Al-Ahram: A Diwan of contemporary life (499)
Despite the vast distance separating Egypt and the US, events in the latter have always had a profound effect on the Egyptian economy, especially where cotton is concerned. Professor Yunan Labib Rizk* monitors the impact America had -- for better or worse -- on Egypt's white gold
During the 1861-1865 American civil war, the north's blockade of the south, the largest cotton producer in the world at the time, precipitated the so-called "cotton famine" and the consequent spiralling of cotton prices in international markets. The effect in Egypt was dramatic. Until then, cotton had only been a secondary cash crop having been recently introduced as such under Mohamed Ali in 1820. However, with the huge profits to be had in the 1860s, Egyptian farmers turned their fields over to cotton cultivation in a big way. This development coincided with the beginning of private agrarian land ownership and the concomitant sway of supply-and-demand criteria over crop cultivation which, in turn, gave rise to large cotton produce in the Egyptian countryside.
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Elevated to Egypt's primary staple, cotton was highly vulnerable to economic and political developments abroad
If cotton was thus elevated to Egypt's primary staple, which status it would retain over ensuing decades, it still remained highly vulnerable to economic and political developments abroad. Naturally, the revival of the US cotton industry following the end of the civil war brought a gradual end to the golden era of the Egyptian cotton boom. The sector was also occasionally rocked by global economic crisis, such as that of 1908. During all that period, however, it faced nothing of the magnitude of the global depression of 1929-1933.
In a public lecture appearing in Al-Ahram on 26 February 1931, Mr Pierce, sales director of the Egyptian Company for Cotton Export, depicted a bleak picture for his sector of the economy. The cotton textile industry depended heavily on cotton farmers whose yields had been as hard hit as other areas of the economy. "As a result, farmers are unable to afford the quantities of cotton textiles they used to purchase and now restrict themselves to only the most essential needs," Pierce said. Of greater concern were the circumstances of factory workers, the largest consumers of cotton fabrics. "In as much as there are some five million unemployed workers in the world today, it is little wonder that this should have a disastrous effect on the cotton weaving industry."
Pierce traced spiralling unemployment among labour to the high wages they had been receiving during World War I, which drove factory owners to introduce machines to do the work of labour. "The effect of this was to distort the balance between production and consumption and to bring the world to a standstill, the only way out of which is to find jobs for that legion of unemployed workers."
In another issue of Al-Ahram, Dr Ahmed El-Amri offers a vivid portrait of the plight of the Egyptian farmer whose cotton crop had been left to rot. "The rising prices of cotton weigh heavily on our minds. Our newspapers convey an admonition against the profligacy of the fellah who, intoxicated by the sweetness of wealth, bought up plots of land for double their price and squandered vast amounts of money on developing that land. Then came the black years, forcing him to cower in his home, unable to provide for his most essential needs. At the outset of every year, we watch the international stock markets as though they were the proceedings of a tender or a charity drive. Our eyes are riveted, we hold our breath, our hearts pound as our cotton is buffeted and humiliated by foreign crises and international political developments and then we sell it cheap and diminish its value with every passing day. If we add to this the costs of production and of pest control and the untold calamities that beset this crop, we can only conclude that clinging to that crop is a form of obstinacy, that we have fallen prey to, a habit that has us bound and fettered in chains."
Not all were as pessimistic as Pierce and El-Amri. Striking a more upbeat note was an Al-Ahram reader, Maghazi Ali, who pointed to Egypt's unique geographic position as it overlooked the Mediterranean and Red Sea and was adjacent to both Eastern and Western markets. Egyptian cotton, Ali said, had distinct advantages over all the rest. "Over there is young Russia with which we vie for bale of cotton. There is India whose cotton is equivalent to the Egyptian ascarto, there is Sudan whose misfortune is still being talked about, and there is Iraq whose failure is apparent to all. True, there is America, the quintessential cotton producer, but it is remote from European markets and its cotton is low in yield per feddan and of short and rough fibre. There remains Egypt, with its ideal location, its unique cotton and its proximity to the markets. Without a doubt, if Egypt rolled up its sleeves and put in some elbow grease it would come out in front."
Public opinion aside, it was the Egyptian government that took practical measures to resolve the crisis. Its first step was to buy up surplus cotton from the producers which both depleted its monetary reserves and created a huge stockpile of cotton that it could either sell at a loss or wait until prices rose again. But patience has its limits. The solution was to launch a promotional campaign for Egyptian cotton and cotton textiles.
That there was a potential for expanding the market for Egyptian cotton was evident in the following memorandum issued by the Egyptian cabinet. The memorandum noted that many countries were beginning to turn to Egyptian cotton "due to its high quality and reduced prices". This increased demand "has compensated for some of the losses in the Egyptian cotton market notably in the US which has subjected Egyptian cotton to heavy tariffs, and in Britain due to the current slump in its spinning and weaving industry".
In light of the prospects for developing other markets, King Fouad issued a decree to allocate LE50,000 towards a promotional campaign. All possible means would be explored, including opening representative offices abroad, advertisement "as Brazil has done", issuing special supplements to newspapers and the business magazines "that are so widespread in all inhabited countries", creating permanent exhibitions in various locations abroad, contracting with commercial outlets to set aside a portion of a store for displays of Egyptian textiles, and contracting with automobile tire factories.
At about this time, the idea began to circulate of holding an international conference in Paris to examine regulating cotton production. Egyptians were fully in favour. Their country produced more than six per cent of the global output in cotton and any decision to restrict the areas of land under cotton cultivation, as some were advocating, would not affect the prices of Egyptian cotton. However, as Al-Ahram put it, for Egypt to undertake any such action unilaterally would "not be to its advantage at all, for it would only stand to lose its clients abroad". On the other hand, if the US were also to commit itself to lowering its production, that would be another matter. It was to explore this possibility that Cairo contacted Washington, opening an unknown, or at least, insufficiently known page in their bilateral relations.
Encouraging Egypt to undertake this step was the news that the Louisiana state government voted not to plant cotton the following year. Al-Ahram commented, "This news is of the greatest importance to all involved in the cotton trade because of the 12 states that produce cotton in the US, Texas ranks first and Louisiana second."
Upon hearing this, the Egyptian plenipotentiary in Washington hastened to the office of the secretary of state to inform him that his government shared the belief of the US that cotton production in the world exceeded demand and that the only remedy was to considerably reduce its cultivation for several years running. Simultaneously, the Egyptian government sent a letter to the US plenipotentiary in Cairo stating that the large stockpiles of cotton in cotton-producing countries were due to overproduction at a time of declining consumption and that officials of the two countries should work together to examine the best means to regulate cultivation of this crop. The letter went on to propose a conference dedicated to this purpose, adding: "The Egyptian government would like to point out that a ban on the cultivation of cotton for a period of a year would inspire consumers to supply themselves with the quantities they need immediately upon the announcement of this measure. On this basis, the Royal Government of Egypt, without preempting the resolutions formulated by the conference on the cotton situation, declares itself willing to study the possibility of introducing a scaled ban on the cultivation of cotton for a set number of years."
Egyptians were further heartened when they heard that the US Board of Agriculture had urged cotton producers in 14 states to destroy a third of their crop in the hope that this would drive up the price of the remaining two-thirds. Al- Ahram relates, "The board announced that it had taken this extraordinary measure because it anticipates a heavy drop in prices leading to a disaster the effects of which would extend beyond the cotton states to all other states if yields continue to exceed the amounts necessary to meet consumption."
Certainly Egyptians would have regarded the measure as extraordinary; indeed, a form of wanton abuse of nature's gifts. Sensing such a reaction, Al-Ahram remarked that, in fact, such measures were not all that out of the ordinary. "In early summer we read that when poultry farmers in California found that egg production was double the quantities consumed, they came up with an amazing means to reduce the surplus in order to keep prices from plummeting. Their solution was to sponsor a marksmanship fair using eggs as targets and awarding prizes to the winners. Millions of eggs were destroyed in this manner."
On the other hand, Al-Ahram could not abide by the wastage when fish merchants in New York poured tons of fish back in the river so as to keep prices up. Had those merchants any mercy in their hearts they would have distributed those riches among the hungry for a nominal sum, thereby benefiting both the poor and themselves, it commented, adding, "However, the blame falls squarely on the government which turns a blind eye to such reprehensible actions."
The New York Times could not have been more correct when it observed on 4 September 1931 that Egyptians were on tenterhooks in anticipation of the American response to its proposal for a cotton conference which would "give this government an opportunity to help solve the global economic crisis". The newspaper remarked that although the American representatives would have difficulty in approving resolutions that would restrict the amount of land under cotton cultivation, a conference would still prove fruitful even if it limited itself to recommendations which the Egyptian government could then incorporate into law. It also noted that Egyptians wanted the conference to take place in the US, near the southern states. "The cotton yields of some of these states exceed that of Egypt in its entirety and their approval would be needed for any cotton policy." Egypt also wanted Russia, the cotton yields of which now exceeded that of Egypt, to attend the conference; however, the Times observed, this could create political difficulties for both Cairo and Washington, neither of which recognised the Soviet government.
The American response, when it did come, was not favourable. On 16 September, Al-Ahram reports that the US President Hoover approved a Secretariat of State memorandum stating that the US "cannot participate in a conference intended to study restrictions on the area of land under cotton cultivation". Although Washington stated that it might be willing to consider a conference that would investigate the means to dispose of surplus quantities, as there were only two countries that produced significant surpluses -- the US and Egypt -- it would be preferable to handle this and other issues on a bilateral basis.
The American custom when taking a decision disappointing to others is to mount a propaganda campaign to vindicate itself. In this case, the US ambassador to Cairo delivered a lecture in the American University in Cairo's Ewart Hall on cotton production in the US. True, too, to the tradition of American showmanship, William Garden opened with a film which he used to demonstrate how practical information can be rapidly disseminated to solve otherwise insurmountable problems in agriculture. He then dazzled his audience with figures on the enormous scale of agriculture in his country. Across the US there were some 650,000 farmers working approximately 350 million acres, rendering it impossible to impose a uniform system. The situation was entirely different from that of Egypt, where strong centralisation of government and resources made it possible to impose a uniform system. The audience got the message. Among those present were Prime Minister Ismail Sidqi and members of his cabinet, including Minister of Agriculture Hafez Hassan who could only thank Mr Garden for the valuable information he had imparted.
Diplomatic niceties aside, Egyptians were not appeased, as was evident in the criticisms in the press of the policies of Hoover. On 30 September, Al-Ahram's special correspondent in New York charged that the US president only began to devote attention to the cotton crisis "after cries were emitted from every direction and the cotton states became outraged over the curious stagnation they were suffering at this critical time". He further accused Hoover of vacillation and indecision. "From the day he succeeded the likes of Washington, Lincoln, Roosevelt and Wilson, whenever a problem was put to him, he formed a committee, and there the subject ended. Little wonder that he has been dubbed Mr Committee. It is likely that this shall be his solution to the cotton crisis, which will thus receive the same degree of attention he has accorded to other matters."
Because of Hoover's wishy-washiness, the correspondent continued, chaos reined. On the one hand, people were coming up with more and more recommendations. Among these was the proposal put forward by the senator from Arkansas, which was for the government to purchase eight million bales of cotton at eight cents a pound. The Board of Agriculture would then distribute this stock among farmers who pledged not to grow cotton the following year. On the other hand, individual states were beginning to take matters into their own hands. In Austin, Texas, farmers stood in two opposing camps over a recommendation to reduce land under cotton cultivation by 50 per cent. In Atlanta, Georgia, farmers favoured coming to an agreement not to send their cotton to the markets at all. According to the proposal, every farmer would "pledge not to break this agreement for a set period of time, after which the prices will rise to 15 or 20 cents a pound". In addition, "the banks in this state have no objection to taking the stockpiled cotton as collateral on loans in order to help cotton producers make ends meet." On top of what seemed a full range of options, the US Board of Agriculture urged farmers to burn a third of their cotton crop. This "amazing recommendation", as Al- Ahram described it, triggered yet another outcry among American farmers and drove home just how grave their predicament was.
With their enormous surpluses, Egyptian cotton producers were in no less serious a predicament, especially now that the Americans had turned down the idea of an international conference. Naturally, the Egyptian government had little choice but to respond favourably to the memorandum approved by Hoover. "The Egyptian government gladly welcomes the opportunity to send representatives to Washington to discuss matters related to cotton cultivation with representatives of the government of the United States," came the reply. Soon afterwards the deputy ministers for finance and agriculture set off for the American capital.
Although Prime Minister Sidqi must have realised that the talks in Washington would produce few concrete results, he would simultaneously have felt that they would have a positive impact on morale. If so, his expectations proved correct. As the Egyptian delegation sailed across the Atlantic, the Manchester Guardian announced that the price of Egypt's high grade, long staple sklaridis cotton rose for the first time in a month, climbing to six pence a pound. The reason for this recovery, the newspaper continued, was that "although the US government has refused to take part in international talks over reducing the amount of land under cotton cultivation, it has offered to discuss with Egypt possible methods and schemes for disposing of the surplus quantities of both American and Egyptian cotton."
Unable to bank on the results of talks in Washington, the Egyptian government had to act urgently and unilaterally, passing a law to reduce the land area given over to that white crop that was no longer gold. Commenting on the law, Al- Ahram wrote, "Lowering production to maintain the balance between supply and demand will safeguard the difference in price that our high quality cotton deserves. That difference had evaporated due to our large surplus. By restoring it to a reasonable ratio we will realise a degree of compensation even if other countries do not reciprocate in reducing their production."
The law seemed fully justified. A statement issued by the Ministry of Agriculture revealed that consumption of Egyptian cotton for 1931-1932 had dropped nine per cent from the previous year and more than 16 per cent from 1928-1929. In addition, the current year's crop added seven million qintars to an accumulated stock of about the same quantity. The total 14 million-pound stockpile was "more than double the average consumption of Egyptian cotton in a single year".
According to the law, land under cotton cultivation would be cut back to 25 per cent of the current levels for all grades of cotton, with the exception of sklaridis, cultivation of which would be reduced to 30 per cent. Al-Ahram observed, "By restricting cotton cultivation in this manner, the stockpile of Egyptian cotton will drop by 150 million pounds. As for the remaining land, it will be turned over to the cultivation of grain, thereby eliminating the shortage that had existed until now and enabling Egypt to meet its own needs of grain."
More than a year would pass before Egyptians would reap the fruits of this policy. For the meantime, they would have drawn an important lesson from their experience, which was that they could not depend on others to solve their problems. Nothing scratches an itch better than your own fingernails, as the saying has it.
* The author is a professor of history and head of Al-Ahram History Studies Centre.