Painful Point

The New Orleans Cotton Exchange last week issued its annual report which concluded: "It is an inescapable conclusion that governmental policies, attempting to hold cotton prices above the world's ideas of values, are the principal and constantly accelerating cause of decreased consumption of the American staple."

Not a word of this would Secretary of Agriculture Wallace publicly admit. Nevertheless decreased consumption sharpened to a painful point the first estimate of the U. S. cotton crop for 1935 given out the following day by Secretary Wallace's department. Forecast was a production of 11,800,000 bales. That estimate was well under the big crops of the late 1920's, but it was 2,100,000 bales larger than last year. With world consumption of U. S. cotton down to 12,250,000 bales, the chance of getting rid of any worthwhile portion of the 8,700,000 bale surplus this year was reduced to practically zero.

Secretary Wallace put on a bold front. The U. S. surplus not only keeps the price of cotton down but also endangers a $270,000,000 investment which the U. S. Government has in cotton. To peg cotton's price last year Secretary Wallace offered to lend producers 12-c- per lb. on cotton. When cotton began selling be, low 12-c- per lb. the Government had to take everybody's cotton. It has already taken 4,500,000 bales.

Very dearly would Secretary Wallace like to get out of holding this profitless bag, stop making any more 12-c- loans. But with the price of cotton threatened by a crop that is huge by 1935 standards of consumption, it was last week becoming politically more & more difficult for him to refuse to make another price-pegging loan offer. In effect, he was in that unfortunate position in which Herbert Hoover's Farm Board found itself when that luckless agency tried valiantly but vainly to peg the price of wheat.

Therefore Secretary Wallace did what the defunct Farm Board did: He announced he would not sell his 4,500,000 bale holdings until the price went up again, to 13-c- per lb. On the question of lending on the 1935 crop he was not yet willing to commit himself. Last week he hedged bravely:

"The Administration sees no cause for anxiety in the present crop estimate. If, when the new crop began to move in volume, there appeared to be a tendency for prices to be depressed, the Administration would not hesitate to offer ample loans that would immediately absorb excess supplies."

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