ANALYSIS OF TOBACCO GEO WEES * ASSOCIATION 17 



association became one not of rendering efficient marketing services 

 to its grower members but rather that of monopolistic control of the 

 market and the setting of a price without full consideration of the 

 factors of demand and supply. This attitude was naturally opposed 

 by the tobacco manufacturing companies in spirit if not by overt acts. 

 This attitude and feeling was unfortunate for two reasons : It ob- 

 scured the real purposes and possibilities of cooperative marketing 

 and it aroused the opposition of tobacco dealers and made the prog- 

 ress of the association more difficult. Opposition to the association 

 on the part of these agencies and the part such opposition played in 

 the breakdown of the organization is discussed later. 



THE MARKET-CONTROL IDEA 



There is evidence that the belief in monopoly control had an in- 

 fluence on the sales policies of the management. The sales policies 

 of the association and operating costs are discussed in following 

 sections. There is also evidence that, in its attitude toward economy 

 in operations, the management was influenced by the prevalent be- 

 lief in monopoly control. Arguments for economy are weakened 

 when it is believed that excessive costs may be met by merely adding 

 them to the price of the product. Extravagant management in this 

 and other associations no doubt has been encouraged and justified 

 largely by the idea that the tobacco association's control over price 

 would make such extravagances appear of little significance. 



A tobacco cooperative association can not rely upon monopolizing 

 the marketing of the tobacco crop for any extended period. High 

 prices bring increased production both within and without the asso- 

 ciation. In the case of this tobacco association the prices and condi- 

 tions existing during the time of its operation caused the production 

 of tobacco in Georgia alone to increase from 5,940,000 pounds in 1922 

 to 39,963,000 pounds in 1926. Other large districts are potential 

 tobacco districts, needing only the stimulus of high tobacco prices to 

 cause a shift to tobacco production. Belief and expectation that the 

 Tobacco Growers' Cooperative Association, through a sign-up of 

 over 50 per cent of the crop in its area, would be able to control and 

 dominate the market was doomed to disappointment. The impossi- 

 bility of the success of such a policy should have been obvious; the 

 harmful effect upon the membership was inevitable. 



The purchase and sale of tobacco in comparatively small lots in a 

 large number of independent warehouses under the auction-floor sys- 

 tem is inefficient and expensive and open to a great deal of abuse. 

 The manufacturing companies must employ a far larger force of 

 buyers than would be necessary under a cooperative system, in which 

 the tobacco of a large number of members could be pooled and sold 

 in large lots of uniform grade, or by sample. But the cooperative, 

 in order to convince its membership that its method of handling 

 tobacco is more conducive to their interest than is the method of the 

 open warehouses, must render to them better service at the same cost 

 or the same service at less cost. When members learn that coopera- 

 tive marketing can not hope to control or set prices, their organiza- 

 tion will be operated on a more efficient, economical, and businesslike 

 basis, and failures will be fewer. 



76534—29 2 



