For these eight years an average reduction of 11 per cent in acreage has meant an average of 25.2 per cent reduction in the crops, resulting in an average 33 per cent rise in cotton prices. The effect of the reduction of acreage has, by the time it reaches prices, been greatly accelerated. Thus the original variation of 11 per cent has been tripled in the final outcome. Engberg in his calculations reaches the same conclusions, finding the yield more variable than the acreage. "Of the two fac tors, yield and acreage, which make up total production, yield varies the more widely. The coefficient of variability of the percentage changes of yield is 14.60 per cent, and that of acreage 9.03 per cent." 23 What is the explanation of this tendency? The pro duction of a bumper crop is due to large acreage, plus an equally important factor—exceptionally fine weather. There are likely no observable cycles of weather, and there may be no laws of chance applicable, but an ex ceptionally fine season is rarely followed by another so favorable. If the weather holds the weevil in check one year, it is not likely to be so kind next year. Decreased acreage thus meets less favorable weather conditions or increased weevil damage, and the total effect is passed on to raise the price all out of proportion to the original reduction in acreage. Such a tabulation serves to show only too clearly the speculative nature of cotton growing.
It can be said in no facetious spirit that all unwit tingly the program of reduction of the cotton acreage has been too successful. It may be asked what has been the effect of the rises in price after reducing acreage. It has simply made impossible any long-time scheme of stabilizing cotton production in the South. No general plan of diversification, it seems, is able to stand un moved before rising cotton prices. A less sharp cutting down of production, followed by slowly rising prices, would be more conducive to a correct apportioning of the southern farm to cotton.
The contrast between society's interest in adequate supplies and the producer's interest in an adequate re turn on production is nowhere better shown in our com petitive money economy than in the cotton market. The speculative element plus the "transvaluation of all values into money values" has produced that paradox in eco nomics—the larger total price of a smaller crop.
Seven times since 1890 a decrease in production has occurred and five times resulted in an increase in the total money value of the cotton crop. The following table ' is arranged to show the paradox of value: An absolute decrease of 22.9 millions bales has meant an absolute increase of $406,800,000 in the total value of seven crops. A decrease in production of 23.4 per cent is thus shown to bring a total increase in the money value of the crop of 12.9 per cent.' To the southern agricultural interests this paradox of value appears as veritable ruin because of plenty. It rankles in the breast of the cotton grower as an unmer ited punishment for the answer of his industry to the world's demand for more cotton. This view is given typical expression in a statement by the general man ager of the American Cotton Growers' Exchange: For four years there has been a practical famine of cotton and the growers have been urged to increase production by expensive methods of insect control, crop fertilization, and intensive cultivation, with the result that they have succeeded in meeting the world's need with a small surplus or reserve in case of future insufficient cotton yield. The cotton trade
and society apparently have answered the successful effort of the farmer with less dollars for a 15,500,000 to 16,000,000 bale crop than he was paid for approximately 2,000,000 bale smaller crop last year. In the face of this discouragement, with the resulting prices below the cost of production even for the better grades and with terrific losses on the lower grades which cost practically as much to produce, there is nothing for the farmer to do but reduce his acreage and produce only such quantity of cotton as the world appears to desire. Failing in this method of securing profitable prices the cotton farmers like wheat farmers will be compelled to turn to governmental price controlling expediences, even though in the past agricultural leaders of the South have op posed such methods of stabilizing prices at fair levels. It appears that the cotton trade does not desire reasonable re serves as they penalize farmers when they exist.' Although they are often given, neither fluctuations in price per pound nor total values of the crop accurately relate the average producer of cotton to the hazards of the market. An index of the risk of the producer must combine two figures ; viz., the yield of the crop, large or small, multiplied by the average price. This figure may be secured by multiplying the average yield of pounds of lint per cotton acre by the average farm price per pound. The following table from 1909 to 1927 is based on the Department of Agriculture figures?' From 1889 to 1909 the statistics are compiled from Lea's Cotton Book 2s The table reveals some interesting facts as to the income of cotton farmers. Within the last fifty years the income per cotton acre has ranged from $10.78 in 1898 to $60.62 in 1919. In the decade of 1890 the returns per acre reached as high as $15.00 but once. Owing to war conditions, boll weevil, and new uses for cotton, the decade 1916 to 1926 has offered the highest returns per acre since the Civil War decade, the lowest $20.02 being in 1920, year of depression and the mean being around $32.28. During this period the cost of production has also been at its highest. Accepting the estimate com monly made that the average cropper, share tenant, or small owner, cultivating virtually no other crop and working only himself and family, can tend approximately twenty acres of cotton, we can see that within a generation his money income may have varied from $215.60 to $1,212.40 a year. To know the effects on the average pro ducer we should study the varying costs of production and his standards of living. In this chapter, however, we are concerned with the cyclical fluctuations, move .ments of prices, and the speculative nature of cotton growing.