Word: gins
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Dates: during 1950-1959
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Mike Di Salle made his first move last week to control prices at the farm level. He put a ceiling on cotton (previously frozen at the gin level) at 45.76? a Ib. The ceiling, which was the highest price that cotton sold at between Dec. 17 and Jan. 25, was 125% of parity and 40% above pre-Korean market prices. Said Di Salle: "Most people will agree that this is a perfectly fair figure...
Commodity traders did not like the ceiling, either. They had hoped cotton would be uncontrolled until it reached the mill. The cotton futures exchanges, which had closed when gin prices were frozen, were still closed at the beginning of this week. They were not sure whether they could trade under the ceiling regulation. In any case, so long as cotton is short and remains at the ceiling, there is little prospect of trading in futures...
...freeze, the cotton exchanges agreed, was unworkable. It left the price of cotton on the farm uncontrolled, but put ceilings on all cotton after it is shipped to the gin. Since the futures exchanges deal in contracts on ginned cotton, that meant that every trader had to compute his own ceiling (i.e., the highest price paid during the Dec. 19-Jan. 25 period). The exchanges had no way of helping to keep track of those innumerable ceilings, or enforcing them; hence they closed down. With both spot and futures markets closed, the cotton mills could not buy the cotton they...
Freeze Squeeze. Cotton men had one solution: drop the price freeze on all cotton below the mill level. In this, the powerful congressional cotton bloc concurred. Tennessee's Senator Kenneth McKellar led a group of 17 cotton Senators to the White House to demand that gin cotton be freed as well as farm cotton. Their argument was that the freeze would actually force prices up by keeping down production and encouraging merchants to upgrade their cotton to get better prices. Agriculture Secretary Charles F. Brannan, who wants a 60% boost in cotton production this year (from...
Last week DiSalle proposed a new formula. He suggested a freeze of all cotton prices (based on an average gin price of 45-77?) from the farm right up to finished goods, and tossed it to Harry Truman for a decision. Said he: "I am going to fight this thing through." DiSalle had good reason for his stubbornness. Raw cotton would set a pattern for meat, metals and almost every other basic commodity. If raw cotton were freed of all controls, as the cotton men wanted, DiSalle knew that he would have little hope of controlling the other basic commodities...