Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-09-22
BY REX COLLIER.


The whole case of the Government
VS.. the Chicago Board of Trade hinges
on the Interpretation of small clause
in the lengthy grain futures act of
1922. providing for prevention Of
manipulation of prices" on grain ex-
changes.
The case of the United States Gov
eminent VS.. the Russian government
is not so clear cut. In fact, 1t is doubt
full that. beyond the ethics of the deal
case exists at all. The outcome of
Committee on Communist activities in
America may put a different complex
ion on the matter.
The law is specific as to punitive
measures which may be taken against
the Chicago Board of Trade or any
other grain pit in the event charges
of failure to prevent manipulation of
prices are sustained. But observers
here declare that proving manipulation
is no easy matter. Mere proof of
hedging" operations in connection with
lation of this type is not prohibited
by law.
Can Suspend Exchange.
The grain futures act provides for a
commission composed of the Secretaries
of Agriculture and Commerce and the
Attorney General to take drastic action
against exchanges guilty of non-com-
pliance with the law. This commits
sion is empowered to suspend the license
of any exchange for six months or to
revoke 1t altogether. 1t is said these
penalties never have been invoked.
Before the license of the Chicago
Board of Trade could be revoked in
the present case the Government would
have to show that in contracting to
sell short 5000 900 bushels of wheat the
Russians were not INDUCING in an APP
proved hedge to insure themselves
against loss in a cash transaction else
where, but were, in fact. seeking to
crash prices In q purely speculative
coup for some proved selfish or Interior
purpose.
If this could be proved-and present
information in the possession of the
Government does not appear to be suf-
flcient-the next step would be to show
that IN permitting this manipulation
the Chicago Board of Trade had failed
to comply with the terms of its Fed
eral license, which call for promulga-
ton by each exchange of proper rules
and regulations to preclude unlawful
speculation.
Secretary Of Agriculture Hyde states
that the inquiry conducted by the De-
partment of Agriculture was limited
by law and that broader ramifications
OF the case, II there are any, will be
investigated by the committee of which
Representative Hamilton Fish of New
York is chairman. This committee has
been delving into Communist activities
In this country. Chairman Fish and
his colleagues will seek to learn If
there actually was an "ulterior" motive
behind the Russian wheat transactions
in Chicago-if the market was ina
nipulated" with the view of depressing
grain prices and spreading discomfort
among the American people.
Could Bar Syndicate.
Another possibility, in the event
manipulation by the All Russian Textile
Syndicate could be established would
be ban on further wheat dealings In
this country by the syndicate, official
agent of the Soviet regime. The grain
futures act invests the Governments
three-sided commission with ample au-
thortty to bar nnanipulators from the
market.
The Russians readily admit the short
sales charged by Secretary Hyde, but
counter with the claim that the mar
ginal trading was bona, f1de hedging,
operation, such as is sanctioned in the
best grain circles. Russia. 1t is claimed
by its agents. merely wished to insure
itself against possible losses in the
Liverpool market by marginal profit on
a possible bear market In this country.
It's Just like betting both ways on the
Athletics to win the world series. II
they lose you lose on one bet and win
on the other. There is no money COM
ing out of your pocket-and none GO
ing in, either, for one bet offsets the
other.
The Russians say that, even conced-
ing Secretary Hydes figures to be cor
Of Russian wheat In the Chicago pit
could not affect a market in which the