Hog-Round Marketing, Seed Quality, and Government Policy: Institutional Change in U.S. Cotton Production, 1920–1960

Abstract

Between 1928 and 1960 U.S. cotton production witnessed a revolution with average yields roughly tripling while the quality of the crop increased significantly. This paper analyzes the key institutional and scientific developments that facilitated the revolution in biological technologies, pointing to the importance of two government programs-the one-variety community movement and the Smith-Doxey Act-as catalysts for change. The story displays two phenomena of interest in light of the recent literature: 1. an important real-world example of the workings of Akerlof's lemons model and 2. a case where inventors, during an early phase of the product cycle, actually encouraged consumers to copy and disseminate their intellectual property.

Banking on the Periphery: The Cotton South, Systemic Seasonality, and the Limits of National Banking Reform

“…11 Because of their humble origins, independent warehouses supplied inadequate storage capacity, which could not effectively protect crops from the elements and theft and increased the risks and insurance costs of storing them locally. As important, they lacked the environmental conditions and expertise to grade crops according to industry standards (Olmstead and Rhode 2003; see also Moulton 1931, p. 187). Backed by crops of uncertain quality and value, their warehouse receipts conveyed limited economic information and so were heavily discounted outside of their immediate market area.…”

“…Rothstein (1965Rothstein ( , 1966. The development of these standards in the cotton economy ultimately depended on federal policy innovations during the interwar period from the Cotton Futures (1914) and Warehouse (1916) Acts to the Smith-Doxey Act of 1937 to develop uniform marketing standards, as well as the U.S. Department of Agriculture and local extension agents to improve production conditions on the ground (Olmstead and Rhode 2003).…”

“…On the other, a purely monetary reform could not lessen cotton=s grip on the regional economy, and with it the systemic seasonality that increased banks= liquidity costs and default risks in accommodating their customers= short-term loan demands. Overcoming this structural constraint would call for more profound economic revolution, whose foundations were laid in the New Deal era (Wright 1986, Fleck 1910, Olmstead and Rhode 2003.…”

Historical and Institutional Perspectives on American Agricultural Development

“…During the interwar years this movement spread to encompass most cotton‐growing districts and to become one of the largest and most successful cooperative movements in U.S. history. Coupled with the Smith Doxey Cotton Classing Act (1937), the USDA programs helped overcome crippling market failures and dramatically improved cotton quality and productivity (Olmstead and Rhode , , pp. 155–98).…”

Partial Adherence to Voluntary Quality Standards for Experience Goods

“…For example,Olmstead and Rhode (2003) give the example where the quality of cotton dramatically decreased once the quality of cotton was tested after many growers had already consolidated their cotton, making traceability impossible. This shows the change in quality choice if price depends on an average industry quality.…”