opposition to the railroads because the farmers could not get to send their wagons to the railroads to haul that trade away.

The CHAIRMAN. Pardon me; you reply, but you do not answer. I am trying to get a direct and categorical reply to the question as to why it is necessary for the cotton business to have a future market when it is not necessary for the iron business to have one. We will confine it to those two.

Mr. CONE. You use the word "necessary." If you want to put the exchanges out of business, I want to say that I would make more money. I assure you on my honor as a man. I hope God may kill me on the spot if I don't believe I would make more money by far.

The CHAIRMAN. Even that is not the question. We will admit, using your own words, that the future market in the cotton business is an evolution, as you doubtless believe, an evolution from a worse condition to a better condition, as all evolutions ought to be. Why is it that the same thing which you seem to think has been such a boon to the cotton trade has not "evoluted" in the iron business?

Mr. CONE. So far as that is concerned, the iron business is a business I do not exactly understand, in the first place. However, I do know there is a trust in iron, a steel trust, which controls considerably the larger part of the iron ore in this country, and I doubt if much could live in competition against it. Further, I believe there are future contracts to be bought or sold in iron certificates, and, as it is a matter to which I have never given study or thought, I am not so sure, but I think you will find you can buy iron certificates.

The CHAIRMAN. Let us take the hay crop. Why is it not necessary to have a future market in order to protect that?

Mr. CONE. As I said before, Mr. Scott, it is not necessary; this exchange is not necessary. But I will tell you I believe it to be a benefit. I believe it to be a benefit to many men, and a greater benefit to them than anything to any other one body of men I can make clear to you.

The CHAIRMAN. The two parties directly in interest in the case of cotton are the producer and the spinner?

Mr. CONE. Yes, sir.

The CHAIRMAN. They could get along without the broker, without the cotton dealer at all, could they not?

Mr. CONE. Certainly.

The CHAIRMAN. Then, if the two parties who are most directly and vitally in interest are agreed on the proposition that the present system is bad for their business

Mr. CONE. Then, sir, it is your duty to protect them.

The CHAIRMAN. Then ought not their judgment to control, rather than the judgment of a man whose only interest is in the commission he has in handling the goods?

Mr. CONE. I think, sir, you as a statesman ought to occupy the same position that the statesmen did in the time of the house of Fugger, those ablest people of the day, who were so ignorant as to say that money was not worth its interest bearing return. You should protect those who are their own worst enemies.

The CHAIRMAN. You said a moment ago that the mill men with whom you dealt were more intelligent than the farmers-which is probably true, without any reflection on anybody-it will be admitted that the mill men are fairly intelligent people; do you, then, think that they ought not know what is to their interest?

Mr. CONE. That is the very point.

The CHAIRMAN. Or do you think they are asking for this legislation because they do know it would be to their advantage?

Mr. CONE. I think, sir, that at the bottom of their hearts-you know sometimes a man befogs or beclouds his mind to the true reason of things-but I do know that in their hearts these shrewd mill men know that if they have made a great big crop of cotton they will let Mr. Farmer carry the cotton, and if they have made a short crop they would be able to find that out and there would be so much less competition; they could pick a great big part of what they wanted before the truth became known to the world.

The CHAIRMAN. While you give them credit for their intelligence, you impeach their candor or good faith. Mr. Parker said here yesterday it did not make any difference to him

Mr. CONE. Pardon me. I said oftentimes a man, through his prejudices, befogs and beclouds his own reason.

The CHAIRMAN. I would like to get your opinion as to a sentiment expressed by Mr. Parker. He said that, as a mill man, it did not make any difference to him what he paid for cotton, because he could fix the price of his goods to correspond. The damage that he said he suffered from the future market was that it created fluctuations, frequent and violent fluctuations, which made it difficult for him to maintain the parity between the cotton and the goods. For instance, he said that this recent heavy decline in cotton had created the impression all over the country that cotton goods ought to be sold a great deal cheaper than they are being sold, the people forgetting that they were made when cotton was high. Do you think there is anything in that?

Mr. CONE. Mr. Scott, in reply to that I wish to say that I have sold more cotton goods than most any man I know of. I have charge of the office of one of the biggest commission houses in the country, or rather, I will put it in this way, the western department of the Cone Exporting and Commission Company, and the sales were so large that the president paid me even a larger salary than he received himself. In Chicago I did the same. Here is the situation as regards cotton goods: I want to say to start with, that I rarely have seen a mill man a bull. I have seen many mill men since the 1st of January who were surprised to find they had come out as well as they did last year. I wish to say further, that it is rare that a mill man admits that he is doing well. They are the worst lot of pessimists I know of. The only year I can remember that they could not help saying they were doing well was the year prior to the panic, when lots of them made over 100 per cent per annum. A year prior to the panic the whole world seemed to get speculation mad in everything, not only in cotton but cotton cloths, in fact, you can turn to most anything you can think of, real estate or what not; spice, coffee; they did even put coffee up a little in spite of the fact the Brazilian Government had bought 10,000,000 bags. I will tell you a fact; I do not know that it governs to-day, but when I had charge of the western territory of the Cone Exporting and Commission Company there were several houses in the West, jobbing houses, that would buy more goods than the whole South put together, not only in Chicago, but in St. Louis.

I used to have a fair average idea of the volume of business that any house in the West would do, whether it was in St. Louis or Chicago, or Kansas City, many of which houses you may not doubtless know the names of. Those jobbers got this same fever of speculation in goods. They were all making a lot of money, though, and there was an excuse for their feeling optimistic and for their high prices. They bought a lot of stuff. Then came along the panic, and they had contracts running beyond the panic. Some of the houses did. their utmost to cancel those contracts, and a good deal of force was necessary to make some of the highest toned houses in the business live up, not only to their legal obligations, but, what is far more than that, their moral obligations. But they suffered. The prices went down something awful. In those big houses of the West the buying is very rarely done by the head of the house. The head of the house formulates the policy of the business, and he and the credit man, the financier, give to the buyers their orders under which those big buyers operate. I have gone to St. Louis and in a single trip I have placed over five million yards of goods, enough goods to make a dress apiece for five hundred thousand women. And those buyers can not buy except what they are compelled to buy at times. I have kept in close touch with that business, because I am a stockholder in a concern that sells the output of about forty cotton mills, and I have not seen anything that borders on the order of speculation or forward buying to any degree since the panic.

Coming after that, here is this high-priced cotton, and they have now a new basis for the selling of goods, one that they are unaccustomed to. Here is a situation that is peculiar. Goods which ordinarily retail at 10 cents a yard that jobber now has to ask a pricethe jobber, for instance, in St. Louis has to offer to the merchant who comes from Texas or Kansas or some other State a price for that goods that the retail price now will be 12 for. We are right now on the ragged edge. This is the time of year-January, February, and March the buyers come to the big markets. The buyers for the retail stores are right now coming to the stores of New York, Chicago, and St. Louis and other big cities, and within sixty days will settle the question whether cotton is going up or down, and nothing that the New York Cotton Exchange does or the farmers do will prevent it. If they do not take hold of cloth inside of the next sixty days, cotton will go down in spite of everything you can do. Personally, I think they are going to take hold of it. I think they have starved and stinted themselves so much that they have to come in, and I think the wealth and prosperity are very great, notwithstanding you read in the papers about it costing so much to live. I have hunted and I can not find anybody down my way who is not getting along very well. They talk about lack of prosperity; I can not find it. I believe they are coming in, and within the next sixty days, as buyers. They have just starved themselves so long, and if they do come in cotton is going to 20 cents, and if they do not, cotton will go down.

The CHAIRMAN. You said in the course of your chief statement that the law of supply and demand operated in spite of the procedure on the boards of trade. I believe you said that if a man could know ten minutes in advance what the fluctuation would be on the cotton market he could take $10

Mr. CONE. One hundred dollars, I believe I said.

The CHAIRMAN. And in a little while buy out Mr. Rockefeller? Mr. CONE. You can easily take pencil and paper and figure that out for yourself.

The CHAIRMAN. How do those two statements hang together, that the operations of the boards of trade do not interfere with the law of supply and demand, and yet that the fluctuations within. those, which take place within ten minutes, are so great that an advance in them would make a man a millionaire in a little while? Conditions as to supply and demand can not change every ten minutes, can they?

Mr. CONE. There are thousands of things that are so minute that govern the principles of fluctuation there is not a mortal man that can tell what governs it.

The CHAIRMAN. Do you believe there was any good cause except the operation of the law of supply and demand for the recent slump in cotton of $15 a bale in two weeks?

Mr. CONE. That slump did not put the price of cotton down hardly any. That slump was caused through the greed of humanity. Human beings are essentially cowards; that is, I mean to say the average human being is cowardly. It is easy to buy when a thing is going up; everybody has courage then. It takes a brave man to sell when things are going up. And it is easy to sell when things are low. It takes a brave man to buy when things are low, and everybody is scared of them. There is hardly one man in a thousand who, had he been satisfied with a fair profit or reasonable profit in that cotton market, could not have gotten out. The biggest sufferers in that market were men who had millions of dollars of profits, who lost them through overextending themselves. If you will study it, you will see that decline in cotton futures was as natural as anything in the world ever was.

The CHAIRMAN. The decline in futures was as natural as anything in the world, but to what extent did the decline in futures carry with it the price of spots in your country? Are you paying as much for spot cotton now as you were when cotton futures were selling for 16.50 in New York?

Mr. CONE. I left home day before yesterday, and I sold that day to one of the biggest mills in my State 1,500 bales of good middling cotton at 15.75, and the highest that I paid for good middling cotton I do not think was as high as 163. Here was the effect of that break in futures. I individually turned in to my salesmen, and I said, "Boys, sell all the cotton you can." And why did I say to them "Sell all the cotton you can?" I sold it lots cheaper than I could buy it. I sold good cotton at 14 cents, and I have not bought that cotton yet, gentlemen, but I have a good profit in it and I have got to pay lots more for that cotton than I sold it at. Why did I sell it? Because I could buy hedges, futures, in New York, May and July futures, active cotton futures. November and December I do not want. I want something active; I want to get in that which everybody wants, you understand?

The CHAIRMAN. Yes.

Mr. CONE. I could buy futures against that cotton, and when the time comes, if cotton goes up, as I believe it will do, I will make a profit. In fact, to take an example, I bought futures at 13.58 and I bought futures at 13.63 and I bought futures at 13.73, and all sorts

of prices in there, and against it I sold cotton at 14 and 14.75, and cotton that I am glad to go out and pay over 14 cents for when the time of delivery comes.

The CHAIRMAN. That suggests this question. This relates to your private business, and you need not answer it if you do not want to. Mr. CONE. Yes.

The CHAIRMAN. Which do you regard as the most important of your operations from the standpoint of profit, the handling of the actual cotton, with either a profit on the bale or your commission, according to the way you handle it, or your margins from the sales of futures?

Mr. CONE. The handling of the actual cotton is the first essential consideration with me; but frequently it happens that I believe that the future market is out of line with spots. In other words, here is what happened to me one day. I was able one day, about two weeks ago, to do this. A mill wanted some cotton for March shipment. I asked them 15.25 cents landed at their point for 400 bales of March cotton, which was the market several weeks ago. I bought against that cotton 400 bales, if I recollect aright, of March futures at 13.90. I had an actual sure profit in that deal, if I chose to go up to New York and ship the cotton back to North Carolina, of about $160 on 400 bales of cotton. I am not going to take that cotton up in New York. Why? Because the future has gone up. There were too many merchants like myself who wanted that cotton, and the result is that it has gone up, and it has come back just as naturally as anything could; it is according to just as natural a law as there is. It has come back; the parity is reestablished, the parity which was jarred out of line has come back.

Mr. LEVER. What jarred your parity out of line?

Mr. CONE. The very thing that I mentioned a while ago; there is the greed. There is that man, and he has got no business in the market perhaps. That I do not know; I can not say. But, gentlemen, that is an ethical, moral question; it is not a question, I think, that the United States ought to have anything to do with.

The CHAIRMAN. I would like to ask whether you handle your business by way of commissions, or do you make actual purchases of cotton?

Mr. CONE. I handle it in both ways. I buy sometimes from the farmer, sometimes from the other dealers. I buy wherever I can buy cheapest. I also try to make commissions. Wherever I buy through another dealer I make him pay me brokerage. I sometimes sell through other dealers and give them the brokerage. It is the profit that I am figuring for.

The CHAIRMAN. When you buy cotton futures, how much do you pay by way of commission?

Mr. CONE. I formerly paid $15 on the 100 bales, but my business kept growing so that I found it to my interest to become a member of the various exchanges. I sometimes, as I said, hedge in Liverpool and sometimes in New Orleans and sometimes in New York, and by becoming a member of those exchanges the brokers to whom I throw my hedges in New York allow me one-half commission.

The CHAIRMAN. Will you make it general and tell us what the usual commission is?

Mr. CONE. In New York it is $15 and in New Orleans it is $15 on the hundred bales.