This is a Southwestern play-party song. Play party songs were designed to protect young people from the evil business of square dancing. Any number of couples would join hands and form a ring. The ladies would march around a single man and sing the first part of the song at a slow tempo. The man would chose a partner from the ring and the dancers would skip around them singing 'Two in the middle and I can't dance Josie.' This would continue until all couples were In the center. They would swing left and Right.
Lyrics and chords available from Folk Den Project.