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weak that it can not stand up against the gambling on the New York Exchange you referred to in the statements which I have read?

Mr. Thompson. No, sir; it is not a fact.

Mr. Burleson. Did you stand up against it on the occasion referred to?

Mr. Thompson. No; we did not. We did not stop it; we could not stop it.

Mr. Burleson. That is what I asked you. Could you stop it?

Mr. Thompson. But the market broke rapidly.

Mr. Pinckard. It occurred on Saturday morning, before the New Orleans exchange opened; a half day in Liverpool.

Mr. Thompson. As I say, when things of that kind come they come suddenly, as a panic, and people are not prepared for them. That is why they succeed when they are premeditated, because the time and place and condition of the market are selected. Now, as Mr. Pinckard suggests, that occurred on Saturday. Those—I do not know if there were any such orders, but I have no reason to doubt it. That is a very bright young man and a good young man that writes that column; put that is his opinion only as to what it is. We were only open two or three hours, and subsequently the market reacted.

Mr. Burleson. Since you have given the reporter a character certificate of that kind, I will read a further part which I did not intend to read. He says:

A nice time to have it, with a bill to kill futures being now considered by the Congress.

[Laughter.]

Mr. Thompson. Yes.

Mr. Burleson. Now, when futures decline as they did on February 19, in accordance with that statement, and you say it is your recollection that they did so decline

Mr. Thompson. Yes; I know that they did decline.

Mr. Burleson. Then these limits that had been given the cotton buyers through the interior to buy so many points off or on futures are controlled at once by those declines?

Mr. Thompson. Ah, but the price of cotton is not

Mr. Burleson. But I am asking you the question if the spot-cotton buyer through the interior, who nas instructions from his principal to "buy so many points on or off futures, does not change his offers of price with such fluctuations? Whenever futures fluctuate, of course, the price that he is authorized to give fluctuates with them?

Mr. Thompson. Yes.

Mr. Burleson. That is all I wanted. You have answered the question. Now, there is one more phase of it.

Mr. Pinckard. You might elaborate that, Mr. Thompson.

Mr. Thompson. I have already elaborated.

Mr. Pinckard. When futures go down 50 points the limit does not necessarily go down 50 points, at all.

Mr. Burleson. Just one more phase of it and then I am through. Chairman Scott asked you the question, based upon a statement of yours, whether this excessive speculation by irresponsible persons could not be prevented by increasing the margin that was required to be put up, and you expressed the opinion that it could. What ia the ordinary margin per bale required by the New York and New Orleans cotton exchanges?

Mr. Thompson. I do not know what the New York Exchange requires, and I am not in the future business at New Orleans. Perhaps you had better ask some of these gentlemen who are.

Mr. Burleson. But you know, do you not? I never bought a bale of futures in my life, and yet I know.

Mr. Thompson. I have known the time, when the market was in a certain condition, when it required $10 a bale margin.

Mr. Burleson. But what margin is required ordinarily?

Mr. Thompson. There is no fixed rule. The brokers try to protect themselves in the foreign market.

Mr. Burleson. I was not asking you about the foreign market. I said in ordinary times, what is the ordinary margin?

Mr. Glenny. In ordinary times the amount of margin demanded depends entirely upon the solvency or the considered solvency of the man who is operating. Credit is given to him in the same way that a bank extends credit to an individual who comes into the bank to borrow money. If a man, in their opinion, is worthy of a credit, he gets it, and to the extent that I think he is worthy of it. If he is worthy of a credit, I call for a certain margin, dependent upon what I consider the solvency of that man, and the reliability of w'hat he does in commercial transactions. It may be $1 or it may be $2 or anywhere up to $10, as the case may be.

Mr. Burleson. No\v; the question was, what is it ordinarily?

Mr. Glenny. There is no fixed rule. I know of no fixed rule.

The Chairman. I understand the gentleman has answered. He says there is no fixed rule.

Mr. Pinckard. I will go still further and say that my business is of such a character that I do not call original margins on anybody. It is entirely a matter of credit. I have not an original margin customer on my books. There is no rule.

Mr. Glenny. I have had men owe me over $100,000 and never worried a minute about it.

The Chairman. Do you desire that any of the other gentlemen of your committee make a formal statement, Mr. Thompson?

Mr. Thompson. No, sir; they are here and will be pleased to answer any questions that may be asked of them.

Mr. Mandelbaum. Mr. Chairman, may I ask the witness a question?

The Chairman. Yes.

Mr. Mandelbaum. You stated when you were asked as to how many grades are deliverable under the New Orleans contract, that there were nine?

Mr. Thompson. Yes, sir.

Mr. Mandelbaum. At least I understood you to say so.

Mr. Thompson. Yes.

Mr. Mandelbaum. On what do you base that statement?

Mr. Thompson. If you listened to me, sir

Mr. Mandelbaum. I listened very carefully.

Mr. Thompson (continuing). I said there were nine grades in the limit, but that each one of those grades had different qualifications, which increased the number of samples that might be delivered Od contract.

Mr. Mandelbaum. And at different prices?

Mr. Thompson. Yes.

Mr. Mandelbaum. Now, at how many different relative prices from middling can grades be delivered on your exchange?

Mr. Thompson. Well, I have not figured it out, sir; but, as I have stated, it makes no difference how many grades

Mr. Mandelbaum. I did not ask you that. You have referred to the number of grades several times that were deliverable on the New York Cotton Exchange, and I ask you now, as president of the New Orleans Cotton Exchange, how many different distinctions are deliverable—if you do not want to call them grades I will call them distinctions—distinct by a different money value, under your contract?

Mr. Thompson. I have nothing to hide, sir, and I will file that with the committee.

Mr. Mandelbaum. I did not say you had anything to hide.

Mr. Thompson. I will file with the committee a statement showing what cottons can be delivered on contract.

Mr. Mandelbaum. Are you president of the New Orleans Cotton Exchange?

Mr. Thompson. I am, sir.

Mr. Mandelbaum. Do you not know how many grades are deliverable?

Mr. Thompson. I am testifying before the committee, and I am not answering your questions.

Mr. Mandelbaum. I have a right to ask that question, Mr. Chairman, have I not?

The Chairman. What is the question?

Mr. Mandelbaum. As to how many different distinctions are deliverable under the New Orleans contract as a contract.

Mr. Burleson. Mr. Thompson has said to him that he would put in the statement; that he is testifying and does not want to state it without being accurate about it.

The Chairman. The committee will, of course, allow Mr. Thompson to answer in any way he sees fit. He is under oath. We can not dictate his answer, Mr. Mandelbaum.

Mr. Mandelbaum. Well, I know; but should he not be called upon to leave with your committee a copy of their rules as to the number of grades or distinctions which are deliverable under their contract, just as we have done?

The Chairman. I understand that Mr. Thompson declined to answer simply because he did not have the data, and he said he would file them.

Mr. Glenny. He said he would do that very thing.

Mr. Sumners. Mr. Chairman, may I ask the witness one or two questions?

The Chairman. Yes.

Mr. Sumners. Mr. Thompson, you stated that as a cotton merchant you base the limit given to your salesman, your purchasers, throughout the country on the future market. Will you please explain to the committee just how you arrive at the limit that you give your purchasers throughout the country—your men 1

Mr. Thompson. Well, Mr. Sumners, I am not in that business. As I have explained before, I am in the factorage business.

Mr. Sumners. All right. Let me ask you if this is not the way it is usually done; you take the future .

The Chairman. If the witness says that he is not in that business and declines to answer a direct question, he would hardly care to answer a question that you asked after a preliminary statement, would he?

Mr. Thompson. I am willing to answer to the best of my knowledge.

Mr. Sumners. I think he can answer this.

The Chairman. I thought you were inquiring as to some future transaction.

Mr. Sumners. No, sir; this is a spot transaction about which I want to ask him.

The Chairman. Very well.

Mr. Sumners. A merchant who is in New Orleans has a man at Vicksburg who is buying cotton for him.

Mr. Thompson. Yes.

Mr. Sumners. Now, in making up that limit he has to put on so many points for transportation, does he not?

Mr. Thompson. Yes.

Mr. Sumners. Then, does he take the future quotations of the day? What future quotation does he take as a basis? You know those future quotations run over several months. What month does he take as a basis for his limit?

Mr. Thompson. He generally takes some active month, some near-by month that is active.

Mr. Sumners. Then does he figure cotton on or off that month?

Mr. Thompson. Yes; and he offers for such grades, good middling and strict middling, so much on or off March quotations. February is an inactive month. He will tell his buyer to pay so much for strict middling cotton, so many points on March.

Mr. Sumners. Does he pay more than the future quotations for March?

Mr. Thompson. For strict middling?

Mr. Sumners. I am talking about on a middling basis, for middling. Does he pay more than the future quotation for March?

Mr. Thompson. That depends.

Mr. Sumners. Now, Mr. Thompson has testified before this committee that a spinner would pay a half a cent more for a future contract provided he could get j ust the sort of cotton that he wanted on that contract. The future contract being the basis upon which the price is made to the producer, and that market being discounted 2 per cent, or half a cent a bale less, does it not to that extent injure the man who produces cotton to have the basis of his market fixed by the futures?

Mr. Thompson. Well, it is not fixed, Mr. Sumners. For convenience in calculation the merchant figures on so many points on March for a certain grade, or on the future market for a certain grade. Now, that is about, or near about, what he can buy that cotton for without any reference to the margin.

Mr. Sumners. I just wanted to know whether that was injurious

to the producer or not? Mr. Thompson. I

do not think it is, necessarily, because if futures decline, and he can not buy strict middling cotton at 25 points on, he will offer 50 points on. It does not necessarily follow that the producer has got to sell his cotton when the market goes down, because the buyer may have to come up and add sometimes 15 points on or 25 points on, and sometimes he buys the cotton at 35 points on.

TESTIMONY OF MR. EDMUND J. GLENNY, VICE-PRESIDENT OF THE NEW ORLEANS COTTON EXCHANGE.

(The witness was sworn by the chairman.)

Mr. Glenny. There are one or two points which I think have not been touched on. I am a future broker, and for that reason I may probably be considered as a buyer, but I do not have to be a future broker, and I might engage in some other cotton business without the necessity of being in the future market. The fact of the matter is that we have left out of sight entirely the safety which is held out to the cotton producer through the future market. We have not considered the basis upon which the largest consuming market in the world buvs and carries sometimes 1,000,000 and sometimes 1,500,000 bales of the southern cotton producer's product.

The Liverpool Cotton Exchange is by far the largest distributing— consuming—market in the world, and every bale of the cotton which lies in that stock awaiting the demands of the spinner is marketed through the future market. The banker, in making his loan to carry that cotton, absolutely requires that the merchant who borrows that money shall have a hedge against it in the future market. Their settlements are made but once a week, notwithstanding the fluctuations, showing the feeling of security which is engendered by the future market in the mind of the financier who lends this money; and we can hardly say that the English banker is anything but a shrewd, bright, well-informed financier. London represents the money market of the world, and in London this cotton is to a large extent marketed.

It is true that the passage of a bill like this in America would not eliminate the Liverpool market, but it would throw into the hands of the Liverpool market the very thing which Mr. Burleson complained of in regard to rates, and so forth. It is hardly natural that the man who is buying your product, particularly when he has not even the national pride or the national feeling toward the producer, should give you more for your cotton than it is worth; and in that connection I want to say that a man with whom I am very intimate, and who does a very large export business, when asked by me what would be the effect of such a bill, said: "If it were not for my friends, I would give a very large sum of money to have this bill passed through the United States House."

That is one phase of the question. Another is this: Somebody asked Mr. Thompson about the spinner taking cotton on contract. For a great many years—I will not say a great many years, but for four or five years—there was hardly a month passed over my head that I did not receive, upon the New Orleans future market, cotton which went directly to the mill, consumed by the mill and not dealt with otherwise; which went right from my office to the mill. They bought the contract in preference to the spot cotton; so that it is not an impossibility for a mill to receive cotton on contract. They did not always get the exact grades which they wanted to spin.

This matter of margins I think I explained; I do not know whether satisfactorily or not.

The Chairman. I have a question or two to ask in reference to that, when you have finished your statement. Have you anything further to say along general lines?

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