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subjects of interstate commerce the contracts themselves may be an injury to interstate commerce, and may therefore be properly suppressed and made criminal. If that be true, there is no contract of sale that may not be made criminal, if only Congress will declare it so, and the further contention be correct that such declaration by Congress can not be questioned.

The limit of legislative discretion in regulating commerce among the States does not go beyond the commerce itself among the States, and that does not begin to exist until the goods begin to move from one State to another by the ordinary lines of transportation. If the theory of the bill be correct, then the liquor traffic, theft, horse racing, and all gambling in the States may be suppressed by Congress.

Nothing in the testimony shows that the farmers will derive the slightest benefit from such legislation. This is the first instance in the history of proposed legislation the avowed purpose of which was to advance the price of products to the consumer.

Does not believe the price of wheat or cotton is much affected by these dealings. There may be fluctuations from day to day, but the average annual price of any of the cereals is not affected. If the bill passes, then prices will be fixed by the millers and the commission merchants, who, when their elevators are full, will say they do not want any more; and then what becomes of the market?

Mr. STEWART. Congress can not enact a law, under the taxing power, the primary object of which is to control business in the States. The object of this bill is not to raise revenue, but to destroy a business.

Mr. WASHBURN, in reply to a question, said: “ The object of the bill is to destroy a system of manipulation by operators on boards of trade, which creates abnormal and unnatural conditions, so that the great products of this country are not sold on the basis of supply and demand.

Mr. STEWART continued, and said that the passage of the bill would put it into the power of the millers and elevator men to combine and regulate prices at their pleasure. This was denied by Mr. Washburn.

Mr. STEWART then argued that the fall of prices was due to the demonetization of silver.

Mr. Vilas. Courts should determine whether such practices are obstructions to commerce and also whether they are illegal. “It is a judicial question."

Mr. GEORGE, in reply, cited the anti-trust law," which was a legislative definition of a trust that was declared to be illegal.

Mr. WHITE's objection to this was that there was a distinction between calling a thing illegal” and saying that it "impeded commerce.

Mr. GEORGE also cited section 5 of the interstate-commerce law, which declared pooling unlawful. He asserted that these dealings constitute an interference with, and an obstruction of, interstate and foreign commerce.

Mr. GRAY denied that the evidence showed that, and contended that the mere fact that prices might be raised or lowered by the board of trade did not prove that interstate and foreign commerce had been obstructed or interfered with; and he further claimed that the dealings referred to had not been shown to reduce the price of commodities dealt in or the profitableness of commerce. But even if they did, Congress would have no power to legislate in respect of any transactions of purely State commerce.

The theory of an amendment offered by Mr. Vilas is that Congress is not the judge of what constitutes an obstruction to interstate and foreign commerce.

Cited decision in Wheeling Bridge case, and Gibbons 14. Ogden (supra), and other cases, and various statutes to controvert that theory, especially acts regulating passenger traffic on shipboard between American and foreign countries, and reconstruction acts, in the matter of which the Supreme Court said Congress was the final arbiter.

Mr. CHANDLER addressed the Senate.

Thinks either the taxing power or the commerce clanse sufficient warrant for the bill. Power the same as that to impose protective duties. Prefers George amendment. Does not believe the bill will accoinplish what is desired. Maintains that the following taxes might be levied for revenue; and if so, (an they not be levied for another and distinct purpose:

1. Duty on imported whisky, wheat, cotton, or tobacco.
2. A tax on persons engaged in the business of importing those articles.
3. A tax on those articles produced in this country.

4. A tax on all persons engaged in the business of making contracts to buy and sell those articles not in their possession at the time of the contracts.

5. A tax on all persons engaged in the business of making contracts to buy and sell those articles in their possession at the time of making the contracts.

Mr. MILLS addressed the Senate.

This is a matter of State regulation wholly. If the National Government has power to suppress such dealings it would also have the power to encourage them if it chooses to do so, against the will of the people of any State.

“ If the amendment written upon the face of the bill that brands it as a regulation of commerce can not be traversed, then Congress is a legislative despotism. The bill is not a regulation of commerce, and does not and can not advance the prices of any product embraced in it. Prices are fixed by supply and demand."

Replying to the argument that the charges on the cotton exchange come out of the cotton, he said: Where does the money come from that is staked on cards. horse races, and elections-out of the manufacturers of cards, the owners of horres, or the voters at electious? No. It can no more be said that the cotton grower pays the charges of this business than it can be said that he receives the profits made by the successful speculator.

“I want to know how a charge of $5 made on a cotton contract in New York can come down to Texas and locate itself on a bale of cotton belonging to one of my constituents? If this can be proved, then it is in the power of the people everywhere to put charges at their will to any amount on the property of others without their consent.

“Future dealings have grown out of the development of civilization by the necessities of that civilization. It comes like the bank, the bank check, the bill of exchange, the clearing house, the railroad, the telegraph and telephone. What is a contract to buy and sell cotton for future delivery but a commercial contrivance by which credit is made money and made to contribute its resources to aid in the work of distribution?"

He termed the transaction a “capitalization of credit," and said each time the contract is sold a benefit is conferred. In moving the volume of annual commerce every dollar in the country is promised twenty-five or thirty times, and the whole country receives an incalculable benefit.

Mr. HISCOCK addressed the Senate.

He called attention to the 10th section as unconstitutional, in that it required a party to give evidence against himself; and cited Boyd r. United States, (116 U. S., 616), in support of his position. The bill would become the basis of the most gigantic trust the country has ever seen.

Mr. WHITE addressed the Senate. The George amendment is more pernicious than the original bill. If its theory be true, then Congress can say that too much acreage in cotton impedes interstate commerce, and could restrict the acreage. Congress could declare that any State government is inefficient and that its reflex result impedes interstate commerce, and could therefore wipe out the State government and put any other in its stead, and where could the line of distinction be drawn between the constitutionality of that bill and this?

Facts prove the declaration of the amendment untrue. Prior to futures the amount of interstate commerce in cotton in the first 3 months never exceeded 30 per cent of the crop. Now it is il per cent in the same time. Future dealing is not new, but is a part of the common acquisition of the human mind for the last 200 years.

He called attention to the number of cities in all civilized countries where such contracts are carried on. They existed in France for 200 years; in Florence since the fourteenth century; and in Amsterdam, since the seventeenth century. They come from a contract known to the ancient law as the “safe arrival of a vessel," whereby a man sold the cargo on a vessel in a foreign port, the cargo not being loaded and the vessel not having sailed, paid for on a sliding scale, having a certain standard as a basis of calculation. Those contracts were transferable, and were often nego:iated.

Such contracts are universal in commercial countries and are approved by writers on political economy. There is a natural right to make them, and to strike them down is to strike down liberty itself.

He showed from tables that the price of spot cotton in New Orleans in the first week of every month of the decade from 1850 to 1860 averaged 15 cent more than in the decade from 1880 to 1890, while in the decade from 1850 to 1860 there were higher prices for everything than in the last-mentioned decade.

He showed from the report of the royal commission that the decline in price in cotton was less than in the other one hundred and oud other articles, so that cotton was relatively higher in the last decade than in the first. In the period from 1842 to 1861 the prices of cotton averaged to cent lower than from 1879 to 1892. The lowest price in the first period for 5 years was lower than in the period from 1890 to 1892. The depression in the season of 1891-92 was caused by overproduction. Spinners could not consume it, and that left a large surplus for next season, which


could only have been taken care of by the system of futures. In the early period producers were at the mercy of the manufacturers; cited statistics to prove that since the existence of futures the cotton market has been steadier and the fluctuations enormously less than before, and said that fact was admitted by many who favored the bill.

The price advanced steadily in the face of the largest future sales ever recorded; hence futures did not lower the price. Futures, as a rule, are lower than spots for the month in which the futures are due, and the early months thereafter; and are higher than spots in the future months after that period up to the end of the crop year.

He showed by figures that futures sustained the market even in years of overproduction. The charges are only 124 cents a bale in the New York Cotton Exchange, instead of 97d, as Mr. George had stated. If cost come out of producers then ought they not to be credited with the profits?

Volume of futures bears no larger relation to the volume of the product than is borne by almost every product in the world—all of which are sold several times over.

He compared the exchanges for the sale of products to the clearing-house of banks, when 4 or 6 per cent often is sufficient to liquidate the differences; and said the produce exchanges were the clearing-houses for products in Europe.

If the committee of 9, called the quotation committee, referred to by Mr. George, has the power contended for of fixing prices, then they are benefactors, because cotton has retained its price relatively better than many other products.

Liverpool is the great cotton market of the world, because it is the great center of consumption. It receives the surplus of the crop of the whole world. Futures are thought to be larger there than New York, probably twice as large. No record is kept. New York is a higher market than Liverpool, relatively. New York is a bull market; Liverpool, a bear market.

Mr. WOLCOTT addressed the Senate.

Thinks the bill unconstitutional, but said if it is passed and declared constitutional it will lower prices. The real demand for the bill comes from the millers and elevator-men. For a week or a day a corner may prevail, but the great law of supply and demand will in the end regulate prices. The bill is a lie on its face.

Mr. GRAY addressed the Senate.
Believes both the original and the George substitute unconstitutional.

Mr. GEORGE. Believes Congress to be the final judges of what are obstructions to commerce.


The power is given to Congress to regulate commerce as it pleases, but not to regulate anything else. When Congress thus has jurisdiction, it may declare or consider anything an obstruction; but it can not acquire jurisdiction by declaring certain things to be obstructions.

The power which the Supreme Court can exercise when an act of this kind is brought before it is. first, to determine whether the subject-matter of the regulation is within the scope of the commercial clause of the Constitution. When it has determined that question affirmatively, then any regulation which Congress makes is entirely within Congressional discretion, and the Supreme Court can not pass upon its wisdom or unwisdom, or as to whether it be an obstruction or no. Cited the decisions of the Supreme Court in favor thereof in The Daniel Ball, (10 Wall., 557), and Veazie v. Moor, (14 How., 568), and quoted from the latter as follows:

“Nor can it be properly concluded that because the produrts of domestic enterprise in agriculture or manufactures or in the arts may ultimately become the subjects of foreign commerce, the control of the means or the encouragements by which enterprise is fostered and protected is legitimately within the import of the phrase foreign commerce, or fairly implied in any investiture of the power to regulate such commerce.

"A pretension as far reaching as this would extend to contracts between citizen and citizen of the same State; would control the pursuits of the planter, the grazier, the manufacturer, the mechanic; the immense operations of the collieries and mines and furnaces of the country; for there is not one of these avocations the results of which may not become the subject of foreign commerce and be borne either by turnpikes, canals, or railroads from point to point within the several States toward an ultimate destinat.on like the one above mentioned.”

He said this bill is the same as that case. He explained the difference between the interstate-commerce act and this bill. In that act it was interstate commerce that was taken cognizance of, and jurisdiction of Congress thus attached, consequently the power of Congress to say what was an obstruction was supreme. Here the contract is not made by those engaged in interstate commerce: it is not concerning the transportation of commodities from one State to another. It is precisely like Veazie 1. Moor, (supra).

He cited insurance contracts in Paul v. Virginia (8 Wall., 168), which were held not to be interstate commerce, because they were not commodities and did not apply to commo:lities which were to be transported from one State to another.

Mr. Harris addressed the Senate.

The bill is a prostitution of the taxing power. The business of options and futures is for the States to regulate or suppress. If this bill be constitutional there are no reserved rights of the States that Congress may not invade. It tends to centralization and paternalism.

Does not think the business lowers prices of products, nor will the bill have the beneficial effects claimed for it by its friends.

Mr. BERRY addressed the Senate.
Opposes the bill as unconstitutional, but believes the business an evil.

The practices are evil and should be suppressed by the States. The bill is a prostitution of the taxing power of the Government, and unconstitutional. Favored the George substitute which had been voted down.


Favored the George substitute, but was not free from doubt as to its constitutionality. Present bill unconstitutional. No authority under the taxing power for such legislation.


The taxing power has been used to confiscate from the first year of the Government and for purposes other than raising revenue. Hence the practice warrants this proposed legislation.


Wanted to find a remedy to stop dealings in “options” and “ futures," and therefore voted for the George substitute. Some misgivings as to its constitutionality, but can not support the bili because he believes it not within the taxing power of the United States Government.


Called attention to instructions from Missouri legislature-116 to 13, to support the bill, but says no legislature bas the right to instruct a Senator to violate the Constitution, or to make him commit perjury.




St. Louis, November 8, 9, 10, 11, 1893.

LW. M. SENTER, aged 62 years; for twenty-nine years a cotton grower in St. Louis. ]

The low price of cotton for 2 or 3 years was because of the unprecedented crops of the 2 preceding years, and probably also by reason of the method of handling future contracts of cotton. Cotton is sold on contracts based on a middling quotation, but with the understanding, under the rules of the exchanges, that most any of the 30 grades or halt grades may be delivered on those contra ts. This is disasastrous to the cotton tracle and to the price of cotton, for the reason that no one buying cotton would want to be compelled to receive it so graded.

Does not believe future contracts in cotton should be abolished, but thinks they should be restricted to legitimate transactions. Suggests no inethod of restriction.

Means by “overproduction” that the supply was greater than the demand. Thinks a lowering of the tariff on cotton goods would create a greater demand for the raw material. “Futures” are generally lower than spot cotton, taking from 2 to 4 months for them to come un with spots. Thinks this has a tendency to depress the price of spot cotton. • Futures” have almost eliminated speculation in spots; and, as Southern people are naturally bullish” on cotton, they have lost in such speculations very heavily. Considers the present mode of dealing in futures injurious to the producer.

Thinks cotton farmers in worse condition than 3 years before, and much worse off than 10 years before. No money in raising cotton at less than 8 cents per ponnd net to the planter.

Opposes" futures” also on moral grounds, because they are disastrous to young men, who risk more money on them than they ought to do, and eventually, as a rule, lose all they have, and often become embezzlers of funds intrusted to their


(W. W. CARTER, aged 53; cotton dealer in St. Louis. 1 Believes the low price of cotton prevailing for several years attributable to overproduction, and also more or less to dealing in “futures." Th nks the price of ** futures" regulates the price of spot cotton, and the business concentrates the money which would otherwise be better distributed.

“ Its moral effects are more disastrous and far reaching thau any other gambling device known to and tolerated by civilization.”

Believes “futures" should be suppressed by the General Government. Cotton seed from an acre sells for as much as wheat from an acre in the Northwest, and the most valuable part, the lint, remains. With future dealing suppressed, the earnings of the cotton producers will remain among themselves. (EDWARD MCCORMACK, a cotton buyer for twenty-eight years, the last ten years in St. Louis.]

Believes the low price of cotton for several years mainly due to overproduction. Thinks future dealing sometimes depresses the price, and at other times it enhances it beyond what it ought to be: in the main beneficial to the producers, because at times there is too much cotton offered for sale to be taken care of by the consumer, and if there were no future transactions the price would go much lower than under the present system. Futures sometimes higher than spot cotton. Future dealings maintain the price of cotton, dealers being able to sell against their contracts and thus avoid losses. Thinks the only weak feature in futures in cotton is that such contracts call for m ddling cotton, and any grade may be delivered. Thinks the contracts ought to specify the grades they einbrace. Futures in cotton have a tendency to give a valuation to property that otherwise would have no fixed value. Instances wool market as being in a more deplorable state than cotton market. Thinks the price of futures for a given month haze a tendency to fix the price of spot cotton for that month; but says they do not depress the price. Actual consumers of cotton often buy future contracts, but tīsually sell them and buy the cotton they use from someone else. Futures are bought with the expectation of delivery. Futures enable the dealer to avoid risks. In buying, the price is maintained; in selling, it may be depressed, but the one offsets the other. * Expense of conducting future transactions comes out of those who s eculate in cotton. Speculation does not depress the price but has a tendency to enhance it. It is no charge on the crop itself. Thinks the future system so interlocked and interwoven with the real market of the cotton crop that if it was abolished it would disorganize the trade in spot cotton.

[J. D. GOLDMAN, president St. Louis Cotton Exchange, and interested in plantations and stores.]

Cause of low price of cotton is due to overproduction. Cotton has not depreciated as much, relatively, as some other products. Has little experience in future business, but knows there can be legitimate business in it. Perfectly legitimate to buy for future delivery what is required to be used, or expected to be sold in the future, and to sell for future delivery what one has or expects to get. Thinks cotton trade deinands future sales. Large dealers who buy spot cotton daily must use futures to protect against the risk of carrying the same. Futures thus benefit the producer by always furnishing a market, which would not be the case if the consumer was the only buyer. Outside of these features, futures may be considered gambling.

The fact that 10,000,000 bales of cotton were sold on the exchange in New York in one year, while the actual crop was only 8,000,000 or 9,000,000 bales, is partly explainable on the theory that many legitimate transactions could easily be and often were had on any one lot or contract. No doubt many transactions were purely gaming. Futures advance price of cotton as often as they lower it. There are always as many buyers as sellers. Knows of no way the risk can be eliminated from all parties. If futures were abolished the cotton trade would be somewhat disorganized, but not wholly so as long as the European market exists. Abolition of futures would injure the producer.

Believes that fully 95 per cent of the gambling in cotton is done entirely outside of the producing community of cotton, and therefore the commissions do not come out of the cotton crop. Cost of covering with futures is very slight compared to the method the planters had in former years of marketing their cotton, paying commission, insurance, interest, etc.

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