the Chamber of Commerce of Minnesota has an imposing, powerful, and interlocking membership-the great mills of Minneapolis, the great terminal elevators of Minneapolis, the leading banks of Minneapolis, and active and wealthy politicians as members-it is pretty difficult to argue, and more than you can reasonably expect to say, that the legislature of the little State of Minnesota will be able-it never has been able yet-to legislate in a way to protect the producers in their rights. Keeping in mind, too, that Minneapolis has a local pride in her great mills, her great chamber of commerce, and great wheat industry and Duluth has also keeping that in mind, and keeping in mind the fact that these terminal cities wish to control the marketing of the two hundred-odd million bushels of wheat grown in the Dakotas and Montana and Minnesota and expect to control it through the powerful agency of the chamber of commerce, it is unreasonable to expect that the farmers, most of whom live in Dakota, who are trying to get proper legislation through the Legislature of Minnesota, will succeed. What will you say of the people in Dakota, who have no voice in the Legislature of Minnesota?

Mr. CAMPBELL. Is any further legislation necessary now to enable the officers of the State of Minnesota to make an inquiry into the conditions of which you complain, if the officers would do what they are empowered to do?

Mr. MANAHAN. That is the difficulty I suggested a moment ago, the difficulty of properly investigating the real violation of the law. The key to the situation is the pit trading, the future trading, and I say that you must investigate the boards of trade where they are located, and it is not much of value if you investigate in one State and not in the other, because you can not get to the bottom of it. You can not legislate against future trading in Minnesota alone with any success, because the same members of the chamber of commerce would operate over the wire in Chicago, and it would simply be a great boom for Chicago.

The CHAIRMAN. Do you contend that the producers have lost by this future trading, or benefited?

Mr. MANAHAN. Most emphatically I contend that they have lost. The CHAIRMAN. What do you estimate that they have lost under the circumstances that you were referring to just now?

Mr. MANAHAN. I estimate it this way—and I have studied it concientiously—and I say the loss has been stupendous to the people of the Northwest when you consider the prices that have prevailed years in Minnesota.

for

The CHAIRMAN. Have you any figures as to what that loss is annually? Or what do you estimate that it has been annually?

Mr. MANAHAN. I estimate that the Chamber of Commerce of Minneapolis and the Board of Trade of Chicago have been able to depress the price to the farmer annually, especially during the months of heaviest movement, on an average of 10 cents a bushel on most all of 200,000,000 bushels.

The CHAIRMAN. Two hundred million bushels annually?

Mr. MANAHAN. Yes; at 10 cents a bushel, one-tenth of that would be $20,000,000 annually. I believe that is absolutely so.

Mr. CAMPBELL. Do you contend that those who operate these exchanges make that $20,000,000 for themselves or their clients?

Mr. MANAHAN. I claim that it is made by the big dealers, not by the small operators, in the Chicago Board of Trade, by the great, big dealers, the big terminal elevator men, the warehousemen of Chicago, like Armour and men of that type. They are the men that rake off the biggest part of this thing and freeze out the small operators and speculators. But we have another witness here who is better qualified to speak on that than I am.

Mr. GARRETT. Cf course, in my section of the country we are familiar with the cotton-future dealing, and give more attention to that than grain dealing. What is the argument made in behalf of the -effect of the ability to "hedge" on grain?

Mr. MANAHAN. The argument is that it makes it safer for them. Mr. GARRETT. For whom?

Mr. MANAHAN. The dealer. They claim that they can sell at closer margins because of the safety. But they are not willing to prove that by the figures. When we put those men on the stand who were dealing in wheat and barley on the Chamber of Commerce in Minneapolis, I put to those dealers the proposition to produce their books, and show whether or not they made a wider margin of profit in wheat by hedging than they did in barley where they had to sell by sample only, but they did not take up my challenge. They were not willing to show by the actual figures that they made more on wheat by hedging and pit trading than they did on barley, which is sold only by sample.

Mr. CAMPBELL. What we really need, from your standpoint, then, is not an investigation by Congress, but a law enacted by Congress prohibiting dealing in futures in grain.

Mr. MANAHAN. I am inclined to think you are right about that. If we could get it without an investigation, so much the better.

Mr. CAMPBELL. An investigation can be made under the State laws of Minnesota and the books of this chamber of commerce reached, can they not?

Mr. MANAHAN. So far as the inspection rules go it may be done, but I think the inspection ought to be national, because it ought to be uniform in all places. The future trading can not be handled by any State alone.

Mr. CAMPBELL. Do we need any legislation to enable us to make an investigation?

Mr. MANAHAN. You mean an investigation to make legislation? Mr. CAMPBELL. No; any legislation to enable us to get at the books of these chambers of commerce.

Mr. MANAHAN. Oh, no; your committee would have a perfect right to make them produce their books, because it is interstate commerce. Mr. CAMPBELL. But a like committee from the Legislature of the State of Minnesota could do the same thing under the laws of the State of Minnesota ?

Mr. MANAHAN. If the lobby in Minnesota was not too powerful. For instance, let me give you an example. Last winter this investigation in the house was started by one of the representatives of the farmers, Mr. Tigen, who started an investigation in the house, and made a motion for a committee of five to investigate the chamber of commerce. The motion was carried and the committee was appointed. This committee hired me as their lawyer and we started

an investigation in the house. Then the Chamber of Commerce of Minneapolis got busy through the politicians in control of the senate and appointed another committee in the senate to investigate the chamber of commerce and the Equity Cooperative Exchange, and we were confronted with the spectacle of the house committee, representing the farmers, making an investigation, and the senate committee, with a majority of it representing the chamber of commerce, also making an investigation.

Mr. CAMPBELL. That does not differ very widely from what we have been doing here.

Mr. MANAHAN. No; and it might happen again.

Mr. CAMPBELL. I think we had a Senate committee and a House committee during this Congress investigating exactly the same. subject.

Mr. MANAHAN. Well, I do not know what the Senate committee has been doing, but I know this, that legislation is imperatively needed that is the fact that I stand upon-legislation that will give us fair inspections and grades, national inspection of grain, and which will also give us public warehouse for grain storage, and which will destroy gambling in this food product. It ought to be done away with, and prohibited, altogether by legislation. It is important in regard to cotton; it is more important in regard to wheat, in my opinion.

The CHAIRMAN. Can we not get at the facts on both sides of this controversy? You could present fully here all that you could by a full investigation?

Mr. MANAHAN. Very likely.

The CHAIRMAN. Can't we get these gentlemen to give us all the facts, their side of the controversy, in the course of several days here, and get at the facts to see whether we ought to legislate or not? Mr. MANAHAN. That is perfectly satisfactory to me.

The CHAIRMAN. I hope the hearing will proceed with that in view. Mr. MANAHAN. I believe there are men right here in this room representing both sides who are sufficiently posted. The representative of the Chicago Board of Trade and the Minneapolis Chamber of Commerce are here, or will be here, and while, of course, the producers are only represented in a sense, weakly, I believe that their side can be put up to this committee fully enough to justify legislation.

Mr. CAMPBELL. If the hearings should take that turn, would it not be proper for this committee to refer your resolution and everything connected with it, to the committee on Agriculture, which has jurisdiction in these matters?

The CHAIRMAN. We might do that later on.

Mr. MANAHAN. If it appears to the committee that this is a prima facie case it might be done later on.

Mr. CAMPBELL. This committee has no jurisdiction to report bills for legi lation.

Mr. MANAHAN. Yes; I understand that.

Now, Mr. Chairman, before I call the principal witness we have here, from Chicago, I believe, Mr. Dillon, representing the first district of South Dakota, wishes to say a few words to the committee.

Mr. LENROOT. On the theory that the chairman has just suggested, that this hearing might be conducted with a view of legislation rather

than investigation, what have you in mind for controlling the situation?

Mr. MANAHAN. Public warehouses at all great terminal points; Federal inspection and Federal grading-not supervision; that would not get anywhere. There are some bills providing for supervision, but that does not mean anything. We must have actual inspection. This would not be a very elaborate department, because there are only a few great terminals, but there should be public warehouses, where everybody would have equal show-a fair chance to store their grain at a fair rate of storage-and where it would be protected, where it would be properly inspected and properly graded. That is one thing. Then besides Federal inspection and public warehousing there should be elimination of this future trading. Let wheat sell as wheat to the men who want to make flour.

Mr. LENROOT. Now, as to wheat raised in Minnesota and shipped to Minneapolis, is it your idea that the Federal Government would have jurisdiction over that wheat for grading and inspection?

Mr. MANAHAN. No; but the Federal Government would have jurisdiction in Minneapolis at the public elevator, the public warehouse, of wheat coming from the Dakotas, where the bulk of the wheat comes from, and the effect of that would be to protect Minnesota wheat as well as Dakota wheat. It would establish a standard for all points. It will protect the man who resides in Minnesota as well as the man who resides in the Dakotas.

STATEMENT OF HON. CHARLES H. DILLON, A REPRESENTATIVE IN CONGRESS FROM THE FIRST DISTRICT OF SOUTH DAKOTA.

Mr. DILLON. Mr. Chairman, the electors of the first district of South Dakota, which I have the honor to represent, are deeply interested in the Manahan resolution.

According to the United States census of 1910, the value of the cereal crops of South Dakota in 1910 was $98,953,050. The value of the cereals produced in my district in 1909 was $38,834,946. My congressional district in 1909 produced 40,090,348 bushels of corn, 22,320,421 bushels of oats, and 8,978,002 bushels of wheat.

The farmers of my district are not satisfied with the manner in which the terminal elevators are now operated. They claim that the members of the chamber of commerce are bound by rules and regulations that prevent their open competition in the products of the farm. It is said that no outsider can buy upon samples of grain until the sale is first made to some member of the chamber, and that some members of the chamber of commerce have elevators and are making sales for themselves while acting as commission agents for the producers. The claim is generally made that the farmer is badly cheated by a system of grading and inspection, and that by comparing the amount of grain received as No. 1 and No. 2 with the amount of grain of the same grade sent out it will be found that the farmer loses millions of bushels each year.

It is also alleged that the farmer's grain is often doctored and mixed with inferior grades and the price is thus lowered to the operators; that the system of weighing is not fair to the farmer and that

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switching and demurrage fees have been charged, where no fees have been actually paid. I am also informed that the big mills in Minneapolis refuse to buy the farmer's wheat when shipped to the Farmer's Cooperative Exchange of Minneapolis, which would indicate that the large milling industry and the terminal elevators have formed a combination whereby they control local prices of the farm products. Now, Mr. Chairman, I want briefly to allude to the fight that has been going on for the last eight or ten years to my knowledge in the State of South Dakota. These farmer elevators sprung up some eight or ten years ago, and wherever one was organized we found the old elevator companies that maintained numerous elevators in the various towns, at once started to put them out of business. Their method in doing so was to lower the price where there was no competition and increase the price where competition existed. By that method they put many a farmer elevator out of business. But that time is past now, until almost every town has a farmer elevator, elevators that are conducted in the interest of the farmer. But the struggle now going on is at the terminal facilities where the farmers are unrepresented, and where their grain is not, as we think, properly weighed, and is not properly graded, and in which they are sustaining serious losses.

To my certain knowledge, I have seen in South Dakota many lawsuits growing out of this chamber of commerce in which farmers and operators have been sued. I have seen the cases tried, and I have known of cases in which those who were operating the elevators have been indicted for embezzlement for operation in futures with the grain in these elevators. Personally, I believe the trading in future options is a national disgrace, and I think the time has come in which there should be laws passed which will put it out of business.

We have here from South Dakota Hon. John E. Kelley, who was at one time a Member of Congress, in the Fifty-fifth Congress, I believe, and who is now a farmer; and Mr. S. G. Solon, of Minnehaha, men that are familiar with the subject and will go into more details than I can possibly do. I only want to express the thought, Mr. Chairman, that this committee will have a full, ample, and complete investigation of this important subject. In my country the agricultural interest is everything. The farmers have struggled along there until they have produced a magnificent State raising the immense amount of grain that I have just mentioned, and I trust that there will be no makeshift in reference to the investigation, that it may be complete and efficient, and that some remedy may be found that will give relief to the country upon these great questions.

The CHAIRMAN. Let me ask you this question. Have you ever called these things to the attention of the Attorney General of the United States?

Mr. DILLON. Not to my knowledge, no.

The CHAIRMAN. So the matter has not been before the Department of Justice, so far as you know?

Mr. DILLON. Not to my knowledge.

Mr. MANAHAN. Mr. Chairman, I will ask Mr. Greeley, of Chicago, to address you.