The Washington herald., 1915-02-07
Cotton Again Takes Up Its Crown.

lotion Again axes up It's Sr0Wn.
About two months ago we printed an article
on this page in which we emphasized the fact that
cotton then selling at about 7 cents a pound,
or a price below that at which, under ordinary
circumstances, it could be produced and sold in
the South. The reason, or reasons, for this low
price obvious to every The cotton crop
of the season was clearly one of record dimen-
sions and it came on top of large crops in the
previous year and in the year before that. AS the
level of prices in 1913 and 1914 had been high,
another large crop in the present season meant
lower prices, inevitably AS matter of fact, it
has been asccrtained since that time that the
seasons cotton crop will be 1900 900 bales,
or the largest record.
But another reason for the fall in cotton, and
in the opinion of many judges stronger reason,
was found in the European war, which tempor
arily closed the markets of Europe to our cotton
planters. 1t was said, and we think truly, that
the cotton spinners OF England had large stocks
of cotton hand when the war broke out and
in all probability would have limited their further
purchases for the time being, even if there had
been no war. However this may be- the actual
result rapid and sensational break in the
price of cotton which had the effect of produc-
ing an even more acute business CONSERVATION in
the South than the war produced upon business
and trade in general in the northern part of the
country So far as the South was concerned, the
blow that was struck at it was of fairly paralyz
ing nature If the Southern planter could not
realize money from the sale of his cotton, except
at a price so far below the cost of production
to be absolutely runous, the circulation of money
in the South would, for all practical purposes stop
and business there would come to end. The
prospect from the point of view OF the banks and
other people who had lent money on cotton,
particularly gloomy Indeed, it the blacklist,
while it lasted, that has been in time.
Despite all this we were so bold as to suggest
to business men and those who entitled to
call themselves capitalists although, perhaps,
only in a small way-the expediency Of buying
cotton investment at the prevailing level OF
prices. Our reason for this was, as we then
stated, that it was a standard business maxim,
whose authority and absolute truthfulness had
never been diminished in the slightest degree, that
when any staple commodity sold lower in the
open market than the price at which it could be
brought to the market, it was as that the
sun shone that it would return to that price The
historical probabilities were, moreover, that the
market price would once more rule greatly above
the production price. We have no desire to cry
az told you So" and we had no expectation that
our confident belief to the certain working out
of economic circumstances would be soon in
dorsed by events. But it is still worth while
pointing out that the average price Of cotton now
at eight leading seaports in the South is cent
and half a pound above that which quoted
at the time our original article appeared.
1t is also interesting to point out that the
reasons for this recovery stand out clearly as
do those which were responsible for the decline
early in the season. With the fear dsSipated of
general and continued business prostration
throughout the country, the confidence of capital
began to return Once the return movement
under way, people with money reflected that it
was a practical certainty that the cotton crop of
the present year would be very considerably re-
duced and also, that in all probability the war
would be ended before the year over. Money
became very easy and was available in ample
supply for the purpose OF holding cotton for bet
ter prices. With these forces in action it could
hardly be supposed that cotton would continue to
be sold below the cost of production. Purchases
of cotton at the prevailing price were therefore
stimulated and in addition to this the repression
incident to the upon cotton manufacturing
activity in England was so far abated that the
English spinuers began to buy again. Cotton was
sold too in considerable volume even to Ger
many and general exports of cotton at the present
time are even greater than they were year ago.
So far see, the present natural buying
power that has been excited in the cotton market
is fully able to sustain the weight" of cotton as
it moves from the plantations
In other words, the law of supply and demand
has exerted itself, as it always does sooner or
later. 1t is a sleepless and supreme law and it
works surely and silently, even though men sleep
or at times foolish as to deny its existence
and overwhelming power. .....