Another Minneapolis line operator expressed the opinion that the rapidity of construction and ease with which wooden houses can be transferred from one place to another has been a considerable factor, explaining the importance of wooden construction at least in the Northwestern States. As the northwestern territory developed very rapidly, elevators were in considerable demand. The wooden elevator can be easily and rapidly erected, with the result that this type of construction was commonly used. Similarly, wooden elevators are easily and quickly enlarged, torn down, or, as happens in certain instances, knocked down and moved to another town. In many cases a wooden elevator can be knocked down in sections, loaded on cars, transported to other localities, and set up again at a cost considerably less than that of constructing a new elevator.

TYPE VARIATIONS.-Table 20 presents the material of construction employed by the different types of elevators and warehouses in the United States.

TABLE 20.-Construction materials of different types of elevators and warehouses in the United States.

Slightly over 86 per cent of all line elevators and warehouses in the United States are constructed of wood as compared with less than 71 per cent of all individual elevators and warehouses which are built of this material. The proportion of wooden construction among all line elevators and warehouses is also considerably above the average of wooden construction-77.28 per cent-which is reported for all elevators and warehouses combined, and the proportion of such construction among all individual elevators and warehouses combined is considerably below the foregoing general average.

An examination of the percentages of wooden construction by types of houses in the above table indicates that the high proportion of cases in which lumber is used by all line types combined as compared with the combined individual types is caused chiefly by the extremely large amount of such construction by the commercial lines. Wood con

A number of elevators in North Dakota, for example, located at points where there was a surplus of elevators, have been thus knocked down, transported in sections to Montana, and there re-erected.

struction in the mill line type is only a fraction of 1 per cent above the average proportion of wooden construction for all types, while neither of the other two line types employ this construction to an extent equal to the average.

COMMERCIAL LINE CONSTRUCTION.-As previously pointed out, the commercial line elevator company is a grain-merchandising undertaking operated solely for the purpose of deriving a profit from the differences in the prices at which it buys and sells. The individual line house is thus merely one part, and it may be a very small part, of a larger buying and selling organization. The commercial line company having presumably no local interests and being concerned solely with the profit and loss derived from the operations of all its houses, apparently considers the matter of elevator construction solely from the standpoint of costs and profits, and resorts to the cheapest type of construction as the one most likely, everything considered, to yield the greatest net return on the investment. As one Minneapolis line operator put it, the commercial line companies have found that the little saved in the cost of insurance by the more expensive types of construction does not compensate for the increased interest on the increased investment.

It is also probable that the commercial lines have in a good many cases felt that it would be undesirable to construct other than cheap houses on account of competition. In more than a few cases competition has rendered the operation of particular line houses unprofitable, and many of the larger commercial line companies have had the experience of closing numerous elevators owing to the development of competition, especially of the cooperative variety.

INDEPENDENT CONSTRUCTION.-It is not easy to determine why lumber should be so much more used by commercial line elevator companies than by independents, since the independent elevator is in essence operating in much the same manner as the commercial line and for the same purpose, i. e., to derive profit from the purchase and sale of grain.

The independent house, however, is almost invariably owned and operated by local people. In many cases a large proportion of the income of the owners is derived from the operation of this particular enterprise, and often their entire capital is invested in it. It is the business in which they are regularly engaged, and they expect not only to remain in it but to do so at the place where they have constructed their elevator. An elevator of this type is not like a line house-merely one of several. The average independent owner can not discontinue the business which is his livelihood and move to some other locality with the same facility as a commercial line company can discontinue a particular house whenever the profit from that house becomes too narrow and, as is often done, transfer operations to another and more profitable locality. The independent operator regards his business as a permanent affair; the line company, operating several stations, regards it as subject to the exigencies of competition, etc., and hence to be continued or discontinued at a particular point, as circumstances justify, and always more or less with reference to the profit of the entire business. As a result the independent operators tend to resort to somewhat more substantial types of construction, building houses of a more per

manent character, better protected against fire, and carrying a lower insurance rate than is the case with the commercial line house.

COOPERATIVE CONSTRUCTION.-The fact that the cooperative elevator also regards its business as of a permanent local character is probably partially responsible for its low percentage of wooden construction as compared with the commercial line, as well as the recent development of the cooperative type (Ch. II, sec. 11). As elsewhere indicated (Ch. V, sec. 8), however, the cooperative elevators handle more grain relative to their size than any other type. Other things being equal, the larger the volume of grain handled by the country elevator the lower is the per bushel handling expense and the larger the possible capital expenditure which would be justified. Moreover, on account of their plan of organization and operation these elevators are in a large proportion of cases able to obtain ample capital, and for this reason are in a position to build comparatively expensive elevators. Finally, there is also to be considered the fact that the farmers build the elevator for the purpose of handling their own grain. They look upon it more or less as a permanent institution and in many cases have a certain amount of pride in having a substantial elevator. These facts also undoubtedly affect the cooperative line, and are, perhaps, responsible for the lower percentage of wooden construction of this type as compared with the commercial line, though the number reporting is very small.

INDIVIDUAL AND MILL LINE CONSTRUCTION.-Slightly less than 54 per cent of the individual mill elevators reported wooden construction. This is far below the average not only of all elevators and warehouses in the United States (77.28 per cent) but also of all individual elevators and warehouses (70.46 per cent) and of either independents or individual cooperatives. This percentage is in great contrast, moreover, to the extent of such construction among the mill-owned lines, over 77 per cent of which are built of wood.

The principal reason for this appears to be the fact that in a great proportion of cases the individual mill elevator is a part of the mill structure itself. Wooden construction involves in case of fire in such an elevator the possibility not only of the loss of the elevator property but also of the mill structure as well. In this fact alone there is good reason for a pronounced tendency to use some form of construction less inflammable than wood for the individual mill elevator. Secondly, mills are usually constructed with the expectation of continuing in business for a relatively long period of time. So long as the mill continues operations it must obtain grain, and a mill elevator can, conceivably, continue to exist and operate as a storage adjunct to the mill as long as the latter is operated, even though there is comparatively little grain raised in the immediately surrounding territory. These two factors make for a type of construction of considerable permanence. In this connection it is interesting to note that, though not shown in the tables presented, something over 6 per cent of all individual mill elevators reporting are constructed of either concrete or steel.

While the mill line elevators show a much higher percentage of wooden construction than the individual mill type, they employ it considerably less than the commercial lines. The reason probably lies in the fact that each mill line usually has at least one house

connected with the mill. This house, like the individual mill type and for the same reasons, would in a large proportion of cases be of some other kind of construction than timber. As a result, the extent of wooden construction among mill-owned line houses is less than that of the commercial lines though greater than in the case of the individual mills.

GEOGRAPHICAL VARIATIONS.-Appendix Table 5 shows the distribution of elevators in the different States and grand divisions according to the material of construction. There is a great variation between States in the percentage of wooden construction reported, the amount ranging from 50 per cent in Missouri to 94 per cent in North Dakota. Broadly speaking, these variations are probably explainable in terms of the proportions of commercial line and individual mill elevators operating in these States. The following table shows the percentages of wooden construction in all the 14 States, separately tabulated, in comparison with the proportion of commercial line and individual mill elevator construction.

TABLE 21.-Proportion of commercial line and individual mill elevators in specified States in comparison with the proportion of wooden elevator construction.

An examination of this table shows that with a few exceptions those States having the largest proportion of commercial line elevators tend to have the highest percentages of wooden construction and those having the largest proportion of individual mill elevators the lowest percentages of wooden elevators. Since, as already pointed out, the commercial lines are much above the average in the proportion of wooden construction and the individual mills much below the average, the distribution of these two types of elevators probably explains, in the main, the State variations. In the case of Montana the less than average percentage of this construction reported is in all probability due to the comparatively recent development of this State as a large producing area.

CHAPTER IV.

DEVELOPMENT OF COUNTRY ELEVATORS AND COUNTRY

MARKETING.

Section 1. Character of the discussion.

In Chapter III there has been set forth the development of the different types of country elevators in the different States as indicated by the figures of construction reported at different periods. In this chapter there will be summarized briefly such other historical data as have been collected by the Commission. No attempt will be made to present a comprehensive history of country marketing for several reasons. In the first place, readily available information in print is comparatively limited. Although a thorough study of all possible sources might have yielded in addition considerable information, such an examination would have involved an amount of research and expense which, considering the reasons for and scope of the investigation, would not have been justified. Moreover, the grain business is so old that outside of Minneapolis and the Pacific coast territory there are comparatively few men in the grain trade who are able to supply much information as to the characteristics of country marketing in the early days, and the information which could be obtained from this source is in consequence not great. Undoubtedly the information obtained from the older Minneapolis grain men as to conditions in that area could have been somewhat supplemented in other sections, but, again, only at an expenditure which it was not felt would be justified. The following brief recital, therefore, is based upon easily available published sources and such historical information as was incidentally acquired in the course of the investigation. In the case of the Northwest territory, this latter information is more complete than for other sections, owing primarily to facts supplied by Minneapolis line elevator operators, some of whom practically grew up with the grain business in that area.

Section 2. General characteristics of early grain marketing.

CHICAGO TERRITORY.-In the very early days a large percentage of the grain was consumed locally. At that time urban centers were not large and a highly concentrated consuming demand was not as yet in existence, except in a few cases. Water-power gristmills were then quite common throughout the country districts and the farmer took much of his grain to these mills, where it was converted into flour and other grain products. In those days the grain fields were usually either adjacent to river courses or relatively close to the larger towns, and surplus grain was either hauled by wagon directly to the towns or shipped to them by boat on the rivers or canals.