95 



that it was not possible to obtain these reserve prices for all grades 

 nor was it possible to increase such price from time to time to include 

 accumulated carrying charges. The association was forced to sell 

 a great deal of tobacco at considerably less than the reserve prices. 

 It was also found that there was little or no demand for certain 

 grades of tobacco (usually the smoking grades) and that the prices 

 placed by the association on such grades were much too high. 



In many instances the association failed to get as high a price for 

 redried tobacco as it did for green tobacco of like grade, even before 

 the redrying and carrying charges were deducted. 45 The difference 

 between the results of the sales of green and redried tobacco be- 

 comes even more apparent when such charges are deducted. In the 

 majority of instances the net price per grade of redried tobacco 

 (that is the redried prices less redrying and carrying charges) is 

 below, sometimes considerably below, the prices obtained for a com- 

 parable grade of green tobacco. Much of the tobacco that passed 

 into the hands of the receivers was sold for lower prices than were 

 obtained for similar grades by the association, and thus reduced 

 still further the average net prices for redried tobacco. 



If the results of sales of green and redried tobacco for the 1922 

 and 1923 crops had been analyzed in this manner by the association 

 it would have been apparent that the redrying of tobacco was not a 

 profitable undertaking and that it was advisable to sell as much 

 tobacco in the green state as possible. There is no means of ascer- 

 taining whether this policy would have affected the price of green 

 tobacco; the prices of green tobacco might have been reduced but 

 probably not any considerable extent. The Federal Trade Com- 

 mission maintained that many leaf dealers were prepared to pur- 

 chase green tobacco from the association during the years 1924 and 

 1925 at the prices demanded by the association (12, p. 76-77) . Un- 

 der these circumstances the association's policy to discontinue sales 

 of green tobacco to leaf dealers in 1924 was most unfortunate. 



The accusation has often been made that the policy of refraining 

 from selling green tobacco of the 1924 crop to exporters and leaf 

 dealers was not to promote the interest of the assocation, but to 

 enable some of its officers to redry a large quantity and to profit 

 thereby. There appears to be a general opinion among the associa- 

 tion members that this was true. The Federal Trade Commission 

 stated (12, p. 9) : 



The policy of excluding exporters and dealers as purchasers of green tobacco 

 resulting in larger shipments to redrying plants manifestly benefited a number 

 of the cooperative's officials, including the majority of its sales staff and sev- 

 eral directors through their financial interests in redrying plants. 



Whatever the facts may be, it is regrettable that the interest in 

 redrying plants of certain influential officers of the association may 

 have caused them to be somewhat less diligent in marketing the 

 tobacco in the green state. 



It might have been advisable, if it had been possible, to sell some 

 of the lower grades of green tobacco at auction. This would have 

 tended to reduce the prices received by nonmembers for such grades, 



45 In Tables 56 to 60 in the appendix is presented a list of the prices by grade obtained 

 by the association for green and redried tobacco in the eastern Carolina and South 

 Carolina pools for the 1923 and 1924 crops, and the old-belt pool for the 1924 crop. 



