DEAR MR. BARNES: In your extended article in the February number of Nation's Business you give me undue credit, perhaps not intentionally, for advising the grain growers of the United States to market their grain on the rising bull market, instead of waiting for the inevitable collapse of the speculative "bull corner," built up artificiallly by "doctored" statistics and by loans of hundreds of millions of 2 per cent and 3 per cent "call money."

In fact, as doubtless you know, I gave no advice. So I am not entitled to the credit. But I did point out that the price of the farmer's crop was fixed-or, perhaps you would say, "stabilized"—by future trading exchanges controlled by a small group of traders or "ring," and I warned producers not to be fooled by money powers pushing up quotations for political and financial purposes known only to that "ring."

However, you credit me with the nation-wide action of the grain growers in marketing their crop more promptly than usual, and this appears to have been the result: By March 1, as reported by the Department of Agriculture, the wheat growers of the United States held on their farms only 113,928,000 bushels of wheat against 137,717,000 in 1924 and 156,087,000 on the corresponding date in 1923.

See what they escaped. From the January high point to April 3 wheat dropped 69 cents and corn 46 cents per bushel. Nearly 730,000,000 bushels of the total 872,000,000 crop of good American wheat-actual wheat raised by toil for the people's bread, not paper "futures" and gambling wind-narrowly escaped that awful crash. I am not egotistical enough to claim the credit. Nevertheless, I hereby extend to you my appreciation of your generosity in conferring upon me the credit.

In addition to crediting me with the farm grain movement by which 6,000,000 farmers escaped the calamity of a 69 cent drop on 730,000,000 bushels of wheat you outline 10 steps by which you and the national administration are going to aid the farmer. One of those "steps" is the following, "Encouragement of future trading on exchanges."

It is apparent by what happened to the "May future" in the Chicago wheat pit by the time your article went to mail, that it is scarcely necessary now to mention the other nine "steps." That one "step" is plenty-more than enough. In that connection may I be permitted to ask you 12 practical questionsa "daily dozen"--which I trust will receive your frank and full answer for the enlightenment of the country.

Question 1. In view of the facts, attested by the Secretary of Agriculture (a) that during the 28 days of February, the month in which you wrote your article, the Chicago Board of Trade alone sold wheat "futures" amounting to 1,581,584,000 bushels, or over five times the official "world's visible supply"; (b) that on Black Friday, March 13, Chicago sold wheat futures amounting to 149,398,000 bushels, or nearly one-half the "world visible"; (c) that during the week ending March 14 the Chicago Grain Exchange sold in wheat futures more than double the "world visible," and during the entire month of March many times all the wheat-"visible" and invisible-then existent on the face of the globe-do you candidly think as a practical business man that "Encouragement of future trading exchanges" is necessary and can you guarantee that the national administration still has that panacea in stock as an aid to the American farmer?

Question 2. In view of the fact, that since the collapse of the "bull" movement, the market price of actual wheat in the leading primary markets of the world now ranges from $1.50 to $1.30 per bushel, according to location, is it not apparent to you that wheat was never worth the $2 and over in January and February, to which it was pushed by Chicago bull interests, and that such price was artificial, unwarranted by world conditions, a ballooning gamble created by price-fixing speculators for their own enrichment after the bulk of the crop was out of farmers' hands?

On that point may I quote, not a Farmer-Labor Senator, but Mr. Joseph P. Griffith, former president of the Chicago Board of Trade, in an interview with the Modern Miller, Chicago, March 21:

"The wheat market became inflated due to a fear that there would be a shortage of wheat and flour the world over, and the sharp break came when these predictions proved to be unwarranted.

"Estimates of an acute shortage were made by the Department of Agriculture officials and by private statisticians. Instead of the anticipated shortage of wheat, it developed that there was a world of wheat on ocean passage and large stocks at points of accumulation in this country.

"Press stories of scarcity and enormous prices excited the public mind and the entrance of this element into the market carried prices to an unnatural level. * * * The bull market has the opportunity to manipulate as it can buy more wheat than is possible to deliver."

Question 3. Will you kindly tell the public when the CRicago "bull" corner, engineered by future traders such as the recent $2 bubble eulogized in your February brief- -was ever of benefit to the world, whether to the farmer who raises wheat, the family eating bread, the miller and cereal industries, or to the business stability of the country? Take the two bull markets preceding: 1922, dropping from $1.72 in March to $1.05 in July; 1921, $2.021⁄2 in February and $1.23 in April.

Does it benefit the farmer? Always the pinnacle is after the bulk of the crop leaves the farm and is in speculative hands. The artificial price definitely damages the farmer in three ways: First, it reduces consumption; second, it promotes overproduction; third, it makes wheat growing, not an industry, but a gamble. In addition, the artificially manufactured price robs the consumer and demoralizes milling and all the cereal industries which afford wheat a domestic market.

Question 4. What is your answer to the millers of the country that the $2 bull market championed in your February brief is paralyzing the milling industry? In witness thereof, note the following:

The Minneapolis flour mills, representing the world's leading milling district, are operating at only 33 per cent capacity (see March files of Northwestern Miller) and the mills of the entire spring wheat section at only 40 per cent of capacity. Of 28 Minneapolis mills, only 11 working.

St. Louis millers wire the Secretary of Agriculture of the blow to milling in the winter-wheat section and want to know if the grain futures trading act authorizing Federal control still exists.

The Modern Miller, Chicago, editorially makes the following charges:

"The topsy-turvy wheat market-up and down-makes milling and breadmaking a foolish and impractical thing.

"As a sport for bulls and bears, accumulating lines or dumpting under pressure, a commodity that must go into consumption as a manufactured product is made a most artificial plaything.

"How can an industry survive trying to function commercially on such a shifting basis as has prevailed since the last wheat crop?"

This is no Farmer-Labor Senator, but Charles M. Yager, president and editor of the Modern Miller, in weekly editorial leaders from January, the $2.06 wheat month, to date.

Question 5. In the face of an average wheat price now prevailing in leading world markets of about $1.40 per bushel in April, are you not willing at this time to admit that the bull propaganda justifying $2 wheat was false, misleading, and whatever the intentions of its purveyors, a fraud upon the producers, the consuming public, and the cereal industries, and a source of mischief and menace to the business stability of the world? Was it not a swindle costing the "public," or "the lambs," hundreds of millions, besides precipitating industrial and commercial failures in legitimate enterprises, as shown by Dun and Bradstreet, running into scores of millions of defaulting liabilities?

Question 6. As regards the cooperation of the Department of Agriculture with the issue of this false propaganda-whether by good intention or otherwise, it is not for me to pass judgment is it not your practical judgment as a publicspirited citizen, that it is time that a Federal department charged by law with the administration of the grain futures act instituted its investigation at the time the false "bull movement was in progress, instead of abetting that movement and thereby promoting the cause of the world-wide disaster?

On that point allow me to quote Mr. Robert E. Sterling, editor of the Northwestern Miller:

"The most that can be hoped for is that the Department of Agriculture itself will gain sufficient wisdom so that it will not again do what it did in January,

just before the wheat market reached its peak, and issue a bulletin stating authoritatively that the price was wholly justified by world conditions."

Likewise please deliberate upon the editorial utterances of the Brooklyn Eagle, quoted by the Literary Digest, that the time for the Government to investigate wheat speculation 'was last fall when the price was soaring; but the investigators were electioneering then."

Question 7. Now that the "acute scarcity" theory is exploded and your $2 "bull bubble" has had its inevitable "bust, are not you willing to frankly admit the orgy of the bulls being past-that the world has plenty of wheat and bread, as shown by the following British summary of world requirements and exportable surplus as for the crop year ending July 1, 1925: Surplus, 103,000,000 quarters (824,000,000 bushels).

Requirements, 98,000,000 quarters (784,000,000 bushels).

Question 8. Instead of "Encouragement of future trading in exchanges" as a panacea for agricultural ills and a bulwark of public welfare, do you not candidly admit that the national administration would act more wisely in curbing such future trading and establishing a safe, stable, and honest grain market for handling the staff of life of 112,000,000 people? On this point may I quote, not Farmer-Labor representatives or even United States Senators, but such conservative editorial opinion as the following:

Washington Post (George Harvey, recent British ambassador, editor in chief): "The farmers want to know why. The country wants to know why * * * it is not a good thing in these days to use the crops of the farmers and the food of the people as counters in a gambling game."

Meriden Journal: "It would be much wiser to have a Government market for wheat and all grains in Chicago, make the trading in all grain futures a crime, and perhaps have a grain board that would fix prices arbitrarily every week. * * * Food speculation ought to be as serious a crime as selling blue sky, and some day it will be." (Quoted by Literary Digest.)

Cleveland Plain Dealer (quoted by Literary Digest): If organized speculation hopes to defend itself successfully against these attacks to which it is continuously subjected, it must alleviate, rather than agravate, price fluctuations. A few more episodes like those in the grain exchanges recently and proposals to prevent dealing in the futures already made in Congress will command wide support.'

Question 9. In your brief defending the price-fixing exchanges you describe the financial operators as "sympathetic," "fair," and "not entirely selfish." Will you kindly set forth the benefits of these virtues as applied to the following national interests, respectively: The benefits to 25,000,000 bread-consuming homes; the benefits to 12,000,000 toilers in the Nation's industries; the benefits to 6,000,000 farmers who need a stable, honest, and dependable market for the product of their labor and capital investment; the benefits to the stability and safe development of the Nation's $60,000,000,000 business. Do you find such benefits in a gamble which in one short year shoots the price of the Nation's bread staple $1 per bushel upward and then 69 cents downward? Is that an illustration of "sympathetic," "fair," and "not entirely selfish" dealing, and a thing to be nationally fostered?

Question 10. In your estimate that pursuant to my erroneous comment the farmers in failing to play into the hands of the Chicago "bulls" lost the equivalent of "$400,000,000," what do you estimate that they saved by escaping the 69 cents per bushel collapse; and what is your estimate of the million lost by the "lambs" who in one week-that ending March 14, as reported by the Government-fell down on future sales amounting to 527,464,000 bushels, or, double the Government estimate of the "world visible supply?" What, moreover, were the losses during the period of the gamble the six months ending April 1where the total world production was first overbought and then oversold in paper futures many times over?

Question 11. Is it not your candid judgment that such an orgy as that which the St. Louis Globe-Democrat describes as a "cycle of more phases and scenic effects than Frank Norris described in 'The Pit" is a national disgrace to the world's leading business Nation and a menace that should be abated in the name of common sense and common honesty?

Question 12. Can you not picture in your mind what must be the general sentiment of the American people-now crystallizing into a national demand— when such a conservative milling journal as the Modern Miller, Chicago, a former defender of grain exchanges, to-day editorially demands:

"Can violent shifts in the wheat market be curbed? This is a question on which the cereal world will be forced to concentrate its best thought. * * *

It is a curse that must be curbed, or its destructive influence will demand governmental action. This is the last resort, but it will be an inevitable result. * * * We see a big disturbance and a very big problem, which must be solved to stabilize wheat values and thus make commercialism and industrialism safe and free from extreme hazard."

In your answers to these practical questions, I care nothing about personal and political charges and countercharges. I care nothing about your recent th -page magazine philippic. You are a representative of the grain business; I a. a public servant of the people of Minnesota who elected me to the Senate to aid he national solution of public problems. Among those problems demanding national solution is to secure for the farm producers of America a safe and honest market for the output of their toil and a safe and honest standard for the bread supply of 112,000,000 people. That is the problem on which the public, I am sure, would be glad to listen to you, if you have vital suggestions to offer.

Yours for the public welfare,

HENRIK SHIPSTEAD.

It might be of interest to the committee to know that up to this time, while Mr. Barnes has had more than a year to answer this letter, he has failed to do so.

You will notice that in this letter I am quoting the editors of millers' journals and men prominent in the flour industry, men who are engaged in legitimate business who admit that the manufacturers of flour, the producers of wheat, and the food supply of the American people are at the mercy of the speculators. In my opinion there is no one in the United States more qualified to testify against the present system than the men I have quoted. They have stated it more clearly than I could if I stood here talking to you all day. This is a situation that we must remedy. These forces are so powerful that only the power of the Government can overcome them and I believe that this bill will solve this problem and for that reason I ask your consideration of it, hoping that you will report favorably to the Senate so that we can have this bill brought up on the floor of the Senate for passage.

To recapitulate, let me restate briefly what I believe this bill will accomplish and why Congress ought to pass it:

This bill incorporates the principle of a ratio price fixed by a corporation that is proposed in the old McNary-Haugen bill and in addition copies the principle in section 15A of the interstate commerce act placed there by the Esch-Cummins railroad law. This is the section of the transportation act that makes it mandatory upon the Interstate Commerce Commission to fix the price on transportation high enough to yield to the railroads a fair return upon what the Interstate Commerce Commission finds to be the aggregate value of the railroad property.

The effect of this bill will be that in the event that the ratio price fixed by the export corporation is not high enough to yield a fair return to the farmer on what is found to be the aggregate value of his property used in production, the corporation shall fix the price on farm commodities high enough to yield a fair return upon such property.

This bill applies to agriculture a long-established principle of public policy-the policy of a Government commission, State or national, fixing a price on transportation, telephone service, electric light service, street railway service. It is the same principle involved in the Federal reserve banking act giving the Federal reserve banks power to fix the rediscount rate, the price of money and credit, so necessary to industry and agriculture. This principle is involved.

in the law creating the Tariff Commission, giving the American manufacturer a protection of a tariff fixed by the commission and based on the difference in the cost of production at home and abroad, thereby eliminating foreign competition for the manufacturer and permitting him to charge an American price.

The purpose of this bill is to fix an American price for the American farmer and place him on a level with the other industries. Tapis following a long established special privilege class legislation pro.d am and as long as it is an established policy we must carry it out its ultimate conclusion and give the same treatment to every industry or else we must reverse this old policy and repeal the special privilege legislation that has been given to transportation, to industry, and to banking.

We must do one or the other. This Congress should either repeal all of this price-fixing legislation that has been given to industry, to transportation, and to banking, or else it must give a price-fixing law to agriculture.

The CHAIRMAN. We will consider the hearings now closed and the committee will meet immediately in executive session. (The committee then went into executive session.)