under the price now if you should have it in Chicago for today's deliver?

Mr. POST. Well, that is quite natural to understand, it seems to me. Mr. TINCHER. That is easy for you to understand?

Mr. PosT. It seems to me so.

Mr. TINCHER. It is said that the people buying wheat in Chicago on yesterday were of two classes: First, the miller, who is going to grind the wheat; and, second, the exporter, who wants to export it. With that information I want to know how it is easy to understand why May wheat would be 28 cents more than the price of cash wheat?

Mr. POST. Because there will be three countries' crops on the market between now and May.

Mr. TINCHER. What three countries' crops do you refer to?
Mr. POST. The Argentine, India, and Australia.

Mr. TINCHER. Has Argentina thrashed its wheat yet?

Mr. Posт. No.

Mr. TINCHER. When do they thrash?

Mr. POST. They harvest in January, I think, about now.

Mr. TINCHER. They have now the Government's estimate of the yield of wheat in the Argentine?

Mr. PosT. Sure.

Mr. TINCHER. Where else did you say?

Mr. PosT. In India and Australia.

Mr. TINCHER. When do they thrash?

Mr. POST. You have got me now into deep water, and I don't know. Mr. TINCHER. You say it is easy to understand, and if it is easy for you to understand I would like to have you explain it to me.

Mr. POST. I say it is because those countries have not had their wheat on the market yet, but will have it on the market in May.

Mr. TINCHER. You say it is easy to understand and yet you do not understand it, and I do not understand it, and nobody has been here from any one of these exchanges who has explained it in any way. But I suppose it is easy to understand from what you say.

I make this.statement because I anticipate there will be some men to challenge it, and if so, I want them to do so and then explain the matter. I think the only understanding is that the gamblers in wheat are holding the price of futures down in an attempt to hold the price of the cash article down, and that they are not ready yet to take their clean-up by having the price jump. That is my opinion of it, and I say that fully understanding that there are plenty of men in town here now and in the grain exchanges who will have the right to challenge it.

Mr. POST. Why don't they take the same attitude toward the cash article to-day, then?

Mr. TINCHER. If the gamblers would let wheat alone to-day it would sell for cost of production, because there is a sufficient demand for the product by the consuming public to have that result. But the gamblers, by manipulating futures, are holding the price 28 cents or 30 cents or 40 cents below the cost of production. That is my position.

Mr. MCLAUGHLIN of Michigan. Do you agree with Mr. Tincher on that?

Mr. POST. No; I do not. I do not see how I can when I stop to realize that wheat is the highest commodity to-day that is raised on the farm.

Mr. MCLAUGHLIN of Michigan. Highest in what respect?

Mr. PosT. In cash value.

Mr. MCLAUGHLIN of Michigan. You mean as to the selling price of it?

Mr. POST. Yes, sir.

Mr. TINCHER. You are interested in the grain business?

Mr. PosT. Yes, sir.

Mr. TINCHER. Your profit depends upon the fluctuations in the market?

Mr. POST. No; my profit depends upon my monthly salary.

Mr. TINCHER. Oh, you are just testifying from the standpoint of a salaried man?

Mr. POST. I am testifying for the company.

Mr. TINCHER. Their profits as a company-not as stockholders but as a company-depend upon the fluctuations in the market? Mr. POST. Oh, no.

Mr. TINCHER. They do not want any fluctuations?

Mr. POST. As far as we are concerned as a company, it does not make any difference whatever either way.

Mr. MCLAUGHLIN of Nebraska. If the period of time for the consummation of future deals were made 60 days, would that interfere with your transactions?

Mr. POST. Yes, sir.

Mr. MCLAUGHLIN of Nebraska. What is the average time of your hedging contracts?

Mr. POST. I could not tell you the average time, but a lot of them run as high as six and eight months.

Mr. MCLAUGHLIN of Nebraska. Has any member of your cooperative organization become a member of a grain exchange?

Mr. PosT. No, sir.

Mr. MCLAUGHLIN of Nebraska. Is any one of them a member of a board of trade?

Mr. PosT. No, sir.

Mr. MCLAUGHLIN of Nebraska. Could they hold membership in either a grain exchange or on a board of trade if they wanted to? Mr. POST. Yes, sir.

Mr. MCLAUGHLIN of Nebraska. You say they could?

Mr. POST. Yes, sir.

Mr. MCLAUGHLIN of Nebraska. Do you know that to be a fact? Mr. POST. Why, memberships are for sale at all times to anyone of good character.

Mr. MCLAUGHLIN of Nebraska. There has been some testimony adduced here to the effect that no cooperative organization has ever been able to land a place on any board of trade or grain exchange; that for some mysterious reason they are barred. Do you know of any cooperative organization that has membership on a board of trade or grain exchange?

Mr. Posт. No, sir.

Mr. MCLAUGHLIN of Michigan. The first question was if anybody connected with your cooperative organization was a member

of a board of trade. I do understand that they bar such organizations as an organization but they do not bar the members who make up such an organization, do they?

Mr. MCLAUGHLIN of Nebraska. I mean as representing the organization. Of course, an individual might become a member; but I mean that no individual has a right as the representative of a cooperative organization on the board of trade.

Mr. MCLAUGHLIN of Michigan. Your idea is that a man who is a part of a cooperative organization who asks for membership for himself individually would be permitted to have a seat on the grain exchange, but that if he asked for membership as the representative of a cooperative organization he would be refused. Mr. Post, do you understand that to be the situation?

Mr. POST. I never heard of anything like that before.

Mr. MCLAUGHLIN of Michigan. None of your members, either individually and solely for himself or as representing the organization, has asked for any such memberbship?

Mr. POST. No, sir.

Mr. MCLAUGHLIN of Michigan. You do not know what the practice of the exchanges would be in that matter?

Mr. POST. No, sir; I have no idea.

The CHAIRMAN. Do you contend that storing and hedging go hand in hand; if you abolish the future you would be compelled to stop? Mr. POST. Yes, sir; in any quantity whatever.

The CHAIRMAN. You would have to fill your elevators?

Mr. POST. You can not do that, because you have only enough room to take care of the current business. At the present time we have twice the grain in store that is represented by the capacity of our elevators.

The CHAIRMAN. Outside of your storage would it be absolutely necessary to the elevator man?

Mr. PosT. It is necessary in this respect-

The CHAIRMAN (interposing). Shortage of cars, of course; but how about outside of that?

Mr. POST. Well, you can handle grain on a much smaller margin of profit in that way than by holding it over and actually merchandising your stuff.

The CHAIRMAN. On cash transactions you do not hedge; you sell them on bids?

Mr. PosT. No, sir.

The CHAIRMAN. Do you say you do not handle corn and oats in that way?

Mr. POST. No, sir; not one time out of a dozen. You always take a discount if you do that. Bids will average as high as 1 to 2 cents a bushel on wheat off the spot market. In selling on bids you are just giving the other fellow who takes the hedge for you all that premium.

The CHAIRMAN. You ship out grain for cash as quickly as you can get the cars?

Mr. POST. Yes, sir.

The CHAIRMAN. If you take a thousand bushels in to-day, do you sell a future?

Mr. POST. Yes, sir.

The CHAIRMAN. Practically every day?

Mr. POST. Yes, sir; every day that I buy a thousand bushels.
The CHAIRMAN. You ship your grain to Chicago?

Mr. PosT. To the best market.

Mr. TINCHER. Do you mean to say that if you bought a thousand bushels of wheat on yesterday at your elevator you would hedge that by selling a future option?

Mr. POST. Yes, sir.

Mr. TINCHER. For what month would you sell?

Mr. POST. I would sell March to-day.

Mr. TINCHER. You would buy wheat if you could sell cash in Chicago at over $2-on yesterday it was $2.08-and sell a March option for $1.80?

Mr. POST. Yes, sir. But I could not sell that in Chicago at $2.08, as you speak of it, when I am out in the country. You have to have the wheat in Chicago in order to sell it for $2.08.

Mr. TINCHER. I understand; but the base is $2.08. You can sell it on the track and make a draft for it on the basis of $2.08, as it was in Chicago on yesterday?

Mr. POST. No, sir.

Mr. TINCHER. Why not?

Mr. POST. Because you could not get a bid.

Mr. TINCHER. You do not know what the bids were on yesterday for wheat on the track?

Mr. PosT. No; but I do know what they have been on previous days. Mr. TINCHER. Did you have any bids on yesterday?

Mr. PosT. No; I am a good ways from home, and I could not know. Mr. TINCHER. Your elevator had cards on yesterday morning with bids for cash wheat that would permit you to load wheat in a car, and it was their wheat then, based on certain deliveries?

Mr. POST. Yes, sir.

Mr. TINCHER. If you were selling it in Chicago, it would be the Chicago price less the freight charges to Chicago?

Mr. POST. It depends upon what you call the Chicago price. It would not be Chicago spot price.

Mr. TINCHER. If you bought wheat in your town on yesterday and sold an option at 20 cents less than the price of cash wheat, you were operating to help the gamblers to keep the price down, instead of using a legitimate hedge to protect yourself. You were making one of the many fictitious deals that is keeping the farmers' wheat down. If you say you need the hedge, why, when the future is 28 cents below the price of the cash product, it seems to me it shows the fallacy of the whole proposition. If the future was higher there might be some argument whereby you would need to hedge.

Mr. PoST. It looks to me just the opposite-that with wheat selling at that price below, the gambler is not making very good headway in forcing the price of wheat down.

The CHAIRMAN. Why is it necessary to hedge a cash transaction? Mr. PosT. Simply because there is not one day out of a dozen that you can get a bid on wheat.

The CHAIRMAN. I am talking now mostly about corn and oats.

Mr. POST. Well, I tried to explain that a minute ago by saying that track bids on the basis of Chicago on corn will average from

2 to 5 cents a bushel less than the Chicago price for corn on the same dav.

The CHAIRMAN. You often get other bids than from Chicago?

Mr. POST. Yes. Take the Quaker Oats Co., and the Douglas Co., when they were in business. But it was very seldom, except when corn was getting scarce, that you could get a bid that was as advantageous as your terminal market spots.

The CHAIRMAN. I understand that you can do better by selling direct than by going to Chicago?

Mr. POST. I do not necessarily mean Chicago.

The CHAIRMAN. If you buy 1,000 bushels to-day, and have an offer, say, of 62 cents for corn, and you accept that offer, that is the end of it?

Mr. POST. Yes; there is no future transaction in that.

The CHAIRMAN. Is there much need of hedging in case of cash transactions?

Mr. PosT. If you are willing to sacrifice the difference in price between track bids and the others, no.

The CHAIRMAN. Oh, but there is a difference in price, as I understand it, and you say there is a difference?

Mr. POST. Yes, sir.

Mr. TINCHER. Your testimony is based upon the premise that there is not one time out of a dozen that you have a cash bid for wheat? Mr. POST. Yes, sir.

Mr. TINCHER. Taking that as a proper premise to start from, I think you are right.

Mr. POST. In fact, I do not think I have had a bid on wheat for 40 days.

The CHAIRMAN. Iowa is not a wheat State?

Mr. POST. No; but we are in a wheat territory. It is a heavy wheat station, too.

The CHAIRMAN. We are very grateful to you.

Mr. POST. And I want to thank you gentlemen.
The CHAIRMAN. We will now hear Mr. Ray.

STATEMENT OF MR. W. J. RAY, OF BOONE, IOWA, REPRESENTING
C. H. THAYER & CO., CHICAGO, ILL.

Mr. RAY. I will speak from the knowledge I have of the country end of the situation. I think that future trading as a hedging proposition for the grain shipper out in the country and for the farmer is very beneficial. It permits him to buy the farmer's grain, and in turn, sell a hedge against it, and ship grain whenever he can get the cars or it is convenient for him to ship, or that it is convenient for the farmer to deliver the grain. He does not need to have a specified number of days to do that in. Then when he ships his grain on to the market and he sells on the spot market, on the cash market, it sells on a competitive basis and he gets everything there is in the way of value for the grain, and he can, in turn, buy in his hedge at the same time with the proceeds of his cash sale. It makes a protection or an insurance for him.

There are possibly times, very few times, when the spread amounts to very much. And, as an illustration, fire insurance does not always