PRODUCTION" OP AMERICAN" EGYPTIAN" COTTON. 1*7 



COMMUNITY CREDIT FOR FINANCING THE CROP. 



The production of cotton in a new region involves some arrange- 

 ment for financing the crop until it can be sold. The expenses of 

 production up to the time of picking are not much greater than with 

 other farm crops, but ordinarily the pickers must be paid promptly, 

 and the cost of picking, together with the cost of ginning, requires 

 an outlay of funds greater than farmers can ordinarily meet without 

 special credit arrangements. This is particularly true when cotton 

 growing is being undertaken in a new region, because the marketing 

 of the crop takes more time than when the industry is well estab- 

 lished. Under such conditions the crop can rarely be sold as soon as 

 it is ginned. It must be classed and assembled into uniform lots, and 

 must move to market gradually if the best prices are to be obtained. 

 Even in the case of the well-established cotton industry in Egypt the 

 crop moves to the market very gradually, much of it not reaching the 

 manufacturer until the following spring or summer. Meanwhile it 

 must be financed. 



In view of the uncertainties attending the marketing of long-staple 

 cotton from a new locality, brokers are not likely to risk paying what 

 they believe to be the full value of the crop if asked to take it un- 

 classed in round lots, as it comes from the gin. For that matter, 

 even when they have the advantage of a well-established market, 

 farmers would probably benefit by holding their cotton in storage 

 until it can be classed into even-running lots and sold with the least 

 element of risk to the cotton merchant or the spinner. 



The associated growers in the Salt River Valley have met this prob- 

 lem of financing the crop by a plan of community credit. Arrange- 

 ments were made with local banks to secure the necessary funds. 

 Each bale of cotton, as soon as it was ginned, was placed in storage 

 and a receipt was issued against it, these receipts being used as col- 

 lateral for loans through the association. In this way it was possible 

 for the grower to procure money to defray his expenses for picking 

 and ginning without losing possession of his cotton until it was 

 finally sold to the manufacturer. In the absence of such a system 

 of community credit, it probably would have been necessary for the 

 grower to sell his cotton as soon as it was ginned for whatever price 

 he could obtain. 1 



GINNING IN RELATION TO PRODUCTION. 



The roller gin which is used for Egyptian cotton can not be oper- 

 ated as rapidly or as cheaply as the saw gin which is used for Upland 



1 In 1917 many growers in the Salt River Valley executed contracts with a corporation 

 manufacturing automobile tires which undertook the financing of their crops in return 

 for an option on the product. 



