prices are too well sustained, and millers accordingly locate where there is little or no active trading in grain-where there is no speculation. The interests of the farmer and the boards of trade are identical. The system should be judged not by its defects, but by its excellencies. "Buying and selling for future delivery exist in all departments of trade, but are nowhere surrounded by such safeguards or attended with such beneficent results as under the rules and regulations of the Chicago board and of kindred organizations." • This beneficent method is the outgrowth of necessity, and has brought into existence the chief grain markets of the world." Without it commerce would become sluggish. Drew a beautiful picture of the benefits claimed to have been the results of the future system. Also presented a protest of the Chicago banks against the proposed legislation, the principal argument in which, that was not embraced in the preceding protest, being that to destroy this system would reduce the circulation of money when most needed to move the crops, would greatly restrict credits, owing to the uncertainty of values, would practically drive the small grain merchants from the field and concentrate the business of handling the products in the hands of wealthy corporations and syndicates of warehousemen and millers."

Proposed legislation would hamper commerce. Except for this method grain which now remains in the West in warehouses would be rushed to the seaboard, where it would depress the market because foreign buyers could beat down the prices. Speculation influences prices to some extent, temporarily, often one way and then the other, but the tendency is to sustain values. Opposes options; not permitted on the board of trade and prohibited by statute in Illinois. The future system brings more spot wheat to Chicago than would come without it. First section of the bill does not conflict with any rule of trade of the board. Would favor national law wiping out options, as thus described. Trading on Chicago Board of Trade begins at 9.30 a. m. and continues till 1.15 p. m. No record kept of trades, but a written contract required for everyone, and an actual delivery also required either of the product itself or a warehouse receipt. After close of market and until 4 p. m., in another room of same building, option trading is indulged in by many board of trade members; but, in his opinion, such trading has no influence upon the real market. Future contracts are negotiable instruments and may pass from man to man indefinitely, but they do not thereby affect the visible supply of the actual product. The reason why futures tend to sustain prices is because there are ten buyers who know there is a short interest in the market to one who is a buyer, because he believes the consumer will take the property at a higher price, and the moment a man sells property which he has not got he becomes a buyer from necessity, the best buyers being the shorts. Such influences are stronger than the depressing influence of short sales. Knows of hardly any bears who have made money as speculators, but knows of many bulls who have done so. Millers favor this legislation, because it would depress the price of wheat and create a monopoly in their favor.

[SAMUEL W. ALLERTON, of Chicago ]

For every seller there must be a buyer, and a market is made up of buyers and sellers from a great number of points. Chicago is the great central grain market of the world. Trading in futures originated in the necessity of trade, and was the natural outgrowth of the requirements of business. Trading in futures in pork was first inaugurated by the Government buying prime mess pork for future delivery during the war. Contrasted the conditions of the grain trade and the packing and milling industries in the early days prior to futures, and maintained that conditions have greatly improved in the interest of the producer and the trade generally. Risks are reduced, and prices necessarily advanced. Without future trading in the fall, when there are large receipts of grain and all has to be sold for cash, the product would go to a low price. This would be in the interest of large carriers but no one else. If farm products were confined to cash transactions prosperity would be wiped out; large combinations of capital would control all. Gave illustrations. "Intelligent speculation establishes more nearly positive values than scattered opinions, and for that reason prices based upon the average opinion of the board are nearer right than those fixed by a few individual views." Gambling in bucket shops ought to be wiped out. Futures tend to regulate values and render prices more uniform. If there was no future trading the farmers' surplus products would be a drag on the market, and would sell at low prices. They would be bought by the conservative buyer whose interest lies in depressing prices. Futures do not govern the market, but they help to maintain it. Thinks it would benefit producers to prohibit all illegitimate transactions.

[J. HENRY NORTON, of the Chicago Board of Trade.]

Argued against the bill on substantially the identical lines of Mr. Hamill and Mr. Allerton, covered the same ground as they did, and made no additional point or suggestion.

[CHARLES A. PILLSBURY, of Minneapolis, member of the boards of trade of Chicago, New York, Minneapolis, and Duluth; president of the largest elevator system in the country, and a stockholder of several others.]

Legitimate sale of wheat should be as free as the air, and legislation should only be directed against gambling in wheat. Thinks 90 per cent of the transactions on Chicago Board of Trade illegitimate. Short selling not necessary. Unknown in real estate, and in the dairy business, which overshadows every other business in the country. Large amounts of flour are sold for future delivery, but 99 per cent of it is actually delivered according to contract. The actual seller of wheat tries to sell on the top of the market; the short seller sells when the markets are weak and it will depress prices. Millers can not now lay in large stock of wheat, lest short seller may depress the market. Maintains that the large amount of short selling depreciates the price of wheat, because the supply is artificially increased. The Chicago market is put up and down on reports as to the prospects of passing this bill. That illustrates the power wielded on the board of trade, and is a strong argument in favor of the passage of some kind of a bill to restrict short selling.

"A man who owns wheat and controls it, or who is the agent, or broker, or commission agent of the men who control it, ought to be allowed to sell wheat in the freest possible manner, and the contract should be in the name of the principal-the man who is responsible-and it should be put upon the principal in the case to show, if he is called upon, that he owns or controls that amount of wheat. Any selling beyond that is illegitimate."

Thinks the world has been gradually drawing on the surplus wheat it has been carrying from year to year. Combats the idea advanced by opponents of the bill that doing away with futures would enable the milling interests to form a great trust to control the price of wheat, and says millers make more money when wheat is high than when it is low. If wheat is $1 in Chicago, which would mean 80 to 85 cents on the farm, the farmers of the Northwest would be as prosperous as the average man in a community. Never examined the Hatch bill. If some legislation is not had to stop short selling, the business will "play out" in five years, as there will not be any buyers. Chicago is the wheat center of the world. and fixes the price for the world. Futures not the sole cause of low prices; admits the financial question has something to do with it. The capacity of the elevator systems of the country probably 50,000,000 bushels. Explains that system as did Mr. Sawyer (supra). Says wheat is higher in Minneapolis than in Chicago.

[B. J. GIFFORD, of Kankakee, Ill.]

Favors the bill, and argued on the same lines as Mr. Pillsbury, who, he said, had "stolen his thunder." Replying to the argument that in times of great depression the short seller becomes an actual buyer, he said if it had not been for such short seller the chances were there would not have been a depression. Better policy not to allow any trader or dealer to make a profit out of a decline in farm products. Says the smaller men on the Chicago Board of Trade favor the bill; that they wanted legislation to prevent "the slugger from breaking the market." Says the bankers' protest of Chicago was signed at the instance of the gamblers on the board of trade, who keep deposits in the banks, and was a "sort of accommodation paper." Error in the bill under consideration, in that it fails to recognize that the owner of a contract for property should stand on the same footing as the owner of the property itself. "The right to buy property for future delivery and to sell it again before or after delivery should in no way be abridged." Referring to the "gold bill" in the early sixties, which prohibited the short selling of gold (and which was soon repealed), he said the country then was in very little trouble about the surplus of gold, and the short seller kept the price downas he does on all occasions. Says the opposition to the bill is welcome to all the help they can get ont of their reference to that legislation; it is against them. Says the short seller is the "pirate of commerce." The law should place the burden of proof upon the seller to show in all cases that a sale for future delivery was legitimate. Recommends that the provision of the bill requiring all contracts for future delivery to be in writing should be omitted. Reduce the tax to onefifth of what it is now. Made some other suggestions as to the terms of the bill, and drew a beautiful picture of conditions with the short seller eliminated.

[W. C. BROWN, of Fostoria, Ohio, representing the Isaac Harter Company, one of the largest winter-wheat mills in the country.]

Argued for the use of futures in his business as necessary for insurance purposes when his elevators were filled after harvest. Says they can thus afford to pay more for wheat, and can get more for flour in foreign countries to which they export.

[E. P. BACON, president of the Milwaukee Chamber of Commerce.]

Says the body he represents thinks a committee or subcommittee of Congress ought to travel over the country and make a full examination of all the conditions surrounding, or in anywise connected with, the system of selling property for future delivery, and says the magnitude of the agricultural interests warrants the suggestion.

Favors the system, and says it has been the outgrowth of the requirements of trade resulting from an expansion of the volume of business and the limited time in which the great bulk of the property has to be handled. One reason price of wheat has declined is the increased production of it in this country. All commodities have declined in price a corresponding extent.

[DENNISON B. SMITH, of the Toledo Board of Trade.]

Made an excellent argument, one of the best that was made, from the standpoint of futures, in favor of the system; but as the ground had been so thoroughly covered before him by other advocates of the system, there is little new to be extracted from his remarks. Says the author of the Washburn bill in the Senate and his partner represent an English syndicate of millers, who will greatly profit by the passage of the bill. Says prices to the producer were lower before the birth of the future system than they have been since. Buyer took larger risks then and the margin of profit had to be greater. Presented a protest signed by all bankers, millers, elevator men, vessel brokers, and leading insurance companies of Toledo.

[A. C. RAYMOND, of Detroit, Mich.]

This question ought to be examined by a committee of Congress, in the great trade centers, placing men under oath. Much misinformation now exists. Futures benefit the farmer by making the margin of profit to the grain dealer so much less, the latter thus being enabled to pay that much more for the grain. This system of speculating, trading in futures, stands precisely in the same relation to the grain business of the country as an insurance company to the stocks of the merchants of the country.

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[Judge WILBUR F. BOYLE, of St. Louis,]

Argued strongly against the short seller and option dealings; analyzed the first two sections of the bill and commended both; explained "puts" and the system of short selling with great particularity and completeness, and contended that the position of the bear in the market was much stronger than that of the bull, and his power much greater, because he had less to lose and more to gain, and required much less money to operate, having any day of the entire delivery month in which to make deliveries if he chose, while the bull was, of necessity, required to be ready to receive the product on every day of the month until delivery was made, if made at all, the necessary effect being to depress prices. Legitimate trading is the selling of that which one owns, not that which one does not own. * * The party who sells a thing before he acquires it is in fact * simply a gambler in that particular transaction.” Maintained that fictitious sales competed with legitimate transactions, saying: "For while there is no competition between them, so far as actual consumption is concerned, the 100 bushels (of fictions) do compete, and vigorously, with the 1 bushel (of actual grain) in regulating the market price of the article; for, when offered for sale, although the party offering it has in fact nothing to sell, there is nothing in the manner of offering it, nor in the sale itself, to suggest that the thing offered is not in actual existence and owned by the party pretending to sell. Hence these offers keep the market continually burdened with an apparent supply, and to the same extent as if it was a real and substantial product." Asserted that the great decline in the value of farm products during the last decade was attributable primarily to the system of future dealings.

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[B. J. GIFFORD, of Kankakee, Ill.]

Says section 2 of the bill should be modified so as to hold the seller, and not the broker, responsible for violations of the law, for the reason that the broker can not necessarily know when he gets an order whether the seller has a license or not. Section 1 should be amended so as not to interfere with the legitimate business of brokerage.

An additional section should be added to the bill placing the burden of proof on the defendant, in prosecutions for violations of the act, to show his good faith in making a future contract.

[Dr. C. W. MACUNE, representing the Farmers' National Alliance.]

Confined his remarks to the cotton industry. The bill will not interfere with legitimate future contracts. Futures have shortened the cotton season for marketing the crops-"squeezing it out of the farmers' hands"-thus depressing prices. They also permit large dealers to depress the market by immense offerings, and then buy in at prices which thev have made, in the meantime frightening off legitimate small investors and the mills. The expenses of the system must ultimately come out of the crop. Believes that when Liverpool wants cotton she conforms to the market of New York, but when she does not New York conforms more to her. The United States produces about three-fourths of the cotton of the world, and the best cotton, and ought to regulate the price of the product. Attributes the present low price of cotton to the tariff, the silver question, and principally to the future system, but not to overproduction. Does not believe there is or has been any overproduction. In New York there is always on hand a surplus of perhaps 10,000 to 20,000 bales of refuse cotton, commonly called "dog-tail," which is held as a menace against a man who wants to enforce a specific delivery of cotton on a future contract. They would get something that was of no account.

[Hon. J. H. BRIGHAM, master of the National Grange.]

Farmers asked for this legislation. They do not want their crop sold by some one else before it is harvested. Short sellers understand that the crop must go on the market within 2 or 3 months of the year, and they then undertake to control prices. Supply and demand have something to do with fixing the prices, but short sellers go into the market and fix prices before anyone knows what the supply will be. Does not oppose future sales where the seller has the product or has acquired the right thereto, but objects to sales of something which does not exist. A seller of an actual product has no interest in the lowering of the price after his sale, but a fictitious dealer's interest lies in depressing prices after he has sold; for that is the way he makes money. Referred to the law stopping the short selling of gold, and that gold advanced rapidly, and said the same would be true of wheat or other commodities if the short seller was put out of business. Not asking that dealings in futures be prevented, but that a man be prohibited from selling what he has not acquired the right to sell by ownership or otherwise. Prices of wheat in this country largely control the price the world over, and they would be higher but for "short selling." Legitimate dealers are afraid to pay the market price for wheat lest the "sluggers" on the Chicago Board of Trade break the market.

[L. RHONE, of the National Grange.]

Said statistics showed that during the last decade the wheat crop of the world had increased only at the rate of 4 per cent, while population had increased at the rate of 27 per cent. At the same time prices had decreased at the rate of 32 per cent; consequently some other force than supply and demand regulates prices. Argued that "short selling" was this force, and said it was an arbitrary control of prices. Opposes the sale of an article if it is not owned by the seller, even if he is able to buy it for delivery to comply with his contract. Production of rye has fallen off also. The price of grain has decreased 33 per cent during the last decade. [C. WOOD DAVIS filed a paper, the argument of which, in substance, follows.] Future sales of wheat overload the market. Suppressing short sales would make room for investment buying. Futures lower prices by reason of the amount of " phantom" products that are dealt in. "Short selling" is not necessary in order to market the crop rapidly, because it is always possible to borrow 90 per cent of the value of the wheat in the elevators, and reputable bankers say that when wheat is low the margin need not exceed 8 per cent. The only possible benefit that can be derived from it is the insurance to the dealer and brokerage

charges and resulting profits to the men employed in the business. Short selling does not increase consumption, but forces the farmer to market his crop early, thereby overloading the market. Short selling saves insurance, storage, and interest for millers, who, without it, would purchase wheat for stock and relieve the market and thus advance prices. Large sums of money from all over the country are squandered on marginal purchases which would otherwise seek legitimate channels of trade and business; and were it not for this, less money would be required to handle the crop. Corners do not benefit the farmer, because it is impossible to run a corner" while any considerable part of the crop is in the hands of the producers, and they always occur after the producers have sold their crop, or if not, they are of such short duration that the farmer is unable to avail himself of them. The board of trade could stop dealings in "puts" and "calls if they would, but they do not want to because 90 per cent of the members of the board deal in them. The real objection that members of the boards have to these dealings is that they are not so profitable as dealings on the open board, and they can not be enforced in the courts. The insurance to the dealer growing out of futures is paid, after all, by the producer, who is the real party that should reap the benefit from it. Quoted from many newspapers to the effect that the grain markets are manipulated by the boards of trade and quotations made regardless of the law of supply and demand.

The real objection of the members of the boards of trade to "bucket shops" is that they have deprived the exchanges of business that they would otherwise get. The methods of both are the same. Combated the statement that "every seller implies a buyer," and said it is not true in effect. Also combats the statement that fluctuations in prices are less violent and sudden under the future system than before, and says that even if the statement were true the result was brought about not by futures, but by the modern system of gathering statistical data as to production and supplies. Spinners desire high prices because they bring a greater percentage of profits. Futures, by depressing prices, force the producer to pay higher rates of interest when he borrows money than he otherwise would. While nominally it may be true that there are as many" bulls" as "bears "in the market, the advantage is with the "bears" always, because they need less money to operate, and only need provide for delivery on any day of the delivery month they choose, while the "bull" must be prepared to accept delivery on every day of the month. The distinction between the operations of the clearing house and the settlement of future contracts is that in the former operations there is actual money on deposit behind every check or draft, while in the latter many of the transactions are admittedly not based on actual products. The commerce of the country that is carried on without the aid of futures compared to that of futures is as 100 to 1, thus demonstrating that there is no necessity for the system.

One of the most injurious phases of this system is the advantage it gives to Europeans to beat down prices before they buy actual products, greatly to the detriment of the American farmer. Futures have a demoralizing effect upon those who deal in them, and are productive of embezzlements, thefts, the betrayal of fiduciary trusts, and other crimes of like character. Farmers do not deal in futures, as was stated before the committee.

The suppression of futures would benefit all classes of the community. "Increasing the purchasing power of the farmers will quicken all the movements of the commercial world."

Submitted table showing the extent of future sales of wheat in New York as compared with the receipts of actual grain, spot sales and exports, the ratio of the former to the latter appearing very large.

The proposed legislation will in no wise restrict legitimate commerce, but is based on the principle underlying commerce that "the owner of property is the one who shall determine its prices, and that only the owner shall exercise the right of selling it or of offering it for sale."

APPENDIX B.

DIGEST OF DEBATE IN THE SENATE ON THE ANTIOPTION" BILL.

July 11, 1892, the antioption bill was taken up in the Senate, on motion of Mr. WASHBURN, who spoke in favor of it.

He explained the essential features of the bill, pointed out that the principal opposition to it came from the professional gamblers in food products and its boards of trade, who by fraud and misrepresentation had drawn to their aid the merchant, the banker, and the business man, to a certain extent, in order to get