such means of communication as railroads and boats, which carry corporeal objects instead of intangible messages, there is, at least, a doubt as to the validity of the proposed legislation when applied to such other means of communication. This doubt arises primarily out of certain statements of the United States Supreme Court in Paul v. Virginia (8 Wall. 168) and cases following it.

"It is firmly established that contracts of insurance are not transactions of interstate commerce which are subject to regulation by Congress under the commerce clause of the Constitution. Paul v. Virginia (8 Wall. 168); Hooper v. California (155 U. S. 548); New York Life Insurance Co. v. Cravens (178 U. S. 389). Likewise, contracts for the sale of an article for future delivery are not, in themselves, transactions of interstate commerce if they do not oblige the transportation of anything from one State, Territory, or District to another State, Territory, or District of the United States. (Ware & Leland v. Mobile County, 209 U. S. 405.) However, in Paul v. Virginia (8 Wall. 183) the court, in the course of its opinion, goes further than to hold that the contracts involved were not in themselves transactions of interstate commerce, and says:

"These contracts are not articles of commerce in any proper meaning of the word. They are not subjects of trade and barter offered in the market as something having an existence and value independent of the parties to them. They are not commodities to be shipped or forwarded from one State to another and then put up for sale.'

"Because of what has been held in the cases referred to, and particularly because of what was said in the extract just quoted, there is some doubt as to whether the Supreme Court would hold that, under the commerce clause, Congress is empowered to regulate the physical

transportation of a written or printed contract or offer to make such contract, which is not itself the subject of interstate commerce." Nor was the Solicitor of the Department of Agriculture beating a new path in the mazes of law when he took a stand regarding the unconstitutionality of this bill. He was in distinguished company; and perhaps the most eminent of all the jurists who viewed this class of legislation as he did was the late Chief Justice of the United States Supreme Court, Hon. Edward Douglas White. Prior to his elevation to the highest court of the land he had served here as a

Senator from my State, and it was while opposing almost identical legislation as this that he made the constitutional argument on the floor of the Senate which attracted the attention of President Cleveland and the bench and bar of the country to his remarkable ability.

That great address has taken its place among the legal classics of America and the words in which he concluded it are as true to-day as when he uttered them. I do not think this committee, in deciding upon the fate of this measure, could do better than to ponder them. Here they are:

"Suppose we do pass the bill and strike the present business methods down, what good is it going to do? Is there not a cotton exchange where futures are dealt in at Liverpool? Are they not on the continent of Europe? Did not just a few days ago a gentleman send me the charter of the organization of a great exchange in the city of Hamburg for the purpose of conducting this business of futures in cotton? Did he not send me a letter from a German merchant saying that they had noticed the intention to strike down the business here, and they hoped it would come to them?

"Is there not a cotton exchange at Alexandria, in Egypt? Does not both the Egyptian and the Indian crop move under the operation of laws of future delivery? Without that system I have shown that the disparity between the American price and English price is large. With the system I have demonstrated that the disparity diminished until there has been an average gain to the producers of this country of over a cent a pound. I am unwilling by my vote here to transfer this vast sum of money out of the pockets of the people of the cotton States into the pockets of the people of Great Britain."

Mr. RANSDELL. Mr. President, without attempting to discuss the matter longer, I hope Senators will bear in mind that this legislation is really to carry into effect the measure which has been pending for a great many years, the bill which is now pending before the Senate and has a preference place on our calendar following the Boulder Dam bill, and it will probably be discussed for days when it comes up; because, when you seek to destroy the existing order, when you do something which will break up and completely put out of business hundreds I started to say thousands and thousands of business firms in every part of this country, you should not do that without long and careful consideration.

It would be almost criminal to take such radical action as contemplated by this amendment unless certain of the ground. If it be right, in heaven's name let us do it. If we are going to better the condition of agriculture, which certainly is now to a great extent in the slough of despond, I say in heaven's name let us pass the legislation, regardless of whom it may affect. But until we are certain, I beg of Senators not to vote in favor of this destructive piece of legislation, which offers nothing constructive in lieu thereof.

Mr. CARAWAY. Mr. President, I am conscious of the fact that there is not much gained by bandying opinions as to what the effect of any piece of legislation will be, but I am persuaded that there is one thing that is true. There is a contention on the part of the Senator from Louisiana that future markets can raise prices. He said, when they were destroyed in 1914, the price went down. If they can raise the price, they can lower the price. That is an admission of all we have ever said, that the future markets are not a reflection of world conditions, but permit the gamblers to fix the price of a product that he does not produce. Nobody need argue that the future market can raise the price and then say that it could not lower it, because if it can influence it one way it can influence it both

ways.

The Senator from Louisiana admits all we have ever said. The difference, then, between him and me is this: He says the exchange is a good thing because it can raise the price if it wants to. I say that it is a bad thing because it permits people who are gambling in the products of other people's toil to influence the prices of products they have nothing to do with creating. He admits that in his statement.

If anybody who knows enough to find his way to the paying teller's desk should insist that the question of closing the markets in 1914 had anything to do with the deranged conditions of commerce, he would at least do himself some justice if he would go and look into the matter of what at that time destroyed all our foreign commerce. The condition then affected just as much things that were to be sold in Europe, that are not dealt in on the cotton and grain exchanges, as it affects those things that were dealt in on those exchanges. That result followed the closing of the sea, when it was not yet known whether Germany and the Central Powers or Great Britain would control the seas. Therefore any shipment that started out was likely to be seized. Of course, all foreign commerce stopped, and everybody knows that 65 per cent of the cotton In the grown in America has to find a market in Europe. face of these facts, to say that the closing of the stock exchange has a thing to do with the cotton market puts a strain on our credulity.

The Senator from North Carolina and the Senator from Louisiana spoke of fixing the price of hogs on future markets. There is not a future market for hogs. The Senator now can not find out to save his immortal soul what a hog is going to sell for on the Chicago market in the morning. There is no way of finding out. The market opens as the traders open it, and there is no future market anywhere for hogs. The Senator says there is a future market in the products. If there is, it does not control the market of hogs, because they do not undertake to say what the market is to be for hogs to-morrow or the next day or the next. Yet that is about as pat an argument as anything else, an argument dealing with hogs on a future market for cotton.

Mr. President, the only difference on this question is this: Had you rather the people who gamble prosper than the people who produce the cotton prosper? That is all there is in it. Any man with any learning may refine as much as he wants, but he is finally going to vote for one crowd or the other, and he is not going to deceive anybody by his vote. He is going to say, "I would rather the gamblers in Wall Street, in Chicago on the grain exchange, or in New Orleans on the cotton exchange, should prosper, than that the people who produce the bread and meat and clothes we wear should prosper."

I know beyond any cavil, and everybody knows, that speculation to a certain extent influences the prices of products that the people produce. If it did not, here is one thing that is so conclusive that it does not need any argument: You can go to the cotton exchanges to-day and buy a hundred million bales of cotton if you want to do it, American cotton, and every living idiot on earth knows there is not a hundred million bales of American cotton in the world, and will not be, in all human, probability, in the next five years. Yet people will undertake to sell it to you for July or August or September, or whatever the delivery months are.

I know that a man who sells that which he has not to somebody who does not expect to take it, and, more than that, who sells what is not in existence and never will be in existence is one of two things-he is a man who has some means to influence the price when delivery date comes on which he is going to settle, or he is an idiot, and since he has money, and idiocy and money do not dwell long together, we are forced to conclude that he has some way to influence the price on delivery date, and thereby be the beneficiary of a gambler's

market.

There would not be anybody rash enough to sell 200,000,000 bales of cotton in a year when there will not be 13,000,000 made,

if he thought there was any way of making him deliver, or suffer for not delivery. He must know how to manipulate.

Gentlemen talk about the exchange being a place where cotton is delivered. The Senator has referred to Mr. Clayton, who I believe is about the keenest gambler in futures I have ever seen. He was so smart that he has brought down the gambling fraternity on his head because he did not play the game according to the rules. He not only skinned all the outsiders, but he went to work with a very keen razor and skinned also the professionals, and Mr. Marsh, who at one time had been the head of the cotton exchange in New York, said the Government ought to indict Mr. Clayton because he was guilty of a dishonorable transaction, that he had manipulated the cotton market, that he squeezed people out of the market, and cost them much money. He sat here with a long array of counsel for weeks to show to the committee-and he convinced every member of it that he was right about it-that you could manipulate the cotton market and ruin people who were not on the inside and engaged in the same manipulation. There was not anybody so full of love for the cotton exchange then when these two were facing each other who undertook to deny that the cotton market could be manipulated.

Mr. Clayton said you could manipulate the New Orleans Cotton Exchange. He said you could manipulate the New York Cotton Exchange. He said they did manipulate the Liverpool Cotton Exchange until it could not be handled as a hedge at all. There was not anybody anywhere-and the Senator from Louisiana was present-who undertook to deny you could do those things.

The statement that the future market gives you the same price for cotton in every place in the United States sounds all right, but if anybody ever grew cotton and sold it at two markets 10 miles apart, he found that that was not true. Some cotton may sell for a cent or 2 cents a pound higher in one town in Texas than in another town in the same county of that State. Everybody has seen that happen. Cotton sells upon the market, unfortunately, as the folks who manipulate the market make it sell. All the witnesses testified before the Smith committee, of which the Senator from Louisiana was a member, that cotton would have sold for a higher price in 1926 if there had not been manipulation. They admitted it, and nobody thought of denying it.

Mr. President, I am astonished that we are told that a legitimate business can not be conducted unless you permit gambling. The Senator from Louisiana says he has speculated in land. He never sold an acre of land to which he did not have title. If he did and it had been found out, he would have had some trouble. You can speculate in land, but you have to have the title to do it. That is all we ask with reference to cotton, that they have the title to the product before they sell it.

Suppose somebody here in the District of Columbia should take a notion he would speculate in city lots and attempted to sell the very ground on which this Capitol stands to somebody who did not know that he did not have a right to do it. He would be in one of two places to-morrow; he would be in jail or in St. Elizabeths. I suspect he would be in St. Elizabeths. Suppose he should undertake to sell the furniture in this Chamber, he would go to one of those institutions. We have asked that the man who sells the thing which the farmer produces shall likewise obtain the right to do it or be penalized for selling that which he does not own.

As the senior Senator from Alabama [Mr. HEFLIN] said yesterday, if you organize a corporation, if the stock of the corporation is capable of being listed, you can list the stock upon the exchanges and have it dealt in, but if you do not want to do that you can not be made to do it. This bill provides only that you can not put the farmer's product on the exchange unless he consents to it. We give him just the same right that is given to every corporation organized in America. You can not sell their stock unless the corporation has listed it, and the right to sell corporation stock goes further than that. If you sell that which does not exist until you produce a corner, they will not let you profit by it. Mr. Clarence Saunders, of Memphis, could give a very learned lecture on that. He bought and bought and bought Piggly Wiggly stock and then made demand for delivery. It was discovered that he had bought more than the outstanding issue and the exchanges would not permit him to force delivery. They broke Mr. Saunders. He took a lot of newspaper space to talk about the exchange turning yellow and "welching" on their game, but they "welched" on it. If it had been a producer of cotton or grain, they would not have protected the people on the other side. They could sell and sell and sell as long as they wanted to, and settle on their commercial differences. We are asking that they apply the same rule to the farmer that they apply to the stocks of the railroads and other commercial institutions whose stock is dealt in on the exchange

that the man who sells must have the right and the power to deliver. When that is a fact we are satisfied.

Mr. KING. Mr. President, the Senator from Arkansas [Mr. CARAWAY] has presented an amendment which deserves most careful consideration. That it relates to a matter of prime importance all concede. There will be differences of opinion as to whether the evils of which the Senator complains can be reached and, if so, whether the amendment which he has offered effectively deals with the same. There will be some undoubtedly who are in favor of checking the evils resulting from dealing in futures upon produce exchanges, who will feel disinclined to support the amendment, being apprehensive that it goes too far and may restrict legitimate transactions. Others may feel that the entire question should be dealt with in a separate bill and not incorporated within a revenue measure.

I concede that the importance of the matter calls for a searching inquiry and that it would be better to deal with it in a special bill. However, the question is before us, and the amendment requires our attention, and we will be called upon to approve or disapprove of the same. It should be stated, however, that the subject has received the attention of committees of Congress during the present session and that the evils of which the Senator speaks were clearly pointed out by witnesses appearing before congressional hearings.

That gambling in agricultural products occurs upon produce exchanges has been established beyond a peradventure of a doubt. That the producers of cotton and wheat have suffered enormous losses through these gambling transactions is a matter patent to everyone.

When these gambling transactions and the evidences of speculations which result in losses to the farmers are pointed out and attempts are made to prevent a continuation of practices so harmful to agriculturists, it is urged that the measures proposed are not satisfactory and will fail to eradicate the evils complained of and the injustices which can not be denied. And there are those who contend that cotton exchanges and produce exchanges are necessary; that though they are tainted with gambling practices they accomplish considerable good.

Mr. President, when exchanges deal in futures and buy and sell commodities which do not exist and which the dealers and brokers do not own and never expect to acquire, injustices are bound to result and farmers are certain to be injured. The violent fluctuations upon these produce exchanges are evidences of gambling practices which can not prove other than harmful to agriculturists and demoralizing to the public. Gambling is not tolerated and many forms of gambling are denounced as crimes. The "corners which frequently are attempted, and sometimes successfully, in commodities essential to life not only interfere with the ordinary and natural processes of trade and commerce but they work irreparable injury and prove financially harmful to the producers. We hear of stock brokers and produce brokers making millions in their stock-exchange transactions. Perhaps they made not the slightest contribution to the wealth of the country. That stock exchanges and produce exchanges may serve a useful purpose must be admitted, and it is to be regretted that these agencies which may be of value to the people are so often employed illegitimately and in a manner harmful to the public. The amendment under consideration does not interfere with legitimate and proper transactions; it strikes only at those that are improper, fraudulent, and harmful to the producers and to the public.

A few years ago I had occasion to investigate the activities of the New York Stock Exchange, as well as other exchanges in the United States which dealt in stocks and bonds. My recollection is that the data which I obtained showed that an overwhelming majority of the purchases upon the New York Stock Exchange were not actual and bona fide; that is to say, the overwhelming majority of the transactions did not involve the purchase and delivery of stocks. They were "margin" transactions, and the broker did not have possession of the stock and made no deliveries of the stock. My recollection also is that in a great majority of the marginal purchases the purchasers lost what they put up at the time of the purchase. In many cases additional margins were called for and the losses of the With fluctuating markets, thonbuyers were thus increased. sands of purchasers lose their marginal payments and the brokers reaped large profits. I reached the conclusion from the investigation made that many of the transactions conducted upon stock exchanges were mere gambling transactions.

The data which I obtained also demonstrated that banks belonging to the Federal reserve system, as well as State banks, were supplying hundreds of millions of dollars which were employed in these speculative and gambling transactions. The evidence was so overwhelming that I believed Congress should deal with the subject. I offered a bill which denied the use of

I made inquiries concerning the activities of stock exchanges and bucket shops in various parts of the United States and learned of the havoc wrought and tragedies which often resulted. Thousands of persons buy, knowing that deliveries would never be made and that the brokers did not possess the stocks which they pretended to sell. The markets were watched with feverish anxiety and with the changing figures of the tickers ruin and disaster were brought to a large number of individuals. Upon produce exchanges the same evils existed and the same disastrous consequences followed.

Mr. President, Congress has the constitutional power to deal with these interstate transactions, and it also has the power to tax these exchanges and the brokers who deal upon the same. I would be glad to support a measure that comprehensively dealt with these speculative and stock-gambling transactions and imposed such penalties as would reduce to a minimum the manifold evils resulting from the existing practices upon exchanges. While not satisfied with the amendment offered by the Senator, and recognizing that it will not prove as effective as desired, nevertheless, I shall vote for it. will be an admonition to those dealing in futures and who convert exchanges into gambling marts that they shall change their ways. It will be a warning to some who deal upon produce exchanges that the agriculturists must not be despoiled and that the results of their toil shall not be utilized to increase the wealth of gamblers.

It

The

The PRESIDING OFFICER (Mr. HARRIS in the chair). question is on agreeing to the amendment of the Senator from Arkansas [Mr. CARAWAY] to the amendment of the committee. Mr. SMOOT. I call for the yeas and nays.

The yeas and nays were ordered, and the legislative clerk proceeded to call the roll.

Mr. CURTIS (when his name was called). I have a general pair with the Senator from Arkansas [Mr. ROBINSON]. I transfer that pair to the Senator from Oregon [Mr. STEIWER] and vote "nay."

The roll call was concluded.

Mr. JONES. I desire to announce that the Senator from Oregon [Mr. STEIWER] is necessarily absent on official business. I also desire to announce that the Senator from South Dakota [Mr. McMASTER] is absent on official business. He has a general pair with the Senator from New Jersey [Mr. EDWARDS]. I also desire to announce the following general pairs: The Senator from Delaware [Mr. DU PONT] with the Senator from Florida [Mr. TRAMMELL];

The Senator from Indiana [Mr. ROBINSON] with the Senator from New Mexico [Mr. BRATTON];

The Senator from Kentucky [Mr. SACKETT] with his colleague the junior Senator from Kentucky [Mr. BARKLEY];

The Senator from Ohio [Mr. FESS] with the Senator from Tennessee [Mr. MCKELLAR];

The Senator from California [Mr. SHORTRIDGE] with the Senator from Mississippi [Mr. STEPHENS]; and

Mr. COPELAND. Mr. President, I have here a letter from the National Bank of Niagara & Trust Co., of Niagara Falls, N. Y., inclosing copy of a resolution adopted yesterday by the directors of that bank. I ask that the resolution may be read at the desk.

The VICE PRESIDENT. Without objection, the clerk will read as requested.

The Chief Clerk read as follows:

Whereas one Jacob D. Hansen, secretary of Lodge No. 346, Benevolent and Protective Order of Elks, a reputable, law-abiding, and respected citizen of the city of Niagara Falls, was, on the morning of May 6 last the victim of an unjustifiable and murderous assault committed upon his person by two members of the United States Coast Guard Service stationed at or near Youngstown, N. Y., while he, the said Jacob D. Hansen, was lawfully and peacefully driving his automobile upon a public highway known as the Lewiston Road in the county of Niagara; and

Whereas our said citizen, Jacob D. Hansen, now lies at the point of death as the result of said assault with a bullet through his temple; and

Whereas warrants for the arrest of the perpetrators of said assault have been issued by the proper authorities of the State of New York; and Whereas the commander of the unit of the said United States Coast Guard Service at Youngstown, N. Y., refuses to allow said warrants to be executed: Now therefore be it

Resolved, That we, the board of directors of National Bank of Niagara & Trust Co. of Niagara Falls, N. Y., hereby indignantly protest against the reckless use of firearms against the persons and automobiles of law-abiding citizens of this community by apparently irresponsible persons of the United States Coast Guard Service, or any other service; and we hereby resolve that every effort should be made to bring said members of the United States Coast Guard to answer in the courts for their assault upon said Jacob D. Hansen to the fullest extent of the

Mr. GERRY. I desire to announce that the Senator from Kentucky [Mr. BARKLEY] and the Senator from New Mexico [Mr. BRATTON] are necessarily absent on official business, attending a hearing before the committee investigating presidential campaign expenditures.

Mr. McLEAN (after having voted in the negative). Has the Junior Senator from Virginia [Mr. GLASS] voted?

The VICE PRESIDENT. That Senator has not voted. Mr. McLEAN. I have a general pair with that Senator and therefore withdraw my vote.

Mr. SACKETT (after having voted in the negative). I have a general pair with my colleague the junior Senator from Kentucy [Mr. BARKLEY]. Not knowing how he would vote, I withdraw my vote.

Mr. ASHURST. I desire to announce that the junior Senator from Arizona [Mr. HAYDEN] is detained from the Chamber on important business. If present, he would vote "nay."

Mr. GERRY. I desire to announce that the Senator from Nevada [Mr. PITTMAN], the Senator from Virginia [Mr. GLASS), and the Senator from Mississippi [Mr. STEPHENS] are detained from the Senate on official business.

The result was announced-yeas 24, nays 47, as follows:

tary of the Treasury of the United States, Senators COPELAND and WAGNER, and Congressman S. WALLACE DEMPSEY at Washington, and to the district attorney of Niagara County.

Mr. COPELAND. Mr. President, this morning I discussed this unfortunate affair with Admiral Billard, who has charge of the Coast Guard, also with Assistant Secretary Lowman, and at the Attorney General's office. Of course, everybody is very regretful of the terrible incident, but I am satisfied that it is a matter which must receive the very serious attention of the authorities. This morning the Commerce Committee gave consideration to the request I made yesterday. It has been determined that next week there will be a meeting of the committee and that Admiral Billard will be heard, in order that the committee may determine what are the rules and regulations and under what conditions a private citizen may be shot. I think for the time being perhaps there is nothing more that can be done, but certainly there must be a reformation in the methods employed in the attempted enforcement of certain laws.

Here was a citizen who was engaged in a perfectly lawful pursuit. He was going from the home of a friend in the country to his own home in Niagara Falls and while in the outskirts of the town was shot and will probably die. If he lives, he will probably be blind as the result of this assault made upon him by

members of the Coast Guard, who were not out in boats patrolling the border, but were upon the public highway.

Mr. TYDINGS. Mr. President, will the Senator yield?
Mr. COPELAND. I yield.

Mr. TYDINGS. I am in thorough sympathy with the movement which the Senator has initiated, but I should like, nevertheless, to say that I think the Senator must be an optimist. There have been three men killed in my own State under similar circumstances. One had nothing to do with a still, but happened to be driving some cows in the vicinity of it; the prohibition agents mistook him for one of the men who was operating a still, and he was shot down. We have done everything we could to bring these men to proper trial. The Federal Government stepped in and took them out of our State courts and insisted upon them being tried in the United States court, where the United States district attorney acted as the defendant's counsel. Under the circumstances, while I hope this move will meet with some success, certainly similar moves have not met with any success in Maryland. Apparently, it is deemed all right by the Christian prohibitionists to take a man's life because he may have a pint of liquor on his person. Mr. COPELAND. Mr. President, I am optimistic to this extent: I believe when the people of this country are thoroughly informed as to what is going on that there will be such resentment that these violent methods will cease. In this case this man did not have any liquor on his person. He was in his automobile on a peaceful errand and in the middle of the highway. A man came out, a man clothed, according to the story that is told me, in overalls and a sheepskin jacket, with a revolver in one hand and a dark lantern in the other. He waved those instruments in front of the automobile, and the driver of the automobile did what any Senator would have done he put his foot on the gas and tried to get away from this man whom he thought to be a highwayman.

A hundred yards farther on he met another man clothed in the same way. The second man started firing at the automobile; five or six shots were fired, and one of them entered the brain of the driver of the automobile, an innocent bystander, so to speak, a citizen who had absolutely nothing to do either with the enforcement or the violation of any law.

I am optimist enough to believe, I may say to the Senator from Maryland, that when the officials of this country, and when the Members of the Senate, and when the people at large realize what violent deeds are being committed in attempts to enforce what appears to many to be an unenforceable law, there will be an uprising and a determination that this thing must

cease.

For my part I intend to go forward attempting in every honorable way to make it impossible for such a wicked performance to be repeated.

Mr. HEFLIN. Mr. President, I sympathize with this man and his family. If these officers have shot this man under the circumstances related here they ought to be discharged from the service and prosecuted for an assault with intent to murder or for murder if the victim shall die. It is a very serious thing for a citizen driving along the highway to be attacked by officers who are claiming that they are seeking to enforce a particular law. If I had been in an automobile driving along the road and some one had stepped in front of my car with a lantern and a pistol in his hand I would have driven fast to get away if it were possible; I would not have stopped, and I do not think anybody else would. The man had a right to try to get away. He perhaps thought, as the Senator says, that a highwayman was holding him up. He did not know for what purpose-perhaps to rob or to kill him. The case ought to be looked into by the Government, and looked into speedily; there ought to be no dallying with a case like this. There ought to be action to-day, and we ought to know of that action tomorrow. There is no use wasting time to ascertain what are the rules and regulations concerning the Coast Guard. The responsible officials ought to bring these men to the bar of justice, so far as they can, immediately and determine what course they are going to take with them; and if they are not going to take any, then turn them over to the local authorities where this crime was committed.

We ought to be careful whom we put in charge of the law. The chief law enforcement officers ought not to put reckless men in the service. Of course, I know how utterly impossible it is in the selection of hundreds of thousands of officers to select men who are discreet and very careful about what they do.

Some reckless men are bound to get into the service. We ought to weed out the reckless ones and we ought to punish them, and they have been punished in my State. They have been convicted where they have done reckless and outrageous things against peaceful, law-abiding citizens.

I called the attention of the Senate the other day to some outlaws in Kentucky who gathered around the home of a woman with three or four children, whose sister was also living with her. She had reported a distillery. She had walked 14 miles into the town to give this information, so that they could remove this monstrosity near her home that would entice her boys, she thought, and the neighbors' children. She wanted to get rid of that thing. She had a right to do it. She was in the lawful discharge of her duty. She was a patriot, a good citizen, in doing that. These outlaws took the law into their hands. They surrounded her house at midnight. They barricaded the doors from the outside, so that the occupants could not get out, and put the torch to that home, and burned the house. When the house was filled with smoke, and the people living there saw the light of the flames flaring up around, they sought to escape, and found they could not open the doors and get out. One of the boys took an ax, broke open the door, and fled through the flame and smoke; and these outlaws, these men who buck the Government, these men who have sworn that they will not permit the eighteenth amendment, and the Volstead Act, to be enforced, taking the law into their own hands, at the dead hour of night, marching up on the humble home of a good woman, a Christian American mother, and burning her house down on her head, when her boy fled through the flame and smoke, shot him to death. She followed suit, and they killed her in the yard, and shot her other children, and shot her sister.

Senators, we must enforce the law. We must enforce it against such outrageous criminals as those, and enforce it against these men to whom the Senator from New York has called attention. The law ought to be above all alike. There ought not to be any partiality shown. We ought to let these officers who disgrace their positions be punished before the country, and driven in disgrace from the service of the Coast Guard.

That is what I favor. I am not in favor of permitting these law-enforcement officers to impose upon innocent citizens. I am not in favor of allowing them to fire into people's automobiles along the highways. I am against it. They ought to proceed under the law, and they ought to do it decently, and they ought to let every person they approach know that they are only friends in the name of the law trying to carry out the law, and that they are not seeking to shoot people and have them running down the road to escape with their lives.

Senators, we ought all to stand together on those things. We all ought to stand together, and tell the Federal authorities to go after those bandits in Kentucky and offer a reward for their capture. I would vote for a reward of a hundred thousand dollars to catch them, because it would be an outrage to permit these criminals who hide away in the mountain fastnesses of that State or any other to proceed with guns upon the home of a humble American mother in the nighttime and to kill her because she has dared to disclose the fact that the law is being violated in her community, and that she wants to remove temptation from her two boys. We ought to offer a reward for the apprehension of these men that will cause the best detectives in the country to go over that part of the country with a fine-tooth comb and gather them up speedily and punish them, and let others know what will happen to them if they dare to kill people who are good citizens and want the law enforced. Turn out these Coast Guards; punish them for assault with intent to murder; and, if this man dies, send them all to the penitentiary or hang them for that crime.

MESSAGE FROM THE HOUSE-ENROLLED BILLS AND JOINT RESOLUTION

SIGNED

A message from the House of Representatives, by Mr. Haltigan, one of its clerks, announced that the Speaker had affixed his signature to the following enrolled bills and joint resolution, and they were signed by the Vice President:

S. 750. An act to amend the act entitled "An act for making further and more effectual provision for the national defense, and for other purposes," approved June 3, 1916, as amended, and for other purposes;

S. 757. An act to extend the benefits of certain acts of Congress to the Territory of Hawaii;

S. 2004. An act authorizing the paving of the Federal strip known as International Street, adjacent to Nogales, Ariz.; S. 2910. An act granting to the State of South Dakota for park purposes the public lands within the Custer State Park, S. Dak.;

S. 3571. An act granting the consent of Congress to the County Court of Roane County, Tenn., to construct a bridge across the Emery River at Suddaths Ferry, in Roane County, Tenn.; and S. J. Res. 135. Joint resolution making an emergency appropriation for flood protection on White River, Ark.

TAX REDUCTION

The Senate, as in Committee of the Whole, resumed the consideration of the bill (H. R. 1) to reduce and equalize taxation, provide revenue, and for other purposes.

The VICE PRESIDENT. The question is on the amendment of the committee.

The amendment was agreed to.

Mr. SMOOT. Mr. President, the next amendment is on page 205, the tax on sales or transfers of capital stock. The present law imposes a tax of 2 cents for every $100 of value on transfers or sales of capital stock. The House struck out the provision of existing law and reduced the tax from 2 cents to 1 cent. The majority of the committee decided to retain the existing law of 2 cents instead of 1.

That is about all there is in the matter, with the exception that it makes a difference of $8,800,000 in the revenue. I can not see why the Treasury should not have that $8,800,000. Therefore, the majority members of the committee decided to amend the House provision by striking out "one" and inserting "two," which is the existing law. That, I hope, the Senate

will do.

Mr. HARRISON. Mr. President, some of us thought that these war taxes should be, as far as possible, removed. Acting on that theory, we voted in the committee to retain the House provision that sought to reduce this stock-transfer tax.

Mr. SMITH. Mr. President, I am sorry that while the amendment proposed by the Senator from Arkansas [Mr. CARAWAY] was under discussion I was engaged in conference on a measure of considerable interest to this body, and to the country at large, and perhaps to some of those who desire to serve their country in a higher capacity, known as the McNaryHaugen bill. I had hoped to get back to the Chamber before the discussion was over and the vote was taken. I voted against the proposition because the method of our marketing is a matter of very vital interest to the producers of cotton. From the time cotton has been produced there has grown up a system which, unless one makes a very close and critical study of it, is so technical that a layman, one who does not know about it, can not understand the paradoxes that occur in it.

To illustrate the point I am making, one not familiar with cotton can not understand how the man who buys cotton is called the "bull," or the friend of the producer, when the producer per se is a seller. He can not understand how a man who goes into the market and buys cotton is a friend of the producer who produces it for sale. That is one of the peculiar features that have grown up, and it is for this reason:

When one buys cotton in the future market at a given price he then becomes for the time being, as long as he is in possession of the contract for the cotton, one who expects to get his profit from a rise in the market. Therefore, the more buyers you have, the more they are interested in the rise of cotton. The man who sells his cotton, strangely enough, is the man who is called the "bear," for the reason that if he sells his cotton for future delivery at its price to-day, and the market goes down, when he comes to buy the cotton to fulfill his contract he may buy it at less than he sold it at, and therefore get a profit; so that the lower it goes the greater his profit, while in the case of the man that buys, the higher it goes the greater his profit. That system has grown up, and therefore there is very often a misunderstanding amongst the trade as to why the buyer should be considered the friend of the producer.

There is another feature of this matter that I think will be interesting to those who read the RECORD. I want to make it plain to them that between the 1st of September and the 1st of January the bulk of the crop has passed from the hands of the producer into the channels of trade. That is necessary. The conditions under which the average cotton producer produces his cotton are such that he must market it as soon as it is ready for market, for the reason that the obligation he incurs in the production of it falls due in the month in which it is to be gathered and put in proper marketable form. Therefore we have this condition existing in the Cotton Belt of this country: There is a 12 months' supply coming on the market within 90 days. The cotton that is put upon the primary market, entering the channels of trade, is a supply that it takes the mills of the world, both European and American, to consume in the succeeding 12 months. Somebody must be prepared to take that cotton and carry it. If we were restricted to the mills-highly organized; few in number, with large resources-the inevitable would happen, that they would be the masters of the situation and would buy only at such times as their immediate needs might justify them in buying.

Under the present system, a cotton merchant may go out and purchase cotton, or he may hedge his purchase-that is, buy a contract-and then, after he has bought his contract at

a given price he can fill that contract by filing it or hypothecating it with a bank as an insurance against his purchase of the cotton. He can go out on the market and buy that cotton with an absolute assurance that he will be guaranteed the price prevailing that day; and the same thing is true on the selling side. The seller can go out and sell a contract against a purchase of actual cotton and secure himself absolutely.

I shall not take the time of the Senate to explain-it is very simple to those who really understand it-how a hedge absolutely protects either the one who has sold against a spot purchase or the one who has bought against a spot sale. It is a guaranty. It is a hedge.

It has been claimed, and I think very truthfully, that under our present system, in view of the absolute necessity of the producer to sell his crop, the hedging process provides a system by which those not engaged in manufacturing may enable the producer to finance his crop by paying him the current price and not restricting him to the mills alone.

The contention has been made that four or five times, or perhaps a hundred times, more cotton is sold than is produced. In a way, perhaps, that is true; but one familiar with the market must understand that a contract even representing actual existing cotton may be registered three, four, or five times during a season, or may be registered four or five times during a day. One buying a contract may sell it during the marketing period of that day, and in turn another may buy; but we must not lose sight of the fact that for every seller there is a purchaser. No matter if they sell five times the crop, somebody buys five times the crop, and one is a balance against the other, because the man who buys is looking for a profit and the man who sells is looking for a profit, and it is a question of which one has the most resources or which has the greater power; and it is our duty to see that advantage shall not be taken of the market place for the purpose of creating a temporary monopoly that would artificially control the market, because, no matter how much speculation there may be in this commodity, ultimately the price will be controlled within a degree by the law of supply and demand.

It is my opinion that the market places are absolutely essential. We ought not to attempt to destroy the market places, but we ought to attempt to drive out those who prostitute the market places. It surely is within our power so to regulate, so to control the dealings in any of our commodities that we can prevent corners, squeezes, monopolies, and manipulations from taking place and yet allow the degree of speculation that is always present in all kinds of business.

The fact is, Mr. President, and everybody will agree, that the market that is alive, the market that is rising, is the speculative market. I do not believe in gambling, I do not believe, as has been done in the cotton market, that we ought to allow certain individuals to come in and sell or to buy without regard to the law of supply and demand, but the speculative element upon which we have to depend in the present condition of the farmer is the element that is willing to come into the market and make a bid on the prospect.

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What did we have in the year 1927? There were in New York 200,000 bales of spot cotton. Everybody knew and everybody knows that New York is clear out of line with the ordinary channels of the cotton business, and it being disadvantageous to handle cotton there, the presence of cotton in that market has a tendency to depress the market. On the other hand, the absence of cotton and the selling of contracts has a tendency unduly to raise the price. Last year there were held in New York 200,000 bales of cotton that was known as line" cotton, known as shy" cotton, just the kind that would clear the loss in reference to tenderable grades-staple. But the presence of the weevil in the South, reduction of acreage, and a bad season cut out of the crop approximately 6,000,000 bales. As soon as the trade understood that the crop was going to be short, at first 3,000,000, which was about the estimate of the department, the price began to rise, and it rose steadily from the point of depression that had occurred in 1926 on account of the excessive production, 18,000,000 bales; it rose gradually from February, and as the prospect for still further decrease in production became apparent it rose more rapidly, until about the 1st of August, when it was beyond a doubt that the crop would be from four to five million bales short. It rose rapidly from the low point in February of about 16 cents until August, when it reached 25 cents.

There was a difference between the low and the high of $45 a bale. In spite of the presence of what was ordinarily a depressing presence of speculative cotton held in New York, the market continued to rise under the absolute pressure of the law of supply and demand, and possibly cotton would have gone to 30 cents a pound, in spite of all the artificial or speculative obstructions that could have been thrown in its way. It would