

|CUNTO^J

»»NNSVl-.AN'»

j. ^ o^ 31- :Vfc '-^7 ryOe 3^"

??* 33 VI 35 3« ?? 38 ^^^59

Philadelphia
SS^ Pittsburgh
Southwestern

33 vSchuylkill

OD^'^ranton

^Lehigh

EErie

nS] Harrisburg

JUj Johns to wn-Altoona

(EH Central
CD Lancaster
CO York
Cj State-wide

Figure 9. Milk Marketing Areas Defined by the Pennsylvania Milk Control Board, January 1, 1937.

»-*•

P>*N5rw-N'»

Philadelphia
13 Pittsburgh
Q Southwestern

ffl Schuylkill
ITT Scranton
S3 Lehigh

iZlErie

I77T Harrisburg

rm Johnstown-Altoona

Ed Central
I State-wide

Figure 10. Milk Marketing Areas Defined by the Pennsylvania Milk Control Coamission, June 2, 1937.

t »'"IS»T.»- '^ ■«

■s:- y 3?'*" ?3 ^A 35 3f '»•' ■ 3JLJ!:Ji-_±S-^

Philadelphia
K5 Pittsbiirgh
Southwestern

CO Erie

[m] Harrisburg

rm Johns to wn-Mtoona

[23 Central
□ Stete-wide

E Scmiylkill
□Q Scranton
C3 Lehigh

Figure 11. Milk Marketing Areas Defined by the Pennsylvania Milk Control Commission, July 1, 1937