COTTOX PRICES AND MARKETS 
51 
clining prices. Since 1915 the trend of cotton prices is above its 
previous relation to other commodities. 
There is no evidence of a slackening of potential demand. The 
spread of the boll weevil and other causes seem to have put costs of 
production on a higher level, thus forcing a change in price relation- 
ship. Figure 6 shows the relationship between the price of cotton 
and the price of all commodities for the years 1902 to 1922. inclusive. 
Changing business conditions, usually referred to as business cycles, 
cause changes in the price of cotton through their effect on the 
ability and disposition of people to buy. To measure the influence 
of the business cycle on cotton prices it is necessary to separate its 
influence from that of the general price level on one side, and of 
changes in supply on the other. 
THE INDEX OF DECEMBER PRICE OF ALL COMMODITIES 
AND THE DECEMBER RELATIVE PRICE OF 
SPOT COTTON AT NEW ORLEANS 
5-Year Moving Avera&es, 1902-1922 
PERCENT 
220 
190 
160 
130 
100 
70 
- 
1906 -1913= 100 
Cotfor 
- 
- 
• / 
if 
if 
if 
N. 
- 
1/ 
- 
- 
All Com 
modifies — ^ £ 
- 
<r 
^y 
- 
. L 1 — -J L^~~ 
I I l i L- 
^_j — 
1902 1905 
1910 
1915 
1920 
1925 
Fig. 6. — This chart shows the general tendency for cotton prices to follow the prices of 
all other commodities, the changes in relation from year to year having been smoothed 
out by the use of the 5-year average. The effect of the prevalence of the boil weevil 
is also evident in the relatively higher price of cotton in recent years 
Figure 7 shows the relationship between the business cycle and the 
price of cotton. 
The change in price due to changes in supply is essentially an 
annual movement, though it is not exclusively so. Supply in the 
sense used in the following discussion is made up of four items: (1) 
Carryover, (2) production of the current year, (3) prospective 
crop of the coming year, and (4) stocks of manufactured goods. 
Over a long period of time availability and volume of substitutional 
material should be taken into account. Each of these items varies in 
importance from one season of the year to another. 
This discussion begins with winter, because there are fewer com- 
plications on the supply side of the price-making forces. By De- 
cember the size of the current crop becomes fairly certain, and this, 
plus the carryover, makes up the supply of raw cotton for the season. 
The next crop is also a factor on the supply side, but its influence on 
