THE UNIVERSITY OF ILLINOIS LIBRARY IXXJIJMENTS ONE IIUNDIIKD ANI) SIXTH SESSION, 1883 . VOLUME V.— Xos. 45 to 52 irclusive. A L B A N : WEED, PARSONS AND COMPANY, LEGISLATIVE PRINTERS. 1883. Digitized by the Internet Archive in 2017 with funding from University of Illinois Urbana-Champaign Alternates https://archive.org/details/testimonyreportw00newy_0 'joev ^ o 3 (5 ^ STATE OF NEW YORK. No. 45. IN SENATE. April 20, 1888. MAJORITY AND MINORITY REPORTS OF THE COMMITTEE APPOINTED TO INVESTIGATE THE CORNERING OF GRAIN AND OTHER ARTICLES. To the Honorable the Senate of the State of New Yorh: The special committee appointed in pursuance of a resolution of your honorable body to inquire into and report relative to “ the whole system of making corners and dealings in futures, with refer- ence to its effect upon commerce, and its influence upon the public welfare,” begs respectfully to report : As the investigation was somewhat novel in its character, and had to deal largely with commerce and commercial men, your committee deemed it advantageous to seek its information at the great com- mercial marts of the State. Its sessions were therefore principally held in New York and Buffalo. Prominence was given to these meetings in the daily newspapers. Subpoenas were issued to repre- sentative persons in trade, commerce, mechanics’ labor and the pro- fessions, and all who desired to testify were granted every opportu- nity of so doing. As the investigation progressed the attention and interest of the public seemed to increase, and much valuable information in the ^ shape of testimony was obtained. It soon became evident to your committee that the commercial 'fy terms corners ” and ‘‘ dealings in futures ” are very much mis- understood by the community at large, outside the trading classes • the former being generally regarded as a species of mercantile con- [Senate Doc. No. 46.] 1 2 [Senate, spiracy of an oppressive cliai*acter, and tlie latter as a system of recognized and tolerated gambling in merchandise, lately introduced into iVmerican commerce, of a very demoralizing and dangerous character. The term “corner” from the mercantile standpoint is intended to illustrate the condition of the market for the time being, relative to an article of merchandise which is in greater demand to lill conti-act obligations, maturing within a given p(U*iod, than the stock on hand will supply. Thus a party is unable to deliver, at the time speci- fied in his contract, an article sold by him at some previous ])eriod, he is said to be “cornered” on that article, just as a ship builder, for instance, who mighty fail to have the vessel completed at the date specified in his contract with the })urchaser, would he deemed “cornered” on his contract; and when this condition of things ob- tains with a number of persons, relative to the same article, it is then said that the market is “ cornered ” for that article. Corners may occur, and often do occur, from accidental causes, such as interrruption to trans])ortation, from fire, from flood, and from many other merc.antile vicissitudes. They ma}^ also arise from protective influences, both conservative and legitimate, as when a seller of property is imperatively asked to deliver the article which he has forced upon the market at detractive values, to the detriment of the business interests of the purchaser or the producer, without having made provision for such delivery ; but corners can only be- come positively injurious to commerce and the public weal when, by taking advantage of the follies or misfortunes of others, a con- spiracy is operated to give factitious and dishonest values to the cornered article through manipulated markets. It is absolutely impossible to avoid “ accidental corners ” because they occur without premonition or premeditation. Their influences, however, are confined to localities, and they are almost always of very short duration. The death of the lamented President Garfield created a corner in those mourning stuffs, deemed essential in evidencing a nation’s sincere and generously expressed grief, just as potent as a break in the canal, during the season of inland naviga- tion, would be in erdiancing the value of breadstuffs in the N^ew York market, until navigation was resumed, or supplies obtained from some other than canal sources. While your committee has been informed and believes that com- merce and the consuming public may suffer temporarily from the No. 45.] 3 “accidental corner,” there are no corresponding elements of injury in the “ protective corner.” It can only be effective when the seller enters into his enfra (dements with the absolute intent of not fulfillino^ them (unless under possible contingent circumstances beneficial to himself), and therefore he makes no provision for delivery to the ])urchaser at the maturity of the contract. In other words, for the purpose of demoralizing market values, the seller enters into a con- tract to deliver at a future period that whicli he has not got, and which he does not intend to obtain, unless through his demoralizing act values are reduced to a point which renders it profitable to him- self to fulfill his contract obligatio; s. This must be very evident, because corners cannot obtain, if the property is forthcoming at the time specified in the contract. The merchant who sells with hon- est intent makes such provision, and, barring accident, cannot be cornered ; the dishonest or thoughtless man does just the reverse. It is a very just conclusion therefore, that in a “protective corner” the seller is the only person at fault. His original purpose is repu- diation, if repudiation will conserve his unrighteous ends, and he is only in default for the reason that he is a knave, or a fool, and as such is not entitled to any other protection than that which the law provides for knaves and fools and honest men alike. If it was not the conceded right of the purchaser to claim that which he had bought in good faith as a protective element in his business, or else to demand and receive the full measure of damage predicted upon market values, in case of a failure to deliver, there would be abso- lutely no such thing as protection in legitimate trade. Nor is it advantageous to the consuming public to have values artificially depressed. The natural law of compensation, which is also a governing element in commercial matters, provides that undue depression will be followed by undue exaggeration, each equally detrimental to the general welfare, and unsettling and vexatious in their effects upon ail classes of society. But corners that are simply conspiracies, or which by combiniiig circumstances and taking advantage of the misfortunes or follies or knaveries of others, have degenerated into conspiracies (whos3 oper- ators aim to wrench fictitious values for property which their victiins are unable to deliver at the maturity of contract obligations, and to to this end manipulate and distort markets through dishonest means), are outrages inflicted upon commerce and the public at large, and should be, and, your committee believe, can be summarily suppressed. 4 [Sknatic. That such corners have been operated in this State within tlie ])a8t few years, botli on the Stock Exchange of New York and in mercantile circles, is an nndispiitable fact. The consuming public arc not so much affected by their operation as the very just outcry against them might lead many to suppose, for tlie reason that they are swift of culmination, and when ended, prices for a time have generally receded below legitimate values, in proportion to their previous enhancement ; but they are, nevertheless, exceedingly demoralizing and hurtful in their tendencies, and if remedies for their absolute suppression do not now exist, your com- mittee would suggest legislation with a view to that end. As stated in a previous paragraph, the law is intended to afford protection to fools and knaves (and it may be said, criminals also) ; from the machinations of wicked or designing men, just as jjromptly and as wisely as it aims to protect society from the criminal classes. This is politic and reasonable, and therefore, the persons who con- spire to take an undue advantage of a knave or fool or criminal, because of the position his wrong doing or folly has placed him in, are themselves knaves or fools and should be dealt with accordingly. For this reason “ conspiracy corners” and their operators, and claims for damage predicated upon manipulated market values, should not have, and do not have, any standing in law. Conspiracies in all their phases are illegal. If a misapprehension exists in the public mind as to the com- mercial meaning and operations of corners, it soon became apparent to your committee that outside of commercial circles a much greater misunderstanding exists relative to ‘dealings in futures” and “its effect upon commerce ” and “ its influence upon the public welfare.” “Dealings in futures,” in a commercial sense, are simply sales and purchases of merchandise for future delivery. For the sake of brevity such transactions are often styled “ options,” because when the property sold under the contract is deliverable during a specified month, and upon any day of that month that the seller may elect, it is called a “ sellers’ s option,” or if the buyer has the right to name the day of delivery, a “ buyer’s option.” These contracts bear on their face the evidence of good faith and are valid in law and equity. Herewith is presented the form of grain contract in vogue among the members of the New York Produce Exchange, and it is a fair sample of its class : No. 45.] 5 ‘‘ New York, January 1, 1883. In consideration of one dollar, in hand paid, the receipt of which is hereby acknowledged, I have this day sold to (or bought from) John Doe, 8,000 bushels of No. 2 corn. New York inspection, at 70 cents per bushel of 56 pounds deliverable at the seller’s {or buyer’s) option, in May 1883. This contract is made in view of, and in all respects subject to the by-laws and rules establised by the New York Produce Exchange in force at this date. KICHARD ROE.” This contract is explicit and its meaning cannot be misunderstood. The buyer professes that he will receive, and the seller that he will deliver. It is legally binding on both parties thereto, and the pur- chaser is entitled to all the benefits under it, irrespective of what may have been the secret intent of the seller, even if that intent at the time he signed the contract was a determination not to make delivery of the corn, if market values did not run in his favor. This system of future sales is not of recent date, nor has it been confined in its operations alone to the United States. It existed in Great Britain and other European countries prior to revolutionary times, but it was more of an exception than a general rule of trade. It did not become a prominent factor in American commerce until eight years ago, when the rapid development of the producing regions rendered necessary its application to commercial pursuits, because of its extraordinary protective elements. So universal has it now become that it is impossible to determine its present volume, it permeates dealings in almost all of the surplus farm products of the United States to what may be very justly termed a limitless extent. Its great popularity rests, not only in protective character but also in the rapidity with which large and small transactions alike can be initiated and consummated, and it must be admitted that it has a very firm hold upon the mercantile exchanges, the boards of trade and the business men of the whole country. It is beyond all controversy that the farmer or producers and smaller class of traders, who deal more directly with them at the numberless towns and stations on our numerous lines of railroads, derive very direet and positive benefits through its operation. Its protective element is apparent when it is understood that the purchases of to- day, however modest in their proportions, can be promptly sold at any of the large interior towns, for future delivery, at prices which enable the producer to receive the then full market value at those points less the cost of transportation, and a fair profit to the middle- man or trader, who in turn is protected from possible loss from [Senate fluctuations of value, wliile liis ])urchasc8 are being transported to their selling destination. The same protection applies to the larger shipper from Chi(;ago, Milwaukee, Toledo or other Lake Ports, who forwards his grain by the vessel load to a seaboard market, to the exporter who seeks foreign custom ; to the miller, and the cotton spinner, in fact to every de])artmejit of commerce that can be ben- efited by such j)rotective influences. And it cannot theretore helj) being regarded, when intelligently operated, as of inestimable corn-- mercial value. Perha])s the importance of this system may be further illustrated by giving the values of the four major articles of export from the United States, in the year 1881. Grain, and products of grain $270,000,000 Cotton 261,000,000 Animal products 157,600,000 Petroleum 40,000,000 $728,600,000 This enormous aggregate represents nearly seven-eighths (7-8) of the total domestic exports from the United States for that year, the gross being $884,000,000. It is claimed, and the statement is based upon competent authority, that probably seventy-five per cent (and very probably much more) of these four items of export, were dealt in by the exporting merchants before they arrived at seaboard ports and found their way on board ships, and it is not improbable that from the time they left the hands of the producer till they came into possession of the exporter, they formed the basis of transactions aggregating ten or twenty times the declared export value, every one of which were legitimate and mercantile. But this is not all. The vessel service which was necessary to transport this property abroad was, to a great extent, contracted for before the shops ar- rived at their ports of American destination, and the bills of ex- change which provided the means of making payments, were also largely sold for future delivery to the foreign bankers. In fact every element relative to these shipments in some way may be said to have ])artaken of this “ future” character. Indeed it was made evident to your committee that the system of buying and selling for future delivery to use the words of a witness is the invention of a great necessity, and has answered the needs so well, and hns helped to build uj) interior towns and largo cities, and mercantile exchanges No. 45.] 7 so rapidly, that it is a universally recognized part of our great and growing connnercial development.” But it has been urged that “ sales for future delivery ” cause violent fiuctuatio?is in values, greater than those v/hich occurred prior to their general introduction into commercial trading. This statement has not been substantiated however, indeed the evidence tends to show that the effect is, to some extent, quite the reverse. •The following table gives the maximum range, of fluctuations in the prices of cash wheat, during the month of March (a fair average month) for sixteen years from 1867 to 1882, inclusive. In 1867 the range was 25 3-4 cts. per bu. 1875 the range was 8 1-2 In 1808 a 11 1-2 a 1876 u 7 In 1869 u 6 3-8 u 1877 ii 9 In 1870 u 11 1 8 a 1878 u 10 In 1871 a 4 1-8 u • 1879 a 3 1-2 In 1872 u 6 1-4 ( t 1880 (( 11 3-4 In 1873 u 8 1-2 u 1881 u 7 1-4 In 1874 a 8 1-2 a 1882 ■ a 15 Total 82 1-8. Average, 10 2-10 72 Av. 9. From this exhibit it appears that for I he first eight years of that period, when future sales were not the rule, the fluctuations average ten and two-tenths cents per bushel per month, against nine cents per month for the last eight years, when the system very generally prevailed. It is also a very remarkable circumstance that from 1860 to 1876, there were only two years in which the balance of trade with Europe was favorable to the United States. During that period importations exceeded exports about $1,174,000,000 which amount may be called the national cost of operating her foreign commerce. From 1876 to 1882, exports have exceeded the value of imports some $1,206,000,000 and it is estimated that the fiscal year ending in the summer of 1883, will add from $150,000,000 to $200,000,000 more to the credit side of the account. Again, it has been said, and great stress has been laid upon this phase of the subject, that a very large percentage of sales made for future delivery, were never consummated by the actual delivery of the property to the purchaser. This is undoubtedly true, and with- out explanation may appear startling and give color to the charge that such sales are simply gambling transactions. In answer to numerous queries relative to this division of the inquiry, one of the New York witnesses formulated a reply which is deemed so explana- 8 [Senatic lory and satisfactory tliat it is given in detail without furtlier com- ment. “It is true,’’ he replied, “ that at titnes a large, and during sea- sons of great activity, a very large proportion of such transactions are not consummated by an actual delivery of the property sold and bought by the contracting parties. In all such cases, however, an equitable mercantile equivalent is substituted, simply as a con- venience to facilitate settlements, which, under the old system of actual deliveiy under all circumstances, were found to be cumber- some, and attended with very unnecessary cost and risk. It is not true, therefore, that because the process of actual delivery in every instance does not take place, there is evidence of illegitimate or tictitious trading. “ New York, because it is the commercial centre of the United States, is a great objective point tV»r mercantile transactions, made on behalf of parties throughout the old and new world. AYith such a constituency, it continually happens that the merchant who buys to-day sells to-morrow, and vice versa, and in the aggregate of these purchases and sales, it also often happens that one transaction can be matched against another in all respects except as to price, and when this matching does take place, differences in value only are paid, without going through the form of a delivery, and then a return delivery, with all the attendant inconveniences of loss of time and labor. There 'would be absolutely nothing gained by a strict adher- ence to the old rule, but, on the contrary, much trouble is avoided, and very rapid and satisfactory settlements are obtained. “ Perhaps I may make this more evident by an illustration from the operations of the bank clearing house 'system, of this city. By means of the clearing-house, enormous daily monetary trans- actions are settled by the actual delivery of comparatively small sums of money, when compared with the grand total. The Mechanics’ Bank, for instance, may possibly have received yesterday from its customers, on deposit, cheques -upon the Park Bank for a large sum, aggregating say $100,000, and the Park Bank from its customers, cheques on the Mechanics’ Bank for another large amount, aggregating, say $90,00(h Now these banks, under the present system of settlement do not pay to, and receive from each other the sum total of the cheques respective!)^ received on de- j)osit. . They sent their representatives this morning to the clearing house and there the gross indebtedness of the one, contracted yester- No. 45.] 9 da)r, was matched against the gross indebtedness of the other as far as it would go, and the difference only was paid by the debtor bank in cash. In this hypothetical case a joint indebtedness of $190,000 was settled by the interchange of only $10,000 of actual money, and yet every item in the major amount was legitimate, nor did the system of settlement employed suggest that a single fictitious ele- ment had entered into the transaction from its inception to its close. It was the growing necessities of the banks that caused them to in- vent the clearing-house system, just as it was the urgent necessities of commerce to improve upon the old method of actual delivery in every instance, and under all circumstances, that suggested the ap- plication of the ^ clearing’ system, wdien practicable, as a more rapid and convenient means of settling contract obligations. In like man- ner the railroad, the steamship, the telegraph and telephone have been made the servants of commerce and each has contributed its quota to aid in her marvellous development. All such means are now deemed essential adjuncts and cannot be dispensed with.” The immediate effect of sales of merchandise for future delivery upon the commerce of New York, is to increase her receipts of ex- portable products, and thereby help to develop every interest that is essential in building up a great and growing metropolis. A single transaction of the many that are daily operated on the New York Produce Exchange, and which took place when the committee was holding its sessions in that city, is given by way of illustration. A New York firm, A,” corresponds with numerous merchants of moderate means, who reside in towns and villages along the line of the Northern Pacific rai^^-oad. The wheat grown in that region is val- uable to millers because of the large percentage of gluten it contains. The quantity, comparatively speaking, is not large, and as navigation is closed during the winter and railroad freights from that remote district are expensive, it is purchased from the farmers by the mer- chants and allowed to accumulate at the country stations and Duluth elevators until navigation is resumed in the spring. But these ac- cumulations may prove disastrous to the owners if the protective element of a sale for future delivery is not resorted to. A ” was therefore directed in January last to sell, at a given price, 150,00C bushels of No. 2 hard wheat for delivery in New York after the opening of lake navigation. “B” is a shipper of grain to Great Britain, having milling customers in England who are anxious to be supplied with such wheat. They are always willing to pay six cents [Sen. Doc. No. 45.] 2 10 [Senate a busliel for it (when dcliverecl on board slii]) at some American sea- board port), over ami above the tlien market price of No. 2 rod winter wlieat, (tlie standard grade of wlieat that is principally used for speculative and shipping purposes) but they declined to forestall what that possible price might be in May, when the western owners directed their protective sale to be made. But in order that he may secure the wheat, (because it is not always on the market) “ B” must purchase it at the time it is offered and must pay a fixed price for it. although he can only sell it to his customers at the cash price that will be current for No. 2 red winter wheat in May, plus the six cents per bushel stated above. It is evident that if “B’’ purchases this western wheat he also will need ])rotection against the possible fluctuations in market values till the following May. He therefore went to the. Produce Exchange and finding that he could sell 150,- 000 bushels of red winter wheat for May delivery in New York, at a price within five cents of that which ‘‘ A ” demanded for his wheat, he sold it, then purchased A’s ” wheat and stood protected ; because, when the western wheat arrives in New Yoi’k in May and is placed on board ship, “ B” will purchase 150,000 bushels of red wheat and make delivery on his contract, and invoice tlie western wheat to his milling friends at the price paid for the red wheat, plus the six cents per bushel, as previously authorized by his English customers. Now, what are the direct benefits to the city and State of New York resulting from this single transaction. When this wheat reaches Buffalo the transportation interests of the State will be benefited to the extent of the freight charge to New York, say six cents a bushel, or $9,000. The weighing, elevating and commis- sions paid in New York will be two cents per bushel, or $3,000. The exporting merchant has earned one cent, or $1,500. It will require four ordinary sized vessels to transport this wheat to its foreign destination, and it is estimated that the average disburse- ments of vessels entering and leaving the port of New York, amount to $2,000 each, or $8,000. These vessels will probably bring inward cargoes which will have to be sold, stored or transported, at an average cost of $1,500 each, or $0,000, so that because the opportunity was allorded “ H” to sell 150,000 bushels of wheat for May de- livery in New York, a transaction was consummated which secured to the people of this State and city (and a very large proportion of it earne(hhy the working classes), the sum of $27,500. No. 45 m 11 It is unnecessary to point out the consequences, if Baltimore, and not New York had been tlie only seaboard city where such protec- tive sales could be made. But it has been urged that this system contains many objectiona- ble features, that it serves as a cloak for transactions that are more akin to 'gambling than legitimate S[)eculative operations, that it causes “corners” and tends to demoralize the youth of the present age. To some extent all these statements arc undoubtedly true. A “ corner” cannot be produced unless there have been previous fu- ture sales, but when discussing corners it was shown that it was the dishonest trader (except in cases of accident, and for such there were remedies), who only could be cornered, and even he is protected from undue severity in the punishment iniiictedi The temptation to over-trade by young or inexperienced men, is very much checked by a right to require margins to insure the ful- fillment of contract obligations, thereby restricting transactions to the ability of the operator te furnish money for marginal purposes, and in a very prominent way gives a warning of the risks that he assumes. But to the uninitiated it does seem to be a cloak for gambling, although gambling cannot exist with reference to future sales where there is an expressed intent to deliver and receive the things sold. There are however systems of gambling known as “ puts ” and “ calls ” and transactions operated in places called “ bucket shops,” which, having the outward semblance of legitimate trading, are very often mistaken for such. They are more disreputa- ble than the ordinary games of chance, for the reason that they are a confessed fraud in law, under the honest name of sales for future delivery, and often catch the foolish and unwary. A “put” or a “call” is a privilege granted the purchaser (for a pecuniary consideration) to deliver to, or demand from the person receiving the money at a given price a certain article of merchandise at some future period named in the contract. The person granted the right to deliver need not deliver, or to demand delivery, need not demand delivery unless he so wills, dur- ing the life of the contract, and such transactions should have no standing in courts of law, and are not recognized as legitimate trad- ings by commercial boards of trade. The “ bucket-shop ” is simply a betting place under the garb ot a trading place, of such a transparent character that its open opera- tions should be suppressed under the statute that closes the ordi- 12 [Sknatk iiary ganil)]iii^ house. Existing laws can break uj) bucket sliops and j)iinisli the operator in “puts” and “calls” if they were rigorously enforced. Hut if it is true that the operation of this system is attended with some objectionable features, would it be wise to abrogate or legislate out of existence the whole credit system because U) the abuse of it can be traced in large measure, the failures and mis fortunes which so often overtake merchants and commercial insti- tutions'^ Shall our Code of legal ethics present this paradox, that merchandise may be sold and delivered to the purchaser upon the promise of future payment, and at the same time deny the riglit to sell merchandise for future delivery with payment to be made upon delivery? Should it not be the aim and end of legislation in this State to attract and encourage every influence and element that will establish and perpetuate the commercial interests of her commercial metropolis? It used to be a time-honored axiom, a kind of antiquated idea overruling all other considerations, that the preponderance of capital would always maintain commercial supremacy. In the present day this is known to be a dangerous fallacy. VYealtli is too diffused throughout this country and daily becoming more so, to permit of commerce being controlled to any one locality by capital. On the contrary, that place in the United States, and especially that city on the Atlantic seaboard, that can localize commerce through the advan- tages of position, transit facilities, both foreign and domestic, and a great trading market, will attract capital from all parts of the world, and then retain it. This State has conferred upon' her Exchanges* and Boards of Trade many valuable chartered privileges, which have resulted in building up associations of intelligent, upright and progressive busi- ness men. These men have in turn become the guardians of her commerce, and holding, as they continually do, their fingers upon the commercial pulse, are best able to detect injurious influences and to suggest remedies. Upon them should be this great responsibility, until it is demonstrated that they are unworthy of the trust, namely, that all legislation which is intended to have a direct bearing upon commercial conditions should, in large measure, first emanate from commercial sources. For these reasons your committee respectfully submit: Firni. We condemn the reckless spirit of speculation and craze to suddenly acquire wealth whicli exists to such a great extent and No. 45.] 18 leads men to buy or sell for future receipt or delivery large amounts in value of property, without the least intention of receiving or delivering the property so purchased or bought, paying a small margin thereon and relying upon future changes in the market for their success and profits. This is not legitimate business, but gambling, and if there is any way in which it can be suppressed without an undue interference with legitimate business, it ought to be done. Second. That a tax should be laid upon certain sales for future delivery, to be collected at the time of settlement in all cases where an actual delivery does not take place. Third. That bona-fide sales of merchandise for future delivery are lawful and beneficial when there is evidence that it is the intent of the contracting parties to deliver and receive the property sold and bought. Fourth. That “ puts ” and “ calls ” and “ bucket shop ” operations are gambling transactions, and should be treated accordingly. JOHN W. BROWNING, EDMUND L. PITTS. SPECIAL REPORT OF SENATOR BOYD. In order that the opinions of the different members of this com- mittee may be fully expressed upon the subject for which this com- mittee was appointed I join with my associates upon the committee in the first, second, fourth, fifth and sixth recommendations, while I disagree with the third proposition which says that laws are already in existence to protect the public interest where these protective influences are demanded. I also dissent from the report of my colleagues as a whole particularly from such part as says, “ there is no corresponding elements of injury in the Protective Corners,” and that it is not a disadvantage to the consuming public to have prices artificially increased, and also that it is the invention of a great necessity, but I approve and indorse all that is said by my associates with reference to bucket shops, and while I dissent from many of the main features in the report of my associates upon the committee, I still adhere to the sentiments as fully expressed in the following : The committee appointed by the Senate ‘‘ to investigate the whole system of making corners and dealing in futures with reference to i its effect upon commerce and its influence upon the public welfare” have not concluded its investigation and as chairman I find it neces- sary to submit to the Senate the following SPECIAL REPORT. During the earlier sessions of the committee, its inquiries natur- ally called for the opinions of witnesses upon ‘‘ corners ” and their consequence. The answer generally tended to prove that corners were injurious, each witness thought his own business one in which they did not occur. Opinions being admitted, several gentlemen availed themselves of the opportunity to present their views in ex- tended addresses which although interesting to many, did not present the facts necessary to intelligent legislation. Although a consider- I Sknatk h; able amount of evodenee was thus obtaineroducing regions that connect with the railroads. It controls both ends of these roads. It ships ninety-five per cent oi Ml oil. It . has bought and frozen out refiners all over the country. By means of the superior facilities for transportation which it possessed it No. 45.] 19 could over- bid in the producing region and undersel in tlie markets of tlie world. Thus it had gone on bnying out and freezing out all opposition, until it has absorbed and monopolized this great ex|)ort which ranks second in the list of exports of our country. — Its oil is carried for fifteen cents a barrel. Out of these rates the mile- age allowed to the Standard leaves about ten cents per barrel weigh- ing three hundred and thirty pounds for a haul of over four hundred miles, besides hauling their empty cars back; contrast with this the charge of forty-five cents for hauling a can of milk, holding ten gallons and weighing ninety pounds, an average distance of sixty- five miles. The Standard Oil Company is an Ohio corporation with a nominal capital of three and one-half millions. It was chartered in 1869, with a capital of $100,000. The controlling spirits of this and the South Improvement Co., are the same.” After the repeal by Pennsylvania of the South Improvement Company’s charter, the attempt to monopolize the oil trade was transferred to the Standard company. From that time it grew rapidly in importance until it now comprehends the Standard Company, Pittsburgh ; the Acme, the Imperial, the Atlantic Kefining, tho Camden, Charles Pratt & Co., the Devoe Manufacturing Co., and J. H. Bostwick & Co. Your committee were unable to ascertain the exact relation of these different organizations, owing to the refusal of several members of the Standard Oil Company, subpoenaed as witnesses, to obey the subpoena, and the refusal of those who did attend to answer our questions, but succeeded in establishing the fact that ninety or ninety-five per cent of all refineries in the country ‘‘ act in harmony with the Standard Oil Company, and that they ship ninety-five per cent of all of the oil of the country, and of course the three and one- half millions of capital is but an insignificant portion of the aggre- gate capital of their mysterious organization, whose business and transactions are of such a character that its members declined giving a history or description of it, lest their testimony be used to convict them of a crime.” These charges also stated that the managers of the Standard had declined to give evidence before a Congressional committee and before a Legislative committee of Pennsylvania, because they were under indictmennt for conspiracy and their evidence might be used against them. Mr. Flagler also promised to furnish the committee with certain information from the books of the company which he failed to give. 20 [Senate The committee deemed it tlieirdiity to recall Mr. Flagler and Mr. Brewster and cross-examine them upon the matters opened by their voluntary statements. They appeared in obedience to subpoenas, were severally sworn, and the counsel for the committee cross- examined them. The questions of the counsel and the answers and refusals of the witnesses are shown by their record pages 635 to 707. Failing to secure proofs of the facts from Flagler and Brew^ster, Jolin D. Rockefeller, the president offthe Standard Oil Company, was summoned, sworn and examined with the result disclosed by the record pages 922 to 934. The committee in this connection present the following sugges- tions. New York city is the port from which petroleum and its products are principally distributed throughout the world. Its annual export value reaches $40,000,000. It is sent to every State and territory in the Union. It is important to know whether the trade in this great staple, designed by Providence for the use and comfort of the human family, is in the hands of men who use cor- porate powers to appropriate it for personal gain. If the half of these charges be true, if the facts be true which a proper cross- examination of the witnesses will probably prove, no corner ” can exist in any article of sale more complete or more injurious to tl^he public welfare than that which has long existed in petroleum, manipulated by the managers of the Standard Oil Company and the corner is made sharper and more oppressive every year. The com- mittee believe that it would be a reproach to the Senate to permit those witnesses to defy its authority and to admit that it cannot ex- tort from these persons the truth, in an investigation, they themselves have Ghallenged. They should be required to answer these questions and if one effect of their answers should be to subject to proper taxation prop- erty worth seventy million of dollars which has hitherto evaded its share of the public bui’den, the State will not be the loser. Further Investigation. As chairman of the committee I also desire to inform the Senate of the extent to which it proposes, with the Senate’s permission, to carry its investigation. The present volume of speculative transactions and their rate of increase in cottons, corn and wheat, have been already proved. Like No. 45.] 21 proof should be made in relation to stocks and securities, coal, petroleum, dressed beef, beef, pork, barley and other grain. Such special facts as illustrate the increase and influence of speculation and corners in these articles should also be proved, the means used and the methods employed in making corners should be disclosed and made public. All this may be done in a very few sessions if the witnesses are required to answer. The suggestion of remedial measures in advance of the completion of the report of the committee would be premature. But in reply to the claim, so strenuously urged, that the acknowledged evil ot corners and futures like those of common gaming and prostitution are beyond legislative remedy, the committee reply that it does not concede that the claim is well-foundpd. If the Legislature cannot wholly suppress these novel forms of speculation it can at least compel them to Lear a fair proportion of the public burden. Enough has already been proven to show, that a small tax on speculative ‘‘deals ” in the Produce Exchange would raise money enough to defray all the^osts and expenses of our canal system, and a like tax on the commissions in speculative sales of stocks and other merchandise would defray the cost of public education and of the administration of criminal law. I am also of opinion that when the cause, effect and dimensions of such a great evil are once made public, although the difflculties in the way of its suppression may be great, they are not insurmountable. The committee therefore recommend the adoption of the following resolutions : Resolved^ That the committee appointed to investigate the system of making corners and dealing in futures be authorized to employ counsel to assist them in conducting the said investigation, and that such authority cover the services of counsel already rendered. Whereas, The committee heretofore appointed by the Senate to investigate the whole system of making corners and dealing in futures, with reference to its effect upon commerce and its influence upon the public welfare, have reported that Leonard Hazeltine, Henry M. Flagler, Benjamin Brewster and John D. Bockefeller have each refused to answer certain proper questions in the matter of' such investigation, put to them by counsel under the direction of the committee ; and W HEREAS, It is essential to the investigation with which such committee is charged and for the protection of the public interest. 22 Senate, No. 45.] that all of such questions should have been and should now be answered ; therefore, be it Resolved^ That in refusing to make answers to the questions so propounded to tliem, Leonard llazeltine, Henry M. Flagler, Henjamin Brewster and John D. Hockefeller have been guilty of a contempt of the Senate. Resolved^ That the sergeant-at-arms of tlie Senate be and he is hereby directed to bring before the bar of the Senate forthwith the said Leonard Hazeltinc, Henry M. Flagler, Ijenjamin Brewster and John L. Rockefeller, and that they be then and there required to show cause why they should not answer said questions or be punished for contempt, or otherwise dealt with as the Senate shall deem proper. • JOHN G. BOYD, Chairmcm. TESTIMONY AND REPORT OF THE SPECIAL SENATE COMMITTEE APPOINTED TO INVESTIGATE THE SYSTEM OP With Reference to its Effects Upon Commerce, and its Influence Upon the Public Welfare. ALBANY: WEED, PARSONS AND COMPANY, PRINTERS. 1882,, RESOLUTIONS. In Senate, March 21, 1882. Mr. Boyd offered the following : Whereas, The cornering of grain and other articles has become a prominent feature of modern business transactions, and it is alleged that it not only unduly enhances the price of articles of prime necessity, but interferes with legitimate business and fosters a spirit of gambling ; and Whereas, On the other hand, it is alleged by those who indulge in this practice that their methods are in accordance with legitimate commercial principles and not opposed to public policy ; and Whereas, It is desirable that this important question should be considered with deliberation, so that there may be no injustice done to the general public or to the special interest therein concerned ; therefore, Resolved^ That a select committee of three Senators be appointed by the President of the Senate, whose duty it shall be to investigate the whole system of making corners and dealing in futures with refer- ence to its effect upon commerce and its influence upon the public welfare ; said committee to sit during the present session at such times and places as they may deem necessary, and to report at the pres- ent session of the Legislature what, if any, legislative action is necessary for the protection of the public interest. Resolved^ That the committee so appointed be and is hereby em- powered to send for persons and papers and to employ a stenog- rapher at a compensation not to exceed fifteen cents per folio. The President put the question whether the Senate would agree to said resolution, and it was decided in the affirmative. The President announced as such committee Messrs. Boyd, Pitts and Browning. 4 Ik Senate, April 13, 1882. Mr. Boyd offered the following : Resolved^ That the committee appointed to investigate the sys- tem of cornering and dealing in “ futures ” be authorized to incur all necessary expenses and to employ a clerk. Which resolution was adopted. i In Senate, June 2, 1882 Mr. Boyd offered the following, which was adopted : Resolved^ That the committee to investigate the system of deal- ing in “ futures ” be authorized to sit during the recess, and to report at the next session of the Legislature. TESTIMONY. The committee met at tne Metropolitan Hotel in the city of New York. Present — Senators Boyd and Browning, of the committee, John W. Corning, Sargeant-at-Arms of the Senate, and Daniel A. Cooney, clerk of the committee. New York, Saturday, April 8, 1882. lion. Chauncey M. Depeyj^ sworn : Examined by Senator Boyd : Q. In your address before the joint Senate ‘and Assembly com mittees on railroads, on the subject of railroad commissions, you made some reference to the evils resulting to the community from illegal speculations which are carried on in grain and so forth ? A. Yes, sir. Q. Would you kindly state to this committee what your views are upon that subject ? A. Well, I used the illustration as an argument 'on that occasion for the purpose of showing that it was not the railroads, but the speculators in grain and provisions which put up the prices of the necessaries of life — that while the railroad charges were constantly decreasing, that these products were increasing unnaturally to the consumer and seller. My information was derived from the public press and from common report not denied — that is, the market reports and therefore I felt at liberty to use the argument publicly in discussion, believing it to be an undisputed fact. I do not know as to the illegality of these transactions as indi- cated in the question, but the public press said two years ago that a few pork-packers were purchasing all the pork there was in the United States, and that then it advanced to somewhere near fifty per cent, and that that was the price at which the consumers had to \ 6 ' pay for it, and that these people made several millions of dollars by that single transaction. It is well known that there was a short crop of grain in this country last summer and a good crop in Europe ; we had made a market in Europe by a large crop the previous year, and it would seem good policy to have retained it by using our surplus, because we had more than we needed to supply tlie market which we created, but all the grain was purchased and held, and as I think, at this time, at prices higher than it sold for in Liverpool, so that English capitalists have been stimulated to extraordinary efforts to find new fields and they have found these in Russia, Egypt, Cyprus and other places ; at the same time the products which came from the sales of wheat had largely advanced to the consumer in this country. The papers announced the night before last that all the wheat in Chicago was withheld by a combination of speculators, and the morning papers announced that the steamships from Boston had offered to take it without charge for transportation as ballast, and that the offer had been declined. That is all I know, and I gather it from sources which are accessible to everybody. I used it in this argument for the purpose, of course, of strenghtening my own case and of defending the railroad companies from the charge that had been made, that it was the railroad companies, by their charges, had increased the prices of the necessaries of life. Q. Will you please state the effect of these speculations in grain and other products upon the transportation interests of the country? A. Of course, none of it comes forward, and, therefore, neither the railroads nor the steamships have any thing to carry in that line. Q. Is that the result of its being heaped up and held back from the market by the speculators ? A. That is how I understand it. Q. What effect have these speculations upon the price of bread- stuffs generally ? A. Very great. Q. Have you any knowledge to what extent they are advanced in price ? A. Just the exact extent that the article, whatever it may be, grain, ])ork, or beef, is advanced beyond its normal or natural price in an open and uninfluenced market. (2. Do you know the limits to which it may go — for instance how much it may change the value or affect the price? A. 1 believe that ])ork has advanced from $8 to $10; I believe 7 wheat was advanced last summer, about sixty cents a bushel, thirty cents of that was speculative ; that is my impression ; I am not a grain dealer, I am simply a general observer, — a student of all these questions. Q. Your extensive business connections necessarily give you an opportunity of knowing about these things, better than a man who does not have such connections ? A. I have studied the question profoundly to see the effect it has had upon business. Q. How does it affect your roads ? A. All the transportation interest in Chicago and St. Louis, the food products, are held by a strong combination, and the railroads cannot get them to come foward. Q. Do you know how much the price of wheat was advanced in Chicago, by reason of these speculations within the past year ? A. I have just said I think the speculative part was about thirty cents a bushel. Q. In E’ew York ? A. Of course. New York prices are governed by Chicago prices; the New York price is the same, plus the transportation. Q. Do you think this advance was caused by the legitimate action of the laws of supply and demand ? A. Probably all advanced, is probably about half of it ; there was a short crop. Q. Do you think that power exists in the Legislature to make laws to protect the public interests against such evils ? A. It is very doubtful. Q. Could you not pass a law compelling a delivery on every sale? A. No, the trade is too vast ; I doubt in all these cases whether you could make laws that would not interfere with the legitimate traffic ; because all these things are done as legitimate transactions ; they don’t differ from them at all ; only tiie methods of legitimate trans- actions are used to accomplish these results. Q. But in your opinion evils do exist in the matter of these spec- ulations? A. Undoubtedly, it w^as not only an evil, but last summer it was one in a national sense. Q, What is your opinion as to the best remedy for that evil ? A. I have not thought enough of it to be able to make a sugges- tion. That would require the best thoughts that a statesman could give it. Q. Do you believe it to be the duty of tlie Legislature to en- deavor to protect the public interest against the growth of such an evil ? A. I belive the Legislature as the people in its aggregate capacity has the power to protect itself. Q. Is there any other information that you would like to offer the committee in regard to this matter ? A. No ; I am here under a subpoena, and I have stated all I know. The reason I used these illustrations in my arguments was that I' believed them to be true. They are the subjects of common in- formation. Q. Do you believe that these speculations tend to advance the interests of the producers in any way ? A. No ; the producer gets no more ; it is after the property leaves the hands of the producer that it is bunched into a few hands and then the price is advanced. Q. The consumer is compelled to pay the difference ? A. Yes; compelled to pay the difference. Q. The proceeds go into the hands of a few speculators engaged ill that business? A. Yes, sir ; it was stated, about two months ago, that four or five agents went to Cincinnati for the purpose of having a contest of speculative skill with gentlemen engaged in the same business in Chicago and that they netted three millions of dollars on their ad- venture in the course of a couple of months ; of course, that was done by advancing. Examined by Senator Browning : Q. It has been charged that the railroads pool their rates ? A. The public must have some scapegoat. Q. That made you look into the matter, and you found that while freight rates were decreasing, prices were advancing ? A. Yes. Q. That led you to give this subject some consideration ? A. Yes. Q. And you found an unnatural value % A. Yes. Q. Be kind enough to tell us what is a natural and an unnatural value, so that we can understand it. What ought to be the natural value of ]>roduce from the west? A. That is a broad question. 9 Q. What ought to go into the estimate to make up the expense — how does that compare with the market price ? A. We grow in this country a large amount of products beyond the needs of our own consumption, and we have been exporting them to Europe for the last few years in such quantities thatit has turned the balance of debt in our favor, to the extent of something between two or three hundred millions a year. That has been the main cause of our extraordinary prosperity for the last few years. We have competitors for our products in the markets of Europe, through the products of Russia, and the continent of Europe ; and to some ex- tent, as far as Australia, Egypt, and some of the islands. The price at which we can undersell these competitors fixes the price that the article is worth in Chicago, because the price in Chicago plus the price the transportation from Chicago to Liverpool must be sufficiently low to undersell European competitors, with our American produce. That has been the case for the past two years, until this last sum- mer. This last summer, I think little, if any, grain has been trans- ported, for the reason that it has been held at a higher rate in Chicago than it has been selling for in Liverpool. Q. There was a corner in the west ? A. In the west. Q. You say that the price advanced in the west? A. In Chicago Q. In grain ? A. Yes, in Chicago. Q. Was this not a result of a combination in the Brokers’ Ex- change ? A. Yo, sir ; every man all over the country was in it ; there was where it was done. Senator Boyd — To what extent was this speculation carried on in Yew York ? A. I don’t know. I don’t think any of it, so far as the actual transactions, was done in the market here. ■ Q. You say the freights were reduced while the prices advanced ? A. Railroad freights have been steadily reducing for the last ten years on coarse goods — the freight on products and the necessaries of life. During the last summer they were unnaturall}" low, owing to the railroad war. One of the causes of that war w^as, that the railroads could not get any thing, so they kept cutting each other to get something. 2 * 10 Q. Do the railroads 'make corners in prices? A. No; they don’t do that. Examined by Sen ator Boyd : Q. Does the reduction in the rates apply chiefly to the through rates ? A. The local rates are affected by this reduction in the same proportion, except on roads where they charge a general reduction ; through rates apply to local rates. Q. But the railroad war — that had reference to through rates? A. During a few months of last summer. There is a popular error that the railroad raises the local rate to make up the losses occasioned by the war on their roads ; but that is never done ; there was never an instance that I know of where a local rate was raised to make up a loss on through rates. Examined by Senator Browning : Q. Is it fair for us to assume that the price paid by the producer and the cost of transportation to tlie sea-port with the legal com- mission added, and a percentage would be the natural value, and all over that an unnatural value? A. Yes, sir. Q. Can you give us the cost of transportation from Chicago to New York ? A. Mr. Jewett can do that. Q. What is the natural value of grain ? A. That varies ; but taking the average, I think twenty cents on the hundred. Q. You mean the hundred weight of grain? A. Yes ; it would cost probably quite as much more from the wheat-field to Chicago. Q. Twenty cents a hundred ? A. Yes; that is, taking all the charges. Q. So that the charges from the wheat-field to the port of New York is about forty cents? A. Well, on reflection, I can’t verify that. Examined by Senator Boyd : C2- Does the New York consumer suffer as much from this unnatural value as the consumer in the country ? 11 A. Yes ; all suffer alike ; 1 think in quinine and opium ; in fact there is hardly any thing that is not liable to be cornered. Q. Imported by New York merchants? A. Yes; I think so. Congress took the tariff off quinine in consequence of the large consumption in this country, there being an immense malarial district ; yet the price was advanced to that which it was before the tariff had been reduced. Q. Can you give us the reason why grain from the w^est is sold more cheaply in the Liverpool market than it is in New York and Cliicago ? A. 1 don’t know that that is the case ; I say the price at Liverpool is the price at Chicago plus the cost of the transportation. Q. Is that always the fact ? A. Always the fact, unless there is an unnatural cause ; unless the quantity of wheat gathered at Liverpool is large, as from a rush from the Black sea, and it has to be sold in a few days at a very much less price. Q. It has been argued in the press and elsewhere, that American grain has been sold at a cheaper rate in Liverpool than in New Y ork ? A. That is impossible ; the price is governed by natural laws,, except in the eases I have instanced. Hugh J. Jewett^ sworn : Examined by Senator Boyd : Q. Will yc»u be kind enough to state to this committee 3"our views concerning the system of making corners and dealing in futures, with reference to its effect upon consumers and its bearing upon the public welfare ? A. Practically, I have no experience or knowledge with regard to corners; all the information I have is that which is derived from the public press and from my intercourse wdth my neighbors and in discussion. If I understand it, I regard this system as extremely vicious and detrimental, not only to the public interests, but to the public morals. If I understand what is claimed to be a corner in grain,” it is as explained by Mr. Depew, where there is a combina- tion of capitalists who unite for the purpose of securing the control of a bulk of any commodity which is in the market, or is to be brought into the market, having control of the market, the market advances and the price becomes unnatural and unreasonable. These pools are generally formed with more or less secrecy. The ordi- 12 nary lousiness man p^jrsiics an ordinary business course ; he buys in the market to meet his contracts ; lie sells at what he agrees to be the controlling market price, and when he comes to buy it for de- livery, it has advanced so that he cannot deliver it at the contract price. The result is that it is detrimental to the ordinary course of business and detrimental to the individuals engaged in it. It ceases to be a commercial transaction and becomes a mere operation of speculation. The most serious thing is that it disturbs the normal and proper condition of the market and advances the price, so long as the pool exists, to the consumer wherever the consumer may be. Those who find it necessary to buy to meet their delivery contracts have to pay the advanced price, and consequently when it reaches the consumer, it reaches him at a price beyond its real value, v/itli- out benefiting either the producer or the legitimate dealer, or the transporter ; the only person benefited is the speculator ; that is niy idea, especially as to grain. Q. Ho you know the principal points where the making of corners and dealing in futures are carried on f A. Ill grain, principally in Chicago; I don’t know of any other place ; that is a kind of a center of the grain transportation of the north-west, and they gather there from all parts of the country ; there may be pools elsewhere, but I have not heard of them. Q. How is the Hew York market affected by these speculations ? A. The Hew Y"ork market is supplied from the west. If the price is advanced in Chicago and the necessities of Hew York re- quire it, it must take it at the advanced price ; and it not only ad- vances the price in Chicago, but to the consumer in Hew York, of course, if Hew Y^ork consumes one hundred barrels of flour a day, or one hundred thousand, and that flour in Chicago produces in the west $8 instead of $5, it requires that much more capital to handle it. The dealers must have a margin, or profit in proportion to the risk he runs in buying, selling and handling it ; hence they must meet the advanced price in' Chicago with the same advance here with a reasonable profit on the increased capital required. It has another effect — it deranges the ordinary course of business, and it reduces the stock in the market; it cripples the dealer here in his ability to comply with his ordinary contracts, and to supply the wants of his ordinary customers, whether at home or abroad ; it has a de- moralizing effect. Q. 'Df) these s])eculations also aifect very injuriously the interests of transportation A. Yery seriously ; at the present moment there is probably a ‘‘ corner ” that controls nine-tenths of the entire grain, not only in Chicago, but at points accessible by way of Chicago ; they are- holding it at an advance ; that is what they call “ cornering.’’ The railroads must maintain their organization ; they must keep their power, their men and every thing ready to meet the demand made upon them, while the ordinary round of business is totally suspended ; at times they are required to be ready with a large capacity to sup- ply the demand for traffic, and at others, within the ordinary traffic they have to keep up the capacity at a large expense. Q. You are president of the Erie Railroad Company ? A. Yes. Q. R’ow it is called ? A. The JSTew York, Lake Erie and Western railroad. Q. How do such speculations as you have referred to affect your road ? A. Just as I have now stated it affected the roads generally ; I don’t think our road is affected to the same extent as some others, for the reason that our through traffic is not so large in transporta- tion as others. Q. Do you know what the natural value of wheat and other cere- als ought to be at the present time ? A. I don’t ; it is a mere matter of opinion. - Q. What is your opinion in regard to it ? A. My opinion is that the farmer should have a reasonable profit, a fair profit upon the product of his soil ; that the middleman or dealer should have a fair profit upon the capital or labor he be» stows in converting the products of a farm into a material proper for consumption ; the transporter should have a reasonable profit for the labor and risk he runs in transporting it, and the consumer is entitled to the product as produced subject to these charges ; that would be a reasonable and natural price. Q. How much has the price of wheat been advanced beyond this reasonable and natural price which you have described, by reason of these speculations? A. At timesr it has been advanced, I think, from thirty to fifty per cent by reason of these speculations ; at times it has been depressed temporarily by reason of these speculations ; as, for example, if a misfortune should befall these speculators and they should be com- pelled to unload speedily on the market, that would depress it ; that*^ has been the case once or twice within my knowledge. 14 Q. Would such a depression benefit the consumer, or would it only tend to the serious injury of the legitimate dealer? A. It would not, as a general thing, benefit the consumer ; the produce would pass from the shorts ” to the “ longs,” or from the ‘Mongs ” to the '‘shorts;” they would hold it until they reorgan- ized. Q. Would it injure the legitimate dealer ? A. In my judgment, any thing out of the ordinary course of business is a serious detriment to the legitimate dealer ; in other words, in my judgment, this huge gambling in property, in pro- duce of different kinds, has substantially annihilated the legitimate dealer. Q. You have termed these speculations “huge gambling” ope- rations, or words to that effect ; be kind enough to explain, for the benefit of the committee, how it becomes gambling ? A. I regard any thing as gambling which is the mere work of chance. Q. Do you think that any portion of the advance which you have referred to as being caused by these speculations was caused by the ' legitimate action of the laws of supply and demand ? A. This country produces largely more than it consumes ; I have stated what I think should be the proper charge to the consumer here ; the market abroad for the surplus should regulate the price. Q. Would the law of supply and demand in that case — there being no artificial impediment — cause an advance or decline in prices ? A. That would be so ; by combination the law of supply and de- mand is largely defeated, and I don’t know of a single instance in my knowledge of this artificial advance that has not to an extent interfered with the law of supply and demand. Q. You look upon the operations of “cornering” and similar speculations as being a very great public evil ? A. I do. Q. Do you believe that it is the duty of the Legislature to exer- cise its prerogative for the purpose of remedying this evil ? A. In every aspect or phase of the case it is just as much its duty to remedy it, as any other public evil affecting the physical condi tion and the moral condition of the people. Q. Do you think that power exists in our State and National governments to make laws to protect the public interests against such evils ? 15 A. I have no doubt of the power of the State of New York to make all needful laws to protect the people of New York against the practice of anj evil in New York; I don’t see how the Legis- lature of New York can prevent these combinations in Chicago; that would be a matter that would require to be regulated by the Legislature of Illinois ; I don’t know that there is any citizen of New York engaged in this enterprise ; there might be; that is a question I never thought of. Q. New York consumers suffer as much from these evils as con- sumers elsewhere in any portion of the country ? A. I should think so. Q. Have you any other views in relation to this matter which you think would tend to aid this committee in its present work of inves- tigation ? A. I have not ; I have never had my attention directed to it v/ith the view of concentrating my mind upon a remedy ; it is merely in my general intercourse with the business of the country that I have seen its consequences, and have formed my opinion in regard to it. Mcaminedhy Senator Browning: Q. You are president of the ^^New York Lake Erie & Western railroad ? A. Yes. Q. Incorporated in New York I A. Yes. Q. Where is your western terminus ? A. Dunkirk and Buffalo. ' Q. And your eastern terminus ? A. In Jersey City — that is, at Piermont. Q. Don’t you re-deliver freight in New York city? A. Yes. Q. All the freight shipped from the west is shipped to New York city ; that is the rule ? A. Yes. Q. Have you as president assumed, or have you been requested to employ agents in the west to purchase grain ? A. No, never. Q. Do you believe a ^^pool” arrangement outside of the State of New York to be carried into effect in New York State, could be reached by the Legislature of that State? A. That is a question of law upon which I w^ould not like to 16 express arf opinion, bnt it seems to me that there ought to be a remedy. Q. Mr. Depew stated that tlie cost of transporting grain from Cliicago was twenty cents a hundred weiglit ; what is tlie average cliarge upon your road ? A. I understand Mr. Depew to say tliat liis average was not based generally ; twenty cents, I don’t think, is a living price. Q. That is not a fair price ? A. No, sir. Q. Is it true that on your railroad when prices advance you de- crease tlie rates? A. That is the case on every road in the country for tlie past fifteen years; for instance, when I came to New York the rates in New York were then from thirty to seventy-five 2:)er cent more than the average rate at present ; there has been a constant decline in trans- portation rates for years. Q. In other words, you state that the expenses and losses of the road have caused no increase of rates ? A. The cost of transportation, warehousing, delivering — every thing within my knowledge, has probably not increased any thing. Q. Do you know of any ‘‘corners” in this State to put up prices, of any commodities? A. I don’t know of any. Q. Do you think a combination or pooling of issues a lawful act ? We all see that there is a combination among individuals to control the prices of certain commodities, with the view of advancing the prices, which you think are detrimental to the public interests and to the consumers — do you think that a lawful act, or do you think, if a lawful act, it can be declared by the Legislature to be unlawful as a conspiracy against trade and^commerce ? A. I have said that I believe the pool arrangement and combi- nation to be detrimental to the moral and material welfare of the public. There are a thousand things detrimental in one man’s judgment which would not appear to be so in the judgment of another ; it might be only unlawful if the Legislature declared it to be unlawful ; this has never been declared to be unlawful; but I have no doubt the Legislature can declare it to be unlawful, and that they can im})ose serious penalties; can bring it within legislative prohibition, and that it can be made the subject of penalties -- 1 have no doubt about it. (L Your mind is clear as to that? 17 A. Yes, sir. Q. Could such combinations be declared by the Legislature to be an unlawful conspiracy ? can you give us your judgment on that? A. It is a conspiracy, and being a conspiracy I believe it could be dealt with by law; I have no doubt about it. By Senator Boyd : Q. By how much per cent in your opinion, are the prices of commodities; the necessaries of life used by the masses of the people increased — by •reason of these speculations? . A. To answer that question intelligently I ought to have more information than I have got, I have no doubt these speculations take place, but I have no knowledge of them. But taking such as I have knowledge of, that I know to exist, I should say from thirty to fifty per cent. Adjourned. New York, Saturday, A 2 ?ril 16, 1882. Present — Senator Boyd, Chairman, Senator Browning. Franldwi Edson^ sworn : Examined by Senator Boyd: Q. Where do you reside ? A. Yew York city. Q. What is your business ? A. Orain and commission merchant. Q. How long have you been engaged in the gram business ? A. 1 have been in the grain business, buying and selling grain, for thirty years. Q. In the city of New York ? A. And in Albany. Q. Were yon formerly president of the Produce Exchange? A. Yes. Q. Will 3 mu state to the committee what you know about the whole system of making corners” and dealing in ‘‘futures,” in reference to its effect upon the commerce of this country and upon the public welfare ? 3 1 « A. Dealings in ‘^lutures” in grain seems to have become a ne- cessity of the country in order to handle the grain product ; my im- pression is that since dealings in futures ”in grain has been carried on that the grain in the country is handled with a great deal less B])Oc- Illation than it used to be before that system was inaugurated ; that is, so far as the legitimate business of the country is concerned ; tlie dealings in “futures” legitimately at pi’esent is this wise, that whereas, in former times a man in Illinois, Ohio or Minnesota wiio had a warehouse in which he gathered together dilferent quantities of grain, sent it to market, and waited until it got to market before he could sell it ; in that way that man and all such men were specu- lating in that grain ; from the time he bought it until the time he liad sold it in the market, he did not know whether he was mak- ing a profit or loss ; now^ that same man fills his warehouse with, grain, and when the^ market in New York or Chicago, from which lie gets quotations every day, or every hour in the day, is a satisfac- tory market to him, he will sell it, deliverable in the future ; that is, he will sell in April to deliver in May, for by that time it is sure to get here, and he does not speculate at all ; it is a. very necessary and a very pretty business and without any speculation on liis part, but then, of course, the dealing in -the future is a very easy way of speculating, and to some extent it is undoubtedly demoralizing to the legitimate trade of the country, but at the same time it has its other side as well ; in the case of “ cornering” grain, of course, it is those who sell what they have not got, and those people who buy what they don’t want and get very much injured ; but there are two sides to it, for a “ coi’oer ” in grain enhances the price of bread- stuffs temporarily ; at the same time it gives the producer so much more for the produce whicli he raises on his farm ; as to selling in futures” being gambling, I think there may be some doubt about that ; I think it is very likely to cure gambling, for a man getting ‘‘cornered” in grain is likely to get careful about it; a man who undertakes to “corner ” in grain usually gets “cornered,” so far as my information goes; 1 have never been “cornered” nor have I ever “ cornered ” any one. Q. Would you ])lease define the word “corner” as it is used in ordinaiy transacttions A. To “ corner” grain means to buy all th.e grain thei*e is, and as miicli more as they will s(dl ; that is, a man makes a conti-act for grain “ toai-j*iv(3 ” at some future time, of as much grain as he cau get j)e-o])l(i to agi*(M3 to d(Tver to him at tliat time. 19 Q. Are you familiar witli the term puts ” and “ calls ’ ’ ? A. ISTo ; lam not familiar with them ; I know what they are. Q. State what they mean ? A. If I should give you $100 for the privilege of “calling ” on you for 10,000 bushels of wheat during the month of May, if you please, that would be a “ call. ” If I sliould give you $100 for the privi- lege of delivering to you 10,000 bushels of wheat, during May, that would be a jput. ” By Senator Browning : Q. It would be a put at a certain jirice ? A. It would be a put at a certain price. Continued by Senator Boyd : Q. Do you know what the advance in the price of grain and other products, caused by speculations of this kind has been within the past year ? A. Iso ; I could not tell ; I think it would be very difficult to tell. hTow, it is generally supposed, or is supposed by some people, that the commerce of the country has been injured by reason of the advance in grain, by the consequent inability of it to export it, as compared with former years ; my opinion is, that that is a mis- take ; my opinion is, that if we had exported grain, if the price had been kept to the point where the exporters would have taken wheat freely, as they have done within the last two years, that we would now be importing grain for our own use, and that would be more demoralizing than any “ cornering” j)rocesse3 you could im- agine. Q. To what extent is this system of “ cornering ” carried on in the city of Aew York ? A. Yery little ; I don’t recollect but one attempt at “cornering” in the market in New York to any serious extent, and that was two years ago, I think ; we have had very little of that sort of thing here. Q. To what extent is this system of dealing in “ futures ” carried on in the city of New York ? A. That is carried on to a consideralile extent now, and is in- creasing, I think, quite a good deal ; increasing quite largely ; I don’t know that I could give an idea of the extent, because I have not the data upon which to make a judgment on that. Q. In what other cities is this system of dealing in “ corners ” and ^‘futures” carried on in the United States? 20 A. Chicago duu« the largest business of that sort ; and it is done in Milwaukee, Toledo and Baltimore; not to any great extent in any other city. Q. To what extent are any of the cities, to which you have re- ferred, besides New York, interested in these speculations? A. I could not say ; it is impossible for me to judge. Q. What effect has this form of speculation upon our railroads? A. At times it undoubtedly has temporarily reduced the quantity which would otherwise have been carried at the time, where these speculations or ‘‘ corners” were going on ; but in the long run I don’t believe they have had any serious effect upon them; if they were temporarily demoralized in consequence of corners” they ultimately got all the wheat and grain to carry which would have gone to the market. Q. How have they affected the steamers and canal boats? A. In the same way ; temporarily demoralized their business ; but in the long run it has not done them harm, I think. Q. How have they affected our merchants and smaller dealers ? A. It has affected those who have been interested in corners either on one side or the other ; in almost every case disastrously ; of course those who have not been interested on one side or the other have been temporarily affected by it injuriously. Q. Can you recite any particular instance in which corners have been made which have affected all the markets ? A. You mean all the markets for grain ? Q. Yes; all produce ? A. No ; I don’t know of one. Q. Mr. Jewett, president of the Erie Railroad Company, described this system of speculating as a national calamity ; what is your opin- ion as to that ? A. I don’t think I could say that it is a national calamity by any means ; I don’ t see why it should be called a national calamity, for the reason that I don’t believe, or in other words, I do believe that most people in this country have a desire to become rich quickly when they start out in the world, and if they undertake to do that in grain, that is unfortunate ; but they are just as likely to do that in stocks and other things as they are in grain ; in other words, I think we are born speculators and we are quite likely to indulge in specula- tive tendencies in grain and we desire to follow it up. Are you not of opinion that such a s^^stem of speculation enhances the cost of the necessaries of life to the consumer ? 21 A. I think any system of speculation is likely to enhance the cost of the necessaries of life in an article in which speculation is carried on. Q. To what extent does it enliance the cost of the necessaries of life to the consumer, such as grain and articles of food ? A. Well, I think to a small extent — a very small extent in- deed — I think. Q. What is your knowledge on the subject? A. In the cases of corners which have been made in the west the prices to the consumer have always been temporarily advanced in any kind of grain ; but the reaction usually follows which causes a corresponding depression in values, so that on an average I don’t believe the consumer pays a much higher cost for the necessaries of life which would result from speculation in grain ; speculation in grain is always based on some reason or other, that is, except in cor- ners ; they may be based simply upon the power of a man to buy what there is in the market and hold it without regard to the sup- ply or demand ; but speculation is based, to some extent, upon the laws of supply and demand. Q. Do you know the price paid per bushel to the producer in the west, within the last 3 "ear, for wheat ? A. I could not tell that at any particular time during last year. Senator Browning — An\* particular time jmu think of ? A. I would not undertake to remember that ; I could tell at my office. ^ Continued by Senator Boyd : Q. Can you state the prices paid after the grain was harvested and threshed out ? A. Yes; we have ourselves paid fora load of wheat — of white wffieat, $1.25 to $1.40 per bushel. Q. AV hat does such wheat sell for in New YYrk city a bushel ? A. Such wheat has been sold as high as — Mr. Bingham of the Produce Exchange here will remember that better than 1 can — $1.52 to $1.54 in New York, not at those times; I have given 3 ’ou the prices I have paid from time to time, and I have given you the highest prices for which this produce would have sold for in New York. I can tell you this — to give you an idea of what you are tr\nng to get at — that the same wheat which we buy in the country, at whatever price we can buy it, we usually sell it the same da}" by selling a future” against it. AYe buy of people in the 22 country, we sell the same day, and we are glad if we can get one cent a bushel commission, and receive the X)rice we paid here and the cost of freight. Q. You first buy the wheat? A. In the country. Q. And sell it the same day ? A. Sell it the same day by selling a “ future ” far enough ahead, for New York, and then deliver it upon the contract we make. Q. You say you sell at an advance of a cent a bushel ? A. Yes, and very glad to get a constant commission of a cent a bushel. Q. How much is that wheat supplied to the consumer at per bushel ? A. I can’t tell you ; we don’t go so far as that ; we buy wheat in the country, and we pay the freight on it and the cost of delivery here or in the harbor, and we get one cent a bushel for our own commission, and we sell to the miller or exporter if he want it. Q. There seems to be some doubt with regard to “ corners ’’ — whether the seller or purchaser is responsible for ‘‘corners?” A. It would be absolutely impossible to create “ corners” unless a man sold what he did not have, and did not know where he was going to get it. • Q. Is it not true that a speculator very frequently sells grain which he does not possess ? A. Yes. Q. VV^hat is the effect of such a system of speculation upon busi- ness generally ? A. Well, of course, it has no good effect upon business generally, but it is a question whether it has any very demoralizing effect upon business. Q. Would you characterize such a system of speculation as gam- bling ? A. It is a species of gambling there is no doubt ; it is a species of betting on the price of grain at some future time. But I would like to correct an idea which seems to have been entertained, although it makes no particular difference with reference to the inquiry you are making, that it is not generally understood, perhaps, that every pur- chaser and seller of grain for future delivery in the city of New York or on the Produce Exchange is a matter of written contract. It is not simply a “bet” or any thing of that sort ; it is a matter of written contract which is just as binding as the contract of a mason. 23 to build or erect a building, and every man who makes one of these contracts is bound to deliver or to receive the grain which he has contracted to deliver, and the buyer of the grain has always the right and the power to demand the delivery of the actual grain and nothing else, and not any settlement for the ditlerence. Q. Do you think it would be for the interest of the public to enact a law forbidding the making of corners ? A. I have thought of the matter and it does not seem to me possible to enact a law which would not be more demoralizing in its elfects than a few corners ” which may ever be made in grain. Q. Please state how such a law would be demoralizing in its effects ? A. In this way ; suppose I had a large number of customers throughout the west — in the agricultural districts of the west — they direct me to buy for their account in New York, for delivery in June, July and ikugust, which, for reasons of their own, may seem very good to them, or to buy for June v/heat, and I may go on and fulfill their orders from time to time, until I had bought a large quantity of wheat and without any intention whatever to make a corner in wheat — without any idea of making a corner in wheat; when the month of June comes they demand the delivery of this wheat, on the orders of my customers in the west, from parties who have contracted to deliver it to me ; they have got it west ; but got it at no place where it can be found ; why then I am accused of running a “ corner no such idea; they sold to me and I have exercised my right to buy what I please in the market, and they have exercised their right to sell to me ; it is a business matter with them as to whom they are going to sell ; for what they have got ; to pin them down to an exact point. I may be considered to be a very imprudent man if I attempted that; then I have made my contracts and I am unable to get wheat low against the cornerers and operators against me, and I am perfectly innocent; no man would be safe; no commission merchant would be safe in fulfilling large orders for any particular kind of grain for delivery for any particular month on a legitimate demand if such a law were enacted; it would be what unfavorable legislation has tended to do for any other kind of business in New York ; it would drive it just out of the State of New York to just outside of the State of New York. Q. Then in your opinion there is no way to prevent men from selling grain or any other produce they do not possess ? A. I don’t believe that if any man is willing to make a contract 24 to deliver a certain article next month and lie ^ave me a good and sndicient contract, that there ought to be any law requiring me to refuse to make the contract with him. Q. You admit that a public evil results from this ‘‘cornering” and dealing in futures? A. There are very few things under the sun that can’t be made to result in an evil, if abused ; and it is very difficult to ])revent abuses. I thirik these things make their owm correction’s by the laws of trade, and much better than can be made by the laws of the . State. Examined by Senator Bro^vning : Q. You have told ns what “ puts ” and what “calls” mean; and what “corners” are; I don’t know that you explained thoroughly what a “future” is; tell us what a “ future” is? A. Yes, if 1 sell to you 10,000 bushels of wheat for delivery at my option, during the month of May ; that is a ‘* future.” Q. Is that what you call an “ option ? ” ■ A. That option consists in delivering at my option in May, at a certain price. Q. Do you have the terms of “ long ” and “short;” what are ‘ ‘ long ” and ‘ ‘ short ? ’ ’ A. A man is “ long ” when he has bought more than he has sold Q. Has “ long ” of the article ? ^ A. Yes. Q. When he is all sold out, he is “ short? ” A. Yes, when he is all sold out he is “ short.” Q. What is a “ squeeze ; ” don’t you squeeze people out ? A. No “ squeezing,” no “ cornering.” Q. When people are driven out of the market, are they not squeezed out ? A. No, they can’t be, unless they are “ busted.” Q. Don’t men get “ busted ? ” A. Yes, when they sell what they have not got and are unable to fulfill their contracts; unable to put up a margin to cover the loss, “R(pieeze” is a term I seldom hear. Q. What is “ settlement day ?” A. They have hi day on which settlements are made; the very last day of the month ; it is called “ settlement day ; ” that is the last day in which a contract can be settled up for that month. If I sell to you 10, ()()() bushels of wheat at $1.30 during the month of 25 May ; the last day for which that delivery can be settled is the last day of May. Q. And then I pay you so much money ; or you pay it to me ? A. Yes. Q. Wliat is spot ? ” A. To buy grain on ‘^spot;” grain in the harbor would be grain on the “ spot.” Q. Do you know that there is a corner in No. 2 mixed oats? A. No. Q. Do you know that there is a corner in No. 1 white, in the market ? ' A. No, I think now that there is. Q. Do you know at any time within the last two months, that No. 2 mixed oats sold higher than No. 1 white oats? A. My impression is that that is the case ; but I don’t remember Q. Was there not a corner ? A. No ; I don’t know if there has been a corner in oats. Q. Would you think if a proposition to deliver 50,000 bushels of No. 1 white oats for No. 2 mixed oats was refused, that would indi- cate a “ corner” in oats ; in other words, if you have agreed to de- liver me No. 2 mixed oats and you offer me No. 1 white oats and 1 refuse it, is it not a sign of a corner in mixed oats ? A. Yes. Q. What effect has that upon the trade ? \ A. That would have the temporary effect of making people who wanted No. 2 mixed oats to pay more than they ought to have paid. Q. Do people on the Produce Exchange, on the floor, do business by operating in options ? ” A. I presume there may be some people who do business by ope rating in options. Q. Have no basis whatever ? A. They have capital ; but they simply deal in the market in options.” Q. Never make a delivery? A. I presume they do some times, and that they are then obliged to make a delivery. Q. Don’t you think that this injures the trade in its legitimate business. A. There are two sides to it ; if dealing in options enhances the price, the market price, why then the producer gets so much more, 4 20 and if tlie consumer has to pay so much more for liis breadstufts, I would not like to say that it is injurious to the trade of the country. Q. Is there a class of operators on the floor known as “ oj)tioii brokers ? ” A. Yes. Q. Have they a basis ? A. They have a basis ; they are brokers ; they do business with other people. Q. You speak of ‘‘ option brokers” — not buying for delivery? A. Every man who buys on the Exchange buys tor delivery. Q. Do you know of any one on the the floor called “ scalpers ? ” A. No ; I don’t know such men ; I presume there are 99 out of ICO people on the Produce Exchange who, if they see the market ad- vance rapidly for any reason in the world, they are likely to make a purchase, and sell as much as they can get and make something out of it; that is ‘‘scalping” the market. Q. You have “calls” every day? ^ A. Yes. Q. What is the average amount of “calls ” every day ? A. I can’t tell. Q. Have you sales outside of “ calls ? ” A. Yes; greatly exceeding them. Q. There is a way of ascertaining the number of bushels deliv- ered at this market ? A. Yes. Q. Do you know the amount of grain in the market to-day ? A. No. Q. The elevators, are they full ? A. No ; the stocks are very light here ; wheat, corn and oats were all very light. Q. I believe you stated what effect the option has on tlie legitimate trade ; what is the condition of the market to-day in regard to grain,, is it high or low ? A. High. Q. How do you account for that ? A. The scarcity of grain. (T T understand it is coining in plentifully ? A. That is not very clear. (^. You state you don’t know who owns the bulk of the oats in the market to-day ? A. a\o; r have not given it any attention. 27 Q. One of the sections of the cliarter incorporating the Produce Exchange states that the corporation is for the ])urpose of securing suitable rooms, and to adopt fair, just and legitimate principles of trade % A. Not exactly that; but it is for the purpose of providing suita- ble rooms in the citj'of New York, and for the purpose of inculcat- ing equitable principles of trade. Q. Has the Exchange ever taken notice of betting upon the floor of the Exchange ? A. Yes; and of any evil, so construed to be on the Produce Ex- change, is always taken notice of. " If a man fail to fultill a conti’act which he has made, whether written or verbal, he will not be per- mitted to be a member of the Produce Exchange. Every man who makes a contract there must fulfil that contract. Q. Do you know of option brokers on the floor of the Exchange making settlements every day ? A. Made every day by people who deal in options. Q. And can a boy with $10, by handing it to an option broker,, buy on “calls?” I give you $10 or you give me $10? . A. I don’t think there is such a thing going on on the Produce Exchange; I think if you go to the Produce Exchange and give your order for a broker to buy or sell, and you leave with him a margin to protect him against loss, he will make the transaction tor you. Q. If it should appear that boys on the floor of the Exchange are in the habit of giving option brokers $10 ©r $20, more or less, before the day is over, and do this repeatedly, would the Exchange take notice of it ? A. The Exchange would not permit any such dealings. Q. The Exchange does not know that that is the fact? A. No ; I don’t think it possible for a boy to do such a thing. Q. You would be likely to know it, if it was the fact? A. I think so. Q. It was stated by gentlemen who represented railroads at our last sitting, that prices have advanced from thirty to fifty per cent on grain by reason of this system of speculation, and they both denied that the producer reaped any benefit ; now, do you think the pro- ducer receives any share of that advance; is that what you mean us to understand ? A. Yes. Q. Mr. Depew and Mr. Jewett, I believe both of them, stated 28 that the prices of grain were advanced on account of speculation and speculators, from thirty to fifty per cent; and that the producer re- ceived no part of that increase ? A. That advance has been made within what time? Q. He means from the time it leaves the ivoducer’s hands, till it reaches the consumer, the price has been unnaturally advanced from thirty to fifty per cent ? A. Continually, or just for the present ? Q. He did not specify the time ; I think he meant thirty per cent the lowest, and fifty per cent the highest; between that would be a fair average of the continual advance, and of the natural value of the produce of the west; in other words, while the railroads were continually decreasing their rates, the prices of produce had been continually advancing, and that that was due to speculation ? A. That the railroad companies have reduced their rates, and that the price of produce had continually advanced, of late, so that they cannot carry grain ; and that that advance has been on account of speculation only ? Q. Yes, sir. A. It is not true ; the fact is that the advance of from thirty to fifty per cent on grain — I think fifty per cent too high — the thirty ])er cent advance has been due to the bad crops of last year, and to its going out of the country ; last year, and the year before, we should have been an importer instead of an exporter of grain. Q. Have you bought any grain recently ? A. We constantly buy. Q. AY hat can you buy grain for to-day — ^ say wdiite wheat — in the market to-day ? A. I did not go to market to-day. Q. AYell, yesterday ; in what market do you buy wheat in the west ? A. AYe buy of any person we can ; we buy of the producer, and buy in the market, and in Toledo, or Kansas, or St. Louis, or Chicago ; in California and other places — anywhere where we can make a commission. Q. AYhen you buy red or white wheat at $1.25, and you buy that in the west, what is the price paid to the producer ? A. We have bought wheat from the producer in the State of Kew York. Q. Have you bought of the ])roducer in Illinois ? A. Not in Illinois; but of the man who buys of the producer. 29 Q. What 1 am trying to get at is this — you say you bought red and white wheat at from $1.25 to $1.40 a bushel on such a day, adding the amount paid for transportation, and I suppose commission ? A. Not commission. Q. What is the natural value then ? I want to find out the dif- ference between the natural and artificial value — the speculative value ; you buy at $1.25 ; what do you do after that ? A. We pay freight and the cost of delivery in the port of New York under the rules of the Produce Exchange. We buy of the producer as far as possible, and we sell to the miller in the State of New York and all we gain is our commission — one or two cents a bushel. If there is any advance in the market we can get one or two cents more ; but there is the natural price you want to get at ; we buy from the producer in the State of New York, and w’e sell in the State of New York at a commission of one or two cents a bdshel. Q. What advance is there generally on the producer’s price? when wheat is $1.25 what ought to be the price in the market? A. 1 don’t gather your meaning. Q. If I call on you for 50,000 bushels of red wheat at $1.25 to day — what would you give for that in the market to-day ? A. I should have sold it for $1.25 ; by the rules of our market,, if I can buy wheat in the w^est and lay it down here at $1.25, our market will not realize to us more than a cent a bushel above that ; that rules the price in our market; not over one cent a bushel. Q. Is it not a fact that the price of wheat in Chicago is higher than its price in New York ? A. Higher here, when you have paid the freight and cost of delivery. Q. If you sell to me in Chicago 50,000 bushels of wheat at $1.25, what would that sell for in this market — wdien yon say that you add one cent a bushel for freight and commission, what would that amount to ? If you sell to me in Chicago 50,000 bushels of wheat at $1.25 a bushel, adding the freight, which we will call twenty cents, and the cost of delivery in New Y^ork, wddch we will call one cent, and the commission, which we will caJlone cent more, and will sell it then at $1.25, with twenty cents ad^ed — $1.45 and with two cents added, making it $1.47, and you will sell it to anybody — that is the natural value of the wheat ? A. Y^es. Q. If some one in the market purchasing that from you, so that 30 he got a inimber of these lots so tliat lie could influence the quantity of wheat in the market he would get a “ corner ?” A. Yes. Q. And when yon are obliged to deliver to him, that puts up the price ? A. Yes. Q. And that is where the unnatural ” value comes in ? A. I am not speaking of values. Q. Mr. Depew and Mr. Jewett wanted the committee to under- stand that the advance of from thirty to fifty per cent is due to that system of cornering and speculating in grain ; is that the fact when such speculation occurs ? A. At the present time it is not the fact ; but the advance in the price of grain is legitimate, because it is on the basis of supply and demand. The supply cannot affect the demand for home use, consequently we have nothing to spare to export, and this requirement for exj^ort has nothing to do with it. Q. You say a law to prevent speculating in ‘‘ futures ” might interfere with the legitimate trade, as you say you might receive a large order ? A. Aggregates make a large order. Q. Suppose you were to fill an order for No. 2 mixed oats, or some one had agreed to deliver to you some thousand bushels of that quality, and to fulfill this order he should come to you and say he had not that quality, but he would give you a better class of oats. No. “ 1” white oats, could you fill the order with that ? A. No. Q. The buyer could refuse to take the better quality than the one he had agreed for ? A. Yes; they are not of better quality. Q. Is not No. 1 white oats better than No. 2 mixed? A. That may be and may not be. Q. What may be the usual difference in the price, when there are no corners and when the market is in a normal condition, between No. 1 white oats and No. 2 mixed oats? A. Two or three cents in favor of white oats. Q. You say you cannot fill an order for the better class of oats than for mixed oats ? A. Yes; but tlierc are certain rules on the Produce Exchange. 'iflicHi are certain grades of grain ; and there is sometimes a demand 31 for a certain grade of grain wliich will increase the price of that grade of grain over another grade of grain which may be of a con- siderably better quality than that ; that is in consequence of the speculation in that grade of grain. Q. Then, so far as the delivery is concerned, it would not pre- vent you from delivering the goods, if you offered a better quality of oats than that you had agreed to deliver, so far as the delivery is concerned, for the purpose of speculating, and they would not ac- cept a better quality ? A. That is it exactly. Q. Do you know of any other period in the past two or three months of “ J^fo. 2” having sold for a higher price than No. 1 ? ” A. I think in the latter part of March ; I think it was the fact that “No. 2” sold higher than “No. 1.” Q. That would indicate a corner, then ? A. Yes; about that time. Examined by Senator Boyd : Q. Your testimony has been chiefly in regard to legitimate trans- actions in grain ? A. Yes. Q. Have you any knowkjdge as to the manner in which these illegitimate transactions are carried on ? A. I don’t know what are called “illegitimate” speculations. Q. Such as are complained of as occurring in Chicago ? A. Cornering? Q. AYs. A. I think I have described that to some extent : the man who believes in better prices in the future comes to buy of the man who does not believe it, and who sells to him proportionately; sells that which he has not got, and when he sells too much, more than can be delivered, why there is a “ corner ; ” buj whether it is to be called “illegitimate” is a question. Q. When prices are forced up by such transactions the burden falls upon the consumer, does it not? A. Temporarily the consumer may have paid somewhat more for bis food, but then there is invariably a limit, and if it is an illegiti- mate corner, there is invariably a reaction which gives to him the benefit of a less price than he would have had to pay if the corner had never been made. Q. Does holding grain corners for a length of time not force the 32 races ot transportation np to a liiglier grade than if there were no cornel’s 'i A. That tendency is botli waj^s ; during a time grain would I'e lield in the west, and if sold in Chicago, and the railroad com])anies had nothing to carry, the freight rates might he reduced, and then Avhen there was a great abundance to carry — after the corners had been broken — then the rates might be advanced because of supply and demand. Q. Is there any other information concerning this subject which you desire to give the committee "^ A. I think not ; I don’t think of any thing now. Examined^ by Senator Bkowntng : Q. Wherever you liave known of corners ” they have been operated by one or more persons ? A. Generally by more than one. Q. So that there is a combination; a forced entry into a pool for the purpose of increasing the price and getting the bulk of that article ? A. So far as I have ever known ‘‘corners,” they have been directed by “pools,” or to use a later term, “ syndicates.” Q. Don’t you believe they can be r^ched by legislation ? A. I don’t think so. Q. Don’t you think it demoralizing and injurious to trade and commerce ? A. ±Sot more now than it was ; I don’t think any laws of trade would be a benefit, or would prevent men from making an option, just such as they please, provided they can find men who are wdlling to take the contract ; I don’t believe that an attempt to correct these evils by legislative enactment would be successful ; in the first place I think it would be more demoralizing to the trade than cornering Q. Has the Produce Exchange ever taken up the question with the view of checking the evils growing out of it ? A. There are evils which you cannot reach ; what no Exchange can reach ; for what you have suggested is new to me ; I come to the Exchange and give some broker on the Exchange an order ta buy a lot of wheat and sell it Avhen it loses $10, and to buy it when itrmikes$10; such a thing might be done; at the same time we are always taught to believe that this is a free country, and that a, man has a right to buy and sell as he likes. 33 By Senator Browning : Q. And bet if he want to ? A. And bet if lie want to. Isaac H. Reed, sworn : Examined, by Senator Boyd : Q. Where do you reside ? A. At tile New York Hotel. Q. AVhat is your business \ A. .Commission and grain, receiving and selling. Q. Where is your place of business ? A. Five State street. Q. How long have you been engaged in that business ? A. For a very long time ; in this particular business some forty years, probably. Q. Will you state to the committee your opinion in regard to the wdiole system of making “corners’’ and “futures” in reference to its effect on commerce and its influence on the public welfare ? A. It is a subject to which I have not given much thought ; it has its good and bad results ; it makes business very irregular and somewhat hazardous, because we are almost entirely at the mercy of the speculator. Q. Does it tend to cause an unnatural fluctuation in the market ? A. Undoubtedly unnatural. Q. Please state to what extent these fluctuations are made ? A. I am not familiar enough with them, to say. Q. Are'you familiar with the terms “ puts ” and “ calls ? ” A. I know them, sir. Q. “Corners” and ‘‘futures?’’ A. I do. Q. Please explain their meaning? A. A “ put ” would be a privilege given to me for a consideration, or you may give me a certain consideration, or I will give you a certain consideration to put a cargo of wheat to you at a certain price, at a given time — a time to come, or to send it to me, or transfer it. A “ call ’’means that for a consideration I can call upon you for a cargo of wheat, to be delivered to me at a certain price ; if the market falls under the price, the proposition is, that I shall give it to you or make you pay me the price, or if the price advances I shall call upon you to give me the property. 5 34 Q. Upon wliat natural conditions would the regulation of prices depend ? A. That would depend naturally upon the 8up})ly and demand ; then it could be aliected artihciaUy. Q. And it is chiefly these artificial effects that you refer to, when speaking of the injurious effect on the market? A. I speak in that way. Q. Please explain what a “ corner ” is ? A. A “corner” is as Mr. Edson ex})lained it; a ])arty gets all tlie property that exists, by" a contract or otherwise, or buys up all on the spot — as much as he can get ; and when the time comes to deli\"er by another party, he can’t find it, aiid the one who has bought up the property makes his own price for it and to deliv^er it ; that is what we call corners. ” Q. To what extent do citizens suffer from these “ corners?” A. Those who are concerned by" it and the consumer probably ; it produces an artificial value in the commodity. Q. To what amount has this artificial value been created gener- ally ? A. I have no knowledge of the extent ; I don’t know that we have had any “ corners ” in wheat ; we have had speculations in wheat which have sent up the price, and which is continually going on, or what we term a ‘‘speculative demand, ” going beyond the price that the exporter can take it at ? Q. Who is responsible for the creation of these “corners,” the seller or the purchaser? A. The purchaser, I should say* ; I should think that the seller was the innocent party ; of course, he wishes to sell his property" to the best advantage ; it is the purchaser who makes the corners. Q. When a man undertakes to sell property which he docs not possess, would he not thereby create a corner ? A. That is a question of morals, I think ; 1 don’t know whether he would be considered a moral man or not ; he would be respon- sible for “ corners.” Q. Is it not true that speculators sell large quantities of grain that they do not j)ossess ? A. That is the case with “option ’’ dealers. Q. What effect has such transactions upon the legitimate market ? A. Cannot state; the market is very large, and there is a specu- 35 lative demand for a commodity ; people ask me as to one course and another course ; all intending to make money ; they will buy at the lowest price, and sell in the future at two or three months ahead. A purchaser will think differently from a seller, being of opinion that he has a better knowledge ; one man may have more knowl- edjre than another. Q. That would be a legitimate speculation ? A. Yes, it is legitimate and illegitimate in these futures; for in- stance, parties in the west who want to avail themselves of the market at the present prices, and who have large quantities to sell, sell it forth- with, and will direct their factor to sell for June delivery. In April when the canals open they may say — we’ll sell the property ” de- liverable in May, and they have the right to sell, deliver and send it forward ; you can’t pretend that that is “ option ” selling ; it is a fair proceeding. Q. Would you describe the illegitimate “ option ? ” A. Artificially buying and selling in the market, and taking the 'chances ; a man sells to take the chances of buying at an advance. Q. Don’t you think there should be some law to prevent that? A. I have no opinion on the subjecjt. Q. Do you think such a law practicable ? A. I have no opinion on that point. Q. To what extent are these unjust speculations — illegitimate speculations — carried on in the city of New York? A. I am not aware ; it is impossible to tell. Q. What operations have been made for delivery, and what arti- ficial ? A. Last February what is termed gambling operations amounted to 759,000,000 of bushels, and the trade operations to 97,000,000 bushels in wheat, corn and oats in February. By Senator Browning: Q. Th^ legitimate sales would be, some for exportation and some for consumption? Jixamination by Senator Boyd continued: Q. The smaller amount would be for ? A. For exportation ; that is what we call “spot wheat” — wheat on hand — “ spot grain . ” 36 By Senator Browning : Q. Ninety-one millions were the call sales? A. Ninety-seven millions. Q. “ Call ” sales ? A. No; sold altogether. Exarmnation by Senator Boyd continued : Q. The sales were legitimate sales ? A. Yes. Q. The others were gambling ? A. Y^es, the February number of this magazine will show it. Q. Did that occur in the city of New Y^ork ? A. Yes. Q. By whom were these illegitimate and gambling speculations carried on ? A. These option dealers — by different dealers and buyers and sellers. By Senator Browning : Q. Does the amount of money involved appear in that paper you have there? A. It does not. Examination by Senator Boyd continued : Q. Does the value appear there ? A. It does not. Q. What effect do these speculations have upon the transporta- tion interests of the country? A. I don’t know. Q. How does this temporary speculation affect the interests of the consumers ? A. Variously; sometimes for their benefit and sometimes not, according as the price is depressed or advanced by these operations ; a meml)er of the committee has asked about boys paying $10 ; I don’t think that has ever taken place there, because the transactions arc confined to 8,000 bushels. Q. A re you a member of the Stock Exchange ? A. No, sir. C^. Of the “ Farmers’ ? ” A. I was not, sir. 37 Q. Are you familiar as to what extent these illegitimate specula- tions are carried on in other kinds of the necessaries of life besides *grain ? A. It is done in provisions, in pork and lard; I think in last year a very large operation was carried on by western houses, but they all broke; that advanced the prices, I think, upwards of $10 a bar- rel ; it took place in connection with a Chicago house and a house here ; tliat was done by purchasing up the whole commodity. Q. Were these combinations by New York and Chicago mer- chants of frequent occurrence ? A. No ; I think not; this is the only instance that has occurred wdtliin ni}^ knowledge, within one or two years. Q. Is there any other information you can give? A. I have none to give ; I have a paper, published in Brooklyn, from which I got a good deal of information pertinent to this ques- tion, and which I would like the members of the committee to read. Q. Are there any extracts which you would like to read before the committee ? A. I will leave the paper with the committee ; they can read it for themselves. Q. Do you know, of your own knowledge, that those statements are true? A. I can confirm most of these statements. Q. Please read those which you would confirm ? A. I will read : — “ Legitimate business has been for years entirely at the mercy of the speculator. The short road to wealth through speculation, which is traversed by visionaries without capital, has generally proved to be a very dangerous one, and the poor but san- guine traveler is lucky to escape entirely from the rich brigands who are always lurking in such places. A certain degree of spirit and love of adventure is necessary to a new country, to be sure, as it peoples prairies, ciits down the forests, builds up factories, and fills our marts with grain and provisions of all kinds. But it gives us ‘‘ bulls ” and bears,” and while in the former case it gives us national wealth, to the latter it often causes financial disaster. The time has passed when gold was the medium of the speculative mania, and unfortunately for the prosperity of the country, wheat has taken its place in all our large cities. Dealers in bread-stuffs buy and sell their “ options ” the same as the stock-jobber sells his puts and calls. A corner is made in articles of food, and there is scarcely a ripple on the journalistic sea of trade reports. Politics, which is somewhat 38 speculative in its way, absorbs most of the time of the journalist, while business, which is far more important, there Ijeing more en- gaged in it /and more capital invested in it, is often let go by ‘ tlie ^ board.’ It is difficult to see the philosophy of callingone set of men ‘gamblers’ because they happen to deal in stocks, and another set ‘merchants’ because they happen to deal in food products. It is about time this 'casuistry was exposed, as men wlio obtain shipments in the west to make fictitious markets in the east, are far more dan- gerous to the public at large than those who buy up certain stocks to make shorts in them scpieal.” Q. We would like to have you read any important fact contained there which you can draw the attention of the committee, and to that fact we would like to have your indorsement as being more reliable? A. Yes, sir; I wdll read further : “All trading, that is, buying and selling commercial commodities for a profit, partakes more or less of risk incident on fluctuations in price and changes in the rela- tion of supply and demand, production and consumption.'’ “The old-time merchant fitted a ship with a cargo and sent her to foreign ports, where it was sold and a return cargo bought and brought back for sale in the home market. The round voyage often occupied one or more years. The man of sagacity,' fore- thought and thorough knowledge of the trade in which he was en- gaged was usually successful, while ill-planned and badly-managed ventures were generally disastrous. “ Transactions of the present day involve the same elements of risk during the period between the purchase and the sale. Since the introduction of the telegraph and the (piick means of transit, risks of fluctuation have been reduced to a minimum. The dis- tributing dealer now being sure of replenishing at any time on short notice takes lighter stocks, the heavier risk being left with the im- porter or producer of the intervening wholesale dealer. A mer- chant in Brazil or Chili has an early advice of ^ur markets. He takes a ship, buys her cargo of grain, which he telegraphs to his correspondent in New York, Boston or New Orleans, and such parts of it as proves satisfactory as to profit is sold before it is loaded on board the ship, the buyers carrying the risk of fluctuation during the voyage. If the cargo has been bought in the home market for consumption in a foreign market, the merchant is in expectation of a profit upon it soon after its arrival at tlie port of destination. If he becomes {ipprehensive he can telegraph to his fact or in Liverpool 39 or Santiiigo to sell the cargo to arrive, in order to avoid a loss or gecure a protit. Again, the miller in Liverpool or New York has an opportniiity to contract for many months’ production of his mill * at an assured though small profit, if he can secure the grain. II is cash capital is too small for so large a supply, and it would both strain his credit and advance the price to buy on time.” A grain man finding he is getting a large stock on hand will sell it out and buy a future to save himself ; now, if you should, by legislative enactment, prevent him from dealing in options, it would be hard on him. Q. In what way ? A. Because he could not make this disposition of the propertjf ; we could not save the owner from loss ; he would rather hold his property and pay storage, but he prefers to sell it now and buy in the future. Q. Suppose a law should be enacted forbidding dealing in futures, all transactions would then be according to or based upon the natural value, would it not ? By Senator Browning : Q. It would then be a natural value all the time ? A. Yes ; but you could not prevent speculation ; I could buy ^ up all the wheat in the country and keep buying it up and advance prices in that manner. Continued by Senator -Boyd : Q. Don’t you think that would be an illegal and immora* transaction ? A. The question was put about dealing with white oats in the place of mixed oats ; that a party had contracted to deliver mixed oats and offered white oats, and the other had declined to take it be cause he wanted mixed oats ; that was a speculation. Examined by Senator Browning : Q. You want the difference between the price that you sold for or bought, or the oats delivered without regard to its quality ? A. Yes ; running the price up and it would be delivered to me ; I wont take another article ; I am a speculator, and my efforts have been to raise the price, and I want you to deliver to me mixed oats ; that is a fair transaction. 40 Examined by Senator Boyd : Q. What increase per cent in the price of grain has been caused by these illegal s]_>ecnlations ? A. I don’t know, sir. Q. Any such increase or the burden of any such increase would fall upon the consumer? A. Upon the consumer of the recjuired commodity; I am not my- self taking an active part in the business, for that reason 1 am igno rant of some of these subjects upon which you require information. Examined by Senator Browning : Q. Mr. Edsotj stated, and I suppose you will concur with him in the opinion, that the present price of grain in the market is owing to a sliort crop ? A. It is in a great measure. Q. Now in connection with that I would like to ask if “ futures” are sold without possession, or without the immediate ])rospect of possession ? A. Yes ; independent of that. Q. So that persons can deal in futures” without the prospect of possession, with a view to increase the price? A. Legitimate business would do that. Q. Then although you raise the market, that would not have any thing to do in regulating the pilces? A. Not of sales in the future; but when the price declines then there is a large quantity in the market, and a man who has got a ‘‘future” would get the benefit of it. Q. Don’t you think the present price of grain due more to deal- ing in “futures” than to a scarcity of supply? A. That question I am unable to answer; that is rather a specu- lative inquiry. Q. If the proportion of business done in sales in the future or options is so much greater than that of spot as shown by the figures you have stated, has not that a great deal to do in advancing the price, or keeping it up? A. It is hard to determine ; we see these fluctuations all the time ; they may in the future elevate the price or they may knock the j)rice down. Q. If that is the tendency, do you think it detrimental to the con- sumers? We represent the people and we are trying to And out 41 some remedy for their benefit, and we want your best judgment on the question ? A. It is a difficult matter to offer a judgment on. Q. Do you know of any corners in No. 2 mixed oats ? A. No. Q. Do you know of an attempt to get up a corner in winter wlieat ? A. I don’t ; I am not familiar with the doings on ’change. Q. How do you do it ? A. There arc my partners and clerks who take an active part. Q. Have you ever held an official position on the Produce Ex- change ? A. I have been the president of that Exchange. Q. At what period 'i A. In 1870 and 1871 I was president. David Bingham^ sworn : Examined by Senator Boyd: Q. Where do you reside? A. In New Jersey. Q. Where do you do business ? A. New York. Q. What is your business? A. Exporter of grain. Q. Your place of business? A. 47 Exchange place. Q. You are connected with the Produce Exchange ? • A. Yes, wdth the board of managers. Q. Have you ever held any official position ? A. Nothing, except that. Q. Have you been president of the Exchange ? A. No. Q. Will you state to the committee what you know and your views concerning the system of making corners and dealing in futures, in reference to its effect on commerce and the public welfare? A. The dealing in ^‘futures” within the last few years has been encouraged on the Produce Exchange and was beneficial to the business of New York ; dealing in futures involves dealing in what a man has not got and the buying of what he does not want. And in dealing in that way, the Exchange has endeavored to keep the run 6 42 of the State ; the extreme of this speciilatioiiis wliat is called ‘‘ cor- ners ” and it bears a relation to o])tions ; the extreme is a decided' evih The Produce Exchange does not recognize “ corners ” and hao rules against these — ])erhaps not tlie best rules — “puts” and “ calls” are not recognized at all. An effort is now being made to enforce these rules ; but with all that it cannot be very well pre- vented. The Exchange has had under consideration regulations. Q. Do “ corners” ever occur among dealers in New York ? A. Yes; there was a corner in March, and one in oats last Mon- clay. By Senator Browning : Q. Is it broken ? A. That breaks always the last day of the month ; if the par- ties who have sold the oats object to deliver and are not satisffed with the price, the other party can appeal to the committee to decide what a fair price is. Q. That is in the Produce Exchange ? A. Yes. Q. They are ordinary dealers ? A. Certainly ; on the Exchange. Q. They are all dealers belonging to the Exchange ? A. Practically tiiey do all the option business done there. Q. Describe some of the evils relating to the making of “cor- ners” and dealing in ‘‘ futures? ” A. I don’t recognize any evils in dealing in futures, ” and I don’t see why a man can’t buy and sell goods and deliver them in the future as on “ to-day ; ” the evil arises where a body of men get together and combine to take advantage of speculation and squeeze” other men like an honest Quaker half a dozen men . get together and have an idea that they can “ pluck ” another man.. Q. Does this frequently occur in New York? A. V^ery rarely ; none of that character ever occur here. Q. \\Tiere? A. In Chicago. Q. Have you known an option broker squeezed out of business — off the floor. A. An option broker is a man who does not do business on his own account ; a broker docs business for another man ; an option 43 dealer does biisines on his own account ; I have known option dealers “ squeezed ” out, by selling more than they were able to carry ; of course they can be “ squeezed out. ” Continued by Senator Boyd : Q. Do yon know of New York dealers taking a part in specula- tions at Chicago or elswhere ? A. I expect they all do. Q. What effect has these speculations upon the transportation in- terests of the country ? A. The effect is to disarrange them ; to give them a large amount of freight when they don’t want it, and to keep it away when they do. Q. How does it affect the rates of transportation ? A. It affects the rates in this way — that a man who can control five or six million bushels of wheat can afford to wait until the rail- roads can carry it at a reasonable rate. By Senator Browning : Q. What effect would it have on the export trade ? A. It does not affect it much ; we can generally buy for export at a legitimate value, whatever its speculative price may be. We can buy in our own markets at a fair value. Q. To what extent does it tend to increase the price of bread- stuffs and other commodities? A. We consider it to be a very severe corner that would advance prices ten per cent. Q. Above the natural price ? A. Yes. In Chicago they are selling April wheat at $1.36, and it costs three cents to carry that into May ; you can buy the same in May at $1.39 ; you can buy for delivery on that day at $1.39. Q. Then the difference of price goes into the pockets of the speculators ? A. Yes. Q. The producer gets none of the benefit of it? A. Yery little. Some producers will send their grain in when there is a corner, but they don’t reduce the corner; the producer cannot spoil the corner, the consumer might ; he can generally buy cheaper than the speculator. Q. What remedy would you propose for the prevention of these evils ? 44 A. The only remedy would be to make all men moral and honest; you can’t do it by law ; the Exchange is the most efficient machinery to work with, and they can’t do it. Q. But yon could prevent the gambling ? A. I don’t think so. Q. Do you think that a power exists in the Legislature to remedy this gambling in grain ? A. I think not, because Chicago is open to the traffic and so is New Jersey. Q. There was a law passed in Illinois in relation to this matter ; do you know what that law was ? A. The law permits all this kind of dealing, but people on the Exchange don’t pay much attention to them; if a man should appeal to the law they would turn him out of the Exchange ; if you go to work and make a law the Exchange did not think desirable, and a man were to appeal to it, they would turn him out. Q. Has it ever been done ? A. Yes; we constantly turn men out for appealing to the law Avhen they make a contract; we settle everything by arbitration, in- cluding these option contracts. By Senator Boyd : Q. What you mean to say is that if a man violates the terms of his contract, that then you turn him out ? A. Yes. Continued by Senator Browning : Q. The witness meant — appeal to any thing outside of the authority of the Exchange ? A. That is what I meant; if a man makes a contract and he agrees to abide by certain rules, if he does not abide by those rules, of course they turn him out. Q. The impression was that you had such rules that if a man attem])ted to obtain legal redress you would turn him out ? A. All contracts are made under the rules of the Exchange. Con- tracts, as j’egards “])uts” and calls,” the Exchange will not enforce; men b)*ought up under it would not pay attenticn to it. Examined by Senator Boyd : Q. Have you known ]>ersons who have been injured financially by reason of these transactions? 45 A. Yes. Q. Know many such persons ? A. Yes; there is a list of tliem on ’change. Q. Are they of frequent occurrence ? A. Kot very frequent; perhaps once in a while — once in a month or so. Examined by Senator Browning . Q. Do you know whether there are any rules permitting or pre- en ting members of the Exchange from doing business outside of Exchange \ A. There are no such rules. Q. Are there any understandings between mill-owners, that they will not sell except upon the floor of the Exchange, or through the Exchange ? A. I don’t know of any such agreements ; the Exchange has a rule that it will not enforce a contract made after four o’clock. Q. Now, being an exporter, when you are seeking a vessel you call that trying to “ get a charter *” is that the term used ? A. Yes. Q. A broker’s charter ? A. Yes, it is done through brokers. Q. Do they ever get up a corner” in charters? A. No corner in charters, because nobody will sell them unless he has them; there is no ‘'option” trade in charters; I have known men charter more vessels than they can get ; I have known men undertake to supply 3,500 quarters and were not able to get more than 3,000; I don’t call that “cornering,” men undertaking to get charters at certain rates. Examined by Senator Boyd : Q. Do you think this system is opposed to public policy ? A. I think not, if confined within legitimate bounds. Q. Don’t you tliink the Legislature has power to pass some law by which it could be confined within legitimate bounds ? A. I think not; I know of no law that the Legislature could pass, or of any existing law, that would enable a man who had been mulcted in any difierence to collect it back ; a law may be passed that might be appealed to by assignees or executors, or which might be a sort of terror to evil-doers; no other law could be appealed to > if I were selling grain and got into a “corner,” I would not 46 appeal to the law; I would face the music and settle ; in case of a man’s death, his executor or an assignee could appeal to the law. Q. Don’t you think that a law could be enacted that would be heneficial to the public to ])revent men selling grain ajid other products which they do not possess ? A. I think not — what they expect to possess; I sold grain to- day, I expect to possess, because dealing in the market entirely for one kind of grain I have got coming now, to-day ; but to-day some spring wheat and red winter wheat are sold instead. Senator Browning : Q. Explain that ? A. I paid to-day for wheat from western parts — wheat of a choice quality — $1.40, delivered in I^ew York ; that will give par- ties in Chicago about $1.30 on board their vessel ; that is just ten cents for bringing it down at the present rate of freight, by lake nr canal ; Isold against that No. 2, red winter wheat, to deliver in May, at $1,471; the intrinsic difference in the value of these two wheats tor milling both of theni does not exceed five cents a bushel, and I will therefore have a difference of twelve and one-fourth cents to save any probable corner in May; 1 receive my wheat grain afloat instead of in store, because in these option-contracts they bet on grain in store which we hold at about one and one-lialf cents less than grain afloat. Q. Is there more profit ? A. No. Q. Explain how you can make money by the transaction ? A. If a firm controls red winter wheat they put the price beyond all reason so that we can’t settle contracts at a fair price — we should lose money — but if they should settle legitimately, or near tlie value of the wheat, we can make a little ; Ave do this business constantly. Q. Does the one depend on the other ? A. Yes ; we make a ])resent purchase of wheat and, therefore, we sell options against it to protect it until it arrives here and we get a better quality of wheat and we take a chance of selling. By Senator Boyd : Q. Mr. Dej)ew stated that there were instances where shippers have offered to transport wheat without cost, even that a premium has been offered by ship-owners who will carry grain as ballast: ean you tell us about that? l 47 A. I shipped some wheat and the company offered to take it for nothing. I paid a farthing a bushel to Liverpool ; we would not. ship it for nothing, because if we did we could not make the steamer responsible in case of damage. Q. Do yon know whether they refuse payment ? A. Yes; in JL)ston they gave some people a premium to ship grain ; it makes good ballast, as it also costs but little for stowage. Q. What is the difference in the price of grain on the other side and on this side ? A. The price is about on a par ; the wheat we bought was just about the Liverpool price. Q. What is the natural condition which regulates the price ? A. Supply and demand fixes the price legitimately. Q. Is tliere any increase of price beyond the natural price caused by artificial means and speculation? A. Yes, but it can only be of a temporary character; something like a dam stopping the water of a river; when it is broken the water rushes through. • By Senator Browning : Q. Can you allow the best grain to be delivered to-day cheaper than you can buy it ordinarily in the market when there is no delivery ? A. We sell and buy it constantly; the prices might change to- morrow. We bought to-day at $1.45 ; the price for the same wheat for delivery in May would be $1.48J- ; for delivery in June would be $1.46J. Q. Selling in the future is generally for more or less ? A. Generally less; ^‘futures” are generally discounted more months in a year than they are at a premium. In May and June they might be at a discount ; but when we come along in the months of November and December, and each succeeding months of the winter, and the canals are closed, and we are supposed to have a stock laid in, they would probably bear a premium the succeeding months at a higher premium than the preceding ones; the winter stocks command a premium ; but when we are expecting a harvest, the premium becomes lower. By Senator Boyd : Q. Have you any further information you can give us ? A. Nothing further^; except to give you a copy of our rules. Adjourned till April 22, 1882, at 2 o’clock. 48 April 22, 1882. No meeting of the committee took place. April 29, 1882. Present — Senator Boyd, Chairman, Senator Browning. Isaac H. Reed^ recalled : Examined by Senator Boro : Q. Any additional statement you wish to make, you will please make it now ? A. I was asked at the previous session, if a seller, who sold what he did not possess, was not responible for the consequences. I replied, that that was a moral question ; I did not comprehend the meaning of the question asked me ; certainly he is respon- sible ; but for what ? — for whaU is the question ; what knowledge do you desire to acquire by that question ; I was asked if a man sold wheat he did not possess, was he not responsible for the consequen- ces. Whether it was an immoral act, may be a question. I replied, that it Avas a moral question ; I don’t know whether I put the right interpretation upon it. Senator Boyd — I don't recollect the question. Mr. Peed — Q. Whether he was responsible for bringing about a state of things, if he sold Avheat which he did not have ; that is to say, by selling what he has not, and a corner’^ comes upon them, is he responsible for his own acts in getting up corners ; ” have you any further questions % In regard to legislative action in the matter of this option business, I do not see why the Legislature should interfere with any legitimate trade; it is considered legitimate; there are several reasons why these options should be made, if necessary. A farmer cultivating a large quantity of ground, if he can make a sale for de- livery at the time of the harvest, and he wishes to avail himself of it, he should not, therefore, be trammeled ; he should be permitted to make a sale. If, on the other hand, a party thinks the market is going to he lower or higher, whicheA^er it may be — Avhether he thinks the market Avill be Ioav or high, he makes an option ” con- ti-act for the future delivery at a ]>rescnt low price; men are bound to make money and they make it in various Avays ; business is always more or less a speculation ; for instance, you Avill findy 40 that wlion cotton in the soutli is likely to be very short, parties who deal in mannhictnred goods would want a large amount of those goods in anticipation of higher prices ; the intelligence of the merchant enables him to speculate and anticipate the wants of the ■people. Q. Is the case of a farmer who sells his crop of wheat deliverable at a future time not very different from the case of a speculator ? A. The case is different ; a speculator will take the hazard ; a farmer wishes to realize at once ; his profits are from the sale of his commodity ; he is satisfied with the price and there his share ends ; but that of the speculator is continuous ; it occurs to me, that a law should not be made ; that no legislative action is necessary to govern these option transactions. There are abuses, as there are in all things * we must take the good with the bad. Q. "Will you please state what these abuses are, Mr. Reed, to which you have referred ? A. For instance corners ” in any one commodity, to monopolize it, to prevent other people getting it, except at a very high price ; but the party who is so unwise as to dispose of what lie has not got, he is the sufferer; but that is the i-esult of speculation ; upon another occasion he might be more successful, but that comes in within the abuses — these option dealings. Q. What effect would any legislation, which would limit specu- lation in this kind of dealing in ‘‘futures” and “ corners,” have upon the Produce Exchange ? A. It might decrease the volume of business unless it could be in some Avay avoided. Q. Would that affect the pecuniary interest and business prospects of the members of the Corn Exchange ? A. It would affect their pecuniary interest, because it is a matter of considerable profit to members of the Exchange — this dealing in ootions. Q, In what way is it a matter of profit to members of the Pro- duce Exchange to have such dealings in the future and options? A. It pays us a profit for doing the business — a commission ; we derive a commission from doing the business. Very many mem- bers do simply a commission business on the Exchange ; they deal largely in these options on commission. Q. Any legislation wdiich would place any restrictions upon such dealings as are now carried on, on the Produce Exchange, would 7 I 50 injuriously affect the interests, pecuniary and otherwise, of iriemhers of the Produce Exchange ? A. It would, if it could he prev^ented by legislation. Q. Are you a member of the Produce Exchange ? A. I am. Q. Have you any other testimony 3mu are desirous to give? A. No ; I have none, except what I have given lieretofore. I think I stated previously that very often the grain warehouses go heated, and a party does not wish to dispose of the grain at the present price, anticipating a higher price ; he desires to ])ur- chase ahead and would sell and purchase for subsequent months ; now to prevent that by legislation would be a veiy unfair thing. Q. Don’t yon think a law could be framed which would tend to remedy existing abuses, which you admit to exist, without materi- ally affecting legitimate business and speculation ? A. That is a question I can’t answer satisfactorily to m^’self ; to give an offhand answer — I don’t see how it can be done. Charles Partridge^ affirmed : Examined by Senator Boyd : Q. Where do you reside? A. 20 East Twenty-second street ; my business place is 43 Front street. Q. In what business are ymu engaged ? A. The flour and commission business. Q. How long have you been engaged in that business ? A. I think since 1862. Q. And you are familiar with all the proceedings of the trade ? A. Yes; with the flour trade. Q. Are you a member of the Produce Exchange ? A. Yes. Q. How long have you been a member ? A. Ever since that time (1862). Please state your views with reference to the system of mak- ing “ corners” and dealing in ^'futures” in relation to its effect on the commerce of the country and upon the public welfare? A. 1 think it is very disastrous to both ; as to commerce, there is no commerce in it. I have just been looking up the trans- actions in this city, of actual sales and options, “puts” and “ calls” etc., and the result is sui-pilsing. 51 I will explain to you : At about the time of gathering of the food cropis of the world, say in September, a statement of the crops and requirement of the different countries, their shortages and surplus is made. I present to you such statement for the year 1879, as follows : Surplus. Eussia Austro-Hungary Chili Canada and Manitoba. British India. Egypt.. Australia. United States, 35, 000, 000 12, 000, 000 4, 000, 000 13, 000, 000 8, 000, 000 2, 000, 000 8, 000, 000 185, 000, 000 267, 000, 000 Deficiency. Switzerland, Spain and Portugal, Italy Germany, Holland and Belgium. England France 8, 000, 000 12 , 000 , 000 18, 000, OOo 137, 000, 000 55, 000, 000 230, 000, 000 Surplus over all 37, 000, 000 Up to this time, 1879, no combination of men had been formed to control the crops of the world or the crops of this country, but the above statement showing Europe’s necessity and America’s sur- plus, inspired certain 'moneyed men in Hew York, Buffalo, Toledo, Chicago, Milwaukee, Cincinnatti, St. Louis and other food markets, to combine together and buy up and control the surplus food of America, and put those who needed it at home and abroad under money tribute to them or starve. In this statement 1 will, if you please, confine myself to illustrations of the dealings of this combi- nation in v/heat, which methods they also applied to other food pro- ducts. To make my statements easily understood, I explain that there are different grades or qualities of wheat, and each market has its chosen inspector to examine the car loads of wheat and determine its grade, each grade bearing a relative price. 52 The largest share of wheat grades, number two winter and number two spring, ‘‘and number two red winter wheat, is almost exclu- sively dealt in by these combinations in New York.’’ The spring wheat is traded in mostly in Chicago, and retl winter wheat in New York; they uniformly have a relative value and are largely exported. The combination of speculators in 1870, and since, send their' agents into the wheat sections, and buy (generally at the doors of the millers and elevators on the railroads), the wheat offered, commenc- ing with the early delivery of the crops; this wheat is sent forward and fills the elevators on the Atlantic coast and in Buffalo, Toledo, Chicago, Milwaukee and other markets, and in New York and Chicago they press lake and canal boats into storage services. From the first receipts of a new crop of wheat until the storage capacity is filled, these speculators gradually run up the price of wheat and hold it above the prices the needful .countries can get supplies from other countries, and make their money by themselves, pretentiously selling, “generally through brokers,” to themselves and others, large quantities at high prices, and further on at low prices to inveigle the unwary into buying or selling “ futures ” one, two and three months in advance, and when these periods expire the combinations sell or buy of each other and to others, in the opposite direction, to make price and scoop the difference in price into their own pockets, and in this way they make more money than they would to sell at prices at which foreign countries would take it, and for such dealings they can afford, as they generally do, to sell late in the season (say March, April or May) for export, for twenty-five cents or more per bushel, less than they could have taken for it in December, January or February ; but while they have made money by this management, our own people pay their unreasonable and arbitral^ prices, and they have filched their victims in deals in futures, options, puts, calls, etc., and the country has lost in gold the difterence in the price the wheat could have been sold for and the price they take, averaging say twenty-five cents per bushel. I have before said that number two red winter wheat represents a very large share of the whole winter wheat crop, and that this grade is chiefly dealt in by speculators in New York (this is No. 2 spring wheat), and is the wheat mostly used and exported. I have got together the dealings on the New York Produce Exchange, in number two red winter wheat, daily, from first July, 1879, to the twentieth A])ril, 1882. The sales for use separately from the specu- lative deals, and the prices which I offer in evidencel EXHIBIT ‘‘A.” Column 1. Humber of bushels of Bed Winter Wheat sold in the Produce Exchange in Hew York city. Column^. Humber of bushels dealt in by “Futures,” “Puts,” Options,” “ Calls,” etc. Column 3. Prices of Spring Wheat Ho. 2, the sales of which are not reported. • Column 4. Prices of Bed Winter Wheat, at different data, in the Produce Exchange. Column 5. 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(M • ; • ; ‘. \ \ \ \ ' . . . esq . • co C^(N oooooooooooooooooooooooooo oooooooooooooooooooooooooo OOOOOOOOOO 0^0 O O 0^0 oooooooooo cq' o' o'' o' CO CO CO (m"' (M*' o' -^T o'' o" C^f O*' O*' o'' '^tn' Co'' (M*' o'" Tin' o'" o'' t^'xHxtHCO^'^OOJt'-CO'-HCOOOiO> 0 (MiOiO'— lOl^COO'^COi:^ OOOOl— i(M'^OC^— ICOO-— iCOOCOO(M(MCq(M-— ixh'GO-— lOCO r— ii — li— 1i — li — If— — li— li— (I— Ir— I t— It— ir— (i — Ir— r— Ir-Hr— I OOOOOOOOOOOOOOOOOOOOOOOOOO oooooooooooooooooooooooooo , — , V , — , , — ^ 1 r — 1 ( — 1 ( — S ( — 1 < — < 1 ( — 1 I — > I — 1 ( — 1 ( — 1 , — ) I — ■, I — ^ ^ I — 1 I — 1 I — 1 DOOOOOOOOOOOOOOOOOOOO DOOOOOOOO 0^0 O O 0^0 ooooooooooo o" r-T r-T o' o'' lo' c^Ti^ jt>r r-T i>r i'-T o" ^'' o' o' C(^ coo *0 1-^000 I'- OOOCOxH^CQ^COOOOOi—iiOOCOi—iCO COO(uo cflccsGcaGCCGcaacciccicidcccccJ ^333SS3333333333S3C3=!3i3=J333:3 EXHIBIT K— (Continued). 78 (n . Ol >. c « 'O'O in « IM d ^ 0 *J 4 cT ; • • • ; CM I— I • . . • r— I • T— ( iCf-JD edH> • • CO • • ■ . . . • »o ■ • • CM • ;;;;;;;;• c-i • 1 ■ • • CM • C 4 • • • »-H • • • ■ 1— t *• r-H • lO CM i-+y> O O CJ Cl l-fH r-f:i • 0 • CO • CM • Cl 8 o C't rt u CJ Z4 cj=f r/300 ccH* cc|» Ml'yj I-*® r-H( eoM • >0 CO • • • • CO CO )- • CO • • • CM CM CM • • • • • CM Cl CM . CM • • •io'”"”' • . . . . rH r-H ,-H :^ : : o CM CM -^• 3 j CC: cn, CO CM (M CM Ol 03 C 5 . t- J, 0 ) *J O m i, 0 ) ^ 1 c 03 OJ "a 03 ^ « nr' z ^ p«^.£ = o o o o o o o C' o c: o cr o c; O' o o O O O’ O O O O O O O O O O 'O o o o O O' 000 O' 00000000000 o o o o c o o O' o o o o o o 0000000 a^iM^-rriiMOCMCO CQOOiMOOr-Hl^-^ ' ' I /-N-\ GOiM-t'iM-t'OOOOO^ — CtO-'O OOOOOCOO'ir+’COr-iCJO— lO'C^ OdCOr-COlOOr-^OCTiCOO.— Ir-Il-O) 00000000000000000000 000000000 O' OOOOOOOOOO S 3 0000'_JI-_)C_?-h' oT (tT o' 00' o' irf co 'O CD lO lO lO O rB I CO O W CO O 'T O. O OC O CO . '^r-lr-Hr-ICOCM^COr-ICMr-lr-Hr-ICMCICOCMr-nCMC^l 000^ co" 1-1 irP i-P t- ^ -r CO O CO CO >-H Cl O I- CO o »0 O CO (O o >— I Cl CO »0 O 00 (O o r-ir-ir-ir-(CMCMCMCMCMCMClCMCMCO 79 Ut) o • »o O • CO • • • CO • • • • HI • • • O HI • r— < • • • • « r— 1 • rH • I— 1 1— 1 CO CYO rJfO >o CO Hi’ Hi’ Hu CO • T-H • • 1'^ -H Hi • HI HI i-JjO icjoo r+t( «>(» y-lfXI CCH' H® »c|cO -*^1 lO >0 to O GO O r-l O CO -rt 0 >0 to to CO CO (Mcqoqrf of o" cocqcqi^OHioqoooor-HiocoooT-^ooi'OOi— i-^coot^Hi (OJi— iCOi-HOt^Wr— wtOHiiOr-HCSi-OOOqi-l-Hir-iOOCOHiHi'— 'CO^ r-T rn" I-T i-T n-"' r-T r-f (of cf i-T r-T (Of Cq of r-f of of CO*' of of of r- " of of t-T of of ooooooooooooooooooooooooooo ooooooooooooooooooooooooooo 0^0^ 0^0^ 0^0 O O 0^0 OOOOOOOOOOOOOO 0^0 o^ Hi' o' o' l-f oo" CO CO Hi" o" Hi" Hi" o" Hi" Hi" o" icf CO o" Co" o" o" o" o" CO o" t'f' OCS'OOi-HOOOHiI'-cMHiiOOl'-C^COCOOCqCOiOOCt^OCOCO T— lCOCS'^PHiCOOOl^OOrH I,— lr-lT-l(MC^CiqCq(MCqCqCqCOCO a!» 3 t»!/ 5 W(y 3 (wa:c»c/ 3 a)!/j(Zja 3 t/ 3 a 3 « 3 t/j(/ 3 aj!Z)« 3 a» O - CD • • r— * • CD X • • lO • O ■ »o • lO • »C c o r— 1 ! ^ • 1—- • r-l ■ .— 1 o r-h «Hi r-l'S orH< i-fx> tJ !'• • -rjl • X • X • Oj • X '?ri on I— I m 'n VI ^ 6ZL9^ ^ =^5^2 r: o — ' M *^P-I oooooooooooo •C'OOOOOOOOOOO ~oooooooooooo 2 S ~r S -j7 o' CO' of lo" cc zS zS of of ^ S zS -*r zS of of cf of o'" p:^ 01 O r? 01 O O r-^ IC O CO O CO -H O ro O IX) ' >0 r— O -H 1' oooooooooo oooooooooo oooooooooo O CO lO X CO lO CO to ^ X o of r-T 01 .-T of of of .-T of of of X^r-lO-f'X-HCiOO — of of r-T r-" 05 of 05' of of O O O O O 0‘ ' o o o o o o ^ 0^0^ 0^0^ 0^0^ O X*' 05*' I'f' o' I'f' cf CO lO' I'-f o' o'' o'' Co'' X t'f 1-0 af CO CO -cjf I -f co' pp ^ lO O X O CO lO X 01 X i— O to *0 O 05 O I-- X o OO O'OOOOOOO'OOOOOO oooooo oooooooooo OOOOOOOOOOOOOOOO 05 CO X 05 1-0 05 CO CO to 05 —I X t-O 05 05 05 05 X *0 <0 X O 05 X lO CD I-' ;7:o'-i2-oor^oooo-oooooooooooooo xS£~c£S5£££S5££3SSSSS2SE 000000000000-00000. !Oa,!OODuiO XiDOJaiaJOlDDaiD DDDDDDO^DDDDDD X rf] X X/ xj xj X X X u} H2 zn cn x rnrnz'fiznznmmzn 81 >> ! I ! I 3 , . . . S *-5 ® • • • I-H ^ .... CD 5 • • • • 1 — I c • • • • O) • • • - C u ec |30 0 . . . . C 5 1 . ; .O 5 • * • ’— o . . • • 1 ^; s : • : -g ^ • • • • lO CJ . . . . o • • cclxi H's ecHi 1 l hHh f+i' • CO I-O * CO ■ * • • CO • 00 • • • O • • • • o • • 00 • • *0 lO • *-0 • ^ • ii^iH . • • >o • Ttl • • 1—1 1— 1 r— 1 : ^ : ♦ • • »o o * . . . o • OD • • • Cl * • • • CO ■ • C 5 • • 'stH • • . . . . ^ • CO • • .' .' ! ! .' • * • • 1—1 I-H • • . T— t • ! ; ! ! ! • • r-H O O O O CTO oooooooooooooooooooo oooooooooooooooooooooooooo oooooooooooooooooooooooooo cc lo" ^ o' o' co' c-f o'' od' o*' o’' D-f (m'' CO CO (dT o"' go' o'' o' o' o'' go' >OGO>OGO'^C^COOCOGOOOOOCO»0 0(Mt'-iO(M1^0^--HOO C1000l-^r-^i-^-T^iO'^(MC^-^COGOi'-OtCGOTticOCOiOOGOGO'^ Cl (M Dl (M C 1 C 1 (MC^COC 1 --hi— I,— I i— Ir-H OOOOOOOOOO'OOOOO ooooooooooooooo OOOOOOOOOOOO'OOO oooooooooo oooooooooo oooooooooo O O CO O G^l O r-H o O O 1- l'~ I- Cl Cl I '- GO 1- GO CO Cl CD O I- Cl CO (O >0 — ' I'- GO CO Cl t'- Cl O CO O O '^+1 O O O O GD O 1^ Cl — r-^r-Hr-irO-'r-HOGlCO^ClCl'— Cl(Mr-(Cl^^i-^r-,-lOOr-l T-JCO-^iOOl^-COO — dCO'^iOt^COOOr-iCl^i-OOt^OOO^ r-Hr-lr-Hr-lT-l.-(r-l — ,-ICICICICIddddCICO a) 0 (l>!DG)a)(DOajDODD OOO-OOOO-QOOO-QO-QOOOOOO-QOOOOO oooooooooooooooooooooooooo ooooooooooooo oooooooooo ooo o o o o o o o ooooooooooo EXHIBIT K~{Contimied). '* * 'd 82 CO e©- January. CM ecNi • • • OX • Ht)1 • • ox • • • r— 1 • -471 CO ■ • CO • rH o:^» • OX • » • Ut r+H \ H^' © O • O • o • • • • CO J2 OX • • • CO •f:8Sl‘e?I!iHv UIO.IJ ^Xi0ll^ No. 3 U. W. i>to CO • • ;;€©■; ccHi * • CO • • ' » • * • • rH -471 • • O . • Tti • l-H iH?< • O • ^ - • rH • -45> • • CO - CO tc of: .c • • GO • 03 30 • • CO • dJ— 1 aa /O >> cx 6 • • €0- • (M W U « a- 2 o i2-3 2» . § ®> o^ oooooooooooooooooooooooo •00000000000000000 0 - 00000 '« o^o___o__o^o^o^o^o^o^o o^o^o^o^o_^o^o^o^o_^o o o o o d V' 'M*' cT o’ o' •^''o' of o' o" '^'' o" •?J^' oT o'' '^'' o' o’' oo' ca >0 O O CO O »0 CO ^ (M O 'S^ CO lO CO O >0 >0 OI CO '^ri !M O -M H--~, I — -- --_ _-- . -_ ___ ___ r o'' of of of ^o^ of of 0< O to OJ CO •— ' >0 lO O lO O -Tf of of co’' of o f o^" of of oi oi oi . ^ o a) 5^2 o o o o o o o o • O O' o o o o o o V. s ro o 'O CO rc'^'O^'^OlCOGOO ^ CO CO CO OI O) Cr; 5^ 1^//, ^ ^ ^ 1/^, Iz; ^ 1^. :z; 5zi 83 ocH< ecH' • 0 • . 0 • • • • • CO . . . . . • lO • • • tO •••••••■ • • • Tt 1 • • • . I— 1 • r-H • • • . . • i r-^ • i-H ; ccM< • i>* • • • • »o • • • CO • 10 • • • • • • • • TjH • • 1 — H • . • • • 1 — 1 • • • r-H • 1 -H oooooooooooooooooooooooo oooooooooooooooooooooooo O O^O^O 0_ 0^0^ 0^0^ 0^0^ 0^0^ 0^0^ 0^0 o^o^o^o o o o o' o' T^r o' ( m" '^f^'co' (m'" cT o'' CO o*' o"' (m’' o"' CO o’' (m"' o’' cd' o' COCOOO^OOOOr-iCSOOOCOr— I'^CIOCOWO-^OIOOOO (M O C^_^OO^CO (M^O^iO CO O O C-1 r-< O 'rfi r-i rH (m" -OOOl^OC. t-H(MCOO)01:^OOOOC^CO^iOOOOi— IIMCO'^COOO^ r-l,— Ir-li-Hr-Hr-lr- ICqCqCSC^C^a)oiDa)iiia)(DOOoooaioa)^icot-ooc50>— tco^»ocor^ooOr-t (_vi I,— Ir-lr-H,— (r-li-Hr-Hi— I 0 q 0 ^ 0 ^ 010 ^ 0 ac> |>^ •>> K*^ t>~> ^ ^ ^ 5^ Li^ C-M Xiri rtc 3 c 3 c^c^c^c^c 3 o 3 c 3 cCc^cCc^c^c^C^o 3 c^c^c 3 c^a 3 rtco 000003:300a3000000000003=!0 coocaOdsociocciacaGcooccooG cflc 3 cCcCc 3 c 3 cCcCc^o 3 cCa 3 c^rtcCcCcCo 3 rtc 3 c^a 3 c^c^co 85 June 1 45 • • ' «|iO w • CO • 0 r— ( • • . (M • • . • -cf • • • • 1-0 • • 10 • CO • • Tti • ‘ • • I— 1 ■ • • • 1— 1 ; ^ • —1 • • r-H ^ : i>bo .0 • - 3 "^ ; . • 00 • • • • • • • cq ci • 10 -f ecM • • 0 ocqooorocqo cqoo.— looococ^CiOfOr-HOOr-i^focqooooooo cr cT I—" j-T 00" i>^ o" 0" i-^coowcocqcocooooi— ii-^to'^cooi— 11— icocqr-t^ cq i-Hr-Hr-i ,_icqcqcqcor-Hr-irH,-ir-Hcqcqr-icq >— icqc^-^cot^ccoo.— fcortHiooi^coorHcq'^kOt^oo i-(r-(i-ir-(,-ir-i,-i,-icqcqcqcqcqcqcq i,'a,'iDOa; EXHIBIT A.— (Continued). 86 ® >> c ® 'O'O 0) (M »o (M ccH* CO • CO • CO • • CO • • • • • I-H • • : : • ••••••••• : :^ : : : H CO o a, jc— • r— I i — 1 i-H O'lCO-fOi-COOOi— •CO'^^iOOt^OOOi— lO^CO-fiOl^COOO— ' r-lr-lr-lr-lr-HrHr-lr-HOICSCSOlOIOIOlOaOICOOO _a _c3 _C3 _C3 _eJ OOCJOOOUUO rtrt!a3c9rtoflrtc3c3c. xhl ■'T* ooooooooooooooooo OOOOOOOOOOOO’OOOOO ooooooooooooooooo o'' '^h' 00" o'" o 6 ' oT o'' o'" o'" o' oT oo*' cirT o'' od' lace to ])ut it ; therefore the trade was cut off for a time, and was ov(,*rbuj’d(med when these gamblers choose to bring it forwards 91 Q. Have you that notice with you ? A. There is a notice in the paper reporting ‘‘ corners’’ in wheat; 20th January, 1880. Q. Do these speculations afiect the markets of the whole country ? A. They do. Q. How do they afiect our canal boat system ? A. Well, they make it irregular ; when these people buy wheat and fill the warehouses, the boats and the railroads Iiave nograin to carry. It is just the same with the shipping ; in 1879 it was reported here in the papers and otherwise, that there were some 872 ships of all grades and descriptions idle in the docks of New York, which came here to carry away our products, which were controlled by a com- bination, and they held the wheat then at from five to fifteen cents higher than what foreign countries would pay for it, even it' the vessels were willing to take it at a small* rate of freight, and they did ofier to take it for less than one cent a bushel, and take it for ballast ; but this combination would not let it go, and they held the wheat into March and later, and sold it then for twenty-five cents a bushel less than it could have been sold for in December and Janu- ary, and that difiFerence was aloss in gold to this country ; besides the loss and disappointment to the shipping. Q. Please explain the term “ options? ” A. A man may say to me, Mr. Partridge I will give you $100 if you will give me the option to draw upon ^mu for so much wheat one, two or three months hence, at a price specified. Q. Is there any limit to the price ? A. We make a price and he says: I will give you $100 to have the privilege of taking 10,000 bushels of wheat on the first of May or the first of June ; ” generally from two to three months ; if wheat goes up so that he can make something he takes it ; if not, he loses his $100 ; it is a bet but there is a limit to it. Examined by Senator Browning : Q. You limit the price ? A. I risk that $100 on the wheat. These men turn up and down prices and scoop the difference into their pockets. You will find wrecks of gambling in our products all over our country, thousands of men who have been ruined by this gambling in wheat. Q. Will yon please describe the term ‘‘ calls ? ” A. It is about the same thing ; “ I’ll give you so much to allow 92 ine to call upon yon for so much wheat in the future, at such a price ; ’’ aud I put down $100 for the privilege of that “ call.” Q. Then the terms puts ” and “ calls ” arc used synonymously ? A. Yes, nearl}^ ; in the one case — a put ” I give you $100 to allow me io put so much wheat at such a price ; a call ” is where a man allows me to call upon him for so much wheat at a future time at such a price. Examined by Senator Boyd : Q. A question has been suggested to me as to the effect of ‘‘ cor- ners ” in producing exportation ; is not the tendency of that to make prices cheaper than thej^ otherwise would be \ A. Why no ; corners make things so high that foreigners can’t afford to take our products ; they can’t get over that ; we don’t eat our products in any thing like the quantity we raise ; we raise products for ourselves, and to furnish foreign countries ; when it is raised above a certain price other countries can’t take it, which is not only a loss to them but to us. Q. Has it not a tendency to make food cheaper? A. Ko ; higher all the time. A boat load of wheat is sold and resold, and passed through one hundred persons’ hands, brokerage having to be paid upon each sale, and the purchaser expects to make something, all of which is added to the price of the wheat for the consumer to pay. One settlement or one delivery cancels and settles all of the sales ; and not one kernel of the wheat is delivered to the ninety- nine gamblers. Examined by Senator Browning : Q. Have you a form of a contract with you ? A. Yes ; here are some provided and used by the Hew York Pro- duce Exchange under its rules : 93 PORK. FIRST CALL. SECOND CALL. Sales. Bid. Asked. Bid. Asked. LARD. Bid. ! Asked. j Bid. Asked. Sales. 1 ' WFIEAT CALLS — First Call. Grade and Delivery. Bid. Asked. Bid. Asked. * i 94 CORN CALLS— Second Call. Delivery. Bid. Asked. Bid. Asked. Sales. Str Cash No. 2 Str No. 2 Str . . .... No. 2 Str No. 2 Str No. 2 Str No. 2 Str No. 2 • Q. Head the columns there, if you please? A. The headings are pork ” first column, bid asked ; ” second column, “bid asked.” Q. This being understood that they have two calls a day ? A. Yes; on the Produce Exchange, New York. Q. The same with wheat A. Yes. Q. Grain ? A. Yes; that is comparatively recent, within four years, prob- ablv less ; this business was not done on the Produce Exchange four or five years ago, it was inaugurated in 1878; now you see the enormous proportions it has grown into. Examined by Senator Boyd : Q. You are of the settled opinion that these speculations are con- trary to sound public ])olicy ? A. Not merely believe it, but I know it; they are not only con- trary to })ublic ])olicy but are hurtful to the morals of our people, and the interests of our people in every way. Q- '^vhat means could our market be regulated naturally? A. By the natural laws of trade which have been in operation sirjcte the time of Moses ; tin? laws of su])])lv and demand, and that everybody knows or could know, and innke tlieir own judgments upon the basis of all 1rad(;, su])])ly and demand. • 95 Q. Are the markets affected in any degree by the products in other countries ? A. Yes; in 1879 when these men expected to get SI. 65, for wlieat they broke and caused a panic here, because in the European markets the people there sought elsewhere for supplies, and drew wheat from nooks and corners nobody ever heard of before, and they got their supply. Q. From .what countries do tliey usually get such supplies? A. Russia, Hungary, Egypt, Australia, Chili, Hew Zealand and British India. The impulse given to the production of wheat in British India, Eastern Turkey and Persia by this artiticial condition of our market, proves to be of far greater importance than this super^cial clique had any conception of ; on the Euphrates and Tygris rivers, also on the Persian Gulf, this artificial stimulant given to the production of wheat resulted in an increased production in many localities of eight to ten fold, as compared with the production of 1879, as indicated by a comparison of the receipts of wheat at Kurrachee (the mouth of the Persian Gulf), in 1879, with those of 1881, and the same ratio of increased production is noticeable in the grain producing sections of British India; and the operations of these cliques have thus resulted in building up a formidable coni petition of wheat that may ultimately result in a great growers misfortune; indeed, it would be difficult to estimate the prospective injury. During the past seasons, 1880-81, the exports from Bombay, Calcutta, etc., exceed twenty-eight million bushels through the Suez canal, previously they did not average seven million bushels per year. Q. What time was that ? A. In 1879 the stimulant was given by the gambling scheme. Q. Were any importations made to our country from these countries ? A. Ho ; not any. Q. How long has this system of corners ” existed ? A. The first I knew of was in 1879 ; I think, that one was the first. Q. Was that the first of the options ? A. Probably not ; but they had not carried it to such an extent before that as to make corners ; ” not that I know of. Q. How long has the Produce Exchange been in operation ? A. I can’t tell ; Mr. Reed could. Mr. Reed — Fifty years. 9G Q. What is your opinion with reference to ])roper legislation to remedy this state of things? A. By all means ; I would make it a penalty of a fine and impris- onment to thus deal in the products our country illegitimately. Q. Are you of opinion, that legislation on this subject is practi. cal)le ? A. lam. Q. Would legislation have a tendency to affect commercial in- terests injuriously ? A. j^o ; beneficially ; this is not a commercial interest ; it is a chance bet ; a gambling deal which has a tendency to make men lazy,” “useless,” “ vicious,” “ unprincipled ” loafers, a burden upon society and destroyers of domestic happiness. Examined by Senator Browning : Q. Have you formed an opinion how it may be prevented ? A. Perhaps not a sound one ; I have views upon^it ; I think we should have laws making it punishable with fine and imprisonment to deal in products of a country, on which people depend for their living, so as to increase their cost by “ options ” and pretensions, useless, and illegitimate dealing ; it is not handling property, it is gambling in it ; I don’t see how it can continue in this way ; there ought to be the strongest law to prevent it. Q. How would you prepare a law to prevent my agreeing to de- liver to you in a month 50,000 bushels of wheat by a contract? A. If you had a farm and was raising wheat and agreed to de- liver it to me, that would be legitimate ; if you were in the city of New York and had no business but to stand round on ‘‘change,” pretentiously buying and selling, and making paper contracts for receiving and delivering products “one,” “two” or three months future, and never receiving nor ever delivering, but settling all contracts by paying or “ receiving” the difference in price of the article at the termination of the contract. I should be equally guilty with you to deal with you. There should be a law to prevent such trading ; a law that a trade should not be settled by paying margins, Q. Suppose I made an agreement with a producer to take all the grain he could deliver to me and with prospect of the possession of the grain, I agre(*d to deliver by contract ? A. Tliat is to agi’ce t(» deliver to you wliat he can. Is not that tlie theory upon which these sales are made? 97 A. No ; both the seller and the buyer understand that the property is not to change hands, but margins are to be paid in settlement. Q. Now the injurious effect y)roduced on the market by specula, tions in grain, pork and lard has a tendency to affect the prices of various other commodities, has it not ? A. It affects oats, tobacco, etc., and other products somewhat in the same way. Q. Fresh meat — has it a tendentw to affect that in any way ? A. Well, I don’ t know that corners ” in pork affected fresh meat ; I don’t know whether it affected trade in cattle. Q. Would it not regulate it in some way, so as to have a tendency to enhance the price of other articles ? A. I don’t think it would tea and coffee ; I don’t know the effect on fresh meat ; but sales that affect wheat in this way would affect all grains, beans even, and probably meats ; I think they would affect them in some way. While there was a ‘‘corner” in pork, it ran up from to $16 a barrel, and I think beefsteak was affected probably to the extent of one cent a pound. Q. What effect is produced by corners upon the transportation ; does it not have a tendency to affect the prices of transporting other commodities so as to enhance their price ? A. When combinations to “ corner ” have bought wheat, and filled the storage capacity, railroads have given notice to agents in the west not to take wheat, and when the corners break and sell for export, wheat moves freely, and transportation is overburdened and charge more freights on all commodities. Examined by Senator Boyd : ^ Q. Could you suggest the form ot any law which would tend to remedy these evils ? A. I don’t know that I should be ready at this time ; but I will do so, if you will give me another opportunity; I would have some legal consultation about that. Q. You will do so at some other time? A. Yes ; I will. ^ Examined by Senator Browning : Q. Take this paper and read the heading to it ? A. “ To the Honorable Senate and House of Bepresentatives of tlie United States in Congress assembled ?” Q. What is it supposed to be ? 13 98 A. It is supposed to be a petition to Congress to pass a law' to prevent these things which liave been spoken of. Q. Does it set forth all the evils ? A. Not all ; I have circulated this petition and I have visited many persons who have sent me dour and I have taken it with me ; there is not a miller in the country that, I have seen hut who w'as glad to sign it, nor a farmer that was not glad to sign it ; I have about a thousand or more substantial meii throughout our country who have signed this petition. By Senator Boyd : Q. Do you know the contents of this document to he correct ?, A. I believe it to he so. Senator Browning — How nearly correct is it to-day? A. 1 think the statements are correct — I ask your attention to the wheat crop in the United States for three years, 1879, 1880, 1881, as per returns of the United States Agricultural Department : Aggregate products. Bush. Acreage. Total, 1879 448, 750, 630 495, 549, 868 380, 280, 090 32, 545, 950 37, 986, 717 37, 709, 020 Total, 1880 Total, 1881 1, 324, 586, 588 108, 241, 687 Senator Boyd — This was the wheat crop of the United States? A. Yes; during these years, as per report of the Agricultural Bureau at Washington. Q. Will you offer this in evidence? A. Yes. INIQUITIES OF COMMEKCE, EXHIBIT SPECULATORS IN HUMAN SUFFERING. It is customary in the month of September for experts to make up from the most reliable dg,ta the surplus and deficiency of wheat in the several countries, and the result in September, 1879, was as follows : Russia Austro- 1 lungary. Chile Surplus. 35, 000, 000 12, 000, 000 4, 000, 000 99 Canada and Manitoba 13, 000, 000 British India 8, 000, 000 Egypt 2, 000, 000 Australia 8, 000, 000 United States 185,000,000 Deficiencies. 2G7, 000, 000 Switzerland, Spain and Portugal 8,000,000 Italy 12, 000,000 Germany, Holland and Belgium 18, 000, 000 England 137, 000, 000 France 55, 000, 000 230, 000, 000 'Surplus, 37, 000, 000 This showing drew together moneyed men, some of whom had never dealt in wheat or flour, to form a syndicate for the purpose of securing to themselves a profit of fifty cents per bushel on our im- mence wheat crop. To accomplish this purpose, they sent out agents into all the grain-growing States to buy wheat, and they continued this business until their purchases had raised the price of wheat ^ sixty-five cents per bushel, and exhausted the storage capacity in the interior and Atlantic markets, and had pressed into this service numerous lake boats in the AVest, and hundreds of canal boats in New York and other Atlantic markets. The railroads were com- pelled to order their agents west not to accept grain consigned for storage, as there was no room for further deposits — thus a complete blockade of the grain crop of the United States was formed early in January, 1880. It was estimated then that 120,000,000 bushels of the crop of wheat remained in the farmers’ hands, and the syndicate owned and controlled 60,000,000 bushels, which they held during January and February twelve cents per bushel above the price at which the de- ficient foreign countries were obtaining their supplies from Russia, Hungary, Australia and elsewhere, which materially diminished ex- ports. The syndicate found they could not put down the price and sell freely for export without carrying down prices of wheat in all the markets of the world. Hence they arbitrarily held their wheat at high prices, in the faith that the surplus in other countries would be used up, and the necessities of the people would aid their purpose to extort their tribute of fifty cents per bushel. In this dilemma the syndicate commenced coining money by de- mand ing high prices, and reporting fictitious sales of wheat among themselves, or otherwise, for export, future, long, short, &c., at fabulous figures, for the purpose of inveigling novices into buying or selling wFeat, whereupon the old sinners at the crank turned 100 . • < prices in the opposite direction, creating what are called corners,’^ and thus swindling the unwary out of their money. They abrogated the laws of supply and demand, and disregarded’ the relative prices of wheat in the different States and in all the iriarkets of the world. For example, they created a ‘-corner” in Chicago, whereupon this gamlding ring arbitrarily put the price of wheat in that city twelve cents per bushel higher relatively than in New York, and five cents per bushel higher than in Milwaukee, at which place legitimate trade prices are the same as at Chicago, showing that the absolute control of prices was possessed and exercised by the syndicate to swindle the victims of their duplicity and to break up legitimate trade. The millers throughout the country have been obliged to pay gambler’s prices for wheat to grind. They have consigned their hour to the interior and Atlantic markets, and drawn advances on the same, with instructions generally to have the hour stored urdess the cost price of it could be obtained. The quantity so shipped and stored exceeded the requirements of the people by 2,000,000 barrels, which has been held at $2.00 per barrel above its real value, which $2.00 our people are obliged to pay for permitting gambling in wheat. This hour cannot be sold to foreign countries in need of it without a loss of $2.00 per barrel, which has already ruined many millers, and has seriously injured all of them ; and it is now — the 1st of A])ril, *18S0 — estimated that three-fourths of the mills have remained idle two months, and must so remain until this nefarious syndicate is de- prived of its power for mischief. The same estimate of the surplus and dehciencies of wheat in the several countries, in September last — which inspired our rich men to combine for the purpose of preventing people, at home and abroad, from getting bread without paying tribute to them — naturally in- spired honest and generous men to bring their ships to our shores to take away our surplus products to the countries which need them, and the result was 500 ships lay at the New York docks for months, the owners pleading for wheat even at ruinously low freights — two and three pence per bushel, and some even as ballast ; but the greedy gamblers, steeled against every plea, all human sympathy and hon- orable dealing, sent the ships away empty — the owners declaring they would not bring sliips to our markets so long as unprincipled gamblers are permitted to arbitrarily control the products of the country. It has been expected that the opening of the lakes and canals, with the usual reduction in prices of freights, would enable farmers and merchants, not connected with the ring, to get their products to the Atlantic and foreign markets, and realize cost ; but it is made known that the Trunk lines of railroads have united with the ring to keep u]) freights and save the gandders. To effect this they have chartered and otherwise got control of the steamboats and other grain carrying vessels on the lakes. The New York Central and Erie have lines to Buffalo, and the I Ynnsylvania, to Erie; the Baltimore and Ohio to Sandusky, and the 101 Wabash from Toledo to Bufhilo. And now, having obtained con- trol of lake, canal and rail freights, of the products of our country, we may expect they will exercise it in their combined interest, irre- spective of either the people’s needs or rights. The end of this nefarious business is foreshadovved by the failure of the ring clique in Grand Ihipids, Michigan, involving the banks in the sum of $d00,000. Thus it is shown that the institutions which the people have chartered — banks and railroads — for the peo- ])le’s benefit, are combined and organized in this most wicked scheme to extort money from all consumers, and to starve the poorer classes of our people. It is estimated tliat the Jim Keene Syndicate, so called, has caused a loss to the United States by not selling wheat to foreign countries before prices declined, and to those whom they have inveigled into dealing with them — the millers, the sliipping interest, legitimate dealers and consumers of Hour in the United States — which amounts to 300,000,000 of dollars. They have abrogated the laws of trade — supply and demand — and the relative prices in different markets, and interdicted commerce between the States and foreign countries ; they have broken up legitimate trade and generally demoralized a most important branch of commerce, thus bringing sorrow and suffering upon our people. I am in favor of enacting laws by Congress, and in all the States, making it a penal offense, punishable by fine and imprisonment, for any ])erson to sell that which they do not possess, or to purchase merchandise which they do not expect to receive and pay for. All contracts which are to be settled by the one paying and the other receiving the difference between the contract price and the value of the article at some future day, and all species of luck or chance trade, dealing or gambling, of whatever description, should be declared illegitimate, and punishable under the law. To the honorable^ the Senate and House of Representatives of the United States^ in Congress Assembled: Your Petitioners beg leave respectfully to call the attention of your Honorable body to a serious and widespread evil, which has long been allowed to exist in the community over which the law- making power of Congress extends — an evil whose ill consequences are felt by all classes in this and other countries. Your Petitioners have especial reference to the accumulation of immense quantities of the cereal products of the soil in the hands of a few capitalists, combining for objects of speculation. It is the custom for these speculators to form pools or syndicates for the purpose of buying and storing grain and flour in such large quantities as to arbitrarily dictate prices and control sales, without regard to the natural laws of trade, which regulate values in the ratio of supply and demand. As only men of large means or extensive credit are capable of en- gaging in these enterprises, they become essentially an array of cap- 102 ital against the industrial classes, wherein the l)anks and moneyed institutions are almost invariably drawn to the support of tlie for-- mer against the latter, and are measurably de])endcnt upon the suc- cess of their schemes. Some of the more prominent evils resulting from these combined operations may be briefly summarized as follows: 1. An unhealthy and feverish state in the produce market, wherein quoted rates furnish no criterion of actual values. 2. The utter paralyzation of one of the leading industries of the land, in the instance of very many of our great flouring mills, in which large amounts of capital are employed. 3. The almost utter suspension, for indefinite periods of cereal ex- ports, which give employment to our shipping, and meet at fair rates the demands of foreign nations more or less dependent upon ours for the necessities of life. 4. The imposition of heavy and unnecessary burdens upon a num- erous class of our citizens, whose immediate necessities compel them to accede to the exorbitant demands of venal and selfish monopolists. To illustrate what has been said, we subjoin the following care- fully prepared estimate of surplus and deficiency in the single article of wheat in some of the leading countries : SUKPLUS. Kussia 35, 000, 000 Austro-Hungary 12,000,000 Chili 4, OOO, 000 Canada and Manitoba 13, 000, 000 British India 8, 000, 000 Egypt 2, 000, 000 Australia 8, 000, 000 United States 185, 000, 000 267, 000, 000" Deficiency. Switzerland, Spain and Portugal Italy Germany, Holland and Belgium England France 8, 000, 000 12, 000, 000 18, 000, 000 137, 000, 000 55, 000, 000 230, 000, 000 Surplus over all 37, 000, 000 It is concluded by a fair estimate that a single one of the so-called syndicates has owned and controlled, since September last, upward of 70,001), 000 bushels of wheat, hoarded and held at prices above the ratesat which foreign markets are able to obtain their supplies from other countries. Hence it is that foreign shipments are arrested, and the gold which 103 would naturally flow into our treasury, is diverted to others. Nor is this all. The ‘M^reak ’’ which is sure to follow, comes too late, and the commodity which was refused at fair rates to other markets, becomes a glut in ours, to the detriment of the producing districts, over which the backsetting wave spreads and stagnates. Your Petitioners, therefore, pray that your Honorable body may see tit to devise some means, not inconsistent with the utmost free- dom of legititnate trade, to effectually put an end to the evils herein complained of. Exainmation continued by Senator Boyd : Q. Have you any other testimony to offer that would be of in- terest to this committee? A. I find that the 'Chicago railroads demanded a freight of from fifty to eighty cents per bushel. The elevators would contain in the aggregate 15,000,000 bushels and frequently they were filled to their utmost capacity. Several railroads refused to receive grain for that market, because they bad no accommodation for it and there was a large expense attending it. There is in storage eight million bushels of wheat, four millions of bushels of corn and 4,250,000 bushels of oats and barley ; ten millions more than last year. There are about a million bushels afioat in the harbor of Chicago. This offers only an exhibition of a grain syndicate of which Mr. Keene was the representative, which by constant purchases had forced the market price up to a point where there would be a large loss in shipping it to Liverpool ; I read from a report Dublished in a Chicago paper, dated January 11, 1880. Q. What is it published in ? A. I take it from a Chicago paper; ‘‘ The Times.” Q. That is what the press said about that state of things at that time ? A. Yes, sir; the press ‘Hlailroad men ” and large dealers. By Senator Browning : ' Q. To what extent has grain exports declined within the last year compared With other years, especially during the last three, four or five months — say in value? I understand that grain exports have been falling off until to day — that they are $5,000,000 less than they have been in other years, so that the balance of trade will be against us, in a short time, if we don’t look out ? A. Here I have the exports per month from 1879 to date' — I think — ♦ lOi JBy Senator Boyd : Q. Be kind enongli to read this ? WiTNiiss — Tlie amounts are put down four times a inontli. Q. In sucli a condition as you liave them there ? A. The exports of wheat from New York, Jkiltimore, Philadel- phia, Boston, Portland, Montreal and San Fi*aneiscu, from Septem- ber 1, 1879, to — Q. On an average what ought to have been the natural ])rice of wheat during that time? A. In December and January it was ])robably five to twenty livo cents higher than it would have been, had it not been tor this outside ti'ade. Q. Per bushel ? A Yes. Q. These fluctuations in prices are not caused by legitimate trans- actions ? A. Not at all ; it is caused by the manipulation of s])eculators at the expense of the consumer. Q. What are the limits between the liighest and the lowest prices? A. I will take tie year 1879 — No. 2 red wheat, August 2, Sl.17 ; October 18, $1.51^; December 25 to 27, $1.60; 29, $1.60J ; 30, $1.60; 31, $1.60^; a difference between $1.17 and $1.60i. Q. Is not an inferior grade of wheat higher in price than first- class wheat, by reason of these “corner” speculations? A. Yes; when a grade of wheat is cornered a superior grade is then offered instead. By Senator Browning : Q. I hand you this paper ; the question I asked was in reference to the decline in grain exports — please to read it — this is the number of busliels of grain exported from this country ; look at the month of April and say what is the total amount exported in April, 1880? A. The total amount for that month, exported, was 11,725,085 bushels. ( J In the month of April, 1881, state the total number of bushels (;xj)orted ? A. 12,515,637. ( >. State the total number in 1882 in the same montli — April ? 105 A. 5,185,633. Q. Can yon account for the decline in the last month compared with the other month ? A. The crop thisye^r was not so large; that may in ])art account for it, and another part of it arises from this combination ; wheat is used at home in a pretty large quantity, and our people Ijave to pay the gamblers expense, which they add to the natural price of wheat ^nd flour. Q. What was grain worth on an average per bushel in April, ISSO — I mean wheat — what was the price of wheat on flrst of April, 1880 ? A. W^ell on the Idth, No. 2, Chicago, was worth $1.26 ; No. 2, red winter, $1.36. Q. What was it worth in April, 1881 ? A. On the 18th, No. 2, Chicago, was worth $1.19 ; red winter, $ 1 , 221 . Q. AVhat was it worth in 1882, the same month ? A. On the lltli April, 1882, red winter was worth $1.43J ; No. 2 spring wheat in Chicago and in Milwaukee, under legitimate trade, is the same price; they can send here for the same freight and the same price, but a corner was made between Chicago and Mil- waukee in 1880, so that on the 21st July, 1880, in Chicago, No. 2 was worth 95|- and in Milwaukee 99| ; they made a corner there of flve or six cents a bushel between Chicago and Milwaukee which was entirely arbitrary ; the prices in there grain markets are the same under ordinary trade ; this will show that at this time they made a corner ” and took out of somebody’s pockets flve or six cents a bushel. By Senator Boyd : Q. Were they illegitimate sales? A. They were illegitimate sales. EXHIBIT “D.” Exports of WHEAT from Neio York, Baltimore, Pliiladelpliia, Bos- ton, Portland, Montreal and San Francisco from September 1, 1879, to August 31, 1881. For week ending from September 1 to 12, 1879 6,845,186 “ “ “ »19. “ 7,034,339 “ “ “ 26, “ 5,241,953 . Total for month of September 19,121,478 14 For week ending October 3, 1879. 5,0G0,03G “ " “ 10, “ 4,(m,247 “ “ “ 17, “ 2,8^19,210 “ “ “ 24, “ 4,r>28.9r>3 “ “ “ 31, “ •. 3,070.257 Total for month of October 21,382,739 For Aveek ending November 7,1879 4,908,574 “ “ • “ 14. “ 3,335,829 “ “ “ 21, “ 2,440,838 “ “ “ 28, “ 1,980,950 Total for month of November 12,720,197 For week ending December 5, 1879 3,024,248 “ “ “ 12, “ 2,238,738 “ “ “ 19, “ 1,797,530 “ “ “ 26, “ 1,099,780 Total for month of December 8,700,302 For week ending January 2, 1880 1,008, ,541 “ “ “ 9, “ 905,724 “ “ “ 16, “ 857,050 “ “ “ 23, “ 1,634,832 “ “ “ 30, “ 1,754,523 Total for month of January 6,820,070' For Aveek ending February 6, 1880 1,826,237 “ “ “ 13, “ 701,939' “ “ “ 20, “ 2,088,26.5' “ “ “ 27, “ 1,133,449 Total for month of February 5,749,896 For Aveek ending March 0, 1880 1,683,468 “ “ “ 12, “ 1,306,550 “ “ “ 19, “ 2,437.700 “ “ “ 26, “ 2,617,002 Total for month of March 8,044,720 For week ending April 2, 1880.^ 1.957.119’ “ “ “ 9, “ 2,288,499 - “ “ 10, “ 2,092,589 “ “ “ 23, “ 3,658,412 “ .30, “ 1,728.466 Total for month of April, 11.725.085 107 For week ending May 7, 1880 1,776,807 ‘‘ “ “ 14, “ 1,897,528 “ “ “ 21, “ 1,999,281 " “ “ 2^ “ 1,909,044 Total for month of May 7,042,720 For week ending June 4, 1880.. 2,355,575 “ “ “ 12, “ 2,902,450 “ “ “ 19, “ 3,309,b84 “ “ “ 25, “ 2,988,993 “ “ “ 30, “ 2,194,896 Total for month of June 13,751,798 For week ending July 9, 1880 3,030,305 “ 16, “ 3,018,684 “ “ “ 23, “ 2,935,110 “ “ “ 30, “ 3,307,471 Total for month ot July 12,291.570 For week ending August 6, 1880 . . 4,608,495 “ “ “ 13, “ 4,595,819 “ “ “ 20, “ 3,194,935 27, “ 4,064,296 31, “ 4,435,353 Total for month of August 20,898,898 For week ending from September 1 to 10, 1880 2,787,309 “ “ “ 17, “ 2,580,314 “ “ “ 24, “ 3,277,722 “ “ “ 31, “ 3,884,624 Total for month of September 12,529,909 For week ending October 8, 1880 3,095,756 - “ “ 15, “ 5.250,419 “ “ “ 22, “ ■ 3,587,090 “ “ “ 29, “ 3,220,182 Total for month of October 15,759,447 For week ending November 5, 1880 2,843,709 “ “ “ 12, “ 2,895,236 “ “ “ 19, “ 3,068,106 “ 26, “ 2,730,752 Total for month of November 11,537,863- 108 For week ending December 3, 1880 2,113,008 “ “ “ 10, “ ' 2,290,020 “ “ 17, “ 2,005,833 “ “ “ 23, “ 1,000,484 “ “ “ 30, “ 3,327,753 Total for month of December 11,038,708 For week ending January 7, 1881 1,790,213 “ “ “ 14, “ 1,007,152 “ “ “ 21, “ 1,542,233 “ “ “ 28, “ 2,345,007 Total for month of January 7,351,505 For week ending February 4, 1881 2,107,470 “ “ “ 11, “ 1,753,443 “ “ “ 18, “ 1,842,449 “ “ ‘‘ 25, “ 1,040,195 Total for month of February 7,403,557 For week ending March 4, 1881 2,023,100 “ “ “ 11, “ 2,792,471 “ 18, “ 2,347,315 “ “ “ 25, “ 2,161,033 X Total for month of March 9,924,885 For week ending April 1, 1881 3,047,275 “ “ 8, “ 2,308,780 “ “ “ 15, “ 2,377,147 “ “ “ 22, “ 2,608,441 “ “ 29, “ 2,173,394 Total for month of April. 12,515,037 For week ending May 6, 1881 2,994,213 “ “ “ 13, “ 2,768,556 “ “ “ 20, “ 1,834,554 “ “ “ 27, “ 1,654,812 Total for month of May 9,252,135 For week ending June 3, 1881 2,957,454 “ “ “ 10, “ 2,627,972 “ " “ 17, “ 2,634,976 “ “ “ 2'l, “ 3,093.529 “ “ 30, “ 2,065,200 Total for month of June 13,379,131 t 109 For week ending July 8, 1881 2,172,978 “ “ “ 15, “ ' 2,010,922 “ “ “ 22, “ 2,151,580 “ “ " 29, “ 1,214,554 Total for month of July 7,550,037 For week ending August 6, 1881 3,510,895- “ “ “ 13, “ 3,049,382 “ “ “ 20, “ 2,980,705 “ “ “ 27, “ 7,717,097 “ “ “ 31, “ 2,090,279 Total for month of August 19,301,018 For week ending September 1 to 10, 1881 4,370,314 “ “ 23, “ 2,371,454 “ “ “ 30, “ 2,800,750 Total for month of September 9,548,518 For week ending October 7, 1881 2,784,499 “ “ ' “ 14, “ 1,241,424 “ “ “ 21, “ 2,014,^54 “ “ ‘‘ 28, “ 1,024,749 Total for month of October 7,005,120 For Aveek ending Novembe. 4, 1881 1,635,929 “ ‘ 11, “ 2,345,418 “ “ “ 18, “ 1,907,982 “ “ “ 25, “ ... 2,099,180 Total for month of November 7,988,515 For week ending December 3, 1881 2,345,989 10, “ ' 1,551,711 “ “ “ 17, “ 2,275,406 24, “ 1,243,389 “ “ “ 31, “ 2,578,321 Total for month of December 9,994,816 For week ending January 6, 1882 1,375,143 “ “ ‘ 13. “ 2,179,900 “ “ 20, “ 1,445,544 - ‘ “ 27, “ 1,259,(318 Total for month of January 6,259,605 110 For week ending February 3, 1882 1,409,544 “ “ 10, “ l,058,f3]G “ “ “ 17, “ 2,228,220 “ “ “ 24, " 1,300,870 Total for month of February 5,007,208 For week ending March 3, 1882 1,500,015 “ “ “ 10, “ 1,571,278 “ “ “ 17, “ 1,023,472 “ “ “ 24, “ 1,203,070 “ “ 31, “ 1,344,208 Total for month of March 7,243,333 For week ending April 0, 1882 985,030 “ 13, “ 1,348,006 “ “ “ 20, “ 1,790,882 “ “ “ 27, “ 1,001,055 Total for month of April 5,185,033 By Senator Browning : Q. Be kind enough to tell ns if “ corners ” are effected by people doing business in this city alone, or whether they are effected by people doing business in Albany and Buffalo? A. 'These combinations extend for corners to different markets, they have to, because Cliicago is a large grain market, larger than this, and it controls other markets by a combination for the purpose and they understand each other ; they communicate by telegraph many times a day. Q. Is there a Produce Grain Exchange in Albany ? A. Not in Albany. Q. At Buffalo? A. Yes. Q. Do you know of any other in the State of New Y^ork? A. There is one in Rochester, and one on the lake below ; that is, in Oswego and other places. (^. Have these [)eoj)le their agents in New York ? A. ddiey have their commission men ; the millers as a general thing do not deal in this illegitimate trade. You stated something in relation to these speculations affect- ing the milling interest injuriously ; in what localities are the mills located which ai c so affected ? Ill A. They are located in Albany, Utica, Syracuse, Bald win ville, Fulton, Oswego, Auburn, Rochester, Lockport, Niagara Falls and Buffalo. By Senator Boyd : Q. Flas this not a tendency to concentrate the capital of the country into the hands of a comparatively few persons ? A. It has at the expense of the many. Q. At the expense of the masses 'i A. Yes; through this illegitimate business ; capitalists combine together without any consideration of the consequences, which is vampirism upon the life of our people. Q. By these illegitimate speculations ? A. Yes; by fastening the expense of their useless lives upon the necessaries of life. Q. Do you think of any thing else ? A. 1 don’t just now, sir. Q. Will you think over a form of law that you would suggest? A. I have consulted lawj^ers here about a law to be proposed to Congress in connection with this petition, but it is not perfected yet ; I have a paper here which contains a staiement of the quantity of wheat in the different markets monthly, from Septem- ber, 1879, to April, 1882, and the markets in New York, Boston, Philadelphia; Chicago, Milwaukee, St. Louis, Indianapolis, Buffalo, Toledo and other places, and I offer that in evidence. EXHIBIT ^^E.” 1 The following table shows the qiuuitity of ivheat at domestic markets for three years, 1879, 1880, 1881. Bushels. Totals January G, 1879 17,864,624 “ February 3, 1879 20,095,509 “ March 3, 1879 21,689,241 “ April 7, 1879. 20,337,370 “ May 5, 1879..... 16,299,250 “ June 6, 1879 16,178,950 “ .July 7, 1879 12,412,123 “ August 4, 1879 14,358,856 “ September 1, 1879 15,539,480 October 6, 1879...*. % 19,710,656 “ November 3, 1879 31,462,923 “ December 1, 1879... 31,117*,732 237,066,714 112 Totals January 5,1880 .31,107,70(7 “ P'ebruary 2, 1880 30,01 2, 1(J4 “ March 1, 1880 28,205, .71)7 “ April 5, 1880 25,518,82.'-^ “ May 3, 1880 23,755,510 “ June 7, 1880 rj,807,2(t() “ July 5, 1880 03,402,007 “ August 2, 1880 1:1,231,304 “ September G, 1880 15,520,410 “ October 4, 1880 15,079.2.3.'' “ November 1, 1880 21,555,079 “ December G, 1880 30,307,047 208,043,083 Totals January 8, 1881 30,200,004 “ Februar}'- 7, 1881 28,734,730- “ March 7, 1881 2.5,1:32,711 ' “ April 4, 1881 23,209,709 “ May 2, 1881 19,427,028 “ .June 0, 1881 17,990,032 “ July 4, 1881 17,044,000 “ xVugust 1, 1881 17,290,775 “ September 5, 1881 18,900,710 “ , October .3, 1881 20,385,741 “ November 7, 1881 20,831,508 “ December 5, 1881 18,839,518 258,072,398 Totals .January 2, 1882 17,081,.338 “ February 0, 1882 17,800,023 “ March .0, 1882 15,239,3:33 “ April 3, 1822 12,008,348 “ April 24, 1882 10,048,393 73,738,035» EXHIBIT “F.” uantiiy of ^ ^Vlicat hi diferent Markets Monthly from September^ 1879 , to Aprils 1882 . 113 Toledo. sip pWsiiliiii iiSilSsUiiii iiP 1— < Buffalo. isSp. mmmmm il2» iiii Toronto. iiSr^ PW iifiHPHtigii iifii sill Indian- apolis. iiii §■2=2 iiiiliililii iiiiliililii giisPsiPsi siii iiai Detroit iiii §fj|i mmuiUMm SpiissPgSs P.P. OgeS ■r. iiii sSjfl sSiiiiiiiiir: iliiliilpgs ^ rH r* p>-2ii»iii§i iiiisislggii of --4 4" iiai ilis Duluth . Sill Il'SS iiiiliililii i§li§|iiii|i issasiisilii l|i| iilu Mil- waukee. iiii S-iii pilsisisiig CO >C m . — 0.' CO rc rr of sii'i ilil it s O Iiii r- i:? siliSliliilg iipppipl !'CCCl0x’cOt-C050 mmmmsm £iii2iiS83gS l.. J._ t-. QO l- CO 4 00 CO CO WMl Sip. CO CO CO CO Philadel- phia. siSS mm mmmmm iiWiiiiigii mmmmm fpmimmiii iiii ilP Baltimore. iSil clS?i5; S|j?iSSi3r^^ r-H of 01 mmnmmmt siPsiiiiiii Ofr-^ rJ-H4ofrH iiiTf ilp New York. iiii iisi ■nc'l'socr.' SslHSIISSijig issiSjiiilii t-' CO oi'-I ri of of of of >f5 sijsi:€®sgliii giillWgiill lOCO'rHrH r-l of 4 4 CO lO i?ii3 Pal ^4coof MONTHS. Ijis jiia 1880. January FehruaVy March April May June July Aurcscnt the said order 117 to the party issuing the same, and receive therefor a specific order, and pay for the grain delivered thereon at the rate of cents per bushel. It is further agreed that each receiver of this order shall continue his or their liability to each other for the fulfilment of the con- tracts referred to, until the above grain is delivered and paid for. Received M. New York, , 158 . accept the within Order from M with all the con- ditions and obligations thereof, on account of contract purchase from , dated ,188 , at cents per bushel, pay- ing dollars, to make the price equal to cents per bushel, the price to be paid to the party issuing the order. Received M. • Q. Where did you obtain these forms ? A. From the New York Produce Exchange at a desk marked ‘‘ margins,” where people go and put up their margins ; at this desk the Produce Exchange attends to keeping the margins of these speculative deals good, and the Exchange is the gambler’s stake- holder — they are sold at two cents a piece. By Senator Browning : Q. Two cents a piece? A. That is what they told me the price was. Q. Is that where they pay the percentage on the sales ? A. Yes. By Senator Boyd : Q. You stated at the last meeting that you would submit a form of an act which you thought would be a proper one ? A. Yes ; here is a form which I desire to submit to you for your consideration: AN ACT to prohibit gambling in the “ Food Products of the United States, or making fictitious sales or purchases thereof by means of what is known and commonly called ‘ Futures,’ ‘Option,’ ‘Puts’ and ‘Calls.’ ” The People of the State of j\ew York, represented in Senate and Assembly^ do enact as follows: Section 1. It shall be unlawful for any person or persons to sell, buy, purchase or deal in any one or more of the food products of the United States, in systems which -ire technically known as “fu- 118 lures,” options,” “puts,” “calls,” gambling, bets of chance, or to buy or sell any privilege or right, or to make any agreement or con- tract for any of said “ food products,” wliicli contract is based on, or involves the value or price of said product at a time future, or determine the price to l)e paid in settlement therefor, or to make any agreement or contract to sell or deliver any of said “ food pro- ducts,” which the seller is, not at the time of such sale in actual possession of, either as owner, assignee or agent, and having the legal right and ability to sell and to deliver the article or ])roduct. But this act shall not be so construed as to prevent farmers and other producers from sending their products to be sold by com- mission men or agents. § 2. Any one or more'persons conspiring to buy any one or more of the “ food products ” of the United States, or which may have been imported into the United States, which product he or she is not putting to its natural use and having no established or regular trade for the said product and who holds the same from use to create what is called a “corner” or “speculation,” shall on conviction, bead- judged guilty of a misdemeanor. § 3. Any agreement or contract made for the sale, purchase and delivery or otherwise of any one or more of the “ food products ” of the United States, or of those imported into the United States, by count, weight, measure, or otherwise, to be delivered at the time of making the contract, or subsequently, shall not be transferable nor valid in the possession or ownership of any other })erson or persons than those named in the contract, excepting in the case of death, in which case the executor or administrator may carry out the contract. § f. All contracts made in violation of the provisions of this act are illegal, and any person who shall violate any of the provisions of this act shall be deemed guilty of a misdemeanor, and upon con- viction thereof shall be punished by a fine of not less than ($250) two hundred and fifty dollars, nor more than ($5000), five thousand dollars, or by imprisonment in the county jail or penitentiary for a period not less than sixty days (60 days), nor more than one year (1 year), or by both such fine and imprisonment, at the discretion of the court. § 5. This act shall take effect immediately. [EXHIBIT M.] Exports of Flour and Wheat from JVew York froni July 3, 1879, to April 21, 1882. For week ending .Inly 1879 Flour. 34,861 45,157 Wheat. 779,855 il U ]0, 1879 659,723 H iC 18, 1879 67,801 1,301,717 it (t 25, 1879 44,805 1,327,593 “ Aug. 1, 187!) 76,695 1,963,289 i ( u 3, 1879 2,960,174 (( ( ( 15, 1879 40,083 1,775,885 119 For week ending Aug. 23, 1879 “ ‘‘ 27, 1879 Flour. 44,394 Wheat 1,860,357 35,302 2,440,352 2,405,872 Sept. 5,1879 77,948 52,581 “ “ 13,1879 •.. 2,247,364 (4 “ 19, 1879 50,643 2,329,279 n “ 20, 1879 Oct. 3, 1879 43,366 2,325, 740 ll 51,067 1,771,127 i i “ 11,1879 40,048 1,991,361 U “ 17, 1879 56,732 2,050,216 1 i “ 24, 1879 “ 31,1879 54,206 1,701,199 1,415,315 .( 56,586 < ( Nov. 7, 1879 1,271,337 1 i “ 14,1879 105,208 1,146,362 u “ 21,1879 115,673 1,012.786 773,598 IC “ 28, 1879 59,810 a Dec. 5, 1879 108,745 1,093,441 i i “ 12, 1879 39,971 55,162 618,602 (4 “ 19,1879..., 800,956 ll ‘‘ 26,1879 42,908 294,227 ll Jan. 2, 1880 49,905 42, 659 656,757 ll “ 9, 1880 434,388 ll “ 16, 1880 41,364 30,119 367,726 1 1 “ 23,1880.. 473,226 ll “ 30, 1880 41,699 698,509 ll Feb. 6,1880 26,531 758,982 1 1 “ 13, 1880 64,592 437,265 ll “ 20, 1880.. 54,125 799,467 4 4 “ 27, 1880 41,931 53,148 374,795 4 4 Mar. 5, 1880 784,200 44 “ 12, 1880 61.269 632,308 44 “ 19, 1880 49,162 964,623 1,533,813 ll “ 25, 1880 72,444 44 April 2, 1880 33,359 947,556 44 “ 9, 1880 1,109,993 4 4 “ 15, 1880 . 40;821 987,363 44 “ 23, 1880 46,985 1,219,613 44 “ 30, 1880 37,534 49,978 1.166,302 44 May 7, 1880 741,137 ll “ 14, 1880 37,238 1,077,728 4 4 “ 21, 1880 53,881 1,559,196 4 4 “ 28, 1880 41,321 1,465,808 ll June 4, 1880 43,266 1,213,609 44 11, 1880 39,489 2,093,270 44 “ 18, 1880 65,010 2,277,575 4 4 “ 25, 1880 47,894 1,632,349 44 “ 30, 1880 29,913 1,520,600 4 4 July 9, 1880 77,397 1,877,429 44 “ 16, 1880 44,354 1,775,603 4 4 “ 23, 1880 55,906 1,044,913 44 “ 30, 1880 1,451,391 1 4 Aug. 6 , 1880 49,170 1,783,100 ll “ 13, 1880 54,039 1,992.155 1 4 “ 20, 1880 57,823 2,143,541 4 4 “ 27, 1880 48,774 1,567,037 44 “ 31, 1880 61,930 1,531,936 44 Sept. 10, 1880 52,101 1,243,257 “ 17, 1880 52,576 1,081, 736 4 4 “ 24, 1880 58,067 1,492,225 ‘‘ Oct. 1, 1880 65,389 1,962,491 « 12U For week ending Oct. 8, 1880 “ “15, 1880 “ “ 22, 1880 “ “ 29, 1880 “ Nov. 5, 1880 “ “ 12, 1880, “ “ 19, 1880 “ “ 2G, 1880 “ Dec. 3, 1880, “ “ 10, 1880, “ 17, 1880 “ “ 23, 1880, “ “ 30, 1880 Jan. 7, 1881 “ 14, 1881 “ 21, 1881 “ 28, 1881 Feb. 4, 1881 “ 11, 1881 “ 18, 1881 “ 25, 1881 Mar. 4, 1881 “ 11, 1881 “ 18, 1881 “ 25, 1881 April 1, 1881 “ 8, 1881 “ 15, 1881 “ 22, 1881 “ 29, 1881 May 4, 1881 “ 13, 1881 “ 20, 1881 “ 27, 1881 June 3, 1881 “ 10, 1881 “ 17, 1881 “ 24, 1881 “ 30, 1881 July. 8, 1881 , “ 15, 1881 “ 22, 1881 “ 29, 1881 Aug. 5, 1881 “ 13, 1881 “ 20, 1881 “ 27, 1881 Sept. 2, 1881 “ 9, 1881 “ 16, 1881 “ 23, 1881 “ 30, 1881 Oct. 7, 1881 “ 14, 1881 “ 21, 1881 “ 28, 1881 Nov. -1, 1881 “ 11 , 1881 18, 1881 Flour. Wheat. 63,328 1,449,088 78,318 2,165,905 56,117 1,678,9.50 58,563 1,368,182 74,881 1,184,003 51,122 780,192 68,131 828,046 46,003 714,640 72,912 056,383 44,970 444,727 116,295 752,239 127,403 831,739 122,970 826,734 94,765 547,701 101,003 716,165 108,014 561,430 119,511 763,235 105,173 8.53,1.52 88,682 651,642 72,870 779,640 75,308 296,474 101,560 968,667 94,163 1,132,063 110,850 972,747 80,398 796,939 102,403 829,207 79,004 982,900 53,572 824,974 105,764 971,517 88,683 1,021,029 67,644 926,991 67,958 776,123 81,622 649,662 62,723 782,580 55,602 1,502,255 71,443 896,571 51,080 1,051,471 65, 105 1,141,479 52,395 731,095 52,099 562,616 59,804 511,824 63,394 640,880 63,497 496,375 71,314 883,527 58,891 1,303,971 62,889 898,108 64,490 1,578,401 80,804 1,237,139 51,532 1,214,014 83,567 1,360,837 50,990 973,304 79,209 1,195,933 54,939 727,398 29,148 429,414 50,861 669,217 49,543 562,133 33,069 6.39,105 44,694 556,647 72,173 769,701_ For week ending Nov. 25, 1881 Flour. 39,370 Wheat. 542,972 n Dec. 3, 1881 64,948 630,091 <( “ 10, 1881 50,070 542,976 i i “ 17, 1881 61,549 407, 703 u “ 24, 1881 42,820 461,762 u “ 30, 1881 70,456 611,033 1 ( Jan. 7, 1882 28,271 203,312 i( “ 13, 1882 58,882 634,280 (( “ 20, 1882 69,424 532^)48 il “ 27,1882 86,127 497,346 < 1 Feb. 3, 1882 59,338 269,964 il “ 10, 1882 71,035 242,134 il “ 17, 1882 65,930 326,248 il “ 24, 1882 65,087 460,565 II Mar. 3, 1882 57,635 494,082 li “ 10, 1882 533,704 il “ 17, 1882% 68,133 483,944 il “ 24, 1882 53,925 443,922 il “ 31, 1882 56,. 73. 486,461 II April G, 1882 “ 14, 1882..’ 36,614 251,839 59,100 362,781 1 1 “ 21, 1882 53,181 407,189 Consider Parrish^ sworn : Examined bj Senator Boyd ; Q. Where do you reside ? A. In Brooklyn. Q. Where do you do business? A. 8 and 10 Water street, New York. Q. What is your business ? A. Produce and commission merchant. Q. How long have you been in that business? A I have been in bnsiness^n my own account and a member of the firm since 1865 ; I have been with the firm since 1852. Q. Are you familiar with the system of making “corners” and dealing in futures ? . A. Yes. Q. Do you know how they are conducted on the Produce Ex- change, and elsewhere, by speculators in this city and in other cities of the Union ? A. Perhaps not so much familiar as some others ; I have only in- formation which I learn in the natural course of business. Q. Will you state to the committee what your opinion is in re- gard to the system of making “ corners ” and dealing in “ futures,” in reference to its effect upon commerce, and its influence on the pub- lic welfare ? 16 122 A. Dealing in “ futures ” and running “ corners ” are not the same thing. The system of dealing infutures has many advantages, and it has only been established in our market a tew years. Some six or eight years ago we found in the trade of New York that un- der the system of dealing in futures, at Baltimore particularly, where it had been established earlier than it was in New York, we got business — •I’egular legitimate business — which we were seeking, on com- mission. In soliciting business, we were asked why we did not have the “grading” system established, which was the lirst step of dealing in futures — that we would get business that we were not having, and they gave us the reason — these par- ties who were buying from the gro’^rs produce and grain — said that under the system of speculation or dealing in futures they could sell against their purchases on any day at any liour in Balti more, but could not sell under our old system of doing business with any certainty on any day in New York. That was, perhaps, nut altogether the reason of thus establishing or starting a system that led to these speculations. It was not practicable to do this busiiiess speculation in grain in our market prior to the establishment of the grading system which grades the grain and bulks it, and then there is no question of the grade for practical dealing ; before that system it was done exclusively by sample ; the establishment of “ grading ” did away with all speculative dealings in the trade b}^ sample, and it came to trading by grades. Dealings in futures ” and in ‘‘ op- tions ” have other advantages, they enable parties who Buy from the growers to sell and “ hedge ” their purchasers, and it is used legiti- mately in various directions for the same purpose. I have known recently a party sell his future in ou^ market and hedge against shipments from California for Europe which was not in a position, available, to sell. These dealings in options foster speculation, and a speculative trade in our market has been steadily increasing, and wdiich has been partly diverted from other markets that were deal- ing in options earlier, such as Chicago, and other markets ; the speculative trade in grain has steadily increased, and those dealings you might, perhaps, term “ speculative ” make up the increase; the legitimate trade in futures increases somewhat also. There has not been in our market many corners. (B You mean in New York? A. In tlieNcw York market there was a corner in wheat two or tliree years ago, and there has been what was claimed, in a measure, a • 1:^3 corner in corn and oats ; a partial corner. It is not easy to say what is, or what is not, a corner in the market at all times. Q. To what extent has the system of speculations increased since the method of making corners and dealing in futures has been in- augurated ? A. Do you refer to our market, or any other ? Q. This market ? * A. Well ; the fact of corners being run was a fact before we were dealing in options in this market at all ; they were in opera- tion in Chicago and Milwaukee earlier than our speculative deal- ings, and buying options in our market ; we have only been dealing in options in New York within a few years. There has been a steady, marked increase in these speculative dealings and dealings in options. Q. Do you consider all this increase of speculations as legitimate or illegitimate ? A. I would like to understand what you would term “legitimate ” and “ illegitimate ” speculations ? Q. Does this speculation arise out of the necessities of ordinary trade ? A. There is a certain amount of tlje trade in future, as I have said before, that we term “ legitimate ” that is not speculative, al- though much of it may be speculative on the one hand and not on the other. The term ‘‘ legitimate dealings” is where there is an intimate connection. between the trade and the property ; where on one side or the other a party has property to sell, or a party buying it wants the property. Where the dealers on both sides did not want the property, but wish to make a profit and close the trade at some future time on both sides, we term that operation a “ specu- lation.” Q. What proportion of these speculations concerning which you have spoken has arisen out of the ordinary laws of supply and demand ? A. Well, it is difficult to dissect the trade and say what portion of it is purely speculative ; it is impossible to do that, although the- whole volume of speculative trade, as compared with business in actual property, would indicate that the larger share was purely speculative. Q. What effect have these purely speculative transactions upon commerce, and what influence have they upon the public 'welfare C A. The influence at one time may be directly opposite to the in- 124 fluence at another time. Speculative trade at one time may promote legitimate bueiiiess and at another time it will restrict it. To illus- trate a little the working of it : Before we had a speculative trade there would come in the market causes having a marked effect upon values, and we would have a difficulty in promoting or making an adjustment of values to meet that change of values: For instance there comes news from abroad which has a natural effect of causing serious decline in values; there was no speculative trade in this market and the effect was paralysing, that information, whilje you were mingling the speculative trade with the legitimate, there are always parties who are short ” and “ long ” in the market, that are read y to trade ; if .the market breaks,” as we term it, the ‘‘ shorts ” come in and cover ; they make activity during the decline, and there are sales all along during the adjustment of prices from the higher to the lower or from the lower to the higher ; that is of great advantage to the legitimate business. If I am carrying on business as a commission merchant I can sell it out before my margin is gone on the decline ; or if I am short ” in getting something sold by some one who does not deliver it, and there comes a rise, I can buy it in. Q. IIow does this system of speculation affect ordinary dealers in breadstuffs and articles of produce ? A. Well, in one way they are able to get at the market very readily to see what it is. In this way it is an advantage to them — to the ordinary dealer. Q. Has it not a tendency to cause unnatural fluctuations in prices in the markets ? A. It has a tendency to cause some fluctuations that otherwise would not occur; but I do not see that that of itself is injurious; to illustrate my idea about that a little — we have now the salable value of the next crop of grain for the year in the market for four or flve months and the growers can take advantage of it ; if there were no speculation in trade there would be very little doing in the distant future, and when there is expected to be a great change in values from the state of the crops in this country the speculative facilities favor the change from one basis to another ; if there were no s})eculation one could not trade much in the future crop until we reached it, and perhaps then there would be a large break, for the next cro]),- which might he a larger one, as is the case mnv; tliat state of tilings would be moi*e annoying 125 to all in the trade than the present ; now there are speculators who trade between the months ; this speculation works well, I think. The difference between June and July wheat is too wide or too narrow ; it will be one thing or the other, so that it makes a bridge between the months. Of course at the present time a speculator has no means of knowing whether the crops will be abundant or other- wise during the coming summer ; there is no certain means of knowing, but of course we have more or less general information. Q. But they assume a great deal of risk in these speculations ? A. Yes; they deal in distant futures, and it is verv’ hazardous; any one familiar with the trade is well aware that a speculator may be ten or fifteen cents a bushel out of the way, either way, in the value of grain after the harvest. Q. Then do you not consider such a system of speculation as a species of gambling ? A. It is entirely similar to speculations in stocks ; it is a very difficult line to draw between speculation and gambling for a sum of money. Q. What is your opinion about that % A. Well, it approaches pretty close on to gambling; some people would perhaps term it ‘^gambling.*’ Q. What would you term it ? A. Well, some deem it almost equivalent to gambling; I should say that — but you can hardly dissect the one from the other — the purely speculative dealing from the one that is not purely specula- tive. If I was a grower and the country promised a large crop and I chose to avail myself of an opportunity to sell in the markets, why I leave you to form an opinion as to whether that would be gambling ” on the part of the grower. Q. Would not that be different from such a trading speculation you have described as going on among the merchants in the city of New York and elsewhere? A. I say they run so intimately into each other that you cannot separate them ; but no doubt a large portion is purely speculative ; probably a very small portion of these distant futures is otherwise than speculative. There is a good deal of trade in speculative mar- kets that is termed “ scalping.” Q. What does that' mean ? A. You wdll make a transaction that you will close when you get a small thing out of it, or whether you do or do not, it is just a temporary transaction,^perhaps done by brokers or local parties on 126 their own account to make a trade and close it during the day or next day. Q. Is it not true that a large amount of tliis speculation is con- ducted by persons who never possess a particle of the grain in • which they speculate ? A. Yes ; there are speculations of that kind — purely speculative. Q. The system among such speculators is to buy and sell what they have not got? A. Yes ; a party sells wheat he has nut got and has the facility of buying at any hour from some one. Q. Then he takes a risk ? A. He takes a risk from it ; he sells what he has not got and ex- pects to buy at a lower rate. Q. Does this system of speculation extend to any other articles of produce besides grain ? A. It extends to other articles. Q. Wdiat are the other articles? A. I hardly know fully ; I hear it said that there are option sales even in eggs. Q. Do you know whether it extends to pork and lard ? A. Yes; and it might to beef, but in the hog market there is quite an extensive speculation. Senator Browning — In petroleum ? A. Yes, in petroleum. Continued by Senator Boyd : Q. Can you state to the committee to what extent the prices of these various products are raised beyond their natural value by these speculations ? A. I should say that the result of these speculations is at times to enhance values and at other times to depress values. Q. By what jjrocess are values enhanced ? A. Well, if under certain information there will come a buying fever or a selling one ; as if produce is likely to fall ; or we have information in regard to the crop which is unfavorable ; or that the s])ring wheat crop which had ])roinised to he very good has turned out to lie unfavorable in consecpience of the weather at harvest time, and that impression had got to be very general throughout the spec- ulative community — that there was going to be an advance in prices — then the speculation would run largely on the buying side; 127 or as we would term it, the crowd are “ bulls ” and the sellers are shy; and we carry values too high, as discovered later. Q. To what extent? A. Well, it was carried by that speculative fever last fall ten or fifteen cents a bushel too high. Q. How much in pork? A. I am not so familiar with the pork trade ; it is difiicult to de- termine ; I speak conservatively. Q. You say it may be carried higher even than that ? A. Yes, it is difficult to determine. Q. Does the producer derive any benefit from this increase of price ? A. Certainly. Q. In what way ? A. The price that the producer obtains for his crop when he sells is governed very intimately by the prices in the central markets and the price of the actual property in the central market is gov- erned very closely by the speculative price. Q. Then who bears all the expenses of this additional price, who pays it to the grower ? A. So far as it falls upon the actual property, it falls upon the consumer at home or abroad, I might say here that we found — if I may give you my opinion in regard fo the speculations of last fall — that the speculators found that we did not govern the world in the values and prices of grain ; and later on we became so much discouraged by the action of foreign merchants in finding out sources of supply in other quarters of the globe that we became as much depressed as we had been inflated by our own situation and we dwindled down and lost all the advance made in this country owing to our crop because of the situation abroad. Q. The natural supply was plentiful ? A. Yes ; and the speculative feeling took an opposite turn by short sales ; ten or fifteen cents below what we have since learned was a fair basis of prices. Q. What effect has this speculation upon the transportation in- terests of the country? A. I should say only a temporary effect. Q. To what extent ? A. Well, I think to a less extent than public rumor attributes to it. 128 Q. Is it your o])inion that evils exist in connection with this sys- tem of illegitimate speculation in grain and othei’ produce? A. Yes, to some extent ; it has its evils and it has its benefits. Q. How in your opinion could tliese evils be i-emedied ? A. I think as far as it is possible to remedy tliem, tlie power lies in the Hoards of Trade. Q. Would you favor legislation in relation to it ? A. I think not. Q. You are familiar with the Board of Ti-ade and its o])eration ? A. No. Q. Are you a member of the Produce Exchange? A. Yes; I might say in explanation of rny statement that I think there is ample power in the Boards of Trade, and their government is a popular government, and an}’ practice in the trade that is deemed by the majority of the Board to be injurious can be restricted by their own rules. Q. To what extent are’ these dealings in futures carried on in the Produce Exchange ? A. I have said before, it is on the increase; it is getting quite important. Q. Becoming a large portion of the means by which they trans- act business ? A. The speculative dealings in futures are several times the ex- tent of dealing in spot property. (T To be delivered on the spot ? A. Yes ; in actual property and actual delivery. Q. Then would legislation, for the purpose of restricting the increase of these speculations, have an injurious effect upon the business relations of the Produce Exchange ? A. It would. Q. In what way ? A. It would restrict the volume of business ; the business is — so far as it is a commission business, is a profitable business. Q. Profitable to the speculator? A. Prufi table to the merchant. (,). Are the commission merchants engaged in this system of dealing in futures'? A. They execute these orders ; all commission merchants take speculative, orders — nearly all ; in fact very often they cannot know their customers. (p 'riiese commission merclnmts act as agents for the speculators ? 129 A. Yes. Q. And from that business derive a considerable share of their profit ? A. A considerable share of their business is of that nature. Q. Do you think that it is in accordance with good public ^ policy that this system of speculation sliould be permitted to continue to increase 'i A. That is a pretty broad (piestion ; I do not know that I could draw any distinction in that respect between speculative bnsiiiess in the produce markets and speculative business in the stock market. It has the same pernicious influence I think. Q. Would you state what those pernicious influences are ? A. Well, they are about the same as the pernicious influences of gambling; with this difference — that speculation in the grain and stock markets is “ respectable, ” gambling is not. Q. That is just the difference ; and the ordinary gambling is for- bidden by law while gambling in grain is not. A. Well, the gambling in grain is so interwoven with legitimate speculation that you might gamble and could not be accused of gambling. Q. Another evil is, I believe, that it enhances the cost of living and the prices of the necessaries of life, docs it not 'i A. At times it does, and at times the opposite ; I think that on the whole it perhaps does not, and there is quite as much temptation to sell fictitious property as there is to buy it, and at times the dispo- sition to sell short ” breaks the market and speedily brings down prices, so that legitimate business moves ; were it not for the “ short ” speculator the legitimate business would be very much checked. Now at times the exporters are very much pleased at the speculative deal- ing in the market ; the large buyer for export is facilitated greatly by speculative dealings; before we dealt in options in New York many large exporters would do their buying in Chicago, because by speculative dealings there, they could buy largely without (by their purchases) influencing tlie market so much, while if there was no speculation and the exporter came in to buy he makes a large change in the price by his own purchases, and the volume of trade is increased largely by the speculative and legitimate business to- gether ; an exporter goes into market and buys options largely with- out influencing the values perceptibly ; then he trades off his options for the actual property. 17 130 By Senator Browning : Q. Yon said tliat syiecnlation liad a temporary effect on transpor- tation, according to public rumor — what do you mean by pulilic rumor ? A. Perhaps, I had better withdraw the remark ; what I meant to say was, tliat it had been stated that the mode of transporting is re- stricted by manipulation, by these corners. Q. Is that tlie fact ? A. You establish a higlier price by manipulation and you will increase the cost of transportation at that point to the seaport and at times you would depress the cost of transportation on the ocean ; if your manipulation was at Chicago you would only increase the transportation for the time being from the interior to Chicago, and you check it for the time being from Chicago to the seaboard but the capacity that any market can hoard grain would amount to eight or sixteen millions of bushels, which as compared with the crop is a mere bagatelle. Q. Does the Prorluce Exchange hold any margins for sales'^ A. There is a system of margins or what are called “ calling mar- gins” in all future transactions regulated by the Exchange and de- positories of the money designated. Q. Who is it taken from? A. They receive it on call from both parties to the transaction. Q. To cover sales ? A. To protect the sales. Q. To what amount ? A. The rule permits a call of ten cents a bushel on wheat; and five cents a bushel on corn and oats. Q. Not a percentage value of so much on the bushel? A. So much a bushel — to be kept good. Q. Is this Exchange sometimes what may bo called a stakeholder in these tiaiusactions ? A. Well, it might bo so termed; the clerk of the Exchange and the oliicei-sof the Exchange have certain duties to perform in regard to these funds for the convenience of the members. (2. Does the committee understand that most of the transactions on the floor of the Exchange are purely in option business and deal- ings in futures ? — That any monew resulting from these transac- tions is deposited with the officers of the Produce Exchange, so that tljcy become a stakeholder at the desk, according to its rules, for botli parties to the transaction, the buyer and the seller ? 131 A. If the committee fully understands tlie system of margins — it is the same system that exists in the stock market ; the parties to this traffic are on the Produce Exchange and in most cases “ carry ” their dealings as we term it; they are not speculators at all ; they are commission houses ; orders come to them from speculators, they will carry on dealings for local speculators ; a local speculator makes a purchase or sells a future and these transactions are carried, as a rule, by the commission houses; they make the ti-ade and permit the houses which carry these rules, and who form a contract, and in whose name it stands, to call both ways for tlie margin ; if the market fluctuates they keep the margin good so as to protect the parties dealing; if the margin is called and is not put up, these rules re- quire that the commission houses shall so deal with the contract, as that they can buy in or sell out the contract. Q. The commission houses, so called, are brokers who have no basis ? A. The commission houses must have good credit and standing in the trade, some of the brokers merely make the trades and give the names of parties they are acting for, as a rule the trades made prove all right and reliable. Q. Is itnot the fact that on the floor of the Produce Exchange there are a number ot men who are option brokers, having no basis upon Avhich to make sales — make sales from day to day, and which is known as “ scalping, ” or who make sales each day or two or three days ? A. There are certain traders, and there are some brokers who will do a little business of the kind you refer to ; they would make sales or purchases, and we And sometimes when they come to us late in the day they will say we have bought that” or “ we have sold that.” At another hour of the day there will be a little differ- ence in the prices, it may be $10, $20, or $30 higher or lower, and they may say “ I would like to have you take the trade that I have made and I will pay you the difference, ” that is reserve what I make. ” Q. That is bad ; that is speculation ? A. Ilot more bad than a longer trade ; this speculation may be closed within five minutes and it might run all day ; there is no certainty in this dealing. Q. Is there nothing paid to the Exchange for that ? A. 1^0 margin put up. Q. What becomes of this money paid to the Exchange ; these stakes that are put up ? 132 A. Whenever a deal is carried or run out, whenever deals are set- tled, and there is no default, these margins go back with interest to- the parties who put them up. If a party fails or makes default in putting up more margin, it is sold out and that margin is held to make good his liability to the party to the contract ; wo regard the margin as merely a security for carrying out the transaction ; and when the transaction is carried out as agreed the money is returned with interest ; these margins draw inteMcst with the depositories. By Senator Boyd : Q. This is a simple mode of providing for any changes in the market between the time of the purchase and the time of delivery ? A. Yes, it is very useful in dealing in futures ; and it is a check to over-speculation. Q. Do all speculators put up these margins? A. They are liable to be called upon ; they must put up a margin if they are called upon, but they are not always called on. If trans- actions are between parties of good standing there is no margin called for until there is a change in the market ; in case of parties of good standing a margin might not be called for until there was a change in the market, although some houses make it a rule to call for a margin ; there is a difference in different houses ; some bouses are very exacting in calling for margins invariably, and other houses will not call for margins from the parties; that is all right because the deal might run against them ; other houses wait until an im- portant change takes place in the market and then call for a mar- gin to protect the dealing. By Senator Browning : Q. Then you can call the Exchange a stakeholder of that kind ? A. No ; I think it is nothing but a very wise regulation ; {\\Q fa~ ture requires all this dealing; there is no distinction between deal- ings that are ])urely speculative and , others ; they loill ham future dealings, and the jiarties making them must be prepared to put up sufficient to cover the risk of the transaation ; they can’t come in and trade and then if there is a loss not pay any thing ; this is evi- dent to all the trade ; we sell flour for the miller, “ to arrive, ” and we have some right to call for a margin from the buyer, and he has the right to call for a margin from us; if the market advances and we do not fullill our contract, there is a security if he loses in the t I'ansaction. 133 Q, How do these speculations affect the millers ? A. At times it is useful to them, and at times it is against them ; 1 don’t think the millers as a class — at times they complain when there is a fictitious value caused by the hoarding of wheat — when there is a corner — that it is against their legitimate ])asin('ss ; in fact there is a few who favor running corners ; still when a corner is run, the disappointments are ten times as numerous as those who have the benefit of it ; of course corners are run up by a syndicate — ])y a small number of parties, and the losers who have sold short” are more numerous. All the members of the Board of Trade have the power to make all the rules that govern dealings in trade ; of course, the majority all make the rules that they propose to carry through. Rohert R. Austin sworn : J^xamined by Senator Boyd : Q. Where do you reside'^ A. Brooklyn. Q. Do you do business in the city of New York? A. Yes. Q. What is your business? ♦ A. Wholesale grocer. Q. How long have you been in that business ? A. About twenty years. Q. Are you familiar with the system of making ‘‘ corners ” and dealing in ‘‘ futures ? ” A. No, sir; I am not personally engaged in that business, nor is our firm. Q. You have some knowledge of the manner in which such trans- actions are carried on ? A. Yes, sir. Q. Will you state your opinion in reference to the system of making corners and dealing in futures, in reference to its effect upon commerce and its influence on the public welfare ? A. I have a general opinion on the question ; I believe that it is detrimental to the public welfare and not necessary for carrying forward the legitimate business of the country. I believe that foi- the time it has a tendency to unnaturally inflate values and to carry them above any proper relations they may bear to the question of supply and demand ; and at other times to depress them 134 «/ below their proper ])lacc in thesanie relations, and it has a tendency to create distrust and uncertainty in business afiairs ; it creates hostile interests in cotnniercial affairs without regard to legitiiriate requirements or tliewantsof the ])ublic, and tliey have a government and control which they arc not entitled to ; that is about my gen- eral view of the matter. Q. Have you any knowledge of the extent to which tliis system is carried in ]N ew Y ork ? A. ISTothing, except what I get in the course of business infor- mation from those engaged in it. I should say that the statement of Mr. Parrish is about correct, so far as my knowledge goes, and that purely speculative transactions are on the increase here and in other markets. To explain my opinion that it is detri- mental to the public welfare, I will state, that all legitimate business to be successful must be based upon something sfibstantial, and especially in that substance which is the result and production of labor, and that all artificial and stimulating processes brought to bear which do not recognize this are a means of disturbance. I will say that as a means of carrying forward speculative operations the selling of futures ” is a facility by which speculative values can be ascertained — that it is a favorable position for that sort of business, that I don’t denj^; but that it is unfavorable for legiti- mate business that grows out of the industry, toil and labor of the community I don’t think admits of a doubt. I think another effect of it is that it unsettles the minds of a large por- tion of the community in regard to the regular pursuits and industries of the country creating a gambling tendency in business affairs ; and my judgment is that all real prosperity that comes to any country comes through the legitimate results of the application of labor, and intelligence applied to it ; and we find always, so far as my experience is concerned, and I think from the experience of other men, that when commercial disturbances come upon the country the first cause is always in illegitimate trading and speculation. In the fall of 1873 there was a ])anic in Wall street ; that came from the fact that speculative influences had run to such ,an extreme that they had largely absorbed the money capital of the country for reckless men to carry their gambling ventures which had in them elements of great gain (»n the one hand or of great disaster on the other ; they were willing to go into the market and bid for money at higher rates than any legitimate business in the country could afford to ( 135 pa 3 ^ ; this state of things and the ciipidit)^ of those who had money to lend had been going on for years before, until the volume of money had become centered in Wall street for the purpose of gamb- ling: in stocks. Hence the crash. The result was that all our legitimate industries were im])erilled ; the farmer, merchant, ship-owner, and manufacturer who were engaged in the regular pursuits of business, not based on speculation, were exposed to a severe strain in their lines of business. When you take the trader’s investments which he is obliged vto carr\^ permanently either in ships or merchandise or factories, and you take the investments which the speculator is not obliged to have, then you put the business man in a position that he has got to be the competitor with gambling which is disastrous to the community and which aids the cupidity of the money lender of the result, has a bad effect upon the legitimate industry of any country. In 1873 the balance of trade was largely in our favor ; the demand for grain and all the products of this countr}^ which came from the soil, from Europe and especially from Eng- land, was active, but right in the face of that favorable state ot things there were plain indications of commercial adversitj^ ; so far as the labor of tliecountiy was concerned we had the tramp ” ; and that was during the times of dealing in “ futures” and of making ‘‘ corners ” on the Produce Exchange and in Wall street stock specu- lation. This state of things is simply a disturbing element against all the legitimate industries of the people. It has been stated here that if a man had a transaction in grain whereby he had gone “ short ” in the market and he saw there was a chance by which h.e could cover it and if he wanted to take a reverse position he could do so and the speculative interests of the country would be facilitated, but after going through these ‘^ups” and downs, ” the argument is that he generally gets in one side or the other; but is it not for the interests of the community that the property should pass only through legitimate channels to the consumer, and that legiti- mate processes only should be used in getting it there? Q. Then these speculations you speak of do not arise from the necessities of supply and demand ? A. Hot at all. Q. Do you know to what extent these illegitimate speculations are carried on in the city of Hew York in grain or other products? A. I have no statistical information in regard to it ; my business is this — we buy and have property delivered to us, and we sell and deliver. Of course vve have ti-aiisactions in ai'ticles of produce on the Produce Exchange, and ve hear more or less of operations that are going on, but we are apart from all speculative dealings and organ- izations and from all pui’chases on a gambling basis. For instance we had for years immense transactions in the United States in coffee ; now that article amounts to a great deal of money and has been generally sold here upon the fair princi])le of isnpply and demand, unless a combination of certain buyers should buy it up and hold it against the market ; but so far as having an organized ])lan of sell- ing futures and making corners we never had it until the past year ; now we have in the city of New York a regular call on the article. The Putter and Cheese PPxchange was organized here a short time ago, and those articles, heretofore, have always taken their ordinary legitimate chances in the trade. Now, with the organization hereof a Butter and (hieese Exchange, there is a large party who want these articles even, and the trade in eggs made a speculation so far as i\\Q fu- ture concernecband perhaps “corners” if they can make them. Now, all that violently enhances the price at times, and at other times unduly depresses it; my experience of thirty years is that you can’t override the cpiestion of supply and demand; you can stimu- late v^alues artificially for the time being on a speculative basis ; but if the supply is sufficient to give a full supply of the property to the market, a reaction will take place and your pendulum will spring back the other way;' speculation, therefore, becomes a dis- turbing element ; if butter is scarce and there is a demand for it, it is wanted and the price naturally goes up to a certain point, and vica mrsa^ to artificially stimulate prices is unnecessary and has no proper place in the commerce of the country. Q. It is unnecessary for the purpose of carrying on the legitimate ])rocesses of trade ? A. Yes, I think it is an unnecessary thing and detrimental to trade ; it creates an undue excitement in trade and an uncertainty, because it is not based upon any sul>stantial foundation. I will take the case of a miller in Buffalo as an example. ITe is a man with an investment in mills, machinery, etc., we will suppose of $50,000 ; a tax ])ayer, and to all intents and purposes a fixed j-csident employing labor and of course a useful member of the community. Now we will snp])Ose that while they are running a corner in wheat in Chicago, this miller finds himself short of grain, thereby preventing him from sup])lying his customers, on 13T TV'hoin he depends for liis business, with flour. He is aware that the price through speculative inlluence'is quite above tiie com- mercial value of the comniodit}', and that as soon as a settlement is reached among the grain gamblers tlie price will decline to its normal condition, but tlie speculation goes on and he can wait no longer and lie is obliged to purchase in order to keep his customers. Now after having gotten himself loaded up with grain at high prices, the corner in Chicago breaks, the price goes down and the miller is saddled with a big lot of grain at a high price. This is where the damage to legitimate industries comes in, in this as well as other avocations. The gamblers carry their point, pocket the gains, derange the regular industries of the country, employ no labor, grind no wheat, supply no legitimate demand, but simply in- jure those that do. Q. What effect has such speculation upon your business and the grocers’ business generally ? A. Our business has not been, as a rule, greatly affected by these speculations. The articles in which we deal as grocers have usually been placed on the market fairly for a purchaser to be able to judge without the intervention of anybody ; of course there are individuals who undertake to make money out of the movements of property. Q. Have these illegitimate speculations of which you have spoken, a tendency to enhance the price of breadstuffs and other necessaries of life beyond their natural value ? A. I will say this they either enchance the value beyond a legitimate and proper limit, or they act in a reverse way, or act upon the producer in times of disaster so that he is injured the other way they either put the commodity at too high a. price so that it is inju- idous to the consumer, or there will be by the influence of specula- tion a reaction upon it which will be injurious to the producer. Q. Then both producer and consumer are alike injured by this undue speculation ? A. I think they are. Q. Do you know to what extent the prices of the necessaries of life are enhanced beyond their natural value by such speculation ? A. Well I think on the average the products of the grower on the soil are enhanced to tlie consumer, without beneflt to the pro- ducer, fully ten per cent. Q. When the necessaries of life are thus enhanced in price be- yond their natural value, do the wages paid to employees keep pace with the prices; that is to say are they increased to a similar extent ? 18 138 A. If those enliaiiced prices run over a certain period of time the wages of the workman will gradually assimilate to the extra de- mand ; but if they last only foi* a jieriod of say of six months, they won’t have a perce])til)le effect upon labor; the laborer simply ])ur- chasea for his consumption; tor that reason the S])eculati vc* princi- ple concentrates itself so powerfully as to make itself felt (piickly and for some time the laborer can’t make his demand for increased wages effective, and is often at a disadvantage in this regard, Q. AVhat tendency have these S|)ecuIations in reference to the concentration of wealth in the hands of a few individuals? A. The selling of futures” and ‘‘ options” naturally has a tetid- ency to give a combination of capitalists power to inflict great injury upon the public. If a certain number of men make up their minds that an article, whether it is wheat or j)ork, or any commodity of universal consumption can be ‘^cornered’’ or a sufficient cpiaiitity be taken out of the market, and they can sell it fur a future delivery, there is an excitement created ; a short party is organized who will undertake to ‘M^ear ” the price, and it becomes a question, what is the gambling price ? it does not become a ques- tion who has got the most wheat or pork, for they don’t expect to deliver it, but who can be made to yield and ]:>ay differences; my opinion is that the forces which undertook to control the market for ; rise within the last three years have been able to inflict serious injury upon their opponents and the public, and have made an en- ormous amount of money. Q. Does that concentration of the wealth of a country in the hands of a comparatively few individuals have a tendency to ]')aralyze the legitimate business interests of the country generally ? A. I think there is a large accumulation of money in a few liands; I think there is a tendency towards a continual absorp- tion of the great industries of the country into a few hands; I think it comes from the power given to these men of great wealth on the one liand, and on the other to their force in the Legislatures to de- mand at the hands of the government special advantages and privi- l(,^ges that ai’e not accorded to the masses of the people, and their power lies chieily in that direction. The owncrshi[) of a liundred millions of dollars by a few men of wealth loaning it ata reasonable niUt of interest to the ])ublic — would l)e no more hurtful to the ])ublic than if it was loaned by five hundred individuals so that they loaned it lor the uses of legitimate business; but if that money was concentrated in the hands of three or four individuals — talented^ 139 ambitious and aggressive men who have power in the halls of the State Legislatures and the Congress of the United States — every- where — asking the government to give them certain special privi- leges that the masses of the community cannot and do not ask, and which I hold it is beyond the province of the government to grant, then it becomes difficult for private enterprise, which is brought into direct competition with this power to contend against it, and the power of capital, places the average citizen at a great disadvantage. Q. Then the concentration of a large amount of wealth in the hands of these illegitimate speculators gives them a greater facility to arbiti*arily dictate the prices of the various commodities than they would otherwise have — does it not ? A. At times; when they can’t do that they rest in the possession of their wealth, as they are not obliged to go into business for a liv- ing, whereas the poorer men of the community have to pursue their business for a livelihood. Q. Do yon think that the continuance or increase of these illegit- imate speculations is in accordance with sound public policy ? A. I think they are inimical to public policy. My remedy would be this — that all these things should be regulated so as to compel the speculators in wheat and corn and pork or other property, to deliver his property on every transaction. I hold that it is not a delivery ” of an article sold unless delivered actually as sold, and has a tendency to deceive the public as to the true posi- tion of affairs. If we report 100,000 bushels of wheat sold and there have not been 30,000 delivered, nor intended to be — then there is simply no such transaction, and the idea goes abroad all over the country that there is a great demand for wheat, v/hen there has not been an absolute delivery of over 30,000 bushels on a reported sale of 100,000 bushels; a false impression is created and honest men do not get the benefit that grows out of that sort of quotation - - let the quotation be a protection to the public, and not a deception. By Senator Browning : Q. Do you believe that those evils which do really exist can be remedied by legislation ? A. I think they can, if the public mind can be concentrated upon the fact that these evils do exist. I think a remedy might be found ; you cannot take a small and wealthy minority of fifty millions of jieople ; and give this force leg- islative direction in aid of capital (which is always taking care of it- 140 self), and withdraw the benefit of legislation from the general comm unity ; before you have made a difference so wide, tliat tlie mass of the people are suffering. Jt must be so; you cannot pour millions and millioTis of dollars into the jjock- ets of a few men unless it has to be taken from the larger mass of men ; if you let things go on with the government aiding it, the first thing you know you will have great misery on the one hand and enormous wealth on the other; and when the people ascertain that they are not honestly dealt by, the j’emedy will come ; it may not be the remedy we desire, but it will come as it has come in other countries before to-day. Will it be in the end wise for us to al- low the accumulated wealth of the country to clutch all these advan- tages which it has enjoyed for the last twenty years through special legislative combination and speculation ? If you do you may have rev- olution. The people of the United States are a forcible set of people ; tiiey have not had fair play at the hands of the govern- ment or in the legislative halls ; these bodies as now constituted are simple instruments to cari'y out the wishes and designs of the capital- ists of the country, but the people will ere long feel the iron enter their souls, and then agitation is going to come. It is plain that there is evil accruing to the masses of the people ; our political influences are entirely in favor of capital ; and there is a sentiment in the country that the average citizen is not allowed to have the influence he ought to have ; and fair-minded middle class men arc seeking that one thing, an equal chance. There is no question in my mind but that we iiave got to have a radical change in the tendency of our laws and less special legislation. Q. Then the changes you would suggest would be the passage of such laws that would protect the mass of consumers and the legiti- mate dealer from being made the victim of this illegitimate specu- lation and combination ? A. Exactly; when we come to remedies, or what we call the ex- ercise of doubtful powers,” any man who will go back and look carefully over the records of legislation for the last twenty years will see that the exercise of “ doubtful powers ” which favor the '•a])italist liave been numerous ; but when the question conies up, “how shall you exercise powers in behalf of the masses of the ])eoi)leU’ then the argument always is “you must not trench upon vested ilglits or enter iijion doubtful legislation. ’’ Doubtful powei’s are \'ery well foi’ (‘apital, but not lor laboi*. It was not considered to be doubtful legislation to give away the 141 public lands of the United States to the extent of 200,000,000 of acres to railroads ; it was not considered the exorcise of a “ doubtful power” when capitalists went to the Congress of the United States and bought up a class of men who are there for the purposes ot pecuniary gain to accomplish this, but the very moment the question is brought up, how you shall protect the people from a telegrapli monopoly or a raili’oad monopoly, then there is a cry about ‘‘ the protection of vested rights.” Have they not bought and paid for them?” Let the government protect the people, and let it make every post-office a telegraph office, so that we can get a telegraphic message sent from here to Chicago or any other place, the same as letters are sent at a fair rate. VVe get a letter sent for three cents, but a telegraph message to Chicago costs seventy-live cents. I only want to show that it is a question of the picrely cujgressim force of loealth broiigld to hear against the common interest of the jjeople. In railroad and telegraph monopolies there is an aggressive and dangerous force, and a remedy will have to be applied. For example : They water their stocks and tax the public on the w’ater ; I can’t take sugar into my store and mix it whth water and get eighteen cents a pound for it, when the ])rice is nine, but railroad and telegrapih men can do that sort of thing. These unfair advantages are gained by the capitalists not in a fair and honest way, but they come up and ask the Legislature of the country to make laws hostile to the interests of the people for their benefit, and often by corrupt means which should consign them to the State prison. All this is illegitimate, audit is high time that the legislative forces of the government should he invoked to aid the jpeojyle. I have, together with many others, been engaged in legiri- mately supplying the demands of the country in my line of business, and we have never asked ari}' favors from Legislatures ; every fair minded man would revolt at it. A very small minority of men possess the capital of the country, and they obtain these grants and privileges, and the people can’t compete wfith them ; they bring their forces to bear and obtain government aid at the expiense of other men whose hours are longer and whose business is to them an absolute necessity. I believe that consumers have rights, and I believe that the producers have rights which ought to be protected. I don’t think any fair-minded man can say that for the past twenty years the tendency of legislation has not been to advance the inter- ests of capital at a very unequal rate. Capital is a great powder in itself and in a tl.ousand ways can take care of itself and increases 142 its power without aid from govornrncTit. T tliou^lit our i^ovcrn- iiient was organized to protect tliose wlio are weak, ])nt it seerns that its whole tendency is to protect tliose wlio are strong? But in all this “corner” liusiness it is ])lain that it is not a question for the producer and the consumer, their interests are not intended to be consulted at all ; it has been reduced to the question of “how much money can be made by an illegitimate practice which produces nothing.” A. Yes; that is it. Q. Are you familiar with the influence which is exerted upon the transportation interests by these speculations? A. I think this influence is as a former authority has stated k to be; I think it has only been temporary. Q. But it has a tendency to disturb the equilibrium of the trans- por tati on business? A. Yes. Q. Is there any thing else you think of that you would like to state to the committee ? A. lYothing ]uirticular ; I believe it to be a matter of the highest importance to the whole community and that the remedy must come from Federal legislation. By Senator Browning : Q. Why ? A. Because influences of that sort are widely spread and any rem- edy would have to be applied with a strong hand. While the State Legislature could do much to remedy these evils the greater remedy would have to be applied at all commercial centres through the gen- eral government. By Senator Boyd: Q. You have been a member of the State Legislature ? A. Yes, in 1858. Q. And are, therefore, familiar with the Science of Legislation? A. Yes ; I think the legislation at that time had not been re- duced to such a state as it is now, still there were some unfavorable inlliKuifM^s in tlu^ l><‘gishiture at that time. By Senator Browning: CL ILiw would you ])i*oj)ose to pinvent me from successfully buy- ing uj) throughout the west the great bulk of the grain produce this 143 year and then sellin»it for a future delivery in this market ; that is a legitimate transaction ; now 1 could make a legitimate transac- tion and it would not appear on the surface that it was illegitimate ; I am trying to get the difference between a legitimate and an illegiti- mate transaction of that nature'^ A. If you undertake to buy all the grain in the country, I would have a law to compel you to actually receive or take it. Q. With a prospect of possession, I sell for a future delivery ; can you prevent me purchasing, if I have the means to buy the great bulk of the grain product? A. No, I cannot. Q. How can you prevent me from selling for a future delivery ? A. I would compel you to receive what you bought and to deliver what you sold ; 1 would not allow you to pay the difference and not deliver the property. By Senator Boyd : Q. There can be nothing done to prevent any sales of property which is actually in the possession of a party ? A. No. Q. But there may be a restriction placed upon men who assume to sell property which they have not got and which they never ex- pect to have the possession of? A. Yes ; that is contrary to public policy ; it is an illegitimate act to be restrained. By Senator Browning : Q. This committee would like to report some bill and have it passed, restricting, within certain limits, persons on the Produce Exchange dealing in ‘‘ futures” and of making calls” and dis- turbing values, as you say that it is detrimental to the people, either consumers or producers '? A. Federal legislation would be necessary; if you made men on the New York Produce Exchange actually receive and deliver every thing they bought, they could go to Chicago or some other city where they could deal in futures and then there would be a large amount of capital taken from this city ; they could deal in both places. As these speculations are contrary to public policy the Con- gress of the United States should pass an act that parties purchasing should receive, and parties selling should deliver, throughout the 144 United States, the article tliey dealt in ; then yon would he placing- each locality in a lair ])osition. Q. Then you would not allow sales of that which a party did not have in his possession ? A. Not so tar as the food products of the world are concerned ; when I take the products of the world, grown for subsistence of the ])eople, I am gambling with the necessaries of life, and I am an enemy to every man who earns his bread by the sweat of his face. By Senator Browning: Q. Are you a member of the Cheese and Butter Exchange ? A. We are represented there; we have no “ options” there. William II. Trqftoii^ sworn : Examination by Senator Boyd: Q. What is your business? A. Commercial Editor. Q. Of what periodical ? A. The Produce Exchange Beporter. Q. How long have you been on that paper ? • A. Nearly twenty-eight years. Q. You are familiar with the making of ‘‘ corners ” and dealing in ‘‘ tutures? ” A. Yes, very well. Q. Will you please state your opinion as to the systems of making “corners” and dealing in “ futures ” and their effects upon com- merce, and their inlluence upon the public welfare ? A. I think it is exceedingly detrimental to the public good and very demoralizing and injurious to the rising generation. Any thing that creates an artificial ^^alue of an exportable article is disas- trous to the commerce of the country ; we should do every thing to increase our volume of exports, and if we create an artificial value of wheat — twenty-five or thirt}^ cents a bushel — over its real value we injure our export trade very seriously. We had corners here some five or six years ago and we drove the trade from us ; w-e get up prices to an artificial height, then foreigners leave us to go elsewhere to supply their market, and finally we have to sell pro- duce at a lower rate, whereby we lose very much ultimately. Take the ca‘^e of the syndicate formed bv Mr. Keene in 1879, when ^ve had a very fine (;rop : tlie crop of 187i) amounted to 448,000,000 butsluds. 'fhe supposition was France, England and Germany, and 145 portions of Austria and Russia had lost their fall crops, and that this syndicate could control the markets of the world — by a combina- ation of twenty or thirty wealthy men, representing from $40,000,- 000 to $50,000,000. This great syndicate, this great undertaking was commenced, 1 think, some time in October, and they ran up the juice from its natural and legitimate level till it finally reached $1.63 cash price, for future delivery $1.65; finally they found that the crops of the world were much larger than they had anticipated, so much wheat came in from all points that the markets of Western Europe were likely to be flooded, and the result was that on the opening of the spring the supply was immense, there did not seem to be an outlet for this immense bulk ; the great movement was in the summer and there was little in the hands of the farmer in the shape of reserve ; but when this combination was formed the belief was that fully thirty millions bushels which had been accumulated from time to time was held. The result was that wdien the warm weather came every thing began to move, and tlie crops in other countries were produced meanwhile — for instance, Australia, New Zealand and Chili poured in their products; in January and Febru- ary these crops are cut, and they all came upon them unexpectedly ; but they overlooked the price influence. You run up the price of wheat to $1.50 ; in Ohio a farmer raisi^^g twenty-five bushels for his own use will sell that, reserving a few bushels, so that jper capita consumption would fall off. For in- stance if we assume the pei' capita consumption to be five bushels a head with a population of fifty-two millions, you could say about 200,000,000 and the requirements for seed about 45,000,000, and the requirements of the tropical and provincial trade is about 30,000,- 000 more, so that amount would be recjuired to meet the consump- tion ; if you take away from the consumption fifteen per cent of what the farmers held it adds to your available supply ; that amount you have not calculated upon, therefore adding to your bulk or to the visible supply largeljq and the result was that when June came wheat went down sixty cents a bushel from its highest point, resulting in a very great loss to the milling and farming in- terests, because nineteen farmers out of twenty will not sell wheat on a rising market; they held it for still higher prices, and got left with a large reserve on hand, the result was a gi‘eat loss ; an aver- age loss of thirty cents, a bushel to those who held ; the loss of the milling interest was very great, because the price was so unduly stimulated and worked up bv artificial causes, that the millers when 19 146 they came into the market found there was a large surplus of hour on hand — and a loss of three dollars a barrel Avas submitted to, after it was found that the surplus of the world was more than adequate to its wants. 1 maintained in an article jmblished in September, that the existing surplus of the world was 60,000,000 of bushels, and the result showed that it was correct. There was an excess that season ; on the 31st of August we found that there was a surplus in the world. During the year the syndicate made large sums of money on grain, because the value Avas fictitiously increased and therefore the public Avas injured, and the farmer Avho held on Avas greatly injured. Q. What proportion do legitimate sales bear to those Avhich may be called illegitimate sales ? A. They fluctuate very much; you have them here in this table Avdiich 1 hold. As a rule ten to one ; but Avhat Ave collect together and compile does not shoAV the extent of the business ; in addition to Avhat AA^e collect together there are large quantities of Avheat sold, Avhich do not come under our observation. In Chicago it is Avorse than in 'New York ; it is not uncommon there to sell ten or twelve millions of bushels in a single day. Q. What other cities are there in Avhich these illegitimate specu- lations are carried on ? A. Mihvaukee, Toledo, St. Louis, and in Detroit to some extent, but very limited, in Buffalo it is very minute ; it sometimes happened that a syndicate Avill be formed Avhen there is a good basis for it, as the failure of our crops last year; they failed us to the extent of 130,- 000,000 bushels; there Avas some chance in their succeeding in con- troling them, because there AA^as a serious deficiency in all the crops. Q. Look oA^er that table and see if the proportion of future legiti- mate sales are correct as there set forth ? A. Yes, as nearly as Ave can get these sales ; as a rule we can- not get half of them some days; the excitement is so great after a change that they don’t represent all the dealings ; this does not represent matters fully, but it is as Ave get them ; this is very correct so far. I think exhibit “ A,” tiled by Mr. Partridge, is a \wy fair rej)resentation of the matter.' C^. That is an exhibit of the sales for future delivery Avhich have taken ]>lace in the Produce Exchange? A. Yes. Put you state that this business is carried on to a A^ery great extent in New York ? 147 A. And outside of the Exchange in New York; on the streets and in other divers places, and more so during the excitement I have spoken of — when the excitement was so great ; when the syndicate thought the price would go up to two dollars and two dollars and twenty-five cents, they believed the supply of the world to be very short. Q. Do these transactions and speculations extend to dealing in other commodities as well as grain ? A. Corn and oats and lard especially ; lard is a very favorite article and so is pork, but not so much so ; there is nothing doing in pork now ; but there is always something doing in lard. Q. How much above the natural price of the necessaries of life do these speculations tend to enhance the cost of such necessaries ? A. That would depend on the amount the syndicate undertook to control, when they undertake to grasp all, as they did in 1879, they undertook to control the crop of the world, hence a great amount of capital was invested in the business by “men supposed to be worth from five to ten millions each, and about twenty of them undertook to control it. Q. Did the producers receive any share of the increased price which these speculations added to the necessaries of life ? A. Not unless they sold when prices ’^yere rising, but only a very small proportion of the farmers will sell on a rising market ; that is the misfortune, they will hold to the last cent ; they become specula- tors. Q. Then the profits of these speculations go into the possession of the speculators alone ? A. If they carry their point successfully ; but to a great many in the speculation I spoke of, it was a serious loss. By Senator Browning : Q. Who was in the syndicate ? A. Mr. Keene — James Keene and others. By Senator Boyd : Q. This system of speculation was designated by some of the witnesses as a species of gambling; do you think it gambling? A. It is solely a bet on the future ; it is a species of gambling , it is very demoralizing; young men want to get a living without labor and I regard that as very hurtful. Q. What remedy would you suggest for the evils resulting from such illegitimate speculations ? 148 A. I am not sure that the law could prevent it, unless you could compel them to deliver every thing they bought and in selling com- pel them to deliver what they sold you ; unless you could pass a stringent law to that efiect; but, perhaps, suggestions could be made that would meet the difficulty. By Senator Browning : Q. In connection with that — you mean deliver what you sell — I will buy grain on April 6, and on the 8th demand its delivery ? A. Yes, I have known one load of corn to settle sixty -five contracts, sometimes a load of corn has settled sixty-hve contracts. Q. You mean that this one load would settle sixty-hve contracts — that they required one load ? A. It passed through sixty-five hands, each contract called for a single load for delivery ; it passed through sixty-five hands and the parties had no intention to deliver or to receive ; it passed along and they handed it from one to the other, Q. Each to make, or lose something on it ? A. Yes, sir ; it is a common thing for a single contract to pass through a great many hands — a great number of hands. By Senator Boyd : Q. Then you think the continuance of such a system of specula- ' tion is detrimental to the public interest ? A. Undoubtedly — unquestionably so, sir. Q. Would you state particularly in what respects it is detrimental ? A. In the first place it is disastrous to the export trade ; that is a thing that above all things should be encouraged. For instance, take the previous season’s business ; we had a great excitement ; we had orders for wheat and we had a fleet of steamers to take it away and the market was so excited that it rose from $1.20 to $1.58 ; the steamers here were prepared to load a large amount of grain and take it away, but they could not get any thing ; the English and French buyers found it more advantageous to go to Bombay, Cal- cutta, Odessa and other places to fill their orders at a lower rate ; the result was that about three hundred steamers were driven from this ]>ort to find cargoes elsewhere ; they succeeded in getting good cargoes elsewhere — most of them. Ilundreds having had the bitter ex])erience in the winter of 1879 they will not come to this port again. During the winter of 1879 and 1880, four hundred sail of vessels lay here for four months, many of them rnn into debt and 149 the majority of vessels which could pay their debts finally had to leave here and seek cargoes somewhere else. Such a state of things destroys us as a commercial people in the eyes of the world ; its infiuence is very far-reaching. Last season was not so bad as that, as buyers could go to California and other places where they had a large surplus. By Senator Browning : Q. Do you think the change from selling by sample to selling by grade w’as the cause of this increase in future sales ? A. No, sir; the increase in future sales, all these future sales are of a particular grade No. 2 red, the wdiole crop has been sold over and over, and the crop in the groud this present season has been sold two or three times over; it is all confined to “ ,No. 2,” and only a small proportion was of ‘‘No. 2” spring wheat, but of winter wheat there is a large proportion. Q. Was there not a time before the grading when they dealt in “No 2.” A. They commenced to grade shortly after ; about seven years ago. Q. Before they sold by sample ? A. They sold by sample ; think “ grading ” is an advantage to the trade, because in No. 2, if the inspectioi] is careful to keep up to the standard, it is useful ; they can telegraph for a certain grade. When speculation comes jn “ No. 2 ” crop has been sold over probably four or five times; it is so in Chicago, for instance there are 10,000,000 bushels No. 2 spring wheat sold in one day. Q. A “corner” in No. 2? A. Yes ; and at eight or ten cents higher than it would have been. Q. Has there been an attempt to make a corner in wheat the last moiitli ? A. No, not much ; the syndicate has bought quite freely at times, the clique I should have said, perhaps. By Senator Boyd : Q. Who is it composed of? A. A combination of members of the Exchange ; I don’t know that I can give you their names. Q. Is there any institution of that sort of which they are mem- bers ? A. No, sir. 150 Q. Is it not true that they purchased from themselves as it were, in order to affect the market ? A. No, sir, they buy to keep the market up; they have to do that when the market is weak. Q. Then they were not transactions made by certain members of this syndicate among themselves in order to affect the market ? A. No ; I think the ^parties selling the wheat were not in any clique at all. Q. Should any legislation that might be attempted on this subject be State or Federal ? A. I think Federal. Q. State your reason ? A. Because it should be of a general character ; because a State law would be detrimental to New York and other cities carrying on business ; this business draws a large amount of capital here, and the trade of this port has increased immensely since tlie organization of this trade ; it was a small matter before that. By Senator Browning : Q. Do you mean illegitimate or legitimate trade ? A. Illegitimate. Q. Do you think that is for the good of the country ? A. No. Q. But it has been drawn here ? A. It has been drawn here. By Senator Boyd : Q. What you mean to imply is, that, if restrictions were placed on legitimate trade, it would have the effect of driving it away ? A. It would take away the trade ; it would drive away capital, it would go elsewhere. By Senator Browning : Q. You mean they have brought their capital here from other places ? A. Yes, sir. By Senator Boyd : Q. They have lirought their capital with them here 1 A. d'hey have brought there capital here. Q. Do you think of any thing else? 151 A. It is very essential to distinguish between illegitimate and legitimate trade ; it is very important to do so, because a great many men will buy to fulbll an order tor a certain montb ; for in- stance — there is a demand for flour for South America ; there is a large trade with Hio Janeiro, and we have sometimes large orders and will buy on the chance dour, and sometimes wheat, on the chance. By Senator Browning : Q. flow would you discriminate between proper sales of that kind and illegitimate ‘^futures?” A. Unless it was stated at the time, you could not, unless they stated they were going to deliver it for a specidc purpose. Q But if the contract does not specify that it is to be delivered ? A. I am not familiar with these contracts. Men who buy for a certain steamer would name the day. There are a great many purchases for a specidc time — of produce for a certain steamer; they are something of the character of a speculation, but then they intend to use it. 1 hear from merchants to-day that in London they have taken their cue from us and that they are selling our crops on the London Exchange ; they sell wheat to be shipped hence in August or July, at a certain rate]; they gamble in the same way. Now suppose a party buying wants the wheat at a certain day and insists upon having it in London ; it must be shipped hence by a certain steamer ; these sales oftentimes put the market here up very much — they have a stimulating effect ; it turns out that these purchases are [to cover forward delivery sales made on the other side. By Senator Boyd : Q. Then the same system of dealing in futures ” exists in Eng- land ? A. Only not so dagrant as compared with this country ; it is a species of gambling ; there they contemplate the delivery of the wheat ; it may be shipped hence for instance, to sell in London to- day — 4,000 quarters of No. 2, red — August shipment at $1.20. I think there was a sale like that, and assuming it would be under that, they buy it low to dll that sale ; there is a great deal of that business carried on. Q. How are the natural prices regulated ? A. By supply and demand. All this will ultimately lead but to 152 one result; capital coiilincd within the hounds of legitimate trade will exercise its proper influence; perisha1)le articles must come down to supply the actual wants of the people. I opj>osed that syndicate of 1879 and they said I was bribed with British gold to write it down. I persisted in my arguments and they took me to task — some fellow in Chicago, in the Inter-Ocean ” paper particu- larly — but I followed up the position I had taken, and urged my views from my standpoint and I had a great victory. Adjourned to meet at the Vail of the chairman. 153 Kew York, May 2T, 1882c Present — Senator Boyd, Chairman^ Senator Pitts. Harlan A. Pierce^ sworn : Examined by Senator Boyd : Q. Where do you reside? A. In Brooklyn. Q. What is your business ? A. Commercial editor. Q. With what journal are you connected, A. The ‘‘Commercial Advertiser.” Q. In the city of Hew York ? A. Yes, sir. Q. How long have you been connected with that journal ? A. I have been connected with it something over a year, and with the “ Commercial Bulletin ” eleven years in the same busi- ness. Q. The “ Commercial Bulletin ’’ is a commercial paper published in the city of Hew York ? A. Yes. Q. Are you familiar with the system of making “ corners ” and dealing in “ futures ? ” A. Quite so. Q. Please state your views and your opinion in reference to the whole system of making “ corners ” and dealing in “futures,” with reference to its effects upon commerce and its influence upon the public welfare ? A. It is certainly detrimental to legitimate business, because it interrupts it ; it is the same with the transportation interests, be- cause it does the same thing; with the shipping interests alike ; and even speculative business is completely demoralized by it at times, and business brouo^ht to a standstill as well as les^itimate trade and transportation. While these “corners” are being run they neither benefit the producer nor the consumer, because they are accompa- nied with a depression of prices by cliques to secure a large supply of stuff at low prices, and when once secured out of the producer’s hands, they advance prices by manipulation and put up prices above 20 154 legitimate value as miicli as tliey were below it, and neither the producer nor consumer derive any benefit. Q. As to the manner of running them ? A. I cannot explain that in one word, further than in a general way in reply to any questions you may ask me. Q. Have you been connected with the Produce Exchange in the city of Hew York? A. I have been there eleven years, with the exception of one year in Philadelphia. Q. Ho you understand the methods of operation by which busi- ness is carried on on the Produce Exchange ? A. Yes, sir, pretty thoroughly. Q. In what capacity have you been connected with it ? A. Commercial editor all of this time. Q. You are familiar with the technical terms used by nersons transacting business on the Exchange ? A, Yes. Q. Please define a corner?” A. There is more than one kind of a “ corner,” there are natural corners, where the supply and receipts have fallen off unexpectedly or the demand has unexpectedly increased and left supplies largely deficient, and there is an excess of short sales unprovided for, which is termed a legitimate corner, and is without manipulation ; then there is a corner ” resulting from a conspiracy of a party of ope- rators, or a clique of operators who go to work to depress the mar- ket by short sales themselves, or by throwing long stuff ” upon the market and shaking out the weak ones who cannot margin up, until they have secured a large number of short contracts from the spec- ulative public in excess of the actual stock of the stuff or article to be cornered. Tlien they go to work and buy up the cash stuff, available for delivery on these contracts within a specified time, and then the corner will be run for a certain month ; sometimes this cash stuff is bought first and then options afterward, but not so generally, as o])tions first and cash afterward. After securing a large line of options or shorts,” two, three, four or five times the amount of the available cash stuff, then they liold the cash stuff so that tliose who have sold it cannot deliver it within the time specified, without buying of tliem, and then they hoist the price. That is the usual corner. Th,at is the corner that demoralizes trade and upsets busi- jiCHS and is the I’csult of a cone])lracy started for the purpose. 155 Then there are sometimes some of both, a little of one and a little of the other. There may be a corner this year on the short crops of last year, but these corners cannot be stopped as they are the result of natural causes. It is the corner where the cliques are formed, or where single operators go into this business for the express purpose of making a corner in the market, that should be dealt with. Q. Is such a system of cornering as you have described, ever re- sorted to on the Produce Exchange ? A. It is. There is scarcely a month without a ‘‘ squeeze, ” corner, or a deal of greater or less magnitude, not generally on a large seale as in Chicago, because this market has not been a specu- lative market in the article of grain until 1877, and the trade has come slowly ; until lately it was comparatively secondary to Chicago. Q. You have to some extent described the effect of corners as an operation upon legitimate trade ; can you state what their effects are more particularly upon the trade in the staples of commerce ? A. They affect the movement of stuff out of the ordinary chan- nels, they take it out of the hands of the ordinary receivers wha are bringing the stuff forward from the west to the sea-board, and exports are impeded while “ corners ” are being run, and are stopped until the corner culminates, and during the time these corners exist, which generally runs from one to three months ahead — during that time every body suffers. The transportation interests are lying idle while this stuff is held back, and then after the corners are over the railroads and boats are overtaxed and have to employ an extra force, and to carry the stuff at an extra expense, but it takes business completely out of the hands of the ordinary receiver and concentrates it all in a few men’s hands, and since this system be- gan there is a large proportion of merchants who had a good re- ceiving business who are now simply brokers in options and get their business from the cliques. At the time I went on the Ex- change there was not a broker in the grain trade except those who buy and sell actual stuff for export, now there are few of these, and I should judge over one-half or three-fourths of the members engaged in the grain trade are brokers in these options and are largely composed of men who were once engaged in legitimate busi- ness, out of which they have been driven by “ corner ” operations. Q. That is the effect produced by the illegitimate dealing you have been describing ? A. Yes. Q. What effect has it upon inland transportation by railroad and canal ? 156 A. I can illustrate that to you, in the operation of Mr. Keene, in this way. Two years ago there was a large crop here with a large deficiency abroad, and ^there was enough grain in the country to keep the railroads at work the year round ; he ran that deal chiefly in Chicago and locked up the wheat there and shut it off from the exporter ; during the winter of that year scarcely any wheat came to this market ; the railroads applied to him for it and he told them, ^‘at a certain rate I will give you so many millions of bushels, if you don’t take it I will ship it all by the lake in the spring;” and the bulk of it was held there until the railroads came down to that rate (by which they lost money) for shipping it by lake or by canal. Then as to the effect upon the transportation interests abroad, cer- tainly our ocean transporting interests are but a bagatelle to our inland interests ; but this year, although the crops have been largely short, there was enough to go forward and keep the steamship com- panies in grain in bulk ; they have been compelled several times within the last two months to pay the shippers a premium to give them wheat to save them the expense of buying ballast. Q. Please describe “ futures ? ” A. A future and an option are the same thing, but of two kinds, seller’s and buyer’s option ; you sell and contract to deliver at any time, at the buyer’s pleasure during a future month (for instance, you sell an option to deliver in June from the first to the last day of the month), that is a buyer’s option ; the buyer will be entitled to call for it from the seller after the first day of the month, but that is a very unusual option, because it sells for a much higher price and generally is for a special shipment and for legitimate business which forms a small proportion of option dealing. A seller’s option is where the seller has the option of delivering during the specified month. Q. What is the effect of dealing in futures upon the commercial interests of the country and other legitimate business ? A. Within limits these operations tend no doubt to stimulate and lieli) trade because they bring the stuff forward which is held at dif- ferent points, and they stimulate the handling and transportation interests, and they give a steady movement to produce during the wliole year when not interfered v,dth by these corners, and in that way tliey ])robalJy do no injury to trade if they do not assist it, wliile tlicy make a great deal of business for the exchanges. Q. AVhat effect lias the system of dealing in “corners” and “ futures” upon tlie Ih’odnce Exchange as an institution? 157 A. It has the effect of driving half the men engaged in the legiti- mate trade into brokers for these cliques, and the effect upon the trade can perhaps be best told by observing the different articles which have been dealt in ; pork and lard were dealt in, in futures, before grain ; and pork was one of the favorite articles ; this was a large market for it at one time, but after a series of years the trade in it went out of it after it got concentrated in a few hands and dan- gerous to the speculative public; dealing in option in pork has now almost ceased and there is nothing left but our legitimate export trade. This winter there have been some movements in relation to re- viving the speculation in pork ; but whether that was the object or not, the pork trade opposed it, an-d showed that the legitimate ex- port trade in pork had increased since option trading had decreased and they were opposed to it on that ground. The trade went into lard and it was stored up in volume here, al- though I don’t think it is so large as at first, as it got concen- trated in the big operators’ and packers’ hands who had control of it to a great extent, which makes it dangerous, but that is an article that is produced the year round, and it is more difficult to corner or control it on account of its being the largest in value of the hog products. Then our w^heat trade was extended in that way and it in- creased the business on the Produce Exchange ; where we used to get an export trade and a milling demand which on a good or bad crop would run from 100,000 bushels a day to 500,000 (that would be an extreme average about 200,000 bushels), we now have a trade there of two or three millions of bushels a day in futures which brings a commission to the members of the Exchange and brings a great deal of trade to this city which formerly went to Chicago, and in that respect it benefits the Exchange by keeping the trade here at home and keeping the money in the hands of our banks at the same timoo It brings stock here, for it is a rule of speculation that the greater the speculation the greater tho stock must be at the point where the speculation goes on, in order to make it safe, because peo- ple will not sell it short for fear of being cornered ; it tends to bring the stuff here to be sold and that stuff gives business to insurance companies, bankers, and members of the Produce Exchange, and no . doubt benefits the Exchange and the port of New York. Q. Is that benefit perpetuated to the consumer of the products ? A. When there is no cornering operation ; it does not affect the price of spot stuff materially, because there are compensating ad- 15S / vantages in speculation ; tliere is as iniicli ‘‘ short ” as “ long ” interest and when the market is controlled by speculation, the stuff is over or under its legitimate values ; when in excess of it, it benefits the producer ; and when there is a deficit, it benefits the consumer. Q. Is it not so that by reason of the operation of the system of dealing in futures ” and ‘‘ corners ” the tendency is to increase the prices of the various commodities above their natural value? A. I think the tendency of speculation is rather to ecjualize them where there is no corner to enhance the values. It is not such a serious evil except from the corners ” because the speculative pub- lic as a rule are about equally divided in opinion, and when the bulls or holders of any article put it up too high, unless there is a corner ” there are generally enough people to bring it down by selling it short ; only in the case of a corner are they prevented from doing so. Q. Then the tendency of making corners is to enhance the prices of commodities ? A. That is the purpose of corners. A corner never depresses prices ; it always puts them at an unnatural value above their true basis, and by unnatural means. Q. Can you tell us to what extent the prices of various products have been increased above their natural value at any thrie by the operation of ‘‘ cornering ? ” A. In the year that Mr. Keene undertook to control the wheat market of the whole country he put the price up as high as $1.64: on this market, where it was held for a short time, although it ranged from $1.40 to $1.50 for one or two months in the fall of that year, and from $1.64 it gradually went down, as very little export busi- ness was done after prices were put up, until near the end of the crop, when millions of that wheat were shipped out of the country on consignments on a basis of about $1 per bushel. That year there was a short crop abroad. My impression is the average price that year of wheat exported was not over $1.25 a bushel, I think it was less ; while the accumulated stock of the clique was disposed of for much less (that is the bulk of it), while this year we have had the reverse, good crops abroad and short cro 2 :)S at home, with wheat at a higher ])rice, although the world’s supply of wheat this year’s turn- ing out to be about the same as last year, which upon a legiti- jiiate basis would make the price of wheat this year not materi- ally higher than a yeai* ago, for our market has been held higher tlian those of the world. The average pi’ice of last year was I think about $1.25 for No. 2 lied Winter, which is generally dealt in here. 159 Instead of an average price of $1.25, or tlie same as last year, with the same world’s supply, it has been kept up by these cornering opera- tions this year ; speculators bought up the crop at from $1.30 to $1.60, the average is somewhere between $1.40 and $1.50 on the whole crop, and all that has been consumed in this country has paid the difference between last year’s price and this year’s, as the result of speculation. Q. What was that difference ? A. The difference between last year’s average of $1.25, and this year’s, between $1.40 and $1.50. This will depend somewhat upon the amount yet to come forward, and the price it will bring before the new crop, upon which there is a division of opinions among speculators. Official reports show that there is enough to make the above average, although the cliques are cornering the market, on the theory that there is none or very little to come forward. Q. It has been suggested to me to ask you whether this country, generally, has lost that amount, the difference in the price between this and the last year ? A. It has ; because we have exported less than usual this year ; and a greater proportion of the crop has been consumed at home. This money has not been brought from abroad, and we. have had to ship gold abroad to make up for holding our surplus wheat above export prices. Q. In 1879 and in 1880 how was that ? A. It was the same that year (1879), the year of the Keene deal, because the clique held the bulk of their stuff until near the new crop, and they afterward sold it at a lower price than they kept up here at which we could make no shipments, when ships were tied here to the docks for two or three months. Q. The fictitious price amounted, as you think, to $1.65 per bushel ? A. That was the extreme. Q. And the price at which they afterward sold was what ? A. The balance of that crop carried into the next — something like ten millions of bushels or more, was closed out at nearly one dol- lar a husJiel / some of it was consigned abroad and brought proba- bly less than that. Q. Then on that ten millions of bushels the difference between $1.00 and $1.60 per bushel was lost entirely to this country by reason of that corner ? ICO A. I would say tlie diflcrence on this ten millions was lost by the men who held it, but what was consumed in this country during the time the clique held the price up was so much lost by this country. By Senator Fitts : Q. Our people had to pay tlie difference? xV. Certainly, while the clique held up the market price all over the country. By Senator Boyd : Q. Has it been the custom of these cliques or rings to which you have referred to attempt to influence the press of New York ? A. There have been two or three attempts of that kind. Q. Please state what these attenq^ts were ? A. There was an attempt made (it was not exactly a cornering clique at that time, but it w^as a clique of men or a ring who con- trolled the Exchange) to prescribe rules by which the members of the press should be governed who came on the Exchange, and the board of managers passed a resolution which was presented to the members of the press for their signatures ; rules by the board of managers for the government of the press ; that was about five or six years ago. The representatives of the press all refused to sign it and reported at head-quarters, and the editors and members took it u]i and made it so warm for them that the wdiole board of managers was swept out at the next election of the Exchange. There has been no attempt since until the past year, and as that was personal to myself I may be biased. . Q. You may give your views for the beiiefit of the public. A. I commenced a series of articles in the Commercial Advertiser upon the new^s, gossip and speculative operations upon the Exchange, and criticized this monopoly of the market by the cliques. I made a special eflort at getting at what they were doing, so as to keep the public advised, and from being roped in I followed that up with marked success for a time without being known, as I wished to see how it would work. Well, as one of the members of the leading houses engaged in that kind of business told me, they put up a job on me to find out who it was that had been giving this information and tlie names of parties engaged in these operations, and there was a gi’cat jiressure ])rouglit on me to leave out the names of those con- noeted with these clique o])erations, which interfered with their HiicccBSH. One operator, who was manipulating the market, told 161 the public that he was going to put np prices ; instead of doing that he was unloading on them. I exposed it and effectually stopped the public buying, and instead of the market going up it broke heavily. Tlien he made a complaint to the board of managers and asked for my expulsion from the Exchange, and the thing was nearly going through, but was barely defeated. This same party brought me up again. The name is notorious, both in Chicago and in New York, as manipulators of the markets, and it was on their operations that I was then writing ; that was the second time, and I defeated him in the board again. This thing had been hanging for some time wdth an occasional threat, “ that if I did not look out I would get bounced ” or expelled from the Exchange, and this same party, after being defeated twice, told me on the Exchange that if I did not keep my mouth shut he would get me off the Exchange yet.” When running corners the cliques have all of the stock, and one-half of the trade are dependent on them for their business. I know one warehouseman who refused to sign his petition for my expulsion, to whom that party went and told him he wanted him to sign it and in such a manner that was equivalent to saying, ‘‘ If you don’t sign it you will get no more grain to store in the same way the brokers were dependent upon him for their business, and in that way he got a large number of persons to sign it ; others wlio were opposed to it did not dare to make opposition to it. These men who p’e in these cliques are necessarily large capital- ists and they have interests in nearly all the banks who do business with the Produce Exchange. These look over the bank loans and control bank accommodations. The' majority of the mem- bers of the Exchange are thus dependent upon the good-will of the five or six men engaged in running corners for their bank accommodations, and this combination keeps men in fear that they would suffer if they acted contrary to their wishes. Q. What rights have the press on the Produce Exchange ? A. That is somewhat doubtful. It has been considered by the members of the Exchange that it is dependent on the will of the board of managers and it really has no rights. There is nothing to prevent the press from being excluded from the floor of the Ex change, if they write any thing it don’t like, as was done yesterday Q. Don’t you think it necessary that the press should have free access to the Produce Exchange, for the purpose of reporting the transactions in the interests of the public ? 21 A. There is no doubt of that in my mind whatever ; the trouble with me was that I reported too much ; I certainly think there should be a law defining and enforcing the rights of the press upon the Exchange or any institution chartered by the State. Q. Has the Exchange a regular reporter of its own, an official reporter ? A. Yes, he giv6s the public just such information as the board of managers of the Exchange chooses and directs ; certainly he has no option. Q. Can you suggest any remedy against the evils in the opera- tions of the system of “corners” and “futures?” A. I think there is no trouble. By Senator Pitts : Q. Can you give a remedy ? ' A. I wrote an article on the subject and I don’t know any thing better than my suggestion, to take the average price that articles would bring in the chief importing countries of Europe, upon which our market is dependent, as the proper basis, of their legitimate value here in Hew York. A penalty of five cents a bushel, to be added to or deducted from that, as a limit to which speculative manipulations could be run, either above the legitimate value on a corner or below it by undue depression caused by a bear raid ; my suggestion was that whenever the prices for a future month were depressed nve cents a bushel, under the cash value for the same grade of the same crop, the “ bulls ” may be entitled to limit their loss at that j)oint so that the holders of actual stock could not be forced to sustain the loss ; and on the other hand when the “ bulls ” elevate the price five cents a bushel above the export basis I spoke of, that there should be a five cent limit, that they can call upon the shorts for margin or force a settle- ment, and that five cents a bushel either ’way should be the penalty, or remedy for undue speculation. Q. Then you think a legislative remedy for the existing evils is possible ? A. Most certainly ; if the Exchange won’t make and enforce such rules themselves. ]>y Senator J^rrrs : Supposing they do not ? A. Then have a law to com})cl them. 163 Q. What kind of legislation would you suggest for the purpose of remedying such evils ; State or National ? A. At one time I wrote that National legislation was the only thing that would do it ; but I have seen reason to change my mind. Mr. Bingham, who was before you as a witness and is one of the largest shippers from the United States, moved at a ‘‘■grain call’’ one day, that a committee be appointed to confer with the grain committee of the Exchange, to frame rules to prevent corners in the market. Mr. Young, of the firm of E. A. Kent & Co., one of the largest commission houses in New York, St. Louis and Chicago, seconded the motion on the ground that it would be of the greatest advantage to New York to bring speculative business here, as peo pie would then be insured against the dangers of corners. I took the view that National legislation was a cure at that time, as I sup- posed, that Chicago would do nothing of the kind or enforce its old rules against cornering, and that it would place this market at a disadvantage, when that market was under manipulation. It was then thought that Chicago would run corners to the diversion of speculative trading from New York. Since then Chi- cago has enforced its old rules, and a committee was appointed to frame new regulations, and recommended the board of managers to adopt a rule expelling members running corners. As a result they have adopted rules in reference to the delivery of different grades of wheat upon contract with a view to stop cornering in Chicago, and I think the Produce Exchange must take similar action, or her trade will even go back to Chicago. I think corners now being for- bidden by Chicago, that it will transfer these operations to this market. Q. Do you consider the system of dealing in “futures” and mak- ing ‘ ‘ corners ” a species of gambling ? A . Well, it is as bad. The '■‘longs ” bet that grain will go up in a certain month, and the “shorts” bet that it will go down within a certain month. Q. Do you know if there is any tribunal to enforce the laws of the Produce Exchange ? A. There is if any dispute has to be decided. Q. There is a court of arbitration connected with the Produce Exchange ? A. Tliere is. Q. Are parties compelled to submit to the decision of the court, usually ? 164 A. Yes, and there is no appeal from it ; practically they are com- pelled to submit their cases there, although their by-laws don’t say that. The practice of the Exchange is usually for members to sub- mit their cases to the arbitration committee. Q. How are the decisions of the arbitration committee enforced ? A. By the executive officers of the State government. The sheriff is obliged to issue an execution to enforce their decisions, which have the same force as decisions of the Supreme Court of New York, Q. Do you know if, by reason of the operation of this system of cornering, the price of pork has been raised from $8 to $16 per barrel ? A. It was ; I can’t give the exact date ; it was sometime within the last two years ; there was a big corner in Chicago two years ago ; I think the lowest limit was $8; it was run. up here and there, too, to $20 ; it was the worst corner that ever occurred in pork. There has been very little done in this market in pork, in option dealings, within the past two years. Q. If the power to enforce the decision of the arbitration com- mittee was taken away from the Exchange, would it have a tendency to remedy the evils of the system of cornering carried on there ? A. It would check them, but whether it would remedy them while the arbitration committee or the board of managers have the powder to suspend a member if he refuses to arbitrate or abide by their decisions, I could not say ; I think while they have the power to make a man settle up in order to hold his seat and avoid expul sion, it would be doubtful ; but still it would check it. Q. Are “corners” of frequent occurrence on the Exchange? A. Well, there is what we. call a “squeeze” in anticipation ot a ‘‘ corner,” and scarcely a month goes over but there is a little or big squeeze, which is another name for a corner; that is not carried through to the end of the month. Q. Are these corners usually financially injurious to certain par- ties engaged in them ? A. They generally are in the end, but in the meantime they work against all the members except the few. They tend to make the ma jority poorer and the few richer every year ; they make the aver- age Triernber more dependent upon those few rich men who have the cfipital necessary to run corners and they monopolize the mar- kets. f 165 Q. Do you consider the system of dealing in “ corners ” and ^‘futures” opposed to public policy ? A. Corners most certainly are, but under proper restrictions I don’t think dealing in futures are. Q. I mean as at presen t carried on ? A. x\s at present carried on, yes; a restriction would make a corner impossible ; but restricting a corner would not wipe out op- ’tion dealings. To stop all dealings in options would, I think, hurt trade, it would hurt the Exchange and hurt the value of the mem- bership, because it would interfere with legitimate speculation if not for future and actual wants. Before option dealing was introduced here there was some legitimate business done in futures as now. Shippers and millers used to buy grain to arrive at a certain date, and legitimate business might not be injured at all by the total stoppage of option dealing. Q. Are you of the opinion that the men who have attempted to interfere with the freedom of the press on the Produce Exchange are attempting to use the Exchange for the purpose of advancing their own interests ? A. There are a good many things done there that look like it. There is their enormous new building and the purchase of valuable properly surrounding it which is not necessary for the Exchange, which looks like a ring ; and there is a pretty strong feeling on the Exchange about the recent purchase of $150,000 w^orth of property. They purchased the rear end of two lots for $160,000 which fronted on Broad street, in the best business portion of 'the city, and near the Stock Exchange, for the whole of which only about $68,000 was paid about three years ago. This, purchase makes what is left of the original property bought for $68,000 worth more than it was before. There are various opinions on the Exchange about that transaction and it has caused a good deal of feeling as to the manner in which the purchase was rushed through, only twenty-four hours’ notice of it having been given, and an injunction was talked of to stop it. All this has caused a pretty strong feeling. Q. Suppose the Produce Exchange to ontain control of the mar- kets, what eftect would that have in controlling trade and the fixing of prices ? A. The Exchange as a body could not do that, it would be the members of the Exchange, but these members could enforce whatever they fixed as the settling price, through their committees. In fact, they have had plenty of corners in the face of the rule they 16G have ‘‘ that the grain committee shall not fix a fictitious price. They have rules which are not enforced, that is the trouble with most of these rules against corners. Q. Do you know that it is a fact that the necessaries of life have increased in price very much recently, such as breadstuffs and meats? A. Meats have recently, but breadstufifs have been held very high for nearly a year. The cliques got up a short crop scare last sum- mer, and they have held prices up ever since, and that is beginning to have its effect upon the prices of meats, because corn is the chief element in the price both of hog and beef products; but the price of beef is not so much due to speculation as that for hogs. During the hard winters of 1880-81 much of the stock of cattle and sheep on the plains were frozen, when they had no shelter and no food, for it takes two years to make calves into beef ; we are now beginning to feel the effect of this in addition to the high price for corn, in the present prices of meats. A large shipper of beef told me the other day that this beef famine was not so much dependent on the price of corn as on the scarcity of cattle. Q. But this increased price in the necessaries of life is, to a con- siderable extent, due to illegitimate speculation ? A. 'No doubt of it, and every article that is speculated in is affected in the same way. By Senator Pitts : Q. You stated that you understood how a corner was made; please state briefly -how that is done ? A . The usual custom is for a clique which goes into a “ deal ’’ (which is another name for cornering), is to depress prices at the time of the year when the crops move out of the hands of the farmers into those of the middle-men ; they do it in two ways, by selling stuff short” themselves to others, and often by throwing ‘^long” stuff which they own themselves, in small quantities, on the market sufficient to break it, and ‘‘shake out” the weak holders. The whole of this option business is done on margins. If I buy or sell a load of ^heat I am liable to a call of ten cents per bushel margin, to put' into the hands of the trust company through the Exchange, which cannot be drawn out until the deal is closed and without the signature of both parties to the contract made at tlie Exchange. Each ])arty to tlie trade lias to keep this ten cents margin good or be sold out, and when they break the market they knock the price down so suddenly that the weak ones’ IGT margins are xixliausted and sold out by the commission men before the market gets so low that there is a loss to them ; that is the way generally of beginning a ‘‘ deal ” at tlie same time the crops are moving out of tlie farmers’ hands and they buy the actual stuff, the object being to lower the price as much as possible below the legitimate value by these artificial ^means until they have bought options from two to five times the amount of the available cash stuff which they have already bought or have to buy, so that the parties from whom they have bought their options are unable to ulfill their contracts, making it utterly impossible for the seller to get the stuff which they have bought from him ; then after it is out of the farmers’ hands and in their own they ‘‘ hoist ” it up from ten to fifty cents a bushel and make these shorts come to them and settle their contracts. Q, How is the farmer hurt by this ? A. He is hurt in this way : When they begin their deals the knock the price down when the stuff’ is coming out of the farmers’ hands and get it as low as they can, but they usually take the pre- caution to run the deal ” at a time when the least possible amount is coming out of the farmers’ hands, so that they have to take as lit- tle cash stuff as possible while getting as many options. They don’t run deals and corners for the farmer’s benefit, they run them at a time when the farmer can get the least out of it. To establish a corner requires considerable pluck and plenty of capital, which the banks furnish the cliques who avail themselves of the back doors of the banks. There is a bank behind every deal. It requires knowl- edge not only of the foreign but of the home crop. A man must be thoroughly posted to run a deal successfully ; but the banks fur- nish the great bulk of the capital to run them, and the men who re- ceive the stuff from the west, when a deal is being run and money get a little tight, they go to the banks wdth their bills of lading to get the money needed, it is a matter of favoritism if they get ac- commodated, while the cliques get all they want. Q. How much do you think they are able to depress the price to the farmer under the actual value ? A. It will depend upon the financial condition the farmer is in^ Q. Taking the average ? A. It has changed within the last few years until this year. The last three years previous to this year the immense crops made the farmer rich ; at the time the crops are harvested, if they were not satisfied with the price they would hold back, but a great many lOS farmers are c;oin])elled to sell a ])ortion ot their crop at once for money. The men running these corners last year carried them through nearly the whole year and rout out crop missionaries last spring ; one house in Chicago sent out three men, paying them $5,000 a year to travel through the farming sections to educate tlie farmers up to bad crops and high price, and then bad ci’op reports were scattered over the country, and that induced them last year to hold back for higher prices this year and saved the cliques carry- ing the stocks which the farmers have done for them for nothing. Q. How are you going to prevent these crop missionaries giving the farmer false information ? A. If there is no corner, there is no occasion for crop mission- aries. If you stop corners there is no inducement to send out mis- sionaries ; it won’t pay to educate the farmer in a false belief. Q. What do you think is the average difference made to the farmer on his produce by this cornering markets ? A. Taking the year of the Keene corner, I think it was a benefit to the farmer, because he gained by selling early to the clique and the clique lost the money, but that was an exceptional 3mar. I think that on the average it would make very little difierence with the farmer, taking one year with another, who are not forced to sell. Q. What difference would it make to the consumer in the arti- cles of flour and meat ? A. I think it makes all the difierence there is between legitimate and fictitious values to him. The farmers have not all got to sell when prices are depressed, but the consumers have all got to con- sume all the time these corners are being run. Q. But there are exceptional cases where the farmer is obliged to sell ? A. But there are no exceptional cases where the consumer is not obliged to eat ; they have to pay the fictitious price ; most of the money the cliques make on the actual stuff is taken out of the pock- ets of the consumer. Q. It affects the consumer in the end ; that is the class that gets hurt ? A. Yes; but the farmer gets hurt too, who is obliged to sell to raise money, and this includes the majority. (2- fn reference to a legislative remedy, do you think it possible that tlie legislature could stoj) these evils? A. 1 think there would be no trouble in putting down conspira- eicK. nyj Q. Whether the laws of New York would affect Chicago ? A. TJiey would not affect Chicago, and I have the impression that the interference of the National legislature would be necessary to render any laws effective there, otherwise these corner transactions might be transferred from this market to Chicago, in the same ^vay that they arc likely to be transferred from Chicago to New York by her anti-corner action of late. Q. That being so, our business men in New York could regulate matters themselves? A. They never have, so far as corners are concerned. Q. I suppose this action of Chicago was recent ? A. Yesterday the decision was made public. Q. Laws made in New York might correct the evil here, but have no effect in Chicago ; the business men there could revoke the rules adopted yesterday ; so that it would be necessary to have the aid of the National legislature ? A. I scarcely think so from what I said in relation to Mr. Bing- ham’ and Youngs’ views of such anti-corner rules, as likely to help New York. I think safety lies in the publication and exposure of these manipulations, for if the Exchange can say what shall not be published on the penalty of a representative of the press be- ing shut off from the floor, it may undertake to say what shall be published, and to prescribe rules for the regulation of the press again. Q. Do the parties forming combinations to make “corners,” re- port sales to influence outside operations, when there are actually no sales ? Ac There is very little doubt that when corners are being run wash sales” are made, but that is a thing a man cannot prove and therefore cannot charge ; when these corners are being run they are not carried to the last day of the month, usually, as they used to be ; but if necessary a deal is run from now until J uly, and when things are all ready they often put the price up by these wash sales,” and sometimes advance them flve to ten cents a bushel in a few days for the express purpose of forcing people to put up more margin, or to exhaust them and force them to settle ; they make these wash sales to get up the prices and force outsiders to come in and cover ; they get up the prices sharply by these means, and it is done extensively, no doubt. Q. Do you understand the printed blank contracts used at the Produce Exchange? 22 170 A. I have seen them ; I liave not examined them particularly ; they are subject to the determination of trade committees, from which, I believe, there is an a})peal to the arbitration committee. Q. Through how many hands do these contracts pass without an actual delivery of the produce? A. You cannot tell ; they may pass through 100 persons’ hands or more; I have known 250 tierces of lard to settle 25,000 on short contract ; I have seen contracts pieced out so as to admit of ad- ditional indorsements on the back, from one to another ; probably seven-eighths of all of the option trade done there are settled up in that ^vay. Q. Does the Exchange hold the margins to keep them good ? A. They are deposited with the trust company, but it is not re- sponsible for them, as I understand it ; if the trust company should fail, parties having deposits there would lose the money. Q. Is there any thing else you would like to state to the commit- tee that you think of importance ? A. I don’t think there is. Q. Is there any suggestion ? ^ A. I don’t think of any. Kellogg Baker ^ swmrn : Examined by Senator Boyd : Q. Where do you reside ? A. In New^ York city. Q. Do you do business in Hew York ? A. Yes. Q. What is your business ? A. I am engaged in the wholesale grocery and provision business! Q. Where is your place of business ? A. 335 and 337 Greenwich street. Q. How long have you been in business? A. More tlian twenty-hve years. Q. Are you familiar with the system of making corners and deal iiig in futures ? A. Not very much; I come before this committee more as a merchant and a legitimate trader engaged in the distribution of actual j)r<)duce, Ixiying and selling produce. I am a member of the Produce Exchange and hear more or less and know something about it 171 Q. Will you state to this committee your opinion in regard to the making of corners in reference to its effect upon commerce and its unflueuce upon the public welfare ? A. I think it is injurious to legitimate trade; it unsettles values and puts at a tictitious price articles that are speculatively dealt in ; especially is it so in the case of grain and provisions. Where there is no anticipation or expectation of delivery of the actual product, but simply a paper transaction. The legitimate dealer cannot buy these goods upon what should be their true value ; that is regulated by supply and demand and what they are worth in the home and foreign markets, but he must pay the price put upon them or made by those who deal in futures or options without any idea of ever receiving or delivering the product. The process of cornering accumulates products at large commercial cen- ters and they are held for a limited time above their value ; then after that they are thrown on the market and values are greatly de- pressed below their legitimate value, lower than if the distribution had been allowed to go in an even market. Q. Then the system interferes with legitimate trade and the reg- ular order of business ? A. 1 think it does decidedly. Q. Does it enhance the prices of the necessaries of life ? A. It does at times ; it causes them to unduly fluctuate ; there is no reason why a barrel of pork should be worth $20 the last day of April and on the 1st day of May (in consequence of a corner) it should be worth no more than $15 — the result of this manipula- tion. Q. To what extent have you known the necessaries of life to be increased above their natural value by reason of those speculations ? A. It would be difficult to state exactly ; the last witness went over that ground quite generally, Q. Then your opinion in regard to these matters corresponds with the ideas suggested by Mr. Pearce. A. To a certain extent, except that I don’t believe in dealing in options and futures, where there is no idea of delivering the actual product ; I think it is all wrong ; it is simply gambling, Q. Would you call it a system of gambling \ A, It is betting on what the future price will be from day to day and from month to month, Q. Do you consider all such speculation against good public policy ? 172 A. I do» I can understand that a merchant who has sometimes to anticipate his wants, buying goods, receiving them and paying for them in advance, but I refer now to the cases wliere there is no intention of receiving the goods and the parties dealing know not what they are buying or selling in reference to quality and do not care to know. Q. Do you know how much these speculations aflect the trans- portation interests, domestic and foreign ? A. I think at times they injure trade by tying up products for a time, and that is done by these very men who run corners and put a fictitious value upon the product, which, therefore, cannot be ex- ported without a loss. Q. Who bears the burden of the increased price caused by this undue speculation ? A. I think the consumer. Q. Have you any other suggestion that you would like to give to the committee ? A. I don’ t know that I have. Q. Do these illegal speculations to which you have referred affect other branches of business besides those in which they are generally carried on ; is any business besides the grain business affected by this system of corners and dealings in futures ? A. The provision market is decidedly, but perhaps not the grocery deparment so much ; still it extends into almost every thing these speculative operations. Q. What is their moral effect upon business generally ? A. I think it is bad. Q. In what way ? A. It encourages young men to engage in these speculations or gambling and to get a livelihood by their wits instead of by actual labor and legitimate business. William F. Ford,, sworn : Examined by Senator Boyd. Q. Where do you reside ? A. New York city. What is your business ? A. I am a journalist. (2- Coiniect(‘.(l with what paper? yV. With Ih-adstreet’s Journal. Q. For how long ? 173 A. About two years, Q. What is the character of that journal ? A. It is a commercial and financial journal, and political, so far as dealing with business legislation is concerned. Q. Chiefiy devoted to the produce interest, is it not ? A, Not as'inuch to produce matters as to finance. Q. Are yon familiar with the operations of the Produce Ex change ? A. No, sir ; not in detail. Q. Are you familiar wtth the system of making ‘‘ corners ’’ and dealing in “ futures ? ” A. Yes, so far as an outsider, without actually being in the busi- ness, can be. Q. But in your capacity as a journalist you are familiar with it ? A. Yes, but not as a journalist who is constantly on the spot day by day. Q. Will you give the committee your opinion in regard to the whole system of making corners and dealing in futures, in reference to the effects upon commerce and the influence upon the public welfare ? A. Well, sir, it would be idle to deny that ‘‘ corners” are at times so engineered as to have a decidedly injurious effect upon depend- ent trades and the carrying business. The miller is temporarily debarred from purchasing grain, and the vessel-owner has to wait the outcome of certain manipulations. It would be well if the evils admitted could be obviated by a direct and simple law. But it has to be considered whether these effects should be dealt with as iso- lated facts, or whether they are not so far incidental to a genera trade development that to attempt by the arm of the law to arrest the excessive speculation would do far greater injury to legitimate trade than can possibly result from speculation. I believe an affirma- tive answer must be given to the proposition, and am unable, there fore, to find sufficient reason for the enactment of legal measures intended to directly check or prevent speculation. From the general point of view, such direct interference is not within the domain of practical legislation. It is never wise to lose sight of Humboldt’s principle that the law should forbid only such offenses as affect society directly. But, even if it were wfise to in- voke the aid of law, it appears that under the rulings of the courts no effective statute could be devised. While the State courts have generally refused to enforce contracts purely and admittedly specu- 174 lative, the Supreme Court of Michigan having declared that, “ if parties see fit to invest money in such ventures, they must get it back by other tlian legal measures,” it has been decided, as in the opinion of Judge Cole, in a Wisconsin case, that ‘‘a party may go into the market and buy goods which he has agreed to sell and de- liver and that therefore a contract to deliver at afutnre day is not necessarily a gambling or wagering contract^ In the case under consideration the enforcement of the contract was refused, but it was admittedly speculative — i. e., with no intention of actual delivery. Suppose a law to be passed forbidding contracts purely speculative, how can it be enforced ? Who is to say tliat in the case of a given contract for future delivery there exists no intention to deliver the goods? Surely not the parties to the contract, for they are agreed. ‘‘Legal measures ” are not required to adjust their difficulties, as the trade exchanges of the country, for nearly all prac- tical purposes, are a law unto themselves. I am of the opinion that there is more “ law ” existing to-day as a menace to gambling in stable articles than can be enforced. If a contract to receive or deliver at a future day is not necessarily a gambling contract, as asserted by the Wisconsin court, it is difficult to see what can be done. Where the attempt has been made the result is flat failure. The statutes of Illinois provide as follows : “ Whoever contracts to have or give to himself or another the option to sell or buy at a future time any grain or other com- modity, * or corners the market, or attempts to do so, in relation to any such comitiodities, shall be fined not less than $10 or more than $1,000, or confined in the county jail not exceeding one year, or both, and all contracts made in violation of this section shall be considered gambling contracts, and shall be void.” This law was passed some years ago, but no convictions nor ar- rests have ever been made under it. So far as can be seen, the only effect of the law has been to sharpen the wits of the members of the Chicago Board of Trade as to ways and means for evading this and all similar legislative devices. It is sought to check speculation in order that the sharp fluctua- tions supposed to 1)0 caused by it may be lessened or entirely stopped this to the end that legitimate trade may not continue to be injuri- ously affected. I give herewith fluctuations in the price of cash wheat during the month of March for eacli of the last fifteen years, the prices given being that of the first day, the lowest, highest, and the closing quotations for the month, with the range: 175 Fluctuations in the Price of Cash Wheat during the Month of March for Fifteen Years. First Lowest Highest Closing day. price. price. price. Range . 1867 $1 87i $ 1 87^. S 2 15 $ 2 15 S 25f 1868... 1 94: 1 89 2 00^ 1 92 Hi 1869 1 1 08i- 1 1 lOf 06f 18T0 79 74-J 85^ 76|- Hi 1871...,..., 1 22f 1 22| 1 26J. 1 04i 1872^ 1 22| 1 18i 1 24i 1 20 06i 1873 1 64:J 1 64 1 72^ 1 66 08i 1874:., 1 54 1 50i 1 59 1 57i 08i 1875 1 13i 1 in 1 21 1 m 08i 1876 1 25 1 24 1 31 1 28 07 1877 1 40 1 40 1 49 1 48 09 1878 1 27 1 23 1 33 1 29 0 1879 1 13 1 13 1 16i 1 14f 013i 1880........ 1 48i 1 37i 1 1 38 Hf 1881 1 I9i 1 19i- 1 26i 1 24i 07 1882,,, ...... . 1 33J 1 29J 1 44i 142J 15 The speculative “ call on the New York Produce Exchange was instituted three years ago. The month of March is thought to be a fair month for purposes of comparison. The record of prices does not show that fluctuations have been more violent since speculation in the staple crops came to be so widely diffused, and so large in volume. The truth is that fluctuations in the prices of staple arti- cles have not been more violent during late years. I append a state- ment showing that the tendency has been toward uniformity of price as exact information concerning the yield of staple crops becomes more easily accessible to the public and the rapidity of ’communica- tion increases. [Exhibit marked Left to itself I believe that speculation will become less violent as the work of crop reporting reaches greater exactness and promptness, and transportation facili- ties increase and improve. It is perhaps worth while to suggest the need of more severe pub- lic condemnation of those who gamble in- stocks and grain while oc- cupying positions of trust. The evident disposition is to only con- demn those who lose. And there is room for society’s inflicting more severe punishment upon the speculative embezzler. As the clearing-house principle finds further extension, betrayals of trust become more heinous crimes. ^Prices for the years down to and including 1872 are Chicago prices ; or the re- inaining years New York prices. [The daily prices in detail are given’^in Exhibits marked ‘ ‘A.”] 170 I hold ill my hand a telegram from Chicago, recently received from a judge of a Chicago court, which says no convic- tions nor arrests have occurred under the law forbidding specu- lation in staple articles, but contracts have been held void in civil suits, ‘‘ see cases in 78th, 79th, 81st and 83d volumes of Illinois re- .ports.” I also submit to the committee the following statement as an Exhibit (put in evidence and marked “ B”). In former years liuctuations were exceedingly violent. EXHIBIT B. One of the most marked results of the introduction of steam transportation is that prices of commodities necessarj'- to life have not only been rendered more stable, but the existence of local markets with widely divergent prices has been placed among the things that were. For grain, at least, there is but one market — the world. It is a mercantile maxim that the surplus kills the price ; hence? if paying prices are to be kept up, there must be opportunity to get rid of the surplus. The facilities for cheap transportation provide an outlet for this surplus, which secures to the producer a guarantee against ruinous prices as the result of an unforeseen and abnormal abundance. On the other hand, a slight deficiency in an article like food effects an abnormal increase in price if there is no opportunity of supplying the deficiency through importation. In the English de- bates upon the corn laws in the early part of this century, it was estimated, upon data furnished by Mr. Tooke in his “ History of Prices,” that a deficiency of one-sixth the English harvest re- sulted in a rise of at least 100 per cent in the price of grain. An- other estimate, by Davenant and King, for the close of the seven teenth century, corroborates this apparently excessive statement Their estimate is the following : For a deficit equal to 1 - 10 . . 2 - 10 . . 3 10. . 4 - 10 . . 5- 10.. There will be a rise in price of 3-10 8-10 16-10 28-10 45-10 This could only mean misery and starvation for the poorer classes ill case of a deficient hiirvest; but free importation of grain and cliea]> 1 i’aus|M)rtatiou have set aside the fear of any such results. No. 2 SPRING WHEAT AT CHICAGO. DAILY PRICES, MARCH 1869. No. 2 Spring Wheat At Chicago, Daily Prices, March 1868. ■f ' . * rr. ■> ( \ \ I I I i ■> i ( ( ^ >< >»:•;?;>y jw>; »«^>; xaot; yc^i:i; NO. 2 SPRING WHEAT AT CHICAGO. AVERAGE DAILY PRICES, DURING MARCH 1872. 74- yy t/r ^ ^ OT-ZTTTTTT rw 1 TTT IZ VV I AVERAGE DAILY PRICES, MARCH 1873, XX No. 2 MILWAUKEE SPRING WHEAT AT NEW YORK, AVERAGE DAILY PRICES.March 1875. ;s? NO QUOTATION ON 2Trt< 1.13 SAME— WHEA T— MARCH— z8j6. » -y I I f ,• Ubi^ahy rwf ‘^ MWnia r !"+■ I !,. ■ ■■ r' ) '■ I 1 . 'V-. J,. ■^, yf; _ -r' f;- i - . ■• ■ _i ;■ •.* I ';V gcyy; y^»:vg y>cy; No. 2 MILWAUKEE SPRING WHEAT AT NEW YORK. AVERAGE DAILY PRICES, March 1877. SAME — WHEAT — MARCH — 1878. 1.23 NO. 2 RED WINTER WHEAT AT NEW YORK. AVERAGE DA /LV PRICES, MARCH 1879. No. 2 RED WINTER WHEAT AT NEW YORK. Daily Prices During March i88i. rt Vi* ii No. 2 RED WHEAT, AT NEW YORK— New Rule. March i88j, L iqA :v:i 1 : ■- y ; 'i- - •{ -' ■ I •■'■ > - ;■■• ^ ; IV t , \ .-V? . , I- ■ . f ■—-t-"' I / t p'!' ■ is -t' ■- ■ ^■‘1'^'- . ■ Qf y. i^ r'-Cf fi;- I P^r.:-:.,. !' 1 ■ -i->:. r/ r-t. ■ V; ■ i::r iTri: •;f.-'‘ -f'‘ >•’.! ■( ‘■'' ’•V w. ■:/ tT""' ■ I -:mp ^■- i - ' V , fRii: ©■’' .' V ! t • -y h. ■3* 1 ■:'• '-^f , -1' : ■ 1 -.-/4 ■' !if'. '•('1 y No. 2 RED WHEAT, AT NEW YORK— New Rule. April 1882. Highest, Lowest, Closing Prices, Cash. Opening, Highest, Lowest, Closing Prices for May Delivery. T" v • , ■' '. ' ‘{^ V. ( - »" S i CORN. HIGHEST, LOWEST AND CLOSING PRICES EACH DAY, March 1882, .Spot, at New York. xApril Delivery, at New York. ! ffMivrpct Of m . Tv ^r ., , ( j; \ ( \ ■' ' 1 ; j CORN. HIGHEST, LOWEST AND CLOSING PRICES EACH DAY. April 1882. .Spot, at New York. May Delivery, at New York. PETROLEUM. Crude, Certificates — Opening, Highest, Lowest and Closing Prices at New York. March 1882. 0.7 REFINED PETROLEUM. !«■«». ‘»i . -A i-' ,\ '. i .1 '^ •■■ . < i ;4. y • I ] < I i J ’■i 'W- • tv-;.. rr»r»t/rr> Of THE or ., • V A ) PETROLEUM. Crude, Certificates — Opening, Highest, Lowest and Closing Prices at New York, April 1882. > v« ^ J "i ' ’ ! i ^ , •"• . i' /f'.r f; r ;•*!» - ;/'X' ff »lf«/.pTVrk {■!Bi?ASy Of the Of ,, , . I . '> I I '. •■a & f i COTTON. Middling Uplands — Spot, at New York. March 1882, 3-16 Vs 1-16 0.12 15-16 % 13-16 % 0.11 11-16 Middling Uplands — at New York — May Delivery. OPENING, HIGHEST, LOWEST AND CLOSING PRICES EACH DAY. .56 • 54 .52 .50 .48 .46 .44 .42 .40 .38 .36 .34 .32 .30 .28 .26 .24 .22 .20 .18 .16 .14 .12 .10 .08 .06 .04 .02 12.00 Middling Uplands — Spot, at Liverpool. June — July Delivery at Liverpool. COTTON. Middling Uplands — Spot, at New York. April 1882, X 3 5 G 10 11 12 13 14. 15 IT 18 19 20 21 22 21 25 26 27 28 29 . . — ■ - — ; -- — — — - - - Middling Uplands — at New York — June Deliver)^ y4. 3-16 % 1-16 0,12 OPENING, HIGHEST, LOWEST, AND CLOSING PRICES EACH DAY. Middling Uplands — Spot, at Liverpool. July-August Delivery, at Liverpool. 1 3 4. 5 Q 11 12 13 14. 15 IT 18 19 20 21 22 21 25 26 27 28 29 5S-64 _ 55-64 54-64 53-64 54-64 B3-64 52-64 51-64 X 52-64 N V 51-64 50-64 50-64 49-64 6^d. 47-64. 46-64 z. -X- 49-64 6^. 47-64 46-64 45-64 45-64 44-64 43-64 42-64 41-64 6>id. 44-64 43-64 — / 42-64 41-64 6?fed. - / 177 The effect of railroads and steamships upon the uniformity of prices is even more marked. In France, for example, in 1817 the difference between the highest and the lowest prices of grain in different parts of the country was 45 francs per hectoliter. In 1847 the average difference w^as 26 francs. Since 1870 the greatest difference at any time has been 3.55 francs. The same tendency is observable if the prices be compared between various parts of Germany. Between nations, too, the same tendency is observable. The fol- lowing table represents the price, in silver gulden per hectoliter, of grain for various periods : ■ England. France. Belgium. Prussia. 1831-30..... 10.25 7.35 6.44 5.65 1831-40 9.60 7.61 7.31 5.37 1841-50....' 9.15 7.89 7.99 6.41 1851-60 9.40 7.84 9.65 8.07 1861-70 8.80 8.69 9.24 7.79 One cannot observe such a movement in prices as this without recognizing that the margin for speculation in grains is tending to- ward narrower limits, and that, as the conditions for a perfect mar- ket come to be more nearly realized, that margin will be rendered still more contracted. By Senator Pitts : Q. Before you had these corners ? A. Yes. By Senator Boyd : Q. Do you desire to explain these exhibits? A. Ho, sir ; they explain themselves. I would call attention to the cotton corner, at Liverpool last year, when the action of the cot- ton spinners at Manchester and Oldham paved the way, for the cor- ner. Spinners sold cotton here short’’ for delivery in September, thinking the crop would be a large one, this was known as the Banges Corner ; ” when September came round Liverpool men had the cotton, and the spinners had to pay the difference. Q. Do you know how the system acts upon the milling interest of the country ? A. Yes; I think it temporarily affects the milling interest, but I think the millers are men able to hold their own, and are as strong as the men on the Exchange ; the milling business of the country is in strong hands, especially in the north-west. 23 178 Q. Would you call these speculations illegitimate dealing in “ fu- tures ” aud making ‘‘ corners ? A. I cannot say that, as a general proposition, I would call a ‘‘ cor- ner” illegitimate; 1 could not say that any body of men so engaged would be conducting an illegitimate business; I could not apply the term ‘‘illegitimate,” except to individual trade; “illegitimate is a relative term. I cannot say as a general proposition, that a “ corner ” is “ illegitimate ; ” I cannot see how buying up grain by speculators, who have advanced information as to the crops, is “ illegitimate.” It may have a somewhat beneficial result, as if the crop is short it may have the effect of doling out the supplies in a manner calculated to make the crop go round. Q. Don’t you know that dealing in “ futures ” and making “ cor- ners” has a tendency to unnaturally enhance the prices of commodi- ties and the necessaries of life? A. No, sir, I don’t know that I have any evidence to teach me that. Q. If it did so would it not be an illegitimate transaction ? A. I cannot say that it is an illegitimate transaction for a man to set about enhancing prices unless he employs illegitimate means, such as sending out false information; I can only apply the term “illegitimate” to the methods he employs. I conceive that this speculation is more rife during recent years owing to the more wide- spread information in regard to the crops. Crop reports have come to be more thoroughly done, and for the time being they tend to di-aw more persons into speculation. The State reports of Illinois, Ohio, and some other States and other wheat States have become fairly trustworthy. When it becomes generally understood that a given line of crop reports are trustworthy, people will wait before going into speculation until, for the most part, the reports are made known, when nobody would want to speculate. Q. Don’t you think that any system of speculation which tends to disturb the natural prices of commodities in the market is illegal? A. Only so far as illegal methods are employed. I can conceive how parties may proceed by false information in these matters. I think, however, that the dealing of one may fairly offset thnt of another. I admit that these are temporary “ short ” corners ; by tlie diagram which I have furnished you will see what was the state of things in Chicago in 1870. Look over that bill ; (Senate bill on this subject shown to wit- ness*) what is your opinion of tliis bill generally? A. I think the ])rinci})le is unwise, for the reason that it imposes a tax on tlie sales of nnu’cliandise on the New York Produce Ex- 179 change whether for casli or future delivery ; that it is a check upon the development of the clearing-house principle ; that it checks the rapid movements of trade which are a marked characteristic of modern times. I conceive that the provisions of this bill are unsound for the same reason that I think a tax on bank checks is very unwise, because it discourages the use of checks in commerce. 1 believe in a free movement so far as practicable, Q. Do you not think that it is the natural right of the consumer of all products to obtain those products at their natural value — at a value fixed by the laws of supply and demand ? A. Yes. Q. Don’t you think that any system of speculation which inter- feres with the trade and compels the consumer t oay a much larger price for his articles and necessaries of life than the natural value is wrong ? A. As a consumer I would say yes to your premises, but I don’t think your premises are sound, Q. Which premises ? A. You ask me first — if any influence — if the producer should not have a natural price, as fixed by the laws of supply and demand ; if so, yes. Now you say if any influence given him other than an average price is it not wrong ; you ask me to admit that it is so. Q. Suppose such a speculative system to exist ; if it does exist, is it not wrong ? A. I don’t concede that it exists. Q. If it does exist, is it not wrong to allow it ? A. I don’t think any thing is right which gives him a price that does not come from the natural laws of supply and demand. Q, Is it not a fact that the system of dealing in corners and futures does frequently tend to enhance the cost of the necessaries of life far above their natural value — above the laws of supply and demand ? A. No, sir; I can buy a commodity for a certain market, and it will take care of itself, if the purchase is based upon the laws of supply and demand, else it would be a failure ; if a man makes a deal in grain with the statistical position against him he is fined pretty heavily. Q. What is the object of speculators in making corners, if it is not to enhance the prices of the necessaries of life, or of the articles ill which they deal ? A. T don’t understand from this point of view the advantage of making a corner to enhance the price. I understand a man makes 180 a corner to take advantage of the situation which enhances the price. Q. Take Mr. Keene’s corner, where a large quantity of grain was bought and the price run up to a point beyond what it would liave done if that corner had not been made, was not that so? A. I cannot speak absolutely ; I only know by representation. You mean a wheat corner, which would have increased the price if he had succeeded with the corner. Q. He did for some time. A. He paid two or three millions for it. Q. But wdiile the pricq was held at this high range the necessaries of life were increased in price, and the cost of living was increased* Was that not illegitimate and unlawful? A. I don’t conceive that it was unlawful if he did not employ unlawful means. Q. Have you any 'other statement? A. Ho, sir : nothing occurs to me. Q. Speculation in the grain market in March is not so active as in other months ? A. Either March or April is the dividing line between two crops, I conceive that in time you will know in the United States, at a given date, what grain is held in Europe and elsewhere. I look to the State reports, and those resulting from private enterprise, to largely develop it, and then you can take these two and put them together. I conceive that eight or ten men are able to extract this information from the country in advance of the rank and file, and if the people on the Exchange will follow what they conceive to be the right course, they may make a great movement sometime, and the means of doing these things are getting to be more easy. The fluctuations in the United States, I have been informed, were con- siderable in 1847 in the staple article. Q. AThat is your theory in relation to the present increase in prices of meats and breadstuffs ? A. It arises from two causes ; first, the short supply, and second a natural rise in response to an active trade ; within the last three years prices have naturally gone up ; every man has been trying to make a ])rofit on his purchases ; I think the “bears” and “bulls” work hard, and we ship our products to Europe to pay our debts, instead of gold, and I see no cause for alarm if we shipped gold. I have conlidencc in the collective judgment of the business commu- nity. Adjourned. 181 Buffalo, N. Y., Novemher 11, 1882. # The Committee met at the Tifft House in the city of Buffalo, H. Y., on the 14th day of November, 1882. Present — Senators Boyd, Cliairman, and Brownino, of the com- mittee, John W. Corning, sergeant-at-arms of the Senate, and Dan- iel A. C. Cooney, clerk of the committee. W. S. Jenkins was duly sworn as stenographer. Alonzo Richmond^ being dulv sworn, testified as follows : By Senator Boyd : Q. Where do you reside, Mr. Bichmond ? A. At Buffalo. Q. What is your business ? A. Our business is commission merchants, handlers of grain. Q. Are you a member of a firm ? A. I am of the firm of J. M. Bichmond & Co. ; we have handled grain here for a great many years. By Senator Browning : Q. How many years ? A. I have been connected with it since 1866. It was about eight or ten years before that my brother was in the business ; I was at that time in Chicago. By Senator Boyd, resuming : Q. How long have you been in the grain business altogether ? A. W ell, I have been for fifteen or sixteen years. Q. In what different places ? A. In Chicago and in Buffalo. Q. How long in Chicago ? A. I commenced to live in Chicago — I left Syracuse and went to Chicago in the fall of 1856, and remained there until 1866, and since that time I have resided in Buffalo. Q. Are you familiar with the system of making corners and deal- ing in futures ? A. I think I am. I have paid considerable attention to it — that is, I have thought of it considerably. I have never been in the business, but I know what it is, from observing it and the man- ner in which it is done by others. Q. Will you state to the committee what your opinions are in re- lation to* the whole system of making corners and dealing in futures 182 with respect to its influence upon commerce and its influence upon the public welfare ? A. I think it is ajgreat evil, and I have thought so for many years. As early as 1870, I saw that this system was increasing rapidly and I was satisfied that it was not an evil that would cure itself, and I then wrote to the secretary of the Chicago Board of Trade, the secretary of the Toledo Board of Trade, and the secretary of the Board of Trade of Milwaukee, also two gentlemen in the city of New York, calling their attention to this system of option trading, and saying that un- less something was done to break it up that it would destroy the le- gitimate business; that it made it difficult for men who wanted to do an honest business and a legitimate business, and made it a great deal easier if men wanted to do this gambling business. Q. You speak of option trading — is it identical with this system of dealing in futures ? A. Yes; this system of trading in futures commenced with the system of grading grain. It is not possible to do it the way that we handle grain in Buffalo, nor was it possible for it to be done in the city of New York until recently, because’when a cargo of grain came to Buffalo it was stored separately and sold by sample. But in the western cities, where the grain is brought into the cities by railroads, each railroad had connected with it a warehouse, and the warehousemen found that it would be almost impossible for them to keep separate each car-load of grain. At an early day the warehousemen commenced to grade the grain. There became a dissatisfaction with the men who owned the grain about it, and claiming that if they did not grade their grain differently, put it up higher, they would send it to another warehouse* — where there were two warehouses on the same track — and therefore at an early day they started this system of grading the grain, appointing inspect- ors to examine the wheat, and grade it, as the Board of Trade de- nominated it, into what was No. 1 wheat, and No. 2 wheat, and other lower grades. From that time they ceased to deal in grain and dealt in receipts of grain. As the volume of grain increased they issued more receipts and made it possible for them to do a larger business. I called the attention of the men at one time in writing to them, although I did not believe in it, T told them it would be better for you to abolish your whole system of inspection than to keep this option trading going on, but it would be almost impossible as long as the grading svstem continued ; and I called their atten- tion to this thing, which I was satisfied was an illegal business'. I was 183 satisfied that it was an illegal business for the reason that it was, I thought, contrary to honest dealing, and my opinion has been sus- tained by a recent decision ^of the Superior Court in Oliicagu, 111., which declares that this option trading, or the dealing in grain where no grain is to be delivered, is illegal and cannot be enforced. I simply called the attention of these Boards of Trade to my opinion and asking them not to enforce option contracts. Said I, Gentle- men, if you will not enforce that system of trading in future sales when no property is designed to be delivered, you will make the trade so hazardous that men will not be likely to go into it — if you do not enforce the collection of these illegal trades.” But that they would not do, because as this business increased more men went into it, and in a little while the great majority of men in the trade were in that way of dealing, and it was therefore for their interest to keep up the business. They try to get men all around the country to do it, because they get a commission out of it — and the result is that to-day there is hardly a city in the United States where this option trade is not now going on. Q. The system of dealing in futures and options has been charac- terized by witnesses who have given their testimony before this com- mittee heretofore, as gambling — -what is your opinion about that? A. That is my opinion ; I believe it is a gambling business. Q. What is its effect upon the public welfare? A. I think it is demoralizing ; I think it has a tendency to drive out a class of business men that would buy the property and ship it and do what we call a legitimate business, it fosters a class of men who are more hazardous and disposed to do this gambling business, and what we call the solid business men are out of the business — going out of it. Q. Have they been driven out by this system ? A. They have been driven out by this hazardous business. Q. Do you know to what extent the prices of bread-stuffs and other produce has been increased by reason of the system of op- tion dealing and dealing in futures ? A. Well, I never have figured that. My attention has never been called to it, to figure it. I know that a great many times they are at higher prices than they would have been if the market had taken a natural course, a natural channel. I think they not only af- fect the price of grain, but are injurious to those interested in the shipping of grain. I have known these corners to keep the 'grain back so that vessels would come down without freight, and I know 184 : last year tliere was a time wlien boats came down froiri Cliicairo t(» Buffalo light, or with but enough for ])a]last. Q. You mean that they had not their full cargo? A. They could not get a cargo there, while at the same time there was a large quantity of grain in <-he elevators, held hack by those who run the corner. By Senator Browning : The grain was held hack ? A. Yes. Q. On whom does the burden of this increase in price of bread- stuffs and other produce fall ? A. I think it falls on the consumer ; the poor men suffer the most. Q. Then you have ho hesitation in asserting that the system of making corners, dealing in futures and options, increases the price of produce and hreadstuffs to the consumer ? A, I think it does ; not only that, hut, I think, it makes all busi- ness more uncertain ; for instance, a man that wishes to manufacture flour or deal in provisions, it makes it very uncertain for them. Q. Then the milling interest is injured by this system ? A. Yery much. Q. And of course all laborers employed by t#ie mills are injured ? A . Yes, sir. Q. By being deprived of constant and steady employment? A. Well, mills may do business, but they do it very hazardously and may do it at a loss ; they will probably have to keep up the price higher than it should be ; I think not only the milling interest, but you take the pork business and any thing where it is possible to corner the market, it will make prices higher than it would be if left to follow the natural law of supply and demand ; the man that con- sumes it is the man that it falls the hardest upon. Q. What would usually fix the natural price of produce ? A. The law of supply and demand should fix it ; there is a mys- terious law in trade that no one can exactly saywhat it is — but so it is — and if trade is left to follow its natural channel it will regulate itself. Q. And this system of gambling, to which you refer, interferes with the regulation of the prices by the law of supply and demand ? A. It does; it keeps it in an unnatural state, a fluctuating state, a feverish state. (^. What remedy would you propose or suggest for this evil ? A. I tliirdc that ])robably it can be done by legislation and proba- bly the general government ; T think the Slate of New York should 185 pass a law making it illegal to deal in a man selling a thing that he has not got, particularly in grain — in the necessities of life ; a man has no right to sell any thing that he lias not got ; I have no objec- tion to a man selling any thing that he knows he can deliver ; 1 think, as this system of trading now extends all over the country, the gen- eral government should take hold of it and pass a law making it penal; I don’t think it can be regulated unless you do ; it will not regulate itself ; it is a thing that will keep growing ; I saw it in 1870 and I see it now ; I am surprised to see the growth of this system ; it is wonderful ; somehow or another it fostered the love of gambling^ and keeps in itself a certain stratum of society, and that is the men that have got hold of this business. Q. Have you any other suggestions that you would like to make in reference to this matter ? A. I do not know that I have ; if you want I should explain that it is confined to these places where this grain comes in in warehouses ? Q. Any thing of that kind that you think would be advantageous? A. I say that this system is confined exclusively to places where grain comes in by railroad and in car-load lots, and is sampled and graded ; those are the places ; I do not know that there is any other way but this grain must be graded ; but I say in no other part of the world is this done as it is done in Chicago and Milwaukee and Toledo, and now to some extent in Hew York, where this grain is warehoused, as before named. Q. Is it conducted in that way in Hew York ? A. Since they have conducted this system of grading grain it has ; it comes from that idea — from that system. • Q. Are you familiar with the workings of the Produce Exchange in Hew York city ? A. I am not. Q. What effect has the making of corners — the accumulation of vast quantities of grain, as you have stated, upon the railroad in- terests ? A. It is disastrous to all transportation interests. As I said be- ' fore, the interest of all men in society is to let the law of trade govern itself — let’ property move as it naturally would without any inter- ference. Freight men that want to do a legitimate business in trans- portation, or any other business, is affected if it is interfered with. Q. Do you know that many of these speculators who deal in fu- tures and corners and options have become rich by that business ? A. Well, I do not know; there maybe some. My observation 21 186 around in this section is that many of them have become poor; it is a gambling business and I think it has been very disastrous to them. I hear of some men that have made money out of it, but I know of a great many who liave lost by it ; I think it is very -disastrous and very demoralizing. Q. Have you a Produce Exchange in Buffalo ? A. Yes, sir. Q. W ere you ever an officer ? A. I was at one time. Q. When ? A. In 1877 I was president of the Board of Trade. Q. Who is the president now ? A. Mr. Schoellkopf. Q. What is his business ? A. He is a miller, and in many other kinds of businesses. Q. What do you sell on the Produce Exchange in Buffalo ? A. We sell grain. Q. AYhat else ? ^ A. Just at present it is more confined to grain, and flour is occa- sionally sold. Q- Pork? A. Occasionally. Q. Lard. A. Sometimes. Q. Petroleum ? A. I don’t think they sell petroleum. Q. At the time that you wrote the letters^to Chicago and Cleve- land, were you an officer ? A. I might have been one of the directors. Q. Did you write upon authority, or upon your own motion ? A. My own motion. Q. You thought that it- was an evil that ought to be brought to the notice of these people, and you wrote ? A. Yes, sir. Q. What evils did you see then ? ' A. I saw that the system was growing, and saw that it would continue to grow. Q. When did they begin grading grain ? A. I cannot remember definitely ; about 1857, I should say. C^. Al)out foui- years ago? A. ft is a good deal before that ; I went to Chicago in the fall of 1856 ; there was no grading tlien by warehouse ins])CCtors, but a few 187 years afterward it began. Then at that time people made up cargoes and sold by samples, but a few years afterward they commenced the system of grading. Q. You have calls here every day on grain ? A. I think they do. Q. How many times ? A. Once a day, I think. Q. Are they all recorded ? A. I think they are. Q. What is^the percentage of legitimate sales comparev^ with the number of sales each day on the floor ? A. I have had very little to do with the business of the Board of Trade for several years. Q. You cannot answer that question ? A. I cannot answer that question. Q. Who is the secretary of the Board of Traue now ? A. William Thurston. Q. Do you know any thing about the bucket-shops in this town g A. I know that there are such shops. Q. What do they sell at these bucket-shops ? A. This option grain. Q. You can go in|;o one of these bucket-shops and say, I want to buy 50,000 bushels of grain to be delivered next month ” and put up a margin ? A. 1 think. so. Q. You know that tnere are bucket-shops? A*. Yes, sir. Q. They have been described to you ? A. Yes, sir. Q. Do you know any thing about policy-sbops where they sell policies on lotteries in Kentucky ? A. Yes, sir, I have heard of such things. Q. Are you familiar enough with the bucket-shops and policy- shops to say that the}^ are very much alike ? A. I think they are very much the same thing; I have always looked upon it as a gambling system. Q. Can you tell us what ought to be the prices of grain and what is the price of grain in consequence of the options for future de- livery — in other words, how much does that option trade increase the price over its legitimate value ? , A. I do not know as I could tell. But I made this assertion to the secretary of the Board of Trade of Toledo, Chicago and Mil- 188 wankee in 1870 — then the business was small to what it is now — then I figured that the price was several cents a bushel higher than it would have been, than the market would have been if it had been allowed to regulate itself by the law of supply and demand, so much higher that it made it unprofitable for a man to attempt to buy grain in that market and ship it. I have never looked up exactly what the difference vras. Q. You say that this business of speculating in grain is confined to places where there are warehouses ? A. Yes, sir. Q. Don’t you know that there are bucket-shops where they sell the same as they do in this town, throughout the Union ? A. They do it, but tliey do it for grain in Chicago ; they do not do it here ; they don’t do it for grain that is warehoused in Bufialo j they do it for grain that is warehoused in Toledo, Milwaukee and Chicago, principally in Chicago, because that is the great grain cen- ter. It is confined to places wdiere grain is graded and receipt given for it. The dealing is not in grain, but 'in receipts for grain. Q. It is on the price ? A. It is on the price Q. Ilise or fall? A. Uise or fall. • Q. A man puts up his margin and loses or wins according to tne sales that day or the day previous ? A. Tes, sir. Q. These places exist throughout the Union ? A. I was surprised to find one in Washington. Q. That isn’t a grain center ? A, No, sir, and I was surprised to find in Syracuse two or three there. (^. They call them bucket-shops ? A. Yes, sir. Q. It is a' fact that these shops do exist and receive margins to pay the difference between the rise and fall in the value of grain ? A. So I understand it. Q. It occurs to me that some of the witnesses stated that it affec- ted the canal boat interest, in that they were taken here occasionally and could not get loads to bring — is that a fact? A. Yes, sir. I remember a time when we had 5,000,000 or 6,000- 000 ]>uRliels of grain held in our warehouses by parties who held the corner in Chicago, and of course it was not for sliipinont. 189 Q. What do you know about this Western Ware-house associa- tion here in Buffalo? A. I know that there is an elevator association that has been here for quite a number of years. Q. Who is the president ? A. Mr. Abell. Q. Who is the secretary ? A. Mr. P. G. Cook, Jr. Q. Do they both reside here ? A. Yes, sir. Q. Do you understand about this bucket-shop business? A. No, sir, I do not. Mr, Charles G. Bru7idige,JhQmg duly sworn and examined by Senator Boyd, testified as follows : Q. Where do you reside, Mr. Brundige ? A. In Buffalo. Q. What is your business ? A. Commission shipping merchant. Q. Are you a member of any firm ? A. Brundige, Bruce & Co. Q. Are you a member of the Buffalo Produce Exchange ? A. Yes, sir. Q. How long have you been in the produce business ? A. About thirty-five years. Q. Are you familiar with the system of making corners and deal- ing in futures and options ? A. I am dealing. Q. And by observation? A. Yes, sir. Q. Will you state to the committee your opinion concerning the whole system of making corners and dealing in futures and options, with respect to its effect upon commerce and its influence upon the public welfare ? A. The whole system of “corners” and “options” I look upon as being exceedingly injurious to the commercial interests of the community, * and it is not confined merely to these articles which are usually dealt with ; it affects every branch of trade, in my opinion, because it un- settles values, particularly in grain, and embarrasses very much legitimate trading ; by legitimateTrading I mean the baying and sell- ing to meet an actual Avant for consumption ; and its influence in the community as to the morality of the thing, I think it is exceed- ingly pernicious and is growing more and more so ; for instance^ partially, mostly Ay information ! rather than by actual 190 clerks in the stores, in the dry goods stores, if tliey can accninidate a few dollars to put up for a margin they put it up on one of these deals; when they lose their money, as they usually do, they want to find it where they lost it, and they often fall into crime in order to supply their passion for this gambling. Q. Then you have no hesitation in designating this nsa system of gambling ? A. Purely so ; that is my opinion in general upon the matter. Q. What is its effect upon the transportation irjterests of the country ? , A. My opinion is that it has a deleterious influence upon that, in that it deranges the current of transporation, sometimes depressing and sometimes increasing the rates. In order to meet the requirements of these corners grain is sometimes held back so that, for instance, in regard to the canal boats, they come here and wait for a long time to get loads, and frequently accept very low rates rather than to lie idle ; and sometimes in obedience to the behests 'of those who hold a considerable quantity, it goes up, Q. It interrupts the legitimate industries connected wdth the transportation interests ? A. Yes, sir. Q. What effect has it upon the prices of necessaries of life? A. The general tendency is to increase them ; to illustrate — w^e look to what is called the supply and demand to regulate the price of grain. When these corners are being run, of course they will not ship it to meet the requirements of grain in other places. They hold ^ back for their own, purposes. I am accustomed to re- ceive cargoes to sell on commission, but wdien these corners are running no one will sell on commission, because of the danger of loss. If I want grain to supply those who are accustomed to come to me to purchase for their consumption I am compelled to buy, and if I buy in Chicago, I buy at a great risk of losing, and the re- sult is that I think grain is several cents a bushel higher in Buffalo than it would be if it were not for these corners — that is, when the corners are existing. Q. Do option speculations and dealing in futures tend to in- crease the price of breadstuff’s ? A. Yes, sir, I think they do. It takes the price out of the rela- tion of supply and demand. Q. Upon whom does this increase in price fall? A. Ultimately upon the consumer. 191 Q. Does the producer derive any benefit from these speculations ? A. I shouldn’t think they did in the long run. Sometimes they lose and sometimes they make on it, but I should think that the producer gets a higher price than he would if it were not for the option deals. Very likely if a farmer gets his grain in Illinois when they are running the price up very high, he gets more. The prices on the produce board in Chicago are mostly fictitious. Q. When they let the accumulated mass of grain go into the mar- ket it has a tendency to depress the prices ? A. Yes, sir; below its normal rate. Q. Then the producer, if he takes his grain to market, cannot get as good prices for his grain as if there was no interruption in this way '? ^ A. No, sir. Q. So that in that way the producer is sometimes made to suffer as well as the consumer ? A. Yes, sir. Q. To what necessaries of life does this system of dealing in op- tions and futures and making of corners extend ? A. Mainly to the wheat, corn, oats, pork and lard, those are the principal articles that are dealt in in these places. Q. There is nothing to prevent it extending to other products ? A. No, sir ; any product that has an established grade can be brought under this system. Q. What remedy for the evils which result from this system of speculation would you suggest ? A. That is a problem that I have not been able to solve to my own satisfaction. If laws could be enforced with any degree of cer- tainty, they might be suppressed by legal enactment, but there are so many ways of avoiding any law, that I see nothing but the ele- vation of the tone of public sentiment. Q. Would it not be possible to enact a law forbidding the sale by persons of produce not in their actual possession, or which they do not own ? A. That would cut off the selling of actual grain by commission men. We sell grain that is not in our possession, but is promised to us by our correspondents. , Q. Could not an exception be made in that direction ? A. It might be, but that exception would leave a loop-hole through which all trades might pass. 192 By Senator Browning : Q. Is that your opinion ? A. That is my opinion, yes, sir. Q. Could not a law be passed that where there is assurance of deliv- ery that could be excepted, for instance, by a bill of lading — do yon think that would leave a loo]i-hole? A. They can crawl through a pretty small hole. Q. Do you think that a heavy tax on all sales for future delivery would have a tendency to check that system of trading ? A. No, sir, I do not, Q. You think they would pay the tax ? A. I think they would pay the tax; just as a man will impose a heavy fee for license, people will drink ; unless you can elevate the moral sentiment of the people above gambling in grain, you cannot suppress it, in my opinion; if you propose a tax they will pay the tax and the cost will ultimately come upon the consumer ; the fact is that the whole community is corrupted by this system ; it extends to all classes and ages and sexes. Q. That is a pretty grave charge, Mr. Brundige ? A. I know it is, but it is true. Q. You may pass a law forbidding it ? A. Forbidding the dealing in options on the regular Produce Exchanges by calls — by call board on the Produce Exchanges ; but then you would drive the same dealing into the bucket-shops. Q. blow long have you had a call board ? A. I do not know ; we have had a call board here for about four years. Q. How did you get along before that ? A. We have dealt in that way for about twelve years ; offices in Chicago have had their agents here, and the man that wanted to deal in this would step in and tell him to buy so much grain on such a margin ; the agf^nt would telegraph right up, and he would put up his margin with the man here, and then when he chose to sell he would step in and say, “ Sell my grain ;” it is done in that wa}^ now. (F I would like to have you explain the call board system ? A. It is this : tliose who run the call board — the members of the Excliange — will assemble at the ])lace designated and the auction- eer will take his stand, with secretaries near by to record all these tilings, and he says, for instance, “ January corn,” and one or more 193 will say, ‘‘ I offer so many biisliels of January corn at such a price,” and if it is not immediately taken he always lowers his price, and if he chooses, he lowers it still more, until he gets a call, and somebody takes it and it is sold ; then he would offer it for more, may be. Q. The man who says he will take this call in January, he has the privilege of calling upon the person of whom he bought it for delivery in January ? A. Yes, sir. » Q. Do you understand the bucket-shop system ? A. I do not. Q. Have you heard of them ? A. I have heard of them ; I have been through them in Chicago, but just merely to walk through ; I have been in what they called a bucket-shop — a huge blackboard stretched across the room — on which the prices are set down. Q. A good deal like a stock board ? A. Ho, sir; they have chairs there, and put up, say $5. Q. Bet their money ? A. Bet their money. Q. As the prices change on the board the money changes hands ? A. Ho, sir ; they get their prices from the Exchange near by. Q. Have they any of these bucket-shops in Buffalo ? A. I do not know. Q. Or in Hew York ? A. I do not know. Q. Or in any other city in the State of Hew York ? A. Ho, sir ; I know that options are dealt in everywhere, in the villages and everywhere. Q. In the villages ? A. Yes, sir, I presume wherever there is a telegraph station, there is somebody dealing in it. I was in a neighboring village a few days ago, and found that some of the village worthies, as I call them, were engaged in this same trade ; I also heard of a farmer in the vicinity who was obliged to mortgage his farm in order to make up his losses on his futures. Q. Do you not believe it would be Y-^ossible to have a law passed to break up the system of bucket-shops altogether ? A. A law could be passed to break them up openly, but then they Avoiild exist in private, just as gambling dens are existing everywhere. Q. However, it is the duty of the law-making pov/er to discharge all its duty in endeavoring to suppress this thing, is it not ? 25 194 A, That is the duty of tlie law-making power, to be sure. Q. It is the duty of every State to see tliatyou have a good Execu- tive to enforce the laws? A. That is so, but it is hard to get that kind of a man. Q. Then it is the fault of the people ? A. That is so. “ Q. Is there any thing else in relation to this matter that as a good citizen you desire to state? % A. I have a desire that the whole thing might be suppressed, for it is demoralizing on legitimate trade. Q. And it is continuing to grow ? A. It is increasing ; it is dangerous now for a man to buy the grain itself with llie idea — for instance, here is a merchant who is dealing in grain. It is difficult for him to supply his customers because of the manipulations of these corner men. It takes it out of his power to deal intelligently ; he is at the beck of a lot of gamblers. If a man wishes to deal in grain he will take an option call that he can gee rid of in a moment, rather than take a cargo of grain that may take him some time to get it where he can control it, and submit to a loss. He knows when he buys his grain that he is not buying it with the expectation that the natural law will prevail ; he takes his chances on the doings of gamblers, as I call them. Q. What do ^mu suppose will be the ultimate result of this thing if it is permitted to continue ? A. I think it will create a public sentiment that will bring about this reform. Q. What effect would it ultimately have upon the consumers of products, if it continues to increase in the way you have just re- ferred to? A. To be sure, they must submit to paying higher prices than they otherwise would. Q. You think these prices will continue to increase until the con- sumers will be aroused ? A. Ho, sir, I do not think it can be carried to that extent. The demoralizing influence of this trade in unsettling and destroying the number of our young men that are engaged in business, clerks and men just commencing in business, and its demoralizing influence through households will be so great that they will say that this thing must be stopped. It will not l)e through the burdens that the con- sumer bears in conse(|uence of the higher prices, but will be through the moral inlluence which it will have through the community. 195 Q. According to your opinion, tlien, if this state of things con- tinues, the legitimate business interests of those who are engaged in dealing in grain and other products will be totally ruined ? A. 'No, sir, not totall}^ ruined, but they will be subject to great embarrassments, and those embarrassments will create a higher price to the consumer. Q. But you say that at present you have no opinion to offer in re- lation to any action that should be taken by the Legislature with a view to remedy these evils ? By Mr. Browning : Q. As I understand Mr. Brundige, he recommends the abolish- ing of calls and the closing of bucket-shops? A. Yes, sir ; it would have a tendency to check it, but what is now done in public would then be carried on in private, it would have about the same effect as the laws against gambling. Q. Do you know that many people have become rich in this busi- ness? A. My acquaintances who have dealt in this business will gener- ally confess that they are out of pocket, and I hear of people mak- ing largely by it, but like all gamblers, if they keep on they may ultimately be out of pocket. Q. How about the bucket-shops, do they get rich out of it ? A. I do not know. Q. The whole effect is that it impoverishes the many to make rich the few ? A. Yes, sir ; if they are careful and require ample margins and these margins to be kept up, they are the ones that make the money • and I think the dealers as a class are the losers. Kecess until 3 o’ clock p. m . Proceedings of 3 o’clock p. m. M. F. Bensley sworn as assistant stenographer. II. M. Kinne, sworn and examined by Mr. Boyd, testified as fol- lows : Q. Where do you reside ? A. In Buffalo. 196 Q. What is your business ? A. Grain and lake business. Q. Are you a member of any firm ? A. Yes, sir. Q. A¥hat is the name of the firm of which you are a member? A, Kiiine, Wilbur & Company. Q. Do you do business in Buffalo ? A. Yes, sir. Q. How long have you been in that business ? A. Forty years. Q. What does your business consist of ? A. Commissions, handling property for shipment, and of course more or less buying. Q. Are you familiar with the system of making corners and deal- ing in futures ? A. I know of them, and I know their ways. Q. Have you ever been engaged in that business yourself ? A. Ho, sir. Q. State to the committee the system by which these corners are gotten up ? A. It is an organized party, an organized party that get together as we are in this room and go on and make arrangements that they get in this corner all the property they can and squeeze everybody out of all the money they can get hold of and pocket it. Q. How do they go about their work in making these corners ? A. It is exactly like forming any other corporation ; as I said be- fore a half a dozen gentlemen get together, men of wealth and power, they get together and make a certain scheme and make use of that scheme in a way to make a great deal of money out of these various operations, generally a corner of that kind, a party of gen- tlemen get together, it is left to one party, sometimes two, to engi- neer and run this pool, as they call it, and then they buy and con- trol this property ; it is not left to all but^generally to one man, one or two, and it is understood generally that this man that is dealing the pool don’t tell anybody what he is doing, don’t tell them ; that is wliat is called a blind pool. A pool corner is a pool got up by certain individuals, half a dozen men, you may say it is in pork, lard or any one thing, it is generally one article ; they put in so much money and it is left generally in the hands of one man, they select one man to operate and run this pool, and sometimes these men slash onto the market a large amount of property and break it 197 so as to get things lower and squeeze the outsiders ; I cannot explain it any other way than it is a general combination of men to rob the public and rob the people, and they say it is legitimate; the busi- ness used to be a good business here, now it is not worth any thing at all ; most everybody that was in it has been broke, for the reason of this selling ^hort; there is just one concern in Chicago that can con- trol the whole business. Q. Will you explain what is meant by dealing in futures ? A. Yes, sir ; a man sells ten or twenty thousand bushels of grain, or of any kind of these articles, he sells for future delivery and there is no property delivered, no property passes hands. On the first of January you can buy property in Chicago, all you want for the year, and that gives them twelve months to deliver that property, and you can sell it again at any time if you see fit to, that is if the market raises so you can make a profit and sometimes they are glad to get out of it at a loss. There is no property delivered or passes hands, it is merely wind. By Mr. Browning : Q. On the day of settlement they pay the difference to the pur- chaser A. Yes, sir. Q. If there is any coming to him ? A. Yes, sir. Q. If not he is the loser ? A. Certainly. By Mr. Boyd : Q. Is the word option ” applied to this system ? A. Yes, sir; the option is for futures. You may telegraph to Chicago to-day and buy a December option of wheat, or corn, and they will buy it for you and you can hold it as long as you choose. If they buy a December option for you the party selling it can de- liver it to you in one day, or he can do it on the second of Decem- ber, or third or fourth, or at any time, and make the settlement with you. Q. Are there any places in the city of Buffalo where dealing in futures or options is carried on ? A. There is the Board of Trade of Buffalo profess to. They have opened a call board, but the trading in Buffalo is mere noth- ing; it don’t amount to any thing. The trading in ISTew York five 198 years ago did not amount to any tiling, and now it is the great trade of 'New York, and just so with Chicago, but I don’t think tlie trad- ing in Buffalo amounts to any thing, it amounts to mere nothing. Q. How long is it since the system was introduced in Buffalo? A. I should say not over three or four years ; to the outside not over five. I don’t know but Mr. Hazard recollects about it, he was in the business a long time. It was not over four years. Q. Does it seem to be on the increase ? A. I want to say about that Buffalo Board of Trade, it don’t amount to any thing ; there is very little trading on the Board of Trade. Q. In addition to the Board of Trade I understand you have cer- tain institutions called bucket-shops? A. There are some, of course ; may be one or two. I suppose by that you mean they are small institutions ; that is by a bucket- shop you mean it is a small way of doing business, or a place where they do business on a small scale ; there is the Trade room in Chi- cago, what they call a bucket-shop there, and there they sell five hundred bushels of wheat and buy it for five dollars, that is a small way from the regular Board of Trade. There is no trade made in the regular Board of Trade in Chicago less than five thousand bush- els, and in a regular bucket-shop they can buy or sell five hundred. Q. A bucket-shop is a small board of trade on a small scale ? A. Yes, sir; not connected with the Board of Trade. By Mr. Browning : Q. At one place you can lose a million dollars and at the other place you can lose five dollars ? A. Yes, sir ; in a bucket-shop they keep a blackboard and you go in and tell them you will take five dollars’ worth of wheat, or you can buy more if you wish to. Q. These transactions in the bucket-shops are made with the owners of the institution ? A. Yes, sir ; very much so ; some of them have put themselves in the shape of a bank, issue checks, and an operator can settle every minute, if he chooses to — settle the differences every minute ; m the regular Board of Trade room they don’t recognize any trade less than five thousand bushels ; it is nothing but gambling; it is just on the same ])rinci])le, or the same system, as the French pools on horse-races= Q. The (leal is entirely made between the speculators and the proprietors of the place ? 19D A. YeSj sir ; the proprietor gets a percentage of one-eighth or a quarter both ways. Q. Do you know of the existence of any such institutions in the city of New York ? A. I don’t know of any bucket-shops there, but the trading there, I think, is generally on the Board of Trade ; that is my impression ; there may be one or two bucket-shops here, but I don’t know whether they are exactly upon the same principle or not, but pretty much so, as I understand it ; I don’t know as there is any bucket-shops here of rny own knowledge ; in Chicago you will find in the bucket-shop the regular board and on the curb five thousand able-bodied men, there figuring to buy and sell, and to rob or ruin, or do something ; there is five thousand men within a circuit of five hundred feet, that is, including the Board of Trade, the open board, and the bucket-shop and the curb, trying to rob or ruin somebody. Q. It has been suggested to me to ask you if you don’t know of your own knowledge that the men who patronize the bucket-shops in Chicago are men chiefly who have been broken down by their adyentures in the Board of Trade ? ~ A. I know that to be so. Q. You have no hesitancy, I suppose, in characterizing these speculations as gambling ? A. I have not the least, sir. Q. What is your opinion in reference to the effect of this system of making corners and dealing in futures upon the commerce of the country and the public welfare ? A. I consider it injurious to all legitimate business, entirely so. Q. In what way does it affect the legitimate business ? Ac In various ways ; it is difficult to tell the details of all these effects. But for instance a miller buys his wheat to stock up for the winter, and when he buys his wheat he pays a fair price, and the first thing he knows there is a lot of bears comes in’and jumps on to the market and knocks it down fifteen or twenty cents, and a man don’t know whether he is afoot or horseback. We never pretended to sell any thing without we had it to sell and to furnish, and since I have been here I have handled a great deal of grain, and if a ves- sel came in I would sell it, but if didn’t come in I would not sell. We didn’t think of selling any thing unless we had it to sell. By Mr. Browning : Q. You say you are in the lake business? 2U0 A. I am not in tlie transportation business. Q. Yon brin^ grain from the north-west down to Buffalo? A. Yes, sir. Q. Upon the lake ? A. Yes, sir. Q. IIosv do yon get it east, by canal and railroad ? A. Yes, sir ; as directed. Q. Do yon ever find grain held back there so you cannot bring it forward ? A. Yes, sir; a great deal of it. For instance a year ago to-day^ 1 will speak from the best information I have now, that there was in Chicago six millions — fifteen millions of bushels of grain in Chi- cago a year ago to-day, from twelve to fifteen million bushels, and a good deal of it was held by pools, which laid there and didn’t come this way. By Mr. Boyd : Q. How did that affect the transportation interests ? A. That affected the transportation interests very seriously. There was plenty of grain but they didn’t want to send it down here, because they were carrying it there. By Mr. Browning : Q. Were the boats lying idle ? A. Yes, sir ; canal freights to-day are lower than I ever knew them in my life at this season of the year; we are shipping wheat to day. at five and three-fourths. I have known it to be fifteen cents a bushel since I have been in the business for transportation of wheat from here to Hew York, and have seen wheat shipped at three and five-eighths. Q. What does it cost you to ship by the canal boats ? A. Five and three-quarters. Q. What does it cost to ship by the railroads? A. About seven and one-half for wheat. Q. On a bushel? A. Yes, sir. Q. What is the influence of all this system of speculation upon commerce generally ? A. Well, so far as regards that, T think it is very detrimental ; this o[)tion trading 1 think is very detrimental to the whole business of the country; that is my feeling about it. Do you know of any ])articular instances where disastrous results have been caused by this system? A. You can say so far as that is concerned that there is one 201 thousand men that has been ruined by it, but of course you say on the otlier hand that these }3eople put their lingers in the tire and got them burnt ; they have no need to have done so. You can sum it all up, it is nothing more than gambling. Hainan goes to Chicago to-day with one thousand dollars in his pocket and spends it on the Board of Trade, it is just the same as though he lost it at a faro-bank, it is one and the same thing, that is my opinion ; there is no differ- ence. You will find farmers on the Board of Trade at Chicago, lots and lots of them, from the country, and they are there speculat- ing on the Board. You may trace back the failures of this country and I will guaranty if you can get at the facts about it that three- quarters of them can be traced right back to Wall street of Hew York, or the Boards of Trade, I have no doubt about it. Q. Among the Boards of Trade you enumerated the Produce Exchange of New York? A. Yes, sir. A man might consider it a legitimate business, he may go into the mercantile business and follow it right along, he is bound to get rich in twenty or twenty-five years, and the minute he steps one step and goes to speculating, he goes to the devil, and three-quarters of them will be traced to speculating in stocks. Q. What effect has that upon the legitimate price of breadstuffs and the necessaries of life ? A. It has greatly been increased ; there was a case here in July, they finally settled on wheat at $1.35 a bushel when the value of the wheat was about $1.05 or $1.10, which made a differ- ence of about $1.50 for a barrel of flour. They have carried this into the courts, and the Board of Trade is a powerful Board in Chi- cago, and they have more or less control over the courts, and the courts have allowed them to rule. Q. How much has the price of flour or wheat been increased by these speculations to your knowledge, in any particular instance ? A. I don’t know that I can specify any particular instance, except generally that the increase of flour, of course, was ruled by the price of wheat more or less. When the market goes up wheat is higli and the millers have got to have better prices for their flour ; some- times wheat goes so high they cannot buy it at all. I think the millers are opposed to this option trading, I think they would be opposed to it generally, that is my idea of it. Q. You know, do you, that the price of breadstufifs has been in- creased by these speculations ? 26 202 I A. Y es, sir, largely ; these things occur a number of times a year. Q. On whom does the burden of this increase fall ? A On the consumers, as a matter of course, Q. Do you believe the producer derives any part of that in- crease ? A. In a measure he does, because if he lias got any wheat on hand he is obliged to take it in the corners, and on the other hand when they go in for depression then it affects the agricultural interests. Q. It disorganizes even agricultural interests ? A. Yes, sir, and I have my doubts whether any law could be passed to reach this evil. By Mr. Browning : Q. Do you think by stopping the so-called bucket-shops would have a tendency to stop it ? A. If that could be done I think it would. Q. Can you suggest any thing else ? A. I don’t know as I can, you get my views generally. I will say as I said before that in speculating in grain the way it is managed now is gambling ; they claim it is not, but I think it is, I don’t see any other way for it. By Mr. Boyd : Q. You think the system is on the increase ? A. Entirely so ; I don’t think it is over four years that there was nothing of this kind in New York, and when the Buffalo Board of Trade tried it it didn’t amount to any thing. Formerly all of our business was buying cargoes as they arrived, and naming the vessels and naming the property itself. We didn’t feel for a minute that we had any right to sell any property unless we had it, that was the feeling twenty years ago. Q. Do you know any system now existing in the city of Buffalo in relation to the grain trade that ought to be remedied ? A. No, I cannot say that I do. The trading, as I said before, all the option trading don’t amount to any thing. There is nothing of it ; there is not enough of it to report, as far as that is concerned. I don’i>know as there is any particular system being done here that is injurious. By Ml-. JIuowning: C^. Is your system of warehousing injurious at all? A. The warehousing, that is the elevators, there are a good many 203 of them, there is too many I think, and they have to turn every way, shape and manner in order to get something out of it. We liave got perhaps thirty elevators here, and they run ten or twelve of them, and the ten or twelve have got to pay for themselves and tlie rest of them. There is too many elevators. The management of the elevators I do not approve of myself, for the reason I have not any confidence in their integrity ; that while they will do for you, and do for you certain things, they will not do the same for me ; there may be strings that you can pull and compel them to do acts that I could not, so we are not on an equal footing. By Mr . Browning : Q. Don’t you think that this pooling of the elevators, somo working and some laying idle and paying those that lay idle a share of the profits, has a tendency to increase the cost of elevating ? A. Undoubtedly. By Mr. Boyd : Q. Tell us to what extent ? A. To the extent of one-half almost of the elevating capacity. Q. If I should come into Bufialo and build an elevator and attempt to do business on a small profit, wouldn’t the}^ make an effort to take me into the ring and pay me some of their profits to close my elevator up ? A. They probably would make an effort at once to get you into their pool of course. Here is a new elevator just finished about thirty days ago that 'they call the Lehigh Yalley,and then the Pennsylvania road they have built a big elevator and they don’t go into the association ; they begin and contract property west, and get it through to sink their commissions here, and all that sort of things and it would not be satisfactory to the receivers here, of course. Even the l^ew York Central railroad elevators — they have two — and they don’t do the same thing fairly, they don’t treat every- body alike. Q. Who suffers from this ? A. The canal suffers somewhat more or less. Q. Canal boatmen ? A. Canal boatmen ; the boats don’ t get what they ought to have. Q. Will you explain that a little more definitely? A. For instance there are two or three houses or lines, the Com- mercial line and the Wabash line contracting from Buffalo to New York, covering all charges, they contract a load and when it gets 204 here, the boats want to get it, they will contract this grain from the west and when it gets here the boatmen will want to get it to take to New York, and they have got to take it at the lowest price in or- der to get it. The railroads have been very fair this year with re- gard to their freight from Buffalo, they have done as much as to say to the canal boatmen we are not in your way, we charge nine cents a bushel and never plow against it, but go on and get good i)rices, and instead of that they have carried this property for a mere noth- ing. There are too many scalpers here in Buffalo for the business, too many men connected with the canal so far as regards living off from it, and it is injurious to the boatmen, there is no question about ito By Mr. Browning : Q. Tell us what the scalper’s method is ? A. A boat comes in here and a scalper gets hold of it for the sea- son ; this scalper gets it for the season ; and I get him 6,000 bushels of wheat to carry ; he takes it and insures it and gives us a bill of lading ; and he takes this wheat and gets out of it about five per cent on the gross amount ; he gets it carried for less than I have to pay him, and, consequently, makes something by it ; and most of the shipping business is done in that way — done by that class of men ; and there are a great many of them. Q. The scalper is a sort of middle man ? A. Yes, sir ; for instance, here is a scalper who has control of thirty or forty boats ; he loads them and sends them off as fast as he can, and they carry the freight so low it is all the time crowding the price down ; as I said before, there are too many scalpers ; it injures the boatmen, and it is a thing you cannot reach. Q. Does all of this have a tendency to enhance the prices of the necessaries of life ? A. Yes, sir. (^. And breadstuffs ? A. Yes, sir. Q. And the whole burden falls upon the consumer ? A. Yes, sir ; it must; you may take oil ; I have seen millions of Ijarrels of oil sold in a day here more than there was in the country. Do they deal in futures in oil also ? A. Yes, sir ; but generally tlie oil is in a shape where there is a <;(;rt i1i(‘at(i ]>assed. 205 Q. Tliey sell it by a certificate ? A. Yes, sir ; our banks, I presume, are all full of those certificates ; I know there has been large amounts of them in the banks ; some of them have been full of these oil certificates when you could not borrow any money on grain ; money is sometimes scarce in Buffalo, and why, simply because they are loaning money to these oil men, and they will pay them more for it ; the canal men sometimes want money and they cannot get it ; why, because the oil men have got it all on these certificates ; if you pass a law to do away with all of these bucket-shops and option business ; if money would do it there would be large amounts that would be paid willingly ; my own im- pression is that they cannot pass any law to reach any of these things. Q. But you think they might be improved somewhat ? A. Yes, sir; of course. You see there are men connected with this business in Chicago, and all that, do you suppose a membership * would be worth $10,000 in New York or Chicago to do away with ^this business? not a cent, and do away with this option business, you can walk in, or they will invite you in. George S. Hazard^ sworn, and examined by Mr. Boyd, testified a^ follows : Q. Wliere do^you reside ? A. Buffalo. Q. Doing business in the city of Buffalo ? A. No, sir. I Q. You are not engaged in any business now? A. No, sir, I am not engaged in any business now. Q. Are you a member of any firm ? A. I am not. Q. Have you been ? A. Yes, sir, my firm on the dock was G. S. Hazard & Co., but I left in 1873, nine years ago. Q. TYhat business did your firm carry on ? A. Produce dealers and commission merchants. Q. How long were you in that business ? A. Nearly thirty years, twenty-seven or twenty-eight years. Q, That was previous to the system of dealing in futures and options ? A. YYs, sir. 206 . Q. Do you know any thing about the system of dealing in futures and options and the making of corners from observation ? A. Yes, sir, by observation more than personal experience, as I never bought an option or sold one. Q. You have known of their being bought and sold, have you ? A. Yes, sir. Q. Will you state to the committee what your opinion is in refer- ence to the effect upon commerce and public welfare of such trans- actions in corners and dealings in futures and options ? A. That is a problem which is very difficult to solve. Some of the effects I could give aii opinion in regard to them, but the gen- eral effect is a difficult problem to solve. In some instances the option business and the future business is a benefit, and then again it is a damage. I think, however, that the damage is greater than • the profits as a rule. Q. What does this damage consist of? A. I think it has a moral tendency to lead young men into specu- lations, and it cultivates and induces a speculation with a desire to* become suddenly rich. They hear of great speculations, people making ten, or fifteen, or twenty, or thirty, or forty, or fifty thou- sand dollars and begin in a very small way, and they cannot see why they with their $100, or $500, they majffiiaveof surplus funds, they cannot see why they cannot become suddenly rich as well as Tom Jones, or John Smith that they have heard of, Q. Do these speculations tend to enhance the price of the neces- saries of life from what they ought to be according to the laws of supply and demand ? A. Sometimes they do, and sometimes perhaps when a corner is broken, then the property is very apt to go below the real or true market value. Q. In that case does the producer not suffer ? A. Perhaps the producer may to some extent, but during the low condition of the market he is the fellow to hold on as a general rule, thinking the market will rise again. I think they are the very last men to sell on a low price. '’J’he tendency, however, is, according to your observation, to disarrange the legitimate business, the legitimate course of business? A. Temporaril}^, I don’t think it does seriously; temporarily, there is an excitement and large advances in different localities, it does not affect the ])rices in Liverpool to any extent, if any, or any 207 part of the country ; it does not affect the prices in New York. I think the prices in Chicago are higher than in Xev\^ York. Q. Is it not true that the prices of American wheat in the United States are sometimes actually higher to the consumer than it is in the city of Liverpool ? A. Yes, sir; I think so; I think if a man wants to buy wheat at any particular time of the year, or at any day of the year, that he can buy it cheaper in Uew York than he can in Chicago. Q. What is the cause of that ? A. This speculation that exists at Chicago. It in some respects has a good effect, the farmer gets better prices for his property. If the farmers would not turn into speculators they would very soon get rich. Q. The temptation is so great I suppose they are anxious to get into it ? A. Yes, sir ; they don’t see why they cannot go to Chicago and make more money than they can to be a farmer. Q. Taking the system of dealing in futures and options and mak- ing corners, is it not a system of gambling ? A. In a sense it is ; it is neither roulette, .or cards, or poker nor euchre, but in a great many respects it does amount to a species of gambling. By Mr. Browning : Q. You can compare it with a lottery ? A. Yes, sir, you can ; and that is so with a great many of these smaller dealers ; that is, the bucket-shops ; I think a great portion; perhaps nineteen-twentieths of the property sold on the Chicago Ex- change are hona fide transactions. Q. Then it is really a game or transaction of chance ? A. In a very great extent, undoubtedly ; I don’t approve of this style of dealing; I have seen its effects in some instances, and still, I have no doubt it exists in many branches of trade at a great loss ; for instance in dealing in sugar, coffee and cotton, a groceryman buys a cargo of sugar, he don’t expect to sell it out by the barrel for the same he gave for it, he buys it on a speculation ; so it is with a great many other things ; I am not defending this system of Chicago speculation, and I am not condemning it really, for I am greatly at a loss to say whether I think it is a benefit, a real benefit or 'a real damage to the people ; it is sometimes a benefit and sometimes a damage I think. . • 208 Q. In all of these transactions somebody must profit by the large amount of money that is turned over ? A. Undoubtedly, Q. Do the masses profit by that, or is it only a few individuals, lucky ones ? A. There has been a great many cases where they have made a great deal of money undoubtedly, and there has been a great many cases where they have lost probably $100,000 ; so far as I am able to judge, the result of corners has not been profitable, and from hearsay I am inclined to think that the results of corners have not been prof- itable ; and from what I have heard, the result of some corners has been very disastrous. Take the system of dealing in futures and options, is there not quite a large number of gentlemen who have accumulated large fortunes ? A. I think likely, and then again some have been stripped en- tirely . Q. Who has to bear the burden of this extra tax upon the neces- saries of life ? A. That is a pretty difficult question to decide ; if a pooV man wants a barrel of flour and happens to be out when the prices are very high he has got to pay probably a dollar a barrel more ; if he is fortunate enough to get out about the time the market is down he saves that much probably, and yet the equilibrium is pretty well pre- served like our lake here, when the wind is blowing strongly from the east we have very low water here and it is very high water at Toledo or Detroit, Toledo particularly, and suddenly it turns around and we get the water back again and they have low water up tliere, and after a while the wind ceases and the lake becomes calm again and the water becomes level. Tliese speculations are founded upon dif- ferent circumstances. A party of men get together and say, now^ the accounts of the crops are bad, there may be a frost, there has been a heavy rain, and the corn looks badly, and the wheat is get- ting rusty, and the reports are bad, there are three or four or five millions of bushels, or twenty millions in the way of spot wheat, and instead of there being a failure of the crop it is abundant, so these men they have to suffer in consequence of it, but if their prognosti- cations prove true and there is a failure, then they can squeeze the market as hard as they please, and somebody else suffers for it. This ][)roj)erty has got to bo sold, they cannot use it, they must sell it, they cann#)t hold it, because wheat and corn are ]>erishable articles to some extent, and if corn is held too long in the bin it is likely to 209 sweat and injure very materially, and that is the case with wheat. I have known wheat to come down to Buffalo here and put into the warehouses and be kept there until they would have to cut it up in chunks to get it out, and I have known corn to come here that would heat in the bins so hot you could not hold your hands in it, and prices of produce of course is governed by all these things. The market has a rather serious effect upon the prices ; sometimes they will get false reports from Liverpool about the markets, either up or down, and that will monopolize this whole thing, and all these things are governed by all these little straws that are falling constantly, and causes the market to go up or down. Q. Is it not a singular fact that the cost of living in the cities of the United Sates, where we have every thing in abundance, is greater than it is in Great Britain, where they have to depend upon foreign produce for their support, and can you account for it ? A. I cannot say that I believe that to be a fact ; so far as my ob- servation is concerned my impression is that living is cheaper in this country. Q. In the cities ? A. I will say that, yes, sir; I think that living in New York city is cheaper than it is in London ; England is taking all of these articles, grain, flour, all our meats, not only barreled up but live stock, all that we have got to spare and will continue to, besides the abundance that is raised in Russia, she will take all that we have got to spare ; every ship-load of grain that goes over across the ocean tends to make the prices here, and all of these articles, cheese, butter, petroleum and cotton that England takes — I don’t know but I used to be familiar with the statistics, and it seems tome now we export to England not less than 100,000,000 bushels of grain, that is wheat, Q. And yet the fact is that as you have stated American produce is not any more expensive in Liverpool than it is in Chicago ? A. Adding the freight, of course, yes, sir. By Mr. Browning : Q. It has been stated here by some of the witnesses before our committee that the cost of produce, a bushel of grain with a fair profit added and the transporation to the sea-board is the natural value of the product, do you concur with that ? A. I suppose it is the natural profit. Q. And they have told us that about three per cent of the sales 27 210 V ■ are legitimate sales and ninety -seven per cent are illegitimate sales, and that these speculations in grain is the consequence of it, and grain has been increased from fifty to one hundred per cent in consequence of this system of speculation, and that that falls upon the great mass of people, do you concur in that ? A. No, sir; I do not entirely, it may temporarily. Q. And that while this system continues from day to day the prices are increased in consequence of it, and that the profits to-day can be called a continuance of the business done upon an illegitimate basis, and illegitimate profits, and increases the actual values, do you concur with that ? Ao Not entirely ; I think the less legislation we have in re- gard to commerce the better ; commerce has a law of its own, and it is unchangeable in many respects, and while there may be at one time a very high price it is sure to be followed a corresponding low price ; I know of friends that I have who live on the Wabash, years ago were men of wealth, and they ought to have been now ; they ac- cumulated a very large amount of property there about twenty years ago, but they have been ruined by going to Chicago and speculating, and sending their sons there and allowing them to go into the specu- lation business and backing them up. Q. What these people lose somebody must get ? A. Certainly. Q. There is not any doubt but what this system disarranges the trade more or less ? A. Perhaps it does, yes, sir. It is a new thing in its modern in- vention, whether it is good or not, I don’t know. I know a great many have been ruined by it, and a great many become enriched. By Mr. Browning : Q. Tell us how in your opinion it can be a good thing ? / A. Well, I don’t know as I can tell you how it can be a good thing. I think it has had one good effect, for instance the high prices of grain and pork have expanded our population in the Wes- tern States, and covered those vast prairies with energetic people who are raising thousands of bushels of grain, and these people liave become rich, and our po])ulation has doubled, and in some of our Western States quadrupled. Q. Do you attribute that to dealing in futures 1 A. No, sir, I don’t know as I do. I will say this much, that so 21i far as the deal in futures is concerned I think it has enhanced the price undoubtedly of the necessaries of life to the consumer. Q. That you say falls upon the consumer ? A. You might say say that, yes, sir. By Mr. Browning : Q. If we should confine the trade to what is produced and what is consumed I think we would be a great deal better off, the pro* ducer ; we don’t object to that, but we do object to buying what you don’t want and what you haven’ t got ? A. IIow are you going to prevent a fellow from doing it? you might as well say this grocer across here wiW not trust people and fail every five years. I should be glad if our State or Government would pass laws to make everybody honest, and industrious, and faithful, and. competent to do any thing they undertook and make them successful, but how are you going to do it? I don’t believe it can be done. Q. What is a fair price for elevating grain ? A. impression is that our elevators cannot afford to do the business, even if there was not half as many as there are now, for less than what they are charging now, which, I think, is three-quarters of a cent a bushel ; and then they store it for ten days, I think. Q. How long has that been the rate ? A. I think nine or ten years. Q. And during the existence of the combination ? A. Yes, sir ; the business has increased to some extent, still the railroads take away so much the elevators here don’t really get as much as they ought to? Q. Do you know of any one person in the city connected with the Elevator Association who can give us an account of the number of bushels of grain that has passed through the different elevators during the season ? A. Yes, sir. Q. Who? A. Mr. Thurstone and P. G. Cook, Jr., I think ; I never have known a single instance, and I have had millions and millions of bushels go through the elevators from 184T to 1873 ; during my period on the dock, and while I was in the bank six years — presi- dent of the bank — I had occasion, of course, to handle a great many elevator receipts, and I never had a single instance that ever exhib- ited the want of integrity, or common honesty in any respect ; and I 212 have always got the very grain that I put into the elevator, and never had reason to saj" tliat the grain was not as good as it was in the vessel ; and I never had any cause to say but what T got rny identical grain ; and I never had any cause to say that the elevator men were not accommodating, and were not taking proper care of my grain ; and I never had the least cause to complain ; and I never considered myself a favorite, or pushed out one side for some one else ; and never had any of my neighbors make any complaints to me about it ; I considered the elevator receipts just as good as tlie United States notes ; it is an institution that has been regarded with great favor by the banks; there have been years when ten would not do the work, and there has been years when ten would be sufficient to do the work ; and sometimes we have received two millions of bushels of grain in a day and eight or ten elevators could not haTidle all of it and get the vessels away in any reasonable time ; but these elevators are compelled to keep their forces on hand and keep every thing ready, so on demand they can elevate a vessel ; there is no place in the world where the amount of grain can be handled in twenty-four hours as can be in Buffalo. Q. How many elevators in Buffalo have you that have not been used for two years ? A. I don’t know. By Mr. Boyd : Q. You are not connected with the association yourself? A. Ho, sir. Q. Those bonds or checks of the association, what are they ? A. When a vessel unloads, the elevator association gives a receipt to the owner of the grain and then he collects his freight on it. That receipt reads : Beceived in store from schooner John Brown so many thousand bushels of grain and pounds, if any, to whom it may concern, subject to the order of, naming the consignee. That receipt is taken by our banks as perfect security, and no one can draw that grain out unless upon the order of the bank, because the bank has had it transferred over to them. This man takes it when he wants the money upon it and gets this receipt changed to tlie order of the Bank of Attica or Bank of Commerce, or whatever bank it is. Q. Tlien you have no hesitation in taking these receipts or ad- vancini^ money on them? A. Ho, sir. 213 George Urbin^ sworn and examined by Mr. Boyd, testified as follows : Q. Where do you reside? A. I reside near Bufl:‘alo. Q. What is your business ? A. Milling. Q. Are you in company with any one ? A. Yes, sir. •Q- What is the name of the firm ? A. George Urbio & Co. Q. How long Iiave you been in that business ? A. About six months in the milling business. Q. What business were you in before that ? A. Flour business. Q. How long had you been in that business? A.. Since 1868. Q. Have you any knowledge of the system of making corners and dealing in futures and options, either from personal experience or observation ? A. I have no knowledge from personal experience, but I have from observation and hearsay. Q. Have you any knowledge from experience — has it affected your business ? A. Yes, sir; it has to some extent when w^e w^ere in the flour business ; it would prevent our buying wheat because it would be higher in Chicago, and it would not pay to buy it there and bring east. Q. Were you compelled at any time to suspend your business in any way ? A. No, sir ; all we would do was to buy a small stock. Q. Did you employ as much help during that time as you did other times? A. Yes, sir. Q. What is your opinion in reference to the effect of dealing in futures and options and making of corners upon the commerce and public welfare ? > A. I think as it was originally started it was a good thing. I look upon it that it was originally started by buyers out in the country back of Chicago, and who sold grain to be delivered at some future time without intending to speculate, and they would buy grain every day to keep their warehouses going, and by not selling at a future time they would become speculators. If they should 214 buy five thousand bushels to-day and sell it to he delivered in York city and the grain was sold as they bought it, I think they would be doing a legitimate business. But T think it has been abused, and been made use of by people wlio had no business to. Q. What do you mean when you say it has been abused ? A. Because it has been done by people who never expected to use any grain, nor pay for any grain, but simply bet on the market, make a bet that certain grain would be a certain price by a certain time, just as a man would bet that a certain horse in a certain race would come in first. Q. Then you regard this system as a system of gambling ? A. Yes, sir„ Q. Will you state any particular instance that you know of where the millers have been disastrously affected ? A. I don’t know as I can state any particular instance where we have been disastrously affected. I have known of one instance wdiere it would probably work in favor of the Buffalo millers, providing they were using that kind of wheat. Wheat was selling in Chicago last year in July for $1.34 for quite a while, $1.34 to $1.45, and these men would contract all the wheat they could, and I think that is one reason why wheat is cheaper a great many times in New Yoi*k and Liverpool than it is Chicago, where they contract so much and hol'd it to break the market down, and for the purpose of speculat- ing. Their object I think in running corners is to get hold of all the actual wheat that would make them any trouble, for instance, if they are buying grain they will induce people to sell short, expect- ing if they buy at a certain time there will be a plenty of wheat to deliver on those contracts, and at the same time they are buying wheat as fast as they can, or as fast as it comes in. Then they will sell it, they cannot sell it there, they have got to send it east, to some place where it would not come back again to trouble them. Q. In these fluctuations the price of flour and wheat is sent up above their actual value sometimes ? A. Yes, sir, flour is not affected as quickly as wheat I think. Q. On whom does the burden of this increase of prices fall ? A. I think on the general public. Q. That is, the consumers then ? A. Yes, sir; sometimes on the manufacturers. l>y Mr. BjiowNiNO : Qo W hat is the price of a barrel of flour to-day ? \ 215 A* Six dollars. Q. What did that sell for a year ago to-day ? A. Seven dollars and fifty cents. Q- What did it sell for six months ago ? A. Seven dollars and twenty-tive cents. Q. Can you tell us the cause of the difference in the price ? A. Low prices for wheat is the cause of the difEerence in the price of hour. By Mr. Boyd : Q. This season’s crops, the abundant crops, hasn’t that some effect upon it ? A. Yes, sir. Q. That I presume would be the chief criterion of the judging of the value in any year ? A. Yes, sir. Q. Were it not on account of these legitimate speculations? A, Yes, sir. By Mr. Browning : Q. Was there a corner in Detroit in June ? A. Yes, sir. Q. Did that increase the prices ? A. Yes, sir. Q. Have you any thing else that you would like to state to the committee on this subject ? A. I want to say something about the Buffalo Board of Trade, where they have this call board. So far as I have seen the Buffalo call board has not been used as a gambling concern ; as far as I know any thing about it all the deals have been actual deliveries of the stuff at some future time. If we wanted to buy wheat to keep our mill going, if we can buy wheat to be delivered next month for less than it would cost to buy that w^heat for cash and carry it we would think it was a good thing to do, providing we thought it was low enough and we wanted to be sure of having stock to run our mill with. If we were not crowded for room we would not hesitate in buying one or two thousand bushels ahead to be delivered. We bought some in Detroit once and did not send it or have it sent forward because we could make just as much to sell it there as to have it sent forward and grind it, we could buy wheat here to re- place it. Alonzo Jltchmond recalled, testified as follows : • I wish to say in regard to this option trading in the Ihiflalo Board of Trade that I agree with Mr. Urhin, that most of the trans- actions here are su])])osed to he future arrivals of the property, hut as I said before you never will get a large amount of option trading in any one city unless you first get a system of grading the grain. The reason that option trading is not so large in hfew Yoi’k city is because they have got their elevators where they grade this grain. Most of the option trading that is done in this city is done by agents that have their offices and do their trading in Chicago; there is a great deal of that. In regard to the elevators I would say that I agree perfectly with what Mr. Hazard says, but I want to say one thing in favor of these elevators. The elevator system of Buffalo is peculiar. In Toledo the elevators are all connected with the railroads and the grain must go to their elevator, the grain that they carry. The Illinois Central Hailroad Company has elevators, and all of the roads that run into Chicago have elevators that take care of their property, their grain, so you see it is a very difficult thing for a man in Chi- cago to take any of his grain anywhere except to the elevator that is connected with the road. M^hen you come to Buffalo it is differ- ent. As I said before years ago we used to store a great deal of property here, as much as our elevators had capacity to, but during the war they kept the prices up every year, two cents a bushel, and that induced men to build many of them ; and then came on a time when they began to discriminate against Buffalo, and that induced men to build floating elevators, and also induced them to build transfer elevators, as the property was simply transferred from the vessel to the canal boat. While as this grain did not come steadily but came in by fleets,' when there was a great fleet that came in all of the elevators would have all they could do, but when there \yas not a fleet only one or two of the vessels, the elev^ators a great many of them were lying idle, and so far as that is concerned it made a great combination between the elevators, and so far as it made fluc- tuations in the prices for elevating, the people made up their minds the only way was to combine the elevators in order to make any money. When our railroads began to cany grain they had to have elevators, and the New York Central road has elevators, and the Erie road, about all the roads, and the Pennsylvania road here is Iniilding a large elevator, the elevator men found that they had to keep up this combination in order to make any mone}", and my op- / 217 inion is that the price of elevating here for two years back has not been remunerative, I am sure ot'it. The year before that we had a large arrival ot grain, and most of the elevators were in use and get- ting a fair premium. I would not give fifty cents on a dollar for the cost of an elevator to-day in Buffalo. One great thorn of the elevators is this, here you have transfer elevators, and floating ele- vators, and these large elevators are not willing to take them into this association. Now, I think the large elevators here would be willing to have the Legislature fix this rate, say at half a cent a bushel on the grain and cover an eighth of the vessel, if they would drive out all of these floating elevators from the creek, pass a law that no floaters should do business in this creek, and also do another thing, and that is to pass a law that no transfer elevator should be allowed to do business that did not have capacity to store at least the largest cargo that comes here. I have no interest directly or in- directly in an elevator, nor my firm. If there is any legislation to be done it should embody that, and that may be applied to Buffalo and Oswego, but should not be to New York city. This would ap- ply particularly to Buffalo and particularly to Oswego, and I am quite sure, and I have talked with our elevator men and they say if you will save us from these blackmailers w’e are willing to have them fix the price anywhere. 1 think there should be some agree- ment, they should agree upon some fair way of doing the business, I wish to say something about the scalpers ; when there were large, wealthy transportation companies on the canal — -I don’t remember the names — -but there was a time when the wealthy transportation companies on the line would get the grain, a schooner would go to them and give them the grain, and they were responsi- ble companies, while the individual boatman, a great majority of them, are not men of much responsibility ; and when they would come to Mr. Hazard, or J. M. Bichmond & Company, for a cargo of grain, w^e would not know these men, but we would know some scalper, and he would come to us and say, that is a good boat, I know; I have examined the boat ; therefore, w^e would take the boat of the scalper, and we would, of course, get the captain always to sign the bill of lading, and we would get the scalper also, and make the scalper bring us a certificate of insurance on the cargo ; but with the W estern Transportation Company we would not even ask for a certificate of insurance, because they were responsible ; but the boat- man we did not consider him responsible ; he may have been an honest man, but the law was so stringent in regard to taking prop 218 erty we would have the scalper to look after the property, and the certiticate of insurance covered the loss from water ; I don’t believe this business can ever be done, as it has been, without scalpers ; the time may come when we get a more prosperous business, and when we form, I have no doubt, combination& with the companies; and we will go back again to the old system and go to those companies, this company, or that company, that are responsible; I don’t know what they charge, but they charge a certain amount for doing the business ; here is a poor man ; he has got to have some money ; he has got to have his bills paid, as it has been years back ; and when J. M. Richmond & Company, or Hazard & Company, receive a cargo of grain, our duty is to look and see that it goes into the proper boat ; and we know these scalpers to be honest men ; and they know such a boat to be a good one ; and so we do the business with the scalper, and he makes the transactions with the boatmen. Adjourned until half-past ten o’clock, morning. Proceedings Wednesday a. m., ]}^ov. 15, 1882. Horace J. Harvey^ being duly sworn and examined by Senator Boyd, testified as follows : Q. Where do you reside, Mr. Harvey ? A. In Buffalo. Q. What business are you engaged in ? A. In the milling business. Q. What is the name of your firm ? A. Harvey & Henry. Q. How long have you been engaged in that business ? A. About fifteen years. Q. Are you familiar with the system of making corners and deal- ing in futures and options? A. Well, I hav^e never had any thing to do with them ; all I know is from hearsay. Q. Have you had any observation of the methods of procedure ?' A. I have my opinion in regard to how they are made. Q. Well, jfiease state that opinion? A. Well, for instance, if there is a hundred thousand-bushels of No. 1 hard Duluth in this market, and I should buy it all, and you or some other dealer should come to me and say, will sell you 219 25,000 bushels of hard Duluth, to be delivered next month,’’ and I should buy it, and did the same with other parties, it would be dif- ficult for these parties next month, if I hold all the wheat, to supply it ; and I could compel them — perhaps not legally — to either fur- nish me the grain, or furnish me the difference in price that we should agree upon. Q. That is, you could compel them according to the rules of the Board of Trade ? Ac Yes, sir. Q. Will you state to the committee your opinion in regard to the effect of the system of making corners and dealing in futures and options upon commerce, and its influence upon the public welfare ? A, I have always contended that there is more money lost than made in dealing in options ; if one party sells the other buys and one or the other has to lose, and besides, there is a commission to pay. There is certainly a commission lost in every transaction. One may make, but the other loses, and the one that makes does not make as much as there is lost, because the broker has to have his commission ; as a miller, I consider it injurious to my business. By Senator Browning : Q. Why? A. Because i^ there is a large advance in grain, wheat for instance, we cannot get a proportionate advance in flour ; flour advances more gradually. After these corners are broken and the market declines, then it hurts our trade again ; flour will sell readily on the advance, and on the decline buyers will hold' off, it getting lower and lower and we have to hold our stock until it gets to the bottom. Q. How did the corner on winter wheat afiect the sale of flour last summer ? A. We got some advance on flour. Q. How much ? A. I couldn’t tell exactly, but not as much as the advance in grain. Q. How long did the rise continue before you got back to the old figures ? A. Well, I couldn’t tell from memor}^ just how long. Q. Have they lowered at all ? A. Oh, yes. By Senator Boyd, resuming : Q. Will you state any particular instances when you felt or knew that this system injuriously affected your business as a miller ? 220 A. I cannot tell any particular case. There is no trouble at all on the advance on the market, because we can buy the grain if it is ad- vancing and make a profit on our flour. The trouble is when the decline comes, then it makes a very dull flour market ; consumers who are in the habit of laying in stock will buy very lightly until they think the bottom is reached. Q. Then your observation has been that the effect of making cor- ners and dealing in options and futures has been to unsettle markets? A. Yes, sir. Q. And render legitimate business in produce and breadstuffs un- certain ? A. Yes, sir. Q. And fluctuating ? A. Yes, sir ; but still I don’t see how you can remedy it ; I think if I buy this 100,000 bushels of wheat and you offer to sell me 25,000 bushels to be delivered next month, I don’t know whether you have got it coming, or whether you are selling something you have no prospect of getting, and I don’t see how you can prevent my buying it. Q. i3ut don’t you think it is quite possible to have a law so framed as to punish men who will sell or pretend to sell produce that they never intend to deliver ; or have any visible means of de- livering ? • A. I don’t think you can reach them by law ; they have tried that in Chicago ; you might go further and say that if a farmer comes in ‘and says I want to sell you a thousand bushels of wheat to be de- livered next month, I have no means of knowing that he has the wheat, and we frequently buy a farmer’s crop, and I don’t know why a dealer hasn’t as good a right to sell wheat to be delivered in the future as a farmer or any one else. Q. Don’t you distinguish between a legitimate dealer and the mere speculator in grain ? A. I would prefer not to have any corners ; I think that steady, legitimate business is the best business, but I cannot see how you can remedy it. (i. Do you think that the system of making corners and dealing in futures and options is an evil ? A. Yes, sir. C^. Do you think it is contrary to good public policy ? A. fiir. And don’t you think it is the duty of the Legislature to in- terfcrct and remedy those evils? 221 A. I should tliink so if I thought they could, but I don’t think they can ; millers here, for instance — there is very little speculation here in options, but millers frequently buy wheat to be delivered the next month, or the next month after; they buy it for legitimate purposes, they buy it for their own use ; I do it some ; if I am go- ing to need wheat in December and can buy it now for less than I can then I prefer to buy it ; there are parties with whom we deal that have this wheat coming and will be here say the first of De- cember ; the owners of this wheat order it sold’; I don’ t consider that — although you may say it is an option, I don’t consider we are doing au}^ thing to make a corner, we are simply buying for legitimate business. Q. That is a legitimate transaction, but what we want to get at is a remedy for the evils of merely speculative transactions ? A. I don’t you think you can make a distinction. By Senator Browning : Q. How long have you known corners to prevail in the grain market ? A. Well, I have heard of them for years, I don’t know how many. Q. As far back as from six to ten years A. Yes, sir; I should judge five to six years, and perhaps longer. Q. Can you give any reason for it ? A. No reason except that a clique of men that have the means see some commodity that they think they can control by buying it all and they buy it and buy the options on the article, and generally make money, sometimes they lose. Q. Do you recollect when they sold grain by sample ? A. We sell grain here almost altogether by sample ; there is % only one o^rain that is sold sold by grade here and that No. 1 hard Duluth. A. You are speaking now of wheat ? A. Yes, sir. By Senator Boyd, resuming : Q. Do you know any thing about the so-called bucket-shop sys- tem ? A. I think I understand how they do business. Q. Please state what you know about it ? 222 A. I don’t think I was ever in one, that is a regular bucket-sliop. I could not tell you any thing only what I have heard. Q. You don’t know any thing of your own knowledge ? A. 'No, sir; there are grain brokers here, but they don’t call themselves bucket-shops. I understand a bucket-shop is a sho]> where you put up a certain amount of margin on the pres- ent quotations, and when that margin is gone your money is gone ; if it goes up you stop it when you please, hang on until you get your profit. Q. Is there any thing else that you would like to state to the committee? A. I don’t think that I would be any good to you as a witness. John B. Griffin, sworn and examined by Senator Boyd, testified as follows: Q. Where do you reside ? A. Butfalo. Q. What is your business ? A. Merchant miller. Q. How long have you been in that business ? A. More or less for forty years — since I started in this business about twenty years ago. Q. Are you familiar with the system of making corners and deal- ing in options and futures ? A. No, sir; 1 am not. Q. Have you any knowledge of it at all from observation ? A. Well, the dealing in options is one thing and making corners is another ; I have dealt in options to a certain extent, but not in corners. Q. Then you refer to making corners when you say you have no personal knowledge ? A. Yes, sir. CJ. Please state to the committee your experience in relation to this ? A. My experience has been that when I am overloaded with a stock I hold 1 have sent to Chicago and sold wheat against it, for fear of a break in the market, and to protect myself. For I have bought wheat in anticipation of the use of it for milling purposes. C^. What is your opinion in relation to the effect of this system U])on commerce generally, and its inlluence upon the public welfare ? 223 A. I think it is only a change of progress — a commercial trans- action. Q. You think it is a progressive change? A. Yes, sir. Q. Do you think it is beneficial to the public ? A. Well, take it as a whole 1 think it is. Q. What are your reasons for arriving at that conclusion ? A. Frequently the buyers for export have orders for August, September, October or November, and they can fill these orders by stepping into a market and buying these options to be delivered when they want it, instead of going into the interior and buying it and carrying it forward. Q. You now speak of legitimate transactions in buying? A. Yes, sir. Q. Are you familiar with the merely speculative transactions ? A. Nothing more than that. Q. Do you think the speculative system is beneficial to the public ? A. It is difficult to answer that question, for a farmer gets the benefit of it and the speculator takes the chances ; I think it would be as well to abandon it if you could. Q. What benefit does the consumer get out of it ? A. The consumer gets the benefit — Q. And the middleman ? A. Takes his chances. Q. How does the consumer get the benefit ? A. The answer to that would be some particular market and when we could reach another market ; in case of a corner of all the markets it would be deleterious to the interests of the consumers. By Senator Browning : Q. I want to ask you just one plain question ; at evidence taken by this committee in New York city given by some of the best busi- ness men, who are thoroughly familiar with this business and who have made a study of it, they tell us that in consequence of this speculation in grain the price has been increased over the natural value something like forty-five per cent — now, we want to know if you think that is a good thing for the people ? A. Well, that was a corner — I say that if corners could be abolislied I should be in favor of it. Q. That is a result of this dealing in futures — now you say that you think upon tho whole it is a good thing ; do you think it is a good thing if tliat was the fact ? A. I don’t mean to say that corners are a good thing. Q. Dealing in futures ? A. Dealing in options — legitimate trading. Q. 1 l ou don’t think any law can be passed to prevent your buy- ing grain from any farmer who has it or has any ]>rospective pos- session, because you don’t want to buy from day to day, you want to buy so as to keep your in ill going the year around ; I understand that, but if it is possible to break up this system of dealing in fu- tures — and about iiinety-seveii per cent of the sales ou calls are merely speculative — don’t you think it is a good thing ? A. 1 don’t think you can break it up. Q. I am not asking you that ? A. ISTo, I don’t think that there is any objections to my buying wheat for October or November if I can ; I was formerly one of the largest receivers here, and I was also receiver in New York before the option business was started. There is almost as much speculation in that apparently as in buying as I speak of for futures. So far as the gambling part of it is concerned, I have never acquainted myself with it. Q. Do you think by selling by grade is an improvement by sell- ing by samples? A. It becomes a necessity; for instance, we buy No. 1 white wheat in Chicago and we have no other way of getting this grade except by buying the grade established by sample. The same when I buy Duluth wheat. Q. As a legitimate dealer if you should make a contract to have delivered to you 50,000 bushels of No, 2 white winter wheat — is No. 1 white winter wheat better than No. 2 ? A. It is for some purposes ; it is considered better — always brings a little more money. Q. Suppose you make a contract to have delivered to you 50,000 bushels of No. 2, for a certain purpose, and the person from Avlioin you purchased could not furnish that, but would offer you No. 1, would you take it in place of the other \ A. That would depend upon what kind of wheat it was. Q. Of the same class of wheat ? A. 1 should be obliged to. (T You would take the better kind of wheat? A. Yes, sir. 225 Q. That is just the difference between you and a speculator, they will make a corner in No. 2 and refuse No. 1, and they will demand tlie difference between the price of No. 2 and the price they were to have it delivered for ? A. That is not as I understand it. Mr. Manning was supposed to be running a corner in Chicago and he cornered the wheat market, and along about the last of August he shipped large cpiantities of it down here and portions of it was for sale. I bought a cargo of wheat here of Mr. Meadows as No. 2 wdieat, but it turned out to be No. 1 wheat, which he had taken as I supposed on this option. It turned out to be a great deal better wheat than I supposed was sold. ' Q. You didn’t object to that? A. I bought the wheat here by sample, and it turned out to be No. 1 instead of No. 2 wdieat. Q. How does the |fluctuationJ in the market affect the sale of flour ? A. It doesn’t affect materially. For instance wneat rises in De- jtroit or Toledo or Chicago (points we draw from), the miller there is forced to pay a proportionate price as we are here, so that it makes no particular difference when there comes these sudden breaks we feel the effect of it. By Mr. Botd, resuming ; Q. How many grades of wheat are recognized by the trade? A. They are different in different markets. I think they have three or four grades in Chicago, two or three grades in Toledo, and the same in Detroit and Milwaukee. There is No. 1 hard white Duluth, tliere is No. 2 and No. 2 hard, and rejected that w’e call merchant wheat. Q. What is the difference between these different grades ? A. At times there is a very great difference. Take for instance No, 1 hard Duluth; it is required to make a certain grade of flour, and you cannot use any other, it would spoil the flour. So here. No. 2, red winter wheat, comes into Chicago, and I want certain other kinds ; for instance, there is a kind of wheat called May wdieat, and mixed, and the long beard Mediterranean, that comes mixed as No. .2 wheat, which is my favorite wheat, par- ticularly to buy. There is another wheat, the Kansas wheat, as it is called, a long beard wdieat and by merchants thought to be a 29 226 superior article for milling. I saw a sample of it and asked my people up there to send some of it down. This Kansas wheat in- spects in Chicago as Ko. 2 wheat. Q. Then is No. 1 wheat a more valuable article? A. It is worth from one to three cents more as a rule in Chicago. Q. Than No. 2 ? A. Than No. 2. Provided you get the same kind of wheat. I wouldn’t take this Kansas wheat at any price, although it sells the same. Q. What is the objection to the Kansas wheat? A. It is a hard, flinty wheat, without any substance; it grinds a corn meal and there is no substance to it. Q. Then you are of the opinion from your observation and ex- perience that tlie system of making corners is an evil and that it ought to be abolished ? A. Yes, sir. Q. You are also of the opinion that the merely speculative or gambling transactions in grain ought to be abolished ? A. Yes, sir ; if you can separate them out. Q. Have you any other suggestions that you would like to offer? A. None particularly that I know of. Thomas Thornton^ sworn and examined by Mr. Boyd, testified as follows : Q. Where do you reside ? A. In the city of Buffalo. Q. What is your business ? A. Merchant miller. Q. How long have you been in that business ? A. About thirty years. Q. Are you a member of a firm, or do you conduct the business yourself ? A. I am a member of the firm of Thornton & Chester. Q. Please state to the committee your opinion in reference to the system of making corners and dealing in futures and options with reference to its effect upon commerce and its influence upon the public welfare? A. I consider it has a bad effect, causing unnatural values at times upon the products of the country. Q. How does it affect your business? 227 A. At times it creates an unnatural value in tlie west for grain bj being cornered — speculated in by speculators ; we have to pay more for it frequently than we should have under the ordinary cir- cumstances ; if we need the grain we have to pay wliatever the speculative value may be in those markets west. Q. How does that affect your business in relation to having a suf- ficent amount of work on hand to do ^ A. We are compelled frequently to pay more than we know it will be worth a few days afterward, as far as we can judge from the tone of the market ; it is raised to an unnatural value for a few days, and if we need the grain for immediate use, we are frequently com- pelled to pay more for it than we wruld in the natural course of trade, without these corners being effected west. Q. Does it ever tend to produce a temporary expansion in your business ? A. Sometimes it restricts for a few days at a time the manufacture of flour. , Q. What effect has it upon the price of flour ? A. It generally enhances the price fo the consumer. Q. How much per barrel do you know that it has enhanced the price of flour ? A. Last year I think it was more affected by it than any other year that I remember. Last fall after the new crop of wheat it was run up to exorbitant prices by speculations very much at the west. Q. And how did that affect the price of flour ? A. Perhaps half a dollar to a dollar in some cases. Q. And how much was the price of wheat per bushel increased by reason of the speculation ? A. Well, according to my judgment, I should say from fifteen cents a bushel to twenty cents. Q. Who receives the beneflt of this increased price ? A. Mostly in these corners of grain it is the parties who own the grain in large amounts in Chicago, generally. Q. You mean the speculators ? A. I mean the speculators. Of course the larmer if he brings in grain during that corner would receive a higher price, as they are compelled to receive all the grain arriving while this corner lasts. Q. Upon whom does the burden of this increased price fall ul- timately ? A. It mostly falls upon the consumer. 228 Q. The whole system of making corners and dealing in futures and options has been characterized by several witnesses wlio liave been examined before this committee as a system of gambling — do you think that it is such ? A. Yes, sir; I think it might be termed gambling, where the |>ar- ties do not own the property they represent to sell, or propose to sell. Q. And to those who make a business of it it is a sort of a busi- ness of chance ? A. Yes, sir. Q. Do you think that the public would be benefited if the sys- tem of making corners and the dealing in futures and options could be abolished ? A. I do, sir. Q. Do you think that it is the duty of the Legislature to inter- fere for the prevention of that evil ? A. Yes, sir. Q. Is there any other information that you would like to give to the committee ? A. I consider it a criminal offense to offer to sell that which he does not have. That is all; that is what I base my opinion on in regard to it. Henry G. Zimmerman^ sworn and examined, testified as follows Q. Where do you reside ? A. Buffalo. Q. AVhat is your business ? A. Milling. Q. Are you a member of any firm ? A. I am a member of the firm of Esser & Zimmerman. Q. How long have you been in that business % A. I have been in that firm three years and a half ; I have been engaged in the milling business for fifteen years. Q. What is your opinion in reference to the system of making corners and dealing in futures and options with reference to their effect upon commerce'and their influence upon the public welfare 'k A. I don’t think that the grain business can be carried on without dealing in futures; just as a farmer wants to sell his grain and want& to know what he gets for it when he brings it in. Q. Y on are now speaking of the legitimate transactions ? A. Yes, sir. Q. Are you familiar with the speculative transactions in grain? 229 A. I am, but still it will be very hard to draw a line between the speculative and what is not speculative. Q. Do you think the purely speculative system is beneficial to the community or otherwise ? A. It will be hard to make the line whether it is speculative or not speculative ; T think if I give a man an order to buy, he does not know whether I am going to use the stuff or sell it again on a speculation. . Q. I refer to the system where men buy and sell something that they have not got and never expect to possess or deliver ; take that side of the question, do you think that is injurious to the public welfare ? A. Of course if you sell any thing that you haven’t got and never expect you can buy it is injurious, but you won’t generally accept any thing unless you expect you can buy it. Q. We find no fault with that, but our object is to find some remedy for the evils which result from the gambling speculations that many men engage in and get rich in at the cost and expense of the public ? A. Just as many get poor as get rich ; I think it is people that are opposed to the dealing in futures are those that got burned once. Q. How has the system affected your business ? A. I don’t think it makes to us any difference whether there is a corner or not. Q. Doesn’t the system of making corners affect your business in any way ? A. A corner may influence the buyers ia our business to buy a little more. It gives a kind of impetus to the trade. Q. Is there a corresponding depression succeeding that impetus that you speak of ? A. Yes, sir; most generally, Q. Then the tendency is to produce unnatural fluctuations in the trade? A. Yes, sir, somewhat ; it cannot help it. Q. And don’t you think that these unnatural fluctuations are in- jurious to legitimate dealers ? A. I hardly think that they are, because it is just like a man who sells any thing he wants something to make people buy, and by having these fluctuations we can tell them it may go up. Q. You regard these fluctuations as a kind of stimulus to the trade in general ? A. Yes, sir. 230 Q. Then do you believe it would be beneficial to the public if the system of making corners could be abolished ? A. I don’t think that it can be abolished, except through the legitimate course of the trade. We have such facilities that if a per- son wants to buy all the wheat let him have it, because I know gen- erally here in Buffalo that any man that can make a corner here is going to do it in time ; if he has all the hard wheat he is going Uj make a corner on hard wheat market, and if he has all the oats he is going to corner the oat market. Q. What effect would that have upon the consumer? A. The consumer would have to pay the advance. It would come down again and balance again. Q. Who receives the benefits of this advance in the price that the consumer has to pay ? A. My experience is that those outside — I think that during this whole last year, during this corner in Chicago wheat, I think the farmers were greatly benefited. I think that the man that makes the corner only makes one-tenth of the profits and the other nine-tenths is distributed all over — goes to the farmers. Q. That is only your opinion ? A. Only my opinion. Q. You have no positive knowledge ? A. No, sir. Q. Is there any other information that you would like to give to the committee ? A. No, sir. By Mr. Browning : Q. I take it this witness is a very practical man — he says* when the speculators go to work and nut un the price he pays the in- creased price ? A. Yes, sir. ^ Q. And you put it on the flour ? A. Yes, sir. Q. And the consumer pays the bill ? A. And the consumer pays the bill. Christian Klinch, sworn and examined, testified as follows : Q. Where do you reside? A. Buffalo. 231 Q. What is your business ? A. My business is slaughtering hogs and cattle, provision trade. Q. How long have you been in that business ? A. About twenty-five years. Q. State if you please to the committee your knowledge and ob- servation and otliei’wise of the system of making corners and dealing in futures ? A. My opinion is the system is very bad. It has a very bad in- fiuence all through the trade and very perplexing on our business. Sometimes we give a man the price of pork at nine or ten o’clock in the morning, either by mail or telegraph, and the parties receiving it hold back until the boards meet at noon all througli the country and of course they take the advantage, sometimes if it is a drop of fifty or seventy -five cents a barrel the buyers won’t buy, and if it raises they are sure to take it, and we are at a disadvantage at this business. Q. That is all men engaged in your business ? A. All men engaged in my business are in the same shape. Q. Does that result from making corners ? A. Yes, sir, it results from these bulls and bears as we call them. Q. State if you please in detail any particular circumstances in which your business was especially affected by these transactions ? A. I don’t want to say whenever it occilrs, but it probably occurs from two to three times a week. The bulls and bears in order to gain their points have to confuse the public ; it is up in the morn- ing and down in the afternoon. They keep doing it for days so that they confuse the public so they don’t know which way it is going to turn, so that they gain their points. It occurs once or twice a week sometimes, and sometimes oftener. There is no telling when pork goes up in the morning whether it is going to stay up all day, or up two hours. Q. These fiuctuations are not caused by the legitimate results of trade ? A. Xo, sir. Q. It is caused by the manipulations of speculators ? A. Yes, sir, for instance yesterday in Chicago raw material — hogs — went up ten to fifteen cents a hundred ; pork dropped fifty cents at the same time. What is that but these speculations ? and that occurs every week. Q. Then the tendency is to embarrass all legitimate dealers ? A. Yes, sir. 232 Q. What elTecthas that upon the coiiduinor ? A. Well, the consiimei- has got^ to loot the hill. Lo(jk at all this lininhng ! Who is going to pay it ; these robbers in Chicago ; who is going to pay the bill. The farmers they are probably paying the biggest portion of it. A man has five or six ])igs and he thinks he is going to bid np the price of pork so that he can get a little bigger price for his pork, and he gambles it all away, and the first he knows he loses ])ork, pigs and all. Q. Can you explain how these speculations of grain is carried on in the bucket-shops ? A. I never was in a bucket-shop and I can only state what I have heard. Q. You have observed the effects of their operations? A. Yes, sir, l am out in the stockyards where these western men come; ten 3’ears ago there was no speculation of this kind to any extent in Chicago. These bucket-shops, they have got it, so that if a man has got five dollars he can go in and invest it ; they couldn’t do it before, because if a man wanted to speculate in Chicago he had to have standing and money. Q. How many such places exist in the city of Buffalo to your knowledge ? A. I don’t know of only one in East Buffalo ; I am not acquainted around ; I don’t know how many there are , but there is one in East Buffalo ; there is a man speculating thei’e now that would never think of speculating if it were not for these facilities they introduce all over this country. Q. What remedy would you propose for the correction of these evils ? A. I don’t knovv whether you can check it all at once ; but kind of put the (iollar on them and shut them up by the piece ; I think I should shut up the bucket-shops first. Q. You think it would be the duty of the Legislature to interfere for the protection of the public from these evils ? A. Yes, sir; it is growing larger all the time, and why not com- mence to contract where they expanded ; these bucket-shops, undoubt- edly, l)rought on this business. Q. Are you familiar with the laws of the Board of Trade or Chamber of Commerce ? A. No, sir. (^. You are not a member of either of these bodies ? A. No, sir; T have met with them in New York, Chicago, Phila- del]>hia and Cincinnati. 233 Q. What, in your opinion, was the cause of the advance in the prices of beef last summer? A. I think the price of beef last spring — I don’t think there was any corner about tlie price of beef, but 1 think that the short crop of corn brou^^ht that about ; you see tiie supply of cattle fell short nearly thirty-three per cent, and that shows on the face of it that there wasn’t much corn raised for the beef; I think that the high price in tlie beef last summer was because there was such a drought in the west, and a good deal of corn had to be fed through the sum- mer to keep the cattle alive ; there was no grass, and that made corn short in the winter for cattle. Q. What effect have these corners in pork and beef upon the transportation interests of the country ? A. I think it has a very great effect ; T don’t think there is any thing near the speculation in beef to what there is in pork ; it is mostly in pork ; you never hear of anybody speculating in beef ; it is all barreled pork ; there is no doubt but it is an injury to transpor- tation, because in Chicago it is their interest to keep all the pork there they can during the winter season, and keep it there so they can have something to speculate on, and they undoubtedly pile up a great deal of pork ; and what we call the grainers, they are the worst speculators there are ; when they get through with their farm work in the fall they go to Chicago and speculate, and they gener- ally hold on to the products. ^ Q. Do you say that there is any moral difference between the system of making corners and dealing in futures and the ordinary system of gambling? A. I think it is one and the same thing ; if you can shut up the gambling shops you can shut up these bucket-shops. Lyman P. Smithy sworn and examined by Mr. Boyd, testified as follows : Q. Where do you Reside ? A. I reside in Dome, Oneida county. I have business at No. 7 Central wharf in Buffalo. Q. What is your business ? A. I am in the forwarding business on the canal. Q. How long have you been in that business ? A. Seventeen or eighteen years. 30 234 Q. Are you familiar with the canal boat system ? A. I think I am. Q. And the elevating system ? A. I know something about theeievating system, not so much so. Q. Are you also familiar with the system commonly known as the scalping l)usiness? A. Yes, sir. Q. AVill you please explain to the committee what is meant by the scalping business in connection with the canal boat business? A. Well, we are scalpers or middlemen, what we call middle- men. We act as agent for the carrier, for the boatmen, as their paid agents. They pay us a commission for doing their business, and for instance a cargo of grain is received by Mr. Meadows or Mr. Richmond, whoever it may be, from the west; we go and make a trade with these gentlemen for the boatmen in the interest of the boatmen, and charge them — get the best price we can when it is done legitimately, and charge the boatmen five per cent on what their load pays; that is the legitimate part of the business. Q. You charge five per cent on what the boatmen receive on the Ireight? A. Yes, sir. Q. How much do they usually receive ? A. If the freight is five cents a bushel, if their cargo is 8,000 bushels, their freight is four hundred dollars, and we get twenty dollars. Q. What is the average rate of freight which they receive ? A. Well, sir, I couldn’t tell exactly without making some fig- ures on it, what the average rate is this year ; I didn’t have time to get at it. Q. Well, about, as near as you can ? (Witness proceeds to read from a paper.) By Mr. Browning : % Q. What do you hold in your hand now ? A. I hold some figures that I took from the book of rates of freiglit from April 27 to November 1 ; I didn’t get every day’s fig- ures, I took along difierent days. By Mr. Boyd, resuming : (^. Will you please read those figures? 235 A. April 27 to April 29, they were five cents for wheat. Q. You mean the boatmen received that for taking a cargo of wheat from the city of Buffalo to New York ? A. Yes, sir ; do you want I should go clear through with these ? Q. Yes, if you please ? A. Five cents April 27 to April 29, May 8, 4 3-4 cents. May 16^ 4 1-2 cents, and I skip along, June 20, 4 1-4 cents, June 28, 4 1-2 cents, July 11, 4 1-4 cents, August 9, 5 3-4 cents, August 29, 5 1-4 cents, September 2, 5 1-2 cents, September 5, G cents, September 23, 6 cents. It run between these points about the same freight. September 25, 6 1-2 cents, October 2, 6 cents, from October 12 to October 16, it was 8 cents, October 23, 7' cents, October 25, 6 1-2 cents, November 1, 6 1-2 cents, how it is 5 3-4 cents. You will observe there is a marked difference in the prices here right along ; those are caused by what we called cornering freights. Q. Will you explain that system ? A. It is no known system. As it is cornering grain in Chicago, it is only among scalping men. Q. How is it brought about ? A. Well, as I say, these men act as agents for the boatmen ; the boatmen are* entirely in their hands; they will take we will say a large amount of grain to arrive, two or three hundred thousand bushels, or whatever it may be, we will say at six cents a bushel for instance; when the grain comes here they will try to break the market — ■ run the market down. Q. Who will? A. Scalpers, us agents. Q. How do they do that ? A. I was going to explain to you. They have got we will say 200,000 or 300,000 bushels to arrive, whatever it maj^ be, they will go to a legitimate shipper that has got stuff on hand — I will sup- pose that I had a 100,000 bushels and I was anxious for this market to go down so that I could make a quarter of a cent, I would go to you. and ask you — if you were a shipper — if you had any thing to ship, and you will say, yes, and I will ask you how much you pay, and you will say 5 3-4 cents, and I say very good, I will take two loads of you. I will pass along to the next man and say got any thing ? ” ‘‘Yes.” “Well, what is the price ” ? Perhaps he will say 5 1-2 cents, or 5 3-4 cents. That makes the market, so you see the market is made between the scalper and the shipper, but the scalper when 236 he is acting in bad faith, when you have shipped a cargo of grain for 5 3-4 cents, I cannot go to Mr. Richmond and get any more for it is not two minutes before he knows all about it. You tele- graph to Chicago that you have shipped so and so ; that is what runs the price down ; of course you cannot always do that, sometimes it runs the otlier way. By Mr. Browning : Q. Then the scalper makes the difference 1 A. Yes, sir. By Mr. Boyd, resuming : Q. You said five per cent was the legitimate market — you have just explained the illegitimate market ? A. Yes, sir; 1 have known them to make a cent a bushel or a cent and a half a bushel by running the freights down. You will see from this paper I have got here some of these figures are way below the cost price, but as some of us scalpers think it is caused by this same tiling, and of course that gives a price to the wheat that is enhanced. For instance if a bushel of wheat could be carried through from Buffalo to New York for five cents, it should be carried for that, and not start at five and one-half or six cents and then run down, bucause it enhances the value of the wheat, and the consumer has to pay it, and it comes out of the boatmen besides, who are rightly entitled to it. Q. Can you tell whether the scalpers who do that business have any connection with the railroads ? A. No, sir, I don’t think they have. Q. Can you tell us what the railroad freights have been ? A. I cannot ; I only know that the railroad freights have been from one and one-half cents to two cents above the canal rates. Q. You speak of your employers — whom do you recognize as your employers ? A. The boatmen ; we act as their agents. Q. To get cargoes to them ? A. Yes, sir. Q. It is your interest, of course, to get as high a rate of trans- poration as you can ? A. Yes, sir. Q. Of course if you get six cents you get more from the boatmen ? 237 A. Yes, sir; when it is done legitimately. Q. Will you explain the illegitimate way in which the business is done ? A. I just explained it. Q. That is by going to the shipper and trying to get higher rates? A. No, with an anxiety to get lower; I just explained that for instance there is five or six of us in the pool, and have we will say 300.000 bushels of grain on hand at six cents, and we want the price at five and three-quarters and rather have it at five and one-half. Q. Why? A. Because we want to make the one-half cent or the quarter of accent. Q. I don’t understand why if you have it at six cents you should want it reduced, because you are paid by the transporter, by the boatmen ? A. We are paid a commission, don’t you see ; we make both ways, both on the shipper and on the canal boatmen ; I think this grows to a great extent out of this speculating business for instance, this way, they say it is necessary to have a through rate, well, it is, that is well enough ; the roads have a certain price ; the canal has no cer- tain price, for this very reason; if a Chicago party wants to lay down 100.000 bushels of wheat in New York or Liverpool, he will tele- graph what he can sell 100,000 bushels of winter wheat in New York for this morning ; he knows what he can buy it for in Chicago and the freight rates are so much ; he telegraphs to Buffalo and asks “ what can you get canal freights for 100,000 bushels of wheat for?” the one to whom he telegraphs goes around and finds out and telegraphs back; if the freight is satisfactory then he can close his contract all the way through ; then the receiver here goes to these scalpers and says, here, I will give you that wheat, whatever there is of it, and then we have it on hand, and we try to speculate on it ; mark you I say they are not all alike, they are not all in that pooling business ; and we consider pools throughout the country as very disastrous to the business. Q. How many scalpers are there in Buffalo ? A. Twenty-three or'twenty-four. Q. Do they have their head-quarters ? A. No, sir ; they have their offices right along together. Q. How long has that illegitimate method of doing business existed ? A. Four or five years. 238 Q. How was it done before that ? A. Well, sir, it was done as I have explained, in a legitimate way. When the cargoes came here they came to the receivers ; the legitimate receivers tliat receive the grain have a percentage, so much, and they shipped it just as low as they could, and the scalpers took of them at just as high a price as they could, and the scalpers gave the boatmen the price. By Mr. Browning . Q. In other words they were honest ? A. Yes, sir. Q. The scalper is an agent for the boatmen ? ^ A. Yes, sir. Q. He has a number of boats on his list ? A. Yes, sir. Q. It is a saving of time to the captain ? A. Yes, sir. Q. It requires capital ? A. Yo, sir; a man could start a scalping house with twenty shillings. If it was not for the scalper the captain would have to go to the shipper to get it, and the shipper does not know these men and we do know them. I know four or five hundred boatmen, and know the shippers and they don’t know any of them. Q. You consider that the scalper is a necessity k A. I consider that a scalper or a middleman — the business done legitimately is right and proper in its place and is a necessity in the business, but not in the way that it has been done in the last three or four years. Q. How could that be prevented? A. I don’t know any way but by legislation ; I couldn’t make any simorestions because I am not familiar enough with the business. Q. Would a formal affidavit answer the purpose? A. I don’t know whether it would or not, there are so many ways they can do it ; they need not contract it themselves, they would have the shipper contract it and they would pay him so much for taking it, and there is a good many ways for doing it. Of course you could legislate against their doing it so openly as they do it now. I don’t know as you can legislate against my taking a cargo of wheat from here to New York if I was a receiver for six cents or eight cents and if you were a mind to give me five or 239 weight hundred dollars I don’t know how you could prevent it. I consider the business very disastrous to the boatmen and to the public generally. Q. There has been a good many hard stories told down at Albany about scalpers ? A. There are a good many hard men, and a good many good men. I think they will compare favorably with any other class of men in the comnmnity. Q. Have the low railroad rates had any thing to do with the system of contracting through from the west to the Atlan- tic? A. Well, I think when the extreme low rates of the road — when there is a railroad war, I think it does. I don’t think only at that time when they were carrying extremely low that it had. Q. It is customary for owners of propeller lines to contract through, is it not ? A. Yes, sir. Most of the boatmen and boat owners throughout the State complain that the scalpers are in their employ and trying to speculate on them; that is, they act as agents and they pay them for it when they know they are at work directly against them, and it has become very bitter, very, between the scalpers and the boat owners and the boatmen. Q. Is there any difficulty between Ihe shippers and the boatmen arising out of that business ? A. No, sir. These boats are run probably nine-tenths of them by individuals ; they own the boats. A few men of the canal own ten or twelve boats apiece, but there is no regular lines. Q. Have the scalpers any thing to do with the handling of the grain or the elevating of the grain ? A. No, sir ; only for the trimming of the boat, Q. Who pays for that ? A. The boatmen. Q. Is that included in the charge for elevating it ? A. No, sir. Q. How much does that cost? A. Ten shillings a thousand. Q. What do you mean by trimming a boat ? A. When it is run in from the spout of the elevator they spread it around. Q. Will you tell us of the twenty-three or twenty-four scalpers in town how many do a legitimate business ? 240 A. That I won’t say, sir. Q. You wouldn’t like to? A. No, sir. By Mr. Boyd : Q. You say that there are only twenty-three scalpers ? A. There is some along about there. Q. The legitimate scalpers and the illegitimate ones? A. All together ; I don’t say positive that there are twenty-three ; there were that many houses ; I haven’t counted them up lately ; of course, those who have charge of these boats wlien they go to an elevator to load there is so much for trimming in ; the next thing when they make their bills is the canal insurance ; the next thing is our commission, and then is the tug towing — towing to the elevator. By Mr. Browning : Q. Who pays all that ? A. The captain of the boat. Q. Does the scalper in any instance pay it ? A. No, sir ; we pay it all, but it is put in our bill in our advances. By Mr. Boy’d : Q. The scalper pays it first and then charges it to the boatmarn? A. Yes, sir. Q. What is the first charge that you have to pay ? A. We pay the trimming ; that comes from the boss trimmer at the elevator ; he brings in his book and we pay him. Q. Vvho pays the elevator charges? A. The grain pays it. Q. That is the shipper — the owner ? A. Yes, sir. Q. Who ^pays the back charges — the lake freight ? A. AYe pay it. AVhat is the next charge you pay ? A. We pay all this — everything for the captain — because he has no money, and sends it into the office ; we will say we pay for the trimming ten dollars ; insurance, we will say, twenty-two dollars ; it is about that now ; we will say for the commission, twenty-four dollars ; it is about that now ; s;iy for a tug, five dollars, and the back charges, we will say, $300 ; that we ])ay to the receiver here ; then we advance the captain, we will say, $200 — call it $550 ; that we have 241 advanced on that cargo ; we draw on our agent in Xew York for twenty days ; make a draft for this whole amount ; pay these trim- mers as they come in, and yay the insurance men as they come in ; but it all conies out of the captain. Q. Who is your agent in New York ? A. We have several; we allow them three dollars apiece for receiving and paying; we deduct that from the draft, and when he collects the freight in New York he collects the $550. Q. You take a bill of lading from the captain in Buffalo? A. We take a bill of lading from the shipper and give him a bill of lading. Q . What does the captain do with the bill of lading — the cap- tain of the boat takes the scalper’s bill of lading? A. Yes, sir. Q. And you take the original bill of lading? A. Yes, sir; signed by the captain to us as shippers. The cap- tain delivers the bill of lading we give him to the receiver in New York. Q. About how much on an average do the captains receive for themselves for the transportation of this cargo ? A. It depends altogether upon the price we get. Q. I am speaking of the average price ? A. Do you mean net or gross ? Q. Net. A. I should say at this year’s prices it would average from $T5 to $ 100 . Q. Pie gets $75 to $100 net? A. I should say it would average about that — net for his earn- ings. Q. Pie gets $75 for his freight to new York ? A. I should judge it averages about that through the season. Q. Does he bring a return freight back ? A. Yes, sir. Q. How much does he receive on his return freight ? A. I think it has averaged about sixty cents a ton. Q. How much would it be on a cargo ? A. It probably would average about fifty-live or sixty dollars, Q. How long does it take him to make a round trip ? A. From twenty-seven to thirty days. Q. Does he provide his own power ? 31 242 A. Most all the boats do. Q. Does he bear his expenses out of this that you call the net profit ? A. No, not out of this seventy-five dollars. Q. You put the power in that? A. Yes, sir; if yoirwant the gross that he run out of I would give you different figures, but you asked me for the net. By Mr. Browning : Q. What would you put the gross figures at ? A. Two hundred and twenty-five dollars for the down trip. By Mr. Boyd : Q. What do the canal tolls amount to usually on the round trip ? A. About a cent a bushel on the car^o. Q. And that is paid by the captain ? A. Yes, sir. Q. Do the scalpers advance that for him ? A. Yes, sir ; we make all the advance and take it out of the freight and draw against the consignment in New York. Q. Explain about the canal insurance ; you say every cargo is insured ? A. For instance, I take a cargo of wheat to go by canal ; I make an application to the insurance company and they bring in the cer- tificates and I deliver them to the shipper. Q. That is to insure the cargo against loss ? A. Yes, sir. Q. In whose interest is that ? A. The shippers. Q. What do the insurance charges amount to on an average ? A. There is first, second and third-class boats ; on a second class boat the rate is about twenty-two dollars, and on the first would be about eighteen dollars to twenty dollars ; that depends upon the rates; they are not always alike. Q. This insurance is made in the interest of the shipper and is paid by the captain of the boat ? A. Yes, sir. C^. How long has that custom been in vogue ? A. Ever since I have been in Buffalo ; that is seventeen or eiarhteen years. 243 Q. Is there any other information you would like to state to this committee, Mr. Smith? A. I don’t think of any thing; I would say that in my opinion I think this contracting system by scalpers on the canal has been to the detriment of the boatmen, from a cent to a cent and a lialf a bushel on each cargo all summer, which would make from $500 to $600 difference with their earnings, and had that price been obtained it would not have diverted a pound of freight from the canal. Recess until 3 o’clock, p. m. Afternoon Proceedings. P, G. Cooh, sworn and examined, testified as follows : Q. Where do you reside ? A. In this city. Q. What is your business ? A. Secretary and treasurer of the Western Elevating Company. Q. How long have you been such secretary ? A. About three years, three years and a half. Q. Do you understand fully the method of operating the eleva- tors and the amount of business done by them ? A. Yes, sir. Q. How many elevators are owned by the company ? A. They don’t own any at all. Q. What connection have they with them? A. They lease them. Q. The company leases all the elevators ? A. Yes, sir. Q. Do these elevators belong to private individuals, or a corpora- tion ? Some of them are owned by corporations, and some by individ- uals ; mostly by individuals though. Q. How many elevators are there in the city of Buffalo so leased by the company ? A. About thirty-six, including floaters and transfers. Q. Are all these leased by the company ? A. There is one elevator that is not, one that is running now. Q. What elevator is that ? A, The Connecting Terminal. 244 Q. Who is that owned by. A. It is owned by some corporation, and I think E. T. Evans is the manager ; I cannot tell the owners. Q. Who is it operated by ? A. He operates it. Q. Is it operated in competition with the company’s elevators? A. No, sir. Q. Will yon explain to the committee generally the system by which these elevators are operated and how used ? A. They all sign a lease to this company. Q. Do they receive a rent ? A. Yes, sir. Q. Do the owners receive the rent annually ? A. Yes, sir. Q. Do they receive any thing else excepting the rents for the elevators ? A. Yes, sir ; there maybe a run of over grain, and bagging grain and delivering grain to the cars. Q. How do you mean, explain more fully wha*t is meant by over- grain and bagging ? A. When it comes into the house it sometimes has to be run into the wagons, or some such thing as that, and for that they will make a charge, and that the elevator has itself. Q. AYhat have been the charges upon the average for the last two years for elevating grain ? A. It is pretty hard to tell the average for last year; this year it has been three-quarters of a cent a bushel for the charge on the grain . Q. That is a uniform charge ? A. Yes, sir ; last year the rate varied from nothing to three-quar- ters of a cent ; three-quarters was the highest. Q. You say from nothing to three-quarters of a cent ; was there any grain elevated for nothing? A. Yes, sir; free of charge to the grain ; outside of that there was a charge to the vessel of one-eighth of a cent. Q. Can you state to the committee what quantity of grain was elevated during the season of 1881 ? A. The amount that went through our office was 98,902,250 bushels — that is 1880. Q. Eighteen hundred and eighty-one? 245 A. Forty-nine millions four hundred and ninety-two thousand four hundred and eighty-seven bushels. Q. For 1882 this far ? A. About 47,500,000. Q. How long does the season for running the elevators last ? A. Generally about seven months. Q. Through what months? A. AVell, from perhaps the middle of April, though very often not until the middle of May, until the first of December Q. The opening of the canal and lake regulates it, 1 suppose ? A. Yes, sir. Q. Do you elevate any for the railroads ? A. Yes, sir. Q. Do you know what quantity of grain was elevated for the canal boats during these seasons you have mentioned ? A. I could not tell. Q. You don’t know what quantity was elevated for the railroads either, do you ? A. No, sir ; I have nothing to show that. Q. What is the reason the owners of the elevators do not operate them themselves? A. Each one for himself, do you mean ? Q. Yes, sir. A. As soon as they do that the competition is so great they don’t get any thing. Q. Then this company was formed for the purpose of combina- tion, combining the elevators’ interests, was it ? A. You might say so, it was to protect themselves. Q. Do you think it would be in the interest of the trade to have competition instead of all the elevators operated by one company ? A. I think it would hurt it. Q. Do you think the elevators could be run profitably at a smaller charge than the charge you have mentioned ?' A. Not with the amount of grain that was handled this year and* last it could not. Q. You have said you didn’t recollect the charges of last year ? A. I could not tell exactly. Q. How are the rates regulated ? A. They are regulated by our company. Q. And it is an arbitrary rate regulated by the company ? 246 A. The rate is made early in the spring. Q. Do you think of any improvement that might be made to the present elevating system in the city of Buffalo '( A. I don’t know of any thing that would help the business any? Q. There are a number of elevators which are not provided with storage capacities, are there not ? A. Yes, sir. Q. Do you believe it to be in the interest of trade to have the elevators provide storage room ? A. I think they have plenty of storage room here now. Q. That is not the question — the larger elevators have storage room ? A. No, sir ; I mean we have all we need. Q. What storage capacity have you ? A. Probably seven or eight million bushels. Q. Is that storage attached to all of the elevators ? A. All of the elevators that we call storage elevators, yes, sir. Q. How many storage elevators have you in this city ? A. About twenty-three I believe, storage houses, twenty-three or twenty-four . Q. How many that have no storage ? A. Twelve or fourteen, taking in the floaters. Q. How many of those elevators are operated during the year ? A. I believe there is only seventeen that run this year, the busi- ness has been very light. Q. If the company had not to pay rent for the elevators that are not in use, or have not been used, and were not compelled to divide their profits with the proprietors of the elevators that have not been used, do you believe they could have afforded to have elevated the grain at any less rate than they charged ? A. Yes, sir ; I think they could make a fair earning if only the houses that run participated in it. Q. How much do you think they might have reduced their charges *per bushel ? A. That is something I never figured on. Q. About as near as you can judge ? A. Not much less than half a cent a bushel, they could make a fair profit off from that. il. About half a cent ? A. Yes, sir. 247 Q. Whereas the charges were three-quarters ? A. Yes, sir. Q. Who ultimately bears the burden of that extra charge ? A. The grain owner. Q. The shipper? A. Yes, sir ; the shipper, or owner. Q. Of course the consumer ultimately -as to do that ? A. I presume he does, yes, sir. By Mr. Browning : Q. You say you maxe the rate at the beginning of the year ? A. Yes, sir. Q. Why do you make the rate at the beginning of the year ? A. So the parties can know what to figure on. Q. What was the rate made last year ? A. It started at live- eighths. Q. What was the reason of its running down 1 A. There were some outside elevators that fell out and then com- petition commenced and they put the rate to nothing. Q. As soon as they fell out the rate went down ? A. Yes, sir. Q. Then they all came together again afterward ? A. Yes, sir. Q. This year ? A. That year later, along in September. Q. What was the rate just previous to their coming together ? A. I guess it was nothing as near as I can recollect. Q. What was it immediately after they came together ? A. Three-quarters. Q. And to-day it is what ? A. Three-quarters. Q. And has been since the first of this year ? A. Yes, sir; since la»t October, I think it was. Q. Can you tell us how much grain goes through this city east, that is, aside from what passes through the elevators ? A. 1^0, sir, I cannot. Q. What proportion goes through by rail ? A. I never noticed that. Q. What proportion of wheat goes east ? A. I could not tell you, I never watched that at all. 248 Q. Were all of the elevators employed last year at the time you speak of A. There were twenty-four running then. Q. How many floating elevators have you ? A. Seven now. Q. Do you think if those floating elevators were dispensed with that the other elevators could elevate and discharge cargoes chea})er than they do now ? A. It might make some difference, but I don’t think any great difference. Q. There was a witness testified yesterday that if they were pre- vented from doing business that the other elevators could accommo- date the trade at a less sum, do you concur with him in that ? A. I don’t think quite to the extent that he figures on. Q. Do you know any thing about this scalping business ? A. Yery little, I am not much interested in it. Q. Are you familiar enough with the business to state what you know about it of your own knowledge — have any complaints ever been made to you, or to the elevating company from others in rela- tion to, the methods adopted by some of the scalpers ? A. I have heard complaints about their contracting the freight. Q. Whom were the complaints made by ? A. Some from other scalpers, and some from outside parties. Q. What complaints have come to your knowledge from ^ other scalpers ? A. They claim it hurts the canal business, cuts the rates down be- low their contracts. Q. Have you ever received complaints from boatmen ? A. Hot in an official capacity. Q. You have heard them make complaints ? A. I have heard them make complaints, yes, sir. Q. What has been the nature of those complaints ? A. The same thing, that they claim thes# contracts hurt them, makes the scalpers that have the contracts work to keep the rates down. Q. State how they do that, please ? A. I think you can get at that by some of those canal men. C2. I understand there is ii class of men doing business here as scalj>er8, acting as the agent of the shipper and the canal men, and who lias a contract at a certain ])rice, say six cents a bushel, and they 249 will then go outside and fix a price by carrying at a less rate, say five cents, and that is all they pay the boatmen, because that price has been fixed for that day, or for that time, is that a fact ? A. I suppose it is, yes, sir. Q. And have all the complaints that has been made to you been of that nature ? A. I have heard such things stated, yes, sir. Q. Are you a member of the Produce Exchange here? A. Yes, sir, I think I am. Q. Are you an officer ? A. ISTo, sir. Py Mr. Boyd : Q. Can you teli us the cost of construction of the seventeen eleva- tors which were in use during the present season ? A. 'No, sir, I cannot. Q. Can you tell us how much it costs to operate these elevators ? A. No, sir. Q. Do you know of anybody that could give the committee that information ? A. Some elevator man might tell you what it cost him to run his elevator. Q. Can you state to the committee the amount of rent paid by the compan y to each of the elevators ? A, No, sir, I could not. Q. Could you obtain that information for the committee? A. Yes, sir, I suppose that could be had. Q. The Western Elevating Company is making money, is it not ? A. Whatever comes into our office is paid out to the elevators again, deducting the expenses of running the office, that is all. Q. The elevator owners form the company, do they not ? A. Some do, the owners of some are in the company, yes, sir. Q. Are there any elevator owners who are not members of the company ? A. There are some, yes, sir; that we don’t have on our books at all. Q. Can you tell us who constitute the Western Elevating Com- pany ? A, No, sir, I don’t know as I could. 32 250 Q. About how many members constitiite the company? A. Thirty-four or thirty-five. Q. Can you give ns the names of some of the prominent mem- bers of the company ? A. Yes, sir, I could give yon some. Q. Please name the names that you remember ? A. William II. Abell, James W. Whitney, C. F. Sternberg, A. J. Wheeler, C. J. Wells, John Wilkesoii ; they are the most prominent ones. Q. Are those gentlemen all residents of Buffalo ? A. With the exception of Mr. Whitney. Q. Is there any other information that you would like to offer to this committee ? A. I don’t think of any thing now. William Thurstone^ sworn and examined, testified as follows : Q. Where do you reside ? \ A. Buffalo. Q. What is your business ? A. Secretary of the Board of Trade, and the commercial editor of the Courier. Q. Are you familiar with all the operations of the Board of Trade ? A. Yes, sir, as a Board of Trade. Q. You have attended during the business hours at the office I suppose ? A. Yes, sir, for nearly twenty years past. Q. How long have you been secretary of the Board of Trade ? A. Twenty years next May. Q. What is its corporate name ? A. The Buffalo Board of Trade Q. What is sold on the floor of the Exchange ? A. Grain of all kinds. Q. Pork ? A. No, sir. Q. Lard ? A. No, sir. Q. Petroleum ? A. No, sir, simply grain. Our business was very large, but since 251 the changing of the mode of doing the business it has fallen olf con- siderably. Q. Is the system of dealing in futures and options carried on in the Board of Trade ? A. We started a call board in June, 1877, and it has been con- tinued since, but it is a weak institution and it has not been success- ful in Buffalo ; it might be in exciting times. Q. Will you explain the operations in detail of the call board ? A. We have a caller, and I act as the secretary of the caller ; the caller announces the price of JSTo. 1 wheat and offers are made, a man will offer what he will give for it, while another will offer what he will give, and another offers what he will give until they come to figures that suits and then a purchase is made; if not it is passed. We generally call two or three options on wheat and corn and oats, on winter wheat and spring wheat. Q. How are the prices regulated at your call board ? A. Simply by the prices offered, simply what a person has an idea the market value is. Q. Is it infiuenced by the Chicago market and other markets ? A. Yes, sir ; by the Chicago market. Q. But these other markets have no direct influence upon the operations of the Exchange as an institution ? A. Ho, sir, not at all. Q. Can you tell us what quantity of grain has been sold under the option and future system during the present season ? A. The present season has been very, very small. I looked this morning, thinking you would ask that question, and I found there has not been quite thirty sales during the year on a call, and gener- ally in options of 5,000 bushels, sometimes it is above that, but generally it is 5,000 bushels. Q. What has the largest quantity been ? A. That I could not say. may be 20,000 bushels, if not more. I am speaking of that from memory. Q. You place the average at about 5,000 bushels in each call? A. Yes, sir. Q. And thirty calls is all that has been made this year ? A. Yes, sir. By Mr. Bkowning: Q. Are they legitimate sales, are they for consummation, or purelv speculative ? 252 A. I could not tell you. By Mr. Boyd : Q. Does the so-called system of bucket-shops interfere with the operation of your board ? A. We know nothing of it as a Board of Trade. Q. What is your opinion in regard to the effect of such institu- tions upon the commerce of the country ? A. I have not given that a thought, sir. I think, however, all bucket-shops as bucket-shops are simply gambling operations — simply gambling institutions. Q. Do you think it would be in the interest of the public to have the so-called bucket-shops abolished by law ? A. I have not given that a thought. Q. Is there any other information that you would like to offer to the committee? A. I don’t know of any thing in particular, except that I have a little book here called ^‘Five minutes’ talk about Buffalo,” which will probably give you considerable information you desire. I have given 10,000 of these away. (Witness j)roduces book to the committee.) Q. Will you offer this in evidence as a portion of your testimony before this committee ? A. Yes, sir. EXHIBIT ^^A.” Trade aitd Commerce of Buffalo. Summary . Annexed will be found full statistics of the trade and commerce of Buffalo for 1881, with comparisons of previous years, in flour, grain, lumber, coal, live stock, etc. The exhibit on the whoh^ is not as satis- factory as that of 1880, but still the business transacted wasrpiitc large. The following is a brief synopsis of the most important features : The receipts of flour (reduced to wheat bushels) and grain in 1881 by lake at i’uffalo aggregated 02,002,895 busliels; by the Lake Shore & Michigan Southern railroad 85,508,400 bushels — grand total, 97,571,- 295 bushels. The other railroads centering liere do not make any re- ports of their traffic, otherwise a much larger exhibit would be shown. The growth of the grain trade of Buffalo is shown by the following 253 figures: In 1836 the receipts by lake were 1,230,351 bushels ; in 1846, 13,366,168 bushels ; in 1856, 25,753,967 bushels; in 1866, 53,388,087 bushels; in 1877, 50,074,648 bushels; in 1877, 65,109,291 bushels; in 1878, 84,046,052 bushels ; in 1879, 78,805,354 bushels, and in 1880, 112,042,927 bushels. The aggregate receipts by lake of flour and grain from 1836 to 1881 inclusive were 1,700,372,075 bushels. The receipts of the products of the forest on the whole were satisfac- tory; prices of all kinds were higher than last year, and the stocks of greater magnitude than ever before known at the close of navigation, but not more than the business prospects Avarrant from the demand manifested ; the trade all the year was very good. The growth of the coal trade is specially noticeable, and it would have been larger had .the transportation facilities from the mines been adequate to the requirements. The total imports of all kinds aggre- gated 2,243,571 tons ; against 1,813,095 tons in 1880. Higher prices ruled this year than those of 1880. The large demand from manufac- turers and others indicated the rapid enlargement of the productive capabilities in all branches of the business establishments of our city. The liA^e stock trade of Buffalo, as will be seen from our full state- ment of it, shows a falling off in receipts this year, as compared Avith last, of 7,605 cars of cattle, 3,222 cars of hogs, and 255 cars of sheep. Yet the strictly local trade has been larger, and, Avith higher prices, business has been fully as remunerative as last year. The shipments of grain from the elevators by railroads connected therewith aggregated 21,808,356 bushels, Avhich, considering the re- duced receipts by lake, indicate a larger movement than last year, al- though not apparent from the footings. The exports by lake for the past season included 825,240 tons of coal ; 170,410 barrels of cement and plaster; 109,810 barrels and 11,655 tons of salt, and 44,462 tons and 23,100 bars of railroad iron. The tonnage of the western-bound freight carried by propellers Avas large but fell far short of 1880. The straits of Mackinaw opened May 3. The first arrival at this port by lake was the tug Anna P. Dorr on May 1. On Tuesday, a. m.. May 3, the schooner M. J. Wilcox left for Racine — the first of the sea- son. The propeller Vanderbilt, laden Avith AV'heat, flour, pork, etc., ar- rived here Monday, p. m.. May 9 ; the first arrival from Chicago. The Erie canal opened May 17, and closed December 6 ; number of days of navigation, 204. The Welland canal (Canada) opened May 2, and closed December 19. The first propeller to pass through the Sault Ste. Marie canal was the China, May 13 ; the last propeller the Wissaliickon, November 29. 254 The disasters during the year on tlie lakes were numerous and losses heavy; over sixty persons were drowned. The grain and forwarding business of Central Wharf this year proved to be generally unsatisfactory, in the face of great national prosperity. The competition of the railroad companies for freights at ruinous prices caused extraordinary low rates of freight by lake and canal, the unsettled condition of the markets, the damage to the crops by the weather, and the wild speculation which prevailed at different periods developing all sorts of devices for making the rich richer and upsetting the calculations of the steady-going merchants, were the chief factors in producing the extraordinary features of the season’s business. The principal sufferers were the boatmen on the canals of this State, the bulk of whom have gone into winter quarters at.best penniless and in many cases deeply in debt. The approximate ruling rates of the various leading articles of pro- duce on December 30, this year, as compared with 1880, show an ad- vance in flour, wheat, corn, rye, oats, beans, seeds, cornmeal, oatmeal, pork, lard, dressed hogs, high wines, potatoes, butter, eggs, cranberries, apples, salt, coal, fish, with a small decline in barley, malt, millfeed, cheese, lemons; the other articles enumerated about the same. The capacity of the flouring mills of the city and suburbs may be estimated at 1,250,000 barrels annually ; all the modern improvements have been added. The malting interest is a very important one; sixty malt-houses have been in operation during the year, turning out over 3,000,000 bushels of malt. The amount of capital invested in manufactures of all kinds is estimated at $27,000,000; the annual value of the products, $45,000,- 000 ; the number of hands employed, 25,000. The banking capital is $3,000,000, with resources equally large. Lake freights on grain from Chicago to Buffalo fluctuated from half a cent per bushel on wheat and corn to 5^c and 5c respectively ; the average for the season was 3^c on wheat and 2fc on corn. Coal was carried from this port to Chicago at rates varying from 75c to $1.75 per ton ; the average was about $1.20 per ton. Many propellers were withdrawn from the various lines before the close of navigation for want of freight. Railroad freights opened at 10-^c for wheat and 10c for corn per bushel, hence to New York, and closed at 8c and 7^c respectively. From the IGth of June to the 18th of November, 6 cents was the nominal rate on wheat. JJie elevator owners were at logger-heads nearly all the season and rates ruled from one-eighth of one cent per bushel to the vessel and 255 ^‘nothing” to the grain to three-quarters of one cent per bushel to the grain and one-eighth of one cent to the vessel. The public can- not complain of extortionate rates this year ! The amount of grain handled by the Western Elevating Company was about 49,000,000 bushels, a decrease from 1880 of nearly 50,000,000 bushels. Transferring grain from elevator to cars cost half a cent per bushel ; trimming in lots of less than five cars $1 per car extra; five cars and over free. The arrivals and departures of vessels in the district of Buffalo creek for the season of 1881 were 6,745, aggregating 4,535,223 tonnage ; last year 10,308 vessels of 5,995,746 tonnage ; a decline in the movement of vessels of 35 per cent, while in tonnage it is only about 24 per cent, show- ing that the small craft have to give way to their large and more econ- omical rivals. The tonnage of vessels built and enrolled was 11,899.51. The tonnage of vessels built, 5,233.64. Forty-nine vessels changed hands by total transfer. The total tonnage of the port at the close of the fiscal year ending June 30 was 217 vessels, of 100,815.43 tonnage^ exclusive of canal boats other than steam, of which the custom-house does not now keep a record. Only eighty-eight vessels of all kinds are laid up here for the winter ; the bulk of the lake fleet is in Chicago, numbering over 1,000 vessels. The receqDts at the custom-house during 1881 were $810,121.45, against $767,628.48 in 1880, and $513,562.18 in 1879. Avery gratify- ing increase in 1881, over 1880, of $42,492.97. * The decline in the canal commerce is very marked. Tlie amount of tolls collected at this port during the season of 1881 aggregated only $325,674.32, as compared with $736,631.10 in 1880. The number of boats cleared, 6,294 ; last year, 10,623. The hindrances to canal navigation during the season were few, and the breaks and damages were speedily repaired. The open weather at the close of the year enabled all the boats to reach tide-water that Avere laden with through freight. The exports by canal from Buffalo were 4,465 barrels of flour and 30,805,949 bushels of grain, a decline of over 15,000 barrels of flour and about 41,000,000 bushels of grain. The total tons (;^rried of all articles aggregated 1, 121,240 (less than half of 1880), of the values of $34,782,568. Over 45,000 tons of flax seed were shipped ; nearly twice as much as in 1880 and four times that of 1879. The movement of coal was largely in excess of 1880. Between seven and eight hundred canal boats are laid up here this season, a most unprecedented occurrence, and indicative of the boat- men’s hard lot. Again the beneflcial results arising from the.“ free list” is shown by 256 large westward moving tonnage on the canal for Buffalo. Tlie aggregate figures of the imports here were 001,879 tons, of the value of 811,048,- 980 ; the tonnage of 1880 was 557,604, and of 1879,449,453. Coal, iion, steel blooms, stone, lime, rock and superphosphates, foreign salt, crockery and coffee were the principal articles upon which the gain was made. Tliis up-freight movement was of great advantage to the boatmen, as without it they would have been obliged to discontinue their business entirely, as the down-freight loads were almost always taken at a loss. Canal freight hence to New York fluctuated from seven cents on wheat and six and one-half cents on corn per bushel to four cents and three and one-half cents respectively ; the average for the season was four and one-fourth cents for wheat and three and three-fourths cents for corn, tolls included. Pine lumber per 1,000 feet ranged from 82 to 83.50, and staves 81 to 1.75 per ton to New York. Merchandise from New York to Buffalo varied from. 81.25 to seventy cents per ton ; the average, eighty-five cents to ninety cents. The receipts of flour and grain at tide-water from all the canals this year were only 38,542,500 bushels, as compared with 72,397,800 bush- els in 1880. The export movement of flour and grain from New York for the year 1881 aggregated about 97,508,000 bushels (including flour reduced to its equivalent wheat), a decrease, as compared with 1880, of 38,217,_ 009 bushels. The receipts of flour and grain at the western lake ports of Chicago, Milwaukee, Toledo, Detroit, Cleveland and Duluth, from January 1 to December 31, aggregate 224,684,041 bushels, a decrease of about 39,000,000 bushels as compared with the figures of 1880. The ship- ments for the same period from these places were 212,668,447 bushels, showing a decrease of about 30,667,000 bushels. The world’s wheat harvest for 1881, as estimated from crop returns, aggregates 1,992,000,000 bushels. Comparative Imports by Lake. The follo'vTing table shows the imports of principal articles into this port by lake for the years 1879, 1880 and 1881 : AkIu^s tons. 1879. 700 1880. 1881. 400 Beans, )ja Barley, bu jikjrw 200 610,740 26,640 335,925 105 , 600 282,510 I'.ae.dii, l)X.s. . . 1,320 4,283 600 1,550 Broomcorn, bales ItmoiriH jikjcM . . 103 3,553 deal, tons 34,648 13,078 7,860 (!oni, bn *. . . . 32,990,993 62,214,717 34,434,830 ('edar |»o>t.s, no 16,730 8,865 40,200 257 Cornmcal, bbls Copper, pkfj’s Copper, toDS Copper, cukes and bars Eggs, pkgs Fish, pkgs Flour, bbls Flaxseed, bags Flax seed, bu Feed, tons Feed, sks Grindstones, tons Hides, no Hides, bdls Hops, bales Hams, tcs Hoops, no Hoop poles, no Heading, bbls Iron ore, tons. . Iron, pig, tons Iron, tons Iron, scrap, lbs Lead, tons Lead, pigs Leather, rolls Lard, lbs Lard, tcs Lard, pkgs Lard, bbls Lumber, feet Lath, pcs Meats, cut, bxs Oats, bu Oatmeal, bbls Oatmeal, bags Oil cake, pkgs Oil cake, tons Oil, bbls Pickets, no Pork, bbls Peas, bu Pelts, bells Rye, bu Sundries, pkgs Silver ore, pk^gs Seed, bags Seed, bu Stone, cords Salt, bbls Staves, no Stave bolts, cords Shingles, no Shooks, bdls Shooks, no Tobacco, pkgs Tallow, bbls Ties, no Wool, bales Wood, cords Wheat, bu 1879. 2,000 12,085 6,064 17,791 186 5,120 897,105 8,399 132 952 14,579,000 14,471 25,380 8,431 127 256,000 46 6,285 40 804,920 81,831 18,568 1,850 202,443,612 4,644,000 1,104,793 2,500 4,443 51,047 379 480 7,190 33,570 25,797 754 1,884,802 75,000 536 293,742 344,312 59 12,070,597 8.640 59,793,700 1,541 767,000 4,143 551 271,693 2,427 1,400 37,788,501 1880. 7,440 2,840 9,971 1,100 820 12,967 1,317,911 177,'748 1,378,886 67 86,717 280 1,337 6,541 271 1,500 10,705,700 170,000 45,597 8,468 9,048 2,011 28,600 1,220 19,127 1,058 247 ’ 120 214,169,352 4,673,050 35,770 1,649,350 3,886 27,465 89,995 150 3,099 40,428 10,775 3,828 743,451 100,000 85,828 82,100 534 3,228 7,875,884 10,101 33,058,000 1,060 6,026 3,512 167,994 2,282 893 40,510,229 1881. 14,320 410 16,540 1,901 1,938 4,750 1,051,250 2,178,938 *86’ 094 3,915 7,964,000 8,516 13,747 10,820 53,000 111 17,243 73 25,424 240,802,160 2,863,000 3,565,737 1,660 45,497 80 11,922 6,038 2,371 22,210 110,000 23,221 214 ’379'86, 275 10,065 25,249,000 964 9,356 1,782 419,842 2,684 2,760 18,495,-320 Aggregate receipts of fiour and grain. 1879. 1880. 1881. Flour, bbls 897,105 1,317,911 1,051,250 Wheat, bu 37,783,501 40,510,229 18,495,320 Corn, bu 32,990,993 62,214,417 34,434,830 Oats, bu 1,104,793 1,649,350 3,565,737 33 258 Barley, bu Rye, bu Peas, bu Total grain, bu Flour to wheat, bu... Grand total, bu. 1879. 610,740 1,914,802 797 1880. 335,925 743,451 10,775 1881. 282,510 22,216 6,038 74,405,626 105,464,147 56,806,645 4,482,525 6,589,555 5,246,250 78,891,151 112,053,702 62,062,895 Grain Trade of Buffalo for Forty-six Years. The following statement shows the grain trade of Buffalo for forty- six years (the receipts by the Lake Shore Railroad not included): Years. 1836 . . 1S37 . . 1838 . . 1839 . . 1840 . . 1841 .. 184-2 . . 1843 . . 1844 . . 1845 . , 1846 . . 1847 .. 1848 . . 1849 . . 1850 . , 1851 . . 1852 . , 1853 . , 1854 ., 1855 . , 1856 . . 1857 . , 1858 . . 1859 . , 1860 . , 1861 . , 1862 . , 1863 . 1864 . , 1865 . . 1866 . , 1867 ., 1868 .. 1869 . , 1870 ., 1871 ., 1872 . , 1873 ., 1874 1875 . , 1876 . , 1877* Flour, bbls. 139,178 126,805 277,620 294,125 597,142 730,040 734,408 917,517 915,030 746,750 1,374,529 1.857.000 1.249.000 1,207,435 1,103,039 1,-258,224 1,299,213 975,557 739,756 936,761 1,126,048 845,953 1,536,109 1,420,333 1,122,335 2,159,591 2,846,022 2,978,089 2,028,520 1,788,393 1,313,543 1,440,056 1,502,731 1,598,487 1,470,391 1,278,077 762,502 1,259,205 1,693,585 1,810,402 807,210 693,044 Wheat, bu. 304,090 450,350 933,117 1,117,262 1,004,561 1,635,000 1,555,420 1,827,241 2,174,500 1,770,740 4,744,184 6,489,100 4,520,117 4,943,978 3,681,347 4,167,121 5,549,778 5,420,043 3,510,782 8,022,126 8,465,671 8,334,179 10,671,550 9,234,652 18,502,645 27,105,219 30,435,831 21,240,348 17,677,549 13,437,888 10,479,694 11.879.685 12,555,215 19,228,546 20,556,722 22,606,217 14,304,942 30,618,372 29,778,572 32.967.686 19,324,612 23,284,405 Corn, bu. 204,355 94,490 34,148 71,337 201,031 454,530 223,966 137,978 54,200 1,455,258 2,862,800 2,298,000 3,321,651 2,593,378 5,988,775 5,136,746 8,065,793 10,108,983 9,711,430 9,633,277 5,713,611 6,621,668 3,113,653 11,386,217 21,024,657 24,388,627 20,086,912 10,478,681 19,840,901 27,894,798 17,873,638 16,804,067 11,549,403 9,410,128 26,110,769 34,643,187 28,550,828 24,974,518 22,593,891 20,939,853 33,362,866 1878* .. 971,980 35,419,136 35,133,853 Grain, bush. 1879* .. 897,105 37,788,501 32,990,993 Y ears. 1880* .. 1,317,911 40,510,229 62,214,417 1881* .. 1,051,250 18,495,320 34,434,830 1836 1837 543,461 Oats, bu. Barley, bu. Rye, bu. 1838 974,751 1836 ... 28,640 4,876 1,500 1839 .... 1,117,262 .... 1,075,883 1 837 . . . 2,553 3,267 1840 1 838 . . . 6,577 909 1841 .... 1,852,325 1839 ... .... 1842 2,015,928 1840 ... 1843 .... 2,055,0-25 1841 ... 14’,i44 2,150 1844 .... 2,335,568 Y’ears. Oats, bu. Barley, bu. Rye, bu. 1842 ... 4,710 1,268 1843 . .. 2,'489 . . . • 1,332 1844 ... 18,017 1,617 456 1845 . . . 23,300 . . * . 1846 . . . 218,300 28,250 1847 ... 446,000 70,787 1848 ... 560,000 .... 17,889 1849 . . . 362,384 1850 . . . 357,580 3,600 1851 ... 1,140,340 142,773 10,652 1852 ... 2,596,231 497,913 112,251 1853 . . . 1,580,655 401,098 107,152 1854 ... 4,401,739 313,885 177,066 1855 ... 2,693,222 62,304 299,591 1856 . . . 1,733,382 46,327 245,810 1857 . . . 1,214,760 37,844 48,53() 1858 ... 2,275,231 308,371 125,214 1859 .. . 394,502 361,560 124,693 1860 ... 1,209,594 262,158 80,822 1861 ... 1,797,905 313,757 337,764 1862 ... 2,624,932 423,124 791,564 1863 ... 7,322,187 641,449 422,309 1864 . . . 11,682,637 465,057 633,727 1865 ... 8,494,799 820,563 877,676 1866 ... 10,227,472 1,606,384 1,245,485 1867 . . . 10,933,166 1,80-2,598 1,010,693 1868 ... 11,492,472 637,124 947,323 1869 ... 5,459,347 651,339 126,093 1870 . . . 6,846,983 1,8-21,154 6-26,154 1871 ... 9,006,409 1,946,923 1,095,039 1872 . . . 6,050,045 3,088,925 301,809 1873 ... 5,972,346 1,232,507 906,947 1874 ... 5,396,781 1,154,948 167,301 1875 . . . 8,494,124 916,889 222,1-26 1876 ... 2,397,257 2,616,081 761,795 1877* . . 4,-279,229 1,652,568 1,155,003 1878* . . 5,122,972 1,375,184 2,135,007 1879* .. 1,104,793 610,740 1,884,80-2 1880* .. 1,649,350 335,925 743,451 1881* .. 3,565,737 282,510 22,-210 Grain, including flour, bush. 1,239,351 1,184,68^ 2,587,887 2,362,851 4,061,598 5,59-2,2-25 5,687.468 6, 642, 6 1C 6,910,718 259 Grain, Grain, including Y" ears. bush. flour, bush. 1845 .... 1,848,040 5,581,790 1846 .... 6,491,522 13,366,167 1847 .... 9,868,187 19,153,187 1848 .... 7,396,012 14,641,018 1849 .... 8,628,013 14,665,189 1850 .... .... 6,618,004 12,059,551 1851 .... 11,449,621 17,740,784 1852 .... . ...13,392,937 20,390,506 1853 .... 11,078,741 15,956,525 1854 .... ... .18,553,455 22,252,238 1855 .... .... 19,788,473 24,472,277 1856 .... 20,123,667 25,753,965 1857 15,348,930 19,578,690 1858 20,202,444 26,812,982 1859 14,429,069 21,530,722 1860 31,441,440 37.053,115 1861 50,662,646 61,460,601 1862 58,642,344 72,872,454 1863 49,845,065 64,735,510 1864 42,044,496 51,177,146 1865 .... .42,473,223 51,415,188 1866 51,820,342 53,388,087 1867 , . . . 43,499,780 50,700,060 1868 42,436,201 49,949,856 1869 37,014,728 45,007,163 1870 39,261,141 46,613,096 1871 60,765,357 67,155,742 1872 62,260,332 1873 67,340,570 73,636,595 1874 61,562,627 70,030,552 1875 65,194,716 74,246,726 1876 46,038,598 50,074,648 1877* . . . . 61,734,071 66,199,291 Grain, Grain, including Years. bush. flour, bush. 1878* 79,176,152 84,046,052 1879* 74,379,829 78,865,354 1880* 105,453,372 112,042,927 1881* 56,806,645 62,062,895 COMPARED BY DECADES. Grain, Grain, including Years. bush. flour, bush. 1836 543,461 1,239,351 1846 6,491,522 13,366,167 1856 20,123,667 25,753,966 1866 51,820,342 53,388,087 1876 46,038,598 50,074,648 AGGREGATE RECEIPTS COMPARED. Decades. 1836 to 1845.. 1846 to 1855.. 1856 to 1865.. 1866 to 1895.. 1876 1877* 1878* 1879* 1880* 1881* Grain, Gram, including bush. flour, bush. 14,368,908 113,766,005 344,213,324 526,976,775 46,038,598 61,734,071 79,176,152 74,379,829 105,453,372 56,806,645 41,851,483 174,717,437 432,390,318 597,121,670 50,074,648 66,199,291 84,046,052 78,865,354 112,042,927 62,002,895 Total 66 yrs . 1,424,695,728 1,700,372,075 * Canadian receipts through custom house not included in 1877, 1878, 1879, 1880 and 1881. Keceipts by the Lake Shore & Michigan Southern Eailroad. The following table shows the principal receipts at Buffalo by the Lake Shore & Michigan Southern Eailroad for the year ending De- cember 31, 1881, as compared with those of 1880 and 1879 : Flour, bbls Wheat, bu Corn, bu Oats, bu Barley, bu . , Rye, bu Total grain, bu . . Flour to wheat, bu Grand total, bu. . Beef, bbls and tcs Butter, lbs Bacon, lbs Broomcorn, bales Coal, tons Cattle, cars Cheese, bxs Cotton, bales Cornllieal, bbls. . . Eggs, pkgs Fish, pkgs Grindstones, no.. 1879. 1880. 1881. 1,187,700 925,100 889,800 12,916,700 15,947,800 8,869,100 753,000 776,200 11,084,000 13,949,400 6,905,000 710,300 913,600 8,343,400 16,761,200 5,409,000 235,800 340,000 39,262,800 5,938,500 33,562,300 4,625,500 31,059,400 4,449,000 45,201,300 38,187,800 35,508,400 183.100 17.538.000 94.540.000 14,047 70,808 36,146 121.100 119,572 212,700 26,590 26,420 21,170 124,920 30.210.000 38.530.000 12,690 75,721 38,413 130,150 96,000 254,100 32,030 26,725 37,210 79,510 20,100,000 31,950,000 14,895 88.949 30,799 85,860 73.950 242,000 35,745 16.950 23,970 260 Hides, no Horses, cars Hops, bales Hogs, cars Hemp, bales Hams, tcs Iron, plates, no Iron, pig, tons Leather, rolls Lard, lbs Lumber, cars Oil cake, pkgs Oil, refined, bbls. . . . Oil, crude, bbls Pork, bbls Pelts, bdls Seed, bags Stones, tons Staves, cars Sheep, cars Tobacco, pkgs Tobacco, hhds Tallow, bbls or pkgs Tanbark, cars Whisky, bbls Wool, bales for this city : Flour, bbls Wheat, bu Corn, bu Oats, bu Barley, bu Rye, bu Hides, no Fish, pkgs Lumber, cars, , . . , Oil, refined, bbls. Oil, crude, bbls. . . Coal, tons 1879. 1880. 1881. 305,997 289,905 304,535 1,061 1,015 830 1,400 555 1,295- 12,503 15,381 14,369 9,133 6,871 6,080- 185,730 204,590 108,500 26,280 29,120 23,920 10,166 6,620 7,726 12,702 10,760 6,016 20,270,000 40,100,000 28, 80(1, 000’ 2,625 4,670 5,073 156,630 201,160 128,370 1,156,745 499,660 445,760 331,165 452,571 497,240 238,450 233,200 201,140 ■ 14,370 16,355 12,950 41,300 66,590 51,180 8,651 9,536 7,624 440 814 921 2,997 3,367 3,466 27,910 35,292 29, 980' 5,623 5,378 5.224 7,080 10,050 1 1,630' 455 680 677 73,650 81,200 70,900 27,755 35,440 26,090- and 1881 the following were 31,400 20,700 31,500 126,200 46,400 50,400 136,800 176,800 ,150,100 130,000 34,200 82,100 22,000 64,000 6,400 2,400 1,600 400 108,182 95,595 117,283 7,585 4,720 4,894 1,145 2,182 2,211 36,030 17,120 2,880 905 53,118 58,696 66,549 5E AND THE LaKE Shore &. Michigan" Southern" Railroad. The following statement shows the receipts of flour and grain by lake and the Lake Shore & Michigan Southern Railroad for three years : Flour, bbls Wheat, bu Corn, bu Oats, bu Barley, bu Rye, bu Peas, bu Total, bu Flour to wheat, bu... Grand total, bu 1879. 2,084,805 1880. 2,243,011 1881. 1,941,050 50,705,201 48,938,793 9,973,893 1,363,740 2,661,002 25,797 51,594,229 76,163,817 8,554,350 1,046,225 1,657,051 10,775 26,838,720 51,166,030 8,974,737 518,310 362,210 6,038- 113,668,426 10,324,025 139,026,447 11,215,055 87,866,045 9,705,250 123,992,451 150,241,502 97,iyi,295 26 Lumber Trade of Buffalo. Th6 following table shows the receipts and shipments of etc., for three years: Imports by Canal. Lumber, feet Timber, cubic feet, Shingles, no 1879. 1880. 1,703,849 3,815,886 82,862 30,000 264,000 Exports by Canal. Lumber, feet 107,158,316 Staves and heading, lbs 56,029,617 ■Shingles, no 34,600,000 75,243,821 58,022,758 17,966,000 Heading, bbls Hoops, no Hoop poles, no Lumber, feet Lath, pieces Railroad ties, no. . . Staves, no Staves bolts, cords Shingles, no Shooks, bundles. . . Pickets, no Cedar posts, no Imports by Lake. 14,471 14,579,000 202,443,612 4,644,000 271,693 12,070,597 8,640 59,793,700 1,541 7,190 16,730 45,597 10,765,700 170,000 214,169,352 4,673,050 167,994 7,875,884 10,101 33,058,000 1,060 8,865 Lumber, feet, Other imports by Railroads and Teams.* ' 90,000,000 87,500,000 lumber, 1881. . 2,357,066 ’172,666 74,865,668 61,652,021 12,253,000 8,516 7,964,000 240,802,160 2,863,000 419,842 3,986,275 10,065 25,249,000 964 40,200 97,000,000 Average Prices. The prices at the yards during 1881 were about as follows, per 1,000 feet : Basswood. . Pine Ash White wood Oak......... Cherry $15 00at24 00 11 00at53 00 15 00at38 00 15 00at36 00 25 00at45 00 32 00at65 00 Chestnut Walnut Maple Hickory Lath, per M. . . . Shingles, per M $25 00at40 00 40 OOatlOO 00 22 00at35 00 30 00at50 00 1 75at 2 25 2 75at 4 25 Coal Trade of Buffalo. The anthracite and bituminous coal trade of this city is shown by the following figures : Anthra.cit.p tons Imports ly Canal, 1879. 92,134 1880. 83,240 1,777 1881. 181,292 500 Blossburg, tons 2,000 Bituminous, tons Exports by Canal. 28,290 25,361 29,222 Bituminous, tons Imports by Lake. 34,648 13,078 7,860 Anthracite, tons Blossburg, tons Exports by Lake, 550,646 30,000 554,670 35,000 825,240 30,000 *Partlv estimated. 262 Imports hy Railroads * 1879. Anthracite, tons 1,000,000 Bituminous, tons 037,022 Blossburg, tons 00,000 1880 . J881 . 850.000 1,005,000 800.000 923,019 65,000 05,000 Exports hy Railroads. No estimate to hand of the movement in detail. Total imports, anthracite, tons.. Total imports, bituminous, tons Total imports, Blossburg, tons. . , Total exports, bituminous, tons Total exports, anthracite, tons., Total exports, Blossburg, tons. . Recapitulation. 1,092,134 933,240 1,246,292 673,670 813,078 931,779 62,000 66,777 65,500 28,290 25,361 29,222 550, G4G 554, G70 825,240 30,000 35,000 30,000 The retail prices of anthracite per 2,000 pounds, delivered in city limits, during the year were as follows: Bloss- 1881. Grate. Egg. Stone. Nut. burg. January 1 $5 70 $5 70 $5 95 $6 20 $4 25 April 25 5 25 5 25 5 45 5 45 4 25 July 1 5 35 5 35 5 70 5 50 4 25 August 1 5 35 5 35 5 70 5 70 4 25 October 1 5 35 5 GO 5 90 5 90 4 25 Dec. 31 5 35 5 60 5 90 5 90 4 25 The range of prices during 1881, for bituminous, delivered to manu- factories, gas-works, propeller lines, etc., were from $2.50 to $4.25 per ton, according to description. The price at retail varied from $5.00 to $6.00 delivered per ton, according to quality, for family use. About 200,000 tons of anthracite, and 10,000 tons of bituminous coal were comsumed by families in this city during 1881. COMPAKATIVE PRICES OF LeADIXG ARTICLES. The following statement shows the approximate ruling rates of the various articles enumerated at Buffalo, December 31, 1881, and the corresponding periods in 1880 and 1879. Flour, bbl.— 1879. 1880. 1881. City gr. sp. No. 1 $6 75 at 7 25 $5 25 at 5 75 $7 00 at 7 75- City gr’d amber 7 25 at 7 75 5 50 at 6 GO 7 00 at 7 75 City gr’d white 7 50 at 8 00 5 75 at 6 25 7 25 at 7 75 City gr’cl new process 8 25 at 9 00 7 75 at 8 25 8 00 at 8 75 Western spring 6 00 at 7 50 5 00 at 6 00 7 00 at 7 75 Western bakers 7 00 at 7 50 6 25 at 6 75 7 25 at 8 00 Western aniber 7 50 at 8 00 5 50 at 6 00 7 50 at 8 00 Western white 7 75 at 8 25 5 75 at G 25 7 50 at 8 00 Westei n new process 8 75 at 9 75 7 50 at 8 25 8 25 at 9 25 Rye 5 50 at G 00 5 25 at 5 75 6 25 at 6 50 Buckwh(iat, cwt 3 00 at 3 30 2 50 at 2 75 4 00 at 4 50 Wlieat, bush — No. 1 Duluth, sp 1 43 •No. 1 h’d Duluth, sp 1 45 1 24 1 54 Red and amber 1 38 at 1 45 1 07 at 1 10 1 43 White 1 40 at 1 47 1 08 at 1 10 1 42 Corn, bush — No. 2 Westein 53 J 50 671 ^§1 Oat.'^, bu. Western 45 40 49 at 50 Rye, bu. We, stern 90 95 1 05 * Parflv estimated. 263 Barley, bush — 1879. 1880. 1881 West, and Can 70 at 90 1 10 at 1 30 95 at 1 10 State 65 at 80 90 at 1 05 85 at 1 03 Barley malt, bu 1 05 at 1 25 1 10 at 1 47 1 10 at 1 25 Peas, bu. (free of duty). Canada y5 at 1 00 1 00 1 00 Beans, bu., bbls., fr .... 1 50 1 35 at 1 80 2 75 at 3 25 Seed, clover, bu 5 50 at 5 75 5 50 at 6 00 5 50 at 5 75 Seed, Timothy, bu 2 90 2 75 2 75 at 3 00 Millfeed, ton — Coarse . 16 00 at 17 00 19 00 16 00 at 17 00 Fine 16 00 at 17 00 19 00 17 00 at 18 00 Finished . ir 00 at 18 00 20 00 21 00 at 22 00 Cornmeal, 100 lb 1 05 at 1 15 1 10 at 1 25 1 40 at 1 60 Oatmeal, bbl . 6 00 at 7 00 6 00 at 6 75 7 50 at 8 00 Mess pork, bbl — Heavy 13 50 13 50 17 50 Short cut 13 50 13 50 17 50 Lard, lb 8 at 84 at 9>^ 114 at 12V Dressed hogs, cwt 6 00 5 75 7 25 at 7 50 Highwines, gal 1 12 1 12 1 19 Potatoes, bu 40 at 45 50 at 60 90 at 1 00 Butter, lb 18 at 27 24 at 30 26 at 33 Cheese, dairy, lb 11 12 at 13 11 at 12 Cheese, factory, lb 12 12 at 13 lU at 13-4 Hops, lbs 30 at 35 18 at 24 20 at 26 Eggs, doz 20 at 23 23 at 28 28 at 30 Cranberries, bbl 8 00 7 00 at 8 00 11 00 at 12 00 Apples, dried, lb 7 at 8 3 at 5 4 at 6 Apples, green, bbl . 1 75 at 2 50 1 25 at 1 75 2 25 at 3 50 Oranges, case . 5 00 at 5 50 4 00 at 6 00 5 00 at 6 00 Lemons, box 4 00 4 00 at 5 00 2 25 at 4 25 Salt, coarse, bbl Salt, fine, bbl 1 40 1 00 1 10 1 40 90 1 05 at 1 10 Coal, anthracite, retail price, delivered, , ton Grate 4 65 5 55 5 35 Egg 4 35 5 55 5 60 Chestnut 5 10 5 80 5 90 Stove 4 85 5 80 5 90 Coal, bituminous . 5 00 at 6 00 5 00 at 6 00 5 00 at 6 00 Hides, green, lb 94 at 10 9 at 114 94 at 114 Hides, cured 16 at 17 at 18i 15 at 18 Leather, lb — • . . . . Best slighted sole 31 31 29 at 31 No. 2 do 29 29 27 at 29 Cement, bbl 80 at 1 00 1 20 1 20 Refined Petroleum , gallon, fire test — 112 at 120 8 at 9 9i at 10 8 at 9 Pease’s Pr’m oil 35 30 at 35 30 at 35 Pease’s H’d light Lard Oil - 25 20 at 25 20 at 25 Extra winter, gal 60 70 95 Do., No. 1, do 58 65 90 Linseed oil, raw 75 57 65 Do., boiled, gal 78 60 68 W. V. oil, black, gallon . 23 23 23 Do., gal., in bbl 25 25 25 Sperm oil, gal 1 00 1 10 1 15 Fish, half bbl—.., White 00 at 5 50 5 75 7 00 Trout 00 at 4 25 5 50 6 0''> Siscoes . 3 00 at 3 25 3 75 4 50 Codfish, George’s Bank, cwt 5 00 at 5 50 5 00 at 5 50 5 50 Halibut, cwt 11 00 11 00 11 00 Mackerel, kit . 1 20 at 3 75 1 10 at 2 80 1 10 at 2 80 Do., bbl 00 at 22 00 9 50 at 14 50 8 60 at 13 50 Sterling Exchange...,., . 481 at 484 480J at 483J 481 at 485 Exports from Elevators by the Erie and Central Railroads. The following statement shows the exports of grain from the ele- vators of this city, by the Erie and Central railroads for the months of — 1881. Jamiiirv April , Wheat, Corn, Oats, Barley, bu. 1>U. bu. bu. 50,250 55,500 3,200 , 104,080 42,000 1,275 28,200 3,700 4,330 3,991 800 1,590 1,002,783 090,119 1,550 882,213 2,070,220 632,002 0,000 567,740 3,904,229 4,200 514,937 2,491,521 816,495 472,527 1,989,278 95,171 , 135,093 1,996,000 209,020 1,264,876 8,000 280,500 200,000 1,000 28,000 4,802,973 15,265,794 1,588,068 57,521 . 9,677,469 20,319,376 469,689 32,960 8,575,129 7,309,007 188,329 94,230 , 9,173,439 9,300,050 254,057 185,212 9,323,348 3,854,034 020,009 348,082 5,984,722 6,581,929 715,049 112,741 6,198,393 6,433,717 1,091,327 00,437 4,658,080 5,209,202 1,318;097 191,277 Uye, bu. 3,7.00 1.259 2,000 .000 259,433 81,831 223,310 90,332 278.291 10,781 10,318 Grand total, bushels, 1874 “ “ 1875. “ “ 1876 “ “ 1877 “ “ 1878 “ “ 1879 “ “ 1880 “ “ 1881 11,386,974 14,800,600 13,672,732 14,235,805 19,130,668 16,308,520 30,758,927 21,808,350 Decrease 1881 under 1880, bushels 8,950,571 Elev'atixg and Storage Eates. The following shows tlie current rates as published by the Western Elevating Company, during the days specified in 1881 ; January 1 to May 17. — On the 20th day of November, 1880, the following card was issued : ‘^Elevating, including ten days’ storage, seven-eighths of one cent per bushel. Storage, each succeeding ten days or parts thereof, one-quarter of one cent per bushel. The vessel pays, in addition to the above, one-eighth cent per bushel. On all grain in store at that date or after, the charge for winter storage will bo one- quarter of one cent per bushel for each ten days or parts thereof, until such charge (accumulated after November 20, 18.S0) shall amount to two cents per bushel ; then the grain shall be free of storage until ten days after the opening of canal navigation in 1881.” May 4 to May 27. — The rates from the opening of navigation on all grain received was five-eighths of one cent per busliel^for elevating, in- cluding five days’ storage; storage each succeeding ten days or pai-ts thereof one-quarter of one cent per bushel ; the vessel paid in addition to the above one-eighth of one cent per bushel. May 28 to June 7. — Nominal from one-quarter of one cent per bushel to nothing” for elevating with days of storage uncertain ; the vessel paid in addition to the above one-eighth of one cent per bushel. Jana 8 to July 2. — One-quarter of one cent per bushel for elevating, including five days’ storage ; storage each succeeding ten days or ]')arts thereof one-qu!irt(‘i* of one cent })er buslud ; the vessel paid in addition to tlie iibove one-eighth of one cent per bushel. 265 July 3 to August 3. — Rates nominally from one-eighth of one cent to nothing. Storage as per special agreement. The vessel paid in ad- dition to the above one-eightli of one cent per bushel. August 4 to August 10. — Transferring grain nothing. Storage one- half of one cent first five days and one-quarter of one cent for each suc- ceeding ten days or parts thereof. Th-e vessel paid iif addition to the above one-eighth of one cent per bushel. August 11 to Sejdember 4. — Elevating, including five days’ storage, one-quarter of one cent per bushel. Storage next succeeding five days or parts thereof one-quarter of one cent per bushel, and then one- quarter of one cent per bushel each succeeding ten days or parts thereof. The vessel paid in addition to the above one-eighth of one cent per busliel. Seytooiher 5 to September 30. — Elevating, including five days’ storage, one-half of one cent per bushel ; storage each succeeding five days or parts thereof one-quarter of one cent per bushel ; storage each succeed- ing ten days thereafter or parts thereof one-quarter of one cent per busliel; the vessel paid in addition to the above one-eighth of one cent per bushel. October 1 to Close of Navigation. — Elevating, including five days’ storage, three-quarters of one cent per bushel ; storage each sncci^eding ten days or parts thereof one-quarter of one cent per bushel; the vessel pays in addition to the above one-eighth of one cent per bushel. On all grain in store November 25 or after, the charge for winter storage will be one-quarter of one cent per bushel for each ten days oi- parts thereof until such charge (accumulated after November 25, 1881) shall amount to two cents per bushel ; then the grain shall be free of storage until five days after the opening of canal navigation in 1882. Note. — The amount of grain handled by the Western Elevating Company was about 49,000,000 bushels against 99,000,000 bushels in 1880, a decrease in 1881 of 50,000,000 bushels. Transferring and Trimming Railroad Grain. Transferring from elevator to cars half a cent per bushel ; trimming in lots of less than five cars $1 per car extra ; five cars and over free. Lake Exports. The following statement, collated from the clearances issued during the season of navigation at the custom-house of this port, shows the exports of the articles named during, the seasons of navigation in 18T9, 1880 and 1881 westward by lake : i879, 1880. 1881. €oal, tons 580,646 589,670 825,24(t Cement and plaster, bbls 103,858 144,125 170,410 Salt, bbls 222,778 225,982 109,810 Salt, tons 26,327 17,725 11,655 Railroad iron, tons 525 35,941 44,462 Railroad iron, bars 21,084 23,100 34 26G Lake Freights from Chicago to Buffalo on Wheat and Corn. The following statement shows the ruling rates of lake freights on wheat and corn from Chicago to Buffalo on the dates specified in 1881 : Wheat, Corn, Wheat, Corn, 1881. bu. bu. 1881. bu. bu. May 9.. • 5 4X July 23 . . 2 May 14.. 53 ^ 5 July 30 . . 23 ^ May 21.. 4 3)^ Aug. 6... 2% 2X Mav 28.. 5 4X Aug. 13. . 334 ' 3 June 4.. 4% 43 ^ Aug. 20.. 2^ .June 11 . . 4K 4 Aug. 27 . . Wa 33< June 18.. 43 ^ 4% Sept. 3.. 3^ 33 ^ June 25. . 33 ^ 3 Sept, 10. . 33 ^ 3 Julv 2.. 4 3K Sept. 17. . 4 33 ^ July 9.. 3>^ Sept. 24. . 2>^ 2 .Tulv 16. . . 33 ^ 3 Sept. 29. . 1 October 1* .... i i October 29 2i 2 October 6 . ., 0 li Nov. 5 2 n October 8 . .. 3 i 3 Nov. 12 2i 2 October 15 . . . Nov. 19 2i 2 October 22 ... 3 i 2 | Nov. 26 0 2 Average Lake Freights. The following statement shows the average ratfes of lake freights on wheat and corn, between Chicago and Buffalo, during each month in the past ten years ; the highest rate on wheat in each year, and the average rate on wheat in each year: 1872 1873 1874 1875 Wheat, Corn. . Wheat. Corn . . Wheat. Corn. . j Wheat. / Corn. . 1 Q'-r 3 Wheat. ’^'Ccorn. . 187 j Wlieat i Corn Tliuliest rate wheat, -1070 3 Wheat. / Corn.. 1870 ^ I Corn . . May cts. June July cts. cts. Aug. cts. Sept. cts. Oct. cts. Nov.^ cts. 8.1 8.3 8.2 9.6 14.8 16.5 12.4 7.4 7.8 7.7 8.8 13.8 15.5 11.4 1872, 19c; average for the season, 11.1c. 7.4 6.5 6.1 6.5 12.6 7.8 7.4 6.5 5.8 5.6 5.7 11.6 6.9 6.9 1873, 14c; season, 7.8c. 4.5 4.2 3.3 3.1 3.5 4.1 4.6 4.0 3.9 3.0 2.1 3.2 3.8 4.2 1874, 6c; season, 3.9c. 3.9 3.0 2.8 2.5 2.4 3.7 5.9 3.6 2.6 2.6 2.2 2.2 3.4 5.5 1875, 61c; season, 3.5c. 3.0 2.5 1.9 2.2 2.6 4.4 3.7 2.7 2.3 1.7 1.8 2.3 4.0 3.3 1876, 5c; season, 2.9c. 3.5 2.4 2.6 4.0 4.0 4.9 4.5 2.9 1.9 2.2 3.6 3.4 4.4 3.9 1877, Oc; season, 3.7c. 2.5 2.1 1.7 3.2 4.4 3.6 4.5 2.2 1.8 1.5 3.0 4.1 3.3 4.1 1878, 7c; season, 3.1c. 3. 1 2.1 2.5 4.9 5.3 7.7 7.0 2.8 1.8 2.3 4.5 4.8 7.1 6.5 1879, 8.5c; season, 4.7c. Doinorallzod; KraOi taken for ballast. 2G7 May June July Aug. Sept. Oct. Nov. cts. cts. cts. cts. cts. cts. cts. « 8 <>| 5.0 7.1 5.8 5.6 4.4 6.8 7.1 4.3 6.6 4.3 5.1 3.9 6.3 6.5 Highest rate wheat. 1880, 81c; season, 5.7c. \ Wheat Corn 4.7 4.1 2.6 3.1 3.2 2.5 2.2 4.2 3.6 2.2 2.8 2.9 2.2 1.9 Highest rate wheat, 1881, 5Jc; season, 3.2c. Lake Freights from Buffalo to Chicago ahd Milwaukee OH Coal. The following statement shows the ruling rates of freight on coal per ton, free from Buffalo to Chicago and Milwaukee, during the season of 1881: 1881. Coal, ton. 1881. Coal, ton. May Ito 29....... $0 75 Sept. 24 $1 30 May 30 80 Sept. 29 .... 1 40 June 4 871 Oct. 12 .... 1 45 June 8 .’ 85 Oct. 15 .... 1 40 June 13 90 Oct. 22 .... 1 45 June 27 1 00 Nov. 1 .... 1 40 July 28 1 10 Nov. 5 .... 1 20 July 29 1 25 Nov. 8 .... 1 30 Aug. 6 1 40 Nov. 14 .... 1 35 Aug. 13 1 25 Nov. 17 1 40 Aug. 17 1 20 Nov. 19 .... 1 50 Aug. 21 1 10 Nov. 23 .... 1 75 Sept. 21 1 15 The dates given are ! the days on which the changes were made. Kailroad Freights from Buffalo to New York oh Wheat AHD CORH. The following statement shows the nominal rates of freight on wheat and corn by railroad, from Buffalo to New York, during the year 1881 : Wheat, Corn. 1881. bu. bu. January 1 to April 4 10^ 10 April 5 to June 9 9 8^ June 10 to June 15 8 7i June 16 to November 18 *61 61 November 19 to December 31 : . . 8 71 Late Arrivals ahd Departures. The following is a summary statement of the arrivals and depart- ures of vessels, with their tonnage, in the district of Buffalo creek, for the season of 1881; also a comparative statement showing the aggregate figures for thirty years : ♦This was the published rate, although private reports indicated that 6c. was paid for wheat nearly all the time stated. 268 Arrivals. No. vessels. Tonnage. American vessels in coastwise trade 2,693 2,249,595 American vessels from foreign ports 114 14,955 Foreign arrivals from foreign ports 496 82,261 Totals, 1881 3,303 2,346,911 Totals, 1880 5,142 3,022,312 Decrease, 1881 1,839 675,401 Departures. No. vessels. Tonnage. American vessels in coastwise trade 2,877 2,102,252 American vessels to foreign ports 106 10,331 Foreign clearances 469 75,729 Totals, 1881 3,442 2,188,312 Totals, 1880 5,166 2,983,434 Decrease, 1881 1,724 . 785,122 Comparative table for thirty years. No. vessels. Tonnage. Men. No vessels. Tonnage. Men. 1852 . . . . 9,441 3,092,247 127,491 1867 ., . .. 12,826 5,806,960 129,300 1853 . . . . 8,298 3,252,978 128,112 1868 . . .. 11,812 4,254,339 116,320 1854 . . .. 8,942 3,990,284 120,838 1869 . . .. 10,201 4,007,496 103.673 1855 . . . . 9,211 3, 360,233 111,575 1870 .. . . . 10,625 4,157,793 105,798 1856 . . .. 8,128 3,018,589 112,051 1871 . . .. 10,894 4,832,641 115,299 : 857 . . .. 7,581 3,226,806 132; 183 1872 . . .. 10,303 4,678,058 106,291 1858 . . .. 8,838 3,329,246 86,887 1873 ., . .. 9,959 4,886,733 107,785 1859 .. . . 10,521 5,952,626 118,119 1874 . . . . 7,447 3,641,019 82,862 1860 .. .. 11,517 4,710,175 120,497 1875 . . .. 6,278 3,259,839 70,392 1861 .. .. 13,866 5,963,896 144,173 1876 . . . . 4,624 2,757,986 55,459 1862 . .. 16,390 6,689,191 166,133 1877 . . .. 6,785 3,539,219 73,893 1863 .. . .. 15,376 6,757,903 157,415 1878 ., , .. 8,743 4,668,688 No. rep. ( ( 1864 ., . .. 14,105 6,891,348 148,161 1879 . . . . 8,447 4,442,717 1865 .. .. 13,746 7,032,593 145,074 1880 .. , .. 10,308 5,995,747 < ( 1866 .. .. 13,682 6,954,859 144,622 1881 . . .. 6,745 4,535,223 ( ( Opening and Closing of Navigation. Statement showing the dates at which navigation opened and closed at Buffalo for ten years : Lake Canal Canal No. days Canal Year. opened. opened. closed. open. 1872 .. May 13.. . . , . Noy. 30 . . ... 202 1873 April 29 . . May 15..., . . . Noy. 24*. . .... 208 1874 5.. . . . . Dec. 5 . . 215 1875 May 12. . . . . . May 18.... . . Noy. 30 . . .... 197 1876 May 4 . . . . .. May 4..., .... 209 1877 A])ril 17.... . . May 8 . . . . . .. Dec. 7 .. .... 213 1878 Marcli 16 , .. April 15.... . .. Dec. 7 . .... 237 1879 A])ril 24 .. May 8.... , . . Dec. 6 . . .... 212 1880 . .. Noy. 20t.. 215 1881 May 1 . . . . .. May 17. .. . Dec. 6 . . .... 204 ♦NavlgMllon unimpeded here lor several days after this date, hut no shipments made exf.ept to Lr)(:k[)ort ; navigation (dosed l)y icteeast of Koine about tlie ;34th; re-opened from Dijcemljer i:!th to J^itli , imdusivo. ^ d'lie K(^v(!re weather cdosiul navigation twelve days before the olliclal time. An immense amount of property was “frozen In.’’ Tonkaqe of Vessels. T!ie tonnage of the port of Buffalo, N. Y., for the fiscal year end- ing June 30, 1881, is shown by the following statement: Sail Vessels. Schooners 60 Sloop 1 Bark 1 Total . . . Total tonnage 62 30,219.28 Iron steamers Steam Vessels. 5 Iron yachts 3 Total Total tonnage Tug propellers 49 Steam yachts 12 Steam canal boats 5 8 6,408.96 Propellers 49 Sidewheel steamer 1 Total Total tonnage 116 56,975.10 Barges. Barges 31 Total tonnage 7,212.09 Grand total, 1881 217 vessels; tonnage 100,815.43 Grand total, 1880 212 vessels; tonnage 99,543.69 Grand total, 1879 211 vessels; tonnage 97,734.46 Increase in 1881 over 1880 5 vessels; tonnage 1,271.74 Vessels Built and Enrolled. . The following is the list of new vessels built here and elsewhere, but documented in the District of Buffalo creek during the year 1881 : Propellers. Tonnage. Oceanica ... 1,490.40 Clyde ... 1,306.76 Cumberland ... 1,601.31 Queen of the West 818.24 John B. Lyon ... 1,710.33 City of Rome ... 1,908.10 Robert A. Packer 921.64 Albert J. Wrigbt 258.48 Tug propellers. 0. W. Cheney 41.91 Maud S George R. Hand. . . . . . . 34.90 Samuel Darling 13.79 General Weitzel 38.78 Charles S. Parnell 30.43 J. J. Evans 14.93 A. C. Adams Tug propellers. Tonnage. R. Porter Lee 13.79 C. A. Shaw 75.6 Belle Sparks 45.66 George H. Notter. 12.67 William F. Logie 15.24 Charles N. Armstrong 15.30 Steam yacht. Julie 6.90 Steam canal boats. E. P. Cook 135.55 S. G. Smith.. 148.38 Stranger 135.00 Win. Spencer 131.76 Schooner-barge. L. W. Drake 456.11 Barge. Hamilton J. Mills 508.88 270 Total new tonnage, 1881. . 11,899.51 “ “ 1880.. 6,153.30 “ 1879.. 5,800.00 “ “ 1878.. 3,685.12 Total new tonnage, 1877. . 1,844.02 “ “ 1876.. 871.73 “ “ 1875.. 4,417.06 Vessels Built. The following is the list of vessels built in the District of Buffalo creek and on record at the custom-house during the year 1881 : Propellers. Tonnage. Jolm C. Gault .. 1,212.71 Bussell Sage .. 1,224.25 Albert J. Wright . . 258.48 'fug propellers. George R. Hand 34.90 A. C. Adams 41.76 B. Porter Lee 13.79 0. W. Cheney 41.91 0 . A. Shaw 7.65 Maud S 33.39 Belle Sparks 45.66 George H. Hotter 12.67 William F. Logie 16.24 Charles N. Armstrong . . . 15.30 A. W. Colton 92.61 General Weitzel 38.78 Mary E. Pierce' 20.22 Charles S. Parnell 50.43 J. J. Evans 14.03 J). P. Hall 54.33 Thomas Hood 39.46 Tug propellers. Tonnage. . V. Taylor 40.25 Steam yachts. Lena Knobloch 87.92 Julie 6.90 Massassauga 96.46 CoraK. D 21.65 Steam canal boats. E. P. Cook 135.55 S. G. Smith 148.38 Stranger 135.00 Free Canal 125.05 Barges. Hamilton J. Mills 508.88 Cyclone 457.30 Schooner. Highland Maid 17.83 Total new tonnage 5, 233. 64 Transfers of Vessels. The following statement shows the number and description of the vessels changing owners by entire transfers at Buffalo during the year 1881 : Propellers 7 Steam yacht, . . 1 Total transfers, 1880 14 Barges 6 Tugs 12 Total transfers, 1879 24 Schooners 22 — — Total transfers, 1881 48 Increase 1881 over 1880 34 Vessels in Winter Quarters. The following is a list of the vessels of all descriptions (exclusive of canal boats; laid up at this port at the close of navigation in 1881 : Recapitulation. Propellers 30 Barges 11 Schooners 10 Tugs 37 Total 1881 Corresj)oridi ng period in 1880 Notk — 'I'lic tmmber of canal boats laid up here is unusually large— between seven and eight hundred. 88 167 271 Customs Receipts. The following statement shows the receipts at the Buffalo custom house during each month and the totals for the past three years : 1879 . 1880 . 1881 . January 130,940 58 $46,339 33 $64,418 16 February 29,480 51 07,361 43 50,224 32 March 36,027 02 06,938 92 69,842 71 April 41,213 85 59,824 92 65,382 79 May < 25,094 94 47,680 00 65,102 27 June 14,879 99 43,169 74 56,124 06 July 27,580 00 39,530 54 35,513 87 August 45,510 30 62,110 89 61,130 08 September 47,124 62 05,220 94 61,391 28 October 65,125 55 90.456 73 78,220 32 November 61 02,308 04 128,073 51 December* 62,450 02 87,159 00 68,541 19 Total $513,562 18 $767,628 48 $810,121 45 Comparative Receipts akd Shipme^^ts and Cereal Crop Move- ment AT Lake Ports. Comparative Receipts at Six Western Lake Ports — Chicago, Mil- waukee, Toledo, Detroit, Cleveland and Duluth, from January 1 to December 31 : Flour, bbls Wheat, bushels Corn, bushels Oats, bushels Barley, bushels Rye, bushels Total grain, bushels Flour to wheat, bushels . . . Grand total, bushels 1881 . 9,143,463 1880 . 6,392,316 1879 . • 6,569,490 43,270,112 92,123,215 30,433,478 9,814,285 3,325,636 71,503,652 120,889,601 27,083,840 9,503,497 2,974,495 86,139,146 74,980,433 21,403,837 9,306,150 3,365,831 , 178,946,726 45,717,315 231,954,995 31,961,580 195,195,397 32,847,450 224,084,041 263,916,575 228,042,847 Comparative Shipments at Six Western Lake Ports — Chicago,. Mil- waukee, Toledo, Detroit, Cleveland and Duluth, from January 1 to December 31: Flour, bbls Wheat, bushels Corn, bushels Oats, bushels Barley, bushels Rye, bushels Total grain, bushels Flour to wheat, bushels 1881 . 9,694,182 1880 . 6,137,011 1879 . 6,767,279 43,824,639 85,810,176 26,356,266 5,858,530 2,347,926 63,960,861 115,573,454 24,075,422 6,140,933 2,900,407 75,036.746 74,010,330 16,660,206 6,860,019 3,416,228 164,197,537 212,650,177 175,983.529 48,470,910 30,685,055 33,836.395 212,668,447 243,335.232 209,819,924 Grand total, bushels. 272 Cereal Crop Movement at Lake Ports Compared — Including i-b ceipts at Chicago, Milwaukee, Toledo, Detroit, Cleveland and DuluMi, from August 1 to December 31, in the years named: 1881. 1880. 18TV. Flour, bbls : 3,708,707 3,453,731 2,85‘^,8G/> AVliefit, bushels 21,108,721 44,705,740 51,354,049 Corn, bushels 45,949,530 52,4:50,402 33,411,005 Oats, bushels 10,782,909 14,759,059 9,709,588 Barley, bushels 0,559,971 7,009,228 7,200,400 Hye, bushels 2,526,492 1,883,449 2,183,200 Total grain, bushels 80,986,089 121,29:3,929 103,858,968 Flour to wheat, bushels 19,543,535 17,268,055 14,204,325 Grand total, bushels 100,531,224 138,562,584 118,123,293 Exports of Breadstuffs from New York. The following statement shows the foreign exports of flour and grain from New York for ten years : Flour, bbls. Wheat, bu. Corn, bu. 1872 1,216,082 13,144,400 25,292,209 1873 1,645,331 27,861,800 15,587,500 1874 2,177,608 34,791,249 19,000,995 1875 1,954,100 20,192,700 12,988,700 1876.. .. 1,887,309 24,135,233 16,677,082 1877 1,476,771 20,712,442 26,174,276 1878 r, 2,557,709 55,062,873 26,680,871 1879 3,399,793 62,239,144 33,770,8:38 1880 4,215,415 61,908,029 49,875,490 1881=^..,. 4,500,000 42,000,000 31,500,000 Oats, bu, Barlej", bu. Rye, bu. 1872.. ..... 31,739 22,066 668,031 1873 49,700 10,400 1,069,100 1874 122,528 3,560 641,660 ' 1875 138,800 1,500 206,900 1876 620,536 87,883 1,336,423 1877 25(|063 2,302,022 2,051,563 1878 : 5,690,782 1,618,667 2,998,053 1879 • 502,224 156,902 3,558,240 1880 427,959 254,883 2,191,183 1881* 450,000 8,000 1,050,000 Reducing flour to grain bushels, the totals compare as follows: 1872 45,238,845 1877 58,871,221 1873 52,808,355 1878 104,740,191 1874. . 65,448,033 1879 117,226,312 1875 49,249,100 1880 135,725,009 1876 52,29:3,655 1881* 97,508,000 ♦Partly estimated. 273 The World’s Wheat Harvest. Agricultural survey of the world’s wheat harvest — Crop in eaeh country, 1881, estimated by Mr. H. Kains- Jackson, of London, Eng- land. United Kingdom. United States British India Russian Empire . . France Germany Spain Quarters. Quarters. 10.000. 000 Italy 15,000,000 50.000. 000 Anstro-Hungary 10,000,000 42,000^000 Turkey 12,000,000 40.000. 000 Holland and Belgium, . . 2,500,000 28.000. 000 Australia 3,500,000 14.000. 000 Canada 4,000,000 18.000. 000 Total. . . . Equal in bushels 249,000,000 1,992,000,000 CANAL COMMERCE. imports. Statement of property left at Buffalo, on the Erie canal, or which was left between that place and the Collector’s office next in order on the canal ; showing the quantity, tons and average value of each article during the year 1881 ; also quantity, tons and average value of each article on the free list, for 1881, going to the West- ern States, Canada and New York : The Forest. Articles. Product of Wood. Quantity. Reduced to tons of 2,000 lbs. Value of each article. Boards and scantling, feet 2,357,066 3,929 $40,070 Shingles, M 172 22 688 Wood, cords 2,877 8,056 8,631 Total Agriculture. Vegetable food. 12,007 $49,389 Wheat, bushels 3,317 100 $4,478 Corn, bushels Barley, bushels 4,000 19,226 112 2,400 461 22,110 Barley malt, bushels . . 211 4 253 Bran and shipstutf, pounds 20,940 10 209 Peas and beans, bushels 9,846 295 29,538 Total 982 $58,988 Manufactures. Furniture, pounds 21,000 11 $2,100 Iron, pig, pounds 39,094,369 19,997 799,887 Bloom and bar iron, pounds 770,560 385 38,528 Castings and iron ware, pounds 5,565,578 4,783 556,558 Foreign salt, pounds 17,898,058 8,949 178,981 Total 32,125 $1,576,054 35 274 , Merchandise. Sugar, pounds Molasses, pounds Nails, spikes and Iiorse slioes, pounds. Iron and steel, pounds Railroad iron, pounds Flint, enamel, crockery, glassware, pounds All other merchandise, pounds Total Other articles. Stone, lime and clay, pounds Anthracite coal. ])ounds Sundries, pounds Total 35,873,040 17,937 $3,587,305 9,042,540 4,821 034,104 3,505,481 1,753 140,219 240,078,289 123,039 7,382,340 158,058,431 79,329 4,759,753 11,545,405 5,773 923,033 150,404,310 78,232 7,823,215 310,884 $25,098,598 151,794,020 75,897 $758,970 303,584,090 181,793 908,902 19,431,405 9,710 971,573 207,400 $2,039,505 Total of all of above articles 023,404 $29,422,534 FREE LIST. Agriculture. Product of Animals. Lard, tallow and lard oil, pounds. . . . Cheese, pounds 8,227 83,487 4 42 $987 11,088 Total 40 $12,075 Vegetable food. Flour, barrels Dried fruit, pounds 0,900 9,351,998 740 4,070 $48,342 1,402,800 Total 5,422 $1,451,142 All other agricultural products. Hemp, pounds 1,281,099 041 $128,170 Total 041 $128,170 Total of agricultural i;)roducts 0,109 $1,591,987 Manufactures. Domestic spirits, gallons Domestic woolens, pounds Domestic cottons, pounds Domestic salt, pounds 'I'otal 409,473 1,878 $704,210 8,3u4,240 4,152 4,152,123 11,221,245 5,011 3,300,374 78,294,019 39,147 391,473 50,788 $8,014,180 275 Merchandise. Coffee, pounds 5,208,622 2,654 $1,061,724 Total . 2,654 $1,061,724 Other articles. Live cattle, hogs and 'sheep Rock phosphates, and super-phos- phates, pounds 20,000 17,827,848 10 8,914 82,000 356,555 Total 8,924 8358,555 Total of free list 68,475 $11,626,446 Grand total tons Grand total value 691,879 841,048,980 EXPORTS. Statements of property first cleared at the Collector’s office at Buffalo on the Erie canal during the year 1881, showing the quantity, tolls and average value of each article, and also the whole amount of tolls received at that office on each article of property during the same period ; also quantity, tons and tolls and average value on each article on the free list for 1881 coming from the Western States, Canada and New York : The Forest. Articles. Quantity. Reduced to tons of Value of each Boards and scantling, feet . 74,865,668 2,000 lbs. 124,776 article. $1,272,716 Shingles, M 12,253 1,532 49,012 Total of the forest, tons Total value 126,308 81,321,728 Total tolls 32,919 Agriculture. Vegetable food. Wheat, bushels ♦ . 12,886,762 386,603 817,397,129 Rye bushels 3,827 107 4,210 Corn, bushels . 16,368,436 458,316 9,821,062 Barley malt, bushels 345,812 5,879 414,974 Oats, bushels . 1,546,924 24,751 696,116 Bran and shipstuffs, pounds . 1,571,460 786 15,715 Peas and beans, bushels 3,533 106 10,590 Total vegetable food, tons Total value 876,548 $28,359,805 Total tolls 290,444 276 Merchandise. Articles. Quantity. All other merchandise, pounds.. 9,433,358 Reduced to tons of 2,000 lbs. 4,717 Value of each article. $471,668 Total merchandise, tons Total value Total tolls 4,717 $471,668 440 Other Articles. Bituminous coal, pounds 58,444,132 Petroleum or earth oil, crude and ref., bbls. 2,514 29,222 440 $146,110 5,028 Total other articles, tons Total value Total tolls 29,662 $151,138 1,700 Total of all of the above articles, tons Total value Total tolls 1,037,225 $36,304,330 325,674 FREE LIST. Boats. Total miles boats cleared — 1,623,604 The Forest. Staves and headings, pounds 61,652,021 Ashes, leached, bushels 15,666 30,326 470 $616,520 1,567 Total - 31,296 $618,087 Agriculture. Product of Animals. Lard, tallow and lard oil, bbls 6,603,405 Total . . Vefjetable Food. Flour, bbls 4,465 Cornmeal, bbls. 4,370 Total All other Agricultural Products. Clover and "rass seed, pounds 918,634 Flax seed, pounds 90,896,726 Total 1 Manufactures. Domestic spirits, gallons 56,280 226 $84,420 Di lineal and cake, pounds 4,221,000 2,111 126,660 Domestic salt, pounds 27,000 14 135 Total 2,350 $211,215 3,302 $792,409 3,302 $792,409 482 $31,225 472 13,110 954 $44,365 459 $73,491 45,448 2,800,393 45,907 $2,800,393 I 277 Other Articles, Rock phosphates and super-phosphates, lbs. 392,000 Totals of other articles Totals of free list Grand total tons Grand total value 196 $11,760 196 $11,760 84,005 $4,478,229 1,121,240 $34,782,568 Imports an^d Exports Compared. Lumber, feet Imports. 1879. 1,703,849 1880. 3,815,886 1881. 2,357,066 Timber, cubic feet 82,852 • • • • • • • • Shingles, M 30 264 172 Wood, cords 253 1,232 2,877 Cheese, pounds 66,492 11,889 83,487 Hides, pounds 19,856 6,792 .... .... Flour, bbls 3,270 6,906 Wheat, bushels 38,516 • • • • 3,317 Barley, bushels 33,329 12,000 19,226 Corn, bushels ^ • 500 4,000 Bariev malt, bushels. • • • • 411 Oats, bushels 200 356 • • • • Bran, etc., pounds 71,836 141,350 20,940 Beans and peas, bushels 11,433 9,560 9,846 Corn meal, bbls 570 » • • • • • • • Hemp, pounds 1,448 1,180,437 1,281,699 Apples, bbls 2,498 1,772 • • • « Dried fruit, pounds 22,291,225 10,201,087 9,351,998 Unmanufactured tobacco, lbs. . 544,666 330,896 Domestic spirits, gallons 3,765 258.782 469*475 Lard, tallow and Urd oil, lbs. . 16,472 44,074 8,227 Live cattle, hogs and sheep,lbs. • • • • < • • • 20,000 Cotton, pounds . . . . 33,410 • • • • • • • • Hops, pounds 30,000 • • • • • • • • Domestic woolens, pounds. . . . 20,767,817 4,715,186 8,304,246 Domestic cottons, pounds 30,335,374 8,048,820 11,-221,245 Furniture, pounds 63,640 24,583 21,000 Pig iron, pounds 77,026,917 95,046,894 39,994,369 Castings, etc., pounds 717,269 2,598,564 5,565,578 Bl’m and bar iron, pounds. . . 323,147 5,282,600 770,560 Bar and pig lead, pounds 286,674 129,828 • • • • Rock and super-phosphate, lbs. .... 200,000 17,827,848 Leather, pounds 202,094 317,339 • • • • Domestic salt, pounds 130,445,522 119,444,200 78,294,619 Foreign salt, pounds 1,273,608 ' 3,724,800 17,898,058 Sugar, pounds *. Molasses, pounds 101,209,371 70,727,626 35,873,046 25,192,643 12,682,083 9,642,546 Coffee, pounds 3,977,021 2,010,131 5,308,622 278 • 1879 . 1880 . 1881 . .Nails and spikes, pounds 2,120,903 1,468,712 3,505,481 Iron and steel, pounds 11;308,043 85,244,728 246,078,189 Kailroad iron, pounds 27,705,443 152,389,434 158,658,431 Crockery, etc., pounds 9,626,003 9,372,347 11,545,405 All other merchandise, lbs. . .. 142,270,775 149,043,279 156,464,316 Stone, limo etc., pounds 90,950,292 87,880,451 151,794,026 Gypsum, pounds 1,246,100 1,194,900 Anthracite coal, pounds 184,267,574 166,480,796 363,584,690 Bituminous coal, pounds 4,000,000 3,553,420 Sundries, pounds 91,481,855 76,155,441 19,431,465 Iron ore, pounds 16,322,722 21,647,754 Total tons of articles carried . . 499,453 557,604 691,879 Total value of articles carried. $43,554,185 $33,692,510 $41,048,980 Exports. 1879 . Lumber, feet 107,158,316 Staves, pounds 56,029,617 Shingles, M 34,600 Wood, cords Pork,bbls 2,131 Lard, tallow, etc., pounds 35,500 Hides, pounds 10,000 Ashes, leached, bushels 39,502 Flour, bbls 4,750 Wheat, bushels 29,708,699 Eye, bushels 1,445,401 Corn, bushels 21,506,162 Barley, bushels 299,757 Barley malt, bushels 295,683 Oats, bushels 908,373 Peas and beans, bushels 22,441 Bran, etc., pounds 318,460 Cornmeal, bbls.. 1,939 Clover and grass seed, pounds. 108,240 Flax seed, pounds 22,238,587 Hops, pounds Domestic spirits, gallons.... 46,950 Oil meal and cake, pounds. . . . 720,549 Furniture, pounds 8,500 Pig iron, pounds 1,845,800 Bl’m and bar iron, pounds. . . . 5,250 Castings, etc., pounds 900 Bar and pig lead, pounds 179,493 Domestic salt, pounds Sugar, pounds 41,100 Coll'ee, pounds 300 Crockery, pounds 1,050 Other merchandise, })ounds . . 1,160,830 )Stone, lime, clay, pounds .... 8,000 1880 . 75,243,821 58,022,785 17,960 400 37,170 8,772,909 20,000 19,886 29,877,017 433,461 40,410,117 18,067 162,179 1,009,123 39,200 6,357 2,532,067 46,040,193 3,500 24,000 3,012,755 10,098,420 1881 . 74,865,668 61,652,021 12,253 6,603,405 15,666 4,465 12,886,762 3,827 16,368,436 345,812 1,546,924 3,533 1,571,460 4,370 918,634 90,896,725 56,280 4,222,000 27,000 9,433,358 279 1879. Bituminous coal, pounds .... 56,573,814 Petroleum oils, crude and re- fined, barrels 55,435 Sundries 7,924,043 Kock and super-phosphate, lbs Nails and spikes, pounds 42,400 Iron and steel, pounds 40,000 Leather, pounds 17,500 1880. 50,722,833 1,208 854,080 895,600 1381. 58,444,132 2,514 * 392’ 666 Total tons of articles carried . Total value of articles carried . Total boats cleared thus : Canal opened Flour, barrels . Oats, bushels.. Barley, bushels Eye, bushels . . Flour to wheat, bushels Grand total, bushels .... , 1,830,843 2,286,992 1,121,240 $48,142,030 $59,539,048 $34,782,568 $591,652 $736,088 $325,674 8,708 10,623 6,294 Grain Recapitulatmi. ain, compared for three year 'S, are shown 1879. 1880. 1881. May 8. April 20. May 17. 4,750 19,886 4,465 29,708,699 29,877,017 12,886,762 21,506,192 40,410,117 16,368,436 908,373 1,009,123 1,546,924 299,757 18,067 1,445,400 433,461 3,827 53,868,392 71,747,785 30,805,949 23,750 99,330 23,325 53,892,142 71,847,115 30,829,274 Eastward akd Westward Movemeot on the Erie Canal. The following statement shows the amount of freight by tons moved on the Erie canal eastward and westward for ten years : Sliixoments of Eastiuard Movhig Freight from Buffalo. Years. Products of the forest, tons. Products of animals, tons. Vegetable food, tons. 1872 347,695 52 1,322,981 1873 296,128 29 1,433,653 1874 216,893 38 1,164,392 1875 151,953 39 1,007,559 783,122 1876 124,379 23 1877 183,019 10,633 1,220,249 1878 234,433 2,686 1,635,082 1879 212,121 364 1,562,208 1880 157,783 9,863 3,302 2,061,990 1881 157,604 877,502 Note. — In 1874 there vvere shippefl 104. 7o4 bushels of barley malt, 153,853 bushels in 1875, 215,238 bushels in 187fi, 205,986 bushels in 1877, 220.723 bushels in 1878, 295,683 bushels in 1879, 162.179 bushels in 1880, and 345,832 bushels in 1885. Of peas and beans, 208 bushels in 1874, 3,844 i)ushels in 1875, 826 bushels in 1876, 544 bushels in 1877, 27,215 bushels in 1878, 22,441 bushels in 1879, none in 1880 and 1,533 bushels in 1881. Years. 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1872 1873 1874 1875 1876 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1872 1873 1874 280 Other aj?’! products, tons. Manufac- tures, tons. Mer- chandise, tons. 1,411 564 367 19 906 853 204 846 530 7 11,602 337 29 373 335 3,516 3,364 292 532 1,406 472 11,174 1,581 643 24,288 1,602 5,049 45,907 2,350 4,717 Other articles, Total tons. tons. Total value. 101,962 1,774,906 $52,855,537 94,035 1,825,623 49,772,070 65,269 1,448,172 46,244,875 38,051 1,219,538 40,608,163 33,213 941,474 24,411,554 38,049 1,459,122 38,229,716 75,758 1,946,602 43,466,806 41,952 1,830,843 48,142,030 26,447 2,286,992 59,539,048 29,858 1,121,240 34,782,568 Total Amount of Tolls Collected. . $1,416,049 31 1877 . 1,415,634 33 1878 . 1,196,780 55 1879 789,830 24 188(» 583,644 42 1881 $467,921 74 628,439 45 591,652 07 736,631 10 325,674 32 Recei])ts of Western Moving Freight at Buffalo. Products of the forest, tons. Products of animals, tons. Vegetable food, tons. 3,467 187 2,337 2,465 72 5,170 2,014 37 15,174 1,529 266 7,521 1,507 88 3,452 1,356 1,874 230 5,881 72 7,211 5,210 51 3,321 9,843 28 6,253 12,907 46 6,404 Otlier a^T products, tons. Manufac- tures, tons. Mer- chandise, tons. 101,519 108,526 151,560 63,369 3 99,305 36,145 281 Years. 1875 1876 1877 1878 1879 1880 1881 other ag’l Manufac- Mer- products, tures, ehandise, tons. tons. tons. 4 lll',531 30,921 60,547 4,627 442 74,426 24,685 304 204,893 106,060 305 130,708 161,708 755 120,700 241,469 641 82,913 313.538 Other articles, Total Total tons. tons. value. 1872 430,846 609,616 $32,178,888 1873 522,051 701,653 19,56%226 1874 373,903 526,311 8,646,610 1875 403,465 555,237 9,193,785 1876 242,815 313,036 5,045,911 1877 287,760 395,080 12,310,455 • 1878 212,038 432,472 22,474,227 1879 198,140 499,453 43,554,185 1880 178,566 557,604 33,692,510 1881 276,330 681,879 41,048,980 Canal Tolls. The following table shows the aggregate receipts of tolls at Buffalo from the opening to the close of navigation for a series of years : 1881 . . . 1325,674 32 1876 $583,644 42 1880 ... 736,631 10 1875 1879 ... 591,652 07 1874 .... 1,196; 780 55 1878 ... 628,439 45 1873 1877 ... 467,921 74 1872 1,416,049 31 Canal opened May 17th, 1881 ; April 20th, 1880 ; May 8th, 1879 ; April 15th, 1878, and May 8th, 1877. The tolls for 1881 from Buffalo to West Troy are as follows (dis- tance 345 miles): Wheat, bushel of 60 lbs., Ic Om 35f ; corn, bushel of 56 lbs., Oc 9m 66f ; rye, bushel of 56 lbs., Oc 9m 66f ; barley, bushel of 48 lbs., Oc 8m 28f ; oats, bushel of 32 lbs., Oc 5m 52f ;malt, bushel of 34 lbs., Oc 5ni 8Gf. Canal Clearances. The following statement shows the number of boats cleared from the opening to the close of navigation for a series of years ; 1881 6,294 1876 4,850 1880 10,623 m5 7,349 1879 8,709 1874 7,628 1878 9,027 1873 9,058 1877 6,908 1872 8,659 36 282 Canal Freights from Buffalo to New York. The following table shows the ruling rates of freights to New York from Buffalo (tolls included, excepting for staves, which are on the free list) on the dates specified in 1881: Wheat, Corn, Oats, Pine lumber, Staves, p. ton. 1881. bu. bu. bu M. feet. free. May 14 7 . . .... .... May 21 6 H 13 50 U 75 Mav 28 5 H H 3 40 1 40 June 4 5 H 3 25 1 40 June 11 5 H H 3 90 1 30 June 18 ^ H 3 2 85 1 25 June H 3f n 2 75 1 13 July 2 4 3i n 2 52 1 00 July 9.. 4 2 00 1 00 July 16 H 4 H 2 50 1 00 July 23 H 4 H 2 65 1 25 Julv 30 H 2 50 1 12 Aug . 6 4 H H 2 50 1 00 Aug. 13 H 2 50 1 00 Aug. 20 4 H 2 50 1 00 Aug. 27; H 4 3 2 50 1 00 Sept. 3 4L 3 2 50 1 25 Sept. 10 4 3 3 00 1 25 Sept. 17 H H 2 85 1 25 Sept. 24 H 4 3 2 85 1 25 Oct. 1 u 4 3 2 85 1 06 Oct. 8 4 4 3 2 85 1 06 Oct. 15 51 H H 2 85 1 50 Oct. 22 H 5 H 2 85 1 50 Got. 29 5i 3 3 15 1 50 Nov. 5 51 3 3 00 1 50 Nov. 12 5 H H 3 00 1 50 Nov. 19 H 41 3 3 00 1 45 Nov. 26 . , .... .... Average Canal Freights. The following statement shows the average rates of canal freights on wheat and corn between Buffalo and New York (tolls included) during each month in the past ten years, the highest rate on wheat in each year and the average rate on wheat in each year : May June July Aug. Sept. Oct, Nov. cts. cts. cts. cts. cts. cts. cts. (Wheat 12.8 12.1, 11., 5 ’ 12.0 12.5 14.2 15.9 ' ( Corn 11.8 11.1 10.0 11.0 11.3 12.6 13.9 llighe.st rate wheat, 1872, 18o; average for the season, 13c. .o-.. jWlieat 11.8 lO.G 10.2 10.0 ll.G 12.7 12.3 ' ' ( Corti lO.G 9.5 9.2 9.G 10.0 11.2 10.6 Highest rate wlioat, 1873, l4o; average, 11. 4o. 283 1874 Wheat. Corn.. . Highest rate wheat, ( Corn Highest rate wheat, ''’“I Highest rate wheat, 1877 j Wheat ^^^^•jCorn Highest rate wheat, Highest rate wheat, Highest rate wheat, Wheat 1880 1881 ^ Corn Highest rate wheat. Wheat Corn May June July Aug. Sept. Oct. Nov. cts. cts. cts. cts. cts. cts. cts. .11.8 11,3 9.5 9.0 9.5 9.5 9.7 10.8 10.3 8.5 8.0 8.5 8.5 8.7 00 t-H 14c ; average, 10c. 7.4 6.9 7.5 8.1 7.0 8.2 10.5 6.6 6.3 6.9 7.4 6.5 7.4 6.1 1875, 11c; average, ' 7.9c. 6.7 6.2 5.9 5.8 6.2 8.3 7.6 5.8 5.4 5.4 5.3 5.6 7.5 5.5 1876, 10c ; ; average, 6.6c. •5.8 5.0 5.4 7.0 7.7 10.6 10.0 5.0 4.9 4.7 6.4 6.7 6.2 8.7 1877, 12c ; i average. 7.4c. , 5.8 4.7 4.3 5.2 8.0 8.0 5.8 , 5.2 4.1 3.8 4.6 7.1 7,0 5.2 1878, 8.5c; average. 6c. 4.7 4.1 5.2 6.5 8.1 8.0 10.2 4.2 3.6 4.7 5.9 7.4 7.9 8.8 1879, 12c ; average. 6.8c. 6.9 6.9 6.0 5.9 5.9 6.7 8.8 5.5 , 6.4 5.4 5.4 5.3 6.0 7.5 1880, 9c ; average, 6 .5c. 5.3 4.7 4.3 4.0 4.8 5.0 5.0 4.8 4.2 3.8 3.5 4.3 4.5 4.6 Highest rate wheat, 1881, 7c; average, 4.2c. Eeceipts at Tide-Water by Canal of Flour, Grain, Etc. The following comparative table shows the quantity of the principal articles of produce left at tide- water from the commencement to the close of navigation in the years indicated : Canal opened Flour, barrels. 1879. May 8. 1880. April 30. 21,200 1882. May 17. 11,000 Wheat, bushels Corn, bushels Barley, bushels. . * Eye, bushels Oats, bushels Malt, bushels ...30,074,000 ....20,178,000 .... 3,130,800 .... 1,053.900 .... 1,118,900 .... 379,900 30.691.800 34.869.800 4,091,700 859,700 1,140,800 637,500 13,701,900 18,472,000 2,982,900 557,000 2,070,600 702,700 Total grain, bushels . . . . Flour to wheat, bushels. . . . . ....56,935,000 . . . 42,000 72,291,300 106,000 38,487,100 55,000 Grand total, bushels. . . . ....56,977,000 72,397,300 38,542.500 The receipts at tide-w'ater by canal of the new crop of barley 1881 were 2,934,700 bushels, against 4,035,400 bushels in 1880, 3,114,000 bushels in 1879, 2,988,000 bushels in 1878, 5,126,500 bushels in 1877, 3,332,100 bushels in 1876, 3,833,600 bushels in 1875, 3,354,300 bush- els in 1874, 2,130,800 bushels in 1873 and 4,147,100 bushels in 1872. The receipts for ten years compare as follows (malt not included): Year. 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 Grain and flour. Flour, bbls. reduced, bush. 137,300 51,996,660 153,500 47,803,200 165,200 48,687,200 113,600 37,674,200 37,100 30,845,300 29,500 47,475,500 14,400 62,510,600 8,400 56,597,600 21,200 71,759,800 11,000 37,839,400 LIVE STOCK TEADE. We present below the usual tables showing the receipts and ship- ments of live stock during 1881, with comparisons, and the average range of prices monthly during the year : EECEIPTS. Per Lake Shore & Michigan Southern Railway. Month. Cattle cars. Hors, cars. Sheep cars. Horses, cars. January , . 2,167 1,256 280 36 February . 1,985 1,045 252 72 March . . . 2,476 951 257 144 April 2,873 983 307 137 May 2,824 1,112 394 85 June . . . , . 2,832 1,062 350 76 July 3,194 970 433 44 August . . , 2,775 914 233 36 September 2,369 1,135 1,583 187 40 October . . 2,942 226 49 November 2,057 1,573 302 61 December / 2,493 1,824 398 57 Total, 1881 30,987 14,308 3,622 830 u 1880 38,023 15,164 3,403 1,001 1879 36,606 12,947 3,190 1,097 « 1878 31,391 13,309 2,983 597 o 1877 24,485 7,744 2,144 610 u 1876 29,771 7,999 2,421 566 Notk.— It Is esiiinatcd that tliero was on the canals when naviRation closed, on the 20th of November, IHHO, 1.1K(),(KK) bnsh(*ls of wlioat, :i,70(),()00 busliels of corn, 30,000 bushels of oats, 30‘.),0(X) i)iiftliels of barley and 42,000 l)UHhels of rye. 285 ,, Cattle cars. Hog cars. Sheep cars. Horse cars. Total 1875 . 22,935 7,300 2,131 915 (( 1874 . 11,049 2,036 1,103 (( 1873 . 22,401 14,078 2,362 1,687 i( 1872 . 12,019 1,838 1,188 {( 1871 . 7,252 1,655 722 {( 1870 . 6,354 2,217 425 January . . ^ . Per Canada Southern Railiuay. 217 128 65 2 February . 175 75 9 March . . . . 93 97 17 April 756 69 70 7 May 337 77 32 5 June 668 194 47 3 July 497 96 14 . . August. . . 461 213 47 2 September 230 46 7 October . . 187 170 34 4 November 121 322 47 2 December 87 258 29 2 Total, 1881 . 5,002 1,835 583 59 n 1880 . 3,533 1,851 490 86 1879 . 232 2,141 592 91 i( 1878 . 2,955 7,020 80 ti 1877 . 1,006 649 50 n 1876 . 919 598 87 (( 1875 . 3,477 837 * 562 81 (( 1874 . 898 431 204 Per Grand Trunh Raihoay. January 133 28 59 6 February 11 55 9 March 1 83 29 April 188 36 15 May 6 19 10 June 1 10 11 Julv 8 27 10 August 294 12 90 9 September 229 18 80 2 October 33 97i 5 November 66i 140 11 December 53 82 11 Total, 1881 ... 190 695 125 1880 . . . , .. 1,711 208 824 138 1879 .... 202 252 816 56 1878 . . . , 166 773 36 ‘‘ 1877 .... 278 67 227 37 286 Cattle noprs, Sheep noraes, cars. cars. cars. cars. Total 1876 1,290 60 6:31 80 “ 1875 2,604 76 879 87 “ 1874 2,583 821 919 86 Per New York, Lake Erie <& Western Railway. January . . February. March . . . . April May June July August . . , September October . . November December. 1 2 1 1 1 i H *2 2 1 1 1 Total, 1881 . 61 24 11 8 Per Great Western Railioay. January . . 241 90 67 1 February . 280 112 59 . . March .... 286 51 57 12 April .... 376 51 32 7 May 687 81 3 3 June ....*, 293 75 3 10 July 278 87 9 3 August . . . 550 56 504 3 September 198 58 33 1 October . . 201 40 33 1 November 404 117 66 4 December 268 31 32 1 Total, 1881'.. 4,062 849 444 64 (( 1880 2,948 2,312 424 73 it 1879 .. 228 1,321 500 67 if 1878 . . 3,028 142 655 70 it 1877 .. 2,409 485 496 67 ft 1876 .. 1,665 1,023 714 51 tt 1875 . 1,192 1,065 633 98 it 1874 . . 860 164 530 26 SHIPMENTS. Per Neio York Central iQ Hudson River Railway. January . . •. 1,886 961 316 41 February . 2,217 901 325 87 March . . . 2,410 724 348 168 287 Month. April .... Cattle cars. 3,738 Hop'S cars. 737 Sheep cars. 316 Horses cars. 148 May 3,582 837 271 90 June .... 807 305 84 July 3,674 830 352 44 August. . . 3,477 770 293 45 September 2,881 894 265 59 October . . 3,053 1,204 269 61 November. 2,202 1,240 311 65 December. 2,085 1,251 290 43 Total, 1881 . . . 10,056 3,661 3,521 755 (( 1880 . . . 35,618 11,572 1,092 a 1879 ... 31,482 10,825 3,571 1,027 a 1878 ... 26,763 10,924 3,120 2,570 634 « 1877 .. 23,287 5,381 5,571 667 t( 1876 . . . 26,325 2,320 366 (( 1875 . . . 24,175 3,737 2,524 803 (( 1874 . . . 24,288 9,207 2,234 1,207 (( 1873 . . . 17,82§ 9,254 2.067 1,531 (( 1872 . . . 18,045 6,642 2,117 354 a 1871 ... 14,363 4,110 1,205 • 1,399 536 (( 1870 . . . 13,022 2,678 343 Per New January Nor^, Lake Erie & Western Raihuay. 898 295 117 6 February . 609 142 80 10 March . . . ■ 772 160 103 25 April .... 149 91 16 May 485 138 111 5 June 1,043 223 70 11 July 146 64 4 August. . . 394 136 49 3 September 434 238 97 1 October . . 421 92 5 November 490 383 116 7 December 487 346 103 5 Total, 1881 . . . 7,089 2,477 993 98 a 1880 . . . 4,430 1,177 130 (( 1879 ... 4,403 8,634 3,133 1,089 233 (( 1878 ... 3,646 1,143 170 (( 1877 ... 8,385 2,296 949 104 <( 1876 . . . 7,783 2,563 986 95 H 1875 . . . 2,366 1,058 106 u 1874 . . . 2,913 1,693 1,146 1,408 82 t( 1873 ... 3,399 171 a 1872 . . . 2,716 3,666 658 144 a 1871 ... 2,666 2,671 702 153 <( 1870 ... 7,826 1,146 111 288 RECAPITULATION. Or and Total Receipts for 1881. Cattle Hogs Sheep Horses Routes. cars. cars. cars. cars. L. S. & M . S. R. E 30,987 14,308 3,622 830 Canada Southern 5,002 1,835 583 59 Gr and Tr link 2,603 190 695 125 Gr eat Western 849 444 64 N. Y., L. E. & W. R. R... 61 24 11 8 Total , 1881 42,715 17,206 5,355 1,086 a 1880 46,258 19,581 5,166 1,298 1879 37,268 16,661 5,098 1,311 i<. 1878 38,625 17,947 5,161 85.0 a 1877 31,348 10,598 3,818 766 a 1876 36,223 10,001 4,309 984 a 1875 30,203 9,281 4,205 1,137 u 1874 29,682 12,441 3,919 1,371 Grand Total Shipments for 1881. N. Y. C. . & 11. R. R. R.... 33,935 10,056 3,661 755 N. Y.,L. E. & W 7,089 2,477 993 98 Total , 1881 41,024 12,533 4,654 853 a 1880 44,568 16,002 4,698 1,105 a 1879 35,885 13,958 4,660 910 GROWTH OF THE 1 TRADE. Cattle Hogs Sheep Horses head. head. head. head. 1857 108,203 117,168 307,549 1858 134,073 92,194 345,731 1859 103,337 73,619 189,579 1860 156.972 85,770 145,354 1861 141,921 101,679 238,952 1862 ;.. 129,433 103,671 524,976 1863 154,789 92,128 474,849 1864 135,797 301,629 155,959 1865 212,839 300,014 207.208 1866 275,091 552,831 341,560 1867 257,872 697,440 239,943 1868 265,105 470,578 385,815 7,773 1869 347,871, 794,272 381,450 12,038 1.870 739,519 561,447 7,896 1871 384,294 886,014 551,131 13,319 1872 1,145,109 606,748 20,786 1873 409,738 1,6)62,500 733,400 28,386 1874 504,594 1,431,800 783,800 21,936 1,067,300 841,000 18,187 289 Cattle head. Hoffs head. Sheep head. Horses head. 1876 615,790 1,150,210 871,928 12,542 1877 1,128,770 763,600 12,557 1878 ' 657,809 2,063,765 1.032.225 13,602 1879 633,556 1,916,015 1,019,600 20,976 1880 ; . 786,386 2.251,815 1,033,200 20,768 1881 738,900 2,096,325 1,113,350 17,376 • STOCK SLAUGHTERED. PcjtiTTiJitRfi i Cattle Ho^s Sheep Efetimated-I 1874 35,073 173,300 90,800 1875 19,956 159,500 118,200 1876 25,651 208,560 103,678 1877 20,158 171,000 47,500 1878 53,025 387,210 175,265 1879 23,511 310,845 87,600 1880 28,000 406,295 88,600 1881 35,845 443,100 98,600 RANGE OF PRICES. The following exhibit shows the prevailing average prices per cwt. per month taken on the principal market day in each week on cattle, hogs, sheep and lambs : Cattle. X Common to fair. Good to best. A Stockers and feeders. January $2 25 at 4 30 $4 20 at 5 75 $2 00 at 3 60 February 2 90 at 4 70 4 70 at 6 00- 2 65 at 3 60 March 4 60 at 6 25 2 65 at 4 55 April 4 90 at 6 00 3 20 at 4 85 May 5 30 at 6 50 3 40 at 5 25 June 5 50 at 6 55 3 20 at 4 90 Julv 3 00 at 5 60 5 50 at 6 50 3 25 at 4 75 August 2 75 at 5 30 5 20 at 6 75 3 15 at 4 10 September 2 90 at 5 40 5 40 at 6 85 2 50 at 4 25 October 3 00 at 5 50 5 35 at 7 00 2 75 at 4 25 November 2 75 at 5 40 5 25 at 6 90 2 90 at 4 65 December 5 50 at 7 75 3 00 at 4 25 Western sheep. Canada lambs. Januarv $4 00 at 5 75 $6 00 at 6 75 February 4 25 at 6 30 6 25 at 6 75 March 4 25 at 6 80 6 50 at 7 OO April 4 75 at 6 85 No sales. May 4 50 at 6 75 a June 4 00 at 6 00 6 75 at 7 00 Julv 3 90 at 5 75 5 75 at 7 00 37 290 August . . . 8e})tember October . . iSTovember. December , January. . , February. March . . . . April .... May June . . . . , July . . . . August . . September October . . November December , Western sheep. Canada lambs. 3 50 at 5 50 5 00 at G 75 3 25 at 5 40 5 25 at G 15 3 20 at 5 25 5 GO at G 25 3 00 at 5 50 5 75 at (> 25 3 00 at 5 75 5 50 at G 75 Hogs Yorkers Medium and heavy. H 70 at 5 45 84 90 at 5 50 5 00 at 0 GO G Of) at G 75 5 30 at 0 45 5 85 at G 50 5 65 at 0 30 G 10 at G 50 5 GO at 0 35 G 25 at G 50 5 25 at 0 20 5 80 at G 50 5 50 at 6 20 G 25 at 7 10 5 50 at 0 85 G GO at 7 20 5 70 at 6 85 6 40 at 7 25 5 70 at 7 00 G 30 at 7 00 5 20 at 0 25 5 85 at G 75 5 75 at G 35 6 00 at 6 70 EXHIBIT KuLES AIsTD EEGULATIOi^S OoVERNING THE MEETINGS AND TRADING OF THE Members of the Buffalo Board of Trade. At a meeting of the members of the Buffalo Board of Trade, held on the 9th day of June, 1877, the following additional rules were adopted : time and method of trading. There shall be a public call on grain daily from 11 to 11-^ o’clock, A. M., to be conducted by the Secretary of the Board of Trade until another person shall be selected by the members of the Board. The call shall begin with cash grain, succeeded by the months in their respective order. The offer to buy or sell at a price shall be accepted before subsequent offers at same figures may be placed. Subsequent offers to sell at a lower or buy at a higher price shall vacate prior offers to sell at higher or buy at lower prices. A transaction shall vacate all previous bids and offers and continue as long as transactions are made at the price. Any dis])ute arising as to offers, acceptances or withdrawals, being in time or not, shall be decided on the spot by the person presiding at the time, subject to an appeal to the members present. The appeal must 291 be promptly taken, and a majority of the members present and voting shall settle the disputed point finally. Quantities of grain constituting purchases and sales under call sub- ject to B(3ard of Trade rules. Cash grain shall consist of any quantity not less than a car-load, specified by buyer and agreed to by seller at time of trading. Grain to arrive shall be in boat-load parcels or smaller parcels when specifically agreed. The name of vessel to be given in every instance. Grain for future delivery, inTots of not less than 1,000 bushels. RECORD OF TRANSACTIONS. A record of all transactions made shall be kej^t in a book prepared for the purpose. It shall be the duty of the parties making trades, that is, both buyers and sellers, to examine the records immediately after the close of the Call Board to see that the entries are correct. Any entry not disputed and appealed from immediately shall be considered correctly recorded. A disputed entry shall be decided by the person that presided at the sale if possible, and when his decision cannot satisfy both parties an appeal must be taken to the Keference Committee of the Board of Trade. There shall be a committee of three appointed by the President of the Board of Trade to determine from time to time which of the arti- cles of grain shall be called, and when more than one kind of grain is to be allowed to be bought and sold on call, the Board to decide on the order in which the calls shall be made. This committee will be charged with the general government of the Call Board. The rules governing sales, deliveries (except as provided in the pre- ceding and following regulations) and payments, already existing, shall govern all transactions under the call. MARGINS. Either party to a trade made for future delivery can call each on the other for ten per cent margin on valuation of the grain named in con- tract, said margin to be deposited before two o’clock, p. m., on the day the margin is called in a bank designated by the Committee of the Board of Trade regulating the Call Board. Margins can be required to be deposited as above specified any time during the life of a contract, or the full ten per cent shall be kept good in cases of advance or decline in prices. 292 PENALTIES. In case of failure of a party to a trade to deposit the margin on his contract, when required so to do by the other party to the trade, within three banking hours next ensuing, tlie party not in default may close the contract by reselling or purchasing as the case may necessitate at the next call of the Board ; and the loss on such contract must be set- tled by the party in default before he can be permitted to further enjoy the privileges of the Board of Trade. A seller for future delivery may at the expiration of his contract tender to the buyer, in lieu of the grain specified in his contract, a price equal to the cost of said grain in the market where the grade called for in the contract is established, together with freight and charges to Buffalo, and five per cent added — and the buyer shall be compelled to settle the contract on this basis. In case a corner is being run in Chicago, Milwaukee or Toledo, then a settlement shall be made on the basis of such of the above-mentioned markets not cornered, with same penalties added. INSPECTION. Wheat . — The grades established in the cities of Chicago, Milwaukee, Toledo and Detroit shall be established here as the basis of trades. Corn . — The grades established in the city of Chicago shall control all the contracts with the Board; but the seller shall be permitted to furnish the buyer a higher grade and better article than his contract calls for, if he chooses. Oats . — The standard of grades shall be the same as existing in the cities of Chicago, Milwaukee and Toledo. Rye . — The same as Chicago aix^ Milwaukee. Barley . — The standard adopted in Albany shall govern sales in State barley, and the inspection prevailing in Oswego shall be adopted as a standard for sales in Canada barley. For Western, the grades estab- lished in Chicago and Milwaukee shall govern. The Board of Trade shall appoint a competent person to the office of grain inspector who shall carry out the details and duties of inspector and establish a rigid system of inspection at as early a day as possible. This Board of Trade shall appoint an Inspection Committee of three of its members, who shall hold office for one year, and whose duty it sliall be to have a general supervision over the grain inspection. An inspector of grain shall also be appointed, who will inspect, under the rules, all the grain ordered inspected, and give his certificate of the grade. This certificate shall accompany all tenders or sales made for future delivery, and shall be conclusive, except when appealed from to the Inspection Committee, whose decision will be final . The fees of the inspector shall be 30 cents per 1,000 bushels, or 20 cents per car-load in car lots, to be paid by the seller. In case of appeal being made to the Inspection Committee, they shall examine the grain, charging a fee of one dollar per 1,000 bushels to be paid by the party against whom their decision is made. GRAIK CONTRACT. The following shall be the form of contract for grain sold for future delivery : Buffalo, N. Y 187 . In consideration of one dollar in hand paid, the receipt of which is hereby acknowledged have this day sold to (or bought from) bushels of at cents per bushel delivered at seller’s (or buyer’s) option 187 , This contract is made in view of, and in all respects subject to, the By-Laws and Kules established by the Board of Trade, in force at this date. In case of any disagreement between the parties to this contract, it shall be referred to the Reference and Appeal Committee of the Board of Trade, whose decision shall be final. Q. Are there any items on that paper which you hold in your hands that you would like to offer to the committee ? A. I don’t know as there is. Q. That you have in your hand is a statement of the present year ? A. Yes, sir. Q. And this book is a statement down to December, 1881? A. Yes, sir. Witness reads the following: — Grain by lake, including flour re- duced to wheat to November first, 52,527,520 bushels. Shipments of grain by canal to November first, 26,471,352 bushels. Toll for the season, $297, 110.04. Clearances of boats, 5,921 ; shipments of flax seed by canal, 80,000,000 pounds ; exports by canal with lumber 294: 81,000,000 feet; shingles, 18,000,000 feet; staves, 74,000,000 pounds; exports by lake, westward, coal, 935,000,000 tons; cement and plaster, 184,000 barrels; salt, 95,000 barrels; salt, tons, 11,500; railroad iron, tons, 25,000 ; railroad iron, bars, 57,000. Q. All these come within the supervision of the Board of Trade, do they ? A. Y es, sir. Q. Have you any statement as to the amount of pork and lard ? A. The shipments of lard by canal eastward, 3,000,347 pounds ; no pork; the shipments by canal of lumber, staves and shingles show very heavy gain this year, and the exports by lake, also — the coal, cement, salt and railroad iron. Q. Is there any other information that you would like to offer to this committee ? A. I don’t know of any thing, sir, unless you think of something to ask me. By Mr. Browning : Q. Have you received any complaints from the shippers, or from the canal boatmen, in relation to any abuses on the part of the scalpers ? A. Ho, sir ; if any complaint had been made it would have been brought before the referee committee, but there has not been any reference case this year. Q. This Board of Trade is supposed to be organized for the pro- tection of canal boatmen ? A. Yes, sir. Q. Have you heard of any of the practices on the part of the scalpers which have proved injurious ? A. I cannot say that I have. Q. Do you think if complaints were made they would be attended to ? A. Certainly. Q. You don’t remember of ever having received any complaints of that nature ? A. No, sir. Q. Are the scalpers members of the board ? A. Yes, sir; a great many of them — not all. By Mr. Boyd ; (2. I>y the laws of the Board of Trade are the dealers in options and futures held on the fullillment of their contracts? 295 A. Yes, sir. Q. What is the punishment of a violation of any contract of that kind of any board ? A. Brought before the referee committee of the Board of Trade, and if a decision is rendered and they do not appeal from it in five days, they can ask the trustee to experiment ; a man might be per- fectly willing to pay and, at the same time, unable to do so ; that ’^ould be taken into consideration. E. P. Fish^ sworn and examined,^ testified as follows ; Q. Where do you reside ? A. Buffalo. Q. What is your business ? A. Commission raercliant and broker. Q. Are you a member of any firm ? A. No, sir. Q. What does your commission business consist of ? A. It consists principally in sending orders to Chicago for the purchase and sale of grain. Q. Where is your place of business ? A. Sixteen West Seneca street. Q. In the city of Buffalo. A. Yes, sir. Q. Do you in your business adopt the system of dealing in futures ? A. I do, sir. Q. And options ? A. Yes, sir. Q. What is your opinion in regard to the system of dealing in futures and making of corners ? A. Well, my opinion is that grain and provisions has come to a certain degree speculative articles, the same as railroad stock, or cotton and such articles, that the general run of trade in dealing in options is generally on speculation, and not for the purpose of receiving the grain or delivering the grain ; as a rule, it is done with the intention of settling the difierences; in other words, speculation. Q. Is your business a speculative business such as you have de- scribed ? A. Not entirely ; I do business that is legitimate, where the grain itself is handled. Q. Will you explain to the committee how your speculation busi- ness is conducted ? A. Yes, sir; a gentleman comes to me and gives mean order, for instance to buy 1.0,000 bushels of corn and puts up liis margin, wliatever I may see fit to call it, if at all, and I send the order to Chicaoro and it is executed there on the Board of Trade, and thev telegraph back to me how trade is, and I rej)ort it to the party, and he holds that trade until he either gets a proht or loses, as he sees fit to get out of it, that is as a rule, and if he can sell for more than he gives he makes a profit, if not he loses. I iiave som^ trades where the parties have stated when thej^ made the trade, for in- stance buy an option, a future option in corn, and I have some legiti- mate dealers say, if they hold that option until the month comes around and the prices drop, they will take the grain and have it shipped to them and pay for the grain and use it. Q. That is they will take the grain at the price they have agreed to purchase it at, even though the price should fall before the time arrived ? A. Yes, sir. Q. What do you mean by the system of dealing in margins ? A. The margin is money to secure the trade ; for instance if a man buys 10,000 bushels of corn I will take five cents a bushel margin, and if the market price goes down five cents a bushel in Chicago he is out this margin, and if he holds that trade I call on him for five cents a bushel more. Q. He is bound to make that good ? A. Yes, sir, if it went against him I would call for additional mar- gin, if he sold out at a higher price than he paid the difference would be paid to him, and the trade would be closed up in Chicago, and his account made up and the balance sent here to him and paid to him. Q. And you charge a commission '( A. Yes, sir. Q, How much ? A. Qu;irter of a cent on a bushel. Q. This margin is charged to him even though the grain may never be delivered '? A. Yes, sir. Q. That is purely a speculative transaction, is it not ? A. Yes, sir ; if he loses it, it goes to the Chicago office, and if he docs not lose it, it is returned to him. Q. If the grain rises he makes a ])rofit ? A. Yes, sir. 297 % Q. Do you know wliat the term “ bucket-shop ” means? A. I do ; that is, I suppose I do. Q., Will YOU explain it to the committee? A. I suppose a bucket-shop is an office where they have tickers giving the quotations from time to time, and people are allowed to go there and deal in small or large quantities, in various margins, and if they make a trade and the market goes against them to the extent of their margins they don’t put up any more generally, the deal is closed up and they lose their investment ; if it goes in their favor they close it out and settle themselves and make a profit. Q. What amount do parties invest in these bucket shops ? A. I could not tell you, I suppose anywhere from 1,000 to 20,000 bushels, I don’t know but less. Q. And what are the extent of the margins that they take ? A. I guess a man can put up from half a cent up as high as he likes. Q. Then he can invest the sum of $5 if he chooses ? A. Yes, sir. Q. Or he can invest more if desirous? A. Yes, sir ; he can invest $500, $50, or $5. Q. Do you do any of that in your business? A. No, sir. Q. Do you know of any houses in the city of Bufifalo that do that kind of business ? A. I have heard of several, I have not been in them. Q. What do you consider the effect of such dealings to be on the public welfare ? A. I consider it to be injurious. Q. Would you designate that as gambling operations ? A. I would. Q. What remedy would you suggest for this evil ? A. That would be a little difficult for me to answer. Q. Do you think it would be in the interest of the commerce and public welfare to have the Legislature interfere ? A. I think it would be in the interest of the public welfare, but not in commerce. Q. In what way would it be in the interest of the public? A™ It would cut off a number of small dealers who ought not to deal. Q. Who are in the business simply to carry on these speculative and gambling transactions ? 38 298 A. I mean it would stop a certain class of speculators from specu- lating. Q. What effect have the operations of these speculators upon the natural price of the produce ? A. None at all. Q. The parties injured are only the persons or individuals who are dealing in margins ? A, That is all. By Mr. Browning : Q. Are you a member of the Board of Trade ? A. I cannot tell you whether I am now or not ; I always nave been. Q. What is the smallest amount that you will accept as a margin in your business ? A. In some cases I make deals without any; five cents a bushel ordinarily, but I have taken less on dull markets. Q. How much less ? A. I have taken three cents. Q. How recently ? A. Probably two or three months. Q. On what amount ? A. I could not tell you, not less than 5,000 bushels of grain. Q. Is that the smallest lot you have taken ? A. Yes, sir. Q. How quick will you decide an operation ? A. The moment I receive the notice. Supposing you were trading with me and wanted to buy or sell, I don’t know you, you \vant to buy 10,000 bushels of corn ; I says you give me a thousand dollars, and as soon as you give me the money I telegraph to Chicago and they send me a reply in a few moments, and if you are prompt with your margins the whole thing is done in fifteen minutes. Q. You say you have taken three cents a bushel when the markets were dull { A. Yes, sir. Q. On not less than 5,000 bushels? A. On not less than 5,000 bushels. Do you have sort of an exchange ? A. No, sir. 299 Q. Do the men come and sit around your office ? A. No, sir. Q. Do you have a black-board with quotations ? A. No, sir. Q. Nothing of that kind ? A. No, sir. By Mr. Boyd : Q. What proportion of your business is legitimate and what pro- portion speculative ? A. But very little speculative. By Mr. Browning : Q. The truth of it is you do business for men who bet on the rise and fall of the market ? A. Yes, sir, just exactly as they do on Wall street on stock. Q. That is about the business you do? A. Yes, sir. Q. If a man wants to bet his money you take it and hold the stakes and charge him a commission ? A. Yes, sir. Q. And it is purely a speculative business ? A. Yes, sir, mostly ; I look upon the speculation on grain as I do upon any other article, cotton, wool, or railroad stocks. Q. Do vou find that your customers are men who deal in grain only, or all classes of people, salesmen, bank clerks and all that ? A. I have no salesmen or bank clerks; they are ordinary people of no particular class. Q. Might have lawyers, editors, doctors and all that class ? A. Yes, sir, I execute orders for anybody that comes in there. Q. Do you do any business for young men, that is boys ? A. No, sir. Q. All limited to men ? A. All limited to men. Q. Who know what they are about ? A. They ought to, they don’t generally, but they ought to. By Mr. Boyd : Q. What proportion of the customers that come into your place of business make protits on this business ? A. I could not answer that. 300 By Mr. Browning : Q. If they kept at it long enough you would get the best share of it? A. Yes, sir, I think the brokers end is the safest, but tliat is not always safe. Sometimes a man will uot pay his margin and the broker will have to lose it. Q. That is where you take a man’s word ? A. Yes, sir. Q. Have you any connection with any other house in this State ? A. Ho, sir. Q. That is doing business of that kind ? A. Ho, sir. Q. There is no house throughout the State that you communi- cate with ? A. Ho, sir. Q. Do you know of other houses like it in the State ? A. Yes, sir. Q. Where ? A. There is half a dozen more here. Q. Do you know of any other house like it in any other city in the State ? A. That I am not positive of, but I imagine there are. Q. Do you know of any in Hew York city ? A. Yes, sir. Q. Can you locate one ? A. I know them but I cannot remember the names now. By Mr. Boyd : Q. Do you know the location of their place of business ? A. 1 do not, no, sir, but I know Chicago houses have representa- tives there. By Mr. Browning : Q. Rave you any connection with any houses in Chicago ? A. Ho, sir. Q. Are you a representative of some Chicago house ? A. Ho, sir. Q. You went into this business on your own motion? A. Yes, sir. Q. A re you interested in any lirm ? A. Ho, sir. 301 By Mr. Boyd : Q. Can you give us a statement of the amount of business trans- acted in your office during the year ? A. I could by the books ; I have not been in the business quite a year. By Mr. Browning: Q. What would be the average a day? A. I could not tel] you without looking at the books. • Q. How many sales yesterday ? A. Yesterday was a very dull time ; 1 don’t think I had but one or two. Q. How many in a busy day ? A. I have had as high as ten or twelve probably. Q. Involving how much money ? A. That would depend upon the fluctuation of the market. I have had in a day probably upwards of 100,000 bushels. By Mr. Boyd : Q. Bepresen ting what margin ? A. That should represent either in money or credit $5, 000. By Mr. Browning : Q. One hundred thousand bushels on which you received a quarter of a cent ? A. Yes, sir, but none of those days have occurred lately. I have known oil to fluctuate recently as high as seventeen cents a barrel in a day. Q. Do you do business with that article ? A. Ho, sir. Q. You don’t touch oil ? A. No, sir. Q. Nothing but grain ? A. Grain and provisions. * Q. What class of provisions ? y A. Pork and lard. Ellis CojStle^ sworn and examined, testifled as follows : Q. Where do you reside? A. Buffalo. 302 Q. What is your business? A. I am a scalper, connected with a scalping house. Q. How long have you been in that business? A. This is my second season. Q. Will you explain to the committee how the business of scalp- ing is conducted ? A. If it is conducted legitimate we go out and get the freight at the best prices that we can get, and load the boats and charge five per cent commission, but I am not the one that does this, I have a partner who takes the freight, and I am sort of a silent partnei* who looks around the institution, and he is the man that generally takes the freight. I don’t undertake to do that kind of business myself. Q. Do you understand the illegitimate system of scalping? A. Not as well as I wish I did. By Mr. Browning : Q. Why ? A. I was not born a thief. Q. Then you wish you was ? A. No, sir, I don’t. Q. Then why do you want to know all about it ? A. •So I could give the public all the information about it. By Mr. Boyd : Q. State to the committee such information as you have in rela- tion to it ? A. The legitimate business is, we represent to be the agent of the carrier, the carrier is the boatman, whom we charge a commission of five per cent on the gross bill of lading, Q. What does the commission generally amount to ? A. A commission of six per cent generally amounts to $23 or $24, but I don’t know exactly, I have not figured it lately. Q. Is there any other information that you would like to offer to the committee ? A. Yes, sir, there is other information that I have, that is from hearsay I understand the way of taking the freight ; I have heard them transact the business and know all about it in that way, al- though I am not and have not been connected with that branch of the business, and don’t propose to be, and it is only from hearsay that I understand it. ( 2 . Do you know any thing about it from observation ? 303 A. Yes, sir.' Q. Proceed and state what you know from observation, please ? A. Tlie grain receivers in the city of Buffalo, some of them, con- tract by telegraph the freight and sub-let it to the scalpers ; there would be three or four scalpers trying to get it, and sometimes a scalper would take ten or fifteen loads of grain at a certain price and then hire the boatmen to carry it for a smaller price, so when the grain gets here it is put into the hands of the scalpers, and some of those scalpers have boats of their own that they can control, and they will load them as fast as they can and send them off. If you wanted to get a cargo of grain carried tohfew York you go to a shipper and ask what freights are and he will tell you the freight has raised, and you go to another on the same day and ask for freights he will say freights are off, such and such a house have sent boats at a certain price ; so that establishes the rate of freight for that day, so you see if we take it we have got to put our boats in at the price made, that is what is called pooling. These people that contract the freight want to make money out of it, and still receive a commission and represent themselves as the agent of tlie boat. Q. What is the illegal portion of that operation ? A. Well, I should think that the Jesse James gang was an orna- ment beside the scalper. They lie for the purpose of making money. Q. Let us understand ; you say that certain dealers undertake with shippers in the west to have grain transported through the canal at a certain sum per bushel ? A. Yes, sir. Q. What IS that sum usually ? A. If the freights were six cents to-day a party would say here is a cargo of 60,000 bushels being shipped at Chicago to-day, what will you take it for? Well, freights are saj^ six cents, I look upon the reports of all the boats, if I was the contracting party, and I would say there is a scarcity of boats, freight is going to be high, and I 'would agree to take it at six and one-half ; well, they would say we liave got better offers, other scalpers don’t think as you do, they think freights will be off, and they would say they had had of- fers at six cents and we want to ship this for less than that, and they will travel the docks until they find some scalper that will take it at three-quarters. Q. At five and three-quarter cents you mean ? A. Yes, sir; and then you would hear a scalper say I made an offer on eight boat-loads of wheat and some one under-bid me and ‘ 304 : they have got it, and they don’t know who that is ; the consequence is when the grain arrives if one scalper takes it he will go around and divide it among his friends and neighbors, so he has got them on his side to help carry off the property, and help put the rate so they can make something out of it. It seems to he the object of these con- tracting parties to make money on the contracts, and still represent themselves to be the agent of the boatmen. Q. The scalper goes to the person to whom the grain is consigned here, and who is to receive it from the western merchant or shipper at the rate of six cents for transporting it to New York ? A. Yes, sir. Q. And the scalper takes it for five and three-quarter cents ? A. Yes, sir. Q. He then goes to the canal boatman and prevails upon him to take it for five cents ? A. Yes, sir. Q. Then this scalper has not only the profit of the three-fourths of a cent a bushel, but he also has a commission that he charges the canal boatmen ? A. Yes, sir. Q. And that is the system ? A. Yes, sir, that is the system. Q. How long has that system been in operation in Buffalo ? A. Quite a number of years, but more to a greater extent this year than ever before ; it has been increasing upon us. As I understand it, I want to tell you a little more; Mr. Sternberg run his elevators last year out of the association, but he contracts the through freight and sub-lets it to scalpers in order to get business for his elevators. Q. Do you think that if there were no scalpers or middlemen brought in that the canal boatmen would receive the full amount paid by the western shippers for transportation rates ? A. Not necessarily, for one would be competing against the other ; for instance here is five loads of grain and there is ten boats to carry it; if it was not for th6 scalpers tliose ten boatmen would go to the grain men and compete for that grain ; each try to get those five loads to carry, and, consequently, would have a tendency to keep the rates low. (2. What, in your opinion, would be a legitimate transaction on the }>art of the middlemen or scalpers? A. To be the boatman’s agent what he represents, without con- li-actiiig the freight. 3U5 Q. And simply charge the boatman his percentage and let that be the only proht which he receives ? A. Yes, sir ; that is all he should be entitled to. Q. And the illegitimate part of it is in contracting witli the com- mission merchant for a rate of transportation greater than what the \ boatman receives, and the scalper gets the dilference for himself ? A. Yes, sir, the scalper takes the grain on his own responsibility ; that is, he takes it at a certain rate and if he can get it carried for less it is his good luck, Q. It has been suggested to me to ask you if a scalper should con- tract at a certain rate and then the rate of freight go up, who would be the loser ? A. Probably the grain receiver, or such a man as Mr. Richmond, because the scalper would not be responsible. His theory would be that of endeavoring to keep the freights down if you and I failed to do it. . Q. Then the grain receiver is the owner ? A. Yes, sir ; and they feel well pleased if they have got the scalpers on their side to help rob the poor canalers. Q. What do you mean by robbing the poor canalers ? A. By giving them small rates. Q. You mean to say that the western shipper is charged a higher rate of transportation over the Erie canal than the boatmen receive ? A. Yes, sir. Q. How much on an average ? A. I presume this year it has been from a quarter to half a cent a bushel. Q. Which ought, you think, to have gone to the canal boatmen ? A. Yes, sir; I think the contracting system has kept the freights a cent a bushel lower than it naturally would have been. We have not had any railroad competition ; the competition has been between the carriers and the contractors this season. Q. Have you any 'other information that you would like to offer to the committee ? , A. There is other information ; I am interested in canal boats and every thing of that kind. By Mr. Browning : Q. You say you own some canal boats ? A. Y es, sir, I own mortgages on some. 39 306 Q. How many? A. I have got seven or eight mortgages. Q. How many others have you got a direct interest in ? A. That is about all ; indirectly I am interested with every poor canaler on the canal. Q. I am asking how many boats you can control ? A. I don’t pretend to control any ; I have only about seven rnort- gages. Q. Did you ever have a single contract in all your experience as a scalper ? A. No, sir. Q. Directly or indirectly ? A. No, sir. Q. Did your partner ever have any ? A. I presume he has. Q. Have you ever reduced the rates on your own boats and sent them otf as you have described ? A. I presume I have. Q. Then you have pocketed the difference between the amount your boatmen were to receive and the amount the contract called for. A. No, sir, I am speaking of the competition that I have told you. Q. You say your partner has made contracts ? A. I presume he has. Q. You say you have sent your boats off with reduced rates on the price named in the contract ? A. No, sir. Q. Didn’t I understand you to say so ? A. No, sir, not my boats. Q. The boats that you have control of ? A. No, sir. Q. Y'ho is your partner? A. Andrew Eagather. Q. Is he here ? A. No, sir. Q. Is he in Buffalo ? A. Yes, sir, he is in Buffalo. Q. You are familiar with your business, aren’t you? A. Partially. 307 Q. Don’t you know what your partner does ? A. I know what he does in regard to our company business, yes, sir. Q. Can you tell me what contracts you have had within the last year or so ? Ai When I associated with him last spring we made an agreement not to contract as far as I was concerned, that I would not go in with him under any considerations where we could not do a legiti- mate business and be the boatman’s agent. Q. Notwithstanding that, you think your partner has made con- tracts ? A. I think he has with some, yes, sir. Q. Then he is one of the thieves you have been talking about ? A. Yes, sir, any man is that contracts in that way. Q. Do you know the price that has been named in the contract in which he forwarded grain ? A. No, sir, he has not told me if he has ever done any such thing. Q. He has kept that quiet ? A. Yes, sir, I would say that would be his individual business. Q. Wouldn’t you be entitled to some of the profits? A. No, sir. Q. Does he keep his own account and partnership account besides ? A. No, sir ; my business was not taking freights. Q. What part of the business did you do ? A. Generally sitting around the dock and talking. Q. Just sit around and talk? A. Yes, sir. Q. What did you talk ? A. Talk up freights and getting the enmity of all the grain re- ceivers ^nd scalpers on the dock. Q. What does your partner do ? A. Ho takes the freight in with the other scalpers, and coaxes the boatmen to go off with a load against my wishes. Q. Then he scoops in the difference between the price the boat- man gets and the price named in the contract ? A. I presume so, if there is any thing of that kind. Q. Can you name anybody else who is doing that sort of business ? A. Yes, sir. Q. Who? A. It is generally understood that Shaffer, Hancock, Hager, Thomas M. Hath, and several others are doing that kind of business. 308 Those are the people that are doing this crooked business ; I call it crooked, the)^ call it legitimate. Q. You don’t call it legitimate? A. No, sir, I say there is not a scalper on the Central wharf that is entitled to a commission from the canalers ; they don’t work for their interests, nor they are not entitled to any commission as an agent, but they still represent themselves to be an agent. Q. How long does your partnership exist ; is it limited to any time ? A. Yes, sir, one year. Q. Then it dissolves ? A. Yes, sir. By Mr. Boyd : Q. The scalpers sometimes advance money to the boatmen, do they not ? A. Yes, sir, in order to get the men under their control to load their boats. Q. I§ it not a convenience to the canal boatmen to have this money ? A. Yes, sir, to make drafts on the banks for instance ; it is a great convenience for them to get a little money, they find they are with- out friends and without money ; and their friends might be in the interior of the State and would have to telegrapli to them. It is cpiite an accommodation to the boatman if he has lost a liorse, or had some bad luck ; it is a great accommodation to canalers to have peo- ple to draw on here in Buffalo because it is quickly done. Q. Is the accommodation of receiving loads from the scalpers not a sufficient compensation to the boatman for the amount of com- mission which he pays ? A. I think the scalper's commission is too high ; I have always argued it has been too high. I could tell you in regard to that ; the carrier is supposed to insure the cargo that he carries and the scalper receives a ten per cent rebate from the insurance company on the commission whicli he pays, and last year it became illegal and their commissions were made uniform. They had been for years five per cent on the cargo ; when that law passed doing away with the rebate on insurance companies they circulated a petition and the scalpers all signed it to raise it and make it on the gross better, that is taking a commission on the toll, which is another dodge, which gave the scalper more on the actual freight, more commission, than it did on his rebate from the insurance company. The toll amounted to a 309 < 3 ent a bushel, which was about four dollars commission, and I think the rebate from the insurance company amounted to about two dol- lars. Of course the scalpers can get together and make the canalers pay whatever they see lit, that is, in the line of commission. Ira Betts, sworn and examined, testified as follows : Q. W here do you reside ? A. Buffalo. Q. What is your business ? A. Forwarding and commission business. Q. How long have you been in that business ? A. About six years. Q. Are you in any way interested in the canal boat business ? A. 1 am some, directly and indirectly. Q. Are you familiar with the system of scalping, as it is termed ? A. I thought I knew something about it. Q. Explain to the committee what the system is, how it affects the canal boatman’s interests ? A. Well, in the first place the grain, most of it, is shipped directly to persons here, what we call the second platform, up stairs ; we receive a great deal of grain from the west that comes direct to us. Last year we had quite a good deal, but not as much as this year; if there is four or five boats come in and desire to get a load, they ask what the freights are, and I tell them, and if they desire to have a load we go upstairs to J. M. Richmond & Co., or some other company that is dealing in grain, shippers, and receive an order from them and we pass it over to the boatmen, and they load their boat and go out with it. Q. Will you explain the illegitimate system of scalping that has been referred to here, if you are familiar with the system ? A. I don’t claim to be very familiar with it. Q. Do you know that such a system exists in Buffalo ? A. I always supposed it was just as honest a business as any other business ; that it could be done honestly just as well as any other business, and so far as I have had any thing to do with it I have done it so, and it has been perfectly legitimate as far as I have been con- cerned, and so far as I know in regard to my partners. Q. What is your opinion in reference * to the system of making corners and dealing in futures and options ? A. I think it is very injurious to the business. 310 Q. In what way ? A. So far as options are concerned I suppose yon mean bucket- shops ? Q. What is your opinion in reference to the system of dealing in options ? A. I believe it is a system of gambling, and I believe it causes cer- tain young men and other parties whom you could not induce to go to a place where there is any gambling going on to go into that system of doing business, and sometimes makes gamblers of them. Q. What efiect has it upon the price of produce and the necessa- ries of life generally ? A. It must run the market up above what the property is actually worth, and it causes a fictitious value to be attached to the article. Q. On whom does the burden fall ? A. It falls mostly on the laboring class of people, that get a fair compensation for their labor and ought to 'be entitled to buy their produce for what it is worth, in proportion to what they get for their labor. » Q. Then the consumers are generally the sufferers ? A. Yes, sir. Q. What remedy would you suggest for that evil ? A. I don’t know as there is a remedy — I presume there is one of course, but I have not had sufficient time to think of a remedy for it ; if I had plenty of time I think I could suggest some remedy. Q. Do you think it is the duty of the Legislature to interfere and attempt to put a stop to these transactions of speculations ? A. I would be willing to leave it to their good judgment. I think they have the power to regulate trade in commerce, and I think it is their duty to do so, and in such a way as they think is best. Q. Do you know to what extent the dealings in futures and op- tions is carried on in the city of Buffalo ? A. I do not, sir ; I never was in one of those places in my life that I know of. Q. Have you any further suggestions to offer to the committee ? A. I don’t know that I have unless you could suggest something. Q. Are you familiar with the operations of the Western Elevat- ing Company ? A. No, sir, I am not, only what I have heard. I have never had any trouble with them myself personally. 311 By Mr. Browning : Q. Did 1 understand you to say that you do this scalping business ? A. I have what we call a forwarding and coininission house, and at the same time receive property when it is directed to us. Q. In the transaction of your business do you act as the agent of the canal boatmen ? A. Yes, sir. Q.- Have you made contracts ? A. Yes, sir, our firm. Q. To forward freight ? A. Yes, sir. ' Q. Do you know whether the firm has done any thing to bear the market down so as to make a profit on the contract besides making a commission out of the boatmen ? A. It has been our aim to get as high freight as we possibly could. Q. You cannot call to account a single instance where you have done otherwise ? A. Ho, sir, I don’t know whether my partner has. Q. You don’t know of any such transaction ? A. Ho, sir, if he did I would object to it. Q. Do you own any canal boats % A. Y"es, sir. Q. On the Erie canal ? A. Yes, sir. Q. How many ? A. I don’t know; I have built a great many boats, I have built probably two hundred and fifty boats. I have been in the boat busi- ness since 1852. Q. How many boats can your firm control now ? A. It can control directly and indirectly about two hundred boats, I think. Q. Do you ship freights at the market rates ? A. I might contract a cargo of grain and agree to deliver it in Hew York for six cents a bushel — suppose a shipper says to me, here I have 100,000 bushels of wheat that leaves Chicago to-day and he says I want to get a canal rate on it, and I look and see where Mr. Gray’s boats are, or some other gentleman’s boats and telegraph to them and say, are you willing to take upon your boats when they arrive, about such a time, freight for five and one-half cents or five and three-fourths cents, and if he says, yes, I make the contract with him. Q. If the market rate was half a cent less than your contract called for that would be your prolit ? A. Yes, sir. Q. In other words, if you should contract at six cents a bushel and at the time the grain is delivered here the market rates are five and three-fourths cents a bushel you would pay the five and three- fourths cents and take the rest ? A. Yes, sir ; and sometimes we have to pay more than the con- tract calls for and then we would lose. Q. IIow often do you lose ? A. Well, in the course of our business this year, the option busi- ness, including the contracting we are not ahead any thing. Q. You are not ahead any thing? A. No, sir. Q; Sometimes you make a profit on a contract and sometimes you lose ? A. Yes, sir, I wdll explain why we occasionally contract. I wish the business could be done without contracts, but others do it, every- body does it. A man comes into Chicago and he is buying grain and wants to know what he can lay it down in New York for before he buys it. The market is so much in New York and he will find out what he can get lake rates for, and then will telegraph to Buffalo and see what we can get canal rates for, then he knows what he has got to pay, he knows what it will cost him to get his wheat down to New York, and it is so with Liverpool. If I was going to buy 5,000 bushels of wheat in Chicago I would know what it was worth in Liverpool, and if I could not get the canal and lake rates laid down, do you suppose I would buy it ? No, sir, I would not. Q. You say your firm sometimes makes a profit on a contract ? A. Y es, sir. Q. And sometimes loses a little. A. Y"es, sir. Q. Do you agree with the last witness that a man who does that business is a thief ? A. No, sir, I do not; I don’t know a man that I would call a thief on the Central wharf. You heard what the last witness said, didn’t you ? A. Yes, sir. Q. You don’t agree with him ? A. I don’t think he really meant just what he said. I will ex- plaij) a little more about this contracting, I don’t explain for any 313 other houses, but so far as our liouse is concerned ; we have these boats coming, and you take a year like this when there is more boats than freight, these men run their boats to our house with the under- standing and supposition that we are capable of furnishing them loads for their boats at some price, because a delay of three or four days is half a cent off, half a cent a bushel off from the grain, and if we keep them lying here five or six days waiting for freight, iliat is don’t get any thing for them, of course they would leave our house, so we reach ahead for business; we have a certain lot of boats com- ing, we know how many leaves Troy every day, we receive telegraphs from them and postal cards, stating about the time they will be here, and we make calculations that we have got to have so much grain for those boats when they come, and we watch to sec who it is consigned to here and try to get the handling of this freight to load our boats with. I^ow, because we get more freight than some others do they ought not to quarrel about it. We do not lessen the canal rates at all, it is the supply of boats and supply of grain that makes it. It is because there is a big fleet of grain and a scarcity of boats, you can run the rate up as high as you feel disposed to. Q. What effect would a corner in grain have upon the canal boat interest ? A. If they corner the grain in Chicago it would not be shipped, they hold it back. Niles Ocese, sworn and examined, testified as follows : Q. Where do you reside ? A Buffalo. Q. What is your business ? A. Canal transportation mostly. Q. How long have you been in that business ? A. Forty years or over. Q. What is your opinion with reference to making corners and dealing in futures and options ? A. It has a bad effect upon the legitimate business. Q. In what way ? A. It disarranges the prices so it is not safe for a man to deal in it. I used to ship grain to Hew York before it got into this corner and option business, and since that it is not safe. Q. Then it is disastrous to legitimate business ? A. Yes, sir; so much so I don’t pretend to do it now. 40 314 Q. Would you designate the system of dealing in futures and op- tions a syslein of gaml)ling? A. Y es, sir. Q. Does it dilfer morally from any other style of gambling? A. I don’t know as it does. In answer to that otiier question I think all these options here are made with tiie intention of delivery, which would not be a system of gambling, but if they were not it would be. Q. What effect has this speculation upon the price of breadstuffs which are the prime necessaries of life ? A. At times it runs it very high and makes a fictitious price, that is clear above the actual value. Q. On whom does the burden of this extra price fall ? A. On the consumer. Q. Are you familiar with the canal system ? A. Y"es, sir. Q. Have you any information to offer to the committee in rela- tion to that matter ? A. In what respect? Q. In relation to the system of grain carried by the canal boats, and in regard to this scalping business ? A. We have got a good many scalpers among us. Q. What effect has the scalping business upon the canal boat in- terests ? A. It makes them pay very severe, makes the. carriers pay very dear for the business they do. They have got a system here by which these receivers don’t deal with the boatman at all, they deal with the scalper, and the scalper deals with the boatman. An indi- vidual boatman is dependent upon the scalpers for his freight, he hasn’t anywhere else to go, anywhere else he can get it, and there are so many of them they create a great competition among them- selves, and it has a tendency to run the freight down instead of up. I suppose you would like to hear something in reference to this con- tracting business. Wq have had more of that this year than before ; these scalpers contract grain to ship and ship it by the boatmen when they get it here, and in that way they become speculators; they go into it to make all the money they can out of it and charge the boat- men a commission for doing the business besides. They will con- tract, say for six cents a bushel, and get the boatman to carry it for 315 live and three-fourths cents ; instead of getting a price and trying to keep it they will go in with tlie receiver and work their game the best they can and run the freights down. Tliey will talk to the boat- man and say, here you better take this, freights are going off, and talk to them and get them to take ‘it at as low a rate as they can ; in- stead of trying to get a good price for tliem they work against them. That has been the effect of it, and it has a very bad effect upon' the carrying trade here. Q. Are you familiar with the operations of the Western Elevat- ing Company ? A. 1 am considerably so, yes, sir. Q. Wliat effect has the present system of canal-boat interest upon the elevating interest ? A. Not any, only they charge too much for elevating. Q. Huw do you know that they charge too much ? A. Because I think it is more than it is worth. Q. What liave the rates been during tlie present summer ? A. Seven-eighths of a cent for transferring, not including the trim- ming, and that is larger than the elevating. Q. Can the canal boatmen trim their own boats ? A. If they choose to, but they don’t; they could not do it fast enough and the elevator men would be dissatisfied and would raise all the objections to it they could, and it is not customary for them to do it. I think it is just as necessary to have these terminal charges done for what it. is worth as it is to have a free canal, it is just the same. Q. What do you think the elevation is really worth ? A. Three-eighths of a cent a bushel where they don’t put it in store, and I think that is a liberal price, and half a cent where they do put it in store and hold it five days. Q. How are the rates for elevation fixed ? A. It is done by this elevating association, they make their own prices. Q. There is no competition, I suppose ? A. No, sir, they have got some tliirty or forty elevators here and two of them did most of the work during the middle of the summer, and along later they had some eight or ten to work out of the wiiole, and the rest lay idle, and some of them have not turned awheel for ten years, and some not for five, and some not this year, and ail of them drawing pay at the expense of this route. Q. What remedy would you suggest for that evil ? 31G A. The Legislature if they can do it, but I think it can never be regulated, though. Q. What would be the nature of the legislation ? A. They have had bills before the Legislature, I suppose you are familiar with it, I don’t think it can be done otherwise. They have had this association so long it has caused a great many elevators to be built, people have built these elevators, the floaters and transfers, for the purpose of blackmailing the association, they have got to buy them up and take them in, and it has a very bad effect upon this route from Chicago to I^ew York, and here are the railroads, they have got considerable of an interest here, although it is their inter- est to keep up the prices so they can get more through freights, and putting up the price here it would have a tendency to draw more freight unto the railroads from the west. That is the system of ele- vating here is a great drawback on this water route, and it is grow- iim worse than it is better. O By Mr. Browning : Q. Do you think you could get along without these scalpers ? A. They become quite a necessary evil the way the business is done. Q. Do you think it could be improved ? A. I don’t know about that. Q. Do you agree with me that a^scalper who is strictly an agent of the boatman and tries to get a good price for him and gives that price that he is a good friend to the boatman ? Q. Yes, sir. Q. And where they reduce the price and try to make a profit at both ends, then it is disastrous to the boatmen ? A. Yes, sir ; they make a profit at both ends when they are lucky, and when they are not they lose. I don’t think they make much out of the contracting, but it has a tendency to drive this freight down and injure the carrier, but they don’t make any thing out of it, I don’t think ; they have been stuck a number of times this year, some of them, pretty strong. Q. I look upon this contracting business as very serious, because the shipper in the west is likely to control the freights on this canal ? A. There may be something in that. O,. Tf that is the effect, do you receive any benefit ? A. \V(m1o not. 317 By Mr. Boyd : Q. Is it not true the grain pays the charge for shoveling and ele- vating ? A. Certainly. Q. It is not a charge made to the canal boatmen ? A. No, sir ; the grain pays it. Q. Yes, sir? A. The lake carrier pays it on the lake and the canal carrier pays it on the canal. Q. It is a charge on commerce ? A. Yes, sir. Q. The burden does not fall on the canal boatmen altogether ? A. No, sir, a great amount of it falls on the lake carrier. By Mr. BROWNiiTG : Q. As I understand it, it is a charge on commerce, and, as a charge on commerce, it is something that falls on the consumer ? A. Yes, sir; and it is just as necessary to get these charges down to a proper price as it is to have a free canal. James //. Baker, sworn and examined, testified as follows : Q. Where do you reside ? A. Buffalo. Q. What is your business ? ^ A. Boat-building by occupation. Q. Are you in that business now ? A. Yes, sir. Q. Have you got any interest in any boats on the canal ? A. Yes, sir. Q. Will you state what your opinion is of the effect upon the canal- boat interest of the making of corners ? A. I think it is bad. Q. In what way ? A. In cornering up this grain and keeping it in Chicago, and allow- ing boats to accumulate here and allowing men to speculate and try and make a fortune out of it ; I think it is the worst kind of gambling. Q. What is your opinion in relation to dealing in futures and op- tions ? A, I think it is about the same, all gambling, the worst kind. Q. Do you think it ought to be abolished by law ? A. Yes, sir, it had. Q. What do you know in relation to the business of scalping as car- ried on in the city of Buffalo, and its effect upon the canal-boat in- terests ? 318 A. I have not been around the dock l)nt little and I am not much acquainted with the way they do the business. Q. Have you derived any knowledge from observation ? A. Yes sir. Q, State what that is in relation this subject ? A. This contract system has been very detrimental to the interest of the canal, I think. Q. How? A. These men take a contract for so much, and some days there are a good many boats arrive here, and they will say, here is more boats than there is freight or grain, and they will try to get the freight down and use their influence to try and get it down as low as they can, and try to get the boatmen to carry it cheap, and drive them into it and make them load any way, whether they want to or not, and it had a bad effect on the whole system. Q. What effect has the elevating system as carried on ip the city of Buffalo upon the grain interests ? A. I could not tell you, only there are a great many idle elevators every day doing nothing. Q. You have no knowledge as to the propriety of the present rate of charges ? A. No, sir. Q, Have you any other information that you would like to offer to the committee ? A. I have not, sir. P. G. Cooky Jr.y recalled, testified as follows : Q. I wish you would explain to the committee here what the value of the warehouse receipts is that the association gives ? A. It is just as valuable as though the man had his money in his pocket, Q. Ail the warehouses are responsible and your association is re- sponsible ? A. Yes, sir. Q. What would be the effect in case the association issuing it broke up, would the warehouse Receipts be considered as secure in case one individual elevator man should give his receipt for grain ? A. No, sir ; I don’t think they would be. Q. If the party that owned the elevators was not supposed to be responsible his warehouse receipts would not be worth much? A. No, sir. 319 By Mr. Browning t Q. Is your association incorporated ? A. No, sir. Q. Then you cannot be sued, nor cannot sue as an association ? A. No, sir. Q. What is your cash account ? A. We have no capital. Q. Where is the security, except that they have confidence in the comj^any as they would have in an individual ? A. The whole elevator interest is responsible, they could be held responsible for the grain. Q. How? A. I donT know as I could explain that. Q. Have you ever had a suit of that kind ? A. No, sir. Q. Isn’t a certificate issued by Jesse Hoyt for grain in his elevator in Chicago just as valuable in the market at New York as a certificate issued by the association here ? A. Yes, sir, Q. If the party is responsible who owns the elevators and has the grain in his possession, wouldn’t his certificate be just as valuable as if he was a member of this association ? A. Yes, sir. Q. In other words, you don’t issue a certificate unless you have got the grain ? A. No, sir. Q. And the grain is what gives the security ? A. Yes, sir. Q. And your grain is all insured, is it not ? A.. We don’t insure it. Q. But it is insured by somebody? A. Yes, sir. A lake vessel pays an eighth of a cent to the elevator company, in addition to the three-quarters charged by the elevator company to the proprietors of the grain. Adjourned until 10 o’clock, morning. Proceedings of Thursday a. m., November 16, 1882. Amos A. Bissell, sworn and examined by Mr. Browning, testified as follows : / ‘620 • Q. Where do you live ? A. Lockport. Q. Where do you do business ? A. Central wharf. Q. Buffalo ? A. Yes, sir. Q. What is your business ? A. Forwarding commission business. Q. Are you connected with any firm ? A. I am a member of the firm of Gallagher, Bissell & Co. Q. How long have you been in business of that kind ? A. Over thirty years. Q. And are you familiar with all its details ? A. Yes, sir. Q. Can you tell this committee what effect corners in grain have upon the market and business generally ? A. AVell, so far as I have been able to discover I think the buying and selling of options is detrimental to the transportation business. Q. What is the selling of an option ? A. The selling of a certain parcel of grain that a man doesn’t have. Q. Selling something that you haven’t got ? A. Selling something that you haven’t got. Q. And buying something that you don’t want ? A. Agreeing to have delivered what you don’t expect to have de- livered. Q. And buying what you don’t want ? A. Yes, sir. Q. Do you think the system of grading gives more opportunity for speculating than the old system of sampling ? A. Altogether ; without grading the gambling system could not be carried on — the option system. Q. Then you attribute nearly all the evils that result from dealing in futures and options to the grading system ? A. Yes, sir. Q. Before that it was scarcely known ? A. Scarcely known at all. Q. You are an owner of canal boats ? A. Yes, sir. Q. Do you think it is necessary to have an agent at Buffalo usually called scalpers to do business for the canal boatmen ? A. Yes, sir. (2- Are you familiar with tlie system of contracting through grain ? 321 A. Yes, sir. Q. Do you think that is a good thing ? A. I think it is beneficial to the transportation business if it is car- ried on right. Q. Do you think a scalper who acts for a canal boatman as his agent is justified in taking a through contract and then bearing down the market ? A. No, I don’t think he is justified in bearing down the market, but invariably better plices can be obtained in the west than there can be after the grain gets here. Q. I think the receiver here is more apt to bear the market than a contractor ? A. He has more opportunity to do it, for the reason that if a man has a contract, to forward that property and whatever the price may be he must forward it, while the receiver can wait a few days — five days’ storage — he can wait and see if he cannot bear the market, see if he cannot ship it less, while a contractor who agrees to forward it, contracts to take it from the vessel and put it on a boat and send it right along without any delay whatever. He often has to pay any expense which attaches to it while waiting here, such as in- surance over night. Q. Can you say any thing to the committee as to the question of charges on the grain or on the boatmen here by the elevators here for transferring cargoes ? A. I think the price is too high here. Q,. You think the price is too high ? A. Yes, sir. Q. For elevating ? A. Yes, sir. Q. How much too high ? A. I think elevating ought to be done here, including the five days’ storage, for at least half a cent a bushel. Q. That is just for elevating ? A. Elevating and transferring from the boat, including the five days’ storage. Q. Including trimming ? A. I wouldn’t say as to the trimming. Q. What pays the trimming, the grain, the shipper or the canal boatmen ? A. The grain. Q. That is not a charge that the canal boatmen have to pay ? A. No, sir; when the canal boatman receives his load he has to 41 322 trim his boat, that is shoveling, and that is more than three times what it should be; the vessel I don’t wish to say any thing about. Q. The cikial boatman has to pay for the trimming about three times what it is worth ? A. Yes, sir; than the labor is really worth. Q. What part of the elevator charge does the canal boatman have to pay ? A. Not any. Q. Who pays that ? A. The grain. Q. The grain pays that ? A. Yes, sir. Q. And if that was any less would the canal boatman reap any benefit ? A. I think it would make the route cheaper and be more business. Q. On the theory that if you make the charges less it is going to increase the volume of business ? A. Yes, sir. Q. Is there any thing else you would like to say now before this commiStee ? A. No, I don’t know as there is. ‘ Q. Do you know any thing about bucket-shops ? A. I don’t have any thing to do with them. Q. Are you the Mr. Bissell who was a member of the Legislature some years ago ? A. Yes, sir. Q. You represented what district ? A. The first district of Niagara county. Q. From Lockport ? A. Yes, sir. Q. As having been a member of the Legislature and having a knowledge of these evils and abuses, can you suggest to this commit- tee how a remedy may be provided and applied to prevent a continu- ance of these abuses ? A. Only CO pass a law to stop them. Q. Do you think that we could draft a law to prevent them ? A. It seems to me so. Q. Are you a member of the Board of Trade ? A. Yes, sir, Q. Has the Board of Trade ever taken up for consideration any of these abuses with a view to remedying them ? A. Not to my knowledge. 323 Q. Don’t you think it is a part of the duty of the Board of Trade to take notice of these things ? A. I think it is. Q. Is it an incorporated institution ? A. Yes, sir. Q. And to your knowledge you don’t know that they have ever taken notice of any of these abuses with a view of remedying them ? A. I don’t think they have ; they never have while I was present. Q, Have you ever been an officer or director of the Board ? A. No, sir; I think we are charged too much for unloading boats in New York. Q. Where? A. New York city ; I think that is the greatest abuse that we have* Q. Go on and tell me about that ? A. We are charged a half a cent a bushel for unloading a canal boat ill New York, and the grain pays something like three-fourths of a cent more to these elevators. Q. That is a cent and a quarter ? A. Yes, sir, and it is entirely too much ; I can unload a canal boat beside a barge as we often do for half the money by hand labor that it costs us to unload a boat there, that we are charged for unloading a boat there. I think $20 would dip eight thousand bushels of grain into another boat beside of it where we pay $40. Q. You think it ought to be about one-half ? A. One-half. Q. This is a uniform rate of charges in New York city ? A. All charge the same. Q. All in together ? A. Yes, sir. Q. Floaters and the rest of them ? A. Floaters and millers and receivers and all of them ; a miller at his own elevator charges the canal boatman $40 to take off his own load, and then steals about $50 worth besides. Q. He gets a rebate ? A. Yes, sir. Q. Are there any rebates in New York; have you ever heard tell of any ? A. There is rebates to the grain. Q. But not to the boat ? A. The boat doesn’t get any ; we pay actually $40 ; they pay some percentage to a man who collects this money and pays it over to them. Q. How much ? A. I think ten per cent. 324 Q. Do you know of any bucket-shops of scalping-houses in New York city ? A, No, sir. Q. In your opinion the charge in New York. ought to be about one- half ? A. One-half I think would be a liberal price for unloading a boat. A vessel only pays one-eighth here in Buffalo. Q. Only one-eighth ? A. That is all the vessel’s charge is one-eighth, while we pay one- half. Q. In New York ? A. In New York ; yes, sir. Q. What is the argument for it ? A. The floating elevator people pretend that they are doing it as cheap as they can, but I notice when there is any likelihood of any law being passed they are on hand to prevent it if possible. Q. You have seen them there to prevent the passage of laws ? A. Oh, I have met them there, certainly. Q. Well, they come down from Buffalo to prevent the passage of laws too ? A. They send certain ones from Buffalo. Q. Do you find that 5mur accommodations in New York are as good and as cheap as they are here aside from the elevating ? A. No, sir, we are charged nothing for wharfage here and there we are charged. Q. What are you charged in New York ? A. Fifty cents a day. Q. What are your towing expenses, how does that compare with your towing expense here in Buffalo ? A. That is fair, we don’t complain of that. Q. Do you experience any other trouble in New York, in the port of New York? A. Nothing but wharfage. Q. Do you think the canal district is properly located in New York? A. I haven’t paid as much attention to that since I left the Legis- lature as I did before. I think it is properly located if we had more room there ; I think these piers that the railroads have there ought to be uncovered and that the railroads ought to lay their boats straight and allow boats to come in and out there, and not lay their boats across the slip and prevent boats from running in and out. They do that to control the ships. Q. If there is any thing else, Mr. Bissell, we will be glad to hear you ? 325 A. I don’t think of any thin^ else. Q. Do you have as good wharf accommodations here as you have in New York ? A. Oh, yes, fully as good ; all lay anywhere, no charge, free. Q. And your opinion is that dealing in futures and options are dis- astrous in their results to trade and commerce ? A. I do. Q. It enhances the price of the necessaries of life and is an extra burden on the people ? A. Yes, sir. Q. And ought to be abolished if possible ? A. Yes, sir ; and tends to hold the grain unnaturally from coming forward at the proper time. Q. That is your own opinion, is it? A. Yes, sir, Almon S. Carpenter, sworn and examined by Mr. Browning, testi- fied as follows : - Q. Where do you reside ? K. Buffalo. Q. Do business here ? A. Yes, sir. Q. What is your business ? A. My business is forwarding and commission — canal business principally. Q. Are you a member of any firm ? A. Yes, sir. Q. What is the name of your firm ? A. Carpenter, Avery & Co. Q. How long have you been engaged in that business ? A. All my life pretty much, 35 or 40 years. Q. Are you familiar with all its details ? A. Yes, sir; I think I have a pretty good schooling in it. Q. Have you dealt in options and futures ? A. Not lately, no, sir. Q. Sufficient to give the committee an idea of how it is carried on ? A. I couldn’t explain that satisfactorily ; I have not dealt in any for several years, in options ; some other person who is more familiar with the way that is done now-a-days can do better than I could. Q. Do you believe that dealing in futures and options has a tend- ency to demoralize and disturb the market ? A. Yes, sir ; I thinR it does. 32G Q. And its elTect is disastrous upon commercial interests ? A. I think it is. Q. Do you believe it has a tendency to increase the price of the necessaries of life over their actual values ? A. Yes, sir. Q. And that the increase falls a burden upon the people ? A. That is the way I look upon it. Q. Do you believe it should be stopped if there is any way that it can be stopped by legislation ? A. I believe it should be if there is any way that it can be stopped. Q. Do you attribute all these evil results in whole or in part to the system of grading ? A. No, 1 don’t know as I can do that ; the system of grading different grades of grain, I suppose you mean ? Q. A^es, sir. A. No, there has always been first and second-class wheat and corn and always will be. Q. Was there as much of an opportunity for speculating when grain was sold by sample as there is now ? A. I don’t think it was quite as safe to speculate as now; that is a man buying by sample, sometimes the sample would be better than what he would get when he came to get his grain, and it used to create trouble ; now a grain inspector announces a cargo of grain to be No. 1 or No. 2, and it must be that. Q. Do you regard buying and selling futures as buying what you haven’t got and what you don’t want ? A. Yes, sir. Q. Do you look upon it as a species of gambling or betting ? A. Yes, sir ; it is nothing more or less than that. Q. Are you familiar with the charges for elevating, discharging cargoes ? A. Yes, sir. Q. Do you think the prices are too high for elevating at this port ? A. It seems to me that the business could be done very much cheaper. Q. How much cheaper A. Well, I think half a cent a bushel for handling grain would be a good, fair paying price. Q. Let me ask you in connection with that if you have given the 8ui)ject of elevating grain sufficient consideration and made yourself sufficiently familiar with the expense of elevating to arrive at that con- clusion ? A. I have. 327 Q. Will you state to the committee as you understand it* the expense of elevating grain which leads you up to the conclusion that half a cent a bushel would be sufficient ? A. Well, all I know about it — I have never been interpreted in the elevators, but I have been familiar with the way the business has been done ever since there has been elevators here. Now, for instance, the five elevators can handle grain and pay expenses, so they claim ihey tell me, of course I never made any figures, at one-fourth of a cent a bushel. Q. Who told you that ? A. Owners of elevators. But understand that don’t pay for break- downs or interest on their money and all that sort of thing, taxes, but the actual expense of handling the grain. Q. Can you tell me who told you that ? A. The working elevators only allow one-quarter of a cent a bushel for handling the grain, and the rest goes into the pool. That is the amount that is actually allowed for the expense of handling this grain elevating it, running it in storage and running it out again. Q. And the other quarter of a cent is to meet any contingency ? A. For profits if there is any, and insurance, and all that sort of things. It is an offset to any losses, too. Q. So that you think that grain could be delivered with a profit for one-half a cent a bushel ? A. I think so. Q. Are there any other charges that you think are exhorbitant at this port in connection with receiving and discharging a cargo of wheat ? A. No, I don’t think there are. Q. The other charges you think are reasonable ? A. Yes, sir. Q. You don’t complain then for the charge of trimming a boat ? A. That one charge is a little too high ; they charge ten shillings a thousand; eight thousand bushels of wheat or corn, that is ten dol- lars. Of course it takes from about four to six men to trim a boat ; some of them load it in forty-five minutes, and some it will take an hour. Q. Load a boat in one hour ? A. Yes, sir. Q. And employ to do that five or six men ? A. Yes, sir. Q. And charge ten dollars to do that ? A. Yes, sir ; I think that ought to be reduced to seventy-five cents. 328 Q. Sevcnty-nvo cents <‘i thousand for the trimmers ? A. Yes, sir; instead of ten sliillings. Q. In other words it ought to be reduced fifty cents ? A. Yes, sir ; I think that would pay tlie trimmers very well ; it would pay the trimmers a good deal better than it would pay the canal boatmen to take it to New York. Q. Do you think the charges in New York are too high ? A. I am not familiar enough with the business down there; it seems to me they ought to do it a little less ; all I know is that our boats have to pay a half a cent a bushel. Q. Are you a boat-owner ? A. I am not just now. Q You have been ? A. Yes, sir. Q. Are you familiar with the system of scalping at this port? A. Yes', sir, it is a part of my business. Q. Are you a scalper ? A. A commercial broker, that is a more aristocratic name, Q. That is the same as a scalper ? A. Yes, sir. Q. Do you act as agent for the canal boatmen ? A. Yes, sir. Q. And you get for them the highest price that you can? A. Our business is to get the best rate we can for the boatmen. Q. And you charge the boatmen a commission ? A. We charge the boatmen a commission for that service. Q. What is your charge ? A. We charge them five per cent on the amount of freight, gross freight. Q. Do you make contracts ? A. We do sometimes ; for this procuring freights for the boats and doing this business, and for our compensation we charge five per cent on the amount of the freight bill, and besides that we have to advdnce the boatmen money to pay tolls and running expenses, and pay the back charges, lake freights and Buffalo charges. Q. Do you get commission on that ? A. No, sir ; we pay that and carrv it until the boat discharges in New York. Q. You make a contract occasionally, you say, for through grain ? A. We do sometimes ; we haven’t done that much for a year or two. Q. When you did tliat did you give the canal boatmen the rate that you contracted for carrying it for them ? 3-n hlic welfare ? 423 A. That has been shown a good deal in dealing in petroleum, taking that first, and a great deal of it is legitimate. Petroleum has to he sold on future contracts very considerably. Crude petroleum can be held very easily for an undefined time, but refined petroleum cannot be held very well. Ordinarily, refined petroleum is put into barrels nt once, on the completion of its manufacture, and it is desirable to get it forward as soon as possible, so that it is not held in stock. Foreign dealers like to buy for future delivery. They have their trade in their special countries and they know ordinarily about what quantity they will want and they like to buy it ahead; so that that makes it necessary for dealers in this country to make contracts ahead in the refined branch of the business. These future contracts make cornering possible at times and a good chance for speculation, and these opportunities have been used without stint by people who dealt in refined petroleum. The Standard Oil Company, which in- cludes a great many organizations acting under the general direction of the Standard Oil Company, those organizations being in fact and substantially one concern, have got the business chiefly in their own hands, and the future deliveries have been a great source of strength to them. A very marked case was in 1876; we had a period of de- pression in petroleum for two or three j^ears wherein crude petroleum had gone down to 40 and 50 cents a barrel, and during the period of that cheap oil, there had been a constant expectation of an advance in values in crude oil, and consequently in refined oil, and foreign deal- ers had been in the habit of carrying large stocks; but after a couple of years or so of v^arrying those stocks they became tired of carrying them and they accepted it as a permanent position in the trade that this very large production would continue, and they concluded that it wmuld be policy not to carry such stocks. It is expensive carrying such stocks in Europe. They have to carry them in warehouses estab- lished especially for the purpose, chiefly at seaports. There are some six or eight prominent ports in Europe that supply nearly the whok' of Europe. In the beginning of 1876, they had become very tired of carrying those large stocks, and crude oil had advanced to $1.50 a barrel about, and foreign dealers had concluded that they had better close out their stocks. This idea was contributed to by refiners; by the Standard Oil Company particularly, in this country ; and it is no doubt the case that they used every inducement they could to keep Europe short. The result was that the foreign trade did not buy any oil much until July, and then they had an enormous quantity to take from that time until the close of the year. The Standard Oil Com- inny had declined to sell oil much for foreign delivery, contrary to the usual custom of the trade. They had not sold oil for foreign de- 424 livery, jind wlien the trade came in in tlie month of July, it came in witli such excited buyers, that they I’an tlie market up frotii ahf)nt 15 cents per gallon foi* refined oil,to2G cents ])er gallon ; and then they concluded that they didn’t want oil particularly, not so had as they thought they had, and they dropped on their bids; but the Standard Oil Company concluded they would not sell any oil for less than 2(1 cents, and their power in the trade was so great that they held the market at 20 cents for some months, and finally when Europe did conclude to come in and buy, they ran the market up to 32 cents and loaded the world up, and then in the following year it dro))ped back very gradually, and commencing in 1877 and 1878 we had another depression in crude oil, and the market has been down to as low as 50 cents a barrel, and a little below, this season, which was the lowest ])oint it had reached since 1874. Q. Do you ascribe the present position of the Standard Oil Com- })any to an important degree, to the system of dealing in futures ?” A. They made a very large capital in 1870 by withholding futures by keeping Europe short, and they did that same thing again in 1870. There had been a great depression in the business in this country in 1879, which was caused, not so much by the conditions of the supply, but from the fact that there was a power which came into the trade which proposed to compete with tlie Standard Oil Company in taking oil from the wells, storing it in the oil countiT, moving it to the sea- board, and selling it to tlie trade throughout the world ; that was the Tidewater Pipe Company; the Standard Oil Company entered upon a policy to drive that company out of business; they had diuven every other concern out of business and they now proposed to drive the Tidewater Pipe Company out of business ; they entered upon an ar- rangement with the railroads. There was a secret compact entered into with the railroads on June 5, 1879, at Xiagara Falls, by which the railroads agreed to make an immense reduction in their transpor- tation of oil to the sea-board ; this arrangement was made retroactive to the extent that tlie arrangement was to commence on the 1st of June and this arrangement was made on the 5th of June. The testi- mony of this secret compact came out in the Hepburn committee in- vestigation ; immediately upon this arrangement being made lietween the Standard Oil Company and the representatives of the different trunk lines, the Standard Oil Company commenced selling oil regard- less of every thing except to make a contract approximating to the price that had been ruling and pushing those sales and those contracts as hal'd as it was ]) 0 ssible for them to do; those contracts ran through the summer and into the fall. On the 23d of June, that same month, the public obtained odicial knowledge that these rates had been re- 425 diiced ; but the Standard Oil Company had been selling millions of barrels of oil during the early part of June, 1879, without the public knowing that the railroads had reduced those nites. The effect was immediately that the price of refined oil declined greatly and the Standard Oil Company had a profit on those contracts at once, I will say, of some millions of dollars — at once had a profit. But the Standard Oil Company had come into this arrangement very suddenly and they had notoil provided for those contracts. In fact, they were short sales, and through my reports, reporting intimately the situation in New York at the time, by daily reports issued here, and following it intimately in the oil country through a daily report issued there, — I saw the situation and I noted it in my reports, and the whole oil country at once grasped the idea that the Standard Oil Company were heavily short upon the market. At that same time or within a few weeks, the Bradford oil field, which had been the cause of the great depression in crude oil .since 1877, began to show signs of limitation in its area, and to show signs of declin- ing production, which became quite pronounced in September, and at that time we had a great business boom which struck the country in September, 1879, and this condition of the Standard Oil Company, being short on the market for crude oil or refined oil — the sale was out for refined oil — and the condition of the Bradford field becoming more favorable at once, and the general business confidence continuing, the price of crude oil ran up from about sixty cents, which was no doubt the basis on which the Standard Oil Company expected to get their oil, to as high as $1.27 a barrel, and it was bad for the Standard Oil Company at that time ; that was 1879 ; the foreign trade had taken their oil on the basis of about $1 per barrel for bringing it from the oil country to the sea-board, and at the same time the Stand- ard Oil Company was getting it moved for about twenty cents per barrel; but the Standard Oil Company, while they made money upon those con- tracts, lost ultimately, because the crude oil w’as crowded up so much upon them; that had quite an important bearing upon the business of the following year, which was an immensely profitable business, and they have testified in court in Pennsylvania recently, that in 1880 they made over $10,000,000; I can see readily wherein they did that; I have set it forth in a report which I issued in April, 1881. Q. Had that any relation to ‘^corners” and ‘^futures,” that im- mense profit ? A. Yes, sir. Q. Please state how f A. They had the benefit of this immense reduction in railroad rates from the 1st of June until the 1st of the following April; from 54 42G the 1st of June, 1879, until the 1st of April, 1880; and after the year’s business of 1879 was clone, the Standard Oil Company liad three or four months of those extraordinary low rates, say twenty cents a barrel to get oil forward, and they moved a large (piantity and put it in store East; the shipments for the first three montlis were as heavy as they had ever been, or heavier, during the busy shipping season which is ordinar- ily in the summer and fall ; that enaliles tliem to load up very heavily with oil in the East ; then they commenced a policy of depressing the markets; they wiped out the manufacturers’ profit on refined oil, and the price here and in Europe was much below the price at which it could be moved and at which it could be sold in Europe; I figured thatin Jan- uary there was.again of $74 upon 1,000 barrels ; that was in New York — a thousand barrels of refined oil — a gain of $111 in February ; then in March, April and May, I figured a loss ranging from $250 to $G85 per 1,000 barrels ; during that time stocks in Europe were being reduced, by shipments to the interior, and the trade became demoralized there ; tiien in June, they commenced to show a profit, and the foreign trade were kept out by all sorts of manceuvers ; the Standard Oil Company declined to sell for future delivery ; this is a case Avhere there is a disadvantage in not making sales for future deliA^ery ; and their profits kept I’unning up and on up, until in October, I figured a profit of $2,000 and over per 1,000 barrels ; at the same time I think that they Avere selling oil in Europe that they had bought there, of the stock there, and by this immense profit Avhich they Avere making in this country of $2,000 in the fall, and the profits which I believe they made in Europe on oil Avhich they bought of the stock there, I can easily account for their making $10,000,000 during the year 1880. Q. By reports in this morning’s papers, one of Avhich I have before me noAV, in an article of this morning’s edition of the Ncav York Sun, there appears to be a \"ery troubled and excited state of the oil mar- ket. Can you give any explanation of that, or trace any relation be- tAveen the conditions Avhich caused this excitement, and the subjects before this committee ? A. The connection is not very close. The Standard Oil Company by tlieir accumulation of their immense capital through the favors Avliich tliey received from railroads — and another feature of their forward sales, is, tliey Avould hold some times and then at other times they Avould load up the whole world Avitli oil. When the Avorld has got confidence in the situation they will sell ahead a good many months and thmi the markets break back from that, and they get an immense jirofitiii that way — with all the cajiital Avhich they have accumulated )>y their favors from i-aili*oads and by their Avithholding forward sales and making forward sales ])revious to a break, it has put them in such 427 a position in the control of capital that they can control our immedi- ate market such as the market of yesterday. I ascribe this very ex- cited condition of the yesterday’s market to their making what we call the carrying rates in the trade, wliich is the interest required to carry oil in the oil country, exceedingly high — and also in Pittsburgh. The carrying rates now for a considerable time for carrying oil from day to day which people who operate upon margins and witli small cap- ital have to do, they have had to pay as high as one hundred per cent right along to carry their oil, and I am convinced from facts which have come to me, that the Standard Oil Company has made a special movement in Pittsburgh, which is an important point for speculating in petroleum, to get tlie banks to withhold 'money from being ad- vanced on oil certificates. We have had a new well in the oil country recently which made some promise of opening a future territory which naturally has a depressing effect and destroys the bullish aspects of the situation in a considerable measure. Then taken in connection with the very large amount of oil carried upon margins by weak hold- ers, all that was needed was a somewhat excited decline, and that would frighten banks and brokers who were holding oil for their custom- ers on margins, and they would throw it on the market, and in that way it is perfectly accounted for why 'we have had this excited break of the last few days from 81.15 to 86 cents, and it is regarded in the trade generally as a manipulation of the Standard Oil Company to depress. Q. Do you know how the oil companies nappened to get such fa- vorable rates from the railroads at the time that you speak of ? A. That is a question that has been a great deal mooted ; the opin- ion has prevailed very extensively that there were very decided advan- tages which accrued to railroad officials through the building up of the power of the Standard Oil Company ; that has been generally denied by railroad officials; in fact they were not very cognizant, I don’t think, of the situation in petroleum, and what was happening in the way of the Standard Oil Company building up this power ; in fact Mr. Jewett testified before the Hepburn committee that he believed it was best that the oil business should be in the hands of one or a few men who could follow it through its shif tings and make a profit out of it by various devices; which the Standard Oil Company have done very effectually, making 810,000,000, as they testified in 1880; but the great source no doubt of those favors was, that the Standard Oil Com- pany got an upper hand in the business, I think from being fortunate- in getting lower rates than others originally between Oil City and Cleve- land, and finding it a profitable vein to Avork and the general trade in petroleum not knowing that those advantages were to be obtained they 428 worked on that line secretly for months and for years ; it was not understood that there were any special favors to any particular ship- pers and the standard Oil Company worked it with great secrecy and finally got such a position that the railroads were in a measure depend- ent upon them., and nothing but some heroic action on the part of some of the railroad, managers could overthrow the control of the Standard Oil Company over the shipments in the refined oil ; that might have been done if they had taken a stand, which they did not do. Q. Are the members of the Standard Oil Com])auy interested in railroad enterprises to any extent ? A. Yes, sir; they are understood to be very largely interested in railroads at present. Q. Can you name any of the leading lines in which they are inter- ested ? A. I have no special knowledge upon that branch ; they are believed to be heavy speculators in railroad stocks. Q. Do you know any of the prominent railroad managers, stock- holders, who are also stockholders in or members of the Standard Oil Company ? A. Mr. Vanderbilt has had interests either individually or in his railroad coinjianies in the United Pipe Line and in the Standard Oil Company. Q. Where does the United Pipe Line originate and terminate ? A. It originates at the oil wells in Pennsylvania and Western New York, and terminates at their storage tanks ; it takes oil from the oil wells to these storage tanks which are located chiefly at the railroad points of the oil country. Q. At various railroad points ? A. At various railroad points. Q. Do they own the Pipe Line terminating at Jersey City. A. That is another division ; in regard to that I can’t say exactly what name those pipes go under, but it is not under the name of the United Pipe Line ; it is another branch of the Standard Oil Company. Q. From your knowledge, then, the Standard Oil Company is master of tlie situation in the oil trade ? A. C^uite com])letely , subject to some modifications ; in the first place, til ere is the Tidewater Pipe Company which is moving oil from the oil country and refining it ; I do not suppose they handle over five per cent of the oil. Py Senator PuowNiN’a ; Q. Where does that pipe start from — where does it take the oil ? A. That starts from the oil wells. Q. And wliere does it deliver ? A. It delivers it near Philadelphia by pipe and from that point it carries it to Philadelphia and to Bayonne. Q. How — by 2 )ipe ? A. They car it from there to Bayonne. Q. Is there not a pipe line connected with New York ? A. Yes, sir ; that belongs to the Standard Oil Company. By Senator Boyd : Q. That terminates at Hoboken, doesn’t it ? A. I think it terminates at Bayonne, further down the bay. By Senator Browning : Q. Is that the only pipe line that comes to New York ? A. Yes, sir. Q. When was that company incorporated ? A. It is hard to tell about that ; that is one of the things that they do not give us much information in regard to. Q. I recollect that in 1878 I was induced to vote for a pipe-line company which gave them very valuable franchises upon the ground that it was going to be an opposition and to break up the Standard Oil Company ? A. Where was that — from the oil country to Buffalo ? Q. I think it was going to come to New York ; the Standard Oil Company must have swallowed that up ? A. That didn’t progress very far; they have swallowed up every thing but the Tideivater Pipe Line — all other lines; there was a line to Buffalo which they swallowed up. Q. The Tidewater Line belongs to another company ? A. Yes, sir ; it belongs to another company ; the Standard Oil Company have tried to get control of it since 1879, but they have per sistently declined to come under the control of the Standard Oil Com- pany. Q. What proportion of the Pipe Line trade’ do they carry on ? A. I have not figures at hand at this moment, but five or ten per cent; in answer to the question you asked about the other powers in the trade, I mentioned the Tidewater Company; and then the specu lative trade m crude petroleum is a power; the people who speculate in petroleum go in very largely, buy or sell, so that the crude market is not entirely controlled by the Standard ; Ave had an immense rise recently from fifty cents to 11.37 in Angust, which was not engineered by the Standard Oil Company ; it was the public sentiment acting upon the decreased prospect of the supply of crude oil; the Standard Oil Company of course no doubt got very great benefit from it, but it 430 was a surprise to them ; this immense break, which resulted in such disaster recently, I do attribute to the Standard Oil Company; they have brought about an excited condition of the trade by which the oils carried on margins had to be thrown overboai'd. Q. And you attribute it entirely to the Standard Oil Company ? A. No, sir, not entirely. There was an oil well struck which has a legitimate “ bear ” influence; but I think that well, and liy their making money scarce in the oil country and Pennsylvania were the two causes ; and so far as the well was concerned there was something of a legitimate influence in depressing it. Qv Which company struck that oil? A. It is called the Anchor Oil Company, but the Standard people are interested in it. Q. Do you know how many oil companies exist in the country which have no connection with the Standard Oil Company or are not under its influence in some way ? A. I could answer that the other way better. There are a few com- panies, large purchasing companies, that the Standard Oil Company are interested in, and then most of the producing they are not interested in. The Standard Oil Company have not paid that atten- tion to producing and swallowing up the producing interest that they have paid to the handling of oil, refining it, etc. They have not tried to encroach upon that ground so greatly. Q. The branch of the oil business which they seem to have mo- nopolized then is the refining branch ? A. The refining and the transportation through the railroads and their pipe lines, and what is a very important part, the storage of petroleum. There are considerably over thirty millions of barrels now in store in the oil country on which they derive a profit, or the greater portion of it. Q. Then all the other crude oil producing companies are dependent upon the Standard Oil Company for the means of refining, transporting and storing tlieir products ? A. The Standard Oil Company stand between the oil in the oil country and the consumers, with the exception of about 5 or 10 per cent, which is represented by the Tidewater Pipe Line; so that nearly all the oil that goes out of the country has to go through the Standard Oil Company’s hands. Q. Is the margin system considerably carried on in the oil business? A. Very largely. Q. Can you state to what extent? A. 'riiat could not be stated with any particular accuracy. About 15 i)er cent margin, or 10 per cent, or 20 per cent, in that vicinity ; would buy a 1,000 barrels of oil, and if the price enhances, it makes 431 capital for the person who has bought one or more thousand barrels rapidly. If for any reason there is a decline below this margin and below the power of the party to put up margins,” by the rule of the Oil Exchanges his oil is sold out. Q. It is an entire loss ? A. It is an entire loss, and it is this enforced sale of oil in that way that contributes to very important fluctuations and very important depressions, those of yesterday being a very marked instance. Q. How many speculative sales of oil are made ? A. It has been frequently the case that sales of petroleum have run up to 20,000,000 barrels per day in the different exchanges, during the last few weeks. The sales at Oil City alone yesterday are reported at 10,000,000 barrels. Those are speculative sales, all of them you may say. There are exchanges that have been established for a con- siderable time- at a great many points. There are some that have been established for a considerable time and there are four or five more in process of formation. Q. Are these merely speculative institutions ? A. Purely speculative. They buy and sell certificates tliat represent oil in tanks in Ihe oil country. Q. What proportion of the oil that is sold or what percentage of the oil that is sold by these transactions are speculative ? A. The real transactions are represented by the shipments out of the oil country. The shipment averaged last year about 55,000 barrels per day. So far this year, I can’t say the average for the year, but they are now running 55,000 barrels per day. Q. Then these would represent the legitimate sales ? A. Those would represent what we call legitimate sales in the way of oil going to the consumers. Q. State what amount of sales are represented as speculative sales? A. The shipments out of the oil region, for instance, yesterday, we will suppose were 55,000 barrels, and the speculative sales were 20,000,000 barrels. Q. Yesterday ? A. Yes, sir. That represents about the rate of the oil going to the consumer, and the sales on speculation, buying and selling. Q. Those sales of oil on speculation, do not they tend to increase the price of oil ? A. No, sir, they work both ways. They tend to increase it and de- press it both. Sometimes the speculation goes to the benefit of the consumer, sometimes to the benefit of the producer, more particularly to the benefit of the middle people, the Standard Oil Company, and generally to the loss of the other middle people, the speculators. 432 Q. Then the Standard Oil Company is the chief beneficiary of this style of doing business ? A. Yes, sir. Q. Have you any other information you would like to give the com- mittee in relation to the oil business ? A. I can’t think of any thing particularly. Q. Have you any special views on the subject of dealing in “ fu- tures ” iif other branches of commerce than the oil business and its elfect upon commerce ? A. Dealing in futures ” is very necessary in the petroleum busi- ness. Q. That is you mean legitimate dealings in ^Hutures” ? A. Yes, sir. This speculative dealing, which I have been speaking of, is mostly in what we call spot oil. That is, it is in the certificates that are delivered at once, either on the same day or within two or three days. The transaction has a view to the future. The man that buys to-day buys with a view of carrying it ; he does not buy a con- tract, he buys a certificate of the Pipe Line, and it is in that form that it difl'ers from an ordinary future, you might say, because it is really the contract of the Pipe Line to deliver that oil to him any time that he wants it. Q. You mean to say these are the legitimate sales? A. No, those are the speculative ones ; the certificate of the Pipe Line is bought ; that certificate represents oil in their hands and it is a contract on their part with the holder of the certificate to de- liver the oil at such time as he wanted it, and he pays them a storage charge for the time it remains with them, and that certificate is negotia- ble, and that same oil may be bought and sold a thousand times. Q. You would regard that as a species of gambling? A. As it is conducted the gambling spirit enters into it very con- siderably ; I think it isi3erfectly legitimate for anybody to buy property with a view of its enhancement in value, and that is the nature of buying these certificates in a great measure ; but where, as the great number of the people do, they buy them without any particular knowl- edge of the situation, it is like betting on a turn of a card very greatly. Q. Then the speculators are frequently heavy losers ? A. They are frequently heavy losers, yes, sir ; we have a good many failures ; they frequently lose very heavily ; as a class, I think the money that is put up in speculation suffers considerable loss, the most of wliicli the Standard Oil Company would get the benefit of, because tlicy liave the inside track ; the ([uestion of margins which you have been inquiring about is illustrated in ])etroleum very well in one of my reports issued some months ago; T traced the power of accumulation in a person buying upon “margins ? ” I presumed that he had $800 433 and bought 10,000 barrels of oil on a margin of ten per cent, which is such as is ordinarily all that is required in the oil country ; then presum- ing the conditions were ripe for advance, that the conditions of supply were very favorable to an advance m the price, and these conditions were thoroughly understood, the market would readily advance say twenty cents per barrel ; the man has made then S2,000 upon his investment of 8800 ; his capital becomes 82,800 ; with that he can buy 25,000 barrels of oil say, and when the market advances to 81.25 he has made 87,000 or 88,000 more and that gives liim a capital of 810,000, and by the time the market gets to 82.50 a barrel, which is nothing very remarkable, looking back a few years in regard to the price of petroleum, this man would be worth about a million dollars by reinvesting at every twenty-five per cent advance, and he has all the time up a ten per cent margin, and a 2 ^ortion of the time he has had a good deal more ; after he had reinvested up to ten per cent, if there had been a fiuctuation against him of ten per cent, his broker or banker would sell him out, and he would be through, but resuming that every thing worked favorably, his 8800 would become nearly a million between the price of eighty cents per barrel and 82.50 ; you can see from that that there is an immense inducement to speculation, and that petroleum, through its very rapid changes, presents those induce- ments ; of course there are corresponding chances of loss, and anybody has to weigh those before he goes into the petroleum market as a s^^eculator. By Senator Boyd : Q. You speak about a report ; do you get out a periodical ? A. Daily and monthly. Q. What do you call it ? A. ^‘Petroleum Trade Reports.” . Q. Whgre is it jiublished ? A. I am now jiublishing them at my office here in the city ; I have formerly published them here and at Oil City, until the beginning of this year, when I came on here to live. Q. It is a regular monthly ^publication ? A. A regular monthly and daily publication ; there is the form of my daily report (producing paper ); a very important jiortion of my business is my cable business through my agents in Europe, who dis- tribute them to my connections there. Q. Have you any thing you would like to say in relation to the present excited state of the market in connection with the subjects before this committee ? A. I do not knaw that I have any thing to say in regard to the con- dition of the market. 55 434 Q. Have you any special views on the dealing in “ futures ” in any branch of commerce ? A. I believe with some of the gentlemen wlio liave testified here that a great deal of this dealing in “ futures” is very beneficial ; there is one department, however, through which I think the evils chiefly come, and that is “short” sales by people who are not i-egiilarly in the trade, to wliom the article does not come in the regular course of legitimate business ; when a large class of sellers have put out “ short ” sales, a “ corner ” becomes possible, but it is rarely, I think, that a “corner” is made except as there are heavy “ short” sales ; the thing of going into open market and buying the products is a matter in which the purchaser takes a great chance, but if there are a large number of “ short ” sellers he does not take a chance particularly, be- cause he corners them and they will run up the market in a very ex- cited manner to get the produce to cover their “shorts;” if those “ short sales ” could be interdicted by legislation, I am satisfied that we woirld not have this excited condition of the speculative markets. Q. Do you mean that a law ought to be enacted prohibiting people from selling what they are not able to deliver ? A. That would not cover it, because ordinarily they can deliver by going into the open market and purchasing ; but the evil comes from their making contracts in a business with which they have no regular connection as between the purchaser and the consumer, making sales expecting to buy at a lower price — purely speculative sales. Q. That is where the evil comes ? A. I think the evil rests in that, and if that could be stopped the speculation in food products and other products would decrease im- mensely. Q. You spoke of the Petroleum Exchanges. How do they carry on their transactions in those exchanges ? A. Very much as stocks are carried on. They make a delivery of the certificate the same as a delivery of stock is made. The chief differences you might say between the Pipe Line certificates and a railroad stock is that in holding the certificate you have to pay some- thing because you own the oil and you have to pay for the carrying of the oil, while in dividend-paying railroad stock you get something. Horace C. Smith, being duly sworn, was interrogated and testified as follows : By Senator Boyd : • Q. Where do you reside ? A. In New London, Oneida county, this State. 435 Q. What is your business ? A. I am interested in boating on the Erie canal. Q. You are the master or president of the Boat Owners’ Associa- tion ? A. The ex-president now. Q. When were you president, of the association ? A. My time expired last January. Q. How long had you been president ? A. Four successive terms, one year each. Q. Will you state to this committee your opinion in reference to the whole system of making corners ” and dealing in ‘‘ futures ” and upon any other subject which may be under investigation before the committee ? A. In regard to these corners” I am not so familiar with them. As I was telling Mr. Cooney, my testimony would have been more appropriate at the other end of the route, in Buffalo. I am more directly interested in boating and shipping grain and carrying. Q. State what you know of any evils affecting the grain interest or * transportation of grain ? A. Heretofore the grain has been shipped by a class of men, they are termed scalpers.” They obtain it of the real shippers, act as middle- men and take it to the boatman, parcel it out. They have adopted that method of doing business till they have reduced the prices in competing with one another to that degree that there is nothing left to the boatman. Q. You mean reduced the price of transportation ? A. Yes, sir ; in 1881 there was a heavy competition on the trujih line railroads which necessarily brought the canal rates down very low; but this season the railroad quotations have been nine cents a bushel from Buffalo to Hew York on wheat and eight and one-half cents on corn ; they have not varied from the opening of navigation to the present day ; but the canal freights have been down as low as four, four and a quarter and four and a half cents on wheat and cor- respondingly low on corn, generally half a cent less on corn than on wheat ; there is no good reason why they should be over two cents under railroad freights because the grain is worth from one cent to one and a half cents more on canal boats in this harbor than it is on the rail. ^ Q. On what grounds do you make that statement ? A. By hearsay. 436 By Senator Brown-in-G! Q. Do you know it to be a fact that it is so that grain in the boat is worth more than grain in the cars ? A. I have often heard it mentioned ; Ido not state that as a fact from personal knowledge, because I have never taken the pains to in- quire into that, only it is a common custom, and. I have heard it repeated often and supposed that it was the fact. By Senator Boyd : Q. Is that the prevailing opinion ? A. Yes, sir. Q. Then your knowledge is that the system of scalping carried on at Buffalo and elsewhere is a tax upon the grain commerce. ? A. Yes, sir. Q. And an injury to the canal interests ? A. Yes, sir ; a very great injury. Q. Do you know any thing about the system of elevating grain in * any of the lake ports ? A. No, sir ; I do not understand that ; I know about elevation here from canal boats. Q. State what you know about that ? A. We are charged one-half a cent a bushel for elevating grain. Q. In New York ? A. Yes, sir ; from canal boats. Q. Do you know what the charges for elevating grain in Buffalo are ? A. No, sir; the canal boats are not charged for that; they are charged trimming,” which is about $10 to a load of 8,000 bushels. Q. And they are charged by some person in connection with the Western Elevating Company at Buffaloytare they ? A. Yes, sir; they are connected with that. Q. What other information would you like to give to this com- mittee ? A. That these ‘^scalpers” ought to be driven off the dock if there is any way. By Senator Biiowni]N'G : Q. Can you get along without the scalpers ? ” A. Now it could be done since the canal has been declared free by the State. Tliere is no necessity for them to prey upon the boatman any longer in the way that they have in the past season. Q. They say that they save you a great deal of trouble in finding ii cargo for you. That if a captain arrives this afternoon, he is not in Buffalo half an hour before he had got a load, and if it was not for the 437 ^'scalpers” to do his business in the absence of the boat, anticipating its arrival, that he would lose time in going around and hunting up a cargo. Is that a fact ? A. 1 don’t think it is, because the grain is there and it lias to be shipped. He used to formerly get it before the ‘^scalpers” were located there, some twenty -five years ago. Q. Did it take you some time to find a cargo ? A. Not very long ; we usually would step into an office and procure one as readily as we do from ‘‘ scalpers.” Q. From what the ‘‘scalpers” said to this committee in Buffiilo, I am of the opinion for one that it is not going to be very long before they will make contracts for nearly all the grain that leaves 'Chicago right straight through to this port and perhaps to England. I believe that will be a fact, and if it is, it is going to make your canal rates subject to the caprice of these “ scalpers ” and contractors and the Chicago market. Do you look upon it in that same light ? A. Yes, sir ; I have no doubt but what it will come to that. Q. Tliere was a shipper there who said that he believed that when a man bought grain in Chicago he ought to know just exactly what it would cost to land it in Liverpool, and the only way he could ascertain that was to make his contracts right straight through, and having made his contracts, that is what he expected to pay and no more. Now, where the “ scalper ” .does what I consider to be im- proper is this, that acting as an agent for the canal boat, he makes a contract to carry the grain through at six cents, and then he and two or three friends “ bear ” down the market and make the rate five and one-half cents, and he makes his one-half cent on the contract and charges you his five per cent on the load. That is where he fails to act as an honest agent and you suffer ? A. Yes, sir. Q. Then his answer to that is that if he makes a contract for your boat at, six cents, and the price when the grain arrives there is six and one-half cents, you won’t do for it the contract price and he loses. You recognize him as your agent when it is to your advantage, but when it is not, you do not recognize him as your agent. He says he makes sometimes on the contract and at other times he loses ? A. He generally makes though, doesn’t he ? Q. They said it was about even. I guess they make. I will take the chance on that. A. I do not know but one instance this season where they lost, and that was where unexpectedly a large amount of grain came into Buffalo and the price advanced to eight cents, and they had quite a large num- ber of contracts at six cents. Q. Then they lost ? 438 A. Yes, sir, bnt that only lasted for a few -days, and that is tho only period during the season that they lost any thing to my knowledge. Q. How many more canal-boats could be on the canals as they are to-day — how many more than are now employed there — there are about 6,000 now, are there not ? A. Yes, sir ; that has been the estimate. Q. Could you put 6,000 more on ? A. No, sir. Q. How many more could you put on ? A. There are plenty now, in my estimation, to do the business. Q. You think there are enough now to do all the business ? A. I do. Q. This business is likely to increase probably one-third or one-half ? A. Certainly. Q. Wouldn’t that have a tendency to increase the tonnage on the canal ? A. Yes, sir, of course it would. Q. Hoiv much more can the canal accommodate in its present con- dition ? A. It could accommodate double the number that is run on it this season, certainly. I do not know the number that has run through this season. Q. You think it could accommodate double the number ? A. Yes, sir, but the present prices or the prices that have ruled this season will drive all the boatmen out of the business and they lay it, as near as I can find out from the owners, all to the scalpers” in de- pressing the price. It put a stop to all boat building. There has not one scarcely been built this season. There is no sale for them if they are built. A man cannot buy any thing out of freight that he takes from Buffalo this season. For instance, I have one good grain-boat, a Rochester-built boat, four horses on ; it has run all the season ; I have had* one cargo at sixty cents that there was 160 clear on it ; that was an ap-trip ; now it is coming down the last time with a load of flax-seed at five cents; that is $60 more; that is all the money that that property, at a low estimate worth $2,000 — that is all the money that was made, and all the men tell me about the same thing, and if this free-canal move- ment does not increase the volume of business and their profits, they are ready to abandon the business. By Senator Boyd : (2. Al)out how much do the scalpers ” charge every boat-owner more tliaii the boat-owner would have to pay if he dealt directly witli tho forwarder ? A. I do not know as there is any difference; I don’t know but the forwarder, if he shipped it, he would charge the boatman just as much 439 commission, five per cent ; I do not know how that would be ; there is an understanding between the shipper and the scalper.” They divide up the profits, so I am told. Q. Then the evil of the scalping business is this, as I understand it, that they make a contract with the shipper at so much a cargo, and afterward they charge a commission also to the boat-owner ? A. Yes, sir. Q. And that commission charged to the boat-owner is exorbitant and should not be charged ? A. Yes, sir. Q. That is the burden which the boat-owners complain of in the scalping business ? A. Yes, sir. Q. What is that commission generally on an ordinary cargo ? A. It is five per cent on the price they obtain; 8,000 bushels of wheat at 5 cents would be S20. Q. Then that is 120, that the scalpers” charge the boatmen, which you think is an unjustifiable tax upon the boating interest ? A. Yes, sir, Q. And that is the extent of the evil of which you complain in the scalping ” business ? A. The greatest evil is their cutting the prices so much under the railroad freights that it produces a figure that there is no profit left to the boatman. Q. That then is in their dealings with the shipper ? A. Yes, sir. Q. And you think that a canal boatman would make better terms with the shipper if he dealt directly with him, instead of through the scalper? A. Altogether. By Senator Browning: ^ • Q. Do you think that for what the scalper ” does he is over paid — the scalper” secures you a cargo, he pays all back charges on the grain ? A. Yes, sir. Q. He pays in fact all the money; he insures the cargo; he advances you $200 or $150 as the case may be, and altogether he pays some $500 or $600, and then sends you on your way, and for that he charges you $20. It is not alone for securing the cargo that he charges you $20; it is for doing all the business in connection with the transfer and sending you out of port ? A. Yes, sir. 440 Q. As I understand it, you do not make so mucli objection to that as you do to liis dishonesty ? A. Yes, sir; that is it. Q. In pretending to act as your agent, when he don’t act as your agent? * A. That is it. Q. In other words, if I secure a contract to send grain over tlie canal at six cents a busliel, if on the arrival oil your boat I should deliver (jver to your boat or a number of your boats, this grain at six cents a bushel I would be an honest contractor and an honest agent of the boat, and Avould be entitled to all the boat pays me for that transaction ? A. Yes, sir. Q. And you wouldn’t grumble at it? A. Yo, sir, Q. That is what an honest agent ought to do; but they do not do that ; this is what they do; they get a contract at six cents and ahalf^ and a dozen of them who have similar contracts will go into the niai’- ket and bear ” it down and fix the price at five and one-half cents, and pay you that and make half a cent per bushel on the contract, and then demand of you also their five per cent ? A. Yes, sir. Q. That is where they are dishonest ? A. Yes, sir. Q. But their answer to that is, and I put the question to you now, if I was a ^^’scalper ” up there doing business for you and others that came into port, and I had a contract for six cents per bushel, and on the day of the arrival the price was six and one-half cents, would you take it at six? A. I would be obliged to ; now there has been a ring established there. Q. If my contract limited me to six cents per bushel and the market rate was six and one-half cents on the day of arrival of tlie grain, would you take it at six cents, or wouldn’t you demand the six and one-half cents ? A. It is the general custom to demand the six and one-half cents. Q. That is where the “ scalper ” says you fail to recognize him as your agent, and he says that he is justified in not acting as your agent when it is below that price. If you could only fix an agency there, which would make a contract for you, and if the rate was six cents or five and one-half cents, and you got the benefit of it and the next time it came around it was six and one-half cents and you didn’t get the benefit of it but took it at the contract price, he would be lit- erally your agent ? A. Yes, sir. 441 Q. He says you recognize him when it is to your advantage, and do not recognize him when it is not, That is their argument against yours. But you are of the opinion that you could get along without scalpers’’ altogether? A. Yes, sir. Q. Wipe them out ? A. Yes. sir; now especially since the canal is made free. Q. Is there any way you can do that — do you think it requires legislation to do it ? A Ido. Q. Tell me why. If the canal boats refuse to do business through those people, wouldn’t that wipe them out ? A. As long as the shippers are leagued in with the scal})ers ’’ to divide up this profit, how are you going to cut them ofi* without some legislation ? It is knavery. Q. You couldn’t get the boatmen to act in concert ? A. No, sir^ the way it has been conducted this year was, a certain ring of those scalpers ” took the contract at such ii price, and when it arrived at Buffalo, they shipped it for half acent lower and pocketed # the overplus and charged the boatmen a commission on what they did give them. That is a wrong way of doing business. It is really a conspiracy against the boatmen to deprive them of the price that they ought to have. Q. Of the legitimate fruits of their industry ? A. Yes, sir; I have another boat here that is engaged in the coal traffic from South Amboy to this city, supplying steamships at 18 and 20 cents a ton and that boat has cleared me double the profit or three times the profit that the one has running through from Buffalo to . here, which is worth double the amount. By Senator Bro wnikg : Q. Are you an officer in the Canal Boat Association ? A. Yes, sir. Q. You have been president ? A. Yes, sir; the time has expired. Q. What office do you hold now? A. I am in the department of the superintendent of public works on the Erie canal now. Q. In the employ of the State ? A. Yes, sir. Q. Can you tell the committee how many of the 6,000 canal boats belong to the Canal Boatmen’s Association ? A. There was over 2,000 enrolled at one time, but they dwindled 56 442 down to quite a low number, some few hundred at the time my office expired. Q. Under your administration ? A. Yes, sir. Q. How many do you tliink belong to it to-day, A. I don’t tliink it is over 200. Q. About 200 canal boats out of 6,000 are represented in the Canal Boat Owners’ Association? A. Yes, sir. Q. And they are generally men who own their own boats, are they ? A. Yes, sir, all of them invariably. Q. I mean the boats generally are owned by one man ? A. Yes, sir. Q. And one man owns one boat ? A. Y^es, sir. Q. There are some boat-owners who own sixty or seventy boats ? A. Yes, sir. By Senator Boyd : Q. Some of those boat-owners are also engaged in the scalping busi- ness, are they not ? A. Y^es, sir. There comes in one trouble. Some of them have a dozen boats or fifteen of them under control and they can establish prices through a combination among themselves. Elmore A. Kent, being duly sworn, was interrogated and testified as follows : By Senator Boyd » Q. Where do you reside ? A. New Y^ork. Q. What is your business ? A. Grain and provision trade. Q. Are you a member of any firm? A. Yes, sir. Q. What is the name of the firm? A. E. A. Kent & Company, New York. (h Wliere do you do business ? A. 80 Broad street. Q. How long have you been in that business? A. .U)oub twenty years in Chicago and New York. (h Please state to the committee what you know, and your opinion concerning the whole system of making ‘‘ corners,” and dealing in 443 ‘‘futures,” with reference to its effect upon commerce and upon the public welfare ? A. The “corners” are incidental in our markets. An opportunity for them is usually offered by short crops ; but as a rule “ corners ” have been disastrous. It is exceptional when they are successful to those who run them. That is my experience and observation. By Senator Browkin^g : Q. Have you ever known of any successful “ corners ” ? A. Yes, sir. Q. When? A. April, wheat in Chicago this last April, and two years ago — or a year and a half ago I think — I won’t be sure which — pork in Chicago. There have been a great* many attempts at “ corners ” that have been disastrous. Q. The two you have cited are the only two that you now think of that were successful ? A. Notable “ corners.” Those are the only two that I can recall now that have been successful. Q. Has there been a “ corner,” or an attempt to make a “ corner ” recently in petroleum ? A. That I am not informed of. I am not acquainted with the petroleum trade. Q. You don’t deal in that ? A. No, sir. Q. Your business is principally in “ options,” is it not ? A. Largely so ; we handle cash property as well. Q. You do not handle the actual property ? A. We do a great deal of it, yes, sir. Q. But your business, the majority of it, is in “ options” ? A. The greater volume, yes, sir. Q. And upon a cash basis ? A. Yes, sir. Q. And your customers, as a rule, do not handle the article ? That is if you sell an option for future delivery in grain, as a rule you do not deliver the grain ? A. It is the intention to deliver. The basis of all these “ options is upon an intention to deliver and to receive the property. Q. But the fact is you settle without a delivery? A. We settle through what they call settling clerks, which is simi- lar to the clearing-house of the banks. The machinery of settling is similar to the clearing-house in the banks ; instead of delivpring the bulk of the property to one and then delivering the bulk right l)ack again, they settle the differences. 444 Q. Do you ever purchase in the open market ? A. Do 1 individually ? Q. For yourself or for your customers ? A. I sometimes do, yes, sir. Q. In what market? A. In New York, Chicago and St. Louis. Q. Principally in which ? A. New York and Chicago. Q. Do you have agents in Chicago ? A. I have a firm in Chicago and St. Ijouis. Q. Is it a connection of your firm ? A. Yes, sir ; they are partners of mine. Q. And you have a connection all the time day by day ? A. Yes, sir. Q. Keep posted as to the quotations ? A. Yes, sir. Q. And you have customers who come in your place and they buy and they sell ? A. Yes, sir. Q. They deposit the margin with you, and you settle the same as if you were running an exchange on your .own hook ? A. We act as an agent of our customers. Q. Can you state what percentage of the business done in your office is with the view of an actual delivery at the time the transaction is made ? A. It is all made with the intent to deliver. Q. Can you state what portion of the transactions do cover an actual delivery ? A. I couldn’t tell ; it would be a small proportion ; it would be about the same proportion in dollars and cents that it would with the clearings of the banks in the city of New York; I think that would be about the relative percentage. Q. About the same percentage as the sales on the floor of the Exchange ? A. Yes, sir. Q. About the same proportion as it is on the Produce Exchange “call?” A, Yes, sir. Q. No more and no less ? A. Yes, sir. Q. 'I'lie legitimate sales are about three per cent of all the sales on the Ih-oduce Exchange flocrr ? A. Yliere are figures ; 1 don’t know what they are. Q. Mr. Craiit stated yesterday that about three per cent would per- liaj)S he a lil^eral average for the legitimate sales as compared with the purely speculative ones — it might be five per cent, but he thought 445 three per cent was fair. The transaction between the customers for whom you act as agent is usually upon a cash basis and the transac- tion is generally on paper ? A, Yes, sir ; even cash stuff is represented by paper. Q, Do you want to state the amount of ‘‘ margins” deposited with you, say in a given year, or wouldn’t you like to do that ? A. I couldn’t tell. Q. Can you give any thing like it — can you state the amount of money deposited with you as ‘^margins” to cover transactions ? A. I could not guess. Q. Can you give the recipts for one day in the shape of margins to cover transactions for which you are retained as an agent ? A. I couldn’t give a guess ; there is more or less money passing in and out of the office every day, as ‘‘margins.” By Senator Boyd : Q. Suppose we take yesterday ; you were in the office, I presume, yesterday ; how much money passed through your office on purely speculative transactions yesterday ? A. Do you mean profits and losses, or “ margins ? ” Q. “ Margins.” By Senator Brownin’G . Q. I mean, for instance, ^he doctor may come in and I may want to buy 50,000 bushels of grain to be delivered next January, and he leaves his margin with you to cover that, ton cents a bushel, we will say, or five cents, and I come in and I leave my margin with you and make my deposit ; the question I ask is, can you tell me the amount of the receipts from that source in any given day within the last ten days ? A. A great deal of the “ margins” between merchants is put up on the Exchange ; they have a system under the authority of the Produce Exchange ; it is put up there and they deposit it in banks. By Senator Boyd : Q. That is where you are simply acting as a broker? A. Yes, sir. Q. But in the transactions of your own office, about how much money was put up yesterday ? A. It ranges, I should say, from $1,000 to possibly $40,000 a day. By Senator Browjs^ikg : Q. Would it be fair to say that it covers $10,000 a day, on an aver- age, right straight through the year ? 44G A. I cannot tell. Q. Would it average $5,000 a day ? A. I think so. Q. And that is ten per cent of the selling value, is it not ? A. It ranges from five to twenty-five per cent, according to the prices and the hazardous markets — anywhere from five to twenty-five per cent. Q. Then if a man deposits $5,000, that would really represent a sell- ing value of $100,000 ? A. Yes, sir. Q. And if it was $10,000, it would represent a selling value of $ 200,000 ? A. Yes, sir. Q. And that would be the volume of business transacted by you for that day ? A. Yes, sir. ' Q. We have a fashion of calling this betting — betting on the in- crease or decrease in the price, and if you will allow me to use that term, when I come in with my margin do you bet against me, or don’t you take any chances of losing on that — do you get a commission on that ? A. I take orders and execute them in the open market. Q. You get a commission ? A. Yes, sir. Q. So you don’t lose any thing ? A. No, sir ; I take no chances. By Senator Boyd : Q. Who gets the amount at last — who receives that — where does that go to ? A. It goes somewhere in the market to any one who happens to be on the opposite side of the market. By Senator Brow^tii^g : Q. If the corner” breaks, the other man makes the money, and the cornerer loses ? A. Yes. By Senator Boyd : Q. Do you represent New York sellers or Chicago sellers ? A. All over the country. By Senator Browning : (i. Most of your business is done right through the Chicago houses, is it not ? 447 A. We do a great deal in New York as well as Chicago. We do business in New York for Chicago parties, and do business in Chicago* for New York parties. Q. It is a paying business, is it ? A. Yes, sir. Q. Do you want to state what your commissions are ? A. Yes, sir ; it is a quarter of a cent a bushel for grain, for buying and selling, and ten cents a package for lard, and five cents a package for pork, standard rates. Q. What is corn worth, to-day, can you tell us ; or yesterday ? A. In what market ? Q. In this market. A. For cash ? Q. We will say for future delivery. What can I buy corn for in January, now ? A, I think it was about 76 1-2, when I left down-town Q. What are oats selling for, in January? A. Oats are 44 7-8. Q. What is wheat selling for, delivered in January ? A. January wheat, to-day, is $1.13. Q. If you should sell 100,000 bushels of wheat, it would represent, probably, $10,000 ; they have to put up ten cents on the wheat ? A. Yes, sir. Q. Is that percentage on the selling value, or on the amount of the margin ? A. The commission is so much a bushel. Q. It is on the value ? A. No, sir; it is on the quantity. Q. If you sell 100,000 bushels of wheat, you get a commission of a quarter of a cent on each bushel ? A. Yes, sir ; $250 for buying and selling 100,000 bushels of wheat. Q. If it was oats you would get the same ? A. Yes, sir. Q. And what business ranges from all the way from $100 to $46,000 a day, it has been as low as $100, and as high as $40,000 ? A. The amount of margins that would be required in the business. Q. And that represents simply one-tenth of the number of bushels ? A. Yes, sir. Q. Are therein number of such houses in New York city? A. Yes, sir ; a large number. Q. How many would you think, fifty ? A. There are 3,000 members of our Exchange. Q. And each has an office outside ? 448 A. No, sir; I'think two-thirds would have a regularly established office. Q. Two-thirds would have a regularly established office where a similar business was carried on ? A. Yes, sir; in different articles on the Exchange Q. Including petroleum ? A. No, sir ; petroleum is not on our Exchange. Q. Don’t you sell petroleum on the Produce Exchange ? A. No, sir. Q. Lard and pork ? A. Yes, sir, and tallow, wheat, corn, oats, rye, barley, flour, whisky and oils, the oils which are the uroduct of the hog, and cotton seed, and linseed and all those oils. By Senator Boyd : Q. Then about how many bushels of wheat do you sell in your office, or how many bushels are represented by the transactions in your office daily, on an average ? A. It fluctuates very much. Q. On an average ? A. It will run from 100,000 to a million and a quarter a day, on the New York Exchange alone. Q. I mean in your own house ? A. In Chicago and St. Louis? Q. No, in New York. A. I say our own office passes in purchases and sales ; it ranges from 100.000 bushels a day to a million and a quarter bushels. Q. And you are allowed a commission of half a cent on each bushel ? A. No, sir ; the standard rate of commission is a quarter of a cent. Q. In addition to that, how many bushels of oats would there be ? A. That is all kinds of grain. Q. How much lard would be represented in the transactions which pass through your house daily on an average ? A. Our business in provisions is chiefly in Chicago. Q. Do you do any business in lard and pork here ? A. Yes, sir. Q. Just state, if you please, how many pounds of lard would be represented by the transactions ? A. I can give you the packages, and we buy and sell from 1,000 to 10.000 packages a day. Q. How many pounds in each package ? A. Three hundred and twenty. Q. What are your commissions on the lard sales ? ' 449 A. Ten cents a package. Q. How much pork per day, on an average ? A. It would range from a thousand to ten thousand barrels. Q. And you say vegetable oils ’ A. We don’t deal in those. Q. The trade of your firm is confined chiefly to corn, pork and lard ? A. Yes, sir. Q. What is your opinion in reference to the whole system of , deal- ing in ‘^futures,” just give your opinion in regard to the legitimate transactions where there is a sale and delivery, and also to the illegiti- mate ones where there are simply sales on speculation ? A. I have studied very closely the operations of this option ” bus- iness for the last five or eight years, and I have come to the conclusion that it is the cheapest machinery that can be invented or devised be- tween the producer and consumer to bring them together. There is no doubt in my mind but what the general average of prices is no higher; if any thing the average is lower to the consumer than it was ten 3 ^ears ago when there were no such dealings. Q. You are now speaking of the legitimate transactions ? A. The option business ; you might call it all legitimate because it is based on the property ; for instance, I have a man in Indianapolis who telegraphs me give me some ofier; boat-load of wheat; 8,000 bushels;” I make him an offer ; he accepts it ; I go immediately into the wheat market and I sell the same quantity for the next month’s delivery. Q. That is legitimate ? A. Yes, sir; the time comes around and that man in the course of three or four days sees he can sell his wheat for au advance in Indian- apolis ; he telegraphs me to buy him the wheat here ; some people would call that an illegitimate transaction, but I wouldn’t, where I buy in what I sell and do not deliver. Q. But where certificates are passed through fifty or sixty hands as a merely speculative transaction, what would you call that ? A. The intent with every man is to deliver just as much as it is in the clearing-house of New York banks, if you understand the opera- tion of those ; the same thing is in operation in our Exchange every day as in the clearing-house of the banks. Q. Do you know the system of business conducted in these places which are called bucket-shops ? ” A. I have been into them in Chicago and in St. Louis ; I have never made an investment there ; never investigated them at all. Q. Do you know whether any such exist in New York ? A. I do not know of any ; no, sir. 57 f 450 By Senator Browning : Q. What is the smallest lot that you will sell? A. Five thousand wheat, or corn, or oats, 250 packages of lard and ; 250 barrels of pork. By Senator Boyd : <2. What percentage of the transactions which daily take place in your office are done with the view to an immediate delivery of the goods or actual delivery of the goods ? A. The intention is that there will be an actual delivery some time. Q. I mean as between the parties to the transaction? A. Do you mean to ask by that what proportion of cash propertv we handle ? Q Yes, what proportion in value ? A. I should put it anywhere from three to eight per cent of all transactions, possibly three to ten per cent. Q. According to your experience almost all engaged in this business are getting rich, making money, are they not ? A. I think that any one that sticks to his legitimate business makes money. Q. Who pays the profits — who bears the burden of the profit which these speculators make, ultimately ? A. I think the real profits that come out of the total transactions in produce are just what it costs to bring the produce from the producer to the consumer ; somebody makes that, and that is all that is really made. Q. Who pays that actual profit, who sustains it in the end ? A. It comes off of both the producer and the consumer. Q. Then they both equally bear a portion of it ? A. Yes, sir ; it is right they should. Q. About how much per bushel would grain be increased in price by reason of these profits between the producer and consumer ? A. It would be very small. Q. IIow much? A. I could not tell. Q. There is an increase of course ? A. Yes, sir; the cost of middle-men; the cost of middle-men ten years ago was greater than it is now' by far. Q. How do you account for that? A. The facilities that are oficred for business. C^. And wouldn’t the increase of production and also the increase of demand l)e a reason why middle men could do their business for less ? A. I think the competition among merchants reduces it to the minimum. / 451 William H. Macy^ having duly affirmed, was interrogated and testi- fied as follows : By Senator Bovd: Q. Where do you reside ? A. In the city, 40 East Twenty-first street. Q. What is your business ? A. President of the Seamen’s Savings Bank. Q. How long have you been such president ? A. I suppose ten or fifteen years. ' Q. Please state to the committee your opinion in regard to the whole system of making corners and dealing in futures with reference to its effect upon commerce and upon the public welfare ? A. I have been out of active business for the last five or six and twenty years, and know nothing about it, only what I have seen in the papers. Q. From what ? A. I have formed the opinion that it is a very bad practice, but I think it is one you can’t control by legislation, because it was a prac- tiee fifty years ago, and more too. Q. The system of making corners ? A. And buying up any article that the merchants knew — by the excess — more than there was, Q. Where parties purehased grain with a view of making a delivery, we do not find fault with that, that is legitimate, but the merely specu- lative part of the transaction ? A. That I think is very bad and injurious to commerce. Q. What effect has it upon the banking interests of the country — I mean the not only dealing in futures, but the making of corners in any staple ? A. I don’t see what effect that would have on banking at all. Q. Would it not affect the moneyed interest by causing fluctuations in the money market ? A. No, I think not; banks would lend on legitimate paper and that wouldn’t be legitimate paper ; they wouldn’t lend on any contracts of that kind ; I have been president of a bank these seventeen years and I am satisfied I should not. Q. And why would the banks not lend on any contracts of that kind ? A. They would look upon it as fictitious. Q. And it would be unreliable ? A. Unreliable, yes, sir ; when notes are given it is supposed that the purchaser has had value received and he has got that material that he can sell and pay the notes with. 452 Q. But in purely speculative and gambling transactions they wouldn’t have that security ? A. No, they wouldn’t have that security; I wouldn’t treat with them at all. Q. In cases where transactions are had between fifty or sixty indi- viduals without any actual delivery of the article dealt in, would you call that a system of buying on speculation and gambling ? A. Yes, sir; I should think it was the worst kind of gambling. Q. Why? A. Because they know they haven’t the produce to deliver or the material ; it is mere betting. Q. And assuming a risk which good public morals doesn’t recognize as being a safe means or way of carrying on transactions or business. A. Not a legitimate transaction of business. Understand I have had no experience in this thing. I have never had any operation of the kind nor been in the way of lending any money on any thing of the kind — never have seen any such proposition. Q. But you know such a state of. speculation exists in the country ? A. I know it from what I read in the papers and from hearsay. Q. Your opinion is that such a system is detrimental to the best interest of commerce and trade ? A. Yes, I think that must be the opinion of everybody. By Senator Browning : Q. Does not a ‘^corner ” affect the banking interest? A. No, I think not ; I don’t see why it should. Q. You have a larger demand then for money, don’t you, than when the market is in a normal condition ? A. You have got no legitimate demand. Q. Does dealing in stocks and cornering ” the market in stocks, pulling up or bearing down, affect the banking interest ? A. No farther than the parties have securities to offer to get loans — not beyond that. Q. Does that apply also to grain as well as railroad stock ? A. Of course. A man that buys if he wants to raise the money to pay for it, he has got to have something tangible to raise the money on. Q. Have you experienced any thing like an approaching panic dur- ing the last week ? A. ffliere has been a great demand for money, I know that. Q. Can you tell the committee the cause for that ? A. No, 1 cannot. 453 Q. It must have been on account of the unsteady condition of the m u-ket, wasn’t it ? A. The great cause is the government locking up so much money. They take in a million and a half a day. Q. It can’t be attributed to fluctuations in the values of stocks? A. No, sir, not so much. By Senator Boyd : Q. Can you form any opinion of how far these illegitimate specula- tions impose a burden upon the consumers of products ? A. I can’t form any opinion how far.’ It certainly enhances the price and that affects the consumers. Q. Then the laboring man’s day’s wages is rendered of less value to him ? A. Of course he can’t buy as much to support his family with his wages. Q. Do you believe it is the duty of the people through the Legisla- ture to remedy these existing evils so far as they possibly can ? A. As I said in the first place, I do not believe the Legislature can effect it at all. Public opinion is the only thing that can affect it, if it can be frowned down. Q. Do you suppose it is possible to crystalize public opinion into the form of an act which would have a repressing tendency upon such wild and illegitimate speculations ? xV. No, I do not believe you can. Q. Then you believe the only way to do is to educate the people and to develop higher sentiments in the community in regard to it ? A. Yes, sir ; let it be frowned down by every well-wisher of his neighbors. Q. And you believe that such efforts as are now being made by this committee, witli the aid of the press, will be beneficial in that respect ? A. I don’t believe it will have any effect myself otherwise than in educating public opinion to show that there is an effort made to sup- press it if it can be done; but I do not believe you can. Q. Is there any thing else that you would like to state to the com- mittee in regard to this matter ? A. No, I think not ; I have not been brought in contact with it in any manner or shape. Q. You have knowledge that it does exist ? A. I have a general knowledge of what is done. Q. The expression of your opinion will have a very great influence in enabling us to accomplish the objects for which the committee was appointed — that is in educating the people ? A. That is what you want ; I think it is very demoralizing, this corner in breadstuffs and other things. 454 Q. And these illegitimate speculations ? A. Yes, sir. The committee then adjourned to Monday morning, November 27, 1882, at 11 o’clock, a. m. New York, November 27, 1882. The committee met at the Metropolitan Hotel in the city of New York, pursuant to adjournment. Present — Senators Boyd and Browning, of the committee, John N. Corning, Sergeant-at-Arms of the Senate, and Daniel A. Cooney, Clerk of the committee. Dr. Howard Crosby was then called, and being interrogated,‘testified as follows ; Senator Boyd — In view of the sacred character of your calling, we will dispense with the ordinary oath. By Senator Boyd : Q. Where do you reside ? A. In this city. Q. You are a minister of the gospel ? A. I am. Q. You have been so for how many years ? A. For more th^n twenty years. Q. Are you familiar with the system of making ‘‘ corners ” and deal- ing in futures,” either by observation or otherwise ? A. I am only familiar with these systems from what appears in the public prints. Q. From your knowledge of the system please state to the commit- tee your opinion in regard to its eSect upon commerce and its influ- ence upon the public welfare ? A. I think it must derange commerce and demoralize public senti- ment ; I look upon it as a forced elevation of values by trick in order to increase indebtedness, and like all tricks must issue badly for the community and its welfare ; I see no difference between cornering and other forms of gambling which are universally considered to be most demoralizing to the community. Q. What is your opinion in regard to what is admitted to be the illegitimate form of speculation in grain or other food products or any commodities ? 455 A. It is dealing in trade with uncertainties, things that may be non-existent and therefore again comes under the head of gambling. I see no difference between it in principle and the ordinary form of gambling, at gambling tables. Q. Please state what you consider to be the influence upon society generally of such practices from a moral standpoint ? A. It gives a feverish tone to society, induces men to make great ventures and to meet with great disappointments, increases the num- ber of desperate men in the community and deters honest men from honest business. Q. What is the legitimate standard of value of all commodities? A. I should say in general the Autlue which naturally belongs to it, the value that is not unnaturally and by pressure or trick produced. Q. What relation has labor to the value of products ? A. Labor of course should add to the value of products and the condition of trade should be such as to farther the reward of all use- ful labor. Q. Then the unnatural forcing up of the prices of the necessaries of life is a tax upon labor rather then a reward ? A. It is already so ; I look upon it as a tyranny and oppression of labor and of legitimate business. If I may be allowed to illustrate, if I am a mariner, I can judge by my scientific knowledge of winds and currents and can steer my vessels across the Atlantic wisely and safely, but if we can imagine that one person by some hocus-pocus could get I charge of the power over the winds and waves and run them in his own interest and against mine, and against every other mariner’s, turning the currents this way and that way at his will, turning the wind hither and thither as he wished, he would be an oppressor and tyrant on the ocean and a nuisance to be abated. Q. Then that term would apply to all persons who are engaged in the “ cornering” of food products, stocks, bonds and every other com- modity or machinery by which the. illegitimate business is carried on? A. I think so ; I think it is especially glaring, however, in the case of food products and important articles of that kind. In the matter of stocks where 'all are engaged in speculating, the loser doesn’t gain so much sympathy, but at the same time the principle is exactly the same ; he has been robbed. Q. When prices are forced up by the operation of ‘^corners” or illegitimate speculation, on whom does the burden ultimately fall? A. It ultimately falls upon the poorer classes who have to pay for high prices where they procure their food and where they pay their rent. 1 45 (j 1 Q. Then indirectly a system tliat would enhance the price of rent and food to the poor man would deteriorate from the value of the wages which he receives ? A. Undoubtedly it would. i Q. That is, the i)urchasing power of his wages would be decreased very materially ? A. It would; I would also say in connection with that question that the fluctuation of prices of the necessaries of life is far more fear- ful to the poor man than to the rich man, and hence any form of ille- gitimate trade which produces those fluctuations is directly injurious to the poorer classes, Q. And carrying on any system which would thus affect the inter- est of the laboring classes might be designated as a declaration and continuance of a civil war upon their rights ? A. It is, in my estimation. As I used the language before I consider it tyranny and oppression. Q. Do you think that the evils resulting from this illegitimate sys- tem of speculation are confined only to the injuries which result to the laboring classes and the poor man, or does it affect all classes of trade and society ? A. I think it affects all classes, but especially I think it affects the poorer class and the honest class. Q. State if you please why especially the honest class of citizens? A. Because their conscience will not allow them to enter into com- petition with those who are over-reaching. They, therefore, back down i from the contest and are overcome. Q. Do you believe it is the duty of the people through their law- making machinery to endeavor to abate these evils? A. By all means. I believe it is within the power and province of the Legislature to correct these evils. Q. Would you please to suggest such provisions as you think might be formulated into an act which would have the tendency or effect of repressing these evils ? A. My detailed knowledge of commerce is so small that I would scarcely venture to ])ropose a plan that should involve any details. I think a general principle of buying and selling only that which really exists should be at the foundation of the law. That principle might have to l)e modified by reason of the nature of things, but I certainly think that principle should be at the basis of the law, that things bought and sold must have an existence and be able to be transferred imme- diately. I 457 By Senator Brownin^g : Q. It has been said by some that when we attempt to prevent all sales except wliere there is an actual delivery that it is a direct attack upon the credit system. What do you think of the credit system? A. I think in any law that is proposed there should be a certain margin for tlie credit system. I do not think we can transact busi- ness without a credit system, but I think that that could be under certain control and limits. Q. Then you wouldn’t advocate the passage ol an act that would make all debts unlawful ? A. No, sir, by no means. By Senator Boyd : Q. Is tliere any thing else that you would like to state to the com- mittee in connection with this subject ? A. Nothing. Alexander E. Orr, being duly sworn, was interrogated and testified as follows : By Senator Boyd . Q. Where do you reside ? A. I reside in Brooklyn and do business in New York. Q. Where is your place of business ? A. 20 South street. Q. What is that business ? A. Grain commission business. Q. Are you a member of any firm ? A. The firm of David Dows & Co. Q. How long have you been in that business ? A. Since 1858. Q. Are you familiar with the system of making corners and dealing in futures ? • A. Yes. sir, I am familiar with all the system. Q. From observation and otherwise ? A. Yes, sir. Q. Please' state your opinion in relation to the whole system of mak- ing corners and dealing in futures with reference to its effect upon commerce and its influence upon the public welfare ? A. As you asked me to state my views in writing, and as what I have written answers many of your questions, you will allow me, please, to read that first and you may ask any questions afterward. The witness then read the following statement: 58 458 ‘‘Gentlemen: — S ometime ago I received a written notification from the clerk of your honorable committee to the effect that at a future period I would bo called upon to testify before you relative to the whole system of ^making corners and dealing in futures with reference to its effects upon commerce and its influence upon the pub- lic welfare/ The letter concluded with the following paragraph : ‘This notice is given to you at this time that you may be enabled to collect such data and circumstances as you may wish to place before the committee when called upon/ ” I thank the committee for giving me this kindly notice for prepa- ration. I believe the question (because it is comparatively new) is much misunderstood by the press, the Legislature, and indeed I may add the whole community outside the largo commercial exchanges and those immediately connected with them in developing the business interests of this country. I beg your permission, therefore, to present my opinions in writing with such practical illustrations as I can vouch for of my own knowledge, and afterward to answer any questions that my remarks may suggest. Your investigation may be classified under four heads, viz. : The system of creating ‘‘ corners ’’ — the system of dealing in mer- chandise for future delivery — the effect these systems have upon commerce and the public welfare, and that legislative action, if any, is necessary for the protection of the public interest. And first. Corners. — Corners may be divided into three classes ; 1st, Accidental ; 2cl, Protective; 3d, Aggressive. “Accidental corners” are not numerous, but under certain condh tions of the market they may prove expensive to those who are unfor- tunate enough to become their victims; they occur through failure oi transportation by lake, canal or railroad — from fire or flood, and, where grain is the article contracted, from atmospheric influences ; they may occur with the most conservative merchants and are simply one phase of the many vicissitudes attendant upon mercantile transac- tions. Permit me byway of illustration to give you two examples of accidental corners, the first of which is partly hypothetical: In Jan- uary, 1881, A had 10,000 bushels of “ Yo. 1 north-western wheat ” in Duluth; it could not leave tliab port till the opening of navigation ; at that time the value of such wheat in Yew York for May delivery was $1.28 per bushel, and A sold it to P for that price and option ; in the month of March following, the value had advanced, and B sold the same wheat for the same delivery to 0, at $1,39 iier bushel. The open- ing of navigation for that year was unusually late and the wheat did not arrive in Buffalo till after the middle of May — too late to be 459 shipped by canal, as originally intended by A ; it was forwarded by rail, upon the assurance that it would be in New York in ample time to meet A’s contract obligations, but accident delayed its arrival till the first day of June, one day too late for delivery under the contract. Meanwhile the value of such wheat had fallen to 11.21 per bushel; the demand for it was very moderate and the stock in New York was exceedingly light, and held entirely by C. A, believing that his wheat would be in New York prior to the end of Mayas promised by the railroad, made no other provision for his contract. B, trusting in the ability of A to deliver the wheat which he had contracted to him, and which he would then deliver to 0, rested upon that faith, and 0 stood ready to receive the wheat when tendered, although his contract price was eighteen cents per bushel greater than the then market value. But the unexpected failure of the railroad to deliver the wheat in New York on the last day of the month caused a demand for 16,- 000 bushels of No. 1 north-western wheat from 0, who was the only person who had any, and he, suspecting that it was wanted to make delivery to him, withdrew his wheat from the market absolutely, and the result was, A was obliged to default upon B, and settle with him by the payment of eleven cents per bushel on 16,000 bushels, which was the measure of his loss through his inability to deliver to C, and a day or two after A sold his wheat on the market at $1.21, the net loss to him being eighteen cents per bushel, or $2,880, because through the efiTect of an unforeseen late spring and a railroad accident, 0 had been able to corner the wheat market for that grade without premed- itating, or in any way infringing, the laws of commercial equity or morals. My second illustration deals with much larger quantities. As a rule, canal navigation closes about the first week in December of each year. It is estimated that shipments leaving Buffalo prior to the fifteenth or tv"entieth of November will reach tide-water without obstruction from ice. In 1880 there was a marked exception, how- ever, winter coming so suddenly and severely that all boats leaving Buffalo on and after INAvember 4th were frozen in the canal and forced to remain there with their cargoes aboard till the opening of naviga- tion in the following spring. The quantity of grain thus suddenly withheld from market amounted to from five to six millions of bushels and as a large part of it had been sold for November or December de- livery, it is not difficult to understand the effect such a misfortune would have had upon prices had the stock of such grain in New York been limited. Fortunately this was not the case, and the disaster coming early in November, thei’e was reasonable time to make provis- ion for maturing contracts without causing very serious loss. 4G0 In both these cases the transactions throughont were legitimate, but the grain was as effectually locked up through accident, as if it had been withheld by design. In the first example C could not be blamed for refusing to sell wheat to A which A intendetl should be given to B and by B to 0 at a much higher price than the then market value. It was C’s good fortune tluit as wheat failed to arrive in time, just as it would have been thegood fortune of those who held grain in Xow York in 1880 if the sudden freezing of the canal had caused as sudden a de- mand to fill contracts and thereby enhanced values, of which they would, according to mercantile usage, have had a right to take advantage. Protective corners” are simply what the name suggests. They are the results of the acts of a merchant (or set of merchants) through the purchase of that which is forced upon the market to the injury of his business and the de})reciation of his wares and merchandise. A has a store filled with cotton goods which he has just purchased for his fall trade. He is waiting for his customers, but B comes forward and says to A’s customers, I will sell a thousand cases of cottons at twenty per cent less than A. if you will accept delivery next week. The immediate tendency of B's offer is to depreciate the value of A’s stock, and A, believing that his prices are reasonable, and that B has some sinister intent, or that B’s offer is a bargain (no matter what his reasons, however), buys them upon B’s terms and awaits delivery. But B, when he sold the cottons, did not have them to deliver, his object was to depress the value of A’s cottons to a price below the price at which he had sold, then to purchase from A at a profit and make delivery on his contract. Finding, therefore, that his first attack was not successful he makes a second with a like result, then a third and fourth, and yet A, or some one else, stands ready and takes B’s cottons as fast as he offers them for future delivery; now the price at which B has sold the cottons, although quoted in the market reports, is not their actual market value ; B has simply acted upon his .opinion of the future value (whether legitimate or illegitimate it matters not) and that opinion is not bind- ing upon his purchasers. When, therefore, B’s contracts mature, if he comes to purchase of A, he (A) has just the same right to withhold his cotton from B, as B had to offer his at a less price tlian Aasked, and if B defaults on his contracts because of A’s refusal to sell, or because A asks a higher price than he (B) is willing to give, he must pay, as damage to A, such differences as A can ])rove this market value to be over and above the price at which sold; protection of this kind though sometimes resulting in ‘^cor- - jjoj-s” is most essential to the agricultural and commercial interests of the United States ; tiie more bountiful the prospective harvest, the ifiore likely is such a })crnicious system of attacks to obtain ; values 461 have often been depressed far below the producing point before the crops has even been begun to be secured, and if a protective check was not created by holding these bands of commercial pirates ” to a strict account and compelling the fulfillment of their contracts or by the payment of corresponding damages, the result to the agricultural in- terests especially would be at times disastrous in the extreme; it is a common practice among farmers, indeed with many it is an imperative necessity, to postpone 2:)ayment of taxes and store debts till after the harvest is gathered’and a sale of part of the crops made; if, therefore, values at that time are depressed by promiscuous selling for future delivery without the j)rospect of the seller being held to a strict ac- count, the loss to the farmer who must realize to meet matured obliga- tions is very evident ; let me give you an illustration; a few weeks 2irior to harvest time, in one of those years of pros2)ective plenty, a. certain merchant chanced to be in Chicago ; a raid upon the grain market was then in ojieration ; average prices for wheat and corn for future delivery had gradually been forced down from fifteen to twenty per cent, and a very demoraliiing state of commercial affairs was im- minent; the merchant noticed that one of the leading operators in the said board had been a previous correspondent, and taking him aside on ’Change cautioned him as to the result of his action ; ho j)ointed out the fact that the prices he made current were much below the cost of production ; that the farmers would withhold their grain, excejDt where absolute necessity comioelled them to sell, and that if he ^^ersisted, the re- sult to himself would be disaster ; his answer was characteristic ; if the farmers don’t sell their grain,” said he, we propose to sell it for them ;” he and his followers did persist and they did a deal of injury, but when the time came to make good their contracts, they howled against the wickedness of corners, and many of them failed ; there never was a more jnst retribution, they had sim|)ly cornered themselves and when they discovered this fact, prices had simply returned to legitimate values ; a very large percentage of mercantile corners (so-called) have their origin %s above described, but they sometimes (although really seldom) degenerate into the third class viz. : aggressive corners,” while ‘^protective corners” may be operated by a wise man on the one side and a fool on the other — it needs a fool on each side to operate an “aggressive commercial corner” except when unforeseen misfortune has overtaken the cornered party. ' An aggressive corner partakes of the character of a conspiracy and should be denounced both in law and equity. It is foreign to commercial enterprise or development and meets with almost universal condemnation from the mercantile community. In a commercial sense, it is taking an undue advantage of the follies 402 or misfortunes of others or of the ordinary risks of legitimate specula- tion, it works in secret and its intent is only developed when the victim is within the toils. An accidental ” or protective ” corner becomes aggressive when by combining circumstances, an enhanced fictitious value is created for that Avhicli the conspirators have to receive from those who have not got it to deliver unless it is obtained through them. Such corners are so repulsive to commercial honor that our Mercan- tile Exchanges and Boards of Trade now discountenance them entirely and when attempted they generally end in disaster to their opera- tors. But outside the commercial world aggressive corners are numerous, and sometimes their effect on commerce is exceedingly annoying and injurious. They could be divided into many classes (too numerous to mention hero), but I will confine myself to three, namely: Money corners, labor corners and legislative corners. The locking up of money is a conspiracy to depress values, and its effect is far reaching and often overwhelming. The process is generally within the limit of law, and its pernicious influences are possible for the reason that speculation is largely carried on by the aid of borrowed capital. It often overreaches the aims of instigations by producing panic, and when confidence is established,valueshave been rudely shakene the innocent and the guilty suffer alike. The usury laws of the Stat- and that feature of the national banking law, which withholds a re- serve twenty-five per cent of deposits from circulation, have greatly aided conspirators of this class, because by limiting the legal rate of interest to six per cent and imposing severe penalties when the law is infringed, capital, in times of stringency, has no inducement held out to seek the place where it is most needed. The late action of the Legislature in modifying the laws relative to money ‘‘lent upon call’’ (and which from the short trial it has had is working admirably) will T)rove a remedy that cannot be too highly appreciated fy the whole community. '‘ Labor corners’^ ixyq very numerous and assume various nhases of operation. The ordinary “strike” when attended with intimidation, and the “ rules of the society ” which have almost extinguished the appren- tice system (intended to i)rodnce a continued supply of skilled labor) are the most common. A man should be the judge of the value of his own time and labor, and no power should attempt to control him in this respect, but when he opposes the riglitof his fellow man to ex- ercise a like j)rivilege, or refuses an education to the youth of his gen- 4G3 ■eraf^ion, he is locking up labor, and operating a ^‘corner ” more per- nicious to the interest of society than all other classes of corners combined. Permit me to quote the words of a prominent judge (Judge Wyler) when passing sentence upon a young man for larceny a short time ago: I cannot see how a young man can get a trade now on account of the trade combinations which prevent boys from becoming appren- tices. Every parent in the land should hold his foot down on these organizations which have the effect of bringing skilled labor here from abroad, and of causing an universal idleness among youth which drives them to crime.” The strong arm of the law should see to it thatdabor in alUts branches shall be protected, and that when intimidation or force is used to op- pose such protection, it should be unhesitatingly put down. I do not know whether the scope of your inquiry was intended to examine into legislative corners, but as their influence upon commerce in all its ramifications is vitally important, I will venture briefly to refer to them. Strictly speaking, they are also numerous, but I shall ^ confine my remarks to two only, viz,: The coinage of silver dollars of the present standard and the pernicious influences of our present tariff laws. * By process of law 88 cents worth of silver (its actual market value) is fashioned into a coin, the insignia of the United States is stamped upon its face, and it is arbitrarily paid out to the people as value for 100 cents. It is made a legal tender for debts due from the governilient not withstanding tlie fact that nearly 14 per cent of its declared value is fictitious and never did have an equitable existence whatever. The people dare not refuse it; they are cornered” by legislation in a more aggressive manner than was ever attempted by commercial or financial intrigues. I will not insult the intelligence of this committee by sug- gesting the only honorable remedy. Tariff legislation may have two great ends — revenue and protection — but then the results exceed the necessities of the one, and over protects the requirements of the other and withholds from the public the tariff-ridden article; it simply creates a legislative corn^ ; a thing done by interposition of law at the cost of the many for the benefit of the few. No country on this globe has elevated and ennobled labor, or seen to it that it has been so well paid as the United States (long may it be so), but no people have ever been so much imposed upon by legislative corners under the pleas of protective labor, as the citizens of the United States. I give it to you upon the authority of the Hon. Mr. Hewitt, that a single manufacturing firm of steel products in Penn- 464 sylvania, u^oon a capital of $2,000,000, earned in a single year nearly two other millions of dollars after it had cared for its workmen, for whose supposed benefit we are told, a tariff of $28 per ton had been im- posed upon steel rails. I will not exhaust your patience with further illustrations of this phase of the subject (Congress has at last a glimmering that a revision of the tariff is essential); 1 shall, therefore, pass on to the second divi- sion of your investigation, viz. : “ The system of dealing in merchan- dise for future delivery.’’ If there has been any one element more noteworthy than another ih aiding the development of the commerce of the United States into its magnificent proportion of to-day it is the facility with which sales and purchases can be made for future delivery. The values of three articles of American products exported from New York in 1881 were as follows : Grain products- $122,852,883 Annual products 108,077,856 Petroleum products 31,596,723 Total $262,527,462 The total export value of tnese products from all other ports of the United States for the same year were : Grain products $147,479,636 Annual products 49,516,005 Petroleum products 8,718,886 Total $205,714,527 Added together, the total value of these three items of export amount to about half of the value of the exports from the United States in 1881. They are all largely dealt in for future deliveries, but as I shall refer to them a little more, in detail hereafter when discussing the next division of the subject, I shall not delay you now. The system of selling and buying these articles for future delivery is not conlined to the American merchant. B^reign merchants, appre- ciating its great advantages, make it almost the rule to protect their prospective needs by making such transactions at our sea-board markets. This is especially so with grain, and I venture the prediction that at no very distant day the cities of New York, Boston, Philadelphia and Baltimore, and such other places as will grant like facilities will be- come the granaries for the world. The telegrapli and steamboat have 4G5 done much to annihilate distance, and the English or Continental merchant who so holds his stock of grain can distribute it through these means to his own home ports of consumption more rapidly then if he held it in Liverpool, Havre' or Antwerp, while at the same time, pending such distribution, he can have the advantage of any other foreign market needing our surplus, and the benefit of our speculative and consumptive market besides. The system is also exceedingly popular with the agricultural and trading classes and inland merchants throughout the length and breadth of the whole countr}^ because of its protective features ; it gives to the farmer a ready market for his products at their full value almost at his own door, because the active-minded energetic trading class who are legion in the small towns and villages along the lines of our numerous railroads have the assurance that the}^ can sell, at a reasonable profit and at a moment’s notice in the large commercial centers, the purchases of to-day, thereby relieving themselves from the, possibilities of a loss on that day’s transactions, and rendering therfi- selves free to repeat their purchases on the morrow ; in the same man- ner the merchant of Chicago, St. Louis or Toledo, who sends to New York his ship-load of grain, can protect his position by selling it for a future month’s delivery without taking the risk of the market for the twenty or thirty days consumed in its transfer to tide-water under the old system, and is able, without multiplying the risk, to repeat his ship- ment as often as the opportunities of the market will warrant; this system is most simple in its ojDeration, and under the rules of our large Exchanges is recognized as a valuable and legitimate means of facilitat- ing commercial transactions; the form of contract adopted by Boards of Trade are similar, and the rules laid down by all of them for the strict observance of such obligations are analogous ; I submit herewith as a sample the form of contract in vogue among members of the New York Produce Exchange; it is concise and definite and refers directly to these rules. Graiit Contract. New York, 18 . In consideration of one dollar in hand paid, the receipt of which is hereby acknowledged, have this day sold to (or bought from) ‘ bushels of New York inspection, at cents per bushel deliverable at seller’s (or buyer’s) option 18 . ' This contract is made in view of, and in all respects subject to the by-laws and rules established in the New York Produce Exchange, in force at this date. 59 400 Misunderstandings or controversies occur but seldom, and when they do are immediately referred under the rules to the appropriate com- mittee and at once settled; through this system sales and purchases for delivery at any future periods agreed upon are made with almost marvelous rapidity and exactness, and the advantages are so positive and assured that their abrogation through legislative interference would produce a commercial revolution more intense and far reaching than any of the great commercial panics of the present generation. This declaration brings one to the third item of inquiry, viz.: The effect which sales for future have upon commerce and the public wel- fare. I have at some extent anticipated this phase of the inquiry in the foregoing remarks respecting some of the advantages derived from the operation of this system. I assure you I have merely touched upon them. I have stated there Avas shipped from the United States in 1881, grain and product of grain valued at 1270,332,519. Probably seventy-live per cent (and, very likely more) of this actual grain was dealt in for future delivery by the exporters before it found its way on board ship, and it is not improbable that from the time it Avas har- vested till it reached the sea-board it formed the basis of transactions of aggregating ten or tAventy, perhaps fifty, times that amount in value. Eatit one of AvhichAvere legitimate and mercantile. But this is not all. The vessels Avliicli transported it abroad Avere, to a great extent, ^con- tracted for before their arrival at their ports of American destination, and the bills of exchange which provided for its payments were also largely sold for future delivery to the foreign banker. In fact every element relative to its shipment in some Avay might be said to partake of this future^’ character. There was shipped from the United States in the same year about 7,200,000 barrels and 13,200,000 cases of petroleum and products of petroleum in from 1,750 to 2,000 ships; eighty to ninety per cent of this vast business, both in petroleum and ships, Avas based upon sales and freight engagemen ts for future delivery. The tobacco importations of France, Spain and Italy (and doubtless Germany Avill ultimately follow the same rule) are government monopolies, and almost alto- gether supplied, without exception, are let from one to two years in advance of re([uired delivery, and they aggregate tens of thousands of hogsheads, and millions of dollors of value. I could enumerate other important items, among them cotton, Avith its crop of over six millions of bales, and exqiorts amounting to oA^er $261,000,000 in 1881, dealt in to a very large extent in exactly the same manner at home and abi-oad, but i presume. I have said enough to make it evident that sell- ing and buying hir future delivery is the invention of a great necessitify 467 and it answers the need so well, and has helped to build up our inte- rior towns and large cities so rapidly, that it is an universally recognized part of our great and growing commercial system. The immediate effect of future sales on the commerce of New York is to increase our receipts of exportable merchandise. I hold that the assurance of an outward cargo will attract ships with inward cargoes, and, therefore, our import trade, in a great measure, will depend upon this system. If our State Legislature should interdict its operation’ and the competing sea-board cities are permitted to retain it, a large part of our foreign trade would leave us and go to them just as surely as foreign steel rails would seek the port of Baltimore if that port received them free of duty, and avoid New York where the present excessive rate of |28 per ton continued to be collected. But it may be said that this system is used at times as a cloak, for transactions which savor more of gambling than are legitimate speculative operations. That also it sometimes assists the conspirator in the operations of an aggressive corner,” and that its influences, if unchecked, may have a tendency to demoralize the young men of the present age. To some extent such statements are true. It is impossible to draw the line between legitimate speculation and gambling, or cornering, transactions, until the interest on the actors lias been developed. Indeed, the interest, under certain circumstances, cannot be discovered at all; but there remains this safeguard, that should the discovery take place (which is the case when the illegiti- mate purpose is sought to be enforced), the rules of our Commercial ^Exchange protects legitimate speculations from the machinations of the one, and the law rendered void the action of the other when its protective influences are demanded. To determine that a great commercial good shall be abrogated, be- cause its abuse might inculcate gambling and prove injurious to the rising generation, would be as preposterous as to interdict the impor- tation of paper stocks and ivory, because a part might be converted into playing cards and dice, wherewith to operate games of chance in an unlawful manner. This brings me to the last division of the inquiry, viz. : What legislative action, if any, is necessary for the protection of the public welfare? In a great commercial country like the United States, where agriculture, manufactures and commerce are the founda- tions of prosperity and wealth, legislation, after having enunciated the fundamental principles of law and order, should guarantee to com- merce that in all matters immediately relating to commerce, legislation should largely emanate from commercial sources. The Legislature of New York has endowed our Exchanges with valuable privileges which 468 have resulted in building up associations of upright intelligent busi- ness men, who in turn have become tlie guardians of the State’s com- merce, and secured to her principal city the proud position of the commercial metropolis of the United States. The New York Produce Exchange now numbers 3,000 members, all engaged in commercial pursuits, and especially those departments which embrace the products of the soil of the cereal-growing States — of oils, of animal-food products, and all their addenda of railroad, lake, canal and ocean transportation. In the operation of this immense business, which represents fi-om fifty-five to sixty per cent of the surplus productions (of these articles) of the United States, necessity has suggested rules (which are commer- cial laws of equity) for the direction and protection of its members. They are altogether too long to mention at this time, but I will cite two which bear directly upon the subject under consideration. If default under a grain contract for future delivery (for any causes whatever) takes place, the following will immediately become opera- tive : ‘‘Eule 21. — Sec. 1. — That in case any property, contracted for future delivery, be not delivered at maturity of contract, the purchasers shall notify, in writing, the committee on grain, of the failure to deliver, and the committee on grain shall, at the next call, publicly read such notice, and buy in the grain, for account of the party directing the purchase, but no unreasonable price shall be paid, arising from manipulated or fictitious markets or unusual detention in transportation. Any legitimate loss resulting to the buyer shall be paid by the party in default, and the grain so bought in shall be a good delivery on defaulted contracts maturing that day.” You will please specially note the protective elements of this rule : No unreasonable price shall be paid arising from fictitious or manipula- ted markets, or unusual detention in transportation,” and further, the damage that can be recovered must be ‘‘ legitimate.” From this you may perceive how the corner question in all its phases of “ accidental,” protective,” and “ aggressive,” can be disposed of, and a strict system of equity administered. The second rule to which I desire to direct your attention refers to the inception of the future purchase or sale. Its purport is as follows: “ In all sales on purchases of grain for future delivery, either party to the contract shall liave the right to call an original margin of ten cents per bushel on wheat, rye and barley, and five cents per bushel on corn and oats, and a further margin from time to time, to the extent of and variation in the market value from the contract price.” 469 This rule contains a protective and restrictive element. The first is a mutual protection to the parties at interest against loss through fluctuations in market value, and the possible vicissitudes of a mer- cantile career. The second restricts the volume of such trading to more conservative proportions because of the margin clause, and is especially beneficial in checking the propensity to assume undue risks on the part of persons of moderate means by compelling them to re- strict their purchases to the capacity of their pockets for margin pur- poses. It is also an answer to the objection, that the system of future sales may prove injurious to young men,” for the reason that young men when they want simply to gamble, and find that they must de- posit margins, as decided above, would prefer a quicker and more di- rect method of determining their ventures. If, on the other hand, their intention is to speculate, the fact that a margin is required at the outset of the transaction induces a consideration and caution that would not exist if the restrictive influences of the margin did not enter into the account. So advantageous has this rule proved, that a con- tract without an original margin clause is becoming the exception on the floor of our Exchange. In 1881, the amount deposited through the Exchange superintendent, for margin purposes, was $15,000,000. From these illustrations, which could be prolonged indefinitely, I as- sume that you are satisfied that the great commercial exchanges are able to legislate within themselves upon important commercial questions. It is reasonable to suppose that holding, as they do, their finger upon the commercial pulse of the nation, they are best able to detect inju- rious influences, and to suggest remedies. If this is true, legislation, which is to have a direct bearing on all commercial questions, should not be forced upon commerce, but should rather await commercial suggestion. Grave errors have resulted from a failure to observe this obligation and legislation, and legislative inquiry has often been misled by design or accident into hasty action. With great respect, j^ermit me to state that I believe this is a misfor- tune that the Legislature of the State of New York has not been quite free from. I believe, gentlemen, that your honoi-ablc committee will find, from this investigation, that the pernicious effects of “ com- mercial corners” and sales for future delivery ” have been greath^ exaggerated. I regret that I am obliged to say that sometimes the press ” and persons desirous of attracting the public ear, make start- ling statements which will not bear investigation. With your permis- sion I will give, in closing, three illustrations of this practice. One is taken from the writings of a gentleman very common in public life, for whose integrity and indomitable energy I have a profound respect — I mean the Hon. John Kelly — and two from 470 statements made to this committee by witnesses who considered them- selves competent to suggest remedies. I wisli it to be distinctly un- derstood that I mean no disrespect to the gentlemen from whom 1 note. I am sure the one, and ! trust the others, would not Avillingly mislead, but my desire is to point out how easy it is for a man of in- fluence and intelligence to be himself misled into making very mis- leading statements. The Hon. John Kelly, in a comparatively recent letter to the Anti- Monopoly Conference held at Albany, makes the following declara- tions : ‘‘ 1st. Even opium, which forms the basis of laudanum, paregoric and other needed medical compounds, and which, from the very nature of its production and excessive customs duties, is expensive, has been made the subject of a ‘ corner.’ A few Wall street speculators formed a syndicate to control the imports, and the [price was advanced from $2.50 to $6.00 per pound, compelling the inhabitants of tenemenis to pay the full price of a day’s living to secure enough medicine for a child that was dying for need of this medicine.” Admitting that a corner had exaggerated the value of the pound of opium to $6.00 (the doing of which I condemn as heartily as Mr. Kelly), that does not justify a balance of hi^ sensational remark. A pound of opium (Troy weight) contains 5,760 grains. I am in- formed by a respectable physician that one grain of opium, or its pro- duct, is a dose for a child, whether it lives in a tenement-houSe or a Fifth avenue mansion. If this estimate is correct, sufficient opium for ten doses would only cost one cent, instead of the unknown quan- tity of the full price of a day’s living,” as Mr. Kelly has it. If Mr. Kelly’s ‘‘child” should unhappily die for the need of opium, the blame must be laid at some other door than the opium corner. That would be only fair play. It may be a pleasure to know that the opium corner referred to proved a disastrous failure to all who were inter- ested in its operation, and the lesson it taught is expected to be permanent. Again, in the same letter, Mr. Kelly writes : “ 2d, The same condition of things exist in bread-stufls, and even the great staff of life is made a mere plaything of selfish speculators of the Produce Exchange. When men like James E. Keene are crushed . between the upper and nether mill-stones of Wall street operators, they rush to the Produce Exchange, and by making corners in wheat, flour atid provisions, seek to retrieA^e their failing fortunes. Mr. Keene, Amour & (Jo., of New York and Chicago, and their associates, liave repeatedly locked uj) all available bread-stuffs, for no other pur pose than to create an artfi-licial stringency and advance the price, 471 compelling the consuming classes to pay exorbitant prices for ^the bread which nourishes and sustains life.” This would be a very terrible state of affairs if Mr. Kelly did not again draw upon his imagination. He cannot be altogether blamed for not knowing better, for many of the' newspa])ers of that day, 1880, when the corner referred to was being operated, were equally erro- neous in their statement. The wheat crop of that year was estimated at nearly 500,000,000 of bushels, and the corn crops at 1,700,000,000 of bushels. If Mr. Keene, therefore, was ‘^crushed” in Wall street, how was he able to buy up ‘all available bread-stuffs,” the estimated value of which (the wheat alone) was about $050,000,000. If Mr. Kelly had charged that Mr. Keene and his associates had tried to destroy the trade of the city of Montreal by damming up the falls of Niagara with a garden spade, it would not have been a more ridiculous cliarge to have made in the in- terest of the Canadian government against these alleged offending corner mongers. But Mr. Kelly further states that the effect of these purchases upon the consuming classes compelled them to pay “ exorbi- tant prices for bread.” Now, although disapproving of this corner as much as Mr. Kelly, the truth must be told, and, therefore, permit me to show you the measure of its effect upon the “bread,” which Mr. Kelly so truly said, “ nourishes and sustains life,” “ Mr. Keene’s corner had little effect in New York, its influence was principally confined to Chicago, where the stock never exceeded a few million bushels, and for the time being it possibly gave an exag- gerated value to wheat in that market of from ten t(f fifteen cents a bushel. But as soon as this influence extended to all markets, the result would be as follows, while the corner lasted : Five bushels of wheat will make about 120 loaves of bread, the usual size. The ficti- tious value of the wheat in those 120 loaves, estimated at the outside figures, would be seventy-five cents, or a little over half a cent per loaf, or, at the outside, one cent added to the cost of a bread ration of an able-bodied man, for one day. Truly, corners, and aggressive cor- | ners, especially, are demoralizing ; but their effects are not so afflict- ing as Mr. Kelly paints them. By Senator Browning : Q. Is that a fact that the price of wheat was not increased Over fif- teen cents a bushel ? A. No, sir ; from ten to fifteen cents. Q,. When did the corner commence ? A. When you come* to speak of actually a corner, there was no be- 472 ginning to the corner ; the corner exaggerated the price for a short time there, but I refer to that a little furtiier on, showing you the exact facts in another general statement which is made here. The witness then continued reading as follows : My second illustration is from the sayings of Mr. F. I>. Thurbcr who has so lately testified before your committee, and who appears to have very greatly exaggerated ideas ; I liave seldom seen a statement of the very many with which he is credited that would bear investi- gation or which could be followed to any logical conclusion. Take for instance, as an example, the remedy he has suggested to you as a corrective of the baneful effects of dealing in products of fu- ture delivery; say would prohibit,” says Mr. Thurl)er, ‘^arnan sell- ing what he did not possess, excepting in the case of a farm or factory, where the growing crop for regular product furnished a regular basis in legitimate trade for such transactions ; in short, I would make actual delivery a basis for a lawful transaction.” Now, the meaning of this (if it really has any sense in it at all) is that he would permit the farmer to take the chances and sell what he had not got ; but he has forgotten to provide the farmer with a pur- chaser, unless he intended, by inference, that the purchaser was to be another farmer ; but assume for a moment that Mr. Thurber did intend that the farmer might sell for future delivery that which he did not possess to a merchant, then the merchant niust sit down and wait till the farmer gets it, because Mr. Thurber says, “I would make actual delivery a basis for a lawful transaction,” except for a farmer; but suppose the farmer’s crop failed and he never did get what he sold and promised t(^ deliver at a future day, what then ? Why Mr. Thur- ber would say, ‘‘ Oh, the wicked merchant has cornered the farmer ; put the rascal in Coventry for daring to take advantage of the honest farmer.” But examine Mr. Thurber’s standpoint from another standpoint intelligent forethought is an essential element in commerce; Mr- Thurber is a grocer having a large trade, and Messrs. A. A. Low & Bro. are importers of teas y Mr. Thurber finds that the demands of his customers upon his stock of tea will exhaust it in three months unless he provides for its replenishment; what is more natural and legitimate than for him to call at Mr. Low’s office and enter into a negotiation for the purchase of 1,000 chests to be delivered prior to the date of his expected need; but perhaps Mr. Low may say, I have not the tea you want now in stoeks, but I expect to have it soon, and I will sell you 1,000 chests deliverable in sixty days from this date ; as this suits Mr. Tliurber’s business equirements he accepts Mr. Low’s offer and the trade is consurnTnated. 473 By Senator Browning: Q. Do you know that to be the fact ? A. This is a hypothetical case I am ‘stating, what has been done every day. Q. It is being done every day ? A. It is being done with my own firm every day. I only give you teas instead of grain, and the same system is going on all over the ^ country. The witness then continued reading as follows : I cannot say what Mr. Thurber’s ideas of such action on the part of Mr. Low would be, but I am positive that Mr. Low would have no idea that he and Mr. Thurber had committed the sin of gambling. But let us follow this transaction a little farther. Before the sixty days come around, suppose that tea has advanced in value and Mr. Thurber finds that owing to the advance the demand for tea from his customers has been lessened and he now believes that 500 and not 1,000 chests will meet his trade requirements. Should he be debarred . the right to sell the surplus 500 chests to a brother grocer wlio might need them or even back again to Mr. Low if that gentleman desired them ? Permit me now to call your attention to Mr. Thurber’s statement relative to petroleum and the Standard Oil Co. Petroleum is a stable, says he, ranking third in the list of our nation’s exports ; here are export values taken from the Chamber of Commerce reports for 1881 : L Breadstuffs 2. Cotton 3. Provisions. 4. Oils $270,332,519 247,695,749 145,793,939 39,077,133 Petroleum is not a third Ibut a modest fourth as shown by these figures. Of the total exports of $39, 000, 000, over $30,000,000 was shipped from the port of New York alone, in a large measure owing to the fact that the Standard Oil Company had located itself in this city instead of some other sea-board port, where Mr. Thurber would have driven it, if (as I believe) he could have had his way in times gone by. Equally erroneous is Mr. Thurber’s statement that the Standard Oil Company “ Through its speculative manipulations it has, within a few weeks, more than doubled the price of crude oil, and its profits thereby iire variously estimated at from $20,000,000 to $40,000,000.” If Mr. Thurber has studied the subject at all, he well knows that :i. short time before the rapid advance in crude oil, there was a very rapid GO 474 decline, caused by the discovery of what at first promised to be very prolific oil territory; when it was found that this expectation was delusive, oil rebounded back*to its former value and some thirty to forty cents per barrel be 3 ^ond it, before the excitement culminated; I believe the Standard Oil Company had just as little to do with the advance as Mr. Thurber, but even if it had, if he, Thurber, was a • lover of fair play, he would have first credited that comjiany with the value of the decline before he debited it with the sum total of the advance and tried to make you believe that it was wholly due to it^ unprincipled action. I profess to know little of the oil interests; the production is about 70,000 to 75,000 barrels per day ; the consumption the world over is from 55,000 to 60,000 barrels per day, leaving a daily surplus to be cared for of from 15,000 to 20,000 barrels. The stock on hand in the United States to-day is estimated at 35,000,000 of barrels, and it has accumulated to this enormous figure in the past five years or thereabouts. It is a most important element in the commerce of Uew York, and as I have before stated gives employment to from 1,750 to 2,000 vessels from this port each year ; it is estimated that the disbursements of a single vessel amount to about $3,000, so that the sum of about $6,000,000 is annually received from the source alone by the different interests dependent upon vessels’ disbursements for their livelihood. In caring for this daily surplus and this enormous increasing stock, I believe the Standard Oil Company and its Associate Storage and Pipe Line Companies are eminently fitted ; I know nothing about their profits or their losses, but I will stake my reputation for ordinary intelligence, that if you will call the officers of the Standard Oil Com- pany before you, you will obtain much valuable information relative to the commercial value of sales for future delivery, and establish ^ the fact that there is scarcely an atom of fairness in Mr. Thurber’s statements concerning their company. My third illustration is taken from the testimony (given before this committee) of Mr. Pierce, the commercial editor of the Commercial Advertiser” of Yew York as reported in the Yew York “ Trilmne” of the 2Sth May last. Ilarland Pierce, commercial editor of the Commercial Advertiser ” was the first witness. He described at considerable length the making of'^' corners,” and said : The tendency of ^corners’ is to enhance' prices, and this is likely to bring out grain or whatever is being ‘ cormu-ed ’ ; this, in time, tends to depress prices. The ^corner formed by James Keene and others in 1870-80 increased the price of wheat to $I.r.0. 'Phis ])rice was kept up during nearly the entire crop year, causing ships to be tied up for two and three mouths. The 475 clique finally closed out the remainder of their holdings, about 10,- 000,000 bushels, at an average of ll.OO per bushel. The amount paid for the wheat by the consumers between this price, -‘Jl.OO, and the higher price, $1.60, was a loss to the country. The amount lost by the clique at the end was away up in the millions. The high price of wheat for the last few months has been due in good part to the ^ corner ’ manipu- 'lated by several large operators.’’ I desire to direct your attention specially to three statements of Mr. Pierce’s : 1. The ‘‘corner” increased the price to $1.60 per bushel. 2. This price was kept up during nearly the entire crop year, causing ships to be tied up for two or three months. 3. The amount paid for wheat by the consumers between “this price, $1.00, and the higher price, $1.60, was a loss to the country.” Mr. Pierce’s first statement is correct if he intended his questions to mean number two red winter wheat (the most valuable general ship- ping grade of wheat) and the place of quotation New York where it maintained the higher value. In the month of December — about the time of the making of the corner in New York — for just four days, namely, the 24th, 26th, 27th and 29th, wheat of this quality and grade sold in New York respectively at $1.60, $1.60 1-2 and $1.60 1-4, at no other time throughout the year (that is the crop year from 1st September, 1879, to 1st September, 1880) can I find a record of $1.60 per bushel being reached except in the four instances stated above. I give herewith the highest and lowest quotations of each month during the twelve months of 1879-80 : September, 1879, $1.09 3-4 to $1.30. October, 1879, $1.28 to $1.51. November, 1879, $1.35 1-2 to $1.48 1-2. December, 1879, $1.48 1-2 to $1.60 1-2. January, 1880, $1.39 to $1.58 3-4. February, 1880, $1.43 1-2 to $1.58. March, 1880, $1.37 1-2 to $1.50. April, 1880, $1.26 to $1.40 1-2. May, 1880, $1.27 1-4 to $1.46 1-2. June, 1880, $1.15 to $1.33. July, 1880, $1.02 3-4 to $1.27. August, 1880, $1.05 to $1.09 1-2. This is for the whole crop year ; I begun at $1.09f for the month of September which was the new crop year and managed to sell as. high as $1 .60| in December ; but $1.60 was not kept up the whole crop year, it was only four days. 47G The witness then continued reading as follows: Second statement is, viz. : That this price (11.60) was kept up nearly the whole crop year. The average for the year was really about $1.32, and that was the intrinsic value of the wheat, not on account of the ‘^corner,” which was only operative in New York for a short period, but }>ecause of the partial failure of the grain crop in Great Britain and tlie Continent which caused an active, and at times an intense,^ demand for our sur- plus. This demand began to be developed soon after the opening of the crop year in September, 1879, when the price of No. 2 red wheat was about $1.10 per bushel ; but during that month it advanced to $1.30 and the month following to $1.50 and held that advance with slight fluctuations till the following April, when the price fell off to about $1.35 for that month and May, and to an average of $1.25 for June, $1.15 for July and $1.08 for August after the crop of 1880-1881 had been assured. As a proof that this advance was caused by legiti- mate demand and not by corner operations, as Mr. Pierce states, I give you the quantity of wheat and flour exported from New York for the crop years of 1877-8, 1878-79, 1879-80, 1880-81. AVheat exported in 1877- 78 1878- 79 1879- 80 1880- 81.. Flour exported in 1877- 78 1878- 79 1879- 80 1880- 81 46,305,410 bushels 60,526,402 67,706,602 50,773,822 2,443,603 barrels. 3,740,755 4,113,854 5,174,976 The export of wheat and flour taken together during the crop year 1879-80 (Mr. Pierce’s corner year) was the largest ever made before or since in the history of the United States, and yet Mr. Pierce would have you believe that the grain that year was held above the reach of export, and that ships were tied up to the docks waiting cargoes in consequence. To show, however, that this demand was not confined to the city of New York, I give the declared values of all exports of breadstuffs from the United States for the same year, which is equally convincing. Exports in 1877-78 $181,811,794 00 1 878- 79 208,615,057 00 1879- 80 288,036,835 00 1880- 81 270,332,519 00 477 t Showing that the declared value was a great deal larger. With regard to Mr.Pierce’s third statement it is so evidently erroneous' that I will not delay you longer by pointing out its inconsistencies — - what I have said, and it is all based upon Mr. E. IL Walker’s (the talented statistician of the New York Produce Exchange) reports, must convince you that Mr. Pierce’s statements should have no weight with you whatever. Instances like these could be enumerated indefinitely, but it would be useless to illustrate further. In conclusion, I respectfully submit two suggestions. First. That commerce can best solve the problem essential to its own well-being without undue legislative interference. Second. That the commercial value of purchases and sales for fu- ture delivery” wmuld be enhanced if a law existed withholding legal effect to all such contracts unless an original margin of not less than ten per cent was deposited by each party (or may be agreed upon) and the saiae to be kept good against fluctuations of market value, upon written notice pending the maturity of such contracts. ^ By Senator Botd: Q. What did you say your business consisted chiefly in ? A. We are receivers of all western products. It is almost entirely a commission business. Q. You are a member of the Produce Exchange ? A. Yes, sir. Q. And how long have you been a member? A. I think' I have been a member of the Produce Exchange since 1858. Q. What you have already stated in regard to dealing in futures, you have stated entirely concerning the legitimate transactions in pro- duce ? A. And also what I deem illegitimate. If you notice we have really several names for a corner. I call an aggressive corner a very illegiti- mate operation. Q. I refer to sales for future delivery ? A. Yes, sir, those are all legitimate. Q. Do you know that a system of sales for future delivery is carried on to a considerable extent which is illegitimate ? A. No, I do not. I know nothing about that system of what they call puts and calls. Q. You do not know any thing about that ? A. I never had any thing to do with it, and I never knew that my Arm had any thing to do with it, and I do not think it is recognized on our Produce Exchange ; I do not think it exists there. 478 I By Senator Browking: Q. What don’t exist there ? A. The system of puts and calls. If it does, it is not recognized at all. We have no rules for it. No recognition of it is given ? By Senator Boyd: Q. You have rules regulating sales on margins, have you not ? A. Yes, sir ; those are the sales for future delivery on purchases for future delivery. Q. Is there not a call made every day on the Produce Exchange? A. Certainly. Q. Do you believe that that is a legitimate way of carrying on busi- ness ? A. I do, most decidedly. Q. Has that any thing to do with the system of puts and calls to which you have just referred? A. No, sir; nothing whatever. If you like I will explain t^ie object of that^ it is to give in an official way to every member an opportu- nity of L)uying or selling in a public manner. For instance, I wish to sell a boat-load of grain ; it may be in the canal, it may be in Chicago, it may be anywhere, I don’t know where it is ; on the call at certain hours, we have a man who acts like an auctioneer, and one man bids and the other man sells in a public way. By Senator Browning : Q. The system of puts and calls you consider illegitirnate ? A. I do, entirely so, and as I said before, I don’t believe it is recog- nized on the Exchange, and I do not believe it is operated on the Exchange; if it is, it is in a suh-rosa manner; we have no rules to recognize it. By Senator Boyd : Q. Will you please explain what that system of puts and calls is, to which you refer as illegitimate ? A. In my explanation I would only have to give you my idea of it, never having operated. I think it means a person giving a certain amount of money to another person for the ])rivilege of giving him at a certain date the thing that is named in the contract. It is not a sale, it is not a purchase, it is a privilege to deliver, and it ap])oars to me to ])e simply a gambling transaction, just exactly a,s a bet would be upon a horse-race. If a horse arrives at the goal first, the man who has nanicil him lias the ])rivi1('ge of receiving fi-om another the amount of money that has 1)cen named. That is the meaning of that, but it is 479 different from a sale for future delivery. Take my own business foi< instance ; I am on the Produce Exchange ; to-day, when business is active, we will receive a telegram from Mr. Jones, who perhaps is a shipper of grain and a correspondent of ours in Kentucky, who says. Sell two cars of grain to arrive next December.” We do not tele- graph back to know whether he has got the grain ; we understand he has when he desires us to sell it. When we sell it, we mean to deliver it. We give a contract which says we will deliver it, and we sell those two cars of grain or those ten cars of grain, as the case may be, with- out waiting a moment — just as rapidly as we can if we can find a purchaser for it. The next telegram may be from a firm in Toledo, say the firm of Farrington & Casey, with whom we have large transac- tions. They say, Sell 50,000 bushels of grain for delivery in Janu- ary.” We sell those 50,000 bushels of grain in a moment, as soon as we can find a purchaser, and telegraph back that we have sold it. We understand that they will put us in a position to deliver; we under- stand that the man who buys from us will take it when we deliver it to him, provided it is in the terms of the contract. Q. That is in the legitimate course of the business ? A. Yes, sir ; and the trading in that way is enormous at times ; at other times when the markets are not active, it is comparatively light, but I should say it would amount to hundreds of thousands of bushels every day, not with my own firm but with the members of the Ex- change. Q. Do you believe it is the duty of the people through the Legisla- ture to endeavor to suppress the illegitimate system of puts and calls to which you have referred ? A. I do, just exactly as I would suppress gambling. Q. Have you any thing to suggest which might aid the committee in preparing a bill for that purpose ? A. I understand there was a law against gambling now in existence, and it would be merely an enforcement of that law that I would apply to the puts and calls ; I do not think you could make it stronger. Q. Suppose the gambling law should not be strong enough to reach that ? A. I think I would mention it by name in the bill, puts and calls.’’ Q. Then you would amend the gambling bill by inserting the words “ puts and calls ” and all similar transactions ? A. Yes, sir ; it is a matter of intent ; when we sell, we sell wdth the expectation of delivery ; when we receive an order to sell we can’t tell what the intent of the man who telegraphs that order is, for he is away a thousand miles; we understand his intent is to do exactly as we do for him ; we do. not understand that he is gambling at all; we 480 •••do not understand that wo ought to interpose an objection to doing what he directs us on the supposition that he is gambling. Q. What percentage of your business is of that nature ? A. I should think that within the last five years the percentage of our business in selling for future delivery or against property to arrive was double or treble, perhaps greater than that — I have not looked closely into that — but double or treble what it was prior to that period, Q. Then that system of trade has increased ? A. Very much ; it has increased largely since we entered into the arrangement with the receivers of grain to have their grain graded and •since the elevators were built at the different terminal points of the city — the railroad terminal points of the city. Q. Would you call that system of doing business a speculative sys- tem ? A. It affords more opportunities for speculation than the ordinary way of waiting until the property was received; but it is a much greater safeguard in the way of operating the business than the old svstem, which required the shipper of the goods to have his property stand at risk during the time of transportation. From Chicago that would be thirty days. The ordinary fluctuations in the market some- times during that period would be very great. This system now of selling before its arrival protects him and enables him to know exactly where he stands, almost from the time of the inception of his transac- tion. Before, he didn’t know until the termination of the thirty days, until the property was sold. Q. What proportion do your sales in which the property is actually delivered bear to your sales which are merely speculative as you have described them ? A. I do not call these merely speculative sales. ‘ I do not sell them any more speculative sales than if the property was delivered. Q. Then the two sales such as you have described — what propor- tion to the actual amount of business done in your* house ? A. I have not looked into that question, but I should think that it would probably'amount to four times, three or four times, the amount of property actually delivered. Perhaps more. I would like to explain the reason why. When my firm makes a sale for any one of its cor- respondents or makes a purchase for any one of its correspondents, it gives its own name. It does not give the name of the correspondent. Now as Ave are constantly receiving orders to buy and orders to sell, we very often buy and sell from the parties whom we have previously traded with in New York ; in other words, if we buy to-day from Mr. A. 10,000 bushels of wheat, in the’ fulfillment of some other order to sell, probably we might sell to Mr. A. the same number of bushels of 481 wheat although we bought it for a party when we bought it from A, When we were ordered to sell we might find Mr. A. wanting to buy and we would sell to him. Therefore the party we had dealt with would hold a contract from David Dows & Co., for 10,000 bushels of wheat bought and another contract for 10,000 bushels of wheat sold, and those contracts would ring ('Ut. There would be no necessity for delivering that wheat there, because it would be handing it back to us, yet both transactions were different and for different parties. The man we bought originally for thus deals with the man we sold for, and the person with whom we had made the transaction in New York would be out of the transaction entirely. I could illustrate it perhaps more plainly by taking you two gentlemen. Suppose I receive from Senator Boyd an order to buy 10,000 bushels of grain and I buy it from the firm of Armour & Co., in New York. Suppose Senator Browning sends me an order a day or two after to sell 10,000 bushels of grain for him. I go in the open market and sell it and I find Armour has been the purchaser of it. I stand in the position of having bought for Senator Boyd 10,000 bushels and having sold for Senator Browning 10,000 bushels and both were transacted by Armour & Co. As far as they are concerned both transactions match. But you, gentlemen, stand, one as having 10,000 bushels bought and the other as having 10,000 bushels sold, so that Senator Boyd delivers the grain that I have sold for him and I receive it and hold it for the account of Senator Browning. By Senator Boyd : Q. So the firm is canceled in the transaction ? A. The firm to you two gentlemen is bound, but the person who originally bought the 10,000 bushels is out of it, because your friend there takes his place so far as he is concerned although we are responsible to both. It is just exactly like a clearance house for banks. To day you draw upon the Mechanics’ Bank and I draw upon the Mechanics’ Bank, and the Mechanics’ Bank has deposited the checks of this gentleman who draws on another bank. Instead of passing the money for those different checks they go to a clearance-house and they put the checks together and they balance the drafts upon the different banks and they strike a balance and they only pay the differ- ences over which is perfectly legitimate and a great facility in assist- ing the large volume of business. By Senator Browniitg : Q. Is your house interested, directly or indirectly, in the profits of the Standard Oil Company ? A. No, sir, none whatever; never had any thing to do with it. 61 482 Q. Were you interested, directly or indirectly with, Mr. Keene in his operations in 1879 or 1880 ? A. We bought some wlieat from Mr. Keene and sold some for him. Q. So you were interested to some extent in that corner ? A. No, none whatever in the corner. Q. I speak more particularly of that period when he obtained con- trol of a large amount of grain in the West and held it ? A. We made some purchases for Mr. Keene, but they were compara- tively moderate. Q. You stated 'that when you receive an order from some one in Kentucky to sell two car-loads of oats we will say, or grain of any description, that that sale and that sort of business is carried on very extensively, and that you expect to deliver the grain ? A. Y^es, sir. Q. What is the fact — that question the Senator has put you in an- other form when he asked you what proportion of your sales resulted in actual delivery — I put it in this other form, what amount of grain do you actually deliver, what proportion, as a result from those sales ? A. I should think sales of that kind, nearly all. Q. Nearly all are delivered ? A. Yes, sir, that is from the small country towns, . Q. Can you tell the committee what proportion of wheat usually grades as No. 1 ? A. A very small proportion,' because No. 1 wheat is a quality of wheat that is not generally saleable, not so active or saleable as No. 2 wheat, therefore they take a poorer quality of wheat and mix it with better quality and make the saleable grade, which is No. 2; that is the grade ; that is the great shipping grade ; the great grade that is called for abroad. Q. What proportion of the grain is grade No. 2 ? A. I should think in a year when the crop is fairly harvested ninety per cent, perhaps more, will be of grade No. 2. Q. And what proportion of the grain is No. 3 ? A. No. 3 and rejected would be the balance ; a very large proportion of the balance would be No. 3, and a very smajl proportion would be rejected ; if the crop was harvested during very wet weather then those proportions would change. Q. How many hands or houses have you knoAvn a contract for wheat to pass through ? A. One contract and settlement ? Q. Yes ? A. 1 do not know of so many. I do not think I remember of more than eight or ten in wlieat, but I have known in lard of one lot of 483 two hundred and fifty tierces of lard settling, I shoula think, thirty or thirty-five different contracts. I remember seeing it as a curiosity. By Senator Boyd : Q. Without any actual delivery of the goods ? A. The system prevents the actual delivery to each person and pass- ing the money between them. It is merely for convenience. The old system was to take and p^ss the lard to each person and to receive pay- ment, but for convenience we have a system of drawing an order upon the first man, and that performs its obligation all through, and then at the end the person with whom that will probably rest brings that order in to the person issuing it, and he makes the payment and delivery. It avoids a large amount of clerical labor and a good deal of risk. Q. How many houses have you known a contract for pork to pass through ? A. The speculation in pork and trading in pork in the city of New York is mostly confined to an actual jobbing trade, and therefore I have not seen it often. Q. Can you state how many times cotton has passed through differ- ent houses ? A. No, sir, I do not know that. I know very little of the cotton market, although we sometimes do some business in cotton. Q. Do you know what the brokerage on wheat, pork and lard is ? A. Yes, I know the brokerage on lard is two cents a tierce, upon pork two cents a barrel, and upon grain different prices attach to it. Some brokers charge a half a cent a bushel and others a quarter of a cent. Q. Is that a charge on the product? A. Yes, sir. Q. Does your firm deal in option contracts ? A. We deal in purchasing for future delivery, if that is what you call option contracts. Q. That is what you call option contracts, is it not ? A. I think it is. Q. Who has the privilege on options, the buyer or the seller ? A. It depends on the way the contract is drawn ; it you wish to buy from me a quantity of wheat for future delivery, if the option rests with me as to the time of delivery, the price would be a little cheaper than if the option rested with you, for this reason, that if the option rests with you to call upon me for the wheat, I must have the wheat on hand and hold it during the month of that option and give it to you the moment you call for it. Therefore I must have it on hand on 484 the first day of the month, because you have a right to call for it, and I may have to hold it till the last day, and all the expenses attending that holding to the last day would be counted as a portion of the cost of the grain to you, whereas, if you bought it at my option, that I would have the option of delivering it to you, I could deliver it to you just as soon as it came into my hands. ^ Q. I would have to receive it as soon as you delivered it ? > A. Yes, sir. Q. Where does that differ from a put and call in the Stock Ex- change ? A. I don’t know any thing about the Stock Exchange, but it would differ in this way; if I understand a put I would have the privilege if I wished to deliver to you ; but if I didn’t wish, I wouldn’t make any delivery at all. Q. If I put up a margin to call upon you at a certain time in Janu- ary to deliver me 50,000 bushels of grain that would be a transaction on the Produce Exchange, wouldn’t it ? A.. No, sir ; we have no such transactions ; we have no puts and calls there, that I know of ; I never knew of any. Q. In one case you have the privilege of delivering to me and I am obliged to take the grain, and in the other case I have the privilege of calling upon you at a certain time for the grain ; that is the difference ? A. You get it wrong; I thought you referred to a buyer’s option or a seller’s option. Q. I can’t see where that differs ? A. Suppose you come to me and say I wish to buy a boat-load of grain” — that is 8,000 bushels — that is the way we sell it, because it comes in a boat-load, about 8,000 bushels ; you wish to buy a boat- load of grain, seller’s option, in January ; I sell* it to you if the price is all right. Q. And I put up a certain amount ? A. No, wait a moment; the rule of the Exchange says that I may call a margin from you, and you may call a margin from me to be put in a place- beyond the control of either of us ; that is to make each perform his obligation to the other ; now the obligation is that some time during January I must deliver to you at my option a load of grain and you must receive it and pay me for it ; now reverse it ; you have the option ; then I must deliver to you a load of grain during January when you call on me and I receive payment from you for it. Wliat is a put ? A put is merely that you give me a certain amount of money to allow you cither to deliver me a load of grain in January or not as you ])lease ; therefore I stand in a position that if you choose to deliver me a load of grain, I must take it from you ; but there is no obligation on your part to deliver me a load of grain if I call upon you lor it ; it is a gamble. 485 Q. There is a difference there, may be, but I can’t see it. A. We will change it this way; suppose I buy from you to-day a load of grain ; I send down to the office and ask you for the grain ; you have to deliver me the grain ; suppose instead of buying it for delivery to-day I buy it simply for delivery in January ; it is an actual transaction ; grain has got to pass ; it is a purchase; now a put is not a purchase at all ; it is merely a j^rivilege given you because you havt^ given me so much money either to deliver it to me, or not, as you please. By Senator Brown-inTt : Q. I have been under the impression right along that I could make a transaction with you by which I would put up a margin and that would give me the privilege of calling upon you at any time in Jan- uary to deliver me the grain or its equivalent ? A. No, sir, then you have got this thing all wrong in your mind. Q. I thought you just stated that ? A. No, you see there is as much of an obligation resting upon you as there is upon me in the ordinary transaction ; in a put there is not ; if you buy a load of grain from me you must receive it from me that is the obligation that we hav/C both entered into. Q. But the fact is on the last day, when settlement comes, the grain don’t pass, but yon pay me the difference ? A. The grain does pass ; if I fail to fulfill my obligations to you under my contract then another power steps in and settles for us ; but the intent of the contract is’ that I sell you and you receive; that is, I must deliver to you, and if I don’t deliver to you, you have yourright then of recourse against me, just exactly as on any contract that you would make. • # Q. Isn’t ift a fact that there is a very small percentage of actual deliv- eries on the floor of the Exchange ? A. Oh, no, there is a very large amount ; transactions are going on every day ; there is a very large amount that will ring out continually as I tried to explain ; for instance if I buy for that firm that I spoke of in Toledo 10,000 bushels of grain for delivery in January, some time during the month of December, that firm may desire me to sell 50,000 bushels for them in January, althoughi bought 10,000 bushels for them ; what would be the result ? When I come to make the delivery, so far as they are concerned, only 40,000 bushels will be for their account, because 10,000 have already been disposed of ; before we sell the grain we don’t wait until we receive the actual grain, but we sell the grain that we are to receive, and the parties for whom we are acting determine that it is a good thing for them to close their con- tract or to sell to somebody else; that thing is going on just exactly as 486 money is being placed into a bank, and then the clearing-house system comes in and reduces the volume to its minimum and that is done en- tirely with the intention of saving labor. Q. What amount of wheat has your house purchased for any one year during the last three years? A. I could not possibly tell. Q. llow much have you sold in any one year? A. It would be a simple guess ; I’couldn’t possibly tell. Q. Can you tell what month during the last year your dealings have been the heaviest? A. Generally the heaviest dealings are immediately after the maturity of the crops in September, October and November up to the close of navigation ; those are generally the heaviest times. Q. Take for instance then last October; what percentage of your sales embraced an actual delivery ? A. That I couldn’t tell you without looking. Q. What is your opinion ? A. I think this year the business has been comparatively light com- pared with other years ; the demand has not been so heavy ; 1 should think double the amount would be within the figures. Q. I don’t understand what you mean by double the amount ? A. I think the volume of our sales would not be more than double the amount of the actual wheat that passed through our hands. Q. That is to say, if you sold 200,000 bushels you would actually deliver 100,000 bushels ? A. Yes, about 100,000 bushels would pass ; it is really guess-work, because I am merely the financial member of the firm and I don’t pay much attention to the volume of the sales ; it is purely guess-work with me. Q. Mr. Dow’s house has the reputation of doing a larger cash busi- ness than any other firm in the market, is not that the fact ? A, I do not know that we aim to do that ; we aim to do a safe busi- ness, and perhaps we do receive a larger proportion of grain than any other house, but what the other houses’ business would be in the sell- ing for future delivery, I could not tell ; I have no means of knowing. Q. Can you tell the committee what different grains sold for last Saturday on call — the quotations for last Saturday ? A. I tliink I could. Q. Wliat were tlie published quotations for Saturday last ? A. Of what kind of grain ? Q. Say of wlieat ? A. I tliink No. 2 red winter wheat, this shipping wheat, was worth about $1.10, somewhere in that neighborhood. 487 Q. That was the quotation ? A. That was about the quotation, Q. Suppose I went in the market, could I buy it for that ? A. I think you could ; whatever the quotation is you could buy it at. Q. Have you ever known a time when wheat or grain sold for more than the quotation marketed it ? A. I do not really understand your question. Q. I have been told that if a man went into the market expecting to buy for the price that was published in the papers he would find himself mistaken ? A. I think newspaper reporters very often get wrong ; I don’t think they would intentionally do so ; there are times when it would be al- most impossible to buy because the property is not there. Q. In other words I have been told, within the last two or three days, that it frequently happens that grain will bring a cent more a bushel than the quotations in the papers or the quotations on ’Change? A. For instance I have seen very often in the morning a dull mar- ket and in the afternoon a very active market or vice verm, and the quotation that the reporter might have of the morning market would not be a fair quotation of the evening market ; you will generally find, though, all the quotations given — the three times of a call ; that is the reason we have calls three times a day in order to have a fair view of the market, an official view of the market ; the price of wheat may be ^1.10 at the first call; that is a published declaration of the value of wheat and a good many transactions take place ; but at the last call the price may be $1.07 or $1.08 ; it will depend entirely upon what the condition of thing is between those two calls. But anybody going in and paying the market value can always buy if the stuff is there to sell. Q. That is the fact? A. Certainly, except in|the operation of a corner very often these persons who are running a corner will say We will sell to an ex- porter, somebody who is taking this away; we will sell a cent or two a bushel less than we will sell upon the market,, because that is apt to come back to us, therefore we won’t sell it at the same price.” Q. Then you are of the opinion that the price fixed on call is generally the standard for a sale? A. The price fixed upon call is a fair representation, a fair uniform representation of the market value at the time the call was made. The person who makes that is not a merchant, he is an employee of the board of managers, and he names the price of the wheat upon that call from his best judgment upon the transactions that take place be- 488 fore him. After the call is over he takes and writes upon the top of the board what is termed a settling price for that day. Let me explain to you what the meaning of that is : if I deliver you a boat-load of grain it is understood that the amount that I am to deliver you is 8,000 bushels; that is the amount I sell you ; but a boat-load of grain may be 7,000 or 8,200 bushels; now the surplus over and above the amount of 8,000 bushels or the reduction below 8,000 bushels is to be settled for at the market price, not at the price of the contract, and therefore for the 200 bushels that I would deliver you over the amount of my contract you would pay me not the contract price, but what- ever the man who operates the call states is the settling price. In other words, if I sell you a load of grain for sixty cents, the 8,000 bushels that I delivered you would be charged at sixty cents, but if the market price at the day of delivery was seventy cents, you would pay me seventy cents for those 200 bushels. That is all there is to that. Q. If that is the fact, you believe that the [calls have an influence on the market then, a decided influence ? A. The calls have the effect of giving public notice of what the actual market price in the opinion of the caller is, at the time the call is made. Then there is a rule that if any member of the Exchange questions the price that the caller puts up, he immediately appeals to the members of the Exchange, the members of the trade, and the members of the trade then decide — not the caller. If the caller’s price is called in question, the members of the trade then decide what is the market price ; but I hardly ever knew of that having been called in question. It is a price that is made by a man employed by the Exchange for that purpose, beyond the influence of anybody. Q. Then these calls give opportunity to men, if they see fit, to bear down or bull up the market, do they not ? A. Yes, it gives them an opportunity to sell. It you are a member of the Exchange and a price is bid for a boat-load of wheat $1.10, you say, I will sell that to Mr. Orr,'’ and I must buy it of you because I have made the offer. Then you immediately make a contract with me for that load of wheat, and you say, Mr. Orr,-as this load of wheat is not to be delivered to you for a month, I would like to have you put up a margin to assure me that when the time comes for my delivery to you, tliat margin will protect me against the possibility of your failure.” That is the meaning of the margin. (2. I understand that; but I am now talking of the calls and their influence upon trade; you admit that these calls afford opportunities to men to bear down the market or of increasing the price ? A. They would, just the same way as they could bear down the 489 market or increase the price on the floor of the Exchange, except the call is a little more public in the way of doing it ; if you have a load of wheat to sell you have got to find a person on the Exchange who wants to buy it at any otlier time than when a call is operated ; the meaning of tlie call is that the buyers and the sellers get together and you say, ‘‘I have got a load of wheat to sell and I will sell it at $1.10,” and I believe that somebody will be there who has a load of wheat to sell if I want to buy one, and I attend the call and say, will have your load of wheat;” if 81.10 does not satisfy me I say, “I will give $1.09 for it ;” and the caller says, Mr. Orr will give $1.09,” and somebody else steps in and says, will sell Mr. Orr,” and you lose the chance of selling it. Q. Do you know what proportion of the sales are made with the view of actual delivery at those calls? A. I believe that every bushel of those sales is made with the view of actual delivery. Q. If I should tell you that on the best authority of persons doing that business and the statement of the officers of the Exchansre about O three per cent of those amounts proposed to be sold is actual delivery and that ninety-seven per cent is pure speculation, then you would agree with the committee, I think, that the calls do give an opportu- nity for speculation and do disturb the market? A. I don’t think they give any other opportunity to disturb the market or to sell than the Produce Exchange gives the opportunity ; the object of the Exchange is for men to meet together who wish to buy and sell, and the call is merely a public way of letting a buyer know that there is a seller present, whereas, in the other case, he would have to go among 3,000 members and find out the man ; it is nothing more than an auction. Q. Before you had the calls'and before you had the grading system you got along very well ; the buyer and seller met on the floor and transacted their business, did they not ? A. Yes, sir. Q. And the legitimate demands of trade were satisfied then, were they not ? A. They were, but not with half the facility that they are now ; let me illustrate ; before we had a telephone we got along very well ; but the moment the telephone came into existence we all put it into our offices and we sell a great deal of grain through that means and have reduced the number of messengers that we had, merely by using the telephone ; if we receive a telegram after we leave ’Change, asking us to sell a load of grain or a quantity of grain, we immediately call? upon the telephone, those parties who, we think, want to buy ; for 26 400 instance, I will cite a case that very often occurs ; we receive an order to sell a very large quantity of grain ; we know a shipper that want it; I will say Mr. Bingham, for instance, a large dealer; we immedi- ately call him upon the telephone, and we say, “we have just got an order to sell grain for next month’s delivery, do you want it ;” he says, ‘‘what is the price;” we give him the price, and if he wants it we immediately m.ake the trade; we make a register of it and write a note saying, “ we have just sold you so much grain,” and send it up to him; the telephone does that; we got along before we had the steamship and before we had the telegraph, but all these things are adjuncts to trade, and if you take these things away from us to-day you would leave us demoralized because the rapidity, the facility, and tliji volume of transactions are enormous now, and these tilings are immediate helps and we wouldn’t know hardly how to get along without them. Q. We don’t want to make the telephone responsible for all this speculation that is carried on throughout the^country. The telephone is a good servant of the people ? A. In regard to speculation, wdiat is it that pays the taxes ; is it not a system of speculation that is going on continually; you must draw a line somewhere ; I can’t draw the line between what would be gambling in grain and speculation in grain, because it must be the intent in a man’s mind ; but I would say this, that I don’t know any firm on the Exchange that ever sold, for future delivery, a bushel of grain, or that ever bought for future delivery a bushel of grain, that they didn’t intend to deliver, and intend to receive at the time that they made the transaction. Q. It is in evidence, given by your ex-president and by a number of ’ gentlemen thoroughly familiar with the transactions of the Produce Exchange, and they have stated it very frankly before this committee, that an option and a future is selling what you have not got, and buy- ing what you do not want, and that it is pure speculation ? A. I don’t say that I sell what I haven’t got ; it is just exactly the same way that an insurance company will take a risk upon my vessel along the lake there ; they are not sure that that vessel will arrive in port ; but they expect it will, and therefore, they take the risk; now I am a commission merchant, and if you are dealing with me, a reputable, upright man, and telegraph me or write to me to sell for you in this market 50,000 bushels of wheat, I immediately sell it for you, because I believe that you arc going to put me in a position to make that delivery ; I can’t tell what your meaning is; if I afn to wait to tele- grapli back to you, to know if you have got this grain and if ybu really mean to deliver this grain and all that kind of thing, it would destroy the whole system of confidence and faith in which we deal. 491 Q. There is no disposition on the part of this committee, I take it, to prevent any such transaction as you have described, because from your statement you do a legitimate business. When you make a sale for a man you expect to obtain the grain and make the actual delivery^ and that is a fact. What we are trying to do is to prevent this nine- ty-seven per cent of the business that is carried on upon a purely spec- ulative basis where no grain is handled or delivered, and is not ex- pected to be handled or delivered, but upon settling day the parties to the transaction step up to the captain’s office and pay the differences ? A. There is never any thing of that kind going on as far as my ex- perience goes, except when there may chance to be a corner, and these corners are very, very seldom, and very much exaggerated when they are. You will find at the end of the month that almost everybody has paid for or settled his contracts or made his^deliveries. It is only in case of the failure to make a delivery that there is a settlement such as you speak of, I don’t want you to carry away any better impression of me or my firm than we deserve. If we sell for a man grain which we have not got actually in hand, but which we expect him to put us in the position to deliver, if a few days afterward or any time pend- ing the delivery of that, he desires us to buy for him a like quantity of grain, we will buy it for him because we think it is perfectly legitimate if a man determines to sell what he has already bought, because he is going to make a profit by it, or because he fears he is going to make a larger loss. He has a perfect right to sell it. If you are going to do away with all speculation and reduce us down to a system of making deliveries and sales of exactly what we have got, then we get down to the position that you would make us — a nation ofhuxters. There would be no speculation or very little speculation. There would be nothing more than the producer and the consumer and they would be brought together. But then what makes cities ? Q. Do you believe speculation increases the value of the product? Don’t you think it has a tendency to put an artificial value on the product that is sold ? A. Ho, sir, I don’t. I think if you examine the condition of things you will find that this system of speculation, with the exception of an aggressive corner, which we all condemn, has the same effect upon consunlers as the telegraph had upon commerce when it was first in- troduced. It is a leveler. It holds together and keeps a very much more level system of prices than existed before it came into effect, just exactly as the telegraph did away with all those surprises in the mark- ets, which were generally created by an arrival of a vessel from abroad. I remember before the telegraph we wouldn’t sell any thing until the steamer arrived, if a steamer was expected. We were suspicious of a 'I! 493 man who came rapidly into the office about the time a steamer was to arrive, because of the news that he might have as against ourselves who didn’t have it ; but when the telegraph came, which gives the markets from abroad every day instead of once a week or a fortnight as they originally did, business went along without the slightest sus- picion and there was no interruption. Q. Do you believe that people who are engaged exclusively in the option business, where there is no pretense of an actual delivery, ought to be prevented from carrying on that sort of business if it is possible? A. If you can determine and define such a man, I question whether you might not prevent them ; but with a proper recognition of every- body confining themselves to a legitimate trade, except as regards their own individual intent, I think it would be difficult to determine; if I determine to buy a load of wheat from you for future delivery, how are you to determine whether I mean to ganible upon that or not? I give you my obligation which says that I will receive it from you and also put you in a position that you can’t suffer any thing from my fail- ure; that is by puttin'g up a margin for the fulfillment of my contract with you; are you to turn around and judge me and say, ^^you are a gambler; you don’t mean to receive this ” ; we can’t tell those things at all ; the rules of our Exchanges recognize the man’s right to buy for future delivery, but they will not recognize this question of ‘‘puts and calls,” which are, as I told you before, simply gambling. Q. You believe that is wrong ? A. I do, sir ; and demoralizing. Q. And so do I ; I take it we both agree that where there is a sale with the intent of an actual delivery it is perfectly legitimate, and ought to be permitted ? A. Yes, sir. Q. Suppose we could prevent the dealing in options pure and simple and making settlements unless there was actual delivery unlawful, would that have a tendency to check the gambling part of the trans- action ? A. Xo, it wouldn’t have that tendency and it would destroy, to a very great extent, this protective feeling. Q. I am speaking now of the gambling transactions where vou go into the market, or I or somebody else we say, with a view of making a gain on account of the rise or the fall of the market on the day of settlement, and then laying in the difference between the price that it sells at and the i)rice that I bought at, or vice versa; that is purely a gambling transaction ; if we make that an unlawful thing it will have a tendency to check the evil resulting from speculation ? A. Who is to determine that? Suppose T buy it and you are to test V 493 my purchase by that rule ; who is to determine whether I am gamb« ling or doing a legitimate transaction ; let me illustrate it a little fur- ther ; I will take the names of actual parties, because these are actual things that come up, and are coming up every day ; take the firm of John Sinclair & (Jo., friends of mine, and very respect- able and upright merchants; they wanted to locate a packing- house, and after looking the ground all over, they located in Cedar Rapids ; so anxious were the people of Cedar Rapids to have them that they offered to give them a location for their packing-house or very large facilities for making money if they would locate there. They did locate there, and immediately around Cedar Rapids and for a hundred miles or so an immense demand arose for the things they packed, pork and such like things. They packed from 1,000 to 2,000 hogs a day. The hogs came into them generally in tliree or four months in very large quantities. They wished to continue the operation of their business during those months ; but it would have been impossible for them to take the risks attendant upon that packing business if they did not in some way take advant- age of the facilities granted them in the large markets for selling that pork Avhen they can’t send it to market because it is not cured. Sup- pose they write to my firm and say, sell for me in your market a thousand tierces of lard foe February delivery we sell for them the thousand tierces of lard, and as far as that thousand tierces goes they are protected against any loss in the stock that they are holding. They use the money which they wouldn’t otherwise have used in going on, or buying another lot of hogs, giving their men employment and keep- ing their factory running. We will advance them too upon that other lot because we know that the risk that they are running is protected by their sales. Now su23pose in the month of January they find that there is a surplus demand right at home for that lard which they had sold for New York delivery in February, and they telegraph to us buy in for us that thousand tierces of lard you sold.” They may have an opportunity of selling that at a better price to the consump- tive trade. We immediately go into the market and buy in that thousand tierces of lard. Now there are two legitimate transactions in which no lard Avill pass of John Sinclair’s through our hands, and if in buying in that thousand tierces of lard we should happen to strike upon the very men that we had sold the thousand tierces of lard to, that lard would ring out, and if we bought it at a different price we would pay them the difference or they would pay it to us. Mr. Sin- clair in the mean time would be going on operating his business — it gets into the tens of thousands at times — the men would be employed, the farmers would have a market for their hogs, and every thing would 494 be done that was straight and honorable and right, and at the same time no lard would have actually passed through the hands of the parties in New York. Take away that protective feature and what would be the result ? Mr. Sinclair’s factory would have to be closed when he got to a certain poijit. Q. What would be your brokerage on that transaction ? A. Our brokerage would be one-half of one per cent for the actual sale of the lard. If the lard came forward and was delivered it would be then one per cent for this reason. Q. I am speaking of that transaction alone. That would be one- half of one per cent ? A. Yes, sir. It is not brokerage. We call it commission. The brokerage would actually be two cents a tierce merely for the selling or buying. Q. If the selling actually took place he would have to pay more than that ? A. The sale does actually take place. Q. You say if the lard was delivered it would be one per cent ? A. For this reason, if the lard was delivered it would have to come forward from the place where it was lying and we would be called upon for the money the moment it left there with the bill of lading, and because we would be under advance for that time we would have to charge a higher commission. Q. Why couldn’t he cancel that contract by paying you your com- mission ? A. Because we were obliged to deliver the lard. We had sold it to somebody. Suppose I didn’t buy it from the man that I sold it to but I bought it from Senator Browning, then Senator Browning, when the time would come, would deliver me that lard and I would hand it over to the man to whom I sold it. But the volume of this trade is so large that we are continually striking upon people whom we have bought and sold from and those things are thus merely rung out as with the banks in clearing-houses. One bank has $10,000 on the Mechanics’ Bank, the Mechanics’ Bank has $11,000 on it, and they meet in the clearing-house and match the checks to the extent that they will match, and they pay the difference of $1,000, and that is the whole extent of this i^ransaction. Q. If you should aI)o]isli calls on ’Change could you meet the de- mands of the ])ublic ])y selling l)y sample ? A. We do sell by sam])le. (h If you sold exclusively by sample could you carry oa all the legitimate transactions in that way ? A. We could in a very modilied manner. But let me explain to you 495 that we could do it very easily if every thing came in by canal. There is a boat-load of grain, a large package, 8,000 bushels, but a load of grain by car is only 450 bushels. Now a train of twenty cars will make one boatload of grain. To sell one boat-load of grain we would have to send to twenty cars to get twenty different samples, and those twenty different samples would all have to match in the eyes of the buyer before he would purchase to the extent of a boat-load. We have a system that those cars come to an elevator. Before they arrive at the elevator the inspector of the Exchange or his agents go through them all and test them according to a grade. Some will be a little higher than the grade, some a little lower ; they all go into one eleva- tor and are dumped into different bins ; all No. 2 will go into No. 2 bins ; then we get our receipts and we sell by the grade, the standards of which are on the Exchange, and instead of having to sample every car as I told you, we make the sale with the same ease, even with greater rapidity, than we would of a boat-load by canal. Q. Supposing you adhere to the grade and sell by grade — you sell by sample now by grade, do you not ? A. No, as a rule not ; if a man wants a very choice load of wheat, we will get a particular bin, and get a sample of that bin, and show him that and tell him we can give him that kind of wheat ; but that is very seldom done. Q. It is a finer grade ? A. If the wheat is better than the grade, we ask the elevators to keep that what is called identity preserved wheat,’’ and it is not put in the elevator, but kept by itself. Q. Could you carry on all legitimate business without this call on ’Change, three times a day ? A. Certainly you could. The call is simply a facility. It does not change the character of the operation at all. It is just like an auction. That is the meaning of it. It is to give a facility to buyers and sell- ers to discover one another without having the trouble of going to 1,600 or 1,700 men, who chance to be on ’Change, that is all. But there is ten times, I don’t know but there is twenty times, more busi- ness done on the Exchange after the calls, when we see who wants grain, from the calls, than there is actually upon the calls ; but the call makes a standard of value. Suppose you tell me to sell your wheat to-day. I don’t like, exactly, to sell it to-day until I know what the call says, because that gives a character to the tone of the market, and then I would feel if I sold it upon the call, or corresponding with the call, you would not find fault with me, in case I make the sale and report it to yoa 496 Q. What would be the practical effect if you abolished the calls ; would it cause complication or rivalry ? A. No complication or rivalry. It would do away with one of those facilities of arriving at a knowledge of the market value. Q. Wasn’t there a greater rivalry before you had the call than there is to-day ? A. No, sir ; if you were in the Exchange you would see great rivalry among us. Q. You have a twelve o^clock call, haven’t you ? A. We have three calls. Q. After a call, a quotation stands good until the next call, does it not ? A. Oh, no ; suppose I want to sell my wheat and you won’t give me the price that, the caller named as the market price, I say very well, what can you give me ?” and if you name a price and I am anxious to sell, the call don’t influence me at all, further than to let me know what is the standard of value for the time. As I told you, the differ- ence between the two calls, some days, will be very, very marked. I have seen, sometimes, four cents a bushel difference between the two calls. Q. What would be the practical effect of preventing settlements on settlement day, except where there was an actual delivery, upon the business transactions of the Exchange ? A. There is never any settlement made upon the maturity of the contract upon the call prices, except in a question of a corner. I tried to explain to you the meaning, or the object, of the call for settlement prices. It is not for settling a contract. It is for settling the differ- ences, and the quantities over or under the standard quantity of 8,000 bushels. Q. I am under the impression that all contracts made for future de- livery in January, not settled before the last day — that the last day is considered the settlement day for all contracts for future delivery in that month ; am I right ? A. Yes, that is the last day that you would have the option of delivering to me. Q. And that is settlement day ? A. Yes, sir. Q. On that day, I take it from what has been stated to this com- mittee, that perhaps ninety-five per cent, and perhaps a greater per- cenlago tlian that of tlie transactions- are settled by the payment of money from one to the other without any actual delivery ? A. You are entirely wrong. Let me exjflain to you. The general 497 rule, ninety-nine out of every one hundred instances, is that con- tracts are settled before the last day, they mature or are closed before the last day ; but in case they are left to the last day, and they are not settled before the call, which is at half-past one o’clock, the middle call, then as I read you the rule the man who has failed upon his contract is subject to this operation. The person to receive that property from him writes immediately to the grain committee, and says : Mr. Jones has not delivered me the property maturing to-day under his contract.” Now the grain committee rises up at the call and reads that statement and says : Gentlemen, who will sell to us under the rules of the Exchange the amount that Mr. Jones was to have delivered to Mr. Orr,” for instance, ‘‘under his contract,” and the grain committee bid it in ; but I read you the rule where the grain committee are prevented from paying any excessive prices for that property that they buy in on account of manipulated markets or markets that are influenced by a failure in transportation, or in other words a corner. Q. Then, in your opinion, there are very few settlements by cash on settlement day, the la«t day of the month — it is all by actual delivery ? A. I do not know whether they may by the last day of the month settle. You may think that, perhaps, the last day of the month may be lower than the first day or the middle of the month, and may not wish to buy in your grain and make a settlement till then. That is entirely optional with the parties who have to make their delivery under the contract, but there is no failure unless the purchase is made through the committee, and that thing I don’t think occurs once in six months upon our Exchange. Q. I have been very greatly misinformed then ? A. I wish you would really inform yourself upon that. Q. I have been told that I could put up $250 down there, for instance, an'd buy five thousand bushels of oats to be delivered in January, and if there is no settlement before the last day of next January I have something coming to me on that transaction, or the person with whom I dealt has something coming to him, and that passes to me or to him, and there is no actual delivery ; but I make money on my transaction just the same. That is what I want to understand ? A.* These things are all susceptible of proof. The only way in which you can make or lose by that transaction if you put up $250 — Q. That is my margin ? A. You can buy a load of wheat or of oats ; they generally call 63 498 upon oats five cents a bushel ; $250 would represent nearly six thou- sand bushels of oats. You make an actual purchase, or somebody for your account makes an actual purchase of six thousand bushels of oats, at an actual price, to be delivered u])on a certain day. You are obliged to receive that when the time comes. Suppose in the mean- while the market goes up or goes down, and you say to your com- mission man that you are doing this through, “ I would like to end my obligation there. I would like to have you sell that out.” He finds somebody who will buy and take your exact position with me, or he may go to the man whom he has sold it for and sell it to him and close it up ; but both transactions are just exactly as legitimate as if you bought at the store. Q. Suppose that should go to the last day of the month ? A. If you went on to the last day of the month and didn’t receive the 6,000 bushels that you bought because the price was up, then the party whom you didn’t receive from would go to the grain committee and make complaint of you, and then under the rules they would lake and sell that grain out for your account on this call. That would be the operation, and you would have to stand the loss or the profit, whichever it would be, according to their sale. By Senator Boyd : Q. And it is to secure that loss or profit that the margin is put up? A. Certainly; there are certain vicissitudes attending all business, and as we are making it a transaction for the future, the only object of this margin is to prevent failure between the times, because, take for instance myself, if I sell you a certain amount of grain for delivery in January, I put myself in a position to deliver you that grain and I expect you will receive it from me ; if you do not receive it from me and there is a loss on that grain, that margin protects me to the amount of that loss, and the balance goes to you as ascertained through the committee appointed by the Exchange, which is beyond the influ- ence of either you or myself. Q. And that is where the gambling aspect of the transaction comes in ? A. I don’t think there is any gambling in that. Q. When the person puts up his margin he assumes the risk of that quantity of grain going down in price ? A. That wouldn’t be gambling, that would be pure speculation. Q. It would be a purcliase on chance, would it not ? A. 8up})ose instead of your buying it for future delivery, you bought it actually for cash and held it for that future delivery, it wouldn’t be gambling ; if you bought a boat-load of grain from me and held it for 499 the January market, and when the January market came you sold it out and made a loss or profit on it, would that be gambling ? Q. No ; if I had the actual grain in my possession I don’t think it would, but you buy it with the intention of receiving it from a person who has the intention of delivering it ; if you bought it with the in- tention of not receiving it and I sold it to you in the same way — A. Then it is a put or a call ; it wouldn’t be a contract ; it would be a put or a call ; but those are not the contracts ; we don’t recognize them ; you always speak about corners ; what is the meaning of a cor- ner ? Who makes the corner ? It is the short seller ; this talk about the capitalists buying all the grain in the United States is all stnff and nonsense ; there is no such thing ; you asked me a question about Mr. Keene’s matter ; it is all over ; my firm never held for Mr. Keene more than a million bushels of grain at any one time nor so much as that ; I don’t think with all the talk that there has been about his corner, -at any time he held more than three or four million bushels of grain. By Senator Browkiistg : Q. Can you tell the committee the number of bushels of grain that are purchased in this country in one year ? A. Yes, sir, I think I could ; the wheat crop of that year, of 1880, was estimated to be a little short of 500,000,000 of bushels, as I say in my statement there, worth about $650,000,000. Q. In connection with that let me ask you, do you suppose that the number of bushels of wheat produced in any year is enough to cover all the sales of a year in the Exchanges ? A. Oh no, it is not. Q. What proportion do you suppose the actual crop bears to the actual sales in any one year ? A. I could not tell you ; I could not even guess at it; I will illustrate it in this way ; there are $194,000,000 to-day of money in the banks; those $194,000,000 represent the actual circulating medium of the people of the United States ; how many times that is turned over I don’t know; but it must be turned over a great many times in the year in the ordinary operations of the trade ; it- is just so exactly in the operations of this grain business and this produce business ; people are buying and selling. Q. Without delivery ? A. Sometimes it is delivered and sometimes not delivered ; it de- pends, just as I exemplified in Mr. Sinclair’s case ; that is going on all over the country ; have you any idea of what the actual value of farm products delivered in Chicago in one day is ? I asked a banker that question when he expressed a surprise that some of these packers re- 500 quired so much money ; take one item alone ; hogs for instance, the actual value market in one day during the season will be something like half a million of dollars ; it will exceed that. Q. The actual produce ? A. The actual value of one item of produce and there is wheat and corn and oats and high wines and tobacco and cotton, and there is every thing going on at the same time, and the ramifications of that are carried on by hundreds of thousands of active mercantile minds, and through the manipulations of that, the money for their families, the money for the labor interests that are involved, and all these things are entering into it, and if you ask me to separate them, to entangle and unravel them, I say it is impossible to do it. Q. You do say that where there is a sale, there is generally a deliv- ery, and that is the expectation, and that is the fact ? A. No ; where there is a sale, the sale is not made without the intent of the delivery and the purchase is not made without the intent of receiving. Q. I have been told that there has not been grain grown enough in this country in one year to meet the sales of a single day on ’Change here, or of two or three days, or a week or a month ? A. That would be exaggeration ; but the volume of transactions in active times is enormous; I have seen an estimate as high as 810,- 000,000 a day. Q. In margins ? A. No, in the sum value of the transactions. Q. Showing that a large proportion of it is purely speculative and that there is not in all cases an actual delivery ? A. There is no delivery in a great many cases ; but let me go a little further ; a few days ago I met an English gentleman named Har- graves*, who is the representative of the Liverpool Exchange ; one of his objects in coming out here was to examine into this system that we have here relative to buying and selling for future; for their mer- chants are going into that system so largely, recognizing the protective element of it; and he got from me the rules and formulas that we have relative to this whole history, and expressed himself as being very much charmed with it ; he recognized the necessities of that thing over there and came out here with the intention of studying up and rendering himself familiar with its whole working; you will read in that statement that I made to you that with the foreign merchants an immense business is being continually done here in the anticipation of demand by buying for future delivery. 50f By Senator Boyd : Q. You made a statement a short time ago which I think you would probably correct if you thought over it. You criticized some of the gentlemen in your own remarks and I want to draw your attention to it for that purpose ; you said that speculation paid the taxes ? A. I say largely helps to pay taxes. Q. Is it not true that labor and the natural products of the country, which labor develops, primarily pay all taxes ; that they are the pri- mary source of all the wealth of the country ? A. I think you are entirely right in that when you come to the fun- damental elements that where we obtain the money for the operation of the government, and the support of the people, is from the soil, that it comes from the soil in some way ; now the New York Pro- duce Exchange is putting up a building that will cost it something like $2,000,000 ; I was looking into that very question, being some- what of an inquiring turn of mind, and taking up every element in that construction and seeing how much there was paid for actual labor upon the construction of that building, I could not find a single ele- ment in it that was not a representative of labor to the extent of about ninety per cent of that whole amount there in that immense building. Q. And the balance of ten per cent represented what ? A. The balance represented the cost perhaps ; take the quarry that they paid for, to get the stone, and then to buy the land on which the timber grew and which the iron came out of; but all these things being considered I estimated it at ninety per cent of actual labor ; but then what gives effect to the expenditures of that labor ? It is the fact that the New York Produce Exchange is an association of merchants and requires room for the operation of its busi- ness ; therefore in labor is this large sum of money expended’ to facili- tate the continuation of that business which had enabled the members of the Exchange to obtain that money to expend for labor. Q. Then speculators are only the manipulators of those commodi- ties which nature and labor have produced ? A, Speculators you might say are the farmers, the mechanics, the financial and mercantile classes. Q. Answer my question, please. The question is, are not speculators only the manipulators of those commodities which nature and labor have combined to produce? A. If you will change the word speculators ” to the commercial community, I will answer, yes; but I think you have no right to at- tach the word speculator,” if you mean it to be an epithet of com- parative contempt to the mercantile community. } 502 Q. No ; I don^t mean it in that sense ; I mean it simply as the speculator or professional dealer ? • A. I am a merchant and at the same time the great element in my business is what might be termed actual speculations. I have riot a positive knowledge of the result of that which I intelligently enter into as a business. Who are speculators ? Is not the school-boy a speculator when he sits down and tries to map out for himself the choice that is to direct his future life ? He speculates upon what par- ticular department his talents will bring him in the best return. Take yourself for instance; I donT fancy that you are simply a sena- tor of the State of New York merely for the emolument that you re- ceive for your action as a senator. You may have other views and you bring yourself prominently before the public and you fit yourself for other positions. After all it is to a certain extent a speculation, for you are not positive of the result. So a doctor and a clergyman when- they are turning their attention to their particular avenues in life speculate to that extent that there is no positive assurance that the result of their intention will be realized. Q. I recognize that the fact of a senator serving the public,devoting his talents to discharge the duties of a public office and the doctor at- tending upon his patient are both laborers. They are helping to pro- duce the wealth of the country. A. But at the same time they are receiving an equivalent in some way that is satisfactory to themselves. You can’t call them philan- thropists. Your definition would be more of a philanthropic char- acter than it would be of the pursuit of a man’s usual avocations for the purposes of livelihood. I take exception to calling you a philan- thropist, or a doctor a philanthropist, merely because he is following a particular line of business which is called a profession. Q. My object was, that I thought you would modify the expression that all taxes were paid by speculation? A. I think Dr. John Hall was the author of the statement that when mercantile men are prosperous, almost all other departments of society are also prosperous, because after all you take the agricultural, the mechanical, the mercantile elements of the country and they are the foundation stones of our prosperity. I take the arts and the sciences, and the professions to be more like the branches of a tree, but after all, these I name are the great trunk of the tree, and sustain and support the branches, the branches perhaps being the more orna- mental part and the trunk being the sustaining part. Q. d’hey are usually helpful in this way that they develop natural resources and apply them to the arts, to the development of tlie com- 503 forts of life. For instance, the electrician discovers the telegraph and the telephone, and they have turned out to be immense mercantile agents and of great benefit to mankind. The engineer who builds a railroad which is one of the great commercial highways produces for mankind. So these that you call ornamental may be useful ? A. I mean useful and ornamental. I don’t mean simply ornamental. The great difference between the merchant and the scientist is this that the merchant will contribute of his capital to sustain and assist the development of science, and then when the scientist lias developed it he is quick to assist and utilize it to his purposes. Q. So long as the merchant is the legitimate agent for the transac- tion of business between the legitimate producer and the legitimate consumer, then his profession is a noble and honorable one ; but when it degenerates into the profession of merely taking advantage of cer- tain peculiar local advantages or otherwise in order to unduly enrich himself at the expense of the producer and of the consumer, then we find fault with it and think it is time some remedy should bo discov- ered ? , A. I would heartily echo that sentiment, and if you would take the trouble to investigate the rules and by-laws and regulations laid down ,by the New York Produce Exchange, you would see that they in like manner*from the A to the Z of those things,echo just exactly what you have stated. Our aim, and I believe we have resulted in producing it, is to create an intelligent, active and honest body of merchants who have first of all, as we all have, an aim in life for their own advantage, but in the prosecution of that a desire to elevate the mercantile inter- ests of the whole country and especially to make prominent the city in which we live. Q. There is just one more question. You spoke of a transaction or an instance, where several sales w^ere had, say thirty-four without any actual delivery of goods. On each of those sales, which were separate transactions in regard to that commodity, were commissions paid ? A. I could not possibly tell what was the character of the business of those other than my own firm ; but judging from my experience I believe that every party to that transaction was exactly in the same light as my own firm was and on all those transactions a remuneration of some kind was paid to the agent — assuming that they were agents — but a good many of those parties may have been perhaps acting for themselves and they may have either lost or made upon the transac- tion. Q. Supposing that each of those transactions was conducted through a broker or commission merchant, would there have been a commission paid on each transaction? 504 . ^ •» A. There would. Q. And the commodity would have had to bear that additional ex- pense ? A. Oh, not at all. There may have been a large measure of loss to some of those parties, and a large measure of gain to some of them without the commodity having to bear it at all. Q. Supposing they all gain ? A. But it is impossible, because the price of the article wasn’t changed a single dollar that day. That was merely the facility for consummating and ending the transaction, instead of having to make actual deliveries to each party having one particular lot of property and having an actual payment. Alexander R. Hammond, being duly sworn, was interrogated as follows: By Senator Boyd: Q. Where do you reside ? A. I reside in the State of California. Q. Where do you reside now? A. I am living in New York, have been doing business here for the last year. • Q. What is your business ? A. Grain and provisions. Q. Where is your place of business ? A. 42 Broadway. Q. Are you a member of a firm ? A. I am a member of the firm of Hammond & Dodge. Q. How long have you been carrying on a business at that place? A. We have not been in existence long there; we used to do busi- ness at 30 Broadway. • Q. How long have you carried on business in the city of New York ? A. Since the 16th day of last May. Q. Have you association with any houses in other cities — business association ? A. We have association in that line of business in Chicago. Q. State to the committee, please, what the nature of your business is and your method of carrying it on? A. We do a regular brokerage, a regular commission business. By the way I prepared a statement in regard to it this morning, and I had my type-writer get it up in a few minutes. I. didn’t receive a notice in regard to this matter until Saturday. 505 Q. Have you got that statement with you ? A. Yes, sir ; .1 have it. Q. And is that statement a correct one ? A. Yes, sir, as far as it pertains to our business ; if there is any thing further I would be pleased to answer your interrogatories in re. gard to it; I have not had much time to look info this matter, only since Saturday. The witness then read as follows: Mr. CHAiiiMAit — The statement made in your summons to the firm of Hammond & Dodge to appear before your commission reads as fol- lows : The cornering of grain and other articles has become a promi- nent feature of modern business transactions. This seems to us to be an assertion made/rom false premises ; the testimony of Captain Edward Hincken, taken before your commission and published in Sunday’s Herald, goes to show that as long as fifty years ago he was engaged in the business of “ cornering ” freights, con- sequently the word ‘‘modern,” used above, should be changed to “ an- cient an old axiom, “custom makes and prescribes the proper use of the English language,” is applicable to the regulation of matters of business, either commercial or financial, and it would appear that the business of dealing in different articles, as suggested in your summons, is as legitimate now as it has been since our English cousins left these shores for their own homes. The business of dealing in “futures,” as understood by us, is simply a desire on part of one individual to speculate in some chosen article, whether it be grain, railroad or mining stock, cotton, oil or any thing else subject to speculation ; when the question comes down to one principle, and it is claimed specularors in grain are “gamblers,” then the answer to that assertion is that all who may be engaged in dealing in any commodity must necessarily belong to that fraternity. There is no law in the world that compels a man to invest money in “ options,” any more than there is to force him into playing faro, chuck-a-chuck, poker or any other game so fashionable even among the so-called “higher classes;” no broker employs men to button-hole customers on the street and drag them into their places of business, nor do they employ “ commercial travelers,” formerly known as drum, mers, as is the case among the majority of so-called mercantile con- cerns in this city. The term “bucket-shop,” introduced in former testimony, is simply a name given to one branch of the business of dealing by another branch ; it is conceded that the larger Exchanges, such as the New York Stock Exchange, deals in greater amounts, but the manner of conducting business is similar, with the exception that no realization 60 50G can bo made in less time than twenty-four liours after date of contract in the former case, while in the mis-named bucket-shop profits are paid immediately on their accruing, if desired ; in the business we represent the dealer becomes his own broker, which is not tlie case in any other speculative branch of trade. He personally makes his con- tract, upon his own judgment, unbiased and untrarnmeled ; he watches the quotations from the Oliicago Board of Trade and received in our office seven minutes from date of the transaction ; he deposits his money with the dealer and draws his profit, if any, from the cashier on representation of his contract. If any gentleman connected with this commission desires to test the truth or falsity of the foregoing statement, we cordially invite him to make a contract with us over our counter and thus see if he is not quickly served and honestly dealt with according to rule. Indeed, we will make no distinction between any of the gentlemen composing this august body, and our regular customers, among whom we count many of the leading retired mer- chants of New York city. In reference to the matter of necessary legislation,^’ it appears to us that the law affecting contracts made between individuals should be sufficient to protect both parties to a transaction. If our business was carried on in some back room with secrecy, and cappers or drummers employed to invite custom, then some reason could be given why it might be called a gambling business to deal in grain and provisions ; but as the doors of our place of business are always open to customers and the public, our books ready for inspection at any time, and the dealers satisfied with our way of doing business, added to the fact that no house of similar character was ever brought into court, we can see no valid reason for the raid now being made upon a respectable industry. Perhaps this commission do not realize the magnitude of the work they are undertaking to perform, or the ramifications the proposed legislation must enter into. We now have the Maritime, Produce, Cotton, Oil, Kailroad, Real Estate, Iron, Mining and other Exchanges, whose business absorbs the attention of many thousands of people and millions of money invested variously, the profits from which have served to build up the lower portion of Broadway with palatial busi- ness houses, and done more to make that portion of the city remun- erative to property owners than any other line of business carried on since our English cousins left the Battery, ninety-nine years ago. From our standpoint Ave consider our business Avill stand the test of examination in all its branches and come out as pure as any represented by the would-be i-eforrners. In concliibioii, wc cannot refrain from calling attention to the lesti- 507 mony of Captain Edward Hincken, before referred to, and, like the man who was too lazy to repeat the Lord’s Prayer on retiring, prefer- ring to print the verses at the head of his bed, say : Them’s our sentiments.” Captain Edward Hincken, a ship-owner and broker, in William street, next testified : He was not prepared to say much against the business of making corners ; he had been trying to corner the freight market for years ; sometimes he hit it and sometimes he didn’t ; it . was his business to anticipate the condition of the market if he could, and he considered it to be perfectly legitimate ; if he wanted to sell wheat or buy wheat, and there was money enough on either side to make the transaction good, he thought he had a perfect right to do so ; to sell that which one did not possess might not be called legiti- mate commerce, but it had been done in one way and another ever since he could remember, and he had an experience of fifty years in business ; the Keene corner of 1880 had the effect of keeping some shipping idle for a time ; but every vessel took away something, and eventually all the grain had to be exported ; if a pendulum was held up one way, it was bound to swing the other, when let go ; he looked upon contracts for future sales as simple mediums of exchange : he had known one contract for 680 bales of cotton to pass through sixty- four successive ownerships, one firm getting possession of it three dif- ferent times ; about thirty-three and one-third per cent of the whole amount went to the brokers for commissions ; that,” said the wit- ness, laughing, ‘Ms where we make our money.” The added cost, of • course, was all borne by the consumer, eventually; there was no seller without a buyer, and no buyer without a seller, and this struggle be- tween the two constituted commerce. Must Fay for it. Q. Suppose the consumer cannot pay the price which is forced upon him by means of this intermediary speculation ? •A. Then he cannot buy. Q. He would have to starve, would he not ? A. He would have to starve, I suppose, but such things never hap- pen ; there is a hidden law that governs all these things ; I have al- ways found that I could get out of a snarl by paying for it, and I have had to pay for it several times (laughter). Witness went on to say that he thought the only legislation needed was that which would reqirire bargains, once made, to be fulfilled strictly ; a man who sold him a contract should not be allowed to plead the baby act, and call him a gambler, because he had chosen sell that contract to some one else. 508 Q. You think bargains should be made compulsory in all cases, legitimate future dealings as well as illegitimate ? A. Yes ; 1 don’t see how you can separate the two. < Q. Don’t you look upon dealing in futures, where no actual delivery is intended, as gambling ? A. Well, all commerce is gambling ; if I guarantee that I will carry certain freight for you from Liverpool to New York, in a certain length of time, I am gambling on the winds ; that has been our bus- iness since 1882. — Sunday’s Herald, November 26, 1882. By Mr. Browning : Q. Where do you carry on business ? A. 42 Broadway. Q. You have a sign up there over the door ? A. Yes, sir. Q. With the name of the firm ? A. Yes, sir. Q. And the business carried on ? A. Yes, sir ; offices 5, 6, 7, 8, 9 and 10. Q. Is it on the first floor ? A. Yes, sir, right off the street from New street and Broadway. Q. What is the size of your premises ? A. About 125 or 130 feet in length I think by the width of the building — all the offices. Q. You have desks and tables and dhai^ there ? A. Yes, sir, and carpeted throughout to the back ; the floors, I be- lieve, are all carpeted. Q. Do you have a blackboard there ? A, We have a quotation blackboard ; a bulletin board there. Q. With the names of the grains and different stock on it ? A. Yes, sir. Q. And on those you put up the Chicago quotations ? A. Just as they are received from Chicago. Q. And a man comes in that place and puts up his margin and says, want to buy so much, or want to sell so much,” and that is the transaction ? A. There is something more to it than coming in there and offering to put up his money ; he enters into a written contract with us. Q. What is the least amount of money you will take ? A. We never sell a less amount of grain than they do in the Grain Exchanges — from 500 bushels to 25,000 or 50,000. • Q. And what amount do you require a jnirchaser to put up upon a sale? A. All the way from one to five or six per cent, just as the purchase is made. 509 Q. From one to five or six per cent of the total- amount? A. Yes, sir; that is, the margin would be about from one to six per cent. Q. And what is the lowest lot you will sell ? A. We sell in sums about the same as they do in the Grain Ex- changes — 500 bushels; I believe they will never sell less than 500 bushels ; in the Grain Exchanges they sell that. Q. Is that the fact ? A. 'Yes; you can go into the Exchanges and buy 500 bushels of grain to-day if you want to, if you get there in time. Q. Or to-morrow ? A. Yes, sir. Q. From a regular broker ? A. From a regular broker; they don’t have any other kind of people in there selling grain. Q. Do you know Mr. Miller, connected with the Exchange? A. I have heard of him ; we do business entirely on Chicago quota- tions, although we are connected here ; we are represented in this Exchange ; we have a broker here who will transact any business that is necessary ; still we deal entirely with the Chicago quotations ; we have a party who will buy or sell grain for us whenever we want him to. Q. Then you don’t make any pretense whatever of handling the article itself? A. Of course we don’t get the bags down into our office g Q. It is purely a speculative business ? A. Certainly, every thing is speculative. Q. You deal in options ? A. We deal in options and we have grain delivered to us, and we have to pay charges in the elevators for having the same, if it happens to fall on us during the present month, if the present option happens to fall on us, and we are dealing in an article. Q. Are your firm members of the Produce Exchange in New York ? A. Not here. Q. Of Chicago ? ' A. We are represented there in Chicago. Q. Do you ever buy in the open market yourself ? A. Very seldom ; we do not go in here; we have nothing to do with the New York market, only occasionally we have an order; we might have an order to-day, or to-morrow, to fill a contract order for say 500 or 5,000, or 20,000 bushels of grain, or something of that kind, and we w^ould send it down and have it filled. Q. Then your business is a cash business on paper without the act- ual delivery ? 510 A. All our grain is delivered if it falls at the present option, if the present option falls upon the house the month that the option falls on, that the contract falls due. Q. Is your place one of the places they call bucket-shops ” described in your paper ? A. AVe have no bucket there in our house, we have nothing to put in them. Q. You have named bucket-shop in your paper ; is your house sometimes called a bucket-shop ? A. I don’t know of anybody ever calling it a bucket-shop” ; they might call it a ‘‘bucket-shop,” if they wanted to, or they might say every man in town was running a “bucket-shop”; I don’t understand, exactly, really, the term “bucket-shop” m 3 ^self; I sup- posed it was where they put up some articles of food in buckets ; they might put up butter or meats, or something of that kind, and ship it; or they might call a man a Peter Funck, or something of that kind, that dealt in gold watches; it don’t make it so; we do a regular cofn- missioii business ; and every man fares alike that comes in there. By Senator Browning: Q. He puts up his money and wins or loses his money inside of an hour ? A. I don’t consider it gambling, though. Q. That is the fact, is it not, that he puts up his money? ^ A. We do the same business they "do in the regular Exchange ; he puts up a margin ; for instance, he buys a quantity of grain of us ; he may come in there a stranger to us; we don’t know who he is ; we demand a margin from him and he puts up his margin to make his contract good ; there is a consideration ; the market slumps off to’ ward evening or any time, and he is required to re-margin or we sell the grain to somebody else. Q. And that wipes out his margin ? A. That wipes out his margin. Q. If he buys and grain goes up, he comes up to the desk and de- mands the difference ? A. He may in the mean time sell his contract to somebody. He may say may be “ 1 liave got a contract for 10,000 bushels of corn,” say January corn, ‘‘and since I made tlie purchase I iiave found that it has advanced two and one-lialf cents a bushel. Now Jim I want to sell this contract. 1 had to i)ut up a margin of two and one-half cents a bushel on it to secure it ; you give me back what I have paid on this niai-gin, and })ay me what it has advanced and I will give you the benefit of it.” 511 Q. And he can go right to your desk and make that same agree- ment ? A. He can come up and have it settled ; he may say/‘ I want to sell you this grain,’’ if I want it, I may buy it from him ; I am not obliged to. Q. You do take it? A. We take it because we have some one that we can sell it to, and if I can purchase any thing and can sell it to some other man, and think I can make a profit on it, I will do so. Q. But you assume that risk yourself ? A. Yes, sir ; so does every other man that does business. Q. If I go down there and put up my margin and I come up and say, Mr. Hammond, I have made $20 on this, and I want my money ” — A. You can sell that wheat to me ; I will buy it back from you and there is a contract passes between us. Q. I get say twenty bushels and if it 'goes down I can walk out without my money? A. No, sir. Q. I have lost ? A. No, sir. Q. I have been cleaned out, haven’t I ? A. No, sir; you can re-margin. Q. Suppose I don’t care to go any more and stop? A. If you have got no confidence in your own judgment, of course, you take a back seat. Q. And I get out ? A. Y"es, sir. By Senator Boyd: Q. Will you please describe how you operate your bulletin board? A. We operate it just the same as they do upon any Exchange; any parties who are doing any such business. For instance in the Produce Exchange here there are two or three tickers in the room. The quo- tations come over in seven minutes from Chicago, and they are called oft there and are placed up for the benefit of the public or the brokers who may be in there wishing to deal. Q. On the blackboard ? A. Yes, sir; it is a matter of record also. They are kept in the office in sheets to refer to at any time in the future. Q. You commence in the morning by putting up the morning quo- tations from Chicago, do you not? 512 A. Yes, sir ; we take first the receipts of hogs ; that is placed on there ‘‘ Receipts from Chicago, Hogs ; ” then as soon as ’Chatige opens we receive the morning quotations, the first quotations, and they are placed on the board. ' Q. Then any person coming in to do business in your office looks at those quotations as marked on the board ? A. Yes, sir. Q. And buys a quantity at that price ? A. Yes, sir, provided he can ; sometimes we are not always ready to sell it. Q. Supposing there is a transaction, he buys at that price ? A. Yes, sir, certainly. Q. And puts up a margin on the purchase ? A. Yes, sir. Q. Of about how much usually on wheat ? A. About one cent per bushel if the market is not bobbing around too fast. Q. How long does he require to wait before there is a change — does he usually wait there until there is a change in the market ? A. He can remain there, and if there is a change in ten, fifteen or twenty minutes, and he sees he has made a profit, he says, I wish to dispose of my contract to somebody else very often he disposes of it to people in the Exchange, who are standing around there ; they are dealers and they hold it an hour or two and then it is sold to us and it is sometimes passed through a dozen hands with the indorsements of the parties to the contract. Q. There is always a written contract ? A. Yes, sir. Q. Suppose he loses, who receives the profit of the margin that he puts up ? A. The man w^ho holds the grain. Q. Hoes he always pay a commission to you as brokers or commis- si'in merchants on that transaction ? A. Most certainly. Q. How much ? A. Twenty-five per cent is the regular brokerage; on some articles, such as lard and pork, there is a difference ; but that is upon grain ; the regular percentage throughout the city is twenty-five per cent. Q,. On the value of the produce ? A. No, sir; upon the margin that is deposited. (}. How much money is deposited on an average daily ;in your of- fice on such margins ? A. I don’t know as T have kept any particular account of it since we 513 I established our new house, but it will average about probably 820,000 to 825,000 or $30,000 a month upon margins. We have not been open a great while and are not doing as heavy a business as some people. Q. And that is on all margins for all kinds of produce ? A. Yes, sir. Q. Y"ou receive twenty-live per' cent on that as your commissions ? A. It is not to be considered that we take twenty-live percent upon all that, because on some articles there is not as heavy a commission as there is upon others, and another thing is that a great deal of this money is re-margins. Some man comes in and re-margins. Of course we have nothing to do with what they re- margin. We merely give him credit for that, don’t charge him any thing on what he re-margins ; we merely do the business just as it is done on the Stock or Produce Ex- change or by any brokers on the street. Q. Do you understand the system of betting in pools on horse- races ? A. I think I do if I remember any thing about it. Q. AYill you explain to the committee your knowledge of that sys- tem of doing business ? A. It is far different from grain, because there are more horses in the race in the first place. There are generally from three to five horses running where there is a pool. The men that manage that of course make the average on the amount of money that is received on any one particular horse, and they keep that average so as to protect themselves, and some of those people who run a French pool, where there is only five dollars invested, charge a commission on it. In French pool they charge a commission on the amount of money de- posited, and it is averaged up and divided up between those who may win on any particular horse, as I understand it. I never ran a French pool-game, but I have nad some sugar invested in it. ■Q. Will you state to the committee wherein your system of doing business by the bulletin board differs from the system of doing busi- ness in the French pool institutions ? A. It is entirely different. Q. Wherein does it differ? A. In the first place I don’t deal in horses to start with ; we deal in grain; and the next thing, we deal in regular articles of commerce and an article of food that is necessary to sustain life, and we pur- chase it and sell it with the idea that we are going to make something out of it ; we sometimes lose ; it is speculative. Q. Is it not a system of betting in reality ? A. No, sir, I don’t see how it can be. Q, Betting on the probable prices or change in prices ? 65 514 A. It is speculating upon the prices, but not betting ; there is no particular bet made. Q. A man makes a contract, makes a purchase of a quantity of grain at a certain price and puts up his margin ; he assumes the risk of that grain decreasing in value, does he not ? A. Yes, sir. Q. Then it is a risk in reality ? A. It is a risk for any man to purchase any thing and hold it think- ing he will get a higher price. Q. How many teiich j)laces of doing business are there in the city of New York — places such as yours? A. I don’t know ; I think there are about 1,500 or 1,600 of them all told doing business here ; I think there are that many, I don’t know, but a great many more, who purchase articles and deal in options That is, there are about that many men ; I don’t suppose there are that many lirms ; but I understand, from information I received, that there is about that many who are doing business here in grain and produce. Besides there are a great many others. dealing in other arti- cles of commerce that do the same kind of business. By Senator Browj^ing : Q. What is the form of your contract between you and the buyer and the seller ? A. ‘‘We agree to buy 5,000 bushels of grain to be delivered to us in the month of November or January,” for instance say No. 2 wheat, at a certain price which is at that time probably posted, which came over the wire from Chicago, upon which he deposits a margin and signs his name on a contract, which is received at 'our office and made a record of. That is merely an application, and then we make out a contract for him, a written contract, in which, if he agrees to buy, we agree to sell, in writing, a certain amount of grain, to be delivered at that time to him. We have not the grain at our disposal, and if we think we cannot get it we telegraph to Chicago an order to our broker to })urchase that grain in the tnarket. If we have tiie grain on our hands and the month of January arrives it may be delivered to us at any time. Q. I am not speaking about a transaction of that kind. If I come down in your place to invest $25 or $30 this afternoon or to-morrow morning and I want to get a return within twenty or twenty-five minutes of my transaction, such as you described a moment ago, what sort of a contract do you give to me if I want to buy — do you simply agree to sell it at such a ])rice? A. Yes, sir. You make an application in writing. We take no 515 man’s word. He signs an application in writing. We have them there printed. We pull down a slip and he makes that application in writ- ing for so much grain or pork or lard. It is handed to us. If we accept of it we make out a contract. Q. Now I want the form of that contract ? A. We receive his application and make out a contract in which we agree to sell for future delivery. By Senator Boyd : Q. State, if you please, the words of that contract, if you remember them ? A. We agree to sell to Mr. John Smith 5,000 bushels of No. 2 corn to be delivered in the month of January at 55 cents a bushel.” By Senator Browning : Q. And you sign your name ? A. We use a stamp for the house, the firm. Q. And you hand that to me ? A. Yes, sir. Q. That is your agreement with me to sell me ? A. Yes, sir. Q. And then I watch the board and I find that it has gone up — this is an instance where you agree to sell me — I have made a profit on the transaction ? A. Yes, sir. Q. I step up to you and hand you back the paper and say, ^^I want you to take this back and give me the difference betjveen the price I paid you and the price of this new quotation.” A. You want to sell it back to us ? Q. Yes. A. If we think we can make any thing out of it we will take it. Q. Won’t you take it ? A. We will take it to balance our books ; we often take it. Q. That is what you call a contract ? A. Yes, sir ; it is a contract in writing. Q. It is stamped with a stamp ? A, Yes, sir; it is stamped by the firm. Q. And who has charge of that stamp ? A. One of the clerks; we keep about a dozen clerks. Q. Each one of these clerks has a stamp ? A. No, sir; only one. Q. That contract clerk makes a contract for your firm ? A. It goes before the general manager of the house, and if he wants to do it — 516 • Q. How long does it take to do that ? A. It depends upon the amount of the business ; sometimes it takes twenty minutes and sometimes two minutes and a half. Q. And if I was right up to the desk it wouldn’t take long ? A. Well, say five minutes. Q. AVhat will the receipts in your house average a day? Q. They will average probably $25,000 to $30,000 a month. Q. That is, that amount of money will pass through your hands ? A. Yes, sir. Q. On that you receive how much commission ? A. It is not all to be taxed by commissions. Q. What will the commission average? A. I am unable to tell you at the present time in this new house ; we are not prepared to say at present ; we have only been open for a short time. Q. Five per cent? A. I suppose one-half of that amount is taxable with commission, to be subject to brokerage. Q. One-half of what amount ? A. $25,000 to $30,000 a month. Q. 'About $15,000 you put a commission on ? A. Yes, sir. Q. Why don’t you put it on all ? A. Because some of it is re-margins ; for instance if you made a contract there and your judgment was wrong and you wanted to re- margin to save yourself, you put up some more money, and we don’t propose to tax you for every cent you put up. Q. What is the commission you put on tlie other $15,000 ? A. The regular brokerage, such as is customary here in the street Q. What is the customary brokerage ? A. Twenty-five per cent upon the original margin. Q. So that your profit would be one-quarter of the $15,000 ? A. That pertains to grain entirely ; but upon the pork and lard it is different. Q. More or less ? A. Some less, some more. Q. And the $30,000 that passes through your hands is on account of transactions in grain, lard, pork and every thing? A. Oh, yes, sir, grain and provisions. Q. Not especially grain ? A. No, sir, grain and provisions. Q. Do yon ever make an actual delivery of grain ? A. A delivery is often made to us in person. 517 Q, It is? A. Yes, sir, delivery is made to ns in Chicago. We deal in Chicago. Q. Do you ever transfer the grain right away from one party to another? A. The contract calls for the grain and it is transferred by an in- dorsement. Q. You just deal in these contracts. That is all, isn’t it? Your business is making contracts with your customers, and there is no more than that in it ? A. We are acting as a broker as between customers certainly. Q. What I mean to say is, you don’t receive cargoes of grain that are sent to yon, and all that sort of thing ? A. There is not a broker in the street who does it scarcely, who re- ceives the cargo himself. He very often purchases it for others and deals for others. The deliveries are all made in Chicago. For instance, if I buy 25,000 bushels of grain to-morrow on December option, when December arrives it is delivered to me and I have to pay storage ; they will charge me for it down here and I may sell it in 500 'bushels lots to anybody. By Senator Boyd : Q. Is it not a fact that the majority of people who transact business in your office and who lose their margins do not re-margin ? A. That depends entirely upon the character of the operator. It is considered by many that the man who re-inargins is not as successful as the one who lets it go and makes a new contract. Of course these matters of speculation are judged differently by some from what they are by others, because you may say it is a speculation entirely. Q. Then the majority of people do not re-margin ? A. I can’t say the majority. There is a great number re-margin. I am not prepared to say whether the majority re-margin or not. Q. What proportion of the men that re-margin in case of their loss of their second margin, put up another margin ? A. A great many. A great many margin up grain 25 cents a bushel sometimes when there is a great slump in grain. They may re-margin if they have purchased. If they sell it is the same way they are called on for more margin by the purchaser. Q. What proportion of your customers have ever called for an actual delivery of the grain sold ? A. They all do it when the month arrives. Q. What proportion ? ^ A. Everybody who has a contract and wishes to settle that day, and wishes the grain delivered to him. 518 Q. What proportion of persons who do business in your office would they make — such persons as continue to hold their contracts ? A. To make the delivery ^ Q. Yes ? A. Everybody holding the contract for grain wishes it delivered to him that day ; he wishes to settle it ; if we have sold it to him he wants it delivered. Q. If he has lost his margin, he is out of the transaction, is he not ? A. Certainly. Q. Unless he re-margins or makes a new contract ? A. Unless he re-margins. If a man makes a contract and puts up a margin and forfeits it, it is over. Q. Of all the persons who make contracts with you, what propor- tion of them demand a fulfillment of those contracts? A. Everybody demands a fulfillment of their contract. Q. Of the delivery of the grain ? A. They call for the contract to be fnlfilled, and it has got to be fulfilled or the margin falls in other hands. Q. I don’t think you understand me just yet ; you say that a man who loses his margin is out of the contract ? A. Certainly. He puts it up to secure good faith, and of course if the grain goes away from him, if the price goes away from him, if we have the article for him, he is required to hold that article and he has got to put up another margin to hold it. Q. You say that a large mumber of them do not put up another margin ? A. A great many of them are not prepared, and a great many think if grain is going up, they will wait till higher prices and sell another lot, and they will have a better advantage in another market ; those parties let the grain go, and go in higher up or lower down. It depends upon whether they have bought or sold grain ; they wait until the market has got to its bottom, or until it has got to its height to get in again. Q. Of all the persons who make original contracts with you, you say a large number of them do not re-margin ; so they lose ? A. Some of them; I don’t say a large number — a portion of them do. Q. Of all the persons who make original contracts with you, what proportion of them demand the ^'fulfillment of their contracts at maturity ? A. Every one of them. Q. Even though a man loses his margin ? A. A man who loses his margin has got nothing left to ask for. Q. That is what I want to get at; of all the parties who make 519 \ original contracts, how many demand a fulfillment of the contracts at maturity ; how many do actually make demand for the fulfillment of the contracts ? A. All those who hold contracts; every man who has a contract, and there is any thing left in the contract to demand any thing for, comes forward for settlement. Q. What proportion do they bear to the whole number of con- tractors ? A. It is hard to, establish that ? Q. About what proportion ? A. It is impossible to say ; it would require a party to go through our books. Q. Do ten per cent come forward ? A. Why certainly ; if they didn’t we would all get rich down there. Q. Do fifteen per cent ? A. Yes, sir ; there have been over fifty per cent of them in the last month, that is fifty per cent of the money invested in the last month has gone against us; in other words, we have done a losing business up to date in our business. Q. You say then that fifty per cent of them did come and demand the fulfillment of their contracts at maturity ; who was the last man with whom you carried out that contract and where was it done ? A. I am afraid you do not understand this business thoroughly ; if you would call down there I could explain it a great deal better there than I could here upon a table; not that I have any particular object in getting you there for any other purpose. Q. You say you enter into contracts with certain purchasers of grain to make deliveries at future dates and I want to know what pro- portion of these purchasers you carry out your contract with ? A. We carry out our contracts in full wfith everybody. Q. I mean by delivery of the grain ? A. We indorse the amount and we have it in Chicago; of course the actual grain does not go into his possession, but he gets a contract for it. Q. Do you in any case give the actual possession of the grain to the person making the contract? A . The actual possession of the grain itself ? Q. Yes. A. No, sir, and there are very few houses in New York that do it. Q. You don’t do it in any instance ? A. It is hardly ever done ; the actual grain is never turned over. Q. You say that those persons who have their contracts in opera- tion and effect at maturity come and demand their fulfillment and 520 you carry them out by indorsing them and sending them to Chicago to get a delivery of their goods ? A. You don’t understand me yet ; I see that I will have to educate you a little on this question of grain; we will say every gentleman in this house walks up to me and says, “I want to buy a lot of grain,” some of them want to buy for November, some for January, February, March, April and May; the quotations are there of the prices and 1 would sell to them ; very well ; I go into the Chicago market or telegraph to the Chicago market and I say, Purchase me Uj, lot of grain up there ;” say it is 100,000 bushels ; I know I can purchase it there be- cause I have my associates there and I make the contracts here for the delivery of that grain to these people. Q. In Chicago or here ? A. I make the contracts here. Q. For the delivery of the grain here ? A. No, sir. There is nothing in regard to where it is delivered sj^ecified, but it is supposed if he deals in Chicago, it will be delivered to him there. Q. Supposing it was named as to where the delivery would take place ? A. The grain is delivered to them through me. 1 am acting as broker for all you people here. Say for instance that 25,000 bushels of that grain is the November option, and it has been delivered. In other words I have a receipt. I have information that that amount of cash grain has fallen uiion my hands, and I am paying storage on it in an elevator. I immediately notify these people that they must come forward and settle on that day, the last day of the month. It is the same thing that is done in the regular Exchange, if you understand that. The same business that is conducted in our place of business is done upon the Produce Exchange, as this gentleman, Mr. Orr here, has explained to you. Q. You notify them to come and settle, and they come and settle, do they ? A. A great many of them, certainly — those who have got any thing. Q. Explain the process of settlement and what the result is ? A. They come to us and say : ‘‘We want you to take our grain.” Very well, we take it off their hands, and we pay them for it. W® hand them back the original margin, and if they have got ten cents a bushel profit, we give them the profit. Q. But you never in any instance deliver ‘the grain ? A. The delivery is made by a contract. Answer the (juestion, please, categorically. You never deliver the grain actually ? 521 A. I don’t understand what you mean by that. Q. You don’t make a physical delivery of the grain, do you ? A. Certainly. We tell them that this grain is to be delivered to them in Chicago. It is delivered to us as their broker. We are paying storage on the grain. We are brokers for these people. We have to pay storage on the grain for them and call on them to settle with us. Q. You do actually deliver the grain in Chicago to some parties ? A. It is delivered to us, and we charge these people with the amount of the expense that is necessary that accrues upon this quantity of grain. Q. That is, charge your customers ? A. Certainly, we charge them with a commission. Q. Who was the last man that accepted an actual delivery of the grain from you, and when was it ? A. They are accepting it every day. I couldn’t tell the name. There are a great many old merchants down there. Q. According to your statement, they only accept a delivery by con- tract ? A. They don’t do it in the regular Exchanges ; they merely indorse- Q. Can you tell the committee one individual who after the com- pletion of your contract that you have just described, has received a physical delivery of grain for which he contracted in your office ? A. I don’t know as I can give his name particularly ; I don’t know as a man is obliged to give any person’s particular name who is deal- ing with him, but I would do it if I had it ; for instance- 500 men come in there and say, “ I want to buy 500 bushels or want to sell it.” Q. When was the last time that you transacted business with any- body who received a physical delivery of the grain ? A. You mean the grain in sacks and elevators and one thing and another. Q. Yes, given to him ? A. I have explained to you that the grain is delivered to us and we are the broker for this party. Q. Delivered to you in Chicago ? A. Delivered to us in Chicago. Q. I want to get at the last time you delivered it to your customers ? A. They do not want the delivery ; we notify them every day to come up and settle, Q. If they don’t come up and settle what is the consequence ? A. We take and sell it to -somebody else if it is on the last day of the month ; we generally take it. Q. And their contract is forfeited ? A. Yes, sir ; it expires on the last day of the month of their option. 66 522 Q. Wliut proportion of your customers allow their contracts to for- feit in that way ? A. Very few ; you are speaking of the actual delivery of the grain; here last week I suppose that the grain market of New York, that is that the grain in New York, was sold about 500 times ; there is just about grain enough in New York at the present time to feed the horse here for twenty-four hours ; I think they would eat it up in forty- eight completely ; there have been large transactions based upon the amount of grain that is in these elevators here ; it is purchased, it is sold and delivered ; the contract for the delivery is handed to you ; I deliver you that amount of grain, say a thousand bushels ; you receive it and deliver it to B., who receives it and delivers it to 0. Q. Your delivery of grain is simply by the delivery of a contract — by contract ? A. We will give them the cash corn if they want it ; hardly anybody ever wants the cash corn ; we take it ourselves; we will get any man the casli corn if he wants to pay the difference ; I have had cash corn delivered to us in Chicago, some 8U,000 bushels not long ago. • Q. About how much of the margins that are deposited in your office are forfeited by your customers ? A. It is a very small amount. Q. What proportion ? A. I don’t think it would exceed five per cent ; I am speaking rather at random about it, but I don’t think it would exceed five per cent and, probably not over three. Q. Who gets that forfeited margin ? A.' It goes to parties who have taken the responsibility of carrying the grain for them. Q. Who are they ? A. They are the brokers. Q. That is yourself ? A. The house. Q. Then all the forfeited margins go to the house ? A. Forfeited margins, if they are purchases, go to the one that sold to them for the non-fulfillment of the contract. Q. Then at the rate of five per cent how much would the forfeited margins be on your dealings during the last month ? A. It is a matter that can be easily computed. We will say for in- stance, we have done $15,000 worth of business in the last month, and there is three per cent of that that are forfeited margins. It don’t amount to much of any thing; $30 on a thousand. There is, say $15,000. It don’t amount to much. We depend entirely upon a regular commission there. 523 By Senator Browking : Q. There is no way you can lose, is there ? A. We have lost every day we have been open except three — this last house. Q. How can you lose if you do a business on commission? A. Very often we carry a lot of grain or material that we lose on. We sell a party a lot of grain and don’t prepare for it in time in the Chicago market. We don’t, in othe^r words, hedge on it. We take a little interest ourselves in speculation. A man buys grain and we think it is going away from him and we buy it and lose on it. Q. What is the smallest amount of money you will take ? A. From five dollars to five thousand dollars. Q. You will take five dollars ? ’ A. We will take any amount a man has got. We hardly ever take as low as five dollars. If a man comes in and wants to buy 500 bushels of corn and the market looks steady we will take five dollars. Q. He goes in and bets five dollars that the price will go up and you bet it won’t ? A. I dispute that ; I am not a gambler. Q. That is about the size of it, isn’t it ? He goes in .there and you agree to sell him and he puts up the five dollars and comes to you in twenty minutes and says, ‘‘ I have won and I want it,” and you pay him ? A. If you make it any other way besides betting. If you come in and say, I speculate with you, I will take the chances with my money that corn is going up to-day,” and I sell it to you, and I say it is for future delivery or any other time, it is a contract and I have to make it good. In the first place we make it good by putting up a margin on it. Q. I have heard men say that they were going down to bet and that is what they called it. I have not been down there. I don’t know any thing about it ? A. You were in Harlem, for instance, this morning and you went down to the elevated road and paid ten cents to come down to Yew York. You bet your life against ten cents that you would be sent to New York some time in the future and you may not get there. You put up ten cents to be delivered to New York in the future some time. Q. Do you think that is a fair illustration ? A. That is exactly the same thing ; a man has got a corner on a rail- road, and runs it to make money, and you get on, his railroad and put up your money. Q. You are at his mercy ? A. If you have not got anybody else to be at the mercy of, you are. 524 Q. Is there a limitation to margins ? A. No, sir. 1 Q. How many times can a man re-margin ? A. He can re- margin as long as he lives, if he wants to, up to the time that the option takes place. Q. Suppose a man comes in your place and puts up his $20, and you agree to sell him, and he goes out and comes back in three hours ; in the mean time it has gone down so far that it has wiped out his margin, and when he comes back he sees the quotation is above it, it has gone back again above the amount, and he says, I am a fortu- nate fellow ; it has gone up,” does he get his money, or do you remind him of the fact that it has gone down since he was there, and he has lost ? A. He is just two hours late. Q. If he buys for January, and holds that little piece of paper which says that you agree to sell for future delivery in January, if he should come back in January and say he wants it, you will say it is wiped out ? A. If he comes to me as a broker and wants me to carry it, I would say: ‘‘ What do you want me to carry on, your money or your wind ? Put up your bank account and I will carry it for you;” if a man comes in and puts up ten cents, and says, re-margin it for me when necessary,” we will do it. Q. There is no limit ? A. There is no limit ; he can 'go as high as the price of the cash stuff that he deals in. Q. Do you ever deal in grain certificates ? A. Very often; I have a great many people who deal in grain cer- tificates ; I have dealt in grain certificates. Q. What proportion of your business is in grain certificates ? A. Not very much, because we don’t deal with New York ; we deal with Chicago business. A. Have any men ever made money in these transactions in your office ? A. We have some of the leading people in New York doing busi- ness there, and they wear good clothing, and they always answer to the ringing of the first bell. Q. Have they made any money in these transactions ? A. -Yes, sir ; a great many of them make money; if it was not a })lacc wliere a man would be squarely and honestly dealt with, they wouldn’t patronize us ; you would be surprised to come to our place of business and. find ])eople there; wo have men there sixty years old that have heeji doing business thirty years in New York, some of 525 them old retired merchants that do not feel like going on the street amongst young men, that come down there with $500 or $1,000, whatever they may choose to bring, and because their judgment tells them corn is going up and there is a demand for it, and not a suffi- cient supply, and they can make money, they invest ; and another class of people who think there is a large crop in the AVest that can be furnished in sufficient time to make it good, turn and say, we will sell it/’ By Senator Boyd : Q. Is there any thing in your contract that says if the market goes down the contract is void ? A. I think there is, but I am not positive ; I will send you a con- tract if it will be of any use to you ; I will send you up an application and a blank contract. ^ H. H. Honor e, Jr., being duly sworn, was interrogated, and testified as follows : By Senator Boyd . Q. Where do you reside ? A. 48 West Twenty-sixth street, New York. Q. What is your business ? A. Trading in grain and provisions. Q. Where is your place of business ? A. 34 New street. Q. Are you a member of a firm ? A. Yes, sir. Q. What is the name of your firm ? A. Honore Brothers & Glover. Q. State, if you please, your knowledge and opinion in reference to the whole system of making corners with reference to its effect upon commerce and its influence upon the public welfare ? A. I think that has been clearly elucidated by Mr. Orr, here. I substantially agree with him ; I am a little more of the opinion, how- ever, that sliort sellers have more to do with making corners than peo- ple who buy the grain. Q. You think that is so? A. I think so, Q. Do you think that the evils arising from this system of doing business are caused chiefly by the short sellers ? A. I am not very clear that the evils are substantial at all from the fact of a corner having been made. 526 Q. Do you know of any evil that results from the fact of persons selling short ? A. It perhaps costs the consumer a trifle more money per annum in case there are a number of corners; but it is a great benefit to the producer, and inasmuch as we are largely an agricultural country and large shippers of grain, I think probably it inures to the greater num- ber of people as an advantage rather than a disadvantage. Q, All except the consumers ? A. I say the greater number of the people. Q. Except consumers ? A. Except consumers. Q. Tlie burden of any additional cost or tax upon the necessaries of life that result from these transactions falls upon the men that eat the bread and other products ? A. Yes, sir^ the consumers ; but that is so trifling that I don’t think it amounts to any thing; I take it that thd dealing in futures ? A. I was managing clerk for a representative house in New York, a house that represented Chicago people who were members of the Chicago Board of Trade, and the New York Produce klxchange. Q. What house was that ? A. It was Simpson & Carroll then ; it is now Simpson & Sou. Q. How long had you been their managing clerk? A. They have only been in business about six months; I was wiih them for throe months and over. Q. And the knowledge you formed in those three months is the only knowledge you possess of this subject. A. I have been in the stock business as clerk ever since I have been twelve years of ago, down in Wall street, with different firms: I have been on and off down there almost all my life, and I thoroughly understand the way the commission business in grain is conducted at present. Q. What sort of business do the firm transact that you were with ? A. Strictly commission business on the Board of TiaJe in Chicago. Q,. Do they deal in futures and options ? A. Oh, yes, they deal in future's ; they don’t deal in privileges at all. Q. Is that a term applied to options? A. No ; you say a future option to deliver in a certain month. Q. Then the word implies a privilege ? A. A privilege would be a put or call ; that is an entirely different thing ; they don’t deal in puts and calls. Q. Do you understand the difference between the legitimate methods of carrying on the grain and other produce business, and what is usually known as the purely speculative or illegitimate ? A. You might class the purely speculative as the bucket-shop busi- ness, and the speculative business through legitimate brokers; the majority of business done in New York through legitimate brokers on the Chicago Board of Trade and New York Produce Exchange is altogether speculative ; they deal entirely on margin ; for instance, saying that they will buy or sell, they will buy January wheat, and they understand thoroughly that before that wheat is to bo received, they will have sold it again; that their broker while making a legiti- mate transaction on the Ciiicago Board of Trade, or the New York Produce Exchange, will have an offset to that transaction before that time ; tliey will never receive the stuff, because, if they want to con- 537 tinue the transaction, they will transfer it to another month by paying what is called a difference ; that is, they will sell the January wheat that they have bought, and buy February wheat instead, making a difference in the transaction. ^ Q. So that they never intend to make an actual physical delivery of the produce ? A. In all my experience in the business and my knowledge of its ob- jects, I have never known such a thing as an actual delivery ; there is never expected to be by the speculative traders. Q. Do you understand the bucket-shop system of doing business ? A. Yes, thoroughly. Q. Please explain to the committee what that is, how it is carried on, how it differs from legitimate business, and what the result is to the community and to the customers that frequent such places ? A. A legitimate trader in a broker’s office will give an order to his broker either to sell stock at a market or to sell at ’Change ; the broker transmits the order to the person on ’Change, and if it can be executed it is executed ; he only acts as a broker; a bucket-shop is carried on altogether on quotations ; they place the quotations on a black-board and stand by certain rules which they have in the different establish- ments ; say their commission is one-quarter per cent, as this gentle- man said his commission was, and corn is selling at sixty cents ; you desire to buy corn and the quotation comes at sixty cents; you go up at once and you buy 500 bushels ; that is the smallest amount he will deal in of corn ; you deposit $5 margin ; you get a contract stating that you buy the corn at sixty and one-fourth cents, and you have de- posited this one per cent margin. When the corn reaches the price of fifty-nine and one-fourth cents that contract is null and void withoct notice at all; buying your corn at sixty and one-quarter cents, aud having deposited one per cent margin when the transaction reaches fifty-nine and one-fourth cents, the margin is exhausted or wiped out, as they call it. Therefore there is no intent to deliver the grain over, no actual intent to deliver the grain even as a broker for either side, and the money that is lost by the customer is absorbed bv the firm Or if you buy at sixty and one-quarter cents and it goes up any thing above that, and the rule is that it is on immediate quotation, you have a right to hand it in and have it closed. They reserve the right to re- fuse any and all contracts or to refuse to close a contract, but it is never exercised. By Senator Browkikg: Q. They pay ? A. They always pay or close. The same thing is done in petroleum and in grain and in all food products. 68 538 By Senator Boyd : Q. Then when the party goes up there where there has been a rise in price, they pay over the dilTerence, do they ? A. Yes, sir. , Q. Do they pay the margin back ? A. Of course ; and the legitimate trader on the Board will pay you the difference within a day or so ; he don’t wait till the maturity of the contract ; if you buy 50,000 bushels on the Chicago Board of Trade and it rises you can sell it the same day if you should want to ; they don’t wait until the following January, until the grain is received and delivered; they pay you the money in every case if you want it ; which further proves that the transaction is speculative and not legiti- mate ; I have never known a case where they waited until that time ; but if you close a transaction and buy the wheat and it goes down, the transaction is literally exhausted; as a rule a commission house-will demand more margin, and if they don’t receive the margin you are notified that unless it is paid they will close you out, and they gener- ally 3o close you out ; whether they have a right at law to do so or no. I don’t know ; I don’t think they have; but you don’t have to wait until an actual delivery of the property for your balance on a margin ; it will be paid you at once. Q. Have you in your experience known of many cases of bankruptcy resulting from these speculations ? A, I have known of severe losses to people who couldn’t afford them ; I could hardly say bankruptcy ; I have known of defaults by people unable to pay their losses to brokers ; but it is not altogether caused by corners ; corners are carried on in a very different way ; we represen- ted Peter McGill who is considered one of the leading men of the West, and who operates principally in corners in a very large way, that is they will form a combination, Peter McGill and Armour and several men in New York; I have known of one firm in New York that failed from speculation, Eichardson, Boynton & Co. ; Mr. Eichardson was considered one of the largest speculators in New York on the Chicago market. Q. Do you know the amount of Ins failure ? A. I don’t know ; it is on record in connection with his note broker. Q. Did others fail with him ? A. Yes, sir ; several others. Q. How did that failure originate ? A. That originated through speculation ; of course I am not speak- ing from actual knowledge ; T cannot say; he was known to be a very large operator in the Chicago market ; it is supposed it originated 539 through his paper being shayed, an overissue of commercial paper ; the process of cornering in Chicago is fostered here to a great extent through combining very large orders for the purchase of grain for any commodity there and in combination with the dealers out there they will buy up every thing they can get and lock it up ; there is always a certain export demand in this city and there is always a large con- sumptive demand, people who desire to consume this stuff, and as the stuff itself is locked up so to speak, at different points of accumulation, it is impossible to get any and the price of course advances ; I have known a case of that this very last spring. Q. Who were engaged in that ? A. It was a very large clique ; I couldn’t state the names ; it was a combination of New York, Chicago and Milwaukee dealers ; they ad- vanced the wheat a very large advance. Q. What is your opinion of the result of these speculations upon our social condition and commercial interests ? A. I think it is prejudicial to legitimate commerce, and morally it is prejudicial, because really it is a system of gambling; it is nothing else ; it could be stopped verry easily. Adjourned to December 14, 1882, at 11 o’clock, a. m. New York, Thursday, Dec, 14, 1882. The Committee met at the Metropolitan Hotel in the city of New York, pursuant to adjournment. Present — Senators Boyd and Browning, of the Committee, John W.' Corning, Sergeant-at-Arms of the Senate, and Daniel A. Cooney, Clerk of the Committee. Leonard G. Quinlan was then sworn, and being interrogated, testi- fied as follows : By Senator Boyd : 0. Where do you reside ? A. In New York city. Q. What is your business ? A. My business is commission merchant. Q. Are you a member of any firm ? A. Of L. Gr. Quinlan & Co., 02 Broadway. Q. How long have you been in that business ? A. I have been here about three years ; going on three years. 540 Q. In New York c?ty ? A. Yes, sir. Q. Were you in business anywhere else previous to that ? A. Yes, sir; I have been in this line of business for twenty-hve years or more. ' Q. In what other cities ? A. In St. Louis and Chicago. Q. What does your business chiefly consist of? A. My business is, chiefly, the buying and selling of grain and pro- visions. Q. Are you familiar with the system of making corners and dealing in futures ? A. I am not, sir; I am not familiar with it from tlie fact that I have never been associated with any’ thing connected with the corner line. Q. But, from observation and report, are you acquainted with it ? A. I know the routine of how corners are made. Q. Please state what your experience has been in reference to cor- ners ? A, Simply disastrous to all concerned. Q. How are they created ? A. By an overpurchase of the property. Q, Do you recollect any special instance where a corner was created which proved disastrous to the parties interested ? A. I only know from hearsay. I have known of a great many, and I have never heard of bat one or two, one, I believe, that was ever car- ried through successfully. Q. What one was that ? A. That was a corner in provisions in Chicago, some two years ago, McKeogh against Arnold. As a general thing, corners are disastrous to all concerned. ' Q. How do they affect the public interest ? A. They are demoralizing. . Q. What is your opinion in relation to the system of dealing in futures ? A. I think that is simply indispensable to trade. Futures were created for legitimate purposes, the legitimate handling of grain, but they have been abused. What do you think of the system as it is .being abused. A. T have tried to think a good deal of it, and the more I think of it, the less 1 know how to correct the evil, if tliat is what you want to get at. (2. You admit, however, tliat an evil does result from the illegiti- mate 8])eculation or corners, and sol speak of futures ? 541 A. Well, of course, it must result in such instances as corners ; I only speak of futures. Take myself ; at one time I was a largo pur- chaser of grain upon railroads in the interior of the country ; made large advances on purchases up the river, when I lived in St. Louis. The rivers were all frozen up, and my stuff, or property, or provis- ions, or whatever it might have been, corn or wheat, was sold for spring deliveries. As I say, these futures were created for that purpose. Speculation, however, took advantage of it — takes it to a great extent, and carries it to this excess of corners. Q. Then your experience has been that the speculative aspect of dealing in futures leads to corners ? A. No, not necessarily, at all. Q. I thought you said so ? A. No, sir ; I don’t wish to be understood so, at all. I think, as I said, that futures are indispensable to trade; that trade could hardly exist without futures ; but if any one said that men, you and I, for instance, should combine to go to work and buy up a lot of stuff to try to corner the market, it would not affect the whole trade. Q. To deal in futures where there is -an intention to .deliver the property is perfectly legitimate and that we concede, but when there is no intention of delivering the property, what is your opinion about such a transaction as that ? A. You can hardly put a construction upon that from my stand- point ; I am doing business in futures and cash and every thing else and we call it futures simply from this fact ; you come into my office and say ^‘Mr. Quinlan I want to buy 4,000 barrrels of pork for May” — or January or February — I take that order in good faith from you that you want that property ; in fact if you were to tell me it was an option I wouldn’t take your order ; but it is not for me to ask every man who comes into my office whether he will tire of his contract, of his purchase or not ; and after you have made this purchase thirty or sixty days you may tire of it or may have profit enough in it ; you may say ‘‘ Quinlan I want to get rid of this pork ; I have got profit enough in it”; then you necessarily force me to sell your property out to somebody else — sell out your contract ; which I do the best I can. Q. I see the train of thought which is in your mind that it is in re- lation to the option business ? A. Yes. Q. That you disapprove of? A. No, sir ; I don’t disapprove of it, because 1 think the option busi- ness is dependent to a great extent ; that the business is dependent upon the option business to a great extent ; without the option busi- ness nobody could do business at all ; but as an option business for the 542 purpose of running corners I disapprove of that — with that intent ; since I have been here, and have beenMn Chicago, since I have lived there, I have been invited to go into little operations that were going on with a view to a corner, but I have always abandoned them — would have nothing to do with them; I think there is scope enough in the market, the legitimate ups and downs of trade, enough for me» to answer my purposes sufficiently so to keep me up. Q. Do you understand the system of puts and calls ? A. To some extent ; more from hearsay than any thing else. Q. AVhat is your opinion in regard to that system of doing business ? A. I don’t know that I could give an expression that is worth any thing; I know in regard to puts and calls that some people buy them and sell them for protection ; I know more about them from reading than from personal handling or trading in them ; I never traded in them at all. Q. The majority of speculators in grain make money, do they not — get rich ? A. That is another hard one for me to answer from my standpoint; some make money and some lose ; I believe as far as I am concerned, on my books, the a m’age customer has made money. Q. You mean the speculator ? A. Yes, the trader or whatever you call him — the client. Q. Who bears the burden of that profit made by the speculators ? A. It is a chance of the market; if a man happens to strike a favor- able market he makes money, and if he buys property and it goes down, he loses.; from my experience with people who are trading it is generally the weak parties who lose the money ; people who generally over-trade ; thus, for instance, if a man has a thousand dollars or five thousand dollars he should buy probably 100 or 200 barrels of pork ; instead of that, if he is a speculator, he would want to buy five times that amount ; when the advance in property comes or the decline — the fluctuations which occur — it is the weak ones who are generally out and the big ones make the money from the strength of their ability to hold and carry the product. Q. It does affect the price of commodities more or less, does it not, the speculative system ? A. In very large volumes such as corners and leading to corners and all that kind of tiling, I think it does necessarily, it must. (. 1 . And the burden of that enhanced price falls upon the consumer of course ? A. Yes, sir. 543 By Senator Brownin-g : Q. What is the form of that contract between you and your cus- tomers ? A. I have no special form. Q. Is that your form ? (Handing witness paper.) A. The form of an order to buy. Q. That is an order to buy? A. Yes, sir. Q. What is the form of the contract ? A. We have no form of contract farther than say, after you bought this you came in and gave me the same kind of an order to sell unless you wanted a written contract. Q. That is about all the form you have, isiiT it ? A. That is about the form for purchases or sales ; it is a guide. Q. That is what you call a contract ? A. No, sir; that is an order. Q. What do you call a contract — you refer to contracts of where a person comes in and makes a contract to purchase for delivery in Jan_ uary, or where he agrees to sell in January, that that is a contract, and if you thought the man came into your office to deal in futures, you wouldn’t tolerate it, that is your statement ? A. Yes, sir. Q. What is the form of contract you enter into between you and your customer who wants to buy or sell for January ? A. If he was to give me an order to buy or sell 500 barrels of pork, or 1,000 barrels of pork. Q. What does he deposit as a consideration or earnest of his good faith to keep that contract ? A. Well, many men make no deposit. Q. Do you call it a contract without a consideration ? A. It depends upon the man’s credit with me ; if you are doing business with me and are in good credit with me, and I know that my wants will be supplied whenever I call upon you, I don’t call upon you when you give me an order for the property until I want the money ; if I want a margin I then go to you for it. Q. Are you in the habit of making other contracts outside of your own business? Have you ever made a contract between a builder or any one doing business outside of your own house where a contract ’'""as required ? A. Well, I don’t know that I have. Q. Have you ever signed articles of agreement ? A, I have, of partnership. Q. Was there a consideration ? • 544 A. Of partnership ? Q. Did you ever know of a 'bona fide contract that did not carry a consideration withjit as a matter of business ? A. Yes, they all must have considerations. Q. Then this contract that you went into is not that sort of a con- tract ? A. A contract with consideration ? Q. Yes, you make contracts without consideration ? A. For dollars and cents we buy property. Q. I am talking now about the contract you make when you don’t require a consideration, when you say a man’s credit is good. A. When I want considerations I get them. Q. Take such a contract, where you take a consideration, how much would you take ? . A. What do you allude to? Q. I will speak now definitely ; say I go into your office and want to buy for January delivery 50,000 bushels of oats ; what would I have to deposit with you? A. Well, Chicago is the head-quarters; St. Louis, Toledo, Detroit and Milwaukee; those are the four or five large cities in the West, ^hiey have changed their rules at Chicago and played heads I win, and tails you lose” — I mean outsiders lose so often there that their speculation is very much less than it was a year and a half ago. People are afraid that they will revamp the rules again if they have a contract coming due, so that if they are one side or the other side, it lets them or ilicir friends out. T think I wrote two or three papers on that last year. 569 Q. What effect has tlie legislation which has taken place in the iState of Illinois in regard to these speculations had upon them? A. It has not had any — not a drop in the bucket, or in the ocean ; not a particle. Q. There have been some judicial decisions also; what effect have they had ? A, They have had none ; the only effect that they have had is that the governors, or trustees, or whatever they are designated, have changed the rules, and by those rules after a contract is made they have varied it. For instance, a large amount of No. 2 spring wheat was sold, and the officers of the board and their associates were all short of it; so they passed a resolution, or rule, or by-law, that No. 2 red winter wheat should be delivered on that spring wheat. Well, in equity of course a man was not losing any thing, because he was getting a better grade of wheat for the same amount of money, but that broke the corner and wheat declined from $1.35 down to $1, a, the winter wheat comes in about four weeks earlier than the spring wheat; but they had sold the whole crop of spring wheat short, and the farmers got no benefit from it. Q. What cities in the East are chiefly engaged in this business ? A. Oh, all of us here — Baltimore, Philadelphia, New York and Boston, but principally in New York. Baltimore does a large grain business, but futures are more dealt in here and in Chicago ; they are the two speculative points. Q. What proportion does the city of New York bear to Chicago in these transactions ? A. Very small. Q. As compared with Chicago ? A. Yes, sir ; Chicago is' the greatest primary receiving port for grain, cattle, hogs and lumber of any in the world ; there is no city in the world that compares with Chicago. Being at the head of naviga- tion, you see it has the advantage of that vast territory there, stretch- ing nearly a thousand miles each way. The annual report of the Chi- cago Board of Trade would be worth your looking over. It shows the receipt of ever}- commodity there since 1831 — no, not since ’31 but long back — the gradual increase every year. It dates back from the earlier days. I went to Chicago in 1850; there was no record kept until later than that; it shows the population from 1850 every year, Q. How are the ordinary dealers in grain affected by the operations of the speculative dealers ; I mean by ordinary dealers what we would call legitimate dealers ? A. Well, I don’t think there are any legitimate dealers; I never heard of one vet, if you mean commission houses. 72 570 Q.- I mean the merchant who goes into this business and sells it in accordance with the law of supply and demand? A. Oh, he don’t exist; there isn’t any such merchant. Q. Tliere is not ? A. Oh, no ; he is of the last generation ; he hasn’t been here for the last generation. Q. Then you think they all speculate in this way ? A. Oh, yes, with no exception. Q. Such a system of speculation is not necessary, is it, to carry on the business of the country ? A. No, sir. Q. You are not in favor of it ? A. Only so far as it is for my interest. Q. I now speak, taking the moral view of the question ? A. Well, -financial morals are at a yretty hig discount f Q. As a matter of political economy what is your opinion about it ? A. Well, I think if there were more ^^roducers and less speculators, it icould he letter for the country. Q. In what way better ? A. Well, there would be more produced and less consumed, and we would have more to export, Q. Do you mean by that to imply that the speculators consum more ? A. And produce nothiny. If they tcill all go to producing, they will produce all that they leant themselves and have a surplus. Q. Can you suggest any remedy for the evils which you have been describing ? A. No, I don’t think it is a possible thing. Q. Why? A. Because I don’t think there is any man or any set of men who can cope with the idea of other people’s minds, when it amounts to a nation of speculators. I don’t think you can legislate on it to d^ any good. Q. Don’t you think it is within 'the power of the people to redress any wrong which may have been committed and provide laws by which wrongs may be redressed ? A. I do, but legislators don’t do it. Q, Then you consider that it is their duty to db it if they will ? A. It is their duty if they can find a way to do it. Q, Now you have had great deal of experience in this, and the committee would gladly receive any suggestion from you in regard ta liow this might be remedied ? A. Well as I said before, I don’t think it is a possible thing. I am not far enough up on the other side of the morals to make a sugges- tion to you. I have been a speculator for thirty years ; I am now; I expect to continue until my to-morrow comes; I don’t know when it will be. And as a nation lue are a nation of speculators — that you will admit — and I, for the life of me, cannot see how you are going to make any legislation that is going to prevent it. Q. Can you tell us where we are going to end if we continue to in- dulge in our speculative prospensities ? A. Well, every few years we will have a smash down, as we did in ’73 — black Fridays,” and every thing of that sort. You must remem- ber that this country has got great recuperative power and we can get on our feet very quick again. Q. Do the speculative interests of the country in any way antagonize the industrial interest ? A. Well, explain the word “ antagonize.” Q. Well, that is act in opposition to them ? A. Always. Q. Please explain how ? A. Well the speculative man is a minority. He has got to control all the legislative acts to continue his speculation. I am speaking more of Wall street — of issuing stocks and bonds, three, four or five for one — watering every thing. He has always succeeded so far, not only in every State and Territory, but in Congress. Q. How does that antagonize the industrial interest ? A. Well, it makes him pay three or four times as much for the transportation of Western produce to the Eastern sea-board than if the thing was done on a square deal. Q. That, then, results from the stock watering operation ? A. From the stock watering operation. That is what I stated in the first place. Q, Please explain the system of stock watering ? A. Well, you are quite as familiar as I am with Vanderbilt’s water- ing Hew York Central. He declared an eighty-five per cent script dividend one day when he knew it was illegal. Then he attached that certificate to the original Hew York Central, and went to the next session of the Legislature and got that legalized. It was a very simple affair ; ask Chauncey Depew about it ; he can tell you all about it, I guess. Q. That is, legalized what you say was eighty-five per cent profit ? A. Eighty-five per cent profit. Q. Upon the gross earnings ? A. Ho, no ; he put that much water under every tie; now Mr William H. Vanderbilt has got to charge just that much more and 572 give that just that much poorer accommodation in his cars; he has to take that off from his employees — hire boys to do men’s work, so that he can pay a dividend on this trash. * Q. And who holds that trash ? A. A, 13, 0 and D, all over the country and in Europe ; it is merged by act of the Legislature into New York Central stock. Q. Added to the original cost of the construction ? A. Added to the original cost of transportation ; they have got to pay just 85 per cent more for freight transportation than they would if that did not exist. Q, From the fact of that stock watering operation, you say that transporters and travelers have to pay 85 per cent more for services received from the road ? A. Yes, sir. Q. Than they would have to pay if it had been left in its original condition ? A. Yes ; he makes it pay 85 per cent ; if he cannot get it in one way — in freight and passengers — he takes it off from his employees ; that is the way they telescope so many cars arid injure so many travelers. Q. Then 1 gather from what you say, that you are very mueh op- posed to the system of stock watering ? A. I am, unless I am in it. Q. Do you know of any recent operations — similar operations in stock watering ? A. Oh, they occur so often that I could not say recent ; ” they are occurring every day. Q. Is the system of stock watering extended to any other industry besides the railroad industry? A. Not to any extent. Q. To some extent ? A. To some extent. Q. To what other industries does it extend ? A. Oh, I don’t know; there are other companies; take telegraph- ing, for instance ; there is a little slight-of-hand there, you know. Q. Do you understand it in the telegraph system — how it is done? A. Well, I understand they issued $15,000,000 and j^ut it in their pockets, and they are charging you for telegraphing upon that $15,- 000,000 ; they have to put that on the tariff ; that is to pay this divi- dend. il Everybody does not know to what extent they carry it? A. Well, they would have carried it further, I suppose, if they had liad a little more time ; five judges out of six in the Superior Court 573 decided that it was an illegal issue ; now they wiirgo up to the Legis- lature this winter and get that stock legalized, probably. Q. Do you know of the system of cornering as conducted by the coal operators ? A. Cornering coal ? Q. Yes, sir. A. I am not very familiar with it ; I think they have one agent for doing the whole thing ; they have a contract among all the coal com- panies — a pool ; one man fixes a price, and they all agree to it ; then they divide their sales. Q. And do they regulate the amount of production according to — A. I only know from the newspapers. Q. You are not interested in the coal business ? A. Not interested in coal, only what I use at home. Q. Is there any other information you would like to give the com- mittee ? A. I didn’t like to give you this; you go down and interview Mr. Vanderbilt’s clerk; he can give you the whole thing from A to Z; I wish to qualify the answer I made that I thought all stocks were 50 per cent too high, by saying that some of them are. tJolin B. Simimerjielcl was then sworn, and being interrogated, testi- fied as follows : By Senator Boyd : Q. Where do you reside ? A. I reside in Brooklyn ; 223 Cumberland street. Q. What is your business ? A. Dealer in commercial paper and foreign exchange. Q. Where is your place of business? A. 63 Wall street. Q. Are you a member of a firm ? A. Yes; J. B. Summerfield & Co. Q. How long have you been in that office ? A. Twenty years. Q. For what classes of dealers do you do business; your specialty? A. The grocery trade, principally ; coffee, tea and sugar people. Q. Do you understand the system of making corners and dealing in futures ? A. I understand it; I presume that I do; you must understand that I am not a member of any Exchange, to begin with — neither the Produce, Petroleum, Stock or any other Exchange — so that my knowledge of these things has come to me, if I may be allowed to 574 explain, from the general knowledge that I have acquired during this last twenty years in the street. Q. You know numerous persons who have been engaged in corners and dealing in futures, I suppose ? A. I presume so. Q. What effect has the fact of a man being engaged in dealing in futures and making corners upon his credit ? A. It has a bad effect on his credit. Q. In what way ? A. It is for the reason that a man that goes in to deal in an article to corner it takes a great risk ; a man going into a corner takes a risk of making a large profit or a large loss ; it is not what we would call a legitimate business ; if I may be allowed to explain, legitimate busi- ness we consider is where a man takes an ordinary risk for an ordinary profit; I don’t know as that would be clear, but a man that goes into a corner goes in to make an exorbitant profit, or he takes the chances of making a large loss. Q. To what extent have you been influenced in your business by such considerations, in your dealing with persons who have been engaged in making corners and dealing in futures ? A. Well, we come in contact with very few of those people, because in our particular line there is but little, in any way, of cornering. Q. I know, but you discount paper, I presume, for persons who have been in the cornering business? A. No, sir; we do not. Q. You do not ? A. No, sir. Q. You would refuse absolutely, I presume, to discount their paper ? A. Oh, well, I should not like to say that, because there are some very large people, you know, who are engaged in these corners that have immense wealth, etc., and I wouldn’t like to say that we wouldn’t discount their paper if it was offered to me ; but I will say that we do not come in contact with those people, and for an ordinary con- cern that was engaged in speculation in that way, we certainly wouldn’t want to discount their paper. Q. Do you know of any failures resulting from such speculations ? A. Only tlie general failures in Wall street. Q. Are they numerous ? A. At times ; yes, sir. Q. And this present year they have been numerous ? A. No, sir. Q. Why not this present year ? A. Well, there has not been any corner this present year, with the exception of perhaps the Hannibal and St. Joe corner ; that was within the last year or year and a half ; but wlien you go back a few years, to the time of the other corners, running back within the last fifteen or eighteen years, why the failures then were numerous when a corner was made. Q. I have also reference to the dealing in futures ? A. Do you mean dealing in futures on the Produce Exchange, Cot- ton Exchange, etc. ? Q. Yes, and elsewhere. A. The failures have not been large in that respect. Q. What is your opinion of the effect produced by making corners and dealing in futures on commerce and the public welfare ? A. I think it is very disastrous and demoralizing. Q. In what way ?j A. In the first place, if I may be allowed to explain, there are two kinds of corners ; there is one corner which is produced by an indi- vidual, or a clique buying a certain commodity against the consumer and against the exporter. If it, for instance, is grain, or wheat, or corn, or petroleum, or no matter wdiat nature it is, that is grown or produced in this country; if this corner is made against the consumer and the exporter, I think it is very bad for the country at large, from the fact that it makes the consumer pay a much higher price than he would have to pay under ordinary circumstances. In the next place, against the exporter it is disastrous because it does away with his business to a great extent, from the fact that the world is not depend- ent entirely on the United States for any of these things, and if this clique or corner is run by these people and the prices put up exorbi- tantly, the world will get its supply from elsewhere, as we saw during 1880 and the spring of 1881, 1 think it was, when Mr. Keene ran a corner in wheat. In the previous year, or the year of the ‘^boom,*’ all the world came here with their ships for freights. It was known that we had a large crop and Europe had a small crop, and the result was that all the ‘‘ ocean tramps,^’ as Mr. Roach calls them, came here for freights and our harbor was filled with shipping and freights were reasonable. The next year, on account of there being rather a small crop, Mr. Keene ran that corner in wheat, and the result was that the vessels coming here did not get their freights and they had to leave our port in ballast, and they never have returned, of course; they found their freights elsewhere. And now, if you will notice the papers, freights are pretty high. We are shipping now quite freely of cotton and grain, and we are paying six pence half-penny, and seven pence a bushel for freight, which is a pretty good freight. I contend that these vessels were driven away from the fact of Mr. Keene’s corner at that time ; that the wheat that is held by these people wlien wo pass a certain time — for instance, if wheat is going from this country largely, say in October, November, December and January - - if the wheat is held here by a clique and it is not exported, we never gain the amount that WG would have shipped during those four months, from the lact that the rest of the world is drawn on, the supply is got from else- where, and we, being a country that grows this stuff, it seems to me that it is a great detriment to us not to export it when we have it to export; therefore, a corner I think is wrong in that respect. Then the next corner is a corner against the shorts,’’ and I contend that that is fraud, from the fact that they induce a man to sell a thing that he has not got, by making him believe that he is getting a high price for it. You will understand that a man don’t sell a thing short in the face and eyes of the law ; he thinks he is going to make a profit, and then by manipulating things, inveigle that man into selling what he has not got. In the mean time they buy it up quietly, and then, when the corner comes, they put the screws on, and the man goes to buy it, and he finds that he has got to buy from these people that he has sold to. ^Ye saw by the papers that on the 29th of last month during the corner in corn, on the Produce Exchange, they asked $1.10 for corn for delivery to the joeople who were short, to settle their contracts, while they offered to sell for export at eighty-two or eighty-three cents. Now, I sa}^ gentlemen, although, of course, I haven’t any interest in this matter, but, for the good of the whole community, I say that that thing is a fraud. Q. What is your opinion in regard to the system of dealing in fu- tures, selling grain for future delivery which a man may not be pos- sessed of, and never intends to deliver ? A. Well, I don’t think that it is of any benefit to the community, 'think it is a detriment. Q. What is your opinion of the effect which it produces upon the le- gitimate commercial interests ? A. I think that that is bad. Q. Could you suggest any remedy for the evils that you have "been referring to ? A. No, I don’t see any remedy for it, unless you can legislate to pre- vent a man from selling, in the first place, what he has not got ; and, in the next place, by making it an offense to run a corner in the neces- saries of life. I any not speaking of corners on the Stock Exchange, or corners in things that have no particular relation to the community at large, and that only a few people are interested in, but, as we all know, if tliese gentlemen make a corner in an article which is one of tin.* necessaries of life, it makes the whole community pay an extra l)rice for that particular thing. 5?7 Q. And enhances the cost of living ? A. And enhances the cost of living, without compensating the la- borer, or the artisan or the mechanic, or whatever he may be ; it don’t benefit him in the least. Q. Or the farmer ? A. Or the farmer ; the farmer may be benefited in a slight degree, but very slight, from the fact that they will not pay a high price for his product ; they want to bejr it first and get it at a low price, and then run it up when they get control of the thing. Q. Is there any other information you would like to offer to the committee ? A. No, I don’t think there is, sir. Adjourned to Friday, December 15, 1882, at 10 o’clock, a. m. New York, Friday, December 15, 1882. The Conimittee met at the Metropolitan Hotel in the city of New York, pursuant to adjournment. Present — Senators Boyd and Browning, of the Committee, John W. Corning, Sergeant-at-Arms of the Senate, and Daniel A. Cooney, Clerk of the committee. Rev. John J. Reed called and examined : By Senator Boyd : Q. What is your occupation ? A. Clergyman. Q. With what denomination and’what church are you connected? A. The Methodist Episcopabdenomination ; the Washington Square Methodist Episcopal Church. Q. Of the city of New York ? A. In this city. Q. How long have you been a clergyman ? A. Twelve years. Q. State, if you please, your opinion concerning the whole system of making corners and dealing in futures, with reference to its effect upon commerce and its infiuence upon the public welfare ? A. Well, of course, being a clergyman, I have no practical acquaint- ance with the subject ; what knowledge I have is obtained from my reading of the papers, some acquaintance with the testimony offered in this case, and general information in regard to the whole matter. Certain principles I believe to be underlying the question ; for exam- ple, that men are entitled to the fruit of their labor and to interest on capital, to benefits accruing from honest ingenuity and talent, and honest skill and superior information ; I believe stock dealings in it- 578 self considered to be legitimate ; stock gambling, however, as you may define it, I conceive to be reprehensible, immoral and unscriptural ; speculation in itself considered, legitimate S])eculation, I judge to be neither sinful nor immoral ; money I Ijolieve to be of a merchantable value and manif stocks I believe alike to be articles of merchandise, commanding their price; but I believe the price of an article of commerce sbould be made to de- pend as far as possible on the laws of supply and demand, and that other influences interfering with the operation of those laws are to be regarded with suspicion, if not to be conceived of as immoral. I understand that as the rapid transfer of products is desirable, so is rapid exchange ; certainly it is a principle in political economy that the more rapidly exchanges are made the better. This principle, I under- stand, is underlying the existence of the Stock Exchange and especi- ally of the Produce Exchange. Q. That is according to the terms of their charters ? A. As I understand the terms of those charters, yes, sir. As a teacher of morals, I believe there is a peculiar liability to fraud where the riglit to property and the property itself is transferred. I do not say that in this case fraud is necessary, but there is a manifest liability to fraud. The business of stock dealing, while not in itself immoral, is accompanied with so many temptations and risks to business honor and integrity, that men may well avoid this form of money-making. I believe that those who are engaged in stock dealing and speculation in grain are peculiarly liable to the reproach of the scripture, which says : They that will be rich fall into temptation and a snare.” To knowingly give less to many than^the equivalent of his money would seem to bo unneighborly and dishonest. Each man, in the proper sense, is a protector — a moral policeman over his brother. The ques- tion asked ages ago, Am I my brother’s keeper ?” to-day by every moral, benevolent, Christian man must be answered in the affirmative. The inquiry raised in the Old Testament scripture is answered by the lips of Jesus in the new : Whatsoever ye would that men should do unto you, do ye even so unto them.” Thus to fiibricate a rumor affect- ing the value of stocks or grain is dishonest. It is to lend onesself to a lie, and thus to be responsible for a theft. To get up a corner in stock or grain, knowing that the value put upon it is purely fictitious, being the result of a combination, this is manifestly immoral. The j)ossibility of thus getting up a corner in corn is hinted at by the preacher in the book of Proverbs, chapter 11, verse 2G : He that withholdeth corn, the i)eople shall curse him ; but blessings shall be upon the head of him that sellcth it.” Then again in Amos, chapter 8, verse 4 : I am here as a clergyman ; I su})pose that is under- 579 stood. The herdsman prophet says : “Hear this, 0 ye that swallow- up the needy ; even to make the poor of the laud to fail, saying when will the new moon be gone, that we may sell corn, and the Sabbath, that we may set forth wheat, making the ephah small and the sheckel great and falsifying the balances of deceit.” As it occurs to me, there is a manifest immorality in any man’s undertaking to sell that wdiich he as yet does not possess. It is liable to the interdictions of scripture, and especially liable to the interdiction of Methodist discipline — the taking up of. goods without a probability of paying for them. As to how far these evils — the evil of stock gambling and grain speculation — may be affected by legislation is a question. In my own judgment the laws of trade are as legally effective as would be the laws of this State. Immorality in any business transaction must ultimately effect its own cure as far as its effect upon the country is concerned. It induces a feeling of insecurity, makes men more cautious, and prevents the possibility or likelihood of repetition. Q. What effect has thie system of gambling in produce and stock upon the young men of the present day ? ^ A . I conceive it to be demoralizing ; it draws young men from the fields of active productive industry, engenders a spirit of unproductive speculation and of gambling, and leads them in many cases to finan- cial ruin. Q. Is there any moral difference between a man who makes a living in gambling institutions, such as faro banks and places of that kind, and the man who gambles in the necessaries of life ? A. Emphasizing the word gambling,” giving it the meaning which you give it, I would say no essential difference. Q. Don’t you think it is the duty of the people of the State, through the law-making power, to provide remedies for all public evils so far as it is possible ? ^ A. I certainly do. ^ Q. Admitted then, that grain gambling and stock gambling is a public evil, is it not the duty of the Legislature to enact laws for the ; purpose of suppressing these evils ? A, That would be my judgment, in the hope that such legislation ’ might prove to be practical, or practicable. Q. Do you know if the system of speculating in grain, now so ex- I tensively carried on, has a tendency to enhance the cost of living by ■ increasing the price of the necessaries of life ? ■ A. I have no direct, present or adequate information, but I would ~ suppose that certainly would be the tendency ; I believe that to be the ! popular conviction. 580 Q. Then you believe that persons engaged in a business which tends unnecessarily to enhance the cost of living by increasijig the prices of the necessaries of life, are public enemies ? A. The premises being proved, that would be the logical conclusion. Q. Supposing tlie testimony which you have read and which has heretofore been given before this committee in regard to the mode of speculation in the necessaries of life to be true, do you believe tliat persons thus engaged are public enemies ? A. I have no idea that they estimate themselves to be such ; I be- lieve that very many of them need to have their conscience enlight- ened; but 1 believe that any man that willfully oppresses God’s poor is practically an enemy of his kind. Q. Is there any thing else that you would like to state to the com- mittee ? A. I might supplement my testimony by a remark that I speak only as a clergyman facing a moral question, without experience, and there- fore without prejudice; I have never bitten •others or myself been bitten. Solomon Dreyfus was then sworn, and being interrogated, testified as follows : By Senator Boyd : Q. Where do you reside ? A. In New York, sir. Q. What is your business ? A. Grain business ; I export grain. Q. Are you a member of a firm ? A. S. Dreyfus & Both, New York and St. Louis. Q. How long have yqu been in that business ? A. Well, I have been in this country only three years ; but I have been in the business oft and on I suppose about twenty-four years. Q. Please state your opinion with reference to the system of making corners and dealing in futures with reference to its effect upon com- merce and its influence upon the public welfare ? A. Mr. Chairman, I don’t know much about it, because I don’t speculate myself ; I can only speak from hearsay and what I have seen ; personal knowledge I have not ; I might buy what I don’t want; but I would n’£ sell what I have not got. il. From observation, what is your opinion with regard to the sys- tem ? A. Well, I think it is a great detriment to the United States in general — this cornering business — but I think that exporters are gaining 581 by it ; for my part, I think that I am gaining by corners, as a shipper ; I believe that I am taking money away from this country as a shipper that really does belong to this country, because where corners are made it is generally done by a certain clique or certain party — three, four, five or six men going together with plenty of money that buy up the week’s loading; as they buy it up, wheat rises ; then a certain time will come \\dien the stock gets too big — more than they can carry on their shoulders — and those parties go to some exporter — Mr. Drey- fus, or any one of those exporters — and say, “ here, we will sell you wheat at ten, twelve, fifteen cents below the market price ; we have bought it cheaper than the regular market price; ” but I liave got to give a guarantee that I will sliip it ; I suppose I would have paid for that wheat six or seven cents more than I really did nay for it liad not the wheat accumulated in the hands of those men ; as we had it, for instance, three years ago, I shipped a great deal of wheat — many millions that I bought from fifteen to twenty cents below the market price ; so that I really put the wheat on the other side — on the conti- nent — England, London and France — cheaper than it could be bought here in the speculative market. Q. And what enabled you to put it there cheaper ? A. Because I got it here from ten to twenty cents a bushel cheaper ; freight was very cheap at that time, so that wheat was really cheaper on the other side after I delivered it, if the large speculator, that had been caught short of wheat, had got to buy it here. Q. Then, can you state directly the cause of your getting the wheat at fifteen cents a bushel less than what you would have had to pay for it under other circumstances ? A. Well, I would have had to pay fifteen cents a bushel more if, in the regular way, the wheat had accumulated here ; I know that cor- ners always put wheat down for export, because when parties buy it they buy, say fifty loads, and they keep it; they do not put it on to the market again ; they put it in store ; but if this corner lasts too long, they might make a mistake sometimes ; they may think there is only about 10,000,000 bushels of wheat in the country and instead of 10,000,000 there may come in 20,000,000 ; when we had the experience of last June we found out that every bushel of wheat that the clique was long on they had got to deliver, and so that was a failure; three years ago, everybody remembers the Keene deal ; people here -lost a great deal of money, and I never have seen a man 3 "et that tried to form a ring or corner on eatables that made money out of it; the poor laboring man has to pay for it; it costs him so much more than they sell it for on the other side. Q. Are you a member of the Produce Exchange ? A. Yes, sir; I am. Q. Are rings of frequent occurrence in the Produce Exchange ? A. Well, we had some nonsense last month. Q. State what that one was ? A. That was in corn ; I haven’t done any thing in corn lately. Q, Do you understand how that was formed ? A. Well, I believe that the parties that were short settled at $1.10, while I know that corn was sold at ninety cents for consumption ; the parties were caught short, and I know that they had to settle at $1.10; I know there was a great deal bought for export at ninety and ninety- two cents. Q. Can you explain by what mode of operation that firm compelled consumers in this country to pay more than exporters ? A. Well, this last time it was not done, because in this last month’s deal, if a man bought corn, he gave a guaranty that he would not bring it back upon the New York market, and he got it at the same price that the exporters did. Q. Then these people assume the power and authority of fixing prices to suit themselves ? A. To suit themselves. Q. And the consumers are compelled to pay those prices ? A. Well, not always; as I say, sometimes they will sell the con- sumer at the same price as they will the exporter. Q. But sometimes they do not ? A. Sometimes they do not ; well, they cannot possibly do it all the time, because if there is a corner on wheat and they stack up six or eight millions, they cannot say, ‘^all right, I will sell 15,000 or 20,000 bushels,” because the miller might swop that wheat around and put it on the market again ; I suppose in a small market where there is not much wheat on hand, they can easily do it. Q. Is there what is known as a ring ” in the Produce Exchange, which controls matters for their own interest ? 'A. Well, I don’t know exactly any particular party. Anybody that has a mind to and has plenty of money can do it. There is nothing to hinder a man from making a ring, if he has got the money to carry it out. Q. In the Produce Exchange ? A. Yes, sir. Q. Do you know of any such rings in existence now ? A. No. Q. I >0 you know of any that have existed ? A. Well, at different times, yes. I don’t know the parties; it 583 might be one firm. If they corner their corn, oats, barley, wheat or rye, it is a ring. It might he one party, and it might be five or six going together. Q. Is there any difference in the application of the rules to members of such rings and to other members of the Exchange ? A. No, sir. Q. Can you name any trade committee that exists there now? A. I don’t understand what you mean; committees on the Ex- change ? Q. Yes. A. Oh, we have got many; we have got an arbitration committee; we have got a grain committee, and we have got plenty of committees, there is a dozen of them I think. Q. What is your opinion of the average of the decisions given by these various committees? A. Well, as I am directly interested, having been on very many ar- bitration committees, I would rather not speak of it. Q. We would like to have you? A. Well, I think they do the fair thing; they try to, any how; if they do not, they try to do the fair thing. Has the system of dealing in grain carried on in New York a tend- ency to drive away tonnage from this port ? A. Yes, sir; it has lately a great deal; inspection has. Q. In w'hat way has it done so ? A. Well, it has lowered the grades of wheat so that the other side will not take those qualities any more, and prefer to go to Baltimore, Philadelphia, New Orleans and St. Louis. In former years I shipped a great many cargoes every month from New York. I have done scarcely nothing this year except on white wheat that I cannot get anywhere else. By Senator Browkiitg : Q. Who has lowered the grain grade ? A. Well, the members of the grain committee. We have got this system of grading; we have an inspector who is a very reliable man. Q. What is his name? A. Sterling. He grades the wheat ; that is, he is intended to be the man that says wheat is su and so; but of late I know that Mr. Sterling has been subject to a great deal of annoyance from the grain committee; I know that Mr. Sterling cannot do as he pleases, and certainly if it was in my power, I should get our by-laws so changed that we would not have any grain committee at all. Q. Why? .1 584 A. Because tlie grain committee is formed of five men ; we are, on this Exchange, either receivers or ship])ers, and if von put on three receivers, you liave to have three of tlieni and two of the otlier; if you put on three receivers and two sliippers, the leaning will be always toward the receivers ; if you put on three shippers and two receivers the leaning will be always toward the shippers — the benefit of the doubt will be on their side ; so I don’t see what we want this grain committee for particularly, as the inspector we have is as honest a man, I believe, as there is walking under the sun ; there should be a law passed — if I could have it done I would spend a great deal of money — that if there is a dispute between the receivers and shippers, the re- ceivers should choose one man and the shippers choose one man, and let those two gentlemen choose another man and try to agree, and let that decision be final ; during this last two months I had a dispute and I had to submit to the decision of our grain committee ; I fought them bitterly — I fought them to the bitter end, and wlien they found out that I was right, the grain committee made the objection that I had a great many friends among the receivers that were satisfied that I was wrong ; and there is the grade of No. 1 white wheat I am speaking of ; No. 2 red wheat is in such a condition that I would not touch it"; when I get a cable I either fill it in Philadelphia, or if I can- not I don’t fill it at all. By Senator Boyd : Q. There is no uniformity in the mode of inspection, or the standard of the grades, is there, in the dift'erent cities of the State ? A. No; there is no uniformity at all ; that is what we have been trying to get ; we want to get the same standard for Baltimore, Phila- delphia, Boston, New Orleans and here. By Senator Browns" ikg: / Q. Now, is that possible ? A. Oh, well, it might be done possibly, yes. Q. How ? A. We would have to lower the grade then because St Louis has much better wheat than we have — abetter quality of wheat ; they would have to ])ut the grade where the lowest one arrives; they w'ould have to ])ut the grade at the shipping poi-t where the lowest grades of wheat arrive ; it could possibly be done, but I suppose it would not last long. Q. Are you familiar with the mode of inspection in the Chicago market ? A. 1 am not, sir ; I have heard it was done by State inspection, but 585 I don’t believe that will work ; I don’t see how the State can nominate an inspector ; to know the quality of wheat takes a longer experience than any other business in the world ; it has been talked over and I believe that the l^ew York Produce Exchange, which is 3,000 mem- bers strong, ought to have enough sense to appoint a responsible man u})on whom they can depend ; if for instance, we get a State inspector, it is my belief that every time the State government is changed on ac- count of politics, our inspector would be changed ; that is my idea ; I don’t know — I may be wrong ; but I believe it would be more of a political machine than any thing else, because it is a very good situation; lots of parties would be applying for it, and 1 should certainly be strongly against State inspection ; I will light all I can to abolish the gr.iiti committee and to have an inspector alone in place of the grain committee; as I said before, if the inspector should make a mistake, then between the two parties let them choose each a man and let those parties choose another gentleman, and let those two parties be satis- fied with the decision of those three men. Q. Do the rules of the Produce Exchange provide any remedy against making corners ? A. I guess not; I don’t know; I don’t think there is any thing in the by-laws about it. Q. Certain witnesses who have been examined before this committee have characterized the system of making corners and dealing in futures as a system of gambling ; what is your opinion about that ? A. Well, I think the whole world is a gambling-house, for that matter ; the dry goods man comes to New York and he buys 10,000, 12,000 or 15,000 dollars worth of dry goods and takes them out West, and they arrive there three weeks afterward; well, he has been gambling for three weeks ; they lay there three months longer and he gambles during that time. By Senator Brownikg : Q. You think that is gambling ? A. A man has a right to buy what he wants ; I have very often bought something I did not need because I thought it was cheap ; I have bought steam cargoes on the other side ; I thought I would make money on them ; sometimes I did, sometimes I didn’t ; but a man that sells what he has not got I think is worse than a gambler; there are different ways of buying wheat too ; for instance, I bought the other day from a very good firm here, for January delivery — my wheat is bought to ship — I bought and paid then a very high price for it; I paid a higher price than wheat will be worth in January, but I wanted my wheat guaranteed at a certain time ; that party has not got the wheat yet ; but I know immediately when this firm had that order, 74 586 they sent out a man to commence buying the wheat ; well, I don’t call this gambling ; I call it gambling when a man goes into a ring and sells to other i)eople thousands ot bushels of wheat with the intention of either making or losing money by it, and the moment he sells it he knows he has not got to deliver it. Q. When you buy wheat and expect to have it delivered, you do not consider that gambling? A. No, sir. Q. But where a dry goods man buys $3,000 worth of dry goods, you think that is gambling ? A. More or less ; I call it regular gambling when a man goes into a ring and sells what he has not got; it can be called nothing else. Q. Will you examine this charter and see whether the figures there are, in your opinion, correct, and state the proportion of shipments from the port of New York, Philadelphia and Baltimore ? A. I could not say, sir ; if I had this in my office I could do it ; I could not possibly say this is correct or not ; I should not wonder if it ’was correct ; I know that Baltimore has shipped a great deal more lately than they have from here; I knoAV there has been at Baltimore over fifty steamers and sailing vessels for January, and I do not believe there has been five taken here for January ; this inspection business is driving freight away from here, as on the other side men say they will not buy in New York wlieat any more on inspection at all ; they have not confidence any more, and they had rather go to Philadelphia, Baltimore or St. Louis ; they have lost faith in the in- spection. Q. Have you any remedy to suggest for the evils of which you have complained and which might be effected by legislation ? A. On which complaint ? Q. With regard to any thing that is a tax or burden upon the grain interest ? A. Well, gambling is a burden, but I don’t see how we can stop it ; I don’t see that there is a law in the world that will touch it ; if men do not gamble one way they will another ; I don’t see how you can do that; a man goes and puts out a certificate that calls for 8,000 bush- els of wheat and attaches a $500 margin to it, and it is only $500 really; if tliat can be stopped, selling on certificates — Q. What is your opinion with regard to selling on certificates ? A. Well, it is gambling, tliat is all. Q. Wdiat effect has it upon commerce ? A . More or less ; sometimes it will not hurt commerce any ; some- times, in case of corners, it might hurt it a great deal. 587 Jay Gould was then sworn and, being interrogated, testified as follows : By Senator Boyd : Q. What is your name ? A. Jay Gould. Q. Where do you reside ? A. New York city. Q. What is your business ? A. Manager of railroads. ^ Q. How long have you been in that business? A. Upwards of twenty years, twenty- three years. Q. Are you familiar with the system of making corners in stocks, grain and other commodities ? A. I may say that I am familiar with stocks ; T never have dealt in grain, except what I have consumed at home. Q. Are you familiar with the system of making corners in stocks ? A. Yes, sir. Q. Are you familiar with the system of dealing in futures in stocks* grain or other merchantable commodities ? ' A. I am familiar with stocks, dealing in stocks ; I have never clealt^ at all in grain. Q. You are familiar with the system of dealing in futures in stocks ? A. Yes, sir ; at present there is very little of that done. Q. State, if you please, your opinion concerning the system of making corners and dealing in futures with reference to its effect upon com- merce and its influence upon the public welfare. A. My impression of that is that it makes a very large market here ; that is, all the world is connected by cables and telegraphs, and the large market is where all the consumers come to buy. The larger you make our market the more attractive it will be to buyers all ove;[’ the world. If our market was narrowed down to so small a compass that every time a large dealer had to buy any grain he had to go and hunt up the farmer out West and buy it, he would go somewhere else. The roads that I am interested in are those that reach the producing dis- tricts, so that I may say that it is the producers that I deal with, not the consumers. Q. That is in reference to grain ? A. In reference to grain. Q. Through what sections of the country do your roads run ? A. Through Indiana, Ohio, Illinois, Missouri, Iowa, Kansas, Nebraska, Arkansas and Texas. Q. What effect has the system of making corners in grain or other produce upon the transportation interests of the country ? 588 A. The only effect that it has upon transportation may be to make an uneven transportation. These fictitious transactions the railroads never carry ; they are transactions on paper ; they only carry tlie actual production ; and tlie movement of it may be facilitated or retarded according to the terminal markets. Q. Do you recollect any corners that there have been in grain within the last few years ? A. Yes, sir. They get them up every little while, of more or less magnitude. * Q. When was the last ? A. I don’t remember. Q. Does the system of making corners in grain injure the transpor- tation interests ? A. Yo, sir, I think not ; 1 think it rather helps, on the whole. As I said before it makes a large market, and on the whole I tliink it helps. The effect of corners probably is to give the producer a better price, on the whole. They make the money. It is not the men that make corners generally ; they lose, because the farmers hold back their produce to take advantage of just such a state of things; they pile the speculator full, and the producer usually gets the great benefit of it. Q. What effect has it upon the consumer ? A. Well, I think the consumer pays more; though my observation has been that the loss usually follows when the speculators suffer. Q. Can you give an instance where the loss has fallen upon the speculator ? A. The corner that was engineered some two years ago, I think, by parties in Chicago I have no knowledge of except from hearsay, though they were reputed to have made a very large loss — millions. The farmers held back their grain and sent it in and took advantage of it. They made the money. . Q. Did Western railroads reap any advantage from that operation or sustain any loss ? A. No, sir, they did neither, except as you may say a railroad car- ried a little more to-day and a little less to-morrow ; they only carry the actual wheat or grain; they do not carry the millions and millions of fictitious transactions that are made through these Produce Ex- changes ; they deal without any regard to the quantity that is pro- duced, except as it has an effect upon the price — a large or small crop ; the railroads carry the actual grain that is raised, no more and no less. Q. Do you recollect any recent cornering in stocks ? 589 A. Yes, sir, the last corner I think was in the Hannibal and St. Joe stock. Q. Do you understand how that corner resulted ? A. It resulted vei‘y disastrously to the man who made it. Q. In what way ? A. He brought the stock up to a very high price, paid more than it was worth, and alter he got through with his corner he had the stock on hand — no market for it. Q. Have you been interested in any cornering transactions in stock within the last ten years ? A. I was interested in the Chicago and North-western corner. Q. Please explain about that corner ? A. Chicago and North-western stock was selling, I think, at about 80 — 75 or 80 ; I considered it cheap at that price and commenced buy- ing; there was a disposition to break it down; my brokers had orders to buy all that was sold, and before I knew it they had bought a good deal more than there was ; when called in to pay for it, the price ran up ; I did not pay over 80, 1 think ; I paid what I thought it was worth. Q. How did that corner result ? A. It resulted in carrying the price up very high ; the stock fell back after the corner to about 80, I think. Q. How high did the stock go up ? A. I don’t remember now ; I think it went up to about 250 ; I think I was induced to part with some at about that price. Q. What effect had that corner upon the commercial interests of the country ? A. I don’t think it had the slightest effect upon the commercial in- terests. Q. What effect had it upon the private fortunes of persons who were engaged in it" A. I don’t know ; I could not say. Q. Do you know of any bankruptcies from it ? A. No, sir, we did not allow anyone to fail; if they coaid not pay we let up on them ; those that could not pay we settled at a much less price. By Senator Browkii^g : A. How did that affect the road itself? A. Oh, not the slightest. 500 By Senator Boyd : Q, l)o you know of any other corners that have occurred within your time ? A. I don’t think of any at this moment ; the Harlem corner, but that was before my time. Q. What effect has the system of dealing in futures in stocks, as con- ducted in the city of New York, upon the general welfai-e ^of tlie community r* A. There are very little futures dealt in now iiiThe Stock Exchange ; the rules allow sixty-day options, and there is very little of it done, in fact, I don’t think it has any effect at all. Q. Has it been done to a large extent in by-gone years ? A. Yes. Q. Wliat effect had it then ? A. Well, I think that every thing that tends to facilitate speculation really benefits the country — draws capital from all parts of the world. Q. In cases where parties sell what they have not got, and other parties purchase what they never intend to receive, what is your opin- ion with regard to the effect of that mode of speculation upon the public welfare ? A. I don’t see any injury that can come from it ; as I said before, you have got to throw your great markets in stocks and grain open and make them free, and the freer you make them the better, the more it will attract capital. For instance, if New York is the center, the more freedom you give to capital and the more freedom you give to all kinds of commercial transactions, whether stocks, or grain, or oil, the more capital will flow here from all the world. Therefore, I should be very careful what restrictions I put upon transactions either in stocks or grain. Q. Do you believe that these speculations conflict in any w'ay with the industrial interests of the country? A. No, sir ; don’t see that they do; the men that deal in stocks and deal in grain make that their business ; they are not the men who plow the soil and produce the grain ; they are following a legitimate business. Q. Are you of the opinion that in the graet division of labor and industry such speculations as we refer to are legitimate or otherwise ? A. I think they are legitimate. Q. Some gentlemen who have been examined before this committee have designated them as being gambling operations : what is your opinioTi a)K)ut that ? A. ^rhat would depend upon the legislation of the country or the Tiatif)n ; if the Logisbduro should say that dealing in futures was gam- bling, or the national Legislature should say that, it would be gambling ; 591 but until they say that, it is not gambling. These men have grown up from small beginnings to very large interests, and it is just as legiti- mate as any other business until the Legislature makes it gambling. Q. What is the great regulator of the prices of all commodities ? A. Consumption and production. Q. In other words, supply and demand ? A. Well, a little difteren^from supply and demand. Q. In what way ? A. Supply and demand embrace all speculative transactions ; in buy- ing and selling grain, as you buy and sell it as a speculative transaction, you cannot discriminate, but when it comes down to finally eating up the grain, that is consumption ; and those laws will always in the end govern. No legislation can change them unless you will legislate that people shall eat more or less. Q. What is your opinion in regard to any system of speculation which would come in between the producer and the consumer and tend to tax commodities more than they would naturally be taxed if they came from the producer to the consumer by the ordinary means of transportation and trade ? A. The consumer or the producer must pay any intermediate charges — one or the other ; whatever is paid to intermediaries comes out of the producer of the country ; but then comes the question whether these large speculations that go on do not, in the end, make up for that ? Q. In what way ? A. By making larger markets ; we wouldn’t produce in this coun- try nearly the amount of wheat we do, were it not for these interme- diaries ; they have their agents out all over the world ; wherever there is a market for consumption, they have their agents out there to sell ; it is these intermediaries that create markets. Q. Then do you think that by the system of speculation our exports are larger than they would otherwise be ? A. Yes, I have no doubt about it. Q. Do you believe if those exports are increased that it has a tend- ency to enhance the cost of living to our own people ? A. No, sir, I don’t think it does ; I think that it promotes emigra- tion to the country and increases our production. Q. These are legitimate transactions ? A. Well, you cannot discriminate between what is legitimate and what is illegitimate ; a man who has an agency in Europe to sell grain he must know what the price is here, and he can buy futures here and sell them over there, and the buyer sends his ships to get it, so that you cannot discriminate. 5^12 Q. Such a trade as that is legitimate, hut there is a system of deal- ing in futures whereby men who do not do any tiling to promote the interests of the country, but simply remain in their otiices and engage in transactions, in making contracts and selling certificates of produce which they never owned, never expect to own, and never expect to de- liver ; we want your opinion on that system, if you please ? A. Well, I don’t think my opinion woii^d be of any value; I give it to you when I say that 1 think any thing that tends to make large markets and draw capital is not an injury, and 1 think that tiie deal- ing — the large speculative transactions in gi’ain and stocks make great markets here and draw capital from every center in Europe here. Q. Perhaps you don’t know, but I would suggest that there is a sys- tem of dealing in grain carried on in places known vulgarly as ‘‘buck- et-shops,” where people are drawn in to speculate and spend their money and never receive any return, and the profits all go into the pockets of the persons who run them ; you, I presume, would desig- nate that as a public evil? A. I have not looked into the system. Q. But suppose such a system does exist, how would you designate it ? A. The public will speculate, from your minister, doctor and barber, down, you will find that they have all got some interest in one way or another, and whether it is done in a “bucket-shop,” or whether it is done in a larger exchange, they will do that. Q. Does not the fact of allowing these speculative transactions rather tend to promote dealing in chance ? A. I, found out West that the introduction of lager beer, taking it in train-loads, distributing it through the country, has almost destroyed intemperance, and I don’t believe that there is the amount of gam- bling in this city that there was before speculation was introduced very largely in stocks. Q. Then you think that speculation in stocks and grain has supplied the place of gambling ? A. I think it has ; I am sure that the speculation in grain benefits the producer, or our home producer. Q. In what way ? A. It ci-eates markets all over the world. A. That is the legitimate system. Where do your agents seek their inai’kets in Europe and other sections of the world, outside of this continent ? A. In England, Ireland, Scotland, Germany, France. Q. And what proportion of the produce of the country is exported annually? 593 A. That varies according to our own crop and the crops abroad. Last year we had a short crop, both of wheat and corn. I have not seen the exhibits. We should export over a hundred millions of bushels of wheat. Q. Which country is the best market ? A. England. Q. You have said that the system of speculation promotes immigra- tion. Please state in what way ? A. Because the large market here induces the construction of rail- roads into new territories, and that induces the roads to send abroad, and get emigrants to settle them up. That adds largely to the pro- duction of wheat and corn. Q. Then you say that the railroad managers exert an influence in inducing emigration ? A. Very largely. Q. Can you give us any instance ? A. Yes, sir; I have been promoting emigration, right along, and spending large amounts of money. Q. Since how many years ? A. Since I have been connected with the western roads, ten years, I suppose; first, the Union Pacilic, that had a large land grant; the Chicago & North-western had a land grant. Q. To what extent have you influenced emigration an.nually, on an average? A. Well, that is impossible to tell. Advertising your own lines abroad, emigration, when it gets over here, may go there, and may go somewhere else. Railroads have undoubtedly been great motors in promoting emigration. I did not go anywhere I was that I did not see agents, and land advertised ; I went through Germany, Holland, and other countries, and I found everywhere our American roads, with their agents promoting emigration, and lands advertised. Q. Have all the roads adopted that system ? A. I think the land grant roads. Q. Which roads are they ? A. The first land grant road was the Illionis Central ; then came our system of other roads — the Union Pacific, the Central Pacific, the Atchison and Topeka, the Chicago, Burlington and Quincy, and Ne- braska and Rock Island, and the Missouri, Kansas and Texas, the Texas and Pacific, and numerous other roads — and vast numbers of them. Q. What means do the roads take to induce emigration, in other words, what inducements are offered to emigrants ? A. They have their lands thoroughly written up, and then they put T5 594 very low prices as an inducement in that way ; and an inducement as to the method of payment; tlie payments come along so that the emi- grant sees that he can pay for his farm out of tlie gradual production of it ; all these statistics are presented to them, and then they have, per- haps, friends that have preceded them, and they verify their statements. Q. Are extra facilities in the way of transportation afforded ? A. Sometimes. Q. By ocean steamers and railroads ? A. Yes, sir ; the great motor in securing emigration, of course, is to meet the emigrants at their own homes and explain to them exactly what they can do and where they are going, and what they can raise when they get there ; all that information is a part of the information that goes to make the emigrant make up his mind to move. Q. How many agents have your roads ? A. I don’t know ; I think that we have a general agent and then he pays, I think, in shape of commissions. Q. You have a general emigrant agent for all the roads ? A. Yes, sir, for all our system. Q. And then he pays a commission to persons who induce a certain number of emigrants to come here ? A. Some such system as that. Q. Upon what terms do you dispose of the lands to settlers ? A. Well, usually the payment of ten per cent in cash, and payment right along over a period of six to ten years, Q. Do you offer them any assistance in the way of providing accommodations — providing them with farming implements, with cattle, or means of cultivating the land ? A. Hot usually ; I have done this when they had a bad crop; I made it a rule to support them until the next crop came in ; in that way we often ship a great deal of wheat and provisions to them on their places until the crops come in ; they always came out all right and paid us. Q. On an average what did you sell them the land for per acre ? A. Well, from 13 to 16 an acre. Q, And in large tracts on an average? A. Some will buy a section, that is 640 acres; but usually about 160 acres of land ; wc would rather sell them in eighties, because the more families we get, the more production and the better for the railroads. i}. Now, on an average, how many emigrants annually does your system bring to this country ? A. Well, T could not tell you that ; I kuow it is pretty large. I have umhu* my immediate control 10,000 miles of road, and about 6,000 or 7,000 of them, perhaps 8,000, are where emigration comes in, but the number I don’t know ; it isjlarge. Every time I go out West 595 — I go out twice a year — I see towns that have sprung up in the in- terval. 4 Q. What country sends the greatest number ot emigrants under your system ? A. I don’t know ; Ireland, Germany, Sweden, Norway, France. Q. Do your agents go to all those countries? A. Yes, sir. Q. About how much of your lands received as grants have been set- tled upon under this system ? A. Well, I don’t know how much. The government’s system of granting lands was to grant the railroads alternate sections, and they usually take those up first, because they get them cheaper. They are thrown open to settlement ; so that I could not tell. We do not care whether they buy our lands to take up government lands, so long as they settle. Q. How much cheaper can they purchase the government lands ? A. I think the government price to the actual settler is $2.50 ; I think that is the price for the land grants. Q. What are the terms of payment ? A. They have to pay cash to the government. Q. Does the government afford them any assistance in the way of providing farming implements or dwellings ? A. No, sir. Q. About how much of your lands still remain unoccupied ? A. I think we have on the Texas Pacific some 12,000,000 of acres. Q. Still unoccupied ? A. Yes ; the Missouri, Kansas and Texas have some million or more, which lies in the Indian territory. Under the grant the Indian title has to be extinguished before it comes to the road, so that that is not open to settlement. The Union Pacific, I think, has some 15,000,000 of acres. Q. There are other roads besides those in which you are interested, are there not, which also have received large grants ? A. Oh, yes, Q. What roads are those ? A. Well, I enumerated them a little while ago. Q. How soon after settlement are the emigrants enabled to send crops to market generally ? A. Oh, I have known a great many cases where the first year they paid all up from the first crop ; where they took the virgin soil and put in a crop of wheat, the first crop gave them a profit that paid for their land. Usually they take that money and put it into improve- ments, and go on and pay more gradually. We have never lost any* 596 by our sales. We have had cases where lands came back to us, but we have in all instances sold it for more. • Q. From the improvements ? A. The improvements from the growth of the country. When I first went on the Union Pacific road it was almost a wild country, and they said that the limit of raising wheat was one hundred miles west of Omaha. Sure enough when I got out there, there was not any we^t of what is called the Great Desert. There was no rain west of this ; that was the reason. We found that the region of rain moved west about twenty miles a year and that would bring in this strip. Now if you go out on the Union Pacific you will find wheat out as far as North Platte, about two hundred and ninety miles west of Omaha The region of rain in that great belt of country has gradually moved west in ten years so that now they raise the finer wheat there. Q. And has that chiefly been settled by emigrants ? A. Oh, yes. Q. Induced to come as you have described ? A. Yes, almost entirely so. There are a great many people who have got pretty well off in the Eastern and Middle States and have sold out their farms and gone West. That is one of the elements of this emigration. Q. And this increase in population is adding to the volume of our products every year? A. Yes; when I first went out I think that the product of Nebraska was not over 1,000,000 bushels of wheat and there was no corn. This year there will be 20,000,000 bushels of wheat, and 100,000,000 bushels of corn. Kansas at that time produced only 2,000,000 bushels of wheat, and this year it will be 85,000,000 bushels of wheat and 150,000,000 bushels of corn. Q. Do you know what price the Western producers receive for their wheat at their local markets? A. That varies according to the prices in Chicago and St. Louis It comes pretty close up to the prices that are made there, less the transportation. Q. About what on an average is the price which they receive? A. Well, there are pretty wide fluctuations. They want to get a dollar a bushel for wheat; they are not satisfied with less. Q. I recollect being in Iowa in 1804, I think, and I remember that the farmers sold their wheat at Cedar Falls at fifty cents a bushel, and some of them had to drive into Chicago, thirty miles, to get across the prairie. It did not strike me as being very profitable ; and I wanted to know whether the prices continued the same as thev were ^ then ? 597 A. Oh, no ; prices are higher now ; I think they pay about seventy cents for wheat in Iowa. Q. How far is the country settled on each side of the Union Pacific railway ; what distance from the railway? A. Well as you go west the distance increases; emigration is spread- ing out. When you get out, say at Columbus, which is one hundred miles west, it is settled up for fifty or sixty miles each side now; in fact south of there it is an unbroken settlement all the way’ through to the Southern Kansas line Q. Have they branch roads at frequent intervals ? A. Oh, yes. The Union Pacific have built a system of them, and the Burlington and Quincy and Chicago and North western are well supplied with roads. Q. Have instances occurred in which corners have been made in the money market ? A. Yes, I think so. Q. Do you recollect any ? A. Most every fall there is more or less speculative movement in 'money. Q. What is the effect upon the commercial interest of the State, of the city and the country of such corners in money ? A. Well, it makes a temporary depression, but it draws capital here from all other centers, and it very soon regulates itself. If they have a high rate for money here, you find cables coming from Canada and Europe, and money in a day or two will be less. Q. Do you think the effects are ultimately injurious to the trade of the country. A, I don’t know about that. It has its good side and its bad side. The fact that those things come to make business men a little more circumspect and careful than they would otherwise-be in their tran- sactions, in that aspect it is a good thing. Where it creates panics, it is injurious. Q. What was the last great corner in the money market of which you have a recollection ? A. They had money very tight here a month ago. Q. How was that tightness reached ? A. I suppose that they reduced the gold certificates. When they had to take the actual gold, it was so weighty they could not do it ; now the government issues gold certificates, and that gives the facility to any one that has money to lock it up. Q. Are corners in the money market produced by capitalists locking up the money ? A. No, sir, not always. They make it worse. There is a greater 508 clemand in the fall of the year for money. In the first place, there is the wheat crop, the hog crop, and the cotton crop that has to be moved. It takes an enormous amount of money that lies idle here in the summer. Then the use of that money leaves less here. Q. How do corners affect merchants in their pecuniary transac- tions ? A. I don’t know. I will have to refer you to the merchants them- selves. Q. I want your experience ; from your own experience how do they ? A. If they have made money for one set of men, it would benefit them ; if they have injured another set, it would he the reverse. Q. Are you familiar with any corners that have been made in the oil crop ? A. Only by reputation. Q. Or in the cotton crop ? A. No, sir. Q. You are interested in the banking business, are you not? A. No, sir. Q. We hear of panics in the money market and on the street fre- quently. What is meant by that ; does it mean a corner having been made ? A. A panic is where men lose their balance — their reason — and rush pellmell. Q. Is that generally preceded by a corner in some commodity ? A. A corner in money might be produced by any thing else which created a general distrust in the public mind ; some great fraud or over-issue of stock, or discovery of a large amount of forged bonds or stocks of any kind, doubt of some great financial institution which was firmly seated in the public mind and had the confidence of every- body. One or alLof these might produce it. A panic is where peo- ple lose their reason for the time being and rush to sell. Q. Are these of frequent occurrence in the circles in which you are acquainted ? A. I have been through three or four of them in my business experience. Q. Will you state each of those occasions ? A. Personally the first one was the panic of 1857. Q. What did that consist of ; how was it caused? A. It was perhaps caused by what was called the Schuyler frauds ; they gave the first incentive to that. It is a long time ago and I can only speak from general impression, but the discovery was made that there had been a large over-issue of New Haven stock. People had been 8j)eculating very heavily. 599 Q. That panic was a panic of the money market ? A. You cannot have any trouble in Wall street — that is the heart of the country, and you cannot have trouble there that is not felt wherever money has its effect in a greater or less degree, so that a money panic in AVall street is sure to have its effect on almost all kinds of business. It may come afterward but it is sure to be felt. Q. What effect had that panic upon the public generally and upon the commercial interests of the country ? A. Well, those have their good effect as well as their bad. I don’t know but what they are a kind of necessary check on extravagance and speculation. It makes people more conservative in the future. Q. What was the next panic ? A. Well then there was a panic at the time the civil war broke out. Q. That was caused by the breaking out of the war I suppose, was it ? A. Yes, sir, largely by that; then there was one in ’69 ; but the greatest one probably was in ’73. Q. Was that the panic usually known as the ‘‘ Black Friday ? ” A. ]^o, the ‘‘ Black Friday” was in ’G9. That was very limited. Q. How was that brought about — the panic of ’69 ; was that pro- duced by cornering the money market ? A. The war led to large fluctuations in gold and commodities — over- trading ; that was the real cause. In 1873 there had been a general over-trading again, an over-extension of railroads on credit largely The panic or revulsion came as a necessary result. Q, In the panic of ’69 — you say that you were interested in all these yourself more or less ? A. Yes, more or less. Q. What was the effect of the panic of ’69 upon our commercial interests and upon the public generally? A. I think the effect was not very long felt after ’69. Q. Was it disastrous to any great extent ? A. No ; the panic of ’73 w^as the culmination. Q. How was that brought about ? A. Well, that was brought about by general over-trading and the construction of railroads on credit largely ; a great many enterprises were put out that did not pay any way for years; the public got full of that kind of securities and they began to go down, and everybody wanted to sell and nobody to buy. Q. And what was the effect of that ? A. Some large houses failed and that frightened capitalists; they wanted to gel their money called in on their loans, and that broke up GOO large moneyed institutions and large houses ; there was general distress. Q. And that was the last panic that you are familiar with ? A. That is the last — ’73. Q. AVere the general interests of the country affected by that ? A. Yes, sir; it stopped railroad construction largely, and retarded the development of the country. Q. Did the panic of ’G9 have a similar tendency ? A, No, not to any such extent. Q. That I understand was confined to money alone? A. Yes, that was confined more to speculation in gold. Q. And how did the speculation in gold bring that about ? A. Well, that was brought about by short and long sales ; it was over-sold, but it was not in any sense a commercial revulsion ; it was limited and did not last long. Q. Now what is your opinion, generally, as to the effect upon com- merce and upon the industries of the country and the public welfare, of these panics and the corners which cause such panics ? A. I think that they have their evil and their good. > Q. AVhat is the evil side of it ? A. It is that men will fail ; men have over-traded ; enterprises that are not on a legitimate basis have to be wiped out, and those that have gone into them have to make the losses. Q. Do legitimate dealers not also suffer ? A. More or less, yes. Q. And the trade of the country is temporarily suspended and thrown into a fluctuating condition, is it not? A. Yes ; the effect of it is that people become more economical and restrict their personal expenses and study habits of economy, and in that way there is good comes out of it ; it seems to be a kind of necessary evil. Q. Do you think it is possible to remedy these evils by legislation ? A. I do not ; I think it would be impossible to legislate against any of these great trades and businesses that have grown up; if you legis- late in New York to prevent dealing in grain they will make some other center and drive the capital away. Q. What would you think of national legislation in regard to the matter ? A. 1 don’t think it is practicable or feasible; I think that you can ])ut some restrictions on it; in dealing in grain you might say that the loss should not exceed a certain price, or in dealing in stocks that the loss should not be ])eyond a certain price ; for instance, the London Stock Excliango have adopted a similar rule ; I think it is ten per cent til ere. 601 Q. The loss shall not exceed that ? A. Yes ; that prevents failures and it prevents corners ; there is no use of making a corner you know, if you have got to settle at a limited price. Q. How could that be done to prevent such corners as the Keen© corner ; you have heard of the Keene corner ? A. Very easily, because if the board would adopt a regulation that the settling ])rice should always be not to exceed ten per cent of the selling price, it would be easy to regulate just the same as in stocks ; say that the'settling price should never exceed ten per cent of the sell- ing price ; that would cure these extreme corners; but I am very clear that you shoifld throw the marts of commerce op'^n to draw capital and benefit the public ; I would make capital in New York as free as the wind. Q. And only restrict it in that way? A. That the loss should not exceed a certair per cent. Q. Is there any other information you would like to offer to the committee ? A. No, sir ; I don’t think I have given you much. Timothy C. Eastman, being duly sworn, was then interrogated and testified as follows : By Senator Boyd : ^ Q. Where do you reside ? A. New York. Q. What is your business ? A. Principally beef and cattle. Q. How long have you been in that business? A. Thirty odd years. Q. Where is your place of business ? A. Foot of Fifty-ninth street. North river. Q. Are you a member of a company ? A. No, sir. Q. State, if you please, your opinion in reference to the whole sys- tem of niaking corners and dealing in futures with reference to its effect upon commerce and its influence upon the public welfare ? A. That would be only on information ; I think it is detrimental to the public welfare and to commerce. Q. Why ? A. It affects prices very materially. Q. In what way ? A. Well, a corner in provisions has the effect of raising the prices. 76 602 Q. What is yoiir opinion with reference to the system of dealing in futures ? A. Where provisions or grain are bought up and cornered and held, that is what I consider a future operation. Q. Do you know of any corners that have taken place in the meat markets ? A. In salt meats — not in fresh meats. Q. Can you state to us the cause of the difficulty between various transportation lines concerning the importation of live stock and car. casses to New York ? A. From the west to New York ? Q. Yes. A. Well, the difference has been heretofore that dressed meats have paid a less rate than live, for the reason that they have been allowed to ship and import whether alive or not. They charged exactly what they did here ; but I believe that is nearly remedied now. I think dressed meats are paid at the present time on order of the shipper Heretofore the time has been when they only paid on two- thirds ; the . other third they would call a rebate to that amount. Q. Wliich is the best system of transportation in the interest of the consumer ? A. I think the live is. Q. In what way ? A. Well, I think the competition in live — there is so many more men engaged in it. For instance, in the city of New York there would be more than 100 different men engaged in the beef supply of New York — that is, drovers and butchers. If it would go into the dressed meat system there would be but two or three firms, or a few firms, and there would be very likely a monopoly, while competition keeps it at the very lowest possible point at the present time. Q. Have you any further suggestions to make to the committee on liis subject ? A. No, sir ; I merely came here to answer questions. I was not aware what I would be called on to answer at all. Q. Who have been the principal promoters in the contest between the importation of live and dead carcasses — the railroads ? A. The dealers. Q. Do you know any instance where the railroad authorities have been interested in this movement ? A. Only by report ; I do not know it of my own knowledge. 603 Leonard Hazcltine, being duly sworn, was then interrogated and. testified as follows : By Senator Boyd : Q. Where do you reside ? A. In New York, sir. Q. What is your business ? A. G-rain, flour and commission merchant. Q. Are you a member of a firm ? A. Yes, Husted & Hazeltine. Q. Where is your place of business ? A. 15 State street. Q. How long have you been in that business ? A. I have been in that business as clerk and partner since 1853. Formerly with the firm of Jesse Hoyt & Co. Q. What is your opinion with reference to the whole system of making corners and dealing in futures with reference to its effect upon commerce and its influence upon the public welfare ? A. That is a long qaestion ; I mean it is a pretty comprehensive question. In forming a judgment on that, perhaps I might be allowed to give my views taking the whole scope of the question . Q. Yes ? A. I regard the agricultural interests of this country as the founda- tion of our prosperity ; that if we have good crops and remunerative prices, prosperity, starting from the farmer, goes down into every branch of trade and commerce. It is just as necessary that good prices shall prevail as good crops, for if good prices do not prevail, and the CDps are obliged to be marketed at less than the cost of production, loss ensues to the producer, which follows down through all branches of trade. When the crop begins to be about ready for market it is deter- mined whether the crop is a good one or poor one by speculators or by operators. A certain class of the community will make up their minds that crops are prolific, that the interests of the farmer will require a very large marketing of the entire crop within two or three months after it has been produced, and they take advantage of the liberal and free movement of the crop to reduce its value. That is done by offering to sell, offers being made by parties to sell the crop for the next month on the following month, at prices materially below the prices that are pre- vailing for cash property, and buying wheat for their offerings compels the marketing of the goods at relatively low prices. I might say further, that under all circumstances a very large proportion of our grain and flour is wanted for export to European ports. Even if they have fairly good crops on the other side, they require a very large / G04 amount of grain from us, and they requiring tliat amount, would be perfectly willing to pay a fair ju’ice for it if the prices were fairly maintained. This offering to sell goods at the movement of the crop as a rule results in the large movement being marketed at moderately low prices. Now then I contend that when any man or body of men who believe that this property is being sold below its value, will step in and buy all that they want to sell them and hold the property until the natural demand shall come in for it, it is just as legitimate as for a dry goods man to buy in the fall and stock up his store with goods for his spring trade, or the grocery man or a dealer in sugar or teas, or any other commodity, and for the last few years this has been growing; capitalists have come in and said, we believe that property is selling below its value ; the demand is not now, but will be a month or two or three mon is later, and we will buy grain and wait for the demand to come in.” That I believe to be wholesome and perfectly legitimate, and really a desirable thing for the country at large. What are nominally termed ‘^corners” are, when the peo- ple that have sold this grain which they have never possessed and never expected to possess, have sold more than the farmers will deliver to them; of late years the farmers have become, in the older portions of the country, men of fair means — you might say liberal means — and they are not obliged to deliver their grain if the market price is not satisfactory; in newer portions of the country they are obliged to de- liver it as soon as the crop matures to pay their expenses and get out of debt ; if the farmers are not satisfied with the price that these gen- tlemen have sold grain at, expecting them to come to their help and deliver it, those persons that have sold grain short, expecting to get it from the farmers, are obliged to come to the man who has bought it and buy it of him ; if he has bought more than the farmers will de- liver, that is a corner. Now I contend if there is any one to be patted on the back and commended, it is the man who will stand up and, be- lieving in the value of the goods, make his obligations to pay for them, and when they are delivered, actually pay for them. Q. Are you a member of the Produce Exchange ? A. I am, sir. Q. How long have you been a member ? A. I have been a member there since 1862. Q. Are corners ever made in the Produce Exchange ? A. There Inive been what are termed corners there in the Produce Exchange. (2- State some such instances ? A. Well, tbero was one here a few months ago — in November — what was termed a corner; 1 am speaking of it now in the general ac- ceptation of the word. 605 Q. Was that known as the corn corner ? A. Yes, sir. Q. How was that corner got up ? A. Well, I don’t know as that is a proper question to ask me ; I can say in a general way that that corner, if it was a corner, was gotten up in the way that all corners that I ever knew any thing of were got- ten up ; to protect property that had been bought so long ago as Au- gust we had bought a large amount of corn for November delivery, be- lieving with the moderate crop of corn which had become almost ex- hausted, that the corn would enhance in value as we approached the end of the crop which would be in November or December. Purchases were made by us to a very considerable extent for from eighty to eighty-five cents as far back as in July and August. These people that did not have corn to sell, and never expected to have it or to receive it, sold down the price of that corn upon us to sixty-five and three-quarter cents. They hammered it by offering to sell property which they did not possess and they sold down our goods, which we had bought, evidently with the determination to compel us to meet the market and sell them at the low prices, and then they would make their profit. Instead of doing that we bought niore, and we bought so much that at the end of the month they were not able to deliver to us, and they came and paid us the price that we asked. Q. What price was that ? A. One dollar and ten cents. Q, To what extent did your operations in that corner go ; that is to say, what quantity of corn did you purchase ? A. Well, I would rather not state that, sir ; it was beyond the amount that they delivered. Q. We would like to have that ; that is a matter that the committee consider important ? A. That is a matter of my own private business. While I am will- ing to give you all the information I can consistently, I do not care to publish in the newspapers the inner secrets of my office. Q. You claim that this was a legitimate transaction, and if so there should be no hesitation in answering the question ? A. I have no objection at all to give that information to the com- mittee, but I do not care to do it here. I will hand it to the chair- man of the committee if you desire me to. Senator BROWi^iNG — I would just as leave Mr. Hazeltine should decline to answer that question as for him to answer it. If he says he declines to answer the question, I accept that. GOG % Senator Boyd — I think that the press have a right to know every thing that we know about this matter. We are not here to gratify ourselves. Senator Browjs’ING — My reason for saying that I would not insist upon his answering the question was, if the gentleman declines to answer, it is evidence to my mind, and ought to be to every man’s mind, that the transaction is not a legitimate one, and not one that would bear the light of day. The Witness — That is your inference, and it is not correct. Senator BROWXii^G — Then you want to answer that ? The WiTi^^ESS — I have no serious objection to answering about the quantity; it was not a very enormous amount. By Senator Boyd : Q. The committee would prefer to have you answer ? A. It was about 2,440,000, as near as I can recollect. Q. How much of that quantity was in actual grain, and how much in certifi(;ates ? A. How n>uch was actually delivered to us ? Q. Yes ? A. I should say about 1,600,000. Q. Is it true that you sold for export corn at eighty-five cents a bushel ? A. Yes, sir. Q. What quantity did you sell ? A. Well, I cannot give you that; I don’t know as to the price ; somewheres in the neighborhood of that j^rice — all the way from eighty- three to ninety cents, I should say. Q. And for home consumption you charged the price of $1.10 ? A. No, sir; the same price for home consumption — anybody that wanted to use it in the trade ? Q. Who did you charge $1.10 for ? A. That was to the gentleman that had sold it and hadn’t got ic ; tliat wanted it to deliver on the contract. Any man that wanted to buy any grain to use, to go into consumption, that is to be fed, he could have it below the prices that had been ruling as an average price for thirty days before. I5y Senator IBiowning : (2. What was that ? A. Jn the neighborhood of eighty to eighty-five cents ; that is for actual consumption, so that it should not interfere in any way with people Unit wanted to oat it. 607 By Senator Boyd : Q. And your settlements with persons from whom you had pur- chased were made at $1.10 ? A. All the way from $1 to $1.10. Q. What quantity did that represent ? A. Well, my impression is something like 600,000 bushels, in that neighborhood. Q. Did those transactions extend to many other persons — firms i A. Oh, quite a number, yes. Q. Who were the chief ones ? A. I cannot tell you; no large amount to any one firm; very con-- siderable to “ blasted Britishers ” that had been selling it short. By Senator Browning : Q. To whom ? A. People living on the other side of the water, in London and Liverpool and Belgium, I believe. By Senator Boyd : Q. Did you purchase grain on the other side ? A. No, there has got to be a very large amount of speculation on the other side, sending orders here to parties ; this I think was very largely that character of transaction. Q. Have the difficulties arising from that corner been all settled up ? A. I think they have, with the exception of one case which is now being tried, which involves a case where I claim to have sold grain to go out of port and not come back, and it actually did come back to the extent of 140,000 bushels. Q. What effect had that corner upon the commerce of this city ? A. It increased the earnings of the railroads running to New York very considerable, I should judge. It brought in a very large amount of corn by rail that would not have come otherwise. Q. What effect had it upon ordinary dealers ? A. None at all ; I supplied them at prices lower than had been the average prices for thirty days prior ; the poor man did not suffer. Q. Are such transactions frequent in your business ? A. No, sir. Q. Was there any other such conducted by your firm ? A. No, I do not know of any of this exact character. Q. Are you familiar with the Keene corner? A. Yes, sir. Q. You were engaged in it? 008 A. I was a partner of Jesse Hoyt & Co. at that time when they were doing some work in connection with it. Q. What effect had that corner upon the public welfare ? A. Well it resulted eventually in getting very cheap bread for the general public at the end. Q. But while the corner was in operation what was the effect ? A. Well, prices ruled high during that season ; but they ruled higher the next season without any corner. Q. That was owing to the shortness of the crop, was it not? A. Well, I don’t think the crop was materially shorter than the year before ; I don’t think there was much difference in the condition of the crops in the two years. Q. lias the Produce Exchange any rules to prevent corners ? A. I think not, sir. Q. About how frequently within the past year have corners been made in the Produce Exchange ? A. Well, I object to the use of the word ‘‘corners,” except in the common acceptation of the word. Q. Tliat is what I mean ? A. I think that there was supposed to be a short interest in the market here in the month of June, which I think resulted in parties receiving the grain that they bought. Q. What grain was that ? A. That was wheat.. Q, Did any bankruptcy result from that ? A. Not that I know of. Q. Do you know of any bankruptcies that have resulted from the recent corn corner ? A. No, sir. Q. Will you explain to the committee why it was that you insisted upon settlements at $1.10 when you sold the actual grain for eighty- five cents ? A. The reason was that I intended to make a difference between the party that wanted to use the property for food, and the party that had undertaken to sell down my goods after 1 had bought them and make me take a low price for them. I intended to make them pay a big price for them. ' Q. Under what law or regulation did you enforce this price upon such persons ? A. fi’here was no objection made to the settlement except in one case. Dealing as men do liere in New York, if a man makes a con- tract to deliver property, he must eitlier pay or deliver it, one of the two. GOO r Q. Was that done in accordance with the rules of the Produce Ex- change ? A. The rules of the Produce Exchange recognize the fact that a man who sells property must deliver it. If he cannot deliver it by getting it from any one else, he can get it by buying of the party that he sold to. Q. Is that so in all transactions ? A. Yes, sir; it is a recognized fact that if a man makes a contract to deliver property, he must do it. Q. Is the property on contracts made in the Produce Exchange de- livered in all instances ? A. In all instances delivered ? Q. Yes. A. No, sir ; I say that if I have sold grain to you and you buy it of me, that makes a delivery. Q. What Avas the nature of that contract with these people with whom you compelled such settlements ? A. The contract was that they signed a contract agreeing to deliver me so many bushels of corn at such a price. Q. What price ? A. Well at various prices. Q. I speak now of these people that you made settle at $1.10 ? , A. Some of it was at prices all the way from $1.09 1-2 down to below seventy cents. Q. Now take the people that you purchased from at seventy cents, did you make them pay $1.10 ? A. I cannot tell you that because I do not look after the details ; I don’t know whether there were any contracts at seventy cents unset- tled ; I know that we bought corn all the way from eighty-six to a trifle beloAV seventy and all the way back to $1.09 ; I don’t know what actual deliveries were made or actual settlements. Q. Take one of the persons with whom you settled at $1.10 ; did your original contract with that person provide for his selling you corn at $1.10 ? A. Oh, no ; that is not what I mean to be understood ; they agreed to sell all the Avay down from July to November and into November — to deliver me 8,000 bushels of corn at' the price agreed upon when the transaction was made — various prices running along. Q. Take one person for instance; pick out one person that you compelled to settle at $1.10 ; give us an instance and state what the terms of your original contract were with such persons ? 77 610 A. I cannot give you that, because I do not know what contracts were setttled or on what contracts they delivered ; I will illustrate it ; on the first day of August, for instance, I bought of Joliu Doe 8,000 bushels of corn for delivery at his option during themontli of Novem- ber at eighty cents a bushel ; he not being able to get tlie corn to deliver buys the corn of me at $1.10 ; that closes the transaction. Q. That is the way it is done? A. That is the way it is done. Q. You don’t make him deliver the corn ? A. Oh, no ; 1 sell him the corn and that makes a delivery ; I sell a man on the first of August 8,000 bushels of corn for delivery to him during the month of November at eiglity cents a l^ushel ; up to the 29th of November he is unable to get the corn to deliver on his con- tract; he comes to me and says, ‘‘lhave not got tha( load of corn; what is tlie price ? ” A dollar and ten ; ” he pays me the difference between eighty cents and a dollar and ten. Q. By what rule is such a contract as that enforced ? A. The general rule that if a man sells property he shall deliver it ; if he buys it of me who has it, then that makes a delivery; I have got the corn ; I do not go through the formality of taking out that 8,000 bushels of corn and deliver it to him, and he deliver it back to me ; we just settle. Q. Supposing he failed to deliver the corn and refused to buy from you at that price, what would the result be ? A. Under our rule the standing committee on grain buy in any such default for the account of the party to whom it was made — for my account, in this instance — and the price that they pay is the set- tling price for all outstanding contracts. That was done in the case of one party, and only one. By Senator Browning : Q. What price did the committee buy it in at ? A. They bought it in at $1.10; It was the open market that had been existing for eight or ten days. I know one firm that sold 100,- 000 bushels of corn at $1.08 and $1.09. It was not, in the popular ac- ceptation of the term, a corner ; it was the open market ; tliere was plenty of corn here ; if I had been the only party that had had corn, and nobody could get any corn except me, that would be what you c:dl a corner and a close corner, but the price advanced rapidly, and it brought corn from all sections ; everybody had corn here to sell — most of the receivers. (2- Do you know what the produce of the country was during (ho [)re8cnt year, the amount of corn produced? 611 A. It was estimated, I think, at about twelve hundred millions. Q. I have forgotten the amount you said your purchases amounted to ? A. Two millions and a half. Q. Tlien your corner was a corner of the speculators more than a corner in the article ? A. I don’t call it a corner ; I believed in the value of the goods. I actually sold all my corn that I had bought for November, at a profit for December, so that the corn that I had left over I sold at a profit for December delivery ; then, early in December I delivered out what I had left over to the market. By Senator Browning : Q. At what price ? A. All the way from 81 1-2 to 85 7-8. Q. Those were the prices quoted ? A. I sold it at different times running from 81 1-2 cents to about 86. Q, If these persons to whom you sold corn to enable them to fulfill their contracts at $1.10 a bushel, had gone elsewhere and purchased the corn and delivered it to you — A. We should have taken it and paid them the contract price. There is no rule which will prevent a man that buys property, believ- ing that it is going up, but it goes down — when a man comes and says, “ here is your property that you bought of me at a dollar a bushel, and I want you to take it and pay for it ” there is no law, as I understand it, of the Exchange that, after the market has gone down to sixty cents a bushel, when he thought the market was going up, permits him to say I will pay you ten cents a bushel ; that is ten cents more than it is worth now.” They do not do that. I contend that the man who will stand up and maintain prices and values when people that have not got property undertake to knock down the value of his goods should have the sympathy and the support of the. public. In other words, a man that sells millions of wind — millions of noth- ing — needs a great deal of courage, because you Ciinnot get out of your contract. ^There is another question in regard to these options that I would like to explain as one of the good features about it ; that is the aid it gives to all dealers in grain in marketing their goods with scarcely any risk. You take the buyers of grain out on all the west- ern railroads at the stations — there are buyers on every line of rail- road who are in close communications with the great markets at Chi- cago, New York and Baltimore, and they go to the farmer and offer the farmer a certain price for his wheat, corn or oats ; they have got 612 a telegram showing that they can sell that either for that montli’s de- livery or the next month’s delivery in the central market. They are able to say at once to the farmer ‘‘1 will give you so much for your goods,” and telegraph on, I have bought this quantity,” and to sell against this for the next month. It enables the moving of the pro- duce without those risks that used to bankrupt people. In tliat regard it is so important that it would hardly do to do away with it. The same Is true in regard to the provision trade and the packers. For instance the receipts have been for the past few days at Chicago in all 50,000 hogs say. There is no packer that wants to take a risk and buy hogs unless he can market his goods for some other time. They sell their bacon or lard or pork for that montli’s or the next month’s delivery or the best delivery — the delivery that will pay them the most money. In that way it greatly facilitates legitimate business. Q. What is your opinion about the man who sells for future delivery what he has not got ? A. Well I think I have expressed that; that is if any enactment can be made to prevent a man from selling something that he has not got, to the damage of people who have bought property in good faith, believing it to be of a certain value and then going to work and sell- ing that property down — if you can stop that, then you will do some good. I understand there is such a law introduced in Congress now, attached to the bankrupt law. Q. It has been suggested to me to ask you if it would do to make a short sale an act of gambling ? A. Well, I confess I do not see the question can be met by leg- islation. I noticed in the paper a day or two ago that Senator Mor- gan, I think of Alabama, attached it to the bankrupt law making it an evidence of involuntary bankruptcy for a man to sell provisions that he (lid not have, or his agents did not have. I don’t know whether such a law as that would be constitutional. It would certainly strike at the root of the evil. But it seems to me that the man that stands up and protects his property against the assaults of people that have not got it, knowing that if they should by chance get it, he has got to take it or provide money to pay for it — he is the man who ought to be protected. As I said before, these future sales based upon the value of the early movement of the crop adds ten to one hundred millions of dollars to the value of the property going out of the country. Q. What is your idea in regard to limiting the amount of the loss to a certain rate ])er cent in all such transactions ? A. Well, I have very radical ideas in regard to a man living up to liis contract. I believe if I sell you a house and lot deliverable next June, that I have got to deliver that to you or pay the damage. I 613 believe if I sell corn or wheat deliverable next June, I have got to deliver it or pay the damage. It is not necessary for me to make the obligation unless I expect to carry it out ; therefore I hold that the man that makes a contract must fulfill his contract. There can never be any short interest to it unless a man sells sometliing he has not got- If he does, and fails to get it, he must pay the damage. My ideas are extremely radical on that point. And I think that is the commercial view of the question as a rule ; men must fulfill their contracts if they make them. Q. Is there any other information you would like to give ? A. I do not think of any thing else. I have just noted down three or four things coming up in the car — three or four other points. I have seen in^some of these proceedings some talk about high prices and all that sort of thing. I have a very radical opinion with regard to the question of prices in grain as affecting the community. I don’t think that ‘‘cheap bread,” in the general acceptation of the term, is necessarily a God-send. I believe that prices which show liberal and remunerative profits to producers will reflect itself in the value of labor, in the value of all manufactures, so that indirectly the poor man reaps a very much greater benefit by high prices than he does by low. But there is such a thing as producing so much of an article as to make it a glut in the market, and no one will derive any benefit from it. I only throw that out as meeting that point that I see has been raised here. Q. Then you do not think that cheap bread tends to the benefit of the public ? A. I think that when you go back you will find that the agricultural interests are the basis of the prosperity of the country. If the farmer reaps a rich harvest and good prices, his money goes into every sort of merchandise in the country ; his money is spent, and it goes into all circles, and it makes that prosperity which we have experienced within a few years, while moderate prices would not. •Q. Taking that view of it, do you not think that some compensa- tion in the way of extra remuneration should be given to people who have to pay increased prices ? Would not that affect wages — affect the value of labor ? A. Yes, it does. When the prices of commodities are high and business is prosperous, then labor receives its share of the reward ; when prices are low, and no one can afford to employ labor and manu- factures are shut down, the poor man suffers. Q. In a case of that kind cheap bread — A. Would be very desirable of course ; but I ^ speaking on the 614 general principle that fair values for all articles of bread-stuff mean general prosperity to the country. * Q. Fair values ? A. Yes, but not cheap ; not down to a price where no one can make any money out of it. Q. How would what you call fair values for bread-stuffs be regulated ? A. It is only within a very few years that the price of corn — in the neighborhood of a dollar a bushel for corn until within a very few years has been a reasonable price along in the fall of the year ; it is only since we have got to raising enormous crops — I think the crops in the last three years have averaged some sixteen hundred millions a year — of course those enormous crops made very cheap corn; but prior to those years when your crop had only reached sevep or eight or nine hundred millions, our -prices were, as a rule, very much higher than they have been for the last few years ; this last year corn has ruled very high by reason of the poor crop last year. Q. Wouldn’t fair prices depend upon the supply divested of the enhanced cost added to it by speculation ? A. Well fair prices would mean such prices as would pay the pro- ducer a liberal profit for his labor and that would be regulated by the cost of his labor. By Senator Browning i Q. You refer to some trouble growing out of the price obtained from the settlement at 11.10 ? A. There was with one party ; under a clause in our rules the grain committee are directed in case of default to buy in the grain for ac- count of the party to whom it is coming — my account in this case — and the prices they should pay are the settling prices for all contracts. Q. Did that person then threaten or has he since threatened to go into court ? A. I have not heard of it, sir ; there is a clause in this rule which directs that they shall not pay any exorbitant price based upon manipulation ; this party who made the default claimed that he was acting for a party in Maine, and he contended that this was a manipu- lation of the market and the price was exorbitant ; the grain com- mittee, however, bought it in notwithstanding his protest, and paid $1.10 for it; the case was then referred to the grain committee, and they again decided, after taking evidence as to the market value of the corn, for some weeks before, that $1 .10 was a fair price; the party then appealed to the board of managers, and the board of managers eustaincd me. • Q. What methods were adopted to run the price up to $1.10 ? 615 A. The demand ; parties came in and bid the market up. Q. Was that formed by a pool ? A. There was no pool in it at all. ♦ Q. No pool ? A. No, sir. Q. Are you interested in the elevator ? A. Which elevator ? Q. Over across the other side of the river? A. I have no interest there. Q. Is that a brother of yours ? A. That is a brother. William iS. Miller, being duly sworn, was then interrogated and tes- tified as follows : By Senator Boyd : Q. Where do you reside ? A. New York. Q. What is your business ? A. Dealer [and broker in grain futures. Q. How long have you been in that business ? A. I have been a member of the Produce Exchange about thirteen years, and more or less connected with grain most of the time, but I have been dealing exclusively in grain futures about five years — since we commenced dealing in those futures on our Exchange. Q. What is your opinion With reference to the whole system of mak- ing corners and dealing in futures with reference to its effect upon commerce and its influence upon the public welfare ? A. Well, my experience has generally been that corners were pro- duced as much by the people who went short of grain as by those who undertook to manipulate the price to a certain point. The fact of dealing in futures does not seem to me to be attributable to the pro- duction of corners, as corners of the very worst kind were produced long before there was any dealing in futures on our Exchange. For instance, I think that during or about the time of the breaking out of the Russian war, some five years ago, when we had no dealing in fu- tures on our Exchange, and nothing except dealing in casli grain, the price of grain advanced in a very short time fifty or sixty cents a bushel, and I found by examined records of twenty-five or thirty years ago — commercial records — the Journal of Commerce — when we had no dealing in futures anywhere in the country, that the advance of grain was more rapid, and worse corners were produced without any dealing in futures than has ever been known since. I think that the records show that grain sometimes advanced fifteen or twenty cents a day, because then the grain was only spot cash grain in the liauds of a few people, andi, consequently, the price would jump up five or ten cents in a few minutes; whereas, at the present time while we are dealing in futures, buyers are able to go into the market and buy large amounts without advancing the market, according to the temper of the market at the time; if there happens to be a bearish feeling, orders for millions of bushels can he filled without jiroducing any rise in the market ; this is by aid of futures; formerly, when there were no futures, a few hundred bushels could not be bought without producing a marked rise in the market and a worse corner than has ever been known while trading in futures. By Senator Browi^ij^g : Q. You do business ^at 17 Moore street? A. Yes, sir. Q. Are you a member of the Produce Exchange ? A. Y’’es, sir. Q. Do you do business on the floor ? A. Yes, sir. Q. A brokerage business? A. Yes, sir. Q. For whom ? A W. S. Miller. Q. For whom do you do business ? A. I do business for customers that I have who are trading in grain. Some of them are exporters ; most of them are members of the ex- change, and are buying and selling grain for certain reasons. Some people are selling grain they have bought in the West on this market, some people have got grain sold to Europe and they are buying here to cover their sales in Europe, and some are buying on speculation. Q. Do you buy and sell ? A. Yes, sir. Most of my customers are men who will make up their minds perhaps to-day, that wheat is very cheap and that it is safe to buy it, and that it is likely to go up a few cents, and they will give me orders and I will go and buy it. They deposit with me a margin covering the possible decline, to make me safe against any decline. I fill their orders. Grain goes up, and I sell out what I bought for them on their orders, pay them over the profit, and charge them a commission for my business. Q. What is your commission ? A. The commission varies. It is all the way from a quarter of a cent a bushel for buying and selling, to a sixteenth for buying and I Gi7 selling. It depends upon who the customer is, what amount of grain he is d.ealing in, and how safe he is to deal for. Q. What is the largest lot you have sold or bought this last year ? A. Well, our market is not a very large dealing market compared to Chicago. I think perhaps I have sold 40 or 50 boat-loads of grain traded in them a day. Q. Do you sell on the quotations reported at the New York Ex- change or the Chicago market ? A. On the New York Exchange, never on the Chicago market. Q. What is the smallest lot you contract to buy or deliver ? A. 3,000 bushels. Q. What is the smallest margin that you have ever accepted for a transaction ? A. Well, it depends upon the party for whom I am trading. There are men whose financial standing is such that I do not require any margin ; then there are others that I would ordinarily want about five cents a bushel margin. Q. Have you never taken any thing less than that? A. Oh, my, yes. As T say, there are people whose financial stand- ing is such that I feel at liberty to trade for them without any mar- gin. Members of our Exchange come to me and say. Sell eight ten boat-loads of wheat for me,” and I won’t want any margin unless the market should go against me. Q. I am referring more particularly now to people you have ac- cepted margins from, I would like to know the smallest amount of money you ever accepted as a margin ? A. I suppose, perhaps, $100 on a boat-load of grain is accepted as a margin, with the understanding that I would sell the man out as soon as that $100 was gone, unless he gave me some more money. Q. Have you never accepted any thing less than $100 ? A. I don’t recollect any thing less than that. Any thing less than that would be about the same as nothing at all. Q. Haven’t you accepted from people on the Exchange, and con- nected with the floor of the Exchange, as low as $10 ? A. No, that would be less than an eighth of, a cent a bushel. Q. Have you never accepted a retainer or any thing you please to call it, as low as $10 and made a return on the same day or the next day ? A. I do not recollect it. Q. You would be apt to if you had done it ? ' A. I think so. Q. Have you ever accepted margins from officials or people con- nected with the Exchange employed there ? 78 1 618 A. No, I have never done any business wirh people connected or employed in the Exchange. My trading in grain has always been for the account of people who were merchants, dealers and specuialurs. Q. And you have never accepted any retainer or any amount of money from — A. Not from officials. Q. From clerks, messengers or others connected with the Exchange ? A. No. The dealing in futures I would like to say has been an advantage to the trading in grain on account of the opportunity that is offered to grain dealers in the trade in the West, to sell their sup- plies before they arrive here. Formerly when we had no dealing in futures, these men would consign tlieir property here when the market W'as $1.10 for wheat and when their grain got here, it would sell for $1.00 a bushel. Now a dealer in the West can sell liis grain to arrive and know just what he is going to get for it. In other words, he had to be a speculator formerly without trading in futures ; he had to be a gambler; he had to take the chances on the market. Now he doesn’t have to take any such chances. In the same way it is an advantage to the exporters. When they order their vessels to this port they can buy grain in advance. So that the idea of people who claim that the cornering grain makes it difficult for them to load their vessels and they have to send their vessels away seems to me hardly tenable. People that ordered their vessels here could have bought grain when the vessel started. There is much dealing in futures ol that kind for export. By Senator Boyd : Q. Suppose they had bought something from people who had not any thing to sell ? A. That would not make any difference. Then they have got to settle with the exporters who have bought that grain to such an ex- tent as to pay the damages for bringing that vessel here and sending it away in ballast. Q. Is that the rule of the Produce Exchange ? A. Yes, sir ; according to the rule they have got to pay the dam- age, as Mr. Ilazeltine just testified. The corner that Mr. Hazeltine has been describing to you was one that was produced perhaps by manipulation somewhat but we have had here in New York perfectly natural corners where grain cornered itself — where the stock of grain was small and a large quantity bought for export when the end of the month came — the time expired for it to go into the vessels for export, the grain was not here, and without any manipulation grain has gone 619 up twenty cents a bushel and over in two or three days and been settled for by the short sellers and exporters. Q. You say this corner in corn was manipulated. Do you under- stand how it was done ? A. 1 imagine so. Q. You are not familiar with the operation ? A. No, sir; I rather avoided trading in November corn on account of its being in a very critical condition. Spencer D. C. Van Bockelen, being duly sworn, was then interrogated and testified as follows: By Senator Boyd ■ Q. Where do you reside ? A. In the city of Brooklyn. Q. What is your business ? A. I am the manager of the Public Produce Exchange, 63 Broadway. Q. How long have you been in that business ? A. I have been in that business for the last six months. Q. Are you a member of any firm ? A. Not at present. Q. What is your opinion concerning the whole system of making corners and dealing in futures with reference to its effect upon com- merce and upon the public welfare ? A. From what little experience I have hadfin them, I should say that they were not prejudicial ? By Senator Browning : Q. Have you a copy of the circular that you recently put on the street ? A. I have not, sir. Q. You are an incorporated institution, are you not? A. Yes, sir. ^ Q. Incorporated by this State ? , A. Yes, sir ; by the State of New York. Q, Have you a copy of your charter with you ? A. I have not, sir. Q. Who were the incorporators ? A. My impression is that the incorporators were J. E. Barrow, J. E. Barrow, Jr., and D. P. Garrett. . Q. Is that all ? A. I think that is all, sir. Q. What is the full title of your Exchange ? / 620 A. The Public Produce Exchange. Q. Are you incorporated under that name and title ? A. That is my impression, sir. Q. Can you come here on Monday and bring the charter with you ? A. I can if I can obtain it. I don’t know where it is. Q. You can obtain it from some one? A. Yes, I presume so. Q. And a copy of the forms used by you]^ Exchange for the trans- action of business, such as contracts and agreements to deliver or buy? A. Yes. H. F. Flagler, being duly sworn, was then interrogated and testi- fied as follows : By Senator Boyd: Q. Where do you reside ? A. In the city. Q. What is your business ? A. I am secretary of the Standard Oil Company. Q. How long have you been such secretary ? A. Twelve years. Q. Are you familiar with all the transactions of the company ? A. Why, substantially so, yes. Q. You have requested to appear before the committee and the com- mittee don’t know what you desire to testify in relation to, but in or- der to lay the foundation we will ask the general question : What is your opinion with regard to the whole system of making corners and dealing in futures with reference to its effect upon commerce and its influence upon the public welfare ? A. Well, sir, it would be a very difficult matter for me to express an intelligent opinion, for the simple reason that I have nothing what- ever to do with transactions of the kind ; from observation extending over a period of many years of commercial crises that have come over our country, and the general manner in which business is and has been transacted, it leads me to think that the evils so-called of corners have been very greatly magnified ; I believe that no business of any magni- tude can be transacted without the privilege of selling for future de- livery is involved ; that I learned when I was a country merchant deal- ing in grain ; a farmer wanting to sell his crops of wheat in the fall ' found himself confronted with the fact that his seeding must be done, and other work must be done, at the price jierhaps prevailing at the time suited to him, but he was not able to sjiare the time to G21 .haul his grain to market ; he, however, was willing to contract his grain at the price then existing, if he could get two or three or four weeks for delivery ; that is an illustration, in a small way, of sales for future delivery, and of course, as transactions are extended and in- crease in magnitude, it is the same principle, differing only in degree, not in kind ; in the management of our business we find that an ex- porter has an order for a cargo of oil, but his vessel is not here ; for some reason or other, his correspondent on the other side does not want that cargo of oil shipped until next week or possibly next month ; he wants to buy his oil, he is willing to buy it at the market price, and he says: “I don’t want to receive it until some period in the future ; ” that is one of the features for selling for future delivery ; without those provisions it would be impossible to transact a large business ; if I may be pardoned a moment longer, take our own business in illus- tration. It is a very ugly business, and while we have very great facili- ties in the port of New York, larger perhaps than are given to al- most any one else, yet we find ourselves oftentimes embarrassed because with a change of wind we have no vessels arriving here at this port for two or three or four weeks ; then, again, we will get a perfect avalanche of them, and while, as I say, we have enormous warehouse facilities, yet we find ourselves often times compelled to pay demurrage on vessels because of our inability to fill them as they ar- rive ; we have to keep our machinery running, or it would not be pos- sible to transact business of that kind ; we make a sale of oil deliv- erable next month ; we manipulate the oil or put it in barrels, or hold it in tanks ready to go aboard the ship whenever it arrives. By Senator Browning : Q, This export trade, then, involves a very large expense and a large degree of risk, doesn’t it ? A. Oh, no, sir; you say very large expense;” in what way do you mean ? Q. I mean it entails additional expense ; the storing it in ware- houses, etc., until the ships arrive ? A. Oh, to be sure ; we find it necessary to create a large amount of plants — expensive warehouses and docks. Q. This expense is caused by this foreign shipment — waiting for vessels, that you have just complained of? A. Do not understand me as complaining ; I speak of it as one of the necessities — the vicissitudes of trade. Q. I thought you referred to it as involving an outlay ? A. We look upon it as an absolute necessity to do business ; our average manufactures, if you please, are from 45,000 to 50,000 barrels 622 a day ; now no business can be so thoronglily regular tliat you ran do on Monday, Tuesday, Wednesday and Thursday, and so on each day, each day’s work ; yon cannot do it; a holiday will intervene, or some- thing or other will affect you, and you must always be in a position to do two or three days’ work in one, if necessary. By Senator Boyd : Q. You have been reciting the conditions necessary for the transac- tion of legitimate business ; what this committee wants to get at is, the effect upon commerce of what is known as the illegitimate dealing in futures; for instance, people selling what they have not got, and transactions being conducted through the medium of certificates where no material is delivered ; we want to get your opinion of that ? A. My opinion on the morality of the transaction ? Q. Yes. A. I just as leave play penny poker, or some other kind of poker, as to do that thing ; as far as the^morality of it is concerned, I do not see any difference. Q. You desired to state something to the committee; will you be kind enough to do so ? A. Well, I will try and not worry the committee in what I have to say ; I wrote you a letter asking permission to come here and testify be- fore your committee, simply because my attention was called to the fact that a gentleman at some recent meeting of the committee, in illus- trating his views, had brought in the name of the Standard Oil Com- pany, and had made here, under oath, a certain statement. The clerk of the committee has kindly furnished me with a copy of the statement made by the witness, and, with your permission, as there are but two or three sentences, I will read them ; prefacing that, however, I want to make this remark: The Standard Oil Company is a concern about which there has been a good deal of talk and against which there exists a great deal of ])rejudice ; probably it is true that the present condition of the public mind, so far as it is given to the Standard Oil Company, is due to the fact that we have paid no attention to all these assaults ; we have regarded them as tlie penalties of success ; w^e have never allowed ourselves to be drawn into any newspaper controversies ; we have never answered any attacks ; during the progress of the so-called lle])burn committee we paid no attention to them ; I wdll say this, tiiat when this came in this kind of a way, I thought perhaps it would lie just as well to come here and make a plain statement of .the fact ; tlic witness says: “ 'I’he Standard Oil Company is an example ; here is a (;or[)oration which, according to the testimony recently given in 623 Pennsylvania, began in 1872 with a $1,000,000 capital, which was sub- sequently increased to $3,500,000, and on this latter capitalization it paid dividends in 1880 amounting to $10,321,812, and it practically con- trols and fixes the value to the consumer on a staple ranking third in the list of our nation’s exports; through its speculative manipulations it has within a few weeks more than doubled the price of crude oil, and its profits thereby are variously estimated to be from $20,000,000 to $40,000,000.” Q. Whose testimony is that statement taken from? A. Mr. Thurber’s ; I want to say that with the exception of the statement that the company was organized with $1,000,000 capital and subsequently increased to $3,500,000 there is not one word of truth in the statement ; it is absolutely false. By Senator Browning : Q. What is the other statement ? A. That we paid dividends amounting in 1880 to $10,321,812 ; it is not only not true, but I have no hesitancy in saying that the facts in the case were, that it did pay a dividend that year of $1,050,000, which was less than three per cent to the stockholders on the capital they had actually invested, Q. That was the only dividend that was declared at that time ? A. That was the sum total of the dividends of 1880 ; I may state further, that I have no knowledge whatever that any testimony of this kind was ever given in the State of Pennsylvania by anybody, and I brand it unhesitatingly as a false statement. Q. Was there a further issue of stock or capitalization to increase that amount ? A. Nothing of the kind ; I make the statement, fully realizing the import of all I say; nothing of the kind. There was no dividend made except two cash dividends which amounted to $15 a share on each of the 35,000 shares and amounted to $1,050,000, and instead of being what it purports to be here, a great profitable mine to the own- ers of it, I say that that dividend of $1,050,000 did not represent three per cent. Now this oil product — this, however, is all personal to the Standard Oil Company, and is perhaps of no special importance to the public, but we have been placed in a wrong position, and I think, as citizens of the State of New York, that we are somewhat interested in this great traffic which is not, as Mr. Thurber states, third, but I believe fourth in value of our exports. I have asked Mr. Brewster to accompany me here, because he is more acquainted with the practical working and detail of the business of recent years than I am ; perhaps at the same time, I may be able to answer any questions that the com- mittee see fit to ask. 624 Q. Are the brokers of the company authorized to deal in future transactions ? A. No, sir. Q. Do the company themselves deal in futures ? A. No, sir. Q. Do you know of oil being sold by certilicate ? A. Oh, yes ; the world is full of it ; the woods are full of it,” to use a current slang phrase. Pardon me — Mr. Brewster calls it to my mind — I don’t mean that we do not sell futures; I mean that we sell for future delivery, and in that particular perhaps I may be pardoned in calling the attention of the committee to the work that the Stand- dard Oil Company has done, that which has been of very great value. When, in the growth and prosecution of our business, we came by virtue of our industry or whatever means were employed in the busi- ness, to occupy a prominent position in the trade, we found that the trade was to quite an extent demoralized by this very thing that I fancy is the real gist of the subject you are after — dealing in futures — selling something that you haven’t got, as the expression is, with- out any expectation of delivering the thing in kind, but when the settling day came around either paying or receiving the difference. We always refused to enter into and never entered into any transac- tions of that kind. We do sell for actual delivery, but never make any sales that we do not manufacture the oil for and expect the buyer to take it, and if he does not take it, we deliver it to him in the ware- house and make him pay for it, and he can do whatever he pleases with it. I fell into the error of thinking that you meant more par- ticularly transactions in crude oil. Those are all done on certificates; the Pipe Line issue certificates to the producer in uniform amounts of 1,000 barrels each. Now, Mr. Thurber makes the statement that we fix this price. We are in the market daily for the crude oil which we, as manufacturers, need to secure in our business; we buy that daily. The price for that oil, it may be for 50,000, 60,000 or 70,000 barrels a day, is fixed by these'speculations which run over an amount of one to three, five, and some days ten millions of barrels. By Senator Boyd : Q. Will you be kind enough to show me the amount (referring to the amount of dividend stated by the witness) ? A. I thought possibly I could find an explanation of those ligures in a typographical error, but when 1 compare the figures I cannot fur- nish the excuse tliat I thought possibly might exist. It is a misstate- ment. 625 By Senator Boyd : Q, Do you know if this amount was published in any of the daily newspapers at any time ? A. No, sir. In fact I had to go to our own books to find it ; I had forgotten it. It is not a matter of public notoriety at all. What amount do you refer to ? Q. The amount quoted by Mr. Thurber ? A. That I don’t know. I thought you had reference to the amount of dividends I stated. Q. Was the amount of dividends that you state published in any paper ? A. No, sir, Q. You know that amounts of dividends have been published in the city newspapers from time to time, do you not, similar to this referred to by Mr. Thurber ? A. Dividends of the Standard Oil Company ? Q, Yes. A. I have no recollection of ever seeing any. If they have been, they have not been published by any authority. Q. Do you know that they were published in the New York Star some time ago ? A. I didn't see it, no, sir. Q. Now what position does petroleum take in the nation’s exports ? A. I have seen it stated that oil ranks fourth in value, but I do not recall what the authority is. 0. Has it not been stated frequently that it ranks third ? A. That I am unable to answer. Q. You say that the company does not practically control and fix the value to the consumer ? A. Yes, sir, Q. Who fixes the value of the oil? A. The various parties who have it to sell and the parties who have it to buy, or rather who are buyers. Q, Is there not some standard of value placed upon it by the Stand- ard Oil Company, who are the original producers ? A, The Standard Oil Company are not the original producers. They fix a price upon their oil from day to day, largely determined by the cost of crude oil, I believe, and the cost of manufacturing it and bringing it to market, which varies from time to time. Q. The Standard Oil Company produce the crude oil, don’t they ? A. Not at all. This statement of Mr. Welch I read very hastily since I have been in the room. I think Mr. Welch makes the state- 79 , ■ 620 merit that tlie Standard Oil Company are largely intei’ested in the pro- duction of oil. The facts of tlie case are that the Standard Oil Com- pany are stockholders in one producing company, and the owner-ship of that stock grew out of just this ti-aiisactioii : they loaned a gentle- man some money and took the stock of that company for security ; the money was not repaid, and they had to take tiie stock to get their money. They are not interested in any other company that is pro- ducing oil. It would be an inconsistent position for them, which they have, I guess, the sense to understand, that a man cannot ride two hor-ses. He cannot be a producer and at the same time in market every day as a purchaser of crude oil. Q. I thought that Mr. llockafeller was one of the original producers of the crude oil ? A. Well, there is no stranger mistake than there is in regard to that company ; there is not a word of trutli in it. Q. That is the general impression ? A. Well, I don’t know but it is ; it is not true ; he has no persona interest and never has had. I am able to state that with confidence from the fact that I was a partner of his before the existence of the Standard Oil Company, I was one of the original stockholders of the company. Q. Who are the members of the Standard Oil Company ? A. Well, it would be impossible for me to give you the names of all the stockholders ; there are quite a good many of them. Q. Are the owners of the wells not members of that company ? A. I don’t now remember but three ; I at the moment cannot recall but tnree gentlemen, who are producers of oil, that are stockholders in our company , there may be a fevv others. Q. Who are those ? A. Captain J. J. Vandergrift, J. D. Archibald and H. L. Taylor. I correct that because I suppose that Taylor’s partners are also stock- holders; there would be two others in that case. Q. Are any of the managers of our principal railroads in that com- pany ? A. No, sir. Q. Have the railroads any interest whatever in the Standard Oil Company ? A. None, except as transporters of the oil the Standard has to ship. Q. Can you tell what the amount of dividend is that has been paid for ten years ending 1880 ? A. No, sir, I cannot. Q. Can you approximate it ? 627 ^ ! A. It would be but a guess ; I should say less than an Average of a million dollars a year ; less than ten million dollars for the ten years. Q. Then that would explain this statement that m that year that amount had been paid ? A. Well* it might. But I put it to you, senator, as a gentleman of fair intentions — in the first place, ‘it seems to me exceedingly strange that any illustration of that kind was necessary — why our company should be singled out to illustrate a point. Q. The object of this committee is to investigate in relation to making corners and dealing in futures. It has been alleged that the Standard Oil Company dealt in futures ? A. Well, that is not true ; let me emphasize what I am going to say — that with the exception of this selling of refined oil for future delivery — near-by delivery — for instance in the month of December, if you please, for January delivery — with the exception of that thing, the Standard Oil Company has never dealt in futures ; now, that is a statement that will astonish a great many people; we are credited with making and unmaking prices — making great fluctuations in prices. Q. By quotations published in the newspapers it is represented that refined oil has been limited in demand, elosing for delivery in January at seven and three-eighths to seven and one-half and home trade lots a;t nine and one-half cents; now why is that diflerence in price ? Why should home consumers be compelled to pay more ? A. I am glad you asked the question ; the oil that is spoken of there is the regular oil of eommerce ; 110 test, which is the great hulk of the oil that goes abroad ; a large ^proportion I should say of all the oil consumed in our own country is of a quality in color and Are test and in gravity, far exceeding in cost and value the oil of commerce ; for instance, Pratt’s Astral Oil, which is, as I understand it, worth con- siderably more than the highest quotation there ; the diflerence in the price is wholly owing to the quality of the goods ; we make some of these oils of as high a test as 300 to 350 degrees — fire test. Q. What does that mean ? A. It means this : that you can put a quantity of oil into a cup be- neath which is an alcohol lamp; you heat that oil up by means of a flame, passing over the face of it a lighted taper, and as the oil heats the vapor begins to rise; there is a thermometer submerged in this oil, and as the oil is heated, the mercury rises; oil standing a test of 110 degrees is what we call, in parlance of trade, the oil of commerce, - for it is the great bulk of the oil that is used ; now this oil must not ignite until it has reached a heat of 110 degrees Fahrenheit ; now that oil of course is more inflammable than oil that would not ignite at 120 ; we manufacture these oils at 150, 175 and so on up to 300 de- grees of fire test. ' 628 Q. And that is used — A. For domestic purposes generally. Q. And IS generally about what test? A. I believe in Ohio it is 140 degrees ; in some of the Western States it is much more than that; I am not familiar with the domestic trade ; I have not given it any personal attention for a great many years; I know these things, perhaps, not as well as many persons outside. Q. But exported oil bears a test up to 110 ? A. A large percentage of the oil that is exported is 110 oil only. Q. That is because — A. That 1 should say would be because there iscpiite as much com- petition among manufacturers in supplying the domestic trade as there is in the export trade ; we have not power to get an extraordinary price for oil sold for domestic use, and when we sell our goods we ex- pect to sell them at as low a price as anybody would sell them of a similar quality. Q. According to your statement with regard to the premiums paid, this Standard Oil Company business was not a very profitable one, do I understand ? A. Oh, no, sir, T don’t say that. Q. Wherein did their profits consist ? A., Why, they consisted in the profits of their business. Q. How long has the company been in existence ? A. Twelve years last January. Q. And you say that the receipts of the company in that time were a little less than $10,000,000 ? A. Oh, no, I am speaking of dividends. My estimate was in an- swer to the assertion that in one year certain dividends were paid, giving the idea that here was a corporation that was paying its stock- holders enormous dividends. Q. Are there any other sources of profit besides the dividends ? A. No, sir. ‘Q. None whatever. A. No, sir, none whatever. Q, Then dividends have been paid somewhere about $10,000,000 in the last ten years ? A. I say somewhere about; I express the opinion that it is less than ten. Q. What was the capital stock of the company when it was first originated ? A. $1,000,000. i). What is their property worth to-day ? * A. fi'lirougliout the United States? G39 Q. Yes ? A. Well, $60,000,000 to 170,000,000. Q. Then they must liave added new capital ? A. They have somewhat, yes — considerable. Q. Was that drawn from the profits of the business ? A. Some of it was ; some of it was fresh cash contributed. Q. How much was drawn from the profits of the business ? A, I am unable to answer the question how much was drawn from the business ; I could answer the other easier ; that I be •able to be precise about. Q. Then it does seem, if they have been able to acquire property worth some 160,000,000 or $70,000,000, commencing twelve years ago with a capital of only $1,000,000, that they must have had greater profits than $10,000,000 in ten years ? A. I don’t deny it at all, sir; I don’t come here as an object of charity. Q. But that would seem to bear out the statement made here that their dividends must have been more in a year than you have stated ? A. I hold the witness’ to the language employed. He says nothing about profits whatever; he makes a certain assertion. Q. But you say the only source of profits to the company is from the dividends ? A. I say the only source to the stockholders is from the dividends ; I don’t mean to say that the dividends that have been paid have repre- sented the earnings of the company at all; nothing of the kind;! don’t want to be misunderstood on that point. Q. The proceeds of the company, I understand, are equally divided among the stockholders in proportion to their stcoks ? A. Not at all ; the stockholders have voted to allow it to remain and accumulate and be kept in the business; it has been by that con- servative course, which has enabled the managers of the company to always be in the front, providing themselves with all the best known mechanical appliances, surrounding themselves with all possible means for protecting and caring for the trade, that it has become what it is — a great factor in the business. Q. How much is Mr. Eockafeller worth, to-day, in his own private , right? A. I could not answer the question. Q. Can you give an approximate idea ; how much are you worth ; yourself ? A. Well, senator, I don’t think that is a proper question to answer Q. Here is a stab men t made before this committee in good faith and i you have attacked it, and it is our duty to see just where the mistake ‘ occurs ; you may be mistaken or the witness may be ? 630 A. I am not mistaken with regard to any facts about which 1 speak Q. If this company commenced with a capital of only $l,00u,000 twelve years ago, and now have property to the amount of $60,000,- 000, and have only received about $10,000,000 dividends, I cannot see where the balance of the $60,000,000 came from ? A. It came- from earnings and additional money put in to increase the capital of the company by new stockholders ; we have to-day prob- ably five times, may be ten times as many stockholders as we had twelve years ago when we commenced. Q. How often do you declare dividends ? A. Well, that depends wholly on the profits of the business; we have no fixed rules at all in relation to it. Q. Then do the stockholders get their profits annually as dividends are declared ? A. They have been doing so; sometimes our dividends have been declared — I remember several years in which we declared an annual dividend ; in other years semi-annual ; other years quarterly ; it was not my object to enter into any controversy with the witness whose language and whose figures I have quoted; it was simply to set this committee right in regard to the facts so far as his statements were concerned ; I come here and claim to be able to speak from actual knowledge, and knowing the actual facts, I assert that the witness knows nothing about the facts, and therefore had no right to make such statements. Q. We are doing our duty to the people ; we want to get at the facts as they really are ; the public have been preyed upon by certain cor- 2 )orations ; we want to see how far the public have sufiered, and to be prepared to remedy the evils of which the people complain ; now if the Standard Oil Company has been making aggressions upon the people, of course it is our duty to find it out; here is a statement which seems pretty large, and you ha\^ asked to come up here to explain it? A. No ; I asked the privilege of refuting it. Your remark, how- ever, encourages me to ask the privilege of saying now something positively in regard to the Standard Oil Company. I had intended to have kept on the negative side of thp question. The Standard Oil Company has been aggressive. Tlie history of the company, from the date of its organization down to tlie ])resent time, so far as it has brought results affecting the people, is one whicli we can speak of with a great deal of pride and pleasure. We started in business with an ample ea))ltal, largely in excess of anybody engaged in the business at that tirn(‘. We prudently kept our money in the business. We wen* determined to be in the front, and at the front all the while. We spent a great many thousands and hundreds of thousands of dol- 631 lars ill experimenting, and I guess it is true that we have been first and foremost in almost every instance with all mechanical appliances and devices for cheapening the cost of manufacturing those goods* We have aimed to make the very best quality of tlie goods. We have been liberal, and the more we could give a man for his dollar the bet- ter off we were, so far as profits were concerned. We believed that our best profits would result from doing the largest amount of business with the smallest amount of profit. Twenty-five cents a barrel on 50,000 barrels is quite a considerable sum of money. Now I mean to assert, without any fear of successful contradiction, that the Standard Oil Company has done more to improve the quality of the oil that is being consumed in the country, and cheapening its cost to the con- sumer, than all other agencies combined. This is simply an ipse dixit. I state it as one familiar with the business. Q. How much have you spent within the last ten years in experi- menting ? A. Do you mean in experimenting in the manufacture ? Q. Yes> A. That would be impossible for me to answer without reference to our books. I cannot answer the question. Q. Can’t you give us — A. Well, if I should say several hundred thousand dollars that would be only an indifferent idea. It might be less — Q. How much would it amount to in one year ? A. I should say two or three hundred thousand dollars Q. That has been going on for the last twelve years ? A. No, because the business has been increasing. I do not mean to say that with the amount of business we had when starting, which has grown at present to 40,000 or 50,000 barrels a day, that the expendi- tures during the early years of the history of the company were at all to compare with those of the later years. Q Do you know how many stockholders there are in the company ? A. No, I do not ; the reason of that is that my private secretary always makes out our list. Q. About how many ? A. Well, I can guess ; I should say about two or three hundred. Q. Now the Standard Oil Company are the only refiners in the country, are they not ? A. Not by any means. Q. How many other companies are there ? A. Oh, we are one perhaps of twenty or thirty others. Q. You own all the pipe lines in the country except one, I believe ? A. No : there is the Tidewater Pipe Line, a distinct and separate 632 organization; yes, I think we own now the entire system tliat is known under tlie name of the United Pipe Line — I think tliat that now takes all the oil with the exception of the the Tidewater; I know we bought one concern this last fall. Q. Can you state to the committee what the net earnings of that company has been annually within the last ten years ? A. No, sir, I cannot. Q. Can you state what it was in the year ’80 ? A. No, sir. Q. Can’t you give any approximate idea ? A. Well, if you will excuse me I would prefer not to guess on that point for it would be but a guess ; I cannot state from recollec- tion. Q. In the absence of positive testimony we would accept your guess ? A. I would prefer not to guess. Q. We would prefer to have you ? A. Well, it would be a guess; it would not be an opinion. Q. Can you state it by referring to your books? A. I could if I was at the office of course. Q. Would you come here to-morrow morning and make that state- men t ? A. Well, I should rather not do so for this reason : that we are not in the position before the community, of public carriers; we are ex- ercising no right of eminent domain; we are accorded no distinct privilege; we are simply here differing only in degree from all other manufacturers buying raw material and selling it to the consumer, and for that reason I think that our possession as manufacturers and our profits should be held sacred ; if we were occupying a different position I should feel differently about it. Q. We have no desire to interfere with your private affairs, but at your own request you have appeared before the committee and you have made an attack upon the statement of a witness which I have no dou*bt was made in good faith under oath, and now it is our duty to see how far your contradiction can be sustained by the facts, and we must insist upon your giving us data to form that conclusion ? A. My statement is simply a contradiction as to the matter of divi- dends ; T simply examined that one thing ; as to the dividends in 1880 ; it never occurred to me that the man meant profits. Q. What were the profits in 1880 ? A. I am unable to say ; I did not look. 633 Q. Can you tell on reference to your books, and produce that testi- mony to-morrow ? A. I could ; I am not willing to do so. Q. We must ask you to do so ? A. Is there any statement of profits made there ? Q. If we knew the profits we would be able to form an estimate of how much the dividends were according to your own statement? A. Well, I really dislike to take issue; I may have fallen into an error, but I thought probably the committee would be glad to learn something of the general working of the Standard Oil Company — of its methods, its purposes and the object it has obtained; I did not expect to be asked any questions with regard to the profits it has made ; as I said in the beginning, this was purely a personal matter ; I desired to contradict it ; I supposed that the simple denial of state- ments made by a man who has no possible means of knowing what the facts were — that the denial by another one who has all the means of knowing, and who, as I say, has made an examination — I supposed that that would be sufficient. Q. You may be mistaken just as well as Mr. Thurber ? A. But where I take my own records, made for the year 1880, as secretary of the company, taking their recorded dividends, and finding them as I have stated them to you, and just exactly as I have stated them, it is hardly fair to assume that I am mistaken, is it ? Qr The word ^‘dividends” seems to be the difficulty; there may have been profits declared which were divided among the stockholders ? Mr. Chittenden — I think I could make a suggestion that might help the chairman and the witness out of the difficulty. I think I have seen it stated somewhere that there was an investigation relating to the affairs of the Standard Oil Company in Pennsylvania, in which the subject of their capital and their profits was made one of judicial investigation. To the witness — Is not that so ? The Witness — I think it is. Mr. Chittenden — As I remember the figures — I have them from the statements made here — probably that was the source of the in- formation. ' I suppose that was so, and probably there may be a mis- nomer of profits or dividends ; but that is probably the fact. Q. When was that investigation held ? A. I have really forgotten whether it was in the latter part of ’81, or in the early part of ’82. By Mr. Chittenden : Q. It was a question of taxation ? A. It was a question of taxation. • 80 634 Mr. Chittenden — And your officers were examined in court. By Senator Boyd : Q. What was the amount of dividends stated there ? A. I know nothing whatever of this matter from any personal knowledge. There is a gentleman in the room, however, who knows it all from personal knowledge, and if you will excuse me and call him he can tell you — Mr. Dodd. I was never in Harrisburgh. I know nothing about that matter at all. I never gave it any attention Q. Do you fix the prices of transportation ? A. No, sir. Q. That is a matter of contract, is it, between you and the railroads? A. So far as we are concerned. Q. Did you personally appear before the Hepburn committee ? A. No, sir. Q. Certain members of your company did, I understand ? Q. Yes, sir. Q. Did they at that time decline to give testimony in relation to their net or gross earnings ? A. They declined among other things to answer certain questions relating to the private affairs of the company, such as profits and divi- dends. They proposed to answer, and did make written answers to all the interrogatories except those which related to the private affairs of the company. I believe that the answers were not received; they were ruled out. Q. How many barrels of oil were exported and otherwise disposed of by the company during the year 1880 ? A. Well I am unable to answer that question. Q. Could you answer it on reference to your books? A. Yes. Q. What where the prices per barrel ? A. That I am not able to answer. Q. Could you on reference to your books ? A. Yes, sir. Q. Wiiat were the profits of the company on each barrel of oil sold ? A. That T cannot tell you. Q. Could you on reference to the books ? A. No; except by taking tlie profits and dividing them by the number of l)arrols. That would establish it. ( 1 . Can you give to the committee that information to-morrow? A. If I til ink it possible fo do it, yes. 035 December 27, 1882. Henry M, Flagler recalled : Examined by Mr. Chittenden : Q. During your own examination, the other day, before this com- mittee, and also during the examination of Mr. Brewster, you made some statements in relation to the connection of other companies with the Standard Oil Company, which, upon being read over, seemed tore- quire some .further explanation. I wish to examine you first in ref- erence to that. You stated, I believe, that you were the secretary of the Standard Oil Company ? A. I do not know how the stenographer may have reported it; I am. Q. And is there a corporation by that name ? A. There is. Q. How long is it since it was formed ? A. Something more than twelve years. Q. And is the corporate name of it The Standard Oil Company ? A. No, sir. Q. What is it ? A. Standard Oil Company. Q. Without the “the ?” A. Yes, sir. Q. Where was the principal place of business at that time ? A. Cleveland, Ohio. Q. Was it formed under the general laws of Ohio ? A. Yes, sir. Q. By written articles of incorporation ? A. Yes, sir. Q. Now you spoke of some other Standard Oil Companies. Is there a Standard Oil Company of New Jersey ? A. Yes, sir, - Q. When was that formed ? A. During the current year. Q. Well, state ? A. I am not able to state the exact time. Q. State it as near as you can ? A. The first of August. Q. Where is the principal place of business of that company ? A. Bayou ue, New Jersey. Q. That is on New York bay, is it? A. Yes, sir. Q. That is formed by written articles of incorporation under the Jaws of New Jersey, I suppose ? G36 A. Yes, sir. Q. And with the same corporate name ? A. I am not absolutely certain about that, whether it is “ The Standard Oil Company,” or ‘‘Standard Oil Company.” Aside from that it has the same name. I am informed that it is incorporated under the name of the Standard Oil Company of New Jersey. Q, Is there a similar one in Pennsylvania ? A. There is ; yes, sir. Q. When was that incorporated ? A. I cannot speak from absolute knowledge, but I should say more than ten years since. Q. And formed by written articles of incorporation under the gen- eral laws ? A. That I am not able to say. Q. You know whether it has a special charter from the Legislature don’t you ? A. No, I do not. Q. Where is its place of business ? A. To the best of my judgment, Pittsburgh. Q. And that incorporate name is what ? A. Standard Oil Company, of Pittsburgh. Q. Are there any other Standard Oil Companies ? A. One in this State. Q. When was that formed ? A. I think about the same time that the one in New Jersey — I think about the first of February, this present year. Q. Where is the principal place of business of that company ? A. New York city. Q. There are the Ohio, New Jersey, Pennsylvania and New York. Are there any others ? A. No more. Q. Now, you spoke of something by the name of United Pipe Line. Is that a corporation ? This is what you said, addressing Mr. Brew- ster, “ I can see very naturally where you have fallen into an error of expression when you say that the United Pipe Line” — A. I can answer your question, which was, if I remember, whether it was an incorporated company. Q. My question is this : is what you spoke of here as The United Pipe Line a corporation ? A. Yes, sir. Q. When was that formed? 637 A. I should say within five years ; four or five years ago as near as I can remember. Q. Where is its principal place of business? A. Oil City. Q. And under what law is that incorporated ? A. Laws of Pennsylvania. Q. By general articles ? A. I so understand_, yes, sir. Q. You spoke of The Standard Oil Trust; is that a corporation ? A. No, sir. Q. Is it a joint-stock company ? A. No, sir. Q. What is it ? A. An indescribable thing I should say ; it is neither of the things that you have mentioned ; neither a corporation nor a partnership. Q. It is not the name of a private person ; tell the committee what it is in general terms ; I donT want to go into much detail about it ; it is something that takes and holds the title of property ? A. No, sir ; what do you mean by title to property? Q. You know just as well as I do ? A. Do you mean real estate ? Q. I mean any kind of property ? A. It is an agreement made by individuals interested who have, by virtue of that agreement, created a trust and put that trust in the hands of trustees. Q. Then certain individuals representing certain interests ? A. Kepresenting themselves, as individuals. Q. Kepresenting themselves, have appointed trustees and vested them with the title of property ? A. Yes, sir. Q. Do the trustees hold no property ? A. They hold stock and bonds and securities for the individuals in trust. Q. But for these individuals alone ? A. For those individuals alone. Q. They don’t hold any stock, property or effects that belong to any of these corporations as corporations ? A. No, sir. Q. Now, you went on to say that there was a Standard Oil Company in this State and in Ohio, New Jersey and Pennsylvania, besides a number of other companies, and the stock of these companies to a greater or less extent is represented in The Standard Oil Company ; what other companies did you refer to ? C38 A. I did not make ilie statement as you liave read it. Q. It is so recorded. Arc there any other companies the stock of which, is to a greater or less extent, represented in the Standard Oil ’’.rrust, any other tlian the companies you have named ? A. In other words, do you mean to ask me whether the trustees hold the stock of any other companies than the four Standard Oil Com- panies already named ; is that the question ? Q. The four Standard Oil Companies and the United Pipe Line ? A. As to whether the trustees hold any other stock than the four companies and the United Pipe Line ; yes, sir; they do. Q. Does the Standard Oil Company, or its managers — that is the original Standard Oil Company — substantially own and control the other corporJltions you have named to-day ? The Witness — Mr. Chairman, may I inquire of you whether, in your judgment, the question is one that comes within the scope of the resolution that created this committee, or whether an answer to that question will throw any light at all upon the subject-matter under investigation ? Senator Boyd — Perhaps Mr. Chittenden can explain. If the com- mittee know what Mr. Chittenden desires to draw out then we will know better what to do. Mr. Chittenden — Mr. Flagler and Mr. Brewster have come vol- untarily before this committee and have made certain statements about the property of the Standard Oil Company, and the relation of certain other companies to the Standard Oil Company, and they have given their views about the extent to which the Standard Oil Company con- trols the oil business. They have also made an issue with a witness before this committee as to a statement which he made. Under that state of facts, as they have themselves opened the subject, it seems to me proper that this committee should know now exactly what the relations of these companies are each to the other, what strength and power they have, how far they act together and have acted together, and how far they control the oil market and the oil business. Now, I shall claim to have this gentleman state all about the stock — I shall not go into details about it, but to state generally about the stock, property and the effects of these different companies and who the per- sons are that managed them. That is my object. Senator Browning — Ido not know what questions the counsel jiroposes to put to the witness. When an objection is raised, it will be time to decide. My own opinion is that this question is put for the purpose of disclosing the opportunities of this company to corner tlie market and to control this vast enterprise, and I think it is a very j»ro])er question. G39 Senator Boyd — That evidently is the object of the question, but I prefeirred to have Mr. Chittenden state what he desired to disclose Now, the explanation has been made and I agree with Senator Brown- ing that the qiiusiion is a perfectly proper one and is within the scope of the provisions of the resolution by which this committee was ap. pointed. The Witness — As the gentleman has based his grounds for asking the question upon certain statements Avhich he says the witness, meaning me, made ; and as I made no such statement your reason falls to the ground. I think you will find in the record that I never made any such statement as you have alluded to. Mr. Brewster made it. Senator Boyd — Mr. Chittenden was present when Mr. Brewster made his statement and you made several statements to aid Mr. Brews- ter to make his statement. That I presume is what Mr. Chittenden bases his statement upon, that you made those remarks. The Witness — Yes, sir; to prevent his misleading the committee, lie also prefaced that statement by saying that we came here volun- tarily to make these statements about the Standard Oil Company. If the clerk has the letter I wrote to the honorable chairman, you will find that. I specifically stated certain un warrants and untruthful statements had been made by a witness upon a former occasion respect- ing the Standard Oil Company and I desired, personally, to be heard thereon. I came here and denied specifically all the statements made by the witness except two, which are, that he correctly stated the capital stock of the company of Ohio when it was originally organized and the subsequent capital. The other statements I deny to-day. I do not admit, because I came here for a specific purpose, that I put myself in any position voluntarily to make any statements respecting the Standard Oil Company, which are not proper subjects under the resolutions. Senator Boyd — I would say that, as you have intimated, you did flatly contradict the statement of one of the witnesses. Mr. Chittenden — I am unwilling to have the statement go in the wav the witness states it. Here is Mr. Brewster’s examination, volunteered, with scarcely one question, except the formal question, put by the committee, by either member of it. Mr. Brewster goes on and makes this statement in Mr. Flagler’s presence, not called out by the committee. Mr. Flagler then interrupts him and states what I have read, and then Mr. Brewster goes on here, page after page, with a labored justification and an attempt to prove that the Standard Oil Company is a public blessing. That is all taken down and becomes a part of your testimony, and I claim the right to a fair, notan improper, / 040 cross-examination on that subject. I don’t think Mr. F'lagler states it fairly when he says that any portion of what I wisli to examine him upon is called out by any questions of the committee. The Witness — Am I responsible for Mr. Brewster’s statement? Mr. Chittenden — I think you are, sir. He is an officer of the company. The W ITNESS — What officer ? Mr Chittenden — I do not care to have any discussion. Q. Does the Standard Oil Company, or its managers — that is, the original Standard Oil Company — substantially own and control the other corporations you have named to-day ? The Witness — Does the committee say it is a proper question to be asked ? Senator Boyd — I think it is. ( The witness, after consulting with his counsel, Mr. Dodd, answers the question as follows) : A. It does not, sir. Senator Boyd — Inasmuch as reference has been made to the letter sent by Mr, Flagler, I would like to ask Mr. Flagler if that is the let- ter (showing letter to witness ) : Standard Oil Company, Standard Block, Cleveland, 0., and ^ 44 Broadway, New York, December V6th, 1882. J. D. Rockefeller, President; Wm. Rockefeller, Vice-President; H. M. Flagler, Secretary ; 0, H. Payne, Treasurer ; to Hon. John G. Boyd, Chairman Senate Divest igating Committee, 88 Cen- tre street, city. Dear Sir — Being aware that certain unwarranted and untruthful statements regarding the Standard Oil Company, its business and methods, have been made to your honorable committee, we desire the opportunity of appearing before your committee at the earliest prac- ticable moment, to be heard in relation to this subject. Very truly yours, H. M. FLAGLER, Secretary. The Witness — It is my signature. I presume it is the letter. (Letter marked Exhibit No. 4 of this date.) Q. In your statement, the other day, you said there is a Standard Oil Company in this State and in Ohio, New Jersey and Pennsyl- vania, beside a number of other companies, and the stock of these (•oin))anies, to a greater or less extent, is represented in the Standard G41 Oil Trust ; to what companies did you refer by this term, “ besides a number of other companies ? ” A. Do you want me to give the names ? Q. Yes, sir. A. The Sone Manufacturing Company; Devoe Manufacturing Company ; Charles Pratt & Company ; Acme Oil Company ; Camden Consolidated Oil Company ; National Transit Company ; Baltimore United Oil Company ; I don’t recollect any others, at the moment. Q. Have you papers in your possession which will accurately show what other companies are included in the answer to the last question ? A. You mean with me ? Q. No ; anywhere in your possession ? A. No, sir. Q. Have yon access to such papers ? A. I suppose I could have access to them ; yes, sir ; I can give you a couple of more now; Galena Oil Company; Eclipse Lubricating Oil Company ; Imperial Refining Company. Q. Ill your statement, the other day, you spoke of the Standard Oil Company as possessing property to the amount of sixty or seventy millions of dollars ; which Standard Oil Company did you then refer to ? A. I didn’t refer to any of them, for I didn’t make any such state- ment. Q. Were you not asked what the property of the Standard Oil Com- pany was worth ? A. Very likely ; I don’t remember whether I was or not ; the record will show ; if I was asked that question, I did not answer it in that way . Q. Did you answer any question with the term “ sixty or seventy millions of dollars ” or words to that effect ? A. I am not quibbling or carping, if you have got it before you I simply say that I didn’t say so ; if you will ask me questions bearing on the acts of the Standard Oil Company relative to stocks, corners, futures, etc., I will answer any question ; if you want to know as to the manner of conducting the business of the several companies, what their relations are to the petroleum business, their manner of dealing as to corners, futures and that sort of thing, I am ready to answer. Mr. Chittendek — I hope this witness will not be personally offensive to counsel. The Witness — Will the counsel indulge me in a word ; it is jus^ this : I will try to be his peer in politeness.” Q. On your last examination, were you asked this question, Ac- *^81 642 cording to your statement with regard to the premiums paid, this Standard Company’s business was not a very profitable one,” were you asked that question ? A. I have no recollection of it. Q. Did you not answer in reply to that, Oh, no, sir, I did not say that ? ” A. I can recall, I think, such an answer. Q. Were you not asked this question, “ And you say that the re- ceipts of the company in that time were a little less than ten million dollars ?” Were you asked that, and did you answer, “Oh, no, I am speaking of dividends ? ” [Objected to, that the witness should not answer until he sees the record.] Q. Now, in the same connection, were you not asked what was the capital stock of the company when it was first originated, to which you answered, “ One million dollars,” and were you not then asked, “What is their property worth to-day? ” and your answer, “ Through- out the United States? Q. Yes? A. Well, sixty or seventy million dollars ?” Now did you not answer, substantially, that the property of the Standard Oil Company throughout the United States was worth from sixty to seventy million dollars? (Record shown witness.) A. I find it so here, but I want to correct this answer. Q. We will correct that afterward ? A. Very naturally, I was not referring to the Standard Oil Com- pany at all. Q. Now, in whatever answer you then made, did you intend to in- clude the companies and their stock which you have named to-day, as being connected with the Standard Oil Trust? A. Well, not limited to those I have named to-day, for it is my opinion that I have not named them all, but I did intend that the an- swer should embrace all the company’s stock in whole or in part, which is held by these trustees, a thing which is generally called the Standard Oil Company but which is not the Standard Oil Company. Q. What is it, if it is not the Standard Oil Company ? A. Tliat is a difficult question to answer. Q. What is the proper name of it ? A. The Lord only knows, I don’t. Q. You say that sometliing or somebody that owns this sixty or seventy millions of property is called the Standard Oil Company but IS not the Standard Oil Company ; now, what is the person, partner- ship or corporation called which owns that property ? A. Wliy, 1 have tried to give you a list of the names of as many ot 643 the firms and companies as lean remember ; I have another one which comes to my mind now. Q. Now, you say the original Standard Oil Company was organized in Ohio, if I understand you; is that so ? A. Yes, sir ; in Ohio. Q. And about the year 1872 ? A. No, 1870. Q. What was its capital ? A. Originally ? Q. Yes, sir ? A. One million of dollars, when it was first organized. Q. Did that company take over any previously existing business ? A. Will you kindly explain what you mean ? Q. Did that company purchase at the time of its organization, and become possessed of, any previously existing plan or business ? A. Yes, sir. Q. By what name was it known ? A. There were two firms in existence that the Standard Oil Com- pany, when organized, first purchased the plant of. One oi them was known as William Rockafeller & Company and the other as Rock- iifeller, Andrews & Flagler. Q. Where was the property situated ? A. In Cleveland, Q. At what price did the company purchase it? A. I cannot answer the question. Q. Don’t you know ? A. If I did, I could answer. No, sir, I do not know. Q. Did they issue stock in payment for it ? A. No, sir ; they did not. They bought it for money and paid for it in money ; issued stock to the stockholders. Q. You were interested in one of the companies yourself, were you not ? A. I was. Q. Do you not know what the Standard Oil Company paid for that ? A. No, sir. Q. Did you not know at the time ? A. I did at the time, yes. Q, Was it half a million of dollars ? A. I shall decline to answer the question. Q. Was not the capital stock of one million dollars of the Standard Oil Company substantially issued or its proceeds appropriated for the purchase of those two previously existing concerns substantially ? A. I decline to answer the question. 644 Q. Yoa took stock in that company at the time, did you not ? A. I decline to answer the question. Q. How did you pay for your stock ? A. I decline to answer that. Q. When that company started, had it any cash capital except those two previously existing concerns ? A. I decline to answer the question. Q. When, if at any time, was the capital stock of that company in- creased ? A. According to the best of my recollection, about June or July of 1872. Q. To what sum or amount was it increased ? A. To the sum of $3,500,000. Q. Has it, at any time since then, been increased ? A. It has not. Q. Did you receive any ot that increased stock ? A. I decline to answer the question. Q. Was not that increase of two and a half millions divided among the original shareholders pro rata ? A. I decline to answer the question. Q. Was it not wholly paid for out of the profits of the company ? A. I decline to answer. Q. Do you decline to answer, because these questions, if answered, would subject you to any prosecution ? A. I decline to answer that question. Q. Tlien am I to understand that you do not decline to answer it on the ground that it would subject you to any prosecution ? A. You are at liberty to understand it as you please. By Senator Boyd : Q. How is the committee to understand it ? A. I decline to answer because it is an improper question. Q. The committee decide that it is not an improper question. If you have any good reason to offer we will gladly accept it, and hear it, but I don’t see any necessity for this controversy between counsel and witness, ' We are here doing a simple duty, and of course we ex- pect you gentlemen to aid us ; that is why you are called here, and if counsel puts any improper question, of course we will exclude it, but I cannot see that any question hero put is improper. Sernitor BiiOWNiiyG — I would like to supplement what Senator Iloyd lias said by adding that if you have any statements that you now desire to make why you regard tliese as improper questions, and why they ought not to bo [)ut, I am willing to hear you -on that question, now. 645 The Witness — I thank you, senator, for the opportunity. I de- cline to answer the questions because they have no bearing whatever upon the subject matter at issue ; the company is a corporation organ- ized under the laws of the State of Ohio and it is not a subject of fit inquiry by the Senate of this State ; I have expressed a willingness to testify cheerfully and promptly in relation to all matters relating to ■corners and dealings in futures; I claim the right to judge as to whether I took stock in a company twelve years ago, whether that has any bearing whatever upon the question in hand ; I deem the question wholly irrelevant and I would be glad to put myself right before the committee; I cannot see how the committee can justify any such question as that. Senator Boyd — We are very much obliged to any witness that ■comes before the committee and offers any suggestion that tends to promote the public interest. Now, when you leave this stand if any other witness comes and contradicts you, we will protect you and sub- ject that witness to a rigid examination. Mr. Dodd — When the inquiry comes into mere personal business, it is the right and the duty of the witness to refuse to answer. Senator Boyd — So far as any inquiry in relation to any private matter is concerned, but so far as any inquiry goes to show the finan- cial condition for several years past of the Standard Oil Company, in order to show that its dividends might have been as stated by the other witness, I deem it proper. The AYitness — The witness referred to stated that in the year 1880 the dividends of the Standard Oil Company had been ten millions and some dollars ; now, if the Chairman can conceive of any possible con- nection between my denial of a statement of a former witness of an event which occurred in 1880, and as to whether I took any stock in the Standard Oil Company in 1872, I am at a loss to see the connec- tion. Mr. Chittenden — The whole of this testimony is not only legiti- mate, but exceedingly important. This gentleman stated, when he was on the stand before, that the funds of this company had very largely come from contributions by the stockholders to the capital stock of the company in money. Suppose it should turn out that here is a business which has grown to $60,000,000 or $70,000,000, which, by locating one company in Ohio, and another in Pennsylva- j nia, and another just the other side of New York bay, and others scattered all over the country beyond the reach of the laws of New , York, this company is enabled without the contribution of any sub- stantial money, but by absorbing other companies, from time to time and from year to year, by that aggressive policy which both Mr. Flag- 646 ler and Mr. Brewster emphasized the other day, they have finally suc- ceeded in obtaining the practical management of the oil business, so that to-day they refine and handle ninety per cent of the product of the oil. Now if this is an honest, straightforward business, and there is nothing wrong about it, the witness should tell this committee every fact, circumstance and particular about its history, about what it started from, how much capital and money have been contributed to it, explain its aggressive policy, and show that this company is what both these gentlemen sought to have it understood to be by you the other day, a public benefit and blessing instead of a public curse. Now I don’t want to go into these details any further than to show what these companies are that it controls, how it controls them, whether, in point of fact, their principal places of business are located ill the other States, or whether really and substantially the principal place of business of all these companies is in New York city, where the whole property ought to be subject to the control of the State au- thorities, where it ought to pay its share of the taxes, bear its share of the public burdens, and do its share of the duties. Now, in that iioint of view, an investigation into the origin of this company and the manner iu which it has been conducted, seems to me eminently proper, and of course' I shall go no farther than is necessary to bring out those facts. Mr. Dodd — That is not the object for which this committee was appointed, nor is it within the scope of their powers. I simply desire to state to you if that is tlie object of this investigation, I shall in- struct the witness to answer no further questions whatever. The Witness — Mr. Chittenden says that I made a statement as he has repeated it. I deny using the language or giving the meaning as he stated in his speech. By Mr. Ohitten^deis' : Q. 1 said that you stated that the property of this company consisted largely of contributions made by the stockholders in money to its capital. Do you say you didn’t state that ? A. I say if there is any thing standing there like that, it is a mistake of the stenographer. Q. At what time was the office of the Standard Oil Company in this city opened? A. The Standard Oil Company of Cleveland ? Q. Any Standard Oil Company? A. About the 1st of August, 1882. Q. At what time did the Standard Oil Company of Ohio, or that organized at Cleveland first have an office in this city ? A. Aliout 1870 was the time of its organization. 647 Q. Who was president of that company ? A. At that time, Mr. Itockafeller. Q. Has he been president ever since ? A. Yes, sir. Q. Where did he live when the company was organized ? A. In Ohio. Q. When did he remove to this city? A. He has never removed to this city to my knowledge. Q. Does he not live here ? A. No, sir. Q. Does he not spend most ©f his time here ? A. No, sir. Q. When did you remove to this city ? A. About three years since, permanently, to make it my residence. Q. Was Mr. Bostwick one of the original officers of this company ? A, He was not. Q. Has not the business which is popularly known as the business of the Standard Oil Company been substantially conducted in this city since its organization? A. No, sir. Q. Has not the largest part of it been transacted in this city ? A. No, sir. Q. Where has it been ? A. Wherever it has had interests about the country. Cleveland probably more than any other place. Q. How many directors has it at the present time ? A. I decline to answer. Q. Do not a majority of those directors live in New York ? A. I decline to answer. Q. Do not a majority of all its officers live in New York? A. I decline to answer. Q. Is not New York city the place of business of substantially all its officers ? A. I decline to answer. Q. Are not its dividends paid in New York city? A. I decline to answer. Q. Are not its dividends declared in New York city? A. I decline to answer. Q. I understood you to state, on your former examination, that a large proportion of the profits of the Standard Oil Company were not divided but were suffered to accumulate with the consent of the stock- holders. Do you mean there was ever any vote of the stockholders to that effect ? A. I decline to answer. G48 Q. Are you able to state what dividends that company has actually made ? A. I decline to answer. Q. What dividends did they make in the year 1879 ? A. I decline to answer. Q. In the year 1880 ? A. I decline to answer. It has already been given. Q. In 1881 ? A. The same answer, Q. Who is president of the Standard Oil Company of New Jersey? A. I decline to answer. Q. Why? A. I don’t see that it has any bearing upon the rjuestion. Q. Are not the oMcers of the Standard Oil Company of New Jersey the same as those of the Standard Oil Company of Cleveland ? A. I decline to answer. Q. Are not the officers of the Standard Oil Company of Cleveland of New Jersey, of Pennsylvania and of New York the same ? A. I decline to answer. Q. Are not those four companies all substantially under the same control ? A. I decline to answer. Q. Why was the Standard Oil Company of New Jersey organized ? A. I decline to answer. ^ Q; Why was the Standard Oil Company of New York organized ? A. The same answer, Q. What was the capital of the Standard Oil Company of NewYork? A. I decline to answer. Q. Was it not $5,000,000 ? A. I decline to answer. Q. Wasn’t that stock, in part or in whole, paid for in property? A. I decline to answer. * Q. You have given the names of a number of corporations con- nected with the Standard Trust; does the Standard Oil Compaii}^, of Cleveland, or its managers, substantially own and control those cor- porations? A. I decline to answer. Q. Are not those corporations all competing companies which have l)een aljsorbed by the Standard Oil Company ? A. 1 decline to sinswer. Q. Was it not a part of the aggressive policy of the Standard Oil Company, which you mentioned the other day, to absorb all competing companies ? G49 A. The same answer. Q. How many refineries of petroleum or coal oil were there in exist- ence in the States of Ohio, Pennsylvania, New York and New Jersey, when the Standard Oil Company, of Cleveland, was organized ? A. I am unable to say. Q. Don’t you know there were more than fifty? A. No, sir. Q. Do you not know any thing on that subject ? A. Not much ? Q. I believe you stated the other day that there were a large number of refining concerns now that were connected with the Standard Oil Company ? A. I think I did. Q. How many such are there, to your knowledge ? A, I can’t answer; it would only be a matter of opinion. Q. You can state how many you remember or know of ? A. No ; I don’t remember ; I know there are a good many refineries outside of those I have mentioned. Q. Are there five in the United States? A. I should think so. Q. Are there ten ? A. I should think so. Q. Won’t you name one ? A. No, I will not. Q. Can you name one ? A. Yes. Q. Why do you refuse to name one ? A, I decline to answer why. Q. Did not the Standard Oil Company, in the year 1876, prove be- fore the Hepburn committee that it refined about ninety per cent of the product of the oil wells ? A. I have no recollection that it proved any thing before the Hep- burn committee. Q. Did not its officers so state before that committee ? A. I don’t know. Q. Did you not so state before that committee ? A. No, sir. Q,. Does not the Standard Oil Company and the refineries with which it is connected and controls refine ninety per cent of the product of the oil wells at the present time ? A. I decline to answer the question. Q. Do you know whether it does or not ? 82 G50 A. I decline to answer. Q. Does not the Standard Oil Company by means of contracts with the railroads and its other facilities control the rates of transportation for crude oil ? A. I decline to answer the question. Q. Does it not in like manner control substantially the price of crude oil ? A. I decline to answer the question. Q. Did you testify on the last day when you were examined con- cerning some fluctuations in the market for crude oil that have oc- curred recently ? A. Your record will show. Q. I ask for your recollection about it ? A. I cannot answer. Q. Have there been such fluctuations? A. Yes, sir. Q. Give us as near as you can the highest price of crude oil during the last few months ? A. I believe $1.36 per barrel was the highest, but I won’t be abso- lutely sure. Q. And in reaching that point did the price start at about fifty cents ? A. It did, the price was below fifty cents. Q. About when ? A. During the summer of the present year. Q. And it went up to $1.35 or $1.36 when ? A. I can't give you the time ; I should say about two months ago. Q. The last portion of that rise was very rapid, was it not ? A, I believe it was. Q. And just preceding that rise did the Standard Oil Company pur- chase a large quantity of crude oil ? A. Not to my knowledge. Q. Don’t you know that it purchased several million barrels in an- ticipation of that rise ? A. I do not. Q. Are you familiar with the purchases made by your company ? A. I am. Q. Did they not send orders to Oil City to buy as high as a million barrels at the time just preceding that rise ? A. Not to my knowledge. Q, What amount of oil did the Standard Oil Company hold when that rise took place ? A. I decline to answer the question. 651 Q. Was it a million barrels ? « A. I have already declined to answer the question. Q. Did the Standard Oil Company sell out a large quantity of crude oil at those high prices ? A. They did not. Q. How much did they sell ? A. I am unable to answer the question. Q. What is the business of the Standard Oil Company ? A. Simply buying crude oil and refining it and undertaking to make an article of illuminating oil and sell it. Q. The company does sell crude oil, does it not ? A. It does in a very small way, sometimes. Q. Does it not sometimes sell in the market as high as a million barrels ? A. Never. Q. Half a million ? A. Never. Q. As high as a hundred thousand ? ■ A. I am unable to state in regard to that. Q. Does the Standard Oil Company control the United Pipe Line Company ? A. In what sense do you use the word ‘^control;” dictate its policy ? Q. In its ordinary sense ; control its price ? A. It has no price ; the United Pipe Line is not a dealer in oil. Q. Its price for transportation ? A. It has prices for transportation and storage. Q. Are not those prices substantially under the control of the man- agers of the Standard Oil Company ? A. They are not. Q. Who is the president of the United Pipe Line ? A. J. J. Yandergrift. Q. The vice-president ? A. D. O’Day. Q. What is the concern of which Mr. Brewster is vice-president ? A. The National Transit Company. Q. Is that a corporation ? A. Yes, sir. Q. Owned or controlled by the Standard Oil Company ? A. No, sir. Q. What is the business of that company ? A Transporting oil. Q. By means of the pipes of the United Pipe Line Company ? 652 A. No, sir. Q. Has it no connection with it ? A. It receives oil from the United Pipe Line and transports it from the interior to the sea-board. Q. Please tell us where this United Pipe Line terminates coming East? At Glean, on the line of the Erie road ; I think it is at Sala- manca, on the Rochester and State Line road, and I am not sure whether it is Kane, on the Philadelphia and Erie road. Q. Does this Transit Company transport oil from where the Pipe Line delivers it to the railroad ? A. Yes, sir, in some cases. Glean is one of these points. Q. Where is the office of the Transit Company in this city ? A. 44 Broadway. Q. Is that Mr. Brewster’s office ? A. Yes, sir. Q. When was that Transit Company organized ? A. I am unable to say of my own knowledge. Mr. Brewster says he thinks a year ago last January. Q. That Transit Company makes contracts with the railroad com- panies for the transportation of oil, does it not? A. Mr. Brewster advises me that it has one contract with a rail- road. Q. The Standard Gil Company purchases crude oil in the oil fields, does it not ? A. Yes, sir. Q. And has that oil transported to New York ? A. Some of it. Q, Has the Transit Company any thing to do with the transporta- tion of that oil at the present time ? A. It has transported some of the oil used by the Standard Gil Company. Q. Does it transport the greater part of it ? A. It has, recently, yes. Q. For how long a time ? A. I should say for two months. Q. Do the owners of the Standard Gil Company, the managers, own any stock in this Transit Company? A. I decline to answer the question. Q. Has the Standard Gil Company contracts with the railroad com- panies for the transportation of oil ? A. It has not. (2- 1 1 as it (*v(‘r liad ? A. Yes, sir. 653 Q. When did it cease to have such contracts ? A. I should say upwards of five years ago ; no, it had one contract with the Pennsylvania road of a more recent date. Q. When did that cease ? A. Well, two or three years ago. Q. How was your oil transported during the period between the ter- mination of that contract and the making of the contracts with the Transit Company ? A. What contracts with the Transit Company ? Q. You said that the Transit Company, two or three months ago, began to transport the oil for the Standard Oil Company ? A. No, sir ; I did not make that statement. 1 said that it had trans- ported pretty much all of the oil brought to New York for the last two months; I did not say it began to do it. Q. When did it begin to transport oil for the Standard Oil Oom- . pany? A. When it had its line completed to New York, which was a year ago, more or less. Q. What do you mean by its line ; has it a railroad line ? A. A pipe line. Q. Then the Transit Company is itself a pipe line company ? A. I have so stated ; yes, sir. Q. Did your contracts with the railroad terminate when the Transit Company’s pipeline was opened? A* No, sir; before that. ^ Q. How long before that ? A. In some cases a year, five years, four years, three years, two years. Q. Before the termination of those contracts and the opening’ of the Transit Company’s pipe line, how was your oil transported ? A. Transported by the railroads at prices made with them from time to time for its transportation. Q. You had contracts with them for transportation ? A. What do you mean by contracts, a written paper, or an agree- ment ? Q. An agreement. A. They were all verbal agreements made from time to time ; might last a month ; lasted as circumstances necessitated. Q. Were those prices lower than their tariff prices ? A. I don’t know what their tariff prices were. I should say, how- ever, in reply to that, that the price paid by the Standard Oil Com- pany for the transportation of crude oil by the railroads was the price at which any one else could have transported oil aside from the Stand- ard Oil Company, 654 Q. IIow do you know ? A. Because I know they were willing to do it for anybody else. I said I did not know what tlieir schedule of prices were; I only know by common report and by their saying they would not transport our oil any less than anybody else’s. Q. These railroad companies have given you rebates in former times, have they not ? A. I decline to answer the question, if it is a question. Q. When did such rebates, if they existed, cease ? A. I decline to answer. Q. Have you any contracts now with the railroads under which you received rebates? A. No. Q. Did you receive such rebates in the year 1881 ? A. I decline to answer. Q. Did you receive as high as $100,000 in such rebates in the year 1881 ? A. Tliat I decline to answer. Q. Have you not in some years received rebates to an amount as high as a quarter of a million of dollars ? A. That 1 decline to answer. Q. Where were such rebates paid to you or to your company ? A. I am unable to say. Q. By whom were they paid ? A. I am unable to say. Q. Can you state the quantity of oil that the companies under the control of the Standard Oil Company have refined and exported dur- ing the past year ? A. No, I cannot. Q. Can you state what peicentage of the exports have been made by the Standard Oil Company or parties connected with it ? A. I cannot. Q. Do you think it is as high as ninety per cent of the exports ? A. I prefer not to think about it. Q. You decline to express any opinion on the subject ? A. Yes, sir. Q. Has the Standard Oil Company any refineries in or near this city ? A, It has. Q. Where are they situated ? A. limiter’s Point, Long Island. Q. Wliiit is tlie name of tliose refineries ? A. 1 don’t know that tliey have any name. 655 Q. What is their capacity for refining ? A. That I am unable to say. Q. Can you tell any thing about it ? A. No, sir. Q. What other refineries are there in or near this city aside from that ? A. Well, there are quite a number as I understand ; I have not vis- ited any of them. I don’t know that I have been in a refinery in the vicinity of New York in six or seven years. Q. Do you know of any ? A. I know by hearsay. Q. What one do you know of by hearsay ? A. Charles Pratt & Co. Q. They are associated with the Standard Oil Company, are they not? A. I decline to answer. Q. Charles Pratt is a director in the new Standard Oil Company of New York ? A. I decline to answer. Q. The refinery of Charles Pratt & Co. is as much under the control of the Standard Oil Company as any of the other companies you have named, is it not ? A. I decline to answer. Q. Now give us the name of some other ? A. I understand that Lombard & Ayres have a refinery. Q. Where is that ? A. I don’t know where. Q. Do you know what its capacity is ? A. I do not. Q. Has the Standard Oil Company any connection with them ? A. I decline to answer. Q. Does the Standard Oil Company control it ? A. I decline to answer. / Q. Does not the Standard Oil Company in your opinion substan- tially control the entire refining business in the States of New York and New Jersey ? A. I decline to answer. Q. I put the same question in regard to the refineries in, and in the neighborhood of Cleveland ? A. I make the same answer. Q. Can you name ten refineries in existence at the present time in the United States that are not controlled by or associated with the Standard Oil Company? 656 A. Not at the moment. A. Can you name five ? A. I guess not. Q. Can you name one ? A. I guess not. Q. Your daily business requires you to understand the market for refined oil and the production and consumption, does it not ? A. No, sir. Q. Who connected with your establishment in New York could in form the committee of these outside refineries ? A. I decline to answer. Q. Of what does the sixty or seventy millions of property which you stated the other day consist ? A. I decline to answer. Q. Is not a large part of it at the present time in the State of New Y"ork ? A. I decline to answer. Q. It was stated the other day by Mr. Brewster that the Standard Oil Company had a large corps of correspondents, domestic and for* eign, and agents in foreign countries ; was that statement correct ? A. I am unable to say. Q. To what office, and where is it located, do those agents report ? A. That I cannot answer. Q. Do they not report to the New York office ? A. I am unable to state. Q. Do you have an office in this city ? A. No, sir. What do you mean by my having an office ? Q. I ask whether you have an office in this city, where you do busi- ness ? A. Yes, sir. Q. Wliere is it ? A. 44 Broadway. Q. The office of the Standard Oil Company, is it not? A. No, sir. Q. Where is the office of the Standard Oil Company in this city? A. 44 Broadway. Q. Is your office in the same building ? A. Yes, sir. (2. Does the Standard Oil Company rent that building? A. '’14iat I am unable to say. (2. You do not know any thing about it ? A. No, sir. (2- That is the place you named as the office of the Transit Company ? G57 A, U has ail office in the same building. Q. Are not agents sent out from, and do they not report to, that building, 44 Broadway? A. I am unable to answer. Q. Who is the president of the New Jersey Company ? A. I decline to answer. Q. Is not his office in New York ? A. I decline to answer. Q. Is not the business of the New Jersey .Company substantially conducted in that buHding, 44 Broadway ? A. I decline to answer. Q. Is not the business of the other companies you have named as connected with the Standard Trust substantially conducted in that building ? A. I decline to answer. Q. Who is the treasurer of the Standard Oil Company? A. I decline to answer. Q. Are you A. I decline to answer. Q. Does the Standard Oil Company make any return to the comp- troller of this city of its gross receipts ? A. What Standard Oil Company are you talking about now ? Q. Any Standard Oil Company with which you are connected ? A. I am unable to answer the question. Q. Does any Standard Oil Company with which you are connected pay any taxes in this city or State ? ' A. I think it does. Q. How much a year? A. I am unable to say. Q. Two hundred dollars a year ? A. I cannot answer the question. Q. Does it pay more than two hundred dollars ? A. I can’t answer. Q. Do you not know that it merely pays taxes on its office and furniture ? A. I can’t answer the question. Q. Do you know what proportion of the oil brought to New York is exported ? A. 1 do not. Q. Did you not hear Mr. Brewster state the other day that it was about eighty per cent ? A. I don’t know whether I heard him or not. 83 658 Q. You said something the other day about petroleum not being the third in the list of exports, did you not ? A. I think I said it was the fourth as I understood it. Q. State how you divide the exports ? A. I don’t divide ' them ; I made the statement upon what I have understood to be the facts in the case ; I don’t know what is ahead of it, except I understand the cereals and cotton are, and then what ranks ahead of petroleum I am unable to state. Q. Do you not know .that if the exports are divided into provisions, cotton and petroleum, or into articles of food, cotton and petroleum? that petroleum stands third ? A. No, I have no knowledge of it ; I have never studied the tables of exports, and do not know from personal knowledge what it is. I have always understood it was the fourth in value. ~ Senator Browxin^g — You don’t object to its being the third ? The Witness — No, sir. Q. Are you a member of the Petroleum Exchange ? A. No, sir, I am not. Q. Do you deal in that Exchange ? A. I do not. Q. Does your company ? A. It does not. Q. No connection with it ? A. None whatever. Q. Do you buy and sell futures in oil ? A. What kind of oil ? Q. Petroleum ? A. There are crude and refined petroleum. Separate them, and I will answer both questions. Q. Well, in crude petroleum; do you buy futures in crude petro- leum ? A. We do not. Q. Nor sell ? A. Nor sell. Q. Do you buy futures in refined oil ? A. We do not. Q. Do you sell them ? A. Do you mean now in the sense of a man selling something he lias not got, and does not expect to deliver ? Q. Yes, sir. A. We do not, to tlic extent of a gallon, and never have. Q' Do you ever sell any more futures than you have of oil in hand, or in the i)roces3 of manufacture, to deliver ? 659 A. No, sir. Q. Did I understand you to state, the other day, something on the subject of ships accumulating in this port waiting for cargo; did you refer to that subject ? A. I believe I did ; yes, sir.' Q. Do you think the oil business had any connection with the accu- mulation of those ships waiting for cargo ? A, Certainly ; it has as much as any other article with which ships are loaded. Q. When do you remember of any circumstance of such an accumu- lation ? A. Not being familiar with our warehouse business I am unable to give you dates. I only know this from the daily records that there are times when we have a large number of ships in the berth, and at other times there are a very small quantity. Q. Do you remember a conspicuous illustration of that occurred in January, 1881, when there were nearly nine hundred ships in this port, and around here, waiting for cargos A. No, I have no knowledge of it, Q. Do you remember that such a case occurred in the months of September and October, 1881 ? A. I do not. Q. Do you know whether or not the accumulation of those ships have occurred at times when there were what are termed corners in the grain trade ? By Senator Browiting: Q. Is the Standard Oil Company, which you say is not the Stand- ard Oil Company, a consolidation of all the oil producers or oil refin- ers, or both of those interests ? ' A. Neither; it is not a consolidation of the oil producing or the oil refining, or the two together. Q. It puzzles me to know what it is. A. The stock is owned to a greater or less extent by individuals who are connected with other companies, but these companies are not an entirety. Q. A syndicate ? A. I don’t know what you call a syndicate. Q. Is there a committee representing the trustees who have a com- mon or separate interest in all these oil companies ? A. No ; that is not exactly the fact of the case. There is a com- mittee appointed by these trustees whose duty it is to hear represen- tatives of any or all of these companies, and this committee act as an 660 advisory committee to the gentlemen of the various companies with whom they come in contact. Q. Is that a hoard of control ? A. No ; the trustees do no business. Q. Have they authority over the different companies ? A. No, sir. Q. So their duties only commence when there is a difference of opinion as to rates or prices, growing out of competition between the different companies ? A. Yes, sir; and the competition may exist between companies in no way connected. Q. So they have no absolute control over these companies except upon questions of authority to settle disputes ? A. Not to that extent. Each company is wholly independent of the other. This committee acts as an advisory committee; has no power to control the actions of any company. By Senator Boyd : Q. It has no legal existence ? A. No, sir. By Senator Biiownin'G: Q. Other than that created by honor, as a committee agreed upon by these companies to decide as to how much each company shall raise or reduce its rates so as to destroy competition ? A. Nothing of the kind. Q. Do you recollect when that committee was first appointed ? A. Very soon after the organization of the trust, in the early part of this year. Q. Of recent origin ? A. Yes, sir. Q. And before that each company did its business separately ? A. Yes, sir ; as it saw fit. Q. What is crude oil worth a barrel at the well ? A. I have not been down town to-day ; yesterday it was worth about 76 or 77 cents. Q. What is the expense of the transportation of it to the place where it is refined ? A. Abour sixty cents a barrel. Q. And what is tlie cost of refining ? A. About half a cent a gallon. (2. And what does refined oil sell for to-day in the market ? 661 A. About three and a half or three and a quarter cents a gallon. I , may mislead you. You ask what is the cost of refining; that does not cover the loss. You take the net cost of a barrel of crude oil, bring- ing it to market, refining it, and the absolute loss in the refuse, and there is not a profit of a quarter of a cent a gallon. Q. Take a hundred barrels of crude oil, what is the net waste in re- fining it ? A. I should say about ten per cent ; then there are various refuses which are not worth as much a gallon as oil — naphtha, tar, etc. ; it is considered excellent if we got seventy-five gallons out of one hun- dred of crude oil ; and that will depend upon the fire test of the oil ; if you make a fire test, you cannot get that. Q. When was the Standard Oil Company organized, the one that does exist ? A. There are three or four that exist ; for instance the Standard Oil Company of New York was organized this last summer. Q. When was the first Standard Oil Company organized ? A. 1870. Q. Now what did oil sell for by the barrel in the market at the time this first Standard Oil Company was organized in 1870 ? A. Twenty to twenty-five cents. Q. What does the same oil or similar oil sell for to-day? A. Seven cents a gallon. Q. A difference of eighteen cents ? A. Yes, sir, if the price was twenty-five then ; I may have it a little too high or too low. A. That is the result ? A. Yes, sir. By Mr. Chittexdeit : Q. What was the product of the crude oil made in 1870 ? A. I am able to say only that it was equal to the demand and con- siderable greater. Q What was it in barrels ? A. I can’t tell what it was then or is now ; I know there has never been a time when there was not as much as the world wanted. Q. You do not claim, do you, that this reduction in the price in re- fined oil from twenty-five to seven cents is wholly the result of im- provements cheapening the process of refining ? A. Not wholly due to that, no, sir. Q. You know that the product of crude oil in 1870 was not a quarter of what it is to-day, do you not ? G62 A. No, I don’t know what the proportions are ; I should think very likely that in 1870 the relation of consumption to production was about the same as now. By Senator Browning : Q. Is the amount of crude oil produced in 1870 or from that time down to this a matter of record ? A. I presume so. Q. Where ? A. I have no-doubt but what it is; may be it is here; I have not it and never have seen it. By Mr. Chittenden : Q. Was not the product of crude petroleum in 1870, four millions four hundred and eleven thousand and sixteen barrels ? A. I cannot say, Q. And was not the same product in 1880 twenty-five million eight hundred and five thousand three hundred and sixty- three barrels ? A. I can’t say. Q. According to your recollection is not that about the proportion? A. It may seem strange that I am not able to be at all precise, but ever since I arrived at man’s estate I cannot remember statistics, but I know if I am buying at eight and one-half and selling at eight and three- fourths I am ahead. Q. You say that the charges on oil from the oil fields are about sixty cents a barrel ? A. I say it cost us sixty cents a barrel. Q. What do you pay for transportation ? A. Sixty cents. Q. What do you pay the United Pipe Line for transporting? A. Twenty cents a barrel. Q. Do they bring it from the oil fields to New York for that ? A. No, sir ; they bring it to Olean on one line, and I think to Kane on the Pensylvania road. Q. What I want to get at is the actual cost, the actual price paid per barrel in large quantities for transporting petroleum from the oil fields to the refineries here ? A. Sixty cents is about the average price. (2- As to this Standard Trust, that is created by an agreement in writing, is it? A. Yes, sir. Q. Have you possession of that writing? 663 A. I have, at my office. Q. Will you furnish the committee with a copy of it ? A. No, sir. Q. You could if you chose to ? A. I suppose so, unless some one prevented me. By Senator Browning : Q. Are you the custodian of that agreement ? A. No, I cannot say I am. Q. Whoever is the custodian of that agreement is he subject to orders from the Board or any one else as to the production of that report ? A. I suppose he would he. Mr. Chittenden — I have to say to the committee that there is no use in my atempting to examine either Mr. Brewster or Mr. Rocka- feller if they pui’sue the course of Mr. Flagler. Adjourned to Friday, December 29, 1882, at ten o’clock, A. M. Benjamin Brewster, being duly sworn, was then interrogated and testified as follows : By Senator Boyd : Q. Where do you reside ? A. In New York city. Q- What is your business ? A. I am vice-president of the National Transit Company, which controls the United Pipe Line and also Trunk Pipe Lines, piping oil. Q. How long have you been such officer ? A. Since something over a year. Q. Are you familiar with the business of the Standard Oil Company ? A. I am, to a very considerable extent. Q. You among other gentlemen appear before this committee for tiie purpose of making a statement; what is it your desire to state ? A. It seemed to me it would be interesting to this committee be- cause, as I conceive, a misapprehensibn exists regarding the operations of the Standard Oil Company, to know something of its operations practically ; I am more particularly in charge of the storage and piping of oil ; to begin at the beginning, this oil territory is covered by a district something less than 100 miles square, and out of that grows the fact which exists of one company practically controlling the business — I speak now of the United Pipe Line — because it is done better,it is done cheaper and it is for the benefit of the great mass of producers ; the LTnited Pipe Lines are connected with more than 20,000 wells; they 064 have their tankage Ininched at different points of sliiprnent; tlie oil is taken from the various i)roducing districts and thrown out to these hunches of tankage ; as you are aware, tlie amount of oil in store has steadily increased from September, 1877, when the total reserved stock in the United Pipe Line was something less than a million and a ludf of barrels, until at the close of November the gross stocks were 31 000 barrels; now as showing something of the magnitude of this busi- ness, the stocks in 1881 increased 8,500,000 barrels; that necessitated the building of store-houses to care for that amount of oil ; I will say that a farm of 100 acres accommodates eighteen tanks — an aveiage level farm of 100 acres ; that seems like a great deal, but we locale these tanks, we dig ditches around them and build ridges so that in the evenr, of a tank being struck by lightning, we with our artillery, which we keep at all bunches of tankage, perforate the tanks below the oil line and ir runs out through those holes and we are able to confine it to a single tank; a fair price perhaps for tankage would be thirty cents a barrel ; conse- quently there was required for plants in 1881 something over two million and a half of dollars for store houses — additional store-houses — saying nothing of the additional pipe, pumps and all the machinery required to handle this oil; in 1882, up to the close of November, the stock had increased 8,000,000 of barrels, so that taking Uecember into con- sideration, 1882 wdll require an addition of two millions and a half of dollars to build these extra store-houses. Of course, to do that, you require a strong company, because if these store-houses are not produced the oil goes upon the ground at the cost of the producer. Now, in these producing regions, whld-catting if you please, is going on constantly, which means men are at the front sinking wells and seeking new develop- ments. When a new district is discovered the producer puts up local tankage — well-tankage as it is termed — enough to accommodate his well perhaps three or four days, perhaps a week ; but he at that mo- ment is perfectly helpless except for some Pipe Line, some storage company, to relieve him of his oil, because a barrel of oil simply means forty-two gallons of oil in bulk. Now for him to undertake to deliver that oil anywhere, to find packages, or even to deliver it in bulk from these remote distriets because this oil is found like other minerals in the midst of dense forests and wild regions, he says to the United Pipe Line,‘^ I wuint you to connect with my well.’’ We run a pipe to his tank. He says, I want to run my oil to-morrov/.” We send a gauger who measures the oil, ho opens the faucet and lets it run and tluMi it is treated ])recisely as money. It is Jones’ well number , district , dated , 379y^(j^ barrels of oil. Now Ihe mo- ment that that oil comes into the custody of the United Pipe Lines from GG5 that moment it is the oil of commerce marketable on all the Exchanires and available to him as money. And here I think you will se^^ the advantages in this district of having one strong compciny on whom every producer can rely, to take care of this oil, as if you district this into three, five or a dozen companies, one company supplies only a certain district and relieves only a certain district. Consequently the market for that oil is limited. That was found to be the difficulty in old times when there was seven different companies. I want oil but I want oil in company B, because that delivers it where I want it and your oil is in C, and therefore I cannot take it. Now when this be- comes one consolidated company, the United Pipe Lines, it delivers oil wherever the customer requires that oil at any of its points of de- livery. Tt jouts the humblest producer in the most remote and inac- cessible district on a precise equality with the man who produces his oil adjacent, if you please, to a railway station. Q. That is the benefit of the Pipe Line system ? A. That is'the benefit of having one line to do this business. Now this company is incorporated under the laws of the State of Pennsyl- vania. Q. Which company is that ? A. The United Pipe Line. Q. You don’t speak of the Standard Oil Company ? A. No, but this is a Standard interest ; it is an adjunct of the Stand- ard, Perhaps I should not say adjunct of the Standard, but the Standard really control this jm’operty, and furnish the capital to take care of this production and really are the owners of this property. Q. But is the company a separate and distinct company from the Standard Oil Company ? A. A separate and distinct organization from the Standard Oil Company, incorporated by the State of Pennsylvania ; now the offi- cers of this company are compelled, under oath, on or before the tentli of each month to make a statement of their condition — to show where this oil is, how much there is of it, and what obligations are extant against that oil. In passing, I will say that the United Pipe Lines have bought, within five days, 450,000 barrels of oil to maintain its stocks ; when the cold weather comes in there is a shrinkage, and before we make our return this whole mass of oil is gauged, I will say for your information, every day, and we know that it is there. Q. You say the Pipe Line, in order to supply a certain demand, pur- chases so many barrels of oil ? A. No, sir; to preserve the integrity of this stock from shrinkage and for evaporation, from shrinkage from any source ; if you hold our certificate for a thousand barrels of oil, if you have a credit balance 84 in any amount of oil, we are responsible to you for that oil, except in cases of fire and tanks being struck by lightning, and that becomes a general average upon this whole mass so far as you are concerned ; the company loses the tank ; the oil becomes a general average upon the whole mass. Mr. Flagler (to the witness) — I can see very naturally where you have fallen into an error of expression, when you say that the United Pipe Line is an adjunct of the Standard Oil Company ; you will remember that the Standard Oil Company don’t own it at all: the Standard Oil Trust own the stock of the Standard Oil Company, and own most of the stock of the United Pipe Line, and own the stock of this company and that company ; the Standard Oil Company is merely one more, to be literal about it; people speak of the Standard Oil Com- pany as the great hydra-headed monster which represents every thing; that is not the fact ; there is a Standard Oil Company in this State, and in Ohio, Now Jersey and Pennsylvania, besides a number of other companies, and the stock of these companies to a greater or less extent is represented in the Standard Oil Trust. Senator Boyd — And the Pipe Line is owned by the Trust ? Mr. Flagler — Whatever interest is owned by the Trust ; it is not the entirety, however; it is a very large percentage of it. The Witness — Now I think you have before you, that here is one comprehensive scheme which takes this oil of the producer which pro- vides him with facilities for storing and running this oil, and which puts the small and large upon absolutely the same footing ; now I will go a step further and say here that the Standard Oil Company come in and their buyers are at the front every day in the year to buy credit balances, that is the amount of -these small pjurchases at the market rate all the time ; if you are a small producer in a remote dis- trict, at the nearest village you will find a Standard Oil buyer, and you take your ticket which represents a credit balance and he pays you the money for it at precisely the same rate that a man is selling 50,000 barrels for on the Exchange ; a better scheme for the protection of the producing interest, and a fairer scheme for all I can scarcely conceive; now the charge for storage, if you please, to the producer — his oil goes into the line and he is allowed thirty days’ free storage; in that thirty days, if he sell his oil, there is no charge ; no charge is made to the producer for the connections to his well ; after his thirty (lays’ free storage, then the storage costs him one cent and a quarter per barrel per month or fifteen cents per barrel per year ; when this oil is taken from the line by the manufacturer, whether it be the Stand- jird (fil Company’s or anybody else’s, a running charge of twenty cents GG7 per barrel is paid ; that is only when the oil leaves the possession of the line ; it may be ten days after they take it into the line, it may be ten years; for this whole 30,000,000 barrels taken into the line not one cent has been yet collected under this system; but this is not onerous upon the producer ; the producer puts his oil into the line and there is no charge, except if he chooses to hold it there for a better mar- ket, then ho pays the storage charges ; as I said before, the Standard Oil Company have their buyers at the front to take these balances at the market rate ; now we come next to the department which I repre- sent — the National Transit Company Trunk Line; there is a line running from the oil regions to New York, terminating at Bayonne; that line, part of the way, has three pipes capable of delivering an aggregate of 48,000 barrels per day; for the whole way it has t\vo pipes capable of delivering here 32,000 barrels per day, and at about each twenty-five or thirty miles we have pumping stations; these Trunk Pipes have exercised no right of eminent domain; they have bought their way, and paid their way, and when they have found a party who says, don’t want your pipe line,” they have made a detour and have found those who did want pipe lines, and have paid and come through ; now we go over the hills and through the valley paying no attention to the grades, but at the proper intervals we have these pumping stations and throw this oil to the sea-board, and those pulsations are going on day and night from one year’s end to the other ; now why do we do this, and who is benefited? We do it to reduce the cost, and when the cost is reduced, just so certain as the laws of gravitation operate, the consumer is benefited ; there are ephemeral and manipu- lative movements of the market, but when you reduce the cost of any given product, that benefit goes to the consumer, and the record of the Standard is without parallel in that respect. Q. In the record of the Standard. According to Mr. Flagler’s state- ment •— A. While these corporations are separate .and distinct, it is practi- cally one set of men who are handling this interest. Q. Then one set of men control all these oil companies referred to by Mr. Flagler, do they ? When you refer to the Standard, you mean what is called the Standard Trust, I suppose ? A. I use Standard in the general sense. Q. As applied to all? A. In the general sense. Q. You cannot blame the public if they use Standard in the same sense ? A. My dear sir, I want them to use it in thesame sense, because the Standard, instead of being a company to be held up to opprobrium 6G8 and has been, as its record shows, a public benefactor. You very pertinently said that this committee represent the people. They do not represent a faction ; they do not represent any disaffected refinery ; they represent the masses. Now whose light is petroleum ? It is the poor man’s light emphatically. You referred to the export of oil at four and three-eighths cents a gallon for refined oil alongside the ship here at New York. Now there is a large amount of that crude oil consumed in the country, but not as it is consumed abroad, because our people are better able to use better light, and we have to bring these low crude oils from the West, because the demand for high test oils — these high test oils in petroleum represent the cream in the milk. Now we have put this machinery to work and reduced the cost of these goods, and no man or set of men come to the Standard except to combine to put up prices ; never have they come to the Standard and said: ‘‘Let us lower prices.” Now I am speaking of these trunk pipe lines, and I say why do we do it ? Why do we put this money in ? In the first jdace oil was hauled out of the regions in packages on cars ; then in wooden tanks on platform cars ; then came various improve- ments in the way of tank cars, until now a very perfect tank car with a valve at the top to load, and a valve at the bottom with which to unload, is in use. Next comes the trunk pipe, which throws the oil from the producing regions to the sea. Originally these refineries were located in the interior. We found in the development of this business — I cannot give you the figures exactly, because 1 have not refreshed my mind, but perhaps eighty per cent of this oil is ex- ported. Q. Is that eighty per cent of all the oil produced ? A. Eighty per cent of all the oil consumed — the world’s con- sumption ; I should say seventy-five to eighty per cent is exported from this country. Now we have found that petroleum and its residu- ary products could be produced cheaper here, and therefore ■we have Vjrought the refiners to the sea-board. Now see what this Standard Oil Company have done for the port of New York. No other city has a pipe line to-day but New York. A tabulated list of exports shows that while in 1881 Philadelphia exported 2,000,000 ; Baltimore 302,000, and New York 6,500,000 of barrels, in 1882, Philadelphia instead of 2,000,000 exported 1,600,000; Baltimore in- stead of exporting 362,000, exported 228,000, and New York instead of 6,500,000 exported something more than 7,000,000 barrels. Now gentlemen the prime factor in that was the Standard Oil Company, liecause it can deliver these goods cheaper here than Philadelphia can deliver, or than Baltimore can deliver them. il- Ooes the Standard send any oil to Philadelphia or Baltimore ? ^ 669 A. The Standard has refineries at both places. When I speak of this I am using the word “ standard’’ in its general sense — standard in- terests. Q. Then you mean by producing this tabulated statement to show that instead of continuing to send large quantities from Philadelphia and Baltimore, they are decreasing the quantities shipped from there and increasing the quantities shipped from New York ? A. I mean to say that so far that has been the result ; that the facilities we have given the port of New York have made it the port of export. Q, Those facilities consist in the pipe lines ? A. Those facilities consist in the pipe lines sent to New York that we have the capacity to deliver the goods here cheaper. Mr. Flagler — I ask the chairman to ask the witness in regard to the production of oil in foreign countries. The Witness — I Av^as coming to that a little later, but I will bring out that point now. 1 want to say here, Mr. Chairman, that I am stating here simply what I believe to be the facts, but I may put them in a clumsy way and may omit a great many things. If I can present this case as it is entitled to be presented, you will be convinced that such is the fact regarding the working of this great interest — that it is a benefit to the people, and has given the people cheaper oil than could have been done from any divided control of this matter. Now the charge has been made that we were wasting the product of this country, that we sold oil too cheap abroad, that we could get double the price just as easy as to get what we do get. Now, gentlemen, that simply arises from the lack of knowledge of the situation. I want to call your attention to this fact, that the Standard Oil Company has a resident agent in the East Indies to protect the petroleum interest. Now every other exporter is benefited by that, for he is not there to protect any ’ particular brand but the petroleum interests of this country and to see that no unfriendly legislation is brought about there, and protect us in every way possible. We have a staff of foreign correspondents, be- cause Ave have a great capital invested in this business, and it behooves us to knoAV what the condition of the world is regarding the market. Now I say to you that the Eussian fields are very threatening to-day. That a railroad has been built, that American tank cars have been in- troduced, that a pipe line forty miles long has been established there, and it is only by these grinding processes that we shall be able to re- tain the trade of Western Europe ; already they are in Eastern Europe with their lubricating oils. Their oils are not as good, although we have reports from some fields that their burning oil is equal to ours, but the average is not equal to ours. T think that is the fact regard- ing that point, and the statistics will show that the price of oil has been steadily deci’easing in price, that the margin between the manu- facturing and selling prices has been steadily lessening, and gentle- men, from that, if you will excuse the expression, comes a great deal of this Damn the Standard now the policy of the Standard Oil Company — if its policy was as charged, it would not live a great while ; in my judgment the policy with which it is charged would be suicidal ; the policy by which it has lived is to grind a large grist and take a small toll, and when they forget that and take a large toll, th^y bring a hornet’s nest of opposition about their ears, which they suffer for; now the speculation of 187G was not the creation of the Stand- ard, but it has suffered from it ever since ; undue profits were realized and it multiplied the machinery in existence*; and now, gentlemen, I appeal to you if it is not common sense, if it does not protect this large property to work cheaper than anybody else can afford to work, and if we do that, the brother manufacturer may suffer, but the peo- ple are benefited; of course, it is impossible to cover this whole ground; I want to give the committee an idea of what the company is doing, and an idea of their policy, because I believe that this commit- tee are misinformed ; I believe that the public are misinformed ; now the Standard have made money ; in 1870, I went into the oil regions and the question was, will it do to invest capital in this enterprise ? Is it a permanent industry? Oil w^as $4.85 a barrel; I met a man there who had 100,000 barrels, and he said, it will be $10 a barrel in less than sixty days; these oil wells are giving out it bankrupted him of course, because he took the wrong tack ; the Standard Oil Company have never faltered ; they have had the courage of their convictions ; they have put their money into this industry; the}^ are producing oil, and doing their work cheaper than any rival organization can afford to do it, and that is their policy, and by that only will they survive; and I ask you whether that is common sense or nonsense, wlietlier it does not appeal to you that that is the true theory of this business. Now oil is unique. Its territory is covered within a 100 miles square. Wheat is produced everywhere ; corn is produced every- where ; cotton is produced in a great many districts so far this dis- trict is confined and it can be worked more economically by this machinei-y controlled in a few hands than it can by scattered and weak organizations. I think 1 have shown you that in the United Pipe Lines. Now if that isso, I repeat simply that the law of gravita- tion is n<;t any more certain to work than that the lower cost of pro- EEC > 'oJ ) ’c 1-5 a fc- CO <- c. ci 0 H 0 03 0 H 0 'A 0 d GO © a ?>:> i-H 1 6 C5 10 1 'i-S ^ >> © 0 . • ^ W ‘0 03 A rrt ^ iO iz; s 0 'tA 0 ^^ t-T'o 6 OC • A> cu c 0 -; ® ® ®5 ^ Uo © o3 +J Ah Ai 05 0 g H ‘3 J a c? n 0 d h5 -*^Vh GO C C~ ® « 0 © +J U tiO © cS ■*■> A- . to 0 w hA 6 tjh . 123 «<3 V5 ? §s • GO O'? 1 — <= 03 0 Ci tr- ■ y ^ r-i CO 1 1 H ©« ! 1 00 1 1 1 a . © © OD © m tx 33 P © M P P 0 P t- 0 r2 CD 123 '© £> M 05 «3 *o P 4i«M . GO r- ( C > C o-jg 2|c 0^ t.-- c 1 > Ph 1 s OxtlH CO s CO 0 CO CD iS 0 GO 0 1 1 GO 0 (m 05 »0 < CO 0 0 0 CO 0 1 1 Ct n «K CD CO ■S'” . O'? io CO 1 ‘~ > c 0 — ® «5 GO 05 C5 1 c ) 0 © 4J 1- ” Sfo © © 4H> P N 08 CD CC CD iO 0 “A > CD 0 i> 1 'Ct I '3 o' GO 05 “A ) u CO 05 CO > c^ CD 05 0 1 1 0 ) CQ I-H GO c3 "Ah 2 ^ AfS :l5S ^ C3 33 pH ^ STATEMENT Respecting Petroleum Exports — (Continued). Yearly Exports. i G84 Percent- age of total. 15.3 14.1 70.6 0 1 1877. Barrels. 986,799 905,162 4,539,278 6,431,239 CT O i- o Perce n age o total ci ao ci o Cl T-H o o 1-H lO Of Of CO CO 03 CO 03 O O l Of GO CO f> 03 O t> C3 ] CO 00 lO i> w 1 Of O GO O o O T- o o' ^ ° QJ «3 CO tH iO o -tH GO CO f> 03 O t- til lo 03 CO GO 0. t- O i>- b. to Of L'- eS CO »0 lO ca Of £- CO t- P CO CO 03 O ^ o ^ c3 Ph CO o O CO Of Of 00 '3H O CO o T-^ tn Of 00 Of 00 . o Of lo lO t- 1-0 lO 00 a O T-( lO Of r-i Of CO CO 00 o Percen age o total. O tH o o o CO 'Oi Of 1-0 cc CO )0 CO lO rZ 'S i' Of 1-0 tH CO crT 03 t- iO 00 CO 1 o Of 1 H cJ O Pm Philadelpb Ualtiniore . New York Totals c o O 5> Percent- age 0 £ total. 1882. Barrels. Percent- age of total. Of O 00 CO T}i Of Of t- ' 100.0 o8 CO O 1C CO C3 lO O 'If -2 T-<_pO u GO CO Of O t' CO a Of CO C3 1C PQ Of CO C3 1 o , GO J> o' ® fS+J ^ i> o c5 CO Of M' T-l 22 CC'rf y-, CO J2 CO CO 1-1 uf o* GO i> O ■rf o" Of c3 O Of CO o PP t-7 CO 1 . Tji GO GO 1 o I’ercen age o total Of 1C T-I Of £- 1 ^ 00 CO l-C S T-' i> O C3 tZ 1— Of GO CO O CO C3 Of 'cT CO o C3 i> -If 1C 1 i> « ■>-• 1C 1 1 00 GO o C-;2 CO — ■ — ■ 2 |o ^ eg -4^ Of 1-1 30 o 00 CO o CO CO CO o 00 CO CO 1-1 o C3 © CO CO ic)i' o O 1C t- CO cC 1C o CO i-T 'ch co" .:=! 03 ® pupq^ Cases are included in above statistics, and are estimated at five to the barrel. 685 •>:> . « .O o ^■'1 II cs ■ai 'Ko se O {z; W <1 H TJI ^ o g § ?s ^ o CC- ^ >D O CO %, CO < ca ^ £■§ O':D?>00 00?>i-HO0ac0-+^2>C0C0>0C0'^C0?0Ci>Oai:-T— iC<<»OCOOCOOCO'+lOCa ^>^^^oa^^lO'^^'^?o^caoo— 'Or-'-F'rticaic-+?^jo OaT-/OJ>'TtH'r^iOaTtiCvJ-^i>-GOiODGt-i>*0;OCO'^CO ‘t-OT^COT— i-HcoOO'^^OOO^CaOO o' cT <> cT o' c^ cT ccT od' ccT oc' S <£ ca' C^?-HCOCaOOi'^'^OT-('^?0^: fiOOOi— lOC'^'Tv? rHO £-OOi>-OOOi>C-i.'-t-COOT-H^ CO OrHCa cs rs r^ «^ __i _ _J I I C2 T— I CO »0 O ca O i'- GO O O O O? *0 t- C- CO — CO COOaa-^OCOiOi— ICOrH'i^O^'^'^O'cnOiOOi^OO O m t- 0) «M § 03 — O O o lO CO >0 -f --f O r-< 00 — < ca O? -r< CO CO GO 'Tt^ CO X) t-OO'^OC^Oa’^OOOOOOOOO'^Oi— It-OiCO lOO^Cai— I'Tf'C^OCOrHCOCOO^COCOOCCO^^i— ICDCO ao 1“ Os OCOOO»OCO^^^-COOO^OCO^^-f(^^COl.OO?r^Ca'^^ OOacOT—?c^'0?COi—(- 'Cvf'rtliOOCOOOCaOOaOT— I t— It— lOO^r— T— , O^irHCa i>*COCr jO'rjH'cO'iHOCOTHCaOOa(X)T— IOO'^^CO<>'?>*iO ooooO'Tt^co?>T— I'^coT-iOixco'^cowOo^ic-io CO'T^O»OCO'0?00?^'COO?GOCOOCO^O^CaO?COCa (0??>G*OcOT— ica2>r— I T— IIOCOOCO^I— ICOCO'-Ht'-»OiOGV^COCarHOOO'TtH ,2 o cocooco^oH^^?>-?>o?craiO'^t^oocacai— lo^io oO(0?coco^T— (aaocoioiococraoDi^co«>o?aDo COOOOi^i^J^t-CaOT— ICaCOOCOO*OGv?'^COOi— I ;- O ^?>.coco?oiooiOt— icoocat— I t— iooiOt>-ioJ>> T— i3>i0C0'^G-Ca(0iC0O OCOOCOi— IOO t-ioOt— l(0?C:aT-iCOOCaOCO-:HCOT— I Tticoa)coGO?>»ocacO’^cacoG:acocv?coaaiOGO'T^T-i OCO?>r- ICvJCOOOKOCOJ>(0?^i>CO'^'>;HuOGO'^'^CO CacOT— l^>CO■(O^CO^>^'Ttl^^^-lO»iOOOO^lO^>-■rl^r-( -iHOOCOCO'tHiOt-iOKOOOGOT— IO iOJ>-COOt— ^cr)00'X)iooo?>a)';H^coocaooi>-io2:^?:- 1—1 T— ( 1—1 O^ T— ^ O^ O^ T— I 1—1 T— I tH TH?C-C0i-I0ciacac•c<^oc:al0^>l0^^-^:^coooc0(^^ca^^cal01— lo J^J^O^C^iC-GOOT-HiOJC-'^i^-OCOCaOCOO^OjC-O GiocaocoJ:^ 00 O*' t-T ^ rn' C^'' r-T cd' o' -fT od' ?> <:Gr T-iOOGOOO?>OOiOCOiOiO'^OiOCO»OiOOOCOOCa GOOTt^^'r^^C^^COCD^>•OCOOO(^?^)OCOC01— IGOGOOO T— It— lT-lT-lrHi— I t— I rHlOJCOCOCO-^'^'^^^'^COCOCO Oi>*c^OCOQOCraocococoocococococ^oaaoO ?>QO^iOCOOCaOCO'^COO?>'£^0?:^T— ICOODCOCO O'tHiOt— I-+ICOT— IGOOCO fJ^CO'^t^OOiOQOOiOO COCOiO''^'TtlOJ>-T— IC^?>'T:^H^OC:arHOOOOOOCO'T^ 03 a S2 S-* ?^O^T— It— l?>-COOaCOiO?C-£-GOOOOO':O^COCO?>*QOCacOiOOO(0 ?T— IC00<0??0i000i0^i0i0co<:0i0i0(0?J>-i0C0T-i0acDG0^c*i000T*H^ca coo^o-coo^o^oocaiOT-^coo^i-ioaT-icoT-iJxoiO OOCOCOiOCOG^aa,-4^<0?0?C^COCaiOxOCOG^£^0 T— icocO'^ooJ>-cO'^<:oioocococa'Oi >QOiO'Ti^OOO '—It— It — It— It— It — It— It— IC^COCOCO'^'^'^'^'^' d^'^'^'^ • o o • : : =5 £3 ^oO 03 :5 7r, £=a.,=3 CQ he I § s S o o :-r3J3c^oO03^"5^£ia4^=3— ^scr'oOQ3 00 00 STATEMENT — {Continued). G8fi 1— ( oo ?> C^^OD ZO CO rJH CO iO ZD O'-ftSt^-tllCrHlOrHCSCVCCO^XCOOQO O 0> lO O CO -+l O? *— I r-t Ci Ci (X £- 'O? o CiO^CO«>COOrHT-(— CV CO ».0 T— I -T r-^ c; O^ CV C5 r-J CO Ci to CO 0'rfO£-*OOiCOCiOXrHT— (0£-OCO 'oT ccT hh' to cc to oP CO r-T oT to ' lo' co o^T— iovotOGyiOOC i<0 £- Ct- 1- O — ' to O JO o CO CO >0 to CO X -r o> O^ -1 Ci x' -t" W to o o o? w 2 C.O '5® C5JOi>»tOT— (OrHT— ii— (tOCti-^H'-tlCtir— It-T— (Cl'^OtOXO-^ tH C5 T— I £-- CO C5 O rH O 0>« 0< O CO CO CO Ci O^ ^ £ - O^ c: i.O 1.0 1— I CO CO CO ?> O 1— I O? JO i> '-H CO OD to to CO Cl -fH CO to »0 o X Ci X 2>C^tOTHO^O^Cit-J'^T-l-t(C10V r-T O? JC^ Cl O^r r-T cT jC^ Cl Cl t-COOi— tCOJOCOClOt-ClJOCO C-ODtOXi-JOJ^XClOClCOCl r—i T— I rH T— I T— I T— I 1— H r— ( tH r—l t—I t— I t— ( t— ' t— t i— < rH y—t i-H Oi i— ' ’-H i— ( ^>•^>•C<^Cl'^^OT— lOCOJOi— I CO t-* — ' 1—1 JO JO OV} to o.< to 0?C0J0C0J0(0iOt0G0i>Cl r-T JC^ CcT cT QO (oT '-in' t-T tcT o COJOtO?>-COCO£>-T— (Cl'-iHO c^?ococo-+^-t^■-H^^-tototo m 0) X X £- o? o -H £- JO o JO o? cn X £- CO rH Cl Cl o X f- o *o 1—1 o X tH o -f rf o JO X Cl o? o X X o IH 1— o? CO o X cc Q a O X X o hH -f X JO o o? X £- o? Cl JO X o? r-J CO o -+ o JO rH X o re? o? X rH o o iH JO JO iH JO ZD o o? -H CO X o Cl '3 JO^ £- o -f X -f X o o o tH X ‘o' of cf iH cf o" rH jo" o? X o? ro? -f X t- o X CO o o JO o? Cl Cl X JO X CO Cl o 'f o X o X IH i>- rf -H o o X o o? -t' X rf to Cl rH o? o Uh U of of of co'' CO CO of of of of of of cf cf cf 'cf 'x'' x" CO cf CO -f -f oS CO to CO CO r-t CO O OD CO -if '-f' of -r O^ ZD JO O? Cl CO CO JO rH (Oi o CO to rH JO -f O JO O? £>• O? OD JO Cl JO O? -rH T— I cT (of I-T erf C/D JO r^> -X X OD Cl CO JO i- £'- CO O JO C. CO O JO C. JO O T-i-fJO-fCOtOOXO^X X Cl i- O f X -f of O^ 0> 0:j CO CO CO CO CO OOXtO-HtOO^r-J-fCOJO-fCO O JO X X Cl CO ct? CO c. Cl 1— I O^ X X-ft^C^XiOXi-HOiCOrHCOXO? of jcf o' (of rH o' 1 -f jrf jcf ?>r GO co' erf CO Oi— l-foco 0> CO X-HXr-i ClOi-fOXXCOXr-iOCVrrOC. JO O X X o c JO o CO X o o •O £- Cl Cl 'jo'' of CO — H Cl CO X JO rH JO X o rH JO ?r- X erf nf i:- O O X o o T-J Jl- JO CO -H O X -f of o Cl Cl o o X X o -f Cl Oi r-H JO O O lO COOX-rOOr-HX-T HHOO-fOCOXXX Cl X o JO o X O' jc: X CO X'fOClXHrfOCOO^-Tirc^i>. i^-fClir-XCOiOOXJOOJO cr-f'cfco'rf cfcrfo'o'cfjo'od' COOO£-JOXOXCOO>i-hO HHXO:? 0 ?X£-JOO^OiOXO -f ' -f' j 6' irf jcf o' t^ t^ o' tif t^r aT cTcT cT rf of erf x'' -f" jjrf O Cl JO CO O? X Cl X -f X ■?> £- -f o o o O O 1— 1 O X Cl O-^ JO JO £- XXClOClOJXi— 1X0 ?> Cl ?>- O'? £- JO JO CO X OXClJOClJOCl-fOCl O iC O Cl -f O'? X X CO O? i—T O rf Jff CO O?' U'f cf Xi>*CirH^C0<0?O0?Cl '-H-Hi— IO?XXCOXXO? o CO ‘O O CO C O X r-i jO CO r-H X O Cl CO T—I o JO O? £^ JO O X T-l t-H X O X CO r-^ o ?- X ^ O? rf -fC-1— lOXJOClX-fXClXOX OJOJOJOt— iJOl— i-f-fClXXO?r-J Co''f'jo'ofrH'c/f'rf£fjrfofof ^^I-T OClClO^JOXJOt-t-OXCl-fO XO?0?XXCO'fHt^'fHi^XXCOX 1-1 JO r-l -t 'f T— I ?> O? t-h O CO -ti 0^0^ cf JO JO X JO O £- £- O x' JO*' O X JO X X JO JO rf CO o? -H O X X X X o o Cl o o o o o o o X X X £- X X Cl o JO o X o? o' r-f X o JO £- O O X Cl X o rH -f r-f of JO o O X X o o X -f -f £- O? £- JO i-H O o? o o jrf T-f CO X £- 1-H O X o? i-H -f JOJOlOtDo'otCtOtC>0^^-f^XXOOT-^O^r^?X'r^l'fJO OO£-OXXOJ0£> JOi>i>00?OXJOO rfXrHOXtOiO-i— IX JO?>‘£-rHOt?csji>.OJO xot-o^tet-xxt- of of o' o"' O*' of cf tif Cl ooox-f— -0?J0O OXO?Oi:-OOOX c o r;; C5 O ^ lx Ph r-O -H ^ blD M c ^ S c: o o S £ fl r-i o f-i 1-. r-H H > O rt r- c ^ ^ 0.0 a? 687 tHCOt— l(^?COCC!lO?>CO^^>O^COCOOOCO^O^— (J>,— ICOO (OC^r- lT-IC£5(X)OGOCCGy'-tl^i— ICO 00 ?>• iO Ci 00 00 -+^ ^ O? GO iO T— I CO 'X) o? »o >o o :o T— I'^'OiC-OOTtl^-HiOiOOO-HCiJOCr. wT-(Ci-+r-i)— ICO i-^-COC-CO'^OGOO^OiOOCCJr-ICOOOi^COir-COOiTH t-T r-T Co' CcT Co' Co' CcT cT Cr CO 00 r-H -X) »0 -H O 1 — I O O iO O -H O >C OD Cl C5 00 cv CO iO Cl i:- 1 — I 1 — I CO lO O Cl CO t- CO o CO CO i-'- C. GO L- OO r-l OCOCJlCOOOOOOCli—COOOOCOODOCOCl^ClClOiOO iO'^COCl2>-r-iuOCOCOCOCOO(CVClCOCOCO0 00 »0 CO ‘C CV GO lO O -hi CO CO CO T-I O^T-lT— lcOOO'-t^^>XlOOO^^CllO(^^'^COCO^;^COOlOCOl— ICl lO C- GO CO »0 00 O GO O^ CO J>- lO O rH O CO o O >C' Cl COCOO^O^OOQOCie^COO^CO 10^0^»0»OC1C1C1COC1C10 t-(0?O?G0t COOQCOOClOOOCOO-HCO^ClJ-COCOt^ 00 00'0?rH0?C0C0O0^'^C10VClOC0T— ICO-^iOi— liOCOCl ^-^O'Oi>"iOC^CO^-COC^rHr-iO^CO iO'^0'^^0'COT-!ClCOOOClOC-t^Cl^>XC10aoC^COCCCO X?r-T-H'^XOCOOO?i>*CO«>-(0?i>-0?’-'OX^Xil-0»0 oo?ci oco'^T— io?ocoxt— loxxonxcic-ic-T—ioco oo''rfi'':d'?^c^ocrt^cd'r-^.*d'cii>-cd'x^o'or'-+'cd'od'o^o'cc^cc\ iO X O Cl ^ O *0 CO X O? -+ CO Ol ^ CO CO X X X X £- O^ X (OiClCl'-'XClO'^OiO— C0C0J>-i02>C0i0£^?>r-^0^ '^■rtH^iO»0>OCOCOCOCOCOOiOiOOOiOiOiOXiOCOiO 1 — I iO O O ro lO r~ CO X lO e- -C'- X O X O? — O X O? X XX'^G^^^^t-C^?’-HT-('Tt^^^:^ClXt^-OXCOXCll-^-+lO X'rhlO?)(0'^X?>XXO^t'-X*-OOXOXCOiOOOi-T^ XClCOXO?O?CVJOXX»OX'^<01COX0-XX'trO?XXX?:^ G9' cT cT ccd od x*' o' CO*' otT aT od ^ cT ccT oT -oT -t" cd' (oT i-OvJCl'^OXO'^'OJOOT-IXClCOCOCOiXXClO^XO^ O O X^ CO t- r-^ O?^ CO^ CO^ Cl^ CO (O? O O X(0??>- r-T o^ cd' x*' ^ 'd' to' o' o' CO 'oT i> ocT cT cT o" — ' ov od x" ted — I,— Ir— irH — I — — — ' 0 > 0 > 0 ^ 0 v> 0 ^( 0 ?' 0 ? Cl lOVO OXXXXCOCO-rXX X CO ^ OV .-O' CO' o XX?>-XXCO^T—lr-liOO?Xi^-^ClX’-^Cl'iOOGV*COi> XXO?CltOiOXC9COX^iOOCO^--HOOXXCOiO?> —lcot-'0?XXiOCOOO'-Hcoi:^?:-XOXi^-X'^X';iH?^- COXr-iX'^OV<>-?>-Xi>C^COO^r-iO'-H^X'^'0?iOtO'^0 o' cfd o' cd' o' 1 — r cid ^ cd *d' ^ id' CO*' CO co*' ‘o' td' d cr co*' XCOtO'^X^Oi'-OXXiOXXi'-O^tOCOOviO^ClOO Cl Cl o O Cl CO^GC? COCl'^lOO'ct^Cl^^-tOXClCOXlO'rt^O icd CO*' od cd cd o r-T — r d' od od' co" cd' x* d id' co" co td go ci o" r-T — <— ^T— 1' — i — 0?0>0? O? O^ O^ O? 0> O? O? O'? OQ O'? O'? O'? OC? X X X Cl X X lO 'Tti CO X X X Cl CO ‘O X O? CO O X O'? to X Cl-i^T-i'XOX'ClXThrtlOCltoXXClXCOO'?COOOCl XCO'^0 X— ioo?coT-HO^X'-hixo-^co — loxiccico^^cn COCOX^CO^':tlCO’^0?ClX^OO'?i— it-X'^COCOO-i:^XCl XX'^iOCO?>-i>-XObXt-Xt-XXClT-iXCOX-+ClX ?> ^ X X O? — Cl — X — O'? CO X c; O'? X X X Cl d? X to -rh tO CO c: CO X o? o? X O'? X tO ?>- *o CO i> CO st- lO CO O'? X ’-1 O O —I O? O'? -H X 0- Cl X0O?COXi>-0 X to to X O T— 1 O X Cl CO Cl o' — d od od cd X d d io" co" X X o rH — H — ^ 1-H O? o? O? O'? O? O'? d? d? O'? o? O? O'? o? c> O? X CO CO CO I The aboye figures are in barrels of forty-two gallons each. Yearly and Monthly Statistics of Petroleum, 1876-1882. 688 c tie tn ■4J VH c o O? -H t-m t- CO lO »0 CO ?>• ^ - CO CO *0 CO o o o o CO ci 'ey CO c. CO CO i- O CO Ci CO CO CO »o i- Cooioocoeyiooococii-Ho cocoeyoocoioi— io'?oo^oco >o to ey CO CO ^ -H ^ t< o ^ ^ oO'^Hcoeycoo^cocyoO'^oi Coeycociocs-Hcooococo (OiCOOOO-rtHiD-t-OOtOi^COCO rH to O? cy 'Of CO CO T— I t- '-H CO to to to to ^ co-Hr-icyto-fcoc-.—'t'-ot- OiO’^-HCOCO— '?>«?Ot-COO oDi^-'ct^eyc5coco(^fatooey — Hoococ 5 rHcoocoo?ey Gvfevfey'Of'cycO'ctHtoioto-tico o-toooeyi— liO-tio-hGO^io coGycococoi-iOT-it-coi>-'Of ocei-rtio— 'COCOCiO-— 'tOCO «\c\«N#\«s#Nrs«srsr\rs»\ -HtOCOOOCOiOCOCO— * — cx> t^f^GycO'-t^'+'CO'+‘iO'':t^-+^ 1 -H GOOfi— ir-i-tHCXiOOiiOCiCiCO ■‘'<^1 '-ttcoO'cHcycoT— looO'-Hoo ooioofi-HCOt^cocO'-rcioH^ ^coc^ococ:rcrooa)'co''crGO ^ > c-O2>OC0C- Jr-iOt^cOCOOiOfCiO'-tiOCO OCOtOCOOCOOCOCiCiOO OOt^OCOCOt-T-ICOt-iOT-H COf:^f>»GOCOQOGOOCOCOg:^CO O— I-Hi— lOO— 'OfOCOrH^'^ COt-OfOf'ct^COf^^T— I— icocoto COCOOCOOOtiOOOOCOiC-O 2>Of£>'?>'OCO’— lr-i?>.OJ>*0 --OcococoioojD^;>coj^^cofr^ £-Or-,C 0 CJ 0 f'^OOO?:-C 0 i>-X''cHCO^COOfOOOOOCi Ci'cjHcOrHOfOf'^Of'chlCOCOO lOCOOOr-HCO'-i^'rjHOOfCOO'^ -f'';tH'r^iOiOiOiOCOCOCOCOCO COOi>>C 5 COCOOfOr-t''=fO(X)OCOGOOf -HO—iOfOSO^COtOCOrJ^i^ cO'Oi'^'riHcO'O'ro*'^'^'^ CO Or-iCOOCOiOiO'^OfOOt^-O I— iaooooioco£'-Ciof'^'?fO o — cO'^'^coa)cot-tos>'CO COC?iOOfiiO^-OOOC:iOiryDO OfOfCOCOCOCOCO’O'COCOCO'^ COCOiOiOCOOf'^lOCOOfi— (CO ^t-oofot.aiOC 50 GOcoc :5 icoofos'^csioooco COCOCOCO'^^'^COt-OOt-COQO cyofofofofofofofofof of of ca . ^ p: Of 5 ^ I a| bb >>§3-1,1 " S o tlD 2 ST ATISTIOS — ( Continued). 689 8 c0'^as>oo?>ioc«0'^t<>ci>C^rHQ0?>i>CO'^ I— ( rH 05iOC'i»OOCiO;cOCO lO ce o§ CO O^COO'^OCOt— (C'^OCC (Cl O-O i;-- t- 00 cc CQ Ci O CO CO t-nOOiO^— I'T^COCO'^'^-fiO csT O o? m T—iO oocoi — I'-rcoO'rv-^'-r oo •^■^OOCOrHt— i—H'rfiOOO'rjH coo^'^'^'-0?>-c;t— icocoio'o T— lOOCO »o 05 c OOCCOOOt— lOiCOCO'chiOiO'CO y^ — * y^ u CC^OOOi:- o CiOOiO-Tt^CSCO-^COOOOCO o ^o^THCocoi.--cor-oocn)0 oo ?: COC^-+l'rt?>t^i>?>GO ■ CO © O^OOGOO^rHOOOlOiOCiCS o i>- c: »C 1 — 1 »0 lO lO CO o CO C5OC0»0 00'>ctl^T— l»0»0i>cc oo CO c. oc^^T-Hoooo^co^coeo^O'^ OO -r+l CO 1— 1 ^ O CO CO iO lO o o c:coo?c: oO(0?J:-ocococo*c^-rH^'^ x 1 VNr\r\rNrN#\#NeNa\»s#s*v o t'- cocoo'^co^coc^i-^ocio-^ lO g rH i-HCOCOCOiO^O^-OT-l^'^t- (Cl COCSCOCO'chCOOrHCiiOiO'^ Cl Q o>o?cocococococoo?o?GS?o? c-co»ococicoi— lo^O'^coir- »o 0) ?^-0?0— iOC O0?00iOt-Ht— ICOCO rHOO^CO o •tO 0?CO^COOO^£'*OC^rHOO^ cT 00 1—1 t-OC^O'TjHcO'^OO}— cGO^ »o 2 CO CO i-- cc O 00 1(0 T— 1 O '-H T-i lO cocccococo'^c(tl(^:)(^:)co(^:)co (^0 1 o oooooooooooo O ; oooooooooooo CO CO lOCOO^COOOiOOOCOOOiCO 00 CO o Q csoc:—'OiOo^iO(X)—>»o?> o 1— (coo?coiO)-Ocorr(cococo(X) (D ® COCOOOCOOOOOOOO (Cl ' U OCiOOOOOO'OOOO o c/jj o CO cooco*ocoQO'^cccoait-'riH o 00 GOCv^CiO^OOCOiOOCOir^i-HO ^1— ICO(^tiCOCCrHO^O? OO^COCOtHOt— ICOOO'^O- o 5 § OiT^OOCOCOCOt— .OO ir-OD o o (j0r-i0(r^oo?>-<05coco?^coc0>CO'-t^COCO-"'^'^CO CO r ^-^OOOC5(X)O(3iC0(^^^^-+l o 0 CO'ctH-+l^O^QOOOCOO?QOO? g o c- o? o? ’-I ^ c: o o lO ?>. 00 i2 Cl) ODOCCCO^T— lO tHt— I (C^ - .« t^O?:^00T-(^r-io-C0G9C0rr o f — ^ CCiO»OiOCOOOOOC t> t:- OvflOOCO(35'd^<>'0?>-<>-CC^ «>• D 'I 00 o '-H Cl (^:) 'O cc I CO t-h CO 1 — Ir— J — i ^ X) ro CC CC O? lO c: :c >0 uo t- t- CO lO O c • CV' O "-0 lO Cl o CO' O *+ T—t Cl O? CO lO "f rH X ? — o? -H oei-o^ioxcicoiO'OOHhiO tH 2 ( lO^O^COO?-)— ICOlO? o? > Exclusive of stock at wells and at the different refineries, which I estimate at 1,000,000 barrels. 690 1882. • «•••••••• • -+lOQO'+QO«-Cii— lCOOCi'7^ T-^ CO locooco-faii^t-^^o-f f H GO CO '^'-t^O-t^’rHfOCOCO-tiiOO-T' CO 'T' »o T— ( ^COOCX)CJ'^^»0»OOCi-+iT—l JO d >c 3 a .^f -+--HCOCO£^COCOi>iOOOT— ( <35 O »OaDiO<-Ht-OQOGOCO-80Ci O JO 1- coro'^'^cococ«c^'3^cococo CO r^ '-tl • G9'^'^«:-»OOGOO^»OCOOO»0 00 -H 0rH0?>0'^aD'^t-00'+ O# 35 g C'iCCCOCOCO(7^C^Gv.C0 CO o GO CO O CO £- C- CO *o c:? o? CsfCOCOCOO^G^O^Oi'^COCOCC CC' CO s CO 5i s g 1 : ‘ 1 m ■ OCO'^iOO'+iOCOO^O?iOGO O? T-l • OiOt^OiOO'^COO'— ICOO JO o? , Q 1 C^Sv?!OiCO^COCOCOCOCOCO'^ GO CO HH H CZ2 1— i CO C-* OiOiOT— ( t— It— it^t^OCOCiO? CO <35 • . '^i:^OiO-rtTCOCOiOCOi>-'0?0 35 <1 O^O^CO'^'^COCOCOCOCOCOCO T— 1 CO H GO cr. o?GOQOOt:^?>-0'^i>ooo O CO o C" COCOCOGCw5G'OS>0? O CO T— It— IC • t- rti CO i.'- T— 1 O CO O 0> O CO GO CO i-I CviOiOiO^CO'^COCOCO'^COCO O CO CO 1 I o . bo ! I !!*.!!!!!. - • • o • > Month. Jiuuiary . . February . March . . . . April Mav June July August . . September October . . November December • C3 • to. . — 1 s ° hS C9i s *‘i'^'rt^s>‘iOZDQOl-^CO(Ji tHCCO'^C0'^tHC^<»0(7^OQ0 lOOOOOOOrHOco^c;?:'- 1 — I r-( CO i.'“ CO O CO - o" ^ ^ CO ^ G^i C-02Q0i>-£^C-OC0O OiOOCO-rHCOiOOO?T-(L-7-l CQCOi^OSi^i— tOOC^?J>COCOiO OCiuOrHJ>-OOT— It— fCOt^QO OOCO»OOOOOGOCOt-iOCl CVOiT— I t— lT-( T— iCy'TiHCOCOCO O'-nOCOi'-G^OiO^^COCOO ^»OrHJr JHOiOOCOOCTiT— I lO CO CO O? O T— I T— I T— I #s#srv*\#s»Nrsrscsrs»N»N ^J>^00t— ICOO rH'OJOilOlO Oi>-iOOOO'^OOC^O(^^C:' 0?tHi— It— It-Ht— It— lOiCO'T^COO? Oi o i.- Oi O QO 00 cT 2> CO GO (O? o^r GV O GO O G^^ zo cCOT-HO?>COQO G^i— I t— I 1— lG^^^':I1CO•'^ i oc:i.ocG;G OtO?>'00?>''^iOG<>COCOG COO':CiOG<}?OOOOiOOCOt— I G^GG9C:> OOG^CiCOOSGviOOOOCjOOiiOOO '::*H05J>G^i>iOCOOOOO'-HO -fG CO CO G^ G^G-CC>G5£>-OGC0Oi>'^G0G5?:- T— It— I T— IG-GiOO OOOOTjlt-CGOCGCOOOOO?:- COCO'^'^'^^COCO'^O'-^-^ Ot— lJ>-0'^?>-T— IGiGSO-^T— ICC O GO 00 'Tf T— I CO O OO G5 00 O t-H CO lO i^O^G'i>-i>-COOO COO?OCOCOQO'^— liOGi'rt^'^ G^CO'Oi’Oi'T±'COGv;GyO^O-G-o?>-cooooocoooo^ COCOCO-rtlCOG0 Xi ^ — 1 < - © O C5 OO i.- Ci cr^ OD GO Ci DD 05 X s: o rH o s 00 1-H >OlX rtlrf — 1-t M|-il x|x T-<|X -I|IM Mj^ >-l-t »£; X|M]-.il «:lx lOrHiO^OCO^OOt-OOT-iiOCO CO © r-irH05GOC5C'0:ocOio2>coo £r o O 1—1 O Oi H? 1 s rH|l^ Mhf r-jx MlrJI »clx m|-- I -'3 ® rH O 05 CO i.-- ic- io- i-'- CO Oi O? 7'i 05 W) T— ( i—H rH T— 1 £ 1 ^ M|Xi-|(MM|'*t-.|W 1M|X Mi'-ll Mit)I M]-^ T-jMm'aO -43 (OlC^COiO-rrOCOCOCOOOiO 2H cO © r^^or^<^i^^^ococJ2^-accoo O o rH rH rH rH T— t 1— 1 tH 1-3 s -43 MHt-lofr-lrilMl-jt n|TjlTH|TllMlXlolXrihilM|XT-|N CO O iH CO >C) O to -r *0 -0> rft 0< o © •COOOiHlOrtiOiOOCOCOrHO CO tHtHi — iT-HrHrHrHr- 1 rnrH hH I-lMHXnl-H MlrJIM|Xt-|XrH|rjlMlrJH-iXT-|C»rH|X r-lX -fi — CO— 'OCO-rHrH — GOtOtroO CO CO © rHO?COCOOOC^O^C s M|rH>OiX ^-iWiaiX T-«lXr-T#M|X Hx ® OCO<0 000?C?OOCOrHrtl to 1 ?:-r-.— JCOirfCOCOiC-iOCOO^CO - o COCOiOiOiO^O^O^O^O^O^JO^rH o? s 1 4o M|-<#TH|r)4 rrlNMlX HH r,-^ M,r(l mHi rrjs* 1-H 4^ 00 rH O O Oi CO O T-1 rr CO CO 0>{ © rtHCOC5-Oitr<05rHO?OC500 CO s io'?o?coo?coco o> j2 u2 =-o 00 M'lrjl m;X MItJI MH mjX nl-^l M|rj< r.|fi^ 'O O X' Hi O '-0 CO O to O O O CO O^ © rHrHrHrHCO-HrttOOiOiiHO? 05 Tt (7?OiO?O^r-(0?O?rtlrtlc0C0rtl o? s 00- : : :»s|s| • 0 ) o a> S ±r' tJO' O CD - o s-i jh s: ww > o ^ l2 ^ oT ^ i? o t • Highest and Lowest Prices of Refined Petroleum in New York. 603 Lowest . «••••••••••• • •••••••••• • ••••••••••• • •••••••• • oo Highest. s Lowest. Ml-rjt rH|®»«5|cOf|00 CV5|->frt|'Me-lCO>C5|»lHlTjH CC O ?> i- i> 00 i:- i- £- C- u:|ao is|oOi-i|.^ CiCiOSQOOOCOOOt-OOir-t-i:^ X o CO Lowest, j T-i|M>o|00lfs|00i-i|®*KlXt-tXI IrtlXCOloOCCSlTjH £- £- £'■ t- £- Ci 00 O t-H Ci Oi T— 1 r|-i CO rH CO 0) Tt Hoo lr-|oo ?r|Tl(i-|(NrH[.^eolooir|!»-i|Tj' OCOOi>-£-£-OOOi-H'^?^0 rH rH t— ( rH rH rH m|30 05 S Lowest, j H'^Mh >nl30r|aoicix«:Ix cv;|»T-i|aor|» wloo ■'XOC5000C)000f5|00 Vi\V> rj^ XlH C0|CC r |-}4 — (|!M Hoo C^C;C:'OXX£'-CO£-£-Xob dpj CO Lowest. t-loo ICSlOO ^33 TH'T^.-'rHrHrHOOCiCSCiX rH tH rH rH rH rH rH rH r'^M o rH QO Highest »0|C30 M|tih — |H mIh -iIm -r ICM Hh i^l X t*i » -iIh (^^(^£C^^rrrHr^r^rrOCiOO rH rH — H rH rH rH rH rH rH T-ico Lowest. M|H M|t}( r-Iw t-|oo n]Xi-ii(N »£5loo a5|-<^ t*|°° OiOr+lrtlcOCOCOCQCCCO'r£Ch|c .1 -+l-+iiOiOr+iioC'-OX>OCOO? rH rH rH rH rH rH rH <0? (O? OS OS CO eojao O OS Month, January February Marcli April May June .H'ly ■ i^ugust September October November December Monthly average. 694 2q V CLj ^ cc 50 CO Cli i 1882. QOOOO?>-*OC:>(X)0'ctH(>?i-(»0 CO O O ■t- CO CO CO 'O CC >0 cn C5 i- CO CO »0 CO *0 T—I 00 -ti *0 lO »> §8 OCO?>-CiGOO?-+iCOCOO’-Ht>» tH lO O CO ers -ft iQ »0 CO it- »0 o CO O t- t- o CO O 0-? iO lO -t" '-f Ov* I-H 1 — f — - . — i - — • r— < GO t- O? ?- 0> 0> QO CO O CO i- w — i t- OJ < - r: — ^ .Q O O/ CO rH OOOOO^T-tOOT-ICCiCnrt^'TjHCOt- OO oo t-OCOCOOO'ODOT-HrHGOCC C5 rH t— lC5t-0^:-0^'rt^^>OCOO^^> 05 COO?THOiO?CO^iOOCOiOOi CO »s»N rs^vNCN^ rvr\^r\ rs r-H t-H t-H t-H •-H »— J rH r— * rH lOCOCOiOCi-fOOOOOO o rHG0OCr:)O-HOOOOOO o t-OCi-Hr-HOOOOOtO riocr5ic o> (O^Gvit^OCClO'. »OCO>Ot-HCOO rH GOt-OCOt-OOOO^COCOCrtCO o ■ .s rN r^ .N »v r rH rH —1 y~* t-H rH T— COiOCOO^'T^COCOt-OiOOO o lO >0 'Tf O? O? C5 CO lO CO aO rH o C5 CO T— It-GOiHCOrHiO'Of-tlOMiO^ t- rHrHr-OTHrHCOCOnC5(0}C5CG,ir:) CD lOiHCOCOOt-COGSO^rHrHO rH rH rH rH CO iOO?COOiOO:?OC5iO^O?CO o Ci-fCscoo^oe-cyj-hci'HOi iOCOt-HCOO(0?^00?OOtHJ>- £- CO ooo^^-^-lOOcocoHHn^o HtlCOOOCOQOOO-HOCOrHCrsO iO'^cohH^oc5000c;c^ rH rH t-H £- 1 oooooocTiOOooiO o OOOOOOOOOOOJHO Ci o OOOOOOCJiO'OO'^O o? CO OOOHi^rtlOO'-HCOGOiOCi'Ttt CD O^ GO t- lO oo iO CO >.0 iO CO *o lO •0'^C0C0C0'^i0£-C0t-Oi0 o oooooooooooo o oooooooooooo o iO OOOOOOO — O'COOO 00 tr- ee OO-^COCOOOCOxOiOOtH o? lO iH 1—1 iH >0 C5 O cr- O Ci O^i rH COlOiOOCOt-CrSTHrHOCOiH rH rH rH oo • • •»•••••••• <» r~»j a >-, U o CQ t»-i iin a ® s OJ CD 1 C95 Production is taken from Pipe Line Runs, which will prove correct in the long run, but may mislead temporarily. The stocks at wells have been reduced during last year about 1,500,000 barrels, which accounts partially for the large runs of 1881. Six principal European ports comprise Bremen, Antwerp, Hambift’g, Rotterdam, Amsterdam and Stettin. The above tables show, in the figures of the past year, some very important and interesting facts: The 'production which Avas believed at the beginning of last year to be at its height continued to increase until July, but has undoubtedly in the mainfield — Bradford — been decreasing since, Avhile the newly found Eastern district — Allegany county — has during this period about made up Bradford’s loss. Whether it will do so much longer is very much doubted, as my best information states, that the Eastern field cannot produce much more than the present production of about 10,000 to 11,000 barrels, and furthermore, that in all probabilities it will soon share the fate of all previous fields, that is, to decrease, if too much, and Avild drilling is going on, as this must exhaust any territory This is also the case in Bradford, Avhere the decrease Avould be much larger except for the heaA^y torpedoing of a great manyAvells last year. The consuniption all over the world has been increasing so enormously that our exports exceeded those of last year over fifty per cent. Taking into consideration, that in some parts of the far East, petroleum has only been introduced the last few years, it is fairly to be expected that the steady increase of the last fifteen years will continue. Should this be the case and the yearly increase only amount to ten or fifteen per cent, it requires only a moderate decrease in the production to change the condition of our article completely, and to do aAvay Avith the con- tinuous increase of stocks. Oil bought at present prices of about eighty cents will cost, after a year, about $1.05, and after tAvo years, about $1.25, including all charges storage and interest, etc., etc. ; and as there is to-day no cheaper article offered for investment or speculation, I can only advise buying oil, as long as the present dull and depressing conditions last. When a general change has taken place and is shoAvn openly, it will be too late to benefit by it. New York, Januar'y 16, 1882. Respectfully, NIC. MEHLEN, 23 William Street. United Certificate, 81-J. Decernher 29, 1882. Benjamin Brewster recalled : Mr. Dodd also appears as counsel for Mr. Brewster. By Mr. Chittenden : Q. In your testimony the other day the following inquiries were put and answered : Q. That is the benefit of the pipe line system ? A. That is the benefit of having one line to do this business ; now this company is incorporated under the laws of the State of Pennsyl- van ia. Q. Which company is that ?' A. The United Pipe Line. ‘‘Q You do not speak of the Standard Oil Company? A. No, this is a Standard interest ; it is an adjunct of the Stand- ard interest ; perhaps 1 ought not to say adjunct to the Standard, but the Standard really control this property and furnish the capital to take care of this production and really are the owners of this prop erty.” Now to what corporation did you refer in that testimony, what was its name ? A. When I spoke of the Standard, I spoke of the Standard in its general public sense ; there are a great many of these matters that are’ called Standard, but I referred to the United Pipe Line’s corporation. Q, Is there a corporation called the. United Pipe Line’s Company? A. United Pipe lanes, not Pipe Line’s Company; UnitedPipe Lines I think is the corporation. Q. Where is that company incorporated ’ A. Pennsylvania. Q. When was it incorporated? A. I think in 1876 or 1877 ; I may be wrong. Q. Are you an officer of that company ? A. I am not. Q. What is its capital ? A. I cannot state that. Q. Your liest impression ? A. I cannot state it. il. Is it ten millions of dollars ? A. I decline to give an impression. Wliat])ipe lines does that company own or control, from what phu^e to whiit place do they extend ? A. Itownsand controls the tankage containing thirty millions of barrels of oil in round numbers ; the small pipes leading to the twenty thousand wells with which it is connected and the pipes leading to 697 certain delivery points where this tankage bundled as I explained in jiny testimony the other day — Glean; and I am unable to give all the points. Q. Give the extreme points to whieh it runs eastward in the diree- tion of the sea-board. A. My impression is that Glean is the eastern point, but I am not certain ; but it is all within a hundred miles square of the oil territory. Q. Does it substantially control what you call the tankage in the oil territory ? A. It owns a very great majority of the tankage there. Substantially all of it? A. I have made my answer. Q. Is that all the answer you can give? A. That is my description of it ; it owns a very great majority of the tankage there but not all of it by any means. Q. Assuming that Glean is the eastern terriiinus, how is the oil transported from that point east t0 the sea-board ? A. By rail and by pipes at the option of the shipper. Q. By what pipes? A. The National Transit Company’s pipes. Q. And they run from Glean where ? A. Bayonne. Q. Gn New York bay ? , A. Gn the N^w York bay or Jersey coast ; in New Jersey. Q. Is the National Transit Company a corporation ? A. It is. Q. Where organized ? A. In Pennsylvania. A. It has a charter. A. Yes, sir ; obtained from the Legislature. Q. When? A. I am unable to give the date ; it is an old charter. Q. Well, how old, fifteen years r A. It may be and it may not be more than ten, I don’t know. Q. Was it a charter expressing that it was for the construction of pipe lines for conveying oil ? A. That I don’t know. Q. Have you a copy of that charter ? A. I have not. Q. Have you a copy in your office in this city ? A. I presume there is one. Q. Will you furnish it to the committee ? A. I decline. Q. Where is the principal place of business of that corporation ? 88 698 A. Perhaps New York ; it has aline running to Cleveland, a line to Pittsburgh, a line to Buffalo, and a line to Milton on the line to Philadelphia; each one of those lines does its business and the Bayonne business ; the official accounts are kept in New York Q. Where is the office at which the principal pecuniary affairs of that company are transacted ? A. What do you mean by pecuniary affairs ? Q. Its business ? A. There is more business done in New York, because this is the largest — the delivery at New Jersey is the largest delivery. Q. Who is the president of that company? A. Clement A. Griscom. Q. Where does he reside ? A. Philadelphia. Q. Engaged in any business there ? A. He is. Q. Is he engaged in business in New York ? A. He is connected with the Bed Star Line. Q. How many directors has the company? . It has six. Q. Give their names ? A. I decline. Q. Why? A. Because it is not relevant to the subject under consideration, and for the general reasons which I assigned here that were stricken out Q. How many of those directors live in New York? A. I decline to answer. Q. Are you a director ? A. I am ; I live in New York. Q. Are you the vice-president ? A. I am. Q. Who is the managing superintendent of the business of that company ? A, The general manager is D. O’Day. Q. Who has the general control of the business of that company, the superior officer ? A. Perhaps I do as much as any one. Q. Wliere does Mr. O’Day live ? A. His liome is at Buffalo; he is on the different lines the greater portion of the time. Q. Is he a director ? A. 1 decline to state. (2- Wliat is the capital of tliat company? A. !!!:io,0()0,oo(). 699 Q. All paid in ? A. All paid in. Q. How ? A. Lawfully paid in. Q. In money ? A. I decline to state. Q. Wasn’t it all issued for property ? A. I decline to state. Q. Were you an original subscriber to any of the stock? A. I decline to state. Q. Do you hold any stock now ? A. I decline to state. Q. How did you pay for your stock ? A. I decline to state, as being neither pertinent or relevant to the object of this committee. Q. Do you know how much of that stock is held by the Standard Trust ? A. I decline to state. Q. Do you decline to state whether you know that fact or not ? . A. I don’t know. Q. Do you not know that more than a majority is ? A. I decline to answer. Q. Do you not know that the Standard Trust controls that cor poration ? A. I know it does not. Q. Does it own a majority of the stock ? A. It does not. Q. Do you know who owns the stock in that company ? A. I decline to answer. Q. How long have you been vice-president of that company? A. Perhaps a year. Q. Has it made dividends since you were vice-president ? A. I decline to answer. Q. Are you an officer of the Standard Oil Company ? A. I am not. Q, Do you know that the Standard Oil Company was organized in this city in the month of August last ? A. I do. Q. Did you sign those articles of incorporation ? A. I think I did ; and here let me ask if you term a director an officer. Q. I rather think I do ? A. I beg your pardon ; I had in my mind as officers, the president,, Vice-ptesident and secretary, but I am a director of that company. 1 700 Q. You are a director in the Standard Oil Company of New York, are you not ? A. I think so. Q. Are you a director in any of these other Standard Oil Companies of Pennsylvania, New Jersey or Ohio ? A. No, sir. Q. What was the capital of the Standard Oil Company of New York ? A. I decline to state. Q. Was it not $5,000,000? A. I have declined to state. Q. Do you know how it was paid in? A. I decline to state. Q. Do you not know that half of it was paid in in property ? A. I decline to state. Q. Did you not make oath to the certificate that half of it was paid in, in property? A. I decline to state on the ground of irrelevancy. Q. Was not the other half of that declared by its certificate to be intended to be issued for the purpose of other refineries ? A. I decline to state ; if that is so, the certificate will show it. Q. Are you a stockholder in the Standard Trust ? A. I decline to state. Q. Do you know what the capital of the Standard Trust is ? A. I decline to state. Q. Does the Standard Trust issue certificates of stock ? A. I decline to state. Q. Have you not got in your possession certificates of stock issued by the Standard Trust ? A. I decline to state. Q. Do you not know in those certificates its capital is stated at $70,000,000? A. I decline to answer. Q. What was the purpose of organizing this Standard Oil Company of New York, in August last ? A. I decline to answer, as irrelevant and not pertinent to the busi- ness of tliis committee. Q. In your testimony the other day you spoke of the aggressive policy of the Standard Oil Company; what did you mean by that ? A. 1 mean the vigorous policy — that it creates business; that it sends its agents to tlic Eastern world, to Europe, and develops a market for this ])roduct. (2- Did tliat include tlie absorption of other refineries ? 701 A. That includes the absorption of other refineries, if that is in the line of developing this business. Q. Do you not know that it has been the steady, aggressive policy of this company, ever since you have known any thing about it, to absorb and obtain control of other refineries ? ^ A. I know that if a refiner wants to sell his business he comes to us, and if his terms are agreeable we buy it, the same as any other parties in the business would buy it ; no other way. Q. And as a preparation for that you endeavor to prevent ms making a profit in this business, don’t you ? A. We do not. Q. How long have you been connected with the Standard Oil Com- pany in any way ? A. I have been a stockholder since 1870 ; since the formation of the company ? Q. Have you been an officer all that time ? A. No, sir. Q. In what capacity have you been connected with the company ? A. I said as a stockholder. Q. How many refineries were there running in 1870, when this com- pany was organized ? A. I have no knowledge on that subject ; it was not my business in 1870, and my general impression would be that of any man not in the oil business. I had no knowledge of any value on that subject. Q. Do you not know that since it was organized it has absorbed and become possessed of the control of more than fifty such refineries ? A. I do not. Q. I understood you to state, the other day, that there were a num- ber of refineries now running with which the Standard was not con- nected ; did you so state ? A. I state so now. Q. How many in this State ? A. I don’t know. Q. Do you know of one ? A. I do. . Q. Yv^here is that ? A. I decline to locate it. Q. Do you know of two ? A. I do. Q. Where are the two ? A. I decline to locate them. Q. Do you know of any such refineries in any other State ? A. I do. Q. How many ? A. I decline to state definitely ; I think there are thirty or forty, or more. 1 702 Q. Where is one of them located ? A. I decline to name any one of them. Q. What percentage of the annual product of petroleum is pur- chased and handled by the Standard Oil Company and the various concerns which it controls? A. A very large proportion ; I am unable to give the exact percent- age. Q. Ninety per cent of it ? A. My impression would be not as much as that ; I should think perhaps eighty per cent, but I could not say that positively. Q. Does not the Standard Oil Company substantially control the market for refined oils. A. The Standard Oil Company makes its prices, and other refiners make their prices. The Standard Oil Company does not control the market for refined oil. Q. Does it not substantially control the market of refined oil for exporting to all other countries in the world ? A. The Standard Oil Company has great weight in the making of prices, but that it controls it is not true. Q. You do not think it does ? A. I do not. Q. In any respect? A. I say it has very great weight ; it has influence, and influence developed to a certain extent is control. ^ Q. You spoke about agents and correspondents which this Standard Oil Company had to watch things in all parts of the world ; where has it such agents ? A. It has one in the East Indies, one of its clerks who travels about from point to point, and has opened several of the Eastern ports to cargo business. Q. Tell us where they are ? A. Then it has its correspondents in nearly all the important foreign markets. Q. Well, has it agents in Australia ? A. No. Q. lias it correspondents there? A. No, I think not. C^. It don’t trade with Australia then ? A. It sells goods to Australia. (,|. Where else is this large army you spoke about, where are they located ? 703 A.. If you will find large army in my testimony — Q. Well, large number ? A. If you will find large number I will have it stricken out. Q. Do you mean to say you did not state the other day that this company had a very large number of agents and correspondents in all parts of the world ? A. I don’t think that was my language. Q. Well, did you not so state in substance ? A. I stated that it had its correspondents and it spent a very con- siderable sum of money. Q. I want to know where this concern has got any foreign agents or correspondents ? A. I have stated before, in nearly all the important markets. Q. Name them ? A. I decline to do that ; I decline to state who they are. Q. You are not asked to state who they are ? A. I anticipated a little; I thought that would be the next ques- tion and I could“save time. Q. You are asked to state the markets? A. That I decline, and rest on my general statement. Q. Can you state such markets ? A. I cannot. Q. Is the business of exporting petroleum to foreign countries by the Standard Oil Company divided up into departments ? A. No, sir. Q. There is no such arrangement, is there, that one set of men had charge of the business, for example in the East Indies, and another in Eussia, and another in Ireland, and another in Germany ? A. No, sir. Q. You mentioned the other day that a running charge of twenty cents a barrel was paid on oil ; what is that charge for ; from what place to what place ? A. I explained that^ in my testimony and I will again explain it if you desire; the United Pipe Lines connect with the well tankage, that is to say, the tankage built by the producers; it may be a longer or a shorter distance ; for that they make no charge; the oil is taken from fhe wells into the line, which means into this mass of 30,000,000 bar- rels; the oil is made subject to a charge on its delivery to a purchaser from the line of twenty cents a barrel, which the purchaser pays on the delivery of the oil to him, and that consideration is for making these connections at the well, for pumping it a longer or a shorter distance, and for waiting, as you see it may be for one year, it may be 1 y 704 ten years, for the jiay ; that is to say these 30,000,000 barrels of oil, which has been five years accumulating, has paid nothing for its con- nections to the well. By Senator Boyd : Q. The charge is twenty cents per barrel from the wells to the tankage ? A. To the delivery point, wherever it may be. By Mr. Chittenden- : Q. What I want to get at is whether that is the charge for transporting oil through these pipe lines from the wells to New York t A. No, sir ; that is a separate corporation that is doing that business. Q. Well, what is this twenty cents a barrel paid for ? A. It is for making the connections with these wells ; it is for send- ing our gauger there and gauging it, and receiving it, and loading it, and transporting it to the point of delivery, wherever it may be, one of a dozen. Q. Y^ou say this is for transferring it to the point of delivery, where- ever that may be ? A. I say it is for all these considerations. Q. Suppose the point of' delivery is New York ? A. The line does not extend to New York. Q. Suppose it is Bayonne ? A. It does not extend to Bayonne. Q. Where does it extend ? A. I explained that the limit of that is within this hundred miles square ; it is a storage company ; here are these 20,000 wells producing oil, and men are going into the woods and finding new districts^ and wherever they go, unless some pipe line comes, they are perfectly helpless. Q. Then you mean that this charge is for transporting the oil from the wells to the tanks, do you ? A. I mean that this charge is for what I said it was, for making these connections ; it is for taking the oil from the wells to the tank- age and waiting for tlie money until the oil is delivered to the pur- chaser who takes it from the line ; it covers all these considerations. Q. It does not cover any transportation from the tanks to any other point ? A. I wish to correct myself ; it may include a very considerable transportation to some ])oint of delivery and it may not — some point of delivery witliin this hundred miles radius. C^. Now, that is the cluirge when the oil has got into the tank ? 705 A. No, sir ; when the oil is delivered from the tank and goes out of the line. Q. That is the charge ? A. Yes, sir. Q. What is the charge for storage ? A. To the purchaser, thirty days free ; then one and one-fourth' cents per barrel per month. Q. What is the charge for transportation ? A. Are you referring to this company now ? That is all that com- pany does. Q. I want to get, if I can, the cost of bringing oil from the oil wells to Bayonne ? A. The charge to the wells in New Jersey including the terminal charge is about forty cents. Q. What is the terminal charge ? A. That is for the use of the dock, and I think, five cents a barrel. Q. Well, do you store it at Bayonne ? A. No, at Bayonne, but we have tankage at Communipaw if the shipper desires. Q. What is the charge for storage there ? A. That I don’t know. Q. What is the charge for taking it from Bayonne to Communipaw? A. It does not go from Bayonne to Communipaw ; if it is destined for Bayonne, it goes to Bayonne, and if it is destined for Communi- paw, it goes to Communipaw. Q. Now please tell me the cost to a person having no connection with the Standard Oil Company of transporting his oil by the use of these lines from his wells to a place on New York bay where he can ship it ? A. Precisely the same so far as I know. Q. What will it be altogether ? A. Whatever these figures foot up ; that is the charge to any party Q. I want you to put them together and give me the aggregate amount ? A. Well, it is about sixty cents. Q. Well, is it sixty cents now, or is it more or less ? A. I am not up in this transportation, but my impression is sixty cents. Q. You are all the while making contracts for the transportation of oil over this National Transit Line ? A. All the time transporting oil. Q. And making contracts ? A. I want to sav as to this National Transit Company and this pipe 89 70G line, that they are scarcely completed ; they are scarcely in full run- ning order. Q. Have you carried any oil from Clean, or whatever the place is to one of these shipping ports ? A. Yes, sir. Q. What have been your charges on that oil ? A. I am unable to state that. My impression is that that would be done in this way, that a party would say, What will you deliver rue oil for at a certain point” — Q. There are owners in the oil fields producing oil that are con- nected with the Standard Oil Company, or these pipe lines, are there not ? A. Yes, sir. Q. Now, suppose such an owner has got the quantity of oil in the tanks for which he has got to pay twenty cents a barrel, what will it cost him now, as the rates of transportation are to-day, to bring an equal number of barrels of oil to some point on New York bay . where he can ship it ? A. The same as it cost the Standard Oil interest. Q. What does it cost the Standard Oil interest ? A. I say sixty cents. Q. What is oil worth to-day ? A. Well, that depends upon the particular moment you look at the ticker ; it is pretty lively to-day or was before I left down town ; it is about 88 to 90 cents. By Senator Browning : Q. What is that for? A. United Pipe Line certificates; that is to say, oil in the custody of the pipe line ; now to get it you have got to add twenty cents and forty cents to bring it to New York. Q. What does that represent, what quantity ? A. Forty-two gallons of oil in bulk. By Mr. Chittenden: Q. Then the actual value of oil here to-day is the eighty-eight cents ])lus the sixty cents, is it not? A. Yes, sir ; that is the actual cost. Q. Now, what are tlie rates of transportation by rail ? A. I imagine about the same; I can’t say positively, but I don’t im- agine they can get any more. How do tlie rates for transportation now compare with the rates of tr:insj)ortation a year ago ; arc they higher or lower? 707 A. I think they are lower, but I am not certain. Q. You used an expression something like this, that the Standard in 1881 ground through nineteen millions of barrels ; what did you mean by ‘‘ground through?” A. I mean to say it transported and refined that amount. Q. Do you know what the product was in 1881? A. I do not; I filed a statement here the other day of the United Pipe Lines which shows it approximately. Mr. Chairman, there is one thought that occurs to me ; the counsel asked me the rate of storage for oil; there is a considerable shrinkage and wastage of oil; there is an accumulation of sediment, just what it costs to carry oil, just what the loss is from these causes we do not quite know, but our best estimates are that it costs from four to five per cent to carry oil. We have bought within the last thirty days four hundred and fifty thousand barrels of oil. To preserve the in- tegrity of this stock before the tenth of every month, or on the tenth, we make affidavit as to this oil, where it is and that it is in our pos- session and also the obligations against it ; that is filed 'With the proper officer of-the State and also posted in our offices. We are constantly making examinations; in cold weather this oil shrinks and we lose. I bought something over half a million barrels of oil which is all paid for out of this storage charge. The committee adjourned subject to the call of the chairman. New York, December 16, 1882. The committee met pursuant to adjournment at the Metropolitan hotel. George Edward Moore, being duly sworn, was then interrogated and testified as follows: By Senator Botd: Q. What is your name? A. George Edward Moore is my name. Q. Where do you reside ? A. In Brooklyn, sir. Q. What is your business ? A. Cotton broker. Q. Where is your place of business ? A. 115 Pearl street. Q. Are a^ou a member of any firm? A. Yes, sir, Q. What is the name of your firm? 708 A. G. E. Moore & Co. Q. How long have you been in that business ? A. I have been in the cotton trade a little over eighteen years ; in the present firm about ten years. Q. Are you a member of the Cotton Exchange ? A. Yes, sir. Q. One of its officers? A. Yes, sir ; I am its secretary. Q. How long have you been secretary of the Cotton Exchange? A. This is my second year. ' Q. How long have you been a member of it ? A. I think about ten years, sir. Q. Your Exchange has requested permission to have certain of its members offer testimony before the members of this committee ? A. Yes, sir. Q. You are one of the gentlemen appointed by the Exchange ? A. Yes, sir. New Yokk Cotton Exchange, ) Neav York, .December 6, 1882. ) Hon. John G. Boyd, Chairman of Senate Committee, 88 and 90 Cen- ter Street, City : Dear Sir — I have the honor to inform you that by resolution passed 4th inst., by the board of managers of this Exchange, the secretary was instructed to communicate with Senate committee now taking testimony in regard to corners, future sales, etc., and to request that members of this Exchange be allowed the privilege of testifying. It was further resolved ithat the president (Mr. M. B. Fielding) ap- point a committee of ten members, with the addition of the president, to give testimony when called upon. Waiting your reply, I am, dear sir. Yours very respectfully, G- E. MOOEE, Secretary, Q. To lay the foundation for your statement, I will ask the usual .question embodied in the resolution, under which this committee was api)oiiited ; What is your opinion in reference to the whole system of making corners and dealing in futures, with reference to its influence upon commerce and its effect upon the public welfare ? A. Gentlemen, since your honorable committee first began to take testimony in tlie matter of future sales, corners, etc., I have watched, witli a great deal of care and attention, the nature of the evidence which lias been lirought before you, and it seems to me, after such careful perusal, that a great deal of such evidence has been given by men who either have no practical experience of such business, or by men who, pei'haps, at some time had, taken a try at making a fortune 709 without much work, and being unsuccessful, now looked on such busi- ness as “highly immoral.” Now, gentlemen, I propose, as a member and one of the officers of the New York Cotton Exchange, to bring before you a few facts in favor of buying and selling for future delivery, and to endeavor to show you how absolutely necessary such business has become to the cotton interests of this great country. In treating this subject I propose to divide it as follows : 1st, what first caused the selling of cotton for future delivery ; 2d, the various interests which such business now fosters and protects ; 3d, the gradual rise of this business, the im- mense development it has attained, and, lastly, a few remarks on speculation, corners, etc. And now as to my first division. Before the cable came into use, orders to bring cotton were sent from Europe by steamer, ^nd at that time there were usually not more than one to two steamers per week, and consequently the merchant had from three to six days in which to execute his order, and in which he knew it was impossible that such order could be countermanded, and consequently he could go through the market, examine the various lots offered and make his purchases of the lots best suited to his purposes and cheapest; but after the cable had been working for some time, the orders from abroad began to come in an entirely different form, namely: “We will give you so much for such a grade, provided you reply by cable in forty -eight hours;” then the time for executing the order got down to twenty-four hours, then to twelve hours, and finally to two hours, and sometimes even less. As soon as affairs got into this state, it became evident to the trade in New York that no buyer could execute these orders promptly enough by going around the market and examining the va- rious lots offered, but that some quick way of trading and covering these orders must be devised, and in answer to this necessity arose the cus- tom of trading for future delivery. At first these transactions were small and in a very crude form, calling for only one grade of cotton, and generally extending over not more than fifteen to thirty days, and sometimes, possibly, sixty days. At first the cotton actually bought on these contracts was shipped, but after a time, it being found that the selling of one particular grade resulted in a great many disputes, the contract was made so that any of five grades could be delivered on the basis of middling, addi- tions or deductions to be made according to the market value of the cotton actually delivered ; and as many times, the order was for some special grade and such contract would not exactly suit, the mer- chant made use of these contracts merely as a hedge to enable him to 710 execute his order promptly, then went into the market, found the lot that suited him perhaps after a week’s search, bought it and at the same time re-sold the contracts he had bought, thereby tilling his order for the grade required. These transactions for future delivery were at first carried on in the offices of the various brokers and on the street, but as the business became larger, it soon was evident to the trade that it would be better to have one room in which these transactions could be made, and in 1870 the New York Cotton Exchange was formed and a charter obtained from the Legislature of this State (I shall at present say nothing about the great work done by this insti- tution for the State of New York, as it will come more fully under another head), and thus the business for future delivery in cotton was fully inaugurated. And now for my second division, namely, the various interests which this business fosters and protects. I have shown you already how necessary this business has become tq the merchant executing orders for export, and it has since developed in a thousand ways in this direction, until I may safely say that the whole cotton business of Europe hinges on the prices of futures in the New York market, and the transactions which at first counted up only a few thousand bales now reach millions a year ; and this style of business is inter- woven into every branch of the cotton and cotton goods trade ; the American or East Indian buyer wants a Manchester manufacturer to supply him with a certain style of goods which he manufactures to be delivered next fall ; the manufacturer immediately goes to his broker and says, what will you sell me fiveh undred or one thousand bales of American cotton for, such as I use, to be delivered at such a time ; ” the broker has his dispatches from New York and knows within a few hun- dredths of alcent what he can buy at, and he names his price ; the manu- facturer accepts and sells his goods to the buyer, a cable is sent to New York to buy 500 or 1,000 bales for that particular month, a reply is re- ceived by cable and the whole transaction is closed ; the broker then writes by mail to his agent telling him the particular grade he wants, and instructing him to buy the 500 or 1,000 bales wherever he can get it cheapest, either at Galveston, New Orleans, Savannah, etc., and as soon as bought to close out the futures and render him a statement of the whole transaction. You can see from this one instance how this style of selling facilitates business, and enables various people to close legiti- mate transactions quickly. I could multiply instances like this by the thousand, and could show you how it permeates all branches of the cotton export trade and makes transactions possible without much, if any, risk of loss, in fact, furtliering legitimate trade. 'Die next branch of tlic Inisinessto wliich this future selling became 711 of use was the “commission trade;” before the commencement of this future business, the commission mercliant making advances on con- signments from the South had no way of protecting himself in case the market was declining except by selling the actual cotton in open market ; this could sometimes be done to arrive if he happened to have what are called ship samples sent from the South, but very often he would not have even these, and then he would have to wait until the cotton actually arrived, had gone into store and been sampled, and between the time of shipment and the time the cotton was ready for sale, the market might have gone down several cents, and he would have reclamations which he probably would never be able to collect ; 1 myself had an experience in this line, which has always impressed me fully, it was in the year 1807 I think ; the market oj)ened in September at about twenty-five cents and dropped by December to fifteen cents ; I was salesman for one of the largest commission houses then in this city; we were receiving large consignments every day and could hardly sell a bale ; we were getting dispatches from our cor- respondents begging us to sell their cotton and could not do it, and we saw large reclamations staring us in the face ; how different the story now ; if a merchant is doubtful about the market all he has to do is to step into the Exchange and in fifteen minutes he can at a difference of possibly 2-100 to 3-100 of a cent per pound close out his whole interest and feel happy and contented; thus you see future selling is a great safety valve to the commission business. Shortly after the war, the planter occupying the upland or northern belt of the cotton States woke up to the fact that he had to im23rove his mode of cultivation and use more manure to make cotton planting pay; this demand for manures of various sorts gave rise to a new branch of trade known as the guano or phosphate trade ; at first the planters bought agreeing to pay a certain price for same, as soon as that crop was gathered, but after a time the planters being unwilling to take the whole risk of the price of cotton for- six or eight months ahead, the form of the contract changed, and a dealer agreed to deliver to the planter as much guano as he needed and take in payment so many pounds of cotton for each ton of guano to be delivered by the planter in the following November and December; it then became necessary for^the guano dealer in order to prevent his having to specu- late for six or eight months on the price of cotton, perhaps on thou- sands of bales (as some of these concerns did a very large business), to find some way of disposing of his cotton for delivery in the follow- ing November and December, and thereby cover himself and make his transaction a legitimate one, and so he turned to New York and made 713 use of the futures of tlic New York Cottou Exchange, tlius covering himself, and the sales under this head have for several years ranged between 1,000,000 and 3,000,000 bales yearly, thus fostering and pro. tecting another great and necessary branch of the trade. And now, gentlemen, we come to our own spinning and manufactur- ing industry. Before the introduction of the future business a manufacturer was obliged to buy a large stock of actual cotton. If he had the money to pay for it himself, he lost the interest on it, and if not, he was obliged to borrow money at a high rate of interest to pay for it. These, together with the expense of storage, loss in weight, etc., ate up a large portion of his profit and obliged him in many instances to get advances at a ruinous rate on his goods to enable him to carry on his business, but now he can come to New York, and through his broker buy future contracts to cover his consumption for as many months as he may^ think best, by depositing a margin of $250 to $500, on each one hundred bales bought, thereby saving the interest, loss in weight, and expenses he would have had to lose had he bought actual cotton, and leaving him the bulk of his money on which to run his business ; and then as he wants the cotton he can instruct his broker to buy the grade he uses, and sell out a like amount of futures. By this means also a manufacturer can make a contract for his production six or twelve months ahead and at once cover this transaction and niake.it a regular, legitimate one without the slightest essence of speculation about it, and I can tell you this is being done more and more every year and is becoming a very important item in general business. I will say very little of how useful thisstyle of business is to the large planter, enabling him to obtain a remunerative price for this prospect- ive crop as soon as planted. I could go on and cite thousands of instances where this style of trading is of immense importance, but having shown you how neces- sary it has become to the exporter, the commission merchant, the guano trade and the manufacturing interest, I propose to have it there and not trouble you further. And now we come to the thirdjdivision of my argument, namely, the growth of this business and the benefits to New York. I stated in my opening that the New York Exchange was chartered in 1870. It commenced its business on September 1st, in that year, a little over eleven years ago. The by-laws and rules under which the business was at first commenced were very crude, but as cases have arisen, chaMges and additions have been made until now the contract em- braces in its delivery every merchantable grade, and we have books of by-IawH and imlcs which cover and provide for every case that can ])OHHibly arise. We have tribunals for the settlement of all difficultie 713 arising between members, and I have no hesitation in saying that we have a code of laws as perfect as human foresight can provide. With regard to the increase of business in the first twenty months, September, 1870, to May 31, 1872, the sales of futures were 5,000,000 bales ; for year ending May 31, 1873, 6,300,000 bales ; for year ending May 31, 1874, 6,000,000 bales ; for year ending May 31, 1875, 8,000,- 000 bales; for year ending May 31, 1876,8,000,000 bales; for year ending May 31, 1877, 10,000,000 bales; for year ending May 31, 1878, 12,500,000 bales ; for year ending May 31, 1879, 20,500,000 bales; for year ending May 31, 1880, 36,700,000 bales; for year ending May 31, 1881, 26,700,000 bales ; for year ending May 31, 1882, 32,700,000 bales. You will see from this that in eleven years the business has increased five fold. The adoption of this style of trading has enabled us to en- courage the shipment to New York of large quantities of actual cotton that would otherwise not come here- and we have handled in the last eleven years an average of a little over six hundred thousand bales per year. But this shows a very small portion of the business done in ac- tual cotton by New York merchants, as, by means of this hedging and covering by futures, they control the business on the bulk of the crop raised in this country, and all these transactions, futures, spots. South- ern purchases, etc., bring money to New York in the shape of com- missions and made it the center of the world for the cotton trade. And now we come to the last division of my subject, namely, specu- lation in corners, etc, I, of course, cannot deny that there is a good upal of sneculation in this business, but what business is free from speculation, and, when you come' down to the actual question, where does business end and speculation commence ? Is not all business more or less speculation ? When a dry goods man sends his agent to Europe to buy, does he not speculate on the chance of some particular style of goods being the fashion the next season and selling well ? Does not the, grocer, when he buys his stock of goods, speculate on the chance of customers coming to buy them at an advance, and, because he may have his stock in his store, is he less of a speculator than the man who contracts for its delivery at some future time ? Is not the builder who tenders for a contract a speculator for future delivery, for he cer. tainly has not the brick and stone and mortar, but expects to buy them at a price to, make a profit ? I tell you, gentlemen, this age of telegraphs and cables and quick communications between the various parts of the world has made this quick way of trading a necessity, and the idea that this is gambling, any more than any other business, is nothing but an old fogy notion worthy of fifty years ago, when .men, who were members of the British Parliament, and supposed to have 714 sense, got up and spoke against granting a charter to the first railway because it would frighten the cattle so that they would never get fat. The popular motto of this better half of the nineteenth century is ‘‘ Perfect freedom to trade in any form.” If a man makes a mistake, it is no one’s but his own fault, and he is i^unished enough by the money he loses. And so with regard to corners. It has become the custom of the newspapers and a great many people lately hold up to opprobrium any person who bought any of the great staples and insisted upon having it delivered to him when due. Now why, in the name of all conscience, should he be held up to scorn ? He has thought Avell of it, has contracted to receive it at a certain time, and when that time comes is willing to pay for it. AVhy should he be hooted any more than the grocer who buys his stock ? I tell you, gentlemen, he is not the one that is most in the wrong, but it* is the man who goes and sells other people’s property in which he has not an atom of inter- est and jirobably never will, but hopes by depressing it unlawfully to force the real owner to sell at a decline, and, when he fails to meet his contract, instead of acting like a man and admitting a fault in his judgment, becomes very righteous and commences to howl about the immorality of the business. I have no compassion for him but can only say, serves him right.” Thanking you for your kindness in listening to me I now close. Q. Are such transactions as you have referred to in the last part of your remarks frequent ? A. Which transactions ? Q. Persons selling ]3roperty which belongs to somebody else ? A. Very often they do, sir. Q. That you will understand is the evil we desire to remedy. This committee does not attack legitimate dealing in any way. Now are those transactions of frequent occurrence in the Cotton Exchange? A. Well, that I could not say, sir, because it is impossible to find out about these transactions. Q. Can they actually occur on the floor of the Cotton Exchange without the members knowing of it ? A. Well, tlie trouble is this: A man gets an order from north, south, east or west, to sell a thousand bales of cotton. That comes from his correspondent. lie does not know whether that man has the cotton, or whether he anticipates getting it from some planter in pa}^- iiieiit of debts or any thing like that ; so that it is an impossibility almost to find out and divide the regular from the irregular business. (2. Do the rules of the Cotton Exchange favor any such transac- tion ? I 715 A. No, sir, the rules of the ^Cotton 'Exchange are these ; the con- tract specifies that the seller shall deliver 45,000 pounds of cotton in grades running from ^‘strict ordinary” to “ fair,” which cover all the mer- chantable grades of cotton, and he is obliged to deliver that cotton or to get somebody else to deliver it for him, provided the buyer requests the delivery, which is always required in one form or another. There is only one way in which no delivery occurs, and that is, if A sells B a contract, subsequently B sells a similar contract to C, 0 to D, D to E, and then finally in some transaction on the floor D sells to A; that makes what is called a ring settlement, and the delivery order is sent from A through, and it comes back to him and the deliveries are made under that, although no cotton actually passes. Q. Are those sales conducted by the medium of certificates ? A. They are conducted by the medium of what are called transfer orders — orders on the warehouse or transferable notices. It is the shape of a notice that ‘^on such a day we will deliver to you 45,000 pounds in accordance with our contract of such a date.” The Cotton Exchange recognizes no settlement of diflereuces. Q. They do not ? A. No. Q. And you have no committee for that purpose ? A. No, sir. Q. You speak of the grading of the cotton. Willyou please explain how cotton is graded ? A. Well, there is quite a number of grades of cotton. The grad- ing commences at the grade of “ordinary,” which is not usually con- sidered a merchantable grade. It is a very low style of cotton and very irregular. It is called ordinary from its irregularity. It has sand in it and low cotton and is mixed. The lowest grade recognized is ordi- nary” cotton. This is not included in the contracts, because of its be- ing an irregular grade. The first grade recognized by a contract is that of “strict ordinary;” then comes “good ordinary,” then “strict good ordinary,” then “ low middling,” then ‘‘ strict low middling,” then “middling,” then “good middling,” then “ strict good middling,” then “middling fair,” and finally “fair,” which is the highest recog- nized grade. Then there are grades of stained, “good ordinary stained,” which is a mixed grade and is not recognized on the con- tract. It ranks the same as ordinary cotton, only that the cotton is stained. Then comes “strict good ordinary stained,” which is received on contracts; “low middling stained,” “middling stained.” The “ stained” does not run any higher than “middling.” Q. Are all .your transactions conducted by grade or by sample ? A. Well, there are two styles of business — one called the future 710 business, which is based on the grade of middling,” but allowing all these grades from ordinary” to ^^fair,” and from strict good ordi- nary stained ” to middling stained,” to he delivered at their relative values according to the daily quotations issued by the Exchange. For instance, if I sell you a a contract on the basis of middling ” and I deliver you low middling cotton on it, I have to accept for that day seven-sixteenths of a cent per pound less than the price in the con- tract; or if I deliver you “good middling” cotton which is a grade higher than middling,” 3 ^ou have to pay me one-quarter of a. cent per pound more than the contract price, and so on with the various grades above and below. Q. Do you deal in futures in your foreign transactions ? A. Very largely, sir. Tney have become a very necessary item in foreign transactions. Q. And you also adopt the system of dealing in futures in your pur- chases from planters ? A. Yes, sir. Q. These, you say, are necessary in order to facilitate the cotton trade ? A. Yes, sir, on account of the quick communication there is now. Q. These, then, you deem legitimate? A. Decidedly, sir. Q. As of course the members of this committee do. You are aware, however, that there are certain illegitimate transactions conducted by persons in the cotton business, are you not ? A. Well, I don’t know that I w’ould call them illegitimate. Now the cotton trade has been different from the grain trade. In the cotton trade since the Exchange has been started we have had five of what has been designated by the public as “ corners,” but these so-called corners liave not lasted more than fifteen or at the outside thirty days; and during the time of the existence of those corners the legitimate trade of the market could buy cotton at the regular market value — that is way below the pnce of the contracts for the particular month that was supposed to be cornered ; that is, that during the time of the existence of this fight between the men who were short and those who wore long of the market, I, as a broker, could fill any orders for 8])inning or for export at the regular legitimate price of cotton and it never affected the legitimate business. Q. It did not? A. No, sir, not during the existence of these corners, because the olijeet seemed to be to ])unisli the man who had sold this cotton at a low^r price* tlian tlie owners of it were Avilling to sell it. Q. How wen* those corners lu’ouglit about? 717 A. Well, I suppose the origin of them was that some parties think- ing that cotton would be lower at the tim - had gone to work and sold it without having it ; I suppose that is the origin of it. Q. Then the selling by these parties of goods tliat they did not pos- sess was the cause of these corners and all the evils that resulted from them ? A. Well, I do not know that any evils resulted from them, sir, be- cause to those regularly engaged in the legitimate trade it caused no evils, but the man who suffered was the man who sold what he had not goj:. Q. Then you disapprove of such transactions as that? A. I disapprove of a man selling a large quantity of stuff he has not got, but I do not see exactly how you are going to divide that from the legitimate business, because when a man offers you 500 bales on the floor of the Cotton Exchange, you cannot go up and swear him that he has got the cotton to sell against; you have got to take it as a legitimate transaction. Q. But suppose you afterward discover that he has committed that offense ; would it not be well to have a law by which he could be pun- ished in order to guard against such transaction ? A. I have a very different opinion on that subject from most people, sir. I consider 'that in this age no restriction should be put upon a man’s buying or selling any thing that he wants to. Q. Whether it exists or not ? % A. If he chooses to sell, selling something that he has not got and does not get that in time to deliver it, I consider that he is punished enough by having to pay out his money. That is my idea about it. I think that in this age there ought to be perfect liberty to a man to trade, to buy or sell, or contract for future delivery, or to do any thing he likes in that way. I think it is a necessity of the age. Q. Then would you brand the selling of goods which a man doesn-ot possess and has no expectation of possessing as a dishonorable act? A. I do not know that I would, because I may be able to see farther ahead than some men ; I may be able to see a time coming when I think certain goods will not be worth the value that they are now ; I may see a time coming when I think that stocks may not be w'orth the value that they are now; they may be very high, according to my idea, and I may be willing on my judgment to agree to deliver those things at a certain future time. Q. Taking a risk ? A. Taking a risk, a fair business judgment risk. Q. W^ould you not consider that as a game of chance ? 718 1 ■ A. Not at all, sir, any more than I would consider buying a house on Fifth avenue at the present prices tliey are asking for thorn, because I think it is the biggest chance in the world that you will have to sell it out at fifty per cent before long. Q. What was the volume ot sales on the Exchange during the year 1881 ? A. That is, we count from the Ist of September, 1880, to the 31st of May, 1881; that is the business year; the cotton year is from the 1st of September to the 1st of September, but we count from the 31st of May to the 31st of May in our Exchange here, because that is the time we elect our officers ; but the cotton year is from the 1st of September to the 1st of September ; during 1881 the sales were 20,700,000 bales. Q. Were any of those fictitious sales ? A. Well, that is something I could not answer you, sir; I presume some of them were. Q. Have you any idea what proportion were fictitious ? A. No, sir, I have not, and I will tell you the reason why you can- not arrive at that ; as I explained in my statement, there, for instance, there are several large export houses in this city ; during the months of July and August spinners in Europe and Great Britain will begin to try to make arrangements for the delivery of the cotton for the next season, during the months of October, November, December, January and so on, and they will make bids to the agents of these houses in Liverpool and^ Bremen and Amsterdam and those various places for shipments for certain months; those export houses will come into this market and they will buy October, November, Decem- ber and January deliveries to the extent that their agents have sold to these spinners on the other side; now, when the time ‘Comes around for the shipment of those cottons, they sometimes can buy cotton cheaper in the Southern ports — very often — especially in November and December — and consequently instead of receiving the cotton sold to them on these Octobers, Novembers and Decembers, they buy cot- ton in the South and sell as fast as they buy a 100 bales in the South, they sell a 100 bales on these contracts here to close them out, and in that way and in all different branches this business is multiplied very much. f^. What are the transferable markets with which you do business ? A. AV'ell, we do business with Liverpool, Bremen, Amsterdam, and numbei-l(*ss interior towns on the continent. (}. Wbth Lnro ))0 alone ? A. (boioa and. Barcelona. G. 1 >o you do any bnsim'ss with Asia or Africa ? A. Well, that is done more in the shape of goods, sir. 719 Q. Sending manufactured goods ? A. Sending manufactured goods ; the principal manufacturing, you see, is done on the continent and in England for the other side, and then of course we rank very high as a manufacturing country here now. ^ Q. Do you depend entirely upon American production for your raw material ? A. Well, American cotton is what is called a happy medium ; it is the best manufacturing cotton grown in the world; it is neither too short in staple nor too long in staple ; there are other countries, such as Egypt, that raise a long staple cotton ; Brazil raises long staple cot- ton, and then East India raises a short staple cotton which is not so well suited and does not make as good a class of goods and is not nearly so valuable as American cotton. Q. Do you trade in any of the foreign productions ; that is to say. do you import foreign products ? A. No, sir ; we are merely engaged in the buying and selling of cotton ; the cotton either goes to the mills here or to some of the ports abroad. Q. Is it entirely American cotton ? A. Yes, sir. Q. One man selling what he has not got and never expects to have and another man buying what he knows does not exist and never ex- pects to receive — what would you call such transactions ; how would you designate them ? A. Well, I don’t know that men do that, sir. Q. Suppose they do ; what would you designate them ? A. Well, I don’t know, I am sure. Q. Assuming that certain men carry on business of that kind ? A. All men, as I understand it, when they buy an article buy it with the intention of re-selling it again. Q. That is your understanding ? A. Yes. Q. I do not imply that you know any thing about these transactions, but we have had evidence produced before us to show that they do ex- ist ; suppose that such transactions do take place ; what is your opin- ion in regard to them ? A. I don’t know exactly what you mean. Q. Suppose one class of men engaged in business make contracts for certain goods which they never expect to receive and which they do not know exist — A. That they do not know exist ? 720 Q. Yes. . A. I never heard of such a thing. Q. The purely speculative system of dealing, as I understand it, is done in that way ? A. No, sir ; not with us ; when a man buys cotton in our Exchange he is bound down by his contract that he must receive and pay for it, unless he passes that on to somebody else, who receives and })ays for it. Q. I do not mean to be understood that I suppose that this does exist in your Exchange — Ido not know that it does — but I simply ask you, supposing such a state of things did exist, how would you desig- nate such transactions ? A. I don’t know how I would designate them, sir. Q. Would they be legal or illegal ? A. I don’t see any objection to a man buying any thing that he wants to buy ; as I stated before, I think there ought to be perfect freedom in that; that is, if a man chooses to buy an article on his judgment, no matter if it is to be delivered to him five years from now, he has, I think, a perfect right to do so. Q. Suppose he never expects to receive it ? A. How can he ? The man that buys an article must expect that unless he sells it out it will be tendered to him. Q. But taking the purely speculative view of it, suppose he buys that by certificate and expects to sell that by certificate again without the transfer of any of tlie material ? A. A certificate is a transfer of the material, sir, if you mean a cer- tificate of so many bushels of wheat in an elevator, or a certificate of so many bales of cotton in a warehouse — a warehouse receipt; he either has to pay for that when it is tendered to him, or he has to pass it to somebody else who pays for it. Q. You know that certain sales take place which are known as ficti- tious sales ? A. We have a very strong rule against any fictitious sales in our market, sir. Q. Do you know that such transactions take place ? A. I do not know it. (2. Supposing such sales do take place, how would you characterize them ? A. Well, wc would very soon put it down if any fictitious sales were rei)orted in our Exchange. Q. I am assuming that sucli sales do take place; what is your opin- ion as to the moral effect of such sales ? A, I do not know how to answer that, sir. <2. Would you ap[)rovo or disappovo of them? 721 r ' A. I certainly should not approve of a man coming to me and say- ing, ‘^1 will give you so much for so many hundred bales of cotton deliverable in such a month, and we will settle at whatever the value of that cotton is when that delivery comes around;” that is not business; it is merely a settlement of differences; that we do not recognize. Q. Would you call that gambling ? A. I should not call it legitimate business, not by any means. Q. Would you call it gambling? A. No, sir; I look on gambling as a different thing; Ido not give the general sense to the word gambling ” that is given to it now- a-days. Q. How do you understand it ? A. I consider that it is playing games of chance. Q. That is the system of sj^eculation that we have just referred to, isn’t it ? A. No, I don’t think so. Q. Then you do not see any evil existing in the present state of business transactions whether they are fictitious sales or real ? A. I don’t see any thing in the present way of doing business. As I said before I think th -t there ought to be perfect freedom for a man to sell or contract to deliver or contract to receive any thing he chooses in the shape of any merchandise, provided he is willing to do so on his judgment. I don’t look on it as any more gambling than the dry goods man or the grocery man' or anybody else buying his stock of goods. Q. Are you aware that certain institutions known as bucket-shops exist in the city of New York ? A. Well, I have heard so, sir. I have never been in any of them and could not tell you where they are located. Q. But from hearsay you know that such institutions exist ? A. What they call bucket-shops. In our Exchange we do not recog- nize any trade under 100 bales on the floor. I have heard that there are places where men can trade in five and ten bale lots of cotton or any thing else. Q, What is your opinion in regard to those institutions ? A. Well, I don’t know any thing about those ; I have never had any experience with them. Q. I do not ask from your personal knowledge but from what you have heard of them, and supposing that they do exist as they have been represented to you, what do you think of them ? What is their influence upon society and upon commerce — upon the public ? A. Well, I should say that they were of very little use to commerce; rather a detriment than any thing else, such institutions as that. 91 722 Q. How would you characterize such a mode of business as is con- ducted in such places ? A. Well, to tell you the truth I do not know how that business is conducted. I have never taken the trouble to inquire. I have never had any thing to do with them, and have never taken the trouble to inquire how chat business is done there, so that I don’t really know. Q. What was the volume of the production of cotton last year in the United States ? A. About 5,450,000 bales. Q. And what was the amount of future sales ? A. 32,700,000. Q. And the whole production ? A. About 5,450,000. Q. What were the transfers on the floor of the Cotton Exchange ? A. The handling of spot cotton in the market was about 000,000 of bales — in this market. By Senator Browning : Q. Then all the business that was done on the floor of the Cotton Exchange, embracing 32,000,000 odd bales, was on the basis of the 600,000 bales ? A. Ho, sir, excuse me ; it was on the basis of the American crop. These^'transactions come from all the world ; they come from Europe, a great number of them, and come from all over this country. How- a-days almost every transaction made in cotton, dry goods, or any thing else, futures are made use of as a hedge. Q. That is just exactly as the committee understand ? A. Are made use of as hedges. For instance, if a man wants to execute an order he has got to buy futures, and then afterward buy the actual cotton and sell out those futures. That duplicates the transaction. Q. lie buys it and then hedges against the transaction as soon as possible, doesn’t he ? A. lie does it to cover a legitimate transaction. By Senator Boyd : Q. Wbat do you mean by hedging ? A. I^'or instance, if I have an order for 500 bales from Liverpool, to-day, of middling cotton, naming the price which they will give me, provided I answer that dispatch in two hours, it is an utter impossi- bility for me to go into the market and buy these 500 bales of that ^Kirl.icailar grade and make the arrangement for it — buy it. and trade on it inside of two hours; but I go into the Excliange, and I find tliat December deliveries are $?10.32, or some- 723 thing like that, and I make my calculation because $10.32 is based on middling, which is the grade I want. I make my calculations on that basis and what the expenses of freight and such things are, to see whether I can meet their order. If I can make a commission on that order, I immediately buy the 500 bales of December cotton and cable over that the order is executed, because I have bought 500 bales of middling basis. I then have plenty of time to go around the market ; I do not care how the market fluctuates then, because I have covered my transaction — I have bought my cotton. But that particular cot- ton on that contract may not suit me, because 1 might get strict ordinary,” I might get stained,” and I want 500 bales of ‘‘ middling.” So I go out into the market ; I go to brokers’ offices, and at last I find the cotton that suits me— 500 bales of ""middling” cotton. The seller, myself and the broker get together. We arrange on the price for that cotton, and I buy it to fill my order on the other side. I immediately step across the street into the Exchange, and I sell out again the 500 bales of futures which I have bought, because I have bought the cotton, and I know that my transaction is closed. Con- sequently that order for 500 bales mates a trade of a thousand bales on the Exchange. You get my idea, don’t you ? Q. Yes. A. It necessitates trading on the Exchange in double the amount of the actual cotton which is shipped. Q. How many transactions do you know of having occurred in re- gard to one quantity of cotton without any actual delivery ? A. How is that, sir ? Q. How many transactions in regard to a quantity of cotton with- Dut any actual delivery do you know of having occurred ? A. I could not really tell, sir; because transactions are so interwoven vith each other that I have no way of telling it ; I am merely a broker, md transactions merely come through me ; lam not able to tell how nuch is delivered because I may get an order for a man to sell a thou- iand bales for him, and when he comes to buy that cotton in after he ■ells his cotton, that he has sold against, he may give another broker he order to buy it in, and I will not know, because the business is iivided among a lot of brokers; the very difficulty I see in it, I don’t ee how in the name of conscience you are ever going to separate the 'ad from the good, or how you are ever going to legislate in such a ^ay that you can separate the bad from the good ; I look on it just ke every thing in this world — that we have got to take the bad with be good, because there is a great deal of good in it, a great deal that is bsolutely necessary to the business of this country. Q. Don’t you think it is the duty of the people through their Legis- 724 latrure to endeavor to suppress any hc\d that may exist, as you have de- scribed it ? A. Yes ; but the question in my mind is whether it is bad ; I doubt it very much ; I think it is straining morality very much to say that this is bad ; you might as well say the same thing of a man that takes a contract to pave a street at a future time, for which he may not at that moment have the stone ; he may not have the workmen, and he may not know what wages he will have to pay the workmen ; but he goes and sends in a tender for the paving of the street ; ho is a specu- lator in futures because he has not the stone, he has not the men; I do not look on this as any more immoral — in fact I do not look on it as immoral at all. Q. By what law is the natural value and price of cotton fixed ? A. Well, its production and consumption, sir. Q. Does not intermediary speculation tend to enhance its price be- yond its natural value ? A. ^o, sir ; I think that since the war, if any thing, it has had a ten- dency to decrease the value taken on the average. Q. Decrease the price ? A. Decrease the value of the article — decrease the price of the arti- cle ; I think if any of you gentlemen will take the trouble to look at the fluctuations of any of the great staples before this species of buying and selling came into vogue, you will find that the fluctuations have been very much more severe and greater ; of course, I do not say that at times by over production or less production, prices will not rise or go down — that is the natural course of events — but what I say is, if you will take an average of ten or twelve years since this species of business has been in vogue, and take ten or twelve years' average pre- vious to that — say previous to the war, because during the war there was very little done in this business — you will find that fluctua- tions have not been nearly so violent; this business has more of the tendency to keep prices on a level plane. Q. What system of business do you refer to ? A. This future sales business and purchase business. Is there any thing else you would like to offer to the committee ? A. No, sir; if the committee wishes to ask me any thing, I will answer. ./allies (/. Jiloss, being duly sworn, was then interrogated and testi- licd as follows : iiy S(Miator lioYi) : < ). Wluu-c <1<) you reside ? / ^725 I ' A. New York, j Q. What is your business ? I A. Cotton merchant. Q. How long have you been in that business ? A. I have been in the cotton business during my entire business career. I have been a principal for seven years. Q. Where is your place of business ? A. 123 Pearl street. Q, Are you a member of a firm ? A. I am — Gwathney & Bloss. Q. As I have been informed by letter under a resolution of your Ex- change, certain members of the Exchange were directed to appear be- fore this committee ? A. I believe so. Q. I am informed that you are one of the gentlemen’ ? A. Yes, sir. Q. In order to lay the foundation for your statement I will ask you the ordinary question, What is 3 ^our opinion with 'reference to the whole system of making corners' and dealing in futures with reference to its eflect upon commerce and its influence upon the j^ublic welfare ? A. As to the matter of future deliveries — that part of the question , — I think it is beneficial. As for corners, never having been inter- ested in them, I perhaps am not a very competent witness. Q. From what you know^ from hearsay and observation would you be in favor of the system of making corners or opposed to it ? A. I should not be in favor of it. Q. Do you think it is detrimental to the public welfare ? A. I do not think it really affects the public very much, if any. Q. Then why should you be opposed to it ? • A. For the reason in its smaller effect, perhaps on the few that may possibly be unfortunate, it is detrimental, but the larger proportion that perhaps may be sufferers are not open possibly to a great deal of sympathy. Q. You know that the system of dealing in futures is divided into the legitimate system of doing business in that way, and the purely speculative system ? What is your opinion as to the purely specula- tive system of dealing in futures ? A. W ell, I think that they are so blended together that it is veiy difficult to separate them ; I think that perhaps that part which is called purely speculative plays such a part as to be considered really a benefit rather than an injury, from the fact that those that may l^e considered as the ones that play that part are really in the position in a sense of middle-men, and they therefore make a very much larger 7^6 , number that are trading thau would be the case if there was no one interested but the man that was at one extreme end — we will say tlio planter — and the consumer at the other extreme end, and in the in- terim we will say, a Southern broker and a merchant in New York, and a broker in New York and a broker at tlie consuming point and finally it reaches the consumer. We will say in New York there are a very large number that act in that middle capacity, some of whom may get or lose larger or smaller amounts ; but the effect of the large number trading is to make an evener tone of market, and subject the person who is buying in the first place to pay a less price, and per. haps prevent the person who is selling from exacting a higher price. So as a matter of fact, although there are a great many that come in to get a small commission, they come in to produce a beneficial result. Q. What is its moral effect upon the business community and upon the community generally ? A. I think no worse really or as a matter of fact than any other species of business. Q. You speak from experience merely as a cotton broker not from any experience you have had as a speculator in stocks or grain ? A. No, from my experience as a cotton merchant entirely. Q. Is there any thing else you would like to state to the committee ? A. No, sir. By Senator Browkiitg : Q. Do you have what is called a settlement day ? A. No, sir. Q. Do you recognize option sales as legitimate in the Cotton Ex- change ? A. Well, there is nothing that is designated by that term that I am aware of. We have contracts. They are sometimes perhaps errone-: ously so called as I have heard it argued, but they are not options as a matter of fact. The Chairman here read the following telegram from Mr. Talmage : “Brooklyi^-, N. Y., Dec. 16, 1882. Senator John" G. Boyd, 599 Broadway : Thanks for the invitation but I am so occupied I cannot coma Have been absent or would have answered your letter. T. DeWITT talmage.’’ John (J. Welch recalled: By Senator Boyd : Q. You are rec.alled to make some statement in relation to thetesti- 727 mony given by certain representatives of the Standard Oil Company. Please go on and make such statement ? A. I want to make a statement as I spoke about further on the sub- ject of corners, etc., in general which I have said something about. I have a few lines here which I will read, calling attention to it. Kegular or legitimate dealing is in buying a commodity, or its paper representive, and holding it for a rise or for the income that can be drawn from it or from both, and in selling a commodity or its paper representative in view of a depreciated value the seller believes it may have, whether the depreciation comes from a decline in the price of the article itself or from a cessation or decrease of income, or from both these causes. The paper representative here referred to is a stock, bond, warehouse receipt or something of the kind and not a mere agreement of an individual or a company to make a future de- livery of the article. Within this definition of legiMmate dealing there is room for speculation, but it cannot go outside of the bonds of the quantity of the article itself. With the short sale, a class of dealings commences that it is not unfair to call illegitimate. With short sales no bonds can be put ' upon transactions. A year’s product can be handled every day, as is now frequently the case with petroleum. And the result is what is called over-trading, and then follow corners, panics, bankruptcies embezzlements, ruin, insanity and suicide. Take away short sales and the w'hole superstructure of commercial gambling will fall to the ground. It is generally regarded even by those most closely related to it as gambling. Treat short sales, the act of the seller, not the purchaser, as gambling before the law, put a dealer in such a position that he may be forced to prove before the law that what he sells repre- sents a commodity in actual existence or in process of creation, and the problem is solved. Thousands of men who haunt Exchanges will have to go to productive industries, to their immense benefit and that of the community in which they live, and an immense advance will be made toward an avoidance of an excess of poverty and an excess of millions. I will illustrate that in petroleum as one case. New wells are a great cause of fluctuation in petroleum. A man may have very early knowledge of the prospect of a well which may be largely productive ; he may own the well or he may get a knowledge in regard to it prior to others. He rushes to the telegraph office. He can send a telegram , to half a dozen Exchanges telling them all to sell for him a hundred thousand barrels. He has no oil. That is a short sale. Other dealers or other operators are watching the brokers closely who receive this order, land knowing them to be operators of importance they see that these sales 728 are being forced on the market, and they rush in, and there is a panic in the market at once. There is an enormous amount of short sales — perhaps a million barrels of short sales — created upon the news of one well. Well, then it is found out that a large amount of short in- terests need oil, and they rush in and buy, and the market will go way up beyond where it was before that well was struck. If the man that had that early information had the oil which he sold, it would be well, and it would not have these bad elfects ; but his rushing his orders to sell entails all these evil consequences, which come from short sales. We had a eulogy passed yesterday upon the Standard Oil Company, in wdiich they appeared in a way that they have never done before, I believe. They had an opportunity to appear before the Ilepburn in vestigating committee of 1880, and every means was used to bring them there, but they failed to appear mostly, and the few that did appear failed to give any information ; but they are taking the tack now of making some statements — Senator Brownin'G — If you are going to give this committee any additional testimony we are willing to hear it, but we will not permit criticism of any witness’s testimony. The Witness — He made a very general statement. Senator Browning — That is our affair. If you have any thing to sav that will contradict what they said we wdll be glad to hear it. The Witness — I will endeavor to coniine my remarks simply to contradictions of testimony bearing upon points which they stated. They stated, for one thing, that nothing could be said against the Standard Oil Company in its relations to the public. I will state that there are a great many things which can be said. The one thing which they have worked for more distinctively than any thing else is for the purpose of absorbing the petroleum business and making it a non-competitive business. The word non-competitive ” describes their condition better than any other. That developed itself quite early in their history. My acquaintance extends back quite intimately with the petroleum business to 1872. We had then in the oil country, where I was living at that time, and where I have lived most of the time since, an intense excitement, which went through the country on finding that there was a scheme, in the name of the South Improve- ment Company, for the purpose of controlling, by that company, the transportation of petroleum out of the region. There were exciting • meetings held at Titusville, Oil City, and Franklin, through a series of weeks. Tliere Avas intense indignation shown, and the result of it was, the tiling was carried to Ilarrisburgh and carried to Washington, and Die charter of the South Im])rovement Company was repealed and then- was a congressional investigation. The contract Avhicli tlie Soutli 729 Improvement Company had with all railroads leading out of the country was to the effect that this South Improvement Company should have rates of freight tliat no other company liad. Points upon that were produced, particularly before the Hepburn committee, whicli rendered all competition impossible, and in consequence of this there was this wave of indignation and excitement went through the oil country. Well, that thing was squelched. But the thing as we learned afterward by official papers which came out subsequently — we learned that the spirit of that thing was carried out. They ren- dered the business substantially non-competitive. They wiped out op- posing corporations and they got the business into their own hands. After these papers came out with regard to the South Improvement Company, I do not remember especially any thing of an official nature bearing consecutive dates, until a correspondence which was developed by the investigation in Pennsylvania came out between the Standard Oil Coinjmny and the Pennsylvania Eailroad Company. The vice- president of the Standard Oil Company dates a letter from Philadel- phia to Mr. Scott, then president or vice-president of the Pennsyl- vania railroad. By Senator Brownin'G. Q. What year was that? A. That was in 1876. This correspondence was in the fall of 1876. He states what they want — that they want rates which no other company nor body of men can have unless — they give a qualifying phrase which, under the circumstances, meant nothing because it was utterly impossible for anybody to have a large business under the cir- cumstances — but the qualifying phrase was that they were to have rates ten per cent under anybody else’s rates, unless these other parties brought them a business that would pay them the same net profit, and which of course was absurd, and which meant nothing except as a sort of saving clause and which was pure buncombe. The contracts were produced between the Erie Eailroad Company and the New York Central Eailroad Company by which leases all the facilities of these railroad companies were turned over to the Standard Oil Company and they took a toll at those places of receiving oil from all oil that was received. I think it was ten per cent or ten cents a bar- rel — something to that effect. Well, theivYhere was another devel- opement. It was testified before that committee that they gave the Standard no lower prices on rates. Mr. Blanchard dwelt upon that very considerable ; but it was shown on that investigation that there was a corporation known as the American Transfer, which was one of the brotherhood of the Standard Company, that received a commission on oil which they furnished to these railroads. Well, now the Amer- 730 icaii Transfer was the connecting link between the United Pipe Lines and the oil country and the railroads. At Olean, which was an im- portant loading point, this connecting link amounted to less than a mile. At Salamanca it amounted to several miles. At Oil City, it amounted to a few hundred feet. But here was the American Trans- fer Company standing between the railroads and the tanks that held the oil in store, and there was where the rebate went to ; it went into their hands. And the American Transfer Company writes a letter which came out in evidence, to Mr. Cassett, an officer of the Penn- sylvania Eailroad Company, stating that they had had twenty cents a barrel rebate and wanted the same from him, which he conceded* Now the point has been to get those advantages, and getting those advantages which they have succeeded in doing, it has been perfect 1\- easy for them to build up this immense business and this immencjc concern which they say is not a monopoly. By Senator Boyd • Q. You desire to show that the Standard Oil Company, as it at the present time exists, is a vast corner on the oil trade ? A. Corner is a very general term ; I don’t think much of the word “ corner ; ” it is not a corner at all ; they have absorbed the business and they have been able to go ahead with confidence ; there is a great deal said about their boldness in proceeding ; they have understood their relations with transportation all the time and they have been able to go ahead with confidence ; the other interests could get scarcely any hearing with the railroad men. Vanderbilt said in his testimony that complaints with regard to the Standard Oil Company came in one ear and went out the other; every thing favored them in getting it, and in getting this immense business it has been easy for them to hold it Now they have made the claim that all this immense improvement which has taken place in the oil business in the shape of sending oil to all parts of the world and the systematized shape in which it is got, has come from their enterprise and energy and ability and capital, and all that sort of thing. Well, now, I think they are very illogical there, because they draw conclusions which the facts do not justify; they have no riglit to claim that. Senator Browning — You are drawing conclusions from the testi- mony wliicli I tliink it is the province of the committee to do. I dem’t tliink it is proper to attempt to prejudice the committee. 'The Witness — I aim not to make criticism ; I am stating what their jiosition was. S(Miator I>ROWNiNt; — You are simply drawing conclusions from the- t('-lim()ii\ , 731 The Witness — I prefer not to do that. Q. We cannot have an}' criticism or conclusion from the testimony, but any facts which may be interesting to the public you may state. A. Very well. Having the possession of the railroad transportation as they did it was very easy for them to absorb the pipe line interest in the oil country, because they could say from what pipe line they would take oil, and the pipe line that did not have a customer for its oil fell into|the hands of the Standard very soon, and one more source of competition was wiped out. Their position was that they had con- ferred a great benefit in making the storage of oil general. It no doubt is a good thing to have the storage of oil general, but that thing was developing in other forms and would have developed no doubt without their intervention, but they took up the business. Q. Now what effect has all this had upon the public interest? A. It has destroyed a great many individual enterprises in the oil trade which would have gone on successfully if they had not had to compete not only with firms in the oil business, but with railroad capital in affording the Standard facilities in moving oil which others did not have ; the manipulations of the Standard are a very interesting thing, and I could say a great deal upon that subject. Q. You have had personal cognizance of all those things ? A. I have observed them closely for a great many years; they claim not to manipulate the crude market; that is a thing that is out of sight because the business is done on the Exchanges where there are millions of barrels traded in every day ; they are the people who make the prices of the refined oil and they are most arbitrary from day to day, and from week to week without any reference to the condition of the crude market or the condition of the refined market ; they may put the price up a cent or two a gallon or take it off that much ; it is very detrimental to the oil interests in Europe ; there are certain reasons why they have an interest in doing that which I could go into if — Q. Be as brief as possible ? A. Well, the refine market has an influence upon the crude market, and by depressing the refine market it has a tendency to depress the crude market, and puts them in good shape to buy crude oil ; then when they w'ant to sell refined oil by holding up refined, it helps sus- tain the crude and it helps them in making their sales for future delivery in Europe; then there is the opposition company, the Tidewater Company ; it is supposed or is a matter of inference in the trade that they depress and raise the refined market with a view to injury to the Tidewater Company which for three years has been struggling against them. 732 Q. Is there auy thing else ? A. I have made a brief statement ; it is not necessary to go into particulars as I know of. Henry Ward Beecher called and examined ; By Senator Boyd : Q. What is your name ? A. Henry Ward Beecher. Q. Where do you reside ? A. 124 Hick street, Brooklyn. Q. You are a minister of the gospel ? A. I am. , Q. How long have you been such ? A. Between forty and forty-five years. Q. What is your opinion in relation to the whole system of making corners and dealing in futures in any commodity with reference to its effect upon commerce and its influence upon the public welfare ? A. It would depend a good deal upon what the corners are and who make tlieni ; I don’t see that there is any special difference between making a corner as it is made on the street almost every day of the j^ear and making it once in one or five years by combination ; that is to say, the moral quality is substantially the same ; I hold that a man who is long-headed, Avho foresees and judges accurately, has an advan- tage over his neighbor, and it is not accounted immoral for him to use that advantage because he is individually better equipped for the busi- ness, and it inheres in him by a law of nature that he has a right to the whole of himself legitimately applied ; now these corners are generally made by simply a combination of individuals or a magnified individual ; they employ their sagacity and foresight, and by com- bined power they make bargains which happily they almost always lose ; but it stands, it seems to me, on the ground of morals, very nearly or })recisely the same thing; I regard the age in which Ave live as the age of combination — not any longer so much politically that is in classes combining, but in commerce, and that vast masses of money directed and used by the combined Avisdom of the ablest men are steadily gaining an ascendency over individual thrift ; how bad it is or how good is another question ; but it is only the carrying out on a large scale, as I see it, of lliat Avhich is alloAved on a smaller scale in all commercial communities; and that question follows the laAv of nature ; it is the struggle for exisiene-f* in a ncAV srdiere and under neAV combinations, and the Aveak go uii':(’i- and tin* strong go forward ; as regards the details of the 733 matter, I never bought nor sold a bushel of oats or corn except for my horse, and he never was damaged by it nor I either. Q. Do you understand the system of dealing in futures ? A. I suppose I do in a general way ; it is a part of my profession — to deal in futures. Q. What is your opinion with regard to the moral effect of the system as carried on in commercial circles in purely speculative trans- actions ? A. When it is done properly I think very well of it, and when it is done poorly I think very poorly of it ; there are two ways of dealing in futures ; one is dealing in realities, and the other dealing in risks and chances; I have heard it sometimes said, that a man sells what he has not got; I don’t think that is true in ordinary cfese§,at all ; a man sells a chance or he sells a risk ; of course a man may sell what does not exist, but as I understand it, that is not the matter that takes place in commerce; now if twenty men or two men, or one man, looking at the state of the nation here, at the crops here', at the possible contingencies and risks of climate, the condition of Europe, in other words, taking all the elements that belong to the world into consideration, is sagacious enough to prophesy the best course of action on it, and he comes out right, I don’t see why it is not legitimate ; and if that is done by one man, I don’t see why twenty men should not put their heads together and do it, and if it is done rightly I don’t see why it does not conform to the average laws of com- merce ; but then a great many are inconvenienced by it ; I think Mr. Vanderbilt said that his inconvenience lay in this : — that he some- times ‘had not enough and sometimes had too much freight; it is a mere question of inconvenience ; it does not concern the public at all; it belongs to all kinds of business ; it is a part of the friction of busi- ness ; if it raises the price of grain, it can only be temporary ; in this country the production of the country and acreage increase every year and the productive power partly by emigration and partly by the nat- ural increase of our country is such that it is almost impossible that there should be either a famine or so near to it as to amount to any 'very great inconvenience more than for a few brief months ; as a per- manent state of things, I don’t see that it is necessary at all that there should be any very great mischief arising out of it ; the question of ab- solute justice is entirely another matter; if you would ask me what would be the gospel doctrine on the subject, I should say that you are all wrong from the top to the bottom of society ; there is no man that loves his neighbor as himself ; no man is willing to lend his in- telligence or skill or even make an average of it among any num- ber of persons ; I am speaking of it now with reference, not to the absolute justice, but with reference to that acknowl- 734 edged justice which is the substance of ordinary commerce ; and l' don’t see any special difference' between what are called corners and futures and so on, except the magnitude of it — I don’t see any dif. ference in moral quality between them and the ordinary transactions of men where one is long headed, and another is short headed and so short in the pocket too; as to the mischiefs and inconveniences, I have never yet seen any business carried on without more or less in- convenience on the right or on the left, or somewhere ; the opera- tion being very large, the incidental disturbance may be quite large, but also the benefits are quite large, for it is not to be de- nied that in the unfolding of civilization combination is doing a great many things that are desirable to be done, and if it is hindering some, it is helping* others; you cannot manipulate individually man by man as you' can by a large corporation ; you cannot do with a hand- ful of money what you can do with a million of money; and there are great benefits on that side ; so far, therefore, as a mere commercial judgment is concerned, I don’t see that there is any great ground for any thing more than special complaint; if combinations are doing wu'ong, that special combination may be wrong, but take the system and I don’t see but what they all stand to- gether. Q. What ought to regulate the standard of prices of all commodities ? A. Well, sir, there is a minor regulation of supply and demand, but I don’t think that that determines it as a general thing ; niy im- pression is that the quantity and quality of brain applied to the production of an article is the fundamental reason for the up and tlie down; those pro- ductions that can be produced with the least thought and most bone and muscle are the lowest ordinarily ; there will come in incidentally things that disturb that principle, conflicting laws ; the things that require the most thought, combination of thought, skillfulness of thought and touch are of the highest value; generally they serve the highest interests of society, and the law of price is the law of brains. Q. Has not the fact that nature produces all necessar y commodities for the sustenance of life something to do in the estimation of the value of those things^ besides the amount of brain used in their production ? A. Well, the more nature does for a man the less he has need for his own brains, and the cheaper things ought to be therefore. td. d’ake the article of bread-stuffs for instance ; they result from tin; soil, from the atmospliere and from various other law's and causes controlled entindy by the Deity; should not the settlement of the pric('8of these things take into consideration those important facts? A. 'I'hcy do not dejxmd any more upon natural laws than carving a staiitc or j)ainting a picture: the fact that the air nourishes all things that, gi-ow and that the soil co-operates is simply this, that men have 735 learned to ride the laws of nature ; but the artist has to use his tools, he has to know the nature of stone, he has to learn their natural forms and curves, and he is in a more subtle way employing the laws of na- ture than the farmer or any producer of fruits, vegetables, seeds o- any thing else ; the whole thing comes to this, that no man can pro- duce any thing by his own will ; but human will put with ascertained laws can produce any thing, and it is the natural law after all that is working for him, whether it is in high art, or anatomy, or mechanics, or agriculture, or any thing else, and one man has no more right to claim any more allowance because it is nature than another; it is just as much nature in one case as m the other. Q,. You admit, however, that the consumer is entitled to the pos- session of all the products of nature at their natural values ? A. If there was any thing of that kind labeled on a field of wheat or on other food, what the natural value was, I should feel as though I had a basis to stand on ; but I do not understand what natural value is. Q. We would like to have your opinion as to the natural value of a field of wheat ? ‘ A. Well, sir, to a very considerable extent there is one practical form that is theoretically urged, and urged also as a general principle, namely, that the amount of cost is the primary fact in developing the value ; that is an incidental fact, but I do not think it is the primary one, and to determine what was the natural value of wheat* you would have to determine what the value of wheat is that nobody had touched except nature ; the value of wheat is how far you have got to carry it ; the value of wheat is how much freight you have got to pay for carry- ing it ; the value of wheat is how much has been raised in all the counties of the State besides yours ; all these go into the value ot wheat; it is not simply who plowed and who sowed; in the complex condition of civilization, there is no possibility of going back to any affirmative or alphabetic laws of nature which shall determine values that are themselves the children of a thousand interplaying influences and causes that affect value; the value of a gorgeous silk dress can- not be determined by its proportional use of the capital of the manu- facturer, nor by the handicraft of the man that produces it, provided that silk dress should come to the city of New York, and was the finest that was ever made, and was so fine as that anybody that got it would have a rare treasure ; the value of that dress is what all the fools in New York would be willing to pay for it in order to have the best dress there ever was in the world; one man may say, if $100,000 is offered for it, I am better able to give him $^00,000 for it than that man is $*100,000 ; another puts up against him until by-and-by it may 736 cost 1500,000, simply because it is absolutely unique; now there is vast extravagance in that ; it is not because that becomes an object oi Talue ; the vanity, or, as you may call it, taste, Avhich is synonymous, very often, of persons determines largely the value; how much pleas- ure will it confer upon me — that is the value of things ; the value of my place at Peekskili to the railroad company would be perhaps ten; to me it is $10,000 ; they would value it simply on account of its mechanical qualities, I on account of its art qualities and its relation to the sentiment and to the love of nature; my birds are worth more than all the hen-coops in creation to me; but in manufactured articles and articles of production and ordinary things, I say that the general law is a law that has to play in an atmosphere that more or less modi- fies it, sometimes retrenching, sometimes extending, but the general law is the quantity of brains and the quality of them — the kind of brains that are employed in the production of it and the relation of the production to the corresponding st 3 de of grain in those that buy it ; it is a mental and not a natural or physical question, and that becomes more and more eminent the higher you go up; that is to say in the mere operation of producing, the value is little enhanced in that way; in the intermediate — in manufacturing — it is increased but not always to a very great extent ; the artisan does not get as much for his work as the artist ; the artist works with a finer head for finer heads and there you get the highest value; and when you come to what is called a fancy price the value lies wholly in the imagination and not in any physical or absolute wants of man in society. Q. AVhat is your opinion of any system of speculation intermediary between the producer and consumer which tends to enhance the price of the necessaries of life unnecessarily ? Well, now that is a question. The word ^^unnecessarily ” changes the whole aspect of the question. In our condition of civilization we must have middle-men — intermediaries. A man makes his chairs and his bureaus ; another man has warehouses and he stores them for him and that adds a little ; and the railroad takes them up and carries them to some distant point where there are purchasers for them and tiiat adds a little more ; and somebody has got to receive them at the end of the route and sell them, and that adds a little bit more. And how much is just right — exactly right — is one of those wondering questions that will require a hundred considerations to de- termine it. But supposing it is determined that a man is very greedy^ or a combination, and that they do permanently inflict society ; there Is no question I suppose — certainly not in the law of morals — that it is wi-ong, as all sellishness is wrong. But a great deal of that which is called interniediary is only so in a useful sense. 737 I Q. I take it of course you refer to the transporteraiid the legitimate dealer ? A. Yes. Q. But where a system of illegitimate speculation — A. What is illegitimate speculation ? Q. It has been designated by witnesses here as that system of specu- lation by which men buy and sell a commodity a great many times for the simple purpose of making a little upon it each time and thereby adding to its general cost ? A. I don’t see but that should regulate itself, for a man cannot sell a commodity of universal repute a great many times, and all the time increase the value, any more than two boys can swop jack-knives and each of them make money out of the other. Q. Well, these men do make money ? A. They do not make it except in an illusory sense “ You may say they make money, but they may be viewed as the man who sits down at a table and is about to eat of a dish, and down it goes. The men that go into Wall street, I am told, come out very quick and never carry out as much as they take in. My observation is, that the men who speculate in that sense are never up to the business they have got in hand ; they are always too slenderly endowed. In the condition of the community itself, in the condition of the seasons and in the supply and demand required over large spaces, we are carrying on that propo- sition where it is a mere question of pounds and tons — every business man is carrying it on ; but when you carry it on on a continental scale it requires a class of faculties that are vouchsafed to very few men in this world, and men that are speculating on chances are the pioneers that run before civilization and open the w^ay for men of larger no- tions and perish in doing it. A man makes an invention and it is said he is poorly paid. He has run before his time, he has to pay the penalty that always follows a man that runs before his time. Another man comes after him and takes his machine and introduces it and be- comes a millionaire ; and people mourn over it. But that is only what has been and always will be I suppose. That man dies and what has he reaped ? He may have reaped nothing but grumbling, but he ought to remember this, I have been poorly paid but millions of men will be better off than if I had not done this.” The man that goes into the street and gambles, who speculates without introducing any new elements or adding any new values, is punished that he dies as the fool dieth. But how are you going to check it without checking com- merce, I don’t see. It as inevitable as an affection is ; you might as well pass a law that a man should never be otherwise than just at 93 738 equipoise in his family ; lie never should feel cross because the colfee wasiiH strong, never should come down except in the most sociable manner. Well, how are you going to get at it. Q. What is your opinion of a man that does not try to cultivate those faculties ? A. Well, I should say that he didn’t go to the right meeting Q. What is your opinion of his moral status ? A. Well, men live on such a low status at large that I don’t suppose it makes very much difference — a little more or less of that? Q. I would like you to answer categorically, what is your opinion of his moral status ? A. If you will give me a definite instance I will tell you, but you are asking a generic question where the special unit would sometimes be one way, and sometimes the other. If, for instance, a man had come to a jiinch in his affairs where he thought by going into the street and doing as other men did he could save his family from poverty and save all which stood related to them and exalt them higher, his motive might be right, but yet the mode by which he undertook to carry out that might be wrong. I should not jucpge him as I would another man thac went there from avarice and burning greed; he had enough, didn’t need any more, a man careless of justice and equity among men, who in his greediness sought to swallow every thing and he came to grief. I should say he ought to come to grief and that that was a punish- ment for his immorality. I don’t thick that all these troubles — I say this confidentially — I don’t think that all these troubles are half as immoral as church fairs are where they have lotteries and gambling carried on under the sanctity of religious forms because they are edu- cating the conscience of the young under the sanction of religion to that which is radically evil in all its after elements ; they begin at the root. And yet the thing is done I think less than it used to be ; but there is very little conscience yet in the community at large on that subject. Q. Admitting that such a system of gambling exists in cliurches or on Wall street or in the city of Chicago or elsewhere, wdiat is your opinion of such a state of things ? A. Well, I think it is very disastrous indeed to morals — very dis- astrous ; not merely in the nature of the transaction but in the con- ditions into which it throws men where they will be tempted more than they will be able to bear. I hold that there is no man that lives on the face (d’ the earth who cannot be broken; and there is no man so gf)od, virtuous, })ure, u])right, so every way right, that he cannot be broken down, and that is the meaning of the Lord’s prayer when it says, “ Ijtiad us not into temptation.” It is very uncertain who is going to (auiic oul or how they are going to come out? Of course one 739 man may not be broken by any money; you might pile all the money on the globe before him and it would not amount to a snap of }^ur thumb; it might be through the medium of ambition that the temp- tation would come. Another man might be tempted not through money or through ambition but through his affections. You might persuade a man from the side of his kindness to do things that he ought not to have done. Taking the whole range of motives though some men might be tempted easily, there are a great many men that could not be tempted except in a certain single line; but when you strike that line and make the temptation and the opportunity and the immunity strong before him, I don’t suppose there is any man that could not be broken down. ’Washington could not be bribed but he swore like a trooper. I have been brought up to suppose that that was not in keeping with the law. Q. Now suppose that a system exists in commercial circles or in other circles by which men combine for the purpose of cornering the productions of the country, and holding them there until people are compelled to pay them such a price atiove^ the natural value as they nsk, and that that price is far above the natural value; what is your opinion of such an act as that morally ? A. Well, there can be but one opinion if it is coming back to a natural value. I will put it in shape; suppose for instance at the time of the great battle of G-ettysburgh where 40,000 men lay wounded and dead, it so happened that one man in New York got possession of all the surgical instruments that could be got here for the next two months say, and that he also got possession of all those medicines that were indispensable for the hospitals of the country, and he should hold them until they had gone uji to such a price as to be outside of the reach of the profession; I think that man ought to be damned. There is a case which is not in lines at all of ordinary affairs. The great law of humanity comes in there and mere money matters have no right to interfere with it. It might be a man could make money in burking folks on the street and selling them to the hospital for dissection and pleading that it was to increase the knowledge of mankind, but there is a law of mankind that no such collateral inci- dent has a right to tamper with. Q. What is your opinion of the man or class of men who will cor- ner the wheat: of the country or the oats or corn of the country in such a way as you have suggested in the hypothetical case of one person getting possession of all the surgical instruments and medicines A. If it were a possible thing that a man could grip the loaf and see men hungering and suffering and he held on to it, I should con- sider that he was an atrocious public criminal and there ought to be 740 sonp form of law that could meet him, but I don’t tliihk that is a supposable case in this country. We own all the latitudes and all the longitudes, and pretty much all the climates, and one thing olTscts another. There is no famine that is going to spread co-extensive all over the land ; therefore, your question is not a fair question because it may make inconvenience, but very seldom can it amount to any thing more than inconvenience — disturbance. Q. It has been testified before this committee that by reason of cor- ners in pork and in wheats the price of pork jjer barrel had been in- creased, I think, double? A. For how long a period ? That is a very important element. Q. For a certain period ; at any rate the price had been increased ; and also by corners in wheat the price of flour per barrel had been in- creased, thereby compelling the consumer, the ])oor man or the rich man, to pay more than what he \YOuld have had to pay for it had these corners not been made ; now what is your opinion of the action of men engaged in making sueh corners ? A. Well, if it is carried to such an extent as to induce general suf- fering it has transcended the law of propriety in business. Ko form of business is to be allowed which in its general tendency and results is inhuman. The sanctity of man is a limit to the exercise of all busi- ness. The emergencies in which life is to be destroyed or property wasted are very different from the emergencies of commerce, where it is merely a question whether a man shall have a little more or less money. For the welfare of the Constitution and the country, a nation may destroy life and may destroy property, but the cause of the ’de- struction of it is supposed to stand connected with maintenance of every thing that is valuable in society. But in commerce it is not so ; it is a mere question of more or less property, and, under such con- sideration, commerce has no right to be inhuman. Q. .Sui)posing in the natural course of events that a man can buy his loaf of bread for eight cents, or Ids barrel of flour for four dollars ; that combinations of capitalists or wealthy individuals set to work and purchase up the large mass of the produce of the country, and by that means compel men to pay instead of four dollars for one barrel of Hour, six dollars, and for one loaf of bread instead of eight cents, nine cents, would that thing be an immoral and dishonest transaction ? A. Well, it might or it might not. If it was on the way to some- tiling better by-and-by by which a man could buy his loaf of bread for six cents, I should say that the present suffering was very well to be h(»rne for the sake of larger relief by-and-by. Nowin combinations tlicre are almost invariably disturbances, hut combinations that look at '41 a later period to a much larger benefit to the community than they had before, while they are disturbing and on the way by friction produce trouble, yet in the contemplation both of the men that do it and of the men that judge about it, where they are preparing the way for a much better state of things they are justifiable, just as the doctor is justifiable in giving the bitter medicine for the sake of sweeter health. Q. But where these persons do not go into these transactions with the view of bettering the condition of men but simply with the view of enriching themselves, how would you designate it there ? A. Well, sir, it is very difficult for you to make a distinction in such matters as that. There may be cases in which everybody will say it is outrageous, and then there will be cases in which nobody would say that, and yet you cannot draw the line between one and the other. You know that some things are in the hands of selfish, indifferent, cruel and inhuman men ; you will see another class of men doing what is, when you come to analyze it, nearly the same thing, but they do not come under rebuke and men justify it in the code of commerce. Q. We ask your opinion as a Christian minister concerning these transactions ? A. I regard you know all commerce while it is doing a great deal of good at the root, it is selfishness. All these forms in which a man is build- ing himself up at the expense visibly of his fellow men are I regard as condemnable morally. But as I understand the scope of your question it is the relative morality and such as a Legislature even would under- stand. Q. Now admitting that evils exist from the system which prevails of. dealing in futures and making corners, what remedy would you suggest for such evils ? A. Well, the best thing that can be done by a public assembly is comparatively little. Laws are very little help to morality. You have got to get your morality first, and then you can maintain a law. Yo law ever made much morality. My theory you know is that the man has got to be born again and his neighbor too, and his neighbor — in other words, that society has got to build itself up on a much higher level than in its hitherto civilization it has thought of. I hold that men are animals in the lower and higher tier of civilization, and that society has been built up on an animal foundation. I hold that men have got to come up on the social, moral and religious faculties of the soul, and a gradual reorganization has got to take place in society following these faculties in the human soul. When I hear socialists and all this class of men finding complaint — and there are millions of reasons for complaint all over the world in every nation. 742 on the globe — but when they think they are going to change it by changing the laws of commerce and changing the wages question, or the legislation, it seems to me perfect nonsense ; what we want is that a man should not be self-indulgent ; we want him to become vir- tuous and benevolent; you never can make society what it ought to be as long as you allow all the great organizations of society to stand on the basis of the animal faculties ; it is slow work, but I think we will get it in the course of a million years. Q. Is it your opinion that such an investigation as this tends to en- lighten the public? A. As this ? Q. Yes? A. Yes, sir, very much indeed ; it has enlightened me a good deal ; I have read more of Mr. Vanderbilt and Mr. Jay Gould than they will ever read of me ; I think it would not be a bad thing for you to come down once a year ; I think you would do more good than you do up there; you are handicapped up there. Q. With the continual laying of such doctrines before the public society certainly cannot help but be benefited ? A. Well, sir, if they want more of them, Plymouth church has ah ways got an extra seat. Q. Are there any other suggestions that you would like to make to the committee ? A. I have none ; my amazement was that I was sent for at all. By Senator Browj^ing : Q. Do I understand that we are both invited to Plymouth Church ? Both of you ; ask for the pastor’s pew ; I never had any thing to do with commerce; I never bought or sold stock — yes I did twice; I bought the first stock at 400 and sold it for 100 ; I thought it was a good stock to lay up, but I found it good to lay down ; I bought one other stock, thinking I had laid up for my children, but that slumped from under me and I quit that entirely; I know noth- ing of corners except in the general way in which every good citizen studies the times in which he lives. Tliomas S. Preston called and examined: liy Senator Boyd : Where do you reside ? A. 110 East Pwelftli street. (2- Von are ])astor of Saint Ann’s Catholic Church ? A. \dcar-G(‘neral of tlie diocese. G. What is your opinion concerning the whole system of making corners and dealing in futures with reference to its effect upon com- merce and its influence uj)on the public Avelfare ? A. Well, I don’t consider myself to have, perhaps, deeply studied the subject. My impression is that it is all against the good of society; that it is immoral in its effect. I should agree with the first clause in in this preamble; I think that the cornering of grain and other com- modities, which is now a prominent feature of modern business trans- actions, does enhance the price of articles of prime necessity, does in- terfere with legitimate business, and does foster a spirit of gambling. That would be my impression. I am told also that there is a great deal of business done where there is nothing to be bought or sold ; that there is a great deal of selling on the Exchange of stock and other things — articles of commerce — that really do not exist: that the O V ^ broker has nothing to sell ; and it seems to me that it does — 1 know it does because I have been told by persons in business — it does in- terfere with legitimate business. It oppresses men who are not will- ing to go into that kind of speculation. It seems to me that there ought to be some way of regulating it. I don’t know what it is ; I saw an article in the Xew York Tribune this morning which expresses my own opinion very well indeed with regard to it — that there ought to be some way by which a law could be made to affect the sale of things which have no existence. It seems to me that the price of a thing has some value of its own, that the cost of production, supply and demand, legitimately considered, ought to establish the cost of an article; that it ought not to be thrown into the vortex of speculation and be made whatever certain wealthy men see fit to make it. I really believe that our system of business in Yew York for the last few years has become more unhealthy and illegitimate than it used to be. At the same time I only sneak, you know, from what I have heard ; I know nothing about it myself personally. Q. But as a Christian minister ? A. I deprecate it, and I should be glad if there was any way to check it. I think there must be admitted a certain amount of chance ; 1 see no difficulty in that. A risk is of value; a man has a right to sell a risk which is of value; but there is a certain limit to that, and because there must be a risk of profit or loss, I do not see why men should be allowed to sell tlffngs which have no existence, or to manu- facture a price with no real foundation beneath it, except that a wealthy man is able to force a certain article to a certain price by his money. Q. Then, by reason of this system of speculation, the price of bread- stuffs has increased beyond their natural value ? A. ft would seem to me so. Q. You would regard that as a great public evil and a moral wrong ? 744 A. I would ; but it seems to me that legislation ought to Ijo able to touch it in some way. Q. Have you any suggestion which would enable the committee to arrive at some conclusion in regard to the best system of legislation to be adopted ? A. AVell, really, I don’t think I am sufficiently instructed on that point. Legislators would be better able to tell what would reach it. The Tribune suggested this morning that some law could be made, and certainly, that there was no injustice in making a law preventing a man selling what had no existence. It seems to me that wise and ]n'udent legislators could devise something hy which business could be pre- vented from going out of its legitimate sphere. I don’t consider myself competent to say exactly what would be best, but I know that business is very differently conducted now from what it used to be. Things used to be simple in my younger days, and the value of a thing would be regulated by supply and demand, and tlie cost of production, but now the value of so many things is purely fictitious, that when it comes to affect articles which are a necessity of life, I tliink it becomes a st - rious evil in the community. I have been told by a gentleman, a mer- chant in the grain business, that the grain business is entirely differ- ent now from what it used to be in former days. This gentleman has been a merchant in the grain business for a great many years. He tells me that pretty much all the grain business is done by buying and selling options, futures, etc., so that the actual sphere of buying and selling for real consumption is very small. Q. Compared with the number of fictitious sales ? A. Compared with the number of fictitious sales. Q. And as a teacher of morals, you have no hesitation in express- ing denunciation of such a system ? A. I have not ; I think it wrong and I think it injurious to the community. The evil of gambling, which is prevented by the laws of the State, effects a good deal of injury, but sometimes it seems to me that this gambling on a larger scale produces more injurious results It very often beggars those who are innocent holders of stocks or other ))roperty, and wlio ought not to suffer, because they have not in any way been concerned in the speculation. And, of course, wealthy men can command the ])roperty of others; they can make the property of others wliatever they ])lease in its value. There are evils, of course,, which never can l)e remedied, I suppose, unless you, as the gentleman said here, just now, go down to the foundation of morality; but I lliink society has a right to legislate against an evil which threatens its own pro8])erity. Have you any furtlier suggestions to offer to the committee ? 745 A. ^o, I think that is about all I know on the subject. Recess. Gustave GoWieil called and examined * By Senator Boyd : Q. What is your name ? A. Gustave Gottheil. Q. Where do you reside, Doctor ? A. 681 Madison avenue, New York. Q. You are a clergyman ? A. Yes, sir. Q. Connected with what church ? A. With the Temple Emanuel in Fifth avenue and Forty-third street Q. How long have you been pastor of that church ? A. About ten years. Q. What is your opinion in reference to the whole system of making corners and dealing in futures in grain and other merchantable com- modities, with reference to its influence upon commerce and its effect upon the public welfare : that is, from your standpoint ? A. Well, with regard to commerce I don’t know that I am compe- tent to speak, having very little experience in that line ; my people are to a great extent engaged in commerce, but I only take a very rare notice of what is doing down town ; I have to deal with their other interests, and probably only feel the state of the market when I come 10 ask for subscriptions to charities or such like ; I can therefore say nothing with regard to that ; but, from a moral point of view, I am certainly strongly opposed to all kinds of gambling and to all trades in things that are not really sold ; if I am to take the standpoint of the Ancient Hebrew law, it would be altogether illegal — such trade ; on the Talmudic ground, it would be simply treated as ordinary gamb- ling, and any man engaged in such trading would be disqualified from acting as a judge, or even testifying as a witness ; not only those who do engage in it, but those who assist, such as clerks, or notaries, in any such transactions, would also be liable to a fine, on the public ground that it is wrong to put a stumbling-block in the way of the blind — misleading people, or helping them to mislead others; of course that law has ceased to have any practical value for us, as we ac- cept and live entirely under the laws of the country where we reside, l)ut its moral aspect and its ethical teachings are still a source of our religious light, and we try to bring it to bear upon the actual require- ments of the day ; I hold all kinds of gambling, especially in articles 94 746 which form the necessaries of the iriullitude, is very sinful^ knowing from my experience and my labors amongst the poor liovv hard it falls upon them and how difficult it is to procure the necessaries from the high prices which rule in the market ; and I further tliink tliat the vast accumulation of properties in individual hands by means of this kind of corners and futures is in itself a very strong proof of a hurtful influence. It is natural that a great many young people who start in business should be misled by the reports of the fortunes accumulated through these handlings of corners, and not knowing the dangers, are easily led into trying the same as far as their means permit them, and very often make a false start in business-life from which it is very dif- flcult for them to extricate themselves afterward. Q. Do you think it is the duty of the people, through their Legisla- ture, to attempt to find a remedy for these evils, and, if possible, to pass an act prohibiting or su])pres3ing them ? A. Well, I have not unlimited confidence in such an action, as I knoAV from experience in other fields of moral endeavor, that legisla- tive interference is insufficient to eradicate an evil so deep-seated, and so wide-spread as this is, and having found such eloquent and weighty advocates as it has done here. But I also hold that the people, through their legislators, are bound to try their utmost tojcheck it and not to let it go entirely uncontrolled. A legislative enactment will certainly do something toward stopping the evil, or at all events confining its evil effects to narrower limits. The very fact thiit the Legislature stamps a certain action as illegal must necessarily pro- duce an effect somewhere, and will help other agencies of another character — will support their efforts. If we, for instance, from the pulpit can point to the code of law in support of what we teach on moral or religious grounds, it is certainly a great help to us. Q. Then you think that any thing that tends to educate the masses of the people concerning the existence of such evils and warning them against the disastrous results is beneficial to the communit}" ? A. I think so, decidedly, although there will always be people who know how to circumvent the law. Still, as I have said, there are others who will take warning and be restricted. Q. '’Idien do you think, as you have referred to that subject, that it is the duty of the press and the pulpit, and in fact of every good citizen, to use their influence for the suppression of the evils resulting fi-oin the ])ractice of making corners and dealing in futures ? A. I certainly think so, and as far as I am concerned, I have never failed from tlu! pulpit to warn the })eoi)le against it. Q. D.'imbling in any form, whether it be in stocks, bread-stuffs, cot- ton, ])etrol(mm or cards, yon consider to bo equally reprehensible and injnrions (o the i)nblic V 747 A. Decidedly so. I would, however, make a distinction between : things that affect the masses of the people directly, such as bread- ; stuff and oil and cotton which does so in a very remote degree. It is very little that the workingman has to pay more for his clothing, if cotton rules higher or lower ; it does not affect him so directly. This : I would only object to on the moral ground, but the speculation in grain and such like, I think also, is to be objected to on the ground of ■; humanity, and on the ground of the great social struggles that are now [ occupying the minds of all thinking men, and sooner or later will i press to the foreground, and we shall have to find an answer, r Q. Our civil and common law to a very great extent is based, is it [ not, upon the rnaxims and mandates uttered by the Hebrew law- [ giver ? I A. I think so ; in fact Bunson, a great authority in England, says distinctly that the English law is very largely derived from the ancient I Mosaic law and resembles it very much in many of its main features. ; Q. And can you at present recollect any instance where the Hebrew law-giver denounces such practices as we have been speaking about, to- ■ wit, making corners and dealing in futures and illegal speculation ? A. Well the fact is that the Mosaic legislation was not intended for a trading people, but for an agricultural, and the only reference to a E matter of that kind is in the distinction made between the inhabitant I of Palestine and the stranger; it was forbidden to take any interest ■ not only from the fellow Israelite, but from any one who took up his permanent abode within the limits of the country, and loans could only J be made as a matter of charity, not as a matter of mercantile specula- ; tion ; the institutions of the Seventh year of Rest and the Fiftieth year of Release made loaning of capital for the mere sake of deriving inter- I est almost impossible — certainly not an advantageous speculation; i whilst those who lived outside the country, if they wished to have any : benefit of the capital, they had to pay interest ; but any thing beyond ‘ a limit where a term is used which denotes eating away — devouring — } that means an interest which devours the capital — was strictly pro- . hibited ; so that I believe on Mosaic grounds, corners and dealing in r futures would have been an impossibility ; as I have said the Talmudic ;■ law is far more explicit ; at that time trade was very largely developed ■ in Palestine and they had their enactments accordingly, but they were very strict and explicit in dealing in certain things ; a man was neither allowed to buy nor to sell them ; and they stated that very reason — because the price of an article may grow more or less and therefore create unexpected losses or gains which they considered unrighteous ; that was very distinct. Q. Do you recollect any special denouncement of the practice of withholding the necessaries of life ? 748 A. Oh, yes ; that we have distinctly in Proverbs — that the curse of the people will fall upon such people; that is very distinct ; the iavv shows great humanity on all sides for the poor and the needy allowing them for instance to go in fields and gather the ears or the gleanings ; then in Palestine every poor man in the time of harvest was permitted to go into any orchard or vineyard and eat^ his fill without let or hin- drance on the part of the owner ; in fact pauperism in our sense of the word never existed in Palestine ; it could not ; the law reads in this way — I am speaking now of the Rabbinical law: ‘^Although at pres- ent gone down in his estate he is still a child of Abraham ; his title to his parental inheritance remains intact and at the year of his release he will enter upon his estate as before ; ” then the pledge taking might perhaps come in here ; it was not permitted to take the garment of the poor as a pledge longer' than during the daytime; at night the taker of a pledge had to restore it because it was at the same time his cover for the night ; and in collecting a debt the owner was not per- mitted to go into the house or ask a pledge; he was not permitted to go into the house so as not to put the father to the blush in the pres- ence of his own household ; he had to wait outside until the father brought it to him. Q. Is there any thing else that you would like to offer ? A. Nothing more, Mr. Senator. Archibald Montgomery, being duly sworn, was then interrogated, and testified as follows: By Senator Botd : ^ Q. Where do you reside ? A. 49 Tompkins place, Brooklyn. Q. What is your business 't A. Exporter of grain. Q. How long have you been in that business ? A. Since 1847; thirty-five years. Q. Are you a member of any firm ? A. The firm is Montgomery Brothers, No. 1 State street. Q. Are you a member of the Stock Exchange ? A. No, sir. il. Have you ever been a member? A. No, sir; tlie Produce Exchange. (^. You arc a member of the Produce Exchange ? A. V(!B, sir ; 1 liave been, since its foundation. (2- Please state to the. committee your opinion concerning the whole flyslem of making corners and dealing in futures, with reference to its ‘ (feet uj)on commerce and its inlluencc upon the public welfare ? 740 A. I have very strong views on that subject ; I think it is very dis- astrous in every aspect and to every interest, more especially to me- chanics and the laboring classes, upon whom the burden ultimately falls; there is one redeeming point in this trading which I think is perfectly legitimate, and that is dealing in futures under proper rules and regulations, either of the Exchanges or the legislators ; I notice * that most of those who have appeared before you, so far as it has come under my observation, all desire, which is natural, that the Legisla- ture should not interfere with thes Eexchanges; like most individuals, they think they can manage it better themselves than by any legislation ; I beg to differ a little with them ; from a cursory glance at the evi- dence whicii has been given me, taken before your committee, both here and at Buffalo and elsewhere, I take it that there is but one opinion on the evil effects of this selling what you have not got, from which the whole evil rises ; selling what you have not got, if you can stop that, you stop corners and you stop all this gambling in the staff of life ; trading in futures legitimately is almost an absolute necessity' at the present day ; it certainly is a great facility to business both from the w^est, to the east, and from the east to foreign ports, and if you can only by the Legislature or through the Exchanges have these sales for future honafide, and a man will be prohibited from selling what he has not got, then the evil is remedied at once ; like all other good laws there are always some men to break them ; there is a law against murder and a law against many other evil things, but we find men every day breaking them ; what we want is just, honorable judges, and when those men are brought forward that they will punish them ; be- cause I see some parties arguing that gambling laws are broken, it is no reason in my mind that good laws should not be made and carried out ; I will not take up your time, gentlemen, the committee and the reporters must all be very tired of this investigation. I still feel a deep interest in and am ready for legitimate business, but not for this gambling business ; the deal which I have heard referred to so frequently, called the Keene deal, which I always understood was Jesse Hayt & Co/s deal, I am more familiar with than with the recent corners, for the reason that it impressed itself on my mind, having suffered very severely from the effects of it ; if you gentlemen choose, you can examine the correspondence at that time which I have here, which will revive the matter in your mind ; it is quite fresh in mine ; you will see a letter there addressed to the president. Colonel Hincken, who appeared before you, to call a meeting at that time to endeavor to find some remedy, but he declined to do so; now I have been enligh- tened by the testimony of the last two days of such men as Vanderbilt, Gould and Mr. Beecher, etc., and when I find that such men as they 750 cannot suggest any remedy, it makes me doubt my own ability, and I do not come with so much confidence here to suggest a remedy as I should have done a few days ago, submitting to tlieir judgment ; I wfill,however,just take one moment and refer to the evidence of a gentle- man who appeared before your committee at the last meeting in No- vember, and an old friend and neighbor of mine, Mr. Alexander E. Orr, a gentleman for Avhom I have the highest respect, both for his intelligence, his perseverance and his indefatigable ness ; whatever he undertakes, he undertakes with an honest purpose and carries it through; but I find that accidentally I have no doubt he has in the figures made a slight mistake which I will endeavor to point out; I think you have got a copy of his testimony ; if you will kindly turn to page 29 and refer to the bottom he says: ‘^The export of wheat and flour taken together during the crop year 1879 and 1880 (Mr. Pierce’s corner) was the largest ever made before or since in the history of the United States;” I would not have referred to this so particularly gentlemen, but “ ever made ” is in italics, putting emphasis upon it; “ yet Mr. Pierce would have you believe that the grain that year was held above the reach of export and that the ships were tied up to the docks, waiting cargoes in consequence; ” that is a fact, they were ; I know it; ^^to show that the movement was not confined to the city of Ne\^York I give the values of the bread-stuffs in currency of the United States ;” now, gentlemen, I will simply ask you to open this book at page 410 (referring to a copy of the Annual Report of the New York Produce Exchange) which is the same authority he quotes from — our statistician ; he works at it day and night ; the only excuse he has for working day and night is that he is an old bachelor; page 410 Q. You read now from the rules or by-laws of the Produce Exchange ? A. I am reading from the statistics which Mr. Orr has referred to as to the exports and average prices. Q. An extract from — A. From this year’s report, 1881; this is official; Mr. Orr, in referring to this matter, puts the export as being the largest either before or since up to this time. I know it is pierely an error of whoever he has intrusted it to, but what I wish to call your attention to, gentlemen, is the fact that in the first four months of that crop year to wliich he refers, eighty million bushels were exported from this country ; the following four months, by reason of the advance from 110 to 100, it resulted in an export of only about thirty millions the following four months, when they had to loosen their grij) a litile — could not hold on — it increased fifty per cent from the ))n‘vions four months about. Tluit is all T have got to say on that. I liavc great luvsilatiou, gentloimm, in criticizing anything of Mr. Orr’s, f)Ut this is a very impui-tant subje(;t, and 1 am sorry that we differ in 751 our conclusions and conceptions, and therefore I would pass it over without criticiziug it at all, but here he comes on page Si8, and also quotes from this same book — and which this book, verifies — the figures are entirely correct — commencing with September, 1879, wheat lOOf, ranging up to 130, September, October, November and Decem- -ber. The range is absolutely correct as taken by our statistician from the books; but they do not quite explain it thoroughly ; that is to say, he gives a range of 109 to 160, but he does not give you the average. That 109 was the first of the month, and it kept continually going up until it got to 130. It kept going up with slight fluctuations from the first of October — it went down from the 28th to the 31st — and for four months it kept continually going up so that the average is a great deal more than you would imagine by taking the average from the extremes. That was on the upward turn. On the downward turn it was, of course, the reverse. Now as regards the statement that ships were not interfered with — however I do not care to quote any more. I will state this without fear of contradiction from any one — that on this occasion of the Keene deal or Hoyt deal, as I crJl it trade was entirely demoralized and the merchants put at their mercy I think a merchant w'ho provides for the future as I have heard so well spoken of to-day, either by superior judgment or by knowledge from others, or any w^ay in which he can get it, is perfectly justified in look- ing into the future and having any advantage that may legitimately arise from it, but if they continue the present mode of doing busi- ness, it is only a question of time when we will not have a merchant in the United States in the commercial line — there will 'be nothing but a nation of gamblers. Now there is just one point that I would like to make, and that is this : that the power at Albany or at Wash- ington — because, gentlemen, I was nearly forgetting a point I would like to state — I hardly think it w'ould be fair to legislate at Albany to control the business of New York unless the National Legislature a, Washington can put all the States on an equality in that respect, because it v7ould naturally drive people to New Jersey or somewhere else, but I do think the Legislature that have granted our Exchanges such privileges have the power to amend or correct that power and I chink there is a case in point just now that I will just call your attention to. If you will kindly turn to Eule 32 of the by- laws which was read to you before, referring to this corn deal of November, and which is still unsettled — arbitration in regard to its going on — I will read you the section : ‘‘Eule 32, Sec. 1. In case any property contracted for future delivery be not delivered at maturity of contract the purchaser shall notify in writing the committee on grain of the failure to deliver, and the committee on grain shall at 1 752 the next call publicly read such notice and buy in the grain for ac- count of the party directing the purchase, hut no unreasonable price shall be paid arising from manipulated or fictitious markets, or un- usual detention in transportation. Any legitimate loss resulting to the buyer shall be paid by the party in default, and the grain so bought in shall be a good delivery on defaulted contracts maturing that day.” Now, gentlemen, one word on that point. The corner in corn on this last month, November, which you are all familiar with, resulted in a settling price of *^1.10. One gentleman not having the corn to deliver refused to pay that exorbitant price, knowing that the very party he had to deliver that corn to Avas selling it for export, and for home consumption at ninety cents. In fact as he testified himself yesterday in almost so many Avords, he Avas buying at $1.00 Avith one hand and selling Avdth the other at ninety cents for the purpose of squeezing these shorts. And these shorts deserved it. But whether that is not manipulation, gentlemen, I leave it to you judge. Adjourned to December 18, 1882, at 2 o’clock, p. m. [From the New York Herald.] The Blockade in Bread-stuffs. A letter was addressed yesterday to the president of the New York Produce Exchange by a leading merchant in that branch of trade, asking him to call a meeting of the members to ventilate and discuss the disastrous effects of the present blockade in breadstuffs, Avhich bears injuriouslv upon many interests. e doubt Avhether such a meeting Avould do any good, although it Avould be interesting to hear the vieAvs of intelligent merchants on the remarkable crisis and dead- lock Avhich has so long existed in that great branch of our commerce. But the Keene clique — dignified Avith the pompous name of a syn- dicate” — Avhich holds such vast quantities of grain blockaded in Chicago, Avill not loosen its grip in consequence of any remonstrances, however earnest and indignant. This enterprising and resolute syn- dicate ” did not ask leave of the Produce Exchange or the public be- fore undertaking its gigantic speculation, and it Avill turn a deaf ear to ])rotests. The food-consuming public in our sea-board cities have an interest in common with the grain dealers, but the members of the Produce Exchange care little for the high prices paid by the com- munity. d'lie place where tlie shoe pinches with them is the stagnation of tlieir own trade; l)ut consumers, of course, Avish them success in any clToi-ts they may make to break the blockade. Still, appeals to jtublie, opinion amount to nothing in such a contest. New York, January 22, 1880. To Edward Hikckek, Esq., President New York Produce Exchange : Sir — I take the liberty of suggesting that you call an early meeting of the members to discuss the present blockade of bread-stuffs in order that some remedy may be found and trade be permitted to resume a legitimate form. As you are well aware of the various interests seriously affected by the present blockade (their long patience and forbearance), I think it behooves you as the head of so important an institution to set the ball in motion, and the result I think will justify the same. There is a point when patience ceases to be a virtue, and that is already reached. With great respect yours truly, ARCH. MONTGOMERY. New York Produce Exchange, ) New York, Jayiuary 23, 1880. ) A. Montgomery, Esq., No. 1 State Street, Neio York : Sir — Your letter of this day is at hand. The Produce Exchange has never taken any measures of the nature you suggest to break the many corners” that have occurred in different articles of merchan- dise, nor has it, in my opinion, the right or authority to resolve ” that holders of produce have not the liberty to hold their wares for such price or time of sale they deem for their interest. Trade cannot be regulated by “ resolutions,” but will regulate itself through the usual means. I respectfully decline to call the meeting you suggest, and remain, Your obedient servant, EDWARD IIINCKEN, President. It is only to the laws of trade, which are as sure in their operation as the physical laws of nature, that the public can look for a remedy in such a crisis. The Keene clique will break down because it has miscalculated. It has failed in forecasting the state of the markets, and must suffer the consequences. The foreign market has proved dull when they expected it to be brisk and eager. For the last three or four weeks the grain trade in England has been reported as unusually slack. There are large supplies in store ; also large supplies affoat bound for English ports ; but the demand is feeble and the purchases small. The Mark Lane Express of January 20 says that ‘‘sales are only prac- ticable at a decline of a shilling per quarter.” The same journal says that “ imports of foreign wheat have mostly gone into granary, as the 95 ♦ I 754 consumptive demand has been very inanimate, lack of confidence be- coming apparent.” The same authority says that stocks are increas- ing, not only in London, but in Marseilles and Bordeaux, while the quantity of wheat afloat still exceeds 2,200,000 (piarters” (17,000,000 bushels, a greater quantity than is now under blockade in Chicago), ^^aiid while a further decline in New York augurs unfavorablv for the success of the American speculation for a rise, the presence of impor- tant stocks in the French port is sufficiently significant.” This is a gloomy outlook for the Keene syndicate. Mr. Keene and his copartners are, no doubt, very shrewd men, but they are in a fair way to repent of their stupendous speculation. In making their calculation they left out several important elements. In the first place, they were misled by the wonderful activity of the for- eign grain trade in the early autumn months. They mistakenly re- garded this as evidence of a demand which would continue until the next harvest, whereas it only evinced the foresight and enterprise of European speculators, who promptly purchased wheat in America as soon as it was known that the English harvest would be deficient. They made haste to buy at once as much as they felt certain they could sell at a profit, and overstocked the immediate market. The Keene clique made the mistake of supposing that the great amount of wheat shipped to Europe during the autumn represented a demand for immediate consumption, when, in fact, it was a mere precaution against a great rise in American prices, looking to the future, and in- tended to secure the profits of the winter and spring trade for Euro- pean instead of American speculators. ' Another great miscalculation made by the Keene syndicate was its underestimate of other sources of supply than Amejica. The mild- ness of the early part of the winter kept the Baltic ports open to an unusually late period, and English trade statistics show importations of wheat, from Dantzic, Stettin, Hamburg, Denmark and St. Peters- burg, as well as from Odessa, Trieste, Egvpt, Chili, Australia and New Zealand. The artificial keeping up of the price in America has simply had the effect of enabling the other wheat exporting countries to market their product. Their supplies have been poured into Eng- land and have kept down the price, while the Keene syndicate has maintained its blockade at Chicago in the vain expectation of a rise which has not come, and which the present state of the English juarket shows is not likely to take place. The Chicago “corner” will necessarily break, and it is now a ((uestion not of weeks but of days. To ])orrow the apt word of the London Economist, the Keene operation has been “isolated.” It could have been successful only 755 by controlling all the grain marts of the world. The isolation,” says the Economist, “ to which this operation for the rise has been ^ reduced, suggested the idea of a silent coalition in Europe to counter- act, through isolating it, the influence of this association, and also through establishing counter centers of speculation in the principal towns of Europe , where these influences are at work.” The Econo- mist says that the reported fall of wheat in New York “ shows how difficult it is to keep up artificial prices within a limited area, and it Avould be still more hazardous to extend the enterprise further.” It is said that a clique or syndicate has been organized in Berlin, 'making that city a center to work up the rise ; but if so, it evidently amounts to nothing, considering that the price does not go up and the demand continues slack and feeble. Mr. Keene and his associates will make no money, but they will gain some wisdom. Communities may safely trust to the beneficent operation of the laws of trade. When the supply of any great necessary of life really falls short it is no detriment to the public if speculators buy up all they can and hold it for higher prices. The increase of price dimin- ishes consumption and makes the scanty supply last until another harvest. But if speculators make a false estimate of the proportion between supply and demand they are sure to pay a heavy penalty. By retrenching consumption in the early part of the year they create an artificial abundance in the latter part when prices go lower than they would have done if left to themselves. The Keene syndicate has enabled the other grain exporting regions of the globe to market their wheat, and when the sluices are opened at Chicago there is likely to be a decided decline in prices in view of the large stocks and moderate demand in the principal importing countries. It will be found, in this instance, that vaulting avarice “ o’er-leaps itself and falls on Tother side.” « B.” The 1879-80 Corher ih Wheat. Sir — The largest estimated requirements of the United Kingdom claimed by the greatest “ bulls ” for the cereal year 1879-80 do not exceed 17,000,000 quarters of wheat, say 136,000,000 bushels, and even this amount they admit may be greatly reduced by an average early harvest in 1880. There have already been shipped from Sep- tember 1 to October 25, from four United States ports (New York, Philadelphia, Baltimore and Boston) and from Montreal wheat and flour reduced to bushels, 23,256,000 bushels, equal to 139,536,012 bushels, for the year, or a surplus of 3,500,000 bushels over the yearly 75G requirements, and it must be remembered New Orleans, California Portland and other minor ports are not included in the above state- ments, as well as other foreign nations from which supplies are usually received. Of course no one supposes that the above-mentioned four United States ports and Montreal can continue the same ratio of exports dur- ing the winter months with the St. Lawrence river and the Erie canal closed. But our railroads are daily increasing their rolling stock and extending their lines, and with an open winter the present high prices to farmers, and remunerative rates of freight, people will be aston- ished at their capacity when all the terminal facilities on the New Jersey side are completed, and cars can be unloaded without delay and at once dispatched for another freight. Besides, New Orleans, during the winter months, may be expected to make good the loss of Montreal, judging from the energy and enterprise of St. Louis mer- chants and the recent improvements of the Mississippi river by jetties, etc., and new lines of foreign steamers. The amount of wheat “in sight '’ is unprecedented, 25,691,223 bushels being the lowest esti- mate, while some authorities make it over 28,000,000 bushels. In fact, the storage capacity of the different centers are now pretty well taxed, judging by the stocks held at various points and the large daily receipts at Chicago, Milwaukee, Detroit, and other receiving points. It will be well for speculators to bear these facts in mind. Legiti- mate business in the grain market has been an impossibility of late, and somebody will yet ‘‘get his fingers burnt” if it is continued. Other countries sometimes spare “Old England” some of their “staff of life ” in exchange for her gold and goods, althougli I grant that the United States are ahead this year. But high prices reduce con- sumption, extend the sources of supply, and increase production the world over. OLD FOGY MONTOOMEKY, Who has had thirty-two years’ experience. New York, Novemler 1, 1879. The Grain- Blockade — How it Came About — A Grain- Export- er’s Views. 7b fJie Editor of the Hercdd : T\\q fact tliat the European crops of last year were more or less de- ficient and of poor (piality is indisputable. The shrewd and far-see" ing Furopean mercbants began buying wheat here and elsewhere as (•ally as .June last, and bought immense quantities for immediate and fill lire deliveries at lowest rates before we had any suspicion of their 757 actual wants, and when the truth dawned upon us they had already secured sufficient quantities to make them, in case of need, independ- ent for months to come. They would have continued to buy at gradually enhanced prices but for our sudden advance forty to fifty cents per bushel, which they considered unwarranted, and adopted then the waiting policy. They freely admitted and still do admit that they will want all the surplus wheat we can spare, the only question being, Who is to dictate as to the rates, Europe or America ? They also acknowledge that if we had the power and endurance (which they doubt) to hold on long enough we would have eventually the upper hand. The present sudden, needless and 'ignominious break, caused prin- cipally by short sales, proved the correct European estimate of our lack of endurance, and Europe will, therefore, l^uy very cautiously until a steady and firm market has been established and is not constantly swayed by the action of bulls and bears. An approximate estimate by the best European and American authorities of the world’s cereal crop of 1879 and its wants shows that, with proper economy, there will be enough to go all round, but not much to spare. Our present prices are, under the circumstances, very moderate. One of the principal arguments for lower prices is the large visible supply here and on passage to Europe. But this is only delusive. The situation has not changed in the least. The actual results of the last year’s world’s crop remain the same, nor have the estimated wunts di- minished. The only difference is that the high prices had the effect of drawing large quantities of wheat out of farmers’ hands, trans- ferring same to warehouses and elevators, and showing a large visible supply which otherwise would still have remained ii\ farmers’ hands invisible. The large stocks, visible and invisible, will all be necessary to supply the wants of the next seven months, until the new crop is available. The average prices of wheat in the United Kingdom dur- ing 1868, ’71, ’72, ’73 and ’74 were 7s. to 10s. per quarter, equal to 20c. to 30c. per bushel higher than they are now, although their average crops during that period were 12,500,000 quarters, equal to 100,000,000 bushels against 5,000,000 quarters or 40,000,000 bushels last year, showing that the present prices are comparatively low. The actual reason why there is no export demand is to be found in the constant manipulations o^^ our markecs by the so-called ‘^clique” or ‘^syndi- cate, ” and the consequent violent fluctuations. As a grain exporter my bussness, like that of my neighbors engaged in the same trade, has greatly suffered on account of the prevailing speculation ; but I am sure that as soon as steady and firm markets 758 are established and maintained, confidence will be restored and the ex- port demand revive on a large scale. Concerning the shipping interests, it undoubtedly suffers from the general stagnation of the export trade, not because bread-stuffs are too- high, but for the temporary lack of European demand. The moment the demand sets in you will find the shipping interests quite ready and quick enough to advance rates of freight even to an exorbitant degree if such would suit their purposes, and many a time the high rates of freight forced holders of merchandise to lower prices and even pre- vented business entirely, so we need not put too fine a point on this matter. In conclusion, I beg to state that the natural laws of trade and com- merce will soon put matters right, and the transgressors will meet with their due reward. Yours truly, • J. LOUEIE. The Graih Blockade. New York, February 4, 1880. . To the Editor of the Commercial Bulletin : The public interest at last aroused in the above subject must be my apology for addressing you — and if space admits, ask a hearing. I am encouraged to do so from the fact (which I am glad to see) that your columns have been open to the views of an Exporter^’ (J. Low- rie. Esq.) ; and being nominally in that line of business myself, do not view matters in the same light as he does, though suffering, as he admits, in common with others in that branch of commerce. And here permit me to say that I have no axe to grind, not being interested ‘Mong or short” one bushel on this season’s crop. I am led to say this from his remarks, that the Press reports are mostly based on information derived from interested parties anxious to further their own views.” The so-called syndicate,” as I understand it, have, no doubt, the pecuniary ability to hold as long as they may see fit ; but I give them credit for more sagacity than to suppose they will continue to' do so when convinced, as they must soon be, that it is a hopeless, and, in my opinion, an ill-advised operation. Holding grain subject to heavy storage and other expenses, and liable to get out of^ condition, they will find very dilfcrent from filling their vaults with bonds, stocks, and other ])ortable securities; for, as I understand it, it is Wall street that holds the bulk. The fact that European crops last year Avere largely . Who are those agents ? A. Well, wc have agents, sir; plenty of brokers there ; people on the fioor. Seymour, Hunt & Co. we do business with, in Chicago. 775 Q. You haven’t any special agent thereto transact business there for you? A. No, sir. Q. And I presume you will admit that the transactions carried on in your Exchange are purely speculative, depending upon the condi- tion of the Chicago market, as you obtain information through the Western Union Telegraph Company? A. They are no more speculative than all transactions in merchan- dise or any other commodity ; I deem all transactions in trades peculative. Q. Then your transactions are purely speculative ? A. Not purely speculative any more than any other transactions in merchandise. Q. Are they impurely speculative? A. I don’t think they are impure; no, sir. Q. About what number of persons visit your Exchange, in a day, on an average ? A. I should say 100 — 150. Q. Persons of all ages, I suppose ? A, Yes, sir. Q. And all conditions in life — females ? A. No, sir ; we do not have any female. Q. Had your Exchange any losses in to-day’s transactions ? A. We had, sir. Q. Had your customers losses, also ? A. They had, sir. Q. What proportion did the losses sustained by your customers bear to the losses sustained by yourself ? A. I think we will come out behind to-day. By Senator Bkowkixg : Q. Mr. Van Bokkelin, you keep an account with some bank I sup- pose ? A. We do, sir. Q. Do you know the balance to your credit in the bank now ? A. I do not, sir. Q. Have you ever made a dividend to the shareholders since the company was organized ? A. Not since I have been there. Q. Was there one declared before you went there ? A. I have no knowledge of the prior business. By Senator Boyd : Q. How often do your stockholders meet do you say ? A. Once a year. 776 Q. You have not attended any of their meetings ? A No, sir ; our annual meeting is in January. Q. Has the next meeting of your stockholders been called yet ? A. It has not, sir. • Q. Where is your place of business situated ? A. 63 Broadway. Q. Where do your stockholders meet when they assemble annually ? A. I have no idea. Q. Does the Exchange keep a bank account ? A. We keep a bank account, yes, sir. Q. In what bank ? A. It is kept with Donald, Lawson & Simpson, 102 Broadway, Q. Are your gains for the day usually deposited in that bank, daily ? A. No, sir. Q. How frequently do youmiake deposits ? A. Very seldom. Q. Where"does Mr. Washington Barrow reside in New York — what street and number ? A. His place of business is 66 Broadway. Q. What business is he in ? A. He is engaged in the stock business — Barrow, Young & Com- pany. Q. There is another who resides in the city ? A. The other is Mr. Brown, I don’t know where he resides. Q. Do you know where he does business ? A. No, I do not; I have seen him in the office of Barrow, Young & Company. Q. Do you know where any of the stockholders reside ? A. I do not, sir, excepting Barrow; Barrow is a stockholder. Q. Could you furnish this committee with a list of your stock- holders ? A. I could, sir. Q. Can you do it to-morrow? A. Yes, sir; no, I would not say to-morrow, because the gentleman who will iprobaby give me the information is out of town. Q. When could you do it? A. 1 could certainly do it by Thursday ; I might do it by Wednesday, I’y Senator Browning : (,1. Arc any of the incorporators members of the Produce Exchange ? A. I don’t know some of the incorporators and so I cannot answer. By Senator B()Y 1 > : (^. How many persons do you employ in your office ? 777 A. Well, eight. Q. What are the respective duties of those persons ? A. Book-keeper, cashier, assistant book-keeper, boys to co])y quota- tions, regular quotations, a man to call off the quotations, a man to mark them down. Q. Do your books show a detailed and correct account of your transactions daily? A. Our sheets do, yes, sir. Q. You do not keep any correct account of all your transactions, do you? • A. Yes, sir; we keep them on sheets instead of in books and those sheets are filed away as books you may say. Q. Yow, Mr. Van Bokkelin, this committee would like you to tell if you know what persons are the beneficiaries of your Exchange ; among whom are the profits divided ? . A. How do you mean — the class of people? Q. How many persons are there? A. You mean in the course of a year or the course of a month? Q. I mean the members of your business — the persons who reap the benefit of this Exchange? A. I suppose there are 500 in the course of a month. Q. You refer to the customers? A. Yes. Q. I mean the proprietors or persons who control and manage and derive the profits of the business ? A. That depends upon how many stockholders there are. Q. Can you tell how many there are ? A. No, sir. Q. Are there five ? A. I don’t know whether there are five or fifteen. Q. Are there more than fifteen ? A. I don’t know how many there are. By Senator Browning : Q. When were you elected ? A. About the middle of August, sir. Q. Last August ? A. Yes, sir. Q. At a meeting of the managers or incorporators ? A. I was put in charge by one of the directors of the company. < 3 . By the directors ? A. Yes, sir. Q. How many were present at that meeting, if you know ? 98 A. I was put in charge by one of the directors. Q. He came and told you that you had been selected as manager ; that you was to take that place ? A. He asked me if I felt competent to take charge of the place. I told him I did ; he said he wished I would do so. Q. And you took the place ? A. Yes, sir. Q. And you hold it to-day ? A. Yes, sir. Q. How many others beside that gentleman connected with the Exchange have you ever met ? A. I have met four of the incorporators. Q. You have met four of the incorporators ? A. Yes, sir. Q. Unofficially? A. Yes, sir. Q. That is all you have ever met ? A. I may have met more. Q. If the committee should call upon you to produce the sheets that show the amount of the transactions, are you able to do it ? A. I am, sir. I have got nothing that I am afraid to show. You are welcome to see every paper and ask every man that I have dealt with since I have been there. If you can find a place in the city of Yew York where you can go and get a fairer and squarer deal, you have got to look for it. By Senator Boyd : Q. How many such places are there in the city of New York ? A. I said before I did not know of another one that dealt in as large lots as we do. Q, I mean similar ? A. There are two other houses that deal in small lots I believe. Q. Only two others ? A. To my knowledge. I have not bothered myself to look around; I attend to my own business. By Senator Browning : Q. You do not interfere with other people ? A. No, sir. By Senator Boyd ; Wlio was tlie gentleman you had the conversation with, with re- gard to entering into the employ of the proprietors of the Exchange? 779 A. Mr. J. E. Barrow. Q. This gentleman who does business at 66 Broadway ? A. No, sir, G. W. does business at 66. Q. Where does J. E. Barrow live ? A. He has no regular home. He is in Washington city at the pres- ent time. Q. What is his business ? A. He has retired, sir. Q. Not in any business ? A. Not in any business. By Senator Brownii^g : Q. He has not retired on the profits out of this institution, has he ? A. I think he retired long before he had any stock in this institu- tion. He is a man of large means. By Senator Boyd : Q. What interest have you in the proceeds of this business ? A. A salaried interest, sir. ’ Q. That is all ? A. That is all, sir. Q. What is your salary annually ? A. Well, is it important that I should state that fact? Q. I would like to have you. We want to find out how profitable this business is and what salary it can afford to pay ? A. My salary is so small that I am a little ashamed to name it. Q. Then you do not , run this business on your own account, do you ? A. I have no interest whatever in the gains and losses excepting so far as making it successful and that it may redound to my credit here^ after. By Senator BROWNii^G: Q. As a business man ? ^ A. As a business man. By Senator Boyd : Q. In case there were heavy losses sustained by the Exchange, who would supply the money to pay those losses ? A. It would come from the capital, sir. Q. That is, the capital stock ? A. Yes, sir. Q. Of 825,000? 780 A. Yes, sir. Q. Where you have such large transactious of course if your losses were continued for some time the $25,000 would soon run out. Who would supply the deficiency ? A. We are doing business under a charter as a stock company and I suppose the only thing would be that the stockholders — I believe there is a law of that kind — .By Senator Brownin^g: Q. Have you ever touched the capital yet ? A. No, sir, it is in tact. Q. You have never been compelled to draw on it ? A. Never, sir. Q. You do not expect to be, I suppose ? A. No. By Senator Boyd : Q. How much has been added to the capital stock since the busi- ness was started ? A. I don’t know. Q. How many dividends have been declared since the business was started ? A. None, since I have been there. Q. I mean since business was started ? A. I have no knowledge of that prior business. Q. Wliat amount have you deposited at the bank where you do busi- ness at the present time ? A. Our cash — I keep that in my own safe, as our business transac- tions close after bank hours and I am obliged to have the money to pay to customers if they come in and ask for it. By Senator Browning : Q. Do you have a watchman down there to look after it ? A. 1 don’t leave it in that place. I have a vault, I leave it in a vault. You can see readily that I cannot tell at two o’clock whether I urn going to pay out one, two or three hundred dollars. PORK. Puiujc I’roduce Exchange, Limited. No. 1 hereby sell yon poi’k (as the order may be given below), and agrees that if I do not, without notice, keej) good my margin below rriarkel price, as per (|Uot;iti()ns posted from time to time on the black- Iroanl in said Mxchange, yon may, without notice, sell tlie pork, for my lutconnt. or cancel the con tract at any time. If my margin shall at any time he eniii’cly exhausted, the contract shall thenceforth be iiiopera- 781 V live aud void. I authorize the proper filling of any blanks below which I may neglect^ and the correction of any errors in price or time named in this order. New York, 188 - According to the above conditions, I sell barrels of mess pork, at per barrel, commissions to be added to said price, for de- livery in next. Margin, $ Time, Public Produce Exchange, Limited. No. New York, 188 . I buy of bbls. mess pork, at, per barrel, for delivery in next. Makgin. Exhausts. Public Produce Exchange, Limited, S. D. C. VxiN BOKKELEN, Managing Director. Close this at WHEAT. Public Produce Exchange, Limited. No. I hereby buy from you wheat (as the order may be given be- low), and agree that if I do not, without notice, keep good my margin low market price, as per quotations posted from time to time on the blackboard in said Exchange, you may, without notice, buy the wheat for my account, or cancel the contract at any time. If my margin shall at any time be entirely exhausted, the contract shall thenceforth be inoperative and void. I authorize the proper filling of any blanks below which I may neglect, and the correction of any errors in price or time named in this order. New York, 188 According to above conditions, I buy bushels No. 2 spring wheat, at per bushel, commissions to be added to said price in delivery in next. Margin, $ Time, Public Produce Exchange, Limited. No. New York, 188 . I sell to bushels wheat, at per bushel, for delivery in next. Margin. Exhausts. Public Produce Exchange, Limited. S. H. 0. VAN BOKKELEN, Managing Director. Close this at 782 J. R. Keene, being duly sworn, was then interrogated, and testified as follows : By Senator Boyd : Q. What is your name ? A. J. E. Keene. Q. Where do you reside ? A. In the city of New York. Q. What is your business ? A. Speculating, I suppose. Q. How long have you been in that business ? A. I should think for twenty years. Q. In what cities have you been chiefly engaged ? A. The city of Snn Francisco and the city of New York. Q. What is your opinion concerning the whole system of making corners and dealing in futures with reference to its effect upon com- merce and its influence upon the public welfare? A. Well, it is very diflicult to answer a question so broadly put as that, but if you will precisely state the question 1 will give you a pre- cise answer to it. Q. That is the reason why I have put that question — because it expresses the purpose for which this committee was appointed ? A. Yes, I understand, sir ; but you want to know my opinion — Q. And your knowledge with reference to the effect of corners upon the public welfare and upon the business of the country ? A. Well, I have never known a corner that ever worked any injury to the business of the people of the country since I have been in New York, excepting one, because all the corners we have had in commodities have been in bread-stuffs and they have lasted so short a length of time that their influence, so far as raising the price of the necessaries of life, has never worked any injury whatever. Had they been protracted over veiy many months they might possibly have worked considerable in- jury to the consumer ; but on the contrary, the agricultural interest has been very much benefited by the advanced prices those corners have occasioned, and as we are an agricultural country, and the basis of our p)-()sperity is agricult;ure, I think any interference with any rules of (loijig business would be very unfortunate. I don’t mean at all to advn(;ai(‘ th(* cornering of any thing, because I think it is a foolish thing and always redounds to the disadvantage of the promoter, but at tin KaiiM* lime I have never seen but one corner that has ever worked any jmblio injury in Ibis country. . What corner was that? / 783 A. That IS the corner that at present exists in coal; that arranjrye- ment between the anthracite coal companies which fixes the price of coal and has fixed it for three or four years at a price which bears heavily on every consumer, is out of all proportion to what they should * sell it at. That is the only corner 1 know of that ever worked any injury in this country. Q. Do you know how that corner originated? A. That originated out of the necessities of the corporations who, burdened with excessive debts and enormous stocks, had to resort to that means of making money in order to pay dividends and interest upon their bonds and stock. That corner has been continued for a long time and of course the public are compelled to pay a great deal more than they ought to for the article. Q. Who are the persons who have originated and still carry on that corner in coal ? * A. The heads of the various coal companies who perhaps have done what others would have done in their places — combined for the pur- pose of advancing the interests of their companies ; but it has been done at the public expense and unwarrantably done. Had the situation of the stocks and bonds of these corporations been what it ought to have been; if there had been wise investments made in the first place it would not have been necessary, but there has been an extension of so much water in that, that in order to pay dividends and keep their heads above water, they have been compelled to combine and put the price of coal at what I consider an excessive rate. Q. Please explain what you mean by the system of watering as car- ried on by those persons ? A. Well watering stock means increasing its capital without giving any equivalent therefor. It also means the private purchase by par- ties interested in the corporation of property, at one value and selling it to the corporation at a very large advance where the company does not get the proper equivalent. Of course these payments are made in shares and bonds, and the result is the same. Q. To what extent has the system of watering stock been carried on by the coal corporations? A. Well, I don’t know; I do not know that I could cite any instance so far as the coal companies are concerned, excepting that they have been compelled under the pressure of hard times or were compelled a few years ago under the pressure of hard times to increase their bonded indebtedness and their stock indebtedness from the simple fact that they failed to earn sufficient money to i^ay their necessary disbursements and expenses. But I don’t know of any increase of the capital stock except under their pressure. 784 Q. AVhat other corporations, it any, liave contributed to tlie corner- ing of the coal crop besides the coal corporations themselves ? A. Well, I don’t know that anybody else has been a party to it except those that were interested parties. Q. Explain how they have conducted their corner ? A. They have combined together to fix the price of coal, and have agreed arbitrarily to maintain that rate ; the consequence is it is practically a corner, and as coal is j^robably the most important of all products that we have, its injury to the great manufacturing interests of the country cannot be overestimated ; while it is charged that anthracite coal, which is the coal that these companies mine, and arbi- trarily fix the rate of — I say, while it is charged that very little of it goes into the manufacture of pig iron, it nevertheless has an influence upon the price of the soft coal ; one reacts upon the other and with dear coal of course we have dear iron and all the results of it. Q. Can you state to the committee how much the price of coal, per ton, has been increased above its natural value by reason of the corner to which you have referred ? A. I should think coal was selling at one dollar a ton, at tide-water, more than the company should sell it at, with a due regard to the interests of the public. By Senator Browkikg : Q. That has been done by limiting the supply, has it ? A. No, sir ; oh, they limit the supply, yes, but the consumption has very largely increased in the last three years. By Senator Boyd : Q. But that was done by arbitrarily fixing their price as you have stated ? A. Yes, sir ; and the production has been limited from time to time, in order to maintain that j)rice so arbitrarily fixed ; coal is selling for almost twice as much as it is in England. Q. And does the cost of production amount to any more in this country than it does in England ? A. Wages or labor may be a little higher here, but I should not think tlierc would be very much difference in the cost. Q. Is tlic cost of transportation from the coal fields to tide-water any more ])er mile jxu- ton on coal than it is in England ? A. 'Tliat I don’t know, sir; I should think not, however. (2. Wliat is your opinion concerning the system of dealing in Inl II n*H ? A. I don’t tliink tliat the commerce of the country and the business ♦ •f tin* country criiild b(‘ carric'd on without that system. 785 Q, You were in the room while the last witness was being examined were you not ? A. Yes, sir. Q. Did you hear his testimony ? A. Yes ; I hoard a portion of it. Q. What is your opinion of the effect of such a business as he states that he carries on upon the public welfare ? A. I should think it was rather demoralizing in its tendency, inas- much as there is no pretense to make deliveries of any thing purchased or sold, and it resolves itself into'a pure act of gambling. As I under- stand from what the witness said, they keep a bank and the other people play against them. Q. And all business conducted in such a style you consider is de- moralizing ? A. Yes; I consider a business of that kind — I cannot call it a business — it is not a business — it is a pure gambling act ; I am not defending gambling at all. As I don’t seo that there is any clement of business in it I am probably not a proper person to answer that question. I cannot contribute any thing that you do not know in reference to it. Q. What remedy would you suggest for the suppression of such a system of — we will call transacting business as the last witness has described ? A. Abolish it by law. Q. Then you think it is the duty of the people through their Legis- lature to provide laws for the suppression of all such systems of deal- ing ? A. I should think it was the duty of the law-makers to abolish that system of dealing. Q. Yow where such sales are made as the last witness described, whether it be in the Produce Exchange or Stock Exchange, or any- where else, do you consider it equally demoralizing even though con- ducted according to the rules of or by sanction of those institutions ? A. Other transactions are not of a like nature at all, sir ; they are not of the same nature at all ; the transactions in the Stock Exchange and in all the great Exchanges of the country are not done in that way at all. If a man buys a future in Chicago he contracts to pay his money for the article that he buys at a certain time when it is deliv- ered to him, and he must take it. He makes an absolute purchase. If I buy a thousand shares of stock to-day in the Stock Exchange I must pay the money for it to-morrow. That is the separate transac- tion. I may re-sell it again, but I have to pay for the identical stock I bought and re-deliver the stock I sell again ; and if I buy a million 99 786 bushels of wheat in Chicago for next month, I have bound myself by my contract to take that million bushels. When it is tendered to me, according to the rules of the Exchange I must take it. I may in the mean time sell it out again, but that is a separate transaction ; and if I do not sell it, of course the transaction remains that I must take the w’heat and pay for it and provide for it. I think the committee are under the idea that what is called dealing in futures is a mere gamb- ling transaction that carries no responsibility except putting up a margin, and that you do not buy the article outright. That is a mistake ; you do. Q. I would just say here that that is the reason why we call you gentlemen before the committee to state how those things are, and to express your views in regard to how any evils that may exist ought to be remedied ? A. Yes, sir; but in the transactions which this gentleman nar- rated to you, and which you ask me to speak of in regard to these bucket-shops, it was a ditlerent proposition entirely, because no trans- fer^ -were made — no obligations made requiring that they shouldeither Take or deliver the grain or pork or whatever it was that was sold. They merely gatnble on the fluctuation. If the thing went down, one person lost his money, and if it went up, one person, the bank, paid it. They are very difierent indeed. Besides a man cannot buy 500 shares of stock in the Stock E:^change unless he goes to a reputable broker and does it and puts up a margin, neither can he go to Chicago and buy 500,000 bushels of wheat unless he does it through a reputable man and puts up a margin. And the moment he does it, it is a con- tract made by 'him to take that stuff. If he sells it for a future month, it is a contract for him to deliver that identical thing. ISTow the committee can see how all those transactions facilitate business, because the Chicago market, which is the greatest corn or wheat market in the Tvorld, merely reflects the public opinion of the country upon the value of the wheat, or the corn, or the pork, or whatever it may be that is dealt in there according to the best lights of the indi- vidual and the millions of individuals who are continually dealing there day after day, or week after week. The farmers and the business men and the speculators, and the army of people of various occupa- tions, read the pa})ers and thuy read up statistics of this thing, and the otlier thing, and they come to tlie conclusion for themselves that this article is selling too low or it is selling too dear, and they speculate accordingly. It is not fair to call that purely gambling. Of ^course it is not fair to say that there is not a large gambling proposition in it, because thei’e is. All l)usiness in this country, in my opinion, is Hj»ecnlativc to the very highest degree, and the business of the country is of such enormous magnitude that it must have the facility of regu- lar markets in order that a man may be able to turn around, and if he makfs a sale, we always know that he can find a market for what he buys or find a market to buy in what he sells. Suppose that dealing in futures were abolished in Chicago, what position would the farmer be in ? What position would the commission merchant in the inte- rior, who sells his goods to the farmers and buys their wheat, be in ? He would have no quotation at all. The wheat that he buys from the farmer to-day may by exigencies of the weather not be delivered for three, four, five, or six weeks. There maybe snow-storms and diffi- culties in transportation ; but the stuff that he buys is sold fifteen minutes afterward for future delivery, and he is safe. And the farmer is satisfied ; ho has got his money because he knows the price. Xow that price is fixed speculatively by the whole country. Sometimes it will be abnormally run up or down by speculation, but it always adjusts itself to the true statistical condition sooner or later. Therefore I believe (and I have thought the matter over a great deal) that without such speculation in futures for the long and for the short account, the business of this country could not be conducted, that it would be wonderfully restricted, and that it would work a great oppression, par- ticularly to the producer, and very largely to the purchaser in a financial way ; because a man, when he makes a sale for a month ahead, of 100,000 bushels of wheat that he has bought in the interior, sells it through his banker; the margin is immediately put up on the sale, and he can draw his money upon that sale and get it ; whereas, if there was no quotation, he could do nothing; he would have to depend entirely upon the money lender, and if wheat pressed in without such a market as I speak of, it might be manipulated down four or five cents, to the injury of the people that happened to have wheat or corn or pork, or any thing of that sort for sale, because there would be no public competition. Q. ^ You have been speaking of the legitimate system of dealing; you are aware, however, that there is a large amount of dealing in futures and transactions in grain carried on which could not be called purely legitimate, are you not ; that is to say, persons come in simply to get all they can make out of their speculations, without rendering either to the producer or the consumer any profit ? A. That is what we are all doing — trying to make as much money as we can in a speculative way — everybody; there is not, I sup- pose, ajDerson in this room nor in any other room nor anywhere else that would not buy something if he thought it was going up ; people dealing in stocks buy because they believe they are going up ; they in- tend to sell them again ; neither is wheat, cotton, corn or pork bought 788 for investment ; it is bought with the expectation of selling it at a profit ; nevertheless, it is not any more speculative than the purchasing by a wholesale dealer on Broadway of a large amount of cotton prints at a Lowell factory in the expectation of the firm making it that they could re-sell the property in a month or six weeks at a very handsome advance ; failing in that, they sell the goods for what they can get, and make a loss ; now can you see any difference in those transactions ; then, if you destroy the speculative feature about all stocks and grain and cotton transactions, you work a great injury to the investor, because you may have an investment of $100,000 in some stock down in Wall street, which pays you an excellent dividend, and you might have occasion to go to Europe, and feel that, in going there, you would rather shift your property into something probably more permanent; how are you going to do it if you haven’t got a speculative market ; you might wait two weeks before you got a bid for it; now all you have got to do is to go down and in five minutes the sale is made and you get your money ; this whole thing is in accordance with the progress of ideas all over the world; you cannot go back; you cannot restrict speculation in this great speculative country; speculation is the civilizer of this country ; speculations in lands, and in railroads, and in all enterprises out in the far West take people there and take the money there ; speculation has been the greatest benefit, and will be the greatest benefit to the people of this country, in my opinion ; I do not mean to say to get up an excitement and boom and frenzy, such as we had for three years, when people went mad and did not know or care whether they were buying a thing that was worthless, so long as they could buy it to-day and sell it to-mor- row in the excitement; I do not mean that, but I mean good, healthy, legitimate speculation in the line of progress and in the line of advance- ment of this country. Q. What do you think of the system of socculation which is usually carried on in Wall street ? A. I think it is all right. Q. It was said by one witness here, who claims to be an expert, that the system consisted in something like this — that a few managers were there, and when the lambs came, they fieeced them ? A. Wb'll, I have no donlit that tliat frequently occurs, but there is nothing to compel a lamb to go into Wall street unless ho wishes to go. Ihit what is your ()j)inion of the system which allows persons who are inexperienced and misled by false reports to go there and be fieeced ? A. Well, yon cannot compel a man in a free country like this*to do any thing but what he wishes to do, and I believe the Stock Exchange in New York have endeavored to do all in their power to prevent, if j) 0 HHible, any misrepresentations in regard to the stocks that are dealt 789 in at the Exchange ; but that is almost an impossibility; that is the only misfortune in regard to speculation ; I do not see how you can touch that evil, because there are men who are willing to say and do jiny thing for the purpose of fostering speculation when they wish to sell, and vice versa. Q. Can you explain how. that evil exists — how it continues to be carried on ? A. Well, I don’t know how it is carried on. Men in Wall street have purposes of their own to serve, and they sometimes indulge in misrepresentations about their own properties, to the detriment and the loss of the people at large, who do not think these things out. Q. And such misrepresentations usually affect the whole market, do they not? A. Well, they do ; they affect the prices of stocks, of course, very naturally — put them up or put them down, as the case may be. Q. Is there any difference in such a system of misrepresentation as ■that and the business carried on by the witness Avho vvas last before the committee ? A. He does not represent any thing at all; the Gold and Stock Tele- graph represents the price of the article in Chicago ; these people come and bet on it or against it, as they choose; if the price of wheat is a dollar, a man buys 50,000 bushels ; he puts up one per cent margin or two percent margin; he does not , intend to take the wheat; if the price goes down to 99, that ends the transaction and the proprietor has got the man’s $500 ; if it goes up to 101, the proprietor pays him $500 ; as I look at his explanation, the association is a hank with an established capital, which allows the people at large to come in and bet against them on the prices no obligation existing to deliver or to take. Q. Is the evil resulting from that system of doing business, what- ever we might call it — ^'Moing business,” I presume — different in its general effects from the system of misrepresentation carried on by certain brokers ? A. Well, in one case there is no misrepresentation. The only evil that I can see ])articularly in the business is that it is purely a gamb- ling transaction, and the margins required are so small that young men and boys and women, and people who have a very small amount of money, who want to take a chance and do something to increase their store, will go in there without any knowledge at all and make a transaction, and probably in the majority of cases they lose their money. But so far as brokers are concerned, as a rule, in Wall street, I don’t think they misrepresent any thing at all ; they merely do the business that is intrusted to them. The misrepresentation comes from people who are financial agents for certain securities, and they some- 790 times misrepresent their value, and sometimes depreciate their value,, as their interests may lead them to do. Q. Are not the disastrous fluctuations in the market which fre- quently occur almost entirely produced by over-speculation ? A. I think they are, generally. Q. They are in no way connected with the legitimate workings of the law of supply and demand, are they ? A. I should think they would be in stocks, as well as in any thing else. If there is too free a supply of stocks, they go down ; if there is an urgent demand above the supply, they go up. Q. How IS it in regard to bread-stuffs and the various necessaries of life ? A. Well, the volume is so large in this country and the movement so large, it is very liard to control it. It regulates itself, I think. That may be very easily illustrated by the working of a corner per- haps in St. Louis, Milwaukee, Chicago, or some other large com- mercial center. Probably the effect upon the price of the commodi- ties of life in New York would hardly be noticed, there is so much of it in the country — the supply is so great. It is beyond the reach of any man or any set of men. Q. What influence have such operations as the corners which you speak of upon our transportation interests ? A. I don’t think they affect them at all, except temporarily. Q. What influence have they upon our foreign trade and upon our exports ? A. I don’t think they last long enough generally to influence it much. I don’t say that they are not unfortunate ; I only say that the consequences, so far as I have seen, have never been very far reaching or disastrous. Q. Now Mr. Keene, a good deal has been said in regard to what is known as the Keene corner ? A. Yes. Q. Now, we would like you to explain that to the committee. We have heard so many versions of it that we presume you are prepared to give us — • A. It IS so long ago that I have forgotten all about it really. I never was engaged in a corner in my life. Q. Never? A. Never, sir. (- 1 . Why, then, has the corner to which these persons refer been called tlie Keene corner ? A. Well, I suppose because I was the central 'figure in the combi- natioj), which owned at that time a very large amount of wheat ; but 791 that combination was not formed for the purpose of cornering the market ; it was only formed for the purpose of defending the in- dividual purchases of the syndicate previously made, and which we felt we could better do by combining than by submitting ourselves to the tender mercy of the bears, who were very active and wanted to sell it, and came near knocking the price down. Q. You speak of a syndicate. Of whom was that syndicate composed ? A. WelJ, I don’t think, unless you press me, it is worth while to state who the parties are — unless you think it is a matter of public interest. , Q. Do any of them reside in New York or do business in New York ? A. Yes. Q. Is that syndicate still in existence? A. Oh, no, sir ; it disbanded long before the wheat that was pur- chased was sold out. Q. Then we have no desire to press the question ? A. Oh, it was not organized for the purpose of making any corner whatever. Q. How long was that syndicate in existence previous to the making of that corner ? A. Well, if you call it a corner,” it w^as made when the syndicate was made, ^because the aggregate holdings of the individuals, when they came together, comprised pretty much all that was in existence. Q. I suppose that the syndicate was something like a certain num- ber of men who had united their capital for the purpose of sending out and purchasing up wheat or corn in the country ? A. No. Q. That was not it ? A. No, sir : these individuals held certain quantities of wheat, pur- chased in Chicago, and they combined for a common ‘ advance. The speculation was considered to be pretty well digested, and to have taken in every possible contingency, and to have estimated the. re- quirements of Europe and the quantity in this country, and it turned out in the main to be correct ; but the pressure to sell was too great and the newspapers took up the hue and cry of a “corner,” and that we were destroying the commerce of the country and raising great disturbance generally, and we were finally compelled to sell what we had purchased at a loss. Q. After the formation of the combination did you send agents throughout various sections of the grain producing country to pur- chase up the grain that was produced during that year ? A. No, sir. 7953 Q.. Did the amount of grain stored by the syndicate amount lo any more than what they possessed previous to the formation of Llie syndidate ? A. I expect it did, sir. Q. To what extent ? A. Well, really my memory would hardly be correct at tliis time, for I really have almost forgotten the transaction ; but we had a very large amount of grain — fifteen or sixteeen or seveventeen million bushels, I think. Q. Altogether ? A. Yes, twenty, perhaps. I may be wrong in my estimate, even of that. I should think fifteen, perhaps, Q. When was the syndicate formed ; at what time of the year, I mean ? A. 1 think in December. Q. And when was it broken up ? A. I think many of the parties dropi:)ed out for want of funds, leaving two or three to bear the burden of the fight and to dispose of the holdings, which were disposed of from time to time, probably, by April or May, or something of that kind, or June. Q. Then we may say that the corner lasted from September — A. No, from December. No, it was not a corner ” at all, because a man that wanted to buy could buy any thing that lie wanted. There was no arbitrary price fixed at all. There was never a day in the history of the Stock Exchange in Chicago, or at least of the Corn Exchange in Chicago, that a man could not have gone in there and bought two or three million bushels of wheat. Therefore there could have been no corner. Q. It has been stated that the syndicate refused to sell wdieat during the continuance of the corner, or whatever you may call it? A. That is not true. Q. It has also been stated that by the influence of the syndicate the transportation of wdieat from the West was suspended temporarily? A. Well, jierhaps it was restricted. Q. It was not absolutely suspended ? A. I don’t think so, but it might have been restricted during the jiendency of that syndicate. Q. To what extent w'as it restricted by the operation of the syndi- cate ? A. Well, the general judgment of the country — of the people of 1 he countj-y — at that time weis that wheat was too high. The New York market was always lower than the Chicago market ; therefore, it would not pay to transport wheat from Chicago to New^ York, wdicn the price 703 was higher there than it was in New York. It miglit have been kept higher by the result of this combination we are speaking of now ; perhaps it was.- Q. And on whom did the burden of that increase in the price fall ? A. I think it fell on the syndicate. I think the farmer benefited by it very much indeed. But, still, the price of grain at that time was not dear. I don’t think any consumer suffered very much by it. Q. How much was paid per bushel at the markets throughout the country and country districts to the producer for wheat at that time ? A. Well, wheat, if I remember, was worth about $1.15 per bushel at that time, or $1.20. Q. ^J’o the producer ? A. Well, I don’t know what the farmer got for it. Q. You don’t know what the farmer got for it? A. No, sir. He got a corresponding price, transportation added, I have no doubt. Q. In what year was that syndicate in existence ? ^ A. I think in the spring of 1880. Q. Now will you state, if you know, how the canal boat interest was affected by reason of that operation ? A. I should think very beneficially. Q. It has been stated that for some time the steam cars — freight cars — had nothing to do by reason of the retention of this immense quantity of wheat in Chicago, and that afterward, when the corner broke, there was such a rush that the railroads were not able to fill their demands, how is that ? A. Whose testimony is that ? Q. I might say all the men connected with the railroad interests that have testified. Have you any knowledge as to that, as to the effect of that operation upon the railroad interests at that time ? A. Well, I don’t think the railroads were very much affected ; I don’t think they carry much grain any way in the winter. People do not pay exorbitant prices to move grain in the winter time when they can wait until spring and have the carrying rate reduced by canal and lake to the lowest price ; so that the amount that they carry is ' very infinitesimal. I suppose their rates probably were up to a point which were practically cornered, and that is the reason that the stuff could not move. If there had been such rates as they should have charged, probably we could have afforded to have moved the material to New York ; they were probably s«ch rates as they have got now, which are more disastrous to the country, probably, than any corner, or any thing that comes to my mind at the present time. 100 794 Q. The committee would like to have you speak in detail with re- gard to that question ? A. What, sir ? Q, With regard to the disastrous condition of the rates of trans- portation ? A. Well, I say that rates are cornered — are arbitrarily fixed. , Q. By whom ? A. By Mr. Fink and by railroad men ; by the trunk lines between here and Chicago. Q. Were they fixed in that arbitrary way during the continuance of this ? A. I think very likely ; I don’t remember, but I think they were. Q. Are they fixed in that condition at present ? A. They are. Q. And do you think the fixing of rates of transportation in that arbitrary way is prejudicial to the commercial interests of the country? A. I think it is prejudicial to the business of the country, of course, because the rates so charged are entirely out of proportion to the ser- vice that is given for them. Q. Can you give us any example or illustrate how they affect the commercial interests of the country; do they impose an unnecessary tax upon the produce of the country ? A. Undoubtedly they do when their rates are fixed beyond the proper compensation ; of course it all comes out of the agricultural products of the country ; it comes out of the farmers’ pockets. Q. Is the consumer affected also by these exorbitant rates that you refer to ? A. Well, he is, of course. Q. How much greater are these rates at present than what they ought to be according to your opinion ; that is to say, how much higher are they than you think they ought to be and afford a fair' compensa- tion to the railroads and other transportation companies for the amount of money invested by them and the cost of serving the public ? A. Twenty- five per cent at least too high. Q. On the transportation of all commodities ? A. Of every thing. Q. And you would designate such a system of fixing rates of trans- ])ortation on our great j)ublic highways as making a corner in these rates ? A. I say fixing therti arbitrarily. Is making a corner in them ? T95 Q. How do such arbitrary rates affect our commerciai interest with foreign ports in the way of getting our products to the sea-board ? A. They increase, of course, the price of all products that come for- ward for export, and upon the principle that the cheaper you can sell the more you can sell, must certainly have a baneful effect upon our export business. Q. Is it a tax which places us in an unfair state of competition with foreign producers ? A. I should think it was. Q. Would it tend to materially reduce the amount of our export tonnage ? A. I should think it would reduce the tonnage ; high rates always restrict tonnage. Q. It was stated here that in 1879 it was reported here, in the papers and otherwise, that there were some 872 ships of all grades and de- scriptions idle in the docks of !New York which came here to carry away our products, which were controlled by combination, and they held wheat then at from five to fifteen cents higher than what foreign countries would pay tor it, even if the vessels were willing to take it at a small rate of freight; what do you know as to that statement? A. It may or may not be correct. Q. And any thing of that kind, whether it be exorbitant rates of transportation, or the fact of syndicates, or the making of corners in our products, do you think it has a tendency to reduce the amount of our export tonnage ? A. I think the higher the cost of the articles that we have for sale, the more we are at a disadvantage with other countries who are also producers and sellers, and therefore I think high rates are injurious and calculated to restrict trade ; as I said before corners are of such short duration that the injury that they inflict, I think, is over- estimated. Q. Is it not true that over-speculation, making corners and high rates of transportation tend to increase prices so that foreign consumers cannot purchase them as cheaply as they can find supplies elsewhere? A. Of course high rates of transportation, as I said before, increase the prices of the products we have for sale, but over-speculation de~ pends very much on whether it is on one side of the account or the other; I don’t know what you mean exactly by — Q. Such a system of speculation as is usually carried on in our vari- ous products ; all the speculators make money I am told. A. You haven’t been in Wall street. Q. And we are also told that the effect of this speculation is to en- hance the cost of products. If that be so, would it not tend to di- minish our exports ? 790 A. I think the thing always rectifies itself. There is a great deal of common sense in this country. Tlie producer is very well posted, and if he sees that there is a prospect that other countries can furnish what he lias to sell clieaper than the ruling price, he will make haste to sell his and never stand upon the order of his going. That soon regulates the price. You cannot maintain things above what they are actually worth, except for a very short time, and I don’t think that speculation has any thing whatever to do with our export interests, unless, indeed, the whole grain product of the country, or any partic- ular product, might he cornered for an indefinite period, which I think to be an impossibility. Q. One gentleman stated that in 1879, when these men (referring to the syndicate) expected to get 11.65 for wheat, they broke and caused a panic here ? A. When ? Q. In 1879 ? A. Wheat never sold — $1.65 in New York ? Q. No, I think this refers to the syndicate in Chicago It says ‘^In 1879 when these men expected to get $1.65 for wheat, they broke and caused a panic here, because in the European markets there the people sought elsewhere for supplies ? ” A. Who broke ? Q. The syndicate — the corner, I suppose ? A. Whose testimony is that ? Q. Mr. Partridge’s testimony, I believe. A. Who is Mr. Partridge ? Q. A member of the Produce Exchange in the city of New York. In 1879 when these men expected to get $1.65 for wheat, they broke and caused a panic here, because in the European markets the people there sought elsewhere for supplies, and drew wheat from nooks and corners nobody ever heard of before, and they got their supplies.” A. Well, I don’t know of anybody breaking, but it is very possible that — Q. It has been suggested to me that it refers to prices 9 A. I don’t think wheat ever sold in Chicago above $1.30 a bushel, and I think, if I remember aright, that the average price of the wheat held by the syndicate was about $1.10 a bushel. il. In the Chicago market? A. In the Chicago niiirket, yes, sir. (2- Wliat did it sell for in New York ? A. $ 1.65 — $ 1 . 60 . (). d'h'it is correct ? A. So that that evidence was not true, whoever gave it. 797 Q. It is true so far as it sold for $1.G5 in New York city? A. You are talking about Chicago. You say this syndicate ex- pected to sell this wheat for $1.65. Wheat never sold higher than $1.30, and it was ruling almost all the time during the pendency of this agreement at from $1.15 and, $1.18, down to $1.06, and the aver- age price of the wheat that was purchased was somewhere in the- neighborhood of $1.10 a bushel. Q. But don’t you know that withholding the wheat crop and stor- ing it in Chicago would tend to lessen the supply in New York con sequently ? A. I don’t think it ran up prices in New York at all; wheat sold at $1.65 long before this arrangement was made — before this corner was made, if you choose to call it so ; it sold at $1.65 a bushel, sir. Q. In New York city ? A. Yes, sir. Q. Can you give any reason why so much shipping should be driven away from the port of New York in that season other than the fact that they could not find freight on account of the withholding of wheat ? A. I don’t believe that statement is true ; in the first place there was plenty of wheat in New York at the time.. Q. You know that the steamships have been willing to oarry wheat to the other side simply for ballast, do you not ? A. I think they have this year — or last year ; last year. Q. Without making any charge ? A. Yes ; there wasn’t any to come forward. Q. What was that owing to ? A. The scarcity of the article in the interior. Q. Then any thing that would tend to make the article scarce in the port of New York would tend to produce such a state of things again, would it not ? A. Well, there are other things besides wheat that this country ships ; it ships a great deal of cotton, petroleum, beef, pork, etc.; the shipments of wheat are not so enormous during the winter; the re- tention of any one article in the interior is not going to create any special change in our exports or going to make any marked difference in commerce. Q. Bo you know of any corners having been made in the cotton or petroleum market which would tend to affect our foreign exports ? A. I do not, sir. Q. It has been stated that our shipping is falling off annually ; it has been said that they are now five million dollars less than they have been in other years ? A. Five million ions less ? \ '08 Q. Five million less ; that is, if I can read it ; so that the balance of trade will be against us in a short time, if we do not look out ; that is, that our exports are not keeping up as they have been in former years ? A. Well, but they didn’t raise any thing last year; how could they keep up ? that is what has driven the ships away ; we had no crop to sell ; the consequence w^as the tonnage sought other countries that could employ it, and has not got back again ; now this year we are rather crippled for tonnage; it will come back by-and-by; it is not the result of any corner. Q. Does our present system of speculation not tend to create arti- ficial values ? A. I don’t think it does, sir. Q. In the testimony of Mr. Trafton, offered before the committee, he says: ^^Take the case of the syndicate formed by Mr. Keene in 1870, when we had a very line crop ; the crop of 1870 amounted to 448,000,000 bushels ; the supposition was that France, England, Ger- many, and portions of Austria and Eussia had lost their fall crops and that this syndicate could control the markets of the world ; by a com- bination of twenty or tliirty wealthy men, representing from forty millions to fifty millions of dollars, this great syndicate, this great un- dertaking was commenced I think some time in October, and it ran up the price from its natural and legitimate level until it finally reached $1.63, cash price for future delivery and 81.65 ? ” A. Who is Trafton. Q. William 11. Trafton, commercial editor of the Produce Exchange Reporter ? A. I think the highest price wheat sold in Chicago for was 81.30 a bushel; it might have sold two or three cents above, but not very much, sir. Q. Don’t you think tliat the corner, or storage, effected by the syndicate had a tendency to run the price up in New York ? A. X(q it was u]-) before the syndicate was formed; wheat sold in New York at 81.60 or 81.65 a bushel before the syndicate was* formed ; why it sold there, you must be the best judge. ip What great wheat producing countries do we compete with ? A. Eussia and India are both great exporting countries ; France is a gi-oiit wheat country, and in good years has a very large exportable surjjlus. How do their markets aff(>ct ours, if in any w'ay ? A. I think we have the controlling markets, (E And have our markets the chief effect in establishing prices? A. IJndoubh'dly. 799 Q. And our prices depend upon the arbitrary decisions of the various Produce Exchanges, do they not ? A. They depend upon the prices that are ruling at the various Ex- changes, yes, and which result from the preponderating sentiment of the country at large in reference to them. Q. Then our Produce Exchanges and that preponderating sentiment which you refer to wliich makes prices have the effect of fixing the prices of produce throughout the world ? A. I think so, undoubtedly. Q. Did the breaking up of the syndicate tend to depreciate the prices of grain ? A. Grain declined as the spring opened and it commenced to move. Q. What was the cause of the decline in prices ; was it the abun- dance of production in foreign countries, or was it simply because those who had control of the products of this country chose to let them go ? A. I suppose the sales that had been penned up in Chicago affected the prices. Q. But was it not more attributable to the fact that our foreign markets were being supplied more cheaply from foreign countries, such as India and Russia? A. I (lonT think so, sir; India was not a f.ictur at that time at all ; the exports of India were nominal in 1879, bin Uiey have bounded up to a very large tonnage now — some 80,000,000 of bushels; in 1879 they could not have been 5,000,000 or 3,000,000 ; I think that the English people were led to believe through the newspapers that there was far more wheat in this country than there really was, and that it was held by combination, and that if they waited they would buy it at , their own price ; they took that advice, and they bought it very much cheaper than they would have bought it during the winter ; had it not been for the hue and cr}", wheat w*ould have moved legitimately at that price and found ready buyers on the other side at the prices at which it was originally bought and purchased by the individuals com- posing the syndicate ; there was no great quantity of wheat in this country at the time, and if it had not been for the interference of peo- ple who had no business with speculation and the hue and cry that was made about it, we should have made more money than we did out of the operation. Q. I understand it was not a successful operation ? A. Well, no; there was some money lost in it, but still — Q. What was the amount of the wheat production in the country during that year ? A. I really cannot remember ; perhaps that statement of 440,000,- 000 bushels would be something near it. 800 Q. How many bushels do you say the syndicate controlled in Chi- cago ? A. Perhaps fifteen or twenty millions. Q. Do you know what proportion of the amount of sales now made in the Stock Exchange are made for the actual delivery of the stuff ? A. In the New York Stock Exchange ? Q. Yes. A. Why, they are all made, of course ; all stocks are to be delivered that are purchased, and all stocks delivered that have been sold ; or, rather, all stocks are received that are purchased, and all stocks deliv- ered that are sold. Q. Do you know about the Produce Exchange ? A. No, I do not know any thing about it. Q. How much of the wheat held by the syndicate was exported from this country ? A. The whole of it. Q. And at what price per bushel was it sold to be exported? A. 1 really do not know, sir, without consulting my books ; I could not tell you. Q. You say there was a depression ? A. There was a depression, but we were selling all the time, and we should have sold a great deal more, but transportation charges were so enormous that we preferred to wait until spring opened up the canals and the lakes. Q. Then you virtually charge upon the railroads the cause of the wheat being held so long in Chicago ? A. I don’t make any charge at all, because the whole subject has been quite forgotten by me ; but I know that arbitrary railroad charges restricted the movement, and they do far more injury to every interest in this country than any corner that two or three men may get up in an article which may kist for a month or two, because the railroads levy tribute upon everybody, on the consumer and on the producer. Q. How much less were you compelled to dispose of that wheat for, to foreigners, than you could have got, had you had reasonable trans})ortation facilities to get it to the sea-board ; I mean, how much less ])er bushel ? A. Well, if 1 remember correctly, the rate from Chicago, that win- ter, was thirty-five cents a hundred, it may have been thirty cents a hundred, 1 do not wish to state it incorrectly. If the transportation price had been what it should have been — (- 1 . What should it have been ? A. Certainly not over twenty or twenty-two cents a hundred. You 801 can see that it made a difference of al)ont six cents a bushel. If the rate was thirty-five cents, that was nine cents a bushel; if it was thirty cents a hundred, it was six cents a bushel. Q. That was a tax upon the wheat ? A. That was a tax upon the wheat. Q. Now, you say you were compelled to sell it for less than you ought to have sold it ? A. I say we did ; we were not comi^ellecl to sell it, but we did ; we waited until spring for better rates of transportation, and had we moved the wheat at reasonable railroad rates we could have sold it at better advantage during the winter. Q. Do you remember how much less you were compelled to sell it for per bushel than you ought to have sold it for ? A. I should think ten cents per bushel. Q. Then that difference in price was so much less in money to this country, Avas it not ? If you had not been able to get the ten cents — A. Of course we should have got the money and it would have come here. Q. From foreigners into our country ? A. Of course. Q. What, in the aggregate, did that loss of money to the country amount to ? A. Well, it must have amounted to two or three millions of dollar^, I should think; not as much as that, perhaps — perhaps a million dollars. Q. And that loss was on the comparatively small smount of wheat which your syndicate'held ? A. Yes. Q. Of course there was a similar loss on all other Avheat that was exported from the West to foreign countries ? A. Unquestionably. Q, Have you been familiar with any corners that have occurred in the money market ? A. No, sir. ■ By Senator Browkii^g: Q. It has been suggested to me that there was more flour and grain exported during the winter of 1879-’80 and the spring following than had been exported before for some years and since that period. Do you know that fact to be true ? A. What? Q. That there was more flour and grain exported during that period Avhen it is alleged that corner existed than Avas exported before for many years, and since ? 101 802 A. Well, if this is the case it shows that the corner did not create any disturbance in trade. Q. Do you know that that is the fact ? A. That I do not know ; as I told you before, the circumstances of the whole thing have passed from my mind. By Senator Boyd : Q. Now, with regard to this matter of transportation, how is it pos- sible to remedy that evil — remove that extra tax upon the produce of the country ? A. By passing a law that all parallel roads shall not be allowed to pool their earnings and fix arbitrary rates. Q. That is, to maintain a healthy competition ? A. Yes. Q. And prevent combinations among railroad corporations ? A. To i:»revent combination of parallel roads. By Senator BROWXiisG : Q. Competing lines ? A. Yes ; for instance, you have the New York Central, the Erie, and the Delaware and Lackawanna running to Buffalo ; I think they all combine and fix the price, do they not ? By Senator Boyd : Q. Are you familiar with our elevating system ? A. Elevated railway system? Q. No; elevating grain system ? A. No, sir ; I am not. Q. You said you were a speculator ; in what commodities do you speculate, chiefly ? A. Well, I speculate in stocks; speculate in oil — stocks generally; I am also engaged in the refining of oil and the business of transport- ing it by pipe from the oil regions in the sea-board. Q. I think you stated that you knew of no corners having been made in the oil crop. ? , A. I do not think of any corner; I think it is too large to corner. Q. Are you a member of the Standard Oil Company? A. 1 am not, sir. , (^. '’.riiat is an o])position line ? A. Yes, I am a memljer of tlio Tide-water Pipe Line Company. llow many pi[)e line companies are there? A. fihvo; tlic Standard Oil Com])any and the Tide-water Pipe Line. 0. It lias been alleged freipiontly, that the Standard Oil Company lias cornered, or attenijited to corner, the other competing refining coni])ani(.‘s and lines ; what do you know about that ? 803 A. Well, it has not cornered ours ; I don’t know what it has don with the balance. Q. Has it made any attempt to corner or to crush out your refineries? A. In no other way than by inaugurating a very active competition. Q. Is there any thing that you would like to state to the committee? A. I am through if the committee are. Adjourned to December 22, at 11 a. m. \ Hew York, Decemler 22, 1882, 11 o’clock, a. m. The Committee met pursuant to adjournment at the Metropolitan Hotel, Hew York city. Metropolitan- Hotel, ) Hew York, Decemler 21, 1882. ) L. E. Chittekden- : Dear Sir — The committee now investigating the system of mak- ing corners have reached a point where counsel is necessary to assist the committee in bringing out many facts of essential public import- ance. But the committee are not authorized, by the terms of the reso- lution appointing them, to retain counsel at the expense of the State, nor are they willing to give assurance of future action. The committee would be glad to have your professional assistance provided you are willing to give it, leaving to the Senate to decide whether in view of the importance of the case it thinks proper to make you proper compensation when the facts are laid before that body. Yours respectfully, JOHH E. BOYD, Chairman of Committee, To which the following reply was received : CniTTEKDEN, TowNSEKD & Chittekden", Laiuijers , ) 160 Broadway, Hew York, December 21, 1882. ) Hon. John" G. Boyd, Chairman, etc. : Dear Sir — I have received your note of this date; any service which I can render in eliciting the facts involved in the subject of its investigation is at the disposal of the committee ; if such service pro- motes the public interest, I have no doubt it will be paid for ; if it does not it will not deserve compensation. From the published reports it seems clear that several prominent gentlemen have justified the prac- tice of speculating in what are called “ futures ” in the cotton, food. 804 light, fuel and property of the people. And exposure of fuo real effect of such speculations upon legitimate business seems to be indis- pensable to proper legislation. Yours truly, L. E.- CHITTENDEN. Adjourned to December 23, 1882. New York, Decemler 23, 1882. The Committee met pursuant to adjournment at the Metropolitan Hotel, New York city. Preseitt — Senators Boyd and Browning of the Committee’; John W. Corning, Sergeant-at-Arms of the Senate; Daniel A. Cooney, Clerk of the Committee, and Mr. L. E. Chittenden, as Counsel for the Committee. Rev. James M. King was then called, and being interrogated, testi- fied as follows : Senator Boyd — In consideration ot the sacredness of your calling we will not put the usual oath. By Senator Boyd : Q. What is your profession ? A. I am a minister in the Methodist Episcopal Church. Q. With what church are you at present associated ? A. 18 West Eighteenth street. Q, How long have you been a minister of the gospel ? A. Seventeen years. Q. What is your opinion of the whole system of making corners and dealing in futures, with reference to its effect upon commerce and its influence upon the public welfare? A. I ougiit to say that I have been trying to inform myself concern- ing these matters, and my principal sources of information have been the revelations that have been brought out by your examinations here; and in view of the fact that I think that a man who bears testimony upon any given subject ought to be so thoroughly posted that he can give information, I don’t consider ’ myself sufficiently well informed or expert in these matters to give information of a character tliat would be instructive to tlie committee ; but, at the same time, I have my own conviction upon these things, and I believe that, in just so far as transactions of tlie character in (picstion foster a spirit of venture ami gami)ling, they are detrimental to public morals; and I think 805 that the result of this investigation and the broad range of the calling of-witiiesses will secure at least two favorable results ; and the first is the calling of the general attention of the public to a discussion of this question, and the public being thus informed whether it is advisable to take any legislative action upon the subject or not ; those who are engaged in questionable transactions will find the public so thoroughly informed, and themselves so thoroughly watched, that it will be at least a check upon them. In reference to any thing more than a gen- -eral opinion based upon this information in the light of the testimony that has been given here by those who ought to be considered as ex- perts in trade, as well as in morajs, I can’t consider myself as being either sufficiently informed or authorized to go into a minute discussion. I might say that one advantage that I consider will accrue from the summoning of witnesses here of the teachers of morals, as well as men engaged in trade, will be the calling of the attention of that class of people who are churchgoers, and who make morality and Christianity and different phases of religion a subject of study, to call the attention of that class of people to make it a thorough matter of study in its relationship to their own life and conduct. If you should call me as a man measurably well informed as an expert in some branch of the- ology, perhaps I might answer some explicit question, but my source of information concerning futures and corners is the same as the gen- eral public — the information that has been given here. Q. Assuming the testimony of business experts which has been of- fered before this committee to be correct, in regard to the system of dealing in futures and making corners, and in regard to the system of what is called illegitimate speculation, what would be your opinion, or rather how would you, as a Christian minister, characterize such transactions ? A. Basing my judgment upon the general drift of the testimony, I should say that there was ample reason for asserting that in many of these transactions there was evident and flagrant dishonesty, and that they inspire, and especially in the minds and purposes of young men, a desire and purpose to secure wealth or returns without legitimate in vestment or adequate labor. Q. Wherein is such a system of speculation different in any degree from the popular idea in relation to gambling ? I might state here that certain business experts have characterized this system of deal- ing as a species of gambling ? A. I will respond in this way: in general I should think not. Where in sales and purchases there is no purpose of delivering I should «ay that that was pure and simple gambling. I 806 Q. Where the system of speculation has a tendency to enhance the cost of the necessaries of life witlrout contributing any thing to the wealth of the country or to tlie increase of production of the country, what would your opinion be of sucli a state of specuhition ? A. I should say that it was not only illegitimate but that the men engaged in it ought to be by law or in some way forced to earn an honest livelihood. Q. Where the produce of the country and all commodities neces- sary for the support of life are by any means withheld from circula- tion and from producers at their proper value for the purpose of en- riching a favored few individuals who have the capital to corner and lock up the mass of the production, what is your idea of such trans^ actions ? I should say in the first place that it is evidently detrimental to the public good, and in the second place, from a moral standpoint, at least ciuestionable. Q. What is the doctrine of scripture in relation to such transactions? A. I should say briefly, that if all men engaged in business trans- actions recognized Christian morality as the basis of their relationships to each other, there wouldn’t be aUy necessity for this committee to meet- Q. That is hardly a categorical answer, and knowing that you are so well qualified to give a categorical answer I will ask you whether such transactions are opposed to or in accordance with the teachings of scripture. ? A. I could say in response to that this : That basing my opinion of the character of these transactions upon the information received from previous testimony before this committee, I should say that they were antagonistic to the teachings of Christian morality. By Mr. Chttten^den : Q. During your ministry, you have been an attentive observer of public affairs, I suppose ? A. I have tried to inform myself, yes, sir. Q. Did you ever hear at all, within the past four or flve or six years, of the terms futures,” ‘^options,” ‘‘ puts,” “ calls,” “strad- dles,” etc., being used as they are now used in tlie nomenclature of speculative transactions? A. No, sir, those ])hrasos are of recent use as far as my knowledge goes. (}. State whetlier or not you have noticed increasing in some pro- j)ortion to tlie volume of speculative transactions, cases of violations 807 by trustees, clerks, cashiers, and other persons acting in a fiduciary capacity of their trust relations ; whether such violations in your judg- ment are more common now than they were say ten or twenty years ago ? A. They have been greatly on the increase in the past ten years. Q. State whether or not you have noticed that in a great majority of cases these violations of fiduciary relations appear to have been caused by speculation ? A. In almost every instance that I have known. • Q. Those cases have become very common within the last few years, have they not ? A. Yes, sir, and one fact I ought to mention from my observation in connection with it : they have become very common with a class of men that when revelations have been made, they have been a shock to the moral and the religious portion of the community, especially. Q. Men have violated those trust relations who stood high in the confidence of the community, and were generally esteemed men of ex- emplary character before ? A. Yes, sir. By Senator Boyd : Q. Can you suggest to the committee any remedy by which those evils might be suppressed by legislation or otherwise ? A. I should say that it would be very desirable to secure an accu- rate definition of crime in connection with these proceedings, and then when the crime has been defined, there ought to be some way of reach- ing it as crime by law. Q. Is there any thing further that you would like to suggest to the committee ? A. I think of nothing. I desire to express myself thoughtfully and carefully upon the matter, as I know the whole thing now has come to be a matter of public education, and where a question of public morals is being investigated, it seems to me that utterances up(3n the subject ought to be most careful and judicious in order to carry any weight with them. I think of nothing that I desire to add. Henry Cleius, being duly sworn, was then interrogated and testified as follows: By Senator Boyd : Q. Where do you reside ? A. 14 West Fortieth street. Q. What is your business ? 808 1 A. Banker and broker. Q. Where is your place of business? A. 18 New street. Q. Are you a member of a firm ? A. Henry Clews & Co.; yes, sir. Q How long have you been in that business ? A. Over twenty years. Q. What is your opinion in relation to th’e whole system of making corners and dealing in futures with reference to its effect upon com- merce and its influence upon the public welfare — that cjuestion em-‘ braces the whole of the authority under which this committee is acting, and that is the reason why I put it ? A. The corners are the result of speculations at times carried to extremities. . They are not frequent and are liable to be less so owing to the result to the parties connected with them, which has not been successful — scarcely ever. It usually leaves the parties with the ma- terial on hand whether it is products — T speak especially, thougli, with regard to stocks — without a market for their property and has always seriously embarrassed them and invariably led to disaster. I have prepared a few notes here which I will read : •‘Speculation is the method now adopted for adjusting differences of opinion as to future values, whether of products or securities. It is more common than in former years because the facility for procur- ing information has increased with the greater intelligence with which business is now conducted and also from the greater rapidity witli which such information can be transmitted by telegraph and cable. In former years the results of a crop were known only vrhen the crop came to be marketed ; now, all is ascertained before the crop is gath- ered. This advance information naturally becomes the subject of speculative transactions which could not exist in former times. “ Speculation brings into play the best intelligence as to the future of values. It has always two sides. The one that best comprehends the facts and conditions of the situation wins in the end ; and the re- sult of the conflicts is the nearest possible approach to the correct valuation. The result of speculation for a fall in prices is based on the presumption of an over supply. If it succeeds, the production of the particular article is checked until prices recover, and in the mean time, production is diverted together articles less abundant. Thus speculation ])r()ves a regulator of both values of i)roduction. A specu- lation for a rise in ])rices is based on a })resum})tion of scarcity or short 8U})ply ; and its direct effect is to (piicken production and thereby re- store the e(juilib]-ium of })ricos. “Corners” usually come from run- 809 uing a speculation to an excessive length, by which the sellers become responsible for deliveries beyond what they can possibly make and thereby place themselves at the mercy of those with whom they 'nave made contracts. These exigencies chiefly affect tlie speculators, and affect the producing community but little. Extreme prices usually grow out of them; but they arc only momentary, and have no effect ii})ou regular or ‘"cash” transactions, which sympaihize very remotely with these momentary artificial quotations. Speculation is not to be judged by its occasional excesses, but })y its general effects, which the foregoing considerations show to be bene- ficial. It regulates production, first, by instantly advancing prices when there is scarcity, and thereby stimulating production ; and secondly, by putting down prices when there is an over supply, and thereby checking production. And it equally regulates prices also by keeping them adjusted to the best obtainable information respecting the con- ditions of supply and demand. “ Speculation is not really the factor that joroduces fluctuations in prices ; it is only the agency for giving effect to the fluctuations in supply and demand, which are the actual factors controlling values. Prices would equally fluctuate in the absence of speculation ; but the changes would come more slowly and later; and therefore in most cases, the variations would come too late to regulate preparations for the succeeding crops. It is one of the great advantages of speculation that it makes conspicuous the results of the present crop in time to adjust preparations for the next; thereby tending to prevent two large crops or two light crops in succession, and thus it becomes an import- ant means of maintaining an even course of prices, and also of evenly distributing capital and labor as among the various industries. ‘‘Corners invariably follow enterprise. All kinds of business that is exclusive leads to corners, such as is covered by patents especially. “ A distinguished merchant, now deceased, made more corners in his time than the balance of the community put together; this he did by contracting for the entire production of certain classes of goods, and as such goods could only be obtain ed at his establishment, he had a close corner in them and charged a fictitious price therefor in many instances, which enabled him often to m ark down below cost staple goods, sucli as all firms had to keep, and not unfrequently thereby break his competitors. Many of the present large mercantile firms now do business in the same way, and ail importing houses deal in “futures,” they sell goods by samples, contracting to deliver at a future stated period, varying from thirty days to one year, in the 810 meanwhile the goods sometimes have to be made or grown and brought from a distance of 3,000 or more miles. All such corn^ws are the natural and legitimate result of enterprise and they will continue to exist and increase in all future time. The intervention of Congress or State Legislatures is not needed to put down American enterprise and Yankee goaheadtiveness, it will beat the world if left alone. Sup- ply and demand is the real regulator and" always asserts its power in the end; those who do not obey its mandates will become the victims. People who buy cheap and sell dear make the money in all lines of business. “ Congress, I well remember, during the war passed an act to sup- press selling gold short, the result was it broke up the general trading in it, and drove the business into foAV hands, thereby giving to said, parties the monopoly and thus produced a corner in gold, which re- sulted in the premium almost doubling in a comparatively short time. The wise statesmen who originated the measure and who were instru- mental in getting it through Congress took alarm at the result pro- duced, and at once had the act repealed. Another attempt and in- terference was made by Secretary Hugh McCulloch, who made a 'mi- nute calculation that Gold Greenbacks should uot range higher than 129f premium, hence undertook by selling treasury gold whenever it reached 180. To keep the price at his figure, his brokers had carte Handle to meet all demands at 130; it was prior to the cable period, hence all foreign neAvs came by steamers. One afternoon, at about tAvo and a half o’clock, the ncAvs struck the street that a serious panic Avas prevailing in England — Overend, Gurney & Co. had failed ; hun- dreds of merchants and many banks also. The foreign bankers here had imperative orders from their correspondence to remit gold to Eng- land at once. The orders were sent to the gold room, and in less than half an hour the government gold broker Avas bailed out of at least $25,- 000,000 of gold in the time Immediately thereafter the premium ad- vanced to 40, and before the close of the next day it reached 60. It Avas the cheap government gold that Avas shipped, and its arrival in England stopped the panic, and but for which general bankruptcy in England doubtless Avould have been ineAutable, thereby causing Eng- land’s high credit to be impaired, and in consequence the sooner building Noav York city, as the financial center of the Avorld, — her future destiny. Corners in stocks Avhich after past experience seldom occur, and all that have been inaugurated have resulted in loss to the conspirators and in most instances their ruin ; it was so in the Black Friday corner, Prairie dii Chein coi-iicr, the Pock Island corner, the Nortli-Avcst corner and moi’e recently the Hannibal & St. Joe corner ; it invariably leaves the ])arties to such nefarious transactions high and dry Avith all 811 the stock on hand and without a market therefor. There is, however, a class of stock and grain dealing which should be suppressed by law, and that is bucket-shop business, as that is merely betting on quota- tions as they pass over the tape on the indicator, the inducements held out by the circulars sent out by such corners capture, as custom- ers, people of small means, such as clerks and servants which not in- frequently lead to acts of dishonesty; railroads obtain their franchises through either Congress or State Legislatures, hence are under the im- mediate control thereof and can be regulated thereby ; corners or pool- ing which is the sam'e thing and now so universal should be prohibited by law ; so should the combinations of coal companies ; also the consoli- dation of telegraph companies, owing to their prejudicial effect upon public interests and also contrary to public policy; they build up monopolies, thereby enriching and making all powerful the few at the expense of the many, and hurtful, politically and otherwise, to the great interests of the nation. * ‘‘Again, referring to short sales or futures, especially in the grain market, they form at times an important sustaining power in the mar- ket. I refer to j^eriods of depressions which come periodically in this country, and but for that element the big and bold European opera- tors would be enabled at such periods to manipulate at the price of our products to suit themselves, and before buying would raid and hammer down prices much below production cost. When we sell to Europe we must do so at prices that give profit on production, or we are not much benefited. I merely cite those cases to show the effect of congressional or legislative interference with business.” By Mr. CniTTEKDEi^ : Q. Have you completed your statement ? A. Yes, sir, Q. How long have you personally been engaged in business in Wall street ? A. Over twenty years. Q. And what has been your general system ? A. Banking and brokerage. Q. The purchase and sale of stocks, bonds and securities, I suppose ? A. Yes, sir. Q. You are engaged in that business now ? A. Yes, sir. Q. Have you ever been engaged in the business of dealing in wheat, corn, provisions, and those things which generally fall under the name of produce? A. Yes, sir. 812 Q. la what manner ? A. I am a member of the Chicago Board of Trade, and execute orders there quite largely. Q. IIow do you execute orders there ? A. I send them by wire to Chicago, and they are executed by my broker there. Q. In otiier words, your broker buys and sells for your customers here, does he ? A. Yes, sir. Q. Do you deal to any extent upon the Produce Exchange here ? A. Yes, sir, somewhat. Q. And in the same way ? A. In orders only. I never bought or sold a bushel of corn or wheat or grain in my life on my own account, nor have my firm ever done so. Q. What business are your customers engaged in for whom you exe- cute these orders in Chicago ? A. They are engaged in the grain business. Some of them have no other business excepting to operate, Q. Have you in mind any one for whom you have made any such extensive purchases and sales for actual consumption or delivery ? A. Yes, sir, a great many, especially for delivery, I have. Q. For actual consumption ? A. For consumption ? that does not quite enter into my business. The orders of that character are usually executed by people who are exclusively in the produce business, such as David Dows and Jesse Hoyt, and firms of that character. Q. Is not your business, so far as it extends to produce, largely speculative ? A. Well, it may be so considered, yes. sir, for those that we do it for. Q. And a very ilittle of it is for actual consumption or sale by the parties for whom you purchase, is that so ? A. Well, I suppose it is. Q. Do you deal in cotton ? A. Yes, sir ; we execute orders in cotton.' Q. In the same way ? A. Yes, sir. Q. And of the same character? A. Yes, sir. (2- ^'ivo us some idea of the amount of your purchases or sales of ])rodiH;(* for example, for any week or month or year — I want to get tlie volume of it ? A. I would 1)0 unable to do that without reference to my books. 813 QJ Does it run up to hundreds of thousands of dollars annually ? A. Yes, sir ; it far exceeds that. Q. It goes into millions, doesn’t it ? A. Yes, sir. Q. Are your cotton transactions equally extensive? A. No, sir; our cotton business is not quite equal to the other. Q. Give us some idea of the annual volume of that as near as you can do so without your books ? A. It probably amounts to some hundreds of thousands of dollars, periodically. Q. Do you deal in oil ? A. Yes, sir ; on orders, exclusively. Q. And orders of the same character, I suppose ? A. Yes, sir. Q. To what extent will your oil business run per year ? A, That is a new addition to the business, made within a few days ; so, therefore, I cannot give much experience as to that. Q. Do you deal in pork and other provisions ? A. We execute orders in them, but our business is not particularly large in that branch. Q. You have been in the produce business in this way for several years, have you not ? A. About two years, I should think. ^ Q. Not over two ? A. No, sir. Q. Were you in it in 1879 ? A. No, sir. Q. The large amount of your business is in stocks and securities, is it not ? A, Yes, sir ; executing orders at the New York Stock Exchange. Q. Executing orders for your customers ? A. Yes, sir, exclusively. Q. Is the greater part of your business done in the Stock Exchange? A. Yes, sir ; almost all of it. Q. You are entirely familiar with the process of doing business in . that Exchange, are you not ? A. I am, sir. Q. And have been for twenty years ? A. Yes, sir. Q. You do a very large business, amounting to many millions of dollars annually, don’t you ? A. Yes, sir. Q. Could you give the committee, in round numbers, an idea of its general volume? 814 A. No, sir, I cannot without reference to the books ; I wouldn’t like to make a guess of it. Q. Give us the best guess you can — the aggregate of your pur- chases and sales ? A. I really would not want to venture on an opinion as to that, be- cause it is quite large. Q. Fifty millions a year ? A. Yes, sir. Q. Probably more than that, isn’t it? A. A^es, sir. Q. On all that you are paying a commission, are you ? A. AYs, sir. A. What are the average commissions of all purchases and sales of that character? A. $12.50 on each 100 shares of stock for buying, and the same for selling. Q. Could you give any general average value of the shares that you deal in — wouldn’t the average be somewhere from $30 to $50 a share ? A. I should think it would range about $50, — somewhere in that neighborhood — the par value. Q. We have heard a good deal in the outside world about specula- tors locking up money in Wall street ; do you understand that process ? A. AYs, sir. Q. It is reputed that Mr. Gould, Mr. Sage, Mr. Dowd, and others, have been engaged in that to a considerable extent during the last few years ; is that report true ? A. I am unable to testify as to their dealings. Q. Is it the general understanding in the trade with which you are connected that such has been the fact ? A. I cannot give facts. Q. AMu know what the understanding is, don’t you ? A . There are various rumors, there have been at times, to that ef- fect. Q. Do you yourself believe that they have been largely engaged in locking u]) money many times within the last three years ? A. 1 won’t say as to those gentlemen ; I think it has been done in . the street at times. Q. Describe the process to the committee ? A. It lias been diflicult in later years to lock up money, and it has scarc(!ly Ix-en doiu* excepting recently. (T Deseribe tin* process? A. 'Idu; pi’oeess wliich is a,(lniissible now — (2- Not now — the past three or four years ? 815 A. It has been impossible for several years past owing to the bulki- ness of gold; it was only gold that could be obtainable, and any one start- ing to lock up gold would find after he had locked up about $500,000 it would be exceedingly difficult to find a place to put any more and keep it safe ; so owing to that fact it was impossible to lock it up. Q. Please explain to the committee the process of locking up money that has been in use or attempted during the last three or four years ? A. Bankers or brokers or merchants or any one haviny balances to their credit in their bank are entitled to draw the money out. and it is their money, and they can do what they like with it ; they can take it home with them or can put it in their vaults, secrete it anywhere audit takes it out of circulation ; the recent act of Congress authorizing the issue of gold certificates makes it easier to be accomplished ; they can de- posit now a million of dollars of gold — Q. Excuse me, but you are going entirely away from my question ? A. I was going to explain how it is done by taking these gold cer- tificates, which you can do — the way it is done and the way it has been done lately. They will deposit their gold in the treasury. It is carted from their bank to the treasury and they take out a corre- sponding amount of gold certificates, and it is an easy "matter to put a million dollars of gold certificates in your pocket and walk home with them, which couldn’t be done with gold, and it can be done with $2,- 000,000 or $3,000,000 or $5,000,000 — there is no limit to it, and there- fore the passage of that act and the authorization of these gold certi- ficates make it comparatively an easy matter to lock up money, while before it was almost impossible. It was done during the war when greenbacks could be got ; but of late greenbacks have been scarce. If you go to the bank they give you gold and not greenbacks. Q. I don’t consider the answer responsive. Please explain to the committee the process of locking up money? The question formerly asked was then repeated to the witness, as follows: ‘^Q. Please explain to the committee the process of locking up money that has been in use or attempted during the last three or four years ?” Q. Do you consider that you have answered that question ? A. There is another raetliod of doing it. Q. State the other method ? A. Certified checks can be retained and not deposited. They rep- resent money in the banks, and that money, of course, belongs to the certified checks, and not being called for, not being deposited, it re- mains in the banks out of use. That is done frequently, but that can last only a few days— not over one or two days generally. The banks 816 find that the certified checks are not sent in and they will take the risk often in lending the money out, being suspicions that the checks are kept back. So it does not last very long. It defeats itself after a while. Q. Are you not personally cognizant of cases in which a party of gentlemen, capitalists, desiring to lock up money, have commenced by loaning large amounts of money on call in the Stock Exchange and elsewhere at low rates ot interest — are you not cognizant of such cases ? A. I am that money has been loaned in that way; yes, and it is loaned all the time, every day. Q. But I ask you wliether you do not know of cases in which money has been so loaned by parties intending to lock it up ? A. That I am unable to say of my own knowledge. Q, You don’t personally know of any such cases ? A. Of my own knowledge I do not know the facts in the case. Q. xVre not such cases frequently reported ? A. They are reported and they carry that suspicion attached to them oftentimes ; but I do not know the facts. Q. xVnd then are you not cognizant of cases where those men have gone to the banks with which they were connected and borrowed as largely as they could the balances, paying interest and leaving them in the banks ? A. Such casee have occurred. Q. And then when they want to lock it up, having secured those balances, they call their loans, don’t they ? A. Those things have occurred, yes, sir. It has occurred so, I think. Q. Is not that a pretty common way of locking up money ? A. It has been adopted, I am inclined to think, often. Q. The effect of that is to compel those who are carrying large amounts of securities when' these loans are called, to throw their securities on the market, isn’t it — one of the effects ? A. Yes, sir. il. And in that way the prices of those securities are forced down and tlieir owners lose money, don’t they ? A. Yes, sir, tliat would be the consequence. Q. Then when these balances are suffered to go out and money be- comes cheap the market reacts and goes up, does it not ? A. Yes, sir. Q. That is one kind of a corner in money, isn’t it ? A. Yes, sir, it tends that way. 817 Q. Do you consider that legitimate speculation ? A. That feature of it I should say not. Q. Isn’t it ruinous and disastrous to legitimate business ? A. Yes, sir, that process is hurtful. Q. Do you know any thing about a corner that took place in Han- nibal & St. Joe stock ? A. Yes, sir. Q. When was that ? A. It must have been about eightjmonths ago I should think, or ten months ago probably. Q. About a year ago wasn’t it ? A. Somewhere in the neighborhood of a year ago — ten months or a year ago. Q. Now along through the year of 1880, and up to July, 1881, what had been the range of Hannibal and St. Joe stock, the market price for it ? A. I should think on an average of about 82 to 81 and I should say about 40 to 50 — somewheres in that neighborhood. Q. Do you happen to know the amount of that stock — the capital of the company ? A. I think it is $9,000,000 if I mistake not. Q. It is largely held in New York, isn’t it ? A. Yes, sir, it is now. Q. And is it one of the stocks permanently dealt in on the Stock Exchange ? A. Not now, no, sir. Q. it was at that time ? A. It was, but now it has no dealings in it at all. Q. There were heavy short sales of that stock during the year ’81, were there not, in this market ? A. No, sir, not heavy for a corner, there were very few short sales ; my estimate is that there were about 12,000 or 13,000 shares of short sales in the stock. Q. What means have you of forming that estimate ? A. That is common report and from the data that I can get at ; I think I have had it intimated through Mr. Duff himself ; I know him quite well ; I have had it intimated by Mr. Duff himself, I think that that was about the amount. Q. Twelve thousand shares would be how much, calling it $100 a share ? A. About a million and a quarter at par. Q. Wasn’t it reported at the time that some holders, one holder in particular, himself held more than 12,000 shares ? 103 / 818 A, There were various reports, but none were found to exist as being correct in reference to those large short interests; but it suf- ficed to make a corner, even the 12,000, or 13,000, or 14,000 shares that existed, because the reports had all the cash stock. Q. It became very difficult for the short sellers to fill their contract^ didn’t it? A. It wasn’t difficult, it was easy, but it very much advanced prices ; there was no time but wliat there was a market for the stock. Q,. What dividends did that stock pay in 1881? A. At that time it didn’t pay any. Q, Has it paid any since? A. No, sir. Q. How high was that stock run up ? A. I think it went up to <80. Q. And it went up in consequence of the corner, didn’t it ? A. A^es, sir. Q. And the shorts had to settle at that price or fail, didn’t they ? A. Yes, sir. Q. Many of them did settle at that price, didn’t they ? A. AYs, sir, I think so from what I learned. Q. And the men who made the corner made a great deal of money, didn’t they ? A. No, sir. Q. Up to the time they settled they made a good deal of money, didn’t they ? A. No, sir, they were ruined ; the man that made the corner was ruined by it. Q. Please notice the question ; at the time he settled and received his pay, he wasn’t ruined, was he ? A. Virtually so, yes, sir. Q. You speak of a man ; were there not several men engaged in that corner ? A. No, sir, I think it was all one man. Q. Who was the man ? A. Mr. Duff, of Boston. il. You don’t think that anybody here in New York had any con- nection with making the corner? A. hio, sir, I do not. Q. Or making any money out of it? A. Excepting as his agents. (2. After the sliorts settled the stock went down, didn’t it? A. 'riiere wiis no nnirket for it which is usual with such corners ; there has not been since. Q Isn’t it sold at all ? 819 f A. No, sir, it is not dealt in scarcely. They may be nominal trans- actions. Q. At what rates ? A. It is quoted at about forty-five, I think forty-five to fifty; forty- five bid, offered at fifty. That is about the stereotyped price each day. Q. Do you consider such a corner as that as a necessary product of legitimate business? A. No, sir, and it does not often occur. After that experience it is not likely to be repeated. Q. I didiiT inquire whether it often occurred or not. Do you con- sider such corners as that injurious to legitimate business ? A. Yes, I suppose it is in the main. Q. Did you hold any of that stoch for yourself or your customers at the time of the corner ? A. I did not. Q. Do you know any thing about the corner in North-west? A. Yes, sir, I have a recollection of it. Q. When did that take place. A. 1 should think that it was in the year 1872. It must have been as far back as that. Q. Was it before the suspension of 1873 ? A. Yes, sir, if I remember right, it was. Q. How was the price of that stock inflated by that corner ? A. It started, I think, at about 80, and then ran up to about 12.80 Q. When the shorts settled up I suppose ? A. Yes, sir. Q. And then where did it go ? A. It went back to the former price at least, Q. Who were the gentlemefl that made that corner ? A. Mr. Gould has always had the credit for it. Q. Had he any associates ? A. No, sir, I think he was alone in it. Q. Have you been personally cognizant of any corners in corn or provisions ? A. No, sir, I am not familiar much in reference to the corners there in that market. Q. Not enough to give any personal information ? ' A. Not enough to give any personal information. Q. You do not mean to be understood, do you, that corners of any kind are beneficial to legitimate business ? A. No, sir ; they are not particularly beneficial of course. Q. Are not all corners of this class — we will come to the patents 820 pretty soon — are not all corners of this class injurious to legitimalc business ? A. They entail losses of course, and to that extent they must be in- jurious to the parties that suffer. , Q. Do they not cause the failures of houses doing business upon a small capital ? A. Often they do. Q. It results in taking away from the shorts what they have to pay to settle without returning them any equivalent; is not that so ? A. I suppose it is; yes, sir. Q. Do I understand you to liken corners of this class to what you call corners made by merchants who buy up all of a particular pro_ duct — do you think that they resemble each other in their effects upon business? A. They are not unlike ; the spirit is the same. Q. Do you think that is a fair comparison between them in their effects upon legitimate trade ? A. They don’t go to the same extremes ; the spirit is the same. Q. Let us take some article in which the eminent merchant, or'any other merchant to your knowledge, has made a corner within the last ten 3^ears ; will you give us some article ? A. All goods that are exclusively dealt in by one firm I consider effectually cornered ; he charges his own prices. Q. I would like you to give some particular article by way of illus- tration ? A. I only can give my views in a general way and apply them to all that class of transactions; I am^not in that business so that, therefore, I cannot give the full details as your question seems to call for ; a dry goods man would be more likely to do tlpt. Q. You intended to give your testimony from your personal knowl- edge, didn’t you ? A. Yes, sir. Q. If you have such personal knowledge does it not relate to some particular article of merchandise ? A. It had reference to all goods that parties had the exclusive sale of. Q. What was one article of those goods ? A. Various classes of dry goods for instance. Q. What article of dry goods ? A. It applies to particular makes of gloves for instance. Q. Like Juvin’s gloves or Alexander’s gloves? A. Yes, Alexander’s gloves would cover it;, it applies to particular makes of woolen goods, blankets and hosiery of peculiar makes. 821 Q. Take some case that you know of ; it would apply to any thing, but we want to get at the facts ; did you ever know of a corner in gloves ? A. My idea with regard to a corner was where you could exact your own price and you wouldn’t find any competition ; a corner is where there is no competition, where you have the exclusive business and you can put your own price on it, which is generally more tlian a fair living profit ; competition makes business healthy, brings prices down to a proper level ; where there is a want of competition you will find prices go up higher than tliey ought to be. Q. My inquiry was whether you ever personally knew of a corner in gloves ? A. The Alexander gloves has always sold for a much higher price than other gloves have. Q. In those cases to which you have referred, are they not all cases* where some merchant purchased the entire manufacture of some manufacturer — were those not exclusively the cases to which you referred among the merchants ? A. Yes, sir; mainly so. Q. If there are any exceptions state them ? A. Those are what I had reference to particularly where they had the exclusive sales of that class of goods or took all that were made of certain manufactures. Q. The manufacturer in those cases originally had the exclusive sale . had he? A. Yes, sir. Q. Do you consider that he made a corner in them ? A. No, he parted with his power to it solely by disposing of that under contract to the party to whom he sold. Q. But were there not at the time numerous other makers of good gloves besides ? A. Not of that identical brand of trade-mark. Q. Do you tiling that that corner, if you call it so, differed at all from the case where a person or merchant buys the entire product of any given factory in this country, large or small? . A. It is the same thing. That is what is so often done. Q. You spoke, I believe, of patents forming a kind of corner ? A. Yes, sir, of goods covered by the patent. Q. Do you consider that that is similar in its effects upon legitimate trade and the corners you have described in Wall street? A. It has similarity of course. Q. Could you name some patented article in which you understand 822 prices have been largely inflated by the having the exclusive use of them ? A. Yes, sir. Q. What? A. Sewing machines; they probably have sold for prices five times more than their production price. Q. Do you know that from personal knowledge? A. In my estimate and from information tliat I have had from time to time. Q. You never dealt in that? A. No, sir, only the investigation of the actual cost of the produc- tion. Q. Have you made such investigation ? A. I have, yes, sir. Q. In relation to what machine ? A. Those that have been covered by patents ; the Singer sewing machine and others. Q. The Singer? A. Yes, sir, I remember doing so some years ago. Q. During the existence of all those patents on sewing machines was there not a regular tariff for licensing under which any person by paying $5 could make any kind of sewing macine he saw fit ? A. I don’t know that fact. Q. You are a member of the Stock Exchange, are you not ? A. I am, yes, sir. Q. And have been for how long ? A. I should say for fifteen years. Q. In the year 1862 how many members were there of the Stock Exchange ? A. I don’t remember. Q. There were about 200, were there not ? A. I should suppose there would be, yes sir, and more. Q. More than 200 ? A. I should think so, yes. Q. How many is your impression ? A. I couldn’t give it accurately ; it was over 200 I should think ; I couldn’t give any accurate statement. Q. What w'ere seats worth when you became a member ? A. They were not dealt in, they were not' salable ? Q. They were not considered of any especial value ? A. No, sir; we obtained our seats as you would become a member of a club at that time. You paid an initiation fee and you were ad- jiiitted as a member of the body. il- What was that fee ? A. J think it was $500. 823 Q. What are seats worth there now i A. From $25,000 to $30,000 I believe. Q. Some have recently been sold as high as $30,000, haven’t they? A. Sales have been made I understand at that. Q. And what is the present number of members ? A. Over a thousand I think. Q. Isn’t it a certain amount ? A. Yes, sir, I am not quite clear as to the exact number, but it is over a thousand. Q. Isn’t it 1,200 ? A. It may be 1,200, I am not quite sure. Q. During your experience in Wall street, the volume of specula- tion has very largely increased, has it not ? A. Yes, sir. Q. Has it increased 30 times over what it was 20 years ago ? A. Yes, sir. Q* The number of firms and persons engaged in this speculative business ha^also increased in the same proportion, hasn’t it ? A. I rather take exceptions to your questions with regard to being a speculative business. For instance, I do not consider myself a speculator. Q. We will waive that and call it in this general stock and security business ? A. Yes, sir. Q. A great many fortunes have been made there, have there not, in that time ? A. Yes, sir. ^ Q. A great many men have retired with fortunes ? A. Yes, sir. Q. That business is largely patronized by individuals from the country, is it not — they send in their orders from the country ? A. The country contributes to the business, yes, sir. Q. In the great majority of these country orders do not the parties who engage in the business in that way fail — in the great majority of cases ? A. No, sir, I should think not. Q. Take your own business. You buy and sell to some extent for actual investors, do you not? A. Yes, sir; largely. Q. By investors, I mean those who desire to invest their money per- manently? . A. Yes, sir. Q. These gentlemen do not buy on margins, do they ? ^ A. No, sir; excepting at times they buy on margins anticipating^ 824 receipts of money, dividends, etc.; when the market suits them they will buy 30 days in advance, perhaps more, and have the stocks car- ried until the money comes in. Q. The large proportion of your business is done upon margins, isn’t it ? A. A good deal of it. Q. Is not a good deal more than half of it done on margins ? A. Yes, sir, I sliould think it was. Q. And from men who speculate either for a rise or fall, isn’t it ? A. Yes, sir ; quite largely so. Q. And your business may be taken as a representative case of the average business in 'the street, may it not — as to the class I mean ? A. I should think so, yes, sir. Q. Do you think that business of buying and selling on margins adds any thing to the aggregate wealth of the country ? A. I do not see how it detracts from it. Q. But do you think it adds any thing to the aggregate value of the property of the country ? A, Yes, sir, I think it does. • Q. How? A. It makes a market for securities which wouldn’t otherwise exist; it enables the building of railroads which couldn’t be built but for the sale of their securities ; the building of railroads develops the country and opens fields that otherwise would be barren ; I think its effect is beneficial rather than the reverse ; it enables us, because we have a market here produced by such speculation, to make a market in other nations, England, Paris, Berlin, Frankfort and all l5uropean markets ; they follow our markets, see the transactions here and they follow. Q. Do you think a market inflated by speculation is desirable to legitimate business ? A. It is a forerunner of enterprise in other lines of business ; all sections of this country take their cue from Wall street. Q. But then I understand you to say that in your opinion a market where values are inflated by speculation is desirable to legitimate trade; do I understand you right ? A. I do noh think it is hurtful when prices are not. Q. That hardly answers the question ; do you think it desirable? A. Yes; I think it is more so than a time of depression; more so than to see })i-ices depressed; it forms an index to the actual condition of the country. Q. Don’t you think that on the whole it would be as well for the country if i-ailroads were constructed just as fast and no faster than the wants of the country demand — don’t you think tnat would be better on the whole ? 825 A. No, sir. Q. Many of these railroads, the construction of which has been forced in advance, have turned out very disastrously, haven’t they ? A. They have, yes, sir. I Q. Some in your own experience have, haven’t they ? A. No, sir. Q. By whicli you have met with very heavy losses, is that so ? A. Only during the collapse of 1873 which was what affected every thing both good and bad ; every thing was torn up by the roots, so that it didn’t make any difference what value there was to any thing. Q. Does not this inflation by speculation tend to give a value to securities which have no actual intrinsic value ? A. It does in some instances. Q. I can put that plainer ; are there not stocks now dealt in on the Stock Exchange that have no value whatever except speculative pur- poses:^ A. No, sir; I don’t think there are. They have a value; It is prospect- ive in many instances. Q. Are there not stocks that show no promise of dividends in the next twenty years ? A. Yes, sir; plenty of them, but still they have their value for the control of the properties which they belong to. Q. Are there not some companies where the control is in the bond- holders ? A No, sir; very few. I don’t recollect of any where the properties are within the control of the bondholders. Q. But where the control is in preferred stock? A. No, sir; I don’t know of any but what requires the common stock to vote in elections to enable the election to be carried in the interest of parties seeking to obtain it. Q. Suppose the results of corners and futures should be to add to the cost of grain and provisions, would you then think them objection- able in the grain and provision trade ? A. If it were a prominent thing, yes; but it is not ; it is only transi- tory and it is only for the moment. I think as far as corners or spec- ulation of futures go in grain that on the whole they are advantageous for the reason, that if there were no futures in the grain there would be times of depression which would be waited for by the large Euro- pean operators who are very cunning, and they would use their influ- ence and hammering powers to depress the market as much as they could, and then would be the periods when they would make purchases for European accounts and they would get our products every year for less than production prices. 104 826 Q. When the price of pork is increased and held up at four dollars a barrel, so long as that takes place those who consume pork have to pay a higher price, don’t they ? A. For the time being, yes, sir; but they will substitute other things in the mean time. Q. And the same would be true of all grains and provisions, wouldn’t it? A. Yes. sir. Q. Have you not known instances in the prices having been so inflated and held up for several months together ? A. Scarcely as long as that, I think. Q. As we are seeking information will you please give the com- mittee an instance in wheat or corn in which this inflation and reac" tion has taken place within the last three years, say ? A. It took place on the small crop of last year in Avheat and in corn which was the natural consequence. Q. At what time during the last year according to your judgment was wheat inflated? A. It was this year; it was in the spring of this year that the in- flated or high price took place. As we neared the end of the crop the apparent scarcity of it became known, and as we came up into the fall. Q. In the spring of this year was wheat high or low according to your judgment? A. It w'as no higher than what was justifiable by the small supply on hand. It was $1.35 ; somewhere in that neighborhood, or $1.30. Q. In March and April it was from $1.35 to $1.48 and $1.49? A. It was legitimate ; that price was based upon the supply and demand. Q. That you consider a fair legitimate price for wheat, do you ? A. Based upon the supply and demand, yes, sir. Q. At that time ? A. At that time, yes, sir. Q. As tlie crop comes in should wheat go up or fall ? A. Fall as it has done. Q. And what is it worth now ? A. I forget what the last quotation was for it. Q. You can get pretty near it ? A. It is quoted every day ; it is between ninety cents and a dollar. (^. At any time since March or April has prices of wheat been in- flated by a corner ? A. A cornel* in cash, that is it has been higher for cash than it has been on o])tions. 827 Q. I don’t wish to prolong it; what I want to draw out is this: You say that corners inflate prices beyond the legitimate price, but the community get the beneflt of it by the subsequent fall below the legit- imate price ; I think that was your statement, wasn’t it? A. That is the way it words usually. Q. I want you to give us some article illustrative of that — when it occurred — so that we may go to the market and test it? A. We have had wheat up to $1.85 and it has been down to 90 ; we have had corn up to 75 and 80 cents and it is now down in the neigh- borhood of 50 cents. Q, I want you to take some time when you think the price was in- flated by a corner, take some period, some particular month, or week or year ? A. I don’t regard that wheat or corn either have been particularly inflated at any time of late. Q. Then your observation does not apply to wheat or corn ? A. There has not been a close corner in either of them. Q. Then your observation does not apply to wheat or corn ? A. Yes, it applies if they should get up a close corner in wheat or corn and you couldn’t obtain it at all; then of course it would be so, but it has not been so. Q. Please give the committee some case in which youj^ statement, in your judgment, does apply — some case in some article ? A. It applies generally to corners when they exist and then a re-ac- tion comes. Q. Then do you mean to say that you can’t state any particular article or any particular time ? A. I can’t specify any particular time, no. Q. Nor any particular article ? A. It covers any thing that there are corners in, but necessaries of life especially. Q. The difference here is between your personal opinion and the fact ; I want to get some fact ; if you can’t give any I will drop it ? A. They did call it a comer in wheat, putting it at $1.35. Q. When was that? A. That was during this last fall, early in the fall. Q. In September? A. Somewhere about that time. Q. And do you consider that a corner? A. I don’t, no ; I don’t think it was a corner, it was what wheat was really worth at that time, considering the short supply. 828 By Senator Browning : Q. Do you desire to say any thing in addition to what you have al- ready said ? A. No^ sir ; I don’t know that I have any more to say. With re- gard to people of moderate means they are prevented during high prices from buying that kind of food, and they will buy other food which they can easily obtain. It may not be as agreeable to them, but it is a substitution and it is attainable. By Senator Boyd : Q. You speak ol persons with moderate means and you speak with a good deal of certainty. Do you know of any instance where per- sons of moderate means did act as you have stated ? A. I don’t know of any particular case. Q. Then in case of the article of flour what would they substitute — what could they substitute for that ? A. They could substitute meat and substitute other grains and veg- etables. Q. You know of no such case, however, where they have done so ? A. I can’t .call any particular instance to mind. By Senator Browning : Q. Have you heard that to be the fact ? A. Yes, I understand that to be the case with the common people, I talk more or less with people and get their opinions, etc., and seek information where I can. get the opportunity, and I find by talking with people that that is what they have done at times. By Senator Boyd : Q. Then you know that corners have subjected people of moderate means to this state of things ? A. At times, yes, sir; it makes them more economical in the use of flour and grain. Q. 'J'hey have been arbitrarily compelled by the manipulators of those corners to sui)stitute coarser material for ordinary ? A. No, not arbitrarily. As I said before I do not regard that these liave been corners. I don’t think there have been any corners. Grain does not go up to these high prices excepting there is a basis for it. It is the sliort su])ply tliat makes it so, and if it goes up to those high ])rices, it is justifiable in most cases, especially if it stays therefor some time. ^I’liis fall ^1.35 was not dear for grain A dollar for grain is always cheap. A lal)oring man will produce a bushel of wheat a day. The labor of a man is worth a dollar, and wheat is never dear 829 at a dollar. That is the price of a man’s labor, and all that will be pro- duced by manual labor is a bushel of wheat a day. That is my opin- ion about that. Mr. Chittendek — These are all expressions of pure opinions and I hope the committee will endeavor to get the plain facts. Senator Browning — Tliis committee have examined a great num- ber of witnesses and heard a great number of assertions, and all our testimony is based upon opinions and observations. Hardly any thing has been adduced upon matter of fact and personal experience. You are commencing now a new rule. You are tying this witness down to what he particularly knows of his own knowledge to be the fact, and you are shutting out all his judgment and his opinion as based upon observation and rumor as brought out upon the street, which is current, and which everybody is acquainted with. Now I am satisfied to have that theory stopped right here, and to produce nothing before this committee except what is produced upon fact and personal knowl- edge, and I heartily concur with counsel if he will stick to that right straight through from now until the end of this examination, but I want to say here that every whit of testimony brought out before this committee now is upon observation and rumor and opinion. Mr. Chittenden — My view is that it is the mission of the com- mittee to form opinions, and the mission of the witnesses to give facts. By Senator Boyd : Q. Is there any thing further you would like to state to the com- mittee ? A. No, sir, I have no more matter to produce. By Mr. Ohitten])EN : Q. I believe you requested the committee to hear your statement ? A. I did not, sir ; I was subpoened. Q. When was that subpoena served ? A. About ten days ago. ^ Q. ilsking you to appear here at what time ? A. I don’t know that it specified a time. It was served at my office upon me. I don’t quite remember the reading of it. Q. You didn’t, however, appear at the time ? A. Not at the moment ; no, sir. Q. But subsequently came ? A. Yes, sir. I took counsel in the matter, and I was informed that it was imperative to respond or it would be regarded as contempt, so 830 that I felt compelled to present myself, and thought it was courtesy on my part also to do so. Rev. Edioard McOly7in was then called, and being interrogated answered as follows : Senator Boyd — In consideration of your sacred calling, the com- mittee will dispense with the customary oath. By Senator Boyd: Q. What is your profession ? A. I am a clergyman. Q. In connection with what denomination ? A. Pastor of St. Stephen’s Catholic Church in this city. Q. IIow long have you been a clergyman ? A. Twenty- three years. Q. About how long in connection with your present charge ? A. Sixteen years. Q. What is your opinion concerning the whole system of making corners and dealing in futures in reference to its effect upon com- merce and itsiiiffuence upon the public w'elfare ? A. I presume that I have been invited here to appear here because of my profession as a clergyman, and some supposed familiarity with the moral view of the case. Q. That is the object ? A. I am giving not merely of my own opinion but that of the casuists, and the moral theologians, as to the morality of gambling and monopolies ; for if I understand the question, speculation in fu- tures and corners is but another form of designating gambling and monopolies. I believe that speculation in futures is a betting, prac- tically, upon the future price of whatsoever the article may be, and that a corner, to whatsoever article, is a monopoly by one or a few per- sons, and banded together to hold the article together, to hold the article for a price higher than would be a fair price if no such monop- oly existed. Betting or gambling in itself is not essentially immoral. Tdie natural law does not so declare it for the obvious reasoji that a man may be iree to dis})ose of certain portions of his projiertv gratui- tously, and if so, he is equally free a forfiori to risk the alienation of such portion of his proj^erty upon a game at cards, the cast of a die, or whatsoever other game might come under that designation of gambling. However, I am free to say and anxious to say, that while gambling is not essentially immoral, it is as Hr. Sainnel Johnson said fionmwhere — I don’t remember exactly where — if not immornl, de- cidedly un})rofitable.” I believe that it is unprofitable and pernicious, and that like many other things that are not strictly immoral by the law of nature, it may be so, and should be so by the law of man ; that it comes within the province of the State, that it were well for the State, and may be, and is the duty of the State, to protect the Corn- moinvealth against the pernicious effects of unbridled gambling. I be- lieve that among the pernicious effects of gambling or lotteries, and among them I would include speculation in futures, of the drawing away for protective pursuits that would add to the wealth of the com- munity, and, therefore, increase the common weal of a large number of able-bodied, and still more keen-witted men who devote themselves to simply exchanging property from other people’s pockets into their own. While I have said that the law of nature does not declare gambling to be essentially immoral, however right, reason, and therefore the law of nature does teach that betting or gambling should be with pretty nearly even chances ; that where it is purely a game of chance in the cast of dice, there is no essential immorality; but the immorality may speedily creep in any other games where skill is added to chance, for nstance in games at cards where, I believe, inmost instances, skilland chance combining, or again in certain games where there is purely a contention of skill or strength, as in prize fights or wrestling matches, the law of nature would surely as right, reason and common sense would dictate, teach here that there must be some kind of equality, some equality of chances, that it were unjust for one extremely more skilled in the game of cards or immensely superior in strength and skill in the prize fight or the^ wrestling to take advantage of the other’s ignorance or lack of such skill, and it occurs to me that while in indi- vidual cases in the matter of speculation in futures there may be no essential immorality for the reasons assigned, that, however, there is the greatest danger in nearly every case that such immorality may creep iu and that therefore in most cases such speculation in futures is immoral, iniquitous, and I would make haste to add or to repeat with more emphasis than before, that it seems to me that here pre- cisely comes in the province, and even the duty of the State, to pro- tect the weak, the ignorant, the simple, the country cousin, from the superior skill, knowledge, adroitness, if not the downright rascality of those who induce them to speculate in futures : for the lambs should be protected from the wolves, and I believe that in the nomen- clature of the street, the country members are known as the lambs whose providential mission it is to be shorn. It seems to me that spec- ulating in futures, as understood I believe by the committee in this in- vestigation, is but another form of lottery and gambling with the ad- dition very probably of the iniquity of fraud or chicanery in either in- stance, or depreciating the price as the case may be, by false rumors 832 V and the matter of panics created by such false rumors ; all of which are iniquitous, immoral and unjust, and the gains that result from such iniquitous proceedings are so unjust that the winner should he held strictly to restitution, even as the thief is held to restore ill-gotten goods. As regards corners, if I understand the question at all, I feel that I am justified in translating corners into the word of monopoly or monojiolies. I understand a corner of the ownership of some article by one person or by several persons banded together for the purpose of acting in concert and holding up the price of the article. As I have said of gambling, or lotteries, or betting, that while in them- selves these things are not essentially immoral, yet they are pernic- ious and should be restrained and prohibited, and I would also say that monopolies or corners in themselves are not essentially immoral for the obvious reason that one may hold the monopoly, and yet sell the article of which he has the monopoly at a fair market price, and if so he is doing no injustice to the com- munity, he is committing no immorality ; but it seems to me that the reasons for which one man or numbers of men would seek a monopoly of tbs market must be for the purpose of enhancing the price beyond a fair market value, otherwise the game would not bo worth the candle, and in such case a monopoly is essentially immoral and iniquitous and should be restrained by the State, and I would say that it is my opinion, and the opinion of the casuists, and the moral theologists unanimously, that an unjust price is a price that would be higher than the higher fair market price if no such monopoly existed and I would add, as a matter of opinion, that both corners and specu- lation in futures certainly must derange the market. They do inter- fere with the ordinary flow of trade, they enhance prices beyond a fair market value at one time to the detriment of those who are bound to use such articles at the time, or who are bound by their contract to deliver such articles, and I believe that it is entirely within the com- petency of the State to supplement the natural law in this as in so many other things, for it is for similar purposes chiefly that the States exist, as we are told hy the highest American authorities that justice may be maintained and done between man and man. Casuists be- lieve, and it is my opinion, for I fully agree with them, that while cer- tain tilings are left undetermined by the law of nature, they may be determined by the law of man, and we are bound as good citizens to respect the law of man in such cases, and we are fully justifled in con- science in acting by virtue of the immunities granted by such law. - For instanc'* if the law of the State declares certain kinds of gamb- 833 ling immoral, the person who has lost in the game is justified in conscience in availing himself of the civil law that exempts him from the obligation of paying, even while he inigiit still consider himself bound as a matter of honor, he may very well consider himself as exempt in conscience, as the law of the State can very well supple- ment the law of nature. Such supplementing of the law of nature by the civil law is obviously necessary in order that civil society should exist at all ; otherwise every man should have to be his own judge and his own executive officer in enforcing his real or supposed rights, and we should have nothing simply but anarchy. I think. that I have said nearly all that I have to say unless some gentleman of the committee would like to interrogate me further. By Mr. Chittendej^ : Q. Do your professional duties lead you into connection with an observation of the laboring and mechanical classes of the community ? A. To a very great extent. Q. You, I suppose, have taken occasion to observe their habits of life, their experience and the difficulties with which they have to contend ? A. I have had frequent occasion. Q. How is it with difficulties of people at the present time — do they find it more difficult to support their families in comfort and to make both ends meet, as the expression is, than they did five or ten years ago, or have their circumstances in that respect improved ? A. I believe that within a few years they have improved. There was a very great depression several years ago subsequent to the year 1873. I believe that for they are somewhat better off to-day than they were during the few years that followed that depression. Q. Are not the prices which that class have to pay for provisions, rents, certainly .as high now and perhaps higher than they have ever been before ? A. I believe that they are higher — as high if not higher. Q. Any thing that inflates the price of provisions, and clothing and rent, adds to the burden of this class of people, does it not ? A. Decidedly. Q. If the price of pork for instance is advanced four dollars a barrel, this class of people have to pay higher for it in proportion, don’t they ? A. To be sure. Q. Is not the best market for the people that one which is adjusted by the law of supply and demand ? 105 834 A. It is. Q. Every speciilation necessarily tends to unsettle that, does it not ? A. It does. Q. And such effect must be injurious to the people? A. It must. Q. Compared with four years ago — I will take it say in 1878 — do the class of laboring people succeed in bringing the year around now as well and as comfortably as they did four years ago in this city ? A. I can hardly say with positiveness as to the comparison between the present period and that of four years ago ; but if I may bo per- mitted I would say that it strikes me that the working classes are suffering constantly because of corners and of speculations. Q. My question leads to this : It is in evidence here that the volume of speculation especially in provisions has largely increased within the last three or four years and I want to know whether you have observed any effect in that respect upon this class of people ? A. I would say that while I believe that 'the working mechanical classes are but one or two degrees constantly above absolute misery, that it is the result of monopoly rather than of the mere S|)asmodic speculations in futures or gambling; that it results rather from a monopoly of one kind and another ; and as Mr. Chittenden has intro- duced the word rent” I should say that perhaps the most grinding monopoly that keeps the poor but one or two degrees above absolute pauperism is the monopoly of rent. Whether that comes within the purview of this committee I don’t know. Q. Is there any thing further you would like to state to the com- mittee ? A. Unless this matter of the monopoly of rent comes within the purview of the committee — By Senator Boyd: Q. We would like to hear your views on that subject ? ^ A. I believe that the worst monopoly is the almost universal mon- opoly in land that gives to the favored few the ownership of what Cod gave to the community, to the created, by the act of creating us human beings at jill and creating us land animals and not birds or lishes, and it is within the purview of the province of duty of the State to so regulate the tenure of land as to abolish any such mo- nopoly, and to make any person who is privileged in holding a desired })iece of land pay tlie full rental value to the community- — that is, to llie State ; while at present, by some kind of chicanery or juggling? the individuals have lieen able to induce the State to give them the ownership of a very large portion of the national domain for nothing, 835 and the people for all time to come must pay for what should have continued to belong to them for all time to come, as a community, such toll as these people can exact for the use of this land by an abso- lute monopoly, because it is possible to create more grain or provisions; but it is not possible for human beings to create another world, or any more land than exists at present. Here, in my opinion, is the w^orst monopoly that calls for legislation, and if I should suggest a remedy it would be the naturalization of the land, by taxing to the full rental value of the land, for the benefit for the State, the municipality, the county, the city, and thus every working man would have his share of the common estate in the exemption of the working men, the parents, the common people, from nearly all future taxes. The rental of a settled community would abundantly support all the public burdens, and would exempt the community from all other taxes, would give a wondrous freedom to trade, and would be, in my opinion, almost the beginning of the millennium. 0. Can you suggest how the State could act in that matter? A. Just as it does at'present, by taxing real estate ; but at present you tax it for a very small percentage of its value. In place of taxing two per cent, or one per cent, or whatever it may be of the selling value of the fee-simple of the land, it should be taxed the full value of the ground rent, so that if the ground on which this hotel stands rents at a fair market value of $100,0U0 a year, this ground upon which this hotel stands should be taxed 8100,000 a year, so that where there' might be such a thing as private ownership in land, in reality it wouldn’t exist ; there would be simply perpetual tenancy by the land- lords. Their improvements which they might put on the land would be theirs ; but the absolute land, as it came from the hands of the Crea- tor, is, in the view of the enlightened economist such as John Stewart Mills and others, the property of the community. And the inherent increment of the value of the ground on which this hotel stands is not the earning of the owner, so-called, of this ground ; it is the earning of two millions of people tliat have clustered all around this center and made this a great metropolis so that it becomes a necessity for the busy multitude here to have this ground to stand upon, to work upon, to print their newspapers upon, and thus the community have earned this value. If all this community should vanish to-morrow, what would this ground be worth ? The owner couldn’t live here. He would have to emigrate to some other community; this is no new doctrine of mine ; it is the view of John Stewart Mills, Herbert Spen- cer and others that this matter of land tenure should be looked into and it is being looked into. 83G .Mr. CrriTTEisDEK — That necessitates a correction and a radical change in our organic law, both National and State, and of course is entirely beyond the reach of the Legislature in the present condition of the Constitution. A. I would answer that question by saying, that the Legislature already taxes ground rents, and it is within the purview of the Legisla- ture to increase the taxes. Senator Bhownixg — You have interested me by bringing up this subject; if I get your idea correctly it is to assess property for its full val ue. The WiTKEss — Its full rental value. Senator Bkowkin^g — That has engaged my attention for a good while ; you mean the full value of the improvements? The Witness — The full rental value of the ground as distinct from improvements, as distinct from agricultural improvements in the shape of drainage, in the shape of houses or whatsoever it may be — agricul- tural improvements or improvements in the way of buildings or the like. Senator Browning — I know how we can tax tenant property; can put the rent at ten per cent on the assessed valuation of the property and in that way he must either pay the full taxes for the full value of the property or reduce the amount of his rent — one way or the other ; in other words you take the house I live in, for instance ; it may be worth $10,000 ; it rents for $1,000, the landlord only pays on an assessment of , $6,500, he is making me pay on $10,000 but he is paying the city out of the difference between $6,500 and $10,000. Now if I should pay a rent of ten per cent on the assessed value of that property I would not pay but $650, But how are we to assess property that is occupied by the owner? that is where the iniquity of such a law would work ; if I could overcome that, I could introduce a law that would accomplish the purposes ; that is what you have been referring to ? The Witness — I would say it is one of the things that is most easy to ascertain, the fair market value of ground as distinct from houses or whatsoever improvements there are upon the ground. You are doing that already in your assessments. You have experts who are opposed to aid the tax commissioners in the assessments of the value of ground and houses. They assess, let us suppose, fully the market selling value of that ground. I say tax that to the full value of the rental ; you have the experience all through New York ciiy of ground held by so-called landlords being let for periods of twenty-one years we will say, or whatsoever other period at a certain rental. Conhscate that whole of that rent; that wo will suppose then is the market value of that rental; conhscate that; tax that })ro})erty pre- cisely the same amount that that man is getting for the ground ; I Would rather leave the house untaxed ; I would leave trade free and 837 would abolis];! custom-houses; in an adult community where ground has obtained such an enormous value because of the adult character of the community, because of the enormous aggregation of population, because of a necessity of the ground to the community to live u})on, to stand upon, to work upon, the ground rental is more than sufficient to pay all the burdens of the State, and it would give absolute liberty and exemption from all taxation; it is not wise, it is not accord- ing to the highest views of political economists to make a man pay a tax for an improvement ; rather pay him a premium, if any thing, for an im})roveinent ; if he builds a house he is doing a good thing; if he causes two blades of grass to grow where one grew before, don’t tax him for that, but rather reward him for it, but make him pay for the use of what belongs to the community, the full value that the market shows belongs to such use ; I would add that I have been largely in- structed and aided in this matter by the book of Henry George, who I think, has done great honor to this country by his work called ^ Progress and Poverty ” in which I am a firm believer. Adjourned to Tuesday, December 2G, 1882, at 1 p. M. ' New York, Decemler 26, 1882. The Committee met unrsuant to adjournment at the Metropolitan Hotel. Mr. Ohittekdek — In the cases of the witnesses subpoenaed that did not attend on Saturday, communications have been received from all of them, in which they each promise to attend before the com- mittee hereafter and therefore no compulsory proceedings will probably be necessary ; one of them, Mr. Hazeltine, is represented here to-day by Edwin H. Burr, who reports that Mr. Hazeltine is ill to-day and is unable to attend. Senator Boyd = — The committee excuse Mr. Hazeltine for the day, and direct that he be present on the 27th inst., at 1 o’clock. George E. Moore recalled : By Mr. Chittendek : Q. What is the corporate name of the Cotton Exchange of this city ? A. (Witness referring to book.) The New York Cotton Exchange. Q. And give the date of the act of incorporation ? A. There have been several changes in it. Q, The original act ? A, The first act was passed April 8, 1871, and there have been changes ; the original was amended by an act passed April 19, 1881 ; that was merely giving additional power; there was one passed May 8, 1880, also. 838 Q. How long have you been connected with the Cotto^ Exchange ? A. I think a little over ten years. Q. And how long have you been secretary ? A. Tills is my second year, Q. What number of members has the Cotton Exchange. A. I believe they have about 450 at present ; I am not sure, exactly, of the number, but in that neighborhood; and it has a president, vice- president, treasurer, secretary, superintendent and board of fourteen managers. The secretary is elected as one of the board of managers, and then the managers elect him secretary from year to year. The office of secretary is not elective. The president, vice-president and treasurer are elected by the members. Q. There are fourteen ? A. There are fourteen, and th« secretary completes the fifteen man- agers, under the act. Q. What is the initiation fee, and what are the yearly dues, at the present time ? A. The present value at which the Exchange can sell a seat is $10,000, that is the initiation fee at present, but the value of the seats is about $5,000, the money value. Q. Do you mean that the number of members by the by-laws is 450 ? A. Limited to that, but the initiation fee is $10,000 now, the Ex- change initiation fee, but I think you could buy, possibly, from the representatives of deceased, or from members who are going out of the- business, a seat for about $5,000, or in that neighborhood, I could not say exactly ; that is about the money value. Q. No person is admitted to the privileges of the Exchange as a dealer, unless he buys a seat ? A. He has to be elected. Q. He must be elected, and now he must buy a seat ? A. Yes, sir; or pay $10,000. Q. Are there individuals and firms engaged in the cotton trade in the city, who are not members of the Exchange ? A. Well, I don’t think there are now, sir; those engaged in the cotton trade, I think, are all members, either one partner or the whole of them. Q. You think they are generally represented in the Exchange ? A. Oh, yes. Q. Ts there a statistician to the Exchange ? | A. No, sir. (i Who has had charge, for the past four or five years, of making up the tables for the Exchange, representing the product and sales, the anujunt of cotton ? 830 A. Those are kept, from time to time, according to the information brought in, kept in the office of the Exchange, of which the superin- tendent has charge. Q. What I want is, who, connected with your Exchange, is most familiar with those statistics and figures ? A. I don’t know, but all the members are supposed to be familiar, because it is a necessary item of their business to be familiar with the information coming in, and statistics generally. Q, Is there not some officer or person who has charge of these daily statements and who, at set times in the year, tabulates them ? A. The superintendent of the Exchange has an office in which he has five or six different clerks, and they each have their various de- 'partments to attend to in entering this information on the books of the Exchange. There is quite an extensive set of books kept for that purpose. Q. I think you stated the other day the product of cotton in the United States in the year 1881 ? A. Yes, sir. Q. Please repeat it ? A. I can tell you from my statement about 5,450,000; that was about the crop within a few thousand bales. Q, Do you remember what it was in 1880 ? A. It was a little over 6,600,000. Q. And in 1879 ? A. I think about five million and three quarters ; that is my im- pression. Q. Is the amount of the crop for 1882 now known ? A. That is something we would give a good deal to know, sir, be- cause on that hinges the question of values. It cannot be known^ because the crop is not completed until the 1st of September, 1883. Q. Yow take the year 1881. Can you tell the number of bales that came to New York ? A. Well, as near as we can get at it, I think we’ve handled altogether in New York about 600,000 bales of actual cotton. Q. Please explain what you mean by handling ? A. Bought and sold and delivered on these contracts, Q, About 600,000 bales ? A. Yes, sir. Q. And. should you think that was about a fair proportion for the average run of the business during the previous years ? A. I think it is ; sometimes it will exceed that and sometimes it is a little less. Q. There was nothing which made last year in any way exceptional in that respect, was there ? 840 A. Except that New York, out of a small crop, bought a great deal more thau her proportion. Q. You think that 000,000 bales was more than her j)ropartion of the crop last year ? A. I do; it was a small crop. Q. Please state the prominent cities in which cotton is handled and sold for export, commencing on the Mississippi river ?. A. AYe will commence down in Texas ; there is Galveston. Now, do you wish to go up through the State ? Q. No, I mean the principal seaports ? A. The next one to that would be New Orleans, then comes Mobile and then Savannah ; Pensacola used to be a port before the war, but it is not much of a port now ; Charleston, AYilmington, Norfolk, Balti- more, Philadelphia, New York, Providence, Boston. Q. Have any of the interior cities like St. Louis or Memphis any export trade that amount to much? A. Well, yes, there is a certain amount of it, not as much as the sea- ports, most of the orders go to the seaports. Yes, there is a certain quantity, more especially from Memphis and St. Louis, because it is shipped cheaply down the river by steamboat. Q. Of the 600,000 bales that came to New York in 1881, how much was exported ? A. That I could not tell you ; it would be impossible for me to get at that, because a great deal goes through here that we do not handle at all. Q. Have you not some impression of about what proportion of what comes here is exported ? A. I should say over half of it was exported ; I don’t like to say positively. Q. Is there not a considerable portion of this 600,000 bales that comes to commission merchants here and is by them sold without going into the Cotton Exchange, at all ? A. No, sir, I don’t think there is; nearly all the transactions now are really made on the floor of the Exchange. This cotton is sampled by the brokers, such for instance as I am, a spot broker, and the samples are exhibited on our tables and the exporters come in there and look at them, examine them and see the grade of them, and then we meet them, the buyers and sellers, on the floor of the Exchange and the transactions are made there. Q. Are there not a great number of cotton brokers who sample cot- ton and keep the samples in their oflices ? A. We keep them in our ollice, we never bring the samples on the floor, but I say the floor of the Exchange is where the buyers and 841 ■sellers and brokers meet; after the buyers have examined the samples, the transactions are usually made on the floor of the Exchange as to prices. Q. Do you mean to say that substantially all the sales of cotton that take place in New York are recorded upon the books of the Cot- ton Exchange ? A. Yes, sir, most decidedly. Q. Then the business that was formerly done by consigning cotton here to commission merchants and having them sell it has substan- tially ceased? A* No, sir, I think not. Q. Well, it has ceased except as it is sold on the floor of the Ex- change? A. No, sir, I think not. Q. Then you do not understand my question. I asked you whether substantially all the sales ot cotton that take place in the city now are made in, and recorded on the books of the Cotton Exchange ? A. They have to be recorded in the shape of the report by the broker. The brokers are obliged to report the sales of actual that they make and that goes in the daily report of the Exchange; otherwise no cot- ton that is not reported can be arbitrated, never can be settled by the arbitration committee under the rules of the Exchange ; that is one of the rules of the Exchange, that all sales not reported, the parties lose the benefit of the Exchange rules and arbitration. Q. AYell, in point of fact then, in your judgment, substantially all these sales are reported and become a matter of record in the Ex- change ? A. Yes, sir. Q. Does that include sales for export as weir? A. Yes, sir, it includes all sales, export, consumption and specula- tion. Q* You used the term that you yourself were a spot broker, what do you mean by that ? A. I mean by that I have an office in which commission exhibit the samples which ’we draw for them ; they sent us an order on the warehouse to draw samples of their cotton and we have a large office in which we have tables and we exhibit these samples and offer them for sale. Q. And sell them ? A. Yes. Q. Well does that term spot broker” define merely the sales are for consumption or speculation ? A. No, sir, it simply defines itself. The spot broker ”isa man 106 842 who attends to the sale of cotton on samples ; he makes sales of cotton on samples. The reason that the“ spot” is used is that it is in dis- tinction from the broker who is employed in the Exchange buying and selling for future delivery. There are two distinct branches of the trade, although in many houses the two are coniVnned. We ourselves only do a spot business, we do not do any future business. Q. You have stated what spot indicates ; is there any similar name for the brokers in futures? A. No. You won’t find spot in that book; it is merely a distinc- tion between the two branches of the trade customary in the market. The others are called future brokers, and loe spot. Q. Does your observation and experience furnish you with the means of forming a judgment of what proportion of the sales are for future delivery ? A. There is a very large business done in future delivery. Q. Have you ever attempted to estimate the percentage of the busi- ness, the proportion ? A. No, sir, I have not estimated the percentage. I can give you the amount of future sales as embodied in the yearly report of the Cotton Exchangers I gave it the other day in my testimony. Q. How much was it in 1881 ? A. I shall have to look at my memorandum. You mean the year ending last September ? Our year counts from September to September; that would be from September 1, 1881, to September 1, 1882, or rather our cotton year ends that way, but our year for the Exchange, that ends on the 31st of May ; I can give you from the 31st of May, 1881, to the 31st of May, 1882, the sales of futures as embodied in the yearly report ; the sales during that time were 32,700,000 bales as reported to the Exchange. " Q. And what during the same period were the sales for consump- tion ? A. I have not got a memorandum ot that. I believe it is embodied in our yearly report but I am not sure. Q. I think you stated that the whole amount of sales made during the year 1881 were about 36,000,000 bales, did you not ? A. No, sir, tliat was two years ago, the large crop. Q. How mucli were the aggregate sales in 1881 ? A. You mean in tlie year ending May 31, 1881 ? Q. Yes, the same year that you have just given ? A. Tdiat is ending May 31, 1882. <2. I asked what all the sales were ? A. I told you 1 had not the memorandum of the spot sales and delivr'ries, but according to the yearly statement we had handled about 600,000 bales in New York, sales to spinners, sales for export and deliveries on contract. 843 Q. Then is it your idea that if that 000,000 bales were added to the 32,000,000, that that would substantially show the amount of spot and future sales put together ? A. I suppose it would, sir — well, no, it would not, because some of these cottons, a very largo proportion of these cottons, were deliv- ered on these future contracts so that the sales had previously been counted as futures. Q. Is there no way that the committee can ascertain the aggregate amount of sales made and recorded at the Exchange for the year end- ing in May, 1882 ? A. I have given them to you ; I told you 600,000 bales of spot cot- ton was actually handled, either sold for exportation, or for spinnings or for speculation. Whatever is not sold to be exported out of the country or to go direct to a spinner, comes under the head, in our re- ports, of speculation, although it may be bought by the party who bought it with the intention of sending it to a spinner, still, if not sent direct to a spinner, it comes under the head of speculation. Q. During that year what number of bales, as nearly as you judge, were sold for exportation or to be sent directly to the spinner? A. That would be very difficult to tell because very often these con- tracts — the cotton received on these contracts goes for exportation or for spinning, so that it is impossible for anybody to arrive at that cor- rectly. Q. May it possibly exceed 600,000 bales ? A. No, sir, I don’t think it could, because that was the amount of cotton actually handled. Q. What are the commissions per bale allowed for brokerage by the rules of the Exchange ? A. What sort of brokers ? Q. For the sale of cotton? A. Future or spot ? Q, If there is a distinction, I want both ? A. A spot broker is entitled to twenty-five cents a bale from the seller, and, if there is no other broker employed in the transaction, he is entitled also to twenty-five cents a bale from the buyer. Q. How about the future ? A. In the future business if a broker buys or sells a contract and gives up his principal’s name the same day he makes the transaction, he gets one dollar for every hundred bales ; if he makes the transaction for a member of the Exchange, and does not give up that member’s, name to the buyer or seller, it is five dollars for the round turn, that is for buying and selling, two dollars and a half for each transaction; that is where he, does it for a resident member; where he does it for a 844 non-resident ni 0 ml)or of the Exchange, he gets seven dollars and a hall* on each, that is seven dollars and a half for selling and seven dol- lars and a half for buying; if he does it for a man . that is not a mem- ber of the Exchange, , he gets twelve dollars and a half for each tran- saction, that is twelve dollars and a half for buying and twelve dollars and a half for selling, or, if he only does one, he only gets half. Q. I call your attention to section 96 of article 9 of your by-laws on page 75 of this book, and ask you whether that accurately states the commissions allowed ? A. That is exactly what I have stated. Q. That IS a correct statement of the commissions allowed, is it? A. Yes, sir ; that is the article which governs it. The following is the section referred to : ARTICLE IX. COMMISSIO]SrS. “Sec. 96. Commissions shall be charged and paid under all circum- stances, both upon the purchase and sale of contracts for future deliv- ery, and where a ^ turn ’ involves two transactions, viz. : a purchase and a sale, a commission must be charged on both, this rule being equally applicable to extension or transfer of contracts from one month to another. ‘^The rates of commission shall be as follows: Twelve and one-half cents per bale for each and every bale bought or sold when the transaction is made for any party not a member of this Exchange. Seven and one-half cents per bale for each and every bale bought or sold wl>en the transaction is made for any member of the Exchange who has not a permanent office established in the city of New York within half a mile of the Exchange, as prescribed by article VIII, sec- tion 95 of these by-laws, and recorded in accordance with the require- ments of section aforesaid. “ Two and one-half cents per bale for each and every bale bought or sold when the transaction is made for any member of the Exchange who has his office permanently in the city of New York, and within the limits, and under the conditions prescribed in section 95 above (juoted, except that where one member merely buys or sells for another (giving up his lu'incipal at or before three P. M. of the day of the trans- action), and does not accept or carry the contract, the rate of commission shall be one cent for each and every bale thus bought or sold. “Tlie above-mentioned rates shall be in each case the minimum commission that may be cliarged by any member of this Excliange, and shall be absoluLely net and free of all and any rebate, telegraphic 845 charge and discount, in any way, shape or manner ; nor sliall any bonus ov pro rata percentage of commission be given or allowed to any clerk or individual for business procured or sought for any member of the Exchange, and any arrangement having in view, directly or indi- rectly, any rebate from the said rates shall be deemed an evasion and violation of this by-law. “In any joint account transaction between a member and a party not a member, the regular commission of twelve and one-half cents per bale must be charged. “ All partners not members must be charged the full rate of twelve and one-half cents per bale upon the individual business.” Q. Are margins required by your rules in case of sales for future delivery ? A. In what respect ? For instance, if it is an outsider gives us an order to buy or sell, do you mean, one not a member of the Exchange? Q. I mean if any person purchases cotton for future delivery is he required by the rules to deposit any margin to secure his contract ? A. Do you mean when this party is a member of the Exchange ? Q. I mean both cases, where he is a member and where he is not ? A. Where he is not a member that is entirely in the discretion of the man who attends to his business for him ; he can neither demand a margin for him or do it without a margin; that is something he has to look out for himself. Q. Suppose he is a member ? A. Where he is a member he has a right to insist upon the member for whom he buys or sells putting, up in the trust company a margin to keep his contract to the ruling market value. Q. Are the rules which regulate the subject of margins rule 3 on page 78, and rules 5 and 6 on pages 80 and 81 of this book ? A. I shall have to look over that because the question of margin is embodied in a number of these rules going all through the book. As I have explained the contracts are required to be kept to the market value as between members; there is such a thing as an original mar- gin, some people call it, where we trade with weak parties, but it is not customary to call for that ; it is not obligatory, it rests with the party making the trade. Q. In the Cotton Exchange has either party to a contract for the future delivery of cotton the right 'to call for an original margin of from one to five dollars per bale at the time of signing the regular contract ? x\. Yes, sir, but he has to call for that within twenty-four hours af- ter the transaction, at least I think that is the time. Q. And the party calling must put up an amount equal to that for which he calls ? A, Yes, sir 840 Q. Is that tlie case where the transaction is between members of the Excliange ? A. Yes, sir ; that refers only to members ; there is no rule for mar- gins from outsiders ; the man who does the business has to look out for that. Q. Suppose a party wants to call a margin, how is the amount which he is entitled to call determined ? A. That depends upon what hour of the day he calls ; the rule specifies that if he calls at a certain hour the fpiotation for a like de- livery at a certain other hour shall be the amount which he has to put up ; the rules are very specific about that. Q. Then it is fixed by sales in the Exchange ? A. Yes, sir; fixed by the regular quotations at these different times ; they are posted in the Exchange at these certain hours and govern the putting up of margins. Q. Do you know what amount of margins are now on deposit ? A. No, sir ; it would be utterly impossible for any one to tell that. Q. Why, they are required to be deposited in a particular place ? A. No, sir; they can be deposited in any trust company ; the party calling the margin designates what trust company he wTshes -it put in. Q. And have you no information, or have you had none at any time of the amounts of margins so deposited ? A. No, sir ; it would be utterly impossible for any man to tell the amount. Q. Are margins usually deposited in the case of the sales of futures ? A. No, sir. Q. The rule is the other way ? A. It all depends upon the credit of a man ; there are some men that very seldom have to put margins because their credit stands very high ; there are other men who when they trade are nearly always called upon for margins because their credit is not good. Q. That depends largely upon the amount of their capital ? A. Partly upon the amount of capital and partly also upon the known character of the tnan or firm. (.}. Is there any record kept in the Exchange of the commissions j)aid or to be paid upon each transaction ? A. No, sir ; that is a question for each member, keeping his own books. Is there any rule prohibiting a member of the Exchange from doing business at any less than a certain commission ? A. Yes, sir; article IX I think provides for that. (}. Where a member of the Exchange buys or sells for a person not a nicml>fr, h<* is i)()und to charge the full rate of 1*21- cents a bale, is he ? 847 A. Yes, sir. Q. Is not a large proportion of this future business done upon the orders of persons who are members of the Exchange ? A. Yes, sir. Q. Can you give the committee any idea of the percentage of the business that is done ? A. I cannot; it would be a very large percentage; it comes from all parts of the world ; I have known orders to come from India and from China to members of the Exchange. Q, Would it be fair to assume that twelve and a half cents per bale was paid upon ninety ])er cent of this future business ? A. I could not say about that; it would be impossible for me to say what proportion, because of course the members of the Exchange do a very lai’ge export business, and they make use of these futures individually in that export trade. Q. That export trade must be limited within 600,000 bales ? A. No, sir ; it is not limited within the whole crop, because the whole trade of the world is now based on these futures in the New York market. Q. Do you mean to say it is possible that more than 600,000 bales were sold and exported in the year 1881 ? A. Not from New York but from this country, and the transac- tions were nearly all based on futures in New York. Q. I am talking about transactions in New York ? A. And the transactions in New York are carried in other places in the country by the purchase and shipment of actual cotton, so that the 600,000 bales which were handled in New York were a mere bagatelle as compared with the amount of cotton which was handled by members of the New York Cotton Exchange. Q. Well those cases are frequent ? A. Yes, sir. Q. And large ? A. No; the fact is that the members of the New York Cotton Exchange control nearly all the crop of this country. Q. Please give us some instance within your personal knowledge in which a lot of cotton not in New York and which never came to New York was sold on the Exchange and exported to some other place. A. I know of one firm from the port of Wilmington that in one year exported over 5 0,000 bales, all of which was sold on the New York Cotton Exchange, and not a bale of which came to New York. Q. What is the name of that firm ? A. That I must decline to give. Q. Why? 848 A. Because I merely give the facts of the case, and I do not think coming into my possession as a broker, I have any right to mention the name of the firm. That firm is a member of the New York Cot- ton Exchange. Q. What I am trying to get at is the exact amount of business tran- sacted in New York, the cost of transacting it and to what it applies? A. I think you will have very great difficulty in arriving at that because the business transacted — Q. I don’t particularly care to press this. Do you know of any others ? A. Yes, sir. Q. In which you are willing to give the names ? A. I don’t know that the gentleman would have any objections; I can give you the name of Rally, the largest Greek exporting house in the world. Q. Now what was the instance, and where was the cotton which they purchased or sold upon the Exchange ? A. I cannot give you the particulars, but I have been told by one of the members of the concern — Q. That would not answer ? A. I know T have sold them cotton myself in all the different ports. They trade millions a year, and would be able to tell you better what they did South. Q. You say you have yourself sold them cotton in other ports? A. Yes, sir. Q. Were those sales reported on the Exchange? A. Some were and some were not. Q. Take some sold that was recorded on the Exchange and which comes into these 32,000,000 bales which you sold to that firm? A. It does not come under these 32,000,000 bales. Q. Or that are recorded on the Exchange ? A. Well, I sold them about three or four weeks ago. Q. I do not want it this year, I want it for the year you mentioned. A. It would be utterly impossible to give the record by years, but during the last ten years since I have been a broker I suppose I have sold a hundred thousand and possibly two hundred bales at other ports. Q. You cannot now state any instance occurring in the year you have mentioned in which you sold them cotton which was at the time in other ports ? A. Y.*s, sir, but I cannot give you the date. If you will allow me to send for my books T shall take great pleasure in telling you. I have sold (piite a number of cargoes. Q. What 1 want to get at is this, do any of these sales that are re- 840 ported in the Exchange which you have mentioned relate to sales of cotton in any other port than the port of New York, the 32,000,000 of bales ? A. Very largely. Q. Explain how ? A. Well, perhaps the best way would be for me to read the first por- tion of my remarks the other day — Q. You have sworn that there were 32,000,000 of bales of cotton sold for future delivery in the Exchange in New York ; now I want to know how those sales are connected with cotton in any other port than New York? A. Very well, I can explain to you ; au exporter comes to me and says, “I want a cargo from Wilmington; I want that cargo to go to Havre or to Bremen, or to any other port on the other side amongst the various ports; can you buy me such a cargo as that ; there are certain houses in New York that have their agents or branch houses in the various ports that I have mentioned in the first part of my evi- dence, Galveston, New Orleans, etc. ; I go to one of them and I say, want a cargo from Wilmington to go to^Havre;” ‘^Well, what sort of grades?” “Well, I want it of various grades, from low mid- dling to good middling; what will you sell me at ? ” Well, he will look at the prices; Well, when do you want it^shipped ? ” Say he came to me to-day ; Well, I want it January shipment; ” he goes over to the board and looks at the price of January ; he knows the difference in value between Wilmington and New York, and he takes January as the basis of his trade, and he says, I will sell you 2,000 bales at such a price,” mentioning a price ; I go to the exporter ; after going backward and forward perhaps half a dozen times, we arrive at a price at which the exporter will buy the cargo, say 2,000 bales ; the man who sells that cargo to me, or to the exporter through me, immedi- ately buys 2,000 Januarys here in New York, and then tells his Wil- mington house what he has done, and to buy the cotton, giving them a certain limit based on the price of the New York market at the time they buy ; as fast as that cotton is purchased in WilmingtcA, or in the interior to be shipped to Wilmington, the agent or agents tele- graph those purchases to New York, and as soon as those purchases are telegraphed a like amount of the Januarys which he has bought are sold out again, because he has bought the cotton in the country which is necessary for shipment ; in that way he covers himself and makes a legitimate transaction of it, taking no risk whatever of the market; that is one way; there are, I may say, millions of transac- tions of that sort during the season ; there is another form, such as 107 850 the house ot Rally Brothers, they have their agents throughout Great Britain and the continent of Europe ; a spinner will come to them and say, I have an offer for my goods, so many months’ production, to be delivered at a ceidaiii time, and I want to buy cotton from you to be delivered to me at certain other times, so that I can manufacture those goods ; I want' American cotton of such a grade ; at what price will you sell it to me?” These agents have their dispatches from Rally Brothers here five or six times a day ; they know' ex- actly, or within a few hundredths of a cent per pound, what the Xew York market is. They name a price to a spinner at which they will sell him the cotton necessary to produce these goods. He accepts their offer. The agent immediately cables to Rally Brothers, in New York, to buy futures to cover this amount. The order is then sent by letter, or sometimes even by cable, a full description of the style of cotton that is wanted, and Rally Brothers buy that cotton in . any market which they find it cheapest in the United States; they may buy it at Galveston, they may buy it at New Orleans. As soon as they buy the cotton, or any portion of it, such purchase is tele- graphed to them here at New^ York, and they sell out a like amount of futures, thereby making the transaction a legitimate one and wdth out any risk of the fluctuations in the market. There are other instances. Q. I only want to say that the two instances you state are identical in their results. You have not at all come to my question. A. If you will explain, Q. In the cases you have stated there was a sale of futures on the Cotton Exchange which, of course, w'ent into the 32,000,000 bales ? A. Yes, sir. Q, But the actual sale of the cotton took place in other ports and other places. I asked you to give me an instance in wdiich an actual sale in another port w^as reported and recorded as a sale on the Cotton Exchange that comes into the 32,000,000. A. It does not come into the 32,000,000. Those 32,000,000 are future traii^actions, and those future transactions are made use of by the exporters and by the spinners, and by others, commission merchants as hedges to transactions. Q. They do not refer to actual cotton at all ? A. Yes, sir, every contract refers to actual cotton. If a man buys cotton, the man who sells it has to deliver it ; there is no such thing recognized in our Exchange as a settlement of differences. (2. In all the casesj^'ou have mentioned there will be a sale reckoned in the 32,000,000, and another sale in some other port ? A. No, sir; tliere wdll ))e a sale and a purchase reported in the 32,000,000. 851 Q. And there will also be an actual sale of the cotton lying in some other port or place ? A. There will be an actual purchase of it in some port of the Uni- ted States, or in some portion of the United States, and a sale in the case of export as are mentioned in another part of the world. Q. How long have you been in the cotton trade ? A. About eighteen years in New York. Q. When did this business of buying and selling futures commence as it is now transacted ? A, Well, it has grown from a very small beginning ; I think it commenced about 1868 or 1869, or somewhere along there ; it com- menced a few years after the cable was in existence. Q. Do you remember how much it was in any year five years ago ? A. I can tell you, sir, from the yearly reports of the Exchange. I caii give you back, well for the twenty months ending May 31, 1872, that was the commencement of the Exchange ? Q. What was it then ? A. In those twenty months 5,600,000 bales of futures were sold. Q. Take four years after the year ending May 31, 1876 ? A. That would be for twelve months ; there were 8,000,000 bales, about, sold. Q. Give it right along after that ? A. Year ending May 31, 1877, 10,000,000; year ending May 31, 1878, 12,500,000; year ending May 31, 1879, 20,500,000; year ending May 31, 1880, 36,700,000 ; year ending May 31, 1881, 26,700,000; year ending May 31, 1882, 32,700,000. Q. Are there any contracts between the Cotton Exchange as a party and the railroad or steamboat coast transportation companies relating to the transportation of cotton ? A. In what respect ? Q. In what respect ? A. I don’t know of any connection between them at all; they sim- ply give us the information of the cotton they bring here, and who are the assignees. Q. Do corners exist in the cotton trade ? A. I believe since the starting of the Exchange there have been five what have been called corners ; I don’t think there was ever what I understand to be a corner in the market. Q. Have there been cases where a body of men acting together con- trol substantially what cotton was for sale ? A. I am not conversant with that enough to say whether they were acting together ; there have been times when prices have gone up for 852 a period of fifteen or thirty days, that is, prices of contracts, but I don’t know that there was any body of men acting together ; that is- somethiug I have no connection with. Q. Take one of the extremes of those cases ; how much did cotton go up ? A. I could not tell you, really ; I think, at the outside, not over a cent to a cent and a half a pound at the time. Q. When did the last one occur that you have in your mind ? A. Last year ; in the -spring and summer of last year prices steadily advanced; it was said to be caused by parties being short of it and other parties long of it, but there was no corner; I have never known of an instance where there was a close corner of it ; people have been short of it and have had to pay. Q. Do you mean to tell the committee that you have no knowledge of any instance in which a nnmber of men have combined together to raise the price of cotton, by purchasing substantially all that was available ? x\. I have no personal knowledge of any such combination existing that I could swear to. Q. But you do know, by report, that such cases have existed? A. I know that cotton has advanced, and certain parties have taken the cotton according as it was tendered to them. Q. Do you know by report of cases in which several parties have combined to raise the price of cotton by purchasing and holding all, or substantially all, that was available ? A. I have heard of such reports, but I know nothing of it person- ally. Q. Do you know any thing about a corner in middling upland cot- ton last year in Liverpool ? A. No, sir; I know there was a great advance there, in October a year ago. Q. How much was that advance ? A. I don’t know ; I think about a penny a pound. Q. Wasn’t it more than that? A. No, sir; I don’t think it was. Q. Did any people in this country have any connection with that, to your knowledge ? A. Not to my personal knowledge; I only know by report, and I don’t know whether they liad any connection at all; it was simply a member of a board of our Exchange was said to be engaged in it. Q. Ilisname? * o A. Mr. Ranger. 853 Q. His first name ? A. I don’t know ; that was in Liverpool, not here. Q. Do you not know by report that men here were engaged in it ? A. No, sir; I don’t know that ; the house in Liverpool, as I un- derstand, is entirely distinct from the house here. Did that corner in Liverpool cause the failure of a considerable number of houses ? A. I don’t know that. Q. Did it cawse the failure of a considerable number of brokers ? A. 1 don’t know any thing about that. I have no immediate con- nection in any way with Liverpool. By Senator Boyd : Q. How many pounds constitute a bale ? A. That ranges very much according to the State in which the cot- ton was raised. The Texas cotton is very heavy, running all the way from 480 up to 600 pounds; then as you come to Louisiana and Mississippi it is not quite as heavy as the Texas, but still very nearly; then when you come into Alabama it is still lower down. The Gulf cotton is what we call heavily-bodied cotton, and weighs more. As you go in to the uplands the bales don’t weigh on an average more than about 440 to 450. The contract in our Exchange is based on 450 pounds to the bale; that is, the contract reads for 45,000 pounds, in about 100 bales, and we take the number of bales coming as close to 45,000 pounds as we can; sometimes it will run over on a contract a hundred or two, and sometimes run under the 45,000 pounds a hun- dred or two pounds, when the contract is being delivered ; we get as close as we can to it without dividing a bale. Q. There is no necessary standard of weight for a bale of cotton ? A. No, sir. Q. About how many bales usually constitute a cargo such as you order from the southern ports ? A. They vary very much. I have' shipped on little brigs as small a quantity as 800, and at other times from eight to ten thou- sand bales. There was a cargo from New Orleans the other day of ten thousand bales, one cargo. They compressnt very hard; they have heavy power presses so that they get an immense number in a vessel. Q. It all depends upon the capacity of the vessel ? A. Yes, sir. The following is the rule in regard to the orighiaTmargins as it ap- petirs in the annual report of the New York Produce Exchange for the year. 854 ‘'Original Margins. “ Rule 3. — Either party to a contract for the future delivery of cot- ton shall have the right to call an original margin of from one to five dollars per bale at the time of signing the regular contract (section 73, by-laws), or at any time prior thereto, and may also demand that one dollar per bale of the amount so-called shall, within one hour after the receipt of such demand, be deposited with the superintendent of the Exchange, in current funds or a certified check. The party calling must put up and deposit an amount equal to that called by him. Margins may be called and shall be put up on verbal contracts and on a slip as memorandum of contract in all respects as is herein pre- scribed in case of a regular contract. “ Provided that all demands for original margins on verbal con- tracts or slips must be made within twenty-four (24) hours after the transaction upon which such original margins are called.’’ Leivis L, Todd, being duly sworn, was then interrogated and testi- fied as follows : By Mr. Chittenden : Q. Where do you reside ? A. Forty-first street. New York, Q. Your street number ? A. 132 to 136. Q. What is your business ? A. I am president of a company. Q. Of what company ? A. The New York Stock Company. Q. Is that an incorporated company ? A. It is. Q. Under what act is it incorporated ? ' A. The act of 1848 and the amendments. It is the Limited Lia- bility Act. Q. What is the business declared in its articles of incorporation ? A. Dealing in corporate securities. Q. What is its capital ? A. ^100,000. Q. Divided into shares of what size ? A. $25 each. . Q. Is its capital paid in ? A. It is. Q. In money ? A. It is. Q. Certificate filed of full payment ? 855 ' A. It is. Q. Where is the office of the company? A. 46 Broad street. Q. How many stockholders are there ? A. I could not tell you, sir. Q. How many have you ever known to be stockholders ? A. I could not tell you ; I don’t know the number of stockholders* Q. Are there ten ? A. I don’t know the number of stockholders. Q. Who is the secretary ? A. Theodore L. Hayward. Q. Where is his place of business ? A. 46 Broad street, the office of the company. Q. Who is the treasurer ? A. Mr. E. W. Todd. Q His place of business ? A. The office of the company. Q. Which officer of the company would know the number and name of the shareholders ? A. The secretary. Q. On what floor is the office at 46 Broad street ? A. On the first floor. < Q. -How many rooms does the company occupy ? A. Nine. Q. Nine rooms on the first floor ? A. No, sir. Q. How many on the first floor ? A. Three. Q. Describe their size as near as you are able ? A. I could not do it. Q* Give the committee the best description you can of their size ? A. About twenty-five feet in width ; about ninety feet in depth in which are three offices. Q. Is the space divided up about evenly, or is one room larger than the others ? A. I should think one room was larger than the other Q. Is not one room about as large as the other two ? A. I should think it was. Q. 'That is the front room, is it not ? A. No, sir. Q. Which room is that ? A. The largest room. Q. Where is it located? A. On the first floor. Q. Rear or front ? 850 A. It commences at the front and runs back. Q. AVhich is the room in which business is done with the public and with customers generally? A. All of the rooms. Q. In which of the rooms is the largest amount of the business done ? A. In the largest room. By Senator Boyd: Q. In which of the rooms, the front, middle or back room ? A. It is not divided in that way. The front room is the smallest office on the floor. By Mr. Chittenden : Q. Where is the largest ? A. The next is a small office, both of which are in front, and the largest of the rooms is in the rear. Q. Give us as near as you can the length of that largest room ? A. About ninety feet. Q. Describe to the committee how that largest room is fitted up and furnished; what there is in it ? A. Chairs, desks, office furniture generally. Q. Any thing else ? A. Tickers. Q. Any thing else, any blackbords ? A. No, sir. Q. Any blackboards in any of the rooms ? A. No, sir, Q. Any place where you quote prices ? A. Yes, sir. Q. How is that posting done ? A. By a small card. Q. Describe how it is done? A. By the small card. Q. What is done with it : how do you get the prices and what do you do with them to inform the public about them ? A. Prices of what ? Q. Any thing? A. Well, the prices of stocks we get from the stock ticker — stock indicator. Q. What do you do with them ? A. We post them on a board. Q. How large is that board ? 857 A. I should say about five by ten. Q. It is not a blackboard ? A. No, sir. Q. What color is it ? A. The natural color of the wood. Q. How do you post them ? A The board is constructed with a small slot in which a key is placed, which holds the card in its place. Q. Now that is for stocks; is the same thing done for the price of any thing else ? A. No, sir. Q. Are the prices of any thing but stocks posted in any of your offices ? A. No, sir. Q. Do you deal in any thing but stocks ? A. No, sir. Q. You do not deal in produce at all ? A. No, sir. Q. Nor in cotton nor oil ? A. No, sir. Q. And have not since the company started ? A. No, sir. Q. Now you said there was some chairs, how many are there ? A. I could not tell you. Q. Give us your best judgment? About how many chairs are there and how many people can be seated in that large room ? A- I should think twenty or thirty might be seated in that room. Q. Could not fifty ? A. There could if there was chairs sufficient. Q. Have you not got chairs sufficient ? A. I don’t think we have. Q. Have you got benches ? A. We have not. Q. You don’t think you have got fifty chairs there ? A. No, sir. Q. Are there counters or desks in that room? A. Yes, sir; both. Q. Is there a counter running along in front of this board that you have spoken of ? A. There is not. Q. What is in front of that board ? A. Nothing. “ Q. Do the counters and desks occupy the whole of any one side of a room ? 108 858 / A. They do not. Q. Now describe to the committee the manner in which business is done in that office, by the company of which you are president, with the public ? A. In what particular line ? Q. Your general business ? A. Well, it is the buying or selling of any of the railway securities either for cash or on a margin . Q. Describe the general way in which your business is being done there to-day ? A. If a party wishes to buy stock the company will sell it to him at a price they name, and if he wants the stock they deliver it to him. If he wishes to buy on margin, we take his margin and give him a re- fer it. Q. Most of your business is done on margins, is it not ? A. A large part of it. Q. And in what sums do you receive margins ? A. As low as one per cent on the par value of the security. Q. I ask in what sums you receive margins ? A. As low as five dollars. Q. Is that the lowest ? A. That is the lowest. Q. You do not receive then less than a margin of five dollars in any case ? A. That is what I stated. Q. There are no exceptions ? A. The smallest amount of margin is five dollars. Q. And on what time do you sell for future delivery ? A. Anywhere from one to thirty days. Q. Do you not sell for less than one day'? A. No, sir. Q. How small a number of shares do you sell ? A. Five shares. Q. Suppose a customer wants to buy upon a margin, he delivers the margin to you, does he — he pays you the margin ? A. He deposits the margin with the treasurer of the company. Q. And what receipt, if any, does the treasurer give him ? A. A receipt for that margin. Q. Does tliat receipt state the contract which has been made ? A. Some of them do, and some do not. Q. Are your contracts written or printed ? A. Printed forms. Q. Have you got any of them with you ? A. I have not. I 859 Q. When did this company commence business at 46 Broad street ? A. In 1879. Q. And it has been there ever since ? A. Yes, sir. Q. About what is the daily average amount of margins which you receive ? A. I could not tell you from memory. Q. Have you any idea about it ? A. Yes, sir. Q. Give us your best opinion of the average amount of margins the company receives ? A. Between ten and forty thousand dollars. Q. Per day ? A. Yes, sir. Q. Does your company keep these stocks on hand in which you deal ? A . Some of them the company keeps on hand, others they do not. Q. What stocks has the company got on hand to-day ? A. I could not tell you. Q. Do you know ? A. No, sir. Q. Do you know that it has any ? A. Yes, sir. Q. What are they ? A. I could not tell you from memory. Q. You say that it has some stocks ; if you know that you are able to tell what ones, are you not? A. No,* sir, I am not able to tell what stocks they have on hand to- day. Q. What property has the company ? A. Keal estate. Q. Do you understand the meaning of the word “ property? ’’ A. I could not tell you the list of the company’s assets. Q. Has it got any assets ? A. Yes, sir. Q. What are they ? A. Largely in cash. Q. Has it got any thing but cash ? A. Yes, sir. Q. What? A. Corporate securities. Q. To what amount ? A. I could not tell you. Mr. John’ T. McGowan — I appear as counsel for Mr. Todd and I think this examination is going beyond the scope of any thing which 8G0 Mr, Todd is required to testify to these resolutions and I think it is proper that an objection should be entered here to this line of an ex- amination. Senator Browning — Upon what theory do you make your objec- tion to the question ? Mr. McGowan — Because it is inquiring into the private busi- of the company. What has this committee to do with the assets of the company or how they are investpd as long as they are properly in- vested ; if the business of the company is not 2 )roperly managed it is a proper subject for the Attorney-General. Senator Browning — Do you think it would be proper for the At- torney-General to make an inquiry of this kind ? Mr. McGowan — If any creditor or stockholder of the company made any complaint that the company was not performing its proper legitimate business, it would be proper for the Attorney-General to hear parties interested and if he thought proper to institute a proceed- ing to dissolve it. Mr. Chittenden — My object is to ascertain the volume of business of this company, its character and its effect upon the community. If the witness declines to answer I will accept that. Mr. McGowan — There is no objection to his stating the volume of the business or its character. Inquiry was made in regard to the particular property and how it was invested. Your committee is not here to make any inquiries of that kind, or as to the number of chairs and desks in the office. Mr. Chittenden — The object of inquiring as to the number of desks and chairs is to ascertain the character of the business and how it is transacted. Senator Boyd — We are very happy to have you here, Mr. McGowan> and to receive your suggestions. We are an investigating committee and not a court of law and we want to get out all the facts connected with this business : Mr. Todd has stated that he deals in futures, and that the chief portion of the property of the company is in stocks which he expects to sell, I presume, for future delivery, and that being the case, I think it is the duty of the committee to know to what ex- tent he is engaged in the business of selling stocks and for what ac- count ho does sell those stocks for future delivery. I think the ques- tion is perfectly legitimate before an investigating committee. If Mr. Todd or his comjiany is carrying on a legitimate liusiness, there is no reason why he should object to stating what their property consistsof. He is the first witness who has appeared before this committee who has made any objection of tliat kind, and if the business is a legitimate and upright business and not detrimental to the public interest, he ^should liave no hesitation in stating it. 861 Mr. McGowA]sr — I do not see why any person carrying on the business of a stock broker should state tlie nature and character of his business except in a general way so that the committee may under- stand \he way the business is conducted ; I do not think it is proper to ask Mr. Todd where the property of the company is located or what it consists of. By Senator Browniis'g: Q. Are you an incorporated company ? A. We are. Q. Under the general laws of the State of New York ? A. Laws of 1875. Q. What is the amount of capital permitted by your charter? A. One hundred thousand dollars. Q. Does the charter specify how it shall be invested ? A. It does not. Q. Or whether it shall be invested in real estate or personal prop- erty, to — the one hundred thousand dollars ? A. I think there is no authority to hold real estate. Senator Brownii^’G — I think the question as to how the capital of that company is invested is a proper one. By Mr. Chittende^st : Q. I understand you to say you do not know what stocks this com- pany possesses? A. At the present time I do not know. Q. Who of your company knows that ? A. The secretary. Q. Has your company, to your knowledge, any substantial property except the cash and stocks you have named ? A. No, sir. Q. Do you know any of the stockholders in that company ? A. Yes, sir. Q. How much stock do you hold ? Mr. McGowan — Is that proper ? I object to the question as irrele- vant and improper, and that it is not within the scope of the resolu- tions under which the committee act. Senator Boyd — The committee rule that it is a proper question. The Witness — I decline to answer. Q. Give the names of such stockholders in the company as you know besides yourself ? A. I decline to do it. Q. Why? 8G2 A. For the same reasons given ])y Mr. McGowan for declining to answer the last question. Q. State the number of shares of stock held by any shareholder in that company aside from yourself ? A. I decline to supply that information. Q. Has this company made any dividends ? A. They have not ? Q. Has this company made any profits ? A. They have. ^ Q. To what amount at the present time? Mr. McGowan objects. A. I decline to answer. Mr, McGowan — The ground of my objection is that it is irrele- vant, improper, immaterial and incompetent. Senator Boyd — The objection is overruled. Question repeated. A. That I am unable to state. Q. Has it made fifty thousand dollars in profits at the present time ? Mr. McGowan objects upon the same ground. Objection overruled. A. I don’t know. Q. Have you no knowledge on that subject? A. I have not. Q. Have you yourself any substantial property except your interest in this company ? Mr, McGowan — I object to the question as not within the line of this inquiry. Mr. Chittenden — I am seeking to see upon what security this gentleman and his company of limited liability are doing a business which entitled them to receive from the public from ten to forty thousand dollars a day in margins. In that point of view I think it is material. Mr. McGowan — I object to the question as irrelevant, immaterial and improi)ei'- Olqection overruled. A. I have. Q. What ? A. A house. (I Where ? A. In Forty- first street. (2- Wbiit number ? A. VVZ to 130. 8G3 Q. What is its value ? A. I don’t know. Q. Subject to any mortgage ? A. Yes, sir. Q. What amount ? A. $100,000. Q. To whom ? A. New York Life Insurance Company. Q. Is that all the incumbrance upon it ? A. Yes, sir. Q. Have you any other property ? A. Yes, sir. By Senator Boyd : Q. Do you own the lots upon which the house is built also? A. Yes, sir. By Senator BROWNiiTG : Q. Your cash capital is $100,000 ; do you consider yourself per- sonally responsible for that amount ? A. I am not personally responsible, it is a limited liability. Q. For your share ? A. Under the limited liability act, a stockholder is not responsible. Mr. McGowan — What the committee want is what you consider yourself worth beyond that ? A. I could not say ; I have not got many creditors. By Mr. Chittenden : Q. Are the other shareholders of your company men of substantial property ? A. I could not tell you, I don’t know their property. Q. What is the name in which the business of this company is transacted ? A. The New York Stock Company, Limited. Q. Is there any sign over your place of business ? A. The New York Stock Company, Limited. Q. Do the names of the individuals appear in your ordinary con- tracts — I mean the officers of the company ? A. The officers of the company’s names appear whenever they in- dividually sign a contract as an officer of the company. Q. What about is the average number of transactions in your office daily ? A. I could not tell. 864 Q. Is it a hundred or five hundred ? A. Sometimes a Imndred, sometimes more and sometimes less. Q. About what is the average of margins deposited ? A. I could not tell. Q. Is it below ten dollars, the average of margins deposited ? A. ily an individual ? Q. Yes. A. No, sir, I should think not. Q. Is it below twenty dollars ? A. I should think not. Q. Is it below fifty dollars ? A. I should think not. Q. What sliould you think was the average amount of margin de- posited by each individual ? A, I should think it would be from fifty dollars to one hundred dollars. Q. Now give us the names of some of the stocks in which you deal? A. C. C. & I. 0. — Cleveland, Columbus, Cincinnati and Indian- apolis railway. Q. Give the names of some of those in which you do your principal business ? A. Chicago, Milwaukee and St. Paul, when it is active. Q. And others ? A. Semi-occasionally Pacific Mail, when there is a spurt in it. Q. Where do you get your certificates to deliver in as small sums as five shares? A. Buy them. Q. Did you ever buy as small a lot as five shares in any of the com- panies you have mentioned ? A. No, sir, we buy them in larger lots and get them split up. Q. Have you ever got them split up in any of the companies you have mentioned in as low certificates as five shares ? A. Yes, sir. Q. Is that common ? A. Quite common. Q. What is your part in connection with this business ? what do you do ? A. General supervision. Q. What are tlie duties of that general supervision ? A. Looking after things generally to see that they all go straight. N By Mr. Biiownin^u. Q. Do they always go straight ? 865 Q. Do they always go straight/? A. Generally; if they don’t, I straighten them. By Mr. Chittejtden : Q. Have you any clerk or ofiBcer whose business it is to receive and deliver certificates? A. No, sir. Q. Who delivers the certificates generally ? A. It is the duty of the secretary, Q. Does he generally deliver the certificates of the stocks in which you deal ? A. He is the only officer of the company that does deliver them. Q. Does he deliver them ? A. Whenever they are called for he makes the delivery. Q. When did you ever know' one to be called for last ? A. I could not tell you ; I have not been in the office to-day at all. Q. Do you, personally, know of any delivery of a certificate of stock that was bought by your company aside fron^itsown stock — of one case ? A. Yes, sir. Q. What was it in ? A. I could not tell you, sir. Q. When was it ? A. Almost daily. Q. Well, you cannot tell any particular case ? A. No, sir ; we deal in odd lots of stock anywhere from three to ten shares ; broken lots are dealt in all the time ; a party comes in and wants from one to three shares of stock ; another man comes in and has them to sell; we buy and sell as low as one share oftentimes; it is a usual thing to find ten-share lots, that come from the other side. Shares that go over the other side, Erie, etc., are usually in ten- share lots and oftentimes they come back here in that way. Q. What is the purpose of this arrangement of a board with a slot to put up the card as you have described ? A. To show the present price and the past prices through the day of those securities that are actively dealt in in the New York Stock Exchange. Q. A customer can see that by going to the- stock reports,can he not? A. After they are printed, yes. Q. Don’t you have this arrangement of the board and these tickets so that a number of persons who are sitting in the office and watch- ing the market may know how it goes ? ' 109 806 A. The purpose is that any one ill the office may see the present price of any security and also see the price at which that security has been selling at evry time during the day. Q. Do you not generally have quite a congregation of gentlemen sitting there watching this board ? A. We gi'iierally have from twenty to thirty sitting there. Q. And as they see the ticket exposed they make their offers or bids, I suppose ? A. No, sir, not usually. Q. Well, how is the busiiiess done ? A. The company name a price at which they will buy or sell ; if you want to deal, that is the price they will buy or sell at. Q. Does not some officer of the company name a price at which the company will buy or sell ? A. Yes, sir. Q. And he stands there calling out this price from time to time ? A. No, sir. Q. How does he inform the crowd ? A. He does not^n form them at all ; if a man wants to buy Pacific Mail he makes inquiry at the office of the company as to the price at which the company will sell Pacific Mail. Q. Do you mean to say there is no announcement to the congrega- tion of prices by officers of the company other than this ticket ? A. None whatever. Q. What was your business before you went into this company ? A. A good while ago ? Q, No, just previous to it ? A. Just previous to it I was interested in a carpet mill. By Senator Boyd • Q. Are you a member of the Stock Exchange ? A. I am not. Q. Are any members of your firm members of the Stock Exchange ? A. No, sir. Q. Have you business relations with any members of the Stock Ex- change ? A. We liave. Q. With whom ? A. Tfiiat is a matter of our private business which I do not care to state ; whenever we want to buy in the Exchange we employ a broker, a member of the Exchange, to buy or sell whatever we may want, the same as any other individual. Have you any firm with which you continually transact your business ? 867 A. No, sir. Q. Or do you go to any person or firm indiscriminately when you want to make purchases ? A. Yes, sir, when we want to make purchases we send out to a broker. Q. By what Market are your prices regulated or according to what market do you settle with your customers ? A. The Gold and Stock Telegraph Company have what are called tickers which record — By Senator Browning: Q. Are your transactions decided by the quotations transmitted to the ticker ? A. They come out of the ticker continuously, the prices of stocks in the New York Stock Exchange at the moment ; when any of our cus- tomers want to buy or sell we name a price that is based on the price of the New York Exchange ; it is not that price usually, but knowing that that is the market price we name a price at which we will sell a small lot ; the only difference between our dealing and the Stock Ex- change dealing is that they deal in hundred share lots, which is the unit, and we deal in fractional lots, any thing under a hundred, and we charge more for a fractional lot than they charge for a hundred shares, from a quarter to half a cent more. Q. Do you complete a transaction sometimes in a day ; for instance a customer puts up a margin at a certain price and the price varies, do you settle with him during that day ? A. Sometimes ; usually a man that buys, after a time when the ) market is either up or down he sells and the company having sold to him and after that bought again, those transactions are paired off. Q. What per cent do you generally accept as the margin on the amount purchased ? A. You mean what the average per cent will be? Q. Yes, sir. A. From three to five per cent ; sometimes as high as ten and some- times as low as one ; from three to four per cent would be a fair average. Q. How do you charge your commissions ? A. We charge no commissions. If you want to buy we sell you the stock at a point above the present market price; if you want to sell that stock wo will buy it below the market price — from a quarter to a half a cent above or below. Q. Suppose a man has bought a lot of stock, and he comes in and wants to settle, how do they settle; what do they settle ? 8G8 A. If a man has bought stock and wishes to dispose of it, we will make him an offer at the price we will give for it, not up to the mar- ket price, generally below the market price, as shown on the ticker of hundred share lots. i By Mr. Chittenden: Q. Suppose he has bought futures, and wants to settle before they mature, how do you fix the price in that case? A. He can either buy or sell against it. You are alluding to what is called a ^^put” or a ^^call.” If you have a put or a call you can either buy or sell the stock against that contract; if you have a call on the stock that is a good margin to go short, an equal number of shares. Q. In your case you say you sell futures ? A. No, sir ; they are not futures, properly speaking; they are puts or calls ? By Senator Browning : Q. If I come into your office and put up a margin, and call upon you the next week to sell me a hundred shares of Norwalk and Danbury railroad stock at sixty-five, and the next day it goes up to sixty-eight, how can I come to you and settle and get the balance coming to me ; can I call at any time and get it ? A. Any time. Q. Suppose it goes up three or five cents, and the next day I come in and say, Todd, I am in clover ; J want to settle ? A. You can either take the stock or take the difference between the price at which you bought and the market price. Q. At my option ? A. Yes, sir ; or what very frequently they do, if you have got the stock, you sell an equal number of shares, and having bought and sold it you can, at any time, get the difference between the price at which you bought and the price at which you sold. Q. Without any commission ? A. Yes ; no commission. Q. And if it goes down five cents by the time of maturity, I have to. settle with you ? A. Yes, you are held to the amount of margin you put up. Q. TIow long does that margin hold good ; until it is exhausted? A. Yes, sir. Q, Whether tlie confract is matured or not ? A. Yes, sir ; there are a great variety of those contracts. 869 By Senator Boyd: Q. How much do you say you usually take in a day of margins ? A. There is no average to he placed on it. Sometimes, if the mar- ket is active, there would be a large deal, and then for weeks with a very dull market there are very small transactions. By Mr. Chitteitden' : Q. You said from ten to forty thousand dollars a day ? A. Forty thousand dollars a day is as high as I ever knew it; for in- stance the day before Christmas there is rarely any dealing done, a few hundred shares ; then I have known some months our dealings run up to four or five hundred thousand shares a month and then down to thirty or forty thousand a month ; there is no't much of an average to be placed on it. Q. Out of that how much do you keep on an average ? A. In other words you want the gross profit on those transactions ? Q. Yes, sir. A. About one-sixteenth of one per cent is the gross profit the com- pany makes on those transactions, which amounts to six dollars and a quarter on a hundred shares of stock, and that is about the average percentage of gain which the company makes in those transactions ; in other words, the company makes about $6.25 on every hundred . Of every $100 of margin about $94 is naid out. The company make about six on a hundred shares. Q. What was your object in doing business in the name of the. Limited Liability Company instead as of individuals ? A. That I might more easily associate other parties with me. Q. In the transaction of this business do you issue circulars? A. No, sir, we do not. By Senator Boyd : Q. What is the general business and social condition of your cus- tomers ? A. That is a broad question. By Senator BRO-VYinKG : Q. Do you do business with minors ? A. No, sir. Q. All men ? A. Yes, sir; usually brokers, bankers and business men on the street ; the same class of people you see speculating in other offices on the street. 870 By Senator Boyd: Q. A large number of young men ? A. Messengers coming from other offices bringing orders. By Senator Browning : Q. You do not allow minors to do business in your office ? A. No, sir, we do not allow minors in the office. Q. Except as a messenger brings an order from some reliable house ? A. Yes, sir; we have for several years kept for the most of the time a door-keeper to exclude that class. By Senator Boyd : Q, Is it not true that you generally have some broker on the floor of the Exchange to manipulate prices in your interest ? A. No, sir. By Senator Browning : Q. Do you mean you never bear down or bull the market ? A. No, sir, it does itself generally ; w^e are not interested in the course the market takes in the Exchange. If you understand the term, we are long and short of the same stocks at the same time. One gentleman comes in to buy and another gentleman comes in to sell the same stock. We* buy it of one and sell it to the other at a dif- ference at about one-half of one per cent above or below the market price. If the price goes up those that are long of the stocks make a gain but it is at the expense of those who are short. A rule in our dealings we about average — about the same quantity of shares will be sold as we buy, and in the majority of instances it makes no difference with U9 whether the market goes up or down. Q. How often have your company declared dividends ? A. It never has declared any dividends Q. Who are the incorporators of the company ? A. I am one of the incorporators ; I could not tell you the names of all from memory, Q. Do you know how many there are ? A. My impression is there are eleven or thirteen ; I don’t know. Q. Do they reside in New York ? A. Yes, sir, most of them. 3>y Senator Boyd : , Q. Have any of them any other business besides this ? A. Yes, sir. 871 Q. What kind of business ? A. I could not tell you. Q. Are any of them brokers ? A. Yes, sir. Q. Do you remember the names of the brokers ? A. I could not tell you from memory. I would be pleasea to sup- ply the committee with a copy of the articles of incorporation, by- laws, etc., and the names of the incorporators. Mr. Chittenden — What is more desirable for the public is the names of the present stockholders. Senator Boyd — Could you supply the committee with that infor- mation ? A. Yes, sir, through the secretary with the names of the stock- holders and the number of shares each hold. Q. Will you do that to-morrow ? A. Yes, sir. By Mr. Chittenden : Q. Then if I understand you a considerable portion of your Dusiness consists in dealing in what are called puts and calls ? A. Yes, sir. Q. And your business differs from that of ordinary brokers in this, that you sell puts and calls on a smaller number of shares than they do? A. That is so. Q. And you sell them on as small a number of shares as five, though you think the average is about twenty-five ? A. That is about so. By Senator Boyd: Q. Do outside parties transact business with each other through you as brokers, or does each customer transact his business with your con- cern ? A. Mostly each customer transacts with our concern. By Senator Browning : Q. There is no membership card of admission ? A. No, sir. By Mr. Chittenden : Q. You have got your certificate of incorporation and by-laws ’ printed ? A. Yes, sir. 872 By Senator Browning : Q. Have you ever refused to pay any of your losses ? A. No, sir. Q. No lawsuits pending against you ? A. No, sir, we certainly do business very long if we had. By Senator Boyd : Q. What is the average amount of your losses daily ? A. They don’t run that way ; we do business for a profit. We sup- ply facilities for speculating in stocks and generally do it to a profit. Adjourned to December 27, 1882, at ten o’clock, a. m. New York, Wednesday, December 27, 1882. The committee met pursuant to adjournment at the Metropolitan Hotel, New York city. Samuel Jacoby y being duly sworn, was then interrogated and testi- fied as follows : By Mr. Chittenden : Q. Are you the treasurer of the New York Stock Exchange ? A. Yes, sir. Q. How long have you been treasurer ? A. Since 1879. Q. Is the book which I show you the annual report of the Exchange for the year 1881 ? A. Yes, sir. Q. This report states that the Exchange has twelve managers, a president, vice-president, treasurer, secretary, superintendent, counsel and consulting chemist, is that right ? A. That is correct. Q. Do you remember of its standing committees? A. No, I do not. Q. There are about twenty are there not ? A. They are all enumerated in there ? Q. Accurately enumerated here ? A. Yes, sir. Q. I notice by your report in the year 1881, that the expense of operating the Exchange for the year 1881 was $76,898.12, is that an accurate statement ? A. Yes. sir. Q. J notice that the cost of gra,in inspection for sixteen months, stated on page 86, is $68,821, is that accurate? 873 A. There is a balance of it to the credit of the new account. Q. Please state what the expenses were for those sixteen months? A. $55,582.93. Q. The Exchange is engaged in the erection of a building, is it not? A. Yes, sir. Q. State the cost of the site of that building ? A. Total cost of the building site approximates $650,000. Q. What is the contract cost of the building to be? Aws, About two million dollars. Q. In addition to that there was purchasad at a later period the rear of some lots upon Stone street was there not? A. One on Stone street, and one in the rear of the Exchange. Q. What was the cost of the purchase on Stone street ? A. I believe $20,000. Q. And what was the cost of that in the rear of the Exchange ? A. $150,000. Q. That in the rear of the Exchange was the rear of two lots that fronted on another street ? A. On Broad street. Q. About what proportion of those lots did this purchase include half of them ? A. That I really could not tell. Q. It was shown during the negotiations of that purchase that those lots had been sold within two or three years previously for about -$58,000, was it. not ? \ A. That I could not tell, but I know the whole property when it was bought by Mr. Popham, I believe the whole property was bought for about $68,000 or $70,000. Q. And the half of it sold for — A. The rear half was sold for $150,000. Q. That was the least valuable half, was it not ? A. Before the Exchange was built it was, but after the Exchange ■was built — Q. State whether you would consider that sale a reasonable illustra- tion of the increase in the value of property in the neighborhood, caused by the building of the Exchange ? A. I think it was. Q. When did the Exchange commence business ? A. That I could not tell ; I was not here until 1866, Q. Tell me, if you can, the cost of seat in the Exchange or what ^ members were required to pay annually in the year 1872 ? A. Two hundred dollars each. Q. Those were the annual dues, were they not ? 110 874 A. No, the annual dues were from twe'ntj-five dollars to thirty dol- lars. Q. Now was that price raised in February, 1873 ? A. The initiation fee was raised to $500 the 1st of February, 1873. Q. Was it raised in February, 1881 ? A. Yes, sir. Q. To what sum ? A. I believe it was $1,000. Q. State whether a vote was passed limiting the membership after January 1, 1882, to 3,000 ? A. Yes, sir. Q. Was a vote also passed fixing the initiation fee at $10,000 ? A. At $2,500, not at $10,000. Q. Is it not stated in your report for that year as follows: Finally the Board decided to submit to the members at an informal ballot three plans that had been proposed, to-wit : the limitation of the membership to 3,000, making the initiation fee $10,000 after January 1, 1882, and the issuing of building certificates. This informal ballot took place November 12th, and resulted in favor of limiting the mem- bership to 3,000, by a vote of 1,162 for this proposition to 303 for the other two plans. An equally emphatic expression was received through the medium of postal cards from members unable to be present. So great was the interest evinced in the matter, that before the announce- ment of the vote, 310 applications for the 300 vacancies had been filed and by the close of ’Change, two days later, $1,000,000 had been de- posited, being for eighty-seven more memberships than could be granted at $2,500.” Is that correct? A. I don’t remember this ten-thousand dollar clause. Q. Does not that ten-thousand dollar clause apply to memberships after the 1st of January and after the 3,000 has been filled ? A. I remember, yes, sir; there was such a proposition made, but I don’t think there was a vote taken on that, although, itsays here there was. Q. Was there not a vote afterward taken, fixing the price at $10,000 and the membership at 3,000 ? A. It was taken at the same time when the $2,500 initiation fee was passed. Q. No person can be admitted to membership in the Exchange un- less he purchases the interest of some member, can he ? A. Yes, sir. Q. What is the market value of seats in the Exchange now ? A. I have heard of sales within the last few days at $2,050 and $2,700. 875 Q. The margins which are deposited in the Exchange are deposited with yon as treasurer, are they not ? A. Deposited directly in the bank ; they go through the treasurer’s books. Q. What are the margins per bushel on wheat, rye and barley ? A. Well, it depends entirely upon the market price; generally from five to ten cents a bushel. Q. Please turn to page 185 ? A. That is the original, ten cents I believe on wheat, rye and bar- ley and five cents on corn, and the further margins from time to time are to cover any variation in the market value from the contract price Q. How much a tierce on lard ? A. Two dollars. Q. And a dollar a barrel on pork and half a cent a pound on al^ other meats ? A. Yes, sir. Q. Now, what is the margin on petroleum? A. I don’t know. By Senator : Q. Do you deal in petroleum down there? A. Yes, sir, a great deal in petroleum. By Mr. Chittenden" : Q. What was the amount of margins deposited during the year 1881 ? A. $10,716,838. Q. Can you give the amount deposited so far during the year 1882 ? A. I can only give you the deposits we had yesterday, $1,855,441. Q. What I want is the aggregate amount ? A. That I have not taken a memorandum of. Q. Is it larger or smaller than it was last year ? A. I suppose it to be larger. Q. Will you give us the best approximation ? A. I could not state any amount ; I might send it up to you. Q. I wish you would send the aggregate amount of margins to the present time ; what are the commissions required to be paid on wheat, for example, to the broker who buys or sells, by outside parties ? A. Well, some charge two dollars and a half for a boat-load. Q. Is there no limitation by the rules or by-laws of the Exchange upon the commissions to be charged by members ? A. I don’t believe we have, no. Q. They have the right to charge whatever they please ? A. Not whatever they please ; they generally charge up to one- 870 eighth of a cent per bushel and as low as two dollars and a half 'for a boat-load. Q. Highest one-eighth of a cent per bushel on all grain ? A. Yes, sir ; that is where brokers give up their own names. Q. I don’t know as you understand me ; suppose a person not a member employs a member to make a purchase of wheat for an out- sider, do the rules of the Exchange prescribe any rate of commission which the broker must charge his customer ? A. I don’t believe they do. Q. Are margins deposited upon all sales for future delivery in the Exchange ? A. No, only when they are asked, only when the parties ask t ave them deposited ? Q. Parties in high credit and of capital are not usually required to deposit margins ? A. No, sir. Q. They are usually deposited by parties of moderate means or of questionable character ? A. Yes, sir ; although some of the larger houses here are required to deposit margins also. Q. I notice that on page 66 of this report for 1881, it is stated that at a large enthusiastic meeting of the New York Produce Ex- change, held May 23, 1881, the following protest against tlie passage of the proposed bill imposing a tax upon broker’s sales was unani- mously adopted ; and among other lesolutions stated here is this. Resolved, that we indignantly protest against the appointment of commissioners, as proposed in said bill, who shall be vested with power to demand access to the broker’s books, and to the names of all parties for whom he transacts business.” Were you present at that meeting? A. No, sir ; I heard of it; it was a public meeting there. Q. What practical objection is there to having the names of parties • engaged in sales of grain and produce for future delivery known ? A. I could not see any objection. Q. This business of the Produce Exchange has been a prosperous business, largely increasing in these last four or five years, has it not ? , A. Yes, sir. Q. And a largo part of the business consists of purchases and sales for future delivery, does it not? A. Yes, sir. Q. Do you not think it is equitable and right that a business like that, having sucli prosperity and magnitude, and being so largely con- nected with futures, should pay a reasonable tax ? A. You mean a broker’s tax ? Q. Yes, sir; whetlier it is not fair and right that brokers making these extensive sales for future delivery, should pay a reasonable tax ? i 877 A. Well, I could not very well answer this question, because I am not familiar with the profits the brokers make, and the large majority of the brokers only get two dollars and a half for each transaction. Q. Suppose the tax was adjusted at a percentage upon their gross commissions. I assume that the tax is to be a fair one, and to be im- posed not only upon sales in the Produce Exchange, but upon all similar sales. I ask whether it is not just that that business should bear some portion of the burdens of taxation ? A. I must say I am not a competent judge upon this point. Q. Have you with you, and will you furnish to the committee the forms used by you in connection with the deposit of margins ? A. I have. The witness produces three papers which are marked Exhibits 1, 2 and 3, of this date. By Senfitor Browning : Q. When was' that sale to Mr. Popham? A. About four years ago. Q. Who is Mr. Popham ? A. He was in the lard refining business. He is now dead. Q. Was he a member of the Produce Exchange at the time ? A. Yes, sir. Q. A member of the building committee ? A. No, sir. Q. Was he afterward a member of the building committee ? A. No, sir. t ). And he sold the property to the building committee ? A. His heirs ; yes, sir, after his death. Q. After Mr. Popham purchased that property, did he occupy it ? A. Yes, sir. Q. Himself ? A. One portion of it; and then the front part he rented to the Pennsylvania railroad and the upper part was rented for offices, and the rear part he occupied himself in the lard refining business. Q. Do you believe there was any collusion, directly or indirectly, in that transaction between Mr. Popham and the building committee of the Exchange by which some parties may have made money out of that ? A. No, sir ; most emphatically no ; one member of the building committee proposed to take that very same lot which the Exchange took at the same price. Q. Who? A. Mr. Armour ; and paid the same amount within one year from the date of purchase ; he made the same proposition as to the lot on 87S Stone street that cost $20,000, but we did not accept that proposition, and we are offered now $50,000 for the same lot which we paid $20,000 for. Q. What was the amount of margins deposited in 1881 ? A. $10,716,838. Q. Can you tell me what the selling value of the property was that that $10,000,000 represented ? A. It is impossible. Q. Did that represent five per cent of the selling value ? A. We assume that the margins amount to five per cent. Q. About five per cent of the selling value ? A. Y es, sir ; on wheat of course it is more ; you may take an aver- age of six or seven per cent. Q. Ten millions average about six or seven per cent of the selling value ? A. Yes, sir. By Mr. Chittenden : Q. The subject of this purchase was submitted to some vote of the Exchange, was it not, before it was consummated ? A, It was submitted to the board of managers and afterward, I believe, to the members of the Exchange. Q. And the whole subject of the relations of this property and of the Exchange to the owners and all that was investigated, was it not? A Yes, sir. Q. And the managers voted to make the purchase ? A. Yes, sir. Leonard Hazeltine re-called: By Mr. Chittenden: Q. In your former examination you spoke of something that you called a corner existing in corn in the Produce Exchange in November last, and you stated the price at wh\ch that was closed at $1.10; at what date was corn worth that in this market, at what date was that corner closed ? A. I object to vour statement of what I stated; I did not state it was a corner ; I was very particular to explain that it was a so-called corner. Q. Then I will call it a so-called corner ? A. The price of corn the last day of the month was from $1.09 to $1.10, and also several days before the last end of the month ; I don’t recollect the dab*. 879 Q. What month ? A. November. Q. AVhat was it on the 10th of December ? A. I could not possibly tell you. Q. Have you no knowledge on the subject ? A. I have no recollection. Q. Can you not tell within five cents what it was ? A. I could not; I can tell what it is to-day ; I can’t tell you what it was on any day without reference to my books. Q. AVhat is it to-day ? A. About sixty-eight and one-half. Q. Did it immediately after the first of December fall off — the price ? A. Yes, sir. Q. Did it fall off as low as seventy-five within ten days after the first of December ? A. I should think it did ; below that I should think ; I should say it went down as low as seventy-two and one-half. Q. At what price did you purchase first with reference to that delivery ? A. Something in the neighborhood of eighty or eighty-five cents last July. Q. State whether you call that a corner in corn ? A. I do not. Q. What do you call it ? A. I call it an excessive demand over supply. Q, An excessive demand for speculation ? A. For the fulfillment of contracts ; yes, you might call it specula" tion I suppose. Q. Was there any excessive demand for consumption at that time? A. There was a good consumptive demand; I don’t know what you mean by excessive; there was a good, fair demand; corn was selling in Liverpool at that time on the basis of a dollar a bushel in New York, adding freights. Q. Have you known a corner in this corn market within the last three years, that you call a corner? A. I have not. Q. Do you know any thing about a sudden rise in the price of corn that took place in September, 1881 ? A. I don’t recall it to remembrance. Q. Do you remember an occasion when some change was made by the Chicago Produce Exchange that caused a large decline in the price of corn ? A. I don’t recall to remembrance. 880 Q. Do you not remember the time in September, 1881, when it was reported that some parties in this city liad purchased about twenty million bushels of corn with the intention of making a corner — of rais- ing the price ; don’t you know any thing about that ? A, I recollect there was some such rumor ; I don’t recollect the time Q. Last September, 1881 ? ’ A. I don’t recollect it ; you mean September a year ago ? Q. Yes ? A. I don’t recollect it. Q. Did you have any connection with it personally? A. I don’t recollect that I did. Q. You are familiar with the manner in which this business is transacted in the Produce Exchange, are you not ? A. Yes, sir. Q. And have been since its organization ? A. Well, I have been for a great many years. Q. Your firm is one of the largest dealers upon that Exchange ? A. I would hardly arrogate that ; we are large dealers. Q. Well, how many bushels of grain does your firm handle in the • course of a year ? A. I could not tell you ; very largely ; millions. Q. Can you not give any approximation ? A. I could not, sir. Q. Don’t you figure it up at the end of a year ? A. I don’t know as I ever did. Q. Are the sales of grain for future delivery in connection with the Exchange usually recorded on the books of the Exchange ? A. They are not usually, except we have two calls ; what are called calls of grain, one at a quarter before twelve and one at three, and records of the trades made at these times are recorded, but none others. You mean officially recorded by the Exchange ? Q. Yes? A. Keporters get what they can. Q. Now, what proportion of the actual sales for future delivery should you think were recorded officially by the Exchange ? A. T should think a very small proportion. Q. Prol)ably not more than one-tenth ?. A. 1 should say not that. It is a transaction which takes half an hour, and it has against it the other transaction of from ten to four o’clock. i). '’I'hero is no obligation by the rules of the Exchange for member to recor(l tlieir sales, is there? A. Xo, sir; the usual custom is to give them to the reporters ;is 881 you come off of the floor, and they are published in the papers. There is no official record kept. Q. Are margins deposited in all cases of sales that are made at the call, as you term it ? A. I should say not a very small percentage, I think. Q. Parties in strong credit and with abundant capital are not usually required to deposit margins ? A. Not usually, sir. Qs How is it with the general business of your firm; are you gen- erally required to deposit margins ? A. We are not. Q. I find reported in the annual report of the Produce Exchange for 1881, sales of wheat on call at forty-four millions four hundred and ninety-two thousand bushels. Is there anyway now of ascertain- ing the quantity of wheat that was sold by members of the Exchange aside from these sales ? A. I should say not ; there is a Produce Exchange paper, a market report, w’hich summarizes the sales of these calls and also what the ’• members report, which may give you approximately the information you require. Q. You yourself have no definite idea of the quantity of wheat jfor instance that is dealt in for future delivery in the course of a year ? A. I have not. Q. Or of corn ? A. No, sir. Q. Except you say you do not think that one-tenth of these sales are recorded ? A. That is a mere matter of judgment ; I think that would be a large proportion myself. Q. It is also reported here that the margins deposited in 1881 are ten million seven hundred and sixteen thousand dollars ; that don’t necessarily imply that those margins are deposited for the sales made on call does it ? A. No, sir. Q. That covers outside sales that are not reported ? A. It would cover all transactions ; no margin would be called for unless there was some transaction whether made on or off the call, and those margin calls are not necessarily original margins upon the origi- nal transactions, but they are represented by the fluctuations in the market ; for instance a party had sold a hundred thousand bushels of wheat and the market had gone down he would probably be called to the market; in that way these margin calls are larger than they other- wise would be. Ill 882 Q. Do you know what the margins by the rules of the Exchange are on petroleum ? A. I do not. Q. I noticed reported in the papers this morning a decision of the committee of arbitration of the Exchange in the case between your firm and Lane & Son ; are you familiar with the facts out of which that arbitration grew ? A. I am. Q. Will you state what the sale was which your firm made to Lane & Son, when it was and its terms ? A. 1 would prefer not to state that until the award is settled ; the award has not been settled yet, and I prefer not to be quoted as giving any expression of my views in the case until it is finally settled ; J ob- ject to any publicity of the question until it is settled ; I have no ob- jection to giving you the award, but as to any statement of facts in re- lation to it I do not desire to give them. Mr. Chittenden’ — I submit to the committee whether the witness should not be required to answer. The Witness — This is an award growing out of a transaction be- tween Messrs. Lane & Son and ourselves; the case has been arbitrated and the award has been substantially in our favor ; the parties have not yet paid the amount of the award; we have tendered them the amount due them by the award ; until the affair is settled by the pay- ment of the award by both partias I do not think it fair that I should give any expression of opinion about it. f By Senator Boyd : Q. Do you object because you think your firm would sustain any pecuniary loss by reason of any statement ? A. 1 think they might ; I am perfectly willing to give you all the information you ask in a fair way of the matters under discussion, but I am not willing to jeopardize any interest I have. By Mr. Chittenden: Q. Suppose we waive that for a moment. What do you claim was the contract which you made with Lane & Son in reference to that corn ? A. I don’t make any claim ; I do not desire to be interviewed in re- lation to that question; it is not a matter, it seems to me, that comes within the scope of this investigation ; it is a matter that I consider would jeopardize my interest, if publicity was given to it. Mr. Chittenden — My purpose is this: It is announced in the ])aperH, apparently by the authority of a committee of this Exchange, 883 that that committee has awarded as damages to Ilusted & Hazeltine, the sum of 14,246 — as damages to Hasted & Hazeltine for selling a lot of corn which Lane & Son had previously bought of Husted & Hazel- tine, had paid for, and which had been delivered to them. In other words, it is an award of damages against them for selling their own property for $4,000. It is a case of future delivery, and it seems to me a case of such extraordinary character, where a party is mulcted in damages for the sale of his own property, that it is a proper question for investigation. The witness produces a copy of the award, which is handed to Mr. Chittenden. Q. At my request you have handed me a paper which reads as fol- lows : “ That deliveries were made in accordance with the rule of the New York Produce Exchange, and that Husted & Hazeltine must pay Lane & Son the full amount of claim, $17,336.31, with interest from November 24, 1882 ; that the charges of fraud and conspiracy against Lane & Son have not been sustained, but that 16,332Yf ^ bushels of corn originally purchased for shipment by Lane & Son, and not shipped, have been delivered by them on grain warehouse receipts Nos, 848 and 849, and Lane & Sons shall pay Husted & Hazeltine $4,246.36, with interest from November 29, 1882, being the difference between the price paid by Lane & Son to Husted & Hazeltine, and the settling price on day of delivery. Fees to arbitrators, $225 ; to notary, $3.50 ; in all, $228.50, to be paid, one-half by each party. New York, De- cember 23, 1882. Signed in the presence of William H. Pierson, Treasurer; G-eorge 0. Martin, George S. Scott, D. D. Mangum, J. F. Fuller, J. E. Hicken.” State to the committee what the sale was by Husted & Hazeltine to Lane & Son, out of which this award grew ? The Witness — Now, Mr. Chairman, I object to answering any questions in relation to this award on the ground that the award has not been paid and my statement may jeopardize me either before the committee, where it may hereafter come, or in other ways, therefore I desire not to be called upon to answer any questions in relation to it. The Ohairmak — The object of this committee’s work is to inves- tigate the whole system of making corners and dealing in futures with reference to its effect upon commerce and its influence upon the pub- lic welfare ; it is publicly claimed that this system of compelling settle- ments is a great evil, and here is a case where a settlement has been com- pelled, and I think it is altogether within the province of this committee to investigate this case ; I do not see where your firm can sustain any loss or injury by reason of your answering the question, for the simple reason that this matter has already been adjudicated upon by the arbi- tration committee, from the judgment already entered, it is a matter of public record, the Press has made it known to the world, and I do , 884 not see that your stating tlie contract transaction out of which it aroso can jeopordize you in tlie slightest degree, the committee must there- fore hold that it is your duty to answer the question. The Witness — I decline to answer it. Senator Boyd — I will here state that of course that ends the matter. By Mr. Chittenden : Q. Does not this award give Ilusted & Hazeltine over $4,000 in dam- ages against Lane & Son for the sale by Lane & Son of their own prop- erty ? A. For the same reason I decline to answer; I decline to be inter- rogated on that question. Q. Had not Lane & Son purchased and paid for the corn in that transaction out of which this grew ? A. I make the same answer. Q. Ilt^l not the firm of Husted & Hazeltine delivered that corn to Lane & Co. ? A. I make the same answer. Q. Did not Husted & Hazeltine retain from Lane & Son the sum of $16,000 and over, due to Lane & Son upon another transaction under a claim of damages for the sale of the corn mentioned in this award? A. 1 make the same reply. Q. Are transactions of the kind indicated by this award common in the Produce Exchange ? A. I should think they were very uncommon ; you mean the liti- gation growing out of that? Q. No, sir ; I mean the case of a claim for damages against a man for the sale of property that he has bought and paid for ? A. I decline to answer that. Q. Will you explain to the committee how any claim for damages against Lane & Son in this case on the part of your firm arose ? A. You have asked me that question, in different forms, about eight or nine times, and I make the same reply each time. Q. Is it true that corn is sometimes worth less for immediate than it is for future delivery in this market ? A. Yes, sir. Q. Explain wliy that is ? A. That is very manifest why grain might be worth less to-day than on a future day, because there would be the cost of the money to carry it, tlie storage and the interest. At other times it may be worth a great deal more on account of scarcity; prospective supplies make future months worth less. (2- At the time of the transaction mentioned in this award, was there a reputed corner in corn in this market? 885 A. I cannot answer that. Q. Why not? A. Because I don’t know. Q. Was there any actual corner? A. Not under my definition of the term corner.” Q. Well, please state your definition of the term “ corner.” A. I stated that in my direct testimony fully; I cannot state it any fuller. Q. At that time were you engaged largely in the purchase of corn — say for a month or six weeks before the 29th of November, 1882 ? A. Yes, sir. Q. Were you interested with other parties in the purchase of corn ? A. That I decline to answer. % Q. Had not your firm and several others formed an association for the purchase of a large quantity of corn with the view of putting up the price ? A. No. Q. Had you made %uch an arrangement or agreement with any other person ? A. I decline to answer any questions as to agreements between my customers and myself ; I don’t think it comes within the scope of your investigation. Q. Were you not engaged in the six weeks previous to the 29th of No- vember in an attempt to make a corner in corn in this market ? A. I have explained that whole thing in my direct testimony, given reasons why I came to buy so much ’corn; I cannot state it any fuller. Q. I repeat the question ? ^ A. I cannot make any further answer than I gave to the committee at my former examination. Q. How much corn had you and your associates purchased at that time, on the 29th of November, up to that time, in that deal ? A. I cannot state that any fuller than I did in my former examina- tion. Q. You stated that your firm had purchased something over two million of bushels ; what I want now is the whole amount purchased ? A. That is all I know any thing of, what my own firm did. Q. Do you say your firm was not interested with any other person or firm in that transaction ? A. I did not say so. Q. I asked you whether they were ? A. You asked mo that before and I told you I would not answer it. 886 Q. Did not other persons or firms with which your firm was inter- ested make large purchases of corn within six weeks previous to the 29th of November, 1882? A. Not that I know of. Q. Do you know whether they did or not? A. I should have been liable to know if they had. I have received no account of any such purchases by firms with which we are inter- ested. Q. Was your firm conducting that transaction of deal fora party of other persons ? Q. I have stated that I decline to answer any questions relating to any transactions between my customers and myself. Q. Do decline to answer, then, because it would subject you to prosecution ? ^ . A. It would subject me to ridicule and ignominy. Q. You do not refuse because it would subject you to any prosecu- tion ? A. It would degrade me to do it, and I would#not do it. Q. Why would it degrade you ? A. I decline to answer that. Q. Is it an honest business ? The WiTi^ESS — Mr. Chairman, I think I have some protection here ; I think these questions are being put in the way of a petty police court. I am a gentleman and merchant, and do not think I come here to be brow-beaten by a lawyer. Senator Boyd — As I stated before, the object of this committee is to investigate this system, concerning which a great deal of complaint has been made. If firms or business men are engaged in a reputable business, they of course should have no hesitation in stating every thing connected with it. The public in this country are in favor of legitimate business ; they love to foster legitimate business, but if there is any thing that should not see the light of day, the people of this State are determined to see it, understand, and form their con- clusions in regard to it themselves. I do not think the questions are at all improper ; I think tliey are calculated to disclose any thing that might be detrimental to the public interests. If there is nothing detri- mental to the public interests in your mode of transacting business, I do not see why you should have any hesitation to answer. If there is, of course you can state so, and we have no power to compel immediate answers; but I will state here that any refusal to answer proper ques- tions will be considered as contempt of the Senate, of which this com- mittee is a ])art, and I hope you will consider the matter and take time — we will give you the time necessary — and answer in such a way as 887 you deem it your duty as a good citizen and an upright business man. The WiT^TESS — I recognize the right of the committee to ask all proper questions. I recognize that the committee are treating me courteously ; I recognize the fact, also, that I am dealing with my customers in good faith and propriety, and it is not proper for me to say Avho gives me an order to buy or sell a load of grain to-day to be published to all the trade. I am dealing Avith gentlemen. It is simply a question of propriety Avith me Avhether I shall disclose the proper secrets of my oAvn business. I think it is not. I submit that they are unfair questions to ask, and I claim the protection of the committee. Senator Boyd — It is a matter of public notoriety and report that what is alleged to have been a corner was created in corn in this city last year, and that the price of corn was forced up from eighty-seven cents to $1.10. The Witness — I explained that fully in my former examination ; gave the reason why more corn was bought. Mr. Chittenden — I am inquiring of this witness as to a transac- tion which is not one month old. Senator Boyd — One in which the public are very much interested^ because it affects the price of the absolute necessaries of life. The millions of consumers in this country want to know what prices they are paying, and whether those prices are legitimate. The Witness — I stated fully that it did not affect the consumer at all. Senator Boyd — That is your conclusion, but other people may dif- fer from you, and therefore I think it is the duty of this committee to investigate and ascertain the facts so as to be able to see whether your conclusion is correct or not. The Witness — I understand you to rule that it is proper for me to ^eveal the names of the customers and persons with whom I had deal- ings in November corn ? Senator Boyd — I think it is necessary. By Mr. Chittenden : Q. What objection is there to your disclosing to the public, and to this committee, the names of the gentlemen for whom you deal upon the Produce Exchange ? A. I hardly think it is worth while to answer that ; I have answered it already ; it is too manifest. I am dealing with these gentlemen and it is not a proper thing for me to divulge their names. Q. Why not ? A. Because it is a matter the public has nothing to do with, and it 888 is a matter of notoriety tliey would not want, and I would not permit them to have. Q. You consider the business in which they are engaged to be an honorable business ? A. I do. Q. A^ou consider it to be a part of the legitimate trade of the times ? A. Yes, sir ; just as honorable as your profession. There is just as much impropriety in your asking for transactions with my custom- ers as in my asking for transactions with yours. Q. Have they requested you to conceal their names ? A. They have not. Q. How do you know they have any objections ? A. I don’t know that they have ; I have got some sense of propriety myself. Q. Is not your real objection to the fact that persons engaged in speculating do not like to have the fact known ? A. That is not. Q. Then you decline to state the names of any of the persons for whom your firm transact business ? A. I think I have. Q. And you decline to state the character of the business you trans- act for them ? A. I have not done that. Q. Are you willing to do that ? A. I have stated that I bought corn. Q. Answer the question ; are you willing to disclose the character of tile business that you transact ? A. I don’t know what you mean by character ; if you will make your question more explicit I will answer you. Q. Give the facts to this committee in regard to the business you transact for your customers ? A. Not beyond what I have given in my former examination, which was very full. Q. Is your firm selling futures now in corn or wheat or grain ? A. If you want a literal answer, I don’t know; I have not been down town for about two hours. Q. Is that all the answer you can give to that question ? A. If you want a literal answer that is the best I can give. Q. Is your firm engaged from time to time during the present month in tlie sale of fii lures iu grain ? A, I sliouhi say they were ; yes, sir. Q. What number of Imshels of wlieat have you sold for future delivery wliich are not delivered, the contracts outstanding at tiic present time ? 889 A. I don’t know, sir. Q. Give it to the committee as near as you can ? A. Well, it is insignificant ; I don’t know ; it don’t amount to any thing. Q. Does it amount to a million bushels ? A. No, not to one hundred thousand ; very little. Q. Is your firm buying from time to time for future delivery ? A. Yes. Q. What amount have you got bought at the present time that is not delivered ? A. That I decline to answer, Q. Is it 5,000,000 bushels? A. I said I declined to answer any questions as to how much prop- erty I have got, bought or sold, the amounts; I' don’t think it is a proper question to ask. * Q. Can you remember in what transactions your firm was engaged in August and September, 1881 ? A. We were in the grain business. Q. Can you remember the particular transactions of those two months? A. I cannot. Q. Can you remember any of them ? A. I don’t recollect any now. Q. Do you not know that on the 2d and 3d of October, 1881, corn fell off about ten cents a bushel from seventy-two and seventy- three cents ? A. I don’t recollect it. Q. Do you not remember of any change made by the Chicago Pro- duce Exchange in their rules which was a matter of extended public discussion at that time ? A. I have answered that question, that I did not. Q. Who is the correspondent of your company in Chicago ? The WiTN’ESS — I submit, Mr. Chairman, that that is not a proper question. Senator Boyd — I think it is a proper question. A. Well, we have a number of them. Q. The principal one ? A. I won’t answer it ; I don’t think it is a fair question at all. Q. Is it the firm of Hobbs & Co. ? A. I will say no. 112 890 New York, Fiuday, December 29, 1882. The Committee met pursuant to adjournment at the Metropolitan Hotel. Mr. Chittenden — I have here a letter from Mr. Jacoby in which he states that the margins deposited in the Produce Exchange from January 1, 1882, to December 16, 1882, amount in the aggregate to $17,470,287.50. William J. Hutchinson, being duly sworn, was then interrogated, and testified as follows : By Mr. Chittenden .• Q. Where do you reside ? A. In New York. Q. What is your business ? • A. Stocks and banking; I am not in active business. Q. Were you a member of the late firm of Kennedy, Hutchinson & Company ? A. Yes, sir, there were two firms of that name. Q. *When did the last of those firms dissolve ? A. The last of the firms were placed in the hands of a receiver, I think it was in August ; I won’t be sure of the month. Q. Was your firm at any time connected with the purchase of a con- siderable amount of what is called the common stock of the Hannibal & St. Joe railroad ? A. Yes, sir. Q. Keferring to the time when there was a large increase in the value of that stock, when did the purchases in reference to that transaction commence ? A. I think it was about the month of February, 1881. Q. What was the price of the stock at that time ? A. In the neighborhood of 50. Q. What number of shares were there of the common stock ? A. Ninety-one thousand and some odd ; I forget the exact amount. Q. Did the firm with which you were connected make large pur- chases of that stock ? A. Yes, sir. Q. About how many shares did it purchase ? A. Well, it is impossible to say the number of shares we bought and sold; I think the amount we accumulated was about forty thousand shares, lield in our offices in New York and Boston. (2. During the time that you were buying and selling this stock was 891 there a considerable short interest in the stock — had a good deal of the stock been sold short ? A. There was from the time the purchases commenced up until per- haps along in the month of August or September when it became cornered. ’ Q. Have you any means of telling the extent of those short sales, the number of shares ? A. I think the actual short interest at the time it was cornered was somewhere in the neighborhood of 12,000 or 13,000 shares, possibly 15,000 ; I am only speaking from memory. Q. When did the price of that stock begin to appreciate rapidly, about what time in the year ? A. In the latter part of April I think the price of the stock was about 58 and by the middle of June it was in the neighborhood of 85 to 90. Q. Now go right on after the middle of June and state in a general way the fluctuations in the price of that stock ? A. The stock fluctuated between 85 and 90 up until possibly about the 5th or 8th of September, 1881, and one day it very rapidly ad- vanced from 95 to 135 bid ; the next morning it sold at 200 and within the next two or three days I think the stock was bid up to 350 ; that is merely from hearsay ; we had nothing to do with that transaction ; it was bid up by outside parties ; but I am quite sure it was quoted at 350. Q. Who bid it up ; was it not the parties that had sold short ? A. No, sir, I think it was bid up by the party who held the stock ; I think he gave the order to do that, but I am not positive. Q. Who was the person or firm that put up that stock ? A. That is a difiScult thing to answer. Q. Who was the person for whom your firm bought this stock ? A. John R. Duff of Boston, and E. D. Bangs of Boston, with whom Mr. Duff had an account ; they had an account of some five or six thousand shares with us. Q. Was Mr. Duff at that time an officer of the road ? A. Not at the time the stock was cornered. Q. Did he become such. A. Yes, sir ; at the election i'n December, I think, he was made vice-president and elected a director. Q. Is he still connected with the road ? A. No, sir. Q. How long did he remain ? A. I think he resigned as vice-president and director in the month of September when the stock was sold to Mr. Gould, the control of the road ; the last of September. 892 Q. Was the control of the road sold to Mr. Gould at that time ? A. Yrs, sir. Q. And Mr. Duff went out with the other officers ? A. No, sir, all the other officers did^ not go out; Mr. Duff and one or two of the directors. Q. Enough to change the control of the road? A. Yes, sir, and since then there has been an election by which it has been more radically changed. Q. How long after the corner was made did the stock remain at this high price ? A. The stock was in the market at 90 and was sold at 42 to Mr. Gould Q. It dropped back immediately to about 90 ? A. It gradually dropped from 150 to par and then was gradually manipulated down to 90. Q. Has that stock ever paid a dividend ? A. I think it paid a dividend; if you can tell me the time Mr. Tweed was in control of the city politics ; it was before that when the stock was held by Boston people, the preferred and the common stock were both dividend-paying stocks ; I cannot give you the dates. Q. How long have you been in Wall street? A. Since 1856. Q. Have you known of other corners being made there ? A. Yes, sir. Q. Well, instance some of them ? A. There was a stock called Paairie du Chein was cornered ; that was when I Avas quite young in Wall street, but lately there was the corner in North-Avest common stock. Q. Who was reputed to have conducted that corner ? A. I think Mr. Gould, and I don’t know whether I care about this name being taken in the notes, a genffeman who is dead. Q. How much was that stock put up by that corner ? A. I think it sold at $250. Q. And started from what ? A. Somewhere in the neighborhood of eighty or eighty-five. Q. Was there a large short interest in that at the time ? A. It was rumored that the short interest was very large. Q. And the shorts lost a very large amount of money ? A. Yes, sir, a very large amount ; it was so reported. Q. Do you know any thing about the process of what is publicly called locking up money in Wall street ? ’ . A. Yes, sir. (. 1 . What is the general purpose of it? A. 'To affect the stock market, to lower the price of stocks. (}. Describe to tin; (!ommitteo the process of doing that, commenc- 893 ing with lending the money in the Exchange, if that is the beginning of the process ? A. Well, there is one way it is done to aflfect the price of money and the price of stocks, say for a day, by parties going to the Stock Ex. change in the morning and borrowing, say anywhere from'five to ten millions of dollars, and at three o’clock not taking the money, simply paying the rate, so that the money cannot be reloaned. Then there is another way of locking up greenbacks ; parties draw their checks on a bank, demand greenbacks and take them out of the bank and lock them up. Q. Is it not sometimes done by parties who have control of a good deal of money, commencing by loaning money at low rates and putting out a large amount and making a very easy money market, and then afterward borrowing all the money they can, refusing to loan any more and suddenly calling in the outstanding loans ? A. Yes, sir, that is done at times. They usually get a good line of stocks out first, though. Q. Well, the effect of that is to make a tight money market and throw stocks on the market ? A. Yes, sir. Q. And to depreciate the price ? , A. Yes, sir, that is usually the object; shake out the weak holders. If money is worth one-eighth or one-quarter per cent a day, it is very unpleasant. ' Q. Are these various processes of making a close money market and locking up, money uncommon, or do they happen several times a year ? A. They happen several times a year ; depends upon the position of prominent operators in the stock market. Q. Is it, or not, practicable for half a dozen of the prominent opera- tors in Wall street, acting together, to virtually control the stock market for, say a week or ten days together, whenever they desire to do so ? A. Well, that depends upon circumstances; sometimes they do and sometimes they do |not ; it depends a good deal upon the vsituation of outside affairs. Q. Are there not times when that is practicable ? A. Yes, sir ; there are times when the strong men get together, and they can do a great deal toward controlling it. Q. What is a fair day’s transaction in stocks on the Exchange when business is what you term good ; how many shares are bought and sold ? A. Well, it varies; sometimes I should say running from 300,000 shares to 800,000 ; 800,000 when business is very active, but even then the whole amount of shares are not reported ; cannot possibly be. 894 Q. Of course there are no means of ascertaining the transactions; they arc not reported ? A. No, sir. Q, Are purchases for actual investment usually reported on the Exchange, or are they usually private ? A. There is no way to discriminate ; the only way to ascertain that is from the brokers themselves ; you cannot tell if a man buys 500 shares of stock whether it is speculative or for investment. Q. Well, you have been in Wall street a good while ? A. Yes, sir. Q. What percentage of the transactions, in your judgment, is for actual investment, and what percentage is speculative ? A. I think that is a question I cannot answer, because there are houses which do what is called an investment business, and other houses that do entirely a speculative business, and there is no means of forming any correct opinion. Q. A pretty large proportion of the transactions are speculative ? A. Yes, sir. Q. A good deal more than half ? A. More than seven-eighths, I should judge. Q. W*hat are the lowest commissions which brokers are allowed to charge outside parties who are not members ? A. One-eighth per cent on the par value. Q. Is there not a kind of business known as the twelve and a half business for a hundred shares ? A. That is it. Q. What is the business known in Wall street among brokers as the two dollar business ? A. That is where a member of the board receives an order to buy stocks for another member and at three o’clock gives up the name of a house for whom he bought the stock. Q. That is, he is permitted to make that transaction at the rate of two dollars a hundred shares ? A. Yes, sir ; provided he gives up the principal before, three o’clock. Q. When did you say you went into Wall street ? A. In 1856. Q. In 1856 what was a seat worth in the Stock Exchange ? A. I cannot tell you, sir: they were admitted at that time by paying a certain amount of money ; I think it was $5,000 to principals, and $5,000 for clerks ; the seats at that time were not saleable. Q. What are seats i!i the Stock Exchange worth now ? A. About $50,000. (2. Has there been, or not. a very lai-ge increase in the transactions it) the Stock Exchatige within the last fifteen years? A. Yes, sir ; :i vcnw large increase. 895 Elisha A. Packer^ being duly sworn, was then interrogated and tes- tified as follows: By Mr. Chittenden' : Q. Where do you reside ? A. New York. Q. What is your business ? A. I am in the coal business, buying and selling coal. Q. Are you engaged in it as an individual or a corporation ? A. As an individual firm. Q. The name of the firm ? A. Packer, Knowlton & Co. Q. How long have you been in and acquainted with the coal busi- ness ? A. Some thirty-five years. Q. You have been in it, practically, all your business life, I sup- pose ? A. Yes, sir. Q. And in your business have you been led to observe the produc- tion and consumption of coal, the prices of its transportation, and its market price from year to year ? A. I have ; yes, sir. Q. You are pretty familiar with the whole subject, I suppose ? A. I think I am ; yes, sir. Q. Do you know about what the actual sales of coal in New York city are, annually, at the present time ? A. No, I cannot tell, sir ; I have not seen a correct statement made of it, and I do not know that any attempts have ever been made to ascer- tain precisely what the amount is. Q. Could you give any idea of the number of tons ? A. If I were going to gfiess at it, I should say 2,000,000 of tons ; •2,500,000, perhaps. Q. What are the principal sources, or localities, from which that supply is derived ? A. From Schuylkill county, Pennsylvania; I refer to anthracite coal, I have no experience in bituminous ; the sources of supply are from the Schuylkill county. Carbon and Luzerne; those three coun- ties furnish, probably, nineteen-twentieths of all the anthracite coal ; and the new county of Lackawanna. Q. Are these counties adjoining, all in the same section of Pennsyl- vania ? A. Yes, sir. Q. Do you know a coal company called the Pennsylvania Coal Com- pany ? A. I do ; yes, sir. Q. Is that a large company ? A. Well, it is not one of the largest. Q. Does that company own coal mines ? A. It does. Q. Where are its coal fields situated ? A. In Luzerne and Lackawanna counties, Pennsylvania. Q. Is there a special name given to the coal which they mine ? A. Theirs is called the Pittston ; that is their trade-mark, I believe. Q. Do they mine all the Pittston coal, or are there others ? A. There are many others ; in fact, there are three or four large companies that mine in the vicinity of Pittston, but they have a dif- ferent name; for instance, the Delaware and Lackawanna is called Scranton. Q. What is called Pittston coal is the coal mined, transported ^nd sold by the Pennsylvania Company ? A. Yes, sir ; we consider that as a trade-mark, belonging to them. Q. Is there a kind of coal called the Scranton coal, in the same sense? A. Yes, sir. Q. And that is mined, transported and sold by the Delaware and Lackawanna Company ? A. Yes, sir. Q. What coals are mined and sold by the Delaware and Hudson Ca- nal Company ? A. They call theirs under the general name of the Lackawanna coal ; it is mined in the same region that the Pittston and Scranton coals are mined. Q. What is the coal called that is mined and sold by the Eeading Company ? • A. That comes under the general name of the Schuylkill coal. Q. State whether the coals mined and sold by these four companies constitute a large proportion of the coal brought to the New York market ? A. Yes, sir, they do. Q. What percentage of the whole amount of coal brought here should 3 'ou say that those four companies control ? A. 1 can give tlie names if necessary of all the corporate companies that send coal here ; tliere are only two others besides, the Lehigh Valley and the Wilkesbarre, both of which send their coal over the New Jersey Central ; the coal of the Lehigh Valley is owned more by individuals; j)robal)l_y thi'ee-fourths or seven-eighths of the coal that the New J<*rsey Central railroad transports is owned by individuals. Q. Do tliey transport the coal from the mines in the neighborhood (J Ilethlehem ? 897 A. It passes through Bethlehem, but Bethlehem is not in the coal region. Q. I refer to the mines of Governor Packer ? A. He was interested in the Lehigh and the Wilkesbarre both. Q. Do these six companies you have named substantially j:) reduce and bring to this market all the coal that is brought here ? A. They do ; yes, sir. Q. And except the individuals you have referred to connected with one company, do the other five companies own and control the au- ^ thracite coal fields so far as they are known ? A. They do, substantially. Q. Do you know what amount of money the Reading Company, for example, claim to have invested in their coal fields ? A. I think about $40,000,000 (forty millions of dollars). Q. And what amount has the Pennsylvania Coal Company ? A. I think about five millions ; that is my recollection, Q. And the Delaware and Hudson Canal Company ? A. It would be pretty difficult to say how much they had in coal because they are largely interested in railroads ; I can only judge by their capital, but they undoubtedly own considerably more of coal properties than the Pennsylvania Company. Q. Well, the Delaware and Lackawanna, how much do they own ? A. I think they own still more than the Delaware and Hudson. Q. So that these large companies, as you understand it, own sub- stantially the coal mines except in some few cases where they are owned by individuals ? A. Yes, sir. Q. Do these companies act together in arranging for the amount of coal that is to be mined and sent to the market ? A. Well, it is sometimes the case, sir. ^ Q. Do they not control the subject of the transportation of anthra- cite coal, practically ? » A. They do. Q. And it depends upon them to say how much coal shall be trans- ported at any given time ? A. It would with the consent of the individual miners who send coal over their roads; they would have no right to say to me that I should stop my mine and they would not furnish me facilities to transport my coal. Q. Do not these large companies shut down and only work their mines a certain number of days in the week? ^ A. That is sometimes the case. 113 898 Q. And very frequently? A. It has happened in the last year perhaps three, four or five times. Q. Do you know what the railroads usually pay the owners of mines per ton for anthracite coal? A. The old leases were about twenty-five cents per ton. Q. How long ago was that ? A. Say in the last twenty years. Q. Have you any knowledge now of railroads being paid more than twenty-five cents a ton ? A. Yes, sir; in the Lehigh region it is fifty cents and in the Wilkes- barre the leases made within the last five years would probably average thirty- five cents. Q. What is the average cost of mining coal per ton ? A. That varies of course ; some pay a higher rate than others. Q. Say take it during the last two years ? A. I should say about a dollar and a quarter. Q. For mining it ? A. Y^es, sir. Q. That is in addition to the transportation ? A. Y^es, sir; that is mined and put on the cars. Q. What is the distance from the coal fields to the points on the Hudson and New York bay where this coal is delivered by the cars ? A. I should think the average would be about one hundred and fifty miles. Q. A large proportion of the coal that supplies New England and the Champlain Valley is shipped by water directly from the points on the Hudson and New York bay where the railroads deliver it ? A. Yes, sir. Q. Now take the coal that is distributed in New York ; how is that brought here from these ports where it is delivered, in lighters? A. In what may be considered lighters, in barges. Q. Is there any regular tariff of freight on coals from the coal fields to tide-water ? A. It fluctuates; it is based upon the price of coal, as a general thing. Q. Price of coal where ? A. At tide-water. Q. Do you mean to say that where there is a large demand which raises the price of coal at tide-water, the prices of transportation are increased ? A. 1 do; yes, sir. (^. What reason is there for that ? 899 A. Well, it is thought to be a fair and equitable arrangement after an experience of a good many years ; it is what we individual miners have been striving for a great many years, and the last four or five years we induced the railroad companies to base it upon the price of coal as being more just and equitable. Q. ^^ow take coal at the lowest price ; what are the lowest rates you have known of transportation ? A. Per mile ? Q. Per ton ; you may give it either way ? A. The lowest I remember would be about half a cent a ton a mile* Q. How high have you known it ? A. During the war — Q. I mean the last three or four years ? A. I should think about one and a quarter cents a ton a mile would be about the maximum. ^ Q. Then the price of transportation varies according to the price of coal from seventy-five cents to two dollars a ton ? A. Yes, sir. Q. Now this freight is paid simply for hauling the coal in cars, is it not ? A. It is for the use of the cars in hauling. ■ Q. Do the railroad companies own the cars ? A. Yes, sir. Q. Who loads them ? A. They are loaded by the miner. Q. Who unloads them ? A. They are unloaded by the companies. This rate they charge, as a general thing, includes the shipping, putting the coal on board the vessel. If vessels are scarce it is put on the wharf and then they have to reship it. Q. In loading a vessel the coal is dumped right into the shute from the car ? A. Yes, sir ; the cost is not much, four or five cents a ton. Q. What is anthracite coal worth in New York at the present time at wholesale ? A. At the shipping port on the bay here? Q. Yes, sir. A. About four dollars and a quarter. Q. What has been the average price for the last two years ; name the sums, the fluctuations from the lowest to the highest ? A. My present recollection would hardly extend, I think, beyond 1881. Q,. Take it for 1881 ? 900 A. I should think the fluctuation would be about seventy-five cents in the course of tlie season, say from $3.75 to 14.50. Q. Those are the prices which the wholesale dealers have to pay for it at tide- water ? A. Yes, sir. Q. That is for twenty-two hundred and forty pounds ? A. Yes, sir. Q. Now what is the cost of lighterage, of bringing it from tide-water to the wholesale yards, per ton ? A. Probably about twenty cents a ton ; for delivering it along side the yard. Q. What I want to get at is the cost of getting a ton of coal where it is delivered by the railroads and put into an ordinary coal yard in the city ? A. They don’t do that. Their responsibility ceases when they get it along side the wharf. We don’t in any case deliver it to the yard ; we have nothing to do with carting it about the city ; we sell it to the retailer alongside his dock and then he discharges it himself, which costs him about fifteen cents a ton, and then he hauls it to his yard. There are very few yards on the water, they are mostly inland ; it costs from thirty-five to fifty cents a ton. 0. He hauls it to his yard, or delivers it to his customers, as he chooses ? A. Yes, sir ; generally to his yard, because it requires re-screening; it is not always in a condition, direct from the boat, to be delivered to customers. Q. What is the general price charged by the retailers to their cus- tomers for the same kind of coal of which you have been speaking ? A. I think they get a profit of about half a dollar. Q. But don’t you know the price ? A. The price fluctuates. There are some who have been long estab- lished in the business who get from twenty-five to fifty cents a ton more than others because they have got a set of customers. Q. What I want to get is the price that is ordinarily charged now by retailers of this kind of coal ? A. I should think the price would be now about five dollars and a half, but I don’t remember to have inquired the price for a month or two. Q. And that is for 2,000 pounds ? A. Yes, sir. Q. Is there at the present time any practical competition in the })usin(\ss f)f mining and transporting anthracite coal to this market ? 901 \ A. Well, only the competition that would naturally exist between these five large carrying companies. Q. Have they not, for the last five years, made uniform rates ? A. No, sir, 1 think not; tliere is no combination for fixing prices. Q. I want to know whether there is not an arrangement by which these several companies charge the same price per ton per mile for coal ? A. I am not aware of any. If it is based on the price of coal I don^t see how that is hardly possible. Some roads are longer than others. Q. Wliat road is your coal transported over ? A. I bring my coal over three roads — the Lehigh Valley, the New Jersey Central, and the Delaware and Lackawanna. Q. Do you not pay those roads the same price per mile for trans- porting ? A. No, I think not. Q. What do you pay each one of them ? A. I think my tolls for the present month on the Delaware, Lacka- wanna and Western railroad would be one hundred and ninety-five cents; on the Lehigh Valley they would amount to — they have a different way of getting at their tolls ; for instance, their starting point is from Mauch Chunk, and they charge a certain rate of tolls over the lateral roads to Mauch Chunk and then a stated rate from there down, which is to-day $1.40 on the average. Q. Do you know what it costs you per ton to get your coal trans- ported from the place where they take it ? A. I think, over the Lehigh Valley, from the different mines, $1.90. Q Now the other road ? A. Well, I think the rates of the Lehigh Valley to-day are lower than the other two roads. Q, What does it cost you over the New Jersey Central, at the pres- ent time ? A. I should think about 1.95. Q. Then it runs from $1.90 to $1.95 ? A. Yes, sir; on the Delaware, Lackawanna and Western road it don’t make any difference where the colliery is situated, they charge the same price from a colliery that is fifteen miles farther away than another ; but the Lehigh Valley manage a little different, they have a rate from each colliery. Q. Don’t it strike you that $1.95 is a pretty liberal price for freight on a ton of coal one hundred and fifty miles ? A. Well, yes, it is a liberal price I should say; but judging from the dividends the companies are declaring I should not say it was an excessive rate. 902 Q. What did you say was the estimated cost of mining coal ? A. I think about a dollar and a quarter, say for the last six months* Q. How much is paid to the miner a ton for mining? A. That varies according to the condition of the mine. Q. Well, about what would be the average? A. I should think they are getting what would pay them two dol- lars and a half a day. Q. Are not miners ordinarily paid by the ton for mining coal ? A. They are in some cases but in others not. Q. Are they not usually ? A. Perhaps in the majority of cases they are. Q. Now what is about the average payment per ton ? A. I really could not say, sir. Q. You spoke of yourself as a miner of coal in connection with con- tracts with railroads, do you actually own mines and mine your own coal ? A. Yes, sir. Q. Where are your mines situated? A. We have one in the Lehigh region. Q. Now take that mine ? A. If the committee will give me an opportunity I will ascertain precisely; I leave that to my superintendents at the mines. Q. So you do not know ? A. I really could not say. Q. Well, is it twenty-five cents a ton P A. I should say three times that, sir, Q. You can obtain that, what you have paid during 1881 and 1882, can you not ? A. Yes, sir ; do you want to know what we have paid in the difler- ent regions? Q. Yes, sir; what the committee want to get at is the average price paid to the miners themselves who mine the coal for their labor ? A. I will ascertain and see that you have it within three or four days. Q. It would be better if you can give them a general idea without confining it to your own mines. By Senator Boyd : Q. Please describe, if you know what the miner’s duties are, from the time he commences to mine the coal until his duties cease — in other words, does the miner not only mine the coal but is it his duty to carry it to the mouth of tlie pit and load it into the cars to be fihipped ? 903 A. The actual miner who cuts the coal does not put the coal in the cars at all, ho has his helpers to do that, who do not probably get more than one-half the price per day he gets. Q. Do the proprietors of the coal mines make contracts with cer- tain persons to mine their coal, which persons employ subordinates to do the work ? A‘. We really employ them ; that is we would not allow our miners to pay what we might consider an exorbitant rate for their men ; we keep it in our control and it is usually included in the same charge. Q. Do you fix the rate of wages that these miners and laborers re- ceive ? A. Yes, sir. Q. What are those wages on an average ? A. They are not paid ordinarily by the ton, sometimes by the cubic yard and in different ways ; there are hardly two mines but what have great difference in the management of the men in that respect ; they all pay about the same rate finally, otherwise some would be short of men and others would have a surplus. Q. You stated a few moments ago that the charge of mining a ton of coal was 81.75 ? A. About 81.25 for the last six months ; what the average was for a term of years I don’t remember. Q. State what the duties are of the person who receives that 81.25 ? A. One would be cutting the coal, another loading it into the car, and then we have our own mules to draw it to the foot of our slopes ; there is no one man that is paid for putting the coal on the car and drawing it to the foot of the slopes ; it goes through two gr three dif- ferent hands, some in our employ and some probably in the control of the miner. Q. What does it cost from the time the mining operation com- mences to place it in the car, per ton ? A. I think about 81.25. Q. There are two different kinds of anthracite coal in the market, red ash and white ash, what is the difference between those two differ- ent kinds of coal ? A. In respect to the cost of mining ? Q. Yes, sir? A. I should say no difference. Q. Any difference in the cost of transportation ? A. Yo, sir. Q. What is the difference in the price as sold by the retailer ? A. The red ash coal would probably bring about twenty-five cents more at wholesale than whit(5 ash, and I think it retails at about half a dollar more. Y. What is the cause of that difference in price ? A. Simply because for a great many purposes the red ash coal is preferred. For instance, the red ash is heavier than white ash on ac- count of the admixture of iron, and for an open grate is considered preferable; the red ash don’t tly about the room, and, for that reason, is considered pleasanter for an open grate ; and then there is less of it, the quantity is limited. Q. By whom is the difference in price fixed ? A. By the owners of the mine. Q. And what is the relative quantity of each produced ? A. The amount of red ash coal is very limited ; 1 don’t suppose that it would amount to five per cent of the total amount of the anthracite coal mined, possibly about that figure. Q. It has been stated that the proprietors of mines have been in the habit of limiting the amount of coal sent into the market for the pur- pose of controlling prices, what do you know about that ? A. That is sometimes done. When we have found that the coal was accumulating we would say work half the time for a week or a fort- night to reduce the stock. Indirectly, no doubt, it has its effect on the price, because if we continued to accumulate the stock the price would go down. Q. And this is done in the interest of the proprietors of the mines ? A. The proprietors of the mines and the transportation companies, undoubtedly. Q. And Uie interest of the public' is not taken into consideration at all? A. I am not aware that it is, but at the same time I don’t think the public suffer from that course. Q. It is done for the purpose of keeping up the price, you say ? A. It is done by the companies in the aggregate as it would be done by an individual; if he found that his stock was being filled to over- flowing, he would be apt to stop as a natural consequence, unless he forced it on the market, and that has not been considered good policy even by purchasers of coal ; what they prefer is a steady price. Q. Is there an agreement usually entered into by all the coal com- panies to restrain' the production of coal for that purpose ? A. Well, it is sometimes done. (2. They enter into a combination ? A. There is no meeting for that purpose. For instance, some indi- viduals may form the opinion that there is too much coal being mined, the stock 1,00 large, and he will go around to the olficers of the other 905 compiinies and convince them of the propriety of holding np for a day or two. Q. Then there is, to all intents and purposes, a combination en- tered into ? A. If you please to call it so. Q. For the purpose of keeping up the price and lessening the pro- duction ? A. I shall not object to your construction of it. New York, January 6, 1883, ) 111 Broadway, j To the Honorable Committee of the Senate on Corners and Futures : ” Gentlemen : — When I was before you on the 29th of December last, as there were some questions asked me which I was not able to answer on the moment, 1 was requested to reply in writing which I now proceed to do. I find by a pretty careful inquiry that my esti- mate of the expense of putting coal in cars was under the actual cost I learn by referring to the annual report of the Philadelphia & Bead" ing Coal and Iron Co., that their cost for putting coal in cars was $1.49 yfo- per ton. I also learn that individual operators (as we term the owners of the mines) make their cost from $1.50 to $1.75 per ton. Probably there are no two operators who make the expense exactly alike — the cost varying by the width of the vein, the depth of the mine, and its freedom from faults, etc., etc. I think it an under- estimate to put the cost of coal in cars at $1.50 per ton ready for market. The miners or cutters of the coal get about one-half of this sum. It is impossible to say how much a ton the laborers in the anthracite region receive, as it varies in and about every mine. While the amount paid is by the yard or wagon it finally resolves itself, into a charge per day, which is from $2.50 to $3.00 for eight hours work, while ordinary laborers, not considered skilled labor, receive about half the above wages for ten hours’ work. To the cost of putting coal in cars should be added, I think, fifteen cents per ton for taxes, insurance, wear and tear of plank and to a sinking fund to absorb the original cost of the same. This, I believe, answers all the interrogatories put to me. I desire to correct my testi- mony as to the cost of mining red ash coal ; coal known in market as a deep red ash coal costs some twenty-five cents a ton more to mine than white ash, on account of the vein being thinner and softer, and the coal being mined from a greater depth. Eespectfully submitted, E. J. PACKER. 906 George L. Pease, being duly sworn, was then interrogated and testi- fied as follows : By Mr. Oiiittenden’ * Q. Your residence ? A. 325 Clinton avenue, Brooklyn. Q. Your business ? ' A. Manufacturer and merchant. Q. Are you one of the trustees of the estate of Alonzo Follett? A. I am one of the assignees. Q. You knew Mr. Follett personally did you not? A. I did. Q. AYhen did he fail ? A. On the 23d of September he made an assignment. Q. How long previous to that had you known him 7 A. Several years ; I should say five or six years. Q. Wliat was his business ? A. Note broker. Q. Was his business large or small ? A. Very large. Q. Was it not the largest note brokerage business that you knew of , in the city ? A. I think it was with one exception. Q. Had he an extensive acquaintance with banks, trust companies and capitalists ? A. lie had. Q. Had he the reputation of skill and ability in forming these acquaintances and impressing such men favorably ? A. He had. Q. Were his customers among the largest and best mercantile firms in the city ? A. I think he had the best lot of customers of any broker in the city ; that is my private opinion. Q. His customers supposed him to be a person of large capital did they not ? A. I can answer for myself. He made a statement to me shortly before he failed. il. State whether that statement impressed you with the belief that ^ he liandled large capital and was in good easy circumstances? A. That was the impression I gained from his statement. Q. You have made considerable examination of his books since you Ix'carne an assignee, have you not ? \ 907 A. I have. Q. From those books and from other sources state whether it turned out that Mr, Follett had sold large amounts of the notes of his customers and received and used the money himself ? A. He did that, sir. /Q. When Mr. Follett failed did he also cause the, failure of other persons or firms, or did they fail in connection with him ? A. My present impression is that there has been but three failures of persons that were in any way connected with him, two of them certainly failed before he did and one about that he failed. I did not think of the endorsers ; there were two indorsers and one party who speculated with him and loaned him notes ; I don’t think you can call him an indorser. Q. And then there were two firms or one firm and a corporation ? A. The corporation went down with him, and the other two parties I think failed before he did. Q. Did they not claim to have failed in consequence of Follett not making returns to them of their money ? A. Yes, sir. Q. They were large manufacturing concerns, were they not ? A. The one that failed before he did was a large manufacturing concern, the other was a speculator, and the one that failed after him was a large manufacturing concern. Q. What amount in the aggregate of paper negotiated by Follett went to protest in consequence of his failure ; was it between two and three millions of dollars ? A. It was. Q. State whether or not that paper was held by a large number, some twenty or more, banks or trust companies, in Yew York and vi- cinity ? A. It was held by a large number of banks and trust companies ; the number I could not without computation give you. Q. You have never ascertained the number? A. No, sir ; it was a large number, however. Q. How long previous to his failure had Mr. Follett been in busi- ness as a note broker ? A. I think about eight years. Q. Where was his place of business ? A. 9 Wall street. Q. In the examination of his books and papers has it come to your knowledge that Mr. Follett previous to the 1st of October, 1881, was engaged in grain speculation in connection with the Produce Ex- change ? 908 A. He was engaged in grain speculation, I don’t know any thing farther than that, through certain Ijrokers ; whether tliey were mem- bers of the Produce Exchange or not I don’t know. Q. Ill the course of that he and his associates appeared to have pur- chased a very large quantity of corn, did they not ? A. Yes, sir. Q. Have you ever conversed with Mr. Follett about that specula- tion ? A. I think I did at one time. Q. Did he tell you whether or not they hoped to make a corner in corn, he and his associates ? A. Do you mean conversation prior to that or since then ? Q. At any time ? A. I think I have had conversation with him since that time ; I don’t know as the word “corner” was used, but in it the matter of buying on a margin or something of that nature was alluded to. Q. And buying for the purpose of putting up the price of corn ? A. He w'as very reticent , I was a customer of his and I accused him of speculation, and he mentioned that he once in a while did a little at it ; my object in having the conversation w'as to find out whether I was doing business with a man who worked on a sound basis, or a speculator. Q. Did he tell you why the price of corn went down, did he give you a history of the action of the Chicago Produce Exchange in that respect ? A. I could not say that he told me ; I was in Chicago at the time myself. Q. There was a fall in the price of corn about the first days of Oc- tober, 1881 , was there not, as yon understood ? A. Yes, sir ; I was in Chicago at that time. Q. Can you explain to the committee what the action was in the Produce Exchange that caused that, what they did ? A. I was told by a party in Chicago that was, I suppose, interested in the speculation, that the committee had met and established a set- tling price, an arbitrary price to settle. Q. For November corn ? A. I could not mention the months. Q. Did you learn that that price was sixty-three cents ? A. It was sixty odd cents. Q. And it was very much less than the then market price of corn? was it not ? A. My iin|)r(‘s.si()n is that it was about fourteen cents. 909 Q, In consequence of that, corn went down very rapidly, did it not ? A. Yes, sir. Q. Have you learned from an examination of Follett’s books whether he and his associates met with a^loss in that transaction ? A. I have. Q. That was the aggregate loss as appears from the books of Follett and his associates ? A. I don’t know that I have any right to tell that. Q. I think so; it is known to hundreds of people ; it has been stated to me ; I know it to have been over four hundred thousand dollars ? A. I could tell you exactly but as an assignee — you say a little four hundred thousand dollars, I shall say you are a good Yankee. Q. Have you ever ascertained how much corn Follett and his as- sociates bought and sold in that transaction ? A. I have not. Q. You have never learned that it was over twenty millions of bushels ? A. I have heard that fact, but whether officially from a knowing* source, I don’t know ; I have heard a great many stories. Q. This occurred in September, 1881 ? A. It did. Q. And he failed in September, 1882 ? ,A. Yes, sir. Q. State whether you have traced other large losses in Follett’s business by speculation ? A. I have. Q. State whether or not this loss in corn is the first flarge and sub- stantial loss, I mean the first in time that you have met with in your investigation ? A. It is not the first. Q. How large a loss in any one transaction have you found before this in point of time ? A. I have found losses I should judge of twenty-five or thirty thou- sand dollar's, and some of those are what you might call legitimate losses, although they were not legitimate ; it was lost in commercial paper that be had guaranteed. Q. I am asking as to his losses in speculation, whether this was not the first substantial loss in outside speculation ? A. Yes, sir ; this is the first of any moment. Q. Are you able to give any estimate as to the amount of debts due by Follett when he failed ^ A. Yes, sir. Q, About how much ? 910 A. His direct liability was about one million eight hundred thousand dollars, and his indirect or contingent liability was about nine million and a half. Q. That contingent liability is on paper that he has guaranteed or become liable for ? A. Yes, sir ; that is the case on the face of it; there will be much of that which was guaranteed that will be contested by the assignee. Q. From your present information is it your belief that Follett’s estate will pay a dividend exceeding ten per cent upon his liabilities? A. Ho, sir, I do not. Q. State whether you find that during the year previous to his fail- ure he met Avith losses in stock speculations ? A. He did frequently. Q. Were you as a merchant dealing with him in his business as a note broker during the two years previous to his failure r A. I was. Q. Did you know any thing about his being engaged in these out- side speculations down, say, to the month of September, 1883 ? I did not positively; I had my suspicions ; it Avas always denied Avhen I asked the question. Q. Denied by him ? A. Yes, sir, and those around him. Q. Had you known that he was speculating in grain and stocks, Avould you have given him commercial paper to sell for you ? A. Ho, sir, nor any other man I Avould not. Q. Don’t you think that Avould be the answer of most of the reput- able merchants that dealt with Mr. Follett ? A. It would be the unanimous verdict. By Senator Boyd : Q. Do you know hoAV much the market price of corn was increased during the pendency of the Follett speculation in Corn ? A. You mean a year ago last September ? Q. Yes, sir. Mr. Chittenden' I have that accurately from another source. The Witness — From memory I could say fifteen or twenty cents a bushel. Elmore If. Walker, being duly sAvorn, Avas then interrogated and testified as follows : By Mr. Chittenden : Q. Wle*?v* do you reside ? 911 A. Brooklyn. Q. Your business ? A. Statistician of the New York Produce Exchange. •Q. How long have you been statistician of the Exchange ? A. Since 18G9. Q. Do you make up the tables which are published in the annual reports of the Exchange ? A. They are made up under my supervision ; I make up a great many myself. Q. Do you have access to the reports of daily sales and transactions that are recorded in the Exchange ? A. It is part of my business to go on ’Change and get the sales, and they are reported in the daily market report. Q. You gather them up from day to day and finally tabulate them and they are published ? A. Yes, sir, they are published daily. Q. Is the book now before you the Report of the Exchange for the year 1881 ? A. It is. Q. Please turn to page 53. Can you state to the committee the number of bushels of wheat that appear to have been sold on the call for future delivery in the Exchange during the year 1881 ? ^ A. I cannot state, except as the cash sales are included in it ; there is a table in which it gives the total sales for the year, page 394 of that book. Q. I find it stated in the annual report, on page 52, that the sales of grain at the calls this year have exceeded one hundred millions of bushels or fully one-third more than last year ; while the margins de- posited against contracts for future delivery were upwards of ten mil- lions of dollars or two-thirds more than for the preceding year ; the course and growth of this business on our Exchange, which is appa- rently destined to assume immense proportion will be seen by the fol- lowing table.” Under it is given in the year 1881, 44,492,000 bushels of wheat ; I asked you whether that does or does not show that there were sold of wheat at the calls for future delivery that year 44,492,000 bushels ? A. I have not kept a separate record in my department; you will notice this is taken from the address of the president; the figures of receipts are taken from the statistical reports which I make up, but the account of the business at the calls I do not keep a record of ; that is kept in the superintendent’s department ex- cept I take the sales that are on the calls both cash and for forward delivery and the sales of the calls, both cash and for forward delivery, and keep them separate. Q. According to this statement on page 53, there was sold on the call 44,492,000 bushels of wheat and 41,912,000 bushels of corn, were there not ? A. Yes, sir. Q. Now can you give the number of bushels of wheat and corn sold on the calls during the year 1881 ? A, I cannot, not here ; I can give you the total amount of cash sales including sales, on and off calls, and that yo^ will find on page 394. Q. Well, what was the total amount of cash sales on the call and off the call. A. The cash sales are chiefly off calls, very little cash business on the calls, and then the business for forward delivery is quite as much or more off calls than on. Q. What was the amount of cash sales off the call and on the call so far as you are able to ascertain ? A. I should think about ten per cent ef the total saleSjbut I cannot give you the exact record here. Q. Can you give me the total amount of sales of wheat for all pur- poses in 1881, that are reported ? A. 488,366,200 bushels. Q. ^nd now the quantity of corn ? A. 233,839,000. Q. You say you cannot distinguish the cash sales from the future sales ? A. Not here ; they have to be taken off every day ; they are kept separate in the daily market reports. Q. In your judgment they would not exceed ten per cent ? A. Not more than that, I should think. Q. Now you do not mean to say that this includes all the sales made in New York by members of the Produce Exchange ? A. All the sales so far as reported. Q. It was stated by Mr. Hazeltine that but a small proportion of the sales were reported, what do you say about that ? A. I think they are very closely. Q. TIow are the sales not made on the call reported, how do you get them ? A. You get them by going to the different merchants, you have got to go over the whole floor to the different merchants and brokers. Q. Do you mean to say you apply to each one every day ? A. Yes, sir ; a half a dozen times. Q. State if you please the crop of wheat for the year 1881 ? A. About 381,000,000. (2- And of corn ? 913 A. 1,120,000,000. Q. Now that wheat crop, how many bushels came to New York in 1881 ; 1 want you to convert the flour into bushels? A. 70,084,000 bushels. Q. How much of that was exported ? A. Received as to wheat alone at New York, 44,297,000, without the flour; the flour they don’t sell on options at all, it is all cash busi- ness. Q. Well, then, this 5,730,000 barrels of flour that came to New York does not enter into speculative business on the Exchange one way or the other ? A. No, sir. Q. Then the wheat that came to New York and that is^dealt in upon the Exchange for cash and futures would be about 44,000,000 bushels ? A. 44,297,000 bushels. Q. Now how much was exported ? A. The wheat exported was 41,788,000 bushels. -Q. Then it results that there was about 3, OOO, 000 bushels of wheat sold for consumption in New York during the year 1881, does it not ? A. There was probably more than that difference, because there were stocks on hand at the commencement of the year, the milling trade of New York consumes usually from four ^to five million bushels ; you have to take the stocks at the commencement of the year and at the close. Q. Now, how much corn came to New York in 1881 ? A. 45,932,000 bushels. Q. What number of bushels of corn were exported ? A. 31,614,000 bushels. Q. It would result from that that there were some twelve to fifteen million bushels of corn sold for home consumption, would it not ? A. Approximating thet. Q. In the export’ trade are the sales usually for cash or for future delivery ? A. The sales are both for cash and future delivery. Q. Well, about what proportion should you judge are for cash ? A. I should judge that more than half are for cash. Q. That applies both to corn and wheat, does it not ? A. Yes, sir. _ Q. Well, for home consumption what paoportion is sold for cash and what for future delivery ? A. The actual amount consumed ? Q. Yes. A. I think that is mostly cash. 914 Q. Then speculative sales of wheat and corn would be confined Uy about half the amount of both annually exported, would they not ? A. I should think so, from one-third to one-half. For instance, parties buy, where they expect a steamer or vessel at a certain time they take an option of delivery at such a time, instead of waiting un- til the steamer gets in. Q. Now give me half the amount of wheat and corn exported in bushels ? A. Half the amount of wheat exported is about 20,800,000, and of corn half of the amount is about fifteen or sixteen millions of bushels. Q. Now those sums fairly represent the number of bushels as well as you can estimate that would ^form the basis of future or option sales ? A. I should think so, the actual receipts and the actual exports. Q. Can’t you give an approximate estimate as to the number of bushels of wheat and corn sold for future delivery! in 1881 ? A. I say probably of the total sales about iiineoy per cent were for forward delivery. • Q. And the total sales were how much ? A. The total sales of wheat in 1881 were 488,364,200 bushels. Q. Now ninety per cent of the whole would be what ? A. 375,000,000. Q. And that number of futures and options is sold on a basis of how many million bushels of wheat. A. 20,000,000 for export and 5,000,000 for home consumption, about 25,000,000 for export and home consumption. Q. Now in the same way what were the total sales of corn ? A, 233,839,000 bushels. Q. And do you think ninety per cent of that was for future deliv- ery ? A. I think it was. Q. Please compute ninety per cent and give me the number of bushels ? A. About 190,000,000 bushels. Q. And half the amount of exports in bushels is how much ? A. About sixteen millions. Q. 14,000,000 against 190,000,000? A. And there is the home consumption besides. The difference be- tween the receipts and the exports will not show the actual home con- sumption because the stocks at the commencement of the year may be (li lie rent. Q. The number of bushels of wheat reported as sold here largely exceed the whole ((uantity of wheat brought to this port do they not? A. Yes, sir, they exceed the whole crop of the country. Q. Now according to your estimate this wheat exported, every bushel of it, would be sold about twenty times over in this market. Do you think that that number of sales is at all necessary to legiti- mate trade ? A. I suppose legitimate trade could be accomplished without quite as much of it. Q. Is not that number of sales and selling the same thing over and over again the direct result of speculation ? A. I suppose most of it is speculation, a very large ’proportion of it at least. Q. Are these speculations in a general way carried on by members of the Exchange for themselves, or are they upon orders of outside parties ? A. I think generally on orders from outside parties. Q. Now suppose an outside party wants to buy or sell a thousand bushels of wheat for future delivery — A. They don’t sell any thing short of 8,000 bushels. Q. Well, take 8,000 bushels for future delivery; what amount of ■commission or brokerage on that transaction will he be required to pay, by the rules of the Exchange ? A. I don’t know what the regulations are in that respect. Q. Don’t you know what the commissions are ? A. I am not practically in the business. Q. By the rules of the Exchange, members are required to charge outsiders a certain commission, are they not ? A. They have no regular rules as to commission, I think, except they have what they observe as between themselves. I think the rate as usually charged by brokers now is, in some instances, two dollars a load or two dollars and a half a load. Q. I am not seeking for that at all ; what I want to ascertain is the commission which outside parties wishing to speculate have themselves to pay to their brokers ? A. I think the brokers charge about one-eighth of one per cent a bushel. Q. Then the commission on 8,000 bushels would amount to how much ? A. It would be ten dollars. Q. Is the rate the same on corn ? A. I believe it is. Q. The same on all grains ? A. I think so. 91G Q. Every time a load of grain is sold are not the commissions on each sale necessarily reckoned as a part of the cost of the load of grain ? A. It would cost so much more, I suppose, to the man who bought the grain and paid the commissions. Q. Then if a load of grain was sold twenty times over the commis- sions would amount to two and one-half cents a bushel ? A. My business is to report the actual sales. My impression is a good deal of this business is done at about two dollars or two dollars and a half a load. Q. For outside parties ? A. I don’t know whether they make that distinction as to outside parties or not. Q. What we want to ascertain is what it costs the public ? A. Some of the commission men can tell you all about that. Q. There are, I believe, about 3,000 members of the Exchange at the present time ? A. Nearly that ; I think not quite. Q. Those members, either as individuals or belonging to firms, are all engaged in handling the grain and other materials dealt in on the Produce Exchange, are’ they not ? A. A great many of them are members without being present ; not more than half of the members are present, I think usually; some of them are out of town millers, some out of the State. Q. A great many are engaged in this business ? A. They are. Q. Have they any other means, those who are engaged in this busi- ness and wlio confine themselves to it — have they any other way of making profits except by commissions in the rise of the grain of pro- duce in which they deal ? A. I don’t think they usually have, unless they are speculators; I don’t think tliey have any other source except commission. Q. Now the amount of commissions paid a year is very large, is it not ? • A. It must be pretty large on such a large amount of grain. Q. Now, I ask you whether the aggregate amount of those commis- sions is not necessarily charged upon the grain and produce and paid ultimately by the consumer? A. Not necessarily paid by the consumer; it may be paid partly out. of the pockets of the persons who are speculators. Q. It is either paid by the consumer or lost by the speculator? A. Jt must be one of tlie two. 917 Q. Is not the same true of the entire cost of supporting the Ex- •change, the entire annual cost? Must not that be added to the price which the consumer pays? ' A. No, you could not add more than what the commissions were; he could not add his other expenses to it. Q. Is the cost of running the Exchange, the annual expenses of the Exchange, paid out of the commissions in any way ? A. I suppose the man uses the commissions to help pay it. Q. This speculative business has increased very largely within the last few years, has it not? A. There has always been more or less of it, not on the basis of calls, not in this city ; it is about four years I think since it first com- menced. Q. In your judgment would not the report on page 53 fairly illus- trate the increase of this business ? A. No, I don’t think it fairly illustrates it, because I think it is larger for the past year than for last year. Q. By this table in 1877 the wheat sold was 15,061,000 bushels, and in 1881, it was 44,492,000 bushels; now my question is whether up to 1881 and from the year 1877, that table would not fairly illustrate the increase of the business ? A. For those years, yes, sir. Q. You say that this year, the increase is larger still in proportion? A. Yes, sir ; it is for eleven months of this year. Q. Can you state for the eleven months of this year the sales of wheat on the Exchange ? A. Total sales at the New York Exchange for forward deliveries for eleven months of this year are about 613,000,000 bushels. Q. And of corn? A. 391,000,000. Q. And that 613,000,000 is based upon the crops of how much ? A. The crop of the past year T suppose is about 510,000,000 but the sales include a part of the previous crop. This is for the calendar year and those for the crop year; they don’t match into each other exactly. Q. What quantity of wheat came to New York in the eleven months of 1882’? . A. Forty-two and one half millions. Q. And what was the amount of exports ? A. 35,600,000. Q. Then by the theory you have adopted, the sales of 613,000,000 would be based upon about 17,000,000 of wheat exported, would they not? A. 17,000,000 for the cash sales, yes, sir. 918 Q. Seventeen and one-half millions for cash, and seventeen and one- ' half millions for futures. Now what quantity of corn came here in 1882? A. In the eleven months of 1882, 14,100,000 bushels. Q. How much of that was exported ? A. 7,800,000 bushels. Q, In your opinion is not ninety per cent of the business done upon the Produce Exchange a speculative business ? A. I slufuld think it was so far as wheat, corn and oats are con- cerned ; in flour it is a cash trade, which might be extended to lard and pork as well. Q. Are you familiar with the warehouse system in connection with the Exchange ? A. I know they have warehouses here that they store grain in, that is about all that I know about it*. Q. The Exchange designates certain warehouse for the storage of grain, does it not ? A. I don’t know, I don’t have any thing to do with that department. Q. Don’t you know that warehouse receipts are only good for the delivery of the grain which is shipped to these few designated ware" houses ? A. I know they have a system by which they issue receipts and those represent the grain, but’ as to the details of it I am not ac- quainted with them ; my duties do not make it necessary for me to in- vestigate it. Q. Don’t you know whether those receipts are confined to the ware- houses designated by the Produce Exchange ? A. I have no recollection of what rule there is in regard to that. Q. Suppose a person not connected with the Exchange goes to a warehouse which is not connected with the Exchange and deposits a load of wheat, 8,000 bushels, and gets that warehouse’s receipt for the deposit, negotiable receipt, is that receipt a good delivery on the Pro- duce Exchange ? A. I really cannot tell you, sir. Any man in the trade will post you fully in regard to that. Q. I find on pages 202'and 203 of this report of 1881, a statement entitled the regular warehouses for the storage of graded grain ‘desig- nated by the board of managers , do you suppose that statement to show the warehouses so designated in 1881 ? A. I suppose that is published authoritatively. Q. Now do you know personally about the contracts existing be- tween the Produce Exchange and the railroad companies ? A. 1 do not. 919 Q. Connected with the storage and issue of receipts ? A. I don’t know any thing about this matter of storage. Q. Have you means of giving the prices of wheat and corn from day to day during the last two years ? A. They are given every day in this report. Q. I want to know the price of corn on the 1st day of July, 1881 ? A. On the 1st day of July the range for that day was from fifty-five and three-fourths to fifty-six and one-fourth. Q. Is there any difference between the price for immediate delivery and for shipment ? A. I cannot say. Q. Now give me the price on the 1st day of August ? A. The range was from fifty-seven and seven-eighths to fifty-eight and one-fourth. Q. Now the 1st day of September ? *A. Seventy-one and one-half to seventy-one and three-fourths. Q. On the 2d of September ? A. Seventy-one and one-half to seventy-one and three-eighths ; the 3d of September seventy and three-fourths. Q. Now the 1st of October? A. Seventy-four and one-fourth to seventy-six. Q. Was there not a considerable falling off in the price of corn in the first week of October, 1881 ? A. It went from seventy-four and one-fourth to seventy-six, the range on October 1st to seventy- two and seven-eighths, on the seventh and on the eighth it was from seventy and one-half to seventy-two ; on the tenth sixty-nine and three-fourths to seventy-one and one- fourth. These are the cash prices. We do not put in the book the option prices at all. Q. Where can the committee ascertain the option prices for corn be- tween June and November, 1881, and between .lugust and December, 1882 ? A. I can furnish them to you; I can draw off what the range of prices is every day right through for each month. Q. I wish you would do that. I want July, August, September and October, 1881. Q. Do you know of a transaction in wheat that has been called the Keene corner ? A. Only from rumor. Q. When did that occur ? A. I think two years ago. Q. There were large fluctuations in the price of wheat in that con- nection, were there not r 920 A. I don’t remember now. Q. Does it ever liappen here that corn for immediate delivery and ‘use costs more to purchase at the Exchange than corn for export oji the same day ? A. I suppose the seller sometimes makes a distinction l)ei,ween that ; it is not a usual course of trade. Q. That occurs when people are trying to raise the price of corn ? A. I suppose the object is to sustain the price of whatever they are dealing in. Q. How great differences of that sort in corn per bushel have you known ? A. I cannot call to mind now any particular instance only I know that such concessions have been made to sell the lowest for export. I think during the fore part of this present year wheat quite frequently sold for export at a less price than they would sell it to dealers at home. Q. How much per bushel ? A. I think usually the differences is quite small. Q. How much was it in that case ? A. I think from one to two cents. Q. Now was there not such an occasion that happened in corn within the last month ? A. I think there was so reported. Q. And what was the difference then ? A. It was said to be from 12 to 14 cents a bushel. Q. That is, corn would be sold to be shipped out of the country, ex- ported, for from 12 to 14 cents a bushel less than it could be bought for immediate delivery here ? A. That was so reported. I have no personal knowledge of it ex- cept from hearsay ? Q. Now what was the price of corn for delivery here at that time was it at or about the time that corn reached 11.10 a bushel ? A. It was about $1.10, yes, sir ; it was $1.10 for two or three days. 'Q. And then it fell back to what ? A. It has fallen to sixty-eight or sixty-nine cents. Q. It was $1.10 the first days of the month ? A. Yes, sir. Q. Now take the last four years and su])pose there had been no speculation in corn but its market had been governed by the ordinary rules of supply and demand, from your knowledge on the subject, do you Ixdieve there has been any period when the juice would have been highei’ than seventy-five cents a bushel ? A. I hardly think within the last fifteen or twenty years there has 921 been any time when there was not any sjoeciilation, even before the system of calls was adopted. Q. I want to find out if I can what would be a fair average price of corn in the market governed by the ordinary rules of supply and de- mand without any speculation in it at all ? A. Take the average for four years ? Q. Yes. A. I don’t think it w’ould average seventy-five cents. Q. Do you know what the western farmers in the corn-producing regions consider a fair price for corn ? A. I believe they get from twenty-five to thirty cents a bushel usually ; sometimes in places distant from the railroad they do not get as much. . Q. Now wheat in the same regions about what do they get for that? A. It depends upon what the character of the wheat is, the kind of wheat ; No. 2 red, which is most largely dealt in, about ninety cents to one dollar. Q. Now do these speculations and the rise in price of wheat and corn make any difference in price which the farmer ordinarily receives? A. I think the farmer sometimes shares the benefits resulting from the advance in consequence of speculation. Q. Take such a case as this that has occurred within the last month where corn went up to $1.10, and then within three weeks w^ent back to sixty-eight ? A. It has been out of the farmer’s hands too long to have him share in the benefit. Q. The farmer did not share in that, did he ? A. No, sir ; I think not. Q. An arbitration has recently taken place between Husted & Hazel- tine and Lane & Son ; were you present at that arbitration ? A. I was not. \ Q. Do you know any thing about the facts ? A. I know nothing about the facts or circumstances connected with it. Q. Please state the average cash prices of corn in New York from and including 1877 to the present time ? A. 1877, the average range was 59 1-3 to 60 1-3 cents ; 1878, 49 1-6 to 49 7-10 cents ; 1879, 49 3-10 to 50 3-8 cents ; 1880, 48 9-16 to 61 1-8 ; 1881, 62 1-2 to 63 5-8 ; that is the yearly average. Q. Now, if you can find No. 2 red wheat, I would like the same as to that? N A. The average range of price of No. 2 red winter, for the year 1881, was from one hundred and thirty-one and one-fourth to one hundred 922 and thirty-two and five-sixteenths, and for tlie year 1880, the average range was from one hundred and twenty six and one-fourth to one hundred and twenty-seven and three-fourths ; these are all cash. Q. Can you give me the price of corn for export on the 29th of No- vember last ? A. I don’t think I can here, sir. Q. It has been stated by one or two witnesses that the price for ex- port on that day was from eighty-two to eighty-three cents ; does that agree with your recollection ? A. I can’t remember now ; it is somewhere in that neighborhood, but I cannot remember exactly the figures. Q. It is also stated that the price for delivery was $1.10 ? A. There were some days during about that time that the delivery here, what was delivered, was $1.10. Q. That would make a difference of twenty-eight cents a bushel — that is, that corn cost more to be delivered for consumption here than it did for export and shipment to the extent of twenty-eight cents a bushel ; do you think that is possible ? A. It is barely possible ; I don’t remember now. I know the trade in cash corn during these high prices was scarcely any thing at all. John D. Rockafeller, being duly sworn, was then interrogated and testified as follows : By Mr. Chitte^tden' : Q. Where do you reside ? A. Cleveland, Ohio. Q. How long have you resided there ? A. x\bout twenty-eight years. Q. Have you ever resided in New York within that time ? A. I have often been in New York ; I am here winters a portion of the time. Q. Do you keep house here ? A. No, sir. Q. You have no household here then ? A. No, sir. Q. And have not had at any time ? A. No, sir. Q. Have you any official connection with the Standard Oil Com- pany ? A. Yes, sir. (2. What is it? A. Pj-osident. (,). How long have you been president? 923 A. Since its organization. Q. Are you also one of its directors or trustees ? A. Yes, sir. Q. How many trustees or directors has it ? The Witness — (To Senator Boyd.) Is this a necessary question,, senator ? Senator Boyd — I think so; simply stating the condition and status of the company. The Witness — I am ready and willing to answer all necessary questions in reference to the case. Q. Will you please answer the question ? A. I decline to answer it. Q. Why? A. Because I think it is impertinent. Q. What are the names of your associate trustees or directors of the Standard Oil Company ? Mr. S. 0. Dodd states that he is counsel for the witness. Mr. Chittenden — What is your official connection with the Standard Oil Company, Mr. Dodd ? Mr. Dodd — Solicitor. Mr. Chittenden — Where is your office ? Mr. Dodd — 44 Broadway. Mr. Chittenden — At the office of the Standard Oil Company ? Mr. Dodd — T he same building, yes, sir. Mr. Chittenden — Are you employed by the company at a salary ? Mr. Dodd — By the Standard and other companies, yes, sir. Mr. Chittenden — And you are in their permanent employ, are you ? Mr. Dodd — Yes, sir. Mr. Chittenden — You do no other professional business ? Mr. Dodd — No, sir. Mr. Chittenden — How long have you been their counsel ? Mr. Dodd — I believe I am not a witness; if the chairman will per- mit me, as counsel, I think these questions in relation to the Standard Oil Company, its organization, its, offices, etc., while they are matters of record and easily obtainable, are not pertinent to the subject of in- vestigation here, and, as the witness has been instructed not to answer such questions, it may as well appear on the record now that he will decline to answer questions, unless in his best judgment they may relate to the questions concerning corners and futures. Senator Boyd — The object of the committee in making this inves- tigation is to ascertain, if possible, as the resolution reads, the effect of making corners and dealing in futures upon the public welfare and 924 upon our commerce, and it might be well when witnesses come before the committee to know their exact status in the community, whether they appear as private individuals or as members of corporations, and, if they appear as members of corporations, it is our duty to as- certain the standing of the corporations. Now we take it as a com- mittee, and I believe it individually, that the Standard Oil Company is a highly influential, important and respectable company, and I do not see that there should be any objection to giving the names of the gentlemen who are engaged in the carrying on of that business so that we may avail ourselves of their extended information in instructing the public, so far as we can, as to the evil effects of dealing in futures and making corners. Therefore, I think the question is a proper one, Mr. Dodd — So far as the object of the* committee is con- cerned I have no doubt that you state it correctly, but a statement was made by counsel representing the committee that he had an entirely different object in this investigation, and therefore we avail ourselves of what we deem our privilege more strictly than we otherwise would. Mr. Chittenden — I desire to say that the counsel for the committee has made no such statement ; I stated exactly the bearings which in my judgment these questions had upon the question of the control by this company of the oil trade, and I shall go into no discussion any farther than to set myself right when such statements are made. We are here to get testimony and if the witnesses do not wish to an- swer they can decline. Senator Boyd — I desire to state to the witness that this investiga- tion is in the interest of the people of the State and is being con- ducted by their authority, and I hope that witnesses will respect the people of this State to such an extent as to answer as promptly as pos- sible all questions which tend to effect the purposes which the people have in this investigation. The Witness — In answer to these remarks I want to repeat again that it is my desire to answer all questions in all fairness and with promptness that are pertinent to the inquiry before us. Of course, I could desire that such questions would be put. I am a man of busi- ness, with a great deal to attend to, and I, of course, would much pre- fer not to have time unduly wasted with questions that do not neces- sarily belong in this class. Senator Boyd — The very fact that you are a man engaged in so much business renders your testimony to the people so much the more valuable and the i)eople expect you, both through their committee and through the Press, to aid them in this investigation as much as possi- ble. 925 Mr. Chittenden’ — Now, if the committee please, I think the rela- tive positions of these gentlemen are pretty well understood, and I hope we shall not incumber the record by any further discussion. Senator Boyd — The further examination of the witness will be by direct questions and categorical answers. Q. What are the names of your associates, trustees or directors of the Standard Oil Company ? A. 1 decline to answer. Q. Where do such trustees or directors respectively reside ? A. I decline to apswer. Q. Have you any connection with the company spoken of by Mr. Brewster in his testimony as the National Transit Company, or a sim- ilar name ? A. I have not. Q. What is the corporate name of that company of which Mr. Brewster is vice-president ? A. National Transit Company. Q. Where is that company organized? A. It is a Pennsylvania company. Q. Who is the president of that company ? A. Mr. Clement A. Griscpm. Q. Where does he live ? A. Philadelphia. Q. How many directors are there of that company ? A. I don’t know. Q. Do you know their names ? A. I do not. Q. Give the names of any of the directors Known to you ? A. I decline to answer that ? Q. Are any of those directors connected officially or pecuniarily with the Standard Oil Company ? A. I decline to answer. Q. Do you know a concern called the Standard Trust ? A. I do. Q. Is that a corporation ? A. It is a trusteeship, I suppose it would be called. Q. Is it or not a corporation ? A. I should say not. Q. Who are the trustees? A. I decline to answer. Q. Are you one of them ? A. I decline to answer. Q. Is Mr. Bostwick one of them ? A. I decline to answer. Q. Is Mr. FJagler one of them ? A. I decline to answer. Q. By what official or corporate name is that trust known among those interested ? A. I decline to answer. Q. Has thta trust, by whatever name it is known, issued certificates of stock, shares or interests ? A. I decline to answer. Q. Has it issued such certificates representing a capital amounting to seventy millions of dollars ? A. I decline to answer. Q. Has it paid dividends upon a capital of about seventy millions of dollars ? A. I decline to answer. Q. Has it not paid dividends at the rate of six per cent per annum upon about seventy millions of dollars since its organization ? A. I decline to answer. Q. Do you hold stock in that trust ? A. I decline to answer. Q. Do you hold stock in that trust to amount exceeding two and one-half millions of dollars? A. I decline to answer. Q. What is the present market value of stock in that trust ? A. I decline to answer, Q. What is the business of that trust ? A. I decline to answer. Q. Has not substantially the property of the Standard Oil Company of Ohio, including shares of stock owned by it in other companies^ been conveyed to, and is not such property now held by that trust ? A. I decline to answer, Q. Was not the property so conveyed to that trust inventoried at about the sam of seventy millions of dollars. A. I decline to answer. Q. Where is that trust located ? A. Its office is 44 Broadway, New York city. Q. Is that its principal place of business ? A. Yes, sir. Q. Does not that trust hold stock in the National Transit Company? A. 1 decline to answer. Q. lias tliat trust ever made, to your knowledge, any returns to the Comptroller of this State? A. 1 decline to answer. Q. lias tliat trust to your knowledge paid any taxes in this State? A. 1 decline to answer. 927 Q. Did not that trust in the year 1881 divide about ten millions of dollars among its owners ? A. 1 decline to answer. Q. Does, or does not that trust substantially control the property of the Standard Oil Company ? A. I decline to answer. Q. Does that trust own many oil wells or interests in such wells ? A. I decline to answer. Q. Does that trust deal in crude oil, buy and sell it ? A. I decline to answer. Q. What was the original capital of the Standard Oil Company of Ohio ? A. I decline to answer. Q. Was not the stock of that- company or its proceeds substantially issued and paid for property in which you were interested ? A. I decline to answer. Q. What is the capital of the Standard Oil Company of Ohio now ? A. I decline to answer. Q. Except the property that was purchased about the time of its organization do you know that any money or other property has been contributed by its stockholders in payment or exchange for its stock ? A. I decline to answer. Q. Do you know what dividends that company has actually made to its shareholders ? A. 1 decline to answer. Q. Has not that company made annually, in each year, about the 1st of January, an inventory of its property, showing its value ? A. I decline to answer. ' Q. Are you not able to show to the committee the property owned and held by that company on or about the 1st day of January since its organization ? A. I decline to answer. Q. Is it true that there are now existing corporations by the name of the Standard Oil Company in Ohio, New York, New Jersey, and Pennsylvania ? A. I decline to answer. Q. Is not the principal place of business of all these corporations at No. 44 Broadway, New York city ? A. I decline to answer. Q. Was not the purpose of organizing these four companies under the same name to avoid taxation ? A. I decline to answer. 928 Q. Has the Standard Oil Company to your knowledge ever paid any taxes in the State of New York ? A. I decline to answer. Q. Does the Standard Oil Company or the Standard Trust Company pay taxes anywhere except in the State of Pennsylvania ? A. I decline to answer. Q, At the time the Standard. Oil Company of Ohio was organized were you engaged in the business of refining petroleum oil ? A. I decline to answer. Q. Were you not at that time, and are you not now, familiar with the business of refining petroleum, the number of refineries in exist- ence and their respective products ? A. Generally speaking, yes, sir. Q. How many of such refineries were there at that time in the State of Ohio ? A. I decline to answer. Q. How many such refineries in the State of Ohio have since come under the control of the Standard Oil Company ? A. I decline to answer. Q. How many such refineries were in existence at the organization of the Standard Oil Company in New York, Pennsylvania, and New Jersey ? A. I am unable to answer the number. Q. How many refineries at the organization of this company were you interested in ? A. I decline to answer. Q. Were not yourself and your associates, Mr. Flagler and Mr. Bost- wick, at the organization of the Standard Oil Company, carrying on two refineries in or near the city of Cleveland ? A. I decline to answer. Q. What was the capacity, the annual product, of those two refineries in refined oil at that time ? A. I decline to answer ; I do not know. Q. At that time, did you and your associates collectively refine one- eighth of the annual product of petroleum in this country ? A. I decline to answer. Q. How many refineries of petroleum have been absorbed by, and brought under the control of the Standard Oil Company since its organization ? A. I decline to answer. Q. How many refineries do you know of in this country, running at tlie present time, that are not owned or substantially controlled by the Standard Oil Com[)any or the Standard Trust? A. 1 could not state exactly the number. Q. you know of any ? 929 * A. I do. Q. Name them ? A. It would be quite impossible for me to give the names of them all ; I know that there are thirty or forty of such refineries. Q. Give the names of such as you remember? A. I decline to. Q. Do you remember of one ? A. 1 decline to answer. Q. Is there one such refinery in the State of New York ? A. Yes, sir. Q. Where is it located ? A. I decline to answer. Q. What is its name ? A. I decline to answer. Q. What is its capacity for refining oil annually ? A. I decline to answer. Q. Is it not true, in your judgment, that the Standard Oil Company, the Standard Trust and the persons connected with those two institu- tions, purchase, refine a'nd sell ninety per cent of the petroleum pro- duced in this country at the present time ? A. I decline to answer. Q. Is the Standard Oil Company of Ohio engaged in refining at the present time ? A. Yes, sir. Q. AVhere are those refineries situated ? A. At Cleveland, Ohio. Q. Anywhere else? A. No, sir; I think not. Q. Are there refineries at Hunter’s Point. A. Yes, sir. Q. Who owns them? A. I decline to answer. Mr. Dodd — I would say that the refusal of the witness to answer is under the advice of counsel. Q. Are they owned by the Standard Oil Company of Ohio ? ■ A. No, sir ; they are not owned by the Standard Oil Company of Ohio. Q. Are they owned by the Standard Trust? A. I decline to answer. ^ Q. Where is the principal part of the oil purchased by the concern with which you are connected, and which is shipped to the eastward, refined ? A. In the neighborhood of New York and Philadelphia, I should say in and about those places. 930 Q. Is much the largest part of it refined in the neighborhood of New York ? A. Yes, sir. Q, Is that oil which is so refined in the neighborhood of New York purchased in the oil fields or is it the product of wells owned by con- cerns with which you are connected ? A. Purchased in the oil fields. Q. Who is the purchaser of that oil ? A. I decline to answer. Q. Who makes the contracts for its shipments ? A. I decline to answer. Q. How is it shipped to New York, by pipe lines or by rail ? A. By pipe lines and by railroads. Q. Both ? A. Yes, sir. Q. From what point to what point by pipe lines ? A. I am unable to give the names of the stations. lam not so familiar with the pipe line business. Q. Well, is it shipped by the pipe lines from the oil fields to some place in Eastern Pennsylvania ? A. Yes, sir. Q. And is it shipped from to New York by rail ? A. By rail in part, sir. Q. Are there any pipe lines that extend from the oil fields to New York ? A. Yes, sir. Q. Are those pipe lines substantially owned and Icontrolled by the National Transit Company ? A, Yes, sir. Q. About what proportion of the oil is shipped by railway coming East ? A. I am unable to state. Q. Who makes the contracts with the railroads for the freight upon that oil ? . • A. I decline to answer. Q. Do you not know personally the terms of those contracts ? A. I decline to answer. Q. Have you not access to those contracts so that you could if you chose give the committee copies of them ? A. 1 decline to answer. Q. Will you give the committee copies of those contracts ? A. J decline to answer. ’ Q. Have you not had for the last eight years contracts with the principal railroad com])anies, special contracts for the transportation of the oil owned by the concerns with which you are connected ? 931 A. I decline to answer. Q. Under those contracts have not such concerns annually received payments by way of rebate ? A. I decline to answer. Q. Have not those payments amounted in some years to ao large a sum as one hundred thousand dollars annually ? A. I decline to answer. Q. Have they not amounted to as much as two hundred and fifty thousand dollars annually ? A. I decline to answer. Q. Have they not amounted to half a million dollars annually ? A. I decline to answer, Q. What sum of money net per barrel do the concern with which you are associated now pay for the transportation of crude oil from che oil fields to New York ? A. I decline to answer. Q. Is not that sum less by twenty-five per cent than shippers not connected with your concern can obtain ? A. I decline to answer. Q. Have you peersonally received dividends on the stock of the Standard Trust? A. I decline to answer. Q. Have you not personally received dividends equivalent to six per centum upon a capital of seventy millions of dollars in the Standard Trust ever since its organization ? A. I decline to answer. Q. When was the last dividend declared by the Standard Oil Com- pany, of Ohio ? A. I decline to answer. Q. Has that company declared any dividends since the organization of the Standard Trust ? A. I decline to answer. Q. Have any of the corporations, the stock of which is held by the Standard Trust, paid dividends to you since the organization of the Standard Trust i A. I decline to answer. Q. Do you know what quantity of oil was exported by tj|e different concerns with which you were connected from the port of New York, in the year 1881 ? A. I do not. Q. How many millions of barrels of oil were refined by such con- cerns in the vicinity of New York in the year 1881 ? 932 A. I don’t know how much was refined. Q. Did not the concern with which you were so connected in the year 1881 purchase over eiglit million barrels of crude petroleum ? A. I am unable to state. Q. Do not the purchases of the concerns with which you are so connected exceed one-half the annual product of petroleum ? A. I think they do, sir. Q. Has the Standard Oil Company recently had a litigation in Pennsylvjinia concerning its taxes ? A. Yes, sir. Q. Have you in your possession a printed copy of the casein which such litigation was involved ? A. I have not. Q. Are you interested in the Equitable Gas Company just organized in this city ? A. I decline to answer. Q. Do not you and your immediate associates in the Standard Oil Company substantially control the Equitable Gas Company ? A. 1 decline to answer. Q. Do not you and your immediate associates in the Standard Oil Company own three-quarters of the stock of the Equitable Gas Com- pany ? A. I decline to answer. Q. What is the capital of the company ? A. I do not know. Q. Do you not know that it is about twenty millions of dollars ? A. I do not. Q. How much of its stock have you got ? A. I decline to answer. Q. Have you paid any thing for the stock which you own of that company ? A. I decline to answer. Q. That company is organized for the purpose of manufacturing and furnishing gas, is it not ? A. I decline to answer. Q. It has recently obtained a contract with the city to furnish gas due the cii^^ for $1.50 a thousand feet, has it not ? A. I don’t know. Q. Is it not so reported to you ? A. It has not been reported to me. Q. Have you not so heard ? A. I have beard nothing about it, except what I may have read in the newspapers; I read in the newspapers that somegas company had a contract of late ; I am unable to say what company it was. 933 Q. You do not know whether it was the Equitable or not ? A. I do not. Q. Do you think it was the Equitable ? A. I decline to answer. 0. Have you investigated the cost of making that gas ? A. I have not. Q. Has not its cost been represented to you ? A. It has not. Q. Has it not been made the subject of discussion in your presence? A. No, sir. Q. Don’t you know any thing about it ? A. I do not. Q Do you know Mr. Stern, the president of that company ? A. I do not. Q Never saw him ? A. I never did. Q. Do you not know that that contract has been entered into with knowledge on the part of yourself and your associates that the gas they propose to furnish can be manufactured for thirty cents a thousand feet? A. I do not. Q. Do you mean to have the committee understand that you do not know any thing about the Equitably G-as Company ? A. I decline to answer. Q. Did you not know that that company has been organized by your associates in the Standard Oil Company ? A. I decline to answer. Q. Do you know the cost of making the kind of 'gas they propose to furnish ? A. I do not. Q. Did you sign the articles of incorporation of 'that company ? A. I decline to answer. Q. Will you say that you did not sign such articles? A, I decline to answer. Q. Do you not know that these articles represent a capital of twenty millions of dollars to be issued for certain gas patents ? A. I do not. Q. Has the Standard Oil Company recently gone into the business of raising cattle ? A. I decline to answer. Q. Has it not entered into leases for a large tract of grazing land in the Indian Territory ? A, I decline to answer. 934 Q. Do you know whether it has or not ? A. I decline to answer. Q. Do you not know that the Secretary of the Interior has recently refused to approve those leases ? Mr. Dodd — I desire to have it appear that only one member of the committee is present. Mr. Chittendejs' — If you raise that objection I will have Senator Browning sent for and have the questions repeated to the witness. Mr. Dodd — I will waive any objection to this examination having been taken during the temporary absence of Senator Browning, a member of this committee. f STATE OF NEW YORK. No. 46. IN SENATE. Apkil 25^ 1883. THIKTY-EIGHTH ANNUAL REPORT OF THE PRISON ASSOCIATION OF NEW YORK, FOR THE YEAR 1882. Prison Association of New York, No. 65 Bible House. To the Lieutenant-Governor and President of the Senate : Sir — In accordance with chapter 163 of the Laws of 1864, we have the honor to present herewith the Thirty-eighth Annual Report of the Prison Association of New York, and respectfully to request that you will lay the same before the Legislature. Respectfully Yours, THEO. W, DWIGHT, I^resident, CHARLTON T. LEWIS, Chairman^ Executive Committee, Ohas. H. Kitchel, Chairman of Committee on Annual Revort. New York, Aprils 1883. [Sen. Doc. No. 46.] 1 OFFICERS FOR 1883. President. Theodore W. Dwight, LL.D. Yice-Presiden ts. Grover Cleveland. Abraham Lansing. Rt. Rev. F. D. Huntington. Sinclair Tousey. Edwin Hutchinson. Andrew D. White, LL.D. Corresponding Secretary. W. M. F. Round, 65 Bible House. Recording Secretary. Eugene Smith. Treastirer, Cornelius B. Gold, 10 Pine St., N. Y. Executive Committee. Charlton T. Lewis, Chairman, Thomas C. Acton, Levi M. Bates, Noah Brooks, Stephen Cutter, John D. Crimmins, Henry W. DeForest, Richard L. Dugdale, Z. Styles Ely, George S. Fraser, Elisha Harris, M.D., Charles H. Kitchel, William Woodbury G. Langdon, AFilliarn P. Letch worth, Henry K. McHarg, Thomas M. Peters, D.D., Henry C. Potter, D.D., William P. Prentice, Wendell Prime, D.D., J. Bishop Putnam, Stephen Smith, M.D., James R. Steers, Lispenard Stewart, Charles B. Waite, Whitlock. General Agent. Stephen Cutter, 65 Bible House. LOCAL COMMITTEES FOR CO-OPERATION AND CORRESPONDEiN CE. Albany County : Residence, Albany — Manrice E. Yiele, William Law Learned, Rev. Refns W. Clark, Edward Savage, Rev. Charles Reynolds, Secretary. Allegany County : Residence, Friendship — Hon. Abijah J. Well- man. Broome County : Residence, Binghamton — Marcus W. Scott, Di-. John G. Orton, Sabin McKinney, B. N. Loomis, E. M. Koyes, Rev. Robert NT. Parke, E. K. Clark, Susan J. Taber. Cattaraugus County : Residence, Little Yalley — Arthur H. Howe, Dr. L. Twombly. Cayuga County : Residence, Auburn — Miss, Perry, Dr. S. Willard, Byron C. Smith, D. M. Osborne, Dennis R. Alward, Mrs. Miles Perry, Mrs. D. R. Alward, Rev. Willis J. Beecher, D.L)., William G. Wise ; residence. Fair Haven — Hon. George I. Post. Chautauqua County: Residence, Mayville — Rev. J. H. Miller, William Chase ; residence, PTedonia — M. S. Moore; residence, Westlield — Alfred Patterson ; residence, Jamestown — flon. Jerome C. Preston. Chemung County; Residence, Elmira — Dr. W. C. Wey, Z. R. Brockway, J. D. F. Slee, Rev. Dr. Knox, Rev, G. H. McKnight, Dr. T. H. Squire, Dr. Ira T. Hart, D. Atwater, Frederick Hall, Rev. F. C. tioskins, S. Convei’se. Chenango County : Residence, Norwich — Dr. H. H. Beecher, B. Gage Berry, Daniel M. Holmes, Cyrus B. Martin. Clinton County: Residence, Plattsburgh — Hon. William P. Mooers, Henry Orvis, Rev. F. B. Hail ; residence, Keeseville — Hon. Henry Kingsland, 2d. Columbia County : Residence, Hudson — A. S. Peet, A. B. Scott, C. W. Gebhard. Cortland County : Residence, Cortlandville — Lewis Bouton, Frank Place, Dr. Frederick Hyde ; residence, Homer — Dr. Caleb Green, Thomas S. Ranney. Delaware County : Residence, Delhi — Dr. Ferris Jacobs, T. W. Brown, Gen. Ferris Jacobs, Jr., O. S. Penfield, Mrs. W. H. Griswold, Mrs. F. Jacobs, Jr., Mrs. W. Youmans, Dr. H . A. Gates, Mrs. H. A. Gates, Mrs. C. A. Frost. Dutchess County : Residence, Poughkeepsie — H. Loomis, Jr., Dr. Edward H. Parker, Edmund Platt, Robert F. Wilkinson, Warren G. Cowle, Mrs. Mary G. Underhill. 6 [Senate Erie County : Residence, Buffalo — Hugh Webster, dames Lyons, P. J. Ferris, Dr. John D. I Jill, David P. Page, Mrs. A. Mclffier- son. Essex County: Residence, Elizabethtown — Dr. 8. E. Hale, hVancis A. Smith, Richard L. Hand, Abijah Perry, Jtol)ert W. lu’vingston. Franklin County: Residence, Malone — Dr. 8. I^. Bates, Hon. W. A. Wheeler, F. T. Heath, Hon. John I. Gilbert, J. P. Badger. Fulton County: Residence, Johnstown — Jacob Benton : residence, Gloversville— John Ferguson, Dr. I^higene Beach. Genesee County: Residence, Batavia — Prof. G. I^hdler, C. T^Fix- ton ; residence, Wlieatville — Hon. J. R. Holmes. Greene Country : Residence, Catskill — George H. I;*enfield, Samuel Harris, Mrs. M. B. Sellick. Hamilton County : Residence, Wells — G. B. Morrison ; residence, Sageville — William H. I^h’y. Herkimer County : Tiesidence, Herkimer — David M. Davendorf; residence, Ilion — E. Remington. Jefferson County: Residence, Watertown — Richard G. Keyes, Jesse M. Adams. Kings County: Residence, Brooklyn — Rev. Job G. Bass, Eugene D. Bern, Rev. Michael J. Ilickie, W. B. Wadsworth, Jatnes M. Shanahan, Thomas E. J^earsall, N. T. Beers, Jr. , William Hadden, Robert Mayhem, Andrew A. Smith, J. B. Clayton, G. H. Tobias, Moses G. Wanzor, W. J. Schaufele. A. D. Mathews. Lewis County : Residence, Lowville — Rev. Joseph H. France, Amos Rice, Carroll House, Royall P. Wilbur; residence, Croghan — Hon. William W. Rice. Livingston County: Residence, Geneseo — Dr. W. E. Lauderdale, Rev. T. D. W. Ward, Prof. W. J. Milne. Madison County : Residence, Morrisville — D. D. Chase, H. P. Meade, Lucius P. Clark ; residence, Oneida — W. R. Williams. Montgomery County: Residence, Fonda — William K. Johnson, Rev. W. Frothingham. onroe County: Residence, Rochester — Hon. Henry R. Selden, Dr. E. Y. Stoddard, James J. Stewart, L. S. Fulton, Quincy Yan Yoorhis, Theodore Bacon, Mrs. Yick. Kew York County : The Association’s Committees on Detentions and Discharged Prisoners. Niagara County : Residence, Lockport — Gaylord B. Hubbell, M. II. Webber, Dr. J. B. Hartwell, Dr. A. W. Tryon, Mrs. Robert Norton. Oneida County : Residence, Utica — Col. Theo. P. Cook, John F. Seymour, Dr. Edwin Hutchenson, Charles!]. Warren, Edwin Hunt; resiflence, Jlome — Simon G. Yisscher, Mr. Converse. Onondaga County : Jiesidence, Syracuse — lion. P. Jhirns, A.' C. Williams, Dr. 11. B. Wilbur, Rev. M. Baird, Mrs. Dr. Dunlap, Dr. R. W. Pease, Hon. W. 11. 11. Gere, Timothy Hough, M. No. 46.] Y W. flanchett, Timothy R. Porter, J. C. Williams, Dr. E. E. Yan De Warker, James A. Skinner, G. L. Ponta. Ontario County : Residence, Canandaigua — Darwin Cheeney, Dr. Harvey Jewett, Cyrus W. Dixson, Mrs. Collins Hart, Prof.^ Edward Tyler, Hon. James C. Smith, Levi B. Gaylord; residence, Geneva — T. C. Maxwell, Arthur P. Rose. Orange County : Residence, Goshen — Dr. J. H. Thompson, Rev. Floyd A. Crane ; residence, Newburgh — Dr. R. Y. K. Montfort, Grant Edgar, William McCrea, John Caldwell, Uriah Tra])hagen, Lewis F. Corwin; residence, Middletown — Hon. J. D. Friend, Hon. J. G. Wilkin. Orleans County: Residence, Albion — Edwin R. Reynolds, Daniel W. Frye, U'. C. Rogers. Oswego county: Residence, Oswego — Hon. O. J. Harmon, G. C. McWhorter, Hon. J. A. Place, Dr. A. S. Coe. G. Mollison, Rev. Geo. Graffley, Mrs. George Goodier, Miss Florence Pettibone, Mrs. C. B. Randell. Otsego County : Residence, Cooperstown — Elihu Phinney,Dr. H. Lathrop, S. M. Shaw, G. P. Keese, Miss Susan Cooper, Dr. W T. Bassett. Putnam County : Residence, Carmel — Hon. W. S. Clapp, J. D. Little, James R. Weeks, Addison Ely, M. D. i Queens County: Residence, Manhasset — John Keese, W. H. Onderdonk ; Residence, Hempstead — Rev. Win. H. Moore, D. D., Ebenezer Kellum, Yalentine Clowes; residence, Westbury — Benj. D. Hicks, Mrs. Jas. R. Willets; residence, Glen Cove — Edwin A. Hopkins; residence, Astoria — Rev. Washington Rod^ man, Miss E. H. Rodman, Dr. J. D. Trask. , Rensselaer County: Residence, Troy — Rev. C. W. Wood, Chair- man^ Amasa R. Moore, H. W. Houghton, Rev. William Irvin, Samuel Foster. Richmond County : Residence, West Brighton — Rev. J. S. Bush, Chairman^ Mrs. J. S. Lowell; residence, Richmond C. H. — Dr. Ephraim Clark, Dr. I. L. Milspaugh, Stephen Stephens, Miss H. Moore, Miss Mundy. Rockland County: Residence, Stony Point — Dr. Win. Govan ; residence, Haverstraw — Alonzo Wheeler ; residence, Nyack — Seth B. Cole; residence, Tomkins Cove — Walter T. Searing, Mrs. Laura Wood. Saratoga County : Residence, Ballston Spa — J. W. Horton, Dr. Morgan Lewis ; residence, Saratoga Springs — Prof. Hiram A. Wilson, Dr. L. E. Whiting, Oscar F. Stiles. Seneca County : Residence, Yaterloo — Hon. S. G. Hadley, Dr. S. R. Wells, Rev. S. H. Gridley, Solomon Carman ; residence, Ovid — Hon. George Franklin, Dr. John B. Chapin; residence, Seneca Falls — Charles A. Hawley. Schoharie County : Residence, Schoharie — Rev. Jacob Heck, Thos. W. Zeh, Jr. s [SENATE, No. 40, 1 Schenectady County : Residence, Sclienectady — ])r. B. A. Mynderse, lion. W. T. L. Sanders, S. B. Howe. Schuyler County : Residence, Watkins — Frederick Davis, Dr. J. W. Thoin])son, Rev. (leor^e Kna])]), Ik W. Woodward. St. Lawrence County : Residence, ('antofi — (leo. Robinson, Rev. James Gardner, 11. H. Judd, Dr. J. C. Preston; residence, Oi;densbnrg — l)r. B. F. Slierrnan, Jb’of. R. (L Pettil)one. Steuben County : Residence, Bath — Guy H. McMaster, Z. L. Parker, Rev. O. K. Howard, Rev. James Aj[. Platt, Dr. A. II. Cruttenden ; residence, Corning — Dr. C. May, F. A. Williams. SuJolk County: residence, Riverhead — N. W. Foster, Dr. R. H. Benjamin, Thos. (k)ok, G. (). Wells. Sullivan County: Residence, Monticello — (Jiarles F. Canedy, Dr. Edward Quinlan, James Strong; residence, Grahamville — Dr. J. M. La Moree. Tioga County : Residence, Owego — Hon. Win. Smyth, Rev. J. A. Ostrander, A. Abel, Y. N. Russell, Hon. T. I. Chatheld, G. B. Goodrich, A Coburn, 11. 1). Piuney. Tompkins County : Residence, Ithaca — Prof. Ziba 11. Potter, Prof, dames Law, Prof. William D. Wilson, Marcus Lyon, Orange P. Hyde. Ulster County : Residence, Kingston — Hon. dames G. Lindsley, Mrs. Mary W. Reynolds, Rev. Geo. Waters, D. D., Augustus W. Reynolds, Rev. C. W. Camp; residence, New Paltz — Dr. C. W. Deyo ; residence, Whiteport — Edward Dorernus. Warren County: Residence, Lake George — Samuel R. Archibald, Francis G. Crosby, Elias S. Harris, Dr. W. R. Adamson. Washington County : Residence, Salem — R. G. Atwood, James Blashtield, E. P. Sprague, C. R. Hawley. Wayne County: Residence, Lyons John L. Cole, Win. Yaii Master, Charles Ennis ; residence, Palmyra — Isaac C. Bronson, Dr. Samuel Ingraham. A. S. Niles, Airs. Horace Eaton, George G. Jessup; residence, Arcadia — Rev. Park Burgess; residence, Walworth — Hon. Lucien T. ATunnans. Westchester County : Residence, W bite Plains — Dr. H. E. Schmid, Mrs. J. O. Dyckman, M. Prudhornme, Rev. F. Y. Yan Kleeck ; residence, Sing Sing — Dr. G. J. Fisliee, Mrs. Catherine E. Yan Cortlandt, L. G. Bostwick, S. G. Howe, Miss E. Roe. Wyoming County : Residence, Warsaw — Hon. Augustus Frank, Rev. L. E. Nassau. Yates County: Residence, Penn Yan — Myron Hamlin, Joseph F. Crosby, Win. F. Yan Tuyl, D. A. Ogden. CHARTER OF THE PRISON ASSOCIATION OF NEW YORK. An Act to, Incoepobatb the Prison Association op New York. Passed May 9, 1846, by a two-thirds vote. r The People of the State of New York^ represented in Senate and Assenibly, do enact as follows : Section 1. All such persons as are now or hereafter shall become members to the said association, pursuant to the constitution thereof, shall and are hereby constituted a body corporate, by the name of “The Prison Association of New York,” and by that name have the powers that, by the third/title of the eighteenth chapter of the tirst part of the Revised Statutes, are declared to belong to every corporation ; and shall be capable of purchasing, holding and con- veying any estate, real or personal, for the use of said corporation ; provided, that such real estate shall never exceed the yearly value of ten thousand dollars, nor be applied, to any other purpose than those for which the corporation is formed. § 2. The estate and concerns of said corporation shall be managed and conducted by its executive committee, in conformity to the con- stitution of the said corporation ; and the following articles that now form the constitution of the association shall continue to be the fundamental laws and constitution thereof, subject to alteration in the mode therein prescribed. Aetiole I. The objects of the association shall be : 1. The amelioration of the condition of prisoners, whether de- tained for trial, or finally convicted, or as witnesses. 2. The improvement of prison discipline, and the government of prisons, whether for cities, counties or states. 3. The support and encouragement of reformed convicts after their discharge, by affording them the means of obtaining an honest livelihood, and sustaining them in the efforts at reform. [Sen. Doc. No. 46.] 2 10 [Senate ^ Article II. The officers of the society shall be a president, vice-presidents, a corresponding secretary, a recording secretary, a treasurer and an executive committee. There shall be the following standing com- mittees, viz.: A finance committee, a committee on detention, a committee on prison discipline, and a committee on discharged con- victs. The number of the executive committee shall consist of not more than thirty-five, of whom not more than ten shall be officers of the society, and not more than twenty-five shall be persons other than officers. Article III. The officers named in the preceding article shall be ex-officio members of the executive committee, who shall choose one of their number chairman thereof. Article IV. The executive committee shall meet once in each month, and keep regular minutes of their proceedings. They shall have a general superintendence and direction of the affairs of the societ}^ and shall annually report to the society all their proceedings, and such other matters as shall be likely to advance the ends of the association. Article V. The society shall meet annually in the city of New York, at such time and place as the executive committee shall appoint, and at such other times as the president, or, in his absence, one of the vice-presi- dents shall designate. i. Article VI. Any person contributing annually to the funds of the association not less than five dollars shall, owing to such contribution, be a member thereof. A contribution of five hundred dollars shall con- stitute a life patron ; a contribution of one hundred dollars shall constitute an honorary member of the association for life; and a contribution of fifty dollars shall constitute a member of the associa- tion for life. Honorary and corresponding members may, from time to time, be appointed by the executive committee. Article VII. A female department shall be formed, consisting of such females as shall be selected by the executive committee, who shall have charge of the interest and welfare of prisoners of their sex, under such regulations as the executive committee shall adopt. Article VIII. Tlie officers of the association shall be chosen annually, at the an- nual rneetiiig, at which time such persons may be elected honorary members as shall have rendered essential service to the cause of prison discipline. No. 46.] 1 11 Article IX. Any society having the same object in view may become atixillary to tills association by contributing to its funds and co-operating with it. Article X. The executive committee shall have power to add to any of the standing committees such persons as, in their opinion, may be likely to promote the objects of the society, and shall have power to fill any vacancy which may occur in any of the offices of the association, intermediate the annual meetings. Article XI. This constitution may be amended by a vote of the majority of the societ}’, at any meeting thereof, provided notice of the amend- ment has been given at the next preceding meeting. The officers selected for the current year, under the constitution, shall continue to be the officers thereof until others shall be duly chosen in their places. And it is hereby further enacted, that no manager of said society shall receive compensation for his services. § 3. The said executive committee shall have power to establish a work-house in the county of New York, and, in their discretion, to receive and take into the said work-house all such persons as shall be taken up and committed as vagrants or disorderly persons in said city, as the court of general sessions of the peace, or the court of special sessions, or the court of oyer and terminer, in said county, or any police magistrate, or the commissioner of the alm's-house, may deem proper objects ; and the said executive committee shall have the same powers to keep, detain, employ and govern the said per- sons as are now by law conferred on the keepers of the bridewell or penitentiary in said city. - § 4. The said executive committee may, from time to time, make by-laws, ordinances and regulations relative to the management and disposition of the estate and concerns of said association, and the management, government, instruction, discipline and employment of the persons so as aforesaid committed to the said work-house, not contrary to law, as they may deem proper; and may appoint such officers, agents and servants as they rqay deem necessary to transact the business of the said association, and may designate their duties. And the said executive committee shall make an annual report to the Legislature and to the corporation of the city of New York of the number of persons received by them into the said work-house, the disposition which shall be made of them by instructing or em- ploying them therein, the receipts and expenditures of said execu- tive committee, and generally all such facts and particulars as may exhibit the operations of the said association. 12 [Senate, No. 4^.] § 5. The said executive committee shall have power, during the minority of any of the persons so committed to the said work-liouse, to bind out the said persons so being minors, as aforesaid, as ap- prentices or servants, with their consent, during their minority, to such persons and at such places, to learn such pro])er trades and em- ployments as, in their judgment, will be most conducive to the ref- ormation and amendment and future benefit and advantage of such persons. § 6. The said executive committee, by such committees as they shall from time to time appoint, shall have power, and it shall be their duty, to visit, inspect and examine all the prisons in the State, and annually report to the Legislature their state and condition, and all such other things in regard to them as may enable the Legisla- ture to perfect their government and discipline. And to enable them to execute the powers and perform the duties hereby granted and imposed, they shall possess all the powers and authority that, by the twenty-fourth section of title rirst, chapter third, part fourth of the Revised Statutes, are invested in inspectors of county pris- ons ;* and the duties of the keepers of each prison that they may ex- amine shall be the same in relation to them as in the section afore- said are imposed on the keepers of such prisons in relation to the inspectors thereof. Provided^ that no such examination or inspec- tion of any prison shall be made until an order for that purpose, to be granted by the chancellor of this State, or one of the judges of the supreme court, or by a vice-chancellor or circuit judge, or by the first judge of the county in which the prison to be' examined shall be situate, shall first have been had and obtained, which order shall specify the name of the prison to be examined, the names of the persons, members of the said association, by whom the examina- tion is to be made, and the time within which the same must be concluded. State of New York, ) In Senate, May 8 , 1846. f The bill having been read the third time, two-thirds of all the members elected to the Senate voting in favor thereof, Eesolved, That the bill do pass. By order of the Senate. A. GARDINER, President State of New York, ) In Assembly, April 24, 1846. ) This bill having been read the third time, and two-thirds of all the members elected to the Assembly voting in favor thereof, Resotced^ That the bill do pass. By order of the Assembly, WM. C. CRAIN, Speaker. Approved this 9th day of May, 1846. Silas Wright. * See S 24, on next page. Kd.46.] 13 State of New York, ) Secretary's Ojftce. ) I have compared the preceding with an original law on file in this office, and do certify that the same is a correct transcript there- from and the whole of said original. In testimony whereof, I have hereunto affixed the seal of this office, at the city of Albany, the fifteenth day of May, in the year of oiir Lord one thousand eight hundred and forty-six. ARCH’D CAMPBELL, Depiity Secretary of State. (Revised Statutes, Part IV, Chap. 3, Title I.) § 24. * It shall be tlie duty of tlie keepers of each of the said prisons to admit the said inspectors, or any one of them, into every part of such prison ; to exliibit to them, on demand, all the books, papers, documents and accounts pertaiiiiiig to the prison or to the detention of the persons confined therein, and to render them every facility in their power to enable them to discharge the duties above described. And for the purpose of obtaining the necessary infor- mation to enable them to make such report as is above required, the said inspectors shall have power to examine, on oath, to be adminis- tered by either of the said inspectors, any of the officers of the said prisons, and to converse with any of the prisoners confined therein, without the presence of the keepers thereof, or any of them. BY-LAWS OE THE PRISON ASSOCIATION OF NEW YORK. I. There shall be a stated meeting of the executive committee on the fourth Thursday of each month, and special meetings shall be held on the requisition of the chairman or any three members of the executive committee. The call for a special meeting shall, in all cases, state the business to be transacted at said meeting. il. At every meeting of the executive committee, five members shall be necessary to constitute a quorum. III. The order of business at every stated meeting shall be as follows : 1. The reading and approval of the minutes of the last preceding meeting. 2. Report of the treasurer. 3. Reports from standing committees. * Section 20 iu last revision. 14 [Sknat® 4. Report from tlie corresponding secretary. 5. Reports from special committees. 6. Report from the general agent. 1. Miscellaneous business. At a special meeting, no other business shall be transacted than that for which the said meeting was called. IV. The chairman shall appoint all special committees ; and no person nominated by him shall be excused, unless upon reasons sat- isfactory to the meeting. Y. The chairman shall decide all questions of order, subject to an appeal ; and the rules of order shall be those embodied in Cushing’s Manual, so far as they are applicable. VI. There shall be four standing committees, namely : A com- mittee on finance, a committee on detention, a committee on dis- charged convicts, and a committee on prison discipline. . YII. It shall be the duty of the finance committee : 1. To devise ways and means for obtaining the funds necessary to carry on the work of the association ; and they may, at their dis- cretion, employ an agent to collect the requisite funds. 2. To audit all bills against the association ; and no bills shall be paid by the treasurer unless approved by the committee and counter- signed by the chairman. 3. To audit and report upon the treasurer’s accounts annually. 4. To invest and control the surplus moneys of the association, under the authority of the executive committee. YIII. It shall be the duty of the committee on detentions : 1. To inquire, as far as may be practicable or necessary, into the causes of commitment of persons in the prisons or houses of deten- tion in the cities of New York and Brooklyn, tand to adopt proper measures for procuring the discharge or providing for the defense of such as shall appear to be entitled thereto. 2. To visit frequently the prisons under their charge, and to en- deavor to improve both the physical and moral condition of the prisoners in all suitable and practicable ways. IX. It shall be the duty of the committee on discharged convicts : 1. To correspond with prison agents or superintendents relative to the character and trades of prisoners, and to ascertain, ])revious to the discharge of each prisoners, his feelings, views and capabilities, witli a view to making the best arrangements for his future employ- ment. 2. k(}ep a record of all ])ersons who will employ discharged prisoners, and of their several occupations ; to procure such employ- 16 No. 46.] ment for prisoners applying therefor as seems best adapted to the capacity of each ; to hold correspondence with employers; to keep a record of the conduct and prospects of those for whom places have been obtained, that they may be sustained and encouraged with the idea that a continued friendly interest is felt for him. 3. To procure suitable boarding places for discharged prisoners, where they will not be exposed to corrupting influences, taking care not to have more than one in a place, where it can be avoided. 4. To see that the prisoners are provided with suitable clothing, of a kind that will not attract particular attention. X. It shall be the duty of the committee on prison discipline : To give attention to the internal organization and management of prisons, embracing the physical and moral influences to be exerted on the prisoners during their confinement. This duty shall be com- prised under the following heads : health, reformation, convict labor, administration and internal police, comparison of different prison systems, visitation of prisons aud houses of reformation, and the whole subject of criminal law#nd penal justice. XI. One or more agents may be appointed by the executive com- mittee to assist the standing committees in the performance of their duty. XII. The recording secretary of the association shall be the secre- tary of the executive committee ; and it shall be his duty to keep the minutes of the proceedings of said committee, to record them in a book provided for that purpose, and to give due notice of all meetings of the committee. XIII. The corresponding secretary shall conduct the correspond- ence of the executive committee and of each of the standing com- mittees when required ; shall act as the general financial agent of the association, and shall report at each stated meeting of the com- mittee. XIY. The treasurer shall receive and safely keep all moneys be- longing to the association ; shall pay over the same as directed by the finance committee ; shall report at each stated meeting of the executive committee, and shall give such security for the faithful dis- charge of his duty as that committee shall require. XY. The president, chairman of the executive committee, and corresponding secretarj^ shall be members, ex-officio^ of all the stand- ing committees. XYI. No alteration shall be made in these by-laws, except upon notice of the proposed amendment, given at a previous meeting of the executive committee. ! THIETY-EIGHTH ANNUAL REPORT OF THE EXECUTIVE COMMITTEE OF THE PRISON ASSOCIATION OF NEW YORK FOR THE YEAR 1882. In accordance with the requirements of the act of the Legislature by which it was incorporated, the Executive Committee submit the following report : County Jails. Time and again the condition and needs of our county jails have been pointed out in reports emanating from this association. The reports of our local committees show in one or two instances some im- provement, but the evils that exist are beyond a radical cure while the present system remains in vogue. Much of the evil communi- cation in our jails arises in no small degree from the fact that the prisoners are allov^ed to associate together in the corridors, without surveillance, and with no regular employment. Thousands of able- bodied prisoners are now being supported in our county jails, at an expense oaput of from $2.25 to $3.75 a week. It is not too much to sa\^ that this State expends annually no less than $1,000,- 000 — speaking in round numbers — to feed and clothe and warm — its army of tramps, petty thieves, drunkards, etc., etc., all of whom are quite as well able to earn their own living as are the majority of tax payers. The following report made by the corre- sponding secretary of the association shows plainly how it is pos- sible to make our county jails self-supporting, or at least very nearly so. The Chester county (Penn.) prison showed in the year 1881 a balance sheet with all the expenses of the prison paid by it- self and an item of $247.70 in cash in favor of the prison. In order to ascertain how this was brought about our corresponding secre- tary visited Westchester and made the following report. Minutes or Special Eepoet on the Prison at Westchester (Penn.). On the 9th of April I visited the Westchester (Penn.) prison and found it an old-fashioned building of stone, with a yard, and high walls of stone all about it except across the front which was opeUgto the street. The cells open upon a central corridor, each having a window that looks directly out into the jail-yard. There are three tiers of cells. [Sen.poc. No.^46] 3 % 18 [Sena^te The kitcliens and offices are on tlie lower floor of tlie main hnild- ing, and tlie odors frojn cooking can be detected in every part of the prison. There is no distinctively prison od(jr. Passage^s, cells and stairs were scrnpulonsly clean, and no part of the prison was dark or gloomy. “The building is heated by steam. There wei'e in the prison forty- nine prisoners, some waiting trial, but a large part of them sentenced to terms of from thirty days to five years. The avei-age length of sentence is two and one-half years. The men, all of whom were confined in their cells, had a healthy look, their muscles firm and with notliing of that hang-dog expression that is populai’ly 8uj)])08ed to go with the cellular solitary system. The Tuen were clothed in checked blue and white cotton stuff, every thread of which is woven in the prison. This is light material, but the prison is kept suffic- iently warm to make heavier clothing unnecessary. Each man is recpiired to take a full bath once a montlp and is encouraged to bathe his feet and upper part of his body frequently. The food is abundant and well cooked, the labor of the kitchen being largely performed by the prisoners under the supervision of a keeper. “Mr. Washington Haggerty, the principal keeper, informed me that there was a diet list, but that he varied it so much, to suit the needs of the prisoners and the season, that it was useless except as a guide as to quantity. Even here, he practically gave every man as much as he could eat. The men made no complaints of their food as to quantity or quality, and their looks showed plainly that they were well kept. “ There are four kinds of labor performed in the prison — Carpet- weaving, weaving of cotton cloth for prison garments and bed clothes, chair bottoming and broom-making. Carpet-weaving is the principal industry. I'he looms are placed in cells eight to twelve feet in size and seven and a half feet high. These are lighted by windows — perpendicular in the lower tiers three feet six inches in height and five inches in width. The frames of the windows are of wrougiit iron, set deeply into the masonry ; the light is ob- structed only by strong wire netting — placed at four or five inches outside the windows — not to prevent escape, but to prevent the passage of notes and other articles by the prisoners. “ The looms are of the most primitive character. Eag carpets principally are woven. To a great extent they are woven to order — the rags being sent in from the town and country round about, and tlie w’arp furnisbed by the prison authorities. For carpets woven to oi'der, the prison receives thirty cents a yard ; the carpets woven of ])i ison material are sold for fifty-eight cents ; they are of excellent (piality, and a considerable degree of taste is shown in the arrangements of color. Each weaver has a task of ten yards a day, hut tliis is an easy tiisk for an expert. The men often weave nearly twice that amount. After having done the regulation ten yards, the weavers receive for over-work two cents for each yard. This is paid to them when they go out — and some of the long term No. 46.] 19 prisoners already have very respectable bank accounts. A man went out I’ecently, after a term of tliree years, which he had shortened by the usual commutation, and carried with him $90 with which to begin an honest life. Better tlian that he carried a trade ; he was an excellent carpet weaver, understanding the business in all its branches. The men never go out of their cells for exercise, and seem to suffer little inconvenience from the confinement. Their windows open directly out of doors, and the exercise of weaving, which requires the movement of the hands, arms and legs, keeps them in good condition. Their beds are beside their looms, and their rations are handed in through the opening in the grated cell door. The urinal and closets are in the corner of each cell, connect- ing directly witli a vault, from which foul odors are excluded by rather primitive, but at the same time effective water traps. The growing hoys are taken out of their cells into lighter and larger cells, where they work in gangs of two or three togetlier at warping and spooling for the looms. They are allowed to talk together freely, and the men at the looms talk across the corridors and from window to window. But a small number were employed at cane- bottoming chairs or broom making when I visited tlie place. There are religious services in the jail every Sunday; the outer cell doors being thrown opci], and th(3 exercises conducted in the corridor. There were but two women in the prison, and they had quarters quite by themselves. “The men seemed full of hope, and many of them had decorated their cells with colored pictures and festoons of paper. “ There seemed to be an excellent understanding between prisoner and keeper, and I could not learn that it had been necessary to re- sort to corporal punishiiient in the prison. It has been found to be a sufficiently effective punishment to stop a man’s work or deprive him of some article on the diet list. The dark cell wou^l have been looked upon with a smile of contempt by the advocates of dark cells. It was a large high-vaulted cell with an elbow ventilating-shaft con- necting with the outside and admitting enough light to make a dark grey dawn in every part of the room. It wasn’t cheerful but it was not dark.” This prison proves most conclusively that it is possible to have a system of labor in our county jails that shall pay its own way and have a disciplinary value besides. Before leaving this subject of county jails, the committee wishes to express its satisfaction at the readiness of the sheriff and other county officers to afford every facility of inspection to the agents of the association, and in several instances to make needed changes without waiting for the tardy action of supervisory boards. Most of our county jails, however, are still a disgrace to the State, and to humanity. The corresponding secretary, having inspected the Rensselaer county jail, reported on it as follows: 20 [Sknate REPORT ON RENSSELAER COUNTY JA FL, SITUATED AT TROY. RKroRT OF Jail Visit ation. To the Executive Committee of the Prison association (f New Yorh — Gcntletnen — : On the 14fh of FebriuiryT visited the jail in Troy, Rensselaer county, in company with the Rev. C. W. Wood of Ti'oy, the chaii’inan of our local committee for the county. We were courteously shown every part of the jail, the keeper, John D. Miles, seeming desirous that we should see what he well understood to be the faults of its construction and arrangement. The jail is a glooniy-looking structure of brick, about 45xY0 feet in size, and situated in a thickly populated part of the city of Troy. Its win- dows are small and almost covered with thick bands of iron, which reduce the passage of light and air to an actual space of about one- fifth the size of the window. A Eire-Trap. The interior of the jail, if it had been planned with that idea, could hardly be a more effective fire-trap. The cells are on the sides and ends of the building in the second story. Ac- cess is obtained to them by a wooden staircase in the middle of one side of the building. It is the only means of reaching the up- per story. It goes from the ground to the garret, which garret is full of combustible rubbish. At the foot of this staircase, in the cellar, is the heater, its hot pipes radiating to different parts of the building. Every thing that these come in contact with is as dry as tinder. Charred timbers could he seen where fires had taken place. The keeper has wisely put iron lathing in some places that are ex- posed to heat, having been several times admonished by fire that he had better do so. Twice within a year fire has made considerable headway in the jail. During the eleven years that the present keeper has lieen in office, the building has been on fire again and again. A lire extinguisher is kept at hand, but the time may come any moment when a fire will get beyond the usefulness of such an instrument. Rensselaer county lieeps sixty-five poor wretches locked up in peril f rom fire every moment of their prison lives. If the jail burns there is little hope of escape for the prisoners. The firemen could not get in, nor could the prisoners get through the absurdly barred windows. The staircase would be the flue of the fire, and therefore impassable. Under such circumstances I have no doubt that an indictment for manslaughter would hold against the supervisors individually if a fire should take place and lives should be lost. A Eiltiiy Place. The ventilation of the jail can be represented by a cypher. The stemdi is sickening, and wujuld be worse but for the constancy with which the keej)e*i’ has fought uncleanliness with whitewash. This st(inch is not altogether due to the condition of the cells or the pris- oners. We were taken into the cellar, a board was taken up from 21 No. 46.] tlie floor, and close beside the heater under the floor, we saw eight- een inches of foul and stagnant water. It had been tliere long enough to accumulate a green, greasy slime on its surface. A dog fell into it while we were there, and stirring it up, the whole place became sickening. As the staircase is a flue, as the heater is at the bottom of the staircase, and as the pool of stagnant water is by the heater, it is quite in harmony with the laws of ])hysics that the dis- ease germs should be carried to every part of the building. Nothing could be better arranged for carrying and spreading the malarial in- fluences that must arise from such a condition of things. This sink of corruption, the keeper informed us, had existed as long as he had known any thing about the jail. Mensselaer county keeps sixty-jive poor wretches locked up^ ex- posed to death from poison every moment of their prison lives. It has been said that our county jails are schools ot crime. This is sadly true, and emphatically true of Hensselaer county. I looked into one cell and saw a boy of fifteen years, arrested, I think, for petty larceny. Four men were in the same cell with him — two of them were burglars and two of them were common drunkards. They had nothing to do the whole day through but to teach that boy traditions of shame. The most shameless and unspeakable crimes are committed in such prison cells. There is practical sepa- ration of the sexes in Eensselaer county jail. The women young and old, sane and insane, criminals by profession and criminals by circumstances are all huddled into two badly ventilated rooms to- gether, and lett to their own evil devices. Rensselaer county keeps its young offenders locked up exposed to contaminating moral influ- ences every moment of their prison lives. In addition to these con- taminating influences of association, the walls are decorated with such pictures as cover the pages of our flash newspapers, ballet dancers, noted sporting and criminal characters, etc. There are no proper or adequate facilities for bathing. The prisoners live in complete idleness. They spend their days in the consumption of tobacco, in repeating the petty gossip of crime, in sleeping and eat- ing, and in telling obscene stories. Mr. Miles certainly feeds the prisoners well, and preserves as good discipline as he can well do considering the classes with which he has to deal, and the incon- venient surroundings of the prisoners. Discharged Convicts. The committee wish particularly to call the attention of your hon- orable body to the needs that exist for a better organized system of help to discharged convicts who wish to return to society as honest men. They leave the prison gates or the jail doors with nothing more than an unsavory reputation, stigmatized as outcasts, and so- ciety refuses to have them again in the ranks of law abiding and honest industry. Many of the men say that they wish to reform ; but society demands something more than a mere word as an earnest of their good intention . [Senate n They have no reputation upon which they can re-establisli tlietn- selves, and society refuses to receive them wliile tliey are making one. You must he proved, says honest industry — and then cuts off all means of jiroliatior). Not only should tliese men he aided by something more than the ])ittance now doled out by the State, hut facilities should he afforded to assist those who wish to reform until they are sufficiently ])urified from the prison taint to he received hack into the ranks of honest labor. Men who come out of prison, where they liave been kept at work under the contract s^^stem, have generally only the merest fragment of a trade, and as they will not he allowed by the ‘‘ Trade’s Union ” to work at that, there remains hut two things for them to do. The alternative is to remain honest and starve, or to be dishonest and feed themselves. The general agent of this association, with great care, portions out the small sums that come from the excise fund, and from sundry contributions from individuals, and he seeks to help the most de- serving and the most ])roniising, but every day turns men away from this office with such inadecpiate help that before they can possibly find employment, they must feel the pangs of want.^ Many a man goes back to vicious courses who could be saved, if the means at the disposal of the general agent were increased. The following reports of officers need no comment. Extracts from report on Kings county penitentiary made by Mr. Cbas. B. Waite of the executive committee. I was particularly struck with the cleanliness of the prisons, like- wise the number of windows which are lofty and permit the sun- light to reach even to the inner part of the cells, the absence of darkness was equally noticeable in the cells. The ventilation of the prisons and cells seems to be perfect, in short they are sweet and clean. The blankets are warm and of good quality. The buckets are emptied at the mouth of a large sewer out of doors. The buckets are thoroughly washed by short-time rn^n and disin- fected and returned to the prison. The hospital is small and low and would seem to be illsuited to its purpose, it compared very unfavorably with the rest of the prison in the matter of light and ventilation. Some of the cells are occupied by two prisoners each. The com- fort of the cells in the long-term prison was particularly noticeable, likewise in the female prison. There seemed to be no restriction in the matter of furnishing, many cells having carpets and curtains, beds with two or three mattresses, etc. This seems hardly con- sistent wdth a thorough inspection as the concealment of false keys, dangerous weapons or even s])irituous liquor is more than possible. The food is good and ])lentiful, compared with care and in a cleanly and inviting manner. The amount ol' food closely approximates the navy ration; the (juantity of bread is not limited. ^^"0. 46.] 23 • The shops in which the convicts are employed are too small and not safe in case of fire, for the pnr])Ose of making escape almost im- possible. The stair-ways are few and not easy of access. The introduction into the prison of free laborers by the contractor and their intermingling with the prisoners is condemned. They could perfectly well be separated and should be. The possibility of communication with the outside seems to be most simple. The appearance of the prisoners is healthy and contented. The grounds of the prison ai‘e not well kept. All of which is respectfully submitted. Dated New York, Aprils 1883. , President. Chas. H. Kitchel, Chairmo/n Committee on Annnal Report. TEEASURERVS STATEMENT FOR THE YEAR ENDING DECEMBER 31, 1882. Receipts. Cash on hand December 31, 1881 $416 23 From individual donations 1, 289 00 From city excise fund 650 00 $2,355 23 Payments. Old indebtedness $90 00 Rent 278 00 Sundries 118 09 * In aid of prisoners discharged from Black- well’s Island and city prisons 649 85 General agent, balance salary for 1881 500 00 General at^ent, account salary for 1882 600 00 2, 235 94 Balance in Mechanics’ National Bank to credit of Association $119 29 * In addition to this item, Mr. Stephen Cutter, the general agent, reports that he has personally received from the State agent and expended in direct relief of prisoners discharged from the State prisons |1, 000.00. CORNELIUS B. GOLD, Treasurer. REPORT OF THE GENERAL AGENT. \ All the statistics of all the penal institutions and alms-houses in this country, and in all civilized countries, go to prove the most pro- lific cause of crime is connected with the sale and use of alcoholic liquors. Our city is a miniature world, we have wards in which tenement- houses prevail and the population more dense than any part of London. There are brought into our six police magistrate courts everj^day in the year (Sundays and holidays included), an average of at least two hundred men and women, ninety per cent of whom are brought there through the use of intoxicating drinks. A total of 65,000 annually — more than 20,000 of of them being intoxicated at the time and 5,000 vagrants, nearly all drunkards. What is to become of these corrupt and debased multitudes ? Some of them will soon fill drunkards’ graves, but they must be cared for with a view to saving them from a life of crime. A steady stream of them are coming from our State prisons and penitentiaries, a large number of whom come to the office of the prison association for assistance. Some of them are young men, es- pecially from our penitentiaries. Their circumstances are peculiar. Their parents are dead or extremely poor ; they have no home or friends, many of them sent to our penitentiary in the summer-time with thin and ragged clothes, for short terms, four, five and six months, they come out in the winter and the summer clothes they went up with are put on them when they are released. They come to our office shivering with the cold. They are not fit to go into the streets, they could not get employment if work was plenty. The authorities at the penitentiary do not give them a cent ; if the prison association does not care for them, what will they do? Our finances are such we can do but little, they are in great danger of drifting into crime and going back again to prison. But this is a difficult problem to solve, these men cannot be trusted with money in their present condition, addicted as many of them are to drink and the company of those who drink. The experience and observation gained in the prosecution of this work by your agent leads him to suggest the necessity of an indus- trial home where these men can go and work, learn trades and otherwise fit themselves to make a living until they are strong [Sen. Doc. No. 46.] 4 26 [Sknate enough to resist temptation, and tlion provided with eTn])loyment suitable for them, they may be(;ome honest and industrious. Besides attending to liis duties at tlie Toml)S prison and tlie courts the agent has assisted eight hundred and five discharged convicts wlio have called upon him at the rooms of the prison association. The following tabular statement shows the number of discharged convicts who have, during the past year, been assisted by the gen- eral agent, and of the prisons and reformatories from which they have been released : No. 46.] 2 Y •I«lo,L Ct)ioa:>0 0-HCi(M'--0<:ocoi:^ CD CO 1- O lO CO O »0 05 •siujr J9ino puotaXuy; ji'rC -^is Avoipn^i; •uosud A:jio T— ( I— I • T— ! QOr-(lOrtHTH'+'^CtJOM pU^JS] s.iiaAv^ORia CDt— IO05C^-rt^C0'^C0'rHOTt- -lu-iojaa •R.iuuia uB-jiuad iJuuq’iv rHCOiOOlCOCOCOiO'rH'THrHl:'- CO r-l T— I CO • rH • 01 rH •8snot?jj{g •aa^saqoo'jj •iij^i';u9';tu9d Alunod 9ua •.?a'8l'}U91IU9d A:;uhoo s’jJui^ uaiiugd puvi -SI sjpMqouia OCOCOCOCqQOCDt-(01r-i(MO COrHCMr-lCOCqcqrHrHOqcq^ i:- GO TH05.-HCOCD -THCqcOCOCOCO GO CO S9ITJIS J9qio JO uoju.qo •lunqnv •Suis Suis • Ol cq cq oq CM oq CO cq THcocooqooT-i'THi^0505Cooq cMcqcocMoq. cmt-ith r-ti-ioq CD CD : ^ 3 ^ n t-i (D c ^ ^ ^ S ^ S o ► * o p, ^ S ^ 9h t ^ ( 3 j K ^ ^ ^ ^ oT^ ^ o H 28 The general agent would call attention to the few cases here selected to illustrate the character and methods of his work for the association ajid the frequency in vvdiich intemperance brings f>erson8 into crime. No. 1. Came to this ofhee from the penitentiary where he had been six times for petty thieving, and had spent three years of his life in prisons. He was persuaded to believe there was a better way to live, that if he became honest he would he ha])py and enjoy the proceeds of his labor. • AVe recommended him to the Home of Industry at 40 Plast Houston street. There he attended the meetings and in a short time professed to be a convert to Christianity. We were not long in obtaining a situation for him at good wages. No. 2. Came from the penitentiary where he had been serving a sentence for assault and battery. This was his sixth term, the direct conse(pience of drink ; he has a good trade and now seems desirous to reform, and was persuaded to go to a good place to board and lodge for a few days. We then obtained a situation for him at steady employment at his trade. AVe have heard from him several weeks since that he was doing well. No. 4. Is young not out of his teens, parents dead, has been to sea as a sailor, seems well disposed, never committed crime, gave himself up to the warden at the Tombs rather than steal. He re- quired friendly advice, a little help and in a short time was shipped to sea at $19 per month. No. 5. A married man, age twenty -eight ; parents dead, has no trade, twice in prison, once in Sing Sing. For this last offense (at- tempt to rescue a prisoner) he was sent to the penitentiary one year. Upon his discharge he protested he did not want to lead a life of crime and was anxious and willing to do honest work. In a few days by being comfortably clad he obtained employment as a truck driver. No. 6. A youth of sixteen years, in the boys’ prison, had been employed in a book store for three years, had by faithfully discharg- inro])erty was found on liiin. He was convicted and sent to tlie penitentiary two years for receiving stolen ^oods. lie came out in May, 1882. The man for whom he drove the horse refused to lake him on again because he had been in ])rison. Ilecallsat tlu; ks to cover his crime, and when he found he would be discharged he burned the books, for which offense he has just served his time. He was very determined to retrieve his ])ast life and start anew. lie determined to be honest and in looking for a situation not to hide the fact that he had been in prison, and hoped to find some (jhristian man who would trust him, employ him and help him to 31 ISTo. 46.] lead a better life. He called at over three hundred offices and places of business, was well received in inaii}^ places until he got to that part of his history where he fell, and then he was informed they did not want him. We had faith in him and assisted him from time to time, until he finally got employment; he is now^ doing well and has a good home where he enjoys the society of Ids wife and children. No. lY. Is a young woman of fair intelligence ; when our atten- tion was called to her by the matron in the Tombs she bad been tried, found guilty and remanded for sentence. In examining this case we found she had recently left her relative in Broome county on her way back to Ireland ; on arriving in this city she went to a store and purchased silk goods for a dress, also some triinndng for her dress; the trimmings she is charged with stealing, which she stoutly denied ; an offer was made if she would pay for them she would be allowed to go, but she spurned the compromise, saying she had paid for them once and that was sufficient. She had beeh fleeced by lawyers who had got all her money with the promise to get her acquitted. We interceded for her and the court gave her only five days cit}^ prison. She was then looked after and a place obtained for her to go to service. In closing this report we feel it our duty to acknowledge the courtesy of all concerned in the administration of law in our criminal courts, by whom we have been treated with uniform respect. To the members of the profession of the law we are much in- debted for the aid rendered us, and for the willingness shown to defend or help anj^ cases in which we may desire such service at their hands. Yery respectfully submitted, STEPHEN CUTTEE, General Agent. \ '■ 4 . s'”'ei*teMi:r:*.v;s!'?H,= , 'v,;g i-i’ '■■ ■ ’y',V'‘.*>-’ ■,■''' -If '' '■^''':^^'".v^''^l^:^'•^^^ ' i., V' '' 'i^ "■ ■■' ' ■"■ '‘- '“■ '■ ^ r.-v,;'y 4 ''' t' . Vs: ,' [y.L ' rU U;.>lhW4'Lt''' • ■ ' .aJ' .^i- *''' 5 :^^^ '>•< V.i'iv"; i.<‘ i >t4V7V,!?rfy,. ■.>:»■<, ci .■'':j.; 1 W,7 ,» ..'.^1^8 - ■' ' '',''':V^f ,' ■■ •■ " V” " ’'?v^ •.■’•<■■■' ■'>'^.^^'• 7 ?^ •*' '. r ' "■ :l].y ■■ t •,. ‘ ■;.' ,■'.■• Y'■.,Hi'^ .iiJvf.'^. ' .'■’^ >(."’■» .‘-6 ‘ i'-, ■ ' 'i'. ' !■ (•\^ ‘ . ' f • ■>■’^'‘ 1 :; ■ ''• '■ ' '■ W“t ’fT ^ y^^iv ■ v' w,; ^ < . ^ .. . ; ■ ^ , '^' , ' ■' i'' ' y ^ *' « ^ 1 «( fc ’y'!> 5 V -I-* % ' ■ , / V ■' ■ V- ' :'^; ' '..M ' - .•■r- t ,-, ■' -.-V YV> ■‘.T;. ' <. ■ . ■ -. , ^ i ‘ , ' > .-i '■ ,■ ;& i ‘. ■ ' yv'-:' : ^ , ■■ ■■. iT’-, ‘ . , '■(■•,'i ... ... STATE OF NEW YORK. No. 47. IN SENATE, April 27 , 1883 . REPORT OF THE BOARD OF RAILROAD COMMISSIONERS. Board of Railroad Commissioners ) OF THE St^e of New York, v Albany, April 26, 1883. ) Present - Commissioners John D. Kernan, Wm. E. Rogers, John O’Donnell. To the Honorable the Senate of the State of New York : The Board is in receipt of the following resolution passed by your honorable body : STATE OF NEW YORK : In Senate, ) Albany, April 25, 1883. j Resolve f That the Railroad Commissioners be invited to report to this Senate, at the earliest practicable moment, what hearing, if any, was had before that Board upon Senate bills, entitled An act in relation to the rate of fare upon the elevated railroads of the city of New York,” and ‘‘ An act to ascertain the capital actually expended in the construction of railroads.” By order, JOHN W. YROOMAN, Clerk. [Sen. Doc. No. 47-1 1 2 [Senate, No. 47.) The bills tlierein inquired about are as follows : AN ACT in relation to the rate of fare upon the elevated rail- roads of the city of New York. The People of the State of New York, represented in Senate and Assembly, do enact as follows : Section 1. From and after the ])asRa^e of this act the rate of fare for each passenger over and upon each of the elevated railroads in the city of New York during the commission hours, which are hereby fixed from four until ten o’clock, a. m., and from three until nine o’clock, p. m., shall be five cents. § 2. This act shall take effect immediately. AN ACT to ascertain the capital actually expended in the construe tion of railroads. 'The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 1. It shall be the duty of the Railroad Commissioners, as soon as practicable, consistent with the duties heretofore devolved upon them, to examine and ascertain the cash ca])ital actually ex- pended in the constructing and equipping of each of the surface rail- roads in the State, including street railroads, and report the same to the succeeding Legislature. § 2. This act shall take effect immediately. The Board respectfully reports that no hearing has ever been had before the Board upon either of said proposed acts, nor has any evi- dence ever been taken in relation thereto. The said acts were recommended by Commissioner O’Donnell in his minority report upon the elevated railroads of New York city, and were not before the Board for its consideration at any time while the said elevated railroad matter was pending before it. • By order of the Board, WILLIAM C. HUDSON, Secretary. STATE OF NEW YORK. No. 48. IN SENATE. April 27, 1883. REPORT OF OOMMTTTEE ON CANALS UPON A RESOLUTION RELATIVE TO ENCROACHMENTS UPON CANAL PROPERTV BY THE NEW YORK, WEST SHORE AND BUFFALO RAILROAD COMPANY. To the Senate : The following preamble and resolution were heretofore submit- ted to the Senate : “ Whereas, The fact is self-evident that the main line of the rail- road of the New York, West Shore and Buffalo Railroad Company is for a distance of one and a quarter miles, at a point about two miles west from Fort Plain, between locks Nos. 32 and 33, built into the Erie canal upon land the property of the State, and for a distance of ten miles east and west froiii that point the work of constructing said railroad upon and along the canal banks is pro- gressing. “ Resolved^ That the committee on canals be and is hereby in- structed to inquire and ascertain forthwith the extent to which the line of the said railroad has been, or is being, constructed upon and along the canal property of the State, which is specially reserved and protected to the State by its Constitution ; by whom the permission was given for such construction, the authority for the same, and the consideration, pecuniary or otherwise, given, granted or promised for such permission, with power to the <;ommittee to send for papers, books and persons, and to report at as earl v a date as practicable.” This preamble and resolution were not di recti}" acted upon hy the Senate, but were referred to the canal committee under a resolution in the following words : “ Resolved. That the resolution be referred to the canal com- mittee to report in the first instance upon the advisability of its [Sen. Doc. No. 48.J 1. ' 2 [Senatk adoption with or witliout amendirient, and upon tlic necessity of any investi^i:ation, or report other tlian can be made by the State o(li- cers charged witli tlie care of the canals, or the Railroad Corji mis- sion.” Yonr committee respectfully report that they have considered tlie I’esolntions at several sessions, of which notice has been given, and that all |)ersons desiring to appear before the committee have had the opportunity of doing so. Yonr committee have been attended ])y the Attorney-(jeneral, the Superintendent of Public Works, and Ids predecessor. Subsequent to the introduction of the original preamble and reso- lution in the Senate, a similar inquiry was directed by tlie Assem- bly, and the speaker of that body received in response to their call written reports carefully ])re[)ared by the Siq)erintendent of l^ublic A¥prks and the State Engineer and Surveyor. In order to avoid additional ex])en8e and annoyance to public offi- cers, the Superintendent of Public Works and State Engineer and Surveyor were not called upon to make separate reports to your committee; but the reports of these officers to the Assembly were considered by your coimnittee, and are made a part of this report. {See Asserttbly Doeiiments^ Nos. 101 and 106.) Your committee do not find that any of the canal lands have been sold or disposed of ; but that the same remain under the control of the State authorities in cliarge of the canals; that certain lands within the blue lines and within ten rods of the Erie canal, not nec- essary for canal purposes, have been occupied by the railroad com- pany ; that this occupation is held by permits specially limited and guarded, so as to maintain tlie free and perfect use of the canals, and that these permits are according to the precedents which have been established in numerous other cases where like permission has been given for many years past to other railroads, a portion of which permits are referred to in the exhibit attached to the report of the Superintendent of Public Works made to the Assembly. Your committee annex hereto the blank, form which has been used for the permits granted to the railroad company, whereby, in addition to other things, itjappears that all the work authorized by the permits is to be done under the supervision of the Assistant Superintendent of Public Works and of the Division Engineer of the canal, upon plans and specifications approved by the State En- gineer and the Superintendent of Public Works, and under inspect- ors to be selected by the Superintendent of Public Works ; that the work should be done at such times as the Superintendent of Public Woi‘ks directs, and so as not to interfere with the free and perfect use of the canals, or endanger the lives or property of those en- gaged in nqiairing, navigating or operating the same. It also appears that by the terms of the permits the railroad com- pany is held liable for all damages to the State, or to individuals, in consequence of the construction of the railroad, and the Superin- No. 48.J 3 tendent of Public Works is given supervisory power over so much of the railroad as may be constructed within the limits of ten rods of the canal. In these permits the Superintendent;^ of Public Works reserves the right at any time to revoke and annul the permits, and to cause the railroad company to remove their road from tlie limits of ten rods of the canal, with the right of re-entry on such lands, as the free and perfect use of the canal at any future time may require, or as may be necessary for making any repairs, improvements, or alter- ations in the same. In addition to the foregoing, an acceptance by the railroad com- pany of the permits is made a covenant for the faithful perform- ance of all the conditions and requirements made by the Superin- tendent of Public Works. Your committee find that in the initiatory proceedings the Attorn ey-General appeared on behalf of the State ; tliat plans and specifications in every case where application was made by the rail- road company to occupy lands within ten rods of the canal are in the office of the Superintendent of Public Works ; that the same, with the maps accompanying them, were submitted to the State Engineer and Surveyor, and that the action of these officers in regard to the occupation of canal lands was afterward submitted to and a})proved by the Canal Board. Your committee, therefore, find that all the facts and papers con- nected with this occupation are to be found in the offices of the Attorney-General, the Canal Board, the State Engineer and Sur- veyor, and the Superintendent of Public Works, and that all the permits and accompanying papers are on file and accessible to the Legislature, or to any private citizen, on proper application. Your committee, therefore, report that no further inquiry is deemed necessary on^tlie part of the committee, and it is their opinion that no other or further action is required. 0. L. MACARTHUR, A. M. HOLMES, D. H. EYANS, JOHN W. BROWNING, R. H. ROBERTS, ROBT. C. TITUS, THOS. F. GRADY. April 26, 1883. Office of Superintendent of Public Works, ) Albany, 188 . i Whereas, the Company, a corporation duly formed and organized under and by virtue of the laws of this State, has made ap})licatloa for permission to construct a railroad , and have, filed in this office maps, plans and profile of the route designated 4 jj [Senate No. 48.] for their railroad and of tlie as required by section 17 of act chapter 276 of the Laws of 1834, Therefore^ permission is hereby granted to said Company to construct and maintain at its own cost and exj^ense a railroad as shown on the ma])s acc-om])anying said application, and now on tile in tliis office, upon the following conditions and re- strictions : 1st. Said Company shall he subject to and shall ])ay as the value of such ])ermis6ion to the State of New York before com- mencing work under said permit, such sum as shall be fixed by a))praisers to be duly a])pointed by the Su])reme Court, in pursu- ance of the statutes for the appraisal of lands taken by railroad companies for the construction of their railroads. 2d. All work authorized by this permit shall be done under the supervision of the Assistant Su])erintendent of Public Works and the Division Engineer of the Division, upon plans and s})ecifica- tions approved by the State P]ngineei’ and the Superintendent of Public Works, and the salaiy of inspectors for said work, to be selected by the Superintendent of Public Works, shall be paid by said Comj)any, and the work shall be done at such times as the Superintendent of Public Works shall direct, and so as not to interfere wdth the free and ])erfect use of the canals, or endanger the lives or property of those engaged in repairing, operating or navigating the same. 3d. Said ' Company shall be held liable for and shall pay all damages that may occui- or arise, either to the State or to individuals, in consequence of the construction of said railroad. 4th. The Superintendent of Public Works shall have supervisory })Owei‘ over so much of said railroad as is or may be constructed within the limits of ten rods of said or upon any lands be- longiug to this State for canal purposes, as provided by section 17 of act cha])ter 276 of the Laws of 1834. 5th. The Superintendent of Public Works reserves the right at any time to revoke and annul this permit and cause said Com- ])any to remove said i*ailroad at its own cost and expense from the limits of ten rods of said ; als > the right on the part of the State of re-eniry and re-occupancy of such lands covered by this [lermit, as the free and ])erfect use of said canal at any future time may require, or as may be necessary for making any repairs, im- ])r()vements or alterations in the same. 6th. An acce])tance by said Company of this permit shall be deemed a covenant for the faithful performance of all the condi- tions and requirements herein contained. In testimony whereof, 1 have hereunto set my hand and affixed the oflicial seal of said office. Superintendent of Public Works. STATE OF NEW YORK. No. 49. IN SENATE. April 28, 1883. REPORT OF COMMITTEE ON CITIES RELATIVE TO THE DE- PARTMENT OF PUBLIC WORKS OF THE CITY OF NEW YORK. The committee on cities of the Senate of the State of New York, to whom was referred the resolution adopted by the Senate on March 15, 1882, directing yonr committee, among other things to examine into the management of the department of public works of the city of New York under Hubert O. Thompson, the then and now com- missioner of said department, respectfully report : That as soon after the adoption of the resolution in question as the official duties of yonr committee would permit, and upon as short notice to the commissioner of public works of the action of the Senate and of the duties of your committee, as seemed consistent with official courtesy and the magnitude of the charges preferred against said commissioner, and on the 31st day of March, 1882, your com- mittee met at the department of public works, in the city of New York, and at various times during the session of tlie Legislature there and elsewhere in the city "of New York, and at the city of Albany, held and continued its sittings and hearings. That in order to advance the investigation -as rapidly as possible and to facilitate an under- standing 01 the various accounts and methods of the department, your committee at its later sessions retained Mr. Richard S. New- combe as its counsel to conduct tlie investigation, and to his indus- try and legal acumen your committee are indebted for the orderly arrangement and clear presentation of results. The commissioner was represented by Mr. George Bliss, Mr. Francis Lynde Stetson and Mr. Robert Payne, as his counsel. Y our committee, at the request 2 [Senate of counsel for Mr. Thompson, before presenting their views upon the merits of the investigation, call attention of the Senate to tlie fact that upon tire first notice to Commissioner Thompson of the investi- gation the access to the records of the department, and an unre- strained opportunity to examine into all things therein, or connected therewith, was accorded. Coming to the matters which your com- mittee was instructed to consider, the Senate is reminded that the resolution directing the investigation proceeded first upon the fact, recited in the preamble, that the expenditures of the department of public works for 1881 exceeded those of 1880 by $620,065.21, and those of 18Y9 by $1,312,759.28; and secondly upon the charge, also recited in the preamble, that such increase of expenditures was due to gross neglect of duty and violation of law on the part of the commissioner. At the outset of the investigation Mr. Thompson stated and explained, in response to questions by your committee, that he became commissioner of the department of public works on December 10th, 1880 ; that the estimates for 1881 were made in September, 1880, by his predecessor, Mr. Allan Campbell; that the expenses of the department vary from year to year, increasing and decreasing with the amount of money appropriated to its use, and that in 1881 the expenditures of the department did not exceed the amount which had been appropriated to be expended by it. Mr. Thompson also stated that there were four classes of accounts in his department which were affected by this increase, namely : 1. Appropriation or tax accounts in which there was an increase of $452,136 00 2. Assessment of reimbpirsement'account in which there w’as an increase of 164,633 00 3. Revenue or temporary tax loan in which there was an increase of 4,718 00 4. Bonded account for permanent water supply in which there was an advance of 3, 411 00 Making as already stated a total increase of $620,076 00 In reference -to the increased expenditure in the appropriation account it was found that $132,835 was incurred for new works, in rebuilding a public market and a public bath, the alterations of armo- ries, and changes in the reservoir system. The balance, $319,301, was for increased work covering a reinforce- ment of the aqueduct which had become necessary from extreme ])ressure and striiin, and on account of its age ; for the repairing and repaving streets, and repairs to tlie boulevards and unpaved roads ; fertile rebuilding of sewers ; for suppressing waste of water and rojiairing the pipes; for the increased cost of lighting the city, and lor improvements to public buildings. The nec.essiticis of these works woi’c made evident, and had been anticipatt;d by the predecessor of the present commissioner in his request to the boanl of estimate and apportionment, which is required No 49.] 3 to pass upon and determine the appropriations of each departmeni of the city. The Comptroller is a member of this board, and it ap- pears that in the course of the political changes in the city, it became his duty to pass as comptroller upon his own estimates, made shortly before by him in his official capacity as commissioner of public works. The present commissioner expended the allowances made by the board of estimate and apportionment, and consequently the committee deemed it necessary only to investigate the manner in which the expenditures had been made. The increased expenditure in the assessment and revenue accounts, aggregating $171, 351, it appears was occasioned by the increase of work on regulating, grading, paving, sewering and other improvements to the streets. In the bonded account there is to beinoted a small decrease in the com- parative expenditure with the preceding year, the money expended was for increasing the water supply by conducting the waters of the Bronx river to the city, and making them available ; the commence- ment of this essential improvement necessitated the purchase of land and water rights, including surveys for a new aqueduct. These statements and explanations of Mr. Thompson have been carefully examined by your committee’s counsel, and it is but fair to the commissioner of public works to say that they have been fully verified. The attention of the Senate is also recalled to the recital contained in the preamble, upon which the resolution of investigation was in part based. .This recital is to the effect that the published quarterly reports of the Comptroller of the city of New York for 1881, show apparent evasions and violations of law, and charter provisions on the part of said commissioner.” It will be seen from the testimony, as well as from the investigation of accounts made by your commit- tee,' that the fact in this regard, is that such payments of over $1,000 were, in many cases, the aggregation of numerous orders, running from $10 upwards, and that these items were and are allowed to ac- cumulate in order to save much clerical labor, and prevent petty transactions in the departments . In the reports of the Comptroller, the dates of the payments are recorded, and not the dates on which the orders were issued by the department of public works, or the dates on which the labor or material were furnished to the department. The sucessive appearance of the names of an individual or firm will occur in the Comptroller’s report, who, although receiving a number for the same class of work or materials at different times, covering a long period, may not render his bills against the city until they have accumulated, and he then receives at one time, several warrants or checks, which aggregate more than $1,000. From the evidence, as well as the examination made by us, it does not appear that any one order, amounting to $1,000, was drawn on any single day, for any one article or kind of work. In regard to the disposition of other funds embraced in the repairs 4 [Senate to sewers, restoring and replacing pavements or flagging over open- ings made in the streets by plumbers and otliers, we lind that while the reports of the comptroller show that sums varying from $800 to $1,000 were paid at dates so near each other as to indicate an ap- parent violation of law, an examination of the accounts and a tracing of the separate bills to the original order from the department of public works, show however, that in many cases, these amounts were made up by aggregating numerous orders, varying in amount from $10 upward as heretofore explained. Touching the matter of supplies, it seems to have been the custom of the department, in the purchase of hydrants, stop-cocks, etc., that the lowest bidder, at a letting of work, should receive the subsequent orders for like articles, until a change in the condition of the market warranted the invitation of new proposals either by public or private letting ; the prices for certain classes of goods, as established by the public letting of October 15th, 1881, prevailed until the public letting of May 4th, 1882, and at the latter letting, the prices were a trifle higher than had been paid in the interim. From an examination of reports and inquiry at other departments, we are informed that all exercise the discretion of purchasing sup- plies without public letting, in quantities amounting to less than $1,000, and it is claimed by the departments that the use of this discretion is generally conducive to the best interests of the city. In the charter of 1857, the limit as to the amounts which heads of departments might expend without advertisement was fixed at $250, but by the charter of 1873, now in force, the amount was increased to $1,000. We are however of opinion, notwithstanding the course hitherto pursued by the department of public works and other city departments, that when it is apparent supplies will be required within a reasonable time to a value in excess of *$1,000, that such supplies should be obtained by contract through public letting under the charter. In conclusion, your committee commends the testimoney taken upon the investigation to the consideration of the senate. Its perusal will show that the committee did not confine its researches within the technical limits ot the resolution, but believing that abuses, if they existed in the department, should be abated whether they fell within or without the strict line of authorized inquiry, your commit- tee sought generally for information touching the right and proper conduct of the public trust reposed in the commissioner of public works. With this field for investigation, thoroughly traversed as your committee believe, no material irregularity or mismanagement in the business of said de])artment has been found, and it remains therefore only for your committee to submit the result of their investigation to the Senate and their conclusion that the evidence does not sustain the allegations coiitained in the preamble to the resolution of March 15th, 1882, and that the commissioner of public work^ should be exonerated therefrom, and recommend to the Ko 49.] 5 Senate the adoption of this report and the discharge of the commit- tee from the further consideration of the matter. THOS. R GEADY, D. McCAETHY, JAMES DALY, FEANK P. TEEANOE, JAMES W. COYEET. We attended but two meetings of the committee and nothing was developed at such meetings, to indicate any want of official care or corruption in the department of public works. F. LANSING, CHAS. H. EUSSELL. j ■ ■' < ' '-Y‘ ‘'v . ^ •‘ - . wm ■' Vr'':.;-i ' •'';■,■ ',■■■■ ■ ' : Vv;-.- ■■ 'IS ■V' >/. (>' ' ■ ^ ^ >:;V " 1 ■ i ',1 ' ::■!■■ ' y ■' f^' f'V y'v i ■■- ./ iM- ' ' fiffv J ■ Y 4: :-4 -.7 - f M,: • ycU'^ ’’7 " ' € M 7::il^^:. ‘''7^4' ■ ■ ' • : i -'X 5 v«7fr :■ ' ■ ' 'i X ' ' '»/ 'V'j ‘if',' ' , /' \ ' ,'■' ‘''.^i''-, * .'• ^ . . * if' .'ii '''■ ■ ' ■' ’ ' ' ' '- 'T'- '.N !.«vf.v ■ r r"'"'!:' ' v ■ '■■' ft rrt , •,- \, ; •/ -'i ' ■',' ' '. '''^. ^ A--. ? P'. ' 'r.' ^ ■ ' •■ ' ‘ ' ■ \>:. VV'v ' • - - -■■ — ■"' .' . ■>. • >f ■ ' n ^'4 ' W-^ ', *' • ' ■'•^'^ . ■ . . ' • . i' ’' '\ y ' .' WK\:^-‘r'^ S: '■ '■' ’'■ ;; f ^ ' -'. , ■' 7 ,i'y .■'I; :Vv.- »■ st?' f / ■' :' •, .'.. .,'P- •=^" 'Vi!,v'*/:v. v-s"'' 1 't* ' ' i-.“Vjr'. ' f ■ 's*' ' ' V ^:', V/ , 'V- "'- . "" . -,#4.^ - >■ -s ' ■ v.A'v ' ; ' :.vV.^' - '-V' ■ '' ' f i • v:,.^ ,-„v, ';. ^,,;v.. ,v ^ ^r- < . •: ' • ■' ‘ f . .1 • ' >' ' -^z :y^ ' fv/j.; , ‘ '■ ^ ^ .. :x^c \ ' ,'. c^;.’ ' >'; ’ ' ..Vi-’"'' -:' ■'/'^' '■: • T jWB V ' ■„ ■ » ■ - . ■ .••■i.: 7 % ■ ■'■;, -o-vy^ •m - ■ '• .• . -4 ■ ■ > • ;-'■ '. ■ '■‘ V.- tv ;v.. «•,.■■■-, s .;, vvi .Jj V . .• ; ' ' . , , vX’''»‘;<^ vi'Xvii^xs ■.’’A''- 'V ^'V: ‘ X' :, . .■ ■ '^' ■ ■' ’ '''■ : tuLSdtt - i >^rli f('' . ■ ' ■..■./v’l'x/, '.i'l'A ■', '^<1 ■ll;' \ / v •' ,( ' !*■ i'W':; STATE OF NEW YORK. No. 50. IN SENATE. May 4, 1883. REPORT OF COMMITTEE APPOINTED TO INVESTIGATE THE LAYING OF MAINS AND OTHER STRUCTURES BENEATH THE SURFACE OF STREETS IN NEW YORK CITY. To the Senate: March 2d, the Senate adopted the following : Whereas, It is matter of serious complaint that certain corporations in the city of New York, having franchise rights to use the streets and avenues of the said city for the laying of mains and other structures beneath the surface thereof, having so exercised their rights in refer- ence thereto as to endanger the lives and seriously affect the health of the residents in said city ; and Whereas, Many complaints have been made as to the condition of the pavements of many of the streets and avenues in said city, result- ing, in a large measure, from the manner in which the corporations referred to have conducted their operations in tearing up and restoring the same ; and Whereas, Pavements of the said city are, in many districts, in a con- dition which renders passage over them difficult and dangerous ; there- fore, Resolved, That it be and hereby is referred to the Senators from the city of New York to inquire into the matters above specified, and report what legislation, if any, is in their judgment necessary to con- trol and secure the proper exercise of the rights and franchises of the corporation referred to, in opening the streets and avenues of said city and in constructing their works beneath the same and restoring the pavements ; and what legislation, if any, is necessary to secure a more adequate and efficient system of paving the streets and avenues in said city . [Sen. Doc. No. 50.] 1 2 [Senate, No. 50.] Pursuant to said resolution a inceting of the Senators represent- ing the city of New York was held at the City TTall in the city of New York, March 31st, for the purpose of hearing argument upon the subject referred to in the resolution. A nund^er of citizens appeared and addressed the committee and their statements are su])mitted herewith. The argument was in favor of legislation authorizing the repavement of Fiftli avenue in tlie city of New York witii a granite block on a concrete foundation. d'hat there should be a durable and substantial pavement provided for Fifth avenue, which is one of the great thoroughfares of the city, there does not appear to be any doubt ; and as the local authorities do not possess the power to make such an improvement, we recommend that some legislation upoif the subject be passed. JOHN W. BROWNING JOSEPH KOCH, FRANK P. TREANOR. REPORT'. Tlie Senate committee, to whom was reterred the matter of the street pavements in New York city, met on Saturday, Marcli 31, 1883, pnrsiuant to, resolution, etc. On motion of Senator Koch, Senator Browning took tlie chair. The following views were given by citizens in relation to street paving, etc. : John J. Bradley gave the following as his views on the matter : It is only about an hour ago, Mr. Chairman, that I was informed that a committee, consisting of the Senators representing the county of New York, were to meet here, for the purpose of hearing what any citizen might have to say in regard to the paving iind repairing and the condition of the streets of this city. I at first thought it Was the intention of the committee to hear suggestions only in relation to the repaving of certain prominent thoroughfares. So far as the uprooting of the streets is concerned, not being an engineer I am unable to say how that can be remedied. I suppose the present commissioner of public works has or will have some advice on that subject. The way streets are torn up and the pavement afterward relaid is a matter that requires very serious attention, and something should be done to remedy it. So far as pavements are concerned, 1 very justly can say that the streets are in a horrible condition — that is, many of the streets are and the principal ones too. Many of the side streets are dangerous on account of the bad pavement, and I consider that they in a great many instances should be regraded and repaved. So far as the streets where a great traffic is done, such as Broadway, and West Broadway, where an enormous amount of traffic goes over them, those who have a great many vehicles have come to the conclu- sion that the only decent pavemient is the pavement now on Broadway laid even if laid level. It is a pavement that I suppose nobody has a patent on and any one is allowed to come in and make their bids on it, and I think the people of the city of New York would be best sub- served by establishing a uniform pavement for all the streets and ^venues similar to that now on Broadway. Eestrictions should be made in regard to tearing up the streets which after they are properly paved and not meddled with will be in good condition. These are my views, gentlemen, without any notice that J was to appeO'^ her^ ^ thank you for your kind attention ! 4 [Senate Views of Mr. Win. T. Ryerson. I am one of tlic firm of Ryerson & Brown and am largely interested in the livery business in this city. The streets have given us a great deal of trouble and annoyance. It has been a very serious matter with us, whei'C they take and tear u]) the street, it subjects us to a great many delays, and our customers have, very ])ro|)crly, made a great many com])hiints and found a great deal of fault with them. I think that the Fifth jivenue ])avement is of very great importance, as it is one of the main thoroughfares, and we have had a great deal of troulde about it. Tlie patent pavement in front of the Ihiekingharn Hotel” is very bad. At one time 1 have seen- as many as three single horses down, on account of the sli])pei-y i)avement there. The pave- ment in front of the Windsor Hotel,” which we do the work for, troubles us a great deal. It is very sli])pcry, ])articularly after a rain, and it is a risk to drive horses there. The right kind of ])avemcnt to be placed there is a rough stone i)avement or a coarse granite pavement. By Senator Browning : Q. Mr. Ryerson, in your judgment, the commissioner of public works has full charge of this matter, has he not ? A. I don’t know. (2. He is superintendent of all the streets ? A. I have understood that the Fifth avenue pavement was a separate matter, that it was under control of the Legislature, and it has been so in the past and would be in the future. It is very important that this avenue should be re])aved with a pavement similar to that on Broadway, and means should be taken to prevent the avenue from being torn up. Q. AVhen was it paved last ? A. Several years ago. Since then . they have tried experiments on it, two or three times, with patent pavements, and every one of them have been a failure and a nuisance. Q. Is there a good pavement there now ? A. No, sir ; it is very slippery, and if it had not been for the action of the stage company in sanding the street, many days we would have been unable to use it at all. When it is very slipj^ery sand is put there, thrown over it by the stage company. The stone with which it is paved is the wrong shape and wears very slippery. Q. What in the way of improvement have you to suggest ? A. A coarse-grained granite stone pavement, laid oval, with a good solid bed of sand underneath. if Has the commissioner of public works now the right to go ahead with these improvements ? A. I have not kept up with the spirit of the times in regard to the rights of the commissioner of public works. I i ll ink it rests with the common council to be done, under the direc- tion of the commissioner of public works. Samuel W. Andrews gave the following as his views on the subject of street paving and rcjiairing: 1 ani jiaj-t owner of the Fiftli avenue line of stages, and have been for tlie last thirty-one years; on the 12th of April next, it will be thirty-one years. 1 ran stages before the present jiavement was laid. J tiiink the present pavement was laid about twenty-live years ago — 5 No. 60.] somewhere about tliat time. It is old and has worn very smooth and very slippery and it is dangerous to horses to travel on it, so much so that every winter we have to sand it over, otlierwise it would he im- passable. This winter we have distributed over two cargoes of sand — since November last, tliat is. AVc have had to do that for twenty-five years. It is impossible to get over these smooth blocks, and we have often been obliged to run around them to avoid them. We give our drivers instructions to go around them. It is a pavement that in my judgment that won’t do Fiftli avenue. From my long experience of thirty years, no other pavement would do that avenue, except a solid stone pavement similar to the Broadway pavement, no other pave- ment would stand there except it, to be laid oval and roughed so that a horse could catch with his feet and wouldn’t slij); such a pavement and such only will meet the requirements of traffic. Our company has spent on an average five hundred dollars (1500) a year for the last few years — I mean for the last twenty-five years, and that foots up quite a large sum of money to be spent by our company repairing a street, besides the amount of money the city has spent on it, also for repairs. The city has done all they could for it in the way of repairs, and the rest we have done ourselves. It is an avenue over which there is a very large traffic, and has caused a great deal of trouble. It is really the only opening to the Central park and the principal thoroughfare from and to the Grand Central de})ot, and over which more omni- buses pass and the best horses travel in the world. The most valuable horses in the world are driven over it. I have heard gentlemen say that they would do any thing to get a good pavement on Fifth avenue and the cost would not be considered at all, what they wanted was a good pavement, no matter about the cost, and that is what Fifth avenue should have. It wants a safe pavement laid where horses are not con- tinually slipping and falling down. I have been requested frequently to call on Mr. Campbell during his administration as commissioner of public works and have done so, and Mr. Campbell told me probably it would be repaved. To-day, positively, it is not safe to drive over it. In my opinion, nothing but a granite pavement should be laid on Fifth avenue, a pavement similar to the Broadway pavement and like the Seventh avenue ])avement. If you drive up Seventh avenue you would be pleased with the pavement. I have frequently went through Canal street, and up that way to get to Seventh avenue, and then back in order to avoid going up Fifth avenue. I am very sure the people of this city would be pleased with such a pavement as that. There is no other pavement that will stand because of the great amount of traffic over Fifth avenue. Another great injury done our streets is allowing them to be torn up at all times. This is wrong ; the streets should be properly paved and after that should be left alone. People driving to the park by way of Fifth avenue are dis- gusted with the pavement of it. It is simply disgraceful. A new pavement should be laid under the direction of commissioner of public works — Mr. Thompson. I think if it were paved under his direction the people would be satisfied that it would be properly done. A number of people have asked me to call and see the commissioner of public works about it. 6 [Senate By Senator Browning : Q. You say a iiuni])er of people have suggested to you the propriety of calling upon the connnissioner of ])ul)lic works to ask him to put down sucli a pavement on Fifth avenue as you say is needed there — what reply did lie make ? A. He said he would do that as soon as he could. Q. Do you think the pavement now on Fifth avenue is worn out ? A. Yes ; the stones have ])een turned over, they are loose ; 1 have turned them over myself, and have taken them up myself by the hun- dred ; we have had to do it in order to get along. Q. When did you last call on the commissioner of public works ? A. I think it is two years ago or more. It was when Mr. Campbell was commissioner of public works. I never spoke to him but once about it. Some gentlemen on the ‘^road’’ refjuested me to call on him in relation to repaving Fifth avenue and I did so, as I promised them I would. When I called on him I told him 1 was directed to do so in relation to it, and he told me that as soon as he could attend to it he would. He said when he got the money he would attend to it. Q. Have you any thing to say about tearing the streets up and put- ting down steam pii)es ? A. Yes ; we have suffered greatly by that. During the last winter jiarticularly, it lias hurt us very much ; they have torn up portions of Broadway and Fulton streets. It has hurt my business very much ; it has not only hurt our business, but it has rendered travel very dangerous ; I had one stage broken all to pieces. One of our horses fell into a hole caused by this laying of steam pipes and hurt himself. Another time a large piece of rock came crashing through the roof of a stage, it must have weighed fifteen pounds, for- tunately no one was killed ; it was caused by the explosion of a steam heating pipe. This thing of tearing the streets up should be stopped. Q. How did you say the rock came through the stage ? A. It was caused by a steam heating pipe bursting, and it sent this large stone up in the air and came crashing through the roof of the stage, nobody was hurt, it broke through the top and went 'right across. By Senator Boyd : Q. Do you say this stone was thrown in the air by a burst in one of tlie steam heating pipes ? A. I presume it was, the driver reported that a steam pipe had bursted in the street, and had thrown this stone through the stage, but nobody was hurt. I have had several horses hurt by stepping into holes in the street. Q. Can’t the holes be avoided ? A. No, sir ; I considered, it very injurious to the streets to allow this laying of steam heating pipes, one can’t imagine the moment a burst might occur. lly Senator Fitzgerald : (2. When you asked the commissioner of public works about the re- paving of Kiflh jiveniie was it to be done out of the a])propriation for r(!i)aii-ing stro(!ts. A. J le replied that there was no money appropriated for that ))urpose now, but that as soon as they had the money they intended to rcjiavo it. In driving through the streets it is like driving No. 50.] 7 oyer a mine, you don’t know the moment tiiey are going to burst and send you up in the air. Not long ago my brother was ])assing down Nassau street, when something resembling an earthquake occ.urred and blocks and asphalt filled the air. Senator Browning — ‘‘If there is anybody here that desires to be heard now upon the subject we are ready to listen to them.” Mr. Marshall : — “Mr. John B. Sherwood said he would be here, he is very anxious to have a granite pavement on Fifth avenue.” By Senator Browning : Q. Mr. Eyerson, have the men in your business ever had any con- sultation upon this subject, and have they come to any conclusion as to how Fifth avenue should be paved ? A. Yes, sir ; several years ago we did, but we were told as there was no appropriation to repave Fifth avenue it could not be done. I was given to understand then that it was a matter with which the Legislature had to deal and not the city authorities. Senator Fitzgerald — Then I suppose the Legislature must make an appropriation for this work; as I understand it the commissioner of public works has an amount set apart for repairing and he can’t use any of that appropriation for repaving ? A. Yes ; that is it, I believe. Q. What have you to say about the present manner of paving the streets — so far as the stone is concerned ? A. Many of the streets are paved with a trap block that wears very smooth, and is very slip- pery, especially in dry weather. In the month of March it is as smooth as glass. We have never experienced any such trouble with the cross- grained granite blocks. I know from experience that the trap block wears smooth. We have four hundred (400) horses running all the time. Q. You are one of the firm of Eyerson & Brown, are you not ? A. Yes, sir. The committee here adjourned sine die, Senator Browning stating that any further information on the subject could be forwarded to him at Albany. The above is a correct copy of the proceedings of the above com- mittee, which met in the City Hall at New York city, Saturday, March 31, 1883, at 1 p.‘ M. New York, Apr^l 2,^1883. TAMES H. LYON, ^i^Stenographer, 8 [Senate 533 Fifth Ave., New York, ) March 31, 1883. f lion. Jno. W. Browning, Senate Chamher, Albany, JY. Y.: Dear Sir — • In (Icfcrence to requests nuide to me })y several of my l)atroiis — owners of Fifth {ivenue ])roperty — it liad been my intention to go before you and your committee to-day to urge the necessity of repaving the Fifth avenue, but other important business has pre- vented me. The condition of this avenue — tlie finest tlioroughfare in the world — is simjvly disgraceful. The little worn-out and slijipery trap block stones were only lit for light carriage driving — the heavy traffic now existing requires a large and dce|) but narrow-edged paving stone set upon a concrete bed to withstand tlic travel. The condition of the avenue to-day renders life and limb in constant jeopardy, as witness the daily accidents. I inclose you a couple of printed slips. Yours truly, ClIAS. MacKAE. A Petition to Kepave Fifth Avenue.with Granite Blocks. New York, Ajiril 4, 1883. Hon. J. W. Browning, Chairman : We, the undersigned residents and tax payers of the city of New York, having seen your invitation to those having any thing to say relative to the repaving of Fifth avenue, would respectfully petition your honorable committee to favorably consider the question of taking up the present pavement and putting down granite blocks the same as Broadway. Every day there is one or more valuable horses fall and permanently injured. We have been as patient as possible in hopes that some action would be taken whereby we would be relieved, but 'up to the present there has seemed to be no prospects of our hopes being realized. Hoping this, our petition, will not be in vain, we are, dear sir, very respectfully. ' Joseph N. Naylor, Thos. N. Cuthbert, John H. Shaw, A. D. Williams, Edward Griffin, George W. Skellen, Jas. llarmel, Edw. P. Moore, John Martine, J. II. Horton, John H. Burk, Geo. H. Rich, E. P. Sanderson, Geo. W. McLean, Alex. Herring, Henry L. Faris, Washington Hadley, Lewis D. Bulkley, Chas. G. Child, W. S. Fogg, J. E. Cossart, Thos. C. de Luce, Chas. H. Whitfield, Peter Kenny, H. R. McMurray, Chas. E. Bostwich, No. 50.] 9 Eugene S. Bull in, Z. M. Quimby, F. R. Arnold, S. H. C. Wade, Jno. N. Gerard, Nicholas W. Day, A. M. Underhill, 0. H. MacLein, Oliver W. West, Edward L. Milhau, Chas. Macauley, J. E. Hamilton, Win. Y. 'bompkins, Theo. N. Melvinn, G. Arnold, F. C. You mans, P. Wm. Binder, J. L. Naylor, R. M. Carrington, Thos. B. Odell, S. H. AVhlkins, Ralph Sharrock, John T. Pryer, C. L. Frees. l;s;^ ■■ ■• ■ ' ‘-■..'131 ;:,.i ■"■ '';■ ".' ,•; '■■■■'■'?.:: .■'' ' r-’’.' S^v. 1 ' ..'^'®'; •■ '' '''.'^' '■■ '• a ■ ' '< »■/■./■' j ' '-r. * '^ ' *• ' .'; • .'-^ > "'W 'i' ■■ -v-" r;-. ..'vH-.' :. ■ ’: ■ ^ •-■■;■- > ■ :, • ., . • '^'' '.' • . '\ -V.'a.-'* ® ■: / ■■; ' ■' '. ■ ■ v ■ ' ■ ' ■ > .• ;■ /w*Vr** I. '■^. ■,'.' f* ■' ■•/■ i - ^ ^ . ' '* ^.y ^ .. ’ V,.‘ .1' ;■', ■ ... ’.' ;r ■■’■v?' ; - .:. ; ■■ • - -v- : ..' r • 'Wwai •-> W-.- ' •;*• .' < ! A A ' :v'&- sp,--. '••,,, . - .f. . ' : A«. /v '■i..AiS<^:A # V ..V-vi-.y- .. . ., ',,; . .,'V . ' <-^..' ^.,.'.'V.V'^^ '■■ r ■/ '; / ‘A" •.^■•Arv‘A A. ■-Ac:!:-. r-— ^ ■ , . ■ >', ' A' A'A' A •^;i.V'A\' yjf'A’''AAv ■’*■ .'AA< • ■ v^SjAv STATE OF NEW YORK. No. 51. IN SENATE, May 3, 1883. i REPORT OF THE SPECIAL COMMITTEE OF THE SENATE, AP- POINTED TO INVESTIGATE THE AFFAIES OF THE ALBANY COUNTY PENITENTIARY. To the Senate of the State of New York : The committee appointed by resolution of the Senate of March 2, 1883, to inquire as to the management of the Albany County Peni- tentiary respectfully report : That upon a hearing duly appointed and notified to the public, by the lecal press of the city of Albany, the officers of the penitentiary and others representing those by whom the management of the in- stitution had been called in question, attended before your commit- tee. That on both sides these parties were represented also by law- yers of experience and reputation. That upon statements made at that hearing by the counsel representing those who asserted mis- management and abuse in the affairs of the institution, allegations were framed as a basis for the investigation, which covered the grounds of cruelty to the prisoners in their treatment and discipline ; of overtaxing them by work ; of the insufficiency and bad quality of the food furnished to them ; of cleanliness in their clothing and ac- commodations ; and of the general care and management of the prison and of the prisoners confined therein. Your committee did not conceive that the resolution under which they acted directed or authorized an examination into the manage- ment of the financial affairs of the prison, that being in their judg- ment a question in which the county of Albany is especially, if not exclusively, interested- Moreover, it was understood by your com- mittee that an investigation in that respect was progressing under direction of a committee of the board of supervisors of that county. Your committee declined to enter upon that subject and limited [Sen. Doc. No. 51.] 1 2 [Senate their inquiries to the topics above mentioned, tliat is to say as to the general management and treatment and care of the prisoners com- mitted to tlie institution, for whom yoin* committee regarded tlie in- stitution as re8])onsil)le to tlie State. Your committee extended to both parties so a[)pearing before them the fullest opportunity to establish their respective accusations and defenses, and issued subpoenas to both sides in such numbers and as often as requested by such parties res]>ectively ; they also adjourned from time to time, and at each of their several hearings extended the right of examination and cross-examination to the counsel representing either side. Yqur committee held six different sessions at which witnesses to the number of twenty in the aggregate produced by those asserting the mismanagement of the institution were examined and cross- examined, and they also heard the testimony of seven witnesses produced on behalf of the penitentiary upon the examination and cross-examination of the counsel for the respective parties. Your committee are not able to discover in the testimony adduced any foundation for the charges made under any of the heads above specified, nor are they able to dispute the statements of those appear- ing on behalf of the institution that it is in all respects, so far as the subjects of investigation entered into by your committee are con- cerned, well and properly managed. Some testimony was given as to the quality of the food, the cleanliness of the cells, clothing and bedding, the care and attention to the sick in hospital, the overtaxing of prisoners in feeble health, which tended to show that there had been abuse or remissness in these particulars, but this testimony was not of a character to which your committee felt justified in according entire confidence, and the statements made by different witnesses testifying against the institu- tion did not wholly corroborate each other. Neither did the testi- mony given on the same subjects by officials of the prison, by the chaplains, two in number, in charge, by the physicians employed there regularly, or by the surgeon and physician called in for con- sultation, all of whom were examined as witnesses, confirm or sup- port such testimony in any particular ; such testimony was on the contrary in direct conflict with the testimony referred to. Your committee also paid a visit to the penitentiary and made personal examination of its various departments, such as the work- rooms for males and females, the cells, the kitchen, hospital, bathing- rooms, meat-room, storehouses, grounds and premises ; and they feel authorized to report that they found each and all of them in an ex- cellent and commendable condition. In the cells of the male departments the condition of tidiness in the bedding seemed to vary with the peculiarities of the inmates, but there was nothing ap[)arent in any of them which in the judg- ment of your committee indicated neglect, or failure to provide suf- ficient changes on the part of the prison officials, nor was any such condition apparent to your committee, as would not be looked for No. 61.] 3 in the bedding of men engaged in labor such as is required of the convicts in the penitentiary. The condition of the cells in the female department was excellent, and there was a marked and most com- mendable neatness in the corridors, kitchen, storehouses and other rooms and apartments of the prison. Your committee inspected the bread and rations of the prisoners, and are able to find no fault either with the quality or quantity which seems to be furnished, especially in view of the provisions of the statute which provide that the food in prisons shall be of wholesome but of inferior quality. There is testimony before your committee which shows that cor- poral punishment has been at times inflicted upon the prisoners, but no evidence was furnished your committee to show that any such punishment has been inflicted since the date of the communication of the Governor of the State to the Superintendent of State Prisons, bearing date February 2, 1883. All which is respectfully submitted. Albany, May 2, 1883. A. P. JONES, ABPAHAM LANSING - ^ . SUMNER BALDWIN. STATE OF NEW YORK. No. 63. IN SENATE. May 1, 1883. KEPORT OF THE COMPTROLLER RELATIVE TO ADIRONDACK RAIL- ROAD COMPANY. STATE OF NEW YORK : Comptroller’s Office. ) Albany, Ajprvl 26, 1883. f To the Senate : I have the honor to acknowledge the receipt, on the 23d inst., of a resolution adopted by the Senate on the 19th inst., of which the fol- lowing is a copy : Resolved, That the Comptroller be and is hereby requested to report to the Senate what lands are claimed by the Adirondack Railroad Com- pany, to be held by individuals as trustees for the benefit of said com- pany and upon which said company claim exemption from taxation, and also upon which of such lands the said company has received ex- emption from taxation. By order, JOHN W. VROOMAN, Clerkr In reply thereto I have the honor to report as follows, viz.: First. That the following described lands, claimed by said Adiron- dack Company to be held in trust for it by Henry C. Crane, the former treasurer thereof, are the only lands described by said resolution, of which 1 have information, viz.: HAMILTON COUNTY. Totten and Crossfield’s Purchase. Township Six. Lots 4, 5, 6, 10, 11, 12, 16, 17, 18, 24, 27, 29, 30, 31, 33, 37, 38, 44, 46, 47, 54, 55, 62 and 63. [Sen. Doc. No. 52.] 1 2 [Senate, No. 52. J Toionslii'p 22. South Lots 17, 20, 24, 25, 2G, 27, 28, 29, 32, 30, 40, 45, 46, 47, 48, 49, 50, 51 and 58. SARATOGA COUNTY. Glen (John) and 44 Others’ Patent. Lot 175, Sub. 9. Kayaderosseras Patent. 24^7i Allotment. Great Lot 9. Lots 1 and 2, sub’s 8 and 9. ST. LAWRENCE COUNTY. Macomb’s Purchase. Great Tract 2, Townsliip^^ GransMre.^^ South part, 9.072 acres. Second. That the Attorney-General now has under consideration the question as to whether or not said lands, during any of the years they were *so held in trust for said company, were legally exempt from taxation. Third. I am not aware that said lands have ever been exempted from taxation by reason of their being thus held in trust for or be- longing to said company. - Respectfully submitted, IRA DAVENPORT, Comptroller. INDEX TO SENATE DOCUMENTS ^A. No Albany County Penitentiary, report of special committee to in- vestigate 51 Albany. (See State Normal School.) Annual report Buffalo State Asylum for the Insane 12 of Commissioners of Emigration 23 Executive Committee of Prison Association of New York . . 46 Hebrew Sheltering Guardian Society of New York 32 Managers Hudson Kiver State Hospital. 10 Managers State Lunatic Asylum at Utica 7 Managers of the Society for the Reformation of Juvenile De- linquents 16 Board of Managers, Western House of Refuge 17 New Capitol Commissioners ... 13 of the Regents of the University 54 of Secretary of State in relation to statistics of the poor. ... 25 of State Assessors 21 State Board of Charities 14 State Engineer and Surveyor on Canals 9 on the railroads of the State 44 State Reformatory at Elmira 8 State Treasurer 3 of the Thomas Orphan Asylum, Buffalo 24 Trustees of the Lenox Library 19 Trustees of the State Museum of Natural History 53 Annual reports. (See Reports.) Assessors, report of State 21 Assembly and Senate, joint rules 5 Astor Library, report of . 15 Attorney-General and Comptroller, report of, relative to New York Elevated Railroad 36 B. Black River railroad. (See Utica and Black River Railroad.) Boarding-house list 28 Board of managers. (See Western House of Refuge.) Brooklyn Jnstitute, report of directors and trustees 27 2 No. Buffalo State Asylum for the Insane, annual report 12 Buffalo, Thomas Orphan Asylum, annual report 24 ^ C. Canal Appraisers^ report 6 Canals, annual report of State Engineer and Surveyor 9 committee on, report of 48 Capitol Commissioners, report of, relative to cost of New Capitol. 42 Capitol. (See New Capitol.) Charities, State Board of, annual report 14 Cities. (See Committee on Cities.) Commissioners of Emigration, annual report of 23, 31 (See Committee on Finance.) Commissioners of New Capitol, annual report 13 Commissioners. (See New Capitol.) Commissioners of the Department of Docks in reply to resolu- tion of the Senate, report of 30 Commissioners of Public Charities and Corrections in city of New York in reply to resolution of the Senate, report of 29 Commissioners. (See Railroad Commissioners.) • Committee on Canals 48 Committee on Cities, report of, relative to resolution of March 15, 1882 49 Committee on Corners and Futures, report of, relative to investi- gation of 45 Committee of Finance on order of the Senate to investigate af- fairs of Commissioners of Emigration, report of 31 Committee on Finance, report of, relative to State Normal School building 43 Committee on Insurance. (See Insurance ; Receiverships.) Committee appointed by mayor of New York city relative to water supply ... 34 Committee relative to corporations in New York city, report of . . 50 Committee of Senate, report of special, relative to receivership investigation 38 Committee of Senate to investigate the affairs of the Albany County Penitentiary, report of special 51 Committee on Villages, report of, relative to the town of Graves- end 39 Communication from trustees State Museum of Natural History. 20 Comptroller and Attorney-General, report of, relative to New York Elevated Railroad Company 36 Comptroller, report of, relative to State lands 52 statement from, in response to resolution of Senate, relative to amount expended upon New Capitol 18 Concurrent resolutions. (See State Museum of Natural History.) Corners and Futures, reports of committee appointed to investi- gate 45 Corporations. (See New York City.) a t). No. Directors and trustees of Brooklyn Institute, report of 27 Department of Docks. (See Commissioners.) E. Executive committee. (See Prison Association.) Elevated railroad. (See New York Elevated Railway or Railroad.) Elmira, report of State Reformatory 8 Emigration. (See Commissioners.) P. Finance. (See Committee on Finance.) Fish and Game Protectors. (See Game and Fish Protectors.) Franchise, rights. (See New York City.) Futures. (See Corners.) G. Game and Fish Protectors, report of, in reply to a resolution of the Senate 22 General orders, list of 11 Governor’s message 2 Gravesend, town of, report of committee on villages, relative to.. 39 H. Harvey, C. S., memorial of, relative to rapid transit legislation. . . 41 Hebrew Sheltering Guardian Society, report of 32 Hudson River State Hospital, annual report of managers 10 I. Indians. (See Onondaga Indians.) Insane. (See Buffalo ; Hudson River ; Utica.) Insurance, report of committee on receiverships 38,^ 41 Investigation. (See Receivership.) J. Joint rules. Senate and Assembly 5 Juvenile delinquents. Society for Reformation of, annual report of managers 16 Ii. Lands. (See State Lands.) Lenox Library, annual report of trustees 19 Library. (See Astor Library.) List of General Orders 11 of Senators 1 of Senators, members, officers and reporters with boarding- houses 28 ' 4 M. iNO, Managers of Hudson Kiver State Hospital, annual report 10 of the Society for tlie Reformation of Juvenile delinquents, annual report 10 State Lunatic Asylum at Utica, annual report 7 of the Western House of Refuge, annual report 17 Mayor. (See New York City.) Members. (See Senators.) Memorial, C. S. Harvey, relatiiig to certain rapid transit legisla- tion 40 Message of Grovernor 2 Majority and minority report of testimony taken by the commit- tee apnointed to investigate Puts and Corners 45 H. New Capitol, amount expended upon, statement of Comptroller relative to • 18 report Capitol Commissioners relative to cost of 42 Commissioners, annual report 13 New York, city of, report of committee appointed under resolu- tion of Senate by mayor of, relative to increased water sup- ply 34 city, report of committee relative to corporations having fran- chise rights to use the streets and avenues 50 city, commissioners of public charities and corrections in re- ply to resolution of the Senate, report of 29 'city. (See Commissioners ; Department of Docks; Hebrew Sheltering Guardian Society.) Elevated railroad, report of Comptroller and Attorney-Gen- eral, relative to 36 Elevated railway, report of State Engineer and Surveyor in ^ reply to resolution of Senate, relative to 37 Prison Association, report of executive committee 46 ^ O. Officers. (See Senators.) Onondaga Indians, report concerning condition of 35 Orders. (See General Orders ; Rules. ) P. Poor. (See Statistics of the Poor.) Prison Association of New York, annual report of executive com- mittee 46 Protectors. (See Game and Fish. ) Puts. (See Corners and Futures.) R. Railroad Commissioners, report of 47 j’e))ort of, I’clative to Utica and Black River rail- road bill 33 Itailroad. (See Utica and Jilack River Railroad.) 5 No. Eailroads. (See State"Engineer and Surveyor.) Rapid transit legislation, memorial of 0. S. Harvey 41 Receivership investigation, report of special Senate committee. . . 38 Receiverships, report of sub-conmmittee on insurance to investi- gate 41 Reformation. (See Society.) Report of Astor Library 15 of Buffalo State Asylum for the Insane 12 Canal Appraisers 6 of Capitol commissioners of estimated cost of completion of New Capitol 42 concerning condition of Onondaga Indians 35 Commissioners of the Department of Docks in reply to reso- lution of the Senate 30 of Comptroller and Attorney-General, relative to New York Elevated Railroad Company 36 Comptroller, in relation to State lands 52 of committee appointed under resolution of Senate by the mayor of New York city, relative to water supply 34 of committee on canals, 48 of committee on cities, relative to resolution of March 15, 1882 49 of committee relative to corporations in New York city hav- ing franchise rights to use the streets and avenues 50 of Commissioners of Emigration 23 of committee on finance on order of the Senate to investi- gate affairs of Commissioners of Emigration 31 of Commissioners of Public Charities and Corrections in city of New York, in reply to resolution of the Senate ... 29 of directors and trustees Brooklyn Institute 27 of finance committee, relative to State Normal School at Albany 43 of Executive Committee of Prison Association of New York. 46 of Game and Fish Protectors in reply to resolutions of Senate 22 annual, of Hebrew Sheltering Guardian Society of New York 32 majority and minority, of committee appointed to investigate Puts and Corners 45 of managers of the Society for the Reformation of Juvenile Delinquents 16 of managers Hudson River State Hospital 10 of managers State Lunatic Asylum at IJtica 7 of managers Western House of Refuge 17 of New Capitol Commissioners 13 Railroad Commissioners 47 of Railroad Commissioners relative to Utica and Black River railroad bill 33 of the Regents of the University 54 special committee of Senate to investigate the affairs of the Albany County Penitentiary 51 State Board of Charities . . . . " 14 State Engineer and Surveyor on Canals 9 e No. Heport of the State Engineer and Surveyor on the railroads of the State 44 in reply to resolution relative to New York Elevated Eailvvay 37 of Secretary of State in relation to statistics of the poor 25 in reply to resolution of Senate 20 of special Senate committee relative to receivership investi- gation 38 State Assessors 21 of State Reformatory at Elmira 8 of State Treasurer 3 of sub-committee on insurance to investigate receiverships.. 4l trustees of Lenox Library 19 of the trustees of the State Museum of Natural Ilistory 53 Thomas Orphan Asylum, Buffalo 24 of testimony of committee on villages relative to the town of Gravesend 39 Reporters. (See Senators.) Resolution. (See Concurrent Resolution.) Resolution of the Senate. (See Committee on Cities ; Commis- sioners of the Department of Docks ; Commissioners of Public Charities and Corrections ; Comptroller ; Game and Fish Protectors ; New York City ; New York Elevated Rail- ways ; Secretary of State.) Rules. (See Joint Rules.) Rules and orders of the Senate 4 S. Secretary of State, report of, in reply to resolution of Senate 26 report relative to statistics of the poor 25 Senate, resolutions of. (See Comptroller.) resolutions (See Game and Fish Protectors.) resolution. (See Secretary of State.) rules and orders 4 (See Committee on Finance ; Resolution of the Senate.) committee. (See Committee.) and Assembly, joint rules 5 Senators, list of 1 members, officers and reporters with boarding-houses, list of, 28 Society for the Reformation of Juvenile Delinquents, annual re- port of managers 16 Special committee. (See Committee.) Senate committee. (See Committee.) Statement of Comptroller relative to amount expended upon the New Capitol 18 State Assessors, annual report 21 Asylum for the Insane at Buffalo, annual report 12 Boai’d of Charities, annual report 14 Engineer and Siii-veyor on Canals, annual report ' 9 Erjgineer and Surveyor on Railroads, annual report of 44 Engineei- and Surveyor, report of, in re})ly to resolution rela- tive to New Yoi’k Elevated railway 37 lands, report of Coin])troller relative to 52 7 No. State Lunatic Asylnm at Utica, annual report of managers 7 Museum of Natural History, annual report of trustees 53 Museum of Natural History, communication from trustees in answer to Concurrent resolutions 20 Normal School at Albany, report of finance committee rela- tive to 43 Keformatory at Elmira, annual report 8 Treasurer, annual report 3 Statistics of the poor, report of Secretary of State relative to 25 Streets and avenues. (See New York City.) Sub-committee on insurance. (See Receiverships.) T. Thomas Orphan Asylum, Buffalo, annual report 24 Treasurer of State, annual report 3 Trustees. (See Directors.) of Lenox Library, annual report .... 19 of State Museum of Natural History, communication from.. 20 of State Museum of Natural History, report of 53 U. Utica, report of managers of State Lunatic Asylum 7 and Black River railroad, report of railroad commissioners relative to 33 V. Villages. (See Committee on Villages.) W. Water supply. (See New York City.) Western House of Refuge, annual report of managers 17 I >: >^55 '■ ''i’^V.;’' I. '‘'^' 'x^ •* •'’'•'*' ' W it‘'' .V • ' , . , : I • ■ ■t ■'■■■;; ■ ,■<«»“'■'■