New-York tribune., 1920-10-24
Insist Cotton
L ar111ers Must
Share Losses
Market Observers Here Be.
lieve Holding Movement
Cannot Increase Prices
Under Present Conditions

Despite the break during the week
in cotton contracts to IS cents a pound
or lower and intensive efforts in the
South to persuade farmers to hold the
new crop for higher prices, there is
little likelihood Of an extensive recov-
cry in the opinion of leading market
followers here.
Manufacturers, jobbers and even
retailers are taking losses now on
goods produced from raw material pur-
chased at prices considerably higher
than the present level" said one o.
server yesterday. "Southcrn farmers,
therefore, who made enormous profits
IN the war years, must expect to take
losses along with others in the in
dustry. Even holding the new crop, if
such thing were possible, would fail
to stimulate demand sufficiently to
increase prices to the midsummer
level
Prices have now reached basis
whore many believe the losses will be
fairly evenly distributed among pro-
duccrs as we'll as among those who
handle manufactured goods. Observ-
ers who have watched the process of
deflation which has been in progress
Tor several months have said that the
decline in cotton would stop only at
the 20-cent level and subsequent de-
Velopments apparently have confirmed
this opinion.
"Thc market in the last few days
has given evidence Of sustained buying
power only at the 1Scent level. For
instance, December contracts sold
hofo hr1y
crs came into the market in sufficient
number to force an advance. Of course,
the bulk of the buying was to cover
short sales, but it demonstrated. many
INSIST, that market opinion had crys-
tallized in the belief that a satisfac-
tory basis had been reached"
The decline in the price of raw cot
ton from July has caused shrinkage
in values estimated as high as $685.
9l7,5Qo based on December contracts
and the governments predicted yield
this potential loss to the farmer is a
fair estimate is debatable, but it ex-
plains vividly the reason for an ex-
tcnsivc propaganda in the South in
favor of holding cotton. December con-
tracts, which are now quoted under
20 cents, were selling in mid-July at
from 32 to 33 cents a pound. July con-
tracts at that time sold near 40 cents,
whereas contracts for October at pres
ent bring only about 20 cents.
This sharp decline reused leading
Southern producers to do all in their
power to start a holding movement.
With propaganda of all kinds they have
sought to spread the belief that con-
certed action will bring about higher
values. Banks have been urged to buy
or
demand delivery in January, when, it
is asserted, prices will advance sharply.
What the result of this plan will be
remains to be seen, but many here pro-
fess to believe that it will not reach
the extent of a wide movement and that
offerings of cotton will be sufficient to
supply the limited demand of mills.
This view is supported by the fact that
business in unfinished cotton goods and
bleachcd goods is virtually stagnant
despite the sharp reductions and that
many mills are on a curtailed produc-
ton basis.
A significant development in trade
circles was the recent reduction by
Converse & Co. Of Is cents on Fruit
OF the Loom muslin, bringing the new
price to 20 cents, admittedly below
the cost of production on the basis of
present prices for raw material and
labor This action was taken, many
believe, on the assumption that either
raw material or labor--or both-would
decline further
Gathering the new crop is at its
height now, with weather conditions
all that could be desired in many
sections. The picking has been com
pIeted IN large part of Texas and in
the southern half of many of the
Gulf states. Government reports in
dlcate that the crop is in fairly safe
position despite its lateness and that
the yield Will be about $4,000 900 bales.
Private advices assert, however, that
deterioration has been greater recent
iy than government figures allow for
and that the crop will not be up to
the latest estimate.