RULES KNOWN AS CAROLINA MILL RULES, OR RULES ADOPTED BY SOUTHEASTERN COTTON BUYERS' ASSOCIATION, AND ASSENTED TO BY REPRESENTATIVES OF AMERICAN COTTON MANUFACTURERS ASSOCIATION AND REPRESENTATIVES OF CAROLINA MILLS, AND GOVERNING THE SALE OF COTTON TO DOMESTIC MILLS.

ARBITRATION.

8. a. In the event of disagreement between shipper and mill upon grade, weights, tare, or other claim, the matter shall be settled, if possible, by friendly agreement. If not, then as below stated.

b. If the mill and the shipper can agree upon a third party who is conversant with the conduct of the business, the question shall be submitted to this third party, and his judgment shall be final.

c. If this can not be done, the mill shall select one arbitrator and the shipper select also one (these arbitrators being other than the official representatives between whom the dispute has arisen), to whom the whole question shall be submitted by both parties to dispute either verbally or in writing, and in the event these can not agree, they are to select a third party to act as umpire, whose judgment shall be final. If an umpire can not be agreed upon, then the matter in dispute is to be submitted for the ruling of the New York Cotton Exchange, but this to be a last resort.

d. If the dispute be as to grade, the samples drawn by the mill shall be submitted, unless the seller claims the right to have new samples drawn, in which event samples of cotton shall be drawn by either party with the consent of the other, or by a third party in the presence of both parties. Provided, however, that in cases where it may be impracticable to have samples subsequently drawn, the cotton not so sampled shall be assumed to be of the grade invoiced.

e. In any arbitration, or where any question is submitted to the ruling of New York Cotton Exchange, the party against whom the decision is rendered shall be liable for the expense of arbitration or submission.

AGREEMENT.

9. In absence of other agreement, differences ruling on New York Cotton Exchange at date of sale are to be used in settling claims under all contracts; and in the absence of specific rules hereto covering any dispute arising between parties, the ruling of the New York Cotton Exchange is to govern. Unless specific agreement is made otherwise, in writing, these rules are to govern in the determination of any difference between shipper and mills.

C. W. HEATH, Chairman,
CAESAR CONE,

A. W. HAYWARD,
T. I. HICKMAN,

ARTHUR WHITTAM,

SPEECH OF SENATOR EDWARD D. WHITE, OF LOUISIANA, BEFORE THE UNITED STATES SENATE, JULY 21 AND 22, 1892, CONCERNING THE WASHBURN BILL: A MEASURE DESIGNED TO PROHIBIT FUTURE DEALINGS IN PORK PRODUCTS, GRAIN, AND COTTON.

Mr. President: The votes which have been hitherto had in the Senate to take up this bill and the general line on which the argument has proceeded seem to indicate that there is probably a majority sentiment on the floor in favor of the bill. I should hesitate very much with this knowledge to make any very elaborate discussion as to the constitutionality of the bill, or as to the wisdom of the legislation which it propounds,

if I were not profoundly conscious that in my judgment there has been before the American Congress for many years no more pernicious, no more vicious, no more flagrantly unconstitutional legislation, no legislation more tending to undermine and destroy the very foundations of our Government, and none more calculated to do untold and untellable harm to the people of this great country. The interests which this proposed legislation affect are enormous. The products, the price or sale of which the bill attempts to regulate, run up into vast proportions.

The theory of the Senator who presents the bill and who urges it with so much zeal on this floor is that if the bill passes, to all the great body of the consumers of this country, representing 78 per cent of the population, there is to be an enhancement in the cost of these vast products. If, then, the arguments of the proponents of the bill be true, upon nearly three billion dollars of products the effect of this legislation will be to increase the price to all the consumers of the country.

My judgment is, on the other hand, that if the bill passes, the necessary effect will be to reduce the prices obtained by the producers of the country to a considerable degree upon this great sum.

With these great issues involved in this bill, issues which go home to every hearthstone in this land, issues which reach out their fingers into the pockets of every man, be he rich or poor, I think I shall be justified in an attempt to discuss its provisions deliberately, in order to point out what I conceive to be the flagrant constitutional defects which are involved in it, and the gross financial and business heresies which it contains.

Mr. President, let me analyze the bill. What does the first section provide? It has been gone over very frequently, but I shall go over it again in order to make clear what I shall endeavor to say.

The first section forbids options, which in the argot of the commercial gamblers are known as "puts and calls." Now, what is a put or call, or an option, as defined in this bill? It is a contract by which a man gives to another a sum of money for the privilege of calling upon that man to deliver property, or for the privilege of delivering to him. It is a purely unilateral contract, by which a man gives a sum of money for the privilege of delivering or receiving property.

So far as this contract is concerned, or this so-called contract, I have no word of defense to raise because it is a contract which engenders no obligation per se.

Courts of this land, at least the courts in my State, have declared it is a contract without a consideration, which can not be enforced; that it involves within its bosom an element of chance which makes it purely aleatory, and, therefore, takes it out of the domain of all those great contracts around which the law throws the shelter of its protection and the instrumentalities for its enforcement.

What does the second section provide? The second section defines futures. What does it define futures to be? It defines any contract to be a future where the one selling at the time of sale is not the actual owner of the property, however real may be his intention to deliver at the time stipulated and however great may be his means of fulfillment. What else does it provide? After defining this contract it then goes on to say that neither the Government of the United States nor any municipality, nor any State, nor any farmer, in so far as he may have made a crop or had a crop in process of being made, shall be brought within the grasp of the provision. The amendment which has been adopted on the motion of the Senator from Minnesota also takes all retail dealers out of the reach of the second section.

The bill defines options. The bill defines futures. Is the definition general in both cases? It is. Now, if the proposed statute stopped there and contained its penalties, then every human being and every contract for options and futures wherever our administration extended would be brought within the provisions of the general statute. Does this bill do that? No; it is discriminating from one end to the other. It is flagrantly and openly discriminating.

After defining options and futures, then the bill goes on to say, not that all contracts of that kind within this broad land shall come within reach of this general statute. No, but it picks out particular things and particular subjects-matter to make them alone the subjects of the general law, which, if it has any foundation in public necessity or public right, should operate over a sway as broad as our jurisdiction.

Now, to what is the bill applied? Here are these contracts and here are these general definitions. What does the bill say? That the articles to which the foregoing sections relate are raw or unmanufactured cotton, hops, wheat, corn, oats, rye, barley, pork, lard and bacon. Of all the vast objects of contract in this land it makes a general definition, and then singles these out alone to cover them by the provisions of the statute. If there is a Senator who does not admit that from the day of the Magna Charta down the first and the elementary principle laid down by English

speaking people is that the general laws should be operated generally and that no discrimination should be exercised? The distinguished Senator from Mississippi (Mr. George) helped to frame a constitution in his State recently. I venture to say that in the exercise of the power vested in the legislature of the State of Mississippi this discriminating clause would be stricken with constitutional paralysis, because it was not the general law. There is not a modern state constitution in this Union which has not put its anathema on discrimination. How, then, is this bill justified? I do not know. By what rule has it been written? What has been the prescience which has looked over all this land and picked out these particular objects to make them alone the subject-matter of this discriminating law?

Mr. President, be the clamor what it may, I know my people well and I should not be afraid to go with my vote before them with this third section in my hand and invoke their ordinary sense of common American fair play and feel absolutely confident of their renunciation of this attempt to discriminate in favor of the one product as against another product.

How is this justified? I have heard some talk about agricultural products. My mail has been burdened every day for almost a month with some circular gotten up by some committee somewhere. The Senator says that this bill is in the interest of the farmers, that the farmers are scattered, that they are not organized and can not protect their right, and, therefore, they must be looked after. My mail has been burdened with private letters, telegrams, circulars, newspapers, pamphlets, in favor of the bill which has engendered in my mind a deep-seated alarm that there is a mighty conspiracy against the comsumers of the country and in favor of certain favored persons, and I think I can demonstrate such to be the fact before I take my seat. Now, take food products. Does this bill embrace food products? Is cotton a food product? Where are butter and cheese, and cattle, and all the thousand other food products which are left out of this bill which is called a food-product bill? You have in the bill things which are not food products and you have not food products in, and yet it is said a great clamor comes up for this bill from the American people because it is a bill to protect food products. If we are going to protect food products let us protect them. Do not let us discriminate.

If the gambling spirit is what the Senator thinks, then this bill is going to close the exchanges to these products and open the bucket shops and gambling saloons all over the country to the products which he discriminates against, and we must write in the title "An act passed by Congress of the United States to stimulate gambling in the agricultural products, and to encourage the opening of bucket shops, by forbidding gambling in a few products and licensing as to the others."

But, Mr. President, what a proposition that these things are picked out for anathema and denunciation because they are dealt in on boards of trade! God of mercy, in this age of the world are we to shut our eyes to every teaching of the English-speaking race? Are we to confess that we are more ignorant than were our forefathers 200 years ago?

What is the history of English commerce? What has enabled it to grow and prosper, carry on its wings the light of civilization and religion and truth all over this world? What has done it, sir, but the energies of the great commercial bodies of the world, speaking through their chambers of commerce and their boards of trade? The very structure of our Government, almost the very fiber of this Government, was evolved in that country which preserved its liberties by the efforts of its great bodies of merchants assembled together for the purpose of trading. The very essence of trading is liberty itself; intercourse engenders the immortal spirit of liberty from the very fact that men gather together in the interest of commerce, which needs the wings of liberty and of peace to spread itself in enlightening and improving the world.

Let us see what the argument of the Senator would lead us to. What are these boards of trade? They are merely the aggregation of merchants who meet in a room to collect the information necessary to enable every man to trade on an equal footing. The telegraph, the reports of all kinds, the bulletin board, and everything open; so, if I may be pardoned the use of such slang expression, there is a fair and square deal; and the man who buys and the man who sells, all possessing the information which is garnered all over the whole world, deal on an equal footing.

Mr. President, boards of trade are true evolutions of that doctrine of equality which has dominated the world, the equality and liberty of man. The poor man with small capital who comes into the great chambers of commerce and the boards of trade, with all the information exposed to his view, needs to protect himself from being gouged and destroyed only with the light of the reason which God has given him. It is putting him on an equality with the rich man. The purpose of this bill, then, is to strike down all the trading which can be done at an equal advantage, and to stimulate the trading where the small man will be at the mercy of the big man. Its purpose, then,

is to allow trading where all the protections which modern society and modern commerce have evolved will be destroyed. * *

*

Mr. President, when I surrendered the floor yesterday I was discussing what I conceived to be the confusion and the discrimination in the terms of the bill as to the provisions creating or defining the acts which the bill prohibits, or virtually prohibits, so as to show that the objects embraced in these definitions were defined by no rule, followed no coherent or consistent line of thought, conflicted one with the other, and were utterly and entirely irreconcilable. If we view the bill as classifying the products as agricultural products, then a vast number of agricultural products were omitted. If we view the bill as a classification of food products it omits many things which are food products.

In answer to that argument the Senator from Minnesota (Mr. Washburn) yesterday said that the line of thought along which the bill proceeded was to reach things which were traded in on boards of trade. The argument which was had yesterday, I think, led up directly to the conclusion that if that were the line of thought which dominated the bill, then the necessary effect of the bill was to increase instead of decreasing gambling and speculation, because, as this system of gambling and speculation has its origin in the inevitable tendency of the human character to take risks, particularly under the conditions of modern life, the exclusion of a few articles which were gambled in to-day, leaving the vast sum of human products out of the inhibitions of the bill, would simply deflect the channel of gambling from the bed into which it now flows into a wider and deeper and stronger and a more pernicious stream of gambling.

I called attention, however, I think, yesterday to the fact that there was in my judgment a philosophically fundamental mistake in attempting to forbid speculative tendencies on boards of trade where that tendency could be executed with reasonable honesty and with reasonable precaution, and encourage and foster speculation where those restraints and restrictions and precautions did not exist.

Last night my attention was called to a discussion of this question in a book on political economy, which seems to be so apposite, so entirely to embrace the subjectmatter of this discussion that I will send to the desk and have read the paragraph to which I wish to call your attention:

"It is a singular fact that markets have been the subject of popular prejudice and moral objection, almost in proportion to the perfection with which they economize time, transportation, and effort, and equalize prices. The proper meaning of a market is not merely the place set apart in which buyers and sellers may meet with their goods, but all that territory, with its groups of buyers and sellers, consumers and producers, of which the residents are so brought into union and contact with each other by the mutual intelligence which arises through reciprocal commerce that one price is arrived at by all with facility and promptitude.

"A market rises into its highest efficiency and value when it concentrates into one focus so large a proportion of the buyers and sellers of a certain commodity as to become, in conjunction with one or two other markets of the same kind, an authoritative standards of prices of the articles in which it deals, for all buyers and sellers through the world. By aid of the quick intelligence which the telegraph supplies and of the swift transportation which steam affords the whole world is then converted into one market having one price subject only to cost of transportation of the product between the point for which the price is quoted and all other points. Such markets are the Bourse of Paris for stocks and securities, the London Stock Exchange as well as the London Produce Exchange, the Liverpool and New York Cotton exchanges, the New York Stock Exchange, Produce Exchange, and Real Estate Exchange, and formerly the Gold Room and the Boards of Trade (grain and produce exchange) of Chicago, in conjunction with those of other western cities, and that of Liverpool.

Concerning these exchanges Professor Jevons says: "The theoretical conception of a perfect market is more or less completely carried out in practice. It is the work of brokers in any extensive market to organize exchanges so that every purchase shall be made with the most thorough acquaintance with the conditions of the trade. Each broker strives to gain the best knowledge of the conditions of the supply and demand and the earliest intimation of any change. He is in communication with as many other brokers as possible, in order to have the widest range of information and the greatest chance of making suitable exchanges. It is only thus that a definite market price can be ascertained at every moment and varied according to the frequent news capable of affecting buyers and sellers. By the mediation of a body of brokers a complete consensus is established and the stock of every seller or the demand of every buyer brought into the market. It is the very essence of trade to have wide and constant information. A market, then, is theroretically perfect only when all traders have perfect knowledge of the conditions of supply and demand and the consequent ratio of exchange; and 36387-A A B-vol 2-10-24

in such a market, as we shall now see, there can only be one ratio of exchange of uniform commodity at any moment.

Mr. President, the object of the bill, the very classification defined in the bill, is to exclude the products which are dealt in on this kind of a market and leave outside of the operations of the bill the products which are dealt in on another or unrecognized market. I ask the desk to have read the description of the other market to which the things not brought into the bill are relegated:

"In the sale of carriages, pianos, jewelry, clothing, and other things which do not admit of such an authoritative contest over the price there is great inequality in the prices at which two persons in the same city on the same day may buy two things of the same kind and of equal value. Hence there is great cheating in such trading. One may pay $200 for a watch which another buys for $100. There is no standard. In all these grades of goods long credits must be given as the dealers must hold the goods until they reach consumers. But in articles dealt in by produce exchanges the price is avanced to the producer, and his crop can always be sold if he desires, even before it is harvested. Hence the authoritative manufacture of prices confers somewhat the same benefit upon a community as is conferred by an authoritative standard of law, religion, manner, and ethics. It enables every man to know each moment how he stands relatively to the results of his past exertions, what they have cost, and how much he can get for them.'

Such, Mr. President, is the description of the market destroyed by the provisions of this bill.

If the purpose and object of the bill is to strike with palsy transactions on boards of exchange or boards of trade, why is it that the terms of the bill leave out all that vast body of property running up into the hundreds or thousands of millions, the bonds and stocks and values of every kind in this country which form the great sum of the speculation of the country?

EXTRACTS FROM SENATOR VEST'S SPEECH BEFORE THE UNITED STATES SENATE IN 1892 RELATIVE TO THE WASHBURN BILL: A MEASURE THAT WAS INTENDED TO PROHIBIT THE BUYING AND SELLING OF GRAIN AND PORK PRODUCTS FOR FUTURE DELIVERY.

I have earnestly endeavored to persuade myself that the path of duty lay in the direction of supporting the pending bill. I have examined it very thoroughly again and again, and I have been unable to come to any other conclusion than that this measure is one of the most pernicious which has come before the Congress of the United States during my fourteen years of public service. Speaking from my own standpoint, and for myself alone, I would be compelled to give up every conviction I entertain as to the structure of our Government before I could give my sanction to this bill.

I know the aggressive and almost overwhelming public sentiment in certain portions of the country is in its favor. I know that explanation will be required in every farming community why opposition is made, but I would rather explain my vote in every township of Missouri from now until the November election than to put myself on record in favor of a bill about the unconstitutionality and the vicious tendency of which I have not the slightest doubt.

Now, Mr. President, what is at the bottom of this whole bill? Legislation for the benefit of the class. Who is here aiding in its passage? Who employs these lawyers to appear here and make learned arguments before committees of the House and Senate in favor of this bill? Who has deluged us with petitions through the mails to pass this bill in the interest of the farmer-the down-trodden and oppressed farmer? Who has done it? The agent of this great milling syndicate, Mr. Pillsbury, who testified before the committee that dealing in options decreases the price of wheat to the producers of the country; Mr. John Whittaker, a pork packer of St. Louis, one of my constituents, who has, of course, endeavored in the course of trade to put down the price of hogs because he is a pork packer and wants to get his raw material as cheap as possible. When did this new burning love for the farmer break out in the breasts of these gentlemen? Is it not in the interest of Mr. Pillsbury, representing 300 mills and elevators in the Dakotas and Minnesota, which belong to Englishmen, to put the price of wheat down to the lowest possible point? Is not wheat his raw material? Is not that the exact case with Mr. Whittaker and other pork packers? Do they not want to put down the price of their raw material. And the cheaper hogs are the more money can be put into their pockets.

I do not propose to go into the immense amount of testimony, which simply amounts to opinion as to what would be the effect of this bill. I might stop my argument simply with the declaration that I believe this bill violates the spirit and letter of the Constitution, but it is.not a question as to the effect of this measure. We are told that speculative markets put down the price of the farmer's product. The over