The Birmingham age-herald., 1920-04-08

1 IS an advance or a decline in the price. | The final disposition of his cotton no
 matter what the grade. has to be on the spot market. The exchange does not help
 him in his differences at all. The spot
 market as rule ignores his differences. l Spot cotton is sold always at the sup
 ply and demand price. lat the market price You can not sell it for penny { more, no matter where 1t is, except in l an accidental squeeze"
 MT. Gronna: l am asking only for in
 formation. Let us take anothtr case. Sup
 pose farmer has a certain number of bales of cotton, and it is all either mid- ding of below good middling. What hap | pens to that farmer when he offers his
 cotton on the markete
 Mir Conner; On the spot market he takes
 the actual price on the different grades On the exchange market he takes the | chance, and with the present law the
 chances are against him, and at last
 his cotton has to be sold at the market
 price. Just suppose I am a farmer and ! that l have 1000 bales of cotton which
 want to sell on the market and get | the money for, but l am not satisfied with the price at the time. I believe it
 will go higher, and go on the exchange
 and buy 1000 bales of cotton. buy that cotton within the ten grades, and the seller could deliver me any part of tt !, that he pleases. Say I am also a. mapu-
 facturer, and I want to buy 900 bales , or cotton, and l go on the exchange and !, buy 1000 bales of cotton. and the time of | delivery comes, when I want to cancel 1 my contract and get the cotton in. I go ] out in the market where the cotton is, anywhere from Virginia to Texas, and buy my 1,000 bales at the market. and
 Sell my hedges. You do not put any low grade cotton or high grade cotton on the
 exchange. They do not have anything 10 1 do with the exchanges. The exchange is not consumer; it is a supposed barom- eter or index of prices and should be a true one.
 Let us take wheat. You have, say million bushels of wheat-I am giving you limited amount, you see-which you want to sell. You do not want to hold it; you want to realize on it before you de liver it. You go into the market and sell million bushels of wheat You go ahead and you get your wheat cut and sell it in the market to the millers, or anybody else; they are the ones who get it at last Then you go and close your hedge. Cotton is handled in the same way. The mills do not get the cotton out of the exchanges They go on the ~market and buy it. Today we have contract hedges in New Orleans. Today we are buying low grade cotton from all over Texas. As we get in the spot cotton we close the hedges, or wait, as we have been do- ing very much to our advantage, and
 close at the end of the month. This lat ter part is speculation, which we would
 not do if the exchange market was true index of the commercial or spot
 market
 MT. Gronna: I will say to the senator that while I have not dealt on the ex-
 changes in grain, I am quite familiar
 with the grain exchange. But we deal with only one grade, and that is the con
 tract grade of wheat.
 Mir. Conner: No. 2.
 MT, Gronna We dealy only with the
 No. northern, which is the contract. grade, and whatever is of an inferior
 quality will of course, be reduced in price.
 Mir. Conner: Certainly.
 MT. Gronna: There is where the wheat farmer has suffered, because there are times when sixty pounds of wheat of a grade which has been graded simply by looking at it or by weighing it will produce practically as much flour, and absolutely as good flour, as the higher priced wheat. do not know that that will apply to cotton. If it does, it seems to me there might be such a thing as penalizing the farmer on the lower grades. MT. Conner; Not through the ex- changes. The exchanges have not anything to do with the value. The exchanges cannot exceed the commer- cial price on any grade. The very minute the exchange got higher than
 the commercial price people would ship the cotton into the exchanges and break it. You cannot sell the cotton higher than the commercial price. The mills are buying the higher grade cot ton at a high price rather than the lower grades at the lower price, be- cause the high cost of manufacture
 and the higher prices of the better grades of goods they can make more money than out of the lower grades. Mir. Gronna: I am quite sure that the
 senator from Alabama wants to do
 " hat is for the best interests of the
 cotton farmer, as well as for the manu-
 eacturer. I am quite sure of that, and
 am not at all surprised that a propa-
 eanda has been instituted and is car-
 red on if there is anything that hurts
 tke exchanges. I had some experience
 with the exchanges myself on the floor
 of the Senate only recently, and I sim
 ply mention this to show that the sen
 ator is not alone in being attacked
 when legislation is proposed which
 will tend to make a commercial price and not a speculative price. When I
 introduced a bill not long ago to abol-
 ish the Grain Corporation, because it
 was my belief. and the belief of great
 many people throughout the United
 States. that the Gsain Corporation was
 in fact a factor in creating speculative
 prices. the members of the Chamber of
 Commerce of Minneapolis who testified here admitted that never in the his tory of the grain trade had there been greater fluctuations on the markets than during the time the Grain Cor poration had exercised control over the wheat
 MT. Conner: Certainly.
 MT Gronnaa Great fear was ex- pressed by the Grain Corporation tha. if my bill should go through the farmer would lose.
 MT. Conner: They always do MT. Gronna: He was the man whom the Grain Corporation, and every grain exchange, every chamber of commerce and every board of trade was trying to protect. Of course. the price of wheat went down temporarily. because there was scare; but wheat today is selling at $3.20 bushel in the mar kets of the city of Minneapolis, and it entirely unfounded. I simply rose to get some information from the senator and also to say to him that I hope the senators from the cotton states will get together and agree upon what they want and, so far as the conference committee is concerned. I am quite. sure they will stand by the judgment of the people who know something
 about the industry.
 Mir Conner: I thank the senator very
 much. I understand that. If this amendment does not go through we have a case against some man from