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Mr. MORRIS. Mr. Brooks, I understood you to say a while ago that you were present at the international convention in Atlanta?

Mr. BROOKS. Yes, sir.

Mr. MORRIS. Do you remember, Mr. Brooks, that a gentleman from the exchange in New York came before the committee of the farmers' union in Atlanta?

Mr. BROOKS. Yes, sir.

Mr. MORRIS. Do you remember what that gentleman said relative to the number of bales of cotton that was handled on the New York exchange annually?

Mr. BROOKS. I think I do.

Mr. MORRIS. What was it?

Mr. BROOKS. I think he said about 70,000 bales.

Mr. MORRIS. I mean futures?

Mr. BROOKS. I think he said-my recollection is about 100,000,000 bales; I am not sure.

Mr. MORRIS. Do you remember when he said that, Mr. Brooks, that a gentleman from South Carolina, a member of our organization, asked him what it cost annually to carry that 100,000,000 bales of cotton, the dealings there?

Mr. BROOKS. No, sir; I do not remember his answer.

Mr. MORRIS. You do not remember the amount?

Mr. BROOKS. No.

Mr. MORRIS. Do you remember him saying anything about three hundred millions of dollars?

Mr. BROOKS. Unless I remember the exact answer I would not like to give you an answer.

Mr. MORRIS. I think I can bring the gentleman's mind to this proposition if I can lead him up to it.

Mr. BROOKS. I think I see the point you are driving at, but I think there are others who will appear before the committee that will be able to give this information.

Mr. MORRIS. Do you remember that he told us who paid that loss? Mr. BROOKS. Yes, sir.

Mr. MORRIS. Tell the committee, please.

Mr. BROOKS. I think his expression was "The unfortunate speculator, and the fool that dealt with him;" I think that was the expression.

Mr. WEISSE. I am a manufacturer; and as the gentleman from New York seems to make an awful point about futures and the part that Wall Street takes in regard to the prices, I would like to ask, in the panic of 1907-I am addressing this to Mr. Brooks or the gentleman from New York

The CHAIRMAN. Mr. Brooks is on the stand now, Mr. Weisse.

Mr. WEISSE. I would like to ask a question for information, what the prices of cotton would have been if Wall Street would have depended entirely on their resources and if the Treasurer of the United States had not helped them out in 1907 ?

The CHAIRMAN. I think an answer to that question would only be a matter of opinion, and we are only trying to elicit information. Mr. NEVILLE. You referred yesterday to States that had passed antioption laws, and said that such laws had driven bucket shops out of existence. Are there any bucket shops in any of those States to-day?

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Mr. BROOKS. I am not positive that there are no bucket shops in any of those States; I know they have been driven out of my own State, and I understand they have been driven out of other States. Mr. NEVILLE. There is one in Charlotte, N. C., to-day, if you want to know.

Mr. BROOKS. Is that right? I didn't know it.

TESTIMONY OF MR. D. J. NEILL, OF TEXAS.

(The witness was sworn by the chairman.)

Mr. NEILL. Mr. Chairman and gentlemen, my name is D. J. Neill. I am the representative from the Farmers' Union of Texas. I was formerly its president. The only official connection that I have with the organization now is as its representative here. I want to say to you gentlemen that our organization in our State has 5,075 local unions; we have 160 county unions; we have 321 warehouses in that State. Our organization universally is against the New York exchange. The legislature of Texas blotted out the bucket shops in that State three years ago, the thirty-first legislature. The exchanges sought to repeal the law by the introduction of a bill in the senate and house, but they found no man in either branch of the legislature who would move to take the proposition up in the committees at all. You take our State, and to-day its eyes are turned toward Washington; the farmers of that State are expecting at your hands and the hands of Congress some kind of legislation along the lines demanded by the farmers.

Now, then, gentlemen, I am from one of the largest cotton producing sections in the South. Our State makes, on an average, three and a half million bales; we have made as much as four and one quarter million bales in a year. You take our people and we have been doing what we could to counteract the influences of the exchanges; we have gone along and built our warehouses; we have adopted our central selling agencies plan; we have made arrangements at Galveston for the handling of our cotton; we can borrow money on our cotton at a low rate of interest, and our people are not called upon at all to hedge their cotton. We have handled several hundred thousand bales of cotton at Galveston, and I believe that we have several thousand bales now in that city. We have two cotton exchanges in the State of Texas, one located at Galveston and the other at Houston; there are no future deals made upon those exchanges; there is a spot price made up in the exchange and sent out to the people of the State; our warehouses get those prices; some of them get it every morning and some of them twice a week. Now, our people in Texas are prepared for the exchange, and our people feel that if the New York and New Orleans exchanges are blotted out it will not affect our people in that State.

Now, gentlemen, as to the threat that was made here yesterday, that if you passed a bill eliminating this hedging proposition the cotton broker would have to retire from business; that same threat was made in our capital city when our bills were pending; they threatened to go out of business; they predicted all kinds of calamities, and they said that the farmers were going to play into the hands of the spinners. I want to say to you gentlemen that the calamity did not come; the broker was just as eager to buy our cotton after the passage of that law as he was before, and but very

few, as I understand, left our State at all. I have just called to mind two of the gentlemen who left, and they went up to New York and became lambs in the hands of the exchange.

The CHAIRMAN. Would it interrupt you to ask you a question there? Had it been the practice of these brokers to hedge in the bucket shops of Texas?

Mr. NEILL. Well, now, I do not know; I do not know whether they hedged there or not. But, Mr. Chairman, in addition to the bucket shops there were a number of branches of the big affair in New York, and it was a practice, whenever they wanted to hedge, to go to these branches and send a telegram over to New York City. The CHAIRMAN. I was attempting to develop the fact whether or not after these bucket shops were legislated out of existence in Texas the brokers abandoned the practice of hedging or whether they simply transferred their hedging to the New York or New Orleans exchanges? But, perhaps, you don't know that?

Mr. NEILL. Well, I do not know; no, sir.

Mr. MCLAUGHLIN. You spoke of the exchanges that are now in business in Texas; are the prices that are given out practically a reflection of the prices given previously in the exchanges in New York?

Mr. NEILL. I understand that the price that is given out by the Galveston Exchange is made upon the average of the spot sales; I understand that that is the case, that it is an average of the spot sales made in that city.

Mr. HAWLEY. You mean for the committee to take that as a statement of fact?

Mr. NEILL. Yes, sir. Now, you take these prices as registered by the Galveston Exchange, and for any number of dates last year it shows almost universally a higher price than New Orleans, where there is no restriction at all; there are a few exceptions; but it has shown a higher price, and the people of Texas have been benefited by the passage of the antioption law in that State. Now, I want to say to you gentlemen that the farmers of my State have been prostrated by the fluctuations of the cotton market; it is destroying the business of the farmers, and I want to say that he is an earnest seeker of relief; we must have relief; our markets have been running up just like sledge hammers and it has largely destroyed the stability of the farmers' business, it has destroyed the business of the merchant because his business is closely connected with that of the farmer; not only that, but it has affected the banks of our State. The farmer wants, gentlemen, stability of market; if it is 8 cents he wants 8 cents; if it is 10 cents give us 10 cents, but this thing of running up and down has unhinged him. I want to say to you that it has largely prostrated the farmers of our country. We feel, down in Texas, that prior to the passage of the Texas law we had no protection; we feel that the fluctuations in the market have largely destroyed actual speculation in cotton; we feel that way and feel again that the prices made in New York, telegraphed to our State, have enabled the cotton men there to form a trust, to the utter destruction of competition, and the only competition that has come to our people at all has been forced upon the cotton brokers by our organization.

Now, in 1907 and 1908 we adopted in that State what we call our "Galveston plan;" we entered into an arrangement with the cotton factors in Galveston whereby we could ship our cotton to Galveston,

store it, draw money upon it, for a low rate of interest, and hold it for twelve months. When the price did not suit in the interior, our people put their cotton upon the platform and the cotton was shipped to Galveston. It had this effect, of putting the interior buyer in competition with the stock market at Galveston. Now, I do not want to take up the time of the committee, but I want to say to you that our people are asking that some law be passed that will give to that people relief; so far as we are concerned we feel that if the exchanges are blotted out our people, under their present arrangement, and their system, and their selling agency, would be able to take care of themselves. Now, we do not want this hedging proposition, gentlemen; and I want to say to you that with hedging, its weight must fall somewhere, and it is going to fall where there is the least resistance, and the least resistance has come always from the farmer of this country, and, gentlemen, it has always fallen upon his head. The broker, when he buys cotton, deducts the price of his hedging, I have been told; and in the beginning it falls upon him; now, then, the cotton broker asks protection, the manufacturers sometimes have asked protection, and, gentlemen, I want to say to you that the farmers of the South ask a square deal and nothing more; that is all we ask. Mr. LEVER. I want to ask you this question: Have you ever had this experience? You are a farmer, I presume?

Mr. NEILL. Yes, sir.

Mr. LEVER. Have you ever driven your load of cotton into your small town, the cotton market, before 10 o'clock in the day, and offered it for sale to the local buyer, who told you he could not give you a bid because he had not heard from New York?

Mr. NEILL. Yes, sir; I have had that experience.

Mr. LEVER. You have had that experience?

Mr. NEILL. Yes, sir.

Mr. NEVILLE. I understood you to say, Mr. Lever, 10 o'clock; that could not happen, because the time is different. I presume you meant 9 o'clock.

Mr. LEVER. Well, I will make it 9 o'clock; that would be 10 o'clock with us in South Carolina. What I was driving at is this: You have not been able to get a bid for your cotton from the local cotton buyer your local market until he has heard from quotations in New York? Mr. NEILL. Yes, sir.

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Mr. LEVER. You have had that experience?

Mr. NEILL. Yes, sir.

Mr. LEVER. So you feel, then, that the spot prices in the South are in a large measure entirely regulated by future prices in New York?

Mr. NEILL. Well, not so much now as it has been. You take our State, and we get the spot prices from Galveston.

Mr. LEVER. You do recognize, however, the very great influence over spots by futures?

Mr. NEILL. Yes, sir.

Mr. LEE. What does it cost to carry a bale of cotton, per month, in a modern warehouse, provided with sprinklers?

Mr. NEILL. In a warehouse in the interior?

Mr. LEE. Well, the best warehouses?

Mr. NEILL. At Galveston it costs us $1 for the first month; that includes sampling

Mr. CHAPMAN. Is that $1 per bale?

Mr. NEILL. Yes, sir; a dollar per bale; after that, 15 cents per month. in interior warehouses.

The CHAIRMAN. Is that in commercial warehouses?

Mr. NEILL. Yes, sir; in commercial warehouses at Galveston. Now, in the interior warehouses their charges are 25 cents a bale for the season; in warehouses in the State they charge, some of them, 25 cents a month, and some of them 15 cents a month, and some of them 10 cents. The warehouses throughout the State regulate their own charges, but at the ports, why, the charges are the same. Mr. CHAPMAN. Does the warehouse charge include insurance? Mr. NEILL. Yes, sir.

Mr. MENDELBAUM. What do you mean by the ports?

Mr. NEILL. Galveston.

Mr. MENDELBAUM. You mean only the port at Galveston?
Mr. NEILL. I suppose it is the same at Houston.

Mr. MENDELBAUM. It is strange that storage rates in Galveston should be four times as much as in the city of New York, where real estate is so much higher than in Galveston. I can not understand that system.

Mr. HOWELL. I understood you to say that by reason of the antioption law in Texas the producers have received a great deal of relief. Mr. NEILL. Yes, sir.

Mr. HOWELL. Well, what are the conditions in the other cottonproducing States? Have they passed similar laws?

Mr. NEILL. Some of them have; I understand Arkansas has a law similar to that of Texas.

Mr. HOWELL. If all the cotton-producing States should follow the example of Texas the evils of which you complain would be relieved to some extent, wouldn't they?

Mr. NEILL. Í think so; yes, sir.

Mr. LEE. We have the same law in Georgia, I think.

Mr. NEVILLE. Just for the sake of straightening the record may I be permitted to ask Mr. Neill a few questions? The railroad commission of Texas has prescribed that where the rate of freight on cotton is over 38 cents per 100 pounds the railroads shall pay the cost of compression out of their freight pay; isn't that so?

Mr. NEILL. Yes, sir; they do that.

Mr. NEVILLE. The common-point rate is 55 cents to Galveston and 49 cents to Houston; 38 cents is the rate at which the railroad commission makes the railroad company absorb the cost of compression? Mr. NEILL. Yes, sir.

Mr. NEVILLE. So that on a freight rate of 44 cents to Galveston the railroad companies also have to absorb the cost of compression in their rates? Now, may I ask the names of your factors in Galveston whose warehouses handle that cotton?

Mr. NEILL. We ship cotton to W. L. Moody & Co., to John D. Rogers & Co., to Bedels & Co., and also to the F. Cannon Company. Mr. NEVILLE. Your cotton is shipped to those Galveston people? Mr. NEILL. Yes, sir.

Mr. NEVILLE. So that when cotton is sent to Galveston and the freight rate is over 38 cents, compression is taken into consideration, because cotton can not leave Galveston unless it is compressed? Mr. NEILL. I think not.

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