called his attention to this fact that these New York gentlemen on the exchange were constantly calling my attention to. He said: "I can make money on this cotton at these prices," and he backed himself with me for about 5,000 bales of cotton at 93 cents a pound. I paid for any amount of that cotton, gentlemen, 121, and for some as high as 13 cents a pound, and yet that was one of the most profitable deals I made that year. When he gave me his order for cotton I hedged myself; I bought futures in New York, sometimes in New Orleans, sometimes in Liverpool. But whenever I can figure that the future is compared to what it represents, there is where I put my hedges. I I bought those hedges, and when the time came I delivered that mill its cotton. I delivered him cotton, as I say, lots of it, when I paid 124 cents for the very cotton I sold that mill at 93 cents a pound, and was glad to do it, for lots of that cotton-13 cents for some. But I made money on it, and why? Because the light article went up; the demand was such that the light article went up faster than the heavy article. It put me in this position-speaking of this gentleman here I did not care what I paid for that cotton. I would just as leave have paid 20 cents for it. It was a matter of indifference to me; that is, in one respect. Of course, if the market had gone down I would have only made my normal profit. As the market went up, I made more than my normal profit, because, as I say, the light article went up faster than the heavy article. It put me in such a position that I was constantly in the market as a buyer. I had so many bales a month to deliver to that mill.

The other side of that question I pointed out yesterday in answer to a remark of Mr. Parker. When cotton is high I have frequently advised my mill friends, I have urged them, to buy their cotton, men who were bears; in fact, it is very rare, gentlemen, that you find a buyer of cotton who is not a bear; that is, particularly among the mill men. They are always using their utmost effort to depress the market and buy their cotton as cheap as they can, and I say that as a man who is close-I do not know any man who is closer to a great number of big mill men than myself. I am intimately acquainted with lots and lots of them, and I have their confidence, just as they have mine. The illustration I gave you yesterday of the reverse of that argument was that when they had cotton up here-I do not know whether you remember or not, but I will put it in the testimony again. I paid over 16 cents a pound for cotton I bought one day, and I would have bought more if I could have bought it on the same basis, a basis which was agreeable to me and on which I could figure a sure profit, as I thought. I bought from the firm of Weil Brothers and the firm of A. P. Loveman & Co., strictly middlingwhat we call "Group A," because there are a certain number of points in the South they call "Group A," and the rate of freight is exactly the same from the far South to any point within that group. I bought strictly middling cotton from those people at 16 cents. I did not consider it, under the situation, worth that much money, but I was able to sell futures against that cotton and did sell futures against that cotton at 16.43, and if those gentlemen over there had offered me their cotton, if I had had any evidence to show that they were reliable and had financial standing, I would have been delighted to have bought their cotton the same way, and hedged myself.

One of the gentlemen before you yesterday, Mr. Parker, in his testimony gave credit to the farmers' warehouses for the advance that took place in cotton last fall. Now, gentlemen, you will find that I asked Mr. Parker this question, if you will refer back to his testimony. I said to Mr. Parker, "Do you not believe that the largest amount of cotton was marketed in October, November, and December that has ever been marketed in your experience in proportion to the size of the crop?" You will find by referring to his testimony that he answered "Yes." Now, gentlemen, is that consistent? He gives the farmers credit for having put the price of cotton up through this warehouse system, and yet he admits he believes more cotton in proportion to the size of the crop was marketed in October, November, and December than has ever been marketed in his experience, and, gentlemen, I believe with Mr. Parker that that is a fact-that the farmers sold in October, November, and December, out of what they had to sell, more cotton than they have ever sold in history in those same three months.

I will tell you gentlemen why they were able to sell that cotton. Last spring futures in the different markets of the world-Liverpool, New Orleans, and New York-for October, November, and December, were at a basis that we could make the importers of cotton abroad a low price for their cotton, because we could buy hedges against that cotton so as to know that we could fairly well-if it is in the ability of man to figure out the value of one thing as compared to another make a reasonable profit against those sales. The result was the foreigners bought from us more heavily than they have ever bought from us in proportion to the size of a crop. Against those sales made abroad-I do not do much export business personally, but Mr. Neville, who is a very large exporter, will bear out what I am going to say, although it did apply to my business locally— I was able to sell cotton for fall shipments at a price that was very attractive to mills. When we came up to fall our commitments for cotton were large. As I said a while ago, I would just as leave pay a farmer 20 or 25 cents for his cotton if I get my small proportion of profit out of it. We force ourselves as buyers into the market to buy that cotton. The same condition, gentlemen, I will tell you, is prevailing to-day, and I believe that those people who are looking for a low price for cotton next fall are going to be sadly disappointed. You will find, if you refer to the papers, that next fall futures are selling more than 2 cents a pound under the present crop. There are lots of people-mills-who can figure a profit on buying their cotton at the prices that they can buy it at. Foreigners have to buy even further ahead than we Americans do. They have to arrange, perhaps, for their ships to come over to be loaded at the ports of Galveston, New Orleans, Mobile, Savannah, Newport News, and a lot of other ports. They are able to buy that cotton and make those shipments far ahead of time, as they are compelled to do, to a certain degree, anyhow, and to a larger degree if they can do so satisfactorily, for the reason that we do not hesitate to commit ourselves for cotton, because we can get our hedge against it. It puts us in the market as buyers of cotton, and we are glad to pay these gentlemen. It does not make any difference; it can go up. In fact, we force the market up and up and up on ourselves.

But we spot-cotton men know what that future in New York represents; we know what that future in Liverpool represents; we know what that future in New Orleans represents, and we know it has to go up, gentlemen, if spot cotton goes up, because if they keep it too low-Mr. Brooks talked yesterday about manipulation putting cotton down 5 points at a time. Gentlemen, if they put cotton down that way by manipulation-I know what cotton is worth; I have seen that sort of thing tried temporarily, but, as a cotton merchant, I will telegraph my orders to New York or New Orleans to buy some of that stuff, and there are plenty of others who will come in. Manipulation can only succeed temporarily. The law of supply and demand governs. Instead of futures governing the price of cotton it is the law of supply and demand. This future system, gentlemen, enables us to be constantly in the market. As I say, I would rather buy when I think cotton is going down than I would ordinarily. Nothing in the world is certain but death and taxes. My opinion may be that cotton is going down; my judgment, I am glad to say to you gentlemen, is right more often than it is wrong but I may be wrong. If I am right I make a trifle more, and sometimes a good deal more than my ordinary profits, as was the case in this recent market we had. On the cotton I bought at over 16 cents my profits were inordinate, but we do not have chances like that more than once in a lifetime. I do not think a chance like that has occurred

since the Sully smash.

If you were to knock the pendulum of a clock and make it swing, it would come to its balance eventually, and just so does the price of spots and futures reach its equilibrium. In this break that occurred in New York recently I sold cotton for much less than I could buy it. I told my salesmen, "Boys, call up all the mills; sell all the cotton you can. I said, "Fill the order books." They called up and we sold-in fact, we did not have to call them up; the mills called us up, and we have orders on our books running clear to August, and that cotton we sold is still owned by those gentlemen over here. But why did we sell it? Because we knew that somebody is selling something in New York for less than it was worth. As each sale was made I telegraphed my broker in New York to buy me July cotton, or buy May cotton. And right there I can probably answer the question that Mr. Sims, of Tennessee, I believe it was, asked, why did I buy May and July instead of November or February? For the reason, in the first place, that I like to get merchandise for cotton, in a certain sense, is merchandise, to me it is merchandise; it may not be to those gentlemen, but to me it is, just the same as any other merchandise, and I want to get in a position where, if I have to dump 10,000 bales on the market, or if I have to buy 10,000 bales, I can do it at probably one or maybe two points, with some infinitesimally small, fractional difference. It is astonishing, gentlemen, the execution I get sometimes on the biggest sort of orders when I go to New York, one way or the other. That market is so big that, without changing it one iota, I can oftentimes execute an order for 10,000 bales of cotton at practically no difference in price to what the quotation is as I see it on my board.

There is no day, no moment, no time, that a man can come to me with an offer to sell cotton but what I will buy it. Even after the close of the market we take our chances that the average run of the

market the year round will even itself. In other words, a man who has cotton to sell may come to me after the close of the market. I will base my offer to him on that cotton on the close of the market. If it opens up and I can get my hedge in higher, such is my profit; if it opens down, such is my loss, and on the law of averages that equals itself. If a man has 1 bale to sell he always will find me a buyer, if he has 5 bales or 500 bales. I will buy cotton in any quantity and at any time and at any price that affords me a reasonable profit. I will go so far as to say, to show you how the business is conducted, that I once made one deal of 2,000 bales of cotton on which my profit was only 20 cents a bale, but the business is so safe that, knowing that the business would go elsewhere, I actually handled the deal. In figures to-day that would amount to about $160,000. The business was absolutely so safe, I just thought, "I am not going to let that $400 go." It looks like poor business management—a $160,000 deal for $400-but it was just like picking up $400 in the street and putting it in my pocket, and if I had not made the trade some other fellow would have.

The spot cotton dealer tries to preserve a general position in the market. He may sell more cotton during the day than he has bought. He knows what his position was at the end of business the previous day. If he sells more than he has bought he buys futures to get his balance. Of course, sometimes, if it is a fractional lot, part of a hundred bales, he can not make a transaction governing that, but it is very rare you can get 30 or 40 bales long or short. But you preserve your balance through the medium of hedges.

One of the gentlemen present, Mr. Burleson, referred to a banker who claimed to have lost money in the cotton business.

Mr. BURLESON. Oh, no; he did not say he had lost it.

Mr. CONE. Yes, sir. Well, I wish to say, Mr. Chairman and gentlemen, that in all businesses we have poor business men and good business men. You can take most any business you can think of, and you can find men who will make immense successes where other men make failures. I can not conceive how a banker can lose money in cotton if he conducts his business on a business basis. In the first place, that banker will lend me money. He knows just as well as I do what cotton has closed at that day in the big markets of the world. New York is generally taken as the standard in this country. As he knows I am good for whatever I take, he will lend me within 10 per cent of the value of any cotton I want to borrow money on. If that market should go down 10 or 20 points, he will ask me to keep that ratio equal, which I will cheerfully and gladly do. If we did not have this hedge system, in the first place, I do not believe that banker would be willing to let me have within 10 per cent of the value of that cotton, because it would be hard to determine the value of that cotton. The value of cotton is a known and fixed thing. I can give you the names of more than a thousand people who can wire you right here, this minute, within one-tenth of a cent a pound the value of any grade of cotton I will ask for, which they could not do if we did not have exchanges. If we did not have exchanges, gentlemen, the banker, instead of being able to lend me within 10 per cent of the value of that cotton, would want to know that I had bought my cotton mighty cheap. I would have to insure myself. How? I would not be able to handle cotton as I did that 2,000 bales on 20 cents a bale. I would

not be able to handle cotton on 50 cents a bale. Take cotton here at 15 cents a pound: what do you think would be a reasonable figure? I think it would take at least a cent and a half a pound off. I would not buy it from the farmer unless I could get a cent a pound less than I regarded it was worth. If somebody else wanted to do the business for less than that, as a conservative merchant, I would have to stand aside. In fact, I think it would put the majority of us dealers out of business. I do not think it would put me out of business, because I think I am strong enough and able enough to gather enough together to protect myself. But it would certainly put these thousand and one little fellows, who are only too glad to make that 25 cents a bale, and whom the bankers will stand by, out of the business. There is a world of little fellows in the South, gentlemen, who can handle, with a few thousand dollars, a whole lot of cotton, simply because the banker knows this man can hedge himself.

The exchanges of the world, gentlemen, gather information, true information, as true as it is within the power of human ingenuity to gather, from all over the face of the world. They gather it from India to Peru; they gather it from Brazil to the Kongo; they gather it from Egypt to China. This information is gathered by the statisticians of the exchanges, and it is disseminated by thousands of brokers to every one interested in cotton. There is nothing that I know about cotton that anyone can not know about cotton. For instance, right this minute, if you would wire out to Major Hardy, one of the best farmers in my county, living 15 miles out of town, what the spot sales in Liverpool were this morning and what New York opened at, he could tell you. I would not hesitate to give you any odds, for I know he knows, because he calls us up on his long-distance phone right at my office, as he wants to know. He also runs a mill out there. He grinds corn and wheat, and he generally asks what cotton and wheat in Chicago are doing; sometimes asks what Liverpool is doing. We generally know what Liverpool has done before the opening in New York. He has the information right there, and everybody can know as much as I can know.

Gentlemen, if you put the exchanges out of business, who would profit? Do you see the representative of Armour of Chicago? Do you see the representative here of the biggest spot dealer in the world, George H. McFadden, of Florida, who handles over 2,000,000 bales of cotton a year? Do you see the representatives of the big mill interests of the South? I guarantee that my own brother, who buys for his different mills over 100,000 bales of cotton, if he could control me, would not have me here this minute, but he would talk to you just as Mr. Parker did yesterday. If you put the exchanges out of business, gentlemen, those men can afford to pay for information and gather it; they would do it; they could have their own men. But do you think this information would be disseminated among these gentlemen? Do you think they would have it? But even if they did have it, do you think their power as merchants would be the same as that of these other big men?

I think, gentlemen, that this question before you is more an ethical and moral question than a question of commerce. It is a question that ought to be handled by the preachers of the country, by the ministers, by those who take up questions of the right and the wrong of things. I do not defend gambling. There is gambling attached