Section 13. Line-elevator 15 price policy. From a careful examination of the correspondence, it appears reasonably safe to conclude that as a matter of general policy the line companies endeavor so far as possible to stick to card 16 or list 16 prices. F. E. BYE, Agent Gilby, N. D. SEPT. 4, 1919. DEAR SIR: * * The receipts seem to be dividing up rather fairly and under these circumstances, we do not want to give you any instructions to pay up for such stuff as is represented by these samples, or for any others. We still feel that a reasonable amount of business done at a reasonable margin is a great deal better than lots of business done at no margins. We down here who are furnishing the money on which our agents buy grain and footing the bills covering the expense of doing business at their stations, cannot lose sight of the fact that this money must come back to us in some way or we will have to shut up shop. The only way we have of getting this back is to buy our grain in the country on a fair margin and cannot, consequently, let ourselves become blinded with this fact by a competitor's doing a little business. I notice that a good many of you are paying a good deal over the card price. I would like to have you write me as to whether or not you have tried to get the market down to card price or as near card price as possible. If you have not already done so, will you try to do so. You will understand of course, that in order to make a fair profit we have got to buy the grain as near card price as possible. * Yours truly, (Pencil note) C. A. MAGNUSON, Prest. ARTHUR, N. D. 8/26/19. The St. Anthony has agreed to come to list, but we can't do anything with the Farmers Elev Agent, but we are going to pay list after today and see how it works out. DEAR SIR: We have yours of the 6th relative to the situation at Cashel, and also have yours of the 8th and note that you will be at Cashel to-day, and have asked us to call you up if we have any special instructions to give you. 18 Competitively, the mill line is sometimes to be considered as a mill and sometimes as a commercial line. In so far as a mill line serves as a feeder for the mill, it will compete to obtain grain more or less regardless of its other line competitors. Many of the northwestern mill lines, however, are operated largely, if not chiefly, as merchandising propositions in the same way as any commercial line and their policy coincides in general with that of the commercial lines. Except in so far, therefore, as the discussion refers to the competition of mill lines to obtain grain for grinding, the term "line" as used in the discussion is intended to include both commercial and mill lines. 10 Prices issued by the Grain Bulletin service. (Ch. VIII, sec. 1.) We have just called up the Equity on this situation again, and he claims that their man was delayed in getting to that point but that he is giving Landousky strict instructions to come down to list. Now we do not believe that they are trifling around on this proposition and feel absolutely certain that they want to buy grain right at that point, as well as at all others. In view of this, we doubt its being good policy to spring prices at that point until we have exhausted all reasonable means of getting the station on the right basis. It is easy enough to put these prices up, but it is something else to bring them down. We are not, however, going to fool around on this thing all winter, but do not feel just yet like putting that station at freight off, which is undoubtedly the only other step open to us. Yours very truly, DEAR SIR: We note your letter of the 2nd and also the letter from your agent at Ambrose. The general buying of our grain at Colgan has been very satisfactory to date. However, there was quite a stir made by our agent as well as all of the other buyers in that territory on account of your agent having received a special schedule of prices to buy on and all of the buyers then got excited and since that time the thing has been somewhat demoralized. Our agent wrote in here and wanted to know why it was that the Northland at Ambrose were sending out special cards of their own and not following the grain Bulletin Card. I have had the same question come up before and I do not know whether this is going to lead to demoralization in a general way or not. However, we are checking up our buying at Ambrose and we certainly do not propose to pay Minneapolis prices for wheat at Colgan if we can help it. GENTLEMEN: I have your letter of the 30th and return herewith letter from your agent at Bergen. Our agent at Bergen was in here about ten days ago and we impressed on him the fact that receipts at his point were going to be light and that we wanted him to buy the stuff at the card. We have been advising him since to follow the card, and if he has not been doing this I would like specific cases. Section 14. Relation of Grain Bulletin to price competition. This policy of the line elevator companies in attempting to hold the markets at which they operate to the Grain Bulletin card or list price is presumably based upon the fact that the card deducts from terminal market prices, not only freight, but also a handling margin of several cents, which is sufficiently liberal to cover both expenses and a margin of profit." (Ch. VIII, sec. 1.) If this card or list price can be maintained, therefore, the line house is usually assured This would probably apply to all houses except those very inefficiently operated or which handle a very small volume of grain. of a profit subject only to being able to procure a fair volume of grain. BASIS FOR AGREEMENTS.-It is difficult to estimate how important a part this card plays in the competition of country elevators. The fact that it quotes a buying price for each station and is generally in use throughout the Northwest would appear, in a technical way, to facilitate agreements by reason of the fact that the elevators at each point thus have a minimum buying price upon which agreements or understandings could readily be based. Mr. G. H. WISHEK, Pres., Zeeland State Bank, Zeeland, N. Dak. Nov. 30TH, 1915. DEAR SIR: Your letter of the 29th received. We are writing Mr. Schatz today to try and get him down to card basis, also that he must not take wheat lower than 54 pounds to the bushel for better than 4 wheat and 2 grade must test 56 pounds. The trouble with Zeeland is that the buyers are all working on their own basis, and not on a common basis. We would suggest that you and the other buyers in town take the Grain Bulletin card which is sent out from Aberdeen, S. Dak., every night and you would get this on the noon train showing the previous days market, and all agree to buy on that basis. We are enclosing you herewith a copy of the Zeeland card for the 29th and you will see by this that wheat closed at Minneapolis at $1.02-3/8 to $1.02-7/8 which leaves you a good margin and cuts out all chances for difference in judgment and gives us a common basis to work at. If you all agree to buy on this basis there could be no differences in opinions. If you can put this work through think you will be a benefactor to all the Grain men in Zeeland and we will stick to this kind of agreement. This Grain Bulletin card will cost each of you .90 cents per month, and it would be a good plan to cut out the C. N. D's as they only make trouble. Yours very truly, RGC. MBL VICT ELEV. Co. Secondly, the technical method of distribution of Grain Bulletin telephonic and telegraphic price changes offers a means of facilitating agreements. In order to reduce the expenses of this service, a station having two or more elevator subscribers receives as a rule only one message. The agent receiving the same then distributes the information to the other elevators at that point. Frequently the agents work in rotation in receiving and delivering the changes, one doing it one week, another the next, and so on, and this system supplies good opportunities for talking over prices, etc. There is also in existence some evidence that F. R. Durant, the proprietor of the Grain Bulletin, formerly had weekly conferences with the operators of certain important Minneapolis line elevator companies. [Cargill Elevator Files.] Cargill Elv. Co., D. D. McMillan. MINNEAPOLIS, MINN., Sept. 17, 1915. Monarch Elv. Co., A. Stewart. National Elv. Co., L. D. Marshall. Northwestern Elv. Co., C. A. Magnuson. St. A. & D. Elv. Co., C. A. Brown. At a meeting held about a week ago, it was suggested that the companies named above meet each Friday afternoon at 3 o'clock in my office, for consultation of matters of general interest. Please be represented this afternoon. F. B. DURANT. PROBABLE INFLUENCE OF GRAIN BULLETIN.-It should not be inferred, however, that these meetings necessarily involved illegitimate discussions or resulted in illegitimate action of any sort. If it be assumed (and there is some evidence to support the view) that Mr. Durant attempts to make the card show a fair minimum buying price in the country, it is necessary that he have a thorough knowledge of the character of the crop and similar conditions throughout the entire Northwest. The officers of the line companies have from their agents' reports such a knowledge of crop conditions at their local stations, and owing to the wide territory covered by the lines, consultations by Mr. Durant with a few line officers is sufficient to supply him with an amount of information otherwise difficult, if not impossible, to obtain. It is not intended at all to imply, however, that this was the purpose of the Durant conferences with the line elevators, but only to suggest that there may have been entirely legitimate reasons for such conferences. It may be regarded, however, as somewhat doubtful that Durant has employed the card, at least in recent years, in furtherance of the line elevator interests. The reasons for this view are found in several facts. First, the lines at present constitute a minority of the subscribers to the card and considerably more than one-half of the subscribers are elevators of other types. Secondly, there are numerous indications that Durant has essayed, at least in recent years, to make the card price at any station reflect what the buyers at that particular station are willing to pay for grain. Third, following the passage of the antidiscrimination laws, Durant took the position that he could not adjust card prices at a station on the request of a line company unless he did it for the line as a whole, though he would adjust the price upon the request of an individual operator. Fourth, the correspondence and other data examined failed to show any clear evidence that the Grain Bulletin is now operated in the interests of the line elevators. If the foregoing is a correct view, the chief influence of the Grain Bulletin competitively is the frequency with which its prices are employed as the basis of agreements among competitors. 18 Section 15. Line-elevator competitive policies on grades, dockages, etc. GRADES, DOCKAGES, AND WEIGHTS.-As elsewhere indicated (Ch. VIII, secs. 10-11), the line companies may lose on grades, a portion of which loss, at least, is compensated for by a profit on dockages and weights. The line agents are constantly checked by their head offices as to their grades and dockages and instructed against either overgrading or underdocking. On the basis of the letters of instruction to agents and other statements contained in the correspondence, it may be stated that, on the whole, the policy of the line companies is to prevent both overgrading and underdocking. Moreover, from correspondence examined, it appears that the lines, with some possible 18 For a further discussion of the Grain Bulletin and Durant's activities consult the chapter on the Grain Bulletin in Vol. III of this report. In that volume will be found detailed discussion of the relation of the line elevators to the Grain Bulletin so far as it was ascertainable and a comparison of actual prices paid in the country with the Grain Bulletin prices, together with a detailed discussion of the relation of the card to prices in general. The foregoing discussion relates only to the matter of the competitive effects of the card at individual stations. exceptions, desire their agents to be as accurate as possible in these matters and also in weights. THE NORTHWESTERN ELEVATOR COMPANY, August 25th, 1919. Circular No. 11. * I want to say this, that we do want to get our full share of the grain, but if in order to get it, we have to pay a high price for it, we want no losses on shortage in dockage, shortage in grades, or shortage in weights. I want you to write me fully, particulars in relation to these matters on this sheet for refer ence. Yours truly, C. A. MAGNUSON, Prest. MAY 15, 1917. A. B. GREENFIELD, Agt., Regan, N. D. DEAR SIR: We have yours of the 12th. Very glad to note that the buyers in your market are all down to strictly list prices and proper grades and dockages. Reference to our general letter of the 14th and again the one of today, will show you the grave importance of paying nothing more than list price. Yours truly, BCC-Mc ANDREWS GRAIN CO. By Mr. M. R. DEVANEY, Gen. Mgr., Mpls, Minn. DEAR SIR: OCCIDENT ELEVATOR COMPANY, * I was at Boyd this week investigating a report to me that we were overgrading and docking but find that our man there has bought his grain so far right and far cheaper than our competitor. I never had as much trouble before trying to work in harmony with our competition and keeping the buyers down to proper grade and dockage. Yours truly, S. J. EPLER. OCT. 11, 1915. M. G. BLAHA, Agt., * Hurdsfield, N. D. DEAR SIR: Now you stated in your letter that the Occident agent overgraded you on this stuff but you did not give us a specific case. I mean you did not give us the man's name nor the date nor the price paid. If you would do that I would take it up with the Occident Co. and think they would take steps to get their agent in line. They are not anxious to overgrade the stuff nor pay any more than it is worth. DEAR SIR: Your letter of the 4th relative to our Dresden agent's cutting dockage is received, and I can assure you that this is a practice that we do not want our agent to reason to. |