Furthermore, the question of adjusting the supply for the next year, cannot be intelligently settled until after investigation of the probable demand.
Therefore, I invite your attention for a few minutes to the question of demand, and especially to the factor of war, since we are now in the presence of the great struggle in the Orient.
The old sources of demand, Europe and America, have gone on slowly increasing with the increase of population, and the rise of the standard of comfort, though a check was sustained by the outbreak of the Boer War, which saw a falling off of over one million bales in the consumption of the united commodities. This slow increase in demand has been more than balanced by the steady increase in supply, coming chiefly from the larger acreage and larger increase of commercial fertilizers in the South. Consequently, for several decades the price of cotton has had a steady trend downward. It was only when new demands came from new markets that the price started upward. The chief of the new markets are those of the Orient. Japan has made great strides in the cotton mill industry, until at the outbreak of the present war, she was consuming over $50,000,000 worth of cotton annually.
But more important even than Japan, has been the new market of China, which, when the present war came, amounted to $90,000,000 annually, chiefly coarse cotton goods, of which a large part has been furnished by Southern mills.
These two markets have come to consume more cotton than is produced by Alabama and Mississippi combined. It is not surprising, therefore, that in spite of the steadily increasing production, the price has steadily risen. The rise has been especially marked since the Boxer disturbances that were followed by a new impulsion in the opening up of China.
As great as this new market has become, it is only in its infancy.
If China were opened up, free to the commerce of all nations, its four hundred and thirty millions of industrial people, would rise from a five cent wage basis to a 20 cent, 30 cent, or even 40 or 50 cent basis, and the average man, instead of having his present outfit of about a half suit of cotton clothes, would have four or five whole suits, which are pulled on in multiple numbers, according to the coldness of the day. This would so increase the world’s demand for cotton that even with a 20,000,000 bale crop, the price could be hardly kept down to 20 cents per pound.
The picture here disclosed is not visionary. Thousands of Chinese worked under my inspection for months reconstructing gun-boats at Hong Kong. The above estimates of their industrial capacity are conservative. Knowing both peoples, I do not hesitate to say that the industrial capacity of a Chinaman is far greater than that of a Japanese, while there are over ten times as many Chinese as Japanese. Moreover, the facilities for communication are advancing. The eyes of the world have been thrown upon China, and the point of the wedge has been entered. A few decades can see marvelous growth in this young giant of a market. I estimate that before this century is half turned, China, properly opened up, will add more than $5,000,000,000 annually to the world’s commerce, and one of the chief staples of this commerce will be cotton, first the goods, then the raw materials, creating a consumption as great as that of all Europe combined.
But this greatest of all coming cotton markets is the most sensitive and the most exposed. When war broke out in the Orient last year, it was clear that Japan and Russia, under the exhaustion, would decline in buying power, and that the thriving cotton trade of Manchuria would be cut off entirely, while the fate of China might become involved and endanger the whole Chinese market. Consequently, the day after war was declared, cotton slumped 5 cents a pound, and started on its downward path, going off nearly 8 cents a pound before indications came in of the large crop, which brought about a further decline of about 3 cents a pound.
The grievous depression we are passing through must be attributed to the war in the Orient. Without war cotton would now be from 12 to 15 cents per pound, even with the big crop. Think what prosperity this would have meant. Can anyone contend that the United States should be indifferent to this war? It may be pointed out that our diplomatic moves were masterful, both in getting the powers to commit themselves to limiting the war zone, and to preserving the integrity of China, and also in negotiating, by cable, treaties with China, not Russia, opening up Mukden, Dalny and Antung, in Manchuria, thus recognizing Chinese sovereignty, and placing the United States in the same attitude as Japan, in standing for the evacuation of Manchuria. Unfortunately, our diplomatic moves had but little deterrent effect, not being backed by an adequate navy. Had we possessed an adequate navy, I am bold to say that Manchuria would have been evacuated and the war would not have come to disturb the earth and bring the present depression over the Southern people.