TO INVESTIGATE THE CAUSES OF THE DECLINE OF COTTON PRICES MONDAY, FEBRUARY 17, 1936 UNITED STATES SENATE, COMMITTEE ON AGRICULTURE AND FORESTRY, Washington, D. C. The committee met, pursuant to call, at 10:30 a. m., in the comLittee room, 324 Senate Office Building, Senator Ellison D. Smith chairman) presiding. The CHAIRMAN. The committee will come to order. Pursuant to a resolution passed by the Senate this committee was authorized to investigate the cotton situation, particularly as it pertains to the activity of the exchanges, the immediate cause of the resolution eing introduced and passed was the break that occurred on March 11. 1935. After the investigation had been begun by those appointed by Le committee to gather the facts, it became apparent that other fluences than those suspected by the committee had, perhaps, contributed materially to the condition existing in the market, and which also contributed materially to the decline, the unusual decline March 11. The committee appointed Mr. Alfred S. Wyllie as their chief attorney, Mr. Levi H. David, and later on, after the resigLation of one who had been appointed, Mr. Pickens was appointed. These gentlemen were authorized to investigate all phases that ey thought were pertinent to this question. They have done so. Ley are now present with their findings, and I want to ask the comtee as we open this investigation to allow Mr. Wyllie to proceed hhis examination of such witnesses as he sees fit on direct exination, in order to have the record conform as nearly as possible to the questions that he will ask and the answers that are made. Later on, of course, there will be an opportunity given to examine The facts and the answers as given. It is not necessary for me to state to this committee or to those ent that there is perhaps no production in America that affects theconomic and financial life of America in a greater degree than the production of American cotton and its sale and distribution. Now, Mr. Wyllie, you may proceed as you think best. 1 STATEMENT OF ALFRED S. WYLLIE, ATTORNEY FOR THE COMMITTEE ON AGRICULTURE AND FORESTRY, UNITED STATES SENATE Mr. WYLLIE. Mr. Chairman and members of the committee, I first want to offer Senate Resolution 103, Seventy-fourth Congress, first session. This is the resolution under which this investigation was begun, and provides for an investigation into the causes of the rapid decline in the price of cotton on the cotton exchanges on or about March 11, 1935. (The resolution referred to follows:) [S. Res. 103, 74th Cong., 1st sess.] RESOLUTION Resolved, That the Committee on Agriculture and Forestry, or any duly authorized subcommittee thereof, is authorized and directed to investigate the causes of the rapid decline of the price of cotton on the cotton exchanges on or about March 11, 1935. The committee shall report to the Senate, at the earliest practicable date, the result of its investigations, together with its recommendations. For the purposes of this resolution the committee, or any duly authorized subcommittee thereof, is authorized to hold such hearings, to sit and act at such times and places during the sessions and recesses of the Senate in the Seventyfourth Congress, to employ such clerical and other assistants, to require by subpena or otherwise the attendance of such witnesses and the production of such books, papers, and documents, to administer such oaths, to take such testimony, and to make such expenditures, as it deems advisable. The cost of stenographic services to report such hearings shall not be in excess of 25 cents per one hundred words. The expenses of the committee, which shall not exceed $10,000, shall be paid from the contingent fund of the Senate upon vouchers approved by the chairman. Mr. WYLLIE. I next want to offer for the record Senate Resolutions Nos. 125 and 172, Seventy-fourth Congress, first session. These resolutions together broadened and widened the scope of our investigation so as to permit us not only to inquire into the rapid decline in the price of cotton on the exchanges on March 11 but to go further and in a general sense inquire into whether there had been any manipula tion or arbitrary influences acting upon the cotton markets, either before or subsequent to March 11, the effect of which was to preveni the orderly marketing of our crops and to prevent the operation o the law of supply and demand. (The resolutions referred to follow :) [S. Res. 125, 74th Cong., 1st sess.] RESOLUTION Resolved, That in addition to the authority conferred upon the Committee o Agriculture and Forestry, or any duly authorized subcommittee, thereof, unde Senate Resolution Numbered 103, Seventy-fourth Congress, first session, agree to March 16, 1935, the committee, or any duly authorized subcommittee thereo shall have authority to investigate, with a view to determining whether ther has been any manipulation, direct or indirect, of the cotton markets, or an undue influence thereupon in connection with the issuance or publication o cotton reports or statements, (1) the causes of the decline of the price of cotto |