The CHAIRMAN. Are you ready for the question?
Mr. HULINGS. I call for the question.

The CHAIRMAN. All those in favor will say aye.

Mr. TINCHER. Aye.

Mr. MCKINLEY. Mr. Chairman, there is only about half a quorum present.

The CHAIRMAN. The gentleman makes the point of no quorum? Mr. HULINGS. I will withdraw my motion until a quorum arrives. The CHAIRMAN. The motion is withdrawn by unanimous consent. What action will be taken on these requests for hearing?

Mr. TINCHER. I do not want to deny to anyone the right to a full hearing, but I understand, and I have it pretty reliably, that the Minneapolis Board of Trade, or not the Board of Trade properly speaking, but some Minneapolis grain dealers who trade in futures, are taking steps to stall us, and they have had some bankers and others to wire in for hearings, and propose to have others to make request for hearings in order to stall us off through this session. In fact, I have been advised they intend to filibuster against this resolution, so to speak.

I am in favor of wiring every one of them that hearings are on, and that they are absolutely open, and that we would like to have them here; but I do want this bill reported out if we can get a quorum some day to do it.

Mr. VOIGT. Would it be a good idea to set a tentative date now for a closing of the hearings? Otherwise this sort of thing will peter along for a month or more.

Mr. TINCHER. They have had a meeting in Minneapolis, and have agreed that they will have bankers and others to wire the committee for hearings, and they purpose to stall us off.

Mr. RIDDICK. Wouldn't it be a good idea to bring the senders of those telegrams together, and suggest that we will give them two hours, and let them select those who wish to speak for them; and then give other representative people two hours, and bring the hearings to a prompt close, and in the meantime give everybody a chance who wishes to be heard?

Mr. TINCHER. Yes.

Mr. VOIGT. Suppose you give them one week.

Mr. RIDDICK. If we tell the Minneapolis people they may have two hours then they will select their best men who will give us all the information they really have to present.

Mr. HULINGS. Is there any use of holding these seances longer than next week?

Mr. RIDDICK. I hope not.

The CHAIRMAN. I have been looking over this list and find that the parties applying for hearings are greatly scattered. They are: F. A. Chamberlain, chairman board of directors, First National Bank, Clearing House Association of Bankers, Minneapolis, Minn. Harry H. Tangenberg, Merchants' Exchange of St. Louis.

C. G. Anderson, manager Farmers Union Grain Co., representing 500 farmers, Aberdeen, S. Dak.

Home Farmers' Elevator Co., Sam Ellenbau, Frederick, S. Dak.

34574-21- -9

G. F. Ewe, Terminal Elevator Grain Merchants Association, Minneapolis.

George A. Kolb, manager Belgrade Flour Mill Co., Belgrade, Minn.

Farmers Elevator Co., Conde, S. Dak.

C. A. Nelson, secretary Farmers Elevator Co., Brooten, Minn.
Frank B. Rice, Star & Crescent Milling Co., Chicago, Ill.
Wm. S. Miles, president Peoria Board of Trade, Peoria, Ill.

A. A. Haagensono, Red River Seed Produce Co., Barnesville, Minn.

C. D. Curry, Columbia Equity Exchange Elevator Co., Columbia, S. Dak.

A. C. Loring, president Pillsbury Flour Mills Co., Minneapolis. Toledo Produce Exchange, Toledo, Ohio.

Harry J. Berry, Indianapolis Board of Trade, Indianapolis, Ind. Quaker Oats Co., Chicago, Ill.

M. J. Cull, Leeds, N. Dak.

F. P. Manchester, Omaha Grain Exchange, Omaha, Nebr.
Farmers Elevator Co., Lamberton, Minn.

J. F. Meyer, Groton Farmers' Elevator, Groton, S. Dak.

Mr. TINCHER. I do not want to deprive them of the right to be heard. But those are gentlemen who were invited to a banquet in Minneapolis, and they attended that banquet, and they have agreed to stall us off and keep this thing going on during the winter if they can. I want them to be heard, but do not want that banquet to stall us off and prevent legislation. Let them come on now.

The CHAIRMAN. I think it was tentatively agreed that we would give a week or ten days to the hearings. Will any member of the committee suggest how long we shall go on?

Mr. HULINGS. I move that the hearings be ended the last of next week, whatever date that is.

Mr. MCKINLEY. That will be the 15th.

Mr. HULINGS. All right, that is my motion.

The CHAIRMAN. You make a motion that the hearings be closed on January 15?

Mr. HULINGS. Yes, sir; and that the sessions of the committee be held so as to meet as far as may be the convenience of those who want to be heard.

The CHAIRMAN. All in favor of that motion will say aye. [A chorous of ayes.] It is unanimously agreed to. Those who have applied for hearings will be so notified.

Is anyone present who wishes to be heard this morning?

Mr. CALVIN. Mr. Chairman, if no one else wants to be heard this morning, I might say what I wanted to say to the committee. I thought there was a regular program, and therefore I did not come here this morning with the expectation of being heard today, but I will go ahead of it is the desire of the committee that I should do so. The CHAIRMAN. The committee will be pleased to hear you at this time.

STATEMENT OF MR. E. A. CALVIN, HOUSTON, TEX.

The CHAIRMAN. You will please give your name, address, and the name of those you represent to the reporter so that the record may show it.

Mr. CALVIN. My name is E. A. Calvin; my residence is Houston, Texas; and I am here at this time myself as a cotton grower. I will add that a number of farmers met in Houston, Texas, a few days ago and asked me to come and present the matter to the committee as best I could.

In this connection I will say that for two years I was president of the Farmers' State Union and was also for a short while president of the National Farmers' Union. I have worked with farmers' organizations since 1905 almost continuously. For two years and a half I represented the market board, composed of the commissioners of agriculture and the presidents of the various farmers' union organizations of the cotton States and was here in Washington during the war.

Mr. Chairman and gentlemen of the committee, I will state at the outset that it will not inconvenience me for the members of the committee to ask me questions whenever they are disposed to do so. I would rather talk in a conversational way than in any other way, and think that better results can be obtained by the members of the committee asking me questions and my attempting to answer them. I desire to say, Mr. Chairman, that I have given, in my own work with farmers' organizations, quite a good deal of study to this question. In fact, I have been studying the question since 1905, at which time we had up in Texas the matter of putting out of business what we called bucket shops. Representing the Farmers' Union at that time I made the fight before the Texas Legislature to abolish bucket shops from the State of Texas, and we succeeded in abolishing them. What I shall say to this committee in regard to exchanges

The CHAIRMAN (interposing). Have you abolished branch houses,.

too?

Mr. CALVIN. No, sir.

The CHAIRMAN. What is the difference between a bucket shop and a branch house?

Mr. CALVIN. Well, my understanding is that the difference is about this, to make a simple illustration: I could, by putting a wire into this building and tapping some one else's wire, convert this room into a bucket shop in about 10 minutes; that is, by making the chairman of this committee or some one else the owner, operator, and controller of the bucket shop. The remainder of us in the room would purchase and sell cotton or grain in small or large lots based upon the quotations shown on the blackboard. If we paid in our margins the owner of the bucket shop would receive them and put them into his pocket, he depending upon there being as many sales as purchases to prevent him from going broke in case of a radical change in the market. The result of those purchases and sales would not be reflected in any market in the world; they would simply be bucketed in that shop, or stopped there. We would be merely betting on the quotations placed on the blackboard. The CHAIRMAN. Based on quotations from where?

Mr. CALVIN. Based on the quotations quoted from the regular exchanges.

The CHAIRMAN. In that respect a bucket shop would be identical with a branch house?

Mr. CALVIN. Oh, no. In a branch house every sale made, every sale of cotton bought or sold, every bushel of wheat bought or sold

goes into a central market or to one of the exchanges, and there becomes a sale or purchase.

Mr. HULINGS. As it is fluctuated.

Mr. CALVIN. And if there is no fluctuation in the market, and the quotations are made correctly, the sale would be exactly the same in a bucket shop as in a branch house, with this important exception, that in the case of the bucket shop you would get immediate returns, and in the case of the branch house the transaction would go through an exchange before returns could be made.

Mr. HULINGS. All sales or purchases made in branch houses go through an exchange and are registered?

Mr. CALVIN. Yes, sir; and sales or purchases in a bucket shop are not registered anywhere except on the wall of the bucket shop, and those in the room of the bucket shop merely bet on the market as quotations appear on the wall.

Mr. HULINGS. Who keeps the bucket?

Mr. CALVIN. The owner of the bucket shop.

Mr. RIDDICK. And transactions in a bucket shop do not affect the value of cotton or grain at all?

Mr. CALVIN. Not at all, because those transactions are not registered in the market at all.

Mr. RIDDICK. What was the reason for your action in abolishing bucket shops in Texas? I just want to get it into the record.

Mr. CALVIN. Because they were purely gambling institutions; that was all they amounted to in Texas. We had 1,520 bucket shops scattered throughout the State in small towns, and we made a fight on the bucket shops because they were purely gambling places.

Mr. TINCHER. Well, I might say that it is the big bucket shop that I am after in my bill. The gambling now is all centered in one big bucket shop. It is purely the gambling end of the proposition that I want to put a stop to. I do not want to outlaw any legitimate trading, and do not think any other member of the Congress wants to do otherwise. As I understand you are not any more for the Chicago bucket shop than you were for the Texas bucket shops.

Mr. CALVIN. I am not for a bucket shop anywhere; that is correct. But I will say this, I heard some of the questions propounded and answers made on yesterday and the day before relative to why exchanges exist at all: In the days when men swapped peanuts for potatoes and coon skins for corn whisky exchanges were not necessary, but as the population of the world increased and as great cities were builded and transportation facilities built up and our commerce became world-wide in its ramifications, the time came when we had to ship immense cargoes of foodstuffs and raw material for the manufacture of wearing apparel and other things across the ocean, taking perhaps 60 and 90 or 120 days or more to transport the cargoes from seller to purchaser; I say then it became necessary to inaugurate some system whereby such commerce could be carried on without too great a hazard.

For instance, if it took three or four or five or six months to transport a cargo of wheat or of cotton to Europe, of course there was danger of fluctuation in price and the contract might be cancelled on arrival of the cargo. So the exchange came into existence, you might say as an evolution in business, the purpose being to enable

men to do business on as narrow a margin of profit as possible and at the same time try to do a safe business. That is my understanding of the evolution in the method of doing business and the establishment of the exchange, and it is upon that ground that I would attempt to defend it.

Mr. HULINGS. And no one farmer ever has enough to load a ship. Mr. CALVIN. That is the idea. Believing that to be the function of the exchange, it is perfectly plain to me why it is to the farmer's interest to have the exchange properly regulated and conducted; because, if the middle man, through the existence of the exchange, can handle grain, cotton, or other farm commodities on a narrow margin of profit, it enables him to give the farmers more nearly what the middle man receives from the manufacturer than he could otherwise give them, based on the market at the time.

pose

A good deal has been said before this committee as to the hedging features of exchanges. It seems to me that that is the principal purand function of an exchange; that is, to afford hedging facilities for the carrying on of business, the buying and selling of products. Some have said here that if the business could be limited to hedging there would be no objection to the operation of exchanges, probably. In other words, if all speculation could be cut out there would be no objection to the operation of exchanges. It was our contention, and we have given some thought to the question, that it is impossible to have proper hedging facilities without some speculation. We do not see how hedging could be carried on unless there was some speculation. For instance, to illustrate: One of you gentlemen may desire to sell a thousand bales of cotton, we will say, and some one else, at the other end of the line, engaged in manufacture, wants that cotton but that some one else is not ready yet to make his purchase. Then you, as a dealer, have got to sell your hedge. Your order is sent into the market, to the exchange.

Now, then, if it is sent in a little later or if it had been sent in a little earlier, I, as the manufacturer, might have purchased the hedge that you are desiring to sell because I might be wanting to hedge in the same amount you are wanting to hedge in. But I am not ready; I am not on the market at that time. The speculator, then, who stands by and is willing to take some risk believing that, based on conditions as he sees them, cotton is lower than it should be, is willing to take the risk and buy the order that you have sent in for sale, for a thousand bales of cotton. Later on I go in and I want to buy a thousand bales of cotton and he, the speculator, who had bought the thousand bales you have offered for sale, turns around and sells them to me. Each of us has been hedging, each of us has been protected, and each of us has so arranged our business, through that means, that we can do business on the narrowest possible margin of profit. In 1914, gentlemen of the committee, the cotton exchanges were closed as a result of the war. I do not believe the grain exchanges were closed at that time, were thay?

Mr. TINCHER. No.

Mr. CALVIN. There was a period of six or eight months when the cotton exchanges were closed; and, of course, no hedging facilities were offered to anyone dealing in cotton. During that time I saw cotton sell, of the same grade and the same staple, for $20 more a bale in one little local market in the country than the same cotton