104 CIRCULAR 10 0, U. S. DEPARTMENT OE AGRICULTURE 



During the four years, 1922-1925, when the association was in op- 

 eration, the purchasing power of all United States tobacco averaged 

 25 per cent above that of the 1910-1914 period. For the three classes 

 handled by the association the increase was 26.7 per cent. The pur- 

 chasing power of dark-fired tobacco increased more than those of 

 either flue-cured or sun-cured tobacco. 



During the three years following immediately after the associa- 

 tion ceased to operate, 1926, 1927, and 1928, the purchasing power of 

 all types of United States tobacco showed a slight decrease over that 

 existing during the years of its operation. As compared with the 

 base period figures, flue-cured tobacco showed a slight upward trend 

 in purchasing power Avith an increase of 7 per cent above the pre- 

 war average. Both dark-fired and sun-cured tobaccos showed a sud- 

 den decline at the time of the receivership of the association. From 

 an average of 148.9 for the association period, the average purchas- 

 ing power in the period 1926-27 to 1928-29 dropped to 78.2 per cent 

 of the 1910-11 to 1914^-15 average for dark-fired tobacco. For sun- 

 cured tobacco there was a decline from 114 per cent to 83.7 per cent. 



It would seem, therefore, that if the association were responsible for 

 any increase in tobacco prices, it was for the prices of the dark-fired 

 and sun-cured t} r pes. The flue-cured type has shown a general up- 

 ward trend in prices irrespective of the existence or nonexistence of 

 the association. However, other factors than the existence of the 

 association may have entered to affect the prices which obtained for 

 the different types of tobacco. These factors may have worked in 

 the same direction as the presence of the association did in affecting 

 tobacco prices, or they may have influenced prices in the opposite 

 direction in spite of the presence of the association. 



The task of ascertaining whether the association succeeded in ob- 

 taining better prices for its members' tobacco than were obtained on 

 the auction floors was rendered exceedingly difficult. (1) Only 7 of 

 the 20 pools that operated during the four years had been closed by 

 May 31, 1926, the end of the last financial year just before receivers 

 were appointed for the association. This caused difficulties of ac- 

 counting in prorating the expenses incurred between the tobacco that 

 was sold and the tobacco shown in the inventories of the receivers. 

 (2) The comparison of the average prices obtained for tobacco sold 

 under the cooperative and the auction-floor systems of marketing is 

 unreliable because of the impossibility of determining whether the 

 quality of tobacco sold under these two methods was comparable. The 

 officers in the leaf department of the association claimed, and there is 

 every reason to believe that their claim was founded on facts, that 

 in a large number of instances members delivered their poorer 

 grades of tobacco to the association and sold their better grades at 

 auction. In these circumstances the mere fact that the association 

 obtained lower average prices than were obtained under the auction- 

 floor system of marketing would not necessarily mean that the as- 

 sociation's results were unsatisfactory. On the contrary, a compari- 

 son of prices of association grade with auction grade might have 

 shown favorable results for the association. 



Several attempts were made in this study to arrive at a satisfactory 

 comparison of prices by grades of tobacco and to ascertain whether 

 the tobacco delivered to the association was on the whole of a poorer 

 quality than was the tobacco sold under the auction-floor system. 



