Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-09-21

ment would rablOn lJS people ana yet
have a surplus of wheat to sell abroad
yet the Russian trading syndicate insists
the wheat will be available for de-
livery. l say that in view of the tariff
and transportation obstacles, delivery
is economically impossible.
1T would appear that the short sales
were nothing more than hedging to
protect wheat sales at Liverpool. If
that is so, then 1t is the first time in
history that a foreign government has
attempted such manipulation in the
American market"
Admit Short Selling.
Associated Press dispatches from New
York quoted officials of the All-Russian
Textile Syndicate ms admitting the
wheat was sold short on orders from
Russia "as a usual hedging operation"
but they argued the transactions were
so small, relatively, that they could
not appreciably affect the standard
prices"
The Agriculture Secretary said it was
not unusual for private agencies and
individuals to indulge in hedging"
operations and that often such activities
were justified and legitimate.
THE idea of foreign government
manipulating grain prices so as to de-
press the American market and serl-
ously affect our farmers and the pub
lie generally, however, raises an entirely
new question of public policy" Mr..
Hyde said.
"I feel, moreover, that it is wrong
for anyone to try to beat down the
prices of American grain, as was done
in this case"
While he does not favor elimination
of all grain futures from market specu-
lstion, Secretary Hyde said the present
case is "a glaring instance of the
necessity for proper rules and regula-
tions to govern such operations In the
exchanges.
The Chicago Board Of Trade owes
it to its own integrity TO minimize trad
ing. which artifically lowers or raises
prices" Mr.. Hyde asserted.
Action Undetermined.
The Secretary could not predict what
steps the Government would take In
the event the Chicago Board of Trade
does not meet the exigency in salts
factory manner" He said the grain
futures act of 1922 had guided the de-
partment In its investigation Of the
Russian dealings and that the depart
ment had gone about as far as II couio
in its inquiries. The committee, oil
which Representative Fish is chairman,
had broader powers, he explained, and
its probe can enter channels barred to
the department.
Under the grain futures act provision
is made for a commission, composed OF
the Secretaries of Agriculture ano
Commerce and the Attorney General
to investigate conduct Of boards OF
trade licensed under the act. While
the act also gives the commission au-
thority to revoke licenses OF exchanges
and traders where law violations oc-
cur, Mr.. Hyde pointed out that this
part of the act never has been tested
Representative Fish conferred WIFI
Secretary Hyde late yesterday regard
ing plans for the House Committed
INQUIRY. Later Mr.. Fish said the COM
mittee would call officials of the Rus
sian syndicate to testify at a hearing
in New York on September 81, and
that the committee then would go to
Chicago and hold another hearing Sep
TENDER 90.
To Call Former AmtOrg oficial.
This is obviously a matter which
Is properly within the scope OF the
committee" the chairman announced.
He said a former vice president Of
the Amtorg corporation would be
would be able TO obtain much informa-
ton from the witness, whose name was
not divulged.
In reply to the first message from
Secretary Hyde, President Bunnell Of
the Chicago board suggested that Hyde
take up with the State Department
the right of Russia to transact bust
ness in America through tncor-
porated agencies. The Secretary, In
commenting on this suggestion, said
the State Department had no authority
to make such an investigation.
Secretary Hyde said that when the
Russians launched their short sales the
grain market in Chicago was on the
upgrade Wheat opened three quarters
of a cent up on September 8, the day
of the first transaction, he recalled, but
fell off and closed under the market
On the next day the opening was lower
than the closing price of the day be-
fore and the market closed still lower
"Of course, all the blame for this fall
ing off cannot fairly be put on the
Russians" he explained, but the short
selling by the textile syndicate I'M
doubtedly had a depressing effect that
was felt widely A bearish movement
quickly spreads"
Hedging" Explained.
Grain experts here explained yester-
day that the operation of hedging" is
really a marginal deal designed to pro-
tect traders against losses incurred be-
tween the time of contract and de-
livery of grain. BY selling short" Is
meant contracting for the sale OF a
certain theoretical amount of grain at
a future date with the expectation of
reaping a profit by possible decline
in prices before date Of theoretical de-
livery.
Thus. If the Russian traders feared
a possible loss in cash wheat transac-
tions at Liverpool, chief market of
Russian wheat, they might counteract
a marginal deal on the declining
market
While Secretary Hyde does not
charge the Russian government with
any act more serious than possible
manipulation of the market for its own
beneft, with consequent deleterious
effect to American farmers, it is under
stood Representative Fish'S committee
will delve into the added possibility of
a Communist plot to spread discomfort
in this country.
Samuel r. McKelvie, grain member
of the Federal Farm Board, was conf
dent the Chicago Board Of Trade could
formulate rules to prevent q continue
ton of the short selling by the Russian
government. At the same time. he
doubted the Farm Board had any legal
authority in the matter.
May Desire 10 Further Unrest.
The Farm Board member said Rus
STA In selling short may have desired
to further unrest and discomfort among
American farmers.
He said through their collectivist
farms, by using modern machinery and
cheap labor on large scale operations
Russia could grow wheat for 80 cents
bushel. This however, he said was