G.: And the further consequences?
A.: The planter is absolutely unable to produce a similar crop. It is the old story, when prices are too low the crop will be curtailed.
G.: We have always experienced that low prices are followed by high ones. What other consequences is this collapse in prices likely to have?
A.: All cotton goods fall in the same proportion as the raw material, this means a bad crisis for commerce and industry, and an unprecedented amount of unemployment. Besides, this collossal drop in prices has caused other very peculiar situations.
G.: Of what nature?
A.: It is well known that cotton is rarely bought at a fixed price, but generally, at the "future" price of the day on which the buyer "calls" his cotton, plus or minus the agreed upon difference for the quality bought. Now, several American houses sold low qualities, at 12.50 cents "off". At that time, "futures" were 40 cents, so that the seller calculated to receive about 27.50 cents, to-day, "futures" are 11 cents, so that, if the buyer "calls" his cotton to-day, he receives it for nothing, and can claim 1.50 cents per pound as well.
G.: Impossible! No German law would permit a buyer to demand his goods, without paying a price at all, and be justified in claiming money in addition from the seller.
A.: What decision would the Bremen Cotton Exchange give? Two possibilities are to be taken into account. If the seller has taken a "future" contract as cover, he has no loss, even if he gives the cotton for nothing, and pays 1.50 cents in addition, because the difference in the "futures" indemnifies him. But if he has no "futures", what then? to part with valuable cotton for nothing, and pay good money as well, would exceed the demands of Shylock.
G.: The "Bremen Cotton Exchange" would probably decline to adjudicate, it has the right to refer it to the ordinary law courts.
A.: A hard nut to crack for the law!