COMMODITIES: The Cotton Grab

Last June Alabama’s desk-farmer, Senator John H. Bankhead, headed the Congressional bloc that shoved through a law forcing the Government to make every effort to buy cotton, wheat and other farm products at 100% of parity.* Cotton prices had soared over 100% since 1939, but John Bankhead wanted more: specifically, he wanted cotton prices to rise nearly 1¢ more a pound. Because cotton and wheat production have been consistently greater than domestic consumption, the law of supply & demand had long worked against Bankhead’s dream of top prices for these commodities. Futures prices in the open markets were constantly sagging under pressure of grain elevators stuffed with surplus wheat, and the Government warehouses stood glutted with the six million bales of surplus cotton which the Commodity Credit Corp. had taken off the farmers’ hands.

Economics by Law. After his law was signed by President Roosevelt, John Bankhead waited & waited, three long months, for War Food Administrator Marvin Jones to get busy and buy cotton. Marvin Jones showed no enthusiasm—he was having trouble enough buying the avalanche of wheat pouring into midwest markets.

Last week Bankhead could wait no longer. It was Congressional vacation time, and his Southern voters were waiting for some proof of the $50 million gift from the taxpayers. Bankhead turned on the heat; Marvin Jones hastily ordered the Commodity Credit Corp. to start buying cotton at parity, beginning Oct. 2. This was believed to be a temporary policy of expediency, to apply to the 1944 crop only —but the consternation in the trade was the commodity news of the week.

When the Jones announcement was flashed to the commodity exchanges, promptly the textile mills sharply curtailed selling cotton goods for future deliveries. They remembered an almost forgotten joker, a 1938 law which prohibits the CCC from selling more than 300,000 bales of cotton a month in the domestic market. While that law remains on the books, the cotton mills cannot hope to get much more than one-third of their monthly cotton needs from the CCC.

There was another joker. If the mills offer to pay the farmers full parity prices for their cotton, there is no assurance the farmers will sell. The farmers can take out CCC loans up to 95% of parity and hold their cotton off the market. Thus they will take the very good gamble that the parity price a year from now may be moved up even higher, or that the mills will be so desperate for cotton that they will bid prices skyhigh.

Bankhead’s efforts to squeeze the last penny of profit out of wartime cotton prices actually means nothing less than socialization of the cotton growers. For the Government may well become the sole buyer of their crops, the arbiter of price, and the dictator of production. Even the hardest-boiled cotton grabber would admit that under this act and its accompanying policy, free markets and free trading have gone a-glimmering—for as long as the policy lasts.

*Parity is an abstraction (which TIME regularly explains in a footnote) that the Department of Agriculture computes every month on the basis of information it gets from 20,000 reporters: 1) the current prices for every major farm crop; 2) the costs of 174 things the farmer buys—food, clothing, furnishings, seed, feed, machinery, fertilizer. The figures are averaged by states, then nationally, then compared with figures that show what farmers got for their produce and paid out for necessities between Aug. 1, 1909 and July 31, 1914, a period of lush agricultural prosperity. The object of parity: to give farmers the same purchasing power now that they had in that period. The reason: when the New Deal started 10.1933 to try to get prices for farmers, a yardstick of “fairness” was needed and lobbyists picked a favorable yardstick.