i^ UV -^/ *w- -- flv* t-X ^:'u. *v ^, .^: Cornell University Library HD 9896.A5 1920b Amendments to Warehouse act.Hearings bel 3 1924 013 981 158 MENDMENTS TO WAREHOUSE ACT HEARINGS BEFORE THE COMMITTEE ON AGRICULTURE HOUSE OF KEPEESENTATIVES SIXTY-SIXTH CONGRESS SECOND SESSION PROPOSED AMENDMENTS TO THE WAREHOUSE ACT FEBRUARY 13 and 14, 1920 WASHINGTON GOVERNMENT PRINTING OFFICE 1920 Cornell University Library COMMITTEE ON AGRICULTUKB. House of Representatives. GILBERT N. HAUGEN, Iowa, Chairman. .TAMES C. MCA^^^^^^^ff^l Qf tf|^gi(f 5^^, SYDNEY ANDERSON,^innes«a. ^ " "■ gZEglEirs. CaNDUER, Mississippi. WILLIAM W. WILSON, Illlr^is. I I I ^ j. , J. THOAIAS HEffLIN, Alabama. CHARLES B. WAX!;, New iort. ' U I llVt^Ojj^g I, 5 j-jEy. Missouri. WILLIAM B. Mckinley, Illinois. JAMES YOUNG, Texas. ELIJAH C. HUTCHINSON, New Jersey. HENDERSON M. JACOWAY, Arkansas. FRED S. PURNELL, Indiana. JOHfJ V. LBSHER, Pennsylvanja. EDw7i|:^)eTOGareisR'®iknown copypFgintKp@sPtT.i©t+@Rs in MELVIN O. Mclaughlin, Nebraska. ^■' ^ clRL^^fflW^S'fates on the use of the text. J. N. TINCHBR, Kansas. J. KUHIO KALANIANAOLE, Hawaii. L. G. Haugen, Cleric. http://www.archive.org/details/cu31924013981158 CONTENTS. statement of — • Page. D. S. Murph 5 G. N. Wilber 9 H. S. Ballard 9 J. F. Walker 18 D. S. Murph (continued) 30 3 AMEA^DMENTS TO WAREHOUSE ACT. Committee on Ageicultuee, House of Eepeesentatives, Friday^ February 13, 1920. The committee met at 10 o'clock a. m. on call of the chairman, Hon. Gilbert N. Haugen (chairman) presiding. The Chaieman. Gentlemen of the committee, this meeting has been called for the purpose of hearing representatives of the Ohio, Iowa, and Michigan -wool growers associations who desire to suggest amendments to the warehouse act. The representatives of these associations were to appear this morning. I am informed that the train on which they were to arrive is late and that it may be some time before they reach here. In the meantime Mr. Murph, who has charge of this work in the depa;rtment, will make a statement. STATEMENT OF MR. DANIEL S. MURPH, SPECIALIST IN COTTON MARKETING AND WAREHOUSING, BUREAU OF MARKETS, UNITED STATES DEPARTMENT OF AGRICULTURE. Mr. MrrEPH. Mr. Chairman and gentlemen of the committee, in making a statement with reference to this matter I may say that I have no knowledge as to the purpose of this meeting of the com- mittee this morning or as to the statement that is to be made by wool growers, except as I have been able to draw some infer- ence from letters which we have had in the last few days from some of our representatives in the field. I merely want to make that plain, so as to indicate the sort of statement I am making, and the nature of the source of my information. My information is very incomplete. It seems, Mr. Chairman, from a letter which we have had, that in the wool industry it is not always entirely desirable to deliver wool only upon surrender of warehouse receipts. Just why that is, I am not entirely clear. The United States warehouse act provides that no product stored in a warehouse licensed under that act can be delivered until the receipt is surrendered. Now, for some reason it appears that in the wool business that requirement has worked some hardship upon producers, and presumably upon other people who want to store wool in warehouses and take receipts for it. Mr. McLaughlin of Michigan. Is that a requirement of the law, or your regulations? Mr. MuBPH. That is a requirerffent of the law. So that some of the wool interests, as I understand, desire to have the law amended some way or other so as to allow the delivery of the wool without the surrender of the receipt. 6 AMENDMENTS TO WAREHOUSE ACT. The Chairman. Mr. Murph, if I may interrupt you I will read a telegram, explaining what is desired by these gentlemen : Hon. G. N. Haugen, Chairman Committee on Ac/riculturc, Washington, D. C. At hearing Friday morning it Is desired to submit proposed amendments to section 18 of warehouse act. George M. Wilber. Mr. Hutchinson. Mr. Murph, I understand that the wool people want to deliver the wool without surrendering the receipt; the re- ceipt has been borrowed on, hasn't it? Mr. MxjEPH. It may be; yes, sir. Mr. Hutchinson. Then the security is gone? Mr. Murph. That is the part I am very greatly interested in hearing myself. I wanted to get information as to just what there is peculiar to the wool industry that seems to make it desirable for these people to deliver the wool without requiring the delivery of the receipt, and just what proposition they had to make that would safe- guard the receipt under those conditions. I had just that point in mind. Certainly, the receipt should be safeguarded. Mr. Hutchinson. Without a dobut. Mr. Wilson. Mr. Murph, I don't know just what you are doing in the Agricultural Department; just what your official capacity is; are you in charge of this warehouse section of the law for the wool industry ? Mr. MuEPH. I have only come into this on account of my asso- ciation with the warehouse act ; I am associated in the administration of the warehouse act. Mr. Wilson. Not as a wool expert? Mr. MuRPH. No; not as a wool expert. I may say, Mr. Chairman, that representatives of the department are now in the West holding meetings. They have been in Ohio and are now in the far West holding hearings as to the tentative regu- lations under the warehouse act with reference to wool, and I thought that this request for a hearing this morning was the result of a meet- ing held by Mr. Nixon with reference to that. Mr. Anderson. You are correct on that point. Mr. Murph. Mr. Anderson tells me I am correct. And the only information I have to give j^ou has come to us from Mr. Nixon. Our information is rather sketchy, as he would naturally expect to give us more detailed information when he reaches here. Mr. McLaughlin of Michigan. Would it help us if you told us what he said, or do you care to do that? Mr. Murph. I think I have given you the substance of what he said. I may read one or two paragraphs of his letter; they will probably state the matter a little more clearly than I have already done. [Reading] : At the hearings in Oolumljus, Ohio, on yesterday, a very interesting situation was brouglit to our attention by the officials of the Ohio Wool Growers' Asso- ciation. As you probably know, this is a very large association composed of 12,000 wool growers. Warehousing is only used as a means to an end, the particular object being to get the farmers' wool together, grade it, arrange it in even running lots, and sell it direct to the manufacturers. AMENDMENTS TO WAREHOUSE ACT. 7 Mr. Anderson. I understand that the diificulty here is this : That wool is a nonfungible product. That is the definition in the act. Mr. MtJEPH. That does not mix. Mr. Anderson. Yes. Therefore, under the act, if you put a bale of wool in the warehouse, it must be kept intact in that package, and that is where the diiBculty arises, as I understand it. Mr. Mtjrph (continuing reading) : They are especially anxious to operate their warehouse uuder the United States warehouse act. They propose to issue receipts for the wool when it is received from the farmer. The farmer is supposed to take his receipts to his local banker and borrow any money he might need until the wool is sold. Un- der their present method of business, it is impossibe to keep the wool in the warehouse until the receipts are returned. They would like to place upon the warehouseman, which is in reality the wool growers' association, the obligation of holding the wool until it is sold and then holding the money for the owners' warehouse receipts outstanding until final settlement is made with the farmer. This seems to be contrary to the Federal act and probably to the statutes of Ohio. On being told that this practice could not be followed under the Federal act they indicated their intention of going to Congress and asking that the act be amended so that the wool could be sold by. the association while the receipts were outstanding. In addition to the officials of the Ohio Wool Growers' Association, it is likely that representatives from the wool growers of Iowa and other Middle Western States will join in the demand for this amendment. After leaving Columbus, Mr. Fast has pointed out certain difficulties, which he has placed in writing. For your information, a copy of his letter is in- closed ; also I have attempted to point out another way in which it might be possible for the business to be handled. This is embodied in a letter to Mr. H. S. Ballard, attorney for the Ohio Wool Growers' Association, a copy of which is herewith inclosed. Now, Mr. Chairman, you notice that there is a reference to a letter of Mr. Fast, who is a representative of the solicitor's oifice and a legal adviser in connection with the administration of the ware- house act, and is accompanying Mr. Nixon. Mr. Fast wrote a letter to Mr. Ballard, attorney for the Wool Growers' Association, in which he pointed out that apparently cer- tain statutes of the State of Ohio might have to be amended befort warehouses could operate in that State in the manner suggested. He states that since the statutes of the State of Ohio seem to require the surrender of the receipt before delivery of the product, and since under the Federal act a licensed warehouseman would be re- quired to conform to the laws of the State of Ohio, therefore aii amendment by Congress would not be sufficient to give the growers the relief they are seeking. I can read that letter if you care to have me do so, but that is about the gist of it. , Now, Mr. Nixon, in a letter to Mr. Ballard, makes a suggestion as a basis for consideration, which, if the committee is interested, I will read — ^it is just one paragraph. The Chairman. Yes ; we will be glad to hear you. Mr. MuRPH. Then my statement will be finished, with the com- ment that Mr. Nixon is making this suggestion for consideration as a practical way to remedy the difficulty which the wool growers ex- perience without making it necessary to amend either the Federal warehouse act or the statutes of the State of Ohio. The recommenda- tion is this [reading] : Let some bank or Individual act as a bonded custodian for holding ware- house receiDts and moneys received from the sale of wool, When the allotted 8 AMENDMENTS TO WAREHOUSE ACT. wool is received at Columbus, it could be placed in the warehouse and the warehouseman could Issue a negotiable receipt for the same. This receipt -could be turned over to the bonded custodian. He, in turn, would issue to the owner of the wool a receipt for the warehouse receipt. This receipt would contain substantially the same data as the warehouse receipt and it would •state that the warehouse receipt would be held by the custodian until the wool was sold and that the money received for the wool would be held until the custodian's receipt was returned and the money then paid to the owner of the wool. The warehouseman in this way would hold the wool until it was sold. Then the custodian would surrender the warehouse receipt before the wool was shipped out of the warehouse. In this manner all of the require- ments of the warehouse act would be met and the business would be conducted in a perfectly safe manner. Mr. Anderson. Mr. Murph, evidently from what you have just read, I was in error in my statement a moment ago. I take it the difficulty here is that the wool growers' association acts both as a warehouseman and a grower? Mr. MuEPH. That is my understanding. Mr. Anderson. And then it issues a receipt and proceeds to sell the wool, making a statement on the basis of the receipt, instead of on the wool itself. Mr. MuEPH. That is my understanding. And as I said, Mr. Nixon advanced this as a suggestion which the wool growers might think it advisable to adopt, rather than to seek an amendment of Ihe statutes. Mr. McKiNLEx. Wouldn't it make it perfectly feasible for the wool growers to go to this institution as they would to a banking institution if that were done? Mr. MuEPH. It appears so. Mr. McKiNLEY. And making it unnecessarv to go to the legis- lature? Mr. Murph. Yes, sir ; I think so. Mr. Hutchinson. Mr. Murph, couldn't this warehouse company give a bond to guarantee these receipts, without changing the law? Mr. Murph. I think that that is really the kernel of the sugges- tion that Mr. Nixon made, and I think that could be done. Mr. Tin CHER. The telegram or letters refers to Order No. 57? Do you know what that is ? Mr. Mueph. No; so far as the United States warehouse act is concerned, we have not issued any order. Mr. Anderson. This refers to Service and Regulatory Announce- ment No. 57, which is evidently a tentative regulation issued by the IBureau of Markets, and on which these hearings have been held. Mr. Murph. That may be, and that is a very different matter. You see, it is only a tentative regulation, but it may be that it has lieen tentatively numbered also. I do not recall. The Chairman. Is it customary, Mr. Murph, to send men into the field to hold hearings on these regulations before they are issued ? Mr. Murph. Before any regulations are issued under the ware- house act we usually send out men to conduct hearings with the people interested in the commodity involved, to get their views. The Chairman. To what extent has that been done ? Mr. Murph. Before the cotton warehouse regulations were issued "we held hearings throughout the cotton States. The Chairman. In how many? AMENDMENTS TO WAREHOUSE ACT. 9 Mr. MuEPH. I think 10 or 12 — somewhere in that neighborhood. And the same thing was done in connection with the regulations for the grain warehouses. The Chaibman. Is that all, Mr. Murph? Mr. Mtteph. Yes, Mr. Chairman ; that is all, I think, now. The Chairman. We are very grateful to you, Mr. Murph. (And, thereupon, at 11.10 o'colck a. m., the committee recessed to meet the following morning at 10 a. m.) Committee on Ageicultuee, HOTTSE OF EePEESENTATIVES, Friday, Fehi-uary H, 1920. The committee met at 10 o'clock a. m., pursuant to recess, Hon. Gilbert N. Haugen (chairman) presiding. The Chairman. The committee will come to order. We have with us this morning representatives of the Wool Growers' Association, who desire to be heard in connection with certain amendments to the warehouse act. May we hear you first, Mr. Wilber? STATEMENT OF MR. GEORGE M. WILBER, MARYSVILLE, OHIO, CHAIRMAN EXECUTIVE COMMITTEE OHIO SHEEP AND WOOL GROWERS' ASSOCIATION. Mr. Wilbee. We have with us Mr. J. F. Walker, Gambler, Ohio, president National Fleece and Wool Growers' Association, and sec- retary Ohio Sheep and Wool Growers' Association; Mr. H. S. Bal- lard, Hartman Building, Columbus, Ohio, counsel for Ohio sheep and Wool Growers' Association; Mr. E. A. Satterly, Farmington, Iowa, vice president National Fleece and Wool Growers' Association and director Iowa Association of Wool Growers; and Mr. Louis Hork- heimer. Wheeling, W. Va., sales agent Ohio Sheep and Wool Grow- ers' Association and wool dealer. Now, Mr. Horkheimer is one of the very large wool dealers in the country. He was our agent last year in disposing of our cooperative wool at Columbus, Ohio. He was very successful. I happen to be chairman of the executive committee of the Ohio Wool Growers' Association and know of his work. With your permission, Mr. Chairman, I am going to ask Mr. Ballard to go over this matter with you, as he c^n probably get it in •fewer words than I could do. The Chairman. What ever is your wish. We will be glad to hear Mr. Ballard. STATEMENT OF H. S. BALLARD, COLUMBUS, OHIO, COUNSEL FOR OHIO SHEEP AND WOOL GROWERS' ASSOCIATION. Mr. Ballard. Mr. Chairman and gentlemen of the committee, I "^ant to express on behalf of the gentlemen who have just been named, as well as on behalf of the Ohio and Iowa Wool Growers' Associations, our appreciation of your courtesy in granting us this hearing, especially in view of the fact that it was fixed for yesterday, but owing to the nonarrival of our train we were unable to be here. 10 AMENDMENTS TO WAEEHOUSE ACT. I shall, I assure you, be as brief as possible and offer as few sugges- tions as may be necessary for you to get our viewpoint trom our ^TiJdgiit say that we are interested in the provisions of the United States warehouse act, originally approved August 11, 191b, and amended and approved July 24, 1919. The reason we are here at this time and did not appear prior to the amendment of the act or prior to its passage is because the conditions which now exist did not then exist and could not have been foreseen ; they have only arisen during the latter part of the last year, and that accounts for our failure not to have been before you at some former time. I might say, by way of preface, that the Ohio Wool Growers Asso- ciation now includes about 20,000 producers of wool. It has been m operation just a little over a year, and the results of the association have been so beneficial to the growers, the producers, as well as to the public generally, that others of the Central producing States have been organized and are now undergoing the process of similar organi- zation. Iowa has already organized; Missouri is practically organ- ized ; also Illinois ; Michigan is going through the process of organi- zation ; and Indiana soon will be. This will take in probably some- thing like 100,000 or more wool producers, and is a form of coop- erative marketing of wool. Last year more than 12,000 Ohio farmers, some of whom are very small producers, and others large producers of wool were members of the association and marketed their wool through the plan as adopted by this association. Something over 20,090,000 pounds of wool was inarketed by the association's agent, Mr. Horkheimer. Last year, being the first time that this system had been in opera- tion, it was possible for us to handle the wool produced in Ohio without reference to this warehouse act. Arrangements had been made to handle it in the same manner this year, and it was only when the bulletin issued by the Department of Agriculture, the Bu- reau of Markets, No. 57, was sent out, and at a conference held with representatives of that department in Columbus, on February 2, we found that the Federal warehouse act, with only one minor change, ■would make it possible for these various associations now formed and in process of formation to operate under it. Mr. McLaughlijSt of Michigan. You said that last year you were able to do it without reference to' the warehouse act ; do you mean that some of your operations happened to be in conflict with that act? Mr. Ballard. None whatever. This act is permissive, as we con- strue it, and not mandatory, and therefore that is the basis of my statement that it was done without reference to the warehouse act. Mr. HuLiNGS. It was stated here yesterday that there was no reason why these warehouses should not operate, notwithstanding the Federal and State legislation; that there wasn't anything in the legislation that would prevent it. If that is the case, what is it you want here? Mr. Ballaed. I will come right to that. This organization js composed of voluntary members of the association who ship to a central warehouse. When the wool comes in it is shipped in bags and is ungraded. The wool moves very rapidly once the clip begins. AMENDMENTS TO WAREHOUSE ACT. 11 and it is impossible when each consignment comes in to grade it then and then definitely give to the depositor a receipt showing the particular grade of his wool ; so it is necessary to receive it in great quantities, marking the name of the owners, and then just as soon as it is physically possible the wool is graded and weighed, and then the different grades are all put together. Then a statement is issued to the depositor showing the amount of each particular grade of wool which he has, and as the market for the various grades opens, the grades are sold, and then settlement is made with the depositor for his wool. Mr. Httlings. The man who holds that certificate of deposit can negotiate it, can he not ; borrow money on it ? Mr. Ballard. He can not; for it is simply a receipt for so many pounds of wool, and the value is not fixed, and it can not be graded at that time. He might possibly be able to put up his receipt with his banker as collateral for a note ; but it is not a form of negotiable x'eceipt and does not come within the purview of the ordinary ware- house receipt. Now, last year, gentlemen, in order to finance this plan, it be- came necessary for the sales agent, who, in this instance is Mr. Horkheimer, and who has had many years' experience in wool buy- ing and selling — ^it bexame necessary for him to advance to each depositor a certain proportion of the amount eventually coming to him on his wool, and in handling this 2,090,000 pounds of wool — and this year there are prospects that there will be three times that amount— it became necessary to have available at all times a large sum of money. Mr. McLaltghlin of Michigan. Do you mean by your Ohio association, or is there to be some way by which your different State associations will act together and thereby the total amount of wool handled will reach the amount of wool stated? Mr. Ballard. Yes, sir: in Ohio alone. Now, this year, especially in view of the financial condition of the country, it is very difficult to get banks to advance large sums of money, or at least a sum that would be required to finance this propo- sition. It was expected that the growers would demand a considera- ble portion of the estimated value of their wool at the time it was received. However, that was not the case, but the money had to be kept on hand at all times, just the same. When the wool was sold, of course, the proceeds were distributed to each man according to his proportion, less the agreed sum for handling. Mr. Hutchinson. What is this society; just voluntarily coming^ in, without putting up any money, or anything? Mr.- Ballard. Yes, sir; at the present time. i ,, , Mr. Hutchinson. What is the object of holding the wool, then? Mr Ballard. The object of holding the wool is to get sulhciently large quantities of each grade so that it can be sold to the best pos- sible advantage for the producer. „ , . , Mr. Hutchinson. You are selling all the time' Mr. Ballard. It is being sold as fast as possible. Mr Hutchinson. You will get your money back right away i Mr. Ballard. In the usual course of trade the money will com& back. Sometimes it may be months, depending on the course o± business. 12 AMENDMENTS TO WABEHOUSE ACT. Mr. Hutchinson. You have this society for the purpose of making money ? Mr. Ballard. The purpose is to market the wool in a cooperative method, so as to cut out and eliminate the dealer entirely and to have the manufacturer secure his wool directly from the producer. Mr. Hutchinson. And you do not charge the farmers anything to join the society? Mr. Ballaed. There is merely a nominal fee, such as is required tinder the Ohio laws. Mr. Hutchinson. Do they take stock, or anything? Mr. Ballakd. They are not required to take stock, because the organization is not beneficial; that is, it is not one for profit, but is merely a method by which this is carried on for mutual benefit. Mr. Hutchinson. You have some officers that have to be paid something? Mr. Ballaed. Yes ; and that pay to the officers comes from the membership dues. There is only one paid officer in the entire association; and the sales agent who operates the warehouse re- ceived a commission upon the total amount sold, out of which he paid all expenses of the grading, storing, insurance, and handling the wool, in every respect. Mr. Anderson. I came in late. I do not want you to go over mat- ter already covered, but I may ask just what it is you are wanting to have done? Mr. Ballaed. As a result of this system of marketing, instead of the farmer or producer receiving a flat rate, upon all of his wool, ungraded, from the buyer who comes to his farm and buys it, he receives the price of the different grades, and when sold in large quantities, of course, a better price than if he were selling just his own little clip, with the result that the farmer who sold to the buyer directly ungraded averaged perhaps 50 cents a pound for his wool last year, while the average price to the farmer in this association was 67 cents a pound ; and yet, notAvithstanding that increase to the pro- ducer, it did not result in any increase in price to the manufacturer, iDecause of the elimination of the profits made by the dealers and the middlemen, who made a profit on it all the way through. So that the producer profited without the consumer being forced to pay any- thing additional for the manufactured wool. Mr. Lee. That is, you cut out the middleman? Mr. Baixaed. We cut out the middleman, and as I have explained, it did not increase the cost to the consumer, even though the producer received a higher price. And the i-esult is the encouraging of the farmer to produce wool, and that is one of the benefits to be derived f I'om associations of this character. Mr. EuBET. How many men in the ordinary way handle the wool from the producer to the manufacturer ; that is, I mean previous to the operation of this organization, and one transaction ? Mr. Ballard. If I may ask Mr. Horkheimer to answer that ques- tion, I think he can do so better than I. Mr. HoEKHEiMEE. It possibly goes through three or four different hands before it reaches the mill ; it might in some cases be five or six. Mr. PuENELL. Would you mind naming them, so we will know who they are? AMBNDMENTS TO WAEEHOUSB ACT. IS Mr. HoRKHEiMEE. The wool generally is bought in small quan- tities, and then is sold to a man who buys in larger quantities, and then perhaps to still another who buys in larger quantities, and then IS passed on to the mill. The mills will not buy the small quantities, and in ungraded lots ; it must be sorted out. And in order to get a sufficient quantity to interest the mill man it naturally takes a num- ber of people to accumulate that much. Mr. PuRNELL. And each one of those fellows adds on a little profit? Mr. HoEKEiMER. Naturally ; they don't work for glory, if they can help it. Mr. Ballard. Now, this act, as we have read it and construed it, in connection with the regulations which were formulated by the Bureau of Markets, contemplates, of course, the encouragement of the production of agricultural products, of which wool is one ; and at the time it was enacted it is apparent that the method of the marketing of wool apparently was not contemplated, because all through the act, and throughout the regulations — and I think Mr. Murph will bear me out in this — it was contemplated that the iden- tity of every article stored should be retained, and does not make any provision any place along the line by which, instead of return- ing to the depositor his wool that it may be sold and the proceeds paid over to him, and that is where we come in conflict with the pro- visions of the act ; because instead of the farmer bringing his wool in and merely storing it, the major purpose is to have his wool graded and sold at graded prices, and, of course, as the act now stands the provisions for the warehouse receipt make it impossible for this co- operative method of collection and selling to be carried on. And so, after our conference in Columbus, we concluded that the best thing to do would be to present to your committee a suggestion as to a proviso to be placed in section 21 of the act, and I think if I read that section and then just the proposed amendment it. will be per- fectly apparent what we are seeking. Section 21 provides [reading] : That a warehouseman conducting a warehouse licensed under this act, in the absence of some lawful excuse, shall, without unnecessary delay, deliver the agricultural products stored therein upon a demand made either by the holder of a receipt for such agricultural products or by the depositor thereof if such demand be accompanied with ( a ) an offer to satisfy the warehouseman's lien ; (b) an offer to surrender the receipt, If negotiable, with such Indorsements as would be necessary for the negotiation of the receipt; and (c) a readiness and willingness to sign, when the products are delivered, an acknowledgment that they have been delivered if such signature is requested by the warehouseman. That, of course, carries the idea of the surrender of the original articles stored, and is a form of receipt which our association, our warehouse, could not issue, because of the fact that it is our plan to sell. The amendment suggested is very simple. There is no change in the section as it reads there, but our suggestion is in this proviso [reading} : Provided, however, Such warehouseman by agreement with the depositor made at the time of the deposit by him of wool may reserve the option to deliver such wool to the holder of the receipt therefor or to the depositor as herein provided, or in lieu of such delivery to sell such wool when and as graded and to pay to such receipt holder or depositor the price received there- 14 AMENDMENTS TO WAREHOUSE AC*. for less any agreed or customary commission for the sale of the same, and in such case such option shall be embodied in the receipt issued for the wool so stored. In other words, the depositor under this proviso would receive a warehouse receipt containing everything that is required by this act and different regulations, with the additional provisions that the warehouseman has the right to sell the wool, and in lieu of returning to him the wool upon demand pay him the price received therefor less the price agreed upon for the sale. Mr. McLaughlin of Michigan. What becomes of the receipt issiied in the meantime ? Mr. Ballard. The depositor may take his receipt to his banker and borrow upon it, and we would have a provision further that in the event of the negt)tiation of the receipt that the holder thereof immediately notify the warehouseman as to his possession of the receipt. Mr. McLaughlin of Michigan. What is that for ; what is the ob- ject of notifying him? Mr. Ballahd. We suggest that in order that there could be no possibility of the holder of the negotiated receipt not receiving his money if he has loaned on it or paid for it, if he notifies the ware- houseman so that the warehouseman luiows that he has it. Mr. McLaughlin of Michigan. But suppose he does not notify him? Mr. Ballaed. The money will not be paid until the receipt is sur- rendered; it will be paid only upon surrender of the receipt, just as the goods are surrendered on surrender of the receipt. Mr. Anderson. Your proposition is that the receipt shall repre- sent the right of the holder to a delivery of the goods or right to delivery of the money paid for the receipt when it is presented to the warehouse that issued it ? Mr. Ballard. Yes, sir; that is it. Mr. Anderson. Now, if that is the case, and you do not pay the money except upon surrender of the receipt, why should you require notice of the holder of the receipt ? Mr. Ballard. I make that suggestion simply because at our con- ference it was suggested that probably that would be a wise provision. It would not be necessary, because "either the goods or the receipt must be surrendered on the payment of the money. Mr. McLaughlin of Michigan. The association gets the prop- erty? Mr. Ballard. They must give a bond. Mr. McLaughlin of Michigan. You did not speak of that. Mr. Ballard. No; that is in another section. And I may say that in the regulations issued by the department Mr. McLaughlin of Michigan (interposing). I am speaking of the law itself. Mr. Ballard. The regulations require a bond. Mr. McLaughlin of Michigan. Then the bond might not be re- quired ; it is up to the department ? Mr. Ballard. Yes ; the department is required to enforce this act. Mr. McLaughlin of Michigan. As written ? Mr. Ballard. Yes, sir. Mr. Anderson. The bond is required in the act. AMENDMENTS TO WAEEHOUSE ACT. 15 Mr. Ballard. The act provides for the bond also. Mr. Anderson. But may I call your attention to the fact that the form of receipt you propose is a form of receipt based upon the lia- bility of the warehouseman, not only as a warehouseman or commis- sion man, but a broker, and that the language of the act as now written covers only his situation as a warehouseman and not as a broker? Mr. Ballard. It would be the same thing, would it not ? Mr. Anderson. I think not; it is for the value of the goods. Mr. Ballard. The bond is for the delivery of the goods, under this proviso. Mr. Anderson. It is a question of what the law contemplates. You can't make the responsibility anything that the law does not carry, and I don't think this provision as to the bond is sufficient, as it stands, to cover the liability that you wish to insert into it. Mr. Ballard. Well, perhaps not, and we will make a note of that. Mr. Httlixgs. As I understand the act at present, it does not per- mit the operation of a warehouse for wool, as you propose, for the reason that such a warehouse, to be successfully operated, must pro- vide for the separation of the wool into grades ? Mr. Ballard. That is right. Mr. HuLiNGS. And therefore you come in with this proviso, as you suggest. Doesn't that proviso simply abrogate the balance of that section? Mr. Ballard. I don't think so. Mr. HuLiNGS. If the warehouseman can't do anything but sell, or can't do anything but divide into these various grades, and can not deliver the identical thing for which the receipt is issued — if he can not do that, and can not operate at all, and your provision provides so that he may operate, it is an abrogation of the balance of the section? Mr. Ballard. Not as to any other agricultural product. Mr, HuLiNGS. No; but I mean as to wool? Mr. Ballard. This refers only to wool. Mr. MoLAtTGHLiN of Michigan. I have not seen this act for some time, and I am not as familiar with it as I ought to be, per- haps, but it seems to me that the idea involved is that when the wool is deposited by the grower and a receipt issued to him that wool shall remain there as security for that receipt, and the ware- houseman is required under the statute to give a bond by which he pledges that the wool shall remain there; the identical wool, so that the receipt may always be good. Now, the change you suggest may be necessary and entirely safe, but after all, it involves this, that the receipt may not be secured by the actual commodity itself, and the security for the receipt may have substituted for the wool itself the bond of the organization, or somebody's bond; that the actual commodity will not be there as security for the receipt, and that bond is to be substituted for the commodity in the warehouse. Mr. Ballard. That is true. Mr. McLaughlin of Michigan. Who gives that bond ? Mr. Ballard. The warehouseman gives the bond. You mean, who becomes surety on the bond? 16 AMENDMENTS TO WABEHOUSB ACT. Mr. McLaughlin of Michigan. Who gives sec^^^y on the bond that the wool will remain there so that the receipt will be good, ana will be kept good; that is his bond, isn't it? Mr. Ballard. Yes, sir. . ^-, -, „„,i „^ri Mr. McLaughlin of Michigan. Now, there is another bond con- templated by your suggestion of the amendment to the laA\ ; ^% no gives that bond '. , , i -j a -f^,. Mr. Ballard. Our suggestion is this, that the bond as provided ±01 in this act is rather negligible in proportion to the value ot the articles that are stored. We are inclined to believe that the amount of the bond should be much greater than that which is contemplated by the act. As I get this it applies very readily to cotton and tobacco, which lends itself very readily to the handling of the actual tobacco and cotton in the bale. . i i. ji Mr. McLaughlin of Michigan. Who gives this second bond ( Mr. Ballard. The warehouseman. Mr. Hutchinson. Who is the warehouseman? Mr. Ballard. In our case the sales agent, or the man Avho is grad- ing and selling. Mr. Hutchinson. It is a part of your society ? Mr. Ballard. It may be a part of the society, or a different or- ganization entirely. Mr. Hutchinson. Isn't it a part of your organization? Mr. Ballard. It is an integral part of our organization ; but our organization can not operate a warehouse. Mr. Hutchinson. This provision you have in there is that a man may sell his wool, whether the owner wants to or not? Mr. Ballard. Yes; that is what it is deposited there for. Mr. Hutchinson. He doesn't put it there for storage at all. Mr. Ballard. The contract calls for that. Mr. Hutchinson. Then I can't see how the provision helps you. Mr. Ballard. That provision provides that it shall be made at the time of the deposit and shall be noted in the receipt. The organiza- tion has a two-fold purpose; first, to increase production of wool; and, second, to market it to the best advantage. Mr. Anderson. I don't get this straight in my mind. Perhaps it is because I can not comprehend, but I don't get it clear. Mr. Ballard. Maybe I do not make myself understood. Mr. Anderson. Do I understand that your organization acts as a warehouseman ? Mr. Ballard. It does not; the organization itself does not act as a warehouseman ; it makes a contract with a warehouseman to handle this wool, and then each member of the association delivers his wool to that association warehouseman, who grades it. Mr. Anderson. And the owner gets a receipt for wool ? Mr. Ballard. Yes, sir. Mr. Anderson. Who gets the receipt for the wool? Mr. Ballard. The farmer, who raises the wool. Mr. Lesher. He only gets a receipt for so many pounds of wool? Mr. Ballard. Yes, sir. Mr. Lesher. And there is no value placed on it ? Mr. Ballard. No, sir. Mr. Lesher. Then he gives the right to sell it at whatever the rate is? AMENDMENTS TO WAREHOUSE ACT. 17 Mr. BalI/Aed. Yes, sir. Mr. PuRNELi.. Then is that wool commingled with other wool ? Mr. Ballaed. Yes, sir; it is commingled with other wool just as wheat is. Mr. Anderson. And then he gets his receipt Mr. Ballaed interposing) . If you will pardon me, here is a man who sends in 1.000 pounds of wool ungraded in a bag; he gets a' receipt for 1,000 pounds of wool; that is all at that time. Just as soon as it can be graded, if he has 50 pounds of one grade, that is placed to his credit ; if he has 250 pounds of another grade, that is placed to his credit. Now, all the different grades are taken together, thrown together — — Mr. Anderson (interposing). Thrown together by whom? Mr. Ballaed. The warehouseman. His wool is of different grades, and all the wool of different grades is commingled with other wool of the same grade. When it is sold, grade No. 1 brings a certain price, and grade No. 2 a certain price, and so on. Mr. Andeeson. Who does the selling? Mr. Ballaed. The warehouseman ; that is the value of the associa- tion. Then when that is sold he is credited with the value of his so many polmds of each grade at the price sold, and settlement is made with him on that basis, less the cost of handling. Mr. Andeeson. And the warehouseman then sells the wool ; that is, all the wool ? Mr. Ballaed. Yes, sir. Mr. Anderson. He does sell the particular wool and deliver the money on surrender of the receipt as is done with grain and cotton ? Mr. Ballaed. That is right. You see, when the warehouseman makes the sale for cotton or grain, he makes the sale himself, and all he has to do is to' deliver the goods and then the holder of the receipt gets his money. Mr. Young. While you are on that, Mr. Ballard: I am familiar with cotton, and not with wool. Cotton is put up in bales of 500 pounds each and graded ; each bale is of such and such a grade, and therefore it stands in a class by itself. Mr. Ballaed. Yes, sir. Mr. Young. Now, your wool comes in not graded, but in the wool of an individual farmer, we will say, in 1,000 pounds, as you have indicated, there are different grades of wool ? Mr. Ballaed. That is right. Mr. Young. And in your warehouse you go through this package of 1,000 pounds and separate it into the various grades? Mr. Ballaed. Yes, sir. Mr. Young. How many grades are there in wool ? Mr. Ballaed. If I may ask Mr. Horkheimer to answer that ques- tion, as he is more familiar with it than I am. Mr. HoEKHEiMEE. The standard grades, possibly 6 grades; but there may be as high as 20. Mr. Young. You get it in nearly as bad as we do in cotton ; your field is nearly as big as ours is in cotton. Now, we will say & grades for illustrating purposes. One farmer may have 6 grades, so you cut out grade 1, grade 2, grade 3, grade 4, grade 5, and grade 164876—20 2 X8 AMENDMENTS TO WAKEHOUSE ACT. 6, SO that when that farmer's bags are opened up he is credited witli those grades? Mr. Ballakd. Yes, sir. ,. Mr Young. Then after that act is done and you have gone aJI through these farmers' wool, it is no longer a separate product ot each farmer, but you take all of grade 1 and put it m one lot^ Mr. Ballard. That is right. Mr. YotJNG. And grade 2, and put it in one lot < Mr. Ballard. Yes, sir. Mr. YoTJNG. And grade 3, and put it in one lot i Mr. Ballard. Yes, sir. • ,.„ . no Mr. YoTTNG. And so on through the different grades i Mr. Ballard. Yes, sir. , , -^ • i . -i. i Mr. Young. And then his individual wool has lost its identity and goes in Avith the others ? Mr. BxiLLAED. Yes, sir. Mr. Young. And that makes it different from cotton and tobacco that comes in in separate bales and can not be opened up? Mr. Ballaed. Yes, sir. Mr HuLiNGS. Does the warehouseman clean the wool r Mr. Ballaed. No; he does not, does he, Mr. Horkheimer? Mr. HoEKHEiMEE. No ; it is not scoured. Mr. Ballaed. It is not scoured ; no, sir. Mr. HuLiNGS. If I bring in dirty wool, it goes in the lot? _ Mr. Ballard. It is graded according to its condition ; if it is dirty, it is graded as that. • j. iu Mr. YouNG. There is a little wool grown in my section of the country, and where it is grown our people don't know a thing in the world about the value. Mr. Horkheimer. Neither did our people until in the last year. Mr. Young. And they are dependent entirely for the value on the fellow who comes through periodically and says, " I understand you have a little wool?" and the farmer says, "Yes; 100 pounds or 50 pounds," and the buyer says, " I will give you so much." That is jail we know about it. Mr. Ballaed. That is all our people knew about it until within the last year or so. Mr. Young. Have you found it profitable to sell under this method for a man who owns a small number of sheep, say 15 or 20 sheep ? Mr. Ballaed. If I may ask Mr. Walker, who is secretary of the Ohio Sheep and Wool Growers' Association, to answer- that question, because he is more familiar with it than I am. The Chairman. Before you close, Mr. Ballard, I want to ask a few questions. Mr. Ballaed. Yes, sir. I am just yielding to Mr. Walker for a moment for the purpose of answering this question. The Chairman. We will be glad to hear Mr. Walker. STATEMENT OF MR. J. F. WALKER, GAMBIER, OHIO, PRESIDENT NATIONAL FLEECE AND WOOL GROWERS' ASSOCIATION AND SECRETARY OHIO SHEEP AND WOOL GROWERS' ASSOCIATION Mr. Walker. We ha^e found, gentlemen, that under the old plan of selling wool that it was bought at one flat rate throughout AMENDMENTS TO WAREHOUSE ACT. 19 the country. As has been developed here, that wool frequently passes through as many as six hands before reaching the manufac- turer. The men who had good wool had to carry the poor wool to the market. The producer of good wool knew nothing about its real value as to grade. This year, by marketing directly to the manufacturer, we succeeded in securing for the grower an average of 17 cents a pound more than the market afforded him before, and we took this plan of work into consideration. We have found that the different grades vary from 25 cents for tags up to 85 cents for the Delaine, and up to the best grades. By this system of market- ing, it is an inducement for a man to put up good wool; to grow better wool. He is getting paid a price that will give him a reason- able compensation for producing good wool, and we believe that this system of marketing will be the means of increasing the pro- duction of good wool in the United States. I may mention that this plan is not being practiced alone in Ohio, but in New York, Illinois, Indiana, and West Virginia are all marketing to a great or lesser extent along these lines, and the current year will find three or four more States marketing along these lines. As you have suggested, we can not preserve the identity of this wool, because a man may have in a clip of 500 pounds six or seven grades, and no man can buy in that way and pay as good a price. It is necessary to separate the wool into grades, and that is what this plan of cooperative marketing does for the purpose of interest- ing the mill man, because he does not buy in small quantities or in ungraded lots; he buys in thousands, and in order to gather the ^mo\ and grade it it means possibly that we blend the wool from '500 farmers. Each man, when he sends in his wool, signs a con- tract with the association whereby he agrees to deliver this wool to the association, who has a representative in the warehouse all the time keeping track of in weights and out weights, grades, and sales. That is done for the protection of the growers, members of the association, and this man is employed by the association for that particular and specific purpose. Mr. Young. Let me stop you right there. When you go to grade it, say I am a farmer and have brought in 1,000 pounds; I don't know anything about the grades of this wool — we grow cotton in my section, and I know something about the cotton, but I do not know about the wool — where do you get your expert that does know those grades, and how can you get such an expert that knows the business sufficiently well so that the manufacturer will come down and accept the grades of your experts ? Mr. Walker. We leave the grading of this wool under the juris- diction of our sales agent, because we feel that he knows all classes of wool that his clients want to get. Now, the grading is done un- der his jurisdiction, because he has the selling of it. and we merely supervise the weights and grades, and if a certain amount goes in this pile, he knows what its current price is on the market, and in that way we know very well whether we are getting a fair price for the product. Mr. Young. But the fellow that does the actual grading? Mr. Walker. He must be working under the man who is selling this wool, because it is put up for a certain clientele. 20 AMENDMENTS TO WAEEHOUSE ACT. Mr. Hutchinson. You have no standard grades ? Mr. Walk-ee. There are three or four standard grades. Here may be a wool of a particularly high quality ; one mill may demand that particular class of wool, delaine wool, -but it may be a little different in character. It might be a little heavier in shrink and it might have more foreign matter, and yet a very high-class wool when cleaned. Another mill may specialize in another wool. It may prefer that on account of a little greater strength in fiber, or different length, or different in degree or quality. The fineness of the wool would determine its value to different manufacturers or mills. Mr. Anderson. When you speak of standards, what do you mean, standard in fineness ? Mr. Walker. Yes, sir. Mr. Anderson. Not a standard as adopted by the Government? Mr. Walker. No, sir. There are standard — the delaine, the half blood, three-quarters, and so on — but in these standards there are cer- tain grades tliey may want ; one mill may desire a ceitain grade. Mr. TiNCHER. Has the Government ever graded wool ? Mr. Walker. No ; I think not. When the wool was in the hands of the Government, the Government valuators came out and passed on the wool as graded. Mr. TiNciiEE. But the department has never fixed a grade on j'our wool as they have on wheat and cotton ? Mr. Walker. No ; I don't know that it would be possible to grade it as they do wheat. Mr. TiNCHEE. It would be possible for them to do it as well as they do wheat. You need not answer that suggestion. Mr. Lee. How many pounds do von handle in vour association? Mr. Walker. We handled 2,090*000 pounds last year. Mr. Lee. At what expense ? Mr. Walker. A total expense, commissions, and evervthing-, grader and everything, of approximately $17,000, and did a business of over $4,000,000,000, and handled it on' considerably less than 5 per cent. Mr. Young. I would lik eto know this: We have some sheep, in a small way; every farmer has a few sheep; has your new marketing system encouraged more small gTowers of sheep in vour section of the country ? Mr. Walker. I will answer that bv saving that there never has been m the history of the sheep industry 'in Ohio as much interest manifested in sheep growing as there is at this moment. In mv own country, we produced over 1,000,000 pounds of wool, which is a county about 22 miles square. Mr. HuLiNGs. What is the effect of foreign importation? _ Mr. Walker. We are not at all enthusiastic on the matter of for- eign importations of wool, naturally, but it has hurt the market to some extent; but we believe that if we can get the business protected as it should be that we will not worry so much over the foreim im- portations. , Mr. HuLiNGS. You mean by tariff? Mr. Walker No; not particularly tariff. I am referring to the proposition of handling the wool and grading it, and selling it for what it really is. o o , ^ Mr. Young. As you go farther West, where they have the great ranches out there, do they grow it in- such quantities that thef are AMENDMENTS TO WAREHOUSE ACT. 21 able to handle it largely as individuals; they are not confronted with the same proposition that the fellow is that has 10 or 15 head? Mr. Walker. Not to such an extent, but you might be interested in knowing thta the Western men are contemplating taking up this system of selling, so that each grower will get the benefit of the good wool in his clip and be penalized for the bad wool. Mr. 1 OTJNG. You are confronted with the same situation with re- gard to the wool that we are in regard to the cotton ; first, the buyer comes through and buys, and then it goes maybe through a dozen hands. Mr. Walker. It frequently does. Mr. YoTjNG. And we have never been able to get away from that system. The cotton grower is paying those bills and we have never been able to work out a situation that will remedy that. But it takes so much money to handle cotton, and for that reason we have had to stand these charges that the cotton grower ought not to stand. Mr. Walker. In Knox County, Ohio, in my county, where we produce about 1,000,000 pounds of wool, it has cost us to get that • wool into the hands of the dealer over $50,000. Mr. Ptjrnell. I want to ask a question; it is hardly in line with your request for this change. You say you have saved to the pro- ducer if cents a pound? Mr. Walker. Yes, sir. Mr. Ptjrnell. By reason of the fact that you are able to sell direct to the manufacturer? Mr. Walker. That is one reason; yes, sir. Mr. PtJRNELL. The producer is entitled to every nickel he can get, and I am not finding any fault with that, because I think he is en- titled to all there is iii it; but I want to know how this cutting out of the middleman is going to help the consumer? Mr. Walker. I might say that that has been one matter, the cutting out of so many men. But the great gain has been in cutting out the speculative feature. They have gone out in the spring, these buyers have gone out and have bought the wool, and have maintained it, and have sold it later at a high price, and we have eliminated that speculation. We are not selling at higher prices except where we have produced better wool. We are selling on the open market in competition with every other producer in the United States. Mr. PuKNELL. You are able to sell a little cheaper ? Mr. Walker. Not necessarily, but we are offering under this plan a very much better grade of wool. Mr. PuRNELL. And as a matter of fact, cheaper? Mr. Walker. Cheaper, because they are a better grade. Mr. Lesher. If the farmer gets this profit of lY cents he is going to raise more wool? Mr. Walker. Absolutely. The only thing we are asking is that we have an opportunity to sell under this plan. Mr. HtJTCHiNsoiir. Can you explain why a suit of clothes costs twice as much now as it did ? Mr. Walker. Yes; I think I can. Mr. McLaughlin- of Michigan. This law provides that there shall be no conflict between it and the State laws, or the operation of it. 22 AMENDMENTS TO WAEEHOUSE ACT. What about your State law on the point you have brought up this morninff? Mr. Walker. Mr. Ballard will take that up with you. If you will bear with me a moment, I would like to ?o just a little further into the reason why we, as producers, are interested in this matter. We want to be able to operate under the warehouse act. We believe it will instill confidence in the men that are handling it. Mr. McLaughlin of Michigan. Why. haven't they had confidence in your State people? Mr. Walker. Yes, sir. But they have not handled it this way. They say, "We don't understand it." But if they know that the warehouse is under governmental supervision it has a psychological effect — there is a psychological situation, which you understand as well as I do. The main reason we are interested in this is that we are mightily interested in increasing the wool production in the United States, and we believe that if we can operate under a Govern- ment license we will stimulate production very much. Mr. McLauoitlin of Michigan. We understand that; we are con- fronted with that all the time; it is the fault of someone in the" States, and it is a serious reflection on them. Wherever we find that the State does not function properly and does not perform these duties and functions, the Government has to go in and do the work for them. I am unalterably opposed to it. Let them do their duty or take the consequences. Mr. HuTCHTxsox. Suppose these farmers put their goods in there and then the warehouseman fails; who takes the responsibilitv ? Mr. Walker. The association has a contract with the warehouse- man, and he has delivered us satisfactory proof that he is liable to ' the exent of the amount of goods we have on hand. Mr. HuTci-riNSON. The warehouseman is lialile to the farmer? Mr. Walker. Yes. sir. Mr. Hutchinson. Not your association? Mr. Walker. No, sir: that is included in the agreement— that he is liable for bad sales, or losses of any sort; he is liable. Mr. HuLiNGS. In case of fire, vou require him to carrv insurance for that, do yon. to the full value ? Mr. Walker. Yes. sir. Mr. Ballard. If I mav be permitted, INIr. Chairman, I want tn add in the matter of grading, sections 11 and 12 of this act provide for the extamination and licensing of graders in these warehouses, and in that way you have rather a imiform standard throughout the country of different grades of wool, so that when the wool is graded in one of the Federal warehouses the buyer Iniows that he is getting fairly uniform grades throughout the country. Mr. HuLiNos. Has the Federal Government anv control over this grading that this agent may make? Mr. Ballard. They have the right to inspect his work, and if he IS not gradmg ]:iropei-]v to revoke his license. Mr. Andeesox. Where do vou find that ? Mr. Ballard. In sections 11 and 12. Mr. HuLiNGs. I am interested in this: A great many people in western Pennsylvania have been writing to me about this: In the matter ot grading. I suppose vou have a high quality of wool brought AMENDMENTS TO WAREHOUSE ACT. 23 in there ; say, delaine, and the wool is full of cockle burrs, or greasy and dirty; how do you grade that to put it in the lower grades? Mr. Ballard. It goes in the lower grade ; it is unsecured and dirty. But the farmer will grow better wool and take better care of it in the future. Mr. Walker. It does not go into the lower grade; but it will be sold as delaine burry. It is graded as hurry delaine and sold for what it is worth with the buiTs in it. The Chairman. Mr. Ballard, the purpose of the proposed amend- ment is to make collective bargaining- in wool effective, is it not ? Mr. Ballard. Cooperative marketing. The Chairman. The purpose is to make collective bargaining effective ? Mr. Ballard. Yes; we think the majority of the wool in this coun- try will be handled in this manner in a short time. The Chairman. To enable you to get the actual value for the wool? Mr. Ballard. That is right. The Chairman. To have it classified? Mr. Ballard. That is right. The Chairman. So that each grower may obtain the actual price to which he is entitled for the wool that he may have to sell ? Mrv Ballard. Yes ; without increasing the cost to the consumer. The Chairman. You spoke of the grading; the other gentleman: said it was to be done by the warehouseman ? Mr. Ballard. Yes, sir. The Chairman. Your amendment is limited to wool ? Mr. Ballard. Yes, sir. , The Chairman. Do you think it is a safe or fair proposition to> leave that to all warehousemen? Mr. Ballard. Oh, no ; it would be only wool warehousemen here. The Chairman. You limit it? Mr. Ballard. Y es ; it is limited to wool. The Chairman. Do you think it is safe to leave it to all warehouse- men that store wool ? Mr. Ballard. I have no doubt it is. The Chairman. In your case, it doubtless is, but we are dealing with the whole country. Mr. Ballard. It is perfectly safe if he is licensed. The Chairman. The purpose of the amendment is to guard against fraud. Mr. Ballard. I get your point. But you think it should be general to wool warehousemen or wool warehousemen acting in this manner. The Chairman. Have you indicated the manner in your amend- ment? Mr. Ballard. No; and I doubt very much if such a limitation: would stand. The Chairman. It is open to all warehousemen who handle wool ? Mr. Ballard. Yes, sir ; those who handle wool. The Chairman. Do you think that is a safe proposition ? Mr. Ballard. I think so, in view of the power given to the depart- ment to enforce this act. The Chairman. The purpose is also to give security to the money lender? 24 AMENDMENTS TO WAEEHOUSE ACT. Mr. Ballard. That is true. . . The Chaikmax. Now, vou tnke away the security, because it is pos- sible for the warehouseman to deceive as to the quantity a.nd quality? Mr Baii \nD. No; he can't verv well deceive, because the graderis licensed himself, and if he does attempt to deceive his license will be revoked. The Chairman. If he is honest it is all right. ., i ■ Mr. Ballard. That contingency can not be eliminated by legis- lation or anything else. The Chairman. The act originally, as reported by this committee, required Government inspection before the receipt was negotiable, and that the receipt should so state that there had been Government inspection, but that was stricken from the act. So now it is possible to negotiate the receipt. Practically all the teeth were taken out of the act by the amendments carried in the last appropriation act. We do not want to get away from it any farther than is absolutely neces- sary. If you are going to leave the grading to the warehouseman, that is proper so far as the honest warehouseman is concerned, but there are men who are not honest, and we must provide against them. Mr. Ballard. Haven't you provided against that in the adminis- trative provisions of the law? The Chairman. They can negotiate any receipt now. You can bundle up anything with a little wool around it and have a receipt issued for it. There should be something to show what is in that particular bale not only as to the number of pounds, but as to the quality as well as the quantity. Mr. Ballard. That is, that the receipt should not be issued with- out the grading? The Chairman. It should be graded by some reliable person. After it has been graded by the warehouseman, it should be passed upon by some one in authority commanding confidence so that assur- ance could be placed in the integrity of the receipt. Mr. Ballard. Yes see, as we now operate, we give a receipt for the number of pounds when he brings in his wool, and later, when it is graded, he is given a receipt or notice for the various grades. The Chairman. Is the first receipt only for the number of pounds ? Mr. Ballard. That is all. The Chairman. Is that receipt negotiable? Mr. Ballard. Well, on the face of it, it shows that it is not for graded wool, and if he is negotiating it he could not negotiate it be- yond a certain amount. The Chairman. Does the amendment state that it may be sold when it is graded ? Mr. Ballard. Yes; " when and as graded." The Chairman. The receipt is to be given on the delivery of the ■wool before it is graded ? Mr. Ballard. Yes, sir. The Chairmn. Is that receipt negotiable? Mr. Ballard. That receipt is negotiable. ?T^® Chairman. Then, you have no assurance as to the quality? _ Mr. Ballard. Not as to the particular quality of that wool after It is graded; that is a matter of contract between the grower and the association. AMENDMENTS TO WAREHOUSE ACT. 25 The Chairmaiv. The principal reason for the passage of the ware- house act .-was to do away with the fraud that was being practiced upon bankers and money lenders, particularly on the money lenders among the cotton men. There was some question as to the quality of the receipts which had always been considered gilt-edged paper. For that reason it was thought that there should be some guaranty to the money lender as to what was back of the receipt. It seems to me there is danger here of drifting away from the purpose of the ■warehouse act. Mr. Ballakd. In drafting this amendment, I may say, Mr. Chair- man, for your information, I drafted it in three ditfereiit ways. The first one was following the language of the act all the way through, following agricultural products, but I saw the very danger which you point out here, but knowing that wool is entirely diffei-ent from any other agricultui'al product, I made it applicable to wool only. The Chairmax. There has been fraud in the handling of wool. There are thousands of dollars in the department now collected from fraudulent transactions in wool. Mr. Ballard. Certainly, and there will be. The Chairman. Then, it is necessary to safeguard as far as possi- ble. Mr. Ballard. Certainly. The Chairman. We all want to do the same thing. We all want to do what is best. I call this to your attention, with the thought that possibly, you might come to some other conclusion or suggest something fiirther to the committee. I may say also, that this com- mittee reported a bill which in it recognized collective bargaining, and that is practically all that is involved here. Mr. Ballard. That is what is involved. The Chairman. We want to give you something practicable. I know you are not for anything fradulent. Mr. Ballard. No ; on the contrary, we are trying to get away from that. The Chairman. So far as you are concerned, it is not necessary to put in these safeguards, but we must deal all with the warehousemen in the country. Mr. Ballard. Will you, Mr. Chairman, give us the opportunity of taking up further amendments if they should suggest themselves ? The Chairman. The committee will be very glad to have you make any further suggestions that you care to make. We will then en- deavor to work out something that will be safe and practical to all concerned. Mr. Ballard. You understand this act is permissive; it is not mandatory upon any warehouseman of any agricultural product. The Chairman. No ; but here is the trouble : The dishonest man may be the first to take advantage of the act. The fact that the public is led to believe that it is under Government supervision, or that the Government is in some way back of it, will enable him to negotiate his receipts. The danger is in misleading the public. Mr. Ballard. I may have misconstrued this act, but I thought the Government had full supervisory powers. The Chairman. It did have that power until last year, under this language in section 18 : " If it have plainly and conspicuously em- 26 amendme:n^ts to warehouse act. bodied in its written or printed terms a provision that such receipt is not neo-otiable," which was stricken out of the act by amendments carriecf in the Agrieiihural appropriation act for 1920. With those words in the act, the receipt was not negotiable without Government inspection, but that is not now required, and, as I have said, one does not know now for sure whether it contains wool or anything else. Mr. Ballard. We have no objection to that provision; in fact, this association is in full harmony with your views and believes that the provision which was taken out oif the act last year should be reenacted. jSIr. A>'DERSON. The whole pui-pose of this law is that there shall be a receipt that is wortli something; that represents a definite value. Now, as I understand it, the way the business is now conducted you issue a receipt for 1,000 pounds of wool; what is that receipt worth? Mr. Ballard. I see your difficulty all the way through. We are thinking of different things. Mr. Anderson. You are talkng about wool, and I am talking about receipts for wool. Mr. Ballard. That is exactly what will not be done in the han- dling of wool. In the handling of tobacco or cotton that is what is done. If they sell those receipts the holder of the receipts gets the cotton or the tobacco; but in this case the holder does not get the wool at all. There isn't any traffic or commerce in the receipts by which the title to the commodity passes. Mr. Hutchinson. Isn't the object to borrow money? Mr. Ballard. He may borrow money, but not pass the title to the commodity. Mr. HrTCHiNSON. Do 3'ou suppose a money lender will loan money without getting assuiance on the proposition from the Government? Mr. Ballard. Yes, sir. Mr. Hutchinson. Have you taken that up to find out? Mr. Ballard. Yes ; there is no trouble in the world about that. Mr. Hutchinson. Have you taken it up to ascertain? Mr. Ballard. Yes, sir. The Chairman. You have no objections to providing for proper security back of this receipt? Mr. Ballard. Why, no. (At this point the chairman left the room, and ]Mr. McLaughlin of Michigan took the chair.) Mr. McLaughlin of ^lichigan. The warehouseman who handles this money and gives the bond, does it on his own responsibility; he is an employee or officer of this association you speak of? Mr. Bali^rd. No ; there is a contract made by him with the as- sociation; a contractural relation. Mr. McLaughlin of Michigan. He is acting in their behalf all the time? Mr. Ballard. In addition to that the association is inspecting and watching all the time, because we have a man watching the trans- action all the time. Mr. McLaughlin of Michigan. Why don't they go on this bond? Mr. Ballard. The individual members of the "association? Mr. McLaughlin of Michigan. The association itself? Mr. Ballard. The association itself has no financial responsibility. AMENDMENTS TO WAHEHOTJSE ACT. 27 Mr. McLaughlin of Michigan. They have, and they are escaping- it ; and why should they ? Mr. Ballaed. For the reason that the association itself, as such, is not selling the wool. Mr. McLaughlin of Michigan. They are not? Mr. Ballard. No, sir. Mr. McLaughlin of Michigan. Somebody is doing it for them ? Mr. Ballarl. Why, yes. Mr. McLaughlin of Michigan. Then they are doing it prac- tically; they have a joint ownership over all of it, and it is their money that will be received by this agent and distributed later by him. Mr. Ballard. No; the relation is not one of joint ownership, but purely a contractural relation. Mr. McLaughlin of Michigan. You can contract for anything. Mr. Ballard. You can not contract for ownership, unless the . title passes. Mr. McLaughlin of Michigan. But the title to the wool is not passed until your agent sells it, and then the title passes to the pur- chaser, wherever he may be. Mr. Ballard. And the money immediately accrues to the deposi- tor, who has the receipt. Mr. Anderson. What is the reason that wool can not be graded when it is received ? Mr. Ballard. If we had a building as large as this office building that might be done in Ohio ; if there were no rooms in the building, or partitions. Mr. Walker. It con not be done. Mr. McLaughlin of Michigan. This thing, as it comes up, con- firms my suspicions from the first. It is something that the Federal Government has nothing to do with. It is a local transaction be- tween the people of the State respecting their property and the handling of it, and because there is suspicion of the ability or honesty — I will withdraw that, I will not say suspicion of the honesty — but there is some doubt as to the way they do the business, and for that reason the Federal Government is asked to step in and do the work on that account. Mr. Tin CHER. If Congress contemplated at the time of the passage of this act that the warehouseman they were regulating and that the act affected, was simply contracting with the owners of the wool in an independent concern, and if the act was passed with a view of affecting the rights of the warehouseman who was a contractor with the owners of the wool, and the association, if we amend the law so as to make it absolutely satisfactory and applicable to that kind of organization and that kind of warehouseman, is there then any bene- fit to an independent warehouseman in other States who does not have wool? Mr. Ballard. He would have to be governed by the same rules and regulations. Mr. TiNCHER. Would that be good for his business, or would that eliminate him from doing business ? Mr. Ballard. Not at all. :28 AMENDMENTS TO WAEEHOUSB ACT. Mr. TiNCHER. It was not contemplated when they passed this law that the warehouseman you are talking about was a warehouseman that would handle wool. Mr. Ballaed. No; and that is the reason that we limit it to •those who do now. Mr. HuLiNGS. You have a going concern there? Mr. Ballaed. Yes, sir. Mr. Htjling. Very successful? Mr. Ballaed. Yes, sir. Mr. HuLiNGS. In the first year of its operation ? Mr. Ballaed. Yes, sir. Mr. HuLiNGS. It has promise for the future and is a success, and why do you want a change at all? Mr. Ballaed. I just suggested at the outset of my statement to take care of the advances which the producers desire it became necessary for the warehouseman to have on hand at all times a large amount of money ; for instance, in Ohio a half million dollars. Now, the warehouseman's interest on that adds to the cost of handling, and in our present situation it is impossible to secure ad- vances from banks in that amount. We could not handle it this year as we did last year. Mr. Andeesokt. Why do you have to have that $500,000? Mr. Ballaed. Here is this wool coming in, 500,000 pounds say, and they want advances against that, because the buyer comes ;around and buys for the big dealers gives the right money right clown, and the farmer has to have a little money during the summer. Mr. Andeeson. Do I understand, then, that the warehouseman advances them a part of the purchase price, with the receipt as col- lateral? Mr. Ballaed. Yes, sir; that has been the custom. Mr. AndeesOjST. And that the warehouseman in this case is the warehouseman, the commission man, and the banker? Mr. Ballard. That is what he is under the present system. Under this system they will finance themselves. Ml'. Anderson. I can't agree with you there quite. I think the only way that the farmer can finance himself on his receipt is on ii receipt that has a fixed value. Now, the gentleman over here [indicating] tells me some of this wool runs all the way from 50 -cents to 80 cents* a pound. Now, I have 1,000 pounds of wool of different grades and I have a receipt for 1,000 pounds of wool, how much money can I borrow on that receipt? Mr. Ballaed. The individual banker in the community usually knows about the character of the wool that is produced in that sec- tion by each farmer. Now, if he will make a loan on that, he wUl base it on the total poundage at the low rate. He is safe. The ■country banker is a pretty shrewd person ordinarily. Mr. Anderson. I am not worrying about the country banker. I -am worrying about the scalawag that gets hold of this receipt. And another thing, what you would do under this proposition is one thing, but you are not the only people who can ask for a license and get it. Now, what disturbs me is the extent to which we open this thing up to the fellows who may not be honest as you fellows may be. AMENDMENTS TO WAREHOUSE ACT. 29' Mr. Ballard. "Will you permit Mr. Murph, of the department, to answer that question ? Mr. Anderson. Yes. Mr. McLaughlin of Michigan. I want to add a word here. As I said before, I doubt the wisdom of enacting this law, but we are into it now, and if we can help you people any and protect the whole thing all along the line against abuse, I think we ought to do it, and I am willing to work with and help the committee to see what we can do. But, as Mr. Anderson says, we can not pass a law for one association, but the law we pass will apply to the whole country. Mr. Anderson. The committee, I am sure, is not antagonistic to- you. Mr. Ballard. No ; we don't think that at all. Mr. Anderson. In fact, I am favorable, and I think the committee is, to cooperative effort in selling and buying in every line. I think it offers a solution for the high cost of marketing in every line. Mr. McLaughlin of Michigan. And I agree with Mr. Anderson heartily in that, too. Mr. Anderson. What I am afraid of is, if we open this up some people who might not be as honest as you would take advantage of the provisions of the law and use them in an improper manner. Mr. Walker. May I suggest that your bond provision would pro- tect that? Mr. Hutchinson. Who gives the bond? Mr. Walker. The warehouseman would be compelled to give the bond. Mr. Hutchinson. Why shouldn't the association give the bond ? Mr. Walker. I think I can answer that in this way : Suppose you send a carload of cattle into the Pittsburgh market, we will say, in order to protect your cattle you would not want a bond from the commission firm to get you a fair price. Mr. McLaughlin of Michigan. But the association can choose its own warehouseman and the man who can act for it? Mr. Ballard. Yes. Mr. McLaughlin of Michigan. And the unwillingness of the as- sociation to stand back of its own employee is a little suspicious, or might be a little suspicious. Mr. Walker. How would you provide for this in an association which is not a large financial institution ? Mr. McLaughlin of Michigan. I don't know, but you can handle it as the law of the State permits. It is one thing to give a bond where there is reasonable assurance that the property will remain there so that he will be' able to make his bond good; it is another thing when he is permitted to part with the property and gather to himself all the money that that property will yield and then have the money in his pocket. Mr. Walker. As I said before, the psychological phase of the mat- ter is important. Men for a hundred years have been selling then- wool along a certain line. " Now, the men who are selling ; here is a little middleman, a little local buyer, taking his slice, and he has a clientele, and he goes to these men and says, " What do you know about this wool; where is it going? I am going to pay you cash. If you send your wool down there youi may get 10 cents more, but 30 AMENDMENTS TO WAREHOUSE ACT. you may not get a cent." Now, the men who have already con- signed to us, we are not worrying about them, but the more men we get into this the better for the proposition generally. If we have a proposition where we can go to these men and hnance this thing our- selves and come back to the man with the argment that he is going into a cooperative proposition it will give confidence. Mr. McLaughlin of Michigan. These middlemen who are object- ing to this collective bargaining do not reach this committee very much. Mr. Walker. No ; but they do reach the farmer in the country. Mr. McLaughlin of Michigan. We want to do what is reasonable for you gentlemen. It has been suggested that Mr. Murph speak. The chairman has asked me to act in his absence ; is it something we can take up with Mr. Murph later? Mr. Ballard. Yes, certainly. Mr. McLaughlin of Michigan. Our time is very limited, but I thinlv we can hear Mr. Murph very briefly if he cares to add anything at this time. FURTHER STATEMENT OF MR. D. S. MTJRPH, SPECIALIST IN COTTON MARKETING AND WAREHOUSING, BUREAU OF MAR- KETS, DEPARTMENT OF AGRICULTURE— Continued. Mr. Murph. On Mr. Amderson's question relative to the possibil- ity of dishonest men securing a license and doing business in wool under the proviso sugested by Mr. Ballard, and as to the method by which they could be kept out, if I understood you correctly, Mr. Anderson ? Mr. Anderson. Yes. Mr. Murph. There would be the same opportunity for a dishonest man to secure a license under the Federal act, I presume, as there is now ; but Mr. Ballard, I have no doubt, had in mind that before any warehouseman is licensed under the act, his character and his assets and the other things that contribute to his responsibility as a ware- houseman are thoroughly investigated by the department. And as I said yesterday to these gentlemen, in case any such amendment were adopted, the bond ought to be greatly increased, because it is much easier for a man who gets money in his pocket to get on a train and get away than for the man Avho handles only wool. Mr. Anderson. Do you think, Mr. Murph, that the average banker — I have no opinion on this subject myself — do you thinli the average man would loan money on this receipt, which has nothing behind it except a bond to pay an indefinite amount on the receipt Avhen it is presented? Mr. ]\Iueph. I have never had any experience in a thing of that sort, and as much as I know about it has been expressed by ]\Ir. Ballard here this morning. Mr. Anderson. That is what it would be. Mr. Murph. Yes ; and whatever assets he may have in the way of other financial assets and personal integrity and security. Mr. Ballard. And the additional security of the depositor and his financial responsibility is behind it. AMENDMENTS TO WAREHOUSE ACT. 31 Mr. AfuEPH. And I also suggested to Mr. Ballard and these other gentlemen yesterday — and I think some of them thought I was a little hostile to their purpose — I also suggested to them that in ad- dition to the increase in the amount of the bond I thought it likely that the premium rate also would be greatly increased, in the case of that sort of bond, and I asked them if they thought the wool trade could stand that increased burden, and they said they thought it could. T think that answers your question. Mr. McLaughlin of Michigan. Of course, when a wool grower gets his depositor's receipt, if he wants to get money he goes to the banker and deposits that receipt. Now, the banker, until the debt is paid, would insist on holding his receipt. It would seem to me, before the warehoviseman should be permitted to dispose of any wool, that receipt should be in his hands, so that he could make some indorsement on it, some memorandum, indicating that the prop- erty had been disposed of, or taken from the warehouse and the money received on it ; and there would have to be some understand- ing or relation between him and the banker. The banker, in all probability, would not want that receipt to go out of his possession. Mr. Ballaed. That could not be done; that is wholly impracti- cable, and that is the reason why the receipt embodies on its face the provision for the sale of the goods and the payment of the money. Now, the goods are sold and immediately thereafter the original depositor, if he still has the receipt, or the banker, if it has been as- signed, will be notified that the money is ready and will be paid. Mr. McLaughlin of Michigan. Now, have you followed this op- eration through to its far-reaching ends ? Mr. Ballard. We have tried to, to its practical working out. Mr. McLaughlin of Michigan. You know, do you, when a banker takes a receipt and makes a loan to the producer, if that banker wishes money from a Federal reserve bank he puts up that receipt and a new note is issued on it ; that is a Federal activity, and there must be abundant security back o"f that ilote, and the Federal bank must know it, and if it knows that property deposited for that re- ceipt and the security for that note has been disposed of, will the Federal reserve bank issue money on that kind of security; and if it did, what might be the effect on the circulating medium and on the business of the country if the securtiy for that note is altogether dissipated or if it has changed radically from what it was in the first instance when it was considered absolutely good, because it was the goods themselves ? Mr. Ballard. The bond is still there for the entire amount. Mr. McLaughlix of Michigan. The bond of the individual ? Mr. Ballaed. Yes ; but with proper sureties. Mr. McLaughlin of Michigan. But the bond of an individual ? Mr. Ballard. Or it might be the bond of a corporation^, Mr. McLaughlin of Michigan. Of a corporation with limited lia- bility? Mr. Ballaed. Yes, sir. Mr. McLaughlin of Michigan. And in the end he has nothing but money in his hands. You see the different things we have to con- sider. Mr. Ballard. I get your point exactly. 32 AMENDMENTS TO WAREHOUSE ACT. Mr. MuRPH. :Mr. Chairman, may I ask Mr. Ballard a question? Mr. McLaughlin of Michigan. Certainly. Mr. MuRPH. Mr. Ballard, I was very much interested m the dis- cussion this morning as to the grading of wool. May I ask whether the holder of the wool or the receipt gets any notice of the grade when it is determiijed ? Mr. Ballard. Yes, sir. Mr. MuRPH. When? Mr. Ballard. As soon as it is graded. Mr. MxTRPPL He gets notice that it contains, say, 100 pounds of a certain grade, and 200 pounds of another grade, and so on ? Mr. Ballard. Yes, sir ; and the settlement is made on the basis of the notice he has. Mr. Mtjrph. Is that on the scoured grade ? Mr. Walker. Partly on the scoured grade, and also on the shrink- - age ; the condition of the shrinkage and the character of it. Mr. MuRPH. Mr. Chairman, the thought I had in mind was this, whether there could be some way by which the statement of the giade could afterwards be attached to the receipt placed in the hands of the man who holds the receipt, so that he will have that much more information about how much he will get in return for his receipt. Mr. Walker. That is not an impossible thing at all. Mr. McLaughlin of Michigan. That would be by a subsequent re- ceipt? Mr. MuRPH. A substitute for the first receipt, or a grade certificate. It seems to me that would strengthen it very much. Mr. Ballard. That was my statement a moment ago. Mr. Walker. It might be two or three weeks after the wool came in before it was graded. Mr. MuRPH. You gentlemen would have no objection to a regula- tion of that kind ? Mr. Ballard. None at all. As I suggested, we do not want to put into this law all these regulatory provisions. It would burden the law too much to go into details, but we have no objection to that at all. Mr. McLaughlin of Michigan. Wliy don't you operate under the law of your State, and if the law should be amended, have it amended ajid then not ask for a Federal license at all ? Mr. Ballard. Then we don't get the benefit of this matter of licensed graders and weighers that this act provides for. Mr. McLaughlin of Michigan. Wlay do you need that? Mr. Ballard. Because of the at least supposed assurance that comes to the association by reason of that law. It may; be only sup- posed. Mr. Anderson. That very supposed advantage and the fact that the license is supposed to indicate a reliability held out to the man who does business with the warehouseman that the warehouseman is reliable makes it so necessaiy to put into the act provisions which willmake it certain that the warehouseman is reliable and that the receipt which he issues stands for something. Mr. Ballard. That is it exactly ; that is what we want. Mr. McLaughlin of Michigan. The Government must see that he deserves the confidence of the people, so that they do not lose, if it IS possible to save them. AMENDMENTS TO WAREHOUSE ACT. 33 Mr. Anderson. The whole question is, if this \a.w is amended in the way you propose, we have established a condition under which the warehouseman is liable under all conditions, and a man 1,000 miles away from the place where that wool is sold must loiow that as well as the man in that immediate community. Mr. BAtLARD. You have in mind all the time the passing of the title by means of the warehouse receipts, which does not take place in the matter of wool. Mr. Anderson. It can be. Mr. Ballard. No ; if you will read my amendment, it can't be done. I can see where we are still having trouble here. [Reading :] Provided, hoicevcr. Such wareliousemau, by agreement with the depositor made at the time of the deposit by him of wool, may reserve the option to deliver such wool to the holder of the receipt therefor, or to the depositor as herein provided, or in lieu of such delivery to sell such wool when and as graded. The option is to the holder of the wool and not the holder of the receipt. There can't any title pass under that. Mr. Anderson. But you can sell the receipt? Mr. Ballard. Sure ; but that will never place the assignee in the position where he can demand the goods. Mr. Anderson. That is exactly the. position I am taking. The assignee can not take the goods. Whether it is a good or bad receipt doesn't help ; it lessens its value. That is the point I am making. Mr. McLaughlin of Michigan. And the purchaser of that receipt, or the one who loans money on it, relies on the Federal Grovernment, because the Federal Government has had something to do with it, and the Federal Government has let the property get away, and the Federal Government, in effect, guarantees it to the people into whose hands the bond comes. Mr. Ballard. As a matter of fact, I don't think that is true. He does not rely on the Federal Government for it. Mr. McLaughlin of Michigan. It passes through the Government's hands. Mr. Anderson. Suppose the man who is licensed is perfectly hon- est, but he has not good judgment, and he issues receipts to these people who bring wool to his warehouse. Now, he does not know much about the wool business, and he makes a number of bad sales. Of course, back of his business and back of him is the bond, but it is only a bond to deliver on the receipt what the best judgment of this man has gotten for the wool, isn't it? Mr. Ballard. Here are your regulations and the safeguards as to the regulations. Mr. Anderson. I know ; but no regulations can put brains into a man's head. Mr. Ballard. No; any more than legislation can wholly change a man's character. If that could be done, we would not need so many laws. A few laws to change men's natures would be sufficient. Mr. Anderson. Yes; that is very true, but we have an obligation, I think, here. Whatever advantage there may be in a Federal license, we have an obligation to see to it that the license means something. Mr. Ballard. If you do not do that, then you are not performing your full duty ; we will agree on that. 164876—20 3 34 AMENDMENTS TO WAREHOUSE ACT. Mr. McLaughlin of Michigan. Is there anything further? Mr. Ballard. We have nothing further. Mr. McLaughlin of Michigan. We are much obliged to you gen- tlemen ; we are glad to have had you before us. You understand, we will confer later with Mr. Murph ; he was for several years clerk of this committee, and w© know him and have confidence in him. Mr. Ballard. We trust nothing we have said here will cause you to have a lack of confidence in us or the association. Mr. McLaughlin of Michigan. No, sir; on the contrary, we have confidence in you and are glad to have had you before us. (And thereupon, at 12.10 o'clock p. m., the committee adjourned.) ■■--tm ..■./■■■■..■■■"♦■"•e'i