UNIVERSITY ©f ILL 
 
 ANTI-OPTION LEGISLATION-PATERNAL INTERFERENCE 
 WITH BUSINESS; 
 
 SPEECH 
 
 HON. JOHN DE WITT WARNER, 
 
 OF NEW YORK, 
 
 IN THE 
 
 HOUSE OF REPRESENTATIVES, 
 
 Monday, June 18, 1894. 
 
 WASHINGTON. 
 
 1894. 
 

 , 
 
 % 
 
 t 
 
 
 
 
 
 
 
VA./^o 
 
 Anti-Option Legislation—Paternal Interference with Business- 
 
 
 
 SPEECH 
 
 OF 
 
 HON. JOHN DE WITT WARNER, 
 
 OF NEW YORK, 
 
 Ln the House of Kepresentatiyes, 
 
 Monday , June 18 , 1894 . 
 
 J) 
 
 cr* 
 
 
 a-.: 
 
 The Honse being in Committee of the Whole on the state of the Union, and 
 having under consideration the bill (H. R. 7007) regulating the sale of certain 
 agricultural products, defining “options” and “futures,” and imposing taxes 
 thereon and upon dealers therein— 
 
 Mr. WARNER said: 
 
 Mr. CHairman : Rising as I do by the courtesy of the gentleman 
 from New Hampshire, who yields me his precedence but not his time, 
 I disclaim interference with the informal arrangement by which my 
 friend (Mr. Cobb of Missouri) controls the time in opposition to this 
 bill. 
 
 Now, sir, I want to start off by joining with my friend from Mis¬ 
 souri (Mr. Hatch) in the straightforward appeal that he has made 
 to this House. I beg every member of this House to read this bill 
 through—not to read merely the four, five, or six sections which my 
 friend from Missouri thinks will be enough for you, but to read the 
 whole bill. Read it through from beginning to end—and it will be 
 too much for most of you. 
 
 If we could have a civil-service examination of the Democrats in 
 this House upon this bill and be assured that they would all so 
 qualify themselves as to try to pass it, there would be no question 
 but that, without a single negative vote from the other side, we 
 would overwhelmingly defeat it by our own votes. It is because 
 this bill is undemocratic; it is because it is paternal; it is because 
 it is unconstitutional; it is because it is intermeddling ; it is because 
 it sums up in one bunch nearly all the sins for which we have so 
 long cursed and labored with the heresies of our brethren on the 
 other side of this House that I, for one, am opposed to it. 
 
 Now, sir, it is very reassuring to be told, as we are told by the 
 report upon this bill, that the bill is the result of long and patient 
 investigation and study, that the committee have had it under con¬ 
 sideration since early in the session. Why, Mr. Chairman, that 
 statement is altogether too modest. Since the time when it was 
 introduced as a Republican measure in the Fifty-first Congress, 
 right down to the present time, long after it has been repudiated 
 by gentlemen who first presented it, I suppose scarcely a day or 
 an hour has passed but that my friend from Missouri has been giv¬ 
 ing this measure careful consideration, and if there is anything 
 1455 3 
 
 i^P 
 
4 
 
 whicli proves that, it is the extent to which, by giving it consid¬ 
 eration, he has changed his mind since he last explained this meas¬ 
 ure to the House. 
 
 On a survey of his work uo one will question the further sugges¬ 
 tion of the report that— 
 
 The opposition to this bill will be different from that which had to be met in 
 the bill which was before the last Congress. Every argument urged against 
 that measure is met in this. 
 
 In fact, there is scarcely a shred left of the bill, which, two 
 years ago, was pressed as perfect, and there is scarcely a single 
 argument which could have been urged in support of the former 
 measure which the bill as now presented does not repudiate. 
 
 Two years ago my friend from Missouri was breathing fire against 
 all dealers in produce for future delivery, and was willing for the 
 time being to throttle his Democratic tendencies, and adopt the 
 most paternal methods to stamp them out. He proposed to make 
 everybody who dared touch the accursed thing first pay a license of 
 $1,G00, and then proposed to fine him at the rate of 5 cents for every 
 pound of cotton, hops, pork, etc., aifd 20 cents a bushel for all pro¬ 
 duce sold by that measure, and to make him give a bond ot $40,000 
 to keep his books so that the Government could always “make tfie 
 penalty fit the crime.” Such was his position after the two years of 
 consideration he had then been enabled to give the matter. Two 
 years of further study have ameliorated his mental condition. He 
 is now careful to explain that “legitimate speculation is the very 
 heart blood of commerce;” and is as vociferous in defending con¬ 
 tracts for future delivery as he was two years since in their con¬ 
 demnation. Two years ago the result of his study had convinced 
 him that “most members of the exchanges deal in ‘puts and calls/” 
 which he rightly brands as gambling of the worst sort; but now 
 he tells us that “but a small percentage of the menbership of any 
 board of trade in the United States, save perhaps the Cotton Ex¬ 
 change of New Orleans, and the Cotton Exchange of New York, 
 deal in ‘speculative gambling’ contracts.” 
 
 If confession is good for the soul, and we can judge of his feelings 
 by the wholesale renunciation of the views entertained by him two 
 years ago which he has made, my friend from Missouri is doubtless 
 the happiest man in this House. If this is his experience, as I have 
 no doubt it is, I know he will thank me for the suggestion that 
 he ask unanimous consent that the pending measure be referred 
 back to him for further consideration. For, sir, if we are to judge 
 of the future by the past the result would most certainly be that, 
 by this date two years hence, his patient investigation and study 
 would have obliterated the bill entirely, and my friend from Mis¬ 
 souri would lead the Democrats of this House in opposition to any 
 such scheme as this for extension of Federal powers, for paternal 
 interference with the details of legitimate business, and for obstruc¬ 
 tion to that part of our commerce, the free transaction of which is 
 most essential to the great agricutural interests of our country. 
 
 FLOUR. 
 
 I am sorry, however, not to be able unreservedly to congratulate 
 my friend upon the progress he has made. As his bill was intro¬ 
 duced, it included flour among the articles over which his watchful 
 care was to be exercised. I understand that this article was omitted 
 from the bill as finally reported by him upon information that this 
 article was always sold by special brand of the miller who ground 
 it. Personally I have not been able to understand why every facil¬ 
 ity should be given the miller to corner the wheat market, at the 
 same time that the system of sales for the future delivery of flour 
 was encouraged so as to keep anybody from cornering him. This, 
 1455 
 
however, might be explained by the fact that the corresponding 
 bill in the Senate, known as the Washburn bill, was composed 
 under circumstances which did not exclude the milling interests 
 from close consultation. 
 
 No such consideration, however, would commend such a course 
 to my friend from Missouri, who is certainly more of a farmer 
 than he is a miller, and I know he will appreciate my defense of his 
 motives, at least, when I assure him that he is mistaken in his as¬ 
 sumption regarding flour, and indeed that he must have been 
 “ stuffed” by wicked men with intent to lead him astray. It is 
 true that the Washburns, and Pillsburys, and other great North¬ 
 west millers, do have their special brands, and, to a large extent, do 
 actually manufacture the flour they permit to be sold under those 
 brands. It is, however, equally true that our great exporters and 
 jobbers, through whom is carried on our great foreign trade, are 
 accustomed to make sales for future delivery, either by contracts 
 providing that the flours delivered shall be equal to samples, or by 
 brands of their own which have no earthly relation to any mill or 
 miller, but which represent simply a standard grade which they 
 carefully maintain, and to fill contracts for which they purchase 
 flour indifferently from any source whatever that furnishes it in 
 sufficiently good and uniform grades. In other words, while it is 
 true that but a small proportion of the flour marketed is marketed 
 by sample, it is also true that the practice of selling futures in flour 
 by brands which are merely guaranties of quality, and which are 
 filled by purchases afterward made, is so general as utterly to 
 vitiate the gentleman’s supposition. I have no question as to the 
 sincerity Of my friend from Missouri. If, however, one may judge 
 from such a particular as this, it is evident that his opinion has 
 been swerved by some one who was about a thousand times as much 
 of a miller as is my friend from Missouri a farmer. [Laughter.] 
 
 I have such respect, sir, for the position of my friend, and I know 
 that the House will rely so largely upon his judgment, that before 
 I take up the special provisions of his pending bill I venture hastily 
 to sketch his attitude from another standpoint. How radically 
 different is his present bill from that of two years ago I have inade¬ 
 quately suggested. But, sir, when we come to compare the report 
 that he made then with the one which accompanies the bill now 
 under discussion, it is as surprising as pleasing to find that his 
 present statement of the several objects had in view is almost word 
 for word that with which he prefaced the oue we were not permitted 
 to discuss in the Fifty-second Congress. How valuable, however, is 
 this statement, which is the backbone of the recent report, may be 
 inferred from the fact that two years since it prefaced with equal 
 grace a most full and contradictory explanation of a totally differ¬ 
 ent bill. 
 
 THE CHARACTER OF THIS BILL. 
 
 Taking up the bill reported by the committee—the ruins of the 
 really imposing structure presented by it a few years ago—I beg, 
 sir, to call attention to a defect of that old bill which this new one 
 has preserved and even exaggerated. In the first section is carefully 
 defined what among business men is known as “ privilege ” dealing— 
 gambling in “puts and calls,” “straddles and spreads.” I do not 
 suppose that there is any one in the United States that will defend 
 these. The very ones who engaged in them would be most prompt 
 to admit that they are gambling, pure and simple. 
 
 Mr. CANNON of Illinois. I would like to ask a single question. 
 My friend is talking about “options,” “puts,” and “calls” and other 
 transactions that I do not know much about. But 1 find that in 
 section 5, page 4, of this bill there is a provision—and I am inclined 
 1455 
 
6 
 
 to think it is a very valuable one, because I do not know exactly 
 what it means [laughter]—that a “contango” agreement shall be 
 in writing. I think that must be something very useful. 
 
 Mr. WARNER. I am coming to that section; and I am going to 
 demonstrate that my friend from Missouri does not know—I will 
 not say he does not know what “contango” means—but that he 
 does not know what some other words there mean. It must be 
 remembered, however, first, that these gambling transactions have 
 nothing whatever to do with either the real produce or its price. 
 They are simple bets as to what, at some definite time in the future, 
 will be the price or variations in price of the article referred to. 
 They have no more to do with actual supply and demand, which is 
 the real criterion of price, than do the bets upon a horse race add 
 to or take from the speed with which either of the horses completes 
 his course. There is, however, no defense for them. 
 
 The only questions in this regard are, whether the evil is one 
 which may properly be attacked by law, and, second, whether it is 
 one the dealing with which comes within the legal powers of Con¬ 
 gress. 
 
 I had expected, Mr. Chairman, to make somewhat of an argu¬ 
 ment on these questions, but from a Democratic standpoint the 
 objects of this bill are so scandalous, and this was so well illustrated 
 by my friend himself in his discussion of them, that he leaves me 
 but little to do. He admits that his object is to enact by Federal 
 statute a new provision of criminal law. He tells you that he pre¬ 
 fers the proposition which was pending in the other House, which 
 directly undertook that; and he then admits that such a provision 
 would be unconstitutional, and that he has therefore gone at the 
 business in this indirect and, if I may say it, undemocratic sort of 
 way in order to reach the same result. If any Democrat on this com¬ 
 mittee will weigh that admission, it will be just as impossible for 
 him to vote for this bill, with that intent confessed by its author, 
 as it would be for him to vote for a bill assuming jurisdiction of 
 petty larceny in the States; and it is not a defense of gambling any 
 more than it would be a defense of petty larceny to object to this 
 unconstitutional and paternal attempt to interfere with and regu¬ 
 late by Federal enactment the local affairs of the several States. 
 
 If, on the other hand, the gentleman tells me that I ought to 
 regard it as a sufficient excuse for the transaction, that he expects to 
 get revenue from this measure, I ask him: “ Why don’t you get down 
 
 and sweep the other gutters of life in order to raise revenue ?” Why 
 does the gentleman omit so many other sources of crime and de¬ 
 pravity from which he might get revenue for the Government of the 
 United States by traffic in human vice, human misery, and human 
 weakness? If, Mr. Chairman, this had been suggested by a Repub¬ 
 lican, as it was four years ago, we would all have denounced it as a 
 most immoral and scandalous proposition. If it had been proposed 
 by a pagan we would have used it as an argument for standing by 
 our foreign missionaries in their attempt to carry enlightenment to 
 the far-off corners of the world, where poor degraded wretches were 
 brought up with such sentiments and surroundings. But when it 
 comes to a Christian Democrat [laughter], and he tells us that in 
 order to interfere with the local and criminal jurisdiction of the 
 States, as he admits wo can not constitutionally do, he will find an 
 excuse by levying a toll on crime; I can only urge that, remembering 
 what the gentleman himself has admitted, you determine that ques¬ 
 tion for yourselves when you come to vote on this proposition. 
 
 REAL MEANING OF “OPTIONS.” 
 
 In the second section are properly defined the contracts of agree¬ 
 ment in general use in many lines of business and which have 
 1455 
 
come to be known as “ futures. ” Right here it may he proper, 
 in view especially of the way in which the draftsman of this 
 hill has used the term “ option” in the first section, and of the 
 extent to which that word is frequently used to designate “ futures 7 ' 
 as such, to explain the real meaning of that term. For it should he 
 understood that the numerous references to “ options” which may 
 he seen in our commercial papers do not refer to the gambling 
 “privileges” described in the first section, hut in general to the 
 legitimate transactions known as “futures.” One of the uses of 
 futures is this: Millers, factory owners, contractors, and others, 
 knowing far in advance that they will require large and definite 
 quantities of raw supplies, find it to their advantage to contract 
 far in advance for the delivery of those supplies at fixed prices, 
 and thus to lessen the risk of any attempt to corner the actual 
 wheat, cotton, or other product before they need it for use. And 
 originally contracts were drawn, for example, providing for cotton 
 to be delivered upon a definite date in a certain month in the 
 future. It was soon found, however, that in the ordinary course 
 of business the exact dates at which the more important contracts 
 became due were generally known, and corners were engineered by 
 those wishing to take advantage of the situation, which could be 
 successful in their ends—that of fleecing consumer on the one hand 
 and producer on the other-^-provided the available stock could be 
 carried for a few days only, including the date at which the con¬ 
 tract fell due. 
 
 In order to avoid this trouble, and to put it out of the power of 
 speculators to corner the market unless they were competent to 
 carry for a considerable time all available stocks, the following 
 plan was devised: Contracts for future delivery were so drawn as 
 to give to the seller the option of choosing, within a certain month 
 named, the day upon which he would deliver the produce bought. 
 From that time on, under such contracts, with ordinary caution on 
 the part of the seller it was practically impossible to corner any given 
 product except at a cost and risk which of themselves were a guaranty 
 against the attempt. A January option, therefore, does not mean a 
 gambling privilege, according to which buyer or seller has the 
 option to carry out or to repudiate his contract; but it means a 
 definite sale to a purchaser, who expects to receive the produce, by 
 a seller, who is bound to deliver it, to whom, however, in order to 
 take away opportunities for cornering the market by others, is given 
 the option of choosing the particular day in the month named upon 
 which he will deliver the goods sold. An “ option,” therefore, as 
 generally referred to, is so far from being a gambling privilege that 
 it is rather a special form of a contract for future delivery devised 
 to reduce the gambling risk in legitimate business. 
 
 EXTENT OF INTERFERENCE PROPOSED. 
 
 This bill, sir, may be summarized as based upon two propositions 
 —both grossly mistaken ones. The first one is that the adminis¬ 
 trative features are reasonable and tolerable, either from a business 
 or political standpoint. On this point I can characterize, in no 
 other way so completely as by quoting extracts therefrom, the 
 utterly ruinous and paternal interference with the marketing of our 
 principal food products in which it is proposed our Government 
 shall engage. 
 
 Sec. 3. That all “options” and “futures” contracts and all transfers and as¬ 
 signments thereof shall be in writing and signed in duplicate by the parties thereto, 
 and every “options” contract shall state inexplicit terms the time when the 
 right or privilege of delivering, or the right of demanding the delivery of the arti¬ 
 cle or articles therein named, shall expire; and every “futures” contract shall 
 state in explicit terms the quantity and the day upon which, c»r the last day of the 
 1455 
 
■8 
 
 S eriod within which, the article or articles therein contracted to be sold shall be 
 elivered; and in each such contract the party so contracting, or the party for 
 whom he acts as agent, broker, or employee in making such contract to sell and 
 deliver, shall state explicitly whether lie is or is not, as the case may be, the owner 
 of the article or articles so contracted to be sold and delivered, or has or has not, 
 as the case may be, theretofore acquired it or them by purchase, or is or is not, as 
 the case may be, then entitled to the right of the future possession of such article 
 or articles under and by virtue of a contract for the sale and future delivery thereof 
 previously made by the owner thereof; and any such contract not including such 
 statements and not so made and signed shall be unlawful, but nothing contained 
 in this section shall be construed to relieve any person or dealer in “ options ” or 
 “ futures ” from the penalties and taxes provided for by this act. 
 
 Sec. 4. That whenever any “options” or “futures” contract shall be termi¬ 
 nated by the absolute sale and actual delivery of the raw or unmanufactured cot¬ 
 ton, hops, wheat, com, oats, rye, barley, pork, lard, bacon, dry-salted meats, or 
 pickled meat embraced in or covered by such contract the person contracting to 
 sell and deliver shall execute a bill of sale in which shall be specified the number 
 of pounds of raw or unmanufactured cotton, hops, pork, lard, bacon, dry-salted 
 meat, and pickled meat, the nnmber of bushels of wheat, corn, oats, rye, and bar¬ 
 ley, delivered, together with the name, title, or designation, and place of business 
 or the custodian, and the serial numbers and dates of the acceptances, certificates, 
 receipts, freight or way bills, or other vouchers representing the quantity of each 
 article sold and delivered. 
 
 Sec. 5 . That whenever any “ options ” or “ futures ” contract shall be termi¬ 
 nated otherwise than by absolute sale and actual delivery of the raw or unmanu¬ 
 factured cotton, hops, wheat, corn, oats, rye, barley, pork, lard, bacon, dry-salted 
 meat, and pickled meat embraced in or covered by such contract, or when such 
 termination shall be delayed or postponed beyond the time designated by the con¬ 
 tract, the cancellation, clearance, settlement, acquittance, contango, backward¬ 
 ation, privilege, waiver, ringing-out, or other agreement or arrangement by which 
 such contract shall be terminated otherwise than by absolute sale and actual 
 delivery of the article or articles embraced therein or covered thereby, or such 
 termination shall be delayed, postponed, or obviated, shall be executed m writing 
 and be signed in duplicate by the parties thereto. 
 
 Sec. 6. That special taxes are imposed as follows: Dealers in “options” or 
 “futures ” shall pay twelve dollars. Every person who shall, in his own behalf 
 or as agent, broker, or employee of another, as vender deal in “ options ” or make, 
 enter into, transfer, or assign any “ options ” contract, or shall by letter, tele¬ 
 gram, or other communication sent from the United States to any foreign country, 
 or by an agent, broker, employee, or partner, resident in any foreign country, make, 
 enter into, transfer, or assign, or cause to be made, entered into, transferred, or 
 assigned, any “options” contract entered into or terminated within the United 
 States, shall'be deemed a dealer in “ options; ” and every person who shall, in his 
 own behalf or as agent, broker, or employee of another as vender deal in “fu¬ 
 tures,” or make, enter into, transfer, or assign any “futures” contract, or shall 
 by letter, telegram, or other communication sent from the United States to any 
 foreign country, or by an agent, broker, employee, or partner, resident in any for¬ 
 eign country, make, enter into, transfer, or assign, or cause to be made, entered 
 Into, transferred, or assigned any “ futures ” contract, entered into or terminated 
 within the United States, shall be deemed a dealer in “ futures.” 
 
 Sec. 7. That the original and the duplicate of every “ options ” contract and of 
 every “ futures ” contract shall at the time of its execution have affixed thereto 
 internal-revenue adhesive stamps representing taxes as follows, namely: For 
 every ten thousand pounds or fractional part thereof of cotton, hops, pork, lard, 
 bacon, dry salted meat, and pickled meat, and for every one thousand bushels or 
 fractional part thereof of wheat, corn, oats, rye, and barley embraced in or cov¬ 
 ered by such contract, one cent. To each and every written or printed instru¬ 
 ment and to the duplicate thereof, evidencing any tranfer or assigumennt of any 
 “ options ” or “ futures ” contract, whether such transfer be by indorsement upon 
 said contract and the duplicate thereof, or by separate written instrument, there 
 shall, at the time such transfer or assignment is made, be affixed internal revenue 
 adhesive stamps representing taxes as follows: For every ten thousand pounds 
 of raw unmanufactured cotton, hops, pork, lard, bacon, dry salted meat, and 
 pickled meat, and for every one thousand bushels of wheat, corn, rye, oats, and 
 barley embraced in or coveredjby the contract, transferred or assigned, one cent. 
 Every bill of sale executed at termination of any “ options ” or “ futures ” con¬ 
 tract shall have affixed thereto an internal-revenue adhesive stamp of the denom¬ 
 ination of two cents. 
 
 To the original and duplicate of every cancellation, clearance, settlement, acquit¬ 
 tance, contango, backwardation, privilege, waiver, ringing-out or other agreement 
 by which the “options” or “futures” shall be terminated otherwise than by an 
 absolute sale and actual delivery of the articles embraced in or covered by such 
 contract, or by which such termination is or shall be delayed, postponed, or 
 obviated, shall be affixed internal-revenue adhesive stamps representing taxes as 
 follows: For every pound of raw or unmanufactured cotton, hops, pork, lard, 
 bacon, dry salted meat, and pickled meat embraced in or covered by such con- 
 1455 
 
9 
 
 tract, one cent; for every bushel of wheat, three cents, and for every bushel of 
 corn, oats, rye, and barley embraced in or covered by such contract, two cents. 
 Every “options” contract that shall expire by limitation without an absolute sale 
 and actual delivery of the article or articles embraced in or covered by such con¬ 
 tract, shall, at the time designated by such contract for its expiration, have 
 affixed to the copy thereof, which shall be retained by the vendor therein named, 
 internal-revenue adhesive stamps representing taxes as follows: For every pound 
 of raw or unmanufactured cotton, hops, pork, lard, dry salted meat and pickled 
 meat embraced in or covered by such contract, one cent; for every bushel of 
 wheat, three cents, and for every bushel of corn, oats, rye, and barley covered 
 by such contract, two cents. 
 
 Sec. 8. That every person engaged in or intending to be engaged in the busi¬ 
 ness of a dealer in “options ” or of a dealer in “futures ” shall, before commenc¬ 
 ing or continuing such business, give notice in writing, subscribed by him, to the 
 collector of internal revenue for the district wherein such business is to be carried 
 on, stating his name, residence, and if a company or firm the name and residence 
 of each member thereof, the name and residence of every person interested or to 
 be interested in such business, the principal place where such business is to be 
 carried on, and whether of dealing in “options” or “futures,” or both, and if 
 such business is to be carried on in a city, the residence and place of business 
 shall be designated by the name of the street and number of the building; and if 
 the whole building is not occupied, the number or other designation of each story 
 and the number and other designation of each room so occupied or to be occupied. 
 Every person intending to commence or continue the business of a dealer in 
 “options ” or of a dealer in “ futures ” shall, on filing with the collector of inter¬ 
 nal revenue his notice of such intention and before proceeding with such busi¬ 
 ness, and on the first secular day of July of each succeeding year, execute a bond 
 in the form prescribed by the Commissioner of Internal Revenue and approved 
 by the Secretary of the Treasury, conditioned that he shall faithfully comply with 
 all the provisions of law relating to the duties and business of a dealer in 
 “ options” ora dealer in “futures, as the case may be, and shall pay all taxes 
 due and all penalties incurred or fines imposed on him for a violation of any of 
 said provisions. Said bond shall be, with at least two sureties, approved by the 
 collector of the district, and fora penal sum of three thousand dollars. Nothing 
 in this act shall be construed to require more than one permit to or bond from 
 any person dealing in “futures” contracts, nor to prevent a change of the prin¬ 
 cipal place of business of such dealer in “ futures ” by first giving notice thereof 
 t© said collector. 
 
 Sec. 9. That it shall be the duty of every dealer in “ options ’■ or “ futures ” to 
 keep at his said principal place of business a book in which shall be recorded, on 
 the day of its execution, the date of each and every “options” or “futures” 
 contract made, entered into, transferred, or assigned by such dealer, in his own 
 behalf or in behalf of another or others, also the name and residence and place of 
 business ot the parties to the contract or to whom transferred or assigned, the 
 kind and quantity of the article or articles embraced in or covered by each such 
 contract, the day when or the last day of the time within which the right or priv¬ 
 ilege of delivering or of demanding the delivery, as the case may be. of such 
 article or articles as are embraced in or covered by any “ options ” contract shall 
 expire, and the day when or the designated period within which delivery shall be 
 made of the article or articles embraced in or covered by any “ futures ” contract, 
 and said dealers shall enter in such book such other particulars as the Commis¬ 
 sioner of Internal-Revenue, with the approval of the Secretary of the Treasury, 
 shall prescribe. All contracts executed during the fiscal year shall be numbered 
 consecutively, commencing with number one for the first contract executed on or 
 after the first day of July, and no two or more contracts made during the same 
 fiscal year by the same dealer shall have the same whenever any “options” or 
 “futures” contract shall be terminated by the sale and delivery of the article or 
 articles embraced in or covered by such contract, the bill of sale shall be numbered 
 to correspond with the number of the contract and recorded in the book with 
 name, title, or designation and place of business of the custodian and serial num¬ 
 bers and dates of the acceptances, certificates, receipts, freight or waybills, or 
 other vouchers representing the quantity of each article so sold and delivered. 
 Whenever any “options” or “futures” shall be terminated otherwise than by an 
 absolute sale and an actual delivery of the article or articles embraced in or covered 
 by the contract, or the termination thereof shall be delayed or post poned beyond 
 the time fixed by the contract the cancellation, clearance, settlement, acquittance, 
 contango, backwardation, privilege, waiver, ringing out, or other agreement or 
 arrangement by which the “options” or “futures” is so terminated, delayed, 
 postponed, or obviated, shall be numbered to correspond with the number of the 
 contract and recorded in the book as in the case of a bill of sale where the termina- 
 ation is by absolute sale and actual delivery. Such book shall at all times be kept 
 in the dealer’s place of business and shall be subject to inspection by the collector 
 or deputy collector of internal revenue or by any duly authorized internal-revenue 
 agent who may make memoranda or transcripts therefrom. And such further 
 particulars shall be entered in such book as maybe prescribed by the Commis¬ 
 sioner of Internal Revenue and approved by the Secretary of the Treasury. It 
 1456 
 
10 
 
 shall be the duty of every person required to keep the book provided for in this 
 section to matye a return monthly to the collector of internal revenue for the 
 district in which any “options” or “futures” contracts required to be entered 
 into such book shall be made, transferred, or assigned. The first return shall be 
 made on the first secular day of the month next succeeding the date of commenc¬ 
 ing business, or within five days thereafter, and returns shall be made on the first 
 secular day of every subsequent month or within five days thereafter. Each 
 return shall be under oath and in such form as the Commissioner of Internal 
 Revenue, with the approval of the Secretary of the Treasury, shall prescribe, and 
 shall show each “options ” and “futures ” contract made or entered into or trans¬ 
 ferred or assigned by such person in his own behalf or in behalf of others during 
 the preceding mon tn, together with all the particulars relative to such contract 
 as are shown by the record, or which may be required by the Commissioner of 
 Internal Revenue, with the approval of the Secretary of the Treasury. 
 
 In the quotations I have just given I have noted only those pro¬ 
 visions which the vender himself is obliged tb carry out. Other 
 sections provide for a most complex and obtrusive system of Gov¬ 
 ernment espionage and a highly specialized system of penalties and 
 criminal law to enforce the act, so that to the pestering of individu¬ 
 als it is proposed to add the multiplication of Federal officers and 
 the elaboration of criminal law appropriately devised as a part of 
 the new system of interference and espionage proposed by the bill. 
 
 There is no parallel in the world for such officious intermeddling, 
 except in some of the tyrannical governments of Europe, where 
 certain vices, being under police supervision, are looked after as 
 carefully as my friend from Missouri proposes to look aftef the 
 marketing of American produce. 
 
 Mr. CANNON of Illinois. Has the gentleman any idea how many 
 thousand internal-revenue deputies would be required? 
 
 Mr. WARNER. The bill if enacted must fall by its own weight. 
 No human being can do business if there are enough deputies about 
 his door to keep track of what he is doing under this bill, and no- 
 self-respecting human being will do business with the prospect of 
 such espionage as is here contemplated. 
 
 A great many years ago it was recognized that although there 
 might be tares in the wheat field, yet it would be better to leave 
 them grow together until the harvest. But my friend from Mis¬ 
 souri [Mr. Hatch] introduces a new principle. He says: “No, I 
 do not believe in pulling up the tares; that may hurt the wheat. 
 All I propose to to do is to pinch each blade of wheat as it comes 
 up, so that if to my enlightened thumb it feels like a tare I can 
 put it down in my books”; and it would he just as possible to 
 make a success of wheat-raising under those conditions as to 
 attempt to do business in the marketing of American produce 
 under the conditions prescribed by my friend from Missouri [Mr. 
 Hatch]. Mark you, the gentleman in his present report explains 
 that he is not against legitimate speculation. He explains that 
 only a few of the members upon any of the exchanges—except the 
 two wicked ones, the cotton exchanges of New York and New 
 Orleans—do much in this line. Mind you that, therefore, in order 
 to meet what he himself not merely confesses but demonstrates is 
 an infinitesimal proportion of the business of this country, he pro¬ 
 poses to stick his intermeddling hands into every legitimate trans¬ 
 action. 
 
 “ringing out.” 
 
 It is perhaps to the credit of my friend from Missouri that the 
 provisions of his bill demonstrate his unfamiliarity with such leg¬ 
 islation. It would be easy to take up section after section and show 
 its absurdity. A single instance must, however, suffice her°.. By 
 section 7 a penalty is provided for any “ ringing out” of contracts 
 for future delivery. 
 
 What my friend from Missouri fails to appreciate is that the 
 “evasion” which he proposes to punish so severely is not an evasion 
 1455 
 
11 
 
 of fulfilment of contracts which have been made, but simply an 
 avoidance of unnecessary trouble and expense in carrying them out. 
 
 The process of ringing out is not a substitute for actually fulfill¬ 
 ing a contract, but simply an expedient to avoid extra expense and 
 trouble in fulfilling it. The “ ringing out” is exclusively an 
 arrangement by which brokers in providing for their numerous 
 customers do so at the least expense to themselves. For example, 
 supposing that my friend from Missouri should to-day order me at 
 New York to purchase him, for shipment to Europe in November, a 
 boat load—or 8,000 bushels—of wheat at $1 per bushel, and sup¬ 
 posing that two weeks afterward my friend from Georgia should 
 instruct me to sell for him at 98 cents per bushel a boat load of 
 wheat deliverable at New York in November. Having placed both 
 these contracts on change, it is not improbable that before their 
 maturity they may have both gotten into the hands of a single 
 broker who, discovering that he is obliged to receive from me a 
 boat load of wheat in November and also deliver to me the same 
 amount in the same month, notifies me of the fact and suggests 
 that he is ready to receive the difference in price, and to consider 
 the contracts as “ rung out,” that is to say, that together they have 
 made a circle or ring, and met and canceled each other. In other 
 words, “singing out” is simply an adjustment between brokers to 
 save the cost of transferring produce back and forth. The cus¬ 
 tomer has nothing whatever to do with it. The man who bought 
 the grain will receive it in November as he stipulated for. The man 
 who sold the grain will have to deliver it as he stipulated for. The 
 only difference is that, instead of each broker, through whose hands 
 the contracts have passed, being compelled to attend to both the 
 receipt and delivery of the grain, it has been arranged between them 
 that there should be but one receipt and delivery, and that—since 
 these can be most easily attended to by the one who has both to 
 receive and deliver the same amount—that all others interested shall 
 be excused from bothering themselves with it. The result is simply 
 so much less trouble in handling grain and so much less of cost to 
 come between the producer and consumer. There is nothing of 
 gambling about it at all, and it is simply one of the methods by 
 which business is facilitated. 
 
 In practice, among the hundreds and even thousands of members 
 associated upon an exchange, these opportunities for cancellation 
 naturally occur as a result of a series of contracts rather than of a 
 simple interchange between two brokers. In every great exchange 
 firm there is therefore some clerk whose business it is to keep track 
 of all their contracts, both bought and sold, and, whenever possible 
 to do so, to obviate expense of mutual receipt and delivery by 
 interchanging against each other corresponding contracts for pur¬ 
 chase and sale—-the saving of time and expense being simply enor¬ 
 mous and absolutely essential to enable expense of handling produce 
 contract to be kept at a point sufficiently low to make them attrac¬ 
 tive for temporary investments. It is true that upon these can¬ 
 cellations differences are paid in cash. This again, however, is 
 neither gambling nor has it anything to do with the purchaser or 
 seller. It is simply a case where a broker, by the rules of his 
 exchange responsible for his customers, finding that in dealings 
 with another broker he is obligated to receive money for the credit 
 of a customer, and to pay out money for the account of another custo¬ 
 mer,simply sends or receives the balances between the two amounts. 
 
 A MEMBER. How about “contango”? 
 
 Mr. WARNER. I will say that “contango” is not particularly 
 wicked. T.t is not, however, the same transaction as “ringing out.” 
 It is a way temporarily to postpone settlement. 
 
 1455 
 
12 
 
 Mr. WALKER. It is the same kind of a transaction. 
 
 Mr. WARNER. It is, in a way, similar, but not the identical 
 transaction involved in “ringing out.” 
 
 Mr. PATTERSON. What is that transaction? 
 
 Mr. WARNER. It is an arrangement for postponing delivery of 
 goods purchased. I have heard it most frequently used with ref¬ 
 erence to the public securities of different countries. I do not see 
 any reason why it should not apply to produce, but it is not gen¬ 
 erally used in that way; at least I have not frequently so heard it. 
 
 Mr. HALL of Missouri. If I understand you the ringing-out pro¬ 
 cess is simply a clearing-house process. 
 
 Mr. WARNER. That is all. The whole business is simply and 
 purely one of clearing-house methods adjusted to the complex re- 
 relation of contracts involving produce as well as money; the reasons 
 for the methods adopted, the economies in their use, and the facili¬ 
 ties given to the advantage ot all concerned, and the utter lack 
 of effect except to reduce the expense of doing his business upon 
 the contractor or contractee being precisely the same as in the 
 case of a clearing-house in its relations to banks and their individ¬ 
 ual depositors. A bank depositor draws a check addressed to his 
 bank requiring the payment to a certain individual of a certain 
 amount of money. This particular thing is, however, one of the 
 most rare of occurrences. What the person does is to deposit 
 that check in his bank, requesting its payment to such bank. 
 What that bank does, however, is not to present that check, but t© 
 turn it into the clearing-house; and what the clearing-house does 
 is not to present the check, but to add it with hundreds of other 
 checks against the bank in question and offset it by the equally 
 numerous credits in favor of the bank in question, and as a result 
 receive from one or another of its members, and pay to one or an¬ 
 other of its members, a balance, infinitesimal as compared with 
 the total amount of its transactions, and having no special ref¬ 
 erence to anyone of them—this without in the slightest degree 
 affecting the relations of any of its associated banks with their 
 customers, whose accounts are kept in precisely the form that would 
 be the case were the primitive method of settling each check by 
 payment in cash at the bank upon which it was drawn in actual 
 vogue. 
 
 I was about to say that it would be just as sensible to fine every 
 drawer of a check for permitting it to be paid through the clear¬ 
 ing-house. This, however, Mr. Chairman, would be an understate¬ 
 ment, for the check involves money transactions alone. The 
 multitudinous contracts thus “cleared” by the “ringing-out” 
 process involves each the handling of enormous bulks of stored prod¬ 
 uce as well as the handling of the money involved. And, therefore, 
 when my friend from Missouri proposes a penalty for the ringing- 
 out of contracts this is much worse than if heshould forbid any check 
 to be settled otherwise than by separate payment in cash at the 
 teller’s window, as is the handling of a boat load of wheat more 
 onerous than the carrying about of a check. The utter igno¬ 
 rance, not merely of the conditions with which he is dealing, 
 but of the most common expedients of permitting business to be 
 done in a civilized way, is the only excuse which my friend can 
 urge. If he were to be charged with the intent to accomplish what 
 his proposition would actually do if carried out, he would become 
 an outlaw to be abated as an Apache or a dynamiter. Of course, I 
 appreciate that he intends no such attack upon commerce. Such, 
 however, is practically the attitude in which this bill places him, 
 and the consideration to which, if he is to be takmi seriously, the 
 commercial world must consider him entitled. 
 
 1455 
 
13 
 
 / 
 
 THEORY THAT ‘-FUTURES” ARE WRONG. 
 
 The second theory on which this bill is based is that deals for future 
 delivery are immoral, and hence that any interference with them is 
 presumably a good thing for the farmer and probably for every one 
 else. 
 
 THE OBJECT OF “FUTURES,” 
 
 As to this, I believe the real trouble to be that our friends are 
 either unacquainted with the nature of the transactions with which 
 they propose to deal, or on the other hand, forgetful of the condi¬ 
 tions under which commerce and business have developed. I am led 
 to these conclusions by the suggestion still frequently made, though 
 not as often as it was two years ago, as in the mind of the speaker 
 a conclusive answer to any defense of the contracts called futures, 
 viz: That they are plainly an attempt on the part of a person to 
 sell what hedoesnot own. That is an entirely correct description, 
 Mr. Chairman, one with which I shall not for a moment quarrel; 
 and it is j ust because such is their nature that the business of dealing 
 in futures is a natural and beneficent one, and will become more ex¬ 
 tended and more beneficent as our civilization develops and the pro¬ 
 cesses of production and distribution become perfected as to one 
 after another of our great staples. To the extent that dealings in 
 futures are substituted for what is known as spot trausactiohs is 
 the gambling element eliminated from the business involved, the 
 effect being in each case to relieve the one who participates in each 
 stage of the transactions involved from all speculative risks except 
 that particular one which, it being his special busness to estimate, 
 is for him legitimate and for any one else would be illegitimate. 
 
 Let me explain. If a jackal wants a shelter, he goes into a con¬ 
 venient cave. If a ground hog wants one, with somewhat more of 
 intelligence directed to that particular object, he digs him a hole. 
 If a savage feels similar need, with still advancing use of intellect, 
 he puts together, or makes his wife do so, the materials of which 
 his rude hut is constructed; or if he is a great chief and wants a 
 bigger one he causes to be brought together the material, and when 
 he has gotten them they are fashioned and put together as he may 
 order. If, however, a civilized man wants a house, about the last 
 thing he does—or about the first thing he is sorry for if he does do 
 it—is to purchase the lumber, the stone, and the brick, and then 
 hire the men to put up the house himself. The reason is plain. In 
 direct proportion as we take advantage of civilized condition we 
 have to deal with a greater and greater proportion of matters as to 
 which no man can be an expert in more than one, and the man who 
 undertakes to be his own architect and carpenter and to serve him¬ 
 self as contractor in every branch required for housebuilding is 
 simply taking in each case a gambling risk about which he can 
 know little or nothing. What he does do, however, is to go to a 
 builder whose special business it is to arrange for the erection of 
 houses in that locality and he contracts with that builder for his 
 house—in other words, he buys a future in houses, deliverable six 
 months, or a year, or two years hence. 
 
 Mr. PENCE. And what if he does not deliver the house? 
 
 Mr. WARNER. If for any reason he dues not want the house, or 
 he wants a different or better house, or if for any reason the two 
 parties concerned come to a different conclusion than they at first 
 contemplated, this beneficent Government—up to date—allows them 
 to attend to their own business. 
 
 It is not assumed—it generally is not the fact—that the building 
 contractor has a single foot of the timber, a single one of the stones, 
 a single thousand of the brick, or, indeed, any of the material that 
 he thus sells in the shape of a future in houses. 
 
 1455 
 
14 
 
 No one, however, won! d claim that this is a gambling transaction; 
 every one, on the contrary, would appreciate that, so far from a 
 gambling transaction, it was a legitimate process by which what 
 would have been a speculative risk in the man who wanted the 
 house, but who knew nothing about building, was transferred, to 
 his great advantage, to a contractor who could legitimately assume 
 the risk in question, for the very good reason that it was his par¬ 
 ticular business, in which he had carefully trained himself, so as to 
 make the contract for him a legitimate business transaction. This, 
 however, is only the first step. The contractor himself is not equally 
 an expert in carpentry and mason work, in plumbing and gas-fitting, 
 and decoration, exterior and interior. He, in turn, having made a 
 contract for the future delivery of a house, calls'in several trades¬ 
 men, each most conversant with the particular branch with which 
 he is to deal, and the general contractor buys of one a future in 
 masonry, of another a future in carpenter work, of another a future 
 in plumbing and gas-fitting, of another a future in painting. And no 
 one knows better than himself that no one of these has on hand a 
 single item of the work he thus contracts to deliver. But, just as 
 the owner ^recognizes the contractor as a man who can undertake 
 the general risk for him much more cheaply and much more legiti¬ 
 mately than he could undertake it for himself, just so the contractor 
 recognizes each one of these several tradesmen as one who can under¬ 
 take in his specialty much more cheaply and much more legiti¬ 
 mately than can he the special risk involved. 
 
 Not merely the articles mentioned in this bill, but iron, copper, 
 tin, cotton goods, butter, cheese, coffee, freights, and exchange are 
 regularly contracted for long in advance by those who are thus 
 enabled to make definite provisions for the particular industry in 
 which they are engaged. Lines of cloths are sold in the same way 
 long before their manufacture. Building materials are thus con¬ 
 tracted for long before the timber is hewn or the clay dug. That 
 the gentlemen who are pressing this bill have not heard of these 
 futures and do not provide against them sinxply shows how little 
 are they acquainted with the universal tendency of civilized busi¬ 
 ness. That they have selected the cases which are best known and 
 most universally practiced simply shows to me, sir, that in their 
 misinformation they have so drawn their bill as to apply it to the 
 very cases in which, on account of the market being universal and 
 the information as to the supply and demand being most easily and 
 most promptly secured, the possible good to be done by such a bill, 
 even upon their own assumption, is the least, and the certain inter¬ 
 ference in legitimate business the greatest possible. Indeed, the 
 future system is being gradually extended to cover every product 
 in regard to which practical methods of grading and preservation 
 are devised; and in every quarter where this has not already been 
 accomplished the ingenuity of intelligent producers and dealers is 
 exercised toward the solution of the problem. It is the universal 
 experience that in proportion as the grading of a product can be 
 perfected and the dealing in it systematized is the economy with 
 which it can be handled between its production and ultimate use 
 to the equal advantage of the one who produces it and the one by 
 whom it is finally consumed. 
 
 ILLUSTRATION PROM COTTON TRADE. 
 
 Now take the case of the cotton manufacture. I can not but feel 
 that the theory upon which this bill is drawn is that the cotton 
 manufacturer, when he finds he wants cotton, takes a cart and goes 
 around and buys it of the planter, takes it to his mill, weaves it 
 into cloth, and then takes the cloth and carts it about, seeking some 
 one to whom he may sell it. This does approach the primitive— 
 1455 
 
 I 
 
15 
 
 the barbaric—method of doing this kind of business; and it is but 
 fair to admit that under such circumstances there would be no 
 trouble about dealings for future delivery. Such, however, as every¬ 
 one knows, is not the case at present. The business of cotton plant¬ 
 ing, of cotton marketing, of cotton manufacturing, and of distribu¬ 
 tion of cotton goods is in each case a highly specialized industry, 
 capable of engrossing all the enterprise, intelligence, and tact of 
 any man, and as to which no prudent man wishes to undertake more 
 than one at a time. In the case of the manufacturer, for exam¬ 
 ple, the one thing with which he is conversant is manufacturing— 
 the process by which, the cost at which, the time within which, 
 given the material ready for his use, he can produce the cloth ready 
 for sale. He does not know anything about cotton-raising. And 
 it would be impossible for him to keep track of the relations between 
 the supply and the demand of cotton, the development of transport 
 and commercial facilities, and all the other data that are included 
 within the province of the cotton dealer. He is equally unac- 
 quaintedwith the methods by which through wholesaler and jobber 
 and retailer, in accord with the varying demands arising from 
 varying conditions, his goods must be marketed to the ultimate 
 consumer. What he does know, and the only thing it is safe for 
 him to depend upon knowing, is the process of manufacture. The 
 risks involved in this are the ones which it is his legitimate busi¬ 
 ness to assume, for the precise reason that he appreciates and can 
 handle them better than anybody else, so that what to anyone else 
 would be a mere gambling venture is to him a business enterprise. 
 How does he do this? 
 
 In general, as you know, the process is about as follows: The 
 manufacturer is without capital except a small margin above that 
 sufficient to enable him to run his factory. He goes to the factor 
 at New York, Boston, or Philadelphia—the man who is specially 
 versed in the methods of distribution of cotton goods. He consults 
 with him as to the kind of goods for which there will probably be 
 a good demand in the near future and as to the prices at which 
 these goods can probably be marketed. He selects those as to which 
 his experience suggests he can most surely make a profit, and there¬ 
 upon contracts with his factor somewhat in this wise: The mill 
 owner contracts to deliver to the factor, say, 10,000 pieces of goods 
 per month for twelve months, commencing three months in the 
 future, and the last delivery being fifteen months off. In turn, the 
 factor contracts to advance funds to the mill owner from month to 
 month at a rate not to exceed a certain rate per yard or per piece of 
 the goods to be delivered, to market the whole product as advan¬ 
 tageously as possible, and to render an account at certain dates, in¬ 
 terest being charged and paid at a certain fixed and generally mod¬ 
 erate rate. There is now left for the mill owner but one factor of 
 anxious uncertainty in the situation. As to the manufacturing, he 
 understands perfectly its different conditions, and as the price of 
 cotton then rules, he knows there is a fair margin for safety and 
 profit in the transaction. The price of cotton, however, may vary 
 by 25 or 40 per cent in the course of the year. It is something 
 which he is utterly powerless to influence. 
 
 After all these arrangements noted are made, he is still in a position 
 in which, while a material reduction in the price of cotton may add 
 greatly to his profit, a sharp rise in this price may bring certain 
 ruin. Should he go on under these conditions his business is specu¬ 
 lative, risky, illegitimate. There are just two ways in which he 
 can avoid this: He can buy at once, by spot contract, the whole 
 amount of cotton he will need for the next fifteen months, thereby 
 necessitating the use of an enormous capital and excessive expense 
 1455 
 
10 
 
 for interest, storage, handling, and insurance; or, going into the 
 market, he can buy cotton in such amouuts as he shall estimate he 
 will need for delivery month by month in the future. His expe¬ 
 rience has taught him that the grades which are near the standard 
 grade vary with such exactness in proportion as does the price of 
 that grade, that he need not concern himself as to the precise grade 
 he wishes; but that by making a present contract for future deliv¬ 
 ery, month by month as he estimates he will need the cotton, of a 
 sufficient quantity of a standard grade, he can, on any month when 
 such contracts mature, secure any marketable grade above or below 
 that standard by simply paying the difference, if what he wants is 
 a better quantity than the standard, or by realizing the difference 
 in case the cotton he wishes to use is of a poordr quality. 
 
 In other words, by the system of dealing in futures the cotton 
 manufacturer is enabled to do his business with but a small propor¬ 
 tion of the capital he would otherwise need, and to do it upon a 
 profit margin much smaller than would be necessary if he was 
 obliged either to take the gambling risk involved in waiting until 
 he needed the cotton before he contracted for it, or, on the other 
 hand, in keeping idle the money and meeting the expense involved 
 in the purchase and holding of the enormous amount of cotton 
 required. And I need not add that in proportion to the cheapness 
 with which the manufacture can thus be carried on, the smallness 
 of the margin which manufacturers are willing to accept, the induce¬ 
 ments which are thus given manufacturers by relieving them from 
 all risks except the one which they are specially qualified to under¬ 
 take, is the manufacture of cotton encouraged, the margin between 
 the cost of the product and the cost of the raw cotton cheapened, 
 the consumption increased, and the demand for and the price of the 
 planters’ product increased. 
 
 To subject such deals to the provisions of this bill not merely 
 involves a harassing trouble and expense, but—since there is no 
 necessary contract relation between the deals in standard grade he 
 has thus made for future delivery, and his actual purchases of spe¬ 
 cial grade, when he comes to need them—the manufacturer would 
 be subjected to all the pains and penalties provided by this bill for 
 gambling transactions. The only alternatives would be such addi¬ 
 tional complexity in the bill, and the practice under it as would 
 make it impracticable, or such evasion by a system of ‘‘washing” 
 contracts as would tend to drive straightforward men out of the 
 business. 
 
 “FTRM OFFERS”—WHEAT EXPORTS. 
 
 Take our great agricultural export trade—that upon which, to 
 a greater extent than upon any other branch of our commerce, 
 depends the prosperity of the great agricultural classes of the coun¬ 
 try. Take the item of wheat, which perhaps is more characteristic 
 than any other, except cotton. American wheat and other prod¬ 
 ucts of the kind are marketed in Europe and throughout the 
 world by a system known as “ firm offers.” That is to say, in the 
 afternoon of each day on the Produce Exchange at New York, or 
 the Board of Trade at Chicago, the American broker sends cable 
 advices to each one of his foreign correspondents—sometimes hun¬ 
 dreds in number andin every part of the civilized world, especially 
 throughout Europe—naming the price at which he will contract 
 to ship them wheat, corn, or other produce, provided the accept¬ 
 ance reaches him before the noon of the following day. The 
 European correspondent neither knows nor cares about the con¬ 
 ditions which will probably govern the course of prices in the 
 next twenty-four hours. But he does know the conditions which 
 affect the immediate demand for wheat or other produce in his 
 1455 
 
17 
 
 country or vicinity, or is in telegraphic communication with those 
 who do know. The European dealer, therefore, calculating upon 
 the basis of the offer made him, sends to his own customers through¬ 
 out the province, or the country where his connections are, and 
 offers to deliver them American produce at certain fixed rates in 
 ease their answer is given within a certain number of hours. 
 
 At the expiration of the time thus given each European corre¬ 
 spondent knows whether he will be able to market at a profit the 
 American produce that has been offered him at a fixed price; and 
 before the close of business on the day succeeding that upon which 
 the American broker has made his offer, there come back to him the 
 acceptances from every part of the world of every man who, at the 
 price named, cares to handle American produce. These acceptances 
 are, of course, from but a comparatively small proportion of those 
 to whom the offers were made. Advised of the amount he will be 
 called upon to deliver, the American broker goes upon“ 'change ” and 
 purchases to cover the sales thus made, and having made his offers 
 according to the best information in a matter in which he is an 
 expert, the average result is a net profit to him on the transaction. 
 By this process, without the employment of any extraordinary 
 amount of capital, without assuming any risk except the one which 
 he is best qualfied to measure, and in return for the assumption of 
 which he has named and received his compensation, the American 
 broker has succeeded in offering at every spot in the entire world 
 American wheat in competition with that from every other country. 
 
 If, however, he is not to be permitted thus to do business; if he 
 is not to be permitted to sell wheat until he has bought it—for 
 the sale is closed the moment the return telegram is received—this 
 whole system of offering and marketing American produce must 
 eease, except in so far as it shall be carried on by the few who are 
 able and willing either to contract in advance for tenfold the 
 amount of produce that they can possibly expect to market, and 
 thereby tenfold increase their expense and risk, or who are willing 
 to limit their offers to the few cases which would be possible if their 
 aggregate is to be confined to the amount the American broker has 
 contracted for. The result would be practically to stop the offering 
 of the American produce in most of the markets in the world in any¬ 
 thing like sharp competition with that from other countries, or so 
 to increase the amount of capital required and the amount of risk 
 involved as to require the exaction of a much larger margin 
 between the price at which the firm offer is made and the price at 
 which the produce can be purchased here. And as the former—the 
 selling price abroad—is fixed by the level of the world’s commerce, 
 this would mean just so much lower prices to the American pro¬ 
 ducer. 
 
 Mr. WILLIAMS of Mississippi. This bill does not do that. 
 
 Mr. WARNER. It is suggested by my friend [Mr. Williams of 
 Mississippi] that the bill does not do that. It may be claimed 
 that if the precise order is filled by the shipment of standard grade 
 that the bill does not prevent that. But it must be remembered 
 that every single one of these orders carried on in trade is negoti¬ 
 able ; and when a Government contractor in Bristol, for example, 
 wants to be sure that he will be able to get the wheat he does want 
 at a price which will enable him to make a profit out of his con¬ 
 tract, he buys No. 2 red wheat. And then, even though he does not 
 want as good a quality, or even if he wants a better quality, he 
 knows that when the time comes he can exchange or settle that 
 contract in such a way as to secure without sacrifice just the 
 quality he wants, the relation of the prices of the two grades being 
 practically constant throughout the world. The case is the same 
 1455-2 
 
18 
 
 as with cotton. The penalties of this bill would prevent perfectly 
 legitimate transactions. 
 
 Now, there is the trouble with the bill of my friend from Mis¬ 
 souri. His intentions are all right; but he does not know what he 
 is about. He assumes that he knows what we mean when we 
 contract, and that if we do not do the precise thing he expects us 
 to do we are committing a crime which, under appointment from 
 heaven, it is his business to look out for and punish; whereas this 
 is legitimate business; and in a great measure, although contracts 
 for future delivery of cotton, as well as wheat, are in what is 
 known as the standard brand, this is the way by which, indirectly 
 as I have mentioned, not merely the standard, brands and grades 
 but the whole great product, of all grades,'is marketed to the 
 purchaser. 
 
 INDUCEMENT FOE TEMPORARY INVESTMENT. 
 
 I have attempted to illustrate but two of the numerous features 
 of deals for future delivery, the conditions of which are inherent in 
 the natural process of the marketing and use of our chief agricul¬ 
 tural staples. There is another consideration which most substan¬ 
 tially affects their price, and by which, not as a matter of original 
 intent, but as a matter of beneficent result, the producer and con¬ 
 sumer alike are greatly aided. Under the old system of spot deals 
 in the products now iargely handled by sales for future deliv¬ 
 ery, the investment in them—as is still the case with every product 
 not dealt in by futures—tended to be limited to those who were 
 specially conversant with the circumstances of their production and 
 use, and had an extraordinary amount of capital at their disposal. 
 As fast, however, as an article became one genrally quoted on the 
 exchanges and extensively dealt in for future delivery it became 
 an attractive object for temporary investment, which is what, I 
 presume, is meant by my friend from Missouri when he talks about 
 legitimate speculation. That any product may be attractive for 
 temporary investment—i. e., for the use of the vast amount of float¬ 
 ing capital that is waiting permanent investment, or kept in hand by 
 its owner as a safety margin in case his more risky ventures fail— 
 certain matters are essential. The product must be a well-known 
 staple, so largely produced and so generally dealt in as to be famil¬ 
 iar to the general public; and the conditions of its supply and use 
 must lie such as to make it reasonably sure that it has an actual 
 worth4ndependent of all probable risks which can be realized at 
 any time without extraordinary trouble or sacrifice. 
 
 These conditions are most nearly met in the case of our great agri¬ 
 cultural staple; and to the precise extent that facilities for infor¬ 
 mation, transportation, and trade have been perfected, our food 
 product has become more and more the normal investment for 
 enormous amounts of capital that, until lately, were left idle in 
 banks or confined to investments in Government funds. An im¬ 
 portant effect of this development has been, first, greatly to increase 
 the number of investors and the amount of capital available for 
 investment in farm produce, and thus somewhat to increase, and 
 even more, to steady its price; and, second, to reduce the margin of 
 expense for handling farm produce between the producer and the 
 consumer, and thus benefit both. 
 
 As to the former, the advantage of more numerous purchasers 
 and more capital for investment in a given product, I shall not 
 assume any special explanation to be necessary. 
 
 On the second point, however, a word may be in order. So long 
 as the dealing in produce is confined to those who have chosen it as 
 their main business, the average profit which they expect must at 
 least be as high as the ordinary interest upon capital, plus the re- 
 1455 
 
19 
 
 ■ward for whatever of risk is involved. Temporary investments, 
 however, are made as an alternative for leaving capital idle; and 
 therefore, provided the investment is one from which his capital 
 can be easily and promptly withdrawn, the investor is willing to 
 purchase the wheat or cotton involved on any terms which, on the 
 average, will secure him a small fraction of the ordinary profits in 
 his main enterprises. As a result of the presence, bidding for wheat 
 to be delivered far in the future, of a vast amount of capital which 
 will be satisfied on the average with profits at the rate of 2 or 
 3 per cent interest, the discount is lessened, that is, a higher price 
 is offered to-day for the wheat which will be needed next De¬ 
 cember, than opuld be afforded by one who was making the purchase 
 and sale of wii'eat simply his main business, and who therefore 
 would insist upon discounting the expected future price to an ex¬ 
 tent which would give him 6 per cent or more interest a s well as profits 
 for his trouble. As a natural and desirable result, .the great bulk 
 of the ordinary business of handling and marketing the farm produce 
 of the civilized world is doue through the temporary investment 
 of floating capital willing to serve its purposes at an interest from 
 3 per cent down to nothing, and eagerly competing for the chance 
 to do so. 
 
 The difference, after deduction of all strictly transport and hand¬ 
 ling charges, between the old profit margin—which in former times 
 used alike to reduce the price to the producer and increase it to the 
 consumer—and that which obtains to-day is a practical illustration 
 of the nature and extent of the universal benefit thus secured. 
 
 It may be urged that the great amount of business has of itself 
 permitted a lower relative scale of charges and profit. But even 
 this is, in its turn, directly attributable to the eagerness with which 
 capital seeking temporary investment avails itself of the opportu¬ 
 nities offered. If it is the result of this system—and it largely 
 is so—that to-day there are five or ten purchases and sales of grain, 
 including the great number made by those who have taken it only 
 as a temporary investment, as compared with the far less number of 
 those made in the main by special dealers a few years since, this 
 simply measures the competition for employment of capital that has 
 been the result of present methods, and indicates the inevitable low¬ 
 ering of interest and carrying charges that is the result of this com¬ 
 petition. In short, the normal transfers and deals necessary between 
 the farmer and the baker involve at the present day not more than 
 one-half or one-fourth of the corresponding expense ten years ago— 
 leaving actual transport charges entirely out of the question. This 
 is the result of the fact that the competition of capital to invest in 
 wheat is such as to quadruple, we will say, the amount of such busi¬ 
 ness done, and therefore reduce the cost at which brokers can afford 
 to do it. 
 
 The farmer is, therefore, directly benefited in the resulting 
 cheapness with which his necessary business is transacted, while 
 the extent of the competition for investment in that business 
 measures the average reduction m the discount—greater for every 
 month in the future—that will be made in naming a present price to 
 the farmer from the probable worth of the wheat at the time when it 
 shall be finally ground into flour. 
 
 Noristhis all. Suchis the sanguine temperament of humanity that, 
 in the case of any article thus made a natural subject of temporary 
 investment, the tendency always is to offer more than conservatism 
 would estimate as safe. It is a most striking and conclusive result 
 of this that the New York market averages higher than the Liver¬ 
 pool market, and the Chicago market higher than the New York 
 market, when cost of transport is considered—in other words, that 
 1456 
 
20 
 
 the temporary investors on the average lose their interest and pay 
 part of the transportation to boot, so that the Western farmer or 
 Southern planter gets just so much more for his wheat or cotton. 
 
 This feature—an advantage alike to the producer and consumer of 
 wheat would be simply obliterated by such legislation as that now 
 proposed. Not only does the fact that the investments are tempo¬ 
 rary, and that the same wheat is sold over and over again within a few 
 months, multiply the obstruction and expense involved by the pro¬ 
 visions of this bill; but it is a fact that frequently—though not 
 nearly so often as claimed—it is convenient for all parties con¬ 
 cerned to settle by paying differences. I presume my friend from 
 Missouri will agree that if a bona fide temporary investor occa¬ 
 sionally wanes to back out of his contract he should be permitted 
 to do so if he can arrange with the one to whom he is under 
 obligation. But the trouble is that if he wishes to do so once in ten 
 times the penalty provided by this bill will destroy his chances of 
 profit on the whole ten deals, and the result will be that no one 
 will have to do with business subjected to such intermeddling, except 
 the few genuine gamblers, who will arrange to evade the law, as 
 they can easily do if they are unscrupulous enough. 
 
 Mr. COX. You have demonstrated in your proposition that in 
 order to send the wheat and the cotton to the consuming market, 
 you bring into use the floating capital, and that makes it much 
 more beneficial to the consumer. 
 
 Mr. WARNER. It makes the interest charge less. 
 
 Mr. pOX. If that is true, what is the man to do that has to buy 
 the actual cotton? 
 
 Mr. WARNER. I must confess that my friend has touched a per¬ 
 fectly pertinent point. The man who actually proposes to specu¬ 
 late in spot cotton has to make his money out of the lower price he 
 can compel the producer to accept and the higher price he can 
 compel the consumer to give; and he is the man who would be hurt 
 by this bill. 
 
 Mr. COX. Then the man who buys the cotton and pays the 
 money for it and gets the cotton is the fool in the transaction? 
 
 Mr. WARNER. It is actually the fact that most money made in the 
 business of marketing cotton consists in the commissions which are 
 received from sanguine gentlemen, who at the end find they have 
 invested their money and. transported the cotton without receiving 
 much, if any, interest. 
 
 Mr. COX. So that the whole question depends on the imagination 
 of the gentleman engaged in it? 
 
 Mr. WARNER. Not at all. It is the way in which our crops are 
 marketed. It is not profitable to-day, as it used to be in former 
 years, for a man to go out and try to corner and control the crops 
 of a single neighborhood, or to try to control the supply of a certain 
 number of factories. If he tries to pinch the producer and the 
 consumer in that way, the system of deals for future delivery 
 will pinch him between them, and give the producer a better price, 
 at the same time that the consumer gets his supplies more cheaply. 
 
 Mr. WALKER. I think some gentlemen have failed to quite see 
 that this transportation is done practically for nothing, that the 
 crops of this country are handled practically for nothing. 
 
 Mr. WARNER. I should not put it quite as strongly as that. I 
 think they are handled practically for nothing so far as the interest 
 charge is concerned, and very frequently the competition of capital 
 does pay a part of the transportation. 
 
 Mr. WALKER. It brings the consumer and the producer right 
 together. 
 
 Mr; WARNER. Right together, at the expense of these middle¬ 
 men about whom I have been talking. 
 
 1455 
 
21 
 
 Mr. TALBERT, of South Carolina. How do those men make their 
 money, then? 
 
 Mr. WARNER. The records will show that of the thousands who 
 do this great business and invest their money to move your crops 
 from the different parts of this country to Europe nine-tenths of 
 them lose money. 
 
 Mr. TALBERT, of South Carolina. They get rich all the same. 
 
 Mr. WARNER. I beg your pardon, they do not get rich. The 
 brokers do well, who also at the same time are profited by the 
 sanguine temperament of these gentlemen ; but the man who, with 
 the great competition of capital, actually goes to the Southern 
 planters and buys their cotton and takes that cotton himself and 
 tries to market it in Liverpool, paying all freight and charges, is 
 the fool from whom his money will be soon parted; and I do not 
 know of a man who has been crazy enough to do it lately. 
 
 Mr. COX. Is there not some way to protect him? 
 
 Mr. WARNER. This bill would do it. This bill would put the 
 farmers at the mercy of the local factors, and it would put the 
 factories under the thumb of men who will corner the spot cotton. 
 
 EXEMPTIONS PROPOSED. 
 
 I am aware that by a somewhat elaborate system of exemptions, my 
 friend from Missouri believes himself to have left the capitalist 
 opportunities for investment in every direction where it will help 
 the farmer at the same time that he has cut him off from realization 
 in every direction which is an inducement to capital. This is a 
 marvelously astute plan—provided the capitalist is an ass and will 
 walk into a hole for the farmer’s benefit, knowing that he can never 
 
 g et out of it for his own. Until, however, there shall arise a new 
 ind of fool—one who keeps his money until he lets the farmer fleece 
 him—all such exceptions are simply ridiculous, and no capitalist 
 will be attracted by le^al permission to go into a speculation, by 
 which somebody else will be assisted, at the same time that he i« 
 forbidden to get out of it in the way most likely to be of advantage 
 to himself. If he can not sell or settle his futures as he pleases, 
 he knows better than to buy them from the farmer or anyone else. 
 
 THE TEST OP EXPERIENCE. 
 
 No test of the pudding, however, is so conclusive as the taste, and 
 nothing can be more conclusive than the tabulated experience of 
 our principal markets under the development of the system of deal¬ 
 ing in futures; and with one suggestion I shall quote the statistics 
 I have lately had prepared. That suggestion is this: While the 
 result is uniformly to demonstrate that so far from excessive deal¬ 
 ings for future delivery being a detriment to the price of the prod¬ 
 ucts dealt in, the contrary is the result, and prices are actually 
 found to be higher in proportion to the extent of such dealings in 
 futures, I must not for a moment be understood to attribute to the 
 extent to which futures are dealt in the whole of the more favor¬ 
 able market which coincided with the increase of such deals in 
 futures. For, although the tendency of so systematizing a business 
 as to make it attractive to a vast amount of capital that otherwise 
 would be unavailable for its purposes is inevitably to cheapen the 
 processes of such business and give better prices to the producer, 
 yet in the long run the relations of supply and demand are the great 
 determinant factors in the price of farm products, as in the case of 
 everything else. 
 
 To a considerable extent, however, on account of the sanguine 
 temperament that characterizes human nature, the extent of deals 
 for future delivery is in a measure a consequence of high prices and 
 1455 
 
22 
 
 at the same time a stimulus to higher ones. No one appreciates 
 more clearly than I do that, since every investment in wheat has its 
 corresponding sale and every sale its corresponding investment, the 
 effect, so far as concerns the mere balance of sales and investments, 
 is rather to steady the price than to improve it, such enhancement 
 as comes from these deals being due to the competition- of cajjital 
 thus induced and the cheapening of interest and other carrying 
 charges thereby resulting. 
 
 The first table which I quote shows the total sales on the New 
 York Produce Exchange of wheat for future and spot delivery, with 
 the range and average price of the contract grades for each month, 
 monthly, for the past six years. 
 
 Total sales on the New York Produce Exchange of wheat for future and spot delivery , 
 with the range and average price of the contract grades for each months monthly , 
 for the past six years . 
 
 
 Total sales of 
 wheat futures 
 
 No. 2 red winter wheat. 
 Price per bushel. 
 
 Mouths* 
 
 and spot 
 bushels. 
 
 Range for 
 month. 
 
 Average for 
 month. 
 
 1888. 
 
 January . 
 
 66,561,000 
 
 Cents. 
 
 89* to 93§ 
 
 Cents. 
 
 91xg 
 
 February. 
 
 76,167, 000 
 
 88 91* 
 
 8922 
 
 March. 
 
 96, 038, 000 
 
 88* 93* 
 
 90* 
 
 April.‘.. 
 
 123, 221, 000 
 
 88| 97* 
 
 93f s 
 
 May. 
 
 171, 833, 200 
 
 91 103 
 
 96| 
 
 June. 
 
 89, 043, 000 
 
 86 95 
 
 eoj 
 
 July. 
 
 125, 226, 000 
 
 87* 98* 
 
 90** 
 
 August.. 
 
 263, 522, 000 
 
 91| 103* 
 
 97/ s 
 
 September. 
 
 157, 868,100 
 
 97 103* 
 
 99 ft 
 
 October. 
 
 224, 505, 200 
 
 104 121 
 
 mil 
 
 November. 
 
 114, 954, 000 
 
 100| 116 
 
 108| 
 
 December. 
 
 49,203, 000 
 
 99* 108* 
 
 104* 
 
 Total range and average. 
 
 1,558,141, 500 
 
 86 121 
 
 97* 
 
 1889. 
 
 January. 
 
 78, 070, 600 
 
 931 to 104f 
 
 98 T \. 
 
 February . 
 
 March. 
 
 April .. 
 
 May. 
 
 June. 
 
 60, 346, 000 
 176, 626, 300 
 152, 587, 900 
 53, 700,150 
 146, 761,150 
 
 93* ioi| 
 88* 99§ 
 82* 89*| 
 80 86* 
 79| 882 
 
 97* 
 
 93* 
 
 86* 
 
 83 t 3 b 
 
 83** 
 
 July. 
 
 83, 508, 000 
 
 85* 91| 
 
 88* 
 
 August. 
 
 34, 821,500 
 
 84 91* 
 
 88* 
 
 September. 
 
 65,160, 000 
 
 83* 88* 
 
 85* 
 
 October. 
 
 146, 565, 000 
 
 81* 88 
 
 84* 
 
 November. 
 
 66, 435, 000 
 
 82* 86f 
 
 84/ b 
 
 December. 
 
 58, 567, 000 
 
 83* 87f 
 
 85* 
 
 Totals, range and average. 
 
 1,123,148, 600 
 
 79| 1042 
 
 88* 
 
 1890. 
 
 January. 
 
 52, 531, 000 
 
 84 T 9 S to 872 
 
 86* 
 
 February. 
 
 80, 024, 000 
 
 8322 87* 
 
 85* 
 
 March. 
 
 116,938, 000 
 
 86* 89* 
 
 87* 
 
 April. 
 
 245,139, 000 
 
 862* 982 
 93| 103* 
 
 93* 
 
 May. 
 
 138,475, 000 
 
 98* 
 
 J une... 
 
 66, 547, 000 
 
 91* 962 
 
 94* 
 
 July. 
 
 95, 218, 000 
 
 94 1002 
 
 96i 3 b 
 
 August. 
 
 137, 625, 000 
 
 94* 1112 
 
 104 
 
 September. 
 
 94, 914, 000 
 
 99* 106* 
 
 101*5 
 
 October. 
 
 76,435, 000 
 
 100* 1092 
 
 106* 
 
 November. 
 
 90,138, 000 
 44,343,000 
 
 96* 1082 
 
 102* 
 
 December.. 
 
 lDlf 106* 
 
 104 ig 
 
 Totals, range and average.... 
 
 1, 238, 327, 000 
 
 83*| 111* 
 
 96* 
 
 1455 
 
23 
 
 Total sales on the New York Produce Exchange of wheat, etc .—Con tinned. 
 
 Months. 
 
 1891. 
 
 January. 
 
 February . 
 
 March . 
 
 April... 
 
 May. 
 
 June... 
 
 July. 
 
 August. 
 
 September. 
 
 October . 
 
 November. 
 
 December. 
 
 Totals, range, and average.. 
 
 1892. 
 
 January. 
 
 February. 
 
 March. 
 
 April. 
 
 May. 
 
 June.. 
 
 July. 
 
 August. 
 
 September. 
 
 October. 
 
 November. 
 
 December. 
 
 Totals, range and average.. 
 
 1893. 
 
 January. 
 
 February.. 
 
 March.. 
 
 April.. 
 
 May. 
 
 June.. 
 
 July. 
 
 August.. 
 
 September. 
 
 October. 
 
 November. 
 
 December. 
 
 Total range and average 
 
 Total sales of 
 wheat futures 
 
 No 2 red winter wheat. 
 Price per bushel. 
 
 and spot 
 bushels. 
 
 Range for 
 month. 
 
 Average for 
 month. 
 
 53, 823, 000 
 
 Gents. 
 
 103* to 110* 
 
 Gents. 
 
 105! 
 
 71, 062, 000 
 
 109* 
 
 112* 
 
 110i* 
 
 190,305, 000 
 
 109 
 
 118* 
 
 113* 
 
 287, 597, 000 
 
 114£ 
 
 128* 
 
 119/, 
 
 218,910, 000 
 
 109* 
 
 117| 
 
 113* 
 
 121, 202. 000 
 
 102g 
 
 Ill 
 
 107** 
 
 124, 616, 000 
 
 93* 
 
 106| 
 
 99* 
 
 169. 732, 000 
 
 97f 
 
 114 
 
 105* 
 
 118,814. 000 
 
 100 
 
 107* 
 
 103/, 
 
 146, 076, 000 
 
 102 
 
 107 
 
 104! 
 
 117,424, 000 
 
 103* 
 
 108 
 
 105*1 
 
 72, 711, 000 
 
 103 
 
 107f 
 
 105/, 
 
 1, 692, 272, 000 
 
 93* 
 
 128* 
 
 108 
 
 93,997, 000 
 
 99| to 
 
 105| 
 
 102* 
 
 154, 577, 000 
 
 99* 
 
 109| 
 
 104| 
 
 142, 280, 000 
 
 96 
 
 107 
 
 101 
 
 190, 717, 000 
 
 96J 
 
 102* 
 
 98* 
 
 134, 954, 000 
 
 94 
 
 99 
 
 96* 
 
 85. 643, 000 
 
 87* 
 
 100 
 
 9111 
 
 66, 637, 000 
 
 82* 
 
 88* 
 
 86 t \ 
 
 63, 620, 000 
 
 79* 
 
 85 
 
 82* 
 
 39, 604, 000 
 
 77* 
 
 80! 
 
 78J 
 
 72, 646, 000 
 
 73* 
 
 80! 
 
 77 !* 
 
 63, 661, 000 
 
 73* 
 
 77* 
 
 75* 
 
 43,112, 000 
 
 74 
 
 79 
 
 76* 
 
 1,151, 448, 000 
 
 73* 
 
 109* 
 
 89| 
 
 60, 765, 000 
 
 77J to 824 
 
 79* 
 
 49, 551, 000 
 
 76J 
 
 81| 
 
 79/, 
 
 99.139, 000 
 
 73f 
 
 79§ 
 
 75* 
 
 185, 882, 000 
 
 74 
 
 78! 
 
 76* 
 
 123, 408, 000 
 
 74* 
 
 81! 
 
 77* 
 
 145, 676, 000 
 
 68* 
 
 76* 
 
 72* 
 
 101, 844, 000 
 
 64* 
 
 73* 
 
 71* 
 
 65, 705, 000 
 
 65§ 
 
 79! 
 
 68 
 
 38, 814,000 
 
 68* 
 
 74* 
 
 72* 
 
 77, 013, 000 
 
 65J 
 
 72 
 
 69* 
 
 74, 234, 000 
 
 64| 
 
 68* 
 
 66* 
 
 30, 434, 000 
 
 64| 
 
 69 
 
 67* 
 
 1,052,465, 000 
 
 64* 
 
 82 
 
 72* 
 
 The most summary consideration of this table makes it evident 
 that prices and future dealings are directly proportioned to each 
 other, i. e., the more extensive the dealings in futures, the higher 
 the price, and vice versa. Taking the summary for the several 
 years, we have during 1888 sales of 1,560,000,000 bushels, including 
 spot, at an average of 97-* cents per bushel; in 1889, 1,123,000,000 
 bushels of sales, at an average of 88£ cents; in 1890, an aggregate of 
 1,240,000,000 bushels, at an average of 96f cents; in 1891, an aggre¬ 
 gate of 1,700,000,000 of sales, at an average of $1.08; in 1892, an 
 aggregate of 1,150,000,000 of sales, at an average price of 89$ cents; 
 and in 1893 an aggregate of but 1,050,000,000 of sales, at an average 
 of only 72$ cents. In other words, the greater the extent of the 
 so-called speculation in wheat, the higher its price, and vice versa. 
 
 II. 
 
 There is another way of looking at the same question, and with¬ 
 out special introduction I present the following table: 
 
 1455 
 
Prices at New Tori and Liverpool for spot No. t red wheat. Ocean steam freights from New York to Liverpool. Total sales of wheat, spot and 
 futures, at New York City. Total wheat crop of the United States. Patio of aggregate sales to crop. 
 
 24 
 
 Ratio of sales 
 at New York 
 
 of futures 
 
 and spot 
 
 wheat to the 
 
 wheat crop 
 
 of the 
 
 United States 
 
 1 for the same 
 
 crop year 
 
 (times 
 
 greater). 
 
 *» o O 
 
 Wheat crop 
 of the 
 
 United States 
 for the cor¬ 
 responding 
 year, as esti¬ 
 mated by 
 the U. S. de¬ 
 partment of 
 Agriculture. 
 
 Bushels. 
 
 421, 086, 000 
 
 512, 765, 000 
 
 357,112, 000 
 
 457, 218, 000 
 
 456, 329, 000 
 
 415, 868,000 
 
 490, 560, 000 
 
 399, 262, 000 
 
 a611, 780, 000 
 
 a515, 949, 000 
 
 6396,131, 725 
 
 Total sales of 
 wheat at New 
 York, spot 
 and future, for 
 the crop year. 
 
 Bushels. 
 
 1,322, 888, 000 
 1, 279, 907, 000 
 
 1, 376. 397, 000 
 
 1,794, 961, 000 
 
 1,445,411,000 
 
 1,603,369,090 
 
 1,154,710,000 
 
 1, 481, 575, 000 
 
 1, 551,541,000 
 
 1,013,701, 000 
 
 797,150,000 
 
 Ocean freights on wheat, per 
 bushel, by steam, New York 
 to Liverpool. 
 
 Extreme 
 range of 
 monthly 
 averages. 
 
 CO CO CO CO rH rH 
 
 Lowest 
 
 monthly 
 
 average. 
 
 r-t <M c5i-t ONrlOrlHN 
 
 ■a 
 
 Highest 
 
 monthly 
 
 average. 
 
 •^Hw-^-tfcoiOiacoiococo 
 
 "O 
 
 Prices at Liverpool for 
 No. 2 red wheat, per 
 bushel. 
 
 Highest and lowest 
 prices quoted for spot 
 delivery. 
 
 Ex¬ 
 
 treme 
 
 range 
 
 for 
 
 season. 
 
 3 e o°o°c?co 0 p!rt2 0 o 0 c5 0 ^ # m 
 
 NNnHnWONCOrHH 
 
 O 
 
 Low¬ 
 
 est. 
 
 OCC*f COiOHinkOOCCOO 
 000}0000>G>00}t>0 
 
 rH rH 
 
 4* 
 
 ‘ffrS 
 
 H ® 
 
 in^iOrH05COCOCOCOOCO 
 COHOHOJHOWN JIOCi 
 
 <*•' 1 ■ 1 ■ 1 ' 1 ' 1 ' 1 '' 
 
 Prices at New York of No. 2 
 red wheat (the standard 
 grade) for spot delivery. 
 
 Highest and lowest 
 price actually sold 
 for, with extreme 
 range. 
 
 Ex¬ 
 
 treme 
 
 range 
 
 for 
 
 season. 
 
 OJCO<M<MC4'*<N<M<NC4rH 
 
 © 
 
 Lowest 
 
 spot. 
 
 price. 
 
 «p to 
 
 ©t-MOOt-t-OOfflOKOiO 
 
 © 
 
 48- 
 
 High¬ 
 est spot 
 price. 
 
 CO rH ^cTJoSMf 
 NOOOONOCOHOOf 
 
 «*• 
 
 Annual 
 
 average 
 
 price 
 
 (crop 
 
 year) 
 
 per 
 
 bushel. 
 
 © oo o ocf <x> © oo co co go 
 
 HO)C>OCOOCCOOt>0 
 
 «► 
 
 Crop year, 
 July 1 to 
 June 30. 
 
 ^lOCOt'OOOiOHNWH 
 
 ooaopooooooo©©©©© 
 
 co^icciticoalorHcico 
 
 OOOOCOOOOOCOOOOJC5C505 
 
 CO CO CO OO OO 00 OO 00 OO 00 oo 
 
 g<o 
 
 Pol 
 
 iff 
 
 CO _ 
 
 is 
 
 Is 
 
 * § 
 
 ® a 
 
 §3 
 
 •O Pi 
 fl Q. 
 
 ^ * 
 
 3 
 
 g a 
 
 if 
 
 «1 
 
 ® ■ 
 
 *■3 
 fa 
 i >> 
 
 3 o 
 
 ©'d 
 
 13 
 
 II 
 
 •Ss 
 
 s 
 
 I p, 
 
 ’& ° 
 
 GO © 
 
 8S 
 
 '§<g 
 
 a ° 
 
 « 
 
 ^S . 
 ® s « 
 
 a Sa* 
 
 Ov3-£ 
 
 *C « g 
 © © 2 
 
 a 
 
 ®5 o 
 S'a H 
 
 £jfi1S 
 
 O o 2 
 Q Sfc 
 
 1455 
 
25 
 
 Unless I am mistaken as to the glear and conclusive character of 
 this table, it needs but little explanation. The volume of trading 
 in futures and cash wheat at New York has declined in the decade 
 from three and one-seventh times the crop in 1883-84 to two times, 
 or actually less, in 1892-^93 and 1893-'94; that is, prices and vol¬ 
 ume of deals have decreased together. 
 
 Again the Liverpool market is usually lower than the New York 
 market, freights and necessary charges being considered, and New 
 York is likewise usually lower than the Chicago market, which is 
 generally considered the home of speculative trading. Or to sum 
 up the consequences of the excessive speculations in wheat, the cost 
 of transporting wheat from Chicago to New York and from New York 
 to Liverpool, and of the interests and charges involved in carrying it 
 from the time it is received at Chicago until it is actually consumed, 
 on an average of six months later, is so reduced by the competition 
 of capital utilizing wheat futures as a temporary investment that 
 the business is practically done for nothing, and the cost of all 
 processes between the time when wheat reaches Chicago and the 
 time when it is sold to an English miller is practically reduced to 
 the cost of transportation alone, and the producer and consumer 
 are alike benefited by being thus brought more nearly together and 
 relieved from what otherwise must be the far greater charge of 
 serving them both. 
 
 III. 
 
 In order to put upon record as well a clear exhibit of the business 
 transacted, as to avoid the merging and thus losing even immate¬ 
 rial details in the figures of a general average, I shall add as an ap¬ 
 pendix to my remarks a table prepared by Mr. J. C. Brown, statistic 
 cian of the New York Produce Exchange, to whom I am glad to ac¬ 
 knowledge other indebtedness, showing the approximate sales on the 
 New York Produce Exchange of contract wheat for future delivery 
 for each month, and separately in each month for every other month, 
 together with the monthly range and monthly average price of spot 
 No. 2 red winter wheat, monthly during the same period from Jan¬ 
 uary 1, 1890, to June 1, 1894. 
 
 I am far from claiming that every figure in the appendix noted is 
 significant upon the questions involved in this bill. Indeed, the 
 one direction in which they are conclusive is as demonstration of 
 the immateriality of such considerations when compared with the 
 dominant one of the relation of general supply and demand, and the 
 most important variance—that of temporary conditions of transpor¬ 
 tation. 
 
 To an extent, however, which I myself did not anticipate, I find 
 that the apparent connection between the volume of sales and the 
 price of wheat is not merely in the direction I have indicated—that 
 is, toward the coincidence of extensive sales and high prices; but 
 that this tendency is even more marked than I had supposed, and 
 in this connection I submit the following diagram, showing in 
 graphic proportion the comparative course of average prices and 
 volume of business, including sales for future delivery (which 
 indeed constitute its far larger portion) in wheat upon the New 
 York Produce Exchange for the last six years. It needs no explana¬ 
 tion. It appears there so plainly that he who runs may read—unless 
 he runs away from it—that, generally speaking, in proportion to the 
 activity in dealings in wheat as measured by the extent of the very 
 business this bill is intended to hamper, is the price which makes 
 its production a profitable one to our farmers of the Northwest. 
 
 1456 
 
CHART SHOWING MONTHLY VOLUME OF TRADE IN WHEAT AND AVERAGE PRICE OF NO. t RED WHEAT ON THE 
 
 26 
 
 1455 
 
27 
 
 IV. 
 
 So much for the general argument upon this point. It may he 
 suggested, however, that it would he more conclusive should I take 
 the conditions which, because they now prevail, are those at once 
 most serious and most practical. If the hill introduced by my 
 friend from Missouri is thus to be judged, damnation awaits it. 
 The price of wheat for May of this year, the great delivery month 
 in the Eastern markets, has ranged from 56 cents to 61|, averaging 
 68f cents per bushel. The sales for delivery during the month of 
 May, 1894, on the New York market were as follows: 
 
 Contracts made in— 
 
 Bushels. 
 
 Average 
 
 price. 
 
 July 1893 . 
 
 180,000 
 910.000 
 2, 685, 000 
 31,445, 000 
 37, 090, 000 
 19, 765, 000 
 29, 690, 000 
 83, 820, 000 
 68,185, 000 
 51, 555, 000 
 
 Cents. 
 
 83£ 
 
 83J 
 
 83i 
 
 m 
 
 73£ 
 
 72f 
 
 70£ 
 
 651 
 
 63 
 
 631 
 
 A n grist, 1893 .__.......... 
 
 Se.pt.Pimlmr, 1893______..... 
 
 On.tohftr, 1893 ________ 
 
 "November, 1893 ____ 
 
 pwimrihftrj 18DS __... 
 
 •Tamiary 1894. ______ 
 
 "February 1894. __ ____ 
 
 "M areb, 1894..... 
 
 April, 1894 ................................ 
 
 Total_ 
 
 325, 325, 000 
 
 68 
 
 
 From this it is plain that, so far from the bears last summer, 
 autumn, and winter having beaten down the price of wheat by sales 
 for future delivery, it was the bulls instead who, on their faith in 
 wheat prices, invested in wheat futures an amount sufficient to carry 
 our total stock of wheat on hand, at prices averaging about 9 cents 
 above what it was worth during the month of May, and who have 
 found themselves the losers to the extent of many millions of dollars 
 on account of the fact that they had to pay during May, 1891, a far 
 higher price for the wheat which they had bought months in advance 
 than, when the price came to be settled by supply and demand in 
 that month, the actual wheat was worth. 
 
 In other words, the farmer who took advantage of the market 
 afforded last September by the system of sales for future delivery 
 obtained 24 cents per bushel more for the wheat that would have 
 been called for by actual demand iu May than he who held it until 
 May received for similar wheat, when the price was fixed by actual 
 supply and demand. If he sold in October he received, under the 
 same system, 19 cents more than though he had waited until May. 
 
 If he sold in November his advantage was 15 cents; in December, 
 13cent8; in January, 11 cents; in February, 6£ cents; and even 
 after holding it until March or April, if he then took advantage of 
 this system, he would have received 3£ cents per bushel more than 
 the average price in Mayas settled by supply and demand. 
 
 Mr. TERRY. That was before we repealed the purchasing clause • 
 of the Sherman law. 
 
 Mr. WARNER. Wheat which was sold for future delivery near 
 to the time of the repeal brought the highest price, much higher 
 than when it was afterwards fixed by the law of supply and demand. 
 
 Mr. SIBLEY. What about those who got only 35 cents a bushel 
 for their wheat? 
 
 Mr. WARNER. Where were they? 
 
 Mr. SIBLEY. They were in Tennessee, the constituents of the 
 gentleman from Tennessee [Mr. Cox]. 
 
 Mr. WARNER. They must have been waiting for this bill to pass. 
 
 1455 
 
28 
 
 Mr. SIBLEY. They have been waiting for something a long time. 
 
 Mr. WARNER. They ought to have sold their wheat last fall, 
 for future delivery, when they would have gotten good prices. 
 
 And these figures develop another consideration, namely, that, 
 instead of the dealings in futures fixing tLie price of spot wheat, it is, 
 on the contrary, the growing certainty of the relation of supply and 
 demand for any given date that, as that date draws nearer, deter¬ 
 mines the price at which futures then deliverable can be sold. The 
 demonstration of our late experience is therefore absolute, first, that 
 by the system of sales for future delivery the farmer has not been in¬ 
 jured, but has been greatly advantaged as compared with what would 
 have been his fate had he depended upon spot sales; and, second, 
 that the price of spot wheat is really fixed by supply and demand, 
 which, in its turn, as fast as its proportions develop, controls, and 
 is not controlled by, the market for future delivery. 
 
 THE REAL CAUSE OF LATE LOW WHEAT PRICES. 
 
 But my friend from Missouri may remind me that the price of 
 wheat is a serious and material matter, and may ask me to account 
 for its serious decline during the past few years. I might retort by 
 quoting from his own speeches and pointing to the price of silver 
 and talking about Indian rupees and Indian exports. But I think 
 he knows better than that now, as I certainly do. And knowing 
 that it is supply and demand, and not rupee exchange or Hindoo 
 proclivities, that govern the price of wheat—knowing, as I suspect 
 he does, that so far from the decline in silver prices of late years 
 having stimulated Indian exports of wheat, those exports have, on 
 the average, been getting less and less instead of greater and greater, 
 I simply quote here the statistics as to exports of wheat from British 
 India, which show that the only year of late in which wheat exports 
 have been as large as they were ten years ag6 was the year 1891- , 92, 
 when wheat was higher here than in any other year of late, and that 
 exports of wheat from India have on the whole decreased since 1881. 
 
 Exports 0 / wheat from British India, from official sources , expressed in bushels or 
 60 pounds,for the years (crop years) April 1 to March 31. 
 
 April 1 to March 31. 
 
 Wheat ex¬ 
 ported. 
 
 April 1 to March 31. 
 
 Wheat ex¬ 
 ported. 
 
 1867 1868 . 
 
 Bushels. 
 558, 852 
 514,231 
 145,988 
 463, 908 
 
 1,189. 251 
 735, 485 
 
 3, 277, 781 
 
 2, 004, 156 
 
 4, 686. 767 
 
 10, 428, 327 
 
 11, 896, 580 
 
 1, 972, 544 
 
 4,109,495 
 
 13, 896,167 
 
 1881-1882 . 
 
 Bushels . 
 
 37,148, 543 
 26, 495, 024 
 39, 202, 638 
 29, 588, 311 
 39, 312, 969 
 41. 588, 235 
 25, 271, 249 
 32, 872,151 
 
 25, 758, 551 
 
 26, 754,103 
 56. 573, 043 
 
 27, 950, 445 
 22,520, 000 
 
 1868-1869 . 
 
 1882-1883 . 
 
 1869-1870 . 
 
 1883-1884 . 
 
 1870 1871 . 
 
 1884-1885 . 
 
 1871-1872 . 
 
 1885-1886 . 
 
 1872-1873 . 
 
 1886-1887 . 
 
 1873-1874 . 
 
 1887-1888 . 
 
 1874-1875 . 
 
 1888-1889 . 
 
 1875-1876 . 
 
 1889-1890 . 
 
 1876-1877 . 
 
 1890-1891 . 
 
 1877 1878 . 
 
 1891-1892 . 
 
 1878-1879 . 
 
 1892-1893 . 
 
 1879 1880 . 
 
 1893-1894 . 
 
 1880-1881 . 
 
 
 
 I have done what I am afraid my friend from Missouri has not 
 done, looked about the world to see what was the explanation of 
 the fall in price of American wheat. There are a number of causes, 
 sir, but they may all be characterized by the one which I shall call 
 to your special attention. 
 
 ARGENTINE WHEAT DEVELOPMENTS. 
 
 The Argentine Republic has of late been developed for agricul¬ 
 tural purposes, especially wheat production, with a rapidity which 
 is comparable only to the promptness with which, when her broad 
 1455 
 
29 
 
 lands were once opened to communication, Dakota became so 
 important a factor in our own wheat supply. I append the statis¬ 
 tics for the last twenty years, from which it appears that wheat 
 exports from the Argentine Republic, starting at nothing in 1870 
 and not becoming constant in any degree until 1883, had risen to 
 18,000,000 bushels in 1892 and 39,000,000 bushels in 1893. 
 
 Exports of wheat, of flour, with total as wheat , from the Argentine Republic an¬ 
 nually, from official sources . 
 
 Tear. 
 
 Wheat 
 (bushels ot 
 60 pounds). 
 
 Flour 
 (barrels of 
 196 pounds). 
 
 Total as wheat 
 bushels (reck¬ 
 oning flour at 4J 
 bushels to a 
 barrel). 
 
 1870 . 
 
 
 
 
 1871. 
 
 294 
 
 180 
 
 1,104 
 11,002 
 6, 351 
 
 1872 . 
 
 625 
 
 2, 306 
 
 1873.;. 
 
 182 
 
 1, 371 
 270 
 
 1874. 
 
 13,136 
 
 14, 351 
 607 
 
 1875. 
 
 135 
 
 1876 . 
 
 766 
 
 3,975 
 2, 453 
 32,822 
 
 18, 653 
 18, 372 
 241, 300 
 
 1, 024, 311 
 114, 870 
 
 70, 936 
 90, 436 
 
 2, 477, 529 
 4,175, 641 
 
 3, 261, 047 
 1, 657, 615 
 9, 013, 366 
 6, 897, 990 
 1, 008, 095 
 
 1877 . 
 
 7, 334 
 
 1878. 
 
 93. 601 
 
 1879 . 
 
 943,176 
 
 18,030 
 16,009 
 14, 481 
 6,173 
 
 1880. 
 
 42, 829 
 
 1881. 
 
 5, 772 
 
 1882 . 
 
 62,658 
 2,232, 329 
 3, 986, 623 
 2, 884,109 
 1, 391,265 
 8, 739,987 
 6, 574, 431 
 
 1883... 
 
 54, 489 
 
 1884. 
 
 42, 004 
 83, 764 
 59,189 
 60, 751 
 
 1885 . 
 
 1886. 
 
 1887. 
 
 1888. 
 
 71, 902 
 
 1889 . 
 
 837, 982 
 12, 047, 924 
 14, 534, 016 
 17, 273, 394 
 37, 037, 280 
 
 37, 803 
 
 1890. 
 
 135,177 
 
 12, 656, 221 
 14, 889, 106 
 18, 227, 457 
 38, 960, 679 
 
 1891. 
 
 78,909 
 
 1892 . 
 
 212, 014 
 427, 422 
 
 1893* . 
 
 
 ♦Commercial reprint of Argentine official figures. 
 
 While the monthly bulletin for March, 1894, of the Bureau of 
 American Republics estimates the exports for 1894 at 2,000,000 tons, 
 or between 65,000,000 and 70,000,000 bushels. 
 
 The startling showing thus made of sudden and great increase in 
 production is made more so by the data thus far received as to 1894. 
 When I first made note of matter to be referred to on this discussion 
 the Corn Trade News of May 14 was the latest number of that peri¬ 
 odical showing wheat in transport. On page 1122 I find that there 
 was at that date actually afloat in transitu between the Argentine 
 Republic and Great Britain • alone 1,500,000 quarters, or 12,000,000 
 bushels of wheat; and that there were also in transitu at the same 
 time for continental ports 615,000 quarters, or 5,000,000 bushels; 
 while the list of ships already chartered and yet to load was simply 
 an appalling one. How great the entire shipment of wheat from 
 the Argentine Republic to Great Britain and the continent will be 
 during the present year is one which no prudent man will put below 
 most extraordinary figures. All calculations have already been dis¬ 
 tanced, and not until the capabilities of the Argentine Republic 
 and their rate of development have become more generally known 
 than at present would it be safe to prophecy what is the future of 
 wheat-growing in the United States. 1 am perfectly well aware 
 that there is more than one consideration which may mitigate the 
 result which now seems imminent. I ^suspect, indeed, that the unex¬ 
 pected increase of Argentine production may have so startled the 
 business world as to have been more than discounted, and thus to 
 1455 
 
30 
 
 have made prices unremunerative even to Argentine producers. 
 There is, however, nothing sure as yet. The situation can not be 
 handled by any obstruction interposed by our Government to the 
 most economical and natural methods of wheat marketing by those 
 who are engaged in it here. 
 
 There never has been a good time—there never will be—to enact 
 any such legislation as that proposed by this bill. It see'ms, how- 
 ver, like the irony of fate that it should be pending at just the mo¬ 
 ment when its uselessness has been most thoroughly demonstrated 
 by the course of late events, and when the damage to be done by its 
 enactment will be of most fatal consequence to American wheat- 
 growers, who are now facing the most serious crisis by which they 
 have ever been met. How desperate is the condition which this 
 bill would further aggravate may be appreciated when I note that 
 under date May 28, 1894, I am advised that grain room to Antwerp 
 had been taken the week before at Baltimore for nothing; that is to 
 say, that one of our great grain-exporting points found so little 
 demand for a commerce which in former years so profitably filled 
 every outgoing vessel as to bring many of them back in ballast, 
 that the comparatively few vessels which have brought cargoes to 
 her found no grain to be carried eastward, except what they were 
 willing to take as ballast alone and without any charge whatever 
 for freight. 
 
 I do not know, sir, that I ever felt much like getting very indig¬ 
 nant at Nero because he fiddled when Rome was burning, because, 
 if anything is well established historically, it is that he was a good 
 fiddler, and I do not suppose his fiddling helped the conflagration. 
 [Laughter.] But now, just at the very time when our export 
 trade in jtroduce is in the very worst peril it has ever experi¬ 
 enced, when it seems essential that every scope should be given our 
 traders to handle their business in the most economical and easy 
 way possible—at such a time as this, for my friend from Missouri— 
 who, although he may know something about fiddling, does not 
 know anything about dealing in wheat or cotton—to come in and 
 propose his intermeddling expedients in order to harrass and put to 
 further expense the men who are already almost driven out of busi¬ 
 ness, is almost too much to view with equanimity. I know he does 
 not mean it; I know he would not do a bit of hurt intentionally; 
 but, sir, his is the calm assur ance of a baby trying to mend a watch, 
 or an anarchist arranging to fix a government. [Laughter.] The 
 only trouble is that the gentleman is of age, and we cannot deal 
 with him according to our sympathies, but must do so with regard 
 to the merits of the measure he proposes to father. 
 
 It would fatigue criticism, sir, to attempt any adequate expos6 
 of this bill and of the depths of misinformation disclosed by the 
 report which accompanies it. And I care now to call attention to 
 but one further consideration in this line. 
 
 THE BILL ENCOURAGES “CORNERS.” OBSTRUCTS LEGITIMATE BUSINESS, AND LEAVES 
 GAMBLING UNTOUCHED. 
 
 Every great speculation in produce which has brought disaster 
 either to the producer, the consumer, or the speculator has been 
 made effective by the purchase and withholding from market of the 
 actual produce involved. If this law forbade this, and its enforce¬ 
 ment could prevent thus forestalling the necessaries of life and 
 industry, and demoralizing the business dependent upon their con¬ 
 sumption, there might be some excuse for 4t. So far, however, is 
 the bill before us incapable of producing this effect that it does not 
 even pretend to attempt it, but, leaving untouched every oppor¬ 
 tunity for this crime against civilization, proposes to discourage 
 1455 
 
31 
 
 capital from produce investments so as to make more easy and 
 more disastrous the “ cornering ” of the actual product. The 
 effect, therefore, is to discourage legitimate business and to lessen 
 the amount of capital available for carrying the world’s stock of 
 produce, thereby facilitating speculation in it by those who shall 
 actually attempt to forestall it, with the inevitable result, when 
 the market breaks, of a time of lower prices than any which could 
 otherwise have ruled. 
 
 The law, however, would be utterly ineffective to prevent gam¬ 
 bling in farm produce. For the whole world is to-day a single 
 market, and purchases are made from Chicago, at London, at Berlin, 
 at Calcutta, as easily as they are at Duluth or New York. Legiti¬ 
 mate business must be carried on and legitimate investments are 
 made along well-defined limits of trade, and within comparatively 
 narrow limits of locality. The gambler is indifferent as to the 
 market in which he deals. The result, therefore, of the enactment 
 into law of this bill wmuld be to demoralize legitimate business in 
 America. As to gambling, however, it would still be carried on 
 by the same men in the same way, except that the nominal place of 
 the fictitious sales and purchases would be London or Berlin instead 
 of New York or Chicago—in the world’s markets where the price of 
 these products is fixed—and whence prices in America would be 
 afflicted (if at all) precisely the same as though the fictitious sales 
 were made here. 
 
 I have omitted, sir, to refer to the puerile devices by which it is 
 attempted in the bill now pending to bring within the scope of this 
 bill numerous classes of contracts which ordinarily would not be 
 subject to the jurisdiction either of our Government or that of any 
 of the States. I shall not assume that there is any member of this 
 House to whom they will not upon reflection plainly appear to be 
 the shams which they really are. I shall not dignify them by the 
 notice involved in an argument against them. As a lawyer, how¬ 
 ever, I will summarily state—what will be concurred in, I believe, 
 by every brother lawyer in this House—that no client of mine 
 who is willing to do his business through foreign offices will ever 
 be in the least degree troubled by them. When we shall all have 
 become wonted to the methods I shall suggest he will be so little 
 bothered by anything which my friend from Missouri lias concocted 
 that he will not have even unpleasant reason to remember his exist¬ 
 ence. But to the American citizen who must do his business here, 
 I can offer no such guarantee. 
 
 CONSTITUTIONALITY. 
 
 As to the broad question of constitutionality, a similar reason 
 would prompt me to let the obviously unconstitutional character of 
 this legislation develop itself from the arguments of those who 
 ventured to defend it. But, sir, I have another reason—and to me 
 even a better one. The ends proposed and the means suggested are 
 so far outside of what seems to me desirable and tolerable, that 
 questions of technical constitutionality are of little moment. To 
 one like myself, who has the little regard for the intent of this bill 
 and the utter abhorrence of the means proposed that I entertain, 
 it is worse than frivolous to urge in addition that it is unconstitu¬ 
 tional. On the other hand, with anyone who, thoroughly under¬ 
 standing the scope of this measure, shall deliberately conclude its 
 end to be laudable and its means proper, I do not care to discuss 
 questions of constitutionality. There is no earthly reason in my 
 mind why, bent upon such an errand, he should allow himself to be 
 restrained by either law, morals, or common sense. 
 
 If there is any man, calling himself a Democrat, who, after fully 
 understanding this bill, needs to consult the constitution or any 
 1455 
 
 * 
 
3 0112 062025736 
 
 32 
 
 other document in order to know whether he shall favor it or not, 
 then, sir, either he or I is in the wrong party. 
 
 The bill is simply a meddling one. If enacted into law, it would 
 be worse than worthless for the aims it professes and which, in sim¬ 
 ple charity, are all those which I attribute to the conscious intent of 
 those who promote it. It is so outrageous that if enacted it must 
 promptly produce such a revulsion as shall blot it from the statute 
 books. Were it a Republican measure, I should have it photo¬ 
 graphed and exhibited as a horrible example of the consummate 
 folly of blind paternalism. As it is, I can only appeal to those of my 
 Democratic friends who may have the least intention of supporting 
 it, to keep on studying it until they are sure they understand it. 
 This being done, not merely is the measure before us foredoomed, 
 but the disgrace of even the presentation of another of its character 
 ever averted from our party. 
 
 The chairman of the committee reporting it has admitted that the 
 bill is an attempt to interfere with what he concedes to be legitimate 
 business in order virtually to apply Federal criminal law to a matter 
 which he confesses is none of the business of the United States 
 Government. And in order to dodge the Constitution, he proposes 
 another evasion; and under the assumption that this subject belongs 
 to the Committee on Agriculture, brings in a revenue bill, and inter¬ 
 feres by an unconstitutional use of the taxing power. 
 
 It seems to me, sir, that as representatives of the various sections 
 of this country, we should not merely avoid interference with the 
 legitimate business of citizens, but that, as Congressmen of the 
 United States of America, we should confine the exercise of our 
 functions within that range of both criminal and civil law that is 
 confided to our jurisdiction. As Democrats we should remember 
 that the welfare of this country demands less rather than more of 
 Federal interference; that we come here not to extend paternalism 
 but to abolish it; and that our office is rather to repeal bad law* 
 than to make worse ones. [Loud applause.] 
 
 14 && 
 
 o