Mr. CLAYTON. It certainly should not have been done. It has been a failure and should not have been done. The best motives in the world are sometimes the most unwise.

Mr. WYLLIE. Well, Mr. Clayton, coming back again to the question I would like to ask, to emphasize your testimony of last Monday, when you gave me a list as to the various number of operations in which you and your concerns are engaged, did you intend to give them all or were there some omitted?

Mr. CLAYTON. I beg pardon. What kind of operations?

Mr. WYLLIE. For instance, you stated that Anderson, Clayton & Co. were engaged in buying and selling spot cotton; Anderson, Clayton & Fleming is a brokerage firm of which you are a member, engaged in buying and selling cotton on the New York Cotton Exchange.

Mr. CLAYTON. Yes, sir.

Mr. WYLLIE. And that Anderson-Clayton Securities Corporation, if that is the correct name, was a holding company.

Mr. CLAYTON. Yes, sir.

Mr. WYLLIE. Have you any interest in any steamship or barge lines of any kind?

Mr. CLAYTON. Mr. Wyllie, I did not attempt on that day to give all of our interests. I answered specific questions by you.

Mr. WYLLIE. That is the reason I am asking the question now, to

see if we agree.

Mr. CLAYTON. I just want to put myself clear, that I don't think I was supposed to give all interests.

Mr. WYLLIE. I am not inferring that you were. I just want to understand that we are in agreement.

Mr. CLAYTON. We have no interest in any steamship lines and never have had. We do own a barge line.

Mr. WYLLIE. And is that incorporated?

Mr. CLAYTON. Yes; it is called the River Terminals Corporation. I believe that is the name of it. They have about 20 barges and they also have some seven or eight river terminals where cotton is received and loaded on the barges.

Mr. WYLLIE. In order not to take up too much time of the committee and I notice, Mr. Chairman, it is now 12 o'clock-would you make a list of all the activities of your concerns which have any relatively important value on your cotton business?

Mr. CLAYTON. I think I can tell you-you brought out nearly all of them on Monday.

Mr. WYLLIE. I want to be careful to see that we don't omit any. Mr. CLAYTON. I don't think you asked about our cottonseed-oil mills. We own about 14 or 15 cottonseed-oil mills.

Mr. WYLLIE. Before you go into that, may I ask you the size of this barge business? What is the capitalization?

Mr. CLAYTON. I think half a million dollars.

We own 14 or 15 cottonseed-oil mills scattered over the country, and we own one small cotton mill in Texas. I don't think you asked about that.

Mr. WYLLIE. How many spindles in that mill?

Mr. CLAYTON. Eight thousand. I believe those are all that amount to anything.

Mr. WYLLIE. And the name of this mill?

Mr. CLAYTON. Houston Textile Mills.

Mr. WYLLIE. Is it correct that you are now building warehouses in Brazil?

Mr. CLAYTON. Warehouses in Brazil. We built one compress and one warehouse in Sao Paula. That is finished. I don't think we are

building any others.

Mr. WYLLIE. What was the size of that warehouse, approximately? Mr. CLAYTON. I don't remember, but I think about 60,000 bales. Mr. WYLLIE. Have you any warehouses or other physical properties in any other foreign countries?

Mr. CLAYTON. I don't recall that we have. We are building one in the Argentine. I don't recall any others.

Mr. WYLLIE. Well, I wonder if you won't study the question I asked a few minutes ago and state what your entire interest is, both at home and abroad, with reference to your cotton activities?

Mr. CLAYTON. We have a small warehouse in Mexico City under lease. But I think that covers the thing pretty well, Mr. Wyllie. I would have to write home and get the information.

Mr. WYLLIE. I don't want to do you an injustice, Mr. Clayton, and I don't want to later bring out some question which would carry the inference that you attempted in any way to avoid the question, so, therefore, I want to give you an opportunity at this time to furnish us a statement setting forth all of your activities, so that if any have been omitted we will have it in that statement.

Mr. CLAYTON. I can tell you now that you have covered every character of activity in which we are engaged. They all relate to cotton, except possibly you may not have asked about a bagging plant we have in Houston. We have a factory there that buys old secondhand bagging in different parts of the world, imported into Houston, shreds it, and respins and reweaves it into jute bagging for covering cotton bales. I think that covers every activity that we are engaged in.

The CHAIRMAN. The committee will now stand adjourned until 10:30 tomorrow morning.

(Whereupon, at 12:10 p. m., the committee adjourned until 10:30 a. m. Friday, Feb. 21, 1936.)

TO INVESTIGATE THE CAUSES OF THE DECLINE OF

COTTON PRICES

FRIDAY, FEBRUARY 21, 1936

UNITED STATES SENATE,

COMMITTEE ON AGRICULTURE AND FORESTRY,

Washington, D. C.

The committee met, pursuant to adjournment, at 10:30 a. m., in the committee room, 324 Senate Office Building, Senator Elmore Thomas presiding.

Senator THOMAS. The committee will be in order.

TESTIMONY OF W. L. CLAYTON-Resumed

Mr. CLAYTON. Mr. Wyllie, may I make a correction in yesterday's testimony?

Mr. WYLLIE. Very well.

Mr. CLAYTON. I would like to make a correction in a statement which I made yesterday regarding the consumption of cotton in the season 1934–35. I said that the consumption of American cotton was 2,000,000 bales less during that season than in the previous season, and that consumption of foreign-grown cotton was 2,000,000 bales more than in the previous season. I was speaking from memory. I have since consulted the 1935 Year Book of the New York Cotton Exchange, prepared by Mr. Alston H. Garside, who, I believe, is now recognized as the foremost cotton economist in the world, and find that the exact figures are: Consumption of American cotton in 1934-35, 2,574,000 bales less than in 1933-34, and consumption of foreign-grown cotton in 1934-35 was 2,325,000 more than in 1933–34. It may be interesting also to give the comparison with the season 1932-33. The consumption of American cotton in 1934-35 was 3,179,000 bales less than in 1932-33, whereas the consumption of foreign-grown cotton was 3,957,000 bales more in 1934-35 than in 1932-33. In other words, the world consumption of all kinds of cotton in 1934-35 was 778,000 bales more than it was in 1932-33, but American-grown cotton showed a decline in consumption in those 2 years of over 3,000,000 bales whereas foreign-grown cotton showed an increase in consumption in those 2 years of nearly 4,000,000 bales. An unbiased student of the situation cannot fail to appreciate the significance of this development in connection with the break in the cotton market on March 11, 1935. In this connection, and referring to the discussion which was had just before adjournment of yesterday's hearing, may I give the following brief quotations from report no. 1575 of this committee to the Senate on Senate Joint Resolution No. 205?

Mr. WYLLIE. Mr. Clayton, I think those things would be better reserved until after we get through with this direct examination. As we told you the other day, it will be perfectly all right to put written statements, and so forth, into the record later on, but I understood you simply wanted to correct some statements regarding figures.

Mr. CLAYTON. That was my principal desire, Mr. Wyllie, in connection with the statement, but just as

Mr. WYLLIE (interposing). I don't want you to use that as an opportunity to violate the chairman's ruling as to putting in written statements at this time.

Mr. CLAYTON. I am not putting in a written statement. This is just a memorandum that I prepared just before I left the hotel this morning, and we were discussing at adjournment yesterday as to what, if anything, could be done in the matter of preventing a recurrence of a severe decline such as you are now investigating, and I just thought it was very apropos to quote here from this report of this committee, the Senate Committee on Agriculture and Forestry. Mr. WYLLIE. We would rather have your statement at this time and let this statement from the party whom you are quoting come in later.

As I understand it, your statement is that the falling off in consumption of American cotton and the increase in consumption of foreign-grown cotton had an effect on the situation which developed on March 11?

Mr. CLAYTON. It certainly had an effect, Mr. Wyllie, but that was not the principal reason, in my opinion, for the decline. It was the unsettlement of confidence on the part of traders in the market, because of the Government interference in one way or another in the cotton business and the cotton market.

Mr. WYLLIE. I think you have covered that very well in the statement which you read.

Mr. CLAYTON. But I have just a very brief quotation here from the report of this committee, which bears directly on the subject and which I think it would be very interesting to put into the record just at this point.

Mr. WYLLIE. How long is that?

Mr. CLAYTON. It is about two short paragraphs.

Mr. WYLLIE. All right, go ahead and read it.

Mr. CLAYTON. This is a quotation from Report No. 1575 of the Senate Committee on Agriculture to the Senate, on Senate Joint Resolution 205:

The Cotton Producers' Pool sold in their operations approximately 1,300,000 bales of actual spot cotton, but replaced the spot bales to the extent of over 900,000 bales of futures contracts, a swapping or exchange transaction that has been unsatisfactory and costly in its consequences. In his testimony before this committee Mr. Johnston, manager of the pool, admitted a loss of $4,000,000 in these future contract transactions. In addition to the losses incurred in these future contract trades, the world cotton market and textile industry have been greatly disrupted by the many uncertainties and the dislocation of the normal differences between months on the various cotton exchanges. The entire cotton trade is in constant fear regarding when and how much cotton the Government will sell of their enormous holdings. When the pool is not selling, the cotton trade is fearful that they will start selling, and when the pool starts selling they are in a panic as to how much the pool is going to sell.