Section 18. Closing and wrecking elevators on a rental bacis.

EXPLANATION OF PRACTICE.-A practice, amounting in effect to a pooling of receipts, is that of closing or wrecking elevators on a rental basis. While the indications are that these arrangements are made chiefly by line elevator companies, it is possible, if not probable, that other types of elevators have also been participants therein.

The method is usually resorted to whenever one or more of the line companies operating at a particular station conclude that there are too many houses interested at the point as compared with the volume of grain to permit any money to be made. In such a situation the line houses interested sometimes arrange for the closing or tearing down of one or more of the houses involved, upon the agree ment or understanding that the other line companies will pay a certain amount of compensation to the line company closing or wrecking the house. In the case of closing, the practice apparently is for the houses remaining open to lease the closed house and leases in due form are apparently drawn to cover such transactions and signed by the interested parties. As a rule the arrangements have apparently been handled through F. R. Durant, of the Grain Bulletin, who appears to have been a sort of clearing house for operations of this character:

Mr. F. R. Durant,

Grain Bulletin, City.

AUGUST 9, 1916.

DEAR SIR: We will be closed at the following Great Northern stations, or are willing to negotiate closing with those interested:

The above stations constitute just 50% of our G N points if I have counted right, eliminating Montana.

Yours truly,

DDM W

CARGILL ELEVATOR COMPANY.

[The GRAIN BULLETIN, Minneapolis, Minn. F. R. Durant, Manager.]

Mr. C. A. MAGNUSON,"

Minneapolis.

MARCH 15, 1915.

DEAR SIR: Attached you will find statement of rentals for 1915-16, the mark # in front of a name indicates that that house was closed the past year on rental basis.

I am somewhat busy just at present with other matters and will appreciate it if you will give this your usual prompt attention and advise me what changes, if any, you would wish to make for the coming year so that the leases may be drawn and if possible the delays of past years avoided.

At Fisher the Monarch house will be wrecked on the basis agreed upon.

Northwestern Elevator Company.

At Maynard, Thorpe decline to pay for wrecking the Monarch house unless the New London is also wrecked, and further, they decline to pay any rental in the future, the New London say they have a good flour trade there and do not care to wreck and unless they can receive rent for a few years more will put their house in shape and open it for the next crop.

Yours very truly,

CARGILL ELEVATOR CO.,

Minneapolis, Minn.

(Signed)

F. R. DURANT.

APRIL 23, 1915.

GENTLEMEN: Below is statement of closed houses for 1915-16.

Leases will be prepared May 1st, please advise any changes in above prior to that date.

RATES FOR CLOSING.-Usually the rental to be paid for a closed house is a sum obtained by applying a rate of 11 cents per bushel to that proportion of the average handlings by all the houses participating, which is represented by the division of this average by the total number of participating houses, whether open or closed.

9964-20-19

[From the files of The Grain Bulletin, Minneapolis, Minn.]

MARCH 12TH, 1914.

NEW LONDON MILLING CO.,

Willmar.

GENTLEMEN: The rental values at Maynard and Raymond figure for the com

It is hoped to make the same arrangement at these stations as was in effect last year, except that Thorpe will probably insist on the regular amount due at Raymond instead of $700.00 as in the past, they have had the matter up with Mr. Johnson, I think; and in this connection, it is a fact Raymond is the only station out of 75 or 80 where houses have been closed under this arrangement where the regular amount has not been paid.

The writer expects to leave for a vacation on the 24th of this month and the Northwestern people insist on knowing what houses are to be closed before the first of April so it would be greatly appreciated if you you take the matter under advisement and come to a conclusion as much before the 24th as possible. Yours very truly.

Thus in the case of the station at Raymond the three line houses handled a total of 892,000 bushels of grain from 1909-10 to 1913-14,25 an average for the station of 178,000 bushels a year, or 59,000 bushels per elevator, which at a rate of 13 cents per bushel would amount to $885.

The closing of houses on a rental basis is not necessarily a permanent thing, and houses closed may be opened up subsequently if the management considers it desirable, as is not infrequently the case.

[From the files of the Northwestern Elevator Co.]

Mr. F. R. DURANT,

City.

JULY 23, 1913.

DEAR SIR: Will you please notify the parties in interest at Osnabrock, Wales and Glasston that we wish to open up at those points this year, and that we are perfectly willing that any of those who have been open there the last few years should close under the same conditions as would apply to us if we remained closed. We consider that we have been closed long enough at those points, and that there have been good crops enough so that no one who has been open there has suffered by reason of being closed, and we don't want our houses at either of those points to become a dead issue, and consequently as they have

25 17,000 bushels apparently being estimated amount yet to come to elevator from Mar. 12, the date of the letter, to June 30, the end of the crop year.

I am

been put in shape to operate we prefer to operate them on this basis. going away Saturday night to be gone until the 11th of Aug. hence this letter. Yours truly,

DEAR SIR: In regard to houses on the Great Northern, would say that we will keep open at

There are I think two houses that we want open that we had closed last year, i. e., Wolford and Nash.

Yours truly

WRECKING AND NOT REBUILDING.-In some cases houses are wrecked or torn down instead of closed, in consideration of compensation paid by the other elevators. When elevators are destroyed by fire, explosion, or any other cause, at towns having more than one elevator, there have also been instances where the remaining elevators have arranged to pay compensation for not rebuilding to the company owning the destroyed house.

[From the files of the St. Anthony & Dakota Elevator Co.]

Mr. F. R. Durant,

c/o Grain Bulletin, Minneapolis.

5/6/14.

DEAR SIR: As you are doubtless aware, our elevator at Northwood, N. Dak., burned about March 1st. As you know, the volume of business at Northwood is very good and it has been a particularly good station for us-in fact, about the best we had. It was the original point for Mr. Heising, where he first started his business.

However, in harmony with the general policy of the elevator companies not to rebuild burned elevators where it can be avoided, we would like to have you submit to the other elevators at the station the conditions under which we will be willing not to rebuild.

If the other three elevators will buy our one-quarter interest in the old Andrews elevator owned jointly, at cost, and pay us on the regular wrecking basis, we will give up our business at that station.

Please let us know the results of your conference at soon as possible.
Yours truly,

HEISING GRAIN Co. By C. A. BROWN,

JULY 7, 1915.

Mr. CLARENCE L. SPAULDING, Pres.,

Personal.

Spaulding Elevator Co., Warren, Minn.

DEAR SIR: We have talked to the Minnesota Elevator Company in regard to the situation at Fonda, and if you do not rebuild at Fonda you will receive the usual closed house penalty for three years.

Yours truly,

ATLANTIC ELEVATOR COMPANY

By

Vice Pres.

So far as the Commission was able to ascertain there has been no such customary charge for wrecking or not rebuilding destroyed elevators as has existed in the case of closing houses. In the last letter quoted above, the compensation for not rebuilding appears to have been the closed house penalty for three years. The same basis also appears to have been used for wrecking in at least one case at Hallock, Minn. Generally speaking, the information obtained indicates that other items than the rental charges are taken into account in arrangements for wrecking or not rebuilding and that the compensation in such cases is determined largely with reference to such other items. This appears in a measure in the following plan of determining wrecking compensation which was employed in about a dozen cases.

WRECKING ELEVATORS.

Each proposition to wreck to be voluntary on the part of owner and only permissible with the consent of a majority of his competitors participating in this arrangement at the station.

When an owner has signified his willingness to wreck a rented house under this plan, if he is not permitted to do so, he shall no longer be under the obligations to keep the house in repair in order to secure his rental.

When a house is to be wrecked and rebuilt elsewhere it must not be located at a station occupied by any of the competitors who help to pay for the wrecking, without their consent.

COMPENSATION.

The basis to be one and one-half times the rental value at the station using last computation in the Grain Bulletin office; (1) deduct five per cent (5%) for each consecutive year previous to the time of wrecking that the house has been kept closed under the rental plan; (2) add ten per cent (10%) for each 5,000 bushels of capacity in excess of 20,000 bushels up to 50,000 bushels; (3) add $100.00 for each competitor at the station who participates. (The purpose of this clause is to give the wrecked elevator a part of the general benefit arising from distributing the burden among two or more competitors.) The maximum compensation for wrecking a house in no case to exceed $2,000.

EXAMPLE.

Station having four (4) elevators, one of 30,000 bushels closed for two years at rental the last year of $400.00:

Another interesting method of compensation for the elimination of elevators from the competitive field was encountered in one instance. Many of the line companies are also cash commission houses or have a subsidiary commission branch. The Cargill Elevator Co., having a subsidiary commission firm (Cargill Commission Co.), agreed not to rebuild a house that had been destroyed by fire at Willow City, N. Dak., provided that other elevators interested at the station where the fire occurred would ship on consignment to the subsidiary com