The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1907-01-19

house receipts that would give us ready
cash enough to tide over any depression
in the market that might come on from
time to time. I wish to sag Just here
that l received a letter from one of the
largest cotton exporters in the south in
which he bitterly opposed interior ware
houses for the storing of cotton, be-
cause they encourage the farmer to hold
indefinitely. in the hope of still better
prices,l and because they reveal to the
government and to all others, who are
seeking to make the crop as large as
possible, the stock in the interior ware
houses which could be kept from the
gaze of the consumer better on the plan
tation where 1t is raised. l do not be-
lieve as this gentleman does; l believe
in being frank and open in all business
dealings. AS matter OF fact, under the
system adopted by the government. they
have pretty good idea of the amount
of cotton raised every year He also
claimed that the risk of fire would be
less on the farm. l beg to differ with
him here again. My observation has been
that A great many of the farmers every
year lose more on account of their cot
ton becoming damaged from being ex-
posed TO the weather than 1t would take
to build warehouse to store it in. Ii
we build our standard warehouses, make
our supplies at home and market our
CIopS SLOWLY DelleNe that Noulu SolNe
the question. l know, also that one of
the great drawbacks to the price of
our cotton today Is this system of flu
ture business The New York exchange,
which enables spectators, particularly
In New York. to form combinations,
more frequently to depress prices than to
advance them.
Refrain From Statistics.
II have refrained from statistics for
the simple fact that they are tedious,
and often not interesting. But you can
readily see that when we come to dis
cuss a proposition and take into consid-
GRAFTON that we are going to try to finance
a crop which pro4uces $3.50, 10000 per
year, and exceeds by far the value of
any article or merchandise sent out of the
country, and the value of the cotton ex-
ported has increased very rapidly, and
within the last five years has increased
over $100,000,000 per annum in export, and
which clothes quarters of the 10000
900 people of the world, you can readily
see that I, as we'll as those with whom
I have corresponded, have failed to tell
you just how to finance the cotton crop,
and can only make suggestions for your
deliberate consideration.
Witherspoon Is Next Speaker.
S. A. Witherspoon of Meridian. Miss,
was introduced. He said in part:
THE probable profits to the stockhold-
ers in corporation organized to buy and
sell cotton and the best plan to operate
on.
THE question propounded in my sub
ject arises out of the proposition, which
many favor. to organize and capitalize
a corporation for the purpose of buying
and selling cotton. 1t is based on the
assumed fact that 1t Is impossible by
unanimity of agreement and concert of
action to secure such control over the
marketing of cotton as always to obtain
fair and profitable price therefor and
that there is a necessity for sufficient
capital in the hands of a corporation to
purchase and hold for better prices that
portion of each cotton crop which cam
not otherwise BE controlled, and whose
sale before there is demand for it has
the effect of depressing the price.
This necessity for large amount of
capital suggests the difficulty of obtain
ing 1t. and raises the question involved
I'm my subject, whether there would be
any profits to those who should invest
their money in such a corporation. If
such a corporation were organized, and
If you should take a part of the capital
stock. would you receive any dividends on
your stock. and would it be a profitable
investment?
Profits In Business.
"Of course the profits in the business
of buying and selling cotton would de-
pend upon the difference between the buy
ing and selling price. If that difference
was greater than the cost of holding,
there would, of course, be profits, and
otherwise there would not. If cotton
could be bought at 10 cents a pound and
sold at II cents pound, the gross profits
would be, of course, So per bale, and if
the cotton had TO be held a year before
the increased price could be obtained,
and If from this we deduct the cost of
holding It, which would be 1Sc a month,
or 81 .16 per year, we would have a net
profit of 1874 per bale, or 56S per cent
on the capital invested. If the increased
price of / cent pound could be obtained
in six months we would have a net profit
of SO. 92 a bale or 7.S4 per cent on the capt.
tai invested, which would be at the rate
of 156S per cent per annum. If the in
creased price could be obtained at the
end of one month from the date of pur-
chase, the net profit would be $4S2, or
3 Ga per cent a month on the capital in
vested, or at the rate of lis per cent profit
per annum. And thus the rate of profit
would depend upon and rapidly change
with the length of time If 1t became
necessary to hold the cotton. 1t Is mani
fest that if cotton could be bought and
sold at a gross profit of l cent per pound
the net profits would be reasonable If 1t
has to be held for a year, that they
would be very large If it had to be held
for half year. And that they would be
enormous il the cotton had to be held for
a month or shorter time. and that out
of these profits there would be sufficient
dividends to satisfy any investor, after
paying salaries of officers and commits
sions of agents which l have not figured
in the cost of holding.
Answered BY History.
"If then it be true that a profitable
business could be organized and conduct
ed on the basis of buying cotton and SELL
ing it at a profit of / cent a pound. the
question arises, is there any reasonable
assurance that it can be bought and sold
in the same season at an advance of
cent a pound, and this question is an
swered both by history and by reason. If
1t always could be done in the past, and
If reason says the future will not be diff
ferent from the past in this respect, then
we have the best assurance that can be
given to any business.
Seeking light from the history of cot
ton, there has not been single year
since 1895, in which cotton could not be
bought at one price and sold at an ad-
vance of a cent a pound. The differ
ence between the lowest price at which
cotton could be bought and the highest
price at which 1t could be sold was in
1891, Is cents per pound; in 1897 1t was
I've cents per pound; in 1898 1t was 1zs
cents; In 1899 II was Z cents; in 1900 1t
was 4 and 6-16 cents; In 1901 1t was 2
and 2-8: in 1902 1t was and lips cents
in 1908 II was and 14-25; in 1904 II was 5
cents and in 1905 to 1906 1t was 2 and 1-3
cents. In any one of the past ten years
cotton could have been bought and sold
at advanced prices, ranging all the way