Use of the official cotton standards of the United States

MISSING IMAGE

Material Information

Title:
Use of the official cotton standards of the United States
Physical Description:
Mixed Material
Creator:
Wright, John W
United States -- Bureau of Agricultural Economics
Publisher:
s.n. ( Washington )
Publication Date:

Record Information

Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 28421016
oclc - 63350423
System ID:
AA00017438:00001


This item is only available as the following downloads:


Full Text
!l! oc-^



UNITED STATES DEPARTMENT OF AGRICULTURE
yV Bureau of Agricultural Economics -

S! :I'





USE OF THE OFFICIAL COTTON STANDARDS
OF THE UNITED STATES
(In Sales to Domestic Mills)







By J. W. Wright,
Senior Agricultural Economist
Division of Cotton Marketing






A Preliminary Report







Washington, D. C.
December 1934


Lc:,^ ^ _





























The effectiveness of the official cotton
standards of the United States as an
instrumentality for facilitating the mar-
keting of raw cotton and for reflect-
ing back to growers the quality prefer-
ences of users of cotton is conditioned
materially upon the extent of use of the
standards throughout the marketing sys-
tem. This report covers one phase
of a broader study of the use of the
official standards by various groups in
the cotton industry.













USE OF THE OFFICIAL COTTON STANDARDS OF THE UNITED STATES
(In Sales to Domestic Mills)




By J. W. Wright, Senior Agricultural Economist,
Division of Cotton Marketing I/




CONTENTS
Page
I n t r o d u c t i o n ..................................................... ............................................................ ........... 1
S o u r c e s o f d a t a ..................... ........................................................................................... ...... 2
Marketing channels through which domestic mills procure raw cotton................ 3
Means employed by domestic mills for specifying requirements with
re sp e c t to q u a l i ty .................. ...... .. .. ... ......... ..................... ............ .. ..................... 5
Extent to which official standards meet mill needs............................................ .. 13
Extent to which cotton meets purchase specifications................ ...................... 14
Methods of making adjustments for cotton not conforming to purchase
s p e c i f i c a t i o n s ..................................................................................... ..................... 1 7
Summary and conclusions...................................................................................................... 18

INTRODUCTION

The official standards of the United States for cotton, established
under the provisions of the Cotton Futures Act 2/ and the Cotton Standards
Act, V/ were designed to fill a recognized need for a uniform method of describ-
ing the various elements and combinations of elements of quality in raw cotton.
The record of the hearings held when these Acts were under consideration in
Congress indicates that it was the general opinion of those who had given the
subject careful study that the marketing of American cotton would be facilitated
materially by the adoption of a uniform method for describing quality as the
basis for purchases and sales of raw cotton throughout the entire market

1/ The study upon which this report is based was planned in collaboration with H. C. Slade, Senior Marketing Special-
ist, and R. W. Webb, Senior Cotton Technologist. The field data were collected by E. F. Buffington, Sanior Specialist
in Cotton Classing, W. I. Holt. Senior Specialist in Cotton Classing, J. G. Martin, Senior Specialist in Cotton Class-
ing, and John B. Grimball, Associate Agricultural Economist, supplemented in certain instances by the field staff of
the Grade and Staple Statistics Section. Mr. Grimball assisted also with the preliminary tabulation of the data.
The study was made possible by the cooperation, in supplying data, of 334 domestic cotton mills, the Cotton States
Arbitration Board, and the New England Classification Committee.
2/ Act of August 11, 1916. 39 Stat. L., 476.
3/ Act of March 4, 1923. 42 Stat. L., 1517.










chain from grower to spinner. 4/ The Cotton Standards Act provides that when
any grade or other description of quality is indicated in connection with
transactions or shipments of American raw cotton in commerce, the official cot-
ton standards shall be used: except that actual samples or private types may
be used when not in evasion of or substitition for the official standards.
Apparently this exception was made because of the recognized difficulty in
providing standards for the element of character. But in effect, the exception
makes the use of the official standards permissive rather than mandatory for
many types of transactions in raw cotton.

Subsequent to the establishment of the official standards, cotton
cooperative associations generally, and other types of marketing agencies in
many instances, have adopted the practice of basing their settlements with
growers on these standards. Transactions intermediate between growers and
spinners in most instances involve direct or indirect reference to the official
standards. Indications are, however, that before the official standards can
be fully effective as a basis for purchasing cotton from producers, the manu-
facturers as well as intermediate marketing agencies must also make full use
cf them.

This report deals with a study designed to provide more complete informa-
tion relative to the procedure followed by domestic cotton mills in procuring
raw cotton and to indicate wherein the official standards may be improved and
their use extended as the basis for quality specifications in mill-purchase
transactions. To supply the information desired, provision was made for as-
certaining (1) the marketing channels through which domestic mills procure raw
cotton. (2) the means now employed for specifying mill requirements with res-
pect to quality, (3) the extent to which the official standards in their present
state of development are inadequate in meeting mill requirements as a means for
describing quality from the standpoint of spinning utility, (4) the means em-
ployed by mills that use the official standards for supplementing them in order
to specify more precisely the qualities of cotton desired, (5) the extent to
which receipts of cotton at domestic mills meet purchase specifications under
present methods of describing quality and the means by which adjustments are
made for deficiencies in quality, and (6) the necessity for improvements in the
existing standards and of providing standards for additional factors of quality.


SOURCES OF DATA

Data as to the procedure of mills in purchasing cotton and in describing
cotton quality for the season 1930-31 were secured by personal visits of members
of Boards of Cotton Examiners and others to 334 mills located in the principal

4/ U. S. Congress. House of Representativea. Hearing before the Committee on Agriculture. 63rd Congress, August 10
and 12, 1914.
U. S. Congress.House of Ropresentatives. Hearing before the Committee on Agriculture. 67th Congress. 4th Session,
February 5. 9, and 12, 1923. Series J. J.
U. S Congress. Senate. Hearing before the Committee on Agriculture and Forestry on H. R. 14302. 67th Congress.
4thb Session, February 20 nd 24. 1923.





3

cotton-spinning centers in the cotton-producing States and in the Northeast.
The mills from which data were obtained included approximately 30 percent of
the spinning establishments in operation in the United States during the season
1930-31 and represented approximately 35 percent of the total United States
consumption of cotton during that season. The mills selected for this study
included various sizes of plants and represented the manufacture of a wide
range of cotton products.
ci
A test of the adequacy of the sample of mills for the purpose of this
study was made by comparing the proportions of the various staple lengths of
cotton consumed by the selected mills in 1930-31 with similar tentative figures
indicating the proportions of these staples consumed during the same year by
all cotton mills in the United States. Such adjustments were then made in the
selection of mills as would make the proportions of the several staple lengths
found in the consumption of selected mills approximate the proportions indicated
for all domestic mills. It is believed that the data obtained and here pre-
sented are representative of actual conditions in the domestic textile industry
during the year studied.

In the analysis of the data the results were first tabulated for all
Skills regardless of type of yarn spun or quality of cotton used. Subsequently
the mills were divided into 3 groups based on the staple length of the major
portion of the raw cotton used, to determine to what extent cotton of various
lengths presents different problems to spinners from the standpoint of des-
S cribing the various elements of quality and of securing cotton of the qualities
S desired. One group included mills using cotton shorter than 1 inch in staple
length; another included those mills using staples from 1 inch to 1-3/32 inches
S inclusive; the third group included those mills using cotton of staple lengths
1-1/8 inches and longer.

SData concerning arbitrations for quality between domestic mills and
selling agencies for the four seasons 1929-30, 1930-31, 1931-32, and 1932-33
were abstracted from the records of the trade arbitration boards and were
tabulated to show the extent of the use of the various methods of specifying
quality requirements on cotton submitted for arbitration.


MARKETING CHANNELS THROUGH WHICH DOMESTIC
MILLS PROCURE RAW COTTON

The marketing channels through which manufacturers procure their raw
cotton depends, in each instance, upon the location of the mill with respect to
the locality of growth of the particular quality or qualities of cotton used
and, to some extent, upon the size and financial position of the manufacturing
establishment itself. Many mills located in cotton-producing areas are able to
procure the qualities of cotton required for their purposes by direct purchase
from growers or from local marketing agencies that perform the service of
assembling the cotton into lots of sufficient size to permit of more advantage-
ous purchase by the mill buyers. Mills located in noncotton-producing areas
and mills using cotton of qualities not produced locally usually find it neces-
sary or advantageous to buy through marketing agencies that are equipped to
deliver cotton of the qualities and in the quantities desired. Mills that








Table 1. Percentage distribution of purchases of raw cotton by domestic mills in cotton-
growing States and in other States, by type of selling agency and of purchase
transaction, season 1930-31

1 Mills in cotton- I
All domestic mills growing States Mills in other States
Type of selling Fixed On Total [ Fixed On Total Fixed On Total
agency price call j pur- I price I call J pur- price call pur-
S 1 _____chased I _____chased _______ chased
Percent Percent Percent IPercent Percent IPercent|Percent Percent Percent
I I I I I I I I I
Growers direct 7 7 9 1 9 1
Country merchants I I
and buyers ..... 11! 2 13 14 2 16 -
Shippers direct .. 7 11 18 9 13 22 2 3 5
Shippers through
brokers..... 8 19 27 5 16 21 19 31 50
Cotton merchants.. 5 11 16 5 7 12 4 26 30
Cooperatives
direct... 2 10 12 2 13 15 1 1
Cooperatives 1
through brokers. 2 51 7 1 4 5 1 6 8 14
--- --- --- j -- ---I-- --- ---------


Total...


. 42 58 1 100 1


45 1 55 j 100


31 69 100


Estimates based on data obtained through a survey of domestic cotton mills.


purchase cotton on a hand-to-mouth basis usually procure cotton from cotton
merchants who maintain stocks of cotton of the quality desired that can be
delivered on short notice.

The relative importance of the various types of marketing agencies in
supplying raw cotton to domestic mills in cotton-producing States and in other
States is indicated in table 1. For the season 1930-31 about 7 percent of
all mill purchases were made direct from growers. 13 percent from country
merchants and buyers including ginners, 18 percent from shippers directly,
27 percent from shippers through brokers, 16 percent from cotton merchants, 12
percent from cooperatives directly, and about 7 percent from cooperatives through
brokers. Mills located in cotton-growing States purchased approximately 25
percent of their cotton from local sources including growers, country merchants.
and ginner-buyers. About 43 percent of the raw cotton supplies of mills in
cotton-growing States were purchased from shippers, either direct or through
brokers. Similar agencies supplied mills in noncotton-growing States to the
extent of about 55 percent of their cotton. Cooperatives either directly or
through brokers supplied a relatively larger quantity of cotton to mills in
cotton-growing States than to mills located outside of the Cotton Belt. the
percentages being 20 and 15 for the two areas, respectively. Cotton merchants
were a much more important factor in supplying mills in noncotton-growing






5

States than in cotton-growing States, the percentages of total cotton sup-
plied from this source being 30 percent and 12 percent, respectively, for the
two groups. Likewise purchases were made through brokers to a greater ex-
tent by mills in noncotton-growing States than by mills in cotton-growing
States. Almost 65 percent of all purchases were made through brokers by
mills located outside of the Cotton Belt as compared with about 25 percent
for mills in the South.

Purchases of cotton by manufacturers may be at fixed prices or "on
call." This detail of the purchase transaction usually depends upon whether
the product in which the raw cotton is to be used has been sold for forward
delivery or is being manufactured for stock. If the products have been sold
.: prior to their manufacture, the raw cotton can be purchased at a fixed price
without the manufacturer having to assume the risk of price fluctuations.
On the other hand, if the spinner is manufacturing for stock, he must either
assume this risk or secure a hedge in connection with the purchase of his
raw cotton. Such a hedge is provided by making an "on call" purchase of the
cotton in which the price basis with respect to a futures month is agreed upon,
leaving the actual price to be fixed when the product has been sold. This
procedure relieves the manufacturer of the necessity of executing futures
contracts, placing this responsibility upon the seller of the raw cotton.
Manufacturers usually prefer to have this service performed for them by the
marketing agencies through which their purchases are made.

For the season 1930-31 approximately 42 percent of all purchases of
cotton by domestic mills were made at fixed prices, and about 58 percent were
made "on call" (table 2). Cotton of the longer staples was purchased "on
call" to a greater extent than was short-staple cotton. Similarly, mills
in the noncotton-growing States purchased cotton "on call" to a much greater
extent than did mills located in the South (table 1). But there was con-
siderable variation in the basis of purchases made through different types
of selling agencies. Cotton was purchased "on call" to a greater extent
S when purchased through brokers than when purchased direct.


MEANS EMPLOYED BY DOMESTIC MILLS FOR SPECIFYING
REQUIREMENTS WITH RESPECT TO QUALITY

Means employed by manufacturers for specifying their requirements
with respect to cotton quality have undergone a gradual evolution since the
early development of commercial spinning. During the early period, bales of
cotton were purchased by spinners or their agents either without regard to
quality or by an examination of the bales at the seller's warehouse. 5/ As
methods of packing improved with the extension of the cotton industry and as
greater attention was given to differences in quality, spinners adopted the
practice of making their purchases from samples submitted to them instead of

S5/ Hammond. M. B. The Cotton Industry An Essay in American Economic History. American Economic Association.
December 1897. Page'280.



:: ..:.






6

Table 2 Purchases of raw cotton by domestic mills by staple length and type of
transaction, season 1930-31

Staple length of Type of transaction
cotton purchased I Fixed price _1On call
Percent Percent

Shorter than 1 inch ..... 46 54
1 to 1-3/32 inches. .. 37 63
1-1/8 inches and longer .. ... ... 35 65
All lengths .. ................. .. 42 58

Estimates based on data obtained through a survey of domestic cotton mills.


visiting the warehouse of the seller. 6/ The next step was the adoption of type
samples to designate qualities desired.

The mechanical difficulties involved in maintaining private types to-
gether with the development of more rapid modes of communication and of forward
trading, made necessary the adoption of standards of quality as the basis for
the purchase and sale of raw cotton. In an attempt to meet this need, various
cotton organizations established their own standards. This procedure was not
satisfactory because of the lack of uniformity in the standards established by
the different organizations and because of the absence of any definite policy
with respect to changes in the standards of the various organizations. 7/ The
need for uniform standards and for a definite policy with respect to such stand-
ards was met, so far as American cotton is concerned, by the establishment of
official standards for raw cotton under the provisions of the United States
Cotton Futures and Cotton Standards Acts. The official standards thus es-
tablished have replaced the standards of the various trade organizations.

The establishment of the official standards has not eliminated other
methods of purchasing cotton for quality, as many domestic mills still make
their purchases from actual samples or base them on private types. Types used
may be those maintained by the mill itself or those supplied by shippers, mer-
chants, or cooperatives. Although a mill in making purchases of raw cotton may
designate certain qualities as represented by the official standards or by
private types, the cotton may be approved on actual samples.


Grade

For the season 1930-31 approximately 68 percent of all domestic-mill
purchases of raw cotton were described for grade by reference to the official
standards, 14 percent were based on mill types, 9 percent on the types of mer-
chants, shippers, or cooperatives, and 9 percent on actual samples (table 3).

6/ Ibid. pp. 282. 290.
7/ United States Department of Agriculture. Universal Standards for American Cotton with a Brief History of the
Movement to Secure Universal Cotton Standards, (Mimeographed) pp. 14-23.










Table 3. Percentage distribution of domestic-mill purchases of raw cotton described for
grade and staple length by specified methods, season 1930-31

Means employed for specifying
grade and staple lenKth Grade __Length of staple
Percent Percent

Official standards.... .......... .. ....... 68 48
Mill types ....... ........... ........... .... ... 14 29
S Types of merchants, shippers, and co-
operatives ......... ............ ............ 9 14
Actual samples .. ..... .............. ...... ... .......... .. ....... 9 9

, Total purchases......... ..... ................. 100 100


Estimates based on data obtained through a survey of domestic cotton mills.


Approximately 50 percent of the mills that consume upland cotton of staple
lengths 1-1/8 inches and longer based their purchases, for this type of cotton,
on the tentative standards for preparation. The information assembled in con-
nection with this study indicates that those mills that make use of the prepara-
tion standards have found them the most effective means available for specifying
requirements with respect to neppiness in cotton. In some cases the tentative
standards for preparation of long-staple cotton (1-1/8 inches and longer) were
used for this purpose even when the cotton purchased was of staples shorter
than 1-1/8 inches.

All manufacturers interviewed in connection with this study were re-
quested to express an opinion as to the advisability of establishing separate
standards for preparation for cotton of staples shorter than 1-1/8 inches.
Twelve percent of the manufacturers advocated the establishment of such stand-
ards, 72 percent did not consider them necessary, and 16 percent declined to
express an opinion.

In many instances manufacturers had not had experience with the ten-
tative standards for preparation and not infrequently they did not know of their
existence.

Some of the mills in the Northeast advocated the establishment of sep-
arate grade standards for long-staple cotton.

An analysis of the arbitrations between domestic cotton mills and mar-
keting agencies involving disputes as to quality from the standpoint of grade
, indicates the extent to which the official grade standards were used separately
and in various combinations during the 4-year period, 1929-30 to 1932-33 (table
4). During this period approximately 64 percent of the cotton involved in
S transactions submitted to arbitration for grade was described according to the









Table 4. Proportionate use of various means employed for specifying grade for cotton sub-
mitted by domestic mills for arbitration, seasons 1929-30 to 1932-33


Means employed for
specifying grade


1 1 1 1 14-year
11929-3011930-3111931-32192-331averge I
[PetIPerecentPercent\iPercentIPercent


standards: 1 1 1 1
Straight grades..... .. ... .... [ 71.4 67.8 48.9 51.7
Split grades........ 6.7 1 7.8 6.6 3.2
Tentative preparation standards ...... [ 1.8 3.7 [ 1.2 .3
Straight grades and preparation standards., .8 2.4 10.8 15.6
Split grades and preparation standards.. !. .7 1 5.2 1 6.4 110.2
Total U. S. standards .. ...... 81.4 86.9 [ 73.9 1 81.0
I I i I
;e types .... .. .. ... ..[ 18.0 [ 12.9 26.0 18.5
:e types with official grade standards. .J .6 .2 .1 .3
e types with tentative preparation i
standards.. .. .....- [
standards..... ......... ...... ........ ..I I 1 | .1
e types, grade standards, and preparation I I 1
standards.... ...... .. .. .. .........[ .1

Total................. ...... ................... .... 100.0 i100 .0 100.0 100.0


S63.6
6.3
1.8
5.2
- 4.1
81.0

18.6
.4


100.0


Data compiled from records of trade arbitration boards.
j/ Based on total bales involved during 4-year period.


straight grades 8/ of the official standards. Transactions in which the ques-
tion at issue was preparation only, and in which the cotton was described for
this factor of quality on the tentative standards for preparation of long-
staple cotton, included less than 2 percent of the cotton submitted to arbitra-
tion. Descriptions were made in terms of split grades 92/ for about 6 percent
of the cotton and by means of split grades in combination with the tentative
standards for preparation for about 4 percent. Approximately 5 percent of this
cotton was described for grade by reference to the official grade standards for
the factors of color and leaf, and to the tentative standards for preparation
of long-staple cotton for the factor of preparation.

About 19 percent of the cotton submitted to arbitration for grade was
described in terms of private types. Negligible quantities involved the use of
official grade standards and the tentative standards for preparation in com-
bination with private types.

8/ The term "straight grade" as used herein refers to the composite of the three factors of grade -- color, leaf and
preparation -- as represented by a single grade box of the official standards.
9/ The term "split grade" as used herein refers to a description in which the grade factors are designated separately
by reference to two or more grade boxes of the. official standards.


U. S.








Prival
Prival
Prival

Prival






9

Table 5. Proportionate use of the United States staple standards and private types for
specifying staple length for cotton submitted by domestic mills for arbitration,
seasons 1929-30 to 1932-33

Means employed for specifying I I I 4-year
staple length 11929-30 11930-31 11931-32 11932-33 average 1/
PErzenAtlPercentlPercent|Percent Percent--
I I I I I
U. S. staple standards......... ........... ... ................... 43.5 53.2 47.3 67.7 50.1
Private types.................... ......... ............ .... 56.5 46.8 52.7 32.3 49.9

Total................ .................................. .................. 100.0 10 100.0 1 O. 1100.0 100.0

Data compiled from records of trade arbitration boards.
I/ Based on total bales involved during 4-year period.


Staple


The official standards for staple length were used much less extensively
by domestic mills as a basis for their purchases of cotton than the official
grade standards. Approximately 48 percent of all purchases were based on the
official staple standards, 29 percent on mill types, 14 percent on merchants,
shippers, and cooperative types, and about 9 percent were purchased from
actual samples displayed by merchants or brokers (table 3).

The extent to which cotton submitted to arbitration was described for
staple on the official staple standards and on private types is shown in table
5. The two methods were used to an approximately equal extent as a means of
specifying quality requirements in such instances.

The continued extensive use of private types as a means for describing
requirements with respect to staple was reported by many mills to be due to
the fact that the element of character is not considered to be adequately pro-
vided for in the official standards for staple length. Since character is
generally considered to be a factor in spinning utility, private types, parti-
cularly the mills' own types, were considered by many mills to be the most
satisfactory of the available means for specifying staple length and character
in the absence of official standards for character.

Mill buyers who had given careful thought to this subject, however,
recognized the fact that the use of private types has been the source of con-
siderable misunderstanding and controversy between the mills and the selling
agencies. Such misunderstandings usually involve the identity or representative-
ness of different portions of private types held by various parties. The
official standards, on the contrary, always carry their own identification
marks and are always available. Moreover, the Cotton Standards Act requires
public entice a full year in advance of any change or revision.


I ~.i-






I0

The use of private types, particularly sellers' types, as the
means for describing quality requirements tends to limit a mill's avail-
able source of supply to that of the selling agency whose type is being
used. On the other hand, when quality requirements are specified on
the basis of the official standards, a broader market from which to buy
is made available,


Character

Official standards for character have not been established, but
in the standards for length of staple, provision has been made for in-
cluding only cotton that represents the prevailing conception of normal,
sound character for each staple length. Therefore, mills requiring cotton
that is normal in character, as represented by the official staple
standards, can use these standards effectively. Mills requiring cotton
other than normal in character as represented by the official staple stand-
ards can use these standards as their basing point by specifying, in appro-
priate supplementary descriptive terms, the specific character of cotton
required as compared with that represented in the official standards
for the staple length desired.

Means customarily employed by mills that do not base their speci-
fications with respect to character on the official standards for staple
include the use of (1) private types in connection with which "equal to
type" usually is specified, (2) descriptions as to character of fiber
required in terms of "hard bodied," variety of cotton, and various other
designations, and (3) specification as to locality of growth.

In the majority of cases two or more of the methods are used in
combination. Table 6 indicates the extent to which each was used singly
or in combination during the season 1930-31.

"Equal to type" and other descriptive terms were used to a great-
er extent by mills consuming short-staple cotton than by mills consum-
ing cotton of the longer staples. The reverse was true with respect to
the use of geographic designations, only about 15 percent of the cotton
being described for character in terms of origin for mills using cotton
under 1 inch in staple length, whereas 48 percent of the cotton 1-1/8
inches and longer was described for character by this method.

Approximately 25 percent of all purchases in connection with
which character was specified were described by means of type in combina-
tion with origin, about 35 percent were based on descriptive terms in
combination with origin, and for about 2 percent all three -- "equal to
type," descriptive terms, and geographic designations -- were used in
combination.

For the 4-year period 1929-30 to 1932-33, approximately 87 per-
cent of the cotton involved in transactions submitted for arbitration in






11


Table 6. Proportionate use of various means employed by domestic mills for speci-
fying requirements with respect to character in raw cotton purchases by
staple-length groups, season 1930-31

Mills grouped according to staple length
Manner of specifying requirements All j of major Part of cotton consumed
with respect to character I cotton Shorter than 1 to 1-3/32 11-1/8 inches
______I_______ _____ 11 inch inches__Jandlonr
Percent Percent Percent J Percent
I I I I
Equal to type..................................... ..... 9.1 13.4 4.8 3.4
Descriptive terms .................................. 9.4 15.1 4.0 .9
Geographic designations...................... 19,3 15.1 11.9 4.8
Equal to type and geographic
designations.............................. 25.1 21.6 35.0 17.1
Descriptive terms and geographic
designations.................................. 34.9 32.8 41.0 29.8
Equal to type, descriptive terms,
and geographic designations... 2.2 2.0 3.3 .7


Total................................................ 100.0


100.0


1 100.0 I 100.0


Estimates based on data obtained through a survey of domestic cotton mills.


which character was a question at issue was described for this element
of quality in terms of private types (table 7). Specifications for
character in terms of the official staple standards were used for about
3 percent of the cotton. For a negligible quantity requirements as to
character were based solely on origin. The official staple standards in
combination with origin, and private types in combination with origin,
constituted the means for specifying requirements with respect to char-
acter for approximately 9 percent and 1 percent, respectively, of the
cotton submitted to arbitration for character during the period studied.

Among the objectionable features of specifying character re-
quirements in terms of origin are: (1) The limits of the areas included
under the various geographic designations are not well defined, (2)
cotton grown in a given area is not uniform in quality either through-
out the area for a given year, or in a given locality over a period of
years, and (3) there is at present no satisfactory means of establish-
ing positively the origin of individual bales of cotton. Furthermore,
regional descriptions, in many instances, are disadvantageous to growers
and tend to discourage improvement in the quality produced. If a region
has a reputation for producing cotton of inferior quality, the producers
of good-quality cotton within that region may suffer from the general
prejudice, and efforts to improve conditions are handicapped. On the
other hand, if a locality has a reputation for producing cotton of good
quality not only may cotton of poor quality from that locality bring


----I---I--









Table 7. Proportionate use of various means employed for specifying requirements
with respect to character of cotton submitted by domestic mills for ar-
bitration, seasons 1929-30 to 1932-33

Means employed for 4-year
sp EcfinR character 11929-3011930-31 1931-2 1932-331averge
IPercent IPercent IPercent|Percent| Percent
I I I I I
U. S. staple standards........ ........... .1 3.1 8.6 1.5 1.1 3.8
Private type .. ................. ............ 96.5 72.9 86.5 79.2 86.9
Origin ............ ................ ............. .1 .1 -
U. S. staple standards and origin......... .. .1 16.9 11.3 19.6 8.7
Private types and origin .. .. ............ .3 1.6 .6 .6

Total ........... .......... ..... 100.0 100.0 100.0 100.0 1 100.0

Data compiled from records of trade arbitration boards.
1/ Based on total bales involved during 4-year period.


undeserved premiums, but there is an incentive to capitalize the repu-
tation of the locality by shipping cotton into it from other sections
and then reshipping it to mills that designate that locality of growth
in their purchase specifications. As a matter of principle, therefore,
it is in the interest of growers as well as spinners to describe the
elements of quality in raw cotton on the basis of inherent physical char-
acteristics rather than in terms of locality or region of its growth.

In the absence of standards for character, however, the designa-
tion of origin to supplement the staple standards in most instances
would be relatively effective if a satisfactory means for the permanent
identification of bales from gin to cotton mill were available which
would definitely establish the place of growth of individual bales, and
if the limits of the various producing areas were more definitely de-
fined. The solution of the problem of permanent identification of bales
and the defining of the limits of specific producing areas probably can
precede the solution of the problem of standards for character. Thus
in the meantime, this supplementary means for specifying quality could
be advantageously used under certain circumstances.

But it must be recognized that because of the lack of uniformity
in the quality of cotton produced in any given area, attributable to
growth conditions as well as to differences in varieties grown, the ul-
timate effectiveness of specifications in terms of locality of growth
must depend upon the further development of single-variety communities
accompanied by some system of field classification with respect to
growth conditions each season.

Since character as a factor of quality is ordinarily taken into
account in evaluating raw cotton from the standpoint of spinning utility,










the need for expanding the official standards to include the element of
character is clearly apparent. There are a number of technological and
practical problems involved in providing standards for character that
have not been solved. 10/


EXTENT TO WHICH OFFICIAL STANDARDS MEET MILL NEEDS

Considering the present official standards collectively, 38 per-
cent of the mills interviewed declared them to be satisfactory in all
respects for the purpose of describing the qualities of cotton required.
They were considered only partially satisfactory in the case of 40 per-
cent of the mills, about 16 percent did not consider them at all satis-
factory, and the remaining 6 percent had not had experience with any of
the official standards.

In general, the reasons assigned for not using the official stand-
ards by the mills that use other methods for describing quality may be
summarized as follows:

(1) The official standards do not conform to the mill buyer's
ideas with respect to the various grade and staple desginations.

(2) The orders establishing the official grade standards provide
for offsetting better quality in one grade factor against deficiencies
with respect to another factor, hence unsuitable color, leaf, or prepara-
tion may have to be accepted if purchases are based on the standards.

(3) The official standards are changed frequently, and mills
using them would have to make corresponding adjustments in specifications
stated in terms of the standards in order to continue receiving cotton
of a given quality.

(4) The element of character is not adequately provided for in the
official standards, hence the use of private types or the purchase on
actual samples is necessary to insure the securing of cotton of the char-
acter desired.

(5) The mill buyer has not had experience with the official
standards and is satisfied with methods of purchasing on the basis of
private types or actual samples.

The experience of those mills using the official grade standards
with satisfactory results, under conditions requiring precision in pro-
curing cotton of given qualities, indicates a lack of foundation for the
fear, on the part of those spinners not making full use of these stand-

10/ Conrad, C. U. and Webb. R. W. The Problem of Character Standardization In American Raw Cotton. U. S.
Department of Agriculture. Bureau of Agricultural Economics. Preliminary Report 1934. (Mimeographed.)







14

ards, that to specify their requirements in terms of standard grade des-
criptions may compel the acceptance of cotton unsuitable with respect to
certain factors of grade. In such instances there is an apparent lack of
knowledge of the official grade standards and of the flexibility of their
use. With a proper understanding of these standards, mills could so make
use of them as to meet almost every conceivable need. This would involve,
in some instances, the designation of specific positions in the grade
boxes for each grade factor separately rather than the average of the box
of a given grade. Some mills find it advisable to specify definite posi-
tions in different grade boxes for each of the factors of grade.

Apparently this practice of "subgrading" is not objectionable from
the standpoint of those marketing agencies which recognize the fact that
with improvements in cotton manufacturing there is a tendency to base
transactions in raw cotton on finer graduations in quality factors and
those which attempt to supply the precise requirements of their mill
customers.

Many manufacturers thought that the official standards are being
changed continuously. Apparently they were not familiar with the provi-
sions of the statutes that require public notice for at least 1 year be-
fore changes become effective after they have been approved by the Sec-
retary of Agriculture, and with the precautions that are taken to guard
against variations when key sets of the standards are prepared and ap-
proved in conference with all interested parties.

Although the cotton industry should not be required to adjust it-
self to frequent changes in the official standards, it should be recog-
nized that significant changes in the quality of the cotton crop, changes
in the technic of textile manufacturing, and advances in the precision
with which quality factors may be measured or evaluated make it not only
necessary but advantageous to the cotton industry that the official cotton
standards be revised from time to time. Such revision can be made only
in accordance with statutory procedure and after due notice to the
industry.

Although the element of character is not fully provided for in the
present standards, this fact is probably not of sufficient importance to
account for the extent to which private types are continued in use in-
stead of the official standards for length of staple. The results of
this study indicate that many of the mills that were not making full use
of the official standards lacked knowledge of these standards and of the
possibilities of their use.


EXTENT TO WHICH COTTON MEETS PURCHASE SPECIFICATIONS

Shipments of cotton received by domestic cotton mills vary con-
siderably in the extent to which they meet purchase specifications for
various elements of quality. About 7 percent of the cotton received by











Table 8. Percentages of raw cotton receipts at domestic mills falling below purchase
specifications by quality factors and staple length groups, season 1930-31


Quality factor


Grade
C o l o r ............................. .............
Leaf .................. ..........................
Preparation..............................

Staple ................... ...............................
Character..........................................


jMills grouped according to staple length
All I of major part of cotton consumed
mills J Shorter than 1 to 1-3/32 1-1/8 inches
_____ 1 inch inches and longer
Percent Percent Percent Percent
I
I
3.49 3.46 1.55 7.67
2.87 2.90 2.77 2.99
2.53 1.95 1.04 7.61

7.21 7.94 6.76 5.57
1.28 2.11 .28 .44


Estimates based on data obtained through a survey of domestic cotton mills.


mills during the season 1930-31 was below purchase specifications for
staple length, about 1 percent failed to meet requirements from the stand-
point of character. Deficiencies with respect to the grade factors a-
mounted to slightly more than 3 percent of total receipts for color, less
than 3 percent for leaf, and less than 3 percent for preparation (table
8). In some instances the same bales were deficient in two or more fac-
tors of quality.

The data indicate that for all shipments to domestic mills defi-
ciencies with respect to the various grade factors were considerably less
in extent for cotton of medium and short staples than for long-staple
cotton. The percentages falling below specifications for color were 3.46,
1.55, and 7.67, respectively, for cotton shorter than 1 inch, from 1 inch
to 1-3/32 inches inclusive and 1-1/8 inches and longer in staple. This
situation was particularly pronounced with respect to preparation. Only
1.95 percent of the cotton under 1 inch in staple length was below purchase
specifications because of preparation, whereas about 7.61 percent of the
cotton 1-1/8 inches and longer was below specifications for this factor.
The percentages of cotton falling below specifications for leaf, on the
other hand, were approximately equal for each of the staple-length groups.

The percentage of cotton falling below specifications for length
of staple was slightly greater for the shorter than for the longer staples.
Deficiencies because of character were, slightly less for the long than for
the medium and short staples.

Cotton reported to be above purchase specifications for quality
was materially less than that reported as falling below specifications.
About 2.04 percent of all receipts were reported to be above specifica-


I











Table 9. Percentages of raw-cotton receipts at domestic mills classing above pur-
chase specifications by quality factors and staple length groups, season
1930-31

Imills grouped according to Staple length
SAll I of major part of cotton consumed
Quality factor mills Shorter than 1 to 1-3/32 1-1/8 inches
________________ __ ____ 1 inch inches_, and longer
Percent I Percent Percent Percent
I I
Grade I
Color 2.04 1.26 0.72 7.54
Leaf .. ... .65 .63 .23 [ 1.60
Preparation .46 .20 .15 1.97
III
Staple. .96 .36 1.61 1.71
Character .14 1 .15 .05 1 .28

Estimates based on data obtained through a survey of domestic cotton mills.


tions for color; 0.65-percent above specifications for leaf, 0.46 per-
cent above for preparation, 0.96 percent above for staple, and 0.14
percent above for character (table 9). Evidently selling agencies ordi-
narily ship cotton of a wider range in quality in the case of cotton of
the longer than of the shorter staples since a greater percentage of
the receipts of mills was reported to be above specifications for the
longer staples as was the case also for cotton falling below specifica-
tions.

The data relative to the extent to which cotton shipped to domes-
tic mills fails to meet the precise specifications of the contracts under
which purchased are based on determinations of quality made by the mills'
own classes, except when the cotton was submitted to an arbitration
board. The classification or comparison may or may not have been ac-
curately made on the official standards or on the private types speci-
fied. Since the classification was not made or supervised by official
classes, information as to the accuracy of the classing is not avail-
able.

Conditions under which cotton is classed at mills should also be
taken into account in any consideration of the extent to which the cotton
meets purchase specifications. Frequently cotton is classed at domestic
mills under conditions that are not the most favorable from the stand-
point of insuring accurate results. Only about 13 percent of the mills
included in this study made a practice of conditioning samples before
classing and of classing the cotton under uniform conditions with respect
to temperature and relative humidity. About 39 percent of the mills had
classing rooms equipped with skylights. In most instances the light
exposure in classing rooms was North, but in a number of instances the
light exposure was West, and in a few instances East or South.










Although less than 9 percent of the cotton purchased by mills
in cotton-growing States was obtained direct from growers, 47 percent
of the mills located in these States purchased some cotton in this
manner. Of these, 96 percent graded, and 94 percent stapled, the cot-
ton before purchase. Apparently the classing was done in a somewhat
perfunctory manner, because about 75 percent of these mills reclassed
the cotton before spinning it. About 5 percent of the bales purchased
direct from growers were resold.


METHODS OF MAKING ADJUSTMENTS FOR COTTON NOT CONFORMING
TO PURCHASE SPECIFICATIONS

Methods employed in making adjustments between selling agencies
and mills for shipments of cotton falling below purchase specifications
may be grouped generally under three heads: (1) Arbitration, (2) volun-
tary replacement by seller, and (3) voluntary allowance in price. The
method most commonly adopted during the 1930-31 season was that of vol-
untary price allowance by the seller of cotton that falls below speci-
fications. Approximately 50 percent of all adjustments were made in
this way, 39 percent were made by voluntary replacement of the cot-
ton, and about 11 percent were by formal arbitration (table 10).

Apparently the method adopted for making these adjustments de-
pends to a considerable extent on the quality of the cotton involved.
For cotton under 1 inch in staple length almost 58 percent of the ad-
justments were made by price allowances to the mills, whereas only
about 4 percent of the cases where cotton of this length was involved
were submitted to arbitration. On the other hand, where cotton 1-1/8
inches and longer was involved, about 58 percent of the adjustments
for cotton falling below specifications were by voluntary replacement
on the part of the seller. In 17 percent of the cases arbitration was
resorted to, and in about 25 percent adjustments were made by price al-
lowances. The fact that replacement by the seller was used much more
extensively than price allowance by mills using cotton of the longer
staples, whereas the opposite situation prevailed in the case of mills
using cotton of the shorter staples possibly may be explained by the
fact that it is possible to use a greater range in quality of raw cotton
in the manufacture of coarse yarns than for yarns of the higher counts.

The type of agency through which the cotton was purchased ap-
parently had very little influence on the method of adjustment adopted
(table 11). Voluntary allowance in price was the method most commonly
used for transactions with all types of selling agencies. Mills located
in cotton-growing States used arbitration in making adjustments to a
greater extent than was the case with mills located in noncotton-growing
S'.ates. The opposite was true in the case of voluntary replacement by
the seller of cotton falling below purchase specifications.








18

Table 10. Methods by which adjustments are made between domestic cotton mills and
selling agencies for cotton falling below purchase specifications and
percent adjusted by each method by staple length groups, season 1930-31


Method of adjust


]Mills grouped according to staple length
All of major part of cotton consumed
Iment mills I Shorter than 1 to 1-3/32 I 1-1/8 inches
I ______ 1 inch inches and longer
Percent Percent Percent Percent
I I I


Arbitration ........ ................... ....... 11 1 4 28 17
Voluntary replacement 39 38 40 58
Voluntary price allowance........... 50 58 32 25
1I--I


Total


.. I 100 1 100


I 100


1 100


Estimates based on data obtained through a survey of domestic cotton mills.


SUMMARY AND CONCLUSIONS

Raw cotton is supplied to domestic mills by several types of sell-
ing agencies. Shippers constitute the most important group of these
agencies. They supplied, either direct or through brokers, about 45
percent of the cotton consumed by domestic mills during the season 1930-31.
About 16 percent was supplied by cotton merchants, 19 percent by co-
operatives, and the remainder by country merchants and buyers and by
growers direct.

Approximately 47 percent of the mills located in cotton-growing
States purchased some cotton direct from growers. However, only about
7 percent of all the cotton consumed by domestic mills was obtained in
this way. A total of approximately 25 percent of the cotton consumed
by the mills of the South was obtained from local sources, including
country merchants, buyers and growers.

Brokers were a more important factor in supplying mills in the
noncotton-growing States than in supplying mills located in the South.

Purchases were made through brokers to a greater extent by mills
located in noncotton-growing States than by mills located in the South.

Approximately 42 percent of the total purchases of raw cotton
were made at fixed prices, and 58 percent were made "on call."

For the season 1930-31 domestic cotton mills described 68 percent
of their purchases of raw cotton by reference to the official standards
of the United States for grade, and 48 percent of all purchases were













Table 11. Percentages of adjustments, between domestic mills and various types of
selling agencies for cotton falling below purchase specifications, made
by specified methods, season 1930-31


I All domestic mills___
Types of I Arbitra-jVoluntarylVoluntaryl
selling agency tion replace- I price I
---- ---- -------- Ment B allowance
Percent Percn I Percent

Growers direct ...... -
Country merchants and
buyers... ....... 12 34 54
Shippers direct ........ 13 26 61
Shippers through
brokers ......... 12 46 42
Cotton merchants ... ..... 7 45 48
Cooperatives direct........ 12 41 47
Cooperatives through
brokers....................... 9 41 50

Total, all types...... 11 39 50


In cotton-growing States __ In other States_____
Arbitra-|Voluntary|Voluntaryl Arbitra- VoluntarylVoluntary
tion replace- I price tion replace- I price
m ent .I I__ _| ment aowanc
Percent Peroent Percent Percent [ er__cent P~era




12 34 54 -
14 26 60 4 24 72

24 38 38 6 51 43
11 39 50 6 47 47
9 35 56 18 57 25

25 22 53 1 50 49

15 33 52 5 49 46


Estimates based on data obtained through a survey of domestic cotton mills.


- ---------- --------------- -- -- ---- ------ ----










based on the official standards for length of staple. Approximately 50i
percent of the mills that consumed cotton of staple lengths to which
the tentative standards for preparation of long-staple cotton were ap-
plicable based their purchases on these standards. 'i

Mills not using the official standards as the basis for their
purchases either relied on private types as a means of securing the
qualities of cotton required or made their purchases from actual samples
submitted or displayed by selling agencies.

For the 4-year period 1929-30 to 1932-33, inclusive, approximately
81 percent of the cotton involved in arbitrations in which grade was
the question at issue had been purchased on the official grade standards,
supplemented in some instances by the tentative standards for prepara-
tion. About 19 percent had been purchased on private types. For arbitra-
tions in which staple was the question at issue, private types and the
official staple standards had been used to an approximately equal extent
as a means of specifying requirements. When character was the question
at issue in arbitrations, approximately 87 percent of the cotton had
been described for this element of quality in terms of private types.
Specifications for character in terms of official staple standards in-
volved only about 3 percent of the cotton submitted to arbitration. The
remainder of the cotton had been described for character by various com-
binations of methods involving the official staple standards, private
types, and origin of growth.

Among the reasons why domestic cotton mills do not use the of-
ficial standards more extensively are: (1) Lack of knowledge of the
possible flexibility in the use of the standards so as to permit of
specifying requirements with respect to each quality factor separately,
(2) indifference to developments in standardization, and (3) lack of
provision in the standards for the element of character.

Specifications with respect to character are made, at present,
by means of private types, by designating normal character as represented
by the official standards for length of staple, by descriptive terms,
or in terms of locality of growth of the cotton.

The fact that the limits of the areas included under the various
geographic designations are not well defined and that the cotton grown
in any given area is not uniform in quality, combined with the absence
of a satisfactory means for establishing definitely the origin of in- i
dividual bales of cotton, makes this method of describing requirements |
with respect to character somewhat unsatisfactory. In so far as a satis-jr
factory means is available, it is to the advantage of growers as well .
as spinners to describe the elements of quality in raw cotton on the
basis of inherent physical characteristics rather than in terms of
locality of growLh.




-j










In the absence of standards for character, however, the desig-
nation of place of growth of the cotton as an adjunct to the staple stand-
ards could be used advantageously if provision were made for a permanent
means of identifying individual bales of cotton and if the limits of the
various producing areas were more definitely defined. The maximum effec-
tiveness of specifications in terms of place of growth is dependent upon
the further development of single-variety communities accompanied by some
system of field classification as to growth conditions.

There is an indicated need for expanding the official standards to
include all factors of quality ordinarily taken into account in evaluating
raw cotton from the standpoint of spinning utility.

Slightly more than 3 percent of the cotton received by domestic
cotton mills during the season 1930-31 was found to be below purchase
specifications for color as compared with less than 3 percent for leaf,
less than 3 percent for preparation, and 7 percent for staple length.
About 1 percent of the receipts failed to meet requirements from the
standpoint of character.

The percentages of total receipts of cotton reported to be above
specifications were 2.04 percent for color, 0.65 percent for leaf, 0.46
percent for preparation, 0.96 percent for staple, and 0.14 percent for
character. The percentages of receipts both below specifications and
above specifications were higher for long staple than for short staple
pttQon,

For the most part the conditions under which cotton was classed at
domestic mills were not conducive to accurate and satisfactory classing.
It was not possible to ascertain the extent to which this situation was
responsible for technological difficulties in manufacturing, on the one
hand, or for rejections of raw cotton, on the other.

Approximately 50 percent of the adjustments between cotton mills
and selling agencies for shipments of cotton falling below purchase
specifications were made by means of voluntary price allowances by the
seller, 39 percent were made by voluntary replacement of cotton, and about
11 percent were made by formal arbitration.

Replacement of the cotton not meeting the requirements for quality
appears to be the most satisfactory basis for adjustment particularly for
cotton used in the manufacture of high-count yarns, in which case the
quality requirements for raw material are more rigid than for the course
yarns.

It is believed that the use of the official cotton standards by
domestic mills would be increased materially if their possibilities as
an effective means of specifying quality requirements were more generally
understood.





UNIVERSITY OF FLORIDA
UhhEUIIIIIflllini
3 1262 08918 7160



22


The more general use of the official standards by domestic mills .
for specifying their requirements with respect to quality in raw cotton
would tend to increase the use of these standards by marketing agencies.
This would make for greater uniformity in methods of describing quality
which, in turn, would tend to simplify and facilitate the cotton market-
ing process and to reflect back to growers the quality requirements or
preferences of manufacturers.


"H'


a-..L




Full Text
xml version 1.0 encoding UTF-8
REPORT xmlns http:www.fcla.edudlsmddaitss xmlns:xsi http:www.w3.org2001XMLSchema-instance xsi:schemaLocation http:www.fcla.edudlsmddaitssdaitssReport.xsd
INGEST IEID EPB57PISK_MSQMG2 INGEST_TIME 2014-04-25T04:37:04Z PACKAGE AA00017438_00001
AGREEMENT_INFO ACCOUNT UF PROJECT UFDC
FILES


xml version 1.0 encoding UTF-8
REPORT xmlns http:www.fcla.edudlsmddaitss xmlns:xsi http:www.w3.org2001XMLSchema-instance xsi:schemaLocation http:www.fcla.edudlsmddaitssdaitssReport.xsd
INGEST IEID ESM8ORTDN_CWHDZO INGEST_TIME 2014-04-21T23:28:47Z PACKAGE AA00017438_00001
AGREEMENT_INFO ACCOUNT UF PROJECT UFDC
FILES