CottonCultureChapter5

By Manford Eugene Jones
A thesis submitted in partial fulfillment of the requirements for the degree of Master of Arts in History.
University of New Mexico, 1939

Texas A&M University History Professor Dale Baum purchased a copy of this thesis from the university's library and contributed it to this site. It is used with permission of Manford Allen Jones, son of the author Manford Eugene Jones. These electronic pages may not be reproduced in any format by other organizations or individuals. Persons or organizations desiring to use this material must obtain the written consent of Manford Allen Jones or contact Jane Keppler, Robertson County TXGenWeb coordinator.

CHAPTER V: PROBLEMS OF COTTON MARKETING

There is plenty of romance connected with the marketing of cotton along the Brazos. It is the story of a continual struggle between the seller and buyer, with the seller fighting for his right to get a fair price for, and good grading of, his cotton.[25]

The first planters freighted their cotton to Houston and Galveston and sold it to cotton factors. These factors extended credit to the planters through local stores, and the cotton producer did not know what price he would get until the cotton was delivered at the seaport. Under this system, the farmer paid heavily for transportation and interest, and the factor took a far profit on the actual price paid.

The Grange or Granger movement came to the Bottom in the 1870s. In each town, cooperatively owned stores were set up to furnish the farm groceries and to pay him a fair price for his cotton. A few of these stores were in business until 1900, but disappeared soon thereafter.

In the meantime, or rather after the railroads came to the Bottom towns, local merchants also furnished farmers with credit to make their crop, and then bought their cotton in the fall. These merchants took a heavy profit. At the same time, local independent buyers began operating during the selling season. This latter group included several Jews who came to Calvert and Hearne.

The second attempt at cooperation was the Farmers Alliance:

"It was only a few years after the decline of the Grange that the Farmers Alliance movement became widespread. Membership in this order was strong in the Southern states, and the organization definitely committed itself to the cooperative marketing of farm products, with particular attention being paid to cotton. A number of local organizations were set up, and plans were made to sell direct to mills. The plans were finally unsuccessful, however, principally because the widespread crop mortgage system prohibited the marketing of cotton through these organizations. The Alliance made attempts to finance the growers, but lacked the necessary resources."

"The Farmers Alliance from the beginning engaged in politics, and, as it became larger, it political activities increased. In the election of 1892, it fortunes became involved with those of the Populist party, and, with its defeat, the Alliance became less and less an influence."[26]

The Farmers Alliance came to the towns of the Central Brazos region in the 1890s. A large warehouse was built in each town, in which to store cotton belonging to members of the Alliance. The Cotton was sold in large groups and sometimes held for an advance in price.

The third attempt at cooperation is explained in the following quotation:

"The next significant contribution to the foundation of cooperative marketing in the South was perhaps made by the Farmers' Union, to to give it its full title, the Farmers' Educational and Cooperative Union of America. This movement originated in Texas, in 1902, and grew rapidly. Of all the organizations which attained prominence up to 1920, this was the most distinctly Southern, and its efforts were devoted principally to the problems of the cotton farmer."

During the first years of the Farmers' Union, attention was focused mainly upon the marketing of cotton. The activities of the Union along these lines were closely allied with the program of the Southern Cotton Association, which had been organized in new Orleans in 1905 under the leadership of Colonel Harvie Jordan, a Georgia planter. The conviction had become widely prevalent that the cotton futures markets, instead of functioning as exchange agencies, were being manipulated to the advantage of the gambler, and at a severe loss to the farmer. The Union advocated a minimum price, and advised the farmer to hold his cotton until he could sell at that level. In 1906, the farmers were told to hold their cotton for at least eleven cents, basis middling. As the Union predicted, the price reached and passed that level, rising from nine and a quarter cents at New Orleans in September to eleven cents in October."

While the efforts of none of the earlier organizations of farmers in the South could be called successful, and while none fulfilled the sometimes extravagant promises made for them, in the light of present day evaluation, each contributed something to the eventual success of cooperative marketing."

Perhaps the most valuable result of these early experiences was the demonstration to Southern farmers of the ideals and practicability of cooperative endeavor. This did much to pave the way for the successful cooperative organizations of today."[27]

When the Farmers' Union was organized in Hearne, Calvert, Marlin, and Waco, the name Farmers Alliance on the warehouses was changed to Farmers Union. The Farmers Union lost out for the same reason that the Alliance did, because it engaged too much in politics.

At the present time in Waco and Marlin, the Bottom farmers are served by the Texas Cotton Cooperative Association, a branch of the American Cotton Cooperative Association, New Orleans, Louisiana. The "Texas Co-op", as this organization is called, attempts to give its members the benefit of buyers skilled in the art of grading cotton and also the benefit of a slightly higher price through mass sales of cotton.

The various cotton cooperative associations perform many services for the farmer that private buyers do no or cannot do. These services are expert classing of cotton, cheaper freight rates, and a better price. In some instances, the independent buyer has been able to beat the price paid by the cooperative because of the cost of these services. In general, however, the cooperatives are reducing the cost of their services each year through more efficient management, and the farmer thus benefits in the long run by joining the cooperative society.

The latest cooperative cotton association in the central Brazos region is the Brazos Valley Cooperative Association. It was organized in September, 1933, at Bryan, Texas; and the territory served consists of the following counties: Robertson Brazos, Grimes, Washington, and Burleson.

J. R. McCrary of Calvert, Texas, was the first president; the board of directors is made up of seven men including the president. This is the only cotton cooperative association formed whose directors serve without pay.

The reasons for this organization being formed were that the Bottom farmers believed they should be getting a higher price than the Texas Cotton Cooperative Association could give, since their staple is longer than the average for other sections of the state, and that some though a smaller organization could serve its members better.

This organization has established a fair minimum price based on world markets. Therefore, since the staple of Bottom cotton is better than the prairie cotton, the Bottom farmer secures a better price. The following is a copy of the marketing agreement entered into between the cotton grower and the Brazos Valley Cotton Cooperative Association:

"Marketing Agreement Of The Brazos Valley Cotton Cooperative Association"

"The Brazos Valley Cotton Cooperative Association, a non-profit co-operative marketing association with its principal office at Bryan, Brazos County, Texas, hereinafter called 'Association', and the undersigned, hereinafter called 'Grower', AGREE: -- "

"(1) If not a member, the Grower hereby applies for and is admitted to membership in said Association, and will carry out the express aims of the Association."

"(2) The Association buys and the Grower sells and agrees to deliver to it, one (1) bale of cotton from and after the date of this contract; subject only to the right of either party to terminate this contract as hereinafter provided. The Grower, at his discretion, may deliver more than one (1) bale of his cotton in any one year. Either party hereto may terminate this contract by notifying the other party in writing between March 1st and 15th of any year; provided, however, such termination privileges shall not be effective until the Grower has delivered the cotton covered herby for one crop year, nor so long as the Grower is indebted to the Association, or its subsidiary corporations."

"(3) The Association agrees to resell such cotton of the Grower together with the cotton delivered to it by other Growers under similar contracts, at the best price obtainable by it under marketing conditions; and to pay over the net amount received therefrom (less freight, insurance, storage, and interest as payment from the Grower; after also deducting therefrom, within the discretion of the Association, the cost of maintaining and operating such Association and the cost of handling, grading, and marketing such cotton, together with the cotton of other members, and a Reserve for credit and other general purposes, said Reserve not to exceed one (1%) percent of the gross resale price of such cotton; said 1% Reserve shall be the property of the Grower to be refunded to him at the discretion of the Board of Directors of the Association, according to the book value thereof as conclusively appraised by the Board of Directors of the Association; I also hereby assign and transfer to the Association, with power at its discretion, to collect any and all Reserves and property interests due and owing me by the Texas Cotton Cooperative Association, of Dallas, Texas, arising out of deductions from cotton delivered to it by me as a member; and when collected that the same shall be set up on the books of said Association to my credit and to become a part of my Reserves in said Association and to be refunded to me as provided in my marketing agreement of Texas Cotton Cooperative Association."

"(4) The Board of Directors of the Association may, in its conclusive discretion, create and establish pools through which the cotton of the Grower and that of other members may be handled and sold; and may promulgate and establish from time to time rules and regulations pertaining to the operation of such pool or pools, and the Grower agrees to be bound thereby and to accept the proceeds realized from the sale of his cotton through such pools, or otherwise, in accordance therewith."

"(5) The Grower agrees that the Association may handle and/or sell, in its discretion, some of the cotton in one way and some in another, as to it might seem most beneficial to the Grower and the other members of the Association, collectively, and the Grower agrees to cooperate with it in such transactions."

"(6)The parties hereto agree that this is a contract of purchase and sale of personal property and shall be binding upon them as long as the Grower produces cotton, either directly or indirectly in accordance with this contract; and that the Association may, in its conclusive discretion, promulgate and establish from time to time, rules and regulations governing the grading and classing, sale, delivery, handling, storing, transporting, borrowing money on such cotton to make advances, or otherwise, and for the full and complete operation of said Association as provided in it charter and By-Laws and all amendments thereto, and the Grower agrees to abide by and perform the same, and to be bound thereby; provided, however, such rules and regulations shall be evidenced by a resolution passed, by the Board of Directors of such Association and entered on the Minutes of its meeting."

"(7) In the event the Grower shall place a crop mortgage upon his cotton during the term hereof, (of which he shall notify said Association), and any money is advanced or paid to the Grower at the time of the sale and delivery of his cotton to said Association, that the same shall first be applied to the payment of said indebtedness, and the Grower hereby agrees to indemnify said Association, against any damage or loss by reason thereof, which shall be due and payable at Bryan, Texas; failure of the Grower to comply with this mortgage requirement shall constitute a breach of this contract."

"(8) LOCAL ASSOCIATIONS. It is understood and agreed by and between the Association and the Grower that the Association, in co-operation with the Central Sales Agency, with which the Association is affiliated, shall have the power and it shall be their duty, as soon as is practicable, to set up and establish in the territory comprising the Association's operations and members, local associations, with appropriate Articles of Incorporation and By-Laws, and other necessary and proper application and contracts in connection therewith, for the benefit of the Grower and other members of the Association; and when such Local Association has been so organized and incorporated, the Grower hereby applies for membership therein and, if accepted, agrees: (a) To execute, when requested by said Local Association, a Marketing Contract, in terms substantially the same as those set forth in this Marketing Contract; or (b) At the option of the Board of Directors of such Local Association, by a resolution duly entered on the Minutes of the meeting, to be bound by the terms of this Marketing Agreement; and the acceptance of said Board of Directors of this contract shall become effective immediately upon notice thereof mailed to the Grower hereof at his address as noted below, and such notice shall be conclusively presumed to have been accepted upon mailing thereof, which shall be evidenced by an affidavit of the Secretary of such Local Association."

"(9) The Board of Directors of the Association and/or the said Central Sales Agency shall have power to organize and/or recognize Local Associations and it shall be their duty to equitably-apportion the duties and activities of the Association and the respective Local Association; and, where such Local Association have been so recognized, the per bale charge shall be limited to the charge made by the Local Association for handling such cotton, plus the overhead per bale cost of the Central Office of this Association."

"(10) It is agreed by and between the parties hereto that this contract may be modified, and amended, by the Board of Directors of the Association from time to time; provided, however, such amendment and modification shall only affect the members consenting thereto, but shall not affect the contract of members who do not consent thereto or operate to release them therefrom. It is agreed that other Marketing Contracts may be entered into from time to time between the parties hereto and other members of said Association; conditioned, upon the Grower being given the opportunity to adopt the same in lieu of this contract."

"(11) The parties agree that there are no oral or other conditions, promises, covenants, representations, or inducements, in addition to or at variance with any of the terms hereof; and that this Agreement represents the voluntary and clear understanding of the parties fully and completely."[28]

We must keep in mind that there are several independent buyers of cotton yet operating in the towns along the central Brazos. However, these men must make a higher margin of profit than the cooperative associations in order to make any money. So, the trend of the times seems to indicate a steady drift of the farmers to membership in the Texas Cotton Cooperative Association or the Brazos Valley Cotton Cooperative Association.

[25] Information secured by interview with H. E. Wrenn, cotton buyer at Marlin, Texas, and J. M. Kennedy, publisher of the Marlin Democrat, Marlin, Texas.
[26] W. R. McCullough and George Wolf, "Development and Organization of Cooperative Cotton Marketing Association," American Cotton Cooperative Association Bulletin, No. E-1 (New Orleans: American Cotton Cooperative Association, April, 1937), p. 21.
[27] W. R. McCullough and George Wolf, "Development and Organization of Cooperative Cotton Marketing Association," American Cotton Cooperative Association Bulletin, No. E-1 (New Orleans: American Cotton Cooperative Association, April, 1937), pp. 21-23.
[28] Pamphlet issued by Brazos Valley Cotton Cooperative Association.