Mr. CLARKE. What is the citation to the Patten case?

Mr. MORRILL. Two hundred and twenty-sixth United States, 525.

In the Minnesota Rate cases (230 U. S. 352), at page 399, the court said: "The authority of Congress extends to every part of interstate commerce and to every instrumentality and agency by which it is carried on; and the full control by Congress of the subjects committed to its regulation is not to be denied or thwarted by the commingling of interstate and intrastate operations. This is not to say that the Nation may deal with the internal concerns of the State as such, but that the execution by Congress of its constitutional power to regulate interstate commerce is not limited by the fact that intrastate transactions may have become so interwoven therewith that the effective government of the former incidentally controls the latter. This conclusion necessarily results from the supremacy of the national power within its appointed sphere."

Then in the case of United States v. Ferger (250 U. S. 199), in speaking about a fraudulent and fictitious bill of lading, the court said:

"But this mistakenly assumes that the power of Congress is to be necessarily tested by the intrinsic existence of commerce in the particular subject dealt with, instead of by relation of that subject to commerce and its effect upon it. We say mistakenly assumes because we think it clear that if the proposition were sustained it would destroy the power of Congress to regulate, as obviously that power, if it is to exist, must include the authority to deal with obstructions to interstate commerce (In re Debs, 158 U. S. 564) and with a host of other acts which, because of their relation to and influence upon interstate commerce, come within the power of Congress to regulate, although they are not interstate commerce in and of themselves."

The case I was going to read from next was a case in a lower Federal court, but it is along the same general line of the Supreme Court decision which I have read.

Mr. CLARKE. Just put in the citation.

Mr. MORRILL. Knauer v. United States (237 Fed. 8, 12). I can read the citation because it is brief.

"The act in question does not require that the defendants shall have been engaged in interstate commerce. If they were all engaged exclusively in intrastate commerce, and they formed a conspiracy to restrain the trade of the manufacturers and wholesalers who were engaged in interstate commerce, that would make them guilty."

Mr. MCLAUGHLIN of Michigan. What court was that?

Mr. MORRILL. I do not have a reference to the particular court, but it was a lower Federal court.

Mr. MCLAUGHLIN of Michigan. And the decision was not appealed from? Mr. MORRILL. No.

Mr. MCLAUGHLIN of Michigan. So the case never reached the Supreme Court? Mr. MORRILL. No; that is the reason I simply referred to it and do not attach any importance to it.

Now, I might mention the Clayton Act. Section 3 of the Clayton Act, among other things, makes it unlawful for persons engaged in interstate commerce, in the course of such commerce, to lease, sell, or contract for the sale of machinery, goods, wares, etc., for use in the United States, or to fix or discount the price upon condition that the lessee or purchaser shall not use machinery or supplies of a competitor where the effect of such lease, contract, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly. In the recent case of United Shoe Machinery Corporation v. United States (advance sheets, 42 Sup. Ct., pp. 363, 368), arising under that act, the court said:

"It is insisted that the leases in controversy were not made in the course of interstate commerce, and therefore can not be embraced within the terms of the Clayton Act. It is provided in the decree that it shall apply to all leases covering shoe machinery shipped from one State to the user or factory for use in another State in the course of or as a part of the transaction between the lessor and the lessee, resulting in the making of the lease. It is true that the mere making of the lease of the machine is not of itself interstate commerce. But where, connected with the making of such a lease, a movement of goods in interstate commerce is required, we have no doubt of the authority and purpose of Congress to control the making of such leases by the enactment of the statute before us."

Mr. KINCHELOE. That case in the lower court that you read from is rather interesting to me. Have you found, in your investigation and in running down these citations, where the Supreme Court has ever held that where two or more conspired to manipulate the market or to raise the prices to the prejudice of those who are engaged in like business in interstate commerce, that they are subject to indictment in a Federal court?

Mr. MORRILL. I can not give you the citations at the moment, because I have not had the time to run through these matters.

Mr. TINCHER. They held that straight out in the cotton exchange case.
Mr. KINCHELOE. In what case?

Mr. TINCHER. When Patten was indicted under the cotton futures act.

Mr. KINCHELOE. I have not read that case, and I did not know about it.

Mr. MORRILL. The Patten case I refer to, because it seems to me very pertinent.

Mr. JONES. In that case there was a direct purpose to interfere with interstate commerce. That is what they intended to do.

Mr. MORRILL. Probably so.

Mr. JONES. In other words, that is what the courts concluded.
Mr. MORRILL. Yes; they concluded that from the effect.

Mr. KINCHELOE. Were the facts involved in the cotton exchanges case the same as those involved in the case referred to here in the lower courts? Mr. JONES. No; I think the one he cited goes further than the Patten case. Mr. MORRILL. May I say that in the course of my work in the department now, I do not have as much time as I used to have to go into legal decisions. My work is largely administrative now, and Mr. Lees, of the solicitor's offices, who is assistant to the solicitor, has gotten for me a number of these citations, and, as a matter of fact, has been making a pretty thorough study of the law, with the idea that he would be able to give a rather comprehensive résumé of the legal decisions.

Mr. CLARKE. Then how do you happen to be here instead of Mr. Lees on this matter?

Mr. MORRILL. Because Mr. Lees is a member of the office of the solicitor of the department, which handles only legal matters, and I was placed in charge of the administration of the future trading act. I was formerly a member of the solicitor's office.

Mr. CLARKE. You are the one designated by the Secretary of Agriculture. Mr. MORRILL. Yes, sir.

Mr. TINCHER. Mr. Morrill, let us have a little of the history of the preparation of this bill, just for the benefit of the committee. You have been with the Department of Agriculture how long?

Mr. MORRILL. I have been with the Department of Agriculture for seven years. Mr. TINCHER. And up until Mr. Wallace's term, you were in what department?

Mr. MORRILL. I was first in the solicitor's office until in 1919, when I was appointed supervisor of the enforcement of the United States cotton futures act. Then I became assistant to the chief of the Bureau of Markets, and subsequently assistant chief, and at the time of the passage of the packers and stockyards act and the future trading act, the Secretary placed me in charge of the administration of those two laws.

Mr. TINCHER. In the preparation of this bill, how long a time did you take to work out this constitutional question?

Mr. MORRILL. Of course, it has been constantly before us ever since the initiation of the proceeding by Mr. Hill at Chicago to test the constitutionality of the future trading act. Naturally we saw the weakness of the bill from a legal standpoint, and we have given a good deal of attention to just how that weakness might be overcome, either in the case itself or subsequently.

Mr. TINCHER. Then after the Taft decision and after I asked your department to go to work on it, how long a time did your legal department spend in preparing this bill?

Mr. MORRILL. They have been giving pretty close attention to it and in addition we have discussed these legal questions with the legislative drafting service of the House, and they are in accord with our views on the legal phases. Mr. TINCHER. Now, tell the committee whom you have in your legal department.

Mr. CLARKE. Is that the same legislative drafting service that prepared this other act that was declared unconstitutional?

Mr. MORRILL. Yes.

Mr. TINCHER. Oh, no; let us get the record straight on that. The legisla tive drafting service prepared the packer control act but they did not prepare the future trading act.

Mr. MORRILL. The future trading act was not prepared by the legislative drafting service nor by the Agricultural Department.

Mr. KINCHELOE. But the packer control act was.

Mr. MORRILL. Yes.

Mr. TINCHER. What lawyers are there in your legal department?

Mr. MORRILL. We have about 25 in Washington, have we not, Mr. Lees? Mr. LEES. About that many.

Mr. MORRILL. And probably 15 or 20 outside.

Mr. TINCHER. Who is the solicitor for the department?

Mr. MORRILL. The solicitor is Mr. Williams.

Mr. TINCHER. Did Judge Hiner go over this bill with you?

Mr. MORRILL. Judge Hiner has nothing to do with the administration of the future trading act. He is connected with the packers and stockyards administration.

Mr. TINCHER. He had considerable to do with the trial of the case, did he not?

Mr. MORRILL. Not with the future trading case.

Mr. TINCHER. I mean with the packers and stockyards case.

Mr. MORRILL. With the packers and stockyards case, yes.

Mr. KINCHELOE. When it suits you to do so, I would like for you to take up this new bill and discuss it section by section and explain to us why it will get around this decision of the Supreme Court on the future trading act.

Mr. MORRILL. Taking the title of H. R. 11843 and comparing it with the title of the future trading act, you will find a distinct difference. The title is en tirely changed. It reads: "For the prevention and removal of obstructions and burdens upon interstate commerce in grain, by regulating transactions on grain future exchanges and for other purposes."

Mr. KINCHELOE. I think you had better quote the title of the old act.
Mr. MORRILL The title of the old act is as follows:

"An act taxing contracts for the sale of grain for future delivery and options for such contracts, and providing for the regulation of boards of trade, and for other purposes."

May I say that in going over the substitute bill, as a means of serving the committee, we adhered as closely as possible to the future trading act, with the exceptions to which I will call attention as I go along.

Mr. CLARKE. The first exception, then, is in the title; is that it?

Mr. MORRILL. Yes. In the first section, immediately following the title of the bill, you will notice that the short title is changed to "The grain futures act." instead of the "Future trading act," merely as a means of providing a distinction between the title of the bill which was declared unconstitutional and the new one.

Mr. KINCHELOE. What would be the difference between the two?
Mr. MORRILL. It is just a matter of reference.

Mr. KINCHELOE. I had the idea that you had drawn this bill with the idea of trying to get around the objections raised to the original act by the Supreme Court, and I was wondering what was the difference between the grain futures act and the future trading act.

Mr. MORRILL. It is purely a question of title. It must be borne in mind, however, that the future trading act does not make the distinction that is made in this bill. It is limited to grain futures and does not apply to cotton futures or to any futures outside of grain.

Now, in section 2a, the language is the same down to line 14 on page 2, and from thereon the material is new in the section and was not contained in the future trading act. I will read it in order to get it before you :

"The words 'interstate commerce' shall be construed to mean commerce between any State, Territory, or possession, or the District of Columbia, and any place outside thereof; or between points within the same State, Territory, or possession, or the District of Columbia, but through any place outside thereof, or within any Territory or possession or the District of Columbia."

Now, that is exactly the same as the definition, so far, in the packers and stockyards act, except we use the word "interstate commerce " instead of the word "commerce."

The CHAIRMAN. Mr. Morrill, did I understand you to say that the department drafted the packer bill?

Mr. MORRILL. No; the packer bill, I take it, is not the product of any one person.

The CHAIRMAN. This committee gave about 40 days' hearings to that bill. We had the legislative drafting service of the House here and we had the assistance of you and others from your department.

Mr. MORRILL. I understand that the legislative drafting service was of a great deal of assistance to your committee.

Mr. TINCHER. I understood the only reference he made to the legislative drafting service was that that service was used on the packer bill and was consulted about legal phases of the present bill.

The CHAIRMAN. The packer bill is not the product of any one man or any one drafting service, or any one department. It is the product of the whole Committee on Agriculture. The committee gave about 40 days' hearings to it. There are thousands of pages of printed hearings in reference to it. Representatives of the Department of Agriculture appeared before the committee and were of much assistance. I am perfectly willing that the department shall have its share of the credit, but I do not want the committee and the House legislative drafting service to be robbed of the credit due them.

Mr. KINCHELOE. I understood the distinction Mr. Morrill made was that the legislative drafting service did assist in the preparation of the packer bill, but did not assist in the preparation of the grain futures act.

The CHAIRMAN. I just wanted the matter to be clear. I do not want to rob the committee and our House legislative drafting service of its share of the credit.

Mr. MORRILL. May I say that I think if you will read the record you will find that I did not say the legislative drafting service did not have anything to do with the drafting of the packers and stockyards' act.

The CHAIRMAN. The question by Mr. Kincheloe, as I understood it, was, Was the packer bill drafted by the Agricultural Department? And your answer was, Yes.

Mr. MORRILL. No, sir; so far as we are concerned it is not material whether we had anything to do with it or not. Subsection (b), beginning at line 21, on page 2, says:

"(b) For the purposes of this act (but not in any wise limiting the foregoing definition of interstate commerce) a transaction in respect to any article shall be considered to be in interstate commerce if such article is part of that current of commerce usual in the grain trade whereby grain and grain products and by-products thereof are sent from one State with the expectation that they will end their transit, after purchase, in another, including, in addition to cases within the above general description, all cases where purchase or sale is either for shipment to another State, or for manufacture within the State and the shipment outside the State of the products resulting from such manufacture. Articles normally in such current of commerce shall not be considered out of such commerce through resort being had to any means or device intended to remove transactions in respect thereto from the provisions of this act. For the purpose of this paragraph the word 'State' includes Territory, the District of Columbia, possession of the United States, and foreign nation." Mr. KINCHELOE. Is that exactly the language of the packers' bill as near as it is applicable?

Mr. MORRILL. Yes; as near as it is applicable. The only change is in order to introduce grain instead of live stock into the definition, and may I explain right there that that definition is not for the purpose of making the transactions on the future exchanges interstate commerce but for the purpose of establishing a basis upon which the relationship of those transactions on the future exchanges will be shown to the transactions that are in interstate commerce. Mr. JONES. Before you leave that section, in your judgment would it be permissible to add in the top line of page 3, "products that are sent or are contracted to be sent," or does your definition cover contracts by virtue of the word "transactions."

Mr. MORRILL. I think it is covered, because later it says, "including, in addition to cases within the above general description, all cases where purchase or sale is either for shipment to another State or for manufacture within the State and the shipment outside the State of the products resulting from such manufacture."

Mr. JONES. Yes; I think that covers it.

Mr. STEENERSON. I would like to ask a question right there on this matter. In lines 2 and 3, on page 3, there are the words, "with the expectation that they

will end their transit, after purchase, in another (State)." Now, that language is taken from the decision of the Supreme Court.

Mr. MORRILL. Yes, sir.

"and

Mr. STEENERSON. But in that decision there are these words added, actually does enter interstate commerce." Now, you make it interstate commerce simply if there is that expectation, although it never goes outside of the State. That is taken from the packers act.

Mr. MORRILL. That language is the language of the packers and stockyards act which was upheld by the Supreme Court.

Mr. STEENERSON. No; not that particular part of it.

Mr. MORRILL. That definition of commerce was upheld.

Mr. STEENERSON. I did not so understand the decision. Anyway, if it is, it goes further than the Supreme Court held in the other case because it simply held that it is not sufficient that there is the expectation that it will enter commerce, if it does not actually enter into the commerce.

Mr. MCLAUGHLIN of Michigan. Do you mean, Mr. Steenerson, that the additional words you give there are a part of the definition or were the words used by the Supreme Court?

Mr. STEENERSON. This whole definition is copied from the opinion of the Supreme Court.

Mr. MCLAUGHLIN of Michigan. Where are those additional words used? Mr. STEENERSON. In the Supreme Court decision from which this language is copied. They copied part of it but not the whole of it.

Mr. MORRILL. Mr. Steenerson, I think you are referring to the Swift case, upon the basis of which the packers and stockyards act was drawn.

Mr. TINCHER. Yes; you are talking about the Swift case.

Mr. JONES. And the packers act did not include the words you use.

Mr. KINCHELOE. And in that case the Supreme Court upheld the whole act.

Mr. MORRILL. May I read the definition contained in the packers case so that you can compare it, as I go along, with the language you have before you? Mr. JONES. Yes; let us have that read.

Mr. MORRILL. Here is the exact language of the packers and stockyards act, and you have before you the language which is used in this new bill. The CHAIRMAN. Give the page.

Mr. MORRILL. I have not the original act before me.

Mr. TINCHER. It is page 2, line 21, of the bill before us.

Mr. MORRILL. Yes; and what I am going to read to you is from the packers and stockyards act, Title I, section 2, subsection 6 and subsection (b) of that subsection:

"(b) For the purpose of this act (but not in anywise limiting the foregoing definition) a transaction in respect to any article shall be considered to be in commerce if such article is part of that current of commerce usual in the livestock and meat-packing industries, whereby live stock, meats, meat food products, live-stock products, dairy products, poultry, poultry products, or eggs, are sent from one State with the expectation that they will end their transit, after purchase, in another, including, in addition to cases within the above general description, all cases where purchase or sale is either for shipment to another State, or for slaughter of live stock within the State and the shipment outside of the State of the products resulting from such slaughter. Articles normally in such current of commerce shall not be considered out of such current through resort being had to any means or device intended to remove transactions in respect thereto from the provisions of this act. For the purpose of this paragraph the word 'State' includes Territory, the District of Columbia, possession of the United States, and foreign nation."

Mr. KINCHELOE. Let me ask you a question right there. Beginning at line 23, is there any difference in the language used there? I notice that the original act says, "a transaction in respect to any article shall be considered to be in commerce," and the bill before us says, "shall be considered to be in interstate commerce."

Mr. MORRILL. I think that was merely an accident. It was not intended to make any change, and I do not believe it means anything different.

Mr. KINCHELOE. Do you think there is any difference?

Mr. MORRILL. No; I do not think there is any difference. Certainly, if there was, there was no reason for making the change.

Mr. STEENERSON. I would like to point out that, so far as I recall, the precise point which I made was not made in the Stockyards case before the Supreme Court, and it can not be considered as an authority to uphold this definition,