Mr. MANDELBAUM. The cloth, yes. Do you want me to tell you why they do it?

Mr. SIMS. I am asking you for a fact and the reason of it.

Mr. MANDELBAUM. I will tell you the fact, why they do so. One fact is that manufactured goods do not fluctuate in the way raw products fluctuate. The price does not change, is one thing. Another is the protection they receive at the hands of Congress. Nothing can be shipped from any foreign country that does not pay a prohibitive duty, almost, and that keeps the goods market more steady.

Mr. SIMS. My question was world-wide, not confined to the United States.

Mr. MANDELBAUM. If it is world-wide, I will answer it no.
Mr. SIMS. They generally sell their goods?

Mr. MANDELBAUM. I am not talking about goods; I am talking about the wool.

Mr. SIMS. I am talking about the manufacturers making cloth from wool. Do they not contract to sell their manufacture ahead of the day of manufacture?

Mr. MANDELBAUM. Yes, sir; they sell it six months ahead.

Mr. SIMS. Then you have answered what you have repeatedly refused to answer. Then, if it is possible for woolen manufacturers, without a woolen exchange, to sell their manufacture six months ahead, why could not cotton manufacturers do the same way without a cotton exchange?

Mr. MANDELBAUM. In the first place, Mr. Sims, you and I do not agree exactly the way the woolen goods business is done. The manufacturer buys his wool, and, as they pretty much have to pay the same price for the wool and have nothing to fear from foreign competition, do not export any woolen goods, they put a certain price on it, and that price is sent out to their drummers, their agents, and those goods are made new only after orders are received, in most instances.

Mr. LEVER. Reference has been made to the Marsh committee. What is that committee?

Mr. MANDELBAUM. The Marsh committee was appointed by the exchange to take up the charges made in the first book of Mr. Herbert Knox Smith.

Mr. LEVER. How long ago was that committee appointed?
Mr. MANDELBAUM. I should say about fifteen months ago.
Mr. LEVER. Has it ever made any report?

Mr. MANDELBAUM. No, sir; they have not come to a conclusion. They are making tests in regard to loss in the different grades, and the reason we did that was because we had been assailed, it being stated that it was not possible that seventeen men could sit on a revision committee and not be somewhat influenced by individual members, and in order to take it out of the hands of anyone to make those differences, we wanted to see-and we have spent a great deal of money on it-whether we could not arrive at a definite conclusion and vote the different grades according to their spinning value, once and forever.

Mr. LEVER. That is the reason you have not made the report? Mr. MANDELBAUM. Yes, sir.

Mr. LEVER. You made some reference to the moral phase involved in this question. Do you consider there is a moral phase involved in it?

Mr. MANDELBAUM. I do not. I am only saying I have been at a loss to understand what the propounders of this bill are proceeding under. I have been impressed it was one thing, and then I have been impressed it was another.

Mr. LEVER. There could not be any moral phase in it, unless there were illegitimate transactions on the exchange?

Mr. MANDELBAUM. There could not; there is not.

Mr. LEVER. There are no illegitimate transactions?

Mr. MANDELBAUM. No, sir.

The CHAIRMAN. I have just one question that I would like to ask Mr. Mandelbaum, perhaps two. What are the most active speculative months?

Mr. MANDELBAUM. There are not so-called speculative months; they are all traded. The only thing is that for some reason or other, for no purpose-I state that under oath for no reason whatever it seems that hardly anybody ever trades in November. There is absolutely no reason for it, and that hardly anybody ever trades in February, and that hardly anybody ever trades in April; and those are the only three months.

Mr. ELLERBE. How about June?

Mr. MANDELBAUM. June, yes; I beg your pardon.

The CHAIRMAN. That fact essentially was stated here by other witnesses several times, and I had a curiosity to know if there was any reason for it.

Mr. MANDELBAUM. It is a mere accident that those months have been the active months, and everybody would rather trade in an active month than in one that is inactive, but it is absolutely and unqualifiedly on no theory connected with the exchange.

The CHAIRMAN. And yet just by accident it happens that the same months each year are dull in the cotton exchange?

Mr. MANDELBAUM. Yes, that does not refer to price. The price is the same whether they are traded or not. You seem to labor under a misapprehension that it would make any difference of the price.

The CHAIRMAN. It really has no particular bearing.

Mr. MANDELBAUM. If you wanted to buy in November you could buy, and it would have the same relative value with the other months. The CHAIRMAN. I understand that perfectly, but the answer to my question would have no particular bearing on these bills. I only asked it out of curiosity.

Mr. MANDELBAUM. Just a mere accident.

The CHAIRMAN. It seems strange to me that in a product in which there was so much trading in bulk there should just happen to be three or four months of the year when the trading would be dull.

Mr. MANDELBAUM. Eight months in the year; only four inactive months.

The CHAIRMAN. I said only three or four months in the year in which the trading should be dull.

Mr. MANDELBAUM. It may astonish you, Mr. Chairman, that we amongst ourselves have often sought for the reason for that, and we

never could find what the reason was that hardly anybody ever trades in February, November, April, or June.

The CHAIRMAN. So there is something about the cotton business that even you do not know. [Laughter.]

Mr. BROOKS. Then you do not agree with Mr. Neville in his statement yesterday that it curtails the consumption of cotton for the American merchant not to be able to sell ahead to the exporters, as he illustrated in his case with the Chinese merchant.

Mr. NEVILLE. I do not think I stated it.

Mr. BROOKS. I am very positive you did.

Mr. NEVILLE. I am reading over the testimony now, and if I find it I will call your attention to it.

Mr. MANDELBAUM. If he stated it I disagree with him, and I have disagreed with a great many of my colleagues; sometimes to a very heated extent.

The CHAIRMAN. That is too bad. [Laughter.]

Mr. BROOKS. If it would benefit the foreign spinners for these futures to be prohibited, throwing the trade over there, why are the American spinners in favor of it?

Mr. MANDELBAUM. I think I made myself perfectly clear that this was one of the phases that came out yesterday in which even we thought it just came out by accident. We did not think of it until it came out yesterday just by accident, when Mr. Neville touched that question, and I just saw where the difference came in, and I do not believe it ever occurred to a spinner. It did not occur to me, I have studied it as closely as anybody.

and

Mr. BEALL. Mr. Mandelbaum, the elimination of the New York exchange, in your judgment, would not be especially to the detriment of the spinner, I understood you?

Mr. MANDELBAUM. I think so; I think it would be to the absolute detriment of the spinner.

Mr. BEALL. It would be possible for the spinner to readjust his business so as to still continue to spin cotton, even without an exchange?

Mr. MANDELBAUM. Everything can be readjusted in this world, Mr. Beall. We even might get along without any Congress. [Great laughter.]

Mr. HEFLIN. You would like to dispose of this one, would you not? Mr. MANDELBAUM. I would not. I have the highest respect for Congress.

Mr. BEALL. You do not agree, then, with these other gentlemen, that the elimination of the exchange would result in putting the producer of cotton very largely at the mercy of the spinner? Mr. MANDELBAUM. Í do.

Mr. BEALL. You do agree with that?

Mr. MANDELBAUM. Yes.

Mr. BEALL. You do think, then, that the elimination of the exchange would put the spinner in position to dominate the cotton market?

Mr. MANDELBAUM. Yes, sir; and it would not be long before he would have a combination, too, to do it with.

Mr. BEALL. You think it would be ultimately to the advantage of the spinner to have the exchange eliminated, then?

Mr. MANDELBAUM. Not after he found how it affected him-sometimes a man wants something very badly and he gets awful sick after he gets it. It has happened to you already; it happened to me yesterday. [Great laughter.]

Mr. BEALL. How did you reconcile that with your statement that the elimination of the exchange would give the spinner the mastery of the market?

Mr. MANDELBAUM. At first it would benefit him as far as the purchase of cotton is concerned. It would certainly work to his benefit for any goods he uses in this country. But one fine day-which is not an isolated case; that case cited by my friend Neville is a case that happens almost every day; we are naturally getting to be less of an exporting country, and are bound to get to be less of an exporting country as our natural products grow less, and are consumed at home and then one day they would find they could not make a contract with a merchant in China, Japan, or in Italy, because they could not secure the cotton for future delivery.

Mr. BEALL. Just one case Mr. Neville used in illustration. In individual instances it would then be to the embarrassment of the spinner? Mr. MANDELBAUM. I would put it in a great many instances, not in individual instances.

Mr. BEALL. Would you think that, as a general rule, it would be to the detriment of the spinner?

Mr. MANDELBAUM. It would be from a political and economical aspect. It would be to the absolute detriment of the industries of the country, which are all intimately connected with each other.

Mr. BEALL. With the elimination of the exchange the cotton merchant could still continue to do business?

Mr. MANDELBAUM. No.

Mr. BEALL. You do not agree, then, with Mr. Cone? He stated he was a cotton merchant and could probably make more money under a different system than he makes now.

Mr. MANDELBAUM. I agree with him and I disagree with him. More might be made on 200 bales than he is making now on 1,500. It may be he looks at it from that view. But I want to give you a little history in answer to that question. When I did business in San Antonio, in 1872 and 1873, we used to figure, in buying cotton, on a margin of 1 to 2 cents above all expenses. That was from $7.50 to $10 a bale, and then very often we came out behind because the margin was not sufficient.

Mr. BEALL. Do you or do you not agree with Mr. Cone?

Mr. MANDELBAUM. I do not agree with him.

Mr. BEALL. That answers my question. Your chief solicitude is for the producer. You think it would work to his detriment?

Mr. MANDELBAUM. My chief solicitude-I want to be perfectly frank-is for everybody connected with that business, whether he be the producer, the spinner, or the man in New York.

Mr. BEALL. Is there anything connected with the New York Cotton Exchange, its methods of doing business, its management, its operations, that you do not approve of?

Mr. MANDELBAUM. As far as the management goes, there is absolutely nothing I do not approve of.

Mr. BEALL. I mean the system of conducting the business.

Mr. MANDELBAUM. There are things on which men differ, like all men differ.

Mr. BEALL. I understand that; but is there anything you do not indorse?

Mr. MANDELBAUM. Nothing that pertains to the cotton exchange as an exchange.

Mr. BEALL. Its methods of doing business?

Mr. MANDELBAUM. No, sir.

Mr. BEALL. You give your indorsement, then, to everything connected with the cotton exchange and its methods of doing business? Mr. MANDELBAUM. Yes, sir.

Mr. BEALL. A while ago you made some comparisons between the Burleson bill and the Scott bill. I understood you to say that the operation of the Burleson bill would affect only one class, either the buyer or the seller, I have forgotten.

Mr. LAMB. The seller.

Mr. BEALL. I would infer from that that you think the Scott bill is a better bill, broader in its application, and so forth, than the Burleson bill?

Mr. MANDELBAUM. I think so.

Mr. BEALL. Have you ever compared those two bills?

Mr. MANDELBAUM. To a certain extent, yes.

Mr. BEALL. I will ask you, as a matter of fact is it not true that the Burleson bill and the Scott bill are exactly the same, except one of them applies to cotton and the other applies to cotton and grain? Mr. MANDELBAUM. I do not think so.

Mr. BEALL. Is it not a fact that the language of the two bills, paragraph after paragraph, is exactly the same?

Mr. MANDELBAUM. I do not think so. I only got them day before yesterday, and I had absolutely no time to make a close study, but on a superficial looking at the bills it seemed to me, and I believe so yet, that the Burleson bill does not speak about anything but selling the

cotton.

Mr. BEALL. If they are the same, then the distinction you draw between them is not a correct one?

Mr. MANDELBAUM. The distinction would not be a correct one, except that it would be a further distinction between the business of the exchanges in this country; that it would eliminate from them the grain exchange.

Mr. BEALL. Suppose there traded on the New York Cotton Exchange only the members of the exchange, only the spinners, only the merchants who handle cotton-they are the only ones who conduct any business on the exchange, or for whom any business on the exchange is conducted-and the New York Cotton Exchange existed under those conditions. Suppose there is only the trading between you members, only the hedging of the cotton merchants and only the hedging of the spinner; could there exist the New York Cotton Exchange as it is conducted now?

Mr. MANDELBAUM. Mr. Beall, I am not a prophet; I can not answer that question.

Mr. BEALL. The question I have suggested eliminates only the man who goes in there and trades on it purely as a means of speculation. That is the only man, I understand, whom my question eliminates.