Evening star., 1923-02-22
ACCENT COTTON
IS NOW POSSIBLE
Poor Growing Season Would
Send Prices Up to New
Attitudes.
MILL SHORTAGE LOOMS
Present Levels Highest in Peace
Times in Last Half
Century.
BY GEORGE DE WITT MOULsON.

=
MANY students of the New York financial
| and commodity markets believe that there ex'
lists in the cotton market Of today q SITUATION
that has not been eQualed since the civil war.
Mr.. Moulson. in the following article. explains
the various phases Of the present situation ana
forecasts what the future may hold.)
! Special Dispatch to The Star.
NEW YORK, February 22.-With
the recent advance in cotton con-
tracts representing the still unplant-
ed crop Of 1929, during which prices
reached q level of 26A cents, con-
siderable attention Is centered today
on reports that so-called short" sales
were being made on the New York
exchange.
1t is we'll within the limits OF
moderation to say that no one
knows whether cotton will be worth
20. 80 or 40 cents when the month
Of October rolls around. In view or
the fact. however, that similar
month was selling at 16 cents year
ago and winter weather In the cotton
states has been moro favorable than
either Of the two preceding ones,
operations In the way OF selling CON
tracts for future delivery are being
undertaken in exactly the same way
that characterized the market on the
opposite side of the account two
years ago. This means that any
owner of a mill can not contract for
| standard for the months Of October,
December or January at the price
quoted on the exchange and sell
goods with the guarantee that no
matter what the future may unfold
he is fully protected.
unpropitious and prices be swept up
ward to higher and higher attitudes.
II is the speculator and not the mer-
chant who will suffer. At IL cents 1t
ment in cotton attractive. and now 1t
is again the price which induces those
who feel a much larger crop likely
this year. following two disastrous
growing seasons, to take the opposite
side OF the market. Where one seller
at 27. three at % and an increasing
number as long as the possibility for
relief exists.
Through a quite popular miscon-
| modify markets. the impression was
| created that somebody was attempt
| ing to depress prices. This brings
| to the fore in concrete form the es-
sential nature OF operations in the
| cotton as well as other markets and
ton trade than an examination OF
| such operations Is worth while. BY
reason of the fact that short" selling
| is less easily understood than the
| the situation existing during the
summer OF 1921 can be used as an
easily understood example OF the re-
verse picture.
Decline After War.
It will be recalled that following the
war advance in cotton to a basis Of over
40 cents a pound prices started on a
collapse in prices generally reached such
an acute stage that cotton which had
! cost in many instances % cents a pound
| or more to produce was being sold for
| less than half that figure Nature had
assisted in the production Of a very
large crop In 1920, SO that the summer ol
| 1921 found the cotton trade facing not
| only a carry-over of almost 100000
bales but a second crop soon to be
marketed.
| The cotton goods business Of the
world was thoroughly demoralized. a
buyers strike" had been declared on
| the part of the consuming public and
| the question of how to lift this enor-
nous. dead weight OF cotton seemed
almost insoluble. But because cotton
was selling below the cost Of pro-
ductfon, men who had no use for cot
ton. but merely in the confidence that
! sooner or later an economic balance
would be restored. began to purchase
contracts in an ever increasing vol
ume. This movement started soon aft
er prices broke through a level OF :
| cents. The volume grew with each de-
cline Many who had not the patience
and doggedness to hang on. sold out and
! lost money. But for every faint heart
ed speculator or investor two were
, found to replace the one who dropped
out.
Record for Contracts.
! Every quarter or half a cent lower
/ attracted additional numbers until
! between II and IL it was estimated
| that the number of long contracts or
| the books of the various houses in
:: history of the cotton business. The
| buying power evoked by the decline
| in prices finally reached such formid-
| able proportions that lower levels be-
came a physical impossibility. though
no one at the time could foresee just
/ what future circumstances would
bring about readjustment. 1t was
not that those who were to become
the eventual consumers of this mass
Of raw material had realized the op-
portunities provided to obtain cotton
for future needs that finally halted
the decline in prices. 1t was the huge
buying of what is called the specu-
Iatiye public that relieved the market
of so much pressure and eventually
produced a state of equilibrium.
Trading ON Increase.
Now that prices have advanced to
the highest level in times of peace In
half a century and the cotton trade
is threatened with an actual scarcity
Of cotton IL mills are to be kept run
ming until new supplies are forthcom-
ing from the yet implanted crop,
forces are becoming operative in the
opposite direction or it would be diff
ficult to set limits to the possible rise
in values. The last few weeks have
developed a very definite line of de-
marcation between those months rep
resenting the crop of 1922 and
those of 1923. Under the impulse Of
conditions attending the supply and
demand equation prices have ad-
vanced steadily for about nine
months.
Trading in new crop positions has
| increased in volume until October
contracts touched 26%, though the
| ultimate value Of cotton as deter.
mined in the markets OF the world in
the month Of October. 1928, is as
problematical as next weeks weather
| .fCopyrght, 1927