Evening star., 1923-12-31
Better Prospects Of Pedce Gue Promise Of Business Groh

the market. During the average mar
keting season anywhere from $4,000
of hedges against cotton bought
somewhere in the south are sold on
the New York exchange alone. But
day succeeded day with quotations
mounting a spiral. without meeting
any. substantial supply of hedges.
runaway market and in h few weeks
prices touched 80 cents a pound.
In nine years out Of ten heaviest
pressure from the new crop is ex-
perienced during the month or ,Octo-
Der. 1t was. therefore, not surprising
that the violent advance in Septem-
ber. and before the south had sold
freely, should have led a large num-
ber of buyers to hold Off. 1t was
evident that the crop would prove
smaller than they had been led to
anticipate. but they had already lost
their chance of cheap cotton. To
miss the market at 23 cents was one
thing. To plunge in at 80 cents under
unsatisfactory trade conditions was
another.
For nearly month the market
backed and filled between % and
% cents, when operators were dumb
founded by an announcement that
a supplementary report on cotton
This was instantly accepted as sus-
ceptible of but one Interpretation.
namely, that previous reports had
been misleading and a drastic cor
rection was contemplated.
Cotton World I'm Turmoil.
The cotton world was thrown into
a turmoil, Shaken as never before.
Prices resumed the upward movement,
and the day the report appeared,
showing a reduction of 100000 bales
in the estimated crop, both the New
York and New Orleans exchanges
were compelled to halt trading so
wild had become the advance >during
to prevent violent price changes as
far as possible and to this end a rule
was adopted limiting the trading
more than 3 cents above or below
the lowest or highest quotations made
in any single session. After the war
these limits were reduced to cents
but for several years there has been
no emergency to require it's enforce
ment.
Following the report of Noyember
2, prices rose cents and beyond a
figure of 80 cents trading ceased. But
the next day the, scramble was on
again, and prices rose above 81 cents
before the end of the month. The
pace became so fast that the Bonn
bay exchange was compelled to halt
all trading in futures beyond that
involved in the settlement of con-
tracts already entered into: Owing
to the Importance of American pro-
duction in making the. world price
of cottons Of all countries, the rise
had reached such proportions that it
seemed advisable to suspend opera
tions as far astthe East Indian Cot
ton Association was concerned.
Both European and Asiatic mills
used cotton other than American last
season because it was to be had and
at a lower price basis. AS a result,
reserves OF foreign growths had been
reduced from 100000 bales in 1921
to 100000 bales in July of this year.
During these two seasons the re-
serves Of American cotton had been
reduction in world stocks of all kinds
of cotton from 14,750,000 on July 81,
1921, to 100000 bales on July, 81,
1923. Production of all kinds last
year aggregated 17,50o,000 bales, with
consumption of about 21,G00,000.
Low Reserve Estimated. :
To go on consuming cotton at the
bring reserves of all growths down
to 100000 bales at the close OF the
present season This figure is so
small that in order to cut the gar
ment to the cloth many mills will be
compelled to suspend operations be-
through production OF another crop.
The threatened shortage the balance
of this year Is SO acute that the mar
ket, like a tourniquet, is attempting
to stop the flow of cotton into con-
suming channels by making the price
prohibitive.
A review Of so unprecedented a
year as that OF 1929 would be lack
ing in one most vital particular,
without reference to the part played
by the Department of Agriculture.
The record is such that, in view of
- nd
at the command of the government
when compared with resources of
private concerns, it Is not surpris-
ing the various cotton reports this
year have aroused widespread criti-
cism.
Wholly aside from the effects on
prices for the producer, the conf
dence in prospects for a larger yield
than was warranted by actual condi-
tions has cost the trade millions Of
public service, bensficial to ali in
terested. both the grower and con-
sumer Of cotton, reports have tended
to bemuddle rather than clarity opin-
ions, to mislead the trade and unset
tie the market.
From time to time during tho past
thirty years agitation has been d.
rected against exchanges as such,
but in all their history, involving
periodic corners and Inanipulations,
1T would be difficult to discover, in
any of these spasmodic and regret
table eruptions Of the system, eff
fects- as far-reaching and disastrous.
When, the world was informed in
the July Washington report that on
June rs there was under cultivation
in the south 38,2s7,000 acres, an area
greater than had ever before been
that remained in the background of
all minds throughout the balance Of
the season. That g. record acreage
was Indeed planned. all familiar with
the situation conceded. That any
cotton the latter part of June, as the
department stated. all private au-
thorities strenuously denied.
AS result, the whole cotton out
look became confused. For the first
time on record, private agencies
thereafter issued two sets Of figures,
showing the indicated crop based on
government estimates of acreage and
on their own figures of the area un-
der cultivation. Had the department
been in line with information from
the trade would have proved quite
different.
In four previous seasons over 81
100000 acres had been put under cot
ton cultivation, and had the figures
Sc, 100000 to ss.soo,oo0. as given i'm in
reliable private estimates, there
would have been nothing in the
planting estimate to inspire undue
confidence in the outturn. But that
the government should report a
record acreage exerted q powerful
Psychological influence. Domestic dry
goods business was not good at that
time, so the mills were encouraged
to postpone purchases of raw ma
terial, banking on a record acreage
TO furnish at least a fair crop. Prices
slumped from above rs cents to below
81 cents, and the state of mind en-
gendered cost American mill owners
countless millions. 4
The October report Of an indicated
yield Of 11,015, 900, when private re-
ports we're around I0,500,0OO, only