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(4) Many entirely new uses were being discovered for cotton, of which two only need be mentioned on account of the enor- mous importance they acquired during the war, namely aero- plane cloth and motor-car tire fabric. At the same time the possibilities of cotton in entirely new forms of fabric were being worked out, e.g. in the hosiery trade, where their first use in cheap cotton hose has led to the evolution of entirely new classes of knitted garments and now even knitted piece goods, which is perhaps the most promising future development of all.

Table B shows the three chief crops, namely American, Indian, and Egyptian:

wages; and second, the annual loss of an increasing percentage of the crop owing to the steady progress of the boll weevil eastward and northward throughout the belt, thus reducing the average yield per acre.

The position before the World War therefore was that the cotton world was faced with a striking application of the eco- nomic law of diminishing return. The greater the quantity of raw cotton they demanded from the world's producers, the higher its cost of production was going, with the result that the price was on the whole rising steadily, and more rapidly than the general level of prices as shown by the index numbers.

TABLE B. -Area, Yield and Prices of the World's Chief Crops, 1911-21.

Season

Area

Crop

Yield oer sere

Liverpool prices (pence per Ib.)

Lowest

Highest

Average

American

Acres

Bales (500 Ib.

Bales approx.)

Middling

1911-12

36,045

16,043

45

4-92

7-53

6-09

1912-13

34.283

14,129

41

6-05

7-19

6-76

1913-14

37,089

14,610

39

6-2O

7-96

7-27

1914-15

36,832

15,067

41

4-25

6-50

5-22

1915-16

31-412

12,953

41

5-34

8-74

7-51

1916-17

34-985

12,976

37

8-12

19-45

12-33

1917-18

33,841

11,912

35

16-90

24-97

21-68

1918-19

36,008

11,603

32

15-24

24-77

19-73

1919-20

33-566

12,218

36

17-85

30-51

25-31

1920-21

35-878

13,500

38

6-38

27-10

1921-22

26,519

Indian

Acres

Bales (400 Ib.)

Lb.

Fine M. G. Broach

1911-12

21,615

3,288

62

4-68

6-06

5-3i|

1912-13

22,028

4,610

84

5-44

6-12

5-84!

1913-14

25,020

5,065

81

4-69

6-25

5-561

1914-15

24,595

5,209

85

4-15

5-75

4-90

1915-16

17-746

3,738

84

5-15

8-40

7-19

1916-17

21,745

4,502

83

7-95

18-80

11-83

1917-18

25,188

4,000

64

16-70

22-90

20-81

1918-19

20,497

3,671

72

14-71

25-50

19-01

1919-20

23-353

5.796

99

17-55

25-35

21-70

1920-21

21,016

3,556

68

6-90

20-60

1921-22

Egyptian

Feddans*

Kantars*

Lb.

F. G. F. Brown

1911-12

1,711

7,424

433

8-87

10-50

9-56

1912-13

1,722

7,533

437

9-56

10-15

9-82

1913-14

1.723

7,684

444

8-15

10-45

9-44

1914-15

1,755

6,490

369

6-30

8-30

7-34

1915-16

1,186

4,806

406

7-50

11-90

10-42

1916-17

1,656

5,iii

310

1 1 -60

3I-50

21-56

1917-18

1,677

6,308

375

28- 5 6f

35-50

30-97

1918-19

1,361

4,821

354

26-59f

30-19

27-85

1919-20

1,574

5,572

354

29-5of

99-00

60-34

1920-21

1,828

6,035

330

13-oof

71-00

1921-22

1,286

The figures in italics are estimates. *A feddan is practically an acre, and a kantar 100 Ib. fSakel. JGood Bhownuggar.

From this table it will be seen that the American crop still in 1920 dominated the world's supply, forming about 60% of the whole, so that the fluctuations in the world's total were practi- cally the same as those of the American crop. These latter fluctuations therefore acquired special importance, and a closer study of them revealed the fact that they were not merely accidental, but seemed to follow a certain rule. They presented an almost regular see-saw movement of area, crop and prices which may be summarized as follows: A large American crop tended to produce a lower level of prices; but owing to the rising cost of production in America, and the fact that the price was barely sufficient to remunerate many of the growers, such a fall in price meant a reduction in the acreage planted the following season. This, other things being equal, produced a smaller crop, which meant an inadequate supply and a rise of price again, followed by a return to larger acreage, and so the circle went on. Thus the price of American cotton was constantly fluctuating in a way which was injurious alike to consumers and producers.

The crucial fact of the cotton situation lay in the increasing cost of production in America, which was due to several factors first, the increased cost of everything used by the planter, and especially the rising labour cost of the crop owing to increased

The Effects of the War. The first effect of the war was a tre- mendous slump in the price of cotton, because the expected cessation of demand happened to coincide with the largest American crop on record. All the exchanges were closed and nominal prices fixed. Under these conditions a difficulty very quickly arose with regard to the position of cotton as contraband. In view of its use for munitions as well as for many other semi- military purposes, it should in the interests of the Allies have been placed under embargo at once; but to do so under the then existing market conditions would have produced utter demorali- zation, and probably a serious dispute with America. It was not for about six months that the question was finally settled by a compromise under which a modified embargo was laid upon cotton; but this was converted into a formal declaration of contraband some months later. In the meantime prices had begun to recover, but not sufficiently to prevent the expected serious reduction of acreage throughout the world for the 1915 crops, which were the smallest on record for many years. In 1916 the American and Egyptian acreages were almost back to pre-war figures, but the average yield that year was poor, with the result that the crops were again much below pre-war normal. During 1916 prices rose sharply as the industry began to realize that demand was recovering in an unexpected way, and that the