The foregoing history of cotton prices indicates that cotton growing is a more or less haphazard game of see-saw between production on one , hand and demand as represented by prices on the other. A generalized type description of their interaction would run some what as follows: Good prices the first year stimulate larger plantings the next year. The second year the increased acreage sends prices down. These low prices discourage overproduction the third year. Comparatively low acreages plus increasing demands, and new uses for cotton cause good prices and the cycle is complete. "The cotton cycle," writes R. G. Engberg, "is normally two years in length. A large crop is usually accompanied by a relatively low price. This tends to reduce the acre age so much the next year that unless there is an ab normally large yield the total crop also is materially reduced. The price therefore rises again and the cycle is complete." " Add to this cycle the complex, unpre dictable factors of weather and weevil and one under stands why the cotton farmer is said to hold a ticket in the world's chief lottery.
Bradford B. Smith writing in the Journal of the American Statistical Society states the economic theory involved: The producers of agricultural commodities will, when taken in the mass, plant that product which they believe will yield them the largest net returns or profits. One of the chief fac tors influencing the net returns is the selling price of the selected crop relative to the possible crops. Thus if the pro ducer is of the opinion that there will be a relatively high price for his cotton crop, that is relatively higher than corn, for example, he will desire to plant cotton rather than other crops; and the greater the relative price the more [cotton] he would wish to have planted." Hubbard writing from the viewpoint of the cotton trade comments : There is an agitation each year based on the one crop theory, but the trade pay little or no attention to editorials and speeches on the subject, for they know from past experi ence that it is the price of cotton, the price of supplies, the supply of labor, and other economic facts, which in the end determine the acreage. The southern farmer and merchant know this, also, but they enjoy the annual discussion which they feel develops the facts.' This psychological theory of the cotton producer as "economic man" choosing and rejecting among elements of production may be true in the main. It neglects, how ever, important social and racial factors and lumps all the human factors in cotton production together in one generalization. The cotton cropper, the permanent ten ant, the farm owner-operator, and the landlord vary essentially in their reactions toward cotton prices as F. W. Gist points out.' The cropper, owning nothing but his labor, is bound to his landlord, and both are wedded to cotton. "The landlord is not interested in
making money in cotton, but in getting his rents in cotton. Cotton means cash ; the cropper can neither steal it nor feed to stock. The cropper is interested simply in paying his rent and his store bill so that he can eat again next year. It is estimated that this group, Negro and white, produce 25 per cent of the cotton grown. This group is never interested in economic production, or in preventing overproduction except when the price of cotton is too low to cover rent or pay store bills."' A step above the cropper, the share renter is estimated to grow about 40 per cent of the cotton crop. He may vary his acreage more than does the cropper, but both southern croppers and share renters, aided and abetted by their landlords and supply merchants, tend to grow cotton without regard to the price. They do not conform to the theory of the "economic man." The farm owner-operators in the cotton states are estimated to grow about 35 per cent of the cotton crop. They grow food and possess a cash income beside that from cotton. It is they who restrict acreage when prices are low and chase high prices with increased acreage.
If owners are forced to the need of credit they can secure it by giving a crop lien on cottoa. The variable human factor then in the production of cotton, the one economic man, is this owner-operator. He is able to speculate with the cotton market by varying his acreage, and it is his reductions that help to vary production. Working on the problem of the relation between the prices of agri cultural commodities and the acreage devoted to that crop the next year, R. G. Engberg of the Institute of Economics found that the highest relation existed for cotton. A correlation of +.62 with a probable error of .08 was found to obtain between the price of cotton and the acreage planted to the crop the next year. The only other significant correlation found, +.42, was for flax.' As a matter of fact, the reductions of acreage do not fully account for the price fluctuations. When the cotton farmer reduces acreage, nature decreases the production in a larger ratio and the price of cotton is correspond ingly increased in greater proportion. That this tendency exists is shown in the analysis of the following table com piled and commented on by Carl Geller.' A glance at the table brings out the following facts : Since 1890 there have been nine low-priced bumper crops followed by nine attempts to cut acreage. The highest reduction in acreage was 17 per cent, the lowest 3, and the average 11. The corresponding reduction in size of crop ranged from 13 to as high as 40 per cent, with the average at 25.2. The resulting increases in price ranged from 8 per cent (owing to an excessively large surplus in 1921), to 64 per cent, with the average at 33 per cent.