bought or sold. Why? That is literally true; he meant literally what he said. They do not deal in cotton on the New York Cotton Exchange; they deal in cotton future contracts. And right on that point I want to read you an interview some friend in New York City clipped out of the New York Commercial and mailed to me on December 7. It is an interview by Mr. T. Ashley Blythe, a director of the National Cotton Manufacturers' Association. He gave out the following statement:

The Commissioners' report

Speaking of the Commissioner Smith report on the cotton exchange

Covers the situation in most respects, but unfortunately does not go far enough. He does not show clearly the unfortunate position that the legitimate spinner or consumer is placed in by the gambling methods of the New York Cotton Exchange. It is a well-known fact that no legitimate cotton spinner in the world can spin cotton yarn out of cotton futures. The commissioner does not state what is known to every well-posted cotton spinner-that the cotton exchange of New York sells you cotton on a middling basis, and when the money is put up and the cotton demanded, gives you for every 100 bales probably not more than 5 or 10 bales of any particular grade. In other words, and to be as brief as possible, the cotton exchange of New York, as it is now operated, is not only clearly in restraint of trade, but, further than this, obtains money under false pretenses.

Theophilus Parsons, the head of the greatest cotton consumers' organization in the world, gave you his opinion about the danger of consumers going there to purchase. Mr. Parker, the president of the American Cotton Manufacturers' Association, the southern organization, tells you they do not go there. Mr. MacColl, who was the president of the National Association of Cotton Spinners, tells you that thousands and thousands of them never buy futures and that the exchange has been used to a very limited extent. And here is Mr. Blythe, a present director in that great northern association of spinners, expressing his views on the subject. Now, gentlemen, can there be any question about it that, in so far as bringing the producer of cotton and the consumer of cotton together, the New York Cotton Exchange does not perform that legitimate and primarily most important function of an exchange.

Now, does the cotton exchange perform the second function of an exchange? I do not want to forget anything. I certainly do not want to evade any phase of this question, and I repeat again, if any member of the committee or any other gentleman here wants to ask any question about this phase of the question before I proceed, I invite him to do it, because if I am in error I want to know it.

Mr. Cocks. I would like to have you explain what became of all this cotton that has been in New York. You say the spinner does not go there to buy it. Where does it go? The same cotton does not stay there from year end to year end, does it?

Mr. BURLESON. Some of it stays there year in and year out.
Mr. HAUGEN. How much of it?

?

Mr. Cocks. That is it. How much do you suppose Mr. BURLESON. These gentlemen are in a position to tell. I will show you this; I will show you, from one of the certificates from their warehouses, that they certificate more cotton in a year than was brought there, showing conclusively that some of it must have been brought over from the year before. You ask me what becomes of it. Did you not hear Mr. Parker when he stated that when the

future contracts were selling so extremely low in New York he thought surely he could go there and accept delivery at a profit; and he went there to one of the great speculators on the exchange, formerly a member of the exchange, a man whom I heard deliver an address in Philadelphia a few years ago? I went over there myself to deliver an address to the cotton spinners, at their invitation, and just before I delivered my address, or just after, I forget which, Mr. Theodore H. Price delivered an address in which he spoke of the New York stock. He said

Mr. MANDELBAUM. I would like to ask Mr. Burleson one question, and that is, you have laid great stress on the fact that it costs a dollar and a half to bring cotton to New York?

Mr. BURLESON. Yes, sir; so Mr. Marsh has said.

Mr. MANDELBAUM. Í believe Mr. Neill, one of the parties you represent, has stated that it cost them the first month alone, in Galveston, one dollar.

Mr. BURLESON. I am neither defending nor explaining conditions in Galveston, Tex. I am explaining the effect of a statement of fact made here by the vice-president of the cotton exchange which shows the impossibility, from a commercial standpoint, of spot cotton reaching New York. I do not feel called upon to discuss Mr. Neill's statement about storage charges; it is extraneous matter, and I do not want to encumber the record with it.

Mr. MANDELBAUM. I know; but I do. I want to know whether my question is not a question of fact.

Mr. BURLESON. It may be; I do not doubt it. It is immaterial. Mr. MANDELBAUM. A question of fact that has been brought out at this hearing?

Mr. BURLESON. I do not doubt it, as far as that is concerned.
Mr. MANDELBAUM. That is all.

Mr. BURLESON. I take no issue with you about it.

Mr. MANDELBAUM. Do you not know it is so, that it has been brought out?

Mr. BURLESON. Mr. Mandelbaum, I do not know it, nor do I for the purposes of this argument care.

Mr. MANDELBAUM. You do not know it?

Mr. BURLESON. No.

Mr. MANDELBAUM. You do not know, in other words, what has been going on or what Mr. Neville has been testifying?

Mr. BURLESON. I will accept his statement; I will let it go at that. Mr. MANDELBAUM. Let it go at that.

Mr. BEALL. Regardless of that, it is a fact that spot cotton does go to Galveston in large quantities.

Mr. BURLESON. Undoubtedly; it is a great cotton market.

Mr. MANDELBAUM. Is it not a fact that three-fourths, or practically seven-eighths, of the cotton that goes to Galveston goes only through Galveston?

Mr. BURLESON. That may be true; it is also a great export market. Mr. MANDELBAUM. Do you realize that there is nearly as much cotton that goes to the port of New York as goes to Galveston? Mr. BURLESON. Oh, no; the facts don't show that.

Mr. MANDELBAUM. We will show you.

Mr. BURLESON. I have your own figures upon that proposition. Mr. MANDELBAUM. Never mind.

Mr. BURLESON. Since the question has been raised, I believe it was; but you gentlemen are in the trade; you should know more about that than I do.

Mr. NEVILLE. We will answer you, Mr. Burleson.

Mr. BURLESON. I say there is more than 2,000,000 bales of cotton that goes to and through Galveston each year.

Mr. NEVILLE. We will give you the whole thing when you get through.

Mr. BURLESON. I will read

Mr. MANDELBAUM. One million three hundred and fifty-two thousand bales went last year through New York.

Mr. BURLESON. I doubt that, but I will read what Commissioner Smith said in

Mr. MANDELBAUM. I do not care about Commissioner Smith; I am talking about the facts in the matter.

Mr. MCLAUGHLIN. I would like to hear what Commissioner Smith says.

Mr. BURLESON. I will read the figures given in his report. The CHAIRMAN. To whom does he credit those figures? Mr. BURLESON. To the New York Cotton Exchange. On page 249 you will find that. Suppose cotton does go through New York for export; let us admit for the purpose of this argument it goes through there for purposes of export; admit that 2,000,000 or 2,500,000 bales go through there for export. Does that make it a spot cotton market?

Mr. MANDELBAUM. Just as much as Galveston, when you say that seven-eighths of the crop goes through Galveston without being handled there, just as much.

Mr. BURLESON. On page 249 of this report are given the New York spot sales, "for export," "for consumption," "on speculation," and the total. I will take the last year we have here, 1906-7: For export, 18,464 bales-I really hesitate to read it because it is incredible for consumption 99,801 bales. Two years ago I was reading from Shepperson's Cotton Facts, or Latham Alexander's Statistics, that for a particular year there was only, I think, 23,000 bales of spot cotton that reached New York during the year, and dear old Shepperson, who has been in the cotton business a long, long time (he is the exchange's principal statistician), nearly had a spasm when he read my deductions from these figures; and he rushed into the columns of the New York Journal of Commerce making a defense of New York as a spot market, and he was ably supplemented in this effort by Henry Hentz & Co., and even the Evening Chronicle took a whirl at me on the proposition, saying I was either wittingly or unwittingly falsifying the records in order to show that New York had ceased to be a spot market, and yet George H. McFadden, the greatest spot merchant in the United States-and these gentlemen can not deny it a member of the New York Exchange, admits it has ceased to be a spot cotton market, and that he has abandoned hope of its ever again being a spot market.

Mr. MANDELBAUM. What page did you read those figures off?
Mr. BURLESON. Two hundred and forty-nine, volume 1.

Mr. SIMS. May I ask you a question right there? It was read yesterday by Mr. Neville in reply to a question from something, I don't know what he read from, that the deliveries and redeliveries.

Mr. HOWELL. And yet there must be a large part of the crop that is inferior cotton?

Mr. BURLESON. No, not a large part, Mr. Howell; it has been estimated at less than 10 per cent.

Mr. NEVILLE. You referred just now to the overs being low grade cotton.

Mr. BURLESON. Oh, no, overs may be either of themselves a very low grade of cotton or it may be that in a year where the cotton crop is of a very high grade, the overs may be extremely high grade cotton. And in a year like that, instead of overvaluing the low grades of cotton the New York Cotton Exchange, because this very high grade cotton is the least desirable cotton, from the standpoint of the spinner, have overvalued the high grades, and I will show you that stated emphatically in Commissioner Smith's report.

Mr. NEVILLE. One more question on the subject of overs.
Mr. BURLESON. Yes, sir.

Mr. NEVILLE. Does it ever happen that a buyer in your territory, in buying your run of cotton, hog-round, could happen to have overs running from strict low middling to good middling? I am only asking because I want to get the record straight; these are not antagonistic questions.

Mr. BURLESON. Permit me to assure you in advance that I always regard you as friendly, and you could not ask a question that would arouse antagonism on my part. I want to answer your question in the utmost candor. Mr. Chairman, as incredible as it may sound, for I have been in the cotton-producing business all my life, from the time I was 18 years old, when I commenced to look after and manage my own farm, I have been producing cotton, and I pledge you my honor I can not tell one grade of cotton from another, hence I can not answer Mr. Neville's question.

Mr. NEVILLE. That is all.

Mr. BURLESON. You must have cotton right before you in order to class it, and then you must be able to keep in mind the difference in grade. That is one of the reasons prompting me to introduce my bill a few years ago to bring about a uniform standardization of cotton. I did it in order that the farmers and producers might be able to secure a standard to show the different grades of cotton.

Mr. MANDELBAUM. Were you not indorsed by the New York Cotton Exchange, and were not your standards approved?

Mr. BURLESON. No; I do not think they have yet been approved. Mr. MANDELBAUM. Were you not, indorsed, and were you not told it would receive the full approval of the exchange?

Mr. BURLESON. I believe that is true; but, as I said before-and I am not saying it just to hear the sound of my own voice; I never was more honest in a statement in my life-I sincerely believe if these gentlemen could conduct a proper exchange in New York they would do it. I have no feeling of antagonism in my heart toward them. I told you just now that geographic conditions, conditions of trade, are such that it is utterly impossible to maintain a cotton exhange in New York, and these gentlemen must recognize that fact. I am not criticising them harshly; they can not help themselves; and I make that statement believing sincerely in its truthfulness. I do not know whether I have answered the gentleman from New York about how it ultimately reaches the spinner. It is bought by such men as Weld, Neville & Co., McFadden & Co.

Mr. BURLESON. I will say to the gentleman from New York that Houston, Galveston, New Orleans, Savannah, Memphis, Taylor, Waco, and Greenville are great spot cotton markets where men are to be found day by day, week by week, and month by month, acting for spinners who want real cotton, buying cotton in even-running grades, for purposes of legitimate consumption.

Mr. Cocks. What I would like to know is how does the cotton get from these spot markets you have mentioned to the spinner in New England, for instance; is it shipped there to him?

Mr. BURLESON. Mr. Cocks, it is bought either by the merchant or some spinner's agent in 100 or 500 bale lots when it is needed, assorted into even-running grades, and that is sent by through bill to the mill.

Mr. NEVILLE. Mr. Cocks, for fear you get a false impression of that, I would like to ask Mr. Burleson if the farmers sell it to the agents in even-running lots?

Mr. BURLESON. Certainly not. I sell my cotton frequently in what is termed, colloquially

Mr. NEVILLE. Hog-round?

Mr. BURLESON. Hog-round. I sell it hog-round. For instance, I have a number of bales of cotton that is very bad, low grade; it was the last pickings; it was the last cotton that was scraped together in the ginnery, before it was put through the gin, and finally ripened into a bale, and I make the entire lot of cotton sell this low stuff. I make the good sell the bad, and the man who buys it culls it, selecting that desired by spinners, and the remainder is what is called "overs." The low grades are left over, and it is these overs, as I will show you by admission of the exchange, or the representative of the exchange, which, as a result of the action of the ievision committee of the New York Cotton Exchange, finds its way to the warehouses of the New York Cotton Exchange and acts as a thermometer or a standard by which the value of the product of the farmer, yet unsold, is frequently if not constantly measured.

Mr. MARSH. May I ask a question at that point? I should like to ask Mr. Burleson whether he has been encouraged by the New York Cotton Exchange to produce and pick a low grade of cotton?

Mr. BURLESON. Oh, no; I have not been encouraged to do that, but I will say this, and Mr. Marsh can not escape the conclusion, and every man here will know it is true-that on a big plantation there is not that care exercised about protecting the cotton from trash. You must remember that in white cotton it is trash alone that either lowers or raises the grade, and when I know, and when it is known by every practical farmer in the South, that some one will take this lowgrade cotton, that you can force them to take it, and that they take it because of the fact that they know it has been overvalued in New York and can be disposed of, I will show you this cotton is overvalued in New York so that no one can possibly get away from admitting it that these low grades of cotton or undesirable grades have been constantly overvalued, that it will find its way to New York. Undoubtedly if that opportunity of disposing of this cotton was done away with, was eliminated, the farmer would be more careful in the gathering and treatment of his crop so as to protect if from leaves and trash.

Mr. HOWELL. You state that the mills buy even lots of cotton? Mr. BURLESON. Yes. Cotton of even running grades.

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