The Washington herald., 1921-01-21
Under-Consumption Base
OF Economic Problems,
Herbert Hoover Ayers.
FAVORS NATIONAL
MARKETING BOARD
Is Strongly Opposed TO
Abolishing Grain
Exchanges.


turaI Committee yesterday to dis
cuss the proposed abolition of grain
exchanges. Herbert Hoover. former
/ United States food administrator,
was led by questions from commit
tee members. to express his views
on the economic situation as 1t ar
7 fects the entire world
The trouble with the economic
situation OF the world he said. is
not a question OF over production
but ono Of under r-consumption-in
one part Of the worId-Europc. The
only solution. he said. is an exten-
sion OF credit to the European ma
tions.
He was opposed TO credit cNtcn-
sion by the government but pre-
dicted that tho recent organization
OF banking Interests undoT tho new
Edgc law would bo Of great vauo
in settling tho problem. NOTHING
can b. done. however. be said. 20
far a. Germany IL concerned. until
the question OF indemnity is settled.
Favors Market Board.
Hoover declared 1t would b. dis
aStrous to abolish the trade eN-
! changes and suggested that their
extension 10 cover other COmmodi-
7 ties. particularly beans. would
prove Of inestimsble value.
Like Julius Barnes. former Pod
Z eraI grain director. who testified
Monday. Hoover urged the creation
T Of a national marketing board. un-
der the Secretary uC Agriculture.
to BE- administered. preferably, by
the Bureau OF Markets.
The function Of such q board, he
said would be- 10 Stsndsrdize, by
cooperation rather than reguls-
tion. the practices Of the exchanges,
and 70 provide an extension Of pub
lie warehouses whore the farmer
could store HE grain, recsiEing ne
gotLable certificate in this way
he would not be forced 10 cell al
the bottom Of the market
In q prepared statement which
he read to the committee, Ar.
Hoover said:
Seeks Regulation.
"A perusal OF the Capper-TinCher
bill or the GrOnna-Haugen bill
shows that il is not the intention
OF these bills to suppress trading
in grain futures. What the legts-
latiOn Is obviously seeking is a
method by which manipulation Of
hedging operations against the in
terest OF producers and consumers
can be prevented.
During the war the Food Nd
ministratiou eliminated such ma
. nipulstion in the corn markets u'
securing a voluntary Limitation by
the exchanges OF tho quantity OF
corn that could be bought or sold
on option BY any one firm or ind
vidual that was not represented by
the actual grain or commitment for
| the grain in some stage Of market
] ing
That limitation was well carried
out. and during that period thCr"
was no manipulation Of the market
and no substantial interference
with the normal processes OF the
hedging market. 7 do not believe
, that determination OF the precise
quantities or method should he fixed
/ by law. as an such attempts 10 con
| troI economic forces must be tents-
tive and based upon CNrerienc"
gained.
Need for Experts.
My own conclusions are that W.
should have a national marketing
. board Of experts. under tho Depart
mcnt oC Agriculture. whose outlook
is primarily to improve marketiuE
conditions. and that some reguls-
{ tory powers should bo given them
of this nature. That they should
determine the precise procedure
from time TO time for administra-
tive action by the Secretary Of AZ
riculture. They could also accom-
plish a great deal in improving the
trade processes through agreement
with the trades; by the establish
ment OF standard practices In CO.
{ operation with them
One function OF such a hoard,
/ for instance, would be TO provide
/ regulation which would secure the
] extension OF public warehouses in
[ Suchs manner that the farmer can
! store his grain at any country elC-
vRtOr or terminal and obtain such
{ a recognized warehouse receipt fhat
will open to him new credit beyond
| his abilities in loans against hold
/ inEs on farms. Such a board could
( give great assistance 10 the deNel-
orment Of cooperative marketing
/ and other important improvements
/ in our marketing processes
Can't Apply Set Rule.
In reply to questions. Hoover said
! it would he difiCult to set down
/ with precision any iufcNible law
/ governing exchanges and CrteT mine
/ in advance whether il would not
/ be subject TO evasion on one hand
| or would work to the detrImeut 81
/ their legitimate phases on the other,
Recognition. he said, must be
| given to the economic Importance
OF hedging operations. and the sole
/ objection OF legislation should he
| the elimination Of wrongful man
/ ipulsUion.
Wrongful manipulation. he con-
/ tinUed, is only accomplished BY the
sale OF very large quantities of
hedges. II requires the sale Of sew
eral million. bushels 70 materially
affect the price.
shorts Arc Injurious.
'On the other hand" he said, Il
have a feeling that large viumes
OF short selling deliberately tn
tended 70 depress the price. results
in considerable injury 20 holderS.
PARTICULARLY farmers who are not
able TO hold on and are forced into
liquidation, thus bringing grain