Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-01
COTTON INDUSTRY
SHOWS STABILITY
Markets of World FIuctuate
in Narrow Range During
Past Year.
BY GEORGE DEWITT MoULsoN

1t would be necessary to look back
ward more than 20 years before finding
season that parallels the last IL
months in showing so limited f1uctua-
tons and such thorough price stabiliza-
ton as have occurred in the cotton
markets of the world.
While the maintenance of prices
within range of 3 cents a pound has
deprived events of the spectacular fea-
lures that characterized many previous
years, when gyrations of 10 to 20 cents
were attended with broad speculative
activity, 1929 will go down in history
as marking the elimination of one of
the most important phases of COM
modify markets and of American agri-
culture.
Against a steadily rising tide of
speculation in securities, grain and
cotton producers have been unable to
contend. The Eldorado visioned by the
popular imagination in the common
stocks of the great industrial and pub
lie utility corporations detected normal
interest in farm products to stock ex-
changes and, during the past five years,
the contrast between industrial and
farming conditions has grown more and
more marked.
AS against the constantly rising level
in the market price of securities, there
has been definite downward trend in
commodities until dwindling profits
in agricultural communities stirred
Congress to action. Just how intimate
have been the relations between the
two phenomena it would be difficult to
judge. But with reports of the hourly
course of the stock market attracting
hundreds of brokerage Offices in every
important town in the South, while de-
velopments in cotton and grain were
ignored, a formidable and highly i'm
portant buying power has shifted its
field in recent years.
Cotton Speculation Declines.
The usefulness of commodity ex-
changes is based on intelligent specula-
ton whereby the producer finds a
broader market than could be furnished
by the consumer alone, and prices are
sustained during the marketing season
against advances later on. But for the
past two years, cotton prices have ruled
several cents below q theoretical level
determined by past records of the work.
ing out OF supply and demand laws In
searching for an adequate and reason
able explanation, the speculative stock
mania must be reckoned an important
factor. The popular cry has been,
millions for stocks, but not one cent
for commodities"
Instead of speculative market.
cotton has become a trade proposition
between producer and consumer each
endeavoring by procrastination to Sc
cure the best possible terms. With
necessity left as the most compelling
FACTOR in consummating the transfer of
ownership, freed from the stimulating
features of market fraught with I'M
certainties, trading has been an ex-
tremely quiet affair throughout the
year.
Farm Board Enters Situation.
The outstanding event of the wear
has been the Intervention of the Fed
eral Government, throurh the func-
| tloning Of Farm Boz - an effort
to restore an economic ..brium be-
tween industries and ulture. While
the great manufacture, plants have
waxed steadily richer until bonded in
| oebtedness MAS been retired in all di-
rections through vast sums provided by
participation of an eager public in
common stock issues, farm mortgages
nave increased annually until the fig
ures attained the staggering total OF
| $10,000,0 100000
Protected from foreign competition
! the majority of manufacturers have en-
! joyed profitable business. With the
price of his products determined to a
large extent by supply and demand in
the crops of the world, the farmer has
found himself deeper and deeper in
debt. The prosperity of the country
as a whole became threatened by the
reduction in the buying power of ar
exceedingly large and important portion
of its population. AS compared with
wages in the city, annual returns tt
the farmer have grown less and less
adequate to maintain, much less raise
the standard of living.
There appeared to be two, and only
two, ways of restoring a more equa
balance. General def1ation would NEAR
lower prices for the goods the farmer
buys by making the purchasing value
of the dollar greater, but postpone the
lifting of mortgages created when the
dollar was worth only 60 cents of its
pre-war figure. The alternative meant
an attempt to raise the price of farm
products through Government assist.
ance by the enactment of higher tariff
and funds for the withdrawal of the
surplus or, at least, its gradual mar
keting. After two defeats during the
SOOllQBS dOtAlAilAoGl oIlOIl dttQ d fGDO Vi
the bill, Congress passed and President
Hoover signed farm bill which fol
the first time in the history of the
country brings the Federal Government
as a price-making factor into com.
modify markets.
Instead of the free play of world wide
economic forces and the final decision
of price level by the law of supply anC
demand, large-scale buying and selling
operations, resembling those In vogue
in twentieth century business enterprise
will be undertaken in order to bring
better returns to the producer as hi
share in prosperity. This injects al
entirely new and therefore, untried ele-
ment in determining prices. 1t 4
neither a direct subsidy nor a Stat
valorization scheme, but something Dor
rowed from each for the purpose o
reaching the same goal-raising price
or preventing lower prices.
Government Exercises Caution.
While the Farm Board has been max
ing loans on a basis of l6 cents through
cut the South. the refusal of the Stapl
Cotton Growers Association to accep
Ian advance of $4,000, 900, owing to tn
conditions stipulated, would indicat
the intention of the Government t.
avoid the pitfalls inherent in valoriza
ton measures. Loans have been ex
tended to members Of cooperative as
sociatIons univ and partake of the ma