They are almost wholly gambling transactions. Has been informed that the large houses in New York often enter into a scheme to break the market when the outsiders have made heavy purchases of futures. Thinks the producers are entirely at the mercy of the New York exchange, so far as prices are concerned. The system depresses prices very much; it affects cotton, lands, and everything the farmer has to sell.

[C. L. ROBINSON, aged 50, a Mississippi planter living in Louisville, Ky.]

Has never dealt in futures. Opposes the future system for identically the sam rsasons assigned by the two preceding witnesses, and states no new facts.

[J. P. FARGASON, aged 58, a cotton factor of Memphis.]

His experience in futures has been very limited. The testimony of this witness is substantially identical with that of the three preceding witnesses, and no good purpose can be subserved by analyzing it in detail.

[L. S. LAKE, aged 49, a cotton factor of Memphis.]

The testimony of this witness is substantially the same as that of those immediately preceding.

[H. H. REESE, aged 37, the Memphis representative of the firm of Hubbard, Price & Co., general brokers and commission merchants, of New York.]

The testimony of this witness was favorable to the future system on substantially the same lines as that of Mr. T. J. McCarthy, supra.

NEW ORLEANS, LA., November 20-27, 1893.

[WALTER C. FLOWER, aged 43, for ten years a cotton and sugar factor, and now president of the New Orleans Cotton Exchange.]

Comparatively considered, the condition of the cotton planter is no worse than that of people engaged in other occupations in the South, and is fairly good. The depressed financial condition of the Southern farmer is due to two causes: First, the low price of cotton; and second, to his confining himself almost entirely to the raising of cotton, instead of devoting his attention to the cultivating and raising of the prime articles of consumption-corn, small grain, stock, meat, and all small, special farm industries. Where you find a planter devoting himself to the cultivation and the raising of these miscellaneous articles, he is generally independent, or in a much better financial condition than the one who devotes himself solely to the cultivation of cotton, and relies upon the proceeds of the cotton to purchase the outside necessaries of life.

Thinks the low price of cotton is due almost wholly to overproduction. A large surplus left over for the last 3 years, added to the large crops, made a supply beyond the demand. The Lancashire strike also lessened consumption, and this had a tendency to further decrease prices; explains the manner in which sales are made on the New Orleans exchange, and submitted a form of the contract in use there, the grade called for therein being of not a less market value than good ordinary white," and the receiver having the privilege to refuse all "sandy, dusty, red or gin-cut cotton." New contracts are carried to maturity, but are settled before. All contracts outside of hedges, which are for legitimate purposes, are pure wagers, except that proportion where the parties to the contract at the time contemplated actual delivery."

A system of futures where only the owner of cotton could sell or contract to sell would not subserve all purposes, but would eliminate from the present method the facilities for hedging, which forms the basis of the export trade and the free-onboard business. It would eliminate also from the fictitious consumptive demand of spot cotton the large amount that is taken out of the market annually by the speculators who are forced to buy as hedges against sales made for future months. Futures have sometimes strengthened the market for spots and sometimes weakened it. Fluctuations occur oftener now than before, but are less violent. New York quotations usually govern New Orleans. The sale of futures has an effect upon the spot market.

[JOHN J. GRAGARD, general commission merchant in New Orleans sixteen years.] The condition of planters is not much worse than it has been, but believes they are getting poorer. In the last three or four months prices have been influenced somewhat by the financial condition of the country; but taking it for some years,

low prices have been caused by unjust manipulations of the future dealings, which have resulted in an annual loss to the planter of over a hundred million dollars. Thinks 99 per cent of futures are pure gambling transactions. Were it not for these dealings, believes cotton would have been 2 to 3 cents higher last season and would be from 14 to 2 cents higher now.

[A. H. MAY, aged 69; commission merchant and cotton planter for thirty years.] Thinks chief cause of low price of cotton is overproduction, and the cause is that planters have to buy their supplies, argely. Not prepared to answer as to the effect of futures on the price of spot cotton. Charges for handling futures are less than for spots, and that may cause the difference in price between them.

[HENRY NEWMAN, aged 55; cotton factor and commission merchant; been in the cotton business since 1865.]

The greater part of the period for the last 8 years has been disastrous to the planters and the country merchants. The last 3 years very unfavorable also, because of the low price of cotton and the high price of provisions.

The system of futures has been a curse to the cotton trade and has been instrumental in desolating many a happy family circle." It has also decreased the demand for actual cotton, and the speculation in actual cotton; also has generally weakened the price of cotton and made the market more irregular. The New York exchange is the great power which regulates prices, having absolute control in the matter. Futures are almost wholly gambling, and the system has been very injurious to the South.

[J. M. PAYNE, engaged in cotton business since 1840.]

Thinks futures injurious to the trade, and says cotton was moved as easily before as since the system came into existence.

[GEORGE W. SENTELL, a cotton factor, commission merchant, and planter since the war.] Large crops, the strike in England and the manipulations of futures have caused the low price of cotton. In the beginning, thought futures beneficial, but the last year or two, not. Quotations controlled largely by New York. Moral effect of futures is bad.

[NORMAN EUSTIS, aged 39; cotton factor.]

Thinks futures beneficial to the producer, but says: "If the system of a future business could be abolished in Europe as well as in the United States it would be a decided benefit to producers of cotton, but to abolish it in New Orleans and New York and to permit it to be carried on in Havre and Liverpool would be to the injury of the producer. There are no benefits except when used as hedges; a large proportion of them are pure gambling.

"The serious depression in prices is due to the fact that the masses of Southern cotton growers are naturally bulls,' and from wanting cotton to go up and wishing cotton to go up they finally get to believe that cotton will go up, and instead of selling their product they hold it and buy futures, and with the first depression in prices * they are forced out at a loss; and where a man buys futures and holds spot cotton he is speculating in both.”

*

[ABRAHAM BRITTIN, aged 52; broker.]

Futures enhance the price of cotton for the reason that under this system a large quantity of actual cotton is held in the speculative markets of the world, or withheld from the consumptive supply. Speculation in any product also enhances the price. The causes of the low prices of cotton are, large crops, the decline in silver and its disuse by many nations as standard money, the easy and cheap transportation, and the improved methods of cultivation.

The visible supply of cotton is what is held in the few principal American seaport cities, the European cotton centers, the amount afloat at sea for the European cities, and the stocks held at about 30 prom nent towns in America. The invisible supply is what is held on the plantations in America, India, Egypt, and other supply countries; cotton held by the mills in America and Europe, and in transit, which is not counted in the visible supply. The means of knowing the amount of the former are very good and pretty fair for the latter. The value of cotton is less affected by long storage than most any other country; it deteriorates very little. The condition of trade and the financial condition of the country have much influence in fixing the price of any commodity.

[JOHN HILLIAR, aged 38; cotton factor and commission merchant since 1881.]

"There are many advantages through the sales of future cotton; but, weighing the entire matter from both sides of the question and considering the moral effect, I believe that the injuries are probably greater than the benefits to be derived. [Rather a "Joey B" opinion.]

[CHARLES CHAFFE, cotton factor and merchant since 1865.]

The causes of the low price of cotton are overproduction and the depression caused by the manipulations of the future market by "rings.' Thinks futures injurious.

[S. W. RAWLINS, aged 74; cotton factor since 1842.]

The cotton trade has not been prosperous for a number of years. Can not see the advantage of futures. [Nothing was brought out in the testimony of this witness that has not been fully covered by many other witnesses who opposed futures.] [ISIDORE HECHINGER, aged 37; cotton factor and commission merchant for nineteen years.] Considers futures detrimental to the producer, the result being that the cotton is squeezed out of the hands of the farmers early in the season and the price then put down, and afterwards prices go up by a manipulation of the market. Futures are always lower than spots, hence the consumer will buy futures and await the delivery month escaping carrying charges meanwhile. Moreover, futures eliminate speculation in actual cotton, leaving the whole stock on the market to the detriment of the producer.

[WILLIAM T. HARDIE, cotton factor and commission merchant for fifteen years.] "There are times when the future business is very beneficial to the cotton; but on the whole it is injurious. * * The general effect is injurious.”

*

[CHARLES E. LEVY, cotton factor and commission merchant nine years.]

Practically the same as the preceding witness.

[ROBERT MAXWELL, cotton factor since 1876.]

Generally speaking (though not always), thinks futures injurious.

[JOHN W. LABOUISSE, cotton broker for twenty-five years]

He took up the subject of the price of cotton from 1842 to 1892, and filed papers and tables of statistics to verify his remarks. He showed that prior to 1849 cotton reached a lower figure than it has ever been since, and that in that same period fluctuations were numerous and violent. Commencing in 1819 cotton with other things advanced, because of the opening of the gold fields of Australia and California and the increase of the metallic money of the world. This range of prices continued on down to 1873, at the time of the demoralization of silver by the commercial nations, since which time there has been a gradual and continuous decrease, attributable entirely to the demoralization of silver. He also showed that during periods of increasing prices the market for futures was most active, and that since the inauguration of the futures system the fluctuation in prices had been less violent than before. Other tables and papers were submitted bearing on the question generally and all tending to show that futures had not been detrimental to the cotton industry, but had in reality benefited not only the producers but the trade in general.

PART II.

THE TOBACCO TRADE

IN ITS RELATION TO TAXATION AND GOVERNMENT MONOPOLIES.

Prepared under the direction of the Industrial Commission by E. W. SAUNDERS.

To the Industrial Commission.

SIRS: I desire to make a report upon the matters embraced in the scope of the resolution under which I was appointed. The topics covered are as follows: (1) the laws of foreign countries affecting the importation and sale of tobacco; (2) the tariff rates thereon; (3) the purchase of tobaccos by foreign governments in American markets by their agents under what are known as regie contracts, and (4) the prevalence of the system in foreign countries, on the part of commission merchants, of selling tobacco at a fixed compensation through brokers who are themselves the purchasers or agents of purchasers.

I. IMPORTATION AND SALE.

In response to the first division of the subject-matter required to be reported upon. I submit in summary form and seriatim the excise laws of a large number of countries relating to tobacco. This report does not comprehend the laws of all of the countries of the world, but it gives the status of tobacco, as a subject of tax, in practically all of those states in which the people of the United States, from the point of view of commerce, are interested.

I have added in each case, when obtainable, extracts from the statistical reports of the Treasury Department, showing the amount of tobacco, raw and manufactured, shipped by the United States into the country reported upon. The figures are for the fiscal year 1898.

AMERICAN COUNTRIES.

1. MEXICO.

There is no government monopoly in this country. Mexico levies an import duty on leaf and manufactured tobacco, and has an internal-revenue tax on Mexican tobacco, and on the wholesale and retail dealers in manufactured tobacco. Her imports from this country, the form and value of the same, are as follows:

Mexico also imported from the United States plug tobacco to the amount of 4,349 pounds, worth $1,026.

2. COSTA RICA.

This country, which abolished the monopoly of tobacco in 1896, returned to it under a later reaction, and by decree of the Constitutional Congress of 1898 declared the importation of tobacco manufactured in any form to be a fiscal monopoly.

Local parties wishing to deal in these articles obtain the necessary authority from the state, paying to the exchequer before taking the same from the customhouse $2.20 per kilogram of gross weight, and taking upon themselves the payment of first cost and charges of introduction. There are no hampering restric tions upon the handling of imported manufactured tobacco by local dealers, unless they are found in executive regulations, which have not been available for examination.

Tobacco imported from the United States.

This country imports from the United States plug tobacco to the amount of 189,731 pounds, worth $31,348.

3. SALVADOR.

This small State imposes an import duty on crude and manufactured tobacco. After its importation the sale of this tobacco is free. No tobacco is at present imported from the United States.

4. COLOMBIA.

Under a law of 1894 this country reserves to itself the right, for a term of six years, to import and manufacture cigarettes and sell the privileges of the same. The production and exportation of tobacco are free. There is a tax upon its use. Manufactured tobacco imported into the country is subject to a fixed tax. There appears to be no tax upon the importation of tobacco in the unmanufactured form.

The laws and decrees relating to the formalities for the importation of tobacco are the same as those relating to other merchandise.

Tobacco imported from the United States.

There are no restrictions upon the sale of American tobacco in this country. All imported tobacco, whether manufactured or unmanufactured, pays an import duty.

All tobacco, of home production or imported, pays a manufacturer's duty.
Tobacco imported from the United States.

Peru taxes all kinds of imported tobacco, and collects the fixed rates at her custom-houses, but there is nothing in her regulations which makes tobacco a government monopoly. Her provisions touching the forms in which tobacco is