Imperial Valley press., 1918-08-28
COTTON ECONOMICS
DISCUSSED BY EXPERT
BY w. w. Morrison.

Conventional tnlnKluS is app w ~
4 reactionary. It's tendencies are lath
H o., definitely toward inadequate prep
4 i.aration for those new responsibilities
which constantly changing conditions
are always creating. Hence, as para
doxical as it may appear, the marci
of progress often brings to the con
ventional individual a penalty lnsteat
a. a nrize. This reverence for ole
standards pervades every field OF hu'
man activity. and, since immemorla
times. has been conspicuous IN every
department of the cotton BUSINESS
from the field to the factory.
1t is really most remarkable now
many people in cotton affairs are stlll
GOVERNED by the conventional view IN
spite of the repeated and convincing
proof of its dangerous inadequacy. 1t
+ is inst as conspicuous, too, among the
more intelligent classes as 1t Is among
the less we'll informed. The writer
of these letters. not so long ago, was
soundly taken to task by the editor
of a financial journal, as having maze
an assault upon precedent, when the
writer stated that the standard by
which the law of supply and demand
in cotton affairs has been interpreted
in the past had become misleading
and. sometimes. dangerous guide.
For many years the initiative IN
the market was controlled by the
spinners and the speculative interests
in the larger markets. Under the oid
regime future contracts and the sur
nlus were the determining factors II
.haping the price of the raw material.
Since the initiative has detinltel!
nassed to the control of the cottoI
producing interests, which defines thf
new order of things, the influence o;
the future market has been eciipsed
and the surplus shifted to negative
nosi+ion. The cause of this farreach-
ing change has been frequently dis
cussed in these letters, so no furthe-
discussion is necessary at this time
except to recite that in this change
lies the difference between the llqul-
dation Of the crop being based on th'
necessity of the seller, as it was a
one time, and on the necessities c
the buyer, as it is now.
The recognition of this vital chang,
has been rather resolutely resisted b.
a very large proportion Of those VIII
hold to the conventional view. TIL
was sharply brought out by the il
terpretation that they placed upon the
break in future contracts on Fehruar
1st of last year and III April of thu
year. They could not realize that
was a break in future contracts an
not in actual cotton; that cotton hel-
by the producing interests rename
undisturbed; that most of the cotto.-
sold after these events was hedged.
and on which a most satisfactory pricc
was realized when both ends of tn
transaction were closed out.
When the governments fist est
mate Of 15,325,OO0 bales came out and,
on war time consumptive basis, 1t
looked that there would be surplus
Of from 100000 to 100000 hale
TO carry indefinitely, the people who
take the conventional view could not
at all see that the vast economic
strength of the South would go a long
way toward neutraliZing the disas-
trous effect Of such a surplus. They
believed, almost to a man, that it
meant an utter collapse in the price
Of cotton, and many of them based
heavy commitments upon that as
sumption. They have been, and are
now, paying the penalty for their 10y
atty to orthodox standards.
This class is now misinterpreting
The recent advance. 1t is being gen.
orally attributed to the marked
shrinkage in the prospective size Of
ne crop. No intelligent Individual
could claim that tl.is has not been a
most important factor, but the ad-
vance is not due 10 this entirely, as
many are constituting it to have been.
Both history and the record abun-
dainty support the view that had there
been a large crop the producing in
terests would have forced a price
well above the levels which future
contracts reached during the recent
decline. After possible weakness in
Texas, which conditions in that state
warranted us in expecting, there
would have been potential resistance
throughout the belt 70 any such prices
Our views remain practically un
changed. We still think it wise fol
the trade III frankly recOpniZe tina