Evening star. [volume] (Washington, D.C.) 1854-1972, 1939-07-02
Cotton Problem Ever Vexing,
Muddled by World Conditions
Every Effort of Administration to Improve
Growers Domestic Situation Lessons
Foreign Outlets
BY Blair B0Hes.

less than $500 100000 for their product.
The world carryover exceeded the con-
sumption. For the United States, the
problem had its nub at home; the ex-
port trade in cotton in 1882 was lively.
When President Roosevelt took Office
in 1888 the American carryover amount
ed to almost 100000 bales. The Agri-
cultural Adjustment Administration in
augurated its plowup program; 10000, 900
acres of growing cotton were turned un-
der the ground; 100000 acres had
been planted Even this drastic step
failed to lift the price above 10 cents
pound. The growers asked for a loan
and got it: 10 cents. The market went
over that figure, and the growers could
make money on their crop.
Through the whole history of the first
A. A. A., which through its benefit
payment and crop-control system was
supposed to balance production against
need in such way that the farmer
would receive just income, the loan was
resorted to as bolster for the cotton
grower. And the loan by now is re-
garded as the villain of the piece in the
cotton story.
12-Cent Loan Follows.
The Decent loan worked so we'll is
1888 that the growers requested it again
in 1884; they got IL cents that time-a
loan so high that the cotton went to the
Government as collateral on the loan
instead of to the open market. The
Agriculture Department added more
bales to the stocks which were still left
to it from the Farm Board Decent loan
program.
Slowly, through the loan policy, the
Government accumulated cotton until
the store has grown so large that 1T
weighs down the prospects of a rise in
price. The stock is a threat to the free
marketing Of cotton, whose problem,
simply, is problem of too much.
At the beginning of 1885, the Govern
ment held 5000, 900 bales of loan cotton,
But Secretary Wallace was satisfied that
through acreage control he was thwart-
ing disaster. The Secretary, however,
could not circumvent such a combina-
ton of foes as the Supreme Court and
the weather. In 1886 the court ruled
against crop control. in the following
year the weather was perfect for cotton.
The court decision resulted in an in
creased acreage. The weather brought
an increased yield for every acre. The
crop year 1878 brought 10000 900 bales
OF new cotton into existence
To prevent chaos in 1887, the Agricul-
tural Adjustment Administration, which
remained in existence even though it was
shorn OF its powers to regulate produce
ton, stepped in with 9-cent loan. BY
the end of 1887. the government held
70OO.0 900 loan bales. A year later, with
revamped adjustment law, the loan
was set at record low: 83 cents. The
world carryover reached 1900 900 bales
one and quarter times what the
world consumed.
At the moment the world carryover is
estimated at 100000 bales, the world
production at 27,6oo,o0o bales. There
was so much cotton in the world when
the 8.3-cent loan was made that it
proved price pegger and speeded up
eAAS AoNSAlAAClC OF
stocks, which now have grown to II, 700,-
600 bales.
Futures Market Upset.
The loan thus not only diverted large
supplies of American cotton from the
market to the Government warehouse,
but it upset the futures market, which
has its speculative aspect There Is no
speculation when it is known that the
Government will lend S3 cents on every
pound. The loan encouraged hand-to-
mouth buying, upsetting the classical
system Of cotton marketing
In Little Rock, recently, Secretary
Wallace said he intended to hold to his
loan policy. His department once wanted
to free itself from commitment to the
loan, but political pressure from cotton
States Senators proved too strong.
However, such an outright subsidy for
the cotton farmer does the country's
general economy little good. Cotton ex-
ports always have been a large factor
In that economy. The loan policy takes
so much cotton of the market that little
is left to export. Thus the administra-
ton is faced with this practical problem:
Lose the export market, or find an
artificial way to compete for the market,
while recerving to the farmers the same
sort Of benefit they receive through the
loan.
The first obvious answer that came to
the Wallace thinkers was a system of
paying the farmers to sell their cotton
on the open market, giving them the
difference between the market price and
the parity price, 1875 cents (the parity
price is the sum which economists COM
pute as justly recompensing him for his
expenditures and EFFORT. Such a pro-
gram would require at least $3.50 900 900
and at once the growers of other crops
probably would demand similar treat
ment. This system would be too costly
for consideration.
The alternative is the export subsidy,
which excites apprehension among for
eign exporters, who fear We may take
their markets from them.