The Cotton Glut Cotton has now been dramatically added to
the list of commodities—among them wheat, coffee, tin, rubber, oil—of which the supply hopelessly exceeds the effective demand. That there should be a cotton surplus is no surprise to anyone, but that the estimated crop in the United States should be on such a scale as to send prices down on the Manchester Exchange on Monday by the unprecedented drop of over 20 per cent, in a single day, from just under 41d." a pound to 30., was beyond the brokers' worst fears. The estimate of over fifteen and a half million bales was fully a million and a half above expectations. But that is only half the story. The Federal Farm Board, in its ill-starred effort to stabilize prices, held 9;000,000 bales off the market last year. What that means is that this year's yield and last year's still unsold stocks amount to just double the average annual consumption of American cotton. The broad consequences of the slump for merchants who bought cotton at higher figures and now have to mark all their products down to the level fixed by the new price of cotton are obvious. The disastrous effects of the Farm Board's attempts to peg the price are no less obvious, though that does not mean that under no circumstances should the endeavour ever be made to stabilize from year to year the price of crops dependent on the vagaries of the weather.
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