Arizona republican., 1920-12-08
Financial Review
By ERIC KOBBE Of BIyth, Witter & Go.

The cost of production does not af- feet the price at which a commodity can be sold It does determine what the producer will attempt to obtain for his product but the demand is the court of last appeal which rules what the selling price shall be. Hence if there is a lack of demand for a certain product, the producers of that product face a situation in which it is necessary for them to accept a price which is low enough to stimulate buying, even though that price is below the cost of production. To falsely stimulate buy ing by curtailing production, or by withholding goods from the market, will eventually lead to lower readjust- ments than if the loss made necessary by the law of supply and demand was accepted at once A lowering of the sale price to the point of stimulating buying will be the bottom, for as soon as buying recommences the price will at once strengthen and the sooner that condition of affairs can be brought about the sooner we will be back at normal times. We have run the whole gauntlet from the widest speculation, the highest prices, and the largest prof it's, down to prices at less than cost and d great volume of business fail ures. Can We not find the middle ground?
 1t appears to the Review that the price readjustment is sound business and an economic necessity. The losses which entail to producers are necessary providing that these losses are not ruin- ous and the present price of sugar grain and cotton, while indicating a l heavy loss, do not indicate ruin. Ii | seems beyond dispute also that the pro- ducers could see nothing for this year except exceptionally high prices fol their products and they allowed theiI cost of production to mount up much 1 higher than was justified on this as sumption. Hence, when these prices 1 failed to meterialiZe, and even dropped | to abnorma fly low prices, the producers were caught with a crop on which th' cost of production had been so higf that they now face a much greater los
 than if this cost had been kept dowI l commensurate with average prices.
 While all the foregoing may be true
 we are talking about ancient history
 and unless we can learn a lesson iron lpresent conditions and study out a solu tion for the problem, it is quite useles to review and rub salt into old wounds Therefore we will take up the condi tion of cotton, which holds all the loca interest, and see if we cannot possibl
 make some constructive suggestions not with any idea that the presen
 situation car be eased to any eXten
 but with the idea that the same mis
 takes will not be repeated in years {
 come.
 The first consideration is betterin
 the market. This is especially true fo
 long staple cotton The advantages c
 this commodity for all purposes ar
 too numerous to mention. and it re
 mains for the producers to organize : marketing association which will stal now to take care of the 1921 crol : Thus the producers will have a voic
 through this association in naming an controlling a just price for their prod uct. Adequate warehouse facilitie
 should be provided. This could taken care of by a state issue of bond
 The producers must introduce bus ness methods in their farming. Yo
 cannot control a thing you do not ow and if a crop must be mortgaged
 pay the living expenses of the produce
 and also the cost Of production, ths
 producer has small chance to say whs { price he will or will not accept for hi
 crop. He must sell for any price thS may be offered. There has been CT