140

UNIV

OF

were stationed at the country shipping points and in some instances country elevators appear to have been operated by the mills themselves. The association handled grain only for the consumption of its members, and the consignment business prior to 1880 was insignificant. The flow of shipments during the early years was almost wholly for milling consumption. Even for the year 1881 the statistics show 16,000,000 bushels of wheat received and flour shipments of over 3,000,000 barrels; which indicates that fully 90 per cent of the wheat received in that year was consumed by the local mills.

The following statement published by Col. George D. Rogers, the first secretary and later the general counsel of the Chamber of Commerce, illustrates the situation at Minneapolis prior to the establishment of an exchange where producers' grain could be sold on commission:

When I came to Minneapolis in 1873 from Calmar, Iowa, where I had been buying and shipping grain, the grain trade was in the grip of the Minneapolis Millers' Association. The need of an organized Chamber of Commerce was pressing, yet it was almost impossible to convince the grain men themselves that such an organization would be successful. Time and again they answered my urgent pleas for a grain exchange by declarations that only cities located at lake or seaports with water transportation were entitled to an exchange. I many times answered them by saying: "Show me another water-power site such as St. Anthony Falls, capable of supplying current for the operation of countless flour mills and I will show you the location for a grain. exchange."

This incident will impress upon grain deale:s of 1917 just the conditions we were forced to meet. Shortly after coming to Minneapolis I sent out circulars to all former patrons announcing that I would handle their grain on commission. A few days later came a letter from a farmer at Luverne informing me that he had shipped three cars of No. 1 wheat, such as was desired by the millers. When the cars arrived I took a sample from each, went to the "agent" of the Millers' Association and asked for a price. "Where did this grain come from?" he asked. "I thought it was quality of grain rather than point of shipment you were seeking," was my reply. He then explained that if the grain was shipped to me from a station where the millers' association had an agent, the mills would not buy it. They had an agent at Luverne and he refused to buy it. Nothing was left for me to do but ship it to Chicago. The wheat was loaded in cars which the railway refused to allow to leave their lines. Hence I requested that three larger cars be parked alongside the grain cars, hired half a dozen men with shovels to transfer it, and went to bed. Next morning when I drove to the siding I found the millers' agent on deck. He asked what I was doing with the wheat and then offered to take it off my hands at the price I had quoted the preceding day. I refused the offer."

The Minneapolis Chamber of Commerce was incorporated in 1881 under a Minnesota statute of that year authorizing the incorporation of such local associations for the advancement of the general trading interests of the community. They proceeded at the outset to establish a grain exchange whereby the members might meet on a common

Pamphlet entitled, "Minneapolis Golden Jubilee," June, 1917, p. 22.

trading floor, subject to definite rules and regulations, to buy and sell carload shipments of grain from the northwestern area. Production had increased beyond the immediate demands of the millers and the old Millers' Association was absorbed and superseded by the newer trading body. In 1885 the secretary reported that "millers in the city and country who, in previous years, made no purchases on 'Change have become large buyers."

12

Membership privileges and requirements.-The exchange association organized in Minneapolis differed from that organized in Chicago in this respect: The Chicago Board of Trade offered at the outset a trading floor to all manner of merchants in the city and tended in later years to specialize in grain because that commodity, more than any other, was marketed through the exchange factors. The Minneapolis Chamber of Commerce was organized by middlemen in the grain trade, and while incorporated under a general commercial association statute,13 took on from the outset the characteristics of a modern grain exchange.

The 538 members listed at the close of 1881 included commission merchants, jobbers, and millers. The total membership of the association has never varied to a great extent from this number. It appears that from 1883 to 1914 the number of members was limited by rule to 550. (See Ch. V, p. 203.)

The market value of memberships has been influenced by the amount of property owned by the association as well as by the value of trading privileges. On September 4, 1901, the building committee reported that the erection of the new building had increased the market value of memberships from $500 to $2,500, making a total increase in the income of the association of $1,000,000. As noted in Chapter IX, the holder of a membership certificate in Minneapolis is protected in his property interest in case of expulsion, which is quite the opposite of the rule followed for a long time on the Chicago Board of Trade.

The present market value of memberships in the Minneapolis Chamber is approximately $5,000. The "initiation fee" is fixed at $7,500 (see Ch. IX) and the annual membership assessment has been $70 in recent years.

THE TRADING GROUPS. The trading interests of the members appear in the following table:

12 Annual Report for the year 1885, p. 27.

13 See Chap. V, p. 191.

14 Voted by directors in 1883. (See Weld: Marketing of Farm Products, p. 274.)

TABLE 37.-Classification of resident members in the grain trade, Minneapolis Chamber of Commerce, Dec. 31, 1917.

As the foregoing table indicates, the cash commission men are clearly the predominant group, although (for reasons peculiar to the market) none of them are listed as exclusively engaged in the commission business. It will be noted that the terminal elevator group is unusually large. (Cf. Chicago classification, Ch. III.) This may be explained by the enormous receipts of grain (especially spring wheat); the fact that the milling demand greatly exceeds mill storage capacity; and by the terms of the Minnesota public warehouse law which permits licensed elevators to store their own grain in public warehouses.18 The large consumers' group (mostly mill buyers) explains to some extent the size of the two preceding classes and is a unique feature of the market. The line elevators still comprise a substantial group, although the 68 members secondarily engaged in the line-house business are largely terminal elevator operators.

The future commission class is small when considered as an exclusive profession. However, 283 members were reported as engaged secondarily as future traders (most of these being primarily cash commission men), so that this secondary interest must be considered. There is only one private-wire house with a main office at Minneapolis. The rules and regulations under which these traders operate are discussed in Chapter V.

The most significant change in the status of the trading groups in Minneapolis has been the increase in the number of commission men and a corresponding decrease in the number of line elevator companies. The manager of "The Grain Bulletin" at Minneapolis, which supplies the tributary areas with price information, reports that whereas "in 1907-1908, 75 per cent of the card quotations were sent to elevators controlled by line companies, to-day (1919) almost 75 per cent are sent to the operators of farmer and independent eleva

16 General Statutes of Minnesota, 1913, section 4482.