and we do this not so much for our sake as not to deprive the great city of New York of its geographical position, which Mr. Burleson tried so hard yesterday to deprive it of.

Now, the only thing that has been brought out that needs an answer is that warehouse business. It appears to us, and it must have appeared so to you, that there is a question as to why they are building those warehouses in the South; are they building them to benefit those people down there or are they building them to get a big remuneration from them? I know of one man in Norfolk, who was the originator, I believe, of building the southern warehouses, who has made some two million dollars out of building them, and storing cotton, in practically a very short time; I do not think it is more than five or six years, and I think that has imbued parties in the other sections of the South to do the same thing, and that, I think, is the kernel of the whole matter. For instance, you take the statement made by Mr. Neill, that the storage at Galveston costs $1 a bale for the first month and 20, 25, and 30 cents thereafter, and contrast it with the fact that in New York City the storage of cotton costs only 20 cents; and you must take into consideration the difference in the land values, the real estate values, between those sections where those warehouses are built in the South and the extreme value of real estate in New York; if you take all those things into consideration I think that warehouse innovation will become patent to you.

As I said before, I do not wish to detain you, I do not want to make any other remarks. We have not come here as politicians and we have not come here as lobbyists; we have not seen any Congressmen, we have not tried to influence anybody; we have not asked even the Congressmen of our own State-I have not even asked Mr. Bennet, who is the Congressman of my district, and a friend of mine, as to what his position is in the matter. We have tried to bring this matter before you in an impartial way by stating facts; we have put facts upon the record at these hearings, and, gentlemen, we are willing to stand or to fall by our record. I thank you.

Mr. LEVER. I have a suggestion to make. Inasmuch as the report of the Commissioner of Corporations has been attacked by the gentlemen representing the exchange, both as to its facts and its conclusions, it seems to me that in justice to this committee and for the further enlightenment of it, and in justice to the gentleman who wrote this report, that the committee ought to afford those men and the Commissioner of Corporations an opportunity to appear before the committee. I think the committee would do itself justice to

invite the commissioner to appear before the committee and give the gentlemen representing the exchange an opportunity to crossexamine him. I only make it as a suggestion, and if there seems to be any objection I will make it as a motion, that we have the commissioner, or somebody representing him, appear before the com mittee at such time as may be deemed necessary.

The CHAIRMAN. The suggestion seems entirely fair, and unless there are objections, it will be taken as the sense of the committee and a time will be fixed at a later date for hearing the commissioner or some one representing him.

Mr. Cocks. I would like to ask if either side here has any figures showing the fluctuation in prices in the wool crop during any one season, and also as to the cost of handling the wool clip as compared to handling the cotton crop. Those points have been referred to many times during the discussion, and I would like to know if some of these people, some one present, has anything which may show the fluctuations in the wool crop and the cost of handling the same. Mr. MANDELBAUM. If you want me to state one instance, I can do so. In January, 1879, I bought three-fourths of the wool clips in a town in Texas when all the wool was still on the backs of the sheep; they had not been shorn as yet-in other words, not clipped; and the price paid at that time was 11 to 13 cents. And Mr. Lynch was at that time the great wool oracle of New York, and men looked upon his reports as having authority; he wrote a weekly circular on wool, and he telegraphed down to some of his friends, among whom was a large wool raiser by the name of Raymond Martin, to be sure and exact a large advance on the purchase which I was making; that very Martin wool was sold to the same identical Mr. Lynch in March at 26 cents a pound; in other words, wool increased in value from the 15th of February to the 1st of April 125 per cent.

Mr. Cocks. The same year?

Mr. MANDELBAUM. The same year, and I more than doubled my money on that wool, and it was not more than two years afterwards that I lost every dollar that I possessed in wool. I know what I am talking about; I court the fullest investigation of this question.

Mr. BURLESON. In response to the suggestion of Mr. Cocks I have no such information, and, of course, it would not be safe for the committee to act upon the isolated transaction had by. Mr. Mandelbaum in 1879. If you will send to the Congressional Library and get copies of the Financial Chronicle you will find the quotations of the market price of wool, and they are, I believe, also given in the summary of statistics provided by the Department of Commerce and Labor.

Mr. CHAPMAN. I do not know that I understood Mr. Burleson correctly about these warehouses, and I would like to ask him if these storehouses and the storing of cotton are under the supervision of the state law of your State?

Mr. BURLESON. Not yet.

Mr. CHAPMAN. Are there any inspectors or other persons who vouch for the quality of the cotton deposited in those warehouses?

Mr. BURLESON. The uniform standard of classification law has not gone into active operation as yet, Mr. Chapman, but I hope it will

be adopted by all exchanges at the beginning of the next cotton season. A movement is already on foot, so far as the State of Texas is concerned, to have state legislation regulating all these matters, and these warehouses that have been erected have been erected by farmers for the purpose of protecting their cotton from damage until it can be safely marketed and ultimately, in the evolution of the cotton trade, the warehouse plan is what is going to come about.

Mr. CHAPMAN. Are certificates now issued by these warehouses? Mr. BURLESON. In some places they are. În Taylor, Tex., in my district, the keeper of the warehouse, who is an expert cotton classifier, classifies every bale of cotton entering the warehouse, and the certificate shows what the classification is; and he has already written to the Department of Agriculture for the government standard, and intends to adopt it so soon as it has been furnished to him.

Mr. BEALL. Every bale is subjected to classification?

Mr. BURLESON. Yes, sir.

Mr. CHAPMAN. However, at present, those are local warehouses for the storing and keeping of cotton, without any regulation by law? Mr. BURLESON. None, so far as I understand it.

Mr. HAUGEN. Are these certificates accepted by merchants and others?

Mr. BURLESON. Yes, sir; they are accepted by the merchants who buy cotton. Mr. T. W. Marse, of Taylor, Tex.-and Taylor is in Williamson County, which was for years, until the advent of the boll weevil, the largest cotton-growing county in the country, but now Ellis County is the largest cotton-growing county-Mr. Marse, who is one of the largest merchants in the town of Taylor, accepts these certificates and advances money upon the certificates to the farmers who have placed their cotton in the warehouse.

Mr. HAUGEN. To what extent is money advanced?

Mr. BURLESON. That depends on the fluctuations of the New York Cotton Exchange; when there is a violent fluctuation taking place the merchant or banker won't give the farmer as much as he would if these fluctuations were not taking place. It depends upon the market value of the cotton.

Mr. HAUGEN. And is generally about 50 or 75 per cent, or about that?

Mr. BURLESON. I don't know.

Mr. NEILL. I would like to state that this year he could draw from $50 to $60 a bale, and the majority of our warehouses in Texas are chartered under the state law; they are corporations under the laws of Texas.

Mr. DICKSON, of Mississippi. Mr. Chairman, there are 65 or 70 cotton warehouses distributed throughout my State for the housing of cotton, and arrangements are made with local bankers and with others for loans thereon of from 75 per cent to 80 per cent of the value thereof, modified, of course, by market conditions; and it is growing in favor.

Mr. BURLESON. Just pardon me one moment.

I have been informed by Mr. Wickliffe, of Louisiana, that Mr. W. B. Thompson, president of the New Orleans Cotton Exchange, in a speech delivered in Texas, gave his emphatic approval to this warehouse system that is being inaugurated in that State.

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Mr. HARDWICK. Before the committee passes entirely from this subject, there are certain amendments that I would like to present. I do not intend to enter into a general discussion

The CHAIRMAN. Mr. Hardwick, you are like the poor-we have them with us always; there are gentlemen here who have come from a long distance with the understanding that they would be given a hearing to-day. You will be given your day in court later on.

Several days ago this date was fixed for giving a hearing to gentlemen representing the grain industry of the country, and I am advised that a number of them are here to-day, representing particularly the Council of the Grain Exchange of North America. I believe Mr. Merrill is chairman of that delegation, and if he is present I should be glad to have him present the speakers in the order in which he would like to have them heard.

Mr. MERRILL. Mr. Chairman and gentlemen: I present to you the delegates of the Council of Grain Exchanges of North America. This council comprises all of the important grain exchanges of our country. There are present, or to be present during the day, representatives from the exchanges of Chicago, St. Louis, Kansas City, Omaha, Minneapolis, Duluth, Milwaukee, Toledo, Buffalo, New York, Philadelphia, and Baltimore. Only one of our constituent members is not present, not feeling any particular interest in the matter, not being a primary market-that is, the exchange at Memphis, Tenn. Of course, our Canadian members have no interest here. The order of procedure outlined at a little caucus last evening, for the purpose of simplifying matters and saving of time, is in the order of, first, the functions of an exchange in a broad and general way, to include such definite and specific statements as the gentleman may find it his pleasure and convenience to introduce, to be followed by the question of hedging, the value of hedging, and that to be followed by the question of bucket shops, and their relation, and then, as the last specific subject, speculation. The first proposition, the functions of an exchange, will be treated by ex-president Walter Fitch, of the Chicago Board of Trade, whom I now present.

The CHAIRMAN. I will state a line of procedure that is usually followed by the committee in hearings of this character. Upon motion at the beginning of the hearings the committee ordered that gentlemen appearing before the committee should be sworn, and as a matter of convenience to the witness, as well as to the committee, the general practice has been to ask the witness to proceed without interruption until he has made the statement that he desires to present to the committee and he will then be expected to answer such questions as the committee or others present desire to ask him. The committee has no desire, of course, to indicate to you or any other gentleman the line your argument should follow, but in order that there may be as little extraneous matter introduced into the record as possible, perhaps you will pardon me for suggesting that the committee is considering a number of bills, the broad purpose of which may be stated in the language of one of them that I have before me, and which I will read, omitting the technical phraseology and reading only the words that convey the purposes of the bill:

Be it enacted, That it shall be unlawful for any person or association to send or knowingly to receive by a telegraph or telephone line any message relating to a contract for future delivery of grain, cotton, or other farm products, without intending that the grain, cotton, or other farm products so contracted for shall be actually delivered of

received, or relating to a contract whereby a party thereto or any party for whom or in whose behalf such contract is made, acquires the right or privilege to demand in the future the acceptance of the delivery of the grain, cotton, or other farm product without being thereby obligated to deliver or accept said grain, cotton or other farm products.

And we trust that gentleman appearing before us before closing their remarks, will offer their judgment as to whether this enactment should or should not receive favorable consideration, and the reasons therefor.

TESTIMONY OF WALTER FITCH, OF THE FIRM OF WALTER FITCH & CO., GRAIN MERCHANTS, CHICAGO, ILLS., AND EXPRESIDENT OF THE BOARD OF TRADE OF CHICAGO.

(The witness was sworn by the chairman.)

Mr. FITCH. Mr. Chairman and gentlemen, I desire to state that the remarks I am about to make will be briefly made. I approached this body, consisting of part of the lawmakers of this country, at first with something of a feeling of timidity. I had the pleasure of listening to the address which was made by the gentleman from Texas, and when I heard Mr. Burleson pause in the flight of his own splendid oratory and refrain from using a certain word, saying "I will not use the word 'gambler,'" I took on courage, and I proceed with better feeling, being sure that courtesy and good feeling will be extended to us in the consideration of the bill that the chairman has just read. And when he used the words "farm products" that brings it home to us; that is our business; we are grain merchants, and have been in the business many, many years. There is always the question asked, in the consideration of questions of this kind, What is that big bugaboo out there in Chicago, what is that big black building at the head of La Salle street and what do they do there?

And there are many opinions as to what takes place there. I have been there, around that big, black building a good many years. I am going upon the principle that this committee is seeking information, and if not assuming too much I would like to tell them in a few words what goes on there; what the functions of that institution are; and what is true of that institution is true of all other well-organized legitimate exchanges. The Board of Trade of the City of Chicago is an organization of about 1,700 members. That organization is not in business, that organization owns and maintains a big building with a big hall in it, furnishing a meeting place for buyers and sellers, personally or by and through their agents. You might ask, "What is the necessity of an institution of that kind?" Simply this: Suppose that Mr. Burleson, for instance, was in the business of handling products in the great city of Chicago, and some man down at Cairo, Ill., should say to him, "You sell potatoes for people on a commission, do you not?" And he would answer, "Yes.' "If So, I wish you would sell ten carloads of potatoes for me; I want to ship them up in about sixty days," and Mr. Burleson being in that business, would have to run all over Water street, where all the commission houses are located, covering a distance of many blocks probably, offering these potatoes for sale and getting bids on them, doing for his customer, who is paying him a commission for performing this service, the best possible. Having a meeting hall for people in the same line of business does not necessitate our running around; we are all there together; that accounts for the rapidity with which we do