Report Outline
Conflicting Aspects of Cotton Control Program
The United States and the World Cotton Supply
Cotton Exports and the Cotton Export Market
Voluntary and Compulsory Cotton Crop Reduction in the United States
Special Focus
Conflicting Aspects of Cotton Control Program
Drastic Reduction of the cotton acreage harvested in the United States in 1933 and 1934 has accomplished the desired objective of raising prices paid to producers and of bringing under control the large surplus of American cotton overhanging world markets. While the carryover at the beginning of the current cotton year on August 1, 1934, was still twice as great as the average for the ten years 1921–1930. the prospect of a much smaller crop this year than last promised to cut the surplus more nearly to normal levels by next summer. In spite of the large continuing carryover, current prices are approximately double those prevailing in the crop year preceding application of the adjustment program. The higher yield from cotton sold, coupled with the rental and benefit payments on acreage withheld from production, has brought relative prosperity to the Cotton Belt as a whole. In its immediate effect on the domestic situation, therefore, the cotton adjustment program has undeniably proved beneficial.
Risk of Foreign Competition and Position of A. A. A.
Grave doubts have nevertheless arisen as to the effect which it may have in the long run on the position of cotton as the country's leading export commodity, and consequently on the future economic condition of the South. The United States for years produced more than half of the cotton grown throughout the world, customarily exporting over 50 per cent of each year's crop. Restriction of acreage in this country appears already to have had the effect of encouraging expansion on the part of foreign competitors. Production of American cotton in the last crop year fell a shade under 50 per cent of the world total, and the widening disparity between prices of American and competing foreign growths resulted in a reduction of the proportion of American cotton going into world consumption and a corresponding increase in the use of foreign cottons. While production in this country could be quickly expanded to meet a rising demand, the fear has been widely expressed that markets once lost will be difficult to regain.
In a report on the cotton situation in its latest bulletin the National City Bank noted “a plain indication … that the policy of restricting production and raising prices in this country, even though it leaves available a more than ample supply of American cotton, leads to expansion of competitive growths, restricts the consumption of American and so perpetuates the surplus problem. It induces the old countries where cotton is long established to grow it to their full capacity, and if continued long enough it may induce capital expenditures [for irrigation, etc.] which will increase their capacity. It stimulates rapid expansion wherever practicable, as in Brazil, and after cotton growing is well established nothing short of another economic debacle is likely to drive it out again.” |
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