San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-02-25
When Prices Went Down
Buyers Were Attracted
by Bargains.
NOW THE REVERSE
Many Spectators Think
That Limit of Ad-
vance Reached.
By GEORGE DEWITT MOULsON,

New York, Feb. 23.-With the re-
cent advance in cotton contracts repre-
senting the still implanted crop of
1923, during which prices reached n
level Of &c 3-4 cents, considerable at
tentiOn is centered today on reports
that so-called short" sails were being
made ON the New York exchange.
1t Is within the limits OF modera-
ton to say that no one knows whether
cotton will be worth 20, so or 40 cents
when the month of October arrives.
In view Of the fact, however, that a
similar month was selling at 16 cents
year ago and winter weather in the
cotton states has been more 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 4
mill can now contract for cotton, &C.
cording TO government standard for
the months OF October, December o.
January at the price quoted on the
exchange and sell goods with the guar
antee that no matter what the future
may unfold he is fully protected.
Advance viii Hurt Spectators.
Should the growing season prove I'M
prOpitious and prices be swept up
ward, it is III especulatOT and not the
merchant who will suffer. At II
cents il wGs the price that rendered in.
vestment in cotton attractive and now
il is again the price which induces
FhoEn ---in Faa1 much 10 oror, 1tl-o
ly this year, following two disastrous
growing seasons 10 take the opposite
side OF the market. Where one seller
appears at &c cents there will be two
az "a, three at 2S and an increasing
number as long as the possibility for
relief exists.
Through e quite popular misconcep-
ton of the functions Of commodity
UsgrEets. the impression is created that
spmebcdy is attempting to depreSs
prices. This brings u the fore in
concrete form the essential nature of
operations in the cotton trade that an
execution OF such operations is well
worthwhile. By reason of the fact
that short selling is less easily I'M
dsrStood than the more simple proceed
-ure Of gOi..g long, the situation exist
ing during the summer OF 1921 can be
used as an easily understood example
OF the reverse picture.
Business Demoralized After War.
1t will be recalledthat following the
war advance in cotton to basis Of
over 40 cents a pound, prices started
on a perpendicular decline. The de-
flation and collapse in values gener-
ally reached such an acute stage that
cotton which had cost in many in
stances % 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 OF
1921 found the cotton trade facing not
only q carry-over of almost 100000
bales, but a second crop soon to be
marketed.
The cotton goods business of the
world was thoroughly demOralized.
buyers strike" had been declared or
the part of the consuming public anC
the question of how to lift this enOrm
Gus lightweight of cotton seemed al
most insoluble. But because cottor
was selling below the cost of produc
ton, men who had no use for cOttoI
but merely in the confidence that soon
be restored, began to purchase con
tracts in an eyer-increasing volume
This movement starte soon afte
prices broke through a level of l;
cents. The volume grew with each de
cline. Many who had not the patienc,
and doggedness to hang on sold on
and lost money. But, for every faint
hearted specul.tOr or investor, tw
were found to replace the one VIII,
dropped out.
Every quarter or half cent lowe
attracted additional numbers until be
tween IL and Il cents, it was est
mated that the number Of long con
tracts on the books of the variOu
xSuses in the trade was the creates
in the history of the cotton business
The buying power evoked by the dc
cline in prices finally reached sue
formidable proportions that lower lev
els became a physical impOssibility
though no one at that time could fore
see Just what future circumstQnc
would bring about readjustment.
Spectators Produce Equilibrium.
1t was not that those, who were t
become the eventual consumers of thi
mass of raw material, had realize
t0e opportunities PRIV iNNA 70 ODl al
tain cotton for future needs that fina
~ halted the decline in prices. 1t wa
the huge buying of what is called I'll
speculative public that relieved II
market of so much pressure and even
ually produced a state of equilibrium
Now that prices have advanced
the highest level in times Of peace
half a century. and the cotton trade
threatened with an actual scarcity
cotton, il mills are to be kept runnir
until new supplies are forthcomir
from the yet implanted crop, fore
are becoming operative in the OppOsi
direction, or it would be difficult
set limits to the possible rise in VI
ues. The last few weeks have
yeloped a very definite line of d
narcation between those months re
Rsent.Eg Tie crop o. 1922 and tho
bf 1923. Under the impulse Of conc
tons attending the supply and demal
equation prices have advanced steadi
FOR about nine n~"ths. Trading
new. crop positions has increased