will answer all legitimate purposes, I for one am ready to join you in that.

Mr. MARSH. I would like to say in answer to that, that I can not conceive of a course better calculated to make the United States a nation of serfs, or peasants, of persons without any enterprise, without capacity for forward movement of any kind or description, than successfully to put into effect the legislation which you say you desire.

Mr. SIMS. That bill may be a bad one; I am not the author of it; I do not know. All of them may be bad. That is what I am trying to find out, what is the sort of bill we want. Now, Mr. Marsh, is there not a class of traders on the floor of the exchange who are termed, generally, "scalpers," who as a rule buy in and out and sell in and out every day, as a rule do not go long or short beyond twentyfour hours or a very few days? There is a class of dealers referred to in the papers as "scalpers," is there not?

Mr. MARSH. There are members of the exchange, yes, who speculate during the day.

Mr. SIMS. In that way, temporarily, from day to day?

Mr. MARSH. Yes.

Mr. SIMS. Is it not evident to anybody that those gentlemen do not have in their minds any intention to deliver the cotton that they speculate in every twenty-four hours, six months afterwards? If they did they would keep what they bought, would they not?

Mr. MARSH. I again seem to come up against a blank stone wall. Every one of those men, members of the New York Cotton Exchange, enters into a contract with full legal and moral obligations attached to it. It is, and has always been, regarded as the right of every American citizen so to do, and a member of the New York Cotton Exchange does it.

Mr. SIMS. That answers it.

Mr. BURLESON. Do I understand by your answer that they do not make those?

Mr. SIMS. He says they do. They buy and sell out every day; do what is called "scalping." Is it not sometimes the case that there is a large number, Mr. Sully, Mr. Brown, or anybody-I mention those because they are generally known-who are running what you call a campaign? The day is approaching for delivery, the spot month is coming to hand, the contract month is coming around. The papers frequently say it is published right there in New Yorkthat the shorts settled with Mr. Sully on the outside. What does that mean? That does not mean they settled through the ordinary channels of the cotton exchange, does it?

Mr. MARSH. I have heard of those settlements.

Mr. SIMS. Are there not such settlements? Is it all false report? Mr. MARSH. I dare say there are. I can not say there are not. I hear of them as taking place. I see in the newspapers that they have taken place. They are generally as elusive as the Irishman's flea, but the newspapers love dearly to report that so-and-so has won out and made a settlement with so-and-so.

Mr. SIMS. Let me state what occurred and what I saw myself, and ask you to explain it. I happened to be in New York once when the condition report of the Government was about to come out. It was in the first part of September or October. I was in a banking house

and a gentleman came up from the floor of the exchange. I do not know that he was a member. He had formerly been a member of the New Orleans Cotton Exchange. They were guessing around and talking among themselves as to what the condition report would be and what it would mean. If it was a certain figure it would be very "bullish," if it was a certain other it would mean nothing, and if it was a certain other it would be "bearish." They were talking among themselves, dealers, men who were there I suppose for that purpose, and this gentleman who came over from the cotton exchange-he said he did, I do not know whether he did or not-said: "Gentlemen, I have the 'dope' to this effect, that it does not matter what the government report of the condition is, they (referring to the cotton exchange) are going to sell the market. They are going to sell it no matter what the report is." He made that statement. I don't know whether it was true or not. He was not a member of the New York Cotton Exchange. He had formerly been, though, of the New Orleans Cotton Exchange. He said: "The dope' is from down there"-pointing in that direction-this was up on Wall street where I was, and he said: "The 'dope' is they are going to sell the market, it does not matter what the report is.' Another gentleman standing by, who was watching the "tape"-I do not know what function he had said: "They are going to fill them up." I am giving you the language. I don't know what it meant. We were all standing there waiting. The report came out. It was "bullish," even beyond the guesses that had been made. The ticker began to show a rapid nervous advance, and it went up and up and up, some thirty points, and then down it went, on the toboggan slide, and this gentleman explained that there were many men who were operating on the exchange who were committed to deliveries in October to permit an advance of the future market right in front of large spot deliveries. That was what was said in my presence. I heard every word of it, and one gentleman was a member of the cotton exchange, the banking man. What did they mean by selling the market regardless of the report, and filling them up? Was that not all artificial and contrary to natural causes?

Mr. MARSH. I should say it was not only artificial, but untrue. Mr. SIMS. I can give you the gentleman's name; you may know him personally.

Mr. MARSH. I wish you would.

Mr. SIMS. I will be glad to give you his name, but I will give it to you privately; I would not want it to go in the hearings. But you say that was not true?

Mr. MARSH. It seems to me as near like a fish story as I have heard for several days.

Mr. SIMS. Exactly what he said, and what "they," referring to the stock exchange, believed would happen, took place, the most "bullish" report-more "bullish" than was estimated by the most extreme—was published, and the market suddenly went up for a few minutes, and then went on down and down and down.

Mr. MARSH. One of the things that people in New York learn— and it makes us a little cynical

Mr. SIMS. These were New York men I am talking about.

Mr. MARSH (continuing). As years go by, is that everything that happens in the cotton market must have a personal explanation in

order to be interesting. These newspapers that Mr. Lever brings here the reporters of those newspapers think that in order to make their reports of the market interesting, they must give all their information a personal appearance; that they must say that so and so was operating heavily on this side, and so and so was operating heavily on that side, when, as a matter of fact, there is absolutely nothing in it at all. Anybody who trusts that kind of a statement passed around might just as well trust the New York Journal.

Mr. SIMS. Although the market seems to have gone exactly as the "dope" was given out it would go.

Mr. MARSH. The market some times goes according to the "dope," and sometimes it does not.

Mr. SIMS. You are coming to the point; it sometimes goes according to the "dope." Is it not to the interest of a large number of speculators-call them whatever you please to give out, encourage, and even manufacture "dope" to affect the future market, and does that not correspondingly, or to some extent, affect the spot market? Mr. MARSH. No "dope" that is not true can affect the price of cotton for more than a few hours at the outside.

Mr. SIMS. Is not a few hours enough to ruin a good many people who are betting on the market?

Mr. MARSH. No, sir.

Mr. SIMS. Have you not seen men wiped out in an hour, their margin gone? I do not mean literally broke.

Mr. LEVER. Right on that very point, you say that no "dope" can affect the market?

Mr. MARSH. No "dope" that is untrue.

The CHAIRMAN. Beyond a few hours, he said.

Mr. LEVER. No "dope" that is untrue can affect the market beyond a few hours. Let us take the illustration of Mr. Hubbard. He sends his marked letter to every paper in my State; he is believed in down there. Suppose he gives the people of the State of South Carolina to understand that the strong probability is that the market is bound to go up within a period, and, as a result of that, a number of South Carolinians buy cotton on the strength of his report or his suggestion. Would not that affect the market? Does not the market respond to buying and selling?

Mr. MARSH. It certainly does; but I said for more than a few hours.

Mr. SIMS. Right in that connection, then, that "dope" I heard given out was true, from the fact that it affected the market for a month afterwards.

Mr. MARSH. That was not what affected the market for a month, Mr. Sims; that was not what affected the market that month. The market was affected by cotton for sale and cotton to buy.

Mr. SIMS. What do you think of the reason given, that they wanted to buy spot cotton in September and October so they could not afford to let the future market go up, therefore they put their future contracts on the market in order to make spots cheaper?

Mr. MARSH. I think it is the greatest nonsense I ever heard.
Mr. SIMS. Yet it worked out all right.

Mr. MARSH, No, sir; it did not.

Mr. SIMS. They got their cotton lower.

Mr. MARSH. Then they sold their hedges lower. If cotton went down, as you say it did, for a month, then when these gentlemen bought their cotton in September and in October, they sold their hedges lower. It did not affect the spot merchant at all. There is no motive for a spot merchant to try to get the market down.

Mr. SIMS. I am talking about speculators, men who operate on your exchange or through its instrumentalities and powers. I want to ask Mr. Marsh, because he is practical, and I might say professional-this is not a proposition which I am advocating, but it has been discussed-could there be a tax levied by the United States Government upon future contracts for cotton on the New York Stock Exchange of, say, one or two or three dollars, or any arbitrary amount, per bale, collected when the purchase and sale are made, by a revenue agent right there, a record kept, and then when the month comes around, the purchaser of that contract, or whoever takes delivery of that contract-not necessarily that it should be between the original parties-receives back the money paid as a tax less 10 cents a bale; would such discriminatory tax as that eliminate the speculator to whom we have just referred, and yet retain all the benefits of the market to the merchant or the purchaser, or whoever has a real interest in the market for actual cotton? Is it possible for such a scheme to work as I have indicated?

Mr. MARSH. A contract for the delivery of cotton in New York is no different from a contract for the delivery of cotton in Memphis, Tenn., or a contract for the delivery of cotton in Atlanta, Ga., or a contract for the delivery of cotton in Galveston, Tex. I believe we are guaranteed that no tax laid by the Government of the United States shall be discriminatory. You can not draw a law taxing contracts for future delivery in New York that will not apply to every contract for the future delivery of cotton in every market in the United States.

Mr. SIMS. We can limit it to exchanges, trades made in exchanges. Mr. MARSH. No, sir.

Mr. SIMS. We can tax such transactions-it has been done, has it not?

Mr. MARSH. It was acceded to by the exchange during the SpanishAmerican war, but no member of the exchange, and no lawyer connected with the exchange, had any doubt whatever as to the absolute unconstitutionality of this act.

Mr. SIMS. You are getting away from what I am asking. Take it that it is legal. If it could be put in practical operation, would it eliminate the pure speculator, who will have the temptation to falsify facts in order to make money out of the contracts before the date of the execution of the contract arrives, so as to avoid the injury that such transactions may cause, if any, upon the real commercial conditions of the cotton industry of any kind or character? Is it practicable? Could it be carried out? You know Mr. Smith refers to that.

Mr. MARSH. I do not know what might be carried out.

Mr. SIMS. Say it is lawful, could it be administered, and would it have the effect of eliminating purely speculative transactions? Mr. MARSH. I do not see how I can answer that.

Mr. SIMS. I did not know but what you could give an opinion. I am not advocating such a law, but it is suggested by Mr. Smith,

and I wanted your opinion as a practical man to say whether such a thing could be done and what the effect would be. The present bill does not deal with that subject at all.

Mr. HUBBARD. Mr. Chairman, may I ask the witness one question? Mr. BURLESON. I have a few other questions if Mr. Marsh is through.

Mr. HUBBARD. My question was just this, Mr. Chairman, and you can submit it or not, as you see fit, the question as to the benefit of the speculator to mankind and the cotton trade in general. The effect of this ruling upon contracts has been passed upon by the Supreme Court, and Mr. Marsh has the decision there, and the remarks of the presiding justice. I think I would like to have him read it. Mr. BURLESON. Do you mean Christie against the Board of Trade of Chicago?

Mr. HUBBARD. Yes.

Mr. BURLESON. We are familiar with that.

Mr. MARSH. If the members of the committee would permit, I should like to submit this for the record.

The CHAIRMAN. If you have a brief statement of it there, you can just append it to the hearing.

(The decision referred to will be found in the appendix.)

Mr. BURLESON. Mr. Chairman, I have just a few questions I want to ask Mr. Marsh, but before I ask him any question at all I want to inquire this: The other day, when you started your testimony, Mr. March, you covered one phase of the question and then expressed a willingness to submit to interrogation.

Mr. MARSH. Yes, sir.

Mr. BURLESON. There are certain phases of this question which I should like to interrogate you about and which you have not touched at all.

Mr. MARSH. Yes, sir.

Mr. BURLESON. Do I understand that you have concluded your presentation of this matter to the committee?

Mr. MARSH. I was hoping, Mr. Chairman, to have an opportunity to make another comparatively brief, general statement in regard to certain other aspects of the question, and then once more to be crossexamined upon that.

The CHAIRMAN. Can you state briefly the aspects you would like to discuss?

Mr. MARSH. I wished in particular to state to the committee-
Mr. BURLESON (interrupting). Advantages of the fixed differences?
Mr. MARSH. That was incidental.

Mr. BURLESON. And the range of grades deliverable under the contracts?

Mr. MARSH. Yes. To discuss, in short, the report of the 'Commissioner of Corporations and the action which the New York Cotton Exchange has entered upon as a result of that report. It is rather late for me to start upon that this afternoon.

Mr. BURLESON. As I understand it, Mr. Chairman, that is the very crux of this matter, and I would prefer for Mr. Marsh to conclude what he desires to say upon those two subjects before I cross-examine him. My cross-examination is going to be very brief, but I would like to have him conclude what he has to say.