100 CIRCULAR 10 0, U. S. DEPARTMENT OF AGRICULTURE 



panies in fixing the prices they were prepared to pay. It is thus im- 

 possible to say whether in setting the prices for the tobacco which 

 they purchased on the open-auction warehouse floors during the time 

 the association was in operation, they were influenced by the total 

 supply available, including stocks in association storage warehouses, 

 or merely by the supply immediately available on the auction floors. 

 It would seem reasonable to suppose that they were guided mainly 

 by the total visible supply and that they were prepared to pay some- 

 what higher prices for the stock purchased on the open-auction 

 warehouse floors, with the idea that eventually the tobacco held by 

 the association would be offered to them at prices low enough to offset 

 the higher prices paid at the auction markets. 



It has frequently been asserted that the fact that the association 

 was in existence helped to keep up tobacco prices during the four 

 years 1922-1926 and that the tobacco growers as a whole were bene- 

 fited. This was possibly the case, but the prices were largely due 

 to the fact that only part of the crops produced in those years was 

 sold. Much of the tobacco in storage on June 19, 1926, when the asso- 

 ciation affairs passed into receivership, has been sold at prices lower 

 than the banker's valuations. If the average price is taken for all the 

 tobacco produced in the area in those four years, it is doubtful 

 whether the existence of the association did substantially enhance the 

 total farm value of tobacco. 



The refusal of the Imperial Tobacco Co. and the American Tobacco 

 Co. to trade with the association added to the difficulties (12). The 

 effect of the attitude of these companies and their leaf-buying forces 

 was to delay or hinder payments to the members and to cause many 

 to sell on the outside as a direct result. The refusal of these com- 

 panies to purchase from the association undoubtedly lessened the 

 competition for such tobacco. The position was not improved by 

 the board's decision in 1924 to discontinue sales of green tobacco to 

 leaf dealers. This practically left only two manufacturing com- 

 panies to which the association could sell green tobacco. The Export 

 Leaf Co. did not purchase tobacco in the green state from the asso- 

 ciation. The attempts to establish direct contact with European 

 buyers proved unsuccessful. Most foreign companies that did not 

 have their own buyers on the markets had for years bought their 

 tobacco through some established American leaf dealers, and appar- 

 ently were unwilling to break their connections. 



Table 41 shows the total quantities of tobacco, green and redried, 

 of the 1922, 1923. and 1924 crops purchased from the association by 

 the larger tobacco companies, and the percentages of the total sales 

 taken by each company. Liggett & Myers Tobacco Co. was the larg- 

 est buyer, taking as high as 41.8 per cent of the sales; this company 

 with R. J. Reynolds Tobacco Co. took over half of the sales as given 

 in this table. In absolute quantities the volume taken by these two 

 companies increased for the 1923 crop but decreased to about one- 

 fourth for the 1924 crop up to September 1. 1925. 



The sales of tobacco to ,; all others " decreased from 69.092.008 

 pounds in 1922 to 7,512.615 pounds in 1924 (to February 28, 1925). 

 This decrease was no doubt due chiefly to the association policy of 

 not selling tobacco in the green state to exporters and dealers. This 

 policy was enacted to prevent the resale of association tobacco and 



