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reason of the fact that cotton was rushed upon the market during about three months in the year it is necessary for the railroads of the country to provide for themselves a tremendous additional equipment which they must have tied up during the rest of the year. It is necessary for the banks of the country to provide a very much larger equipment; and so with the whole machinery in my section of the country. The farmers of the country would market their cotton gradually if they could. I do not mean if they financially could, because the banks of the South and the farmers of the South are able now to do it; but they do not know what to do. Take the January situation, for instance. The season opens up. The farmer has his cotton at home. The economic thing to do is to market it, say, during ten months in the year, Mr. Thompson, I believe, advocates that scheme. His cotton is worth 15 cents. He does not know what it is going to be worth next day. He does not know whether they will raid the market, as they did in January, and break it. He does not know how much higher it is going, because it is not responding to the law of supply and demand. The result is he dumps the whole crop on the o The cotton of the South went to market at about 13 cents, I believe. It was economically worth 15 cents. A great deal of that cotton was bought by European speculators. I do not know how much, but we will suppose it all was, in order that the figures may go in the record. The difference between 13 cents and 15 cents on 11,000,000 bales is $110,000,000. If that cotton had all been bought by European speculators, or by whomever it was bought, it was an economic waste of that amount in so far as producers are concerned. We believe that if these outside influences were destroyed, if the disturbing influences were destroyed, after the cotton comes in sight then its price would not break as it does now. It certainly would not if this system of hedging was not in vogue, because the men who buy cotton at 15 cents would not sell it for less than that. There are some other minor features about it, but in my judgment the most serious thing produced by the system of speculation is the disturbance of the market, which renders it impossible for the farmers of the country to apply sane business methods in the marketing of their product. I believe it is a tremendous economic loss to the whole United States. We depend on cotton for our balance of trade. I do not say that o but the amount of cotton exported is larger than the balance of trade in America. Mr. LEveR. What applies to the farmer applies to the spinner also, does it not ? Mr. SUMNERs. Absolutely. I am not in favor, Mr. Chairman, of sending cotton higher than the law of economy sends it, because it always reacts. All that the producers of this country want is a market governed by the law of supply and demand, undisturbed by such influences as are traceable to the great exchanges of the country, and I think from the national standpoint that abnormally high prices have a tendency and will have a tendency to develop large competitive territories outside of the United States for the production of cotton. As a matter of fact, with the market shot to pieces the spinner does not know what to do. It is in testimony here that hedges on the exchanges do not protect the spinner. It can not do so when

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Now, just this hedgin: the gentleme being a serio cotton is the a shirt like I fellow who fixeThese gentle that they feel to will not say to if you abolish to ieces. It is the bigg They are honeinstitution of slavand I will come every man who is abolished, in two as we know it wo temptation and to down. Operation exchange could no ence depends | go in there and bus thrive upon a distu There is nothing : man of fair inform: disturbing elements, from the producer to are too resourceful to that confessedly has who produce the cott consume it. So far as I am cone. appeared here as produ to take the chance. I what will happen. No manufacturers have a believe no manufacture the exchanges. Manui chance. I believe the the chance. The only this measure are the ino. compared with the rightin the same class. If t . their services, or find the that is the end of it. Mr. LEveR. Mr. Sumne the committee your idea. please, just how dealing in producer and the ultimate Mr. SUMNERs. Mr. Chai South with reference to the through a rate hearing in 1,

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*LBAUM. In other words, it is what you think are the

ditions dictate the price that the farmers ought to get for

Rs. I think so; yes, sir. -
hank the committee for having listened to me, and ask
ots of the New York Exchange on southern warehouses
ed as a part of my remarks.
s. Mr. Chairman, in order not to be unjust to anybody
o have this telegram go in the record. The statement
re some days ago concerning the Farmers' Elevator
Xansas City.
1AN. The Farmers' Terminal Grain Company?
3. Yes; that is the official name, I believe. This tele-
answer to the statement made before the committee,
ey ought to have a right to have it put into the record.

t this company is connected with bucket shops is absolutely untrue. organized and composed of the best citizens of the States of Kansas •luding farmers and bankers. This charge must come from Chicago y boards of trade, who are trying to prevent us from handling our thank you to give me particulars.

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ough is the same gentleman who signs the letter that
record.
(AN. Mr. Marsh, have you decided whether you care to
ent or not *
Mr. Chairman, we should like to make a very brief
ing only five or ten minutes.
AN. For the information of the committee I will state
emen representing the New York Cotton Exchange
heard in relation to the Herbert Knox Smith report,
emely anxious that Mr. Smith should be here at the
r. Smith was notified of their wishes in this respect, but
he had an engagement out of Washington that would
sible for him to appear to-day. The delegation from
n offered to return at any future day, but Mr. Smith
onse to that suggestion that he would prefer not to
he committee under circumstances which might make
there were a joint debate or anything of that sort;
tated his conclusions and had given the facts upon
I them in his official report, and did not feel that he
n to enter into any defense of that report.
ee will be very glad, however, to hear anything which
have to say for the delegation from New York.

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F ARTHUR R. MARSH, REPRESENTING THE NEW
YORK COTTON EXCHANGE,

had been previously sworn.) Mr. Chairman, I desire to say for the delegation from Cotton Exchange that we feel greatly embarrassed at which has arisen because Mr. Herbert Knox Smith, of Corporations, has declined to appear before the he time when they were setting forth our reasons for he report which the Bureau of Corporations has issued s—vol 2–10–43

the parity between futures and spots does not remain stable. the }. break in futures there is no telling where futures wo one, and spots, too, if it had not been for the fact that the eld spot cotton would not turn it loose when the market wa oś. May I ask one question, Mr. Chairma The CHAIRMAN. Yes. Mr. MANDELBAUM. As I understand you, Mr. Sumners, yo the oil and against the exchanges solely from an economic VIeW Mr. SUMNERs. Well, I would hardly state it so broadly, but ment here is based on an economic position. I do not bel the purely gambling transactions in the exchanges are ben anybody, and I would oppose it personally on that ground. r. MANDELBAUM. But you oppose it from an economic view 3 Mr. SUMNERs. Yes. Mr. MANDELBAUM. I took your whole argument that way Mr. SUMNERs. That is the only argument I can make he Mr. MANDELBAUM. I have no further questions to ask, M Ina Il. Mr. SUMNERs. That is the whole proposition. Mr. LEVER. But your idea is that there is a great deal of transactions carried on on the exchange? Mr. SUMNERs. Yes. Personally I should oppose it on th and I think the congressional committee in determining a that sort, just like the courts of the country did in the lou would go much farther and much quicker when they find can, as the darky said, “kill two birds with one stone,” an a great gambling institution as well as protect interstate c. r. MANDELBAUM. You stated that cotton ought to be by economics and that it is worth 15 cents at the present * Mr. SUMNERs. I believe that. Don't you ? * Mr. MANDELBAUM. It does not make any difference what or what you believe. You base it on your economic resourc must base it on something. You stated those words your Mr. SUMNERs. Yes. Mr. MANDELBAUM. Now, on what do you base that? Mr. SUMNERs. That is a pretty long story. Mr. MANDELBAUM. You base it on the price it is selling fo must base it on something. Mr. SUMNERs. Do you want me to answer? If you d answer. Mr. MANDELBAUM. Yes. Mr. SUMNERs. I believe— Mr. MANDELBAUM. It is not what you believe. The qu What do you base it on ? Mr. SUMNERs. You must let me answer it if you want n believe, Mr. Chairman, that it has cost the farmers of the S. year 15 cents to produce that cotton, allowing them a reason a very reasonable margin for profit. I base it on my know economic conditions in the South, and I think when they d cents for it they get very much less than the average citize United States is getting to-day for a less amount of labor.

- ! - - - - m**'. MANDELBAUM. In other words, it is what you think are the

efomic conditions dictate the price that the farmers ought to get for

act this cotton? e maso. SuMNERs. I think so; yes, sir. Mr. Chariant to thank the committee for having listened to me, and ask -- the reports of the New York Exchange on southern warehouses Summoxorporated as a part of my remarks. an econ". Brooks. Mr. Chairman, in order not to be unjust to anybody ld like to have this telegram go in the record. The statement roadly." ade here some days ago concerning the Farmers' Elevator do not at Kansas City. ges are: IRMAN. The former Terminal Grain Company? hat gro". BRooks. Yes; that is the official name, I believe. This telen econ" came in answer to the statement made before the committee, think they ought to have a right to have it put into the record.

is thus:

nt *::: that this company is connected with bucket shops is absolutely untrue. |Il

pany is organized and composed of the best citizens of the States of Kansas is to ask, #. including farmers and bankers. This charge must come from Chicago ‘ansas City boards of trade, who are trying to prevent us from handling our on. Will thank you to give me particulars. t deal of 9 S. H. McCULLough. ea Cullough is the same gentleman who signs the letter that eit on th in the record. ining a HAIRMAN. Mr. Marsh, have you decided whether you care to in the lot statement or not - they find ARSH; Mr. Chairman, we should like to make a very brief stone,” anot, taking only five or ten minutes. - ...tate on AIRMAN. For the information of the committee I will state ht to be e gentlemen representing the New York Cotton Exchange g resent: o be heard in relation to the Herbert Knox, Smith report, ep * extremely anxious that Mr. Smith should be here at the ence what me. Mr. Smith was notified of their wishes in this respect, but it resouried that he had an engagement out of Washington that would ords so impossible for him to appear to-day. The delegation from 10 ork then offered to return at any future day, but Mr. Smith that? in response to that suggestion that he would prefer not to before the committee under circumstances which might make is sellinglear as if there, were a joint debate, or o that sort; is had stated his conclusions and had given the facts upon If you he based them in his official report, and did not feel that he led upon to enter into any defense of that report. committee will be very glad, however, to hear anything which arsh may have to say for the delegation from New York.

ONY OF ARTHUR R. MARSH, REPRESENTING THE NEW
YORK COTTON EXCHANGE.

he witness had been previously sworn.) *MARSH. Mr. Chairman, I desire to say for the delegation from ow York Cotton Exchange that we feel greatly embarrassed at i. tuation which has arisen because Mr. Herbert Knox Smith, yo. ...ioner of Corporations, has declined to appear before the it of la"mittee at the time when they were setting forth our reasons for *g that the report which the Bureau of Corporations has issued

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