The Chattanooga news. [volume] (Chattanooga, Tenn.) 1891-1939, 1920-10-19
THE FALL OF COTTON.

THE FALL OF COTTON.
| What Ia happening TO cotton Ia this:
the demand has fallen Off, and the price
| thereupon fell, too. The same old law
OF supply and demand which brought
the price OF the 1eecy staple from 10
cents In 1915. to 40 cents last year,
again this year cut down the price.
II is not surprising that II should
happen so. Europe would like to buy
| our cotton, but cannot. Tho exchange
rate between continental curronces
which have boen based on the printing
press. and ours, based on the gold dol
lar. is such that France or Germany
| cannot AFFORD to buy American cotton.
American mills have largely caught
up with their orders, and are no longer
running Mt fun capacity. Buying Is held
up for the nonce, ana 50 tho domestic
demand for cotton Inns abated. This
has all combined TO bring the price OF
cotton tumbling.
In the south Atlantic states another
enemy has added to the woes OF the
planter-the boil wecvil In Georgia and
Alabama through tho wcovi tho yield
has been cut to about 40 per cent. Tho
planter Is faced with 30 per cent.
~
dollar he expected to get, he will OBJ
tain 20 cents. What this win mean to
the south Atlantic states II is easy TO
realize. II will mean that the 1920
crop was a failure. almost as much of
one Rs was that OF 1914, when the
Buy n Bao of Cotton" campaign was
inauRuratcd to hold mp cotton prices.
The southern planter gets his money
/ "A IA ha Ill Ia .
ton. The rest OF the time he lives on
credit. The small town merchant sells
him the food for himself, family. labor
ana stock The merchant clothes him,
furnishes his home, and carries him.
over to the next year. rs bankers say.
This merchant, In turn, depends on the
large wholesaler and his local bnnk to
carry" him until the cotton planter
can sell his cotton uud pay up; tho
wholesaler depends on the manufacturer
Tor time for payments, and 40 It goes.
Tho banks In each stage OF the pro-
erosion are used to capacity In tho
carrying" Then normally tho planter
sell his cotton. and thoro arc payments
In full MI down the line.
But this year the planter doesn't
want TO sell his cotton, which no
|
that price. lie goes to tho merchant
ana tells him that although he promised
to pay when the crop was in, he VIII
not do so, and that the merchant must
| sell him even more on credit Then
the merchant cannot pay tho whole
saler. and 80 on down the line. The
result is n dangerous Interruption TO
the delicate machinery OF general busl-
ness which may produce stagnation or
worse.
The planter. refusing to sell his cot T.
ton at 20 cents, Ia within his rights,
II he-can pay his debts to the merchant
who financed him the past ycnr; II no
can pay his debts. IL is the wise thing
for him to hold his cotton, and wait
for higher price for II, Hut II he OK
poets the merchant TO finance his spec
ulatton, he is putting load on him,
ana on the business Of the section.
which Is not Justly his.
There IL considerable agitation
against the federal reserve banks be
cause they Will not redlscount ware
house loans on cotton held for advanc-
| ing prices. Rut the reserve board can
not make such loans. Gov. Harding s
position that the reserve systcm was
not meant TO hold M artificial prices r.
absolutely sound II the board did wish
to do 30, there IN n provision IN tho
federal reserve law prohibiting then
from doing aof
The law says that n bank must have
NJ lcnst 40 per cent OF It's assets I'm
reserve. The banks are having to strain
every tendon 20 observe this feature
The Atlanta branch, after rcdlscountinr
$ih 600 600 OF It's paper. Saturday showed
Itself within the margin of the law Ivy
one-haf Of ! per cent. The genera
average Tor the entire svstom showed
but 427 per cent. reserve, The re,
serve banks show that thov have no,
tho legal power, nor the financial ahtl.
ity, 10 finance cotton and keep tho
planter from taking the loss which ha,
come 60 him through tho working of
economic law
A demand for the retirement or rests.
nation ur Secretary Houston, 81 IN,
treasury department, because no ha'
not forced the reserve board To- nnauc,
the holding OF cotton, iS ridiculous Mr.
Houston, while secretary of agriculture
showed hrond understanding Of IN,
farmers economic necessities. Nut b,
knew that thcv couldn't beat tho law
Of supply and demand. no matter whp
way they tried TO do 80 aud has wlsol,
refused 20 he party TO any attcmp
60 do 30
with the world IN the situation Il ls
the south can confidently expect cot
ton prices 60 rise again The world {
starved for cotton to hc ahir to cloth
, | herself Germany Moods o OOO 600 bales
Austria. France. Turkey. Tho urur am
far east mood American cotton. Ru
81 t.,,.