Evening star., 1939-03-31

OuQer tIle SENATE plan, Clle COttOn
farmer will be required to agree to
cut production and he may repur-
chase at a low price, possibly 3 cents
pound, some of the cotton which
the Government has stored and on
which it has previously loaned
money up to about II cents. The
difficulty with this plan is that
farmers have already planted much
of their acreage and the scheme
might result in widespread unem-
ployment for cotton pickers in the
South.
Under Mr.. Roosevelts plan, the
United States would fix a price for
cotton in world markets which
would be low enough to recapture
trade and then the Federal Govern
ment here would pay subsidy over
and above the world price.
Theoretical Operation.
The idea is something like this:
America has about 100000 bales
of cotton which has been carried
over as a surplus from other years.
About II 100000 bales of this cotton
Is virtually owned by the Govern
ment because loans of II cents a
pound have been made against the
commodity. whereas the world price
has been for some time below that
figure. Indeed, the present loan
hyy Gouory1Y,3n1of &c
8.3 cents a pound, which has become
the world price. Now cotton pro-
ducers in other countries can grow
cotton at less than 83 cents pound
so they offer to sell their product
at just under the 8.3 level and thus
keep American cotton from moving
into its logical export market. To
prevent this the Presidents plan is
to let the American cotton fall
to about 6i2 cents in world markets
and then foreign competition will be
diminished and more of the Ameri-
can product presumably will be sold.
Thus when the American exporter
sells his cotton abroad for 612 cents,
the Federal Government here would
pay him another 18 cents so that
no would eventually get 8.3 cents
for each pound. This would tend
to keep the domestic price in the
United States up to 8.3 if that is the
level finally decided upon for do
mestic markets. The cost is esti-
mated at about s6O,000,000 to $780,
100000 at first, but if America sells
a bigger and bigger volume of cot
ton, the Government could afford
to let the loaning price or domestic
level 60 down bit and thus reduce
the amount of the subsidy.
Exports Fall to 30 Per Cent.
1t is often pointed out that in re-
cent years world production has
been been increased and world con-
sumption has been enlarged, too,
but yet America, which used to ex-
port so per cent of the worlds sup
ply of cotton, now sells abroad only
about 80 per cent. But it would ap-
pear that while consumption has in
creased, it is in countries where
production has been stimulated, as
In Russia and China, and that the
rest of the world has in many in
stances been compelled to reduce
its use of cotton because of the rel
atively high price of the commodity
in terms of even the deprecated
monetary units of other countries.
Thus Germany has been forced to
use substitutes for cotton and has
not been able to buy her former
supply.
One may debate at length what
has brought on the present situa-
ton, and there will be many who
will insist that Americas own loan
schemes and attempts to peg the
price at too high a level encouraged
foreign producers to come into the
export market. But the fact re-
mains that condition and not a
theory faces the cotton farmer, and
whether a Republican administra-
ton were to come into Office tomoc-
row or somebody else were elected
on the Democratic ticket, the situa-
ton to be dealt with today is the
one In which the cotton farmer finds
himself in world markets.
Again and again, as one surveys
the many economic problems which
are growing out of world conditions.
the truth is emphasized that while
our export trade may. as has often
been said, be only 10 per cent of
our total business. the percentages
in specific commodities governed by
world prices and world conditions
may run up as high as 30 to so per
cent.
May Create Export Monopoly.
II the Congress adopts these new
plans for cotton subsidy or two-price
systems, it merely means that Amer
lea is keeping step-awkard though
it be with the trade restrictions i'm
posed on her from outside. Gradu-
ally it would seem that America is
moving toward government con-
trolled monopoly of export as a
means of combating the competi-
ton Of government-controlled mo-
noplies of other countries.
1t is not a new Development
President Hoover fought against it
as far back as 1929-but world con-
ditions now are so overpowering
that as a means of self-defense
against raids from other countries
the United States is reluctantly &C
cepting the challenge and is strug-
Cling to defend her exports. But
when America starts playing this
game it may mean dumping OF
surpluses so that foreign peoples
will actually get Americas farm
production at prices lower than
those enjoyed by our own people.
Here again, however, American
manufacturers, protected by domes-
tic tariffs in the home market, have
for years sold for export at lower
prices than charged at home, so
there's nothing new in that device.
(Copyright. 1939D