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Now, this is the ordinance or the law that is proposed to be amenden by this provision and we can not take that into consideration in this committee.
Mr. ANTHONY. Why could not that be covered by a rule or regulation?
The CHAIRMAN. The Secretary could not do that because that would be an amendment of an act.
Mr. Byrns. Does that resolution fix the rate?
Mr. BYRNS. What rate does it fix?
The CHAIRMAN. And this is an amendment to that. Of course, we have not any jurisdiction over that.
Mr. SHERMAN. I understand it is costing more than that amount to clean the space up, and the point is that it is not self-sustaining. · The CHAIRMAN. You will have to go before another committee and get authority to do that.
Mr. ANTHONY. If the Government is going to operate a market, the Secretary of Agriculture ought to have blanket authority to cover all those things by rules and regulations.
The CHAIRMAN. He certainly should, and I rather think he has such power except that he has not authority, of course, to repeal that act. The space outside is not considered a part of the market, is it?
Mr. FRANKLIN. I do not know.
Mr. FRANKLIN. The District Commissioners control it, but they appoint a clerk under this resolution which Mr. Madden just read. They appoint a clerk in the market to police it.
The CHAIRMAN. It is a part of the street and, of course, it will be under the District Commissioners, I assume, and the matter ought therefore to go to the District Committee, I presume, and not to the Committee on Agriculture. You can not turn this activity over to the Secretary of Agriculture. This is a part of the management of the city of Washington and is outside the building line, and they must be responsible for regulating the traffic on the street.
Mr. Sisson. Except in exceptional cases, Mr. Chairman. Of course, Congress would have the right to give jurisdiction of any portion of the city to the Secretary of Agriculture that was necessary in the management of this market.
The CHAIRMAN. That would not be very good practice, would it? Mr. Sisson. I do not know. It might be the best practice to follow for market purposes.
Mr. SHERMAN. You understand the Center Market Co. has always fought bitterly any effort to take the farmers off that street. It has been proposed repeatedly that the farmers be taken away from the south side of Center Market, but the theory is that the farmers at. tract so much trade that they make the stalls inside more desirable than they would be if the farmers were not there, so the Center Market Co. has been glad to have them remain on the streets adjoining this property.
ide of Cerpeatedly thata ke the far
WEDNESDAY, NOVEMBER 9, 1921.
ENFORCEMENT OF FUTURE TRADING ACT.
STATEMENTS OF HON. J. N. TINCHER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KANSAS, AND MR. H. F. FITTS,
ASSISTANT IN REGULATORY WORK, DEPARTMENT OF AGRI· CULTURE.
The CHAIRMAN, “Enforcement of the future trading act: To enable the Secretary of Agriculture to carry into effect the provisions of the future trading act, approved August 24, 1921, $50,000."
If there is anyone here who would like to make a statement as to this item we will be delighted to hear him.
Mr. TINCHER. Mr. Chairman, this law takes effect the 24th of December next, and the Secretary of Agriculture has outlined his plan for the enforcement of it. I am glad there is a deficiency appropriation bill coming up at this time, because it is very necessary that the Secretary have money to enforce the law. In order to call the committee's attention to the importance of the enforcement of this law, I want to state that within the last 10 days there has been a concerted movement among certain members of the exchanges to depress the wheat market, and they circulated a report over the signature of certain members of exchanges that there was exactly ten times the amount of wheat at the Galveston port for export that was actually there, and they depressed the price of wheat, by that message which was sent generally to various markets, 7 cents a bushel that day. That is one of the evils of the exchanges that this bill is supposed to cure. In other words, it makes the sending of that kind of a message a felony on the part of the party who sends it and forfeits his right to trade upon the boards of trade, and in that way insures correct market reports.
The CHAIRMAN. Do you think the appropriation enabling the Secretary of Agriculture to enforce the act will obviate things of that sort!
Mr. TIXCHER. This is one thing I know it will obviate, because that is one thing we deal directly with in the bill.
The CHAIRMAN. I notice there was some question about the constitutionality of this law raised, but the court in Chicago has just decided that it is constitutional.
Mr. TINCHER. One member of the Chicago Board of Trade brought the action in Judge Landis's court.
Mr. Woop. Was there not also a suit brought in Kansas City ?
Mr. TINCHER. Not involving this law. That was in reference to a Missouri State statute which is similar to this. The exchanges at Kansas ('ity and Chicago both held conferences with their counsel and went into the matter thoroughly and decided, so far as they were concerned, they would not test the constitutionality of it, thinking it was constitutional.
The C'HAIRMAN. Have you anything further to say, Mr. Tincher?
Mr. TiXCHER. I am a little surprised at the amount of the appropriation. I had supposed they would ask for more money, but the Secretary has gone into the matter.
Mr. Wood, Just on that point, it was stated during the argument on this bill that this was one instrumentality of the Government that was not going to cost us anything because there was plenty of machinery in the Department of Agriculture already to enforce this act without the appropriation of any money.
Mr. TINCHER. I do not recall that being said. I think I said more than anyone else, probably, during the consideration of it, and I remember that the gentleman from Illinois [Mr. McKenziej asked me what it would cost a year to enforce it and I told him I thought $200,000 a year. This is based upon an appropriation of $100,000 a year.
Mr. Wood. I thought it would be almost a paradox if anything that the Government had to do with could get by without costing somebody something.
Mr. TINCHER. Of course, I think this one depression of 7 cents a bushel by a false market report cost the farmers in my district more than it will cost to enforce this law for the six months, and was really an unfair manipulation of the market and did not do any legitimate trader any good and is not approved by the legitimate boards of trade themselves.
The CHAIRMAN, Mr. Fitts, will you be kind enough to tell the committee what the Secretary of Agriculture is required to do under this act?
Mr. Fitts. This law, as you probably know, provides for the taxing of grain involved in contracts for future delivery, with certain exceptions, the principal exception being if done by or through a board of trade or a member of a board of trade which has been designated by the Secretary of Agriculture as a contract market. In order to procure that designation by the Secretary as a contract market, certain conditions must be met by the boards of trade, and these are enumerated in the act. They are that they must furnish certain reports, which are deemed necessary by the Secretary, in order that he may know the trend of business, and be generally informed; that they shall prevent the dissemination of false and misleading or inaccurate information which might tend to affect the price of commodities; and that they shall prevent the manipulation of prices or the cornering of grain. Those are the principal conditions.
The CHAIRMAN. What are your duties under the act ? Mr. FITTS. I should have explained that Mr. Morrill, who is assistant to the Secretary, has been designated in charge of the enforcement of this act and intended to appear before the committee and explain it fully, but, unfortunately, he is now in the West on some other hearings, and I will endeavor to go into the matter.
The CHAIRMAN. Just tell us in your own way just what you have to do.
Mr. Fitts. This act was passed on August 24 and is effective four months from date. It will therefore be in force on December 24. On that date all dealings in grain futures are taxable unless the business is transacted at a board of trade which has been designated as a contract market by the Secretary. The boards of trade must apply to the Secretary for designation as contract markets, meeting the conditions which are specified in the law. Of course, it will take some time to receive such applications and pass upon them. The Secretary then will designate the board as a contract market, provided it has met the provisions of the law.
The CHAIRMAN. Is it within the power of the Secretary to suspend a board of trade after he designates it?
Mr. FITTS. There is a commission provided for in the law composed of the Secretary of Agriculture, the Secretary of Commerce, and the Attorney General, which, after hearing in proper form, has the power to revoke the designation of a contract market. That is subject to review by the court, however.
The CHAIRMAN. After designation what jurisdiction has the Secretary and what are his functions?
Mr. FITTS. In order to procure the requisite information, to see that no false or misleading information is disseminated or that manipulation is not practiced, it is necessary to have employees of the department on the ground to keep in touch with the situation and to procure data of importance as a result of close contact with the future exchanges.
The CHAIRMAN. Do you require the boards of trade designated to make these reports?
Mr. FITTS. Yes; it is required in the law that the boards of trade shall provide for the furnishing daily of reports of all transactions, or that they shall be kept available for the information of the Secretary or his representative.
The CHAIRMAN. Where do they send them? Mr. FITTS. The provision is that they shall be kept available for the Secretary for a period of three years, or longer if the Secretary shall so direct.
The CHAIRMAN. So that the person designated by the Secretary to be on the ground will have access to them all the time.
Mr. FITTS. Yes, sir; the Secretary or his representative. I might say there are six so-called future markets, the principal one being Chicago. The other places are Milwaukee, Minneapolis, Duluth, Kansas City, and St. Louis. They will be the markets concerned. However, at Milwaukee there is an insignificant amount of trading done, and it is not contemplated at this time to take care of that market except from Chicago. If conditions are found to be such that it requires some attention, that can be arranged I might say that in going over these estimates they have been revised, to my knowledge a couple of times, and have been cut, I think, right to the bone, providing only for the minimum force in Washington and at these markets.
Mr. BYRNs. Who cut them, the Budget Bureau, or were they cut in the department ?
Mr. FITTS. They were cut right in the department. Mr. Morrill and the Secretary went over them.
Mr. BYRNS. This is the original amount submitted to the Budget Bureau ?
Mr. Fitts. Yes, sir.
Mr. ANTHONY. Is there any revenue to come from the operations under this act?
Mr. Fitrs. No, sir.
The CHAIRMAN. Have you covered all of the activities required of the department?
Mr. FITTS. No, sir. The CHAIRMAN. We should like to have you cover them first. Mr. Fitts. There is one other point. Section 9 covers the broader aspect of grain marketing. It provides that the Secretary of Agriculture shall investigate marketing conditions of grain and grain products, and by-products, including supply and demand for these commodities, cost to the consumer, and handling and transportation charges; and that he shall also furnish information to producers, consumers and distributors. That covers the situation generally. The Secretary will send men to the markets in order that they may become familiar with the existing conditions and furnish information which will serve as the basis for possible further investigation or action. As I understand it, this estimate simply covers the necessary regulatory work at the markets contemplated by the law, and under it will be collected and assembled the information deemed worthy of careful scrutiny and consideration.
The CHAIRMAN. I presume that he has, in his regular annual estimates, made calculation for the other activities?
Mr. FITTS. I am not certain just how far he has gone. That estimate also has been submitted for the next year.
The CHAIRMAN. I know.
Mr. Fitrs. But in the present estimate that is not included. These men will go into that as they can in connection with their other duties. This is merely the basis for starting the work, and they can determine later just how far it is necessary or advisable to go into the other phases. There is a very small force in Washington.
The CHAIRMAN. Will you be kind enough to tell us just how you arrived at the estimate, what the form of the organization will be, how many of the men designated will be in Washington, and how many elsewhere?
Mr. FITTS. I was about to say that in Washington it provides for the administrator and his assistant, as well as for an economist and an examiner, and five clerks, who will handle the business as it comes in from all the markets. At Chicago, the principal market, there will be a market supervisor and his assistant, an accountant or statistician, and a clerk. That office also will handle Milwaukee. At Minneapolis there will be a market supervisor and an assistant, practically the same as at Chicago, and there will be at the start a clerk assigned to Duluth to handle the business, it not being a very large market.
Mr. ANTHONY. What is the need of the statisticians?
Mr. ANTHONY. Have you not a large number of statisticians in the
Mr. Fitrs. They all have their work to do, and provision is madle for them in connection with the various lines of work required...