The Tariff on Long-Staple Cotton and Its Effects

Excerpt: Two entirely different methods of analyses were used to make two independent estimates of the effect of the duty on the price of American long-staple Upland cotton. In the first of these approaches, the maximum effects of the duty on the price, consumption, and production of Egyptian Uppers were estimated and the indirect effect of these changes on the price of American long-staple Upland was approximated. In the second approach, the effect of the duty on the premium at Memphis of American 1-1/8-inches over 7/8-inch cotton was estimated and this effect on the premium was translated into an effect on the price of Upland long-staple. The two analyses agree in indicating that the duty raised the domestic price of American long-staple Upland less than one-fourth of the 7-cent duty above what it would have been without the duty. The analysis of premiums shows that the beneficial effect of the duty on the domestic price of American 1-1/8 inch cotton was undoubtedly less than 1.8 cents per pound on the average in the 7 post-duty years. This analysis also suggests that the duty may have raised the average price of this cotton only 0.2 cent or less during this period and that it hardly seems likely to have raised the average price by as much as 1/2 cent. The other analysis indicates that the duty probably benefited the price of the domestic cotton less than 1/2 cent per pound. It is believed these estimates are a liberal statement of the benefits conferred by the long-staple cotton duty on the price of American long-staple Upland cotton.