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before we concluded the hearings. Is that what you have in mind ? Mr. CHRISTIAN. Yes, sir.

The CHAIRMAN. Here is a telegram from the president of the New Orleans Cotton Exchange, which reads:

[Radiogram-Mackay radio]

FEBRUARY 6, 1935, 10:11 P. M. 128 MKH 108 NL 1/50 1 Extra. B New Orleans, La., Feb. 6. Hon. MARVIN JONES : Chairman House Committee on Agriculture,

Washington, D. C. In view of conversation had with two of our representatives in Washington last week and your assurance that hearings before your committee on H. R. 3009 would be confined to consideration of floor brokerage. Our exchange was not represented at meeting of your committee on Tuesday of this week. We have since been informed that the hearings are to be broadened at the meeting with your committee on Thursday, February 7, and if this is to be the case we request an opportunity to be heard before hearings are closed inasmuch as time allowed to reach Washington by Thursday would be too short.

C. P. ELLIS, JR.,

President New Orleans Cotton Bxchange. That is a matter for the committee to determine.

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REGULATION OF COMMODITY EXCHANGES

FRIDAY, FEBRUARY 8, 1935

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HOUSE OF REPRESENTATIVES,
COMMITTEE ON AGRICULTURE,

Washington, D. C. The committee met at 10:30 a. m., pursuant to adjournment, Hon. Marvin Jones (chairman) presiding.

The CHAIRMAN. The committee will please come to order.

The chairman was not here yesterday during the last few minutes before adjournment. It was necessary for me to go to the House on a matter that was coming up there immediately after the session opened. I understand that some of the members of the committee wanted to ask some further questions this morning.

Mr. ANDRESEN. Mr. Chairman, I made a unanimous-consent request that Dr. Duvel furnish the committee with a list of the complaints that had been made to him, and as to his actions in connection with those complaints as to whether or not he had received cooperation from the business conduct committee, in order that the committee might have some definite information as to the nature of the complaints which he had received. He said he would furnish that.

The CHAIRMAN. I do not know about that. Some of those matters they are not permitted to give out. We will hear Dr. Duvel.

I have in my hands a copy of the hearings that were held last April.

Hearings were held on this identical measure, on April 3, 4, 5, 9, 11, 12, 13, 16, and 17, last year, and it was gone into rather thoroughly. That is one reason why we are trying to avoid duplication as much as possible.

Dr. Duvel, we will be glad to hear further from you. I think some questions were asked of you yesterday before we closed. STATEMENT OF J. W. T. DUVEL, CHIEF, GRAIN FUTURES ADMIN

ISTRATION, DEPARTMENT OF AGRICULTURE, WASHINGTON, D. C.-Resumed Mr. DUVEL. I want to say part of the information requested yesterday will be furnished by Mr. Mehl, who was going to produce it this morning, but he has been detained and has not been able to get here yet. I really wanted him to go on first. However, there is something that I will take care of and get out of the way.

On yesterday there was brought up one of the questions, if I recollect, which was with reference to the stopping of trading on the 15th day of the month-authorizing that power.

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Now, Mr. Davis in testifying before the committee stated that a law or regulation prohibiting new sales of wheat futures during the last 15 days of the delivery month, for example, new sales of the Kansas City December future during the last 15 days of December, would prevent terminal elevator operators buying cash wheat for the purpose of putting it in store, selling the December future against it and delivering the wheat upon the futures so sold.

If I understood Mr. Davis correctly he stated further that such a prohibition would necessarily and of itself lower the bids of terminal elevator operators for cash wheat for prompt delivery during the last 15 days of the delivery month whenever the following future was selling below the expiring future. For example, if new sales of the December future were prohibited during the last 15 days of December and the May future was lower than the December future, terminal elevators would base their bids for cash wheat during the last half of December upon the May, rather than the December, future.

If this assumption of Mr. Davis is entirely correct cash wheat of contract grade during the last 15 days of December 1934, should have sold in Kansas City at prices at which it could have been bought and delivered at a profit on the Kansas City December future.

It is a fact, however, that during the last half of December 1934, there was no day on which the lowest price paid for no. 2 hard wheat, the contract grade, in the Kansas City Board of Trade was not above the highest quotation for the Kansas City December during the same day.

The daily weighted average prices of No. Hard cash wheat and the high, low and average price of the December future on the Kansas City Board of Trade as reported by the Kansas City Grain Market Review from December 15 to 31, 1934, was as follows: I will leave with the reporter a table. I do not think it is necessary to read it, but will talk about the average figures.

(The table above referred to is printed in the record as follows:)

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During the last half of December 1934, the average price of all sales of No. 2 Hard, the contract grade, was $1.035/8, while for the same period the average of the daily high quotations for the December future was $1.0014 and the average of the daily average December future price only 985/8. In other words, this contract grade wheat was

bought at an average price 338 cents per bushel above the highest December future that could conceivably be sold against it and at a price 5 cents per bushel above the average price of the December future. Therefore, it is perfectly clear that this cash wheat was not purchased for delivery upon the December future. Whatever the reasons for the relatively high price of this cash wheat may have been, it is certain that its delivery upon the December future through sales of the future at the time it was bought was not one. An elevator operator does not buy wheat at 1035, with the intention of delivering it within 15 days upon futures sold at 985/8 or 1.0014.

Likewise, in the Kansas City Grain Market Review of December 10, 1934, in the review of the cash market of December 10, 1934, the Kansas City Grain Market Review said: “It is expected that only a few more days will elapse until all dealings will be on the basis of May."

In the report of the market of December 11, this journal stated that cash “ Trading was based on 9912 to 9934 cents for May.

In other words, on the 11th of the month, switch in trading was expected, from December futures on to May futures.

This chart [exhibiting chart to the committee] shows here during the month of December this [indicating] is the cash wheat prices; this lag in the cash wheat prices, and this sindicating] is the futures prices; this being [indicating] December here, and then it was based on the 11th, based on the May.

The CHAIRMAN. Is that the customary practice in the latter part of the month, to buy cash wheat on that basis?

Mr. DUVEL. Yes, sir; it is quite frequently done on the Chicago market earlier. That is based upon December, and that [indicating] futures.

The CHAIRMAN. Dr. Duvel, Mr. Mehl is here, if you want him to go on. Mr. DUVEL. I will just finish this part. The CHAIRMAN. Very well.

Mr. DUVEL. Now, this chart shows Kansas City through the 3 months, September, October, November, and December.

Up to this point here [indicating on chart]. These were all based upon the December futures, with a cash price ranging about the same distance above, and when we get here [indicating on chart] then it is based on May futures, with the cash running about the same distance above the May.

That [indicating) is what they actually paid.

Now, there is a difference in opinion. There are times, of course, that that happens. That is the distance (indicating on chart] the futures is at a discount. There are other times when it works the other way.

Mr. ANDRESEN. Mr. Chairman, may I ask a question right here on this?

The CHAIRMAN. Mr. Andresen.

Mr. ANDRESEN. Last year, Dr. Duvel, and the present season, is abnormal so far as wheat is concerned; is that not correct?

Mr. DUVEL. Yes, sir. I think that is correct.

Mr. ANDRESEN. A short crop, and a premium is paid on all cash grain over the futures options. So, if you are basing your statement

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