This no doubts helps to account for the larger amount of capital in the Western grain States. By way of suggesting the relative importance of grain to other interests the following table has been compiled, showing the relation between grain and other commodities moved on three representative Western railroads: These figures are from the last annual reports. About 90 per cent of the coal hauled on the Rock Island and Atchison roads was soft coal-a Western product. The Atchison figures are for the Atchison, Topeka and Santa Fe proper, which runs largely through a grain country, and not for the "system." It has been suggested that the movement of crops now imposes a smaller task upon capital than formerly, largely because there is more capital, but partly because of improved facilities. One improvement is in transportation facilities. While the railroad mileage in the chief grain States has not been increased to any important extent in the last 7 years, the efficacy of the roads has been increased, so that 1 mile of road will do more work than 7 or 8 years ago. This has come about through heavier construction, more powerful locomotives, heavier average train loads, fuller equipment, etc. There has been a like improvement in water transportation. Grain can now be moved more rapidly than formerly, if necessary. This of course decreases the demand upon capital. The amount of capital necessary for transportation charges is much less than formerly. On that point the following table prepared by the Department of Agriculture is as good evidence as any: The east-bound movement of wheat from Chicago and the freight-rate charges between Chicago and New York for the years 1870 to 1898, inclusive. 1 Rates from 1870 to 1879, inclusive, reduced from currency to their equivalents in gold. The east-bound movement of wheat from Chicago and the freight-rate charges between Chicago and New York for the years 1870 to 1898, inclusive-Continued. It may be added that in the matter of the movement of currency between Chicago and the country, while exact statistics are not available for any extended period, enough information is at hand to demonstrate that, as in other effects of the crop movement upon monetary affairs, no rule can be laid down, and the other factors in the situation often overcome the influence of the crop movement. For example, the heaviest shipments of currency to the country in any month for at least more than 2 years occurred in September, 1899, when the amount of currency sent to the country from Chicago may be roughly estimated at $15,000,000 to $20,000,000. This may be attributed to the crop movement. But in September, 1898, when Western receipts of wheat were about the same as in 1899, currency shipments were light, probably not over 50 per cent as heavy as in 1899. Again shipments of currency to the country in February and March this year, when the crop movement is supposed to be about over, were about the same as in October and November last. PART THIRD. COTTON IN COMMERCIAL DISTRIBUTION. INTRODUCTION-THE COMMERCIAL POSITION OF COTTON PRODUCTION. I. ECONOMIC ANALYSIS OF THE PRODUCTIVE SYSTEM 1. Land as a factor in cotton production 2. The productive efficiency of labor 3. The scarcity of farm capital.... 4. Managing ability in making and marketing crops. II. ORGANIZATION OF THE DISTRIBUTIVE SYSTEM 1. The concentration of the crop at interior towns.. III. THE OPERATION OF DISTRIBUTIVE INTERESTS 1. Relation of the world market to the farm market 2. The railway movement to seaports and interior gateways 5. Cost of export transportation... 6. Competition among Southern seaports. IV. THE EXPENSES OF DISTRIBUTING THE COTTON CROP 1. Approximate cost of reaching the consumer. 2. Relation of farm prices to freight charges. 3. Expenses of marketing cotton through Northern gateways 4. Expenses of marketing cotton through seaports 5. Expenses of shipping cotton to Japan 6. What makes the price of cotton?. Page. 143 144 144 145 146 149 150 150 151 154 164 166 166 168 171 173 175 176 177 177 179 180 182 186 188 INTRODUCTION-THE COMMERCIAL POSITION OF COTTON PRODUCTION. In none of our staple crops has there been so great a fall of prices as in that of cotton, from 1872 down to 1894, when a figure not far from the bottom level was reached. General commodities, according to Sir Guilford Molesworth, fell during this period of 22 years fully half their value. Wheat prices fell still more and cotton most of all. The following figures show the relative decline in prices of general commodities and wheat and cotton from 1872 to 1894:1 During the early part of the period the Southern States were passing through a most trying ordeal of political reconstruction, but the political was in no way to be compared with the economic reconstruction that the phenomenal fall in the price of cotton imposed upon their agriculture. In fact, the process resulting from the pressure of lowering prices of cotton was destructive rather than reconstructive in its effects upon capital and labor employed upon land. The level of prices, it will be noticed by the diagram following, declined more rapidly than the rate of production increased, so that generally speaking the larger the crop the greater the catastrophe to the producer in lower rewards for his labor and in higher rates of interest for all capital of which he could get the use. Another feature of cotton prices has affected the general situation of the producer. They are subject to such fluctuations as to make production itself much more of a speculative venture than is the case with grain growing, stock raising, or almost any other form of farming. The table of closing quotations on middling upland for a series of years illustrates the speculative character of the market prices of cotton regarded as a basis for investment on the part of the producer and all directly involved, whether they be laborers, landlord, tenant, merhants, or bankers. 1 Royal Commission on British Agriculture, Final Report, 1897, p. 194. 130 If a given outlay of economic resources yields 8-cent cotton one year and 5-cent cotton the next, under existing conditions of cotton production the producer pays the risk. His borrowings at high rates of loan from bank and his buyings from the merchant show, by the premiums and prices paid, that neither of these is disposed to bear the brunt of price caprices. From this standpoint we wish to make some analysis of the thoroughly unsatisfactory situation of the producer while dependent primarily on the caprices of a foreign speculative market, and then to point out more clearly the influence of the rise of a near-by factory market upon the economic position of the producer of cotton. I.-ECONOMIC ANALYSIS OF THE PRODUCTIVE SYSTEM. 1. LAND AS A FACTOR IN COTTON PRODUCTION. The general cotton situation, from the standpoint of the world's market, may be briefly described as follows: The world's annual supply is approximately 14,000,000 bales. Of this amount the United States produces 80 per cent. The 14 other producing countries yield the balance. The United States is therefore substantially master of the productive situation as far as raw cotton is concerned. Her only prospect of rivalry comes from four countries-India, Russia, Egypt, and Brazil. At present, however, these countries together yield only a small but growing proportion. We send 68 per cent of our raw cotton to foreign consumers. This relation of the United States to the cotton market is the first fact of primary importance. The second fact is the continually downward trend of prices excepting this year-to producers. Two commercial effects have followed from this-it has affected the internal organization of our productive system by bringing into cultivation the more favored tracts of land where production is carried on at a minimum of expense. This has increased the world's demand for our cotton for consumption. The half of our cotton is now made beyond the Mississippi River. The second effect of low prices has been the expansion of area under cotton cultivation by the use of fertilizers in the older eastern cotton territory. Both of these effects have also contributed generally to an average increase in yield per acre; but the general effect of low prices for the product upon foreign acreage has been to discourage expansion in some cases and to suspend cultivation to a great extent in others. The net result of falling prices upon the internal constitution of our cotton-producing system has been to prepare it more fully than ever for competition with the rest of the world in the open market. But there are certain elements of economic weakness in the present constitution of this productive system, which will militate against the continued supremacy of the United States as long as they are allowed to remain. A critical analysis of the condition of production is thus necessary to show the bearing of production upon distribution. In cotton production, as in any other species of industrial enterprise, four economic factors are always required: Land, labor, capital, and managing ability. In the proportion in which each of these factors enter, each division of agricultural industry has its own peculiar constitution. The progress of each species depends on maintaining the right proportions of every factor in the farm economy. In stock raising, cotton growing, in cereal culture, and in dairying, a diversified farming, each of these factors plays a different rôle. In all of them, however, land is the basis. Private property in land lies at the bottom of prosperous agriculture. So far as land is a factor in production of cotton, we have no hesitation to say that the general disposition to increased ownership in land beyond capacity to cultivate it had been one of the greatest drawbacks upon this industry. In the first place, the rule has been to sink too great a proportion of the total capital investment in land, leaving too small a proportion of capital free for developments and improvement in the state of cultivation for fertilizers, drainage, and care of the crop. The planter or farmer who is "landpoor" is not in position to command sufficient labor or capital to do justice to the portion under cultivation, to say nothing of the portion not under cultivation, in which his working capital is locked up and earning nothing whatever. The bearing of this factor upon the market is simply this-that it has prevented the owner and cultivator alike from adapting the system to external changes; it has kept him in a groove, and left him no margin for experimentation as to the more advantageous direction of capital and labor on his land. The result has been that in 2 years enough cotton has been produced to suffice for 3 years' consumption. The undue proportion of capital sunk in useless land has therefore contributed largely to the inability of producers to do anything else but go on; and, going on, has, under falling prices, ineant bankruptcy to altogether too many for the general prosperity. The entire system of production has been weakened by this feature of its economic constitution. In the production of the cotton crop the system of land tenure is peculiar. Two types of tenure prevail under three different forms: That of cultivation by owners, that of lease to small tenantry, and that of the large estate, operated under a system of superintendence. Of these three systems, the experience of the Western nations seems to set its seal of approval upon the first, cultivation by owner, as the one whose economic constitution is calculated to yield the best results in the long run. Of this system the cotton belt has seen least in the older States and most in the newer ones, but it is still the least developed system of tenure of the three. In this form of tenure the factors of land, labor, capital, and management are combined in the same person-the proprietor and producer. The responsibility for the right use of the three agents of production centers in a single authority. There is no division of interests in organization. Under common control adjustment to change is free, and new departures are comparatively easy to enter upon. This form of tenure has in it a far greater degree of adaptability of farm policy to changes in the market, and therefore has a more commanding influence upon the course of prices. Sixty-nine per cent of the farms in the pine-level portion of the cotton belt are occupied and worked by their owners. The average of acres to the work animal is 37, as against 22 for the whole cotton belt. The product per work animal is 3 bales, while for the rest of the cotton belt, where other forms of tenure prevail, it is 2 bales. (The Cotton Plant, p. 227.) 2. THE PRODUCTIVE EFFICIENCY OF FARM LABOR. The low efficiency of negro labor is one of the causes which puts the cotton crop at a disadvantage in the market. His is, however, no longer the only supply of labor available. His efficiency is much higher in other lines of enterprise than in cotton growing. In the manufacture of tobacco, in trades, in transportation, and in fruit growing his efficiency is of a much better order. The cause of this difference is to be sought in the fact that in the system of cultivation generally in vogue the negro laborer has all the economic drawbacks that help to make labor inefficient. He is poorly fed, poorly housed, poorly paid, economically dependent, and well-nigh hopeless in his outlook upon the future for himself and his fainily. Naturally it is inevitable that an industry, dependent upon such labor, must suffer in the quality of the product; naturally, too, it would lay emphasis upon greater quantity rather than on superior quality of product. In the latter case wastefulness is 1 Industrial Commission, testimony of J. H. Hale, Agricultural Labor, pp. 376-37 |