PRIMARY MARKET PRICES AND QUALITIES OP COTTON. 5 



made, as prices show clearly that there is a relationship between the 

 States in these two sections. The western belt is almost uniformly 

 lower in price than the eastern belt, while between Texas and Okla- 

 homa, it is shown that the values are relatively the same. The 

 factors that cause this difference in prices in the two sections are 

 explained in part, as follows : 



From these investigations, it appears that in the eastern belt the 

 higher prices may be accounted for in three ways : First, and probably 

 the most important cause, is proximity to cotton mills. Certain 

 mills find it advantageous to control producing sections in their 

 vicinity in so far as possible, thereby reducing competition. It is 

 thus possible for them to pay higher prices because of low freight 

 rates, as they see just what they are buying, and because they reduce 

 the risk of loss in weight claims, delays, and the many other hazards 

 incidental to buying from a distance. A second factor is probably 

 the absence of most of the middlemen. A portion of the cotton pur- 

 chased in the eastern belt, especially in the Carolinas, passes directly 

 from the primary purchaser to the mill buyer, which enables the pro- 

 ducer and consumer to secure profits that ordinarily are obtained 

 by the intermediaries. A third probable reason is that in the eastern 

 belt primary marketing conditions are superior, storage houses are 

 more generally available, money rates are comparatively lower, and 

 competition probably exists to a greater degree, than in the west. 

 Then, too, the marketing of the cotton is in the hands of farmers 

 who, through generations of training, know the approximate value 

 of their crop, and, as a result, command a fair price for their product. 

 If the price offered does not satisfy them they usually can store in a 

 warehouse and, with the certificate issued, negotiate a loan, at a 

 reasonable rate of interest, for such amounts as may be necessary to 

 finance their business. 



The results of this survey also show that in the western belt 

 different conditions exist in the different primary markets. New 

 sections have been developed and the virgin soil needs little f ertilizer, 

 which enables the farmer to produce cotton at a low cost except for 

 his own labor. Low cost of production permits the underselling of 

 the eastern sections where fertilizers add materially to the expense 

 of raising cotton. It is a long haul to the mills, warehouses are very 

 few, and banking rates as a rule are higher than in the eastern sec- 

 tions. Lack of proper facilities for housing and borrowing on the 

 crop induce the farmer to market his crop as rapidly as it is gathered, 

 for with no warehouse available it must be left exposed to the weather, 

 and his experience has shown him that this is usually done at a heavy 

 loss. Then, too, a portion of the crop is raised under the hen system, 

 and the merchant or banker is rarely willing that the farmer should 

 keep the cotton on the farm, as it is not safeguarded, is subject to 



