that insofar as the commission houses are concerned there would be no trouble with 90 percent of them.

Mr. GOODMAN. The thought I have in mind is that the board of trade, having control over the machinery of the code, could act much more effectively than the Department in getting information and reaching the violators.

Dr. DUVEL. I do not think that it would change that aspect of it.

Mr. GOODMAN. Then, do you believe that the code should be forgotten if the bill is enacted into law?

Dr. DUVEL. No. I am in full sympathy with it; but there are some provisions in the bill that are not in the code, and some in the code that are not in the bill. It is well to try them out.

Mr. FULMER. Have you finished?

Mr. GOODMAN. Let me ask just one or two more questions?

Mr. FULMER. Yes, Mr. Goodman.

Mr. GOODMAN. Would it not be better to operate under the code, since the code could be changed if it is found to be ineffective in dealing with the iniquities complained of, whereas if this bill is enacted into law it is pretty hard to change it in order to meet any of those problems?

Dr. DUVEL. The code, by operation of law, expires in June 1935, which is only 14 months away.

Mr. GOODMAN. Yes, that is true; but at the same time the code has been adopted, and would it not be well to try out the experiment rather than to place on the statute books a very definite law, a bill which is so hard to change?

Dr. DUVEL. Well, that is the same argument that has been presented here before when proposed legislation has been submitted, by those who oppose the enactment of it. Now, they say, "Wait until the next session of Congress' and when the next session of Congress comes along they will have some other reason and ask you to wait until some other plan has been tried out.

Mr. GOODMAN. That may be true; but would it not be well to try the experiment with the code and if it is found not to operate entirely satisfactorily, then a law can be passed? I just wanted to get your opinion on that.

Dr. DUVEL. No.

Mr. CHASE. I have one other question.

Mr. FULMER. Mr. Chase.

Mr. CHASE. Dr. Duvel, when was this bill drafted?

Dr. DUVEL. I beg your pardon?

Mr. CHASE. When was this bill, H. R. 8829, drafted; when was it completed?

Dr. DUVEL. Well, I cannot give you the exact date.

Mr. CHASE. Approximately; was it in January, February, or in December, or perhaps March?

Dr. DUVEL. It was early in February, I believe.

Mr. CHASE. February?

Dr. DUVEL. Yes; something like that.

Mr. CHASE. When was information about it furnished the public?

Dr. DUVEL. About the bill?

Mr. CHASE. About the bill.

Dr. DUVEL. When was information about this bill first supplied the public? Mr. CHASE. Given to the public.

Dr. DUVEL. I do not know that it was given until it was introduced in the House.

Mr. CHASE. That would be March 26, 1934.

Dr. DUVEL. Yes; whatever the date is.

Mr. CHASE. Not until about that time?

Dr. DUVEL. Yes; about that time.

Mr. CHASE. Did Mr. O'Neil or Mr. Taber have advance information about this bill?

Dr. DUVEL. Not that I know of.

Mr. CHASE. You will recall that one of them testified here that he was authorized by action of his board of directors in December, and the other by action of his board in January, later supplemented by action of his board in March or April to appear here in support of this bill. I presume that was in reference to general authority concerning the principle involved.

Dr. DUVEL. Of course, prior to the introduction of the bill it was known there was a demand for the present bill or some of the proposed amendments. I do not know what time that occurred.

Mr. CHASE. That evidently served as the basis for their statement. Dr. DUVEL. That was quite a little while prior to the introduction of the bill, although I think there was a temporary draft of the bill, submitted by the Secre

tary with the approval of the President, to this committee under date of February 14.

Mr. CHASE. Doctor, do you still think that there is no significance in that press release of the

Dr. DUVEL (interposing). That was not considered at all; that was turned over to the solicitor and went through the usual channels.

Mr. CHASE. Now, let me ask you about Mr. Crawford. Questions were asked about the case of a man named Crawford. When did he buy?

Dr. DUVEL. Mr. Crawford was a trader and had been trading in the market for quite a while.

Mr. CHASE. When were his operations which have been criticized, directly or by inference?

Dr. DUVEL. Well, Mr. Crawford has been criticized a good deal. I will say this for Mr. Crawford: He has been unjustly criticized in some things. He was a large speculator, as he admits, and has always admitted.

Mr. CHASE. May I ask you if it is true, as has been suggested here, that he started with a capital of $25,000?

Dr. DUVEL. I do not know.

Mr. CHASE. Could he have been a large operator with that capital?

Dr. DUVEL. Not with that capital.

Mr. CHASE. Then he must have had a large capital to have been a large operator?

Mr. DUVEL. He was a large operator. Whether he started in with $25,000, or when he started in, I do not know; I do not know anything about that.

Mr. CHASE. Do you know when he was buying in the market?

Dr. DUVEL. When he was buying?

Mr. CHASE. Yes; you say he was a large operator.

Dr. DUVEL. Yes.

Mr. CHASE. Do you know when he was buying?

Dr. DUVEL. I would have to look that up.

Mr. CHASE. What I am getting at, Dr. Duvel, is that some questions have been asked here about his operations, and I know very little about it; but I would like to know whether or not there was an infraction of the law, and if there was an infraction of the law, whether you took action; and if you did, what action you took.

Dr. DUVEL. Mr. Crawford traded in large quantities of grain, not only wheat but other commodities.. I do not know what his largest interest was, but he did more heavy trading during that period, I guess, between October 1932 and July 1933, when the rules or regulations concerning reporting requirements were suspended, at the time when the Chicago Board of Trade undertook to regulate itself, keep its own records, and to clean its own house and prevent excessive speculation. That was the situation when Mr. Crawford was Mr. CHASE (interposing). Did he lose any money?

Dr. DUVEL. We have no information; we were not getting reports at that time, and even though we had been getting reports, there is no provision in the law preventing a man from buying or selling 10,000,000 bushels or 20,000,000 bushels; that is not a violation of the law. Mr. Crawford, however, was one of the few men who, during all of this period, reported his transactions each day, although he was not obliged to do so. Some of the reports we have had may show that his tradings were large, but large trading in itself is not a violation of the law. Mr. CHASE. On the basis of your statement that this press-release statement concerning Mr. Cutten has nothing to do with this bill, there was no particular purpose in bringing the Cutten case into consideration of this bill, was there? Dr. DUVEL. There was not, and I am very sorry that it was interjected into the discussion.

Mr. CHASE. Then, the members of this committee may disregard entirely the discussion of the Cutten matter in considering this bill?

Dr. DUVEL. It does not have anything to do with it. It has nothing to do with it.

Mr. CHASE. Some questions were asked about it.

Dr. DUVEL. We knew that there were some big lines traded in on the board of trade, that there were some large transactions, and because of the information we had around May 13, after there had been an advance of about 25 cents a bushel, Secretary Wallace called upon the board of trade to furnish him information that was being reported to the board of trade on these special accounts. And my inquiry in the office a few days ago indicates that letter has never been replied to and that the information was not furnished. There was a statement before

this committee the other day that there was no line exceeding 2 million bushels. The records show otherwise.

Mr. DoXEY. Have you completed?

Mr. CHASE. I have one or two more questions I would like to ask.

Mr. DoXEY. Go right ahead.

Mr. CHASE. In view of some of the questions that have been asked and statements that have been made concerning the provisions of the proposed legislation, I would like to ask, Dr. Duvel, if it is true that this bill is aimed primarily at the Chicago Board of Trade?

Dr. DUVEL. It is not aimed at the board of trade.

Mr. CHASE. Is it intended to control them; is that your idea?

Dr. DUVEL. Eighty-five percent of the trading is done in Chicago, and any price movement in other markets moves along with Chicago.

Mr. CHASE. Then, do I understand

Dr. DUVEL (continuing). And naturally, Chicago is affected most.

Mr. CHASE. There is nothing else back of it?

Dr. DUVEL. That is all.

Mr. CHASE. Now, may I ask you this question: Have the members of the Chicago Board of Trade been helpful to you in your department or antagonistic toward you?

Dr. DUVEL. They have been both. For instance, we have members on the Chicago Board of Trade and on other exchanges, and some large commission houses, who have authorized us to examine their records at any time and have said to us, "Don't bother us when you want to examine our records; you know where the books are, and you have authority to go there and get what you want, and if you cannot find it our men will be glad to help you.'

We have other houses, as I said awhile ago, where every time we find it necessary to examine the records more time is consumed in explaining our authority under the law than is required to do the actual work involved in the examination of the records. Frequently it does not require more than 10 minutes to get all the information needed.

We have repeatedly urged upon the Chicago Board of Trade to impress upon its members those trading on the board-that they must give us access to their records.

That has been partially complied with and partially not.

Now, just one word with reference to the case against Mr. Cutten. I do not have any grudge against Mr. Cutten. Personally, he is a delightful gentleman, as are all of these large traders. I have met a number of them during this period. But prior to 1933 there have been only 16 who have had transactions involving 2,000,000 bushels or more, and 3 of them have gone to their final resting place. Those whom I know personally are delightful people; they are interested in profits; they are anxious to make money

Mr. CHASE (interposing). Let me ask you one further question. object to speculation?

Dr. DUVEL. No.

Mr. CHASE. Do you regard it as necessary in the marketing of grain?
Dr. DUVEL. As long as we have the futures market; yes.

Do you

Mr. CHASE. And it is the manipulation by operators that you are seeking authority to control?

Dr. DUVEL. Yes.

Mr. CHASE. Their manipulations in the market?

Dr. DUVEL. That approach manipulative operations, excessive speculation.

Mr. CHASE. And you think the passage of this bill would help to accomplish that purpose?

Dr. DUVEL. I think it would; yes.

Mr. CHASE. Then may I ask you this question: In what particular, or why, do you regard the code as ineffective? Is it because it is purely temporary or because it lacks teeth, or is it because it is not comprehensive enough?

Dr. DUVEL. Well, in the first place, it is temporary. In the second place, it does not go far enough, in my opinion.

Mr. CHASE. In what respect does it not go far enough?

Dr. DUVEL. Well, I will answer your question, but I want to say, as Mr. Mehl has already told you, that we are interested in the code and are going to do every thing we possibly can to help make it a success.

So far as the 25-percent marginal requirement of large traders is concerned, I do not believe it can be enforced. I would like to see it enforced, and we are going to do everything we can to enforce it and to make the code a success.

Now, on the question of margins, I personally feel that the grain and commodity markets offer different problems in the matter of margins than we find in the stock market. A commodities market is handled in a different way. If large-scale speculative trading is detrimental to the market-and there is no doubt about it in my own mind—it would seem desirable to provide some means of restricting it. If there is to be a limit, it should be fixed in advance and not changed in the middle of the game, and made the same for all traders. While an increase of margins on large trades, as required under the code, may serve to restrict some speculative operations, it will result in even greater advantage to the trader having sufficient funds to meet such increased margins. Heavy concentrated trading is generally closely associated with excessive price fluctuations. That is what took place last July when the price of May wheat dropped from $1.28% to $0.974, or more than 30 cents per bushel, in 2 days. On July 20 we had the largest single day's trading in wheat in the history of the board of trade163,117,000 bushels. The next largest day was October 24, 1929, with total trading in wheat of 156,126,000 bushels and a price decline of 11% cents.

Mr. CHASE. Your statement is that you do not think the code will control that situation?

Dr. DUVEL. No; I do not believe it can be properly policed.

Mr. CHASE. It will not relieve it?

Dr. DUVEL. It places some restriction on the large traders and in many cases will be effective.

Mr. CHASE. The code can be amended?

Dr. DUVEL. Yes; the code can be amended

Mr. CHASE. Mr. Mehl made a statement that the bill was drafted primarily to control operations of some 8 to 16 men; is that your opinion?

Dr. DUVEL. Well, insofar as that limit is concerned, we know that there are only 8 to 16 of them during this period; we have never had over 16.

Mr. CHASE. Up to 16?

Dr. DUVEL. Yes.

Mr. CHASE. Since what time?

Dr. DUVEL. Since 1925, up to the end of 1932, only 16 individuals have ever reached 2,000,000 bushels or more.

Mr. CHASE. And in your judgment, this general legislation is necessary to control the operations of those 16 men?

Dr. DUVEL. Well, there are only a few of them.

Mr. CHASE. Yes.

Dr. DUVEL. There have been only a few whose operations were that large. Mr. CHASE. Are you authorized to answer questions relative to the policy of your Department?

Dr. DUVEL. Well, the questions of policy are left to the Secretary, of course. Mr. CHASE. Yes.

Dr. DUVEL. Questions of policy are left to him.

Mr. CHASE. That is all.

Mr. MITCHELL. Just one question. From what I understand you to say, the Commission is without power and has not been able to control the market flucuation; the N. R. A. cannot possible control it, and the exchange will not control it, then why have the shell game at all? Why not just abolish it by law and let our farmers earn their living by the sweat of their brow, as the Bible says? Dr. DUVEL. My answer is that I do not know.

Mr. MITCHELL. Nobody seems to be able to control it.

Dr. DUVEL. But I would like to say that we have been working under this system for 80 years, and I would like very much to see the abuses corrected so it can operate with greater fairness.

Mr. MITCHELL. It has just been a shell game, has it not?

Dr. DUVEL. There are abuses, of course.

Mr. MITCHELL. It is just a shell game, and first you see it, and then you do not see it. Why not just abolish it and let the law of supply and demand have an opportunity to operate?

Dr. DUVEL. My ambition-I may say that I believe in the futures marketand I sincerely hope, sometime before I die, to see the Chicago Board of Trade an institution of such standing that when you go out into the country and talk with the producer you will find him well informed as to how his commodity is handled and he will stand up for the futures-trading system and say that we have the best marketing machinery of any plan ever developed. I do not know whether that is possible, but I have that ambition.

Mr. MITCHELL. It will require some change.

Dr. DUVEL. I beg your pardon.

Mr. MITCHELL. There will certainly need to be some radical changes made. Dr. DUVEL. I would like to see it given another trial.

Mr. MITCHELL. That is your hope, at least?

Dr. DUVEL. Yes.

Mr. MITCHELL. And in your opinion you think it should be permitted to exist? Dr. DUVEL. Yes.

Mr. FULMER. How much longer do you think it will take you, Dr. Duvel? We will have to complete the hearings in a short time.

Dr. DUVEL. I can stop most any time, Mr. Fulmer.

Mr. FULMER. You will have the privilege of extending your remarks, of course. Dr. DUVEL. Most of it has been discussed.

Mr. DoxEY. Just in conclusion. I do not want to inject myself into this, but I will say, Dr. Duvel, that the committee appreciates your position and the position of the Department. Now, this thought occurred to me in the answer to a question that Mr Chase brought out, and I say this merely for the purpose of the record. He indicated that some member of the committee, by questions, brought forward the Crawford case. I think the record will bear me out, and Í make the statement, that a statement from one of the witnesses referred to the July episode, which is nothing more than the Crawford case, continuing from October 1932 to July.

I do not think it was the purpose of any member of this committee to bring that into the discussion here, but it was brought up in that way, and since that has been injected into the record, I want to ask you this question:

By what authority, or at whose suggestion, were the rules suspended from October 1932 to July 1933 for the purpose of permitting or allowing the Chicago Board of Trade to clean its own house?

Dr. DUVEL. So far as I know, I will answer by the best information I have. Mr. DOXEY. Yes.

Dr. DUVEL. It was at the request made of the Chicago Board of Trade at that time. It was, however, approved by the Secretary.

But I would like to add one thing further; it was stated here the other day that the exchange was closed July 21 and 22 because the personnel were overworked and could not go on any longer. Now, personally, I do not believe that was the

real reason.

Mr. DOXEY. That is all.

Mr. BOILEAU. Dr. Duvel, you stated, as did Mr. Mehl, that 16 typically large operators have bought 2,000,000 bushels or over during the time since 1925, and yet you have no law, no criminal law, at the present time against them. Dr. DUVEL. No.

Mr. BOILEAU. Would you object to giving to this committee the names of those 16 men who apparently have exercised such a tremendous influence on the price of grain?

Dr. DUVEL. That is one thing that the law prohibits; as it stands now, we cannot give their names.

Mr. BOILEAU. But these 16 men do have a tremendous amount of influence on the price of grain; is that correct?

Dr. DUVEL. Yes.

Mr. BOILEAU. And it is your opinion that their operations largely control the price of grain?

Dr. DUVEL. As I stated the opening day of this hearing, in 80 percent of the cases where there was a large fluctuation in price we had large concentrated speculative transactions.

Mr. FULMER. We desire to thank you. We have some correspondence here which we have had requested to be read, but unless there are some objections, it will be inserted in the record.

The committee will stand adjourned subject to the call of the chairman. (Thereupon at 12:20 p. m. the committee adjourned.)

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