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such board of trade, director, officer, agent, or employee shall cease and desist from continuing such violation or violations, and if such board of trade, director, officer, agent, or employee, thereafter and after the lapse of the period allowed for appeal of such order, shall fail or refuse to obey or comply with such order, such board of trade, director, officer, agent, or employee shall be guilty of a misdemeanor and, upon conviction thereof, shall be fined not less than $500 nor more than $10,000 or imprisoned for not less than six months nor more than one year, or both. Each day during which such failure or refusal to obey such order continues shall be deemed a separate offense."

Sec. 10. The Grain Futures Act is amended by adding after section 8 (U.S.C., title 7, sec. 12) the following new section: “Sec. 8a. The Secretary of Agriculture is authorized

“(1) to issue licenses to futures commission merchants and floor brokers upon application in accordance with rules and regulations and in form and manner to be prescribed by the Secretary of Agriculture; and

* (2) to refuse to issue a license to any person if such person has violated any of the provisions of this Act or any of the rules or regulations promulgated by the Secretary of Agriculture hereunder for which the license of such person has been revoked; and

"(3) to suspend or revoke the license of any futures commission merchant who shall accept any order for the purchase or sale of any commodity for future delivery on or subject to the rules of any contract market from any person if such person has been denied trading privileges on any contract market by order of the Secretary of Agriculture under the provisions of paragraph (b) of section 6 of this Act and the period of denial specified in such order shall not have expired; and

“(4) to fix and establish from time to time fees and charges for the issuance of licenses and renewals thereof and for copies, not to exceed $10 for each such license, renewal, or copy; and

(5) to make and promulgate such rules and regulations as, in the judgment of the Secretary of Agriculture, are reasonably necessary to effectuate any of the provisions or to accomplish any of the purposes of this Act; and

“(6) to communicate to the proper committee or officer of any contract market and to publish, notwithstanding the provisions of section 8 of this Act, the full facts concerning any transaction or market operation, including the names of parties thereto, which in the judgment of the Secretary of Agriculture disrupts or tends to disrupt any market or is otherwise harmful or against the best interests of producers and consumers."

Sec. 11. Section 9 of the Grain Futures Act (U.S.C., title 7, sec. 13) is amended by

(a) striking out the word "section" and the numeral “4” and inserting in lieu thereof the following: "section 4, section 4a, section 4b, section 4c, section 4d, section 4f, section 4h, section 4i, or section 4j”;

(b) inserting after the comma following the word "Act” the following: "or who shall manipulate or attempt to manipulate the price of any commodity in interstate commerce, or for future delivery on or subject to the rules of any board of trade, or who shall corner or attempt to corner any such commodity,"; (C) striking out the words "said

section” after the words "mentioned in” and inserting in lieu thereof the words "section 4 of this Act”; and

(d) inserting after the word "deliver” the words or cause to be delivered":

ŠEC. 12. If any provision of any section of the Grain Futures Act shall be held invalid by reason of any amendment thereof by this Act, then and in that event such section, in its original form without amendment, shall continue in force and effect. No proceeding shall be abated by reason of any such amendment, but shall be disposed of pursuant thereto.

Sec. 13. This Act shall take effect ninety days after the date of its enactment.



The CHAIRMAN. The committee will be in order. Mr. Jones, we shall be glad to hear from you in connection with H.R. 9623.

Mr. Jones. Mr. Chairman and gentlemen of the committee, this bill is in effect an amendment to the Grain Futures Act which was passed some years ago.

The administration of the Grain Futures Act has developed some need for changes and for a plugging-up of some of the loopholes. This measure covers the principal grains sold on the exchanges and also includes cotton. In the main the bill, in addition to clarifying some of the provisions of the old act and giving certain powers to eliminate abuses in the system, provides that a commission composed of the Secretary of Agriculture, the Secretary of Commerce, and the Attorney General may fix trading limits on the speculative long or short side of the market. The latter is the main change in the measure as it was originally fashioned. Of course, it adds some commodities and makes this a commodity bill, so that any other commodity may be added and the bill will be applicable to it.

The two main needs for this bill are, first, the tendency of a few traders to go into extreme position in the market and cause unusual fluctuations even in normal flow of the market, and at other times they take advantage by getting together and take control of the market for the time being at least, making the market frequently more a gambling place than a marketing place. The intention was to provide an actual marketing place for commodities.

I feel that this measure is made especially important because of the apparent certainty that there will be a measure controlling the stock exchanges. There are certain men who insist upon dealing in these commodities improperly and if we have a rigid stock-exchange measure, as we apparently will have, it will make it all the more necessary that this particular field should not be left open as an invitation for those same men to switch from one to the other, improper trading and further upset the market.

Mr. SABATH. Those men are turning their gambling activities to these commodities.

Mr. Jones. At least that danger would be possible. I have talked with Mr. Hope, the leader of the minority of our committee, and we have agreed to ask the committee for 3 hours general debate and for a rule that will permit amendments, the ordinary rule making consideration in order.

Unless members of the committee wish to ask me some questions, I do not think I have anything further to say.

Mr. SABATH. I have talked to you about this matter two or three times, Mr. Jones.

Mr. JONES. Yes; that is true.

Mr. SABATH. You have doubtless read the evidence adduced as to the activities of Mr. Cutting in Chicago in connection with this matter.

Mr. JONES. Yes; we discussed that.

Mr. SABATH. Mr. Cutting, it was unmistakably shown, sold millions and millions of bushels of grain in about 20 different accounts.

Mr. JONES. He sold many millions in different accounts and he did not report the accounts as his own.

Mr. SABATH. That again bears me out in thinking that there should be a limitation or a restriction on short selling, because that, with the practices of a few others, largely brouglit about the destruction of prices of wheat, corn, barley, rye, and everything else of those kinds that those fellows could lay their hands upon. Is not that true?

Mr. JONES. There is not any question but what the market is vitally affected in that way, and abnormally affected. These markets

were established as marketing places and that is what they should be preserved for.

I have in my office some of these so-called “tipster sheets” in which short selling is urged. All the way through those sheets nothing is stressed about the price of farm products as such for the farmers, but the chance to make big money by selling short or by speculation is stressed. In other words, a good many of those men apparently do not have any conception of the purpose of the exchanges. I think a measure of this kind will be helpful to preserve the original purpose of the statute.

Mr. Sabath. How far have you gone in this bill in connection with preventing or stopping short selling?

Mr. JONES. The Commission may go to any length it wishes. It may make just such limitations as it wants to with reference to any commodity and it has the authority to stop the speculative business of those exchanges if it sees fit to do so in an emergency. It does not interfere with hedging. Mr. Kvale has just

called my attention to the newspaper dispatches of yesterday indicating that the speculators are taking advantage of the peculiar situation existing in grains now and that they are making tremendous sums at the expense of the producers.

Mr. Sabath. Just now I rather think they are shooting the prices up on account of the misfortune that has befallen the Middle West and the far West. They calculate that there will be a short crop and they are boosting prices. I have nothing against that. It is only for a few days, perhaps; and the moment they can issue an unfavorable report showing that the damage is not so great as anticipated, they will drive the market down again.

Mr. JONES. That is the way those men make money.

Mr. SABATH. And all at the expense of the farmers and the agricultural interests of this Nation.

Mr. JONES. The records show from 8 to 16 traders through the years who have been largely responsible for these tremendous fluctuations. The provision for a proper limitation and especially during an emergency will, I think, be found helpful.

Mr. SABATH. Was there any evidence adduced that the same practices are applied to lard, butter, and eggs?

Mr. JONES. There is some such evidence. I may say that 95 percent of the speculation is in grains and cotton. About 70 percent is in wheat and the principal grains and 25 percent in cotton.

This measure is so worded that from time to time additional commodities may be inserted by the use of one word. The word "commodity” is used and the bill is drafted so that with developments those commodities may be included.

The CHAIRMAN. Is the administration anxious to have this bill considered by the House?

Mr. Jones. Yes. It feels that the situation produced by the enactment of stock-exchange legislation makes this measure very desirable.

Mr. Cox. In this bill, H.R. 9623, you indulge in the practice of making declarations of fact, which is done, I presume, with the view to aiding courts or tying the hands of the courts which ultimately pass upon the bill. Some of these declarations seem to do violence to justice, reason, and commonsense. I do not think you have time to

make an exhaustive explanation. For example, in section 4 (a) you say—

Excessive speculation in any commodity, causing sudden or unreasonable fluctuations or unwarranted changes in the price of such commodity, is an undue and unnecessary burden on interstate commerce in such commodity.

That strikes me as being absured; yet declarations of fact may be necessary to support what you would do.

Mr. Jones. A somewhat similar declaration has been commented upon by the courts in passing upon other legislation. These principal grains and, as the gentlemen well knows, cotton as well go largely into interstate commerce and even into foreign commerce and whatever affects the commodity in its channels affects interstate commerce.

Mr. Cox. We are trying to justify much that is being done nowadays by saying that it is a proper exercise of power that the Congress has under the commerce clause of the Constitution. I have been hopeful that we might reach the point where we could turn and go the other way, rather than pursue the course which ultimately leads to destruction of State sovereignty in its entirety. In other words, I have been hopeful that we might reach the point where we could give the Constitution its rightful and sensible interpretation rather than apparently violate it by the exercise of a power which I do not think exists.

Mr. JONES. I am in entire accord with the position of the gentleman from Georgia; but some of these businesses have grown to such an extent that no one State has an opportunity to handle a matter of this nature. For example, in the State of Kansas an effort was made to regulate the powerful Standard Oil Co., but the officials said they would not pay any attention to such a puny authority.

Mr. GREENWOOD. Has the President given you any expression with respect to the passage of this bill?

Mr. Jones. The President has sent here two messages about this subject. In the committee report we quote from one of those messages, in which the President indicates a desire for this sort of legislation.

Mr. Cox. It is in step with what we are asked to do.

The CHAIRMAN. It is distressing that I cannot remain here, but I have just received an urgent message from the Speaker and Mr. Byrnes, the majority leader, saying they want me to join them and go to the White House at 11:15 this morning. Is there any objection to granting this rule? (After a pause there was no response.) Do you, Mr. Jones, wish to take this up next week?

Mr. JONES. Yes. I may say that Mr. Hope is here.

The CHAIRMAN. I will ask Mr. Sabath to preside during my absence. I think we should vote this matter out before we adjourn.

Mr. Cox. I think we ought to take action on this at once. This is obnoxious to me, but we will have to go on with it.

Mr. Mapes. Are you for this proposal, Mr. Hope?

Mr. HOPE. Yes. It was reported out by the Committee on Agriculture almost unanimously. I think there were two votes against it in committee.

Mr. GREENWOOD. Why not act right now? Mr. Cox. It seems to be all right and there is no objection. Mr. Smith. Mr. Jones, did your committee consider the advisability of having this act administered by the same agency that will

administer the stock-exchange act rather than by the three Cabinet members you mentioned?

Mr. Jones. We discussed that to some degree. This measure would allow the present Grain Futures Administration, which has been handling this matter for years, to handle this. The only thing that would be handled by the Commission is the matter of fixing limits. We felt that when it comes to fixing limitations over trading that we would better have the Commission do that. It is difficult to get a Commission to act so that the main features of the act would be administered by the Department of Agriculture.

Mr. Cox. This would perform the same work the Federal Reserve will perform in connection with the regulation of stock exchanges?

Mr. JONES. The same idea prevails in connection with this matter; yes.

Mr. Hope would like to make a short statement, as I understand.


IN THE CONGRESS FROM THE STATE OF KANSAS Mr. SABATH. We shall be glad to hear the gentleman from Kansas, Mr. Hope.

Mr. ĤOPE. Mr. Chairman and gentlemen of the committee, I do not want to take up your time unnecessarily, especially since you have indicated your action in connection with this subject; but I do want to concur in what the Chairman of the Agriculture Committee has said as to the need and urgency of this measure, and I hope this committee will grant the requested rule, as it has indicated it will.

As I said a moment ago, the vote in the Committee on Agriculture on this bill was almost unanimous. This bill has been given thorough consideration in the Agricultural Committee, and it is one upon which the committee agreed and considered in previous sessions. In the last Congress a bill quite similar to this was favorably considered and reported by the Committee on Agriculture, but no action was taken on it by the House.

The bill is based upon recommendations by the Department of Agriculture—the Grain Futures Administration, which has had charge of the administration of the present Grain Futures Act ever since enactment in 1922. This bill closes a gap, a good many loopholes which experience has demonstrated exist in the present act and it strengthens the act in a good many ways. It carries the provision that the proposed Commission shall have the power to impose trading limits, which it is hoped will curb excessive speculation.

I would be the last one in the world to say that we ought to close the grain exchanges. I think they are performing a very useful function, but the legitimate function of these exchanges is to furnish a market, to enable one with grain to sell to have a ready market for it.

They ought to reflect a supply and demand situation insofar as commodities are concerned. Here we have excessive speculation where traders and gamblers who have no restraint upon their activities take an active part in the markets, and it has been very clearly shown that they do prevent the operations of the laws of supply and demand. They cause violent fluctuations that are not justified by the supply and demand for a particular commodity. That is the main purpose of this legislation, namely, to prevent those unreason

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