On the other hand, if thwarted in obtaining the spoils of war and left simply to a fair competition, militarism will be unable to hold its own, and will be driven to the wall, and be compelled to disarm by the great economic forces of commerce and industry, and we can then confidently expect the establishment of general and enduring peace long ere this century is gone.
What would be the effect upon cotton?
If peace is restored and maintained, cotton will start again upon its upward course and in a few years, with such a vast demand as China would create, I am conservative in saying that the price would pass the 20 cent mark, and remain above this mark, no matter how large the crop.
On the other hand, if events are allowed to drift on and a general war comes, cotton would become a drug on the market, even though reduced acreage, calamity and distress would spread over the South. Indeed, with militarism uppermost, wars and rumors of wars would continually disturb the world, nations would be exhausted and lose in their buying capacity, and the myriads of helpless peoples would pass under the military yoke and remain unable to buy clothing. The greatest source of Southern prosperity would be permanently blighted, and a serious blow would be struck at the general prosperity of America, and at the happiness of mankind.
Under these circumstances, when it is a question of 3½ cent cotton or 25 cent cotton, I do not hesitate to say that the solid influence of the South should be felt for having our country act promptly and vigorously, to use every proper means to restore the balance of the world on the side of peace, and to bring about the ending of the present war and the restoration of Manchuria to the commerce of the world.
It only remains for us to refer summarily to the factors of supply. It is practically certain that the South will continue to produce the bulk of the world’s cotton. During the Civil War, when cotton was over $1.00 a pound, persistent efforts were made all over the world to develop cotton growing, but in vain. The Gulf Stream on one side, and a vast continent on the other, produce climatic conditions for cotton culture not duplicated anywhere else in the world. We may expect some increase in the output of Egypt on account of developing irrigation, and possibly a temporary increase in the output of India, and other secondary sources due to the recent high price, but the present depression will tend to check this movement. Therefore, the South may be expected to continue to produce over 80 per cent of the world’s supply so that the question of supply lies in our own hands.
The two factors in determining the supply are the seasons and the acreage. While the general law of the average holds, history shows that the temperate zone is liable to wide fluctuations in seasons, which it is impossible to foresee. The recourse to offset the unhappy consequences of wide fluctuations is a reservoir or fly-wheel, into which the fat years can pour their supplies for making up the deficit of the lean years. The uncertainty of cotton demand, hinging upon war or peace, is now added to the uncertainty of the cotton season. Recourse to storage is therefore absolutely necessary, and a wide system of warehouse storage should be created. I will not endeavor to go into the details of such a system, but venture to suggest that it should be organized on bedrock principles, and operate on the securest lines, so that a warehouse certificate would be absolutely safe and universally negotiable. Lessons could probably be learned from the systems in use in pig iron storage, where the market is also subject to wide fluctuations. The American Pig Iron Storage Warehouse Co. would probably be the best pattern.
The factors of acreage should be carefully investigated before any radical action is taken.
I know it is best for a farmer to have a diversified crop as it is best for a city to have diversified industries, and it is wise for a farmer, like a nation, to produce the necessities required for home consumption. The present fearful depression will doubtless have a partial benefit in this direction, but I fear too much importance is now being given to this question. While I would urge the farmers to diversify their crops, I would hesitate to recommend a sweeping reduction in the world’s production. In fact, as an economic principle, there can be no such thing as over production at this stage of the world’s progress, particularly in the great world’s staples, like those of food and clothing. For generations to come mankind, on the whole, will go hungry and half naked. The true principle is not to try to reduce the product but to provide for a general increasing buying capacity and particularly for the case of the undeveloped peoples of the earth, by increasing their opportunities to work for the world’s market, and to make the wages necessary to purchase the products. If we could only be sure that peace is to prevail, so that the market of China would be restored, and could go on increasing, I would not hesitate to urge against any reduction in acreage. On the contrary, I would urge a steady increase, for no matter how great the increase, the supply would never keep up with the growth of demand. As conditions now stand, however, I believe conservative action is advisable—action that would lean rather toward the side of preparation to store up for future use the surplus, if war should come, than to materially reduce the acreage, and my advice to the individual farmer is to become independent and diversify his crop, and then plant his usual acreage in cotton.
It may be pointed out that one effective way to offset the losses from low-priced cotton is for the South to invest more and more in cotton mills, that benefit from these prices, and the logic of the situation would have cotton growers invest their available capital and saving in cotton manufacture. The true aim of the South should be not only to produce the cotton, but the clothing for the world. And every country in the South should have cotton mill industries organized with local capital and should develop and educate its labor for the high grades as well as coarse.