hand, the price of the pork? In other words, I would like you to discuss the relationship of a spot hog with futures.

Mr. WHITE. Yes. Well, the man who is packing hogs will look at the price of the futures as well as the price he is getting for certain parts of the animal that do not enter into speculation in a broad way; he figures the cost of the hogs based upon a future market.

Mr. LEVER. So the price of a hog is based upon the future quotations largely?

Mr. WHITE. To a considerable extent.

Mr. LEVER. And the price, also, of the pork and the lard would be based in the same way, largely?

Mr. WHITE. Largely, yes. Where you want certain meats they say the price will be so much above or so much below May, or July, or September deliveries.

Mr. LEVER. So that if speculators should get together and put a fictitious price on or off of hogs, or lard, that speculation would then control the price?

Mr. WHITE. If speculators should buy futures to such an extent as to put the price up that would increase the manufacture of that particular article to meet that speculative demand.

Mr. HAUGEN. And force the price up?

Mr. WHITE. Are you now speaking of a general demand or, as the gentleman did awhile ago, where he gets to the end of the month, and where some one was cornering the market?

Mr. LEVER. Is it possible to corner the market? I was not here when that question was asked.

Mr. WHITE. The amount of business done, where there is any corner, is very small compared to the total amount of business on the board. It attracts more attention, it is reported in the papers, and there are always exaggerated reports of the amount of the trade and of the amount of money made.

Mr. LEVER. A corner, I would take it, would be the result of the effect of artificial conditions, isn't that a fact?

Mr. WHITE. Sometimes it may come about by natural conditions, but generally through artificial conditions.

Mr. LEVER. Those conditions are usually brought about by manipulations of the future contracts?

Mr. WHITE. It is through some one having more stuff bought than there is. And I want to say right here that those corners are wrong. Mr. LEVER. They are wrong?

Mr. WHITE. They are; in my judgment they are a detriment to the best interests of the exchange and disturbing to the business. But, sir, the amount of business in that way, as I said before, is exceedingly small. I regret it; it is one of the barnacles on our ship.

Mr. LEVER. Is there any way under your rules by which a corner could be prevented?

Mr. WHITE. We lately offered an amendment to the rules for the purpose of controlling corners and also providing a penalty for any one who should default in the fulfillment of his contracts, for the purpose of eliminating that feature; it was voted down by a very small majority, largely because there were some who thought that it possibly impaired the sancity of contracts, and if a man undertook to sell an article and had made no provision for the fulfillment of his con

tract that he had only himself to blame if he suffered under it. But I think the sentiment now is getting around to where something in that line will be adopted in the pretty early future.

Mr. JOHN W. SNYDER. I saw in yesterday's paper that hogs had sold at $9.80, the highest price obtained in forty years. Does the farmer get the benefit of that advance or does the packer, who has sold at a lower price, get the benefit of that price?

Mr. WHITE. The farmer is getting the full benefit of it.

Mr. SNYDER. The packer who sold at a lower price is losing money? Mr. WHITE. Yes, sir.

Mr. LEVER. I see in to-day's New York Commercial that pork has not been so high for forty years. The headlines are "Speculators boosting pork. They hold to their stock in Chicago and prices keep climbing." Now, I take that from the headlines and from the reading of the story I take it that the farmer has parted with his hogs and that the speculators have them, is that the fact?

Mr. WHITE. No, sir. Those hogs are coming to the market every day of the month and every day of the year, every business day, and there are times of the year, one season, when the farmer is selling more, and another season when hogs are less plentiful. But the statement there that the speculators holding on to pork is causing the advance is not so, that has nothing whatever to do with it in this instance. I can tell you in a few words the reason for the present high price of pork. During the panic there was a depression in a great many articles and the farmer was wanting money; the country banker was wanting money, and he was calling upon the farmer to give him all he could of anything, and the hogs came to market, and they were depressed down to where it was unprofitable to raise them, compared with the price of corn. I should say that corn was relatively from 15 to 20 cents a bushel above the price that the farmer was receiving for his hogs. The next year the corn crop was not a very good one and the price of corn went up to a very high figure; there was a loss in feeding hogs, and so the farmers sold their stock to a low point; then last year the receipts fell very much; we are feeling the effects of that condition; we are still feeling it and in a larger degree. It is entirely due-it is almost a hog famine, due to the very small supply in the hands of the farmers.

Mr. LEVER. So you do not agree to this proposition, set forth in this New York Commercial, under a Chicago date line, that

The situation in Chicago now depends on the action of the speculators; they and the packers are engaged in a war of prices, speculators holding out for a rise and the packers trying to make purchases at present prices.

Mr. WHITE. I do not believe in that in the least.

Mr. LEVER. You do not believe that at all?

Mr. WHITE. No.

Mr. LEVER. You said a moment ago that the farmer was getting the full benefit of the rise in the price of hogs. The converse of that proposition would be true, that the consumer, the eater of pork, is getting his full share of the burden of high hogs, wouldn't it? Mr. WHITE. Yes.

Mr. LEVER. So that if the speculator is helping the producer of the hogs, on the one hand, he is hurting the consumer of the hogs on the other?

Mr. WHITE. Well, sir, with regard to that, I would say that the present price of hogs and hog products is due entirely to the great scarcity of the hogs.

Mr. HAUGEN. Has there been any more fluctuation in the hog market than in the cattle market?

Mr. WHITE. There has been lately; they have gone up more.

Mr. HAUGEN. To what extent ?

Mr. WHITE. I couldn't tell you without reference.

Mr. SNYDER. Isn't it a fact that live hogs are stored in Chicago the same as corn?

Mr. WHITE. No, sir.

Mr. SNYDER. Waiting for a market?

Mr. WHITE. No, sir. When a farmer has them to sell he sells them to a shipper, or they are shipped into Chicago on his account to a commission man and they are marketed in the yard; the price is fixed that day, and the next day the hogs are killed, so that the farmer gets the full benefit of the daily prices on hogs, and at the present time hogs are scarce and they are wanted, and on this occasion there is no money in the packing of them, whether you sell the product to a consumer or to a speculator; they are standing relatively a little higher than the product on account of the competition.

Mr. MCDERMOTT. On Thursday the Chicago Journal stated "The jump in price as ascribed to the activity of eastern shippers." You know who they are?

Mr. WHITE. Yes, sir.

Mr. MCDERMOTT. "And it was estimated that between eight and ten thousand hogs would be sold during the day." That is one of the reasons why the price is high; the eastern buyers are coming into the Chicago stock yards and buying heavily for their eastern consumers?

Mr. WHITE. Yes, sir. Two years ago, at the time when I told you hogs were relatively much lower than corn, the East was doing the same as the West-marketing their hogs and getting out of stock to a great extent. Now, this winter they have had a moderate supply from eastern points, but they have reached the point where that supply is giving out, and they have been sending into Chicago and other western points for hogs.

Mr. MCDERMOTT. There are hundreds of fellows in the Union Stock Yards buying for eastern firms, aren't there?

Mr. WHITE. Yes, sir.

Mr. MCDERMOTT. What we call "scalpers" in the yards and commission men?

Mr. WHITE. Yes, sir.

Mr. LEVER. Your testimony is, then, that ordinarily the law of supply and demand governs the price of hogs and the price of pork? Mr. WHITE. The law of supply and demand does govern it.

Mr. LEVER. But there are occasions, under the rules of your exchange, where a corner might take place and artificial conditions arise which would give artificial prices?

Mr. WHITE. That would happen only toward the end of the month, say the month that you are living in, in which there is very little trading.

Mr. LEVER. But it could happen on occasions?

Mr. HAUGEN. Is it not possible to get a corner on any article if you have the money and means of bringing it about? Couldn't one effect a corner in sugar, nails, barbed wire, or anything else if you have the money and means to bring about such a corner?

Mr. WHITE. Yes.

Mr. LEVER. Did you ever hear of a corner in nails?

Mr. HAUGEN. Isn't it true that Mr. Leiter made his first million dollars through a corner in nails?

Mr. WHITE. I am not aware of it.

Mr. HAUGEN. I have seen it stated in the paper that Mr. Leiter made his first million dollars through a corner in nails.

The CHAIRMAN. As a general proposition the difference between running an article into a corner in which there is no future market and one in which there is a future market is that the former would require a great deal more capital than the latter for the reason that you would have to pay the full value of the article, instead of simply depositing enough to carry it forward?

Mr. WHITE. Yes, sir; because if a man is running a corner he has to take all the stock that there is that any one can give him, and the number of successful corners I think you could count on the fingers of one hand; the men who attempt them, in nearly every case, go broke. Leiter lost $10,000,000 through trying to corner wheat.

The CHAIRMAN. He was a bright and shining example of the truth of your statement.

Mr. WHITE. Yes, sir. I have known of five or six attempted corners. There was one by McGeogh in 1883, when he had all the lard of the packers; he got it in the month of May. What happened? They were making all the lard they could, and naturally the little streams of lard from St. Louis going South, going East from Chicago, going East from Omaha and Kansas City, going in various directions, became diverted to the corner, and he soon realized that it is very easy to make and very heavy to carry.

The CHAIRMAN. You stated, in reply to a question by Mr. Lever, that you regarded the manipulation of the market with a view to running a corner as an evil which it would be well to eliminate?

Mr. WHITE. That is my own personal view and the view of a large number of our members. I would not attempt to justify a corner. The CHAIRMAN. Would you also regard it as an evil on the part of members of your exchange to seek to induce outsiders to speculate on the board?

Mr. WHITE. I think you would have to discriminate between what I would call the legitimate and illegitimate in speculation. I think that all economists for years have recognized the speculator as necessary in the matter of commercial economy. I think that ever since Joseph bought up all the wheat in Egypt, when there was a great surplus, and carried it until there were years of scarcity, thereby preventing a great deal of distress, not only in grain but in other things, men have tried to forecast the future, men whose minds are trained in that particular line, men who make a specialty of it, and the speculator buys that stuff and bears the burden of carrying it from the time when there is an oversupply and carries it along until the time when it is required.

The CHAIRMAN. It does not require any particular inducement to bring the speculator into the market; he puts himself into the

market because that is his bent and that is his business; but I would like your attention to a specific case. I have before me a market letter of a member of the Board of Trade of Chicago, from which I read these paragraphs:

It is the duty of the wheat investor to anticipate the coming upturn in May wheat. The high points for May, 1910, wheat lie ahead. I pay telegraph tolls on all orders to buy or sell full lots of wheat. I want your account. Smallest amount of wheat handled 1,000 bushels. Your margin check should equal 4 cents per bushel or $200 on 5,000 bushels.

Of course, no man can read that without knowing that it is a bald and palpable bid for the orders of mere gamblers, of men who simply want to take a flyer on the board.

Mr. WHITE. A bid for speculative business.

The CHAIRMAN. Now, do you believe that that is essential to the business of your exchange.

Mr. WHITE. A market letter like that?

The CHAIRMAN. Well, such a bid for speculative business as that? Mr. WHITE. No, sir; not essential.

The CHAIRMAN. Do you think it is in the interest of the exchange that members should be permitted by your rules to embody such suggestions in their letters?"

Mr. WHITE. I do not know that it is a matter over which we would have any control.

The CHAIRMAN. But you are a self-governing body; you could correct it if you thought best?

Mr. WHITE. There are market letters and market letters; some market letters are eminently good.

The CHAIRMAN. Undoubtedly so. I am not criticising market letters generically. They are necessary.

Mr. WHITE. Yet the good letter is an endeavor to get business. The CHAIRMAN. But I am calling your attention to this particular kind of a letter. Now, Mr. Fitch the other morning had no hesitation in saying that he did not believe that that was good business, that he regarded that as one of the barnacles on the board of trade, and I simply wanted your opinion upon it.

Mr. WHITE. If I was in the commission business I would not send out such a letter; I would rather not see any.

The CHAIRMAN. You know I am not asking these questions in a controversial way, but simply to get your judgment upon them. You know, of course, the only thing that ever gives the Chicago Board of Trade, or any other board of trade, any trouble or brings criticism upon them or suggests legislation such as we are considering here now is, in common parlance, the gambling on the boards, the practice under which lambs out in the country are induced to come into the corral and be sheared. Now, as the president of that organization, proud of its standing, anxious to maintain its good name and to promote its business, have you ever considered the question as to whether some rules might not be devised that would free it from any just criticism along the lines I have suggested?

Mr. WHITE. I do not think the question of market letters has ever been discussed. Has it, Mr. Merrill?

Mr. MERRILL. Not formally, but that has been a very live question informally, along the line of the questions asked by the chairman. The very general feeling on our board is that we have got to have censorship. I do not know whose letter that is and prefer that you