The nonpartisan leader. [volume], September 05, 1921, Image 11

About The nonpartisan leader. [volume] (Fargo, N.D.) 1915-1921

Image provided by: State Historical Society of North Dakota

                
Mr.
•v"*.
BY WALTER W. LIGGETT
Liggett is a Washington (D. C.) correspondent for
liberal newspapers. He was formerly connected with the
Nonpartisan league.
HEN the Capp6r-Tincher bill for the
regulation of grain exchanges was in
troduced in congress, President Grif
fin of the Chicago Board of Trade
said that "the grain exchanges of the
country will voluntarily withdraw
from business and close their market places rather
than submit to the intolerable, unfair and arbitrary
features of this legislation," and the day the bill
passed the house of representatives the price of
wheat dropped 11 cents on the Chicago Boar'd of
Trade.
But when the Capper-Tincher bill passed the sen
ate on August 9, instead of creating another selling
panic on the grain exchanges, the price of wheat
actually advanced.
The fact is that the bill was amended bit by bit
in committee until it finally became acceptable to
and even was welcomed by some of the foremost
grain traders of the country.
The original bill provided real regulation. Grain
gamblers had reason to fear its passage. It im
posed a tax of 20 cents a bushel, whether the actual
commodity was intended for delivery or not, upon
every bushel of grain involved in transactions on
grain exchanges known as "privileges," "bids,"
"offers," "puts and calls," "indemnities" and "ups
and downs." These are technical terms that relate
to deals, usually only made between professional
traders, which are admitted to be gambling propo
sitions pure and simple. The bill also provided that
a tax of 20 cents a bushel should be imposed on
every bushel involved upon each contract of sale of
grain for future delivery made at, on or in the ex
change, board of trade or similar institution, ex
cept where the seller was the owner of the actual
physical property or the grower thereof, or where
such contracts were made by or through a member
of the board of trade which had been designated
by the secretary of agriculture as a "contract mar
ket."
SECRETARY WALLACE HELPS
GRAIN MEN IN CONFERENCES
The bill then authorized and directed the secre
tary of agriculture to designate as "contract mar
kets" such boards of trade as were located at a ter
minal market upon which cash grain is sold in suf
ficient yolume and under such conditions as fairly
to reflect the general value of the grain and the
difference in value between the various grades of
grain. The governing boards of such exchanges
were required to file reports in accordance with
regulations prescribed by the secretary of agricul
ture, showing the details of all transactions, either
cash or future. These reports were to be kept on
file for three years.
The governing boards of exchanges were forced
to provide for the prevention of manipulation of
prices by dealers or operators, including a reasona
ble limitation upon the total quantity of grain of
the same kind covered by contracts unfulfilled or
unsettled at any one time by or on behalf of the
same person, commonly called "open trades" in
speculative transactions. Co-operatives had to be
admitted to exchange membership.
The secretary of agriculture was given wide pow
ers to enforce the law, and was authorized to make
investigations regarding the operations of grain
exchanges and to publish the results.
It is not strange, in view of the bill's original
provisions, that prominent members of various
grain exchanges made vociferous protests and that
newspapers friendly to these institutions con
demned the bill as almost akin to bolshevism. The
legislatures of the various states in which the grain
exchanges were located reluctantly were being
prodded into action by their farmer constituents
and some pretty drastic bills aimed at the Chicago
Board of Trade already had been introduced in the
Illinois assembly. It was the menace of this threat
ened state regulation as much as anything else that
brought the grain operators to their senses and
hastened their decision to accept federal regulation
gracefully—provided it could be amended to suit
them.
Early in the year. President Griffin of the Chi­
?~V
Grain Men Amend Capper-Tincher Bill
With Help of Secretary Wallace, Wheat Pit Operators Get Congress to
Take Teeth Out of Measure Intended to Protect Farmers
cago Board of Trade, according to the testimony of
witnesses interested in the bills pending before the
Illinois legislature, informed members of that body
there was no necessity of it passing the bill be
cause an agreement had been reached in Washing
ton on federal legislation which would be satisfac
tory to the board of trade.
The first step of grain men was the sending of a
delegation to Washington to amend the Capper
Tincher bill "satisfactorily," and the delicate task
of pulling its teeth was entrusted to Julius H.
Barnes of the Duluth Board of Trade F. C. Van
Dusen and F. B. Wells of the Minneapolis Cham
ber of Commerce, and L. F. Gates, former presi
dent of the Chicago Board of Trade. Barnes, prob
ably the greatest grain operator in America, was
closely associated with Herbert Hoover during the
war, as head of the United States Grain corpora
tion he was active in promoting Hoover's fruitless
campaign for a presidential nomination, and at the
present time is a stockholder in the Washington
Herald, the paper which Hoover purchased to fur-
a
The Minneapolis Chamber of Commerce, whose rep
resentatives were successful in getting the grain
exchange regulation bill denatured, as told
by Mr. Liggett on this page.
ther his political interests.. The delegation of grain
operators undoubtedly relied to a considerable ex
tent upon the-friendship of Hoover, about the most
powerful figure in the Harding administration.
Farmer leaders have the assurance of two very
reputable witnesses that the~~four grain dealers in
question, convoyed by Secretary Hoover, called on
Secretary of Agriculture Wallace and a number of
very interesting conferences ensued. Later the
whole thing came out in the hearings of the senate
committee on agriculture. Chester Morrill, assist
ant chief of the bureau of markets, "spilled the
beans" on the very first day of the hearing by stat
ing: "It is my understanding that some represen
tatives of the grain companies visited
the secretary of agriculture a few days ago
to formulate changes that would meet their ideas
and submit them to the secretary."
Later, F. B. Wells of Minneapolis, possibly mak
ing a virtue of necessity, said before the committee:
"Several members of the grain trade called on
the secretary "of agriculture to discuss with him
the attitude of the department toward legislation.
Secretary Wallace suggested to the gen­
tlemen in attendance at the conference that they
submit to him a memorandum embodying the
changes which might be jnade in the bill."
Later, Secretary Wallace admitted that he had
... PAGE TWELVE
held conferences with grain operators and that
these four men, their* attorney, and the attorney of
the department of agriculture held subsequent con
ferences and finally submitted suggested amend
ments.
Now, this is not to suggest that there was any
thing dishonest in Secretary Wallace discussing
the pending Capper-Tincher anti-grain gambling
bill with four of the biggest grain operators in
America, but I do think it strange that practically
all their suggested amendments should have been
accepted by Mr. Wallace and later recommended
by him to the senate committee on agriculture,
which adopted them, with the result that the Cap
per-Tincher bill has been made so harmless that
the biggest grain operators in the United States
publicly admit the bill is acceptable and privately
probably hail it with delight.
I have before me as I write a tattered, torn and
dirty copy of the original Capper-Tincher bill, with
the typewritten amendments made by the four
grain operators, their attorney, and the solicitor of
the department of agriculture. After several con
ferences these gentlemen agreed upon certain
amendments shown in this copy.
Now, what are these amendments thus agreed
to arid how vital are they?
One amendment adds to the provision about the
keeping of memorandum of sales for three years
and longer, if the secretary of agriculture shall so
direct, a clause which states "which record shall
"at all times be open to the inspection of the sec
retary of agriculture and the department of jus
tice." Now, this looks harmless enough most
jokers do—but I can find plenty of competent at
torneys, several of them United States senators,
who believe that this clause by implication prevents
the federal trade commission from having access to
these records! If this is true, the grain operators
have won a big victory and another nail has been
driven in the coffin of the federal trade commis
sion, one of the few governmental agencies that
have honestly tried to serve the people.
GIVES BIG EXCHANGES
A VIRTUAL MONOPOLY
Another amendment gives such exchanges as the
Minneapolis Chamber of Commerce and Chicago
Board of Trade a virtual monopoly .of the grain
handling business. As originally written para
graph A of section 5 provided the secretary of ag
riculture was directed to designate contract mar
kets "when located at a terminal market upon
which cash grain is sold in sufficient volume and
under such conditions as fairly to reflect the gen
eral value between the various grades of grain."
The amendment adds, "and having adequate stor
age facilities and recognized weighing and inspec
tion service," thus confining the "contract mar
kets" to a few well-established centers.
Another amendment is vital. The original draft
imposed a "reasonable limitation" upon the total
quantity of grain of the same kind which could be
handled by any one operator at one time upon
"open trades." Practically every witness who ap
peared before the house and senate agricultural
committees agreed that the use of unlimited "open
trades" was the most common method of manipu
lating the market. Practically all witnesses agreed
that no legitimate interest would suffer if "open
trades" were limited to 500,000 bushels at one op
eration. The trend of the testimony stressed this
proposed limitation as one of the really promising
features of the bill, which held some hope of check
ing speculation on futures and making manipula
tion of prices impossible. Yet the amendment
agreed to by Secretary Wallace and adopted by the
senate committee on agriculture struck out all ref
erence" to "reasonable limitation" and thus emas
culated the most fundamental feature of the orig
inal bill.
The next amendment was a cunning attempt to
nullify the second most important feature of the
original bill, its provision which forced grain ex
changes to admit co-operative associations. The
proposed amendment inserted the words "under the
same terms and conditions as other members.**
This would have prevented co-operators from dis
tributing patronage dividends to their members
and of course made it impossible for them to oper
ate on grain exchanges. This amendment,
-ti
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