i ee TE I ee ey Enel 
TO PREVENT SALE OF COTTON AND GRAIN IN FUTURE MARKETS 49 
ith the elimination of futures. The whole cotton trade is based 
n it. The spinner gets an order for goods. He has got to go to a 
otton market to buy that cotton before he could accept this order. 
Now, this cotton market sells it. How could he possibly sell it unless 
he could hedge himself by buying futures? He must do it. He 
ould not take that enormous risk. 
In July and August, before the crop really starts to move, there are 
probably over 2,000,000 sales every year sold ahead for delivery, 
or shipment in October, through the following months. 
Senator RANSDELL. You use hedging in the same sense as insur- 
ance, do you not? _. 
Mr. HAYNE. They must hedge or they could not take that enor- 
mous risk. If they did take that risk, they would have to either charge 
an enormous price to the spinner or would have to buy at a very cheap 
rice from the producer to cover the enormous risk, and I do not 
hink that they could care to do it. You take the banks to-day, 
hey absolutely, on large advancements on cotton, require that tha 
otton be hedged. Any large line of cotton that is being carried 
as futures sold against it, and the bank knows it or they would not 
end anything like the amount of money on cotton unless it wa 
hedged. I think Mr. Hecht, of the Hibernia Bank & Trust Co., a 
bank that has some $60,000,000 deposits, told me he was going to 
rite you a letter on that subject, Senator Ransdell. 
Senator RANSDELL. I have not got it vet. I probably will get it 
his morning. 
Mr. HAYNE. Mr. Powell, of the Marine Bank, told me that Mr. 
laiborne, vice president of the Whitney Bank, is coming on to 
estify to that statement that the banks would not advance on cotto 
o any extent, but would just be guided by the question of the per- 
sonal credit of a party, which would shut out, in other words, all but 
the very large operators. 
Senator RANSDELL. This hedging of cotton is necessary to make 
he transaction a stable one, is it not? 
Mr. HAYNE. It is absolutely necessary. 
‘Senator CAPPER. I know what the theory is in regard to future 
rading, and, no doubt, at times it probably does help somebody, but 
the point I am in doubt about is whether the farmer gets any good 
out of it. I think it helps the dealers and middlemen and everybod 
She after it leaves the hands of the farmer. hat is, it may help 
em. 
Mr. HAYNE. But where would the farmer be, Senator Capper, if 
he exchanges were closed? The cotton buying business would simply 
be in the hands of a very few large firms. The small firms could not 
get credit from the banks to buy cotton. Now, surely, if these large 
firms have a monopoly of the business, no one could think that they 
would pay the farmer as much as if they. have great competition, and 
if the farmer wanted to sell direct to the spinner the spinners are 
ew pod the farmers are many, and surely the farmers would not fare 
as well. _ 
Senator CAPPER. Do you have short selling on your cotton ex- 
change? 
Mr. HAYNE. There has to be a seller for every buyer