Mr. CUSHING. There is a rule that prevents the manipulator from taking his shirt. That is about what it is.

Mr. SIMS. That is manipulating the market?

Mr. CUSHING. In other words, you get a wheat market which is up to $1.50, we will say, right here, and the committee say "$1.50 is a fair price," and they will not pay any more. If it was not for that rule, there is nothing to prevent that man putting the price up to $5; nothing except the common law. He can not collect.

Mr. SIMS. I think the rule is right, and should be enforced, and I think therefore legislation along that line is also to be encouraged. That is the point that I was making. That is all that I want to ask you.

The CHAIRMAN. Mr. Merrill, before you go on I would like to give a few minutes to Mr. J. Ralph Pickell. Mr. Pickell, as I understand, does not represent any organization, commercial or otherwise, but he is the editor of the National Hay and Grain Reporter, of Chicago, Ill., and I believe the committee would be glad to hear him for a few minutes.

TESTIMONY OF MR. J. RALPH PICKELL, EDITOR OF THE NATIONAL HAY AND GRAIN REPORTER, OF CHICAGO, ILL.

(The witness was sworn by the chairman.)

Mr. PICKELL. Mr. Chairman and gentlemen of the Committee on Agriculture, it is unnecessary for me to state that I am not here as the representative of any particular organization or any grain exchange or any association in this country, but solely at the courteous request of your honorable chairman, who is a personal and cherished friend of mine. Chairman Scott knows that I am opposed to his bill in its present form, and that I base that opposition upon actual experience in the grain business and a personal investigation of the methods of conducting the grain business in the various terminal markets of the United States. It is unnecessary for me to revert to the time when I was in the grain business with my father in Humboldt, Kans., the home of your honorable chairman, further than to say that if we had not been able to hedge our purchases of grain, we could not have paid the constituents of your honorable chairman within 5 to 10 cents a bushel of the prices that we actually paid them; and in this connection I want to emphasize one thought which it seems to me has not been brought out here as emphatically as it should have been. My father was in the stock business in Humboldt, Kans., and in the fall of the year he would purchase his steers. He would buy them in Kansas City, and at the same time he would buy May corn. Now, he never expected to receive a bushel of that grain, and yet he purchased the corn at the same time that he bought the cattle because he knew it would take just about 10,000 bushels of corn to get those steers ready for market next June. That is one phase of the hedging business that seems to me very important in connection with grain exchanges in this country, and one which has not been made as emphatic as I believe it should be.

You asked about the hay business, and it was explained that on account of the baling and the difficulties of transportation, owing to its bulk, it can not be transported quickly, as you understand, it would be practically impossible to trade in futures in hay. But on the

10th day of January, 1910, I heard the president of the National Hay Association, Mr. H. W. Robinson, of Green Spring, Ohio, say before a meeting in Columbus, Ohio, of that association that it had been the ambition of his life to get hay futures traded in in the terminal markets. I merely mention that to show you that that is the sentiment. Wichita, Kans., recently adopted the system of future trading. Mr. McCullough, president of the Wichita Board of Trade, told me two weeks ago that if the Scott antioption bill became a law it would absolutely throttle the grain business in that thriving little city. Wichita needs that grain business for the same reason that Kansas City needs it, as was explained to you by Mr. George H. Davis.

I have reason to believe that the bucket shops in this country are behind this bill. I believe that those illegitimate institutions, those bloodsuckers of the curb, are behind this bill more or less. Now, these things come to me in my office. I do not know absolutely that there are two-that is, I have not proved that there are two-bucket shops behind this bill, but I know beyond the question of a doubt that there is one bucket shop behind this bill.

The CHAIRMAN. Just one minute. In just what sense did you use the words "behind the bill?"

Mr. PICKELL. I will explain that right now, Mr. Scott. I will explain to you just exactly what I mean. Here is a letter from the president of one of the largest bucket shops in the State of Kansas, which was written to the president of the Kansas Grain Dealers' Association, which association held a meeting in Kansas City two weeks ago, and in this letter, which may become a part of the record if it is so desired, the president of that illegal bucket shop indorses the stand which the president of the Kansas Grain Dealers' Association took against bucket shops in his address to the association, and goes further to ask that President Cox of the Kansas Grain Dealers' Association use his influence in getting the Scott antioption bill enacted into law. This is the letter, and it may become a part of the record if you so desire.

Now, what I mean to say is this: The bucket shops of this country either see their doom, they either read the handwriting on the wall, because 10 States in this Union have already passed laws to put the bucket shops out of business

Mr. LAMB. How about Kansas?

Mr. PICKELL. They have a law which has just been recently passed, and I understand that the state's attorney is just beginning work upon it. What I started to say is this: The bucket shops of this country understand that they are about to be put out of business by the States, and desire to pull the legitimate exchanges down with them, or else they understand that if the Scott antioption bill becomes a law there will still be a certain amount of trading. For instance, Chicago will always do a certain amount of speculating, even if this bill becomes a law. So that these bucket shops see there would be an opportunity for them to spring up in the States and thrive upon the suckers who live around them, and their business would not be molested if the Scott bill went into effect; and that is what I meant when I said that I thought the bucket shops would be glad if this bill was enacted. You understand my idea?

The CHAIRMAN. Yes, I understand, and I thought I understood your first expression; but it was rather ambiguous; because when you say

that certain influences are behind the bill the general interpretation of that is that they have suggested the bill or are promoting it. Mr. PICKELL. Oh, no, sir; not at all.

The CHAIRMAN. That is quite a different statement from the statement that they are in sympathy with the bill.

Mr. PICKELL. No; they see that it can promote their own aggrandizement, as I interpret it, if this bill becomes a law; not that they have anything to do with it, which never suggested itself to my mind. All of you gentlemen here must be getting letters from over the country asking that such a bill be passed, and when I secured this letter by accident in Kansas City two weeks ago it suggested to me immediately that a part of the cry was coming from the bucket-shop people.

Mr. LAMB. For one, I have never received a letter asking that such a bill be passed.

Mr. PICKELL. Is that so?

Mr. LAMB. That is so.

The CHAIRMAN. Now, will you read the letter?
Mr. PICKELL. The letter is as follows:

THE FARMERS TERMINAL GRAIN COMPANY,
Kansas City, Kans., February 9, 1910.

Mr. R. E. Cox, President Kansas Grain Dealers' Association,

Kansas City, Mo.

DEAR SIR: We want to applaud your efforts to stamp out bucket shops and speculation in farm products and foodstuffs, and we are highly in accord and sympathy with you, and further ask that you join with us in assisting Congressman Scott to pass his antioption bill now pending before Congress, prohibiting gambling in farm products and foodstuffs on boards of trade, and ask that you pass a resolution indorsing Congressman Scott's bill.

Yours, very truly,

THE FARMERS TERMINAL GRAIN COMPANY, By S. H. McCULLOUGH, President.

Mr. SIMS. Where is that from?

Mr. PICKELL. From Kansas City, Kans.

The CHAIRMAN. Did you refer to that company as a bucket shop organization?

Mr. PICKELL. Yes, absolutely; absolutely. Before closing, the thought that I had in my mind was this, that after an investigation of the various methods of conducting business in the terminal markets, it seems to me to revert back to Adam Smith, who wrote his work on political economy one hundred and thirty-five years ago, when he said:

The natural price, therefore, is the central price toward which the prices of all commodities are continually gravitating.

To my mind, gentlemen, while there are evils, ghastly evils sometimes, connected with the board of trade, it seems to me that the wheat pit and the corn pit and the oat pit represent the twentieth century gravitating of grain prices toward the central price. I thank you for your courtesy.

Mr. SIMS. So far as the South is concerned, the very people who put the bucket shops out of existence are the people who are behind this bill here.

Mr. PICKELL. I am glad to know it.

Mr. SIMS. I am glad to inform you, because you ought to know it.
Mr. BURLESON. You admit the evil of bucket shop gambling?
Mr. PICKELL. Absolutely, yes, sir.

Mr. BURLESON. The proprietor of this bucket shop, or alleged bucket shop, whose letter you have just read, confessed the evils of bucketshop gambling. You say he admitted the evil of it and said that it ought to be wiped out?

Mr. PICKELL. Well, sir; there is his letter.

Mr. BURLESON. Well, I understood you to say that he approved of the closing of the bucket shops himself.

Mr. PICKELL. That, I believe, is the close of the letter.

Mr. BURLESON. Let me ask you this. Did you ever know the price of a farm product to be affected by the price in the bucket shop? Mr. PICKELL. No.

Mr. BURLESON. Consequently, the only people who are injured by the bucket-shop transactions are the people who buck in the bucket shop; is not that true?

Mr. PICKELL. Unless the bucket-shop operator happens to get the worst of it himself; then he would be injured, of course; naturally so. Mr. BURLESON. It is the man who bucks the bucket shop that usually gets the worst of it?

Mr. PICKELL. That is true; yes, sir.

Mr. BURLESON. It is a fact that the operation of gambling that he alluded to in his letter is the gambling on the boards of trade and exchanges?

Mr. PICKELL. Yes.

Mr. BURLESON. It is a fact that the gambling on boards of trade and exchanges frequently affects the market price of farm products; is not that true?

Mr. PICKELL. I am not thoroughly convinced as to what you mean by "gambling."

Mr. BURLESON. You have brought that letter here. The writer of that letter alludes to gambling on the boards of trade and exchanges. Mr. PICKELL. Yes.

Mr. BURLESON. I mean those transactions where the buyer does not intend to receive or the seller intend to deliver.

Mr. PICKELL. I am not thoroughly convinced that there are any transactions of that kind.

Mr. BURLESON. You are not convinced that there are any transactions of that kind?

Mr. PICKELL. No, sir; and I have made it a study.

Mr. BURLESON. Well, if there are transactions of that kind, are you in favor of them?

Mr. PICKELL. If you refer to bucket-shop gambling, I am against it, and any man

Mr. BURLESON. Mr. Produce Editor, I mean transactions upon the boards of trade.

Mr. PICKELL. Yes.

Mr. BURLESON. And cotton exchanges.

Mr. PICKELL. Yes.

Mr. BURLESON. Where there is no intention on the part of the seller to deliver or on the part of the buyer to receive.

Mr. PICKELL. Yes.

Mr. BURLESON. If there are transactions of that kind on the exchanges, are you opposed to them?

Mr. MERRILL. You are if it is gambling, are you not?

Mr. BURLESON. Hold up; he is under oath. Let him answer for himself. Mr. Merrill is not in charge of his conscience.

Mr. MERRILL. I only wanted to facilitate the reply.

Mr. BURLESON. Oh, yes.

Mr. PICKELL. Will you ask that last question over again?

Mr. BURLESON. If there are transactions upon the boards of trade and exchanges of the country where the buyer has no intention of receiving and the seller has no intention of delivering, are you opposed to transactions of that kind?

Mr. PICKELL. If there are

Mr. BURLESON. Yes.

Mr. PICKELL. Transactions of that kind; yes, sir, I am opposed to them.

Mr. BURLESON. And if it can be reached by legislation, they ought to be prohibited?

Mr. PICKELL. Where the seller has no intention of delivering?
Mr. BURLESON. That is right.

Mr. PICKELL. Or the buyer of receiving?

Mr. BURLESON. Yes.

Mr. PICKELL. That is right, yes.

Mr. BURLESON. Now, would you be very much surprised if I told you that the Scott bill, which you say is backed by the bucket shops, confines itself exclusively to the class of transactions that you say you are opposed to and which ought to be prohibited?

Mr. PICKELL. I would say, sir, that I would not only be surprised, but I would say that I do not believe you have a correct comprehension of the bill.

Mr. BURLESON. Of the bill?

Mr. PICKELL. Yes.

Mr. BURLESON. That I did not understand the bill?

Mr. PICKELL. Yes.

Mr. BURLESON. Now you are excused, so far as I am concerned.

TESTIMONY OF MR. JOHN C. F. MERRILL, VICE-PRESIDENT OF THE CHICAGO BOARD OF TRADE.

(The witness was duly sworn by the chairman.)

The CHAIRMAN. Mr. Merrill, in order that there may be no doubt that you will be able to conclude the statement you wish to make, I will ask the members of the committee to refrain from questioning you until you have concluded.

Mr. MERRILL. Yes; I will be as brief as possible, because I realize that the whole subject has been pretty well covered.

As you gentlemen all know, this hearing is being conducted by the Council of Grain Exchanges of North America; it was so announced to you at the opening of it. That council comprises all the important exchanges of the country, and they have their delegates before you. At the opening I recall that I stated that we had subdivided the subject, and that speculation was one of those subdivisions. In spite of my protest the council placed upon me the presentation of that subject to you, and I realize, gentlemen, that it may be an uphill proposition, and I shall not dwell upon it at great length, in fact scarcely any time will be consumed by it, when I will be as rapid as possible in getting through with the general survey.