- MY TURN -
By Bill Griffin
I got into the cotton business because of a theft. In those days merchandising companies had office clerks that shuttled all paper warehouse receipts back and forth between the banks and the office.
Each receipt had the word “negotiable” written on the front of it.
One company’s office clerk hatched a scheme to steal some receipts and sell them for cash. Somehow, the FBI got onto the scheme and set up a sting in an alley in downtown Memphis. As soon as the clerk handed the receipts over to the FBI agent posing as a buyer, he was arrested and put in jail. An employment agency had originally sent me on this interview. Luckily, the company hired me, and I worked there for more than 30 years.
After working there for about a year, the head squidge in the sample room joined the Navy. The boss called me in and asked if I wanted the job in the cotton room or stay in the office. I asked what would happen if I stayed in the office and was told that I could eventually become office manager. I asked what would happen if I took the sample room job, and the boss told me that is where you learn the cotton business.
So, I took the sample room job as a squidge although I felt it was a demotion because a squidge is considered the lowest position in the cotton business.
When I entered the business in the mid-1950s, there was no active futures market because the United States was sitting on a 15-million-bale CCC inventory that it was auctioning off through catalogs to the highest bidder. However, there was a floor under prices that could be bid, and any bid below the floor was not accepted by the CCC. Therefore, no futures market was needed.
Over several years this inventory gradually disappeared – re-creating the need for an active futures market. Thus, I had to learn the cotton merchandising business all over again. I walked into the office one morning and heard a new sound, a ticker tape machine that was spitting out trades on the New York Cotton Exchange. Since then, we have had an active, sometimes very active, futures market that served the industry well until a few years ago. It was a very efficient market with between 35 and 45 percent speculative interest, which provided excellent liquidity, and the entire industry had faith in the market. Not so today.
The daily price limits have been increased from 2.00 c/lb to 3.00 c/lb and today can be 3.00, 4.00 or 5.00 c/lb depending which criteria is met. The trading months were extended from 18 months to 24 months, and one could probably go into the swaps market today and trade even farther out than 24 months.
Change is bound to come, but the cotton industry is a resilient industry. When I entered the business, I was told I was crazy because cotton was a dying industry, but now more than 50 years later cotton is still a going business because it is a non-perishable, renewable crop.
The industry will change as necessary, and we at the American Cotton Shippers Association’s International Cotton Institute at the University of Memphis continue to monitor those changes and incorporate them into the program curriculum. We are developing the 15th consecutive program at the Institute where we provide an opportunity for people from around the world to learn and speak the same trade language.
Our investment in this school continues to pay dividends every year for the industry. That gives me a lot of hope for the future.
– Bill Griffin, Memphis, Tenn.