ASSOCIATION 97 



The large tobacco companies had obtained adequate supplies of 

 most grades of tobacco on the open auction warehouse floors at about 

 the same (or somewhat higher) prices that were demanded by the 

 association. These companies were then not willing to take such 

 grades of tobacco from the association unless the price was consid- 

 erably reduced. This placed the association in an embarrassing posi- 

 tion, for when the prices were first set on these grades of tobacco 

 they were not out of line with the prices being paid to nonmembers 

 for similar grades of tobacco. If the association had been forced 

 greatly to reduce its prices for such tobacco the average price would 

 have been seriously lowered. 46 This would have aggravated the dis- 

 content already existing among members. Rather than make con- 

 siderable reductions, the tobacco was kept in the hope that conditions 

 would improve. As a matter of fact, instead of improving, condi- 

 tions gradually became worse. The volume of such tobacco in stor- 

 age gradually increased and added to the problems of the association. 



Figure 17 indicates that although receipts of tobacco from mem- 

 bers fell off considerably after 1923, the stocks of leaf tobacco at the 

 end of each succeeding crop year tended to increase. The stocks at 

 the end of the 1925 crop year were almost 8,000,000 pounds less than 

 they were at the end of the previous crop year ; this was due largely 

 to the fact that deliveries had decreased by over 20,000,000 pounds. 

 Increase in stocks from 1923 to 1926 was due to a relative decrease 

 in the annual sales. Table 55 in the appendix and Figure 18 show 

 that not only did the sales fall off every year after 1923, but the 

 percentage of sales to receipts plus stocks fell off every year after 

 1922. This was probably due to an accumulation of these grades of 

 tobacco which were increasingly difficult to sell. It appears to bear 

 out the contention of the sales committee that many members during 

 the last few years delivered only their lower grades of tobacco to 

 the association and sold their better grades on the open auction ware- 

 house floors. It was almost impossible to dispose of much of the 

 dark-fired tobacco and many of the lower grades of flue-cured to- 

 bacco at the reserve prices the association had placed on such 

 tobacco. 



It is possible that the handling of dark-fired tobacco increased 

 the difficulties and the expense of operating the association. The 

 demand for dark-fired tobacco had been decreasing steadily for 

 years and an increasing proportion of the stocks of tobacco held by 

 the association at the end of each year consisted of this type. This 

 undoubtedly increased the expense of selling, as the sales staff of 

 the dark-leaf department had to make greater efforts to dispose of 

 this low-value tobacco. It also increased the carrying expenses and 

 the expenses of handling the flue-cured pools as the overhead ex- 

 penses were prorated partly on a value basis. It now appears that it 

 would have been better to organize separate sales pools to handle 

 the different types of tobacco instead of burdening the more valuable 

 types of tobacco with part of the expense of handling types for 

 which there was a relatively small demand. 



Table 40 shows the relative difficulty of selling the tobacco of the 

 different pools. The dark-fired tobacco sold least well, 30.28 per cent 



40 Farmers are more interested in the average price they obtain for their tobacco than 

 in the prices they obtain for any particular grade. 



76534—29 7 



