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Mr. BEALL. How is that wheat then disposed of in your market? Suppose it comes below any one of these four grades? §. SNYDER. It is disposed of on its merit. Mr. BEALL. By sample? Mr. SNYDER. No; I can sell No. 3 or No. 4. The grades are set forth in this book as to what shall constitute No. 1, No. 2, No. 3, or No. 4. Mr. BEALL. Under that contract, then, if they specify that No. 3 can be delivered Mr. SNYDER. Then No. 3 may be delivered. Mr. BEALL. It may be. Mr. SNYDER. Yes; but you can not force the buyer to take it. Mr. BEALL. You are in the grain business. John Smith, down here at Richmond, sends you $500 with directions to buy for him a certain number of bushels of wheat, Baltimore contract. Mr. SNYDER. Pardon me; for a certain month? Mr. BEALL. Yes. Usually his margin is 5 cents a bushel. That would be 10,000 bushels, with $500 as a margin. Mr. SNYDER. Yes, sir. Mr. BEALL. You would sell that wheat for him— Mr. SNYDER. I would buy it for him, if he sent me an order to buy it for him. M. BEALL. Well, he sends you an order to sell it. Mr. SNYDER. Then I would sell it for him. Mr. BEALL. You do not know John Smith? Mr. SNYDER. Not at all. Mr. BEALL. You say, though, that under the contract you would make for him that delivery was contemplated, and you would sell 10,000 bushels to somebody else, and you would notify John Smith that you had sold it. Mr. SNYDER. Yes, sir. Mr. BEALL. John Smith would know to whom you had sold it? Mr. SNYDER. Yes, sir. Mr. BEALL. And the party to whom you sold it would know from whom he bought it? Mr. SNYDER. Not necessarily. Mr. BEALL. Well, would that transaction end your connection with the matter? Mr. SNYDER. Not until it is closed; not until the wheat is bought back or delivered to the buyer. Mr. BEALL. Now, Bill Jones, from down in Alabama, sends you an order to buy for him 10,000 bushels of wheat, and sends you $500. You would § it, would you? Mr. SNYDER. Yes, sir; if I knew Bill Jones. Mr. BEALL. That is the point I was getting at. In the one case, John Smith sends you an order, accompanied by $500, to sell. Mr. SNYDER. And I know John §. Mr. BEALL. No, you do not know him. Mr. SNYDER. I would not deal for him if I did not. Mr. BEALL. You would not sell it. Mr. SNYDER. No, sir. Mr. BEALL. If he sent you the $500% Mr. SNYDER. I would have to know that his check was good. Mr. BEALL. Suppose he sent you New York Exchange?

Mr. SNYDER. Then I would deal for him. Mr. BEALL. You would want to know, of course, whether his check was good only so far as the $500 was concerned. If he sent }}. soo in money, you would sell the 10,000 bushels of wheat for II in Mr. SNYDER. Necessarily. Mr. BEALL. You would not make any inquiries as to whether John Smith had any wheat or not? Mr. SNYDER. No, sir; it would be none of my business. Mr. BEALL. None of your business? Mr. SNYDER. Not a bit. Mr. BEALL. And you would not make any inquiries to find out whether it was within his power to deliver that 10,000 bushels of wheat 3 Mr. SNYDER. No, sir. Mr. BEALL. Is that the system that prevails on the Baltimore Exchange? Mr. SNYDER. No, sir; that is not the system that prevails. John Smith sends me a check for $500 to sell 10,000 bushels of wheat. I sell it for him, for May wheat; and if he wants to buy that wheat in before the month of May, I charge him a quarter of a cent a bushel for the transaction. Mr. BEALL. Well Mr. SNYDER. I am trying to get it the way you want it. I charge a uarter of a cent a bushel for the transaction. If, on the other hand, }. Smith sees proper to ship that wheat and fill his contract, he pays the excess commission. Mr. BEALL. He may not have any wheat. Mr. SNYDER. Then he makes an option deal of it. Mr. BEALL. You would execute it on New York Exchange? Mr. SNYDER. I would. Mr. BEALL. Without any inquiry as to whether he could, if delivery was demanded, deliver 10,000 bushels to this other man that bought the 10,000 bushels, you would execute that order? Mr. SNYDER. Yes, sir. Mr. BEALL. Without any inquiry as to whether or not the other man would be able to pay for that quantity of wheat, if delivery was tendered to him? Mr. SNYDER. Yes, sir. If his margin is being exhausted—and that is one thing that you gentlemen seem to lose sight of I have at any time the privilege of calling for additional margin. The CHAIRMAN. Suppose he does not respond? Mr. SNYDER. Then P i. the Follo. of selling him out, and sending him any profit that may have accrued, or charging any loss that may have resulted. Mr. HAUGEN. You do that to protect yourself? Mr. SNYDER. I do that to protect myself. Our rules cover it. Mr. BEALL. So far as you know, does that same method of dealing "Psy to the other exchanges of the country? r. SNYDER. Yes, sir. Mr. BEALL. But where an order is accompanied by cash the order is executed ? Mr. SNYDER. We are in business for that purpose.

Mr. BEALL. Without any inquiry as to the ability of the man to complete that contract if the necessity should arise for it?

Mr. SNYDER. Yes, sir; the other exchanges do the same thing.

Mr. BEALL. Are you not engaging in speculation pure and simple when you execute that sort of an order ?

Mr. SNYDER. Not at all, sir.
Mr. BEALL. You would not inquire-
Mr. SNYDER. I am filling a legitimate order.

Mr. BEALL. Do you call that a legitimate business upon an exchange, when you will sell for a man 10,000 bushels of wheat without the slightest knowledge as to whether or not he is able to deliver it, or without any thought as to whether or not he expects to deliver it?

Mr. SNYDER. I will answer your question by saying this: Suppose you want to buy an automobile, and you go into an automobile place of business. You are a perfect stranger, and they ask $3,000 for the automobile. You want it to-day, or next week, and you put down the money or give a certified check

Mr. BEALL. I would have to put down the money for the value of the automobile.

Mr. SNYDER. Of course, if you are going to take it right away of course you would.

Mr. BEALL. Do you know of an automobile dealer that would permit me, without any inquiry as to my responsibility, to put up about 5 per cent

Mr. SNYDER. Yes; 5 per cent.
Mr. BEALL. Of its value ?
Mr. SNYDER. And I will take your order right now.
Mr. BEALL. And take the automobile away?

Mr. SNYDER. I will take your order right now, and deliver the automobile to you in May, and then you pay me the difference. I will take your order and place it with an automobile man—and I am not in the automobile business.

Mr. BEALL. But the automobile would never be delivered until the balance of the money was paid.

Mr. SNYDER. Of course not. Neither would the wheat be.

Mr. BEALL. That is the very point. In that sort of trade you have no assurance that any delivery is contemplated or that the party who buys the wheat is capable of having delivery made to him, and yet you call it a bona fide transaction.

Mr. SNYDER. I will give you an instance right here. I bought from the Armour Grain Company 25,000 bushels of corn. I bought it as a hedge against three loads of corn that I sold for a certain shipment. The Baltimore market got away from me overnight, and as soon as the market opened I wired to the Armour Grain Company, Chicago: “Buy twenty-five December corn.” They bought the twenty-five December corn, and the market went against me. This is an actual demonstration, gentlemen. The market went against me. I took the delivery of the corn in Chicago. The market went down. In the meantime I bought my corn in Baltimore and shipped it to Europe. I took delivery by Armour. They sent in the papers-and if you want them I will send them to you-giving the names of the parties, with the delivery date, and I sold it out as cash corn. There is the other side of the transaction. I sold out the cash corn in Chicago and made money on it. If I had closed my option I would have lost on it. Mr. BEALL. The only thing I want to be clear on is as to whether you would sell 10,000 bushels of grain without any knowledge of the responsibility of the man for whom you sell it. Mr. SNYDER. If he sends me New York Exchange— Mr. BEALL. For the margin and all? Mr. SNYDER. No, sir; for the commission I get out of it; not the margin. The margin protects me. Mr. BEALL. I understood that if a man sent you $500, which is 5 cents a bushel on 10,000 bushels of grain, with directions to you - to sell 10,000 bushels of grain for him, you would do it? Mr. SNYDER. Yes, sir. Mr. BEALL. And you would make no inquiries as to the financial responsibility of the man? Mr. SNYDER. None whatever. Mr. BEALL. Or whether he had any wheat or not, or whether there was any prospect of him having any wheat, or whether he expected to deliver any wheat or not? Mr. SNYDER. Well, now, this question arises there: I might write to Mr. Smith, in confirming this transaction for him, and ask, “Is it your intention to ship this wheat, or to make an option trade of it?” That is often done. Mr. BEALL. Suppose he said he wanted to make an option trade? Mr. SNYDER. Then I would know exactly how to protect myself. The CHAIRMAN. The only significance of that word “option,” as you use it here, Mr. Snyder, is that it is within the option of the seller to deliver the grain on any day of the month specified that he may choose. There is no option about his delivery. He must deliver it? Mr. SNYDER. He must deliver, or pay for it. Mr. HAWLEY. The option attaches as to the day of the month. Mr. BEALL. Let us stick to this case of John Smith from Richmond. If he sends you $500 with the direction to sell 10,000 bushels of wheat for him, you will sell that? Mr. SNYDER. Yes, sir. Mr. BEALL. Or, if he sends $500 with directions to buy 10,000 bushels of wheat for him, you will buy? Mr. SNYDER. Yes, sir; I will do it as quickly as I possibly can. Mr. BEALL. Without— Mr. SNYDER. It makes no difference whether he is from Richmond or from Alabama. Mr. BEALL. Without knowing whether he is able to deliver the wheat or capable of receiving it. Mr. SNYDER. It makes no difference where he is from—Kansas or Washington or anywhere else. Mr. BEALL. Of course. Mr. SNYDER. If he was from Alabama the chances are the order would be for cotton, and I would know nothing about it. Mr. BEALL. It makes no difference where he lives. The system is what I am talking about. Mr. SNYDER. I would fill that order if it was possible to fill it. Mr. MERRILL. To follow the line of the Congressman's inquiry, is it not true that in buying that wheat on the order so outlined you fully expect to receive the wheat on that purchase?

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Mr. SNYDER. No; not until I know. I must say not until I know the John Smith he refers to. Mr. MERRILL. No; I beg your pardon. Not that you expect to receive the wheat from John Smith, but you expect to receive it from • the man you buy it of for him. Mr. SNYDER. The chances are that I may take the wheat in and close up his trade, and not have to put up money Mr. o: No; but suppose you only had the one trade on your book, John Smith's trade, and you bought the 10,000 bushes in the open market for him, and later on he ordered you to sell that out. Is it not true that the wheat would be delivered to you, and by you delivered out, on the buying sale for his account? Mr. SNYDER. It is done every day in the year. Mr. MERRILL. And the delivery is absolute, and is intended in every instance? Mr. SNYDER. It is done every day in the year. I will tell you that this is done too. When that wheat is delivered, I will deal for him under our rules, for a quarter of a cent a bushel, just the same as if he had shipped me 10,000 bushels of wheat. He pays the same commission for handling it. Mr. BEALL. You get the commission, coming and going? Mr. SNYDER. Yes, sir; everything. Mr. BEALL. Suppose he does not put up any more than $500? Mr. SNYDER. If the margin is being exhausted, I close him out. Mr. BEALL. You sell him out 7 Mr. SNYDER. I buy him in. Mr. BEALL. You buy him in of somebody else? Mr. SNYDER. Yes, sir. Mr. BEALL. Suppose you buy him in for Bill Johnson Mr. MERRILL. You do not mean that you buy in wheat intended for the account of John Smith, for the account of somebody else? I . SNYDER. I buy in wheat that I have sold for him from whoever ease. o MERRILL. From somebody else. Not for somebody else. Mr. SNYDER. From somebody else. Mr. BEALL. Suppose you buy from Bill Johnson, of Indiana. Mr. SNYDER. No, sir; I beg your pardon. I buy it on the floor of the exchange. Mr. BEALL. Well, you buy it from some broker who is selling it for somebody else. Mr. SNYDER. Yes, sir. Mr. BEALL. Suppose he is selling it for Bill Johnson over in Indiana. Bill has sent in $500 with directions to sell for him 10,000 bushels of Taln. g Mr. SNYDER. Yes. Mr. BEALL. He sells the 10,000 bushels of grain that you buy. Mr. SNYDER. Yes, sir. Mr. BEALL. He has made no inquiry as to whether or not Bill Johnson expects to deliver any grain. In all those transactions can you see any actual delivery of the wheat? Mr. SNYDER. The wheat has to be in the country before it can be traded in. Mr. BEALL. Do you not The CHAIRMAN. Pardon me. You do not mean that, do you?

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