the business of the Baltimore Chamber of Commerce is more of a cash business than it is of a speculative nature.

The CHAIRMAN. You have a speculative market, however, in Baltimore, have you not?

Mr. SNYDER. Our members at times make their hedging at home instead of away from home. When the business is of larger volume they have to go outside of home to do it.

The CHAIRMAN. How about the man you have designated as a rank speculator? Does he find scope enough in the Baltimore market, or does he have to go to some other vicinity?

Mr. SNYDER. For quick trading he would have to go to other markets where there is more trading in options than there is in our market. We are not angels when it comes to trading. We are not angels when it comes to hedging trades that we have already made, but we are not what might be classed "speculators." Our speculation, if you might term it such, is done from the hedging standpoint. For instance, I offer to-night on the close of the market to the continent of Europe, or to other parts of Europe, to the British Isles, the United Kingdom, a certain quantity or quantities of corn or wheat or rye, as the case may be. I have that grain in sight, if not on hand. I base my offers to the other side on the close of the market of the day. I must take into consideration that that wheat, corn, or rye, or oats, as the case may be, can not be shipped to-morrow; and it may not be shipped next week, and may not be shipped next month. It may be shipped three months from now. I offer so many thousands of bushels of grain, in such and such shape. Ocean shipments must be taken into consideration; shipments in Baltimore must be taken into consideration; and if the stock of grain at Baltimore is too small, we know where to lay our hands on it over night, in the west; and we frequently wire to our friends in the west "We want cable refusal on a certain number of bushels, 100,000 or 150,000 bushels of corn, wheat, or rye, for such a shipment to meet such an order," and they give us that overnight option at a price above the market. We embody that in a cablegram and send it to the other side. Sometimes we connect; sometimes we do not connect. It may take a week or two to make connection back and forth, day after day, by cabling. the other hand

On

The CHAIRMAN. That all relates to what are undoubtedly bona fide transactions, the propriety and necessity of which nobody questions. I think the point upon which this committee would like your opinion is whether it would be possible either by legislation through Congress or by a rule on the part of your exchange, to retain the legitimate and necessary functions of your exchange, such as you have outlined, and eliminate what you have designated as the rank speculation. Mr. SNYDER. In wheat?

The CHAIRMAN. Wheat, corn, or any other product.

Mr. SNYDER. I think it would be a blessing to us if the rank speculation could be eliminated.

The CHAIRMAN. Have you any suggestion to make as to how it could be done?

Mr. SNYDER. I have not. I think that would have to be left, Mr. Chairman, principally to the boards of directors of the various exchanges.

The CHAIRMAN. You think that rules could be devised by those boards which would eliminate it?

Mr. SNYDER. I think prohibiting corners to a very great extent would bring that about.

Mr. HAWLEY. Have you ever tried to devise such rules?

Mr. SNYDER. I can not say that our chamber has. The Chicago Board of Trade, I understand, are now working along those lines.

The CHAIRMAN. Has your board of trade ever frowned upon the practice on the part of your members of inducing speculation through attractive and suggestive wording of their market letters?

Mr. SNYDER. Not as a chamber of commerce. Different firms get out different market letters. Such a letter as you read on Saturday, sir, I am sure, if it emanated from Baltimore, would be the means of causing censure. I am perfectly satisfied it would.

The CHAIRMAN. You think the members of your chamber of commerce do not use such methods?

Mr. SNYDER. No, sir; I have never known of such a letter coming out; and I think that our board of directors would immediately take cognizance of it and would reprimand the member or censure him. Mr. LAMB. May I ask a question?

Mr. SNYDER. Certainly.

Mr. LAMB. Have you read these bills that we have before this committee?

Mr. SNYDER. I have not, sir. I have read only a synopsis of them in the newspapers.

Mr. LAMB. Then you can not say whether or not the enactment into law of these measures would prevent what you call hedging?

Mr. SNYDER. No, sir; but from the articles that I have read on the subject I think they would interfere with hedging. I would be very much pleased to have a copy.

Mr. LAMB. Certainly. I thought you had read it.

Mr. SNYDER. No, sir; not fully.

The CHAIRMAN. Perhaps Mr. Snyder would rather finish his statement before being questioned.

Mr. SNYDER. I had finished. I am subject to your questions.

Mr. LEVER. Hedging is impossible unless you can keep the parity between spots and future contracts. Is that true?

Mr. SNYDER. I do not quite understand that question.

Mr. LEVER. I mean to say, unless there is maintained a uniformity of parity between the spot transaction, the spot price, and the price of future contract, your hedging operations are made dangerous and sometimes can not be had at all. Is that the fact?

Mr. SNYDER. Oh, no, sir. We can hedge at all times; but whether we can hedge at the price we want to hedge at is a question.

Mr. LEVER. What I wanted to bring out was this: Do you regard the parity between the spots and futures as necessary to the best interests of your hedging operations?

Mr. SNYDER. I will give you an instance right there and right now. I made this calculation yesterday or day before yesterday. I tookMr. MERRILL. To answer the question, is it not true that there are fluctuations in the hedging basis as well as in the market prices. Mr. SNYDER. Naturally; naturally.

Mr. MERRILL. It is never a fixed parity, Mr. Congressman. It is always fluctuating, like other commodities, or like the value of the goods in any line of business.

Mr. LEVER. Where this fluctuation is found, does it not interfere with your hedging transactions and make it dangerous for the hedger?

Mr. MERRILL. No, sir; I do not think it does. I shall be very happy to go into that in detail later.

Mr. SNYDER. I would like to answer the gentleman's question in another way. Our market for spot corn closed on Saturday at 681 cents. Our market for May delivery corn closed at 71 cents. I figure the carrying charge, including storage, insurance, and interest from last Saturday to the first of May, if I want to carry the actual grain at Baltimore instead of having it run in from the west. If I wanted to carry the actual grain in Baltimore I would have bought spot corn at 683 cents, and it would cost three and nineteen onehundredths of a cent per bushel to carry it to the 1st day of May. On the 1st day of May my certificate must have fully three days storage to be deliverable; otherwise there is a penalty of an eighth of a cent a bushel for the next five days. You can readily see how it would pay a firm doing a large business having the privilege of buying the actual grain, we will say, in the west for future delivery, or, in case of failure to buy the actual grain to-day, to buy the future at a difference, the carrying charge difference; because, Mr. Chairman and gentlemen, he does not have to pay for that grain until the bill of lading is delivered to him with the contract.

Mr. LEVER. But suppose the May option was very much overvalued by some system of manipulation on the board or somewhere on the exchanges of the country; would it not make it dangerous for the hedgers to buy on that?

Mr. SNYDER. No, sir; that is exactly why we want to do hedging. One of the things that we want to overcome is a less supply. When the supply is less the market is higher, nine times in ten; and when the supply is greater the market is lower. You have not a dry-goods man in the United States who does not speculate. You have not a grocer who does not speculate. You have not any department of the Government of the United States that does not speculate. You have not a grower, a farmer, who does not speculate. If he holds his stuff instead of putting it on the market when it is ready for the market he speculates, at one hundred cents on the dollar. If he puts his grain on the market, and wants to speculate in a safer way, he can get ninety-five cents on the dollar back, and speculate with five cents on the dollar. The farmer, the producer, is the greatest speculator this country has ever produced.

The CHAIRMAN. There are no bills pending before the committee the purpose of which is to attempt to put a stop to such speculation as you have suggested. That is an incident of the business which everybody recognizes. What we are trying to do is to find some way, if there is a possible way, to allow these legitimate functions to proceed, while putting an end to the evils that everybody recognizes exist in connection with these exchanges.

Mr. SNYDER. Then, Mr. Chairman and gentlemen, in endeavoring to do away with what I term rank speculation I would suggest most respectfully that you be very careful not to interfere with the legitimate ends of the business. This business has grown from year to year, and in years has become an immense business. At present the United States is handicapped in the exportation of its grain by the larger production in Argentina and in Russia. They are offering grain to the continent of Europe and to the British Isles for less money than the price at which we can put it over there in any volume.

The CHAIRMAN. In what products is there a future market in chamber of commerce?

Mr. SNYDER. Wheat and corn, principally.

your

The CHAIRMAN. What grades of wheat are deliverable on your contract?

Mr. SNYDER. Our contracts generally are No. 2 red. We can deliver No. 1 northern wheat from the Northwest, or can deliver No. 1 hard Kansas wheat on No. 2 red contracts when not otherwise stipulated. But when a contract is made for No. 2 red-we will say No. 2 red, May-No. 2 red must in every case be delivered. When the contract is made for No. 1 northern, No. 1 northern must in every case be delivered. When it, is made for No. 1 Kansas hard, No. 1 Kansas hard must in every case be delivered. I will read you here, if you will permit me

Mr. HAWLEY. Before you do that, let me ask you a question. In reply to a question put to you by Mr. Lever I understood you to say that hedging depressed prices.

Mr. SNYDER. No, sir; I did not. I said hedging was a protection to the merchant, to the buyer, and to the seller. You misunderstood me, sir.

Mr. LEVER. Is it any protection to the grower of the wheat-the producer of the wheat?

Mr. SNYDER. There is the protection of the price he gets for it, sir. The purchaser of wheat can go into any market that deals in it and buy or sell, if he wants to.

Mr. LEVER. But he would have to buy through a member of the exchange?

Mr. SNYDER. He would have to buy through a member of the exchange and would have to pay a legitimate commission for doing so. Mr. LEVER. That leads me to ask you this question before I get away from it. When an outsider endeavors to make a contract through a member of your exchange or board, do you make any inquiry as to whether or not he is a rank speculator, as you designate him, or whether he is a legitimate dealer?

Mr. SNYDER. I have no means of doing that. If I get an order from you to buy or sell 5,000 or 10,000 bushels of May wheat, I would not think for a moment of executing that order without knowing you, unless I had your margin in hand. A certain amount of margin is required.

Mr. LEVER. If I sent you a margin of $500, and you did not know anything about me, and I gave you an order, would you execute it without making any inquiry?

Mr. SNYDER. At the market; certainly, sir; because you would want me to buy it. I might buy it from the chairman of the committee, a member of my exchange, and within half an hour of that transaction there might be a call for margin. I would charge you the usual commission for buying and selling. I will say further to you, and for the information of the committee, that if your margin was being exhausted I would notify you that your margin was being exhausted and that I would require more margin, for the simple reason that the gentleman from whom I bought the wheat had already called on me for margin, or would call, and I would have to have it in hand or close your trade.

The CHAIRMAN. In your judgment what would happen to the exchanges if the margin system were eliminated, and if you made specific contracts as to payment and the time of payment?

Mr. SNYDER. Mr. Chairman, if the system of margins on the different exchanges was eliminated, we would go back to the time of Joseph when he cornered the corn of Egypt; and nobody has ever told us how it was paid for. It would drive the people out of business.

The CHAIRMAN. Would it not take more money to corner a product if you had to pay the full value of it than it would if you had to pay only a fraction of that value?

Mr. SNYDER. If I had $100,000 at my command to-day I could buy only $100,000 worth of grain. Mr. Reynolds testified here, I understand, last Saturday, that his concern bought before the corn was ripe 600,000 bushels of corn, and that they paid the farmer an installment on that corn. He referred to the fact of having sold to me and to others. We make contracts with the western dealer who makes a contract with the western farmer, and I am sorry I did not bring over a copy of our confirmation. I intended to bring it, and I will be very glad to mail it to you if you would like it-the confirmation blank. That blank shows exactly what the transaction is, and that corn is expected to be delivered. I would be very glad, if the committee cared to have it, to send it.

The CHAIRMAN. It is the corn that is not expected to be delivered that we are interested in.

Mr. SNYDER. In all cases delivery is contemplated, even in speculation.

Mr. LEVER. But is delivery expected?

Mr. SNYDER. It is contemplated. Mr. Peck testified that when he bought 1,000 bushels of wheat overnight and hedged for Chicago, he did not intend to send it to Chicago, but to Minneapolis or the southern mills; and I corrected him at the time, if you remember, by saying, "You hedged your original profit." He hedged his original profit. The CHAIRMAN. In order that the record may be measurably complete, I would like to call your attention to the questions I asked in regard to the cornering proposition. I understood you to say that if no margin deals were permitted it would be easier to corner a product than it is under the present system. Will you explain how it happens that it would be easier to corner wheat, for instance, if you had to pay the full price for every bushel you bought than it is now when you can get possession of it on the payment of a cash outlay of five cents a bushel?

Mr. SNYDER. Mr. Chairman, if margins were not required on grain deals, any rapscallion in the country could give orders to buy more than the country produces.

The CHAIRMAN. But he would have to accompany those orders by the full value of the grain.

Mr. SNYDER. NO. You or I would put up our original margin, but if any rapscallion could come in and buy and buy and keep on buying, and he did not have to put up a margin, you would not know whether you were afoot or on horseback.

The CHAIRMAN. You quite misunderstood my question, evidently. When I inquired what would happen if the margin system were done away with, I did not mean that there should be substituted for that system a practice of buying for nothing. I meant that there should