Over the Hump?

With a scandalous clatter, the bottom fell out of New York's butter market last week. The day after Christmas, wholesale butter prices fell on the New York Mercantile Exchange from 84 1/4-c- a lb. to 74 1/2-c-, sharpest drop in many years.

The cry arose that the market had been rigged. So it had. The Dairymen's League Co-operative Association, an organization representing some 27,000 of the 44,000 milk producers in the six-state New York milkshed, made no bones about having done the job. Reason: the league wanted to "protect" farmers from a drop in milk prices, which, under a Federal-State marketing formula, are largely determined by butter prices. (The combined average of butter and skim-milk prices for the 30 days ending December 24 had to be over $1 to keep prices up.)

Fake Bottom. But, across the U.S., skyhigh butter prices had started to sag in mid-December. In Chicago they went down 7-c-. A fortnight ago Swift & Co. was so sure they were going down that it contracted to sell upward of 50,000 lbs. of butter to state institutions at 69-c- a lb., starting in January. So the worried league stepped in and bought upward of 500,000 lbs. of butter, kept a false bottom under the New York market until the January price of milk was set where the farmers wanted it. When the league stopped buying, the price collapsed. The league lost about $50,000 on butter trading. But farmers will get about $600,000 more for their milk. New York consumers would foot the bill.

True Top? To U.S. consumers generally the big news in the butter scandal was that retail prices of butter, and many another staple, were at last going down. Prices of canned citrus fruits fell one-third in some cities. In Florida and Texas, prices of citrus fruits were down 50% to 60% from last year, as a bumper crop was harvested. The glut was so great, and prices so low, that packers and growers slapped a temporary embargo .on shipments, trying to keep prices up in northern markets. Eggs were down generally 3-c- a dozen; meat and lard dropped an average of 10-c- a lb.

The price of food, which had reached an alltime high in November, according to the Bureau of Labor Statistics, began slipping down. As yet, the drop was too small to bring many cheers from consumers. But it looked as if the peak in food was passed. The overall cost-of-living index had been still edging up in December. By last week, it looked as if it too might soon start down.

In the after-Christmas lull, department stores slashed prices as much as 75% on hundreds of items. Examples: in Seattle, Sears, Roebuck sold $9.95 kitchen tables for $1.98; in Philadelphia, Snellenburg's cut prices on men's, suits from $27.50 to $18.71. In many cases even drastic cuts failed to lure buyers. Sellers hoped that the lull was temporary. Buyers hoped that their turn had finally come.

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