The Dillon herald. [volume] (Dillon, S.C.) 1894-????, 1920-06-03
South Must Defend Cotton.

w. w. Morrison in News and Courier
On January II there was discussed
at some length, in these letters, the
difference between the relation which
cotton other raw commodities and
manufactured products, bore to defia-
ton which was at that time begin
ming to be featured in the current
news.
Since then public interest has been
greatly accentuated by the declared
policy of the Federal Reserve Board,
whose activities have aroused a feel
ing of real apprehension in the minds
Of quite a large section Of the busi-
Ness community. 1t seems well, there
fore, to review the problem Of della
ton again, particularly as the pro-
tlem has recently become more clear
'ly denied in some of its more impor-
tant phases.
If we are to study the problem in
an enlightened way it is essential that
we sharply differentiate. in the outset
between the products, whether man
ufactured or not, that have passed
out of the producers control, on the
one hand, and the raw material that
still remains in the producers con-
troll on the other. For it is evident
that the prevailing price Of the form
ei, as compared with the Legitimate
cost of production, is geratly inflated,
while the prevailing price Of the lat
ter shows in most cases. only a iegi-
innate profit an din some instances
even loss.
1t has been a notorious feature OF
this era of high prices that when
the price of the raw material in the
hands of the producer has ad-
vanced the price of the commodities
held in second hands, whether as
manufactured products or as raw
material, was never advanced TO cor
respond, but in almost every instance,
was marked up from three to four
times and even more, than the origi-
nal advance in the raw material just
iified. This practice has been, al
most universally, INDUCED in by the
middlement who handled these pro-
ducts in their transit from the pro-
ducer to the ultimate consumer.
Thus the records are abundant and
unequivocal that the price of COM
Imodities, whether manufactured or
otherwise, has been greatly inflated
after they have left the hands. of
the producer. The commonsense
view of the matter is. therefore, that
these products will have to bear, in
the end, practically the whole burden
of deflation. This view is confirmed
by the fact that underproduction oil
staple raw material is common
throughout the world, hence any
shrinkage in the price while held by
the producer is illogical and an illu-
sion. The truth is. it is not only illog-
ical but dangerous. since it would
tend very definitely to accentuate the
shortage in these prime necessities
that it is now Of the very first i'm
portance to relieve.
1t is most interesting to note that
these activities of the middlemen, in
advancing prices without regard to
the basic cost of raw material, was
really the logical outcome of a de-
mand greater than the supply. The
middleman kept on advancing prices
Just because the people, on account OF
acute competition for the supply
available, just kept on paying what
was asked. seemingly without ques'
ton, until very recently. These :
cessive profits in manufacture pro
ducts has had the effect Of attracting
a steadily increasing number OF the
most efficient labor away from the
production of prime raw materials to
participate in the higher wages which
manufacturers could pay, and has
been the real cause of the underpro-
duction which, as indicated, is loom
ing now as a grave menace to the Or
derly process of the worlds economic
life.
AS this dehation relates to cotton:
It is evident that the price Of the
manufactured product is enormously
inflated. 1t is just as evident that
the raw material is selling below the
cost of production. Hence. it is clear
that a sweeping deflation in price Of
cotton goods would be logical. 1t Is
also just as clear that any recession
in the price of raw cotton would be
illogical. Not only would it be illogi-
cal. but unthinkable as well. since II
would certainly reduce production tc
where it would be a world disaster.
l Summed up, in the midst of all this
rather wild and incoherent meddlina
with economic laws, it stands Out
clear and sharp that the South mus,
defend cotton. This has ben fire.
Quently urged in these letters, parti
cularly on January II and Februar!
IA. 1t is evident then that deflation
and every other economic and politi
ca, event Of Importance, would be
made the basis for an attack On the
price.
During the last five years these at
tacks have resulted in nothing more
than a temporary recession in the
price of future contracts; they have
in no sense, distributed the cotton
held by the growers. which, after ali
is the basis upon which future con
tracts must be finally liGuidated. There