RISKS OF THE COTTON MARKET 127 



ments of prices, and the speculative nature of cotton 

 growing. 



The effect of fluctuations of cotton prices on the 

 southern community is complex and far-reaching. Within 

 themselves these price movements may be said to con- 

 stitute practically another business cycle for the South. 

 The business cycle is one thing ; the cotton cycle another. 

 Engberg attempted to investigate the price influence of 

 the domestic business cycles on cotton. Using the volume 

 of pig iron production as an index of general business 

 conditions, he correlated these figures with the price of 

 cotton nine months afterward. He found a correlation of 

 -J-.489. 29 Below .50 is not regarded as a high correlation. 

 It will be remembered that the correlation of the size of 

 the domestic crop to price was found to be .778, much 

 more significant. He sums up: "It was found that out 

 of 19 farm products, including butter and cheese, only 

 three hogs, sheep and cotton had fluctuations at all 

 typical of the business cycle." 



The coefficients indicate that only in the case of cotton 

 does the apparent influence of the business cycle approach 

 in magnitude the influence of the volume of production. 

 Often moving in harmony with the national cycles, cotton 

 prices have frequently operated to give the South a 

 period of depression in the midst of the nation's pros- 

 perity. It might be pointed out that while a nation-wide 

 depression would be reflected in reduced takings of cotton 

 mills, a corresponding period of prosperity would not 

 take up the slack in a bumper cotton crop. A like phe- 

 nomenon is found in the Western Wheat Belt. It is the 

 penalty visited upon specialized regions. A good example 



29 Industrial Prosperity and the Farmer, p. 154. 



30 Ibid., p. 86. 



