On the other hand, the cotton industry of America practically possesses a natural monopoly such as obtains in no other product of equal importance. American pro duction, which averages around 60 per cent of world production, practically determines the international price of cotton. American Upland Middling, which is expected yearly to make up 90 per cent of the United States crop, furnishes "the 'basic price' which controls the prices of all other grades of American Upland cotton and also, more or less, of all other kinds of In April, 1924, a gloomy period for cotton manufac turers because of the short crops of the three years preceding, John A. Todd, the English authority, was quoted in a leading American farm journal as seeing no chance of increasing supplies outside the United States over a million bales a year. "One week of favorable or unfavorable weather at a critical time in America means more to the world's immediate cotton supply than all the efforts being made to increase production elsewhere," he said.' In The Cotton World published in 1927 he made the statement, ". . . that the fluctuations of the Amer ican crop from year to year are so great that they may easily counteract the total effect of any changes that take place in all the other crops put together." 6 No other group of American agricultural producers have an economic position of such strategic value. The United States may have a short wheat crop, for instance, with very little influence on the price. An example will serve. With a United States crop of 374 million bushels in 1893, wheat sold for 30 cents a bushel less than in, 1891, with a United States crop of 600 million. To what extent a short American cotton crop may influence world prices was shown in the effects of the localized American Civil War. In 1863 the lowest spot price of middling was quoted at 70 cents and the highest at $1.60: The export price is given at 55 cents, but there was no cotton for export owing to the blockade.' R. G. Engberg in his study found the size of the American crop to have a high negative correlation with world cotton prices. "If we take percentage by which the New York spot price in December changes from that of the preceding year for each year from 1881 to 1913 and correlate these figures with the amount of cotton ginned in corresponding years, a correlation of —.778 is He concluded that this shows the volume of American production is the major price factor." The impression should not be given, however, that this potential monopoly has been of any advantage to the producers. Such fluctuations in price as have occurred have been due mainly to natural causes affecting pro duction. Cotton growing is a most disorganized indus try, and cotton growers are extremely individualistic. There are no economic and social policies developed to strengthen the grower's position. Many southern writers and orators have noted this fundamental contrast between the potential and the actual situation of the cotton grower. The following quotation from an address of W. B. Thompson, President of the Southern Cotton Asso ciation at its convention in Dallas, Texas, in 1908, is a type of statement that has been uttered so often in the South that it has no meaning: The cotton growers of the South are the greatest wealth producers in the world. The cotton growing industry is po tential to make the South the richest country in the world.
In years gone by, because of helplessness awhile, and be cause of the habit of submission, the South has realized the minimum benefit from its great opportunity, and like a blind and listless Dives [stc] has accepted the crumbs while the body of the feast has been swept away and fed to others. Let the cotton planter realize the possibilities of his advantages and it will follow that every other business interest of the South and every acre of land and every share of stock in business will increase in value.' Every bad year is the occasion, as we shall see, of social unrest and innumerable panaceas for relief. All these are forgotten upon the next good price year, and so the cycle goes. Campaigns for restriction of cotton acreage follow upon the wake of every disaster. Agree ments to cut acreage 10, 15, or 20 per cent are cheer fully made, and in many instances as cheerfully broken. One almost comes to feel that the speculative element in cotton possesses a fatal fascination for the farmer. One good year offers balm for several bad ones. Many intelligent farmers can be found who prefer to risk their crops on outguessing their neighbors in planting and producing cotton rather than join with them in coopera tive determination of cotton acreage. There are other important factors in this connection. The Cotton Belt is too big to be successfully organized. There exist, as will be shown, differential costs of production in favor of the farmers of the new western areas. But the idea remains that one never knows what cotton will bring and one cannot trust one's neighbor. And after all there is a chance to beat the game, for "What do you 'spose cotton'll bring next fall?" The interaction of demand and supply as a causative factor in determining cotton prices is a problem de manding elaborate statistical analysis by the economic technician. It has been carefully presented by Professor H. L. Moore in a monograph on Forecasting the Yield and Price of Cotton.' It is sufficient to say that demand as conceived by the economist is a very elastic thing, absorbing large crops offered at low prices in a surpris ingly short time and measurably reducing the rate of consurription of small crops offered at high prices. New uses for cotton, as in automobile tires, are likely to be discovered at any time. Higher standards of living and new social customs among remote peoples are an un predictable though no less important factor. The in creasing use of silk and the advent of new artificial fabrics like rayon cause a lessening in demand. Owing to the vanishing forests, rayon will have to be made from short lint cotton. In the long run the manufacture of rayon may come to be regarded as the substitution of an expensive technical process for nature's chemistry of soil and sunlight. But increased uses of cotton through out the world await the raising of the standards of living of many peoples. As Honorable Adam M. Byrd of Mis sissippi told his fellow-members of the House, the cotton farmer's way to prosperity depends on his inalienable right "to displace the fig leaf in all the ends of the world by the cotton shirt." 13 It was Ambassador Wu Ting Fang of China who charmingly and hopefully ad monished his hosts, the Southern Textile Manufacturers, that if his countrymen should decide to add another inch to the tails of their shirts it would require the whole cotton crop of the South.