Mr. DICKINSON. Suppose they happened to get their heads together and say: "Let us all buy to-day." Couldn't they raise the

market?

Mr. MACMILLAN. How could they do that? They are scattered all over the United States.

Mr. DICKINSON. Well, they seem to do a lot of things with a considerable sort of effort?

Mr. MACMILLAN. I can not see how that would be possible. Mr. DICKINSON. Well, as a usual thing don't you find the speculator catering to a rising market rather than to a falling market?

Mr. MACMILLAN. What do you mean by catering? More of them around on a rising market?

Mr. DICKINSON. Yes.

Mr. MACMILLAN. Yes; I think speculators are generally bullish. Mr. DICKINSON. When grain is going up speculators are in in greater numbers?

Mr. MACMILLAN. Than when grain is declining; yes, sir.

Mr. DICKINSON. So the speculator is in evidence until the peak is reached, and then he gets out from under and lets it go as far as it will go.

Mr. MACMILLAN. You must remember that there are speculators on both sides of the market all the time.

Mr. DICKINSON. You have just admitted that the greater number are on the rising side?

Mr. MACMILLAN. But I have not admitted that the greater quantity is on the rising side.

Mr. DICKINSON. I see we will have to tie you down to both number and bushels?

Mr. MACMILLAN. Wherever there is a buyer there must be a seller. There must be a balance.

Mr. DICKINSON. Yes; but after the buyers have bought, while the margins are going up, they can get out from under and let it go. It only reaches a bottom when the consumer comes in and wants a commodity for actual consumption?

Mr. MACMILLAN. If you mean there are a greater number of buyers on rising prices than on declining prices, then I think your statement is correct.

Mr. DICKINSON. No; what I mean is that the speculator has more to do with rising prices, and that the actual consumer is the fellow who prevents a drop below a certain actual valuation.

Mr. MACMILLAN. I do not think that is correct.

Mr. DICKINSON. You do not think that is correct?

Mr. MACMILLAN. No, sir.

Mr. DICKINSON. Aren't future prices reflected in the cash, as a general rule?

Mr. MACMILLAN. Approximately, but not entirely.

Mr. DICKINSON. Have you had any troubles with cash following futures at the present time?

Mr. MACMILLAN. Cash has declined more than futures.
Mr. DICKINSON. As a matter of fact, the hedge, in

to be an absolute insurance, or is it always an absol

Mr. MACMILLAN. Not absolutelo, sir.

Mr. DICKINSON. Have not +

hedged their purchases with

and cash did not run together, and they have lost as much on their hedge as though they had carried the original grain?

Mr. MACMILLAN. I do not know of any such case. The hedge only began, you will remember, the 15th of July.

Mr. DICKINSON. But I have reference to previous hedges, long before the war.

Mr. MACMILLAN. I have no recollection of any such conditions. Mr. DICKINSON. Would pure insurance against fluctuations, carried by a legitimately organized association for that purpose, suit the needs of your company just as well and answer the same purpose that the hedging privilege now answers?

Mr. MACMILLAN. In what way? Do you mean a straight out insurance policy?

Mr. DICKINSON. Yes.

Mr. MACMILLAN. I think it would if there is any way of providing it at a reasonable price.

Mr. DICKINSON. Well, you do not think that that would be any greater risk than insuring a man's automobile against theft or collision, do you?

Mr. MACMILLAN. I should think it would be vastly greater.
Mr. DICKINSON. You think the risk would be greater?

Mr. MACMILLAN. Yes, sir.

Mr. DICKINSON. You have not looked up data on the matter of automobiles that are bumped into in Washington, have you?

Mr. MACMILLAN. No; but I have to pay an insurance premium myself, and I have knowledge of what they charge.

Mr. DICKINSON. You do not think that that would be a legitimate field for an insurance organization?

Mr. MACMILLAN. I do not.

Mr. DICKINSON. That is all.

The CHAIRMAN. Without a fluctuating market, there could not be any speculation, could there?

Mr. MACMILLAN. There would be no inducement to speculation? The CHAIRMAN. There could not be any speculation if the price. were fixed?

Mr. MACMILLAN. No, sir.

The CHAIRMAN. Are complete records kept of all transactions on the Chamber of Commerce of Minneapolis?

Mr. MACMILLAN. There are no records kept at all.

The CHAIRMAN. Have you no record of the amount of the aggregate or the volume of business transactions?

Mr. MACMILLAN. Not kept by the exchange; no, sir. The clearing house has a record each day of the total trades and of the members making them.

The CHAIRMAN. What record does the clearing house make?

Mr. MACMILLAN. I do not know whether I can answer that. I am not an officer of the clearing house, and never paid any attention to their records.

The CHAIRMAN. Is that a part of the exchange, the clearing house? Mr. MACMILLAN. No, sir; it is a separate organization, but the conditions for membership are, first, that the individual, as a member of the Minneapolis Chamber of Commerce, will abide by the rules and regulations thereof, and it is organized solely to clear the trades of the members.

The CHAIRMAN. The exchange simply furnishes the building in which the operations take place?

Mr. MACMILLAN. That is all. We simply furnish a market place and quotation service to the traders.

The CHAIRMAN. How is the record kept?

Mr. MACMILLAN. The manager of the clearing association is Mr. Williams.

The CHAIRMAN. And that is independent of the exchange?
Mr. MACMILLAN. Of the chamber of commerce; yes, sir.

The CHAIRMAN. Is any complete record kept of the set-off or the ring settlements?

Mr. MACMILLAN. No, sir; that is all handled through the clearing house. Everything is brought to the close of the market each day and trades are balanced out. So, we have no ring settlements such as they have in Chicago.

The CHAIRMAN. You have no record of either one?

Mr. MACMILLAN. I do not know just in what form the records of the clearing association are.

The CHAIRMAN. Who could give that information?

Mr. MACMILLAN. I am quite sure that you could get that from the Federal Trade Commisison. They made a very exhaustive examination.

The CHAIRMAN. Any other questions?

Mr. MCLAUGHLIN of Michigan. You have heard the questions and answers here in regard to speculators and manipulators. There has been an effort made to define each and to distinguish between them. Are you able to give a definition of a speculator and of a manipulator?

Mr. MACMILLAN. I do not know whether I can give it any better than the other gentlemen did. We have been peculiarly free from manipulators in our market. We have had no attempts of that kind. But in a general way I think a manipulator is one who attempts to buy or sell more than the market would be able to take care of, and for the purpose of making it impossible to complete contracts, and therefore force a settlement.

Mr. MCLAUGHLIN of Michigan. What would you think of this definition of a speculator: One who deals under existing conditions as he interprets them but does not attempt to alter them. While a manipulator is a speculator who, by reason of the large quantities in which he deals, attempts to force artificial conditions or to exaggerate conditions for his own advantage?

Mr. MACMILLAN. I should think that was a fair definition. I am sure that it is better than I could have given you.

Mr. MCLAUGHLIN of Michigan. The speculator may be indulging in very small deals as they offer. The manipulator, under this definition, must necessarily be a man with a large amount of money, or making a show of having a large amount of money. Isn't that true? Mr. MACMILLAN. Yes, sir; I think that is correct.

Mr. MCLAUGHLIN of Michigan. I was interested in what you said to the effect that a very small percentage of the hedges and deals by speculators led to the actual delivery of grain.

Mr. MACMILLAN. I am glad to answer that question. For example, in our own case a hedge contract would require that we would

put into store in a regular elevator the specified number of bushels and deliver the warehouse receipt. It would cost a cent and a half a bushel to get that out of the store, plus any charges that would accrue, before it was possible to get it loaded. We bring that wheat from our country elevators into the market and sell usually direct to the mill, instead of making the delivery through putting it into the storehouse; that would make an additional burden, the minimum being a cent and a half a bushel, but it would really amount to about an eighth of a cent more, that including switching and inspection charges and so on. On the other hand, there is the advantage to us and to the mill to trade these cars on the track in Minneapolis for the hedge.

Suppose, for example, we speak of 10,000 bushels, and we have 10,000 bushels of wheat hedged. Well, we have 10,000 bushels of wheat on the track. The mill has that 10,000 bushels bought. It is no advantage to either party to put that in store and allow about 2 cents a bushel in charges to accumulate. By making the trade directly-that is, by their giving us a future--we can exchange with them the cash grain and make a considerable saving.

Mr. MCLAUGHLIN of Michigan. I was interested in your answer, as I referred to it before, because my impression had been and is that there was really a very small percentage of actual deliveries, and I have been surprised-very much surprised-at the testimony of gentlemen who have insisted to us that the percentage of actual deliveries was really very large. I did not think so. I do not think it is an advantage that it should be large. Those gentlemen have stated actual conditions, and I would not say anything that would reflect at all on any of the gentlemen who have told about large deliveries, although it seems to me that some of them wanted us to believe the percentage of deliveries was pretty large.

Mr. MACMILLAN. Well, there are so many different angles to the grain business that it is very easy for you to get different kinds of experience. A terminal elevator buys grain and hedges it with the purpose of making delivery, and they do deliver very large proportions of the wheat that they purchase. But as far as the grain that comes directly from the country is concerned, it is frequently a decided disadvantage to have that go into the storehouse. It is to the advantage of both sides to exchange the futures and take the cash grain on track rather than in the store.

Mr. MCLAUGHLIN of Michigan. It seems to me, as far as a determination of this question by the committee is concerned, as to whether or not it would seem advisable to recommend the enactment of any of this proposed legislation, that it is absolutely immaterial as to whether those deliveries are made or were contemplated; that there is some measure of speculation, some measure of gambling in it, and really it does not make any difference how much there is. I can not see why any gentleman should try to make this committee believe there is a great lot of deliveries on this proposition.

The CHAIRMAN. We are grateful to you, Mr. MacMillan.

Mr. MACMILLAN. And I thank you.

The CHAIRMAN. We will now hear the next witness.

STATEMENT OF MR. A. L. SEARLE, REPRESENTING THE TERMINAL ELEVATOR GRAIN MERCHANTS' ASSOCIATION, MINNEAPOLIS, MINN.

The CHAIRMAN. What is your association?

Mr. SEARLE. It is an association that covers all the primary markets.

The CHAIRMAN. You may make your statement.

Mr. SEARLE. The Terminal Elevator Grain Merchants' Association is an association representing the terminal elevator operators throughout the United States. This brief is filed on behalf of said association in opposition to proposed legislation, the purpose of which would be to destroy or seriously interfere with the buying and selling of grain for future delivery, as practiced on leading grain exchanges throughout this country.

Among the important factors in the distribution of the crop are the terminal elevators located at the leading terminal grain markets. It is the practice of the grain producers throughout the entire West to market the bulk of their product within a few months after the harvest and several times as fast as the actual consumptive demand during that period. The function of the terminal operator at the terminal markets is, in addition to storing grain for others, to purchase and store the surplus grain receipts during the heavy cropmoving period from September 1 to December 31 of each year, and to hold the same until needed by flour millers, linseed-oil crushers, and others. The terminal elevator operators are therefore very large buyers of grain, and their importance as buying agencies is not fully appreciated.

Practically all of the grain purchased by terminal elevator operators during the heavy-crop moving period and carried by them until the following spring or summer, is purchased with money borrowed from banks or others, and the security furnished for these loans is represented by terminal warehouse receipts.

These receipts are negotiable and are extremely serviceable as collateral in obtaining loans. The regulations governing terminal elevators vary somewhat in the different markets. In Minneapolis, for example, operators of public terminal elevators must be licensed by the railroad and warehouse commission of the State of Minnesota and must furnish a bond in the sum of 15 cents per bushel on the capacity of the elevator for the protection of holders of warehouse receipts. In addition the elevator operator must furnish daily reports to the State registration department, showing all cars unloaded into and loaded out of the terminal elevator and the amount of each grade of grain on hand at all times and the amount of warehouse receipts outstanding against same. All warehouse receipts must be precisely in the form prescribed by the statute and must be numbered consecutively and must be registered with and later canceled by by the State registration department. In addition the Chamber of Commerce of Minneapolis employs an inspector who continuously estimates the quantity of each kind and grade of grain in these elevators as an additional safeguard to the holders of warehouse receipts. All of these safeguards have resulted in terminal warehouse receipts representing the highest form of collateral