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Mr. NEVILLE. You are assuming that I am on the cotton exchange all the time, and I am not.

Mr. BEALL. Well, as a member of the New York Cotton Exchange, after all these years as a member of the exchange, you can not cite us to anything connected with the operation of that exchange that you think should be remedied ?

Mr. NEVILLE. You bet I can!

Mr. BEALL. I want you to cite me one thing connected with the operation of the exchange that you think should be remedied.

peration of the Do you surelyxious now that you t

Mr. BEALL. Yes; I am anxious now to see some specific practice that prevails on the cotton exchange that you think should be remedied.

Mr. NEVILLE. No; you didn't say that.
Mr. BEALL. Well, you can answer the question.

Mr. NEVILLE. You asked me if there was anything in my experience, anything in the cotton exchange that I thought desirable to change, and I am going to answer that question.

Mr. BEALL. Very well, answer that question.

Mr. NEVILLE. Just what I told you, gentlemen, in regard to the fixing of difference between grades.

Mr. BEALL. You have told that. Is there anything else?
Mr. NEVILLE. That is all I know.

Mr. BEALL. That is the only correction you would make in the rules or practices of the exchange?

Mr. NEVILLE. Yes, sir; so far as I can recall now. Mr. BEALL. With that one change, in your judgment, the system would be as perfect as possible for fallible mortals to make ?

Mr. NEVILLE. Well, I think so, sir. I don't think I have misstated it, either.

Mr. BEALL. Do you agree with Mr. Marsh, that upon a declining market the risk of the cotton trade falls upon the producer, but that on an advancing market the risk of a cotton trade is distributed throughout the world and falls upon the consumer ?

Mr. NEVILLE. Mr. Beall, I am not much of a political economist,

Mr. BEALL. And I am not, either, and so I am asking for information.

Mr. NEVILLE. And I must confess I have not looked at that phase of the subject.

Mr. LEVER. I would like to inquire a little about this scalping business.

Mr. NEVILLE. I thought you were through an hour ago; you said you only had one question.

Mr. LEVER. How do they differ from the ordinary transactions-
Mr. NEVILLE. There is no difference.
Mr. LEVER. Delivery is intended all the way through ?
Mr. NEVILLE. Absolutely all the way through, and they take it, too.
Mr. LEVER. They take it ?
Mr. NEVILLE. Yes.

Mr. BEALL. I want to ask you a question which you need not answer if you do not want to, because it is with reference to your own dealings. What is the largest amount of cotton that you have ever bought upon the New York Cotton Exchange in any one transaction?

Mr. NEVILLE. Twenty-five thousand bales.

Mr. BEALL. What is the largest amount of actual cotton that has ever been delivered to you on the New York Cotton Exchange?

Mr. NEVILLE. Eighty-two thousand bales.

Mr. BEALL. Twenty-five thousand bales is the largest amount you have ever bought and 82,000 bales is the largest amount that has ever been delivered to you.

Mr. NEVILLE. Yes, sir; and I paid for it in one day, took it up and paid for it in one day.

Mr. Sims. I would like to ask you a little further, continuing the subject that I was asking you about this morning. I asked you about the possibility of selling cotton at this time, say in February, to be delivered in October or December, and the basis of such a sale, and instead of answering the question directly you detailed a transaction you had with a spinner in South Carolina and stated that you bought for that spinner October futures.

Mr. NEVILLE. Yes, sir.

Mr. SIMs. Who sold you those futures-a member of the cotton exchange?

Mr. NEVILLE. Yes, sir.
Mr. Sims. How did he get those futures ?
Mr. NEVILLE. I told you the only way I could-
Mr. SIMs. Who supplied them?

Mr. NEVILLE. I don't know who supplied them and I don't want to know. All I know is that that merchant on the exchange, or merchants on the exchange, had enough cotton to sell at that price.

Mr. Sims. You mean October cotton

Mr. NEVILLE. Yes; had enough October cotton to sell at that price to satisfy my spinner's demand.

Mr. SIMs. Did the cotton exchange member that sold you 25,000 bales have a way to hedge against a possible loss on the selling side of that contract?

Mr. NEVILLE. Mr. Sims, you are assuming those merchants do that selling for their own account. Now, what was in the minds of the customers for whom they sold I don't think anybody can tell.

Mr. SIMS. Was it not impossible for the sellers of that October cotton to you to have any hedge or anything in the nature of a hedge on the New York Cotton Exchange?

Mr. NEVILLE. No, sir.
Mr. Sims. If they had actual cotton they could deliver ?
Mr. NEVILLE. No, sir.

Mr. Sims. Then persons in order to hedge, it is necessary that somebody through the cotton exchange has to take a pure, speculative, unhedged risk?

Mr. NEVILLE. Not necessarily. It might have been the reverse of that.

Mr. SIMs. In October ?

Mr. NEVILLE. Yes; except that I will take June instead of your February. Mr. Sims. But I am taking October for next year.

Mr. NEVILLE. I will say June, 1910, and October, 1910. I will take that,except that this really happened in 1907. Another South Carolina spinner

Mr. SIMs. Can you not answer without giving a long detailed transaction?

Mr. NEVILLE. I can not do it; the best way to answer a question of yours is to give an actual happening.

Mr. Sims. They complain when I ask questions that it takes so long

Mr. NEVILLE. I can not answer always flatly; I have to give some explanation when you ask your questions. Another South Carolina spinner, well known to Mr. Lever, came to me in my office and said, "Neville, I am up against it.” Í said, “What's the matter ?” He says, “I've got 8,000 bales of spot cotton on hand. I have the equivalent of 4,000 bales of manufactured goods on hand, which I can not sell without a loss.” He manufactures gingham. He says, “The gingham market is such that if I accept the price I can sell my gingham I will lose money. But I know this,” he said, “this depression will pass over." I said, “There is not a thing for you to do except to sell 12,000 bales of October contracts ahead against your manufactured goods unsold and against your cotton unsold." He says, “All right, sell them.” And I sold them for him. And now, I don't say that it did happen, but that thing might have happened when I bought that 25,000 bales. That is my answer to that question.

Mr. Sims. Do you imagine that all cotton sold through members, not by them on future months, even into another year, grew out of just such conditions as that?

Mr. NEVILLE. I did not say that.

Mr. Sims. I know you did not, and that is why I am trying to get you to the point. I will ask you if it is not a fact there are a vast number of contracts sold by persons who are not hedging and have no cotton or cotton goods or any other existing element of cotton value to discharge that contract ?

Mr. NEVILLE. Nothing would please me better than to give you a flat answer, Yes, but I can not do it truthfully.

Mr. Sims. I want you to answer truthfully, of course.

Mr. NEVILLE. I am trying to do so. I have told you that some of it may have been purely speculative.

Mr. Sims. Just another question and I have done. Is it possible to operate the New York Cotton Exchange as a hedge to actual dealers like yourself with speculative transactions eliminated ?

Mr. NEVILLE. How are you going to eliminate speculation ?

Mr. Sims. I say, would it be possible to operate it if all that kind of transaction was eliminated, if it could be done?

Mr. NEVILLE. That is a question I have never given much thought to. I am not on the exchange a great deal, and with the exception now and then of a sporadic season, such as this year, there is not any excessive speculation; and right on that point, if I may be permitted, Mr. Chairman, I would like to give you a little résumé. If the cotton producer this year should have sold his cotton to the manufacturer on the basis of what the manufacturer said it was worth to him in finished goods, he would not have gotten 104 cents for the crop. Last year, owing to your big crop, 14,000,000 bales, practically—a year ago everybody was as blue as indigo and cross and crabbed because cotton was selling around 94 cents and going to 7} certain, and perhaps 7 cents. Speculators thought it was cheap, owing to the unfavorable weather conditions in Texas, and bought it; and they bought it and bought it and bought it, with the result that the farmer has marketed his cotton this year on an average of better than 134 cents, I believe. I think that would be about the average price.

Mr. Sims. I say frankly that I think speculation on this past crop has been a great boon to the grower.

Mr. NEVILLE. Now, how to eliminate speculation is something that is too much for me.

Mr. Sims. We do not want to eliminate investment speculation, but investments by monopoly and up-and-down contracts and manipulation for making a man turn loose his margin

Mr. NEVILLE. Mr. Sims, I am perfectly astounded to hear so much of that from thinking men since I have been in this room. I am perfectly astounded to presume that a set of reputable merchants could and would, would if they could do it, get together to shake out such as you describe

Mr. Sims. I accept every word you say, that you do not do that sort of thing; but men who operate through you, called great operators, manipulators, do that sort of thing.

Mr. NEVILLE. I beg to differMr. Sims. What do you mean when you say "running a bull campaign ?

Mr. NEVILLE. That is newspaper talk; I don't know what it means.

Mr. Sims. And when you say the “Brown & Hayne campaign," what do you mean?

Mr. NEVILLE. I don't knowMr. Sims. I know what they mean; at least I know what they claim. They are “out for the goods," as they say.

Mr. NEVILLE. If you know, you know more than I do.
Mr. Sims. What do you mean by “shaking out the shorts?

Mr. NEVILLE. I don't know. It seems to me the proper expression would be "poke up the shorts” and “shake out the longs.'

Mr. HEFLIN. Why do you limit the number of members of the New York Cotton Exchange?

Mr. NEVILLE. I don't know; I could not answer that. Mr. HEFLIN. Do you know how many members of the New York Cotton Exchange live in the cotton belt? Mr. NEVILLE. I could not say.

Mr. HEFLIN. Mr. Marsh, who is vice-president of the exchange, said in a speech in New York two or three years ago, “All of the arteries of the cotton world lead not merely to New York, but to the very floor of the Cotton Exchange.” Do you think that is true ?

Mr. NEVILLE. Yes, sir.

Mr. HEFLIN. Now, then, if the New York Cotton Exchange is so powerful in the cotton world, don't you think the number of members of that exchange, if it is going to exist at all, should be unlimited, so that from time to time new men from different sections of the country could buy seats on the exchange, and in that way all sections of the country could be represented ?

Mr. NEVILLE. I have never known a man who applied for membership, if he had the price, that did not get it.

Mr. HEFLIN. But it is limited, so you can not have over 450 members.

Mr. NEVILLE. That is true.

Mr. HEFLIN. I have seen the statement that only 30 or 40 members belonging to that exchange live in the South.

Mr. NEVILLE. I could not answer that.

Mr. HEFLIN. Are there any foreigners who are members of the exchange?

Mr. NEVILLE. Yes, sir.
Mr. HEFLIN. Do you belong to the Liverpool Exchange?
Mr. NEVILLE. Yes, sir.

Mr. HEFLIN. Does Mr. Marsh belong to the Liverpool Cotton Exchange ?

Mr. NEVILLE. Yes, sir.
Mr. Herlin. Does Mr. Hubbard belong to the Liverpool Exchange?
Mr. NEVILLE. I presume so.

Mr. HEFLIN. You said this morning that the Liverpool Exchange was run by the spinners of England, or in their interests. · Mr. NEVILLE. Yes.

Mr. HEFLIN. And how many foreign members belong to your exchange?

Mr. ÑEVILLE. I could not answer that.

Mr. HEFLIN. Who is there here who can answer that? (After a pause.) I believe those are all the questions I have to ask.

Mr. HUBBARD. I do not think Mr. Neville brought out the fact that the associate members have no vote in the Liverpool Exchange, and that no member can be an active member of the Liverpool Exchange unless he resides in England. They elect associate members, however, who have no vote.

Mr. HEFLIN. I think Mr. Cone said he belonged to every exchange in the world.

Mr. NEVILLE. He said he was an associate member of the Liverpool Exchange.

Mr. HEFLIN. My recollection is that he said he was a member of every exchange.

Mr. HUBBARD. He could not have been a full member of the Liverpool Exchange.

Mr. BROOKS. I have never heard it mentioned in the discussion, and I want to ask this: Do you consider that a forfeiture of margin is in any sense a payment of damage for a noncompliance with a contract ?

Mr. NEVILLE. It seems to me that there is a legal question involved that I am not competent to answer.

Mr. BROOKS. You would not care to commit yourself on that point ? Mr. NEVILLE. I don't know anything about it. That is a matter for a lawyer.

Mr. BROOKS. Well, do you think it possible to gamble on the exchange?

Mr. NEVILLE. That requires a scholastic definition of the word “gamble,” which I am not prepared to give.

Mr. BROOKS. You do not know, then, whether you think it is gambling or not to deal in margin certificates purely?

Mr. NEVILLE. No; I don't think it is gambling.

Mr. BROOKS. You think gambling is immoral as a general proposition, do you not?

Mr. NEVILLE. It depends altogether on how you play it and who plays it. I have known people who sat down to a 10-cent game who didn't regard it as gambling.

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