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Mr. TOBEY. How long will that be 2 years more or 4 years more?
Mr. MARSHALL. This is somewhat along the similar lines that have just been covered. It seems to me that if Mr. Cutten's activities are looked upon as resulting in a real injury to the markets of the country, from the standpoint of the farmer, and if his activities have been going on all during these months, and such activities are injurious to the market in which the farmer sells his commodity, it seems to me that this case should have received attention long before one day last March.
Dr. DUVEL. We have not any authority under the present Grain Futures Act to limit trading-Mr. Cutten or any other individual can buy a million bushels of wheat or sell a million bushels
Mr. MARSHALL (interposing). It just seems to me that you could have made this investigation, that you now say was completed in March, in less than 2 years' time, and given the information to the public, if you were going to try the case before the bar of public opinion; that could have been done much sooner.
Dr. DUVEL. Well, of course, it was not our purpose to try him before the bar of public opinion.
Mr. MARSHALL. Well, you say you have nothing else that you can do; and if that is the only way you could take action, it seems to me that could have been done sooner.
Dr. DUVEL. That is not the only thing; we have furnished the information as soon as it was available to the solicitor. And information of that kind or character is not such to which you can assign a whole army of persons to secure; it is highly confidential information, and the policy of the Department, which it has always followed, is to use every possible means to protect the operations of individual traders.
Mr. DoXEY. Dr. Duvel, if you had asked for any definite or specific appropriation to carry on this work, do you think it would have been denied?
Mr. DUVEL. Well, we have had appropriations which have been cut at times including those intended for this class of work.
Mr. Doxey. But you did not make a direct appeal to Congress for any definite sum to carry on this work.
Mr. DUVEL. As far as this case is concerned, we have gone as far as we felt justified in going with the information that we had at the time. Just as soon as we secured the necessary information, we presented it to the solicitor and he promptly arranged to go ahead with it.
Mr. Doxey. I did not want to enter into any argument, but I just wanted to know whether that was the reason, that you had been denied any request for appropriation for this purpose.
Mr. DUVEL. No.
Mr. MITCHELL. If you cannot regulate these exchanges, if it is a business that cannot be regulated, then would it not be better for the country as a whole, if they refuse to be regulated, for them to be put out of business?
Mr. DUVEL. Well, personally, I have always been a believer in the future-trading system.
Mr. MITCHELL. Do you not think there is much more harm resulting to the country as a whole than of benefit accruing under this character of procedure?
Mr. DuVEL. Well, the only way I can answer you is by saying that we have had 80 years of futures trading, and if you should, with definite legislative action, take away, at a single blow, the present system, it would leave the grain-marketing machinery in a very uncertain position.
Mr. MITCHELL. Why not let the grain producers handle it and stop all this speculation? Let it be controlled by the law of supply and demand.
Dr. DUVEL. Our position is that there are certain abuses which should be corrected and that there should be an amendment to the Federal law authorizing the Department to control those abuses so that we could deal with the persons who are responsible for such abuses.
The present Grain Futures Act is largely an act that was passed as a preliminary measure to make it possible to study the whole problem of futures trading, with some limited penalty provisions; but it does not contain the authority that is: needed.
As I mentioned at the opening of this hearing, in 1926 there were two traders who held 32.6 percent of the open contracts in the market. That was not a violation of the law. That was a detriment to the producers and to the welfare of the general public, but it was not a violation of the law.
Mr. MITCHELL. Do you think, Dr. Duvel, that during the 30 years that you have been connected with this work the American people have been injured rather than helped by this speculative system, with all of the suicides and tragedies. connected with it?
Dr. DUVEL. We have been trying to study this with a view to correcting those evils, finding some way to improve upon it. That is the reason why we are asking for this legislative authority.
Mr. MITCHELL. Yes.
Dr. DUVEL. That has not been tried. The best answer I can give to the question is that under the futures trading system grain is marketed at a lower margin of cost than any other commodity in our country. It is true that there are abuses, but this system affords a ready market to the producer. There have been many abuses, and still are, and what we are trying to do is to find an effective way of eliminating them.
Mr. MITCHELL. In a situation where the Government is loaning 45 cents a bushel on corn, and where we find, as we say today, through manipulation, corn selling at 40 cents a bushel, that means somebody is being robbed, does it not? That is just larceny, robbery, or burglary.
Dr. DUVEL. Well, Mr. Mitchell, so far as the loans that are made by the Government are concerned and the problem of the grain futures market which we are dealing with here; there is no relationship between the two. If the price continues to go down the Government will be the owner of some corn, probably.
Mr. MITCHELL. Do you not think this has a depressing effect upon the price that the American farmer is going to receive for his grain? Why not let the law of supply and demand exert itself; in the end it would not hurt the American farmer as much as this speculation.
Dr. DUVEL. I do not think it would be wise at this time to go that far.
Mr. MITCHELL. You would not justify petty larceny until grand larceny is committed?
Dr. DUVEL. No.
Mr. CHASE. In your opinion you did not have sufficient evidence in 1933 to prefer charges in the Cutten case?
Dr. DUVEL. In 1933?
Dr. DUVEL. That is the reason we presented the matter to the Solicitor of the Department.
Mr. CHASE. And the Solicitor
Dr. Duvel (continuing). And it was a question of getting a special attorney to handle it.
Mr. CHASE. Getting a special attorney?
Dr. DUVEL. Yes; because the attorneys in the Department, due to pressure of other duties, could not handle it.
Mr. CHASE. How long did that take?
Dr. DUVEL. After the special attorney was secured and it was about 30 days before he reported for duty.
Mr. CHASE. How long a time was used in securing the special attorney?
Dr. DUVEL. There were a considerable number of interviews with attorneys during that intervening time. Mr. CHASE. That was after the complaint was completed?
Dr. DUVEL. Just before the report was filed. I cannot give you the exact time.
Mr. CHASE. The date on the copy of the charges is the 9th day of April 1934. It was completed just before that?
Dr. DUVEL. The report was completed, the information was in our office, and turned over to the attorney to handle. And he went right ahead with it, and it just took the usual course through the Department.
Mr. CHASE. You stated that the attorney was Mr. Tierney? Dr. Duvel. Mr. Leo F. Tierney. Mr. CHASE. Yes. There is shown on this copy of the charges a notice for release to the press at 3:30 p. m. on April 11. Was this article released to all newspapers throughout the country?
Dr. DUVEL. Yes.
Dr. DUVEL. Released at a general press conference. I was not there, but that is my understanding of it.
Mr. Chase. So there was no point in the chairman's or my reference to the Washington Post, the article in the Washington Post
Dr. DUVEL (interposing). No.
Mr. CHASE. And an article similar to that in the Washington Post appeared in the New York Times and the Baltimore Sun?
Dr. DUVEL. Yes.
Mr. CHASE. The reason I ask is because you and Mr. Boylan seem to be somewhat at variance in your ideas; and you say that there is no connection between the Cutten case and this hearing?
Dr. DUVEL. No.
Dr. DUVEL. That came along, as I say, in the usual course. It was completed and went through the Solicitor's office and handled in the ordinary way.
Mr. CHASE. The fact that these charges were signed on April 9 and that the press release was made at 3:30 p. m. on April 11 does not indicate anything more than a coincidence?
Dr. DUVEL. The Secretary never releases information of that kind until the complaint is served; until the complaint is delivered to the individual.
Mr. CHASE. In your judgment, Dr. Duvel, the fact that these charges were preferred, that the complaint was filed, that the press conference was held, and that the release was made, and that the article appeared in the daily papers all over the United States at the same time, and in connection with the press story of these hearings which we are now holding, was merely a coincidence?
Dr. DUVEL. I think that it had nothing whatever to do with the Cutten case. If on Saturday before it was served, Mr. Cutten had decided to take a trip to Canada or some other place and could not have been reached, there would not have been any press release and nothing would have been said about it.
Mr. CHASE. Let me ask you this further question: This action against Mr. Cutten is brought under the present law, the existing Grain Futures Act?
Dr. DUVEL. Yes.
Mr. CHASE. It is an action under the present law, not under the code or under the proposed legislation, but is brought under the law that has been in effect for some time, and was in effect in 1932?
Dr. DUVEL. That is right.
Mr. DoXEY. Dr. Duvel, I do not want to prolong this discussion nor do I want to appear facetious, but who is the Solicitor in the Department, to whom you refer, that handles these matters?
Dr. DUVEL. Mr. Seth Thomas.
Mr. DoXEY. From the statement you have just made it would seem that you had some considerable difficulty in selecting or finding an attorney available to do this particular work. Is that the main reason for the delay in the action?
Dr. DUVEL. Well, he had some difficulty in securing one; there was about a 3 months' period
Mr. DOXEY (interposing). I was just wondering whether it had occurred to anyone down there, if they were anxious to get an attorney, that they could call on some Member of Congress; we could give you the names of attorneys; that was not done, was it?
Dr. DUVEL. Not so far as I know, Mr. Doxey.
Mr. Doxey. I realize that the legislative and executive branches of the Government are entirely separate and should be, but I am just suggesting this out of a spirit of cooperation, that, if you had asked me, I could have given you the names of some attorneys, some good, reliable attorneys, who could have taken action in this matter.
Mr. BOILEAU. May I ask another question?
Dr. DUVEL. May I just state further, that we brought this matter to the attention of the Solicitor and that it was handled in the regular course, and when it was put into his hands there is nothing further we could do.
Mr. BIERMANN. Well, it seems to me that most of the gentlemen on this committee are lawyers, and ought to be able to understand that matters of this kind are often dragged along for several years. I do not know why you should be so concerned about this delay.
Dr. DUVEL. I have no apology to make for the action of the Department. My only regret is that our Solicitor did not have this information before and that we were not able to complete this case so that you might have all of the facts before you today.
Mr. BIERMANN. It would take some time to complete the case anyhow,
Mr. BIERMANN. Sometimes these cases are run along for years after the lawyers get them in their hands. They cannot always dispose of them so quickly.
Mr. BOILEAU. Dr. Duvel, I do not want to have you gain the impression from the questions I have asked that I am criticizing the Department's handling of this affair. The purpose of my questions is to find out whether there is something needed to improve the law; anything that we can do so far as improving the legislation is concerned. Do you feel that the recommendation that you have made here is sufficient to enable you to correct such abuses as you feel exist, insofar as that is possible?
Dr. DUVEL. We have felt that the bill as it is written probably goes as far as we are justified in going at the present time, and that it will take care of all major abuses.
Mr. BOILEAU. And that you can prevent recurrences of these abuses?
Mr. BOILEAU. Now, under your regulations at the present time, do you have any effective way to deal with a man whose transactions exceed 500,000 bushels? I understand that he must make a report.
Dr. DUVEL. Yes. Mr. BOILEAU. Well, you have had difficulty in getting those reports, you said. Suppose that the man does not make a report, such reports as he is supposed to make under the present law; and you have had some difficulty, is that correct?
Dr. DUVEL. Getting proper reports has offered some difficulty.
Mr. BOILEAU. Yes. Now, you propose to have a limitation of say 2,000,000 bushels, under the proposed set-up; is that right?
Dr. Duvel. Well, whatever limit the Commission should arrive at; it may be 2,000,000 bushels. Mr. BOILEAU. Let us assume that it will be 2,000,000. I understand. Dr. DUVEL. Yes.
Mr. BOILEAU. Assume that the Commission puts a limitation of 2,000,000 bushels, or that you should provide such a limitation in this bill, and that an individual should exceed that limit, have you anything in this legislation that would enable you to get that information or to deal with the violator of that rule or regulation?
Dr. DUVEL. There is not anything except the present method we have of going out and getting that information from the books.
Mr. BOILEAU. Well, I understand that. Now, is there not this danger, that you are going to be faced with the same situation, same, identical situation, in this bill so far as getting that information is concerned and in determining whether there has been a violation of the rules by individuals engaging in excessive trades, above the 2,000,000-bushel limit, that you have at the present time? What assurance have you that they will not go ahead, in violation of those rules, and disregard the 2,000,000-bushel limit?
Dr. DUVEL. Nothing except that there is a provision in this bill making!it a criminal offense.
Mr. BOILEAU. That is the only difference.
Mr. BOILEAU. Is there not some way that you can suggest to get this information without all this difficulty? It seems to me that there should be some more effective means of getting these reports.
Dr. DUVEL. No more than there is a way of preventing violations of any law-for example, to keep a man from driving through a red light unless there is a policeman watching him.
Mr. BoiLEAU. Well, put a policeman on it.
Many of the commission houses cooperate with us to the fullest extent; others resist and make it difficult to secure the information. There may be, on the part of some, an honest reason for not divulging their business transactions. Some of the clearing members simply tell us not to bother them, but to go ahead and get what we need from the records. In others we have to spend much time in explaining the authority under the law, whereas the information might be secured in a few minutes.
Mr. BOILEAU. What are some of the provisions in this bill, if it should become a law, that would enable you to take action against the violator of the rule of the commission, the individual who exceeded the 2,000,000-bushel limitation? What is there in this bill providing that such acts are criminal? · Dr. DUVEL. In the present law?
Mr. BOILEAU. No; in the bill as it is now proposed.
Dr. DUVEL. Well, if they fix a limitation, a trading limit, and that is exceeded, there is a penalty provided of $10,000 fine; I think it is. Mr. BOILEAU. Just provides a fine? Dr. DUVEL. It also provides for imprisonment of from 1 to 5 years.
Mr. BOILEAU. The same as under the present act. Now, have there been any fines assessed for violation of the Grain Futures Act up to the present time?
Dr. DUVEL. No.
Mr. BOJLEAU. But so far as violations are concerned, during the 10 years that your Department has been operating under the Grain Futures Act there have been no cases tried -
Dr. DUVEL. Well, I would not say that no cases have been made involving the criminal penalty.
Mr. BOILEAU. You do not believe, to your best recollection, that during the 10 years there have been any acts that amount to a violation of the criminal provisions; that is, that have been brought to the attention of your Department?
Dr. DUVEL. Well, there are very few provisions under the present law that involve criminal offenses.
Mr. FULMER. How long will it take you to complete, Doctor? We are going to have to stop before long. · Mr. Doxey. How long would it take you if we did not ask you questions?
Dr. DuVEL. Well, most of the points have been covered. I can stop at any time you think advisable. Mr. GOODMAN. I would like to ask a question or two, Mr. Chairman. Mr. FULMER. Mr. Goodınan desires to ask you some questions, Doctor,
Mr. GOODMAN. Could the iniquities that are complained of now be reached under the code adopted by the board of trade, the grain exchanges?
Dr. Duvel. You would have the same difficulty in the code that you have under this bill.
Mr. GoodMAN. Yes; but under the code which has been signed by the exchanges and has been approved by the President, they can reach them, can they? · Dr. DUVEL. Of course, the code places no limitation upon trading. The code only increases the marginal requirements 25 percent over a certain limitation.
Mr. GOODMAN. Would not the code authority be in better position to control this matter of investigation than having it left under the Department's regulations; and those operating under the code than by trying to reach them by legislation?
Dr. Duvel. In exactly in the same position as under the law; they would have to go through the same procedure, have to deal with dummy names. I believe 114603–35—SER