Q. So that the same cotton has been sold again in this way a great many times? A. Without question.

Is that true or false?

Mr. NEVILLE. Well, I should say perhaps a little of both; about six of one and half a dozen of the other.

Mr. BURLESON. Half true and half false ?

Mr. NEVILLE. That is the best answer I can give.

Mr. BURLESON. What part is false?

Mr. NEVILLE. That part he says is true, and what he says is true is false.

Mr. BURLESON. That is the answer you desire to give on the record, is it?

Mr. NEVILLE. I think that is a good answer to such rot as that. Mr. BEALL. What do you say to a statement like this:

At a meeting of the revision committee in November, 1907, Dr. J. H. Parker, president of the exchange and a member of the committee, said some of the cotton was exceedingly low in grade; also that some of the stock had been on hand for four years and was not taken out for the reason that it was of such poor quality that it was undesirable at the grade "differences" then existing.

Mr. NEVILLE. It may have happened. It very often happens that there are lots of low-grade cotton that are perfectly spinable that, where the supply exceeds the demand, might not be consumed before a new crop comes in.

Mr. BEALL. That statement was made by Dr. J. H. Parker, president of the exchange.

Mr. NEVILLE. I understand; I am not controverting it. I am very much obliged for saying who it was made the statement, because Mr. Burleson has not been so considerate in the questions that he has read. He has not given the names of the men from whom he quoted. Mr. BEALL (reading):

Various grades of cotton certificated by the New York Cotton Exchange in the crop years 1890-91 to 1906-7, inclusive.

What is meant by the word "certificated?"

Mr. NEVILLE. That means the cotton that has been inspected for irregularities, such as unspinable, gin cuttings, straw, feathers, and what not. "Certificated" signifies to the world that that cotton has been inspected and classed by the classification committee of the New York Cotton Exchange, has been given grades, that grades have been specified in that grade certificate, and the holder of that certificate gentlemen, I want you to mark this-the holder of that certificate, if he thinks that cotton is not properly classed, has the right under the by-laws to demand that that cotton be resampled and reweighed and reclassed, and if there is a difference in class of the reclassed cotton and what he paid for, the Cotton Exchange is responsible for such difference.

Mr. BEALL. Am I to understand that certificated cotton means cotton that can be delivered upon the contracts?

Mr. NEVILLE. Yes; after it has been classed.

Mr. BEALL. This table here shows grades of certified cotton in New York warehouses on January 10, 1907. The total was 115,697 bales of certificated cotton in the warehouses in New York.

Mr. NEVILLE. What date is that?

Mr. BEALL. January 10, 1907.

Mr. NEVILLE. Yes, sir.

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Mr. BEALL. Of that amount, something like 3,000 bales were of middling grade, or above it?

Mr. NEVILLE. Yes, sir.

Mr. BEALL. Six thousand bales strict low middling; 17,000 bales fully low middling; 21,000 bales low middling; 19,000 bales barely low middling; 11,000 bales strict good ordinary, and so forth down the line, getting down to strict low middling tinged, 9,000 bales, and low middling tinged, 6,000 bales.

Mr. NEVILLE. Yes, sir.

Mr. BEALL. That would indicate that of the 115,697 bales all but about 3,000 bales were below the grade of middling?

Mr. NEVILLE. Yes, sir; and that indicates more than that, Mr. Beall.

Mr. BEALL. I would be glad for you to state what it does indicate. Mr. NEVILLE. I anticipated that question.

I have here before me the New York Cotton Exchange market report for January 10, 1907, which shows that the certificates outstanding January 9 were about 120,329 bales. But I have taken the class from Mr. Burleson's speech delivered on February 4, 1907, and if I might read the grades that I have taken from that speech I would like to do so. He had a certificate of class received from Mr. John Tanner, who was then chairman of the warehouse and delivery committee.

Mr. BURLESON. Which one?

Mr. NEVILLE. The argument you made February 4, when you asked for this investigation of the exchange.

Mr. BURLESON. That is when I introduced the resolution.

Mr. NEVILLE. Yes; and submitted a statement.

Mr. BURLESON. I have not that one before me, but I have this one [indicating].

Mr. NEVILLE. I can not use that one, because there is a half hour's figuring here.

Mr. BURLESON. Very well, then. When Mr. Neville gets through with that one, I will put this one in the record.

Mr. NEVILLE. Mr. Beall, that statement indicates to me more than you said, sir. From my handling of the cotton business that season, the New York stock on that day was a very fair average of the stock of cotton existing in the South for sale by the planters and the merchants. That stock of cotton averaged low middling cotton on an exact calculation based on the differences existing in the New York market for that day for each grade above and below middling. Mr. Beall and gentlemen, if a thing does not exist, it is hard to get, is it not? Now, in all candor

Mr. BEALL. I do not raise any question about all this cotton existing, that you could have found those grades in the South.

Mr. NEVILLE. But we have been criticised because in that disastrous year a spinner wanting to buy cotton could not go to the New York market and buy contracts and get strict middling cotton. We have been criticised for that by Mr. Parker

Mr. BEALL. Could he go to the New York market at that time and buy a contract with any assurance that low middling would be delivered to him?

Mr. NEVILLE. A spinner who wanted low middling at that time could have gone to any man who had a stock of cotton in New York and could have bought a selection of certificates, the certifi

cates, I dare say, not containing over four grades of cotton, and could have gotten an average of any grade of cotton.

Mr. BEALL. He could not have gotten that sort of cotton on the New York Cotton Exchange, could he? Of course you, as a member on the outside, could sell to Mr. Hubbard, who might be a spinner in a particular grade of cotton; but if Mr. Hubbard came onto the floor of the New York Cotton Exchange and bought a thousand bales of cotton from you, could he have secured from you under that contract the delivery of any particular class of cotton?

Mr. NEVILLE. No, sir. He would have gotten exactly what he bought when he went into the market, when he bought it. He would have gotten 100 bales of cotton of practically 50,000 pounds weight, containing grades deliverable on contract at so much per pound, based on middling, with deductions or additions of grade below or above middling.

Mr. BEALL. And you would have delivered to Mr. Hubbard, the spinner, the quality of cotton that there was at that time the least demand for, would you not?

Mr. NEVILLE. I can not say I would. I would in all probability have delivered to him some cotton which by its storage date on the warehouse receipt would enable me to get rid of storage; or I might have delivered him cotton that is what we know as an "expirer that is, lacking a few days of reaching the point where the cotton had to be reweighed and reclassed again.

Mr. BEALL. How often does that reclassification and reweighing have to occur?

Mr. NEVILLE. Once a year.

Mr. BEALL. Well, you would in all probability have delivered to him the cotton that you could have delivered to him most advantageously to yourself?

Mr. NEVILLE. Most assuredly I would, sir. When he bought it he ought to have known he would get it that way.

Mr. BEALL. And that would be the class of cotton that there was the least demand for ordinarily, unless some of these special reasons intervened?

Mr. NEVILLE. No; as much as I would like to answer that in the affirmative, Mr. Beall, I can not consistently do it. I would have given him the cotton that suited me best to give him.

Mr. BEALL. Well, would it not suit you better to give him the cotton that there was the least demand for?

Mr. NEVILLE. Not altogether. I might have had cotton in there which I knew a demand would come for-and that was the case.

Mr. HOWEL. Are all the grades of cotton dealt in on the New York Cotton Exchange?

Mr. NEVILLE. Yes; every one of them.

Mr. BEALL. I understand that when a man buys on the New York Cotton Exchange a hundred bales, to be delivered in October, say, that you have the right to determine the particular grade of cotton that you will deliver to him?

Mr. NEVILLE. Yes, sir.

Mr. BEALL. He has no voice at all in the matter?

Mr. NEVILLE. He buys on a basis middling contract.

Mr. BEALL. I understand; but he has no voice in saying whether he will take fair or whether he will take one of the lowest grades under the contract?

Mr. NEVILLE. He has a voice in this way, Mr. Beall.

Mr. BEALL. I mean after he makes the contract; then the option as to the kind of cotton he shall receive rests with you?

Mr. NEVILLE. Yes, except this way: When he buys that contract from me he knows he is buying a basis of middling contract, and he knows the terms under which he is buying it. It frequently happens that spinners, buyers, buy a contract for a mill, and when they find who they have bought that contract from they go to the seller and say, "Look here, old man; I want a hundred bales of low middling," or a hundred bales between strict low middling and low middling, "and if you will give me a selection of certificates I will pay you 10 points on.'

Mr. BEALL. He pays a premium for the right to exercise that option himself?

Mr. NEVILLE. No; I didn't say that, and I do not think you can infer that from what I said.

Mr. BEALL. All right.

Mr. NEVILLE. I said he paid a premium of 5 or 10 points for selecting the quality that he wanted.

Mr. BEALL. Can you explain the distinction between what you just said and what I indicated?

Mr. NEVILLE. I think the distinction is there; I can not explain any more than that, however much I would like to do so.

Mr. BEALL. I appreciate your accommodating spirit, but still I can not see any difference between my statement and yours. Well, now, under that contract the operator that sells the contract for delivery in October has the option of determining upon what day in October that delivery shall be made; is that true?

Mr. NEVILLE. He has the option of delivering that cotton any time during that month.

Mr. BEALL. There is only one day in October that the buyer can demand the delivery?

Mr. NEVILLE. Yes, sir.

Mr. BEALL. That is the last day of October?

Mr. NEVILLE. Yes, sir.

Mr. BEALL. While the seller has thirty-one days in which he can make that delivery?

Mr. NEVILLE. He has as many days as there are delivery days in the month.

Mr. BEALL. While the buyer has one day in the month.

Mr. NEVILLE. Mr. Beall, that point would be well taken if the buyer did not know those conditions when he bought.

Mr. BEALL. I recognize he knows them, but I just want to get at the terms of the contract. Now, you operate on the exchange. Do you ever buy or sell cotton except for the purpose of hedging spot transactions?

Mr. NEVILLE. No, sir.

Mr. BEALL. You do not?

Mr. NEVILLE. No, sir.

Mr. BEALL. To what extent does that prevail on the exchange, such a practice as is referred to, in your judgment?

Mr. NEVILLE. I think that would be very hard to answer, and I must confess I am not competent to answer it.

Mr. BEALL. In your judgment there are operators on the New York Cotton Exchange who buy and sell not for the purpose of pro

tecting any spot transaction and really not for the purpose of delivering cotton and receiving cotton; is it your judgment that there are such transactions on the exchange?

Mr. NEVILLE. There may be.

Mr. BEALL. Is it not your judgment that there are existing such conditions, not simply a possiblity, but is it not your opinion that that condition exists?

Mr. NEVILLE. I dare say such conditions do exist; naturally, in the nature of the business, they would exist; but what proportion they are I am unable to say.

Mr. BEALL. You can not state the proportion, but you are satisfied that such a practice does prevail on the exchange?

Mr. NEVILLE. I have said it doubtless happens; yes.

Mr. BEALL. Do the operations of that kind, in your judgment, have a tendency to affect the price of spot cotton?

Mr. NEVILLE. I should think, Mr. Beall, that would depend very much on the nature of the scalper. If it was a selling scalper it would affect it temporarily, or if it was a buying scalper it would affect it temporarily. Then in the long run it doesn't make much differ

ence

Mr. BEALL. No, it doesn't make any difference whether he is a selling scalper or a buying scalper; it doesn't make any difference as to the character of the scalper.

Mr. NEVILLE. I do not think it makes any difference one way or the other.

Mr. BEALL. You do not think it affects the market very much? Mr. NEVILLE. No, sir.

Mr. BEALL. Do you think that is a good practice to prevail on the New York Cotton Exchange?

Mr. NEVILLE. I do not think it is a bad one.

Mr. BEALL. Do you think it is a good one?

Mr. NEVILLE. Yes; I think that anything that creates a demand for cotton is good. There must be a demand where there is a sale. Mr. BEALL. That feature of the New York Cotton Exchange meets your approval?

Mr. NEVILLE. Yes, sir.

Mr. BEALL. That is the basis of a great deal of criticism of your cotton exchange.

Mr. NEVILLE. I don't know.

There seems to be so much criticism

it is pretty hard to find what people do want.

Mr. BEALL. Well, you think that if that is the basis that even that is not a just matter of complaint against the exchange?

Mr. NEVILLE. I am not a censor of morals and I would like to answer that question, but that "even that" in there is pretty hard for me to get at.

Mr. BEALL. I will ask you this. If there is anything connected with the New York Cotton Exchange that you do not approve of. Mr. NEVILLE. That is a pretty hard question to answer, sir. I would have to be a wizard to answer that.

Mr. BEALL. Well, have you ever seen any practices there that you think ought not to prevail?

Mr. NEVILLE. No, I must confess I don't think I have.

Mr. BEALL. So far as you can tell, after an experience of a good many years on the cotton exchange