in New York to 1 raised in the United States. He said that the first three sections of the bill, on a fair construction, could not be considered to apply to any other class of contracts than those which the courts have decided are void-when there is no intention to deliver goods; quoting legal authorities.

He analyzed dealings in futures and the testimony taken by the committees, and declared that all these transactions were mere wagers, as delivery was not contemplated in but few instances.

Replying to the argument that futures prevent violent fluctuations in prices, he contended that the creation of the Agricultural Department and the other means of disseminating information in respect to the amount and condition of the growing crops were the conditions which prevented violent fluctuations in price, and not futures. Such things, he said, did not exist in the decade from 1850 to 1860, which had been cited as the period of great fluctuation. He showed the vast amount paid out for commissions to brokers on the exchange, and cited the testimony of Mr. Bloss, of the New York Cotton Exchange, to prove this sum came out of the cotton crop, which he figured at about $3 a bale.

He believed the bill as drawn was unconstitutional, there being no power under the taxing power of the Constitution, but ample power under the commerce clause, to prohibit fictitious dealings, which are not commerce, but are obstructions to commerce and are in restraint of trade, citing authorities in support of that proposition. He contended that Congress is the proper and final judge to determire what is an obstruction to or restraint on commerce, citing the Wheeling Bridge case, (9 How., 647; 13 How., 518).

Mr. HUNTON addressed the Senate.

He maintained that dealings in options were only one of the causes of the low price of farm products, and that the tariff and the demonetization of silver were greater causes. He believed the bill constitutional, or at most doubtful, and said he was willing to give the benefit of the doubt to the producer. He preferred the George substitute, but would vote for the main bill. He inserted, as part of his remarks, numerous newspaper articles against short selling.

July 27, Mr. COKF addressed the Senate.

He thought the bill unconstitutional, and not warranted under the taxing power of the Constitution, citing authorities. He contended that it was not uniform, referring to the exceptions in section 2. and said he favored the George substitute. He claimed it was class legislation only in the sense that it is directed against a criminal class.

Mr. MITCHELL of Oregon.

He said he would refer the doubt as to the constitutionality of the bill to the Supreme Court. He argued in favor of its constitutionality and said the taxing power of the Constitution was ample, that the tax was uniform, in that it is laid on the same thing at the same rate, and is coextensive with the limits of the United States, citing judicial authorities.

Quoting from Mr. White in reference to Veasie Bank v. Fenno, the State Bank case, (8 Wall., 533), that “If a tax, it was not illegal, because Congress had the power to prohibit that which it had the right to prohibit under another clause of the Constitution," he said that if Mr. George was right that Congress, under the commercial clause of the Constitution, had the right to prohibit options in futures, then it is clear the taxing power may be used to tax them out of existence. Mr. PALMER addressed the Senate.

He quoted the statutes of Illinois against gambling in grain, and bucket shops, and said the bill was a perversion of the taxing power, not to be justified by any sound system of reasoning: that it was not uniform in section 11, and was an interference with the police power of the States. The Illinois law, he said, was enforced as far as public sentiment warranted, and a Federal law would not be

better enforced.

He asked the question, "Can Congress define and punish gambling in the States?" and said this was just what this bill did. He maintained that the tendency of the bill, aside from its unconstitutionality, was to encourage that growing feeling toward social helplessness and toward dependence upon despotic agencies outside of and beyond the people themselves; that it was a substitution of despotic means for the enforcement of the law among the people, who have the right to enforce their own laws by their own agencies, and that it required the Federal Government to do what the States could and ought to do.

July 28, Mr. PADDOCK addressed the Senate.

He favored the bill on moral grounds. It would distribute the visible supply of grain more widely and generally over the country among the mill and other large consumers and wholesale grain dealers, thus retiring from the market a very large portion of each year's crop, and would help to steady the market. It would reduce

the vast army of fiction dealers who are now supported by the producer or consumer, or both. Speculation would be reduced to actual products and would not be under the control of fictionists. He called attention to the enormous sales on the exchange as compared with quantity on hand, and said if these dealings were necessary as a support to the market for the products dealt in, why was it that the other great staples-wool, hay, etc.-have an infinitely more steady, reliable, and satisfactory market than the former.

He controverted the argument of the opposition that "when the farmer is marketing his wheat in large quantities all futures or speculative values are higher relatively than cash wheat," and cited statistics in support of his contention. From these statistics he argued that all outside investments were destroyed, because the short seller could and did intimidate the investment buyer by offering wheat for future delivery for less than its present value, and thus reduced the price, and the price of futures thus determines the price of actual commodities. He said the tendency of short selling is to confine speculation in actual grain to those who desire to secure a storage charge which the outside investor can not afford to pay, and this throws the control of the market for actual wheat into the hands of the miller, the exporter, and warehouseman and drives the investor from the actual market for the benefit of those who own storage rooms of great capacity and the owners of public elevators. He said a steady market, with infrequent fluctuations, regulated by the law of supply and demand, was most desirable to all legitimate trade and business. He incorporated certain correspondence into his remarks going to show that European merchants dealt in futures on exchanges in this country in order to hedge their contracts in other countries for the purpose of depressing prices here, and then buying up at such prices actual products for European needs, and that this country was made to underwrite and assume all the hazards of European dealers in all parts of the world without receiving the slightest compensation therefor. He termed the present system detrimental to the railroads and the banks, because of the sporadic movements of actual products which are caused by it.

Mr. TURPIE addressed the Senate.

He said the taxing power alone was not equal to the case, but the power was ample under the commerce clause, and Congress therefore has the choice of means to cure the evil; that "when affirmatively and independently from another and a different source power is given to the Federal Government to deal by act of Congress with a subject, Congress has the choice of methods and may proceed directly by a penal prohibitory enactment, or it may proceed indirectly by a measure of taxation, and both are equally legitimate: and that the history of legislation and jurisprudence upon these questions will show this." He maintained that the practices were destructive of interstate commerce.

DEBATE IN THE SECOND SESSION OF THE FIFTY-SECOND CONGRESS.

December 12, Mr. GEORGE addressed the Senate.

He called attention to the fact that since last session efforts had been made in the various cotton markets to depress the price of cotton, based upon the fact that the bill was pending in the Senate, and said that, in view of the vast aggregation of wealth in the country which had injected new methods into business, the doctrine of laissez faire was no longer proper.

If future dealing in cotton is so essential to the interests of the farmer, why are such dealings confined to but two places in the United States when at least seven seaports of the country handle more of the actual commodity than either one of those two places? Described the New York Cotton Exchange, which. he said, was composed of 454 members, the initiation fee being $10,000. No man but a warehouseman licensed by the exchange can receive cotton. Weighers, samplers, and even truckmen must have a license from the exchange to handle the product.

It regulates the entire business to suit its own pleasure, and the entire cotton business of the country is at the mercy of the New York Cotton Exchange. The committee on quotations fixes the price at 2 o'clock for the next day, when the market does not close until 3. It fixes prices on days when there is no market. The revision committee meets nine times a year, and fixes prices, and fixes the relative price of other grades of cotton.

No farmers are in the body. It also has judicial powers, power to summon witnesses, and settle all disputes between its members free from the jurisdiction of the courts of New York or of the United States. By charter, the award of the arbitration committee of the exchange can be filed in court, and becomes the judgment of the court, and the court is bound to enforce it.

30

He said that, because of the action of the Senate the day before, the exchange forced cotton down from 2 to 5 points, while corn and provisions went up in Chicago.

He said the brokerage on futures was about two and one-half times as much as was received for actual cotton during the same period, and asked: "Is not the community paying too high a price for distributing cotton through the instrumentality of futures when it takes the gross value of 24 bales to market 1?"

Referring to the statement of the advocates of futures, that the marketing of the cotton crop has become so interlocked and interwoven with the future system that if you touch the future system you disorganize the real business of the country, he said if this be so, then the actual cotton must pay the expenses of marketing the whole of it-commissions and all-on futures.

He figured out that to market the crop of 9,000,000 bales it would cost for brokerage, insurance, interest, etc., $19,000,000, and asked who paid that if it did not come out of the crop. Referring to the figures which show futures to be lower than spot cotton on the same day of the month, and to the fact that in futures only a margin is required while for spots cash is necessary, he said the speculator would naturally deal in futures, thus lessening speculation in spots, and the demand for spots was thus left wholly to the consumer.

He cited letters of cotton factors who were opponents of the bill showing that the market had gone down by reason of futures, and quotations to show great fluctuations in the market, and said the alleged benefit of futures was not made out. Treating of what is known as "hedging," he said that on every such transaction there was a loss of the commission at least, and ridiculed the claim of the Memphis Cotton Exchange that hedging was therefore beneficial to the trade. Mr. PALMER addressed the Senate.

He criticised the definition of options and futures in the bill, and said “options," as defined by the bill, were not the options of the courts, and that "futures" of the bill embraced legitimate contracts in all branches of business. He made a constitutional argument against the bill as interfering with the police powers of the States, and said it was not a revenue bill, and that there was no power in the Constitution to support it.

He attacked the tenth section of the bill as requiring parties to give evidence against themselves, and therefore violative of the Constitution and of common right. He attacked the fourteenth section as giving to ministerial officers the right to make laws.

Mr. PEFFER addressed the Senate.

He called attention to the universal demand from the farming interest for legislatior on the lines of the bill, citing special instances. He agreed with Senator George on the constitutional question that the power to prohibit is derived from the commerce clause of the Constitution. He asserted that the farmer is at the mercy of the middleman, and that the profits of futures come out of the producer. He said the only distinction between this and other forms of gambling is one of degree. He did not believe the bill a panacea for all the ills of the farming interests, as competition and invention and the reduction of the volume of money have also contributed to depress prices.

January 4.

His objecMr. SHERMAN believed the taxing power sufficient for the purposes of the bill. Mr. WHITE moved to strike out the proviso at the end of section 2. tions were that, inasmuch as the bill admitted the legality of certain future contracts when carried on by a particular class of people, at certain places, it was class legislation of the worst type to forbid them to another class of persons at a place where quotations were posted, thus making the legislation partisan and not universal, illustrating his argument by referring to the county fairs and the other market places which have come down from the remote past as centers of business. January 5, Mr. VILAS addressed the Senate.

He said that the bill was unconstitutional, its admitted object being to suppress and destroy the transactions condemned in it, and not to raise revenue: it was unnecessary, because the things attacked-that is, the purely gambling transactions are already illegal under State laws. The taxing power was not broad enough to cover contracts made and to be performed in the State. Legislatures of the State should determine what are lawful contracts and what are not. He distinguished the case of Veasie Bank v. Fenno, (8 Wall., 533), which construed the statutes taxing the issues of State banks, and the oleomargarine statute from this: The first was "a means properly adopted by Congress to protect the currency which it had created, namely, the legal-tender notes and the national-bank notes:" and the no instance will be found of the He maintained that latter is a revenue bill.

exercise by Congress of the ostensible power of taxation, not to raise money, but to prohibit or suppress the doing of something in which the true source of the power of such inhibition is not referable to some other grant of the Constitution." He attacked the George substitute as also unconstitutional, and said the argument in support of that was-

1. Congress may directly interpose to suppress any domestic transactions sanctioned by the laws of a State, and conducted by its own citizens wholly within its borders, although in no wise interstate or foreign dealing, not even amounting to commerce at all, if their indirect effect in some manner unfavorably influences or, n his language, obstructs or restrains other transactions, whether by the same or other persons, which are, or might become, interstate or foreign commerce.

2. Congress may conclusively assert that any such domestic infra-state transaction does unfavorably influence interstate or foreign commerce, and thus, foreclosing inquiry of the fact by the courts, invest itself with legislative power to denounce and suppress the domestic transaction which otherwise citizens of a State might rightfully engage in, protected and sustained by its laws.

He contended that both propositions were untenable. The power to regulate, under the commerce clause of the Constitution, extends only to the means and implements of such commerce. On the second point, he declared the Wheeling Bridge Case does not sustain Mr. George's position.

Even admitting that the system of dealing in futures operates to depreciate the price of the commodities in question, it does not follow that thereby interstate and foreign trade in them is obstructed, because the more the price of an article of common desire is lowered the more extensive becomes its use and the more active the traffic in it. Results show no obstruction—no necessity of legislation. Power of the legislatures of the States to cope with the evil ample.

Mr. VILAS offered the following amendment: In section 2, after line 15, insert “And does not in good faith intend to purchase and deliver the articles contracted to be sold and delivered according to the terms and requirements of such contract." Mr. WHITE addressed the Senate on the amendment.

He said the amendment does not go as far in recognition of future contracts as the decisions of the courts, which hold such contracts to be invalid only when neither party intended to deliver.

Mr. GEORGE replied:

The amendment would destroy the bill. The testimony shows that the future sales of cotton are equal to 4 to 1 of the actual crop, and yet everyone said all those sales contemplated a delivery, which was utterly impossible; therefore, with the amendment in, the bill could not be enforced. He asserted that, notwithstanding the transaction or the thing prohibited by Congress may be upheld by State law, if, in fact, it be an interference with interstate or foreign commerce, it is within the competency of Congress to make a regulation annulling that which is good under the State law; and declared every contract on the New York Cotton Exchange a gambling one.

Mr. HOAR addressed the Senate.

If this bill be sound in principle, there is not a transaction of mankind which it is not within the constitutional authority of Congress to regulate, unless it come within the direct prohibition of what we may call the bill of rights, or unless it come within the direct affirmative action of the powers of the States.

Mr. GEORGE replied that the evidence taken by the committees showed that the "future" system, so far as cotton is concerned, has been so interwoven and interlocked with the commerce in cotton that if we destroy it we disorganize the whole cotton trade. Therefore that brings it within the competency of Congress to declare that the same is an obstruction to commerce.

Mr. PALMER cited the practice in Illinois and other States, of notes payable in property at the market value of the property when due, and said they would be illegal under this bill. The bill comprehends too much; it not only refers to gambling, but goes into the minutest transactions of life.

Mr. PUGH.

According to the testimony before the committee, 90 per cent of the future contracts in New York and New Orleans in the last 20 years would be protected by the amendment proposed, and it would take the life out of the bill.

Mr. VILAS compared the cotton exchanges, in the vast amount of their future sales, to the New York Clearing House, where millions of dollars' worth of business is transacted, and yet little money is handled.

Mr. CALL favored the bill on moral grounds, and believed it constitutional, but preferred the George substitute.

Mr. WHITE addressed the Senate.

He described the present method of marketing the cotton crop in the South, and asserted that unless the amendment proposed by Mr. Vilas was adopted the merchant would not be able to advance money to the cotton farmer to make his crop, and the result would be that the farmer would necessarily have to become a speculator and sell his crop before it was grown.

Mr. VEST addressed the Senate.

He said the theory of the substitute is that absolute power exists in the Congress of the United States to declare that any practice or pursuit in any State of the Union is an obstacle to commerce, and the Supreme Court is inhibited from making inquiry and deciding upon the truth of that fact. He cited judicial authority against that theory.

Upon the theory that dealings in options and futures diminished the price to the producer, then commerce should naturally increase, since low prices make most buyers.

Mr. HOAR addressed the Senate.

He said the bill infringes the rights of the States; it is not a tax bill, as no tax is expected to be raised, none contemplated, but only the suppression of the practice. Quoted Gibbons v. Ogden, (9 Wheat., 1), as follows:

Congress is not empowered to tax for those purposes which are in the exclusive province of the States. When, then, each government exercises the power of taxation, neither is exercising the power of the other." Cited many decisions of the courts in his argument against the constitutionality of the bill as a taxing

measure.

He dissented in toto from Judge Cooley's view, expressed in a magazine article, as to the right to tax the Louisiana Lottery out of existence.

Addressing himself to the George substitute, he contended that it was not constitutional, illustrating his argument by many citations, and said the effect of it would be for Congress to take charge of every transaction in business which in any way even remotely lessened the amount of interstate or foreign commerce.

To say that the cost of brokerage on fictitious sales comes out of the crop is no more logical than to say that every bet at a horse race is paid by the owner of the horse. The consequences are too remote.

Legislatures of the States have ample power to prohibit these practices if the people of those States so desire.

Mr. VEST, referring to Judge Cooley's magazine article maintaining that Congress could tax the Louisiana Lottery out of existence, read a query put to Judge Cooley by David A. Wells, as follows: "If your contention be correct that the Congress of the United States can tax ont of existence any lottery within any State, what prevents the Congress of the United States from taxing out of exist ence in any State saloons, opium joints, brothels, and other institutions which they deem deleterious to the public morals?" and said that the query had not been answered. He said if Congress has this power, then what police power is left to the States?

Mr. PLATT addressed the Senate.

The bill is unconstitutional. Congress has power to lay and collect taxes not penalties; it is not authorized to confiscate. It never has been held that anything is a "tax" which does not contemplate the raising of revenue for the purpose of the Government: citing many authorities on taxation to support his statement. Whenever the legislature undertakes to take the whole of a man's property it is not taxation, but confiscation pure and simple.

The bill is not an exercise of the taxing power, because it does not intend to raise revenue, and the primary and essential purpose of a tax is to raise revenue. Referring to the George amendment, he defined interstate commerce, under the decisions of Gibbons v. Ögden, (9 Wheat.. 1), and Coe v. Errol, (116 U. S., 517), and asserted that this amendment undertook to deal with business and products of the State before such became subjects of interstate commerce, within the meaning of those decisions.

He said, "No dealing, legitimate or illegitimate, in any property in a State can in any way be an obstruction to commerce between that State and another State: no method of purchase, legal or legal, no method of transacting business, so long as the property is in the State and not delivered to a common carrier for transportation from that State to another State, can in any way be an obstruction to, or an interference with, or an injury to, commerce which shall flow from a State to another State;" and asked, "Is a contract of sale within a State commerce between the States?" And if not, then it can not be prohibited or regulated by Congress. He asserted that the theory of the amendment was, that before the articles which are the subject of the contract of sale have in any sense became