Evening star., 1935-06-23
KING COTTONF'
By Frederic ]. Haskin.

could be depended upon to produce q
huge annual increment of cash. The
fact that so much Of the cotton crop
was sold abroad for cash had q con-
tsnuing favorable effect on the Ameri-
can balance of trade. In return for the
stream Of fiber that annually moved
overseas, there flowed stream of cash.,
The South at one time produced about
three-fourths Of the entire worlds sup
ply of cotton.
All that has changed. There has
been a steady alteration over quite a
period of years, but recently it has
accelerated until the loss of the cotton
market is being looked upon with alarm
World consumption Of American cotton,
for the first nine months of the 1934-5
crop year has amounted to 1854 900 run
ming bales. This compares with con-
sumption OF 10,585 900 running bales
during similar period one year earlier
Here is a decline of 1874 per cent in
single year. -~s
The reasons for this dethronement of
King Cotton to position where instead
of three -fourths Of world consumption s
being supplied from the American South.
less than one-half is supplied are va
rious. 1t is now realized that a principal
reason for the abrupt decline in the
last year has been the New Deal policy
of cotton price maintenance. 1t will
be recalled that the Agricultural Adjust
ment Administration, through the Com
modities Credit Corp, began lending
more money on cotton than cotton was
worth in the world market. Cotton, like
wheat, has what is known as q world.
price. ..-
When this world price was 10 cents a.
pound, the Commodities Credit Corp
agreed to lend II cents a pound. There
was a string to this, of course. The
borrower had to agree to curtail pro-
duction the following year. It was the
theory of this type of finance that.
through crop curtailment, the price of
cotton would advance to a point at
which it would in fact be worth IL cents
and, thereby, secure the Government
loan.
But the corporation reckoned without
the world. Spinners In Japan, in
Poland, in France, England, Belgium
wherever there are textile mills, began
to shop around for other cotton. For
years there has been intensive work to
build up other sources of cotton supply.
Governments have gone so far as TO
SubSidize cotton growing in an effort to
break loose from the American mo-
nopoly. This artificial raising of the
American price was apparently decisive.
Foreign SpinnerS were not going TO pay
II cents for American cotton when they
could buy elsewhere for 10 cents. One
result of this has been that the United
States Government is holding more than
100000 bales on which it has lent u
cents pound.
Foreign Demand Curtailed.
The scheme of curtailment has worked,
Of course, and less cotton has been
planted, but the scheme has worked two
ways While curtailing supply it also
has curtailed foreign demand so the
situation remains practically the same.
What has made the situation worse is
that domestic consumption has been de-
clining at the same time the foreign
demand has dropped. In the first nine
months of the 1934-5 crop year domestic
consumption dropped ST. per cent. The
world consumption figures include both
foreign and domestic consumption. The
foreign consumption, looked at sepa-
rately, emphasizes the emergency. For
the first nine months, exports of cotton
were only 1896, ,785 bales. This was a
decline of almost 40 per cent, compared
with the comparable nine month period
for the previous year before the price
control system was in effect.
There are several reasons for the de-
cline in the domestic consumption of
American cotton. The imposition Of the
cotton textile code may have had some
effect in that the price of cotton piece
goods was raised in order to meet the
increased costs OF the minimum wage
and maximum hour schedules. Then,
too. there is steadily gaining compe-
tition with cotton of other fabrics. A
chart of consumption of rayon In COM
parison with cotton shows that while
cotton has been declining slowly, rayon
consumption has leaped upward.
Synthetic Competition,
The ingenuity of the Europeans, eSpe-
cially the Germans, in developing syn
thetic processes is well known. and the
American chemical industry is by no
means backward, so both at home and
abroad there is springing up synthetic
competition with cotton while Russia,
Egypt, China, Brazil and other countries
are pushing production of natural cotton
The cotton textile code was the first
to go into effect under the N. R. A. and,
while, indubitably, the code has bettered
the conditions of workers, the increased
costs have been a burden to the COM
panies. The statements of almost every
cotton textile mill in the country show
decreased profits or outright net oper-
ating losses and, at the same time, in
creased inventories, overhanging stocks
of unSold goods on hand, the weight of
which on the market will tend to keep
prices down indefinitely.
AS In other fields, the Japanese COM
petition has become an important factor.
Japan bought most of her first textile
machinery from the United States and,
still buys some. With the cotton spin
ming trade we taught her she now, with
her cheap labor, is shipping huge guam
titles of cheap goods into the American
and world markets. A compensation
is that Japan has become an excellent,
customer for raw cotton. She takes as
combined, but is stimulating cotton pro-
duction in China to gain the advantage
of lower price. H'
The cotton textile industry, Of course
will continue to be one of the Nations
great industries. The last census of.
manufactures, taken for 1888, showed the
value of cotton goods produced to be,
$849 ,076 ,000 But this marks a substan-
tial shrinkage compared with 1929. In
that year the value of cotton goods pros
duced was $i,507 ,525, 900. To be sures
all prices were higher in 1929. and some