The 1920s, although often viewed as an
era of bathtub gin, flappers and widespread well-being, in fact saw a disproportionate
share of the prosperity held by Wall Street's businessmen and bankers, and the new
industries that produced consumer goods: automobiles, refrigerators, radios and motion
pictures. Farmers did not share in the wealth. Against a background of postwar economic
crisis and bumper crops, agriculture was suffering a prolonged depression. Commodity
prices fell and remained depressed. Nationwide, hundreds of thousands of farmers lost
their farms.
For that reason, the Roaring Twenties were also
a decade when many U.S. agricultural cooperatives were born. Spurred by the Capper-
Volstead Act of 1922, growers banded together to improve their livelihoods. Every
industry, every commodity had its tales of woe and exploitation, and cotton was no
different. Across the U.S. Cotton Belt, which stretched from the Carolinas to California,
growers had finally had enough of the century-old system of middlemen that had controlled
their industry. Three major cotton marketing cooperatives sprang forth - Mississippi's
Staplcotn in 1921 (see related story), Southwestern Irrigated Cotton Growers in Texas in
1926, and California's Calcot, Ltd. in 1928. All remain in operation today.
A look at the way the cotton business operated
before these cooperatives came into being leaves little doubt why they were born.
-Catherine Merlo
A merchant samples a handful of cotton while the bale from which the lint was pulled
is weighed, around 1920.
(Photo courtesy of Calcot, Ltd.)
"As farming for profit replaced or
supplemented production for use in the United States, a host of middlemen arose - more in
fact for the handling of cotton than for almost any other product.
Farmers had no way to protect their own
interests. They were helplessly in the hands of [middlemen and purchasers], and
mercilessly exploited by them through control of the financing and marketing of their
crops.
Through the latter part of the 19th century and
into the 1920s, the cotton marketing system became more and more complex. The gap between
the grower and the ultimate consumer became wider and wider, even though the mills that
spun the region's cotton came to be located in the very Cotton Belt itself. Communication
became lightening fast and transportation was speeded up to an extent undreamed of in
antebellum days. Even though futures market exchanges and an increased knowledge of
spinning values removed from the middlemen a great portion of their risks, the charges
against planters - tariffs, freights, commissions - were rarely lightened. There was
little they could do, individually, when arrayed against the complexity of the established
cotton marketing system.
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Mule-drawn wagons filled with cotton wait their turn at a Mississippi Delta gin in the early 1900s. (Photo courtesy of Staplcotn) |
The farmer did not market his cotton. The
system marketed it for him and left him little discretion, except in the comparatively
rare instances when he was able to pay his debt and hold over a few bales until the
following spring or summer. Crop mortgages came due in the fall, and to meet them, the
farmer had to rush his cotton to the gin, and from there to the holder of the mortgage,
who took it in at the prices current in the local market.
If the producer was allowed by the mortgage
holder to sell the cotton himself, or in the rare instances where his crop was free of
lien, he generally disposed of it to a street buyer in the nearest market town. In many
towns, the street buyers made a practice of never bidding actively against each other.
They took turns at the offerings, and the buyer whose turn it happened to be named a
price. If his bid was rejected, it was unlikely that any other buyer would make a higher
offer.
Whether or not the buyer himself knew the grade
and staple value of the individual bales, offers were not made on the same basis of these
values, but on a price which was the same for all cotton in a load, sometimes for all the
cotton offered in a community on a given day. This practice, known as "hog
round" buying, gave the farmer no premium for better grades and longer staples.
Under this system, the injustices to growers
were appalling. The U.S. Department of Agriculture began investigations of cotton prices
in 1912, and disclosed that it was not unusual for the cotton trade to take a toll of
thirty dollars a bale from the cotton farmer. Prices of middling cotton in the same
market, on the same day, could and did vary an unbelievable amount.
"These variations show a condition that is
unfair to the producer, for it is the farmer, ignorant of the value of his crop, and
knowing least about marketing his product, who as a rule is called upon to submit to such
practices," USDA reported.
In 1918-19, USDA conducted further
investigations and found that only in very rare instances were farmers receiving the true
value of their product.
There were many abuses inherent in the
marketing system, which were costly to farmers and against which, unorganized, they were
powerless to cope. Country damage was prevalent, as adequate warehouses were lacking;
bales were sampled excessively, and since better qualities of lint brought no premium,
farmers made little attempt to raise quality cotton. As a consequence, American cotton
lost much of its prestige in world markets." 
- From "Development and Organization of Cooperative Cotton Marketing Associations," by W.R. McCollough and George Wolf, American Cotton Cooperative Association, New Orleans, 1937. Reprinted in Legacy of A Shared Vision: The History of Calcot, Ltd., 1995.
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