"(c) No person shall be excused from attending, testifying, answering any lawful inquiry, or deposing, or from producing any documentary evidence, before the Secretary of Agriculture or any referee, officer, or employee designated by him, in obedience to the subpoena of the Secretary of Agriculture or any such referee, officer, or employee, in any cause or proceeding, based upon or growing out of any alleged violation of this act, or upon the taking of any deposition herein provided for, upon the ground or for the reason that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him or subject him to a penalty or forfeiture. But no natural person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing, concerning which he is compelled under oath so to testify, or produce evidence, documentary or otherwise, before the Secretary of Agriculture or any referee, officer, or employee designated by him, in obedience to the subpoena of the Secretary of Agriculture, or any such referee, officer, or employee, or upon the taking of any such deposition, or in any such cause or proceeding: Provided, That no person so testifying shall be exempt from prosecution and punishment for perjury committed in so testifying." SEC. 6. Section 9 is amended to read: "SEC. 9. Any person who shall violate the provisions of section 4 of this act, or who shall fail to evidence any contract mentioned in said section by a record in writing as therein required, or who shall knowingly or carelessly deliver or cause to be delivered for transmission through the mails or in interstate commerce by telegraph, telephone, wireless, or other means of communication, false or misleading or knowingly inaccurate reports concerning crop or market information or conditions that affect or tend to affect the price of grain in interstate commerce, or who shall violate the provisions of sections 4A to 4M, both inclusive, or who shall violate the provisions of section 5A, shall be deemed guilty of a misdemeanor, and, upon conviction thereof, be fined not more than $10,000 or imprisoned for not more than one year, or both, together with the costs of prosecution." SEC. 7. The following new sections are added at the end of section 12: "SEC. 13. The Secretary of Agriculture is authorized "(1) To determine from time to time, and prescribe by rule, regulation, or order, the grades of grain which shall be deliverable on futures contracts and shall give due notice thereof. "(2) To establish from time to time price differences at which grades other than the contract grade may be delivered on futures contracts. In fixing such price differences the Secretary of Agriculture shall give due consideration to and be guided by the actual commercial differences in the values of the several grades obtaining on the particular market and/or on other markets governed by similar conditions, but shall not thereby be precluded from making such other and further allowances in said price differences as are reasonably necessary to safeguard the interests of both buyers and sellers. "(3) To issue licenses to commission merchants and brokers and to agents and correspondents of commission merchants as provided for in section 4M hereof, such licenses to be in such form and for such periods not less than one year as the Secretary of Agriculture may determine. 66 'SEC. 14. The Secretary of Agriculture may from time to time fix and establish such fees and charges for the issuance of licenses and renewals thereof, not to exceed $10 for each license or renewal, as may be reasonably necessary to cover all or part of the cost thereof, which fees and charges shall be collected by the Secretary of Agriculture and by him covered into the United States Treasury as miscellaneous receipts." SEC. 8. The amendments designated as sections 4E, 4F, 4G, 4H, 41, 4J, 4K, 4L, and 4M in section 3 of this act and the amendment designated as section 5C in section 4 of this act shall not become effective until one hundred and eighty days after the passage of this act. The CHAIRMAN. Senator Caraway, do you desire to make a statement at this time? Senator CARAWAY. No, Mr. Chairman. The CHAIRMAN. Senator Capper, do you wish to make a statement? Senator CAPPER. No. The CHAIRMAN. I am advised that Mr. Weld, who is connected with the New York Cotton Exchange, wishes to make a statement before the committee. We will hear you now, Mr. Weld. STATEMENT OF PHILIP B. WELD, PRESIDENT OF THE NEW YORK COTTON EXCHANGE The CHAIRMAN. Will you please state for the record your name and occupation and whom you represent? Mr. WELD. Philip B. Weld, president of the New York Cotton Exchange. Mr. Chairman and gentlemen of the committee, as the representative of the New York Cotton Exchange I am appearing in opposition to the Caraway bill and the Ransdell bill. In many ways my reasons for opposing them are quite different. The CHAIRMAN. You are going to refer to the Capper proposition? Mr. WELD. I thought the Capper bill pertained simply to grain futures. The CHAIRMAN. It does. Mr. WELD. I have nothing to do with grain. We feel in the case of each legislation that at the present time it is absolutely unnecessary. We believe the proposed legislation is largely due to a lack of understanding of the essential service the cotton exchange performs and to a mistaken idea that it does some things that it does not do. There seems to be a widespread belief that the exchange makes the price of cotton and causes the price of cotton to advance or decline. This it does not do. It simply registers and concentrates in one place the world-wide demand and offerings of cotton, which two forces result in the prices recorded on the exchange. There is also a mistaken belief that the form of our contract can influence the price of cotton; that one kind of contract will depress the price, another elevate it. If this were so, one could lift himself by his bootstraps and perpetual motion machines could work successfully. The one essential and, in our opinion, very beneficial service the exchange performs is that it enables the country's cotton crop to be distributed from the farmer to the consumer at a minimum cost, a cost far less than would be the case if there were no futures market, and at a cost less than in commodities that do not have the advantages of a futures market. As to the Randsell bill, we feel that in most important essentials our present contracts conform to it. We do object to its provisions regulating the number of ports any one exchange may have for delivery, and we also object to the extra supervision by the Department of Agriculture of exchange affairs. We feel at the present time there is no need for more Government interference with business. Furthermore, there is on the House calendar an appropriation, passed by the Senate, of $75,000 to investigate the volume of futures trading, and until this report is made and carefully considered, we oppose any legislation regulating the cotton exchanges. As to the Caraway bill, it would destroy the chief beneficial functions of futures exchanges, namely, the price insurance they afford cotton merchants and mills, which price insurance enables the cotton crop to move from producer to consumer at a minimum cost. say, sir. That is all I have to Senator CARAWAY. There is nothing new in that. I have heard We could have read it from reports that for at least 15 years. that we have had before. The CHAIRMAN. Senator Capper, I believe you said that Mr. O'Neal desired to make a statement. STATEMENT OF EDWARD A. O'NEAL, PRESIDENT OF THE ALABAMA FARM BUREAU AND VICE PRESIDENT OF THE AMERICAN FARM BUREAU FEDERATION The CHAIRMAN. Mr. O'Neal, please state your full name for the record. Mr. O'NEAL. Edward A. O'Neal, president of the Alabama Farm Bureau and vice president of the American Farm Bureau Federation. Mr. Chairman, I wish to appear for my organization. I am in favor of the Capper-Dickinson bill. Our organization of farmers throughout the country is very anxious, indeed, to, as far as possible, see the success of the agricultural marketing act. In that act two of its main purposes as declared by Congress are to organize farmers into farmer-owned and farmer-controlled cooperative associations. The other main purpose is to minimize speculation in farm crops. Senator CARAWAY. Why do you want to minimize it? Mr. O'NEAL. Senator, if you will permit me to finish my statement, I think I can show you what I mean. Senator CARAWAY. No; I shall not have time. Why do you want to minimize it? Mr. O'NEAL. We realize that speculation in farm crops has been very hurtful to our program. Senator CARAWAY. In other words, you can not stabilize prices so long as some gambler runs the prices up and down? Mr. O'NEAL. No. I think that I can show that we have very little to do with prices as matters are manipulated now. Senator CARAWAY. That is what I say; you can not stabilize prices so long as some gambler runs the prices up and down. Mr. O'NEAL. That is correct. Mr. Chairman, we think there are four things covered in this bill. The bill was prepared by the distinguished Senator from Kansas, Mr. Capper, and by Mr. Dickinson in consultation with the Department of Agriculture, through Mr. Duvel, who has charge of the Grain Futures Administration. The first thing is that the Secretary of Agriculture should license the members of exchanges. The second is that there should be a limit put on short selling. Senator CARAWAY. Why do you want a limit on short selling? Mr. O'NEAL. Senator, the short-selling proposition runs away with the market. Senator CARAWAY. In other words, it hurts the market? Mr. O'NEAL. Yes. Senator CARAWAY. Then why not stop it? Mr. O'NEAL. I would be willing to go with you there if we had the machinery to handle our business so that could be done. Senator CARAWAY. That is the ultimate aim, is it? Mr. O'NEAL. Yes, sir; to let the farmer have charge of his own. market. Senator CARAWAY. You want to work down to that? Mr. O'NEAL. Yes, sir. The third point refers to the rules and regulations that are now made by the exchanges themselves. We feel that the public, the grain farmer, and the cotton farmer, tooI am a cotton farmer-should have something to say about the rules and regulations through the Secretary of Agriculture. Senator CARAWAY. Do you not think that it is very dangerous to let anybody make rules under which you live? Do you not think they should be fixed by law instead of by some man guessing? Mr. O'NEAL. I certainly do; yes, sir. The fourth point is that we feel that authority to close or suspend such exchanges should be vested wholly in the Secretary of Agriculture. Senator SMITH. Mr. O'Neal, let me ask you a question right there. Do you not think that before any remedy can be brought about the producers of these staple crops must have sufficient finance, sufficient organization, and sufficient financial support by which they can distribute their products? As it stands now within 90 days. the wheat farmer and the cotton farmer have got to find a market for the next succeeding 12 to 14 months. There is the difficulty. We thought when we set up the farm board that we had made a start through which we could manage our wheat and cotton; without any reference whatever to any of the machinery, we would concentrate through this avenue and distribute our stuff pretty much according to our idea of the law of supply and demand and at a reasonable price. We can not control the people who are going to buy unless we can control the thing that we are going to sell. So long as we have no control over our processes of selling we can not control the processes of buying. You have to seek first the Kingdom of God and all of these things will be added unto you. We must get down to where we have sufficient power over the thing we produce to control the price. That is essential. You know and I know that if we had 80 or 90 per cent of the wheat and cotton under the control of our own organization they could speculate until their heads fell off, but when they eat bread or use war cotton they would eat bread at our price or use war cotton at our price. We were hoping that through the establishment of the farm marketing act we would make a beginning. It looks like we have not done that. The CHAIRMAN. Opinions differ on that. Let us get back to the bill. Mr. O'NEAL. I was on my fourth point. In this bill we feel that the Secretary of Agriculture should have charge. That is in the bill. We feel that he should be able to close exchanges when they do not act right and that he should be able to initiate some of the rules. I understand that now the rules are initiated by the exchange themselves. Mr. Chairman, generally speaking, I think that covers the four principal things in the bill. I just want to say this, that as a background to my statement is this fact: We have got about two and a half million wheat farmers in this country and we have 14 contract grain markets, those of 14 contract grain markets having about 5,500 members. Now, what are 2,500,000 farmers going to do against 5,500 men on the grain exchanges? The figures show that our wheat crop of 1930 was 80,000,000 bushels of wheat, and that the exchanges handled 25 times the actual wheat produced. What, if you please, are 2,000,000 cotton farmers going to do against 900 members of the New York and New Orleans Cotton Exchanges? I believe also that Chicago has the name of dealing, but not much. Senator CARAWAY. They sell more cotton than we grow. Mr. O'NEAL. I did not know that, but there are about 900 members against 2,000,000 cotton farmers. Senator NORRIS. Mr. O'Neal, may I ask you a question regarding an important point there? Mr. O'NEAL. Yes, Senator. Senator NORRIS. Í am not at all out of sympathy with what you want to do, but you want to get this power to make the rules to close the exchanges and put all of that power in the hands of the Secretaries. Of course, we all know that the Secretary of Agriculture, like all other heads of departments, known as the Cabinet, are so often appointed for political purposes and to pay political debts; and, while I am not ascribing to them any bad intentions whatever, you might get a Secretary of Agriculture who would not know very much about this question. He would have to study and practice and get experience for four or five years before he would be able to express an opinion, and by that time there would be a change of administration. Has your organization ever given consideration to that? Could we not devise a better plan and place it in the hands of some one who would be better qualified to carry it out? Mr. O'NEAL. I am very glad, indeed, that you asked that question, Senator. There has been some criticism of this bill of Senator Capper's, due to the fact that it went into a great deal of detail. The reason for that detail is this: As you know, the country is full of lawyers. Senator CARAWAY. No; attorneys. Mr. O'NEAL. Attorneys; that is right, Senator. The country is full of attorneys trying to make up their minds what the law is on this and what the law is on that and what the law is on the other. In this bill we are laying down, if I may be pardoned for using the term, a decalogue in grain trading. Senator CARAWAY. It comes back to this: If short selling is an evil, then why temporize with it? You do not say that murder is an evil, but people are still being killed and we will not make it against the law for the next 50 years in the District of Columbia. What is the purpose? If you are trying to reach something, why do you not reach it? Mr. O'NEAL. Well, it is hard to change the thing entirely at just one sweep. Senator CARAWAY. Do you believe that the grain exchanges are manipulated? Mr. O'NEAL. Yes, sir. Senator CARAWAY. Then they are not manipulated in favor of the grower, are they? Mr. O'NEAL. Assuredly not. Senator CARAWAY. That is an evil, then, is it not? |