place of business by filing with the clerk of such court a written petition praying that the order of the said commission be set aside or modified in the manner stated in the petition, together with a bond in such sum as the court may determine, conditioned that such exchange will pay the costs of the proceedings if the court so directs. In which event the exchange shall continue to function until it has been decreed guilty, at which time the suspension shall go into effect as provided above. The clerk of the court in which such a petition is filed shall immediately cause a copy thereof to be delivered to the Secretary of Agriculture, chairman of said commission, or any member thereof, and the said commission shall forthwith prepare, certify, and file in the court a full and accurate transcript of the record in such proceedings, including the notice to the exchange, a copy of the charges, the evidence, and the report and order. The testimony and evidence, taken or submitted before the said commission duly certified and filed as aforesaid as a part of the record, shall be considered by the court as the evidence in the case, but this shall not be construed as denying to the exchange its privilege of appearing before the court in its own behalf or of submitting additional evidence or testimony. The proceedings in such cases in the circuit court of appeals shall be made a preferred cause and shall be expedited in every way. Such a court may affirm or set aside the order of the said commission or may direct it to modify its order. No such order of the said commission shall be modified or set aside by the circuit court of appeals unless it is shown by the exchange that the order is unsupported by the weight of the evidence or was issued without due notice and a reasonable opportunity having been afforded to such exchange for a hearing, or infringes the Constitution of the United States, or is beyond the jurisdiction of said commission: Provided, That if the Secretary of Agriculture shall refuse to designate as a contract exchange any exchange that has made application therefor, then such exchange may appeal from such refusal to the commission described therein, consisting of the Secretary of Agriculture, the Secretary of Commerce, and the Attorney General of the United States, with the right to appeal as provided for in other cases in this section, the decision on such appeal to be final and binding on all parties interested.

(b) If the Secretary of Agriculture has reason to believe that any person is violating any of the provisions of this act, or is attempting to manipulate the market price of cottonseed oil in violation of the provisions of section 5 hereof, or of any of the regulations made pursuant to its requirements he may serve upon such person a complaint stating his charge in that respect, to which complaint shall be attached or contained therein a notice of hearing, specifying a day and place, not less than three days after the service thereof, requiring such person to show cause why an order should not be made directing that all contract exchanges until further notice of the said commission refuse all trading privileges thereon to such person. Said hearing may be held in Washington, District of Columbia, or elsewhere, before the said commission, or before a referee designated by the Secretary of Agriculture, who shall cause all evidence to be reduced to writing and forthwith transmit the same to the Secretary of Agriculture as chairman of the said commission. That for the purposes of securing effective enforcement of the provisions of this act the provisions, including penalties, of section 12 of the interstate commerce act, as amended, relating to the attendance and testimony of witnesses, the production of documentary evidence, and the immunity of witnesses, are made applicable to the power, jurisdiction, and authority of the Secretary of Agriculture, the same commission, or said referree in proceedings under this act, and to persons subject to its provisions. Upon evidence received the said commission may require all contract exchanges to refuse such person all trading privileges thereon for such period as may be specified in said order. Notice of such order shall be sent forthwith by registered mail or delivered to the offending person and to the governing boards of said contract exchanges: Provided, That such order does not stop or prohibit the liquidation of contracts of purchase or sale already made by the offending person. After the issuance of the order by the commission, as aforesaid, the person against whom it is issued may obtain a review of such order or such other equitable relief as to the court may seem just by filing in the United States Circuit Court of Appeals of the circuit in which the petitioner is doing business a written petition praying that the order of the commission be set aside. A copy of such petition shall be forthwith served upon the commission by delivering such copy to its chairman or to any member thereof, and thereupon the commission shall forthwith certify and file in the court a transcript of the record theretofore made, including evidence received. Upon the filing of the transcript the court shall have jurisdiction to affirm, to set aside, or modify the order of the commission,

and the findings of the commission as to the facts, if supported by the weight of evidence, shall in like manner be conclusive. In proceedings under paragraphs (a) and (b) the judgment and decree of the court shall be final, except that the same shall be subject to review by the Supreme Court upon certiorari, as provided in section 240 of the Judicial Code.

(c) Any exchange that has been designated a contract exchange in the manner herein provided may have such designation vacated and set aside by giving notice in writing to the Secretary of Agriculture requesting that its designation as a contract exchange be vacated, which notice shall be served at least ninety days prior to the date named therein as the date when the vacation of designation shall take effect. Upon receipt of such notice the Secretary of Agriculture shall forthwith order the vacation of the designation of such exchange as a contract exchange, effective upon the day named in the notice, and shall forthwith send a copy of the notice and his order to all other contract exchanges. From and after the date upon which the vacation became effective, the said exchange can thereafter be designated again a contract exchange by making application to the Secretary of Agriculture in the manner herein provided for an original application. SEC. 8. That in order to effectuate the purposes of this act, the Secretary of Agriculture is authorized to investigate the handling, grading, and transportation of cottonseed, cottonseed oil, and the products and by-products thereof, and to make public from time to time, in his discretion the result of such investigation and such statistical information gathered therefrom as he may deem of interest to the public, except data and information which would separately disclose the business transactions of any person and trade secrets of customers: Provided, That nothing in this section shall be construed to prohibit the Secretary of Agriculture from making or issuing such reports as he may deem necessary, relative to the conduct of any exchange or of the transactions of any person found guilty of violating the provisions of this act under the proceedings prescribed in section 7 of this act: Provided further, That the Secretary of Agriculture in any report may include the facts as to any actual transaction. It shall be the duty of any person engaged in the business of dealing in cottonseed oil or the products or by-products thereof, when requested by the Secretary of Agriculture or any agent acting under his instructions, to answer correctly according to the best of his knowledge, under oath or otherwise, all questions touching upon his knowledge of the details and terms of any cash or spot or future transaction participated in by him involving any cottonseed oil or the products or by-products thereof, or to produce all books, letters, papers, or documents in his possession or under his control relating to such matter. Any such person who shall, within a reasonable time prescribed by the Secretary of Agriculture or such agent, willfully fail or refuse to answer such questions to or produce such books, letters, papers, or documents, or who shall willfully give any answer that is false or misleading, shall be guilty of a misdemanor and upon conviction thereof shall be punished by a fine not exceeding $5,000.

SEC. 9. Any person who shall violate the provisions of section 4 of this act, or who shall fail to evidence any contract mentioned in said section by a record in writing as therein required, or who shall knowingly or carelessly deliver for transmission through the mails or in interstate commerce by telegraph, telephone, wireless, or other means of communication, false or misleading, or knowingly inaccurate reports concerning crop or market information or conditions that affect or tend to affect the price of cotton-seed oil in interstate commerce, or who shall forcibly assault, resist, impede, interfere with, improperly influence, or attempt to improperly influence any person employed by the Secretary of Agriculture in carrying out any of the provisions of this act, shall be deemed guilty of a misdemeanor, and, upon conviction thereof, be fined not more than $10,000 or imprisoned for not more than one year, or both, together with the costs of prosecution.

SEC. 10. If any provision of this act or the application thereof to any person or circumstances is held invalid, the validity of the remainder of the act and of the application of such provision to other persons and circumstances shall not be affected thereby.

SEC. 11. No fine or imprisonment shall be imposed for any violation of this act occurring before the first day of the sixth month following its passage.

SEC. 12. The Secretary of Agriculture may cooperate with any department or agency of the Government, any State, Territory, District, or possession, or department, agency, or political subdivision thereof, or any person; and shall have the power to appoint, remove, and fix the compensation of such officers and employees, not in conflict with existing law, and make such expenditures for rent outside the

District of Columbia, printing, telegrams, telephones, law books, books of reference, periodicals, furniture, stationery, office equipment, travel, and other supplies and expenses as shall be necessary to the administration of this act in the District of Columbia and elsewhere, and there are hereby authorized to be appropriated, out of any moneys in the Treasury not otherwise appropriated, such sums as may be necessary for such purposes.

The bill reached the calendar, and, at the suggestion of the New York Produce Exchange, opportunity was given to them, and perhaps to others, to again appear before the committee in opposition to the bill, or in an effort looking toward its modification. Who is here representing the exchange this morning?

Mr. STORTS. We have a committee of six here this morning, Mr. Chairman.

The CHAIRMAN. Very well. Whom do you desire first to appear and make a statement in opposition to the bill?

Mr. STORTS. When this bill came up for discussion

The CHAIRMAN. Pardon me. Whom do you desire to speak before the committee? Do you desire to make a statement?

Mr. STORTS. I was going to make an opening statement.
The CHAIRMAN. Very well.

STATEMENT OF WILLIAM A. STORTS, BROOKLYN, N. Y., REPRESENTING NEW YORK PRODUCE EXCHANGE

The CHAIRMAN. Give your name, address, and occupation, and your connection with the association you represent.

Mr. STORTS. My name is William A. Storts. I live in Brooklyn, N. Y. I am a member of the New York Produce Exchange, representing them as one of a committee in this hearing.

The CHAIRMAN. Very well, Mr. Storts. You may make such statement as you desire.

Mr. STORTS. When this bill came up before, we had hearings on it and it was never reported out of the committee, and appeared to be dormant until last December, when it was reintroduced under this new number, 1414. At that time we hoped to have some further hearings on account of additional matters that have come up, but in some way or other we failed to cooperate, I presume, with the result that it was put before the Senate without any further hearings.

The CHAIRMAN. I think I have explained that twice to the Members of the Senate, and was responsible for getting it referred back to the committee. I think the committee understands that I think you had better explain your opposition to the bill.

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Mr. STORTS. The opposition to the bill is that the bill proposes solely Government regulation for the cottonseed futures on changes. There has been no general demand from the trade for such a thing. The exchange has had a record of 30 years, increasing continually in volume. The trade seemed to be fairly well pleased. Of course, there is opposition to it to some extent, but it is a minority interest, and we feel that the evidence, as proven by the market and the fact that there has been no general demand for Government regulation, is sufficient to oppose the bill.

The CHAIRMAN. With respect to what commodities does the New York Produce Exchange make contracts and deal? Mr. STORTS. They have all sorts.

The CHAIRMAN. All agricultural commodities?

Mr. STORTS. Practically, more or less, yes.

The CHAIRMAN. Is cotton the dominant product?

Mr. STORTS. Not cotton. We do not trade in cotton.

The CHAIRMAN. Cottonseed oil?

Mr. STORTS. We trade in cottonseed oil.

The CHAIRMAN. That is the only place you touch cotton?

Mr. STORTS. Yes. We feel that the general situation does not require Government regulation; and that any differences of opinion which have arisen in regard to this matter should be settled by the trade itself, instead of through legislation. It is on that basis, principally, that we oppose the bill.

The CHAIRMAN. What effect do you think this measure would have upon your exchange?

Mr. STORTS. That is a very hard proposition to say. This bill designates the Agricultural Department to formulate rules and regulations under which contracts should be made, and not knowing just what their investigation would develop and what conclusions they would come to, it is a very hard proposition to say that. We believe I say "we," voicing the opinion of the vast majority, although there is some difference of opinion, of course-that if we should change the contract materially from the one that is now operating it would eventually react against the interests not only of the exchange, but of the cotton oil industry as a whole.

The exchange has a record of thirty-odd years. The trading has continued to increase right along. Up to the time that we were closed by the Food Administration during the war the exchange showed an increased volume of business every year. Beginning with 1920, when we were again allowed to resume trading, it has shown increased trading ever since. Last year was the biggest year, when we had about 5,250,000 barrels of oil trades in. Since the first of January, in the three months that have already passed, the results show that we are trading on the basis of over 7,000,000 barrels of oil per year, and that is conclusive evidence to the exchange itself that the contract as it now stands is well liked by the trade as a whole. Otherwise we would not show this increase.

There has been much criticism in regard to carrying charges and such things as that, which seem excessive, but when they are compared with carrying charges in other commodities and other exchanges, they are no more severe than you would naturally expect in any other commodity.

We feel that while there is some objection, and possibly it deserves a little more consideration than the exchange has given to it, at the same time we feel, from our experience and our record, and the answers which we have had from different people in regard to this bill and the change in rules and regulations, that the business as it is now conducted, both as to form of contract and the operation of the exchange, is the most equitable and fair system that could be adopted. That is the basis upon which we oppose this bill.

It has been compared with other markets. I do not think that has anything to do with the case, as to what happens in other markets. The exchange itself, standing on its record, believes that there should be no governmental regulation, or no intervention except that which is arranged by the trade or industry, within itself, by agreement. The Interstate Cottonseed Crushers Association, which, of course, is

the governing body, you might say, of the industry, has made no request for such a thing of the New York Produce Exchange, although there are some members of the Interstate that have requested changes, without specifying anything particular as to what is desired.

The exchange, in the first place, has nothing to sell to anyone, and nothing to be gained by any arbitrary action in refusing to give the industry as a whole what it wants. The exchange desires to have a contract and to conduct the business on the broadest possible scale, so as to induce general trading from the whole industry. Therefore, it would be foolish for us, as an exchange, to simply refuse to meet the demands from the trade, if there is a wide demand from the whole trade. We would be willing to make any kind of a change that would be satisfactory to them, if we decide from investigation that it would be to the best interest of the business and would increase the business, but we feel that such a thing would be impossible under the experience we have had, and also under the experience of other markets. On that basis we have taken the position that this is not required by the trade. It is not demanded by the trade as an industry, and it is entirely unnecessary for the good of the business. The rules of the exchange regarding qualities are identical with the Interstate Cottonseed Crushers Association, which is the body that governs every crude mill, you might say, and refiner also, in the industry. The procedure of deliveries and methods there has been such that the business has increased every year under it, and under those conditions it is inconceivable, almost, that there should be any general demand for a change. It is a refined oil that we trade in altogether. It is a manufactured article, manufactured from the crude, and it is an entirely different business, in a way, from the crude mill end of the business. The refiners use if for hedging purposes. The crude mills mostly, I think use it for speculative purposes. Some of them, however, do use it as a strictly hedging proposition.

The results, however, taking everything into consideration, show that the business on the exchange increases continually from year to year. The year 1927 was a record year, and the year 1928, on the basis of the present trade, will even make a new record.

We have with us here several refiners who actively operate on the exchange. We have a few brokers and we have some crude-mill representatives. I have numerous telegrams and letters from the crude-mill fraternity, from different sections, in which they oppose the bill. I think it might be well to present some of them to the committee later, just simply as a matter of information. In the meantime, however, it might be well to hear some of our other representatives.

Senator CAPPER. Is the business of your exchange confined entirely to trading in futures?

Mr. STORTS. On cotton oil, yes, sir.

Senator CAPPER. That is what I mean.

Mr. STORTS. But we have other business. The flour business, for example.

Senator CAPPER. You do not deal in actual cottonseed oil? Mr. STORTS. Many times. Of course, that goes with the proposition. If a man wants to buy cottonseed oil, and he buys it and just simply sits there, he will get it. It will be delivered to him. We trade