enactment of the Agricultural Adjustment Act
of 1933, as a result of the great depression,
it has been the duty of the Department of
Agriculture to provide price and income pro-
tection for farmers.

However, the Committee felt that it is not the
function and the role of the commodity markets
to have an impact one way or the other on farm
prices. The proper regulatory function of an
agency which regulates futures trading is to
assure that the market is free of manipulation
and other practices which prevent the market
from being a true reflection of supply and
demand. Therefore, the agency which regulates
futures trading must have a neutral role on
commodity prices. The Committee felt this
neutrality can best be maintained by a com-
pletely independent agency." 24/
supplied.]

[Emphasis

The issue of USDA regulating futures was again considered in 1978. COMEX was among the many witnesses opposing any return of jurisdiction to USDA. The COMEX statement stressed that the arguments against USDA jurisdiction were equally applicable to granting futures regulatory jurisdiction to any policy-making agency (e.g., Treasury).

"We do not share the views of those in this in-
dustry who are advocating that Congress be asked
to 'turn back the clock and return this agency
and its functions to the USDA. This makes no more
sense than for us to suggest that COMEX should be
regulated by the Treasury Department because it
trades gold and silver, or the Bureau of Mines
because it trades copper and zinc. Frankly, we
question the motives of even suggesting return of
the agency to the USDA. There are inherent dif-
ficulties in combining both national economic po-
licy and regulatory functions within one agency.
The General Accounting Office recognized this when
they recommended that a completely independent
agency would be preferable to continuation of the
agency within USDA:

24/

S. Rep. No. 93-1131, 93rd Cong., 2d Sess. 20-21 (1974).

'[A] potential conflict of duties and re-
sponsibilities might exist if the commis-
sion were located within the Department of
Agriculture, and chaired, on a permanent
basis, by the Secretary of Agriculture who
is charged by law to influence and maintain
the prices of many of the commodities traded
in the futures markets; . . . [also] the
removal of any appearance of conflict of
duties and responsibilities is necessary

to instill the fullest public confidence'." 25/
[Emphasis supplied.]

8.

Restructuring of jurisdiction over the futures markets could change Congressional oversight responsibility and negate the benefits of the experience and expertise of the agriculture committees in dealing with these markets.

The House and Senate Agriculture Committees have had long experience with the futures markets and are aware of the differences between futures trading and securities trading. In addition, during the development of the 1974 Act, and the 1978 reauthorization process, these committees and their staffs demonstrated an awareness and understanding of problems relating to the futures industry, including problems affecting the "world" commodities such as those traded on COMEX.

The importance of maintaining futures regulatory legislative oversight jurisdiction in the agriculture committees was considered when the CFTC was designed in 1974. When the Senate was considering its version of the '74 legislation, to establish an independent commission (as opposed to the House version which called for an agency within the USDA), a number of witnesses expressed concern over whether this might remove jurisdiction from the agriculture committees. One representative of a farm group commented,

"When rules and regulations are being reviewed,
we would much prefer the Senate Committee on

25/ Senate reauthorization hearings, id. note 2, at 440-41 (Statement of Lee H. Berendt), citing H.R. Rep. No. 93-975, 93rd Cong., 2d Sess., 60 (1974).

Agriculture to review the rules and regulations
prevailing on commodity exchanges than we would
the Department of Commerce, and I will be very
blunt about that, sir." 26/

The following exchange from the 1974 Senate hearings further illustrates the consideration given to committee jurisdiction by both the House and the Senate. Senator Curtis asked Congressman Neal Smith, who testified in the Senate hearings, whether any questions had been raised in the House with respect to other committees seeking jurisdiction over the legislation:

"MR. SMITH: Yes. The Commerce Committee would like to have had jurisdiction but all of the CEA bills were referred to the House Agriculture Committee because they sought to amend an existing law that sets up the CEA which is under the Agriculture Committee.

SENATOR CURTIS: I agree with that theory. I think it is really important that the Committee on Agriculture have jurisdiction because the basic purpose of this legislation is to better serve agriculture.

MR. SMITH: I don't know about the Senate rules, but under the House rules whatever committee had jurisdiction over the original bill would continue to have oversight jurisdiction over the Commission.

SENATOR CLARK: I talked with the Senate Parliamentarian about that and he certainly indicated it would fall within the jurisdiction of the Senate Agriculture Committee without any question.

We

SENATOR CURTIS: I hope that is right.
have had some experience in having committees
raid committees for jurisdiction." 27/

26/

Senate hearings on H.R. 13113, id. note 5, Part 1 at 423 (testimony of L. C. "Clell" Carpenter, Vice President, Midcontinent Farmers Association).

27/ Id. at 221-222.

Proposals to transfer part or all of the CFTC's jurisdiction to some other agency under the jurisdiction of another committee could represent just such a raid -- and if the raid were successful the benefits of the Agriculture Committees' experience and expertise would be lost.

COMMODITY EXCHANGE, INC.

AND

COMEX CLEARING ASSOCIATION, INC.

Chronology
of

Activities Relating to the Silver Market

from

September, 1979 through March, 1980

April 14, 1980