Mr. HUBBARD. May I ask Mr. Parker if he recalls that cotton sold in August of 1900 at 5 cents?

Mr. PARKER. Yes.

Mr. HUBBARD. And in May it sold between 11 and 12 cents?

Mr. PARKER. Yes; I recall that cotton sold, as Mr. Hubbard says, in August of one season at 5 cents. That happened to be the first season I manufactured; in the season of 1898. My average price of cotton that year was 4 cents; the next year my average price of cotton was 5 cents; and yet they were the two hardest years I have ever had in manufacturing since I have been in business. The price of print cloths and the price of goods generally was even below the parity of cotton that. year.

Mr. BEALL. What special reason was there for that difference?

Mr. PARKER. That was simply due to the demand of the trade. There had been a very large crop made.

Mr. HUBBARD. Was it not due to the fact that the crop of 1899-1900 was a remarkably small crop?

Mr. PARKER. Mr. Hubbard, of course you follow those crops more carefully than I do. I can not speak offhand. I accept your state

ment.

Mr. HUBBARD. Was it not also due to the failure of the cotton crop in Bombay?

Mr. PARKER. There was certainly a legitimate reason for it. Spot cotton would never have risen in the succeeding May to 11 or 11 cents unless there had been a mighty good reason for it. I should say generally that it rose notwithstanding the exchange, as a general proposition, rather than on account of the exchange; though this year I make an exception.

Mr. BEALL. Take an ordinary year, the months of October and November and along at that season of the year, when the crop or a considerable portion of it is still in the hands of the producer. What is the ordinary rule?

Mr. PARKER. The ordinary rule is that the price is depressed in the fall months. That is the ordinary rule. I think, though, that as long as our southern planters continue to market too large a proportion of their product in those months, they must expect that to a certain reasonable extent.

Mr. BEALL. Take the instances that you can recall, when there has been a very considerable advance in the price of cotton as the result of speculation. At what season of the year has that generally occurred?

Mr. PARKER. It has ordinarily occurred in the early springJanuary or beyond.

Mr. BEALL. Where was the cotton with reference to the producer at that time?

Mr. PARKER. It was out of the producer's hands. And I will go further

Mr. HUBBARD. May I ask right on that point if Mr. Parker is speaking from memory, or whether he is speaking from records?

Mr. PARKER. I am speaking from memory, and I expect from a faulty memory.

Mr. HUBBARD. I think that if Mr. Parker will examine the records he will find that the price of cotton in New Orleans is, as a rule, lower

on the 1st of May than it is on the 1st of December. (I speak of New Orleans because that comparison was made by Mr. Hester, and New Orleans is Mr. Parker's favorite market.) He will find, I think, if he examines it carefully, that eleven years out of fourteen the price of cotton in New Orleans on the 1st of May is the same or lower than it is on the 1st of December. That is a matter of record, and was a matter of record before the Agricultural Committee as long ago as 1891, when I had the honor of appearing before it with Mr. Hester.

Mr. PARKER. That may be true, gentlemen; I would not undertake to deny it. I will also tell you what is true of myself as a spinner--that I follow the course of, I think, a majority of the spinners, and I buy my cotton in the fall.

Mr. BEALL. Because you get it cheaper.

Mr. CONE. May I ask Mr. Parker a question? Do you not think, Mr. Parker, that there has been a larger percentage of this crop marketed in October, November, and December than any crop that has ever come under your observation?

Mr. PARKER. That is my judgment. That is the reason why I said I thought a man would be doing a very perilous thing this year to sell ahead without having the spot cotton.

Mr. HAUGEN. I understood you to say that if boards of trade or dealing in futures were eliminated, it would necessitate the building of warehouses by the spinners to store their stock of cotton for the year?

Mr. PARKER. It probably would necessitate our enlarging our warehouses; yes, sir.

Mr. HAUGEN. How would that affect the smaller spinners-those without capital or financial standing?

Mr. PARKER. My experience with the smaller spinners is that the large majority of them do not buy very much ahead, even now. It is the larger spinners who have to buy ahead. The smaller spinner, as a rule, certainly in the South (I am speaking of the smaller spinner in the South), does not anticipate his needs. He takes his chances on the market.

Mr. HAUGEN. This would necessitate the spinner making large contracts for future delivery if he bought cotton at that time?

Mr. PARKER. As a rule, yes, sir; that would be the only right thing to do.

Mr. HAUGEN. Under the present system does not the smaller spinner buy for future delivery through these boards of trade?

Mr. PARKER. I do not think he does. I simply say that as a rule the smaller spinner does not buy ahead, does not anticipate his needs in the same way that the larger spinner does. Using as many bales of cotton, for instance, as I do, I am afraid to take the risk of getting my cotton around me unless I have it absolutely in the warehouse. The smaller spinner is going to use only a few hundred bales in the course of the season, and he is willing to take a risk that I can not afford to take.

Mr. HAUGEN. Do you sell for future delivery?

Mr. PARKER. I sell my goods for future delivery.

Mr. HAUGEN. Nearly all spinners do?

Mr. PARKER. Yes.

Mr. HAUGEN. The smaller spinners as well as the large ones?

Mr. PARKER. They differ in their policy, but they do sell more or less.

Mr. HAUGEN. The smaller spinners as well as the large ones?
Mr. PARKER. That is right; yes, sir.

Mr. HAUGEN. The smaller spinner, selling for future delivery, without ready cash or financial backing, would be unable, then, to make contracts for future delivery? He would be unable to get the stock?

Mr. PARKER. He would be unable to make contracts for future delivery of the character he now makes. In other words, he would not buy his cotton on the exchange although, as I tell you, I do not think as a rule he now buys it on the exchange. What he does is to buy it from a cotton dealer, such as my friend Mr. Neville. He would not be cut off from that.

Mr. HAUGEN. And the dealer, in turn, hedges?

Mr. PARKER. The dealer, in turn, hedges now; yes, sir.

Mr. CONE. Mr. Parker, was it not your experience last spring and summer that the farmers held cotton for fall delivery more largely than you had ever known them to do before?

Mr. PARKER. Yes, sir; and they made a very serious mistake.

Mr. SIMS. I should like to ask Mr. Parker a question. There seems to be an impression that without future dealing we would have to have warehouses to take care of the cotton. Do we not now have to have warehouses to take care of it?

Mr. PARKER. I think that if the effect of doing away with the exchanges would be to have warehouses to take care of all the cotton, it would be worth many, many times any possible harm that would come from the abolition of the exchanges. Unfortunately, too many of our planters now let their cotton stay out in the weather right through the winter, and do not warehouse it. If, by the abolition of the exchanges, we could force them to a condition where they would warehouse their cotton, it would be the best thing in the world for all of those interested in cotton.

Mr. SIMS. But it is a fact that there are warehouses to take care of cotton now?

Mr. PARKER. There are; and the most intelligent farmers are now learning to avail themselves of them.

Mr. MCLAUGHLIN. Who do you mean would build these warehouses the planters or the spinners or the manufacturers?

Mr. PARKER. The spinners would build a large portion of them. But what is going to come eventually is a condition under which either the planters themselves will build the warehouses or the warehouse companies will build them in order to do a regular warehousing business. I appeared before the legislature of South Carolina last week earnestly urging the passage of this uniform warehouse bill, which has been proposed by the different States, so as to give our people a chance to get a warehouse receipt which will be marketable in New York, Boston, in Providence, in Chicago, and everywhere else. What is going to come-and it is not very far off, either-is that we are going to have in the South warehouse companies just like you have elevator companies in the West.

The CHAIRMAN. Have you those companies to any extent now? Mr. PARKER. I, myself, am connected in a small way with one company-the Standard Warehousing Company, of South Carolina

which has a capital stock of $500,000, I believe it is, or in that neighborhood, and which does a storage of about 90,000 bales.

Mr. BURLESON. Is it not a fact that during the last three years. there have been about two thousand of them built?

Mr. PARKER. Yes; there are a great many small warehouses being built all around.

The CHAIRMAN. Is it the practice of those warehouse companies to receive the cotton and charge so much a month for warehousing it? Mr. PARKER. That is right.

The CHAIRMAN. Or do they advance a certain portion of its value? Mr. PARKER. There are different methods pursued. They all charge for the storage. Some make an advance upon it directly. The general method, though, is that they give a warehouse receipt to the farmer. Once we get capital assured of the safety of the warehouse receipt, and that the cotton will be kept there until it is needed, and the receipt can be hypothecated in the banks at a reasonable rate of interest, the effect has been (and I think Mr. Burleson will bear me out) that in the last three years the rates of interest on cotton collaterals have declined very greatly in the South. I have been able, myself, to help in placing loans for farmer friends this past season as low as 5 and 5 per cent and last season as low as 41 per cent, whereas in the South, previously, our rates have been 7 and 8 per cent.

Mr. MCLAUGHLIN. You were asked a question by Mr. Cone as to whether, if the exchanges were abolished, you would not "have a picnic buying your cotton." You answered the question, evidently understanding it. I did not get the force of it. If you understood his question sufficiently to have an opinion as to what the outcome or result would be, I should be glad to hear it.

Mr. PARKER. What Mr. Cone meant was this: His idea was that if the exchanges were abolished the only purchasers would be the spinners; that these intermediate men that now purchase and hedge on the exchanges would be afraid to do that business, and that therefore only the spinners would be left as purchasers.

Mr. MCLAUGHLIN. The producers would be at the mercy of the manufacturers?

Mr. PARKER. Of the spinners; that was his suggestion. I do not agree with that suggestion. I think there are two ways in which that is going to be avoided, though I recognize that temporarily there is going to be a certain amount of readjustment necessary. One way is, as I have undertaken to explain, that there will be built up this warehouse system, by which the South will realize the necessity of storing its cotton and marketing it gradually, so as not to give the spinners that advantage. I am assured that there is going to be a steady, continuous growth in that direction. The other reason is that as long as there is any commodity like cotton on the market men like my good friend Mr. Neville (I have used his name a number of times, as he is one of the largest of the intermediate men) will buy just as much as they do now, especially if it goes beyond what they think is below the average of prices. So I do not think Mr. Neville will have the "picnic" my friend Mr. Cone would expect him to have. I certainly do not advocate this legislation with any view of that "picnic," because I take exactly the other view.

Mr. CONE. Let me ask Mr. Parker a question there: Mr. Parker, do you think a bank, in the first place, would lend money on cotton, or lend the money that would be needed to start with, with the consciousness that the dealer it is lending to can not hedge his cotton?

Would

that dealer handle that cotton as he does now for 25 or 50 cents a bale? Would he handle it for less than $5 a bale? Would you buy cotton and put it in your warehouse unless you felt that you were getting enough off the price to guarantee that you were going to get good interest and carrying charges out of it?

Mr. PARKER. As I said a moment ago, I think that in all probability the business would be temporarily complicated through the abolition of the exchanges. It is a pure question, take it all in all, of the pros and cons. To-day the cons overbalance anything which can be said for the pros. I recognize the very suggestion made by my friend, that, temporarily, until the South can readjust itself to a condition of marketing its crop only as needed by the spinners, there would necessarily be a certain amount of depression in the sale of the commodity, and possibly an extortionate profit given to the intermediate man. Let me take a case under the present exchange rules, and see whether the intermediate man has not at times made an extortionate profit.

The intermediate man who bought cotton in January, and who sold it a week ago or ten days ago, made a profit of about $10 a bale, or about 2 cents a pound. I think that is an illegitimate profit, and I think it was made through illegitimate conditions. If he hedged his cotton when he bought it in the first week of January, and if he let his hedges go and sold to the spinner at the price he was charging the spinner a week or ten days ago, he made a profit of $10 a bale. If my friend Mr. Neville will allow me, I will give you one illustration which affects his own firm. I was very anxious to get a certain lot of cotton of 300 bales for one of my mills when cotton futures were 161 cents, and I just stubbornly said I would not pay over 14 cents for it. I was offered that cotton at 143 cents at that time. Cotton futures declined 3 cents a pound, but I never got that cotton cheaper than 14 cents. In the meantime the intermediate man who had bought cotton and had hedged it by the futures got the benefit of the decline of 3 cents a pound in futures, and only suffered a loss in the spots he had bought of the difference between 15 or 15 cents, which he said it cost him, down to 14 cents.

Mr. NEVILLE. You are assuming that the man. who bought that cotton got a lot of cotton which you wanted. We do not operate in that class of cotton.

Mr. PARKER. I am assuming that he hedged.

Mr. NEVILLE. You are assuming that he hedged at 16.486, which was the highest point May cotton reached.

Mr. PARKER. That is right.

Mr. NEVILLE. And you are assuming that he took his hedges out at the lowest point.

Mr. PARKER. That is right.

Mr. NEVILLE. Those are two assumptions.

Mr. PARKER. I will preface that by this statement; I wish to make it clear now. If, on the day that futures were highest, he bought cotton and hedged it, he did not pay at that time over 15 to 151 cents, because the producer never got, this last season, over 15 to 151

cents.