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NAME AND ADDRESS DATE
NORTHWESTERN UNIVERSITY
A STUDY OP COLLECTING AND REPORTING
WHOLESALE BUTTER PRICES AT CHICAGO
BY THE UNITED STATES DEPARTMENT
OF AGRICULTURE, 1938-1939
A DISSERTATION
SUBMITTED TO THE GRADUATE SCHOOL
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
for the degree
DOCTOR OF PHILOSOPHY
SCHOOL OF COMMERCE
DEPARTMENT OF MARKETING
BY
ROY ASHMEN
EVANSTON, ILLINOIS
JUNE 12, 1950
ProQuest Number: 10060841
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PREFACE
During the year 1937* the Bureau of Agricultural
Economics, TJ• S« Department of Agriculture, began a criti
cal analysis and appraisal of its farm-products market
news service. Early in IJjQ, G-ordon W. Sprague, Senior
Agricultural Economist and local representative of the
Chicago office for Dairy and Poultry Products, Bureau of
Agricultural Economics, U. S. Department of Agriculture,
stimulated interest in a research program pertaining to
the marketing of agricultural products in the Chicago
area. As a consequence, a general cooperative research
agreement between the U. S. Department of Agriculture and
Northwestern University was worked out, with supplemental
agreements relative to specific projects. The writer
selected as a doctoral thesis project the study of whole
sale butter price collecting and reporting at Chicago.
The present study is the result. A copy of the Memorandum
of Agreement between the Bureau of Agricultural Economics
and Northwestern University is included as Appendix A.
This cooperative agreement which set in motion the
writer1s research project is also referred to in this
study as the Cooperative Research Project. In connection
with this project, the writer was appointed Research
Agent in the Bureau of Agricultural Economics, U. S.
Department of Agriculture, and placed on the Federal
payroll. One of the advantages of this was that it
o
allowed the writer access to first-hand information.
A large part of the information used in this
study was obtained from the Chicago office of the Dairy
and Poultry Division, Bureau of Agricultural Economics,
U. S. Department of Agriculture where the writer had
desk space during 193^ and 1939* This information was
obtained as a result of: numerous conferences with
Cordon W. Sprague and others associated with the market
news work of the Dairy and Poultry Division; observation
of the operating routine of the market news service;
study of the files of the office including unpublished
material; access to the data and findings from two sur
veys of creameries conducted by the office in 193^; in
formation submitted to the office by firms buying and
selling butter on a wholesale basis in Chicago; and
other first hand material of a confidential nature ob
tained from the U. S. Department of Agriculture.
In addition to the above sources, the record
books of the Chicago Mercantile Exchange containing the
volume of "spot call" trading in butter were made acces
sible to the writer through Lloyd S. Tenny, Manager of
the Exchange. Still another source of unpublished infor
mation was the files of the Dairy Produce Publishers, Inc.,
publisher of the Dairy Produce Yearbook and Dairy Produce,
a trade journal. A source of much informal but never
theless important information was obtained from tne many
weeks of personal contact with the market during 193^
and 1939 the conversations with men of long experience
in the butter business, either on the floor of the Ex
change or at their places of business. The time spent
on the floor of the Chicago Mercantile Exchange during
trading sessions was especially valuable from the point
of view of getting the "feel" of the market. Observing
the government reporter in action provided information
on factors affecting his work of reporting wholesale
prices. Observing the grading of butter and talking
with the inspectors provided information on the interpre
tation and application of standards.
Findings under the Cooperative Research Project
were sent to Washington, D. C. from time to time for
current use. In 1939, the important data which had been
collected under the project were organized into a con
fidential report entitled "Butter Price Quotations at
Chicago" and submitted to the Bureau of Agricultural
Economics, U. S. Department of Agriculture, Washington,
D. C., by Gordon W. Sprague and Miss Gertrude G. Foelsch,
Junior Agricultural Economist, of the local USDA office
mentioned above. This action was in accordance with the
cooperative agreement which stated that "data collected
shall be available currently if desired by the Bureau
for Market News uses, or for other purposes." Subsequent
to the preparation of the report just mentioned, the
writer collected considerable information which is pre
sented only in the present study.
c;
From the above discussion on sources, it should
be clear that most of the material dealing directly with
the collecting and reporting of wholesale butter prices
was obtained at first hand, Besort to some published
material was had in order to develop the writerTs back
ground and to provide additional material for those
sections of the manuscript where first hand data were
not available.
The reader should be cautioned that the material
for this study of wholesale butter price reporting at
Chicago does not apply beyond 19I4.O and especially em
phasizes the years 1958“1939* writer received special
permission to complete the study with the data collected
up to that time owing to interruption of his work by
entry into the armed forces of the United States.
The writer is unable to recall with exactitude
all the individuals who provided him with guidance and
assistance in the preparation of material for this thesis
prior to the War. Those who stand out especially in
his mind are the late Dr. Fred S. Clark, School of
Commerce, Northwestern University, Dr. hyndon 0. Brown,
formerly of the School of Commerce, Northwestern Uni
versity, and Gordon W. Sprague, formerly of the Bureau
of Agricultural Economics, U. S. Department of Agri
culture •
For vigorous and decisive guidance in the prepara
tion of this study, from the days of the pre-war material
to the present manuscript, I am greatly indebted to
Professor James R. Hawkinson, School of Commerce, North
western University* Dr. Ira D. Anderson, School of
Commerce, Northwestern University, read the manuscript
and provided many valuable suggestions. In addition,
the manuscript was partially remoulded by the construc
tive suggestions of Dr. Richard M. Clewett, also of the
School of Commerce, Northwestern University. Mr. Ralph
L. Westfall, Lecturer in the School of Commerce, North
western University read Chapter IV and made helpful
suggestions•
Without the constant encouragement and help of
my wife, Frances, this study would not have been com
pleted •
\
Evanston, Illinois
June 12, 1950
TABLE OP CONTENTS
Page
PREFACE......... 2
LIST OF TABLES.........* . . . . . . 9
LIST OF FIGURES............................... . . 11
Chapter
I. THE PROBLEM AND ITS SETTING........ . . . • 12
The Importance of Wholesale Butter Price
Reporting
The Policies of the USDA in Collecting and
Reporting Wholesale Butter Prices
General Criticisms, Past and Present, of
Butter Price Reporting
Methodology and Plan of Development
II. A HISTORY OF BUTTER PRICE REPORTING . . . . 56
Introductory: The Growth of the Butter
Industry in Relation to Butter Price
Reporting
The Elgin Board of Trade
The Chicago Butter and Egg Board
III, SOURCES OF WHOLESALE BUTTER PRICE INFORMATION
AND THE PROCEDURE OF THE USDA PRICE REPORTER
AT CHICAGO........................... . . 123
Butter and Standards for Quality
The Location of Butter Price Quotations in
the Channels of Distribution
The Chicago Mercantile Exchange
The Commercial Price Reporter and His
Price Reports
The Government Price Reporter and His
Price Reports
IV. . THE AVAILABILITY OF OPEN MARKET BUTTER SALES
FOR USDA PRICE REPORTING AT CHICAGO . . . . 167
/
An Analysis of the Trend and Volume of
11 Spot Call” Trading
Reasons for Small "Spot Call" Volume
Some Trends In Butter Marketing Affecting
the Wholesale Butter Price Reporting Service
of the USDA
