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We will buy the wheat if we can hedge it and we need the speculator to hold the market up until the demand catches up with the supply.

If this code were given a fair chance, if it is found best to limit lines or any of the things that a majority interested want in that bill we can amend the code and if it is found after a year or more that this code does not cover it, I certainly will have nothing to do with it and we can kill it and then go on with your legislation.

Now, my point, Mr. Chairman, in taking up your time is to earnestly request that you do not handle this bill hurriedly; that you appoint a subcommittee to go into these matters more in detail-our people will give you all of the information—have hearings and hear both sides of this question. There are so many people that are interested in just one phase of this question, but appoint a subcommittee that can take the time to go into the details on each side and if we cannot convince them that the farmer is going to get the worst of it on this, that you will throw a lot of people out of work; that you will tear down an industry, where we have nothing to substitute, then go ahead and pass your law; but first give us the benefit of appearing before a subcommittee that has lots of time and go into every phase of this thing. We will furnish all of the information you want; we will open up the avenues for investigation and it certainly is of great interest not to virtually hamstring a market that has been 75 or 80 years building up, without going into the details.

Now, if your committee decides that after that that it is the proper thing to go ahead and pass this bill, after you find out what you are doing, why, we will have to abide by the consequences.

I will be glad to answer any questions, Mr. Chairman.

The CHAIRMAN. Just one or two questions, Mr. Davis. You spoke of the 10 days' notice. How much iotice is given now?

Mr. Davis. None. It is usually known if a man is going to deliver


The CHAIRMAN. You mean that I can tell a man that I have this wheat right out here for delivery and he has to take it now?

Mr. Davis. Yes. Deliveries are made by warehouse receipts to the clearing house and we have to take wheat or corn or oats and put it in the elevator, weight it up, have it inspected, have the receipts registered, and then make delivery through the clearing house with the warehouse receipt. Well, that takes a minimum of 2 or 3 days, probably 2; of course, if we have the grain in the elevators we can deliver immediately.

The CHAIRMAN. The Secretary may fix the time at not to exceed 10 days. He would fix a reasonable time, would he not? He would fix any time that the dealers found practicable.

Mr. DAVIS. Yes; but he fixes the time not on the basis of what the farmer gets for the grain. He fixes

The CHAIRMAN. Ought not there to be a certain time? You do not have any maximum limit at all now. Is that the way it is?

Mr. Davis. No; there is no time limit, Mr. Chairman.
The CHAIRMAN. No time limit in any way.

Mr. Davis. You see, a man knows if he stays within the current month that he gets delivery.

Now, nine-tenths of the trade go out before the 1st day of the month, because nine-tenths of the trade is speculative and they do not want delivery. They are engaged in trying to guess the future course of the grain market. It is the 10 percent that stay in such as mills, people of that sort, that want delivery, and they are always prepared to take it. They make their arrangements before the 1st of the month. Most of them have their offices there. For instance, Washburn-Crosby, Pillsbury, Larabee, all have offices there.

The CHAIRMAN. So it can range clear across from the time the order is taken to the end of the month the way it is now, and there is no definite, specified time?

Mr. Davis. No; none at all. , The CHAIRMAN. Would it not be better for both sides to have a time limit on those things so you would know that there would not be any danger of misunderstanding or any undue advantage taken?

Mr. DAVIS. Why should a man who says he wants December wheat to grind into flour against a sale he has made, why should he have any time? He does not care when he gets it. He hopes he does not get it until the last day of the month.

The CHAIRMAN. But the other fellow may take some time.
Mr. DAVIS. Selling?

Mr. Davis. He has to go out and get the grain, Mr. Chairman, and the man who buys December expects delivery.

The CHAIRMAN. If there were a definite specified time, both sides could be ready for it.

Mr. Davis. "Well, as it is the man who buys knows. Those things have been developed over a period of years.

Now, as I said 10 days would just cost the farmer from threeeighths to three-quarters to carry that grain.

The CHAIRMAN. Your board could make a recommendation covering that. The code could have a regulation covering it. Mr. DAVIS. Oh, yes, we could. The CHAIRMAN. Have you ever done it? Mr. DAVIS. If it were found desirable, we could.

The CHAIRMAN. Has it been done? Mr. Davis. No; it has not been advisable. The CHAIRMAN. Has it been tried on delivery? Mr. Davis. No; because of the added cost of doing business. Our idea is cost-you have no idea how close the grain is handled; cash grain.

The CHAIRMAN. With regard to this 15-day provision that the time shall be fixed not earlier than the 15th day of the delivery month to which the contract applies : Suppose a fellow comes right in at the last day of the month. He would not have time to enter into a contract, if actual delivery was to take place during that month. It seems to me this is just giving the department a chance to make this definite so that there will be no misunderstandings.

Mr. DAVIS. Well, suppose it rains, Mr. Chairman, in July, and the farmer out there cannot get his wheat in. Now, these mills may have bought wheat against flour sales. Do you think it is right to shut them out of the last 15 days of July? We would be shut out. We would be glad to buy their wheat when it comes in on the market, and in 2 days we can deliver it for the farmer.

The CHAIRMAN. This does not say it shall be the last 15 days. It shall not be longer than that. It might be made a maximum of 3 days, or 5 days, after consultation and the Secretary sees which would be the best.

Mr. Davis. Who is he going to consult; who is going to tell the Secretary what the conditions are in Kansas City, Minneapolis, Toledo, or any other place?

The CHAIRMAN. You have a rather practical man at the head of the Grain Futures Administration, have you not?

Mr. Davis. Mr. Duval is very familiar with futures trading, but I do not think that the doctor would claim to be an expert on cash grain. If he is, he ought to be in the cash-grain business, because we have got a big field there and need more men who are competent in the cash-grain field.

The CHAIRMAN. Of course, you understand this bill does not affect hedging in any sense at all.

Mr. Davis. But, Mr. Chairman, that is what I want to get across to you. You say it does not affect hedging.

The CHAIRMAN. You say, of course, that you have to have the market in order to hedge. Mr. Davis. That is it.

The CHAIRMAN. In your argument you are clear over with the other fellow because of the necessities of the market.

Mr. DAVIS. Yes. We must have a market. We cannot hedge unless we have a buyer. We do not care what the buyer does with it. You see, it goes through the clearing house. We do not even know who the buyer is. We deliver the warehouse receipt. The price is what we are interested in.

The CHAIRMAN. We are getting into a field that has been covered so thoroughly on that that I will not ask any further questions.

Are there any other questions by any of the members of the committee ? Mr. GILCHRIST. Mr. Chairman, I would like to ask something.

The CHAIRMAN. Mr. Gilchrist. Mr. GILCHRIST. This bill has been before Congress for the past year or two and even before that, has it not?

Mr. Davis. In various forms; yes, sir.

Mr. GILCHRIST. Well, is it not true that this specific bill has been before Congress and that the only difference here is the transposition of some of the paragraphs in this bill as compared to former bills?

Mr. Davis. Substantially so.
Mr. Davis. But we had no code then, Mr. Gilchrist.
Mr. GILCHRIST. I know.

Mr. Davis. We developed that in the light of this bill to cover the points that we thought you wanted covered.

Mr. GILCHRIST. You believe in a code system, do you, for all of the industries, eight or ten hundred of them?

Mr. DAVIS. Well, that is a rather large order to ask whether I believe in the code for all of the 800 industries. I believe that a code endeavoring to cover any abuses in the future market is much more flexible than any law you could pass, because if you found, for instance, on the limitation of lines, if you found that it did not work and that it was putting the farmers' grain down 10 to 25 cents a bushel, you could in 30 days' notice, with the Secretary's permission, amend the code and take it out.

Mr. GILCHRIST. How is it amended when it is amended ?
Mr. Davis. The Secretary and the President-
Mr. GILCHRIST. By the trade itself!
Mr. Davis. Their recommendations.

Mr. GILCHRIST. The trade itself is instrumental in making the amendment? · Mr. DAVIś. The trade holds a hearing. Mr. GILCHRIST. Yes. Mr. Davis. And everybody is heard. Mr. GILCHRIST. They then make a recommendation.

Mr. Davis. Then we recommend it to the Secretary. If the Secretary approves, he passes on it and the President approves the amendment, and then it becomes law.

Mr. GILCHRIST. Then it is up to the Secretary finally to amend the code if he wants to ?

Mr. DAVIS. After hearings.
Mr. GILCHRIST. After hearings?

Mr. Davis. Yes, sir. And the agreement of the trade. Of course, he can force amendments against the advice of the trade. He has that authority under the code. Mr. GILCHRIST. Well, that is all.

The CHAIRMAN. Any further questions? If not, we desire to thank you, Mr. Davis.

Mr. Davis. Thank you, Mr. Chairman.



Mr. WICKHAM. Mr. Chairman, I should like to add my voice to the suggestion of a subcommittee, and I wish also to extend to that subcommittee a very cordial invitation to visit the Chicago Board of Trade and study these processes.

Now, that institution was not built from a blueprint. It is merely the experience of merchants, crystalized in the white heat of individual competition. Every rule there has a purpose. Every rule there is tested by the experience of merchants. It is hard to explain it all, but I do feel that if a subcommittee would come there, let us show them the reasons for these various rules, let us show them processes, they would have information that they will never get through orations delivered here.

We need study of this question, real study of it.

Dr. Duval is head of a bureau, and has naturally a desire to increase the power of that bureau, just as I, as a grain merchant, desire to promote my business. Our viewpoints are colored. They must be, by our personal desire and ambition; but here is a great trade institution that you propose to regulate. But if you are going to do so, study the question; study the trade.

One point, in particular, that has not been brought out at all in all of these discussions, and, in my judgment, it is the most important of all, and that is the uniformity of law. We have always been told that a law should be something that anyone who runs may read. They say that the grain trade has always opposed legislation. Well, why shouldn't we? Legislation has become a matter of confusion. We are under the Agricultural Departinent. Other codes run to the N. R. A. Ours runs to the N. R. A. and the A. A. A. That is two more departments. We are under the Grain Futures Administration. There is a fourth department. And then we have 48 States passing laws regarding our contracts. Conflict after conflict. The United States Government says we can do something. The State of Illinois says we cannot. The code says you must do something. The State of North Dakota says you cannot.

Now, if you are going to pass a law, and I feel that the trade is more eager than anything else that it should be clarified and there should be some authority that we can go to and find out what we can do; but I submit that in all justice, if you are going to draft a law, if the Federal Government will say, as it has said, that these future contracts are in the stream of interstate commerce and subject to Federal regulation and Federal control, and that is sustained by the Supreme Court, then you must take away the control of these 48 States. Only in fairness, make this legitimate. Quit constant legislating. I think you will all agree that legislation has become largely a matter of ballyhoo.

Now, study this question. I am speaking for the farmer. Every dime I ever had is invested in agriculture. I want the farmer protected and I want his market protected.

Here is a machine that, in my judgment, is the most efficient instrument of distribution commerce has yet devised. It is not perfect. Nothing human is. It has only been running for 80 years. It is not as good as it will be 100 years from now, but it is better than anything else. It is able to take 12,000,000 bushels of wheat every day and turn it into bread. There is not a station on a railroad in the wheat country where you cannot go any day and sell wheat for cash and there is not a grocery store anywhere in the civilized world where you cannot buy flour, and yet the crop will vary as much as 2 or 3 or 400 million bushels in a year. That is good distribution. That is the best distribution I know of. And I think that you gentlemen, charged with all of the responsibility that rests now upon you, because of the state of agriculture, certainly owe it to the farmers of this country to take a few days over with a subcommittee and study this question. We will give you everything we have.

Mr. Boylan joins me in a very cordial invitation to come to Chicago. STATEMENT OF PHELAN BEALE, GENERAL COUNSEL FOR THE

NEW COTTON EXCHANGE, NEW YORK, N. Y. Mr. BEALE. Mr. Chairman and gentlemen: My name is Phelan Beale. My address is 165 Broadway, New York City. I am counsel for the New York Cotton Exchange.

I have a very brief statement to make.

At the hearing before this committee on last Thursday, a committee composed of four members of the New York Cotton Exchange attended for the purpose of being heard. As the entire session was consumed by representatives of the Chicago Board of Trade who

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