32 CIECTJLAK 10 0, IT. S. DEPARTMENT OF AGRICULTURE 



In the tri-State area the auction-floor warehousemen often sell fer- 

 tilizer and supplies to the tobacco growers ; in many cases they take 

 a crop lien on the tobacco crop of the debtor grower. The grower 

 then feels compelled to sell his tobacco at the warehouse of his credi- 

 tor. In many small towns the local supply or time merchant owns or 

 has interests in the retail store, the tobacco warehouse, the fertilizer 

 business, and other enterprises which the growers patronize. These 

 merchants may refuse to advance credit to the grower unless the 

 latter sells his tobacco in accordance with the merchant's wishes. The 

 fact that many tobacco growers had been purchasing for years much 

 of their fertilizer, feed, and other supplies from the local, long- 

 established tobacco auction-floor warehousemen or from supply mer- 

 chants who often were financially interested in independent ware- 

 houses, deterred many from becoming members of the cooperative 

 association or made it very difficult for those who did become mem- 

 bers to avoid selling on the auction floor. 



To sell through the association often meant that the member cut 

 off his former source of credit and became entirely dependent upon 

 his payments from the association to meet his expenses. It meant a 

 sudden change from a six to eight months' credit basis to a cash basis, 

 with the payments for tobacco sales, which were the chief and often 

 sole source of the cash income, small, tardy, and uncertain. Many of 

 the growers were not prepared, especially after two years of low 

 incomes, for this radical change. 



In a statement to the Federal Trade Commission the Tobacco 

 Growers' Cooperative Association said (i£, p. Jfi) : 



Many members of the association were put to a severe test during its first 

 year of operation when they received a first cash advance on their deliveries 

 of approximately 40 per cent as compared with the nonmembers who took all 

 of their money immediately upon the sale of their tobacco on auction floors. 

 This condition caused some contract breaking throughout the entire area where 

 the association received tobacco but especially in eastern North Carolina, where 

 a large proportion of the members were tenant farmers and under obligation 

 to merchants who, in most cases, demanded the quickest method of payment for 

 fertilizers and supplies and thus forced their tenant customers to sell their 

 tobacco for the largest immediate return. 



In regard to the effect of the credit condition of the members upon 

 their loyalty to the association, the Agricultural Investigating Com- 

 mittee 13 reported in 1925 : 



The committee finds that the principal cause of nondelivery of tobacco in 

 the beginning was opposition from interests to whom these members were 

 indebted. In certain sections a large number of growers owed warehousemen, 

 time merchants, and others for the money with which they made the 1922 

 crop. Often the people whom these people owed not only forced them to break 

 their contracts and sell their tobacco on the auction floor but also tried to 

 dissatisfy them with their association. 



Because of the small amount of the advances and the slowness of 

 subsequent payments it was difficult for the landowning member to 

 meet his obligations. It was doubly difficult for the landless mem- 

 ber who had a crop lien against his tobacco crop and whose creditor 

 was demanding immediate payment for the loan of the past year, 

 and was threatening to give no loan (to tide him over to the next 



"A special committee composed of agricultural officials from the States of Virginia, 

 North Carolina, and South Carolina, as well as editors of several farm papers, which was 

 requested by the association to investigate its affairs for evidences of alleged misman- 

 agement. 



