pT —— Sr Sr LSSSSSS SE TRE 
TO PREVENT SALE OF COTTON AND GRAIN IN FUTURE MARKETS 19 
must be somebody else on the other side of the contract who is engaged 
in speculation; does it not follow that in every hedging transaction, 
hile the man who sells or buys, as the case may be, is doing it for the 
protection of a bona fide deal that he has made in the purchase or sale 
of grain; that he could not enjoy that hedging privilege unless some- 
ody else is engaged in speculation, because it has to have two sides 
o it. 
Mr. DUVEL. Otherwise, if any—— 
The CHAIRMAN. Well, that is true, Mr. Duvel, now is it not? 
Mr. DUVELL. It is true. 
The CHAIRMAN. Now, if hedging is necessary, or seems to be 
esirable, then the speculation must be permitted so far, at least, 
hat it will enable men to hedge? Is there any way by which specu- 
ation could be stopped at that juncture and not permit it to go an 
urther? 
Mr. DUVEL. It is difficult to determine just where that line is. 
That is, if you depended on hedging transactions purely, for one 
hedging transaction to offset another, the hedge buyer might not be 
in the market at the time the hedge seller was in the market, and, 
as you indicate, Senator, the speculator comes in and is willing to 
take the grain at that price, naturally, of course, from a speculative 
standpoint, in the expectation that at some future time he will be 
able to dispose of his contract, whether it be a long or short contract, 
at a profit to himself. 
The CHAIRMAN. Now, if a law were enacted that would prevent 
it all, including hedging, do you suppose it would follow that insurance 
companies, organized perhaps for that specific purpose, would engage 
in the business so that a man in a legitimate deal would be able to 
et insurance? 
Mr. DUuvEL. Well, that would be hard to tell, whether that would 
be the result or not. We do know, of course, that insurance companies 
now are willing to insure almost everything ; but in a condition involv- 
ing prices there would be a risk which would probably involve a 
igher expense than the insurance feature cost through the present 
system. 
The CHAIRMAN. Through the hedging? 
Mr. DUVEL. Through the hedging system. 
Mr. KENDRICK. You mean, Mr. Chairman, that insurance should 
e substituted for the present hedging? 
The CHAIRMAN. Yes. As I understand it, those who advocate 
he right to hedge do it as a matter of insurance. That has always 
been the testimony here; that if they are deprived of it, they are 
eprived of the opportunity to take out insurance on the risk that 
hey have taken either in the buying or selling of grain for a bona 
fide purpose. 
Mr. DUVEL. In other words, the people engaged in the cash grain 
business enter into their transactions with a view to receiving a 
merchandising profit, and that is the only profit which they are inter- 
ested in, and they utilize the futures market as an insurance feature 
along that line, so that they will have a merchandising profit? 
The CHAIRMAN. Does it always means a profit? If there is a profit 
n one, there is not on the other? 
Wn; 
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