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accept conclusions with such terrific pecuniary consequences to innocent persons as arise from the opinions and the conclusions of the Commissioner of Corporations ?

We are doing the best we can, Mr. Chairman. We are doing the best we can as cotton merchants. We are giving consideration to what we believe to be the genuine interests of the cotton producers of the country. We are abused and we are scoffed at; we are called malefactors, and I know not what; but we are doing our best. We are not, however, ready to be coerced into the adoption of principles in the conduct of our business which we see have calamitous consequences, and calamitous consequences at the very time when there is most need of helping those thousands and tens of thousands and hundreds of thousands of men, who have sweated through the long summer raising a crop of cotton, and have then, through the act of God, seen that cotton lowered in value beyond anything they ever anticipated.

Mr. Chairman, I have nothing more to say on this point; but I should like to say a few words with regard to the bills which, as I understand it, are before the committee.

Mr. SIMs. Mr. Chairman, is it your purpose to continue in session a few minutes longer ?

The CHAIRMAN. The House is in session, and matters are pending there in which Members are interested. I think the committee will have to adjourn now, and we shall be glad to have you continue the discussion along the lines you suggest when we resume our session at 2 o'clock this afternoon.

Mr. BURLESON. Before you adjourn, Mr. Chairman, just let me make this suggestion: I should prefer to cross-examine Mr. Marsh with reference to the parts of his presentation of the matter which he has already made before he goes into the discussion of the details of the various bills.

Mr. Marsh. I am not going to discuss the details of the bills, Mr. Chairman, I am simply going to point out-and I can do it, I think, in five minutes-certain considerations which may not have occurred to members of the committee in connection with the proposed legislation. I do not think any discussion about it will be necessary.

Mr. BURLESON. If Mr. Marsh takes the position that certain considerations have not suggested themselves to the Members who introduced those bills, there will be considerable discussion of the matter. He says it will only take five minutes; but he can not tell. He thought he could present this matter in fifteen minutes, and it has taken him an hour and a half to do it. I should prefer, before we get so far away from his presentation of the other phases of this matter, to interrogate him. I will not take long in doing it. I am going to ask questions that will not call for long dissertations upon political economy.

The CHAIRMAN. We will confer in regard to that matter, and make some suitable arrangement when the committee resumes its session at 2 o'clock.

Mr. Sims. Another thing, Mr. Chairman. I intended to ask Mr. Neville a few questions; but in talking with Mr. Neville he tells me that all economic questions should be addressed to Mr. Marsh. I therefore want to ask him a few questions, instead of Mr. Neville.

(The committee thereupon took a recess until 2 o'clock p. m. of the same day.)

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AFTER RECESS.

The committee met pursuant to the taking of recess, Hon. Charles F. Scott, of Kansas, in the chair.

Mr. MENDELBAUM. Mr. Chairman, Mr. Burleson, of Texas, this morning offered a paper entitled "Board of Trade of the City of Chicago v. Christy Grain Stock Company,” which contains, to a great extent, nothing but the personal opinion and personal conclusions of Mr. Burleson. We are entitled, it seems to me, to examine and crossexamine him in regard to the matter, as he treats of a decision of the Supreme Court in a manner which is not exactly borne out by the facts. In the concluding paragraph he states that the argument in H. Rept. 67 is contrary to the decision in the case of the Board of Trade of the City of Chicago v. The Christy Grain Stock Company. That is based upon a willful failure to distinguish between contracts.

We claim we have made that distinction between the contracts. Our contract is clearly a contract within the meaning of the decision of Justice Holmes of the Supreme Court, and that is further established by the fact that in recent cases of this kind tried even in the South-I refer here to the case of Haven & Clement v. James, and Clement & Smith v. James, tried in Atlanta, and also a case in the United States court for the southern district of New York, the case of Springs Company v. James—the trial justice held that he had to follow the law as laid down by the Supreme Court of the United States, and took particular pains to enunciate the doctrine that even if the party sending in the order had in his mind that he would not perform the condition imposed by that contract-in other words, that he would neither receive nor deliver—that decision would be without any effect whatsoever as long as he had not entered into a positive agreement with a party in New York or Chicago to the effect that it should be a contract in which no delivery or receipt of goods was intended, and that the fact that he had no right to receive them on the contract in Atlanta would not render that contract illegal if they had the iutention to receive or deliver, for the reason that the party in Chicago or New York could not read the mind of the man in Atlanta who has not the order.

That is all I want to say at this time, but it seems to me it is not fair to us that such testimony should be read into the record by Mr. Burleson without giving us an opportunity to examine what has been put into the record, and to cross-examine him as to his conclusions and opinions.

The CHAIRMAN. I take it that Mr. Mendelbaum has examined pretty carefully what Mr. Burleson has said, and therefore I suppose his statement is made as a brief reply to Mr. Burleson,

Mr. MENDELBAUM. That it is not in accordance with our information, and anything offered at this meeting, as I understand it, should be testimony. So it seems to me that one class of testimony should be handled like another, and for that reason we would like to have an opportunity at some other time to examine him upon that statement.

The CHAIRMAN. I have no doubt that Mr. Burleson will be willing to be examined.

Mr. MENDELBAUM. The committee will understand that I refer to Mr. Burleson's statement, and I have no reference whatever to the committee in my criticism.

Mr. BURLEson. In explanation I will say that Mr. Mendelbaum, not being a lawyer, does not understand that in order to properly discuss the decision in the case of the Board of Trade v. Christy it was necessary to in a measure detail the facts of the case as set forth in the opinion of the court.

Mr. MENDELBAUM. I do not take issue with Mr. Burleson in that; I simply claim we ought to have the right to know what is in that paper, as he knows.

he CHAIRMAN. We will not pursue this matter any further at this

time. . Mr. Burleson has expressed his desire to appear before the committee at a later date if anybody desires him to § SO.

The committee has questioned Mr. Marsh at such length that members have said they did not care to continue further at this time, and Mr. Burleson desires to ask him some questions.

Mr. SIMs. I would like to ask Mr. Marsh a few questions that I intended to ask Mr. Neville. In discussing this matter with Mr. Neville he said that all subjects pertaining to the economics of the question should be asked Mr. Marsh.

The CHAIRMAN. If you will make your questions as brief as you can, we will shorten the inquiry.

Mr. SIMs. Yes; I will do so.

TESTIMONY OF ARTHUR R. MARSH-Resumed.

Mr. SIMs. You stated in substance that the reason daily transactions on the cotton exchange were not made public was because of the inaccuracies and errors that necessarily occurred on account of the hurry and confusion of doing the business of the day. That is in substance correct? Mr. MARSH. I think so. Mr. SIMs. And that did not so much apply to the stock exchange, for the reason that they delivered their stock the next day and errors could be corrected Mr. MARSH. Yes. Mr. SIMs. Are not all transactions on the cotton exchange for future delivery, or otherwise, noted, and is not a record made of them; is not some record of them kept in the cotton exchange? Mr. MARSH. Not in the cotton exchange, no; only the price. Mr. SIMs. Is there no report of the amount of the transaction? Mr. MARSH. No. Mr. SIMs. Is there no way to keep that report by or through the cotton exchange? Mr. MARSH. They attempt to keep a record Mr. SIMs. I do not mean for current publication, but to keep a permanent record? Mr. MARSH. I should not like to sav that some means could not be found to keep it, but the physical difficulties are found to be almost insuperable. . SIMs. What I mean is this: At the end of the month or at the end of the wear is there not a method or are there not facilities in the cotton exchange by which it can be ascertained—the number of transactions in bales that took place, say, the previous year? ho MARSH. There is no machinery at present for ascertaining that.

Mr. Sims. Well, do you not think that that would be good information for the country to have? I will withdraw that question, because that is only a matter of opinion. But, anyhow, there is no method at the present time by which they could publish accurately, either monthly or semimonthly or every six months, or at the end of a year, the actual number of transactions in bales?

Mr. MARSH. No; there is not.

Mr. Sims. I want to ask you if there was no speculative business done at all, would it be practicable and possible for members of the exchange to hedge against actual business in the way of spot delivery ? I say speculative business, which is sometimes referred to by persons who are not acquainted with the proceedings of the exchange as what would be illegitimate; but I will say speculative business. If there was no speculative business done at all, would it be practical for members of the exchange to hedge against actual business in the way of spot deliveries?

Mr. MARSH. My impression is that it would still be possible. I have stated to the committee that there are months at a time when there is practically no speculation being done in the cotton market, and yet the process of hedging continues through those periods.

Mr. Sims. If I understand you, then, what we call a pure speculator-I mean a man who buys a contract for the future who does not intend to carry it out literally, but intends to sell out before the month of delivery arrives—that the business of that man is not necessary to the real function of hedging upon the exchange, that such an element of business and that such people-people who do that kind of business—are not necessary to hedging.

Mr. MARSH. I should say not.

Mr. Sims. Therefore, if purely speculative transactions were eliminated by any process, it would not injure the cotton exchange so far as the hedging business is concerned ?

Mr. MARSH. I think the process of hedging would still go on.

Mr. Sims. I wanted your notion as to that. Now, Mr. Marsh, is it a fact or not that in a certain year—I do not remember the year--Mr. Sully carried on a campaign in the May delivery, as was stated in the public press, after which it was represented in the paper that Mr. Brown and Mr. Hayne, of New York, came to the cotton exchange and carried on a campaign of July, August, and September? Do you remember what year that was?

Mr. MARSH. My impression is it was 1903. Mr. Sims. Well, I wanted to be accurate about it. Is it a fact that that year, especially for the September contract, cotton to the extent of thousands of bales was returned or shipped back or shipped from spinners in New England and some other places, and even Europe, and carried to New York, for the purpose of delivering upon contract to New York ?

Mr. MARSH. I was not then, myself, on the floor of the New York Cotton Exchange or living in New York. I was a member of the New York Cotton Exchange at that time, but I was not living in New York. So I can not answer that question.

Mr. Sims. I will state to you, if my recollection is correct, that that same year the official report of the movement of cotton shows that between 40,000 and 50,000 bales of cotton were returned from Europe after being shipped over there, and freights paid and insurance paid, that that many bales were returned and delivered on contracts to New York, because it was more profitable for the spinner not to spin, but to get a contract delivery value in New York; it was more profitable for him to do that than it was to go ahead and spin the cotton. If such was done, do you, as an authority on the subject, regard that as good economics, applying to the general cotton trade? Mr. MARSH. I do not see anything uneconomic about it. Mr. SIMs. Then do you think it is proper to promote a business which disturbs the consumption of cotton in the way you said it could be consumed, by being spun or manufactured, and bringing it to New York and keeping it there, simply as a means of liquidating or receiving a profit upon a tender through the rules of the exchange? Mr. MARSH. Mr. Chairman, my recollection is that in 1903 spinners were carrying what we call an invisible supply of cotton; that is, a stock of cotton at their mills sufficient to last them about two months, to go on spinning the cotton for two months without buying any more. I can see nothing destructive or disturbing to trade, for some of those spinners, if it was spinners who entered into this transaction, who had on hand cotton enough to run them for several weeks or months, to resell a part of it to Messrs. Brown & Hayne, if they were the speculators in question, and turn it into money, knowing that within a month or two the new crop of cotton would be moving freely and that they could easily repurchase what they had sold out. Mr. SIMs. Right there you have come to a very important matter. The natural course of cotton is to be manufactured, and currently manufactured, if possible, each year. When a large amount of cotton was diverted from natural channels of consumption, sent back and delivered upon the September contract in New York to these speculators, and therefore held over and added to the current crop that year, did that not have a tendency, and necessarily have a tendency to depress the value of the new crop, because that much of the old crop was held over through this speculative arrangement, and augmented the new supply to that extent? Mr. MARSH. Am f to understand Mr. Sims to mean that if that cotton had not been shipped to New York it would have passed out of existence? - Mr. SIMs. No. This is what you should understand me to say. If it had not been for what they call a bull campaign—you know what that means, literally and technically—that this cotton.never would have been shipped back from Europe and delivered in New York, and would have been manufactured in Europe, where it went for the purpose of manufacture, or to New England, or wherever else it might have gone, that it would have gone the way you say—and we are admitting that the right and proper and natural way for cotton to go is into the hands of the manufacturer. Therefore the manufacturer, by this operation of the exchange, was delayed in manufacturing the cotton, and this accumulation of stock, accumulated by reason of this campaign, did not go into consumption in the year it would have gone into consumption, but was held over, and augmented the next crop to the extent of this unnatural or speculative dealing on the cotton exchange. Mr. MARSH. I am not aware, sir, that any spinner consumed a ound less of cotton during that period than we would have consumed if this operation had not been entered into; and as far as the effect of

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