PRIMARY COTTON" MARKET CONDITIONS IN OKLAHOMA. 17 



The differences established by various cotton exchanges are sup- 

 posed to be based upon the supply and demand for the different 

 grades and to be readjusted as the proportion of the different grades 

 in each crop becomes evident. As the spinning value and waste 

 content of grades have never been systematically worked out, there 

 is no accurate information in existence on which a scientific difference 

 sheet can be made. 



If the difference represents what the consumer is willing to pay, 

 these differences should be approximately uniform throughout the 

 country. Because he can not tender them on general contract and 

 may not be able to negotiate a satisfactory sale, the interior agent is 

 probably justified in offering less for low-grade bales than they will 

 bring on the exchanges. For the high grades, however, for which a 

 premium is regularly offered by exchanges, there would seem to be 

 no good reason why he should not offer proportionately as much 

 above middling prices as the exchanges do. The whole question of 

 a fair and logical difference sheet is closely allied to the question of 

 fair and impartial grading, and such a system is never likely to come 

 into existence and be put into general use by any of the forces now 

 controlling the cotton industry. 



Summing up this whole matter of premiums and penalties, we 

 may say that the farmer sells his cotton subject to comparatively 

 little variation in price in consequence of variation in grade, but 

 that he is subjected to a process of averaging to which he is not 

 consciously a party, which is based upon no definite consideration 

 of his rights or interests and which must inevitably be so adjusted 

 as to leave a hidden profit for the buyer. This system of averages is 

 arrived at by rule of thumb, is never reduced to writing, and is 

 subject to no supervision or adjudication. 



Averaging prices on the original purchase of cotton is a vicious 

 practice because it is impossible to equitably distribute its benefits 

 and burdens. On each particular day of the season the man who 

 sells a good bale receives less than he should because his price is 

 averaged down a little to cover the loss which the buyer will sustain 

 on the poor bale of his thriftless and indifferent neighbor. If each 

 farm and each farmer produced good and poor bales in the same pro- 

 portion, a reasonable system of averaging prices for the day would 

 work no particular hardship, although the average price would neces- 

 sarily be low enough to protect the dealer who must resell on accurate 

 grades; but when it is remembered that many individual crops are 

 better throughout the season than others, because of superior seed, 

 better cultivation, prompt picking, and careful handling, it is one of 

 the most vicious injustices of the entire cotton-handling system that 

 an average price should be enforced against these better crops, thus 

 11835°— 13— 3 



