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exchanges, where not to exceed one-tenth of the grain grown is marketed, prices are determined for the entire product and often months in advance of the sowing of the seed (this is especially true of the staple product of the Southern plantations), thus despoiling the farmer and planter of that voice in fixing the price to be received for the product of his labor and capital which is accorded to other producers.

“Fourth. That market quotations, now made by the limitless offers of fiat products by the 'short sellers,' regardless of the value of or the volume of actual product in existence, may again be determined by the offering of real product by the owners thereof or by those who have acquired from such owner the right to the future possession of the articles offered, and thereby to limit to the amount actually existent the offerings of the staple products of the farm.

"Fifth. To prevent the overloading of domestic markets and the breaking down of prices of farm products by 'short sales' made by foreign merchants for the purpose of insuring them against possible loss on purchases of Indian, Egyptian, South American, Australian, and Russian produce, whereby the American farmer and planters are made underwriters of the commercial risks of the European, by whom no bonus or premium is paid for assuming insurance risks that destroy much of the value of our products.

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"Sixth. That by restoring the functions of the law of supply and demand, now inoperative by reason of the limitless offers of the short-seller,' a measure of relief will be given and prosperity partially restored to that great class constituting more than 40 per cent of our population who inhabit the farms, and whose lacking prosperity, your committee believe, is due, in no considerable part, to the practice of short selling,' whereby the prices of the products of the farm have been determined and fixed, during recent years, at an unremunerative level.

"Seventh. To restore to the producer an honest market and such prices as will follow the unfettered operation of the law of supply and demand which the committee believe will be sufficiently remunerative to restore, in part, the power of the farmer and planter to purchase the product of forge, factory, and mill, and thus bring prosperity to the artisan, manufacturer, distributer, and transporter." The first section of the bill defined "options" as "any contract or agreement whereby a party thereto, or any party for whom or in whose behalf such contract or agreement is made, acquires the right or privilege, but is not thereby obligated, to deliver to another or others, at a future time or within a designated period, any of the articles mentioned in section 3," those articles being the following: Raw or unmanufactured cotton, hops, wheat, corn, oats, rye, barley, grass seeds, flaxseed, pork, lard, bacon, and other edible product of swine.'

The second section defined "futures" as 66

any contract or agreement whereby a party contracts or agrees to sell and deliver to another or others, at a future time or within a designated period, any of the articles mentioned in section 3 of the act, when at the time of making such contract or agreement the party so contracting or agreeing to sell and make such delivery, or the party for whom he acts as agent, broker, or employee in making such contract or agreement, is not the owner of the article or articles so contracted or agreed to be sold and delivered, or has not theretofore acquired by purchase, and is not then entitled to the right to the future possession of such article or articles under and by virtue of a contract or agreement for the sale and future delivery thereof previously made by the owner thereof."

It was provided, however, that the act should not apply to contracts with Federal, State, or municipal authorities, nor to contracts made by any farmer or planter for the future delivery of the products of the land, either grown or growing, nor to any contracts to furnish any farmer or planter with any of the articles named in the bill which he might require for food, forage, or seed.

Section 4 defined a dealer in "options" as follows: "Every person, asssociation, copartnership, or corporation who shall, in their own behalf or as agent, broker, or employee of another or others, deal in 'options' or make any options contract or agreement, as herein before defined, or make any transfer or assignment of any such 'futures' ('options' meant) contract or agreement;" and a dealer in "futures" was defined in the same language, except in this definition the word "futures" was used instead of "options" in the definition of the former class of dealers.

This section then provided that such dealers should pay an annual license fee of $1,000, and also pay a tax of 5 cents on each pound of cotton, hops, pork, lard, bacon, and other edible product of swine, and 20 cents a bushel on each bushel of the other articles named in section 3 which were the subject of any "options" or "futures" contract which he, as vendor or assignor, should make, transfer, or assign, either in his own behalf or on behalf of others.

Section 5 required every dealer in "options" or "futures" to apply, in form and manner prescribed, to the collector of internal revenue for his license and pay the

fee of $1,000, and at the same time to execute a bond in the sum of $40,000, to secure the payment of the taxes provided in section 4 and his compliance with all the requirements of the act. This section further provided that such dealer should not transact any business in "options" or "futures," while any of the taxes provided in section 4 remained unpaid, although he might have a license in his possession to do such business.

Section 6 required the collector of internal revenue to keep a register subject to personal inspection, in which should be recorded al applications for license under the act and a statement as to whether a license had been issued thereon.

Section 7 provided that all "options" and "futures" contracts and agreements, and all transfers and assignments thereof, should be in writing and signed in duplicate, and state the time at which they would expire or mature.

Section 8 required every dealer in "options" or "futures" to keep a book in which should be recorded the date of any "options" or "futures" contract made by him; the names of the parties thereto, whether they appeared as vendor or vendee; the kind and amount of the articles agreed to be sold; the contract time of delivery; and if there should be a transfer or assignment of the contract, the name of the assignee and assignor; which book was at all times to be open to inspection by the officials of the Internal Revenue Department.

Section 9 required dealers in "options" and "futures" to make weekly reports to the collector of internal revenue, setting forth the facts and items required by section 8 to be recorded, and thereupon pay the taxes provided in section 4 upon the business transacted in the preceding week.

The collector was then required to enter such report in a public register, and make monthly reports to the Commissioner of Internal Revenue of the business transacted in this line.

Section 10 imposed a penalty of $20,000 fine, or imprisonment from six months to ten years, or both, upon dealers in "options" or "futures," for a violation of any of the provisions of the act in respect of the license fee, or taxes, or for making false and fraudulent returns to the collector.

Section 11 provided that neither the payment of the taxes nor the procuring of a license should exempt such dealers from the operation of the State, Territorial, or municipal enactments relating to the same subject-matter.

Section 12 required any party, whether as owner or as having acquired the right to the future possession of any of the articles mentioned in section 3, intending to make, transfer, or assign contracts for the sale and subsequent delivery of any of such articles, to procure a license therefor from the collector of internal revenue, paying $2 annually for the same. Such party was also required to keep the same kinds of records and make the same reports as were required of the regular dealers in "options" and "futures," and for violating this section was subject to a fine of not less than $1,000 nor more than $5,000.

Section 13 provided that whenever the making of any contract for the sale and future delivery of any of the articles named in section 3 should not be reported as required, or if it should come to the knowledge of the collector, or if he should have reasonable cause to believe that, at the time of making, transferring, or assigning any contract for the sale and subsequent delivery of any of such articles, the party making, transferring, or assigning thereof was not the owner of or not then entitled to the future possession of the article or articles contracted to be sold and delivered, it should be the duty of the collector to demand from such vendor or assignor proof of such ownership or right to the future possession of such property; and if proof should not be furnished upon demand, then such contract should be held to be a "futures" contract, as defined in section 2, and should subject the maker thereof, unless he should have a license covering the period of the transaction, to the payment of the $1.000 license fee, and also the taxes provided in section 4, as well as the fines and penalties provided in section 10. Section 14 extended and applied all provisions of existing internal-revenue laws relating to the recovery and enforcement of taxes, fines, and penalties, so far as applicable, to the recovery and enforcement of the taxes, fines, and penalties imposed by this bill.

Section 15 required the Commissioner of Internal Revenue to prescribe rules and regulations to carry the act into effect; and, when approved by the Secretary of the Treasury, such rules and regulations were to have the force and effect of law." On the 6th of June, 1892, on motion of Mr. Hatch, the bill passed the House, under a suspension of the rules, by a vote of 167 to 46: 116 members not voting. Under the rules of the House, but 30 minutes for debate was permissible, 15 minutes to a side. In this short debate, 7 members spoke for the bill and 12 against it. The essential points made in the argument in favor of the bill may be summarized as follows:

1. Such legislation was demanded generally by the agricultural interests of the country.

2. This legislation would destroy gambling in agricultural products, which, in itself, is pernicious on general principles, and is a swindling of the fariners and planters and other agricultural interests.

3. It would enhance the value of agricultural products, and would thus benefit the whole country, and would at the same time restore to trade and business the free and uninterrupted exercise of the law of supply and demand.

The opponents of the measure made the following points against it:

1. The bill was unconstitutional, because not warranted under the exercise of the taxing power of the Constitution.

2. It was also unconstitutional, because it was violative of the rights of the States to control their own domestic affairs. If the practices condemned were pernicious as alleged, then they were against the States in which they took place, and the guilty parties should be amenable to the States and to them alone.

3. The bill interfered with the liberty of contract.

4. It was a sham proposition to raise revenue, the object being to prohibit and not to tax the business; and it was, therefore, a prostitution of the taxing power for purposes not contemplated in the Constitution.

5. It would destroy legitimate commerce and export trade, and would depreciate the value of farm products instead of enhancing them.

6. It was a bill in the interest of a syndicate of milling interests, and its passage would result in the formation of a gigantic millers' trust which would control the price of the entire production of the cereals at its own pleasure.

Replying to the constitutional objections urged against the bill, those favoring its enactment cited the statute taxing the production of oleomargarine, and the act relating to the Louisiana Lottery, and contended that those acts were sufficient precedents for the proposed legislation; and they also asserted that every pernicious practice that had ever become general, and every universal evil in the history of the country had used the same arguments and had sought to shield itself from interference and interruption behind the Constitution.

The bill reached the Senate on the 9th of June, and was ordered to be printed and lie on the table. On the 16th of the same month, after a short debate, it was referred to the Committee on the Judiciary, which in the meantime, as before stated, had taken a large amount of testimony on the subject-matter of the bill. On the 7th of July Mr. Platt, representing a majority of the committee, reported the bill back without recommendation, except that it be placed on the Calendar for early consideration, and said that while the committee believed that dealing in agricultural products by persons not having the ownership or the right to the ownership thereof constitutes a great evil and injury which ought to be remedied, if there was any power under the Constitution to remedy the same, they had been unable to agree upon any measure of relief.

Messrs. George, Pugh, and Coke, representing a minority of the committee, joined in a report, which, in substance, was that they believed that it was a perversion of the taxing power of the Constitution to use it for the purposes of the bill, but that they believed Congress has full power, under the commerce clause of the Constitution, to prohibit such dealings as being impediments of interstate and foreign commerce. They therefore reported a measure on these lines, an analysis of which will be made further on in this report.

Mr. Mitchell, a member of the committee, submitted a brief report embodying his individual views on the subject, to the effect that Congress could suppress fictitious dealings in agricultural products on the boards of trade either by the exercise of the taxing power, or by an exercise of the power conferred by the commerce clause of the Constitution, and with certain minor amendments to the bill he favored its passage.

The amendments referred to by Mr. Mitchell had been previously brought to the attention of the Senate by Mr. Washburn, and were subsequently adopted by the Senate as in committee of the whole, without opposition. They were in substance as follows:

1. In section 4 the definitions of dealers in "options" and "futures," respectively, were enlarged so as to embrace any one who should, "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 foreign country enter into any 'options' or 'futures' contract" as before defined.

2. In section 2 the following additional future contracts of the farmer or planter were excepted from the operation of the act: "Any contract made with any person to furnish and deliver at a future time or within a designated period any of such articles purchased for the domestic consumption of the purchaser or his household." 3. The words "grass seeds," "flaxseed," and "other edible products of swine" were stricken from section 3.

4. Section 13 was amended so that its provisions did not, in any respect, apply to the transfer or assignment of any "option" or futures" contract.

5. Section 13 was further amended so that the penal provisions of section 10 should not apply to the transactions regulated by the first-named section.

6. At the end of section 2 a proviso was inserted that none of the farmers' or planters' future contracts excepted from the operations of the act should be made or settled in any manner upon any board of trade or produce exchange of any kind, or in any place, or upon any premises where price quotations of the articles contracted for was announced or bulletined, nor should they be subject to the rules and regulations of any such board or exchange.

Certain other purely clerical amendments were also adopted without opposition. The debate in the Senate on this bill was of the most animated character and was protracted to a great length. Perhaps no measure was ever more thoroughly discussed in Congress. It was advocated with singular ability on substantially the same grounds as in the House, and was opposed in a masterly manner principally on the grounds of its alleged unconstitutionality, its alleged interference with legitimate trade and business, and on the further ground that, even admitting that dealing in "options" or in "puts" and "calls" was pernicious in itself, they did not affect legitimate transactions or interfere with the natural operations of the law of supply and demand. Another argument that was pressed with great vigor by the opponents of the bill was that dealings in "futures" were the legitimate outgrowth of the rapid advancements of commercial and industrial affairs and were made necessary by the commercial and industrial revolution that had been wrought by the mighty agencies of steam and electricity, and the inventive genius of man, and that boards of trade and commercial exchanges were the clearing houses for the products of the farm and were just as essential to the stability of prices and the successful and rapid distribution of those products as were the great clearing houses of finance for the successful transactions of business purely financial.

The debate began on July 11 and continued until July 30, near the close of the first session of Congress, several hours of most of the legislative days being devoted to it. It was resumed December 12, shortly after the second session convened and was not concluded until January 31, on which day the bill as amended passed the Senate by a vote of 40 to 29, 16 not voting.

An analysis or digest of this debate will be found in Appendix B.

In the course of the debate numerous amendments other than those pefore referred to were offered, nearly all of which were voted down. A number of proposed amendments of minor importance were not discussed, and some of them were not acted upon, and they will not be specially considered. A mere statement of them will be sufficient. Those of this class were substantially as follows:

1. (By Mr. WASHBURN.) Insert at the end of section 11 a provision that every "option" or "future" contract as defined in the bill, when made outside the jurisdiction of the United States should be null and void when attempted to be enforced in court of the United States.

2 and 3. (By Mr. JONES, of Arkansas.) In section 2, except from the operation of the act the following future contracts:

(a) "Any agreement to pay or deliver a part of the product of land as compensation for its use, or as compensation for work or labor done or to be done on the same." Adopted.

(b) “Any agreement made with a manufacturer to deliver to him at a future time raw material of the particular kind, grade, or quality required to be used in his business, if such agreement be not made in any merchants' exchange or other association, nor to be subject to the rules and regulations thereof, and shall be for a bona fide delivery of such raw material of the kind, grade, and quality named in such agreement." Not pressed.

4. (By Mr. GIBSON, of Louisiana.) In section 2, except from the operations of the act the following "futures" contract.

"Any contract or agreement in writing by any person actually to receive and pay for any of the articles to which the bill relates at a specified future time, where there was an actual bona fide sale." Not pressed.

5. (By the same.) In section 3, insert the following articles to be subject to the operations of the act:

"Flour, tobacco, beef, cattle, sheep, mules, horses, lumber, building material, silver, gold, iron, copper, coal, lime, oil, lead, stocks and bonds of any description whatsoever, wool and woolen goods, cotton goods, silk and silk goods, leather, leather goods, cotton-seed products, and all other articles, raw or manufactured, that are the subjects of barter or trade and commerce among the people of the United States, or between them and the people of foreign countries." Not pressed.

6. On motion of Mr. Washburn the original section 12 was stricken from the bill. Afterwards a shifting of the last few sections was made, section 13 becom ing section 10; section 10 became section 11; section 11 became section 12; section

14 became section 13; section 15 became section 14; and a new section numbered 15 was added providing that the act should go into effect on July 1, 1893.

7. On motion of Mr. White the item of "flour" was added to the articles mentioned in section 3 to which the act should relate.

8. Mr. White moved to strike out the proviso to section 2 above referred to, which forbade any of the farmers' or planters' future contracts that were excepted from the act to be made in or upon any board of trade or other such like association or in accordance with any of the rules of such bodies; but after a short debate thereon the motion was lost by the vote of 15 to 32, 39 not voting.

9. (By Mr. VILAS.) Restricting the definition of a "future" contract in section 2, so that there should be excluded therefrom all contracts in which the seller in good faith intended "to purchase and deliver the articles contracted to be sold and delivered according to the terms and requirements of such contract." Rejected by a decisive vote after a lengthy debate.

10. (By Mr. DANIEL.) Strike out section 10, formerly section 13. Rejected after a lengthy debate by a large majority.

11. (By Mr. MILLS.) After section 14 insert a new section as follows: "That all railroad corporations, associations, or companies engaged in interstate commerce shall, within six months after the passage of this act, provide at all stations established or that may be established on their roads, side-track facilities for all persons or parties to erect and maintain private elevators or warehouses, of a capacity of not less than five thousand bushels each, for the storage of grain while waiting shipment on such lines of railroad, and permit such elevators and warehouses to be erected, maintained, controlled, and operated by any person or corporation desiring to erect, maintain, control, and operate the same for said persons. And it is hereby made the duty of said railroad companies to receive and carry over their lines all grain offered for shipment to and from such private elevators and warehouses, and they shall receive in their cars and carry over their lines of railroad all grain offered in carload lots at such stations without previous storage, and shall transport the same at the same rates charged for transporting grain for elevator and miller companies. And every railroad company that shall fail or refuse to comply with the provisions of this section shall be guilty of a misdemeanor, and on conviction shall be fined the sum of ten thousand dollars for each offense." Rejected without debate, 21 to 46, 21 not voting.

12. (By Mr. MILLS.) After section 14 insert a new section as follows: "Any person, corporation, or company which shall enter into any combination or agreement to fix the price at which grain or cotton or other agricultural product shall be bought in any market in the United States, or to prevent competition in the sale and purchase of grain or cotton or other agricultural product in any market in the United States, shall be guilty of a misdemeanor, and, on conviction, shall be fined the sum of ten thousand dollars for each offense so committed." This was also rejected, without debate, by a vote of 26 to 40, 22 not voting. 13. (By Mr. CARTER.) In addition to the articles mentioned in section 3, to which the bill was to apply, insert "silver bullion." This was rejected by a large majority.

14. (By Mr. WALCOTT.) In section 3 add the following articles to which the bill should relate: "Petroleum or any of the products of petroleum, or certificates representing the same and dealt in on the exchanges of the United States; also high wines, spirits, and whiskies." Rejected.

15. The proposed amendment which provoked the most discussion and was by far the most important one offered emanated from Senator George, and was generally called the "George substitute." This amendment went to the very foundations of the bill itself, and proceeded upon an entirely different principle, while seeking to accomplish the same purposes as did the original bill. Whereas the original bill relied upon the taxing power of the Constitution as the source of its authority, the George substitute was based upon the commerce clause of the Constitution.

Its first three sections were the same as the corresponding sections of the original bill.

Its fourth section declared that "options" and "futures," as therein before defined, were obstructions to and restraints upon interstate and foreign commerce, and were, therefore, illegal and void; that every party to such contract, either as buyer or seller, should be guilty of a misdemeanor, triable in the proper district or circuit court of the United States, and punishable by a fine of the full value of the contract if that amounted to $1,000, or $1,000 when the value of the contract was less than that sum, and imprisonment for not less than one year nor more than five; and that every such contract should constitute a separate offense on the part of both parties thereto.

Section 5 declared any exchange, board or other association where "options" or "futures" contracts were made, encouraged, settled, regulated or adjusted to be

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