The farmer retains this storage ticket until such time as he decides to sell. He then presents his ticket to the elevator agent, who computes the total storage charges, deducts them from the price he is paying for that grade of grain on that day, and draws a check or draft to the farmer for the net proceeds.

Storage tickets are often lost. Duplicates can be had upon application to the issuing company and the filing of a bond.

Very rarely does a farmer present his storage tickets and demand delivery of the grain called for by such tickets. In the event that he were to do so he would be required to pay such storage charges as might have accrued upon the grain in question. Moreover, in such cases the farmer would not and could not receive back the actual grain which he delivered to the elevator, since this grain would not ordinarily have been kept separate but would have been binned with other grain of similar kind and grade owned either by the elevator company, other farmers, or by both the elevator and farmers. In fact, the actual grain delivered by the farmer may have been sold and shipped a long time previously, the elevator company having purchased a future, which is sold when the farmer cashes in his storage tickets.13 (Ch. IX.)

SPECIAL BIN STORAGE.-If the farmer, instead of storing his grain in the elevator or warehouse with the intention of ultimately selling it to the house, stores with the expectation or intention of later demanding delivery of the identical lot he has unloaded, the grain in question is treated as special bin storage grain.

Special bin storage transactions are comparatively rare in the central grain States. Such transactions usually occur either when a farmer intends to ship his own grain or when the farmer and elevator agent are unable to agree upon the grade. In the first case the grain is put in an empty bin, and a special bin-storage ticket is issued for each load. This ticket does not indicate grade or dockage, but simply the gross weight and bin number. The reason for omitting the grade and dockage is that the elevator is not responsible for the same and guarantees only that the identical grain received will be surrendered upon the presentation of the tickets. When the farmer has finished his hauling or decides to ship, the elevator loads the grain into a car, collecting fees for this elevation and loading service (Ch. VII) and also for the storage, if any. In the event of a disagreement between the farmer and the agent as to grade, the grain is elevated to an empty bin and its identity preserved until a sample has been sent to the terminal market and there graded. The grade thus established, the elevator agent issues a regular storage ticket to the farmer if he does not wish to sell immediately, or a check in case he does. If the regular storage ticket is issued, the grain is given the grade thus determined, and thereby becomes ordinary storage grain. The usual ticket issued for special bin grain by elevators in the Northwestern grain States is the regular storage ticket with a notation thereon that the transaction is special bin storage. The use of a separate ticket for such special storage is not general, as the occasions are not frequent enough to warrant different forms for this type of transaction.

13 The only instance reported to the Commission of a farmer demanding delivery of ordinary stored grain was in a case where the grain was required for seed.

STORAGE FOR OWN ACCOUNT.-Elevators as well as farmers may hold back grain from the terminal market awaiting higher prices. The extent of this practice varies. In the Northwest only 13 out of about 150 elevators visited by the Commission's agents reported storing for higher prices. Several of these reported that they held only about 10 per cent, or "very little," or "occasionally." One reported holding from 15,000 to 20,000 bushels of wheat; and still another that grain was held if bought on a falling market until a profit could be realized. Line elevators in the Northwest frequently fill the house with good grades of grain (usually wheat) for the purpose of carrying it through the winter.

In Iowa and Illinois grain apparently is much more often held by elevators for higher prices than in the Northwest. In Illinois about one-half of the elevators visited by the Department of Agriculture agents reported affirmatively on this matter and in Iowa about onethird. The following tabular statement presents the number of elevators in Iowa and Illinois reporting to the department's agents affirmatively and negatively on this question for each crop year, 1912-13 to 1916-17.

There are indications in the data gathered by the Commission that the attitude of the country elevator on holding back its own. grain is frequently influenced by the hedging policy of the elevator, and the differences in this respect between the Northwest on the one hand and Illinois and Iowa on the other confirms this view. Reference to the chapter on hedging operations (Ch. IX) shows that in the Northwest hedging is much more prevalent than in either Iowa or Illinois. If an elevator has hedged its grain, there is little reason to hold it except for the purpose of realizing either a carrying charge or a possible premium of the cash grain over the future. By hedging, the elevator has presumably protected itself against loss, but it has also presumably limited its profit, except so far as the cash grain goes to a premium later in the crop year. Unless the cash grain should go to a premium, any advance will presumably be offset by a corresponding advance in the future. For this reason, therefore, there is probably less inducement for the hedging house to hold grain than for the nonhedging house. The nonhedging house, however, having no future outstanding, will obtain the full benefit of any price advance, although it must also bear the loss resulting from any decline. In the case of the nonhedging house, therefore, there is a speculative inducement

for holding grain, which is largely absent in the case of hedging houses.

PACIFIC COAST.As a rule the Pacific coast warehouse is much more a warehousing facility for the farmers than is the elevator in the more easterly sections, which is, on the whole, chiefly a merchandising organization. Storage of grain on the Pacific coast is quite distinct from that of other sections. Low, flat warehouses with large capacities predominate, and as the grain is handled in sacks it is a simple matter to store the individual grain of a farmer in distinct piles, and this is frequently done. Some companies in issuing a storage ticket for grain do not specify the grade of grain, but keep it piled separately. Other companies ordinarily issue a storage ticket which specifies the grade, but do not keep the specific grain separate except when requested to do so by the farmers. These two methods, therefore, roughly correspond with special bin and ordinary storage in the case of bulk handling.

Section 5. Sale of grain by contracts.

Many of the contracts of elevators with farmers for the delivery of grain are reported as made while the grain is being harvested. This is to be interpreted broadly, however. It may mean while the grain is being cut, while it is in the stacks, or again while being threshed, or even after threshing. In other cases contracts are made prior to the harvest, before the grain has been cut. Generally the elevators in the Northwest that contract for grain confine their contracts to grain being threshed or already threshed and stored in the farmers' granaries.

Such contracts for grain are both oral and written. Because of the reluctance of some farmers to sign written contracts, some companies make oral contracts only. Other companies will make only written contracts. The oral contracts are frequently loosely made and indefinite. The written contracts are more explicit, more formal in character, and more easily enforced. In making a contract the country agent may agree to purchase the farmer's grain either at a price agreed upon at time of contracting or based upon the price prevailing at time of delivery.

Various samples of written contracts were obtained during the inquiry, one of which is printed herewith as Appendix 3.

On the whole, these written contracts are very much alike. While there is some variation in the form and wording thereof, they are generally short, simple, and explicit, calling for the delivery before a specified time of a certain number of bushels of grain in a stated condition. For example, in the case of corn the contracts usually specify whether the corn is to be shelled or on the ear. Contracts made by cooperative and independent companies are generally in duplicate, one copy going to the farmer and one being retained by the elevator; those of line companies are usually made in triplicate, the third copy going to the head office of the line company.

INTERVIEWS ON GRAIN CONTRACTING.-The character and extent of grain contracting was carefully inquired into by the agents of the Commission and the Department of Agriculture. On the basis of this information the following statements with regard to this practice may be made.

In the Northwest, with some differences in different sections, practically all classes of elevators are disposed to discourage the making of contracts with farmers. The Minneapolis line companies interviewed stated that they preferred not to make these contracts, while of the approximately 150 representatives of mill, cooperative, and independent elevators interviewed in the country 69 per cent stated that they did not make contracts, and 18 per cent that they contracted but very little and only with farmers whom they were certain would deliver. About 4 per cent of these representatives informed. the Commission's agents that they had contracted in the past, but had abandoned the practice because of failure of farmers to deliver, and another 4 per cent reported that, while they contracted, they did so only in special cases, as, for example, when the farmers were in need of money owing to inability to deliver grain on account of bad roads.

In the grain States tributary to Chicago contracting appears to be much more prevalent than in the Northwest. Thus in Iowa and Illinois 73 out of 95 elevators reported that they made contracts for grain with farmers; 21 out of 39 in Iowa; and 52 out of 56 in Illinois. In south central Illinois a few elevators reported contracting acreage. The few line companies operating out of Chicago, Indianapolis, and Peoria, in contrast to those in the Northwest, do considerable contracting. Although one milling line reported only a few acreage contracts for grain, and only with farmers whom they thought would make deliveries, an official of one of the other line concerns stated that his company made contracts just prior to the harvest for about 5 per cent of the grain received at its elevators and for from 25 to 50 per cent between the time of cutting and the time of threshing the grain. These contracts were made by the agents of the company and the farmer at a stipulated price and called for delivery on or before a specified future time.

A 19-house line operating out of Peoria is also in the habit of making contracts with farmers for the delivery of grain, these contracts usually running for 10, 30, 60, or 90 days. An Indianapolis mill line likewise reported a good many contracts with farmers for the sale of grain.

Contracting for grain at a fixed price has proven an unsatisfactory practice with many elevators. The principal objection thereto is that if prices are in advance of those stipulated in the contract when the time of delivery arrives the farmer becomes dissatisfied and often refuses to fulfill the contract.14 If the elevator then attempts to enforce it the usual result is that the farmer transfers his business to another elevator. His dissatisfaction easily spreads to other farmers, especially if the elevator in question is an independent or one of a line company and may result in a serious loss of business.

PACIFIC COAST.-Contracting with farmers for their grain by both warehouses and terminal market interests is a common practice on the Pacific coast. In this territory the farmers are financed to a considerable extent by terminal market buyers, mills, and other grain dealers. When such advances are made it is quite customary

It is interesting to note that out of 79 Iowa and Illinois elevators visited by the agents of the Department of Agriculture 25 reported that deliveries on contracts were not to be relied upon.

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to enter into contracts either for the farmer's whole crop or else to an amount sufficient to cover the advances. The contracts are generally made during the harvest season and usually to enable the farmer to pay the expenses of harvesting. They usually specify the price to be paid the farmer for his grain.

In this territory, apparently, contracts are customarily complied with, and no complaint from this section that the farmers refuse to fulfill such agreements was reported.

Section 6. Distribution of total purchases by kind of grain.

RELATIVE MARKETING IMPORTANCE OF DIFFERENT GRAINS.-Appendix Table 6 presents the purchases of about two billion bushels of grain by country elevators in the 14 principal grain-producing States during the crop years 1912-13 to 1916-17, classified according to the kind of grain (Appendix 2, inquiry 14). This table may be consulted for the details of country-elevator purchases.

The following summary statement presents the proportion of different kinds of grain purchased in the 14 principal grain-producing States in comparison with the production of those grains in the same States:

1 Percentages compiled from the State production figures in yearbooks of the Department of Agriculture each year from the volume of the following year, except 1917.

The foregoing figures may be said to be fairly indicative of the relative marketing importance through elevators of the different kinds of grains. The great bulk of the grain crop which is marketed undoubtedly moves through the local elevators, and the sample obtained by the Commission is so large that it would seem not unreasonable to assume that the foregoing results reflect the actual marketing conditions with very substantial accuracy. About 37 per cent of the total grain marketed through country elevators is wheat; about 31 per cent oats; and barely 24 per cent corn. The proportion of total marketings represented by barley and rye are very small, amounting to something less than 7 per cent of the total in the case of barley and less than 2 per cent in the case of rye.

Although corn represents about 50 per cent of the total crop production of the five principal grains in the 14 States for which purchases were tabulated, it amounts to less than 25 per cent of the total of the five grains marketed.

In the case of wheat, rye, and barley the reverse of the foregoing situation with regard to corn obtains. Although wheat comprises