Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-12
FAVORABLE PHASE
SEEN FOR COTTON
Gain in Consumption and Bet
ter Competitive Position
Held Probable.
BY JOHN L. COOLEY.

AsSoClANed FfeSS FINANCIAL writer.
NEW YORK, August I2.-Although
the Government estimate OF 1884,
ooo-bale cotton crop for this season was
so stunning q surprise that prices
dropped TO the lowest levels of the CEN
fury, there are some Theoretically favor
able aspects to q substantial increase,
in the opinion of observers here.
A big crop. it Is pointed out, would
put the United States In q favorable
competitive position, especially as re-
CARDS India, which has been making
steady inroads into American markets
for the Southern States leading staple.
India now produces about 20 per cent
Of the world supply
Low prices should also, it is believed,
stimulate consumption through the ex-
pansion of outlets Such, at least, has
been the experience in other times OF
bumper crops, although 1t is recalled
that world conditions then were much
nearer parity than at present.
Stocks Below Normal.
Furthermore. the dry goods and yarn
markets may be steadied by the decline.
erably below normal because of BUSH
ness uncertainties in general and cotton
price uncertainties in particular, but
one result Of the break, it is felt, may
be increased buying by manufacturers.
The more immediate consideration Ia
the effect on the grower and on the
millions of people who get their hveli-
hood from King Cotton. Immediately
the crop figures were published. the
possibility OF 5-cent-a-pound cotton
came up. Should the price go to that
figure it is believed some farmers might
not think it worth while to harvest.
since the cost of picking alone averages
40 cents a hundred pounds. However,
not every one is willing to predict 30
low a quotation. Cotton did touch
nickel a pound in 1841 and on two or
three other occasions later in the nine
tenth century approached the same
level. The low on the records Of the
New York Cotton Exchange, going back
to 1888, is sos cents, made by the De-
cember position in 1898. The record
high is ATS cents, reached in July,
1920. Last seasons range was 6.56 TO
1892, both for July.
One of the big questions proposed
by the current slump is the effect on
cotton co-operativeS holdings and the
stocks held by the Farm Board Agency.
1t has been suggested that the finan-
ctal strength OF the former organiza-
tons might be tested by margin calls,
although the co-operatives are said to
be financed for a long period. Mainte-
nance of their positions, as well as re-
tention of the Government-owned stocks,
would have q Steadying effect on the
market 1t is not believed here that
the sterilization corporation would sell
at so great sacrifice.
"An Act Of God"
The big crop now in prospect is due
entirely to the whims Of nature-what
the lawyers would call IAN act of God"
Because Of last years carry-over acre.
age was reduced 10 per cent but un-
usually favorable weather decided the
issue against efforts at restriction. Dis
tricts which in the past few years had
recourse 70 fertilizer, used on the aver
age 80 per cent less material than last
year, for rainfall was well distributed
and artificial stimulants were not
needed
1t is sometimes argued that there Is
balance between large crops. low
prices, and small crops, high prices;
but cotton circles here point out that
this does not apply. Bumper produc-
ton means increased costs for picking
and ginning, which eat substantially
into the returns.
Economists are wondering whether.
after all, the world is not entering a
period of low prices for all commodities,
an interval that may last for some time
and thus bury still deeper the happy
philosophy which marked the new era"
of 1928-29. In this connection, It Is
recalled that 90 years ago cotton was
regarded as high when it crossed 10
cents The end of postwar defiation,
some observers point out, may well
mean the return of old-fashioned stand
ards of value and their retention for
some little time.