30 BULLETIN 1392, U. S. DEPARTMENT OF AGRICULTURE 
year, they have eliminated for their members the possibility of loss 
or gain from sales made at the bottom or top of the market. They 
have smoothed out for their members the short-time fluctuations in 
the price curve through these methods, thereby protecting the mem- 
ber to much the same extent that the cotton merchant obtains pro- 
tection by hedging in the futures market. 
5 
=— I 
MERCHANDISING 
ae 
Orderly marketing relates especially to the quantity of cotton 
sold and the time of sale. Merchandising, a term frequently used 
interchangeably with orderly marketing, has a much broader mean- 
| ing. Orderly marketing is, in fact, only one phase of merchandis- 
i ing. Merchandising involves standardization of quality, preparation 
i for marketing, advertising, the carrying of adequate stocks, elimina- 
f tion of waste, equitable distribution based on comprehensive market 
if information, expert salesmanship, and such operations and policies 
|) as are effective in establishing and maintaining trade confidence. 
| It relates to all operations carried on in connection with the dis- 
{|| posal of the product. An effective merchandising policy, in con- 
| nection with the cooperative marketing of cotton, may be defined 
! as a plan of marketing designed to result in maximum returns to 
the producer and a minimum expense to the consumer of raw cot- 
ton, through the use of efficient methods and practices by which 
cotton is made available in the quantity and condition desired and 
at the time and place of greatest demand. 
— es Oe 
. POOLING 
) 
: 
Growers frequently refer to their respective associations as 
| “pools.” This is not an incorrect use of the term in the sense that 
) they have aggregated their interests and property to further a 
| joint undertaking. To obtain the economic benefits of collective 
action they pool their interests by individually and collectively 
transferring to their central association the control of the market- 
ing of their cotton and the distribution of the returns therefrom. 
In order to equalize these returns between members, the associa- 
tion pools the cotton received according to grades and staples, re- 
turning to each individual having cotton of a particular grade and 
| staple his pro rata share of the average price received for the entire 
| lot of which it is a part. 
In general, each association maintains its own pools, apart and 
distinct from like pools of other associations. The exception is the 
arrangement previously described whereby the Arkansas Cotton 
Growers’ Association handles the cotton of several smaller associa- 
tions. All pools are for the cotton season, that is, the pools of 1924 
cotton are effective for the entire 1924-25 season, or until they are 
sold. 
With two exceptions the associations adhere strictly to the prin- 
ciple of handling all cotton on a pooling basis. The exceptions are 
the Arkansas Farmers’ Union Cotton Growers’ Association and the 
Staple Cotton Cooperative Association; the first selling a small 
quantity of “ distress ” cotton for its members; the second provid- 
SESS So SS. 
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