grain marketing centers. The competitive relationship between producing areas on the one hand, and marketing or consuming points on the other, has created for the territory between the Mississippi and Missouri Rivers a system of combination rates applying to and from the river crossings (i. c., the "rate breaking" points). These combinations serve as maximum rates for shipments from intermediate points. On the principle of "water competition" rates for many years were maintained from Missouri River points to the Gulf so low as to materially assist in the development of the Kansas City market. As river transportation of bulk grain became of negligible importance this principle of "water competition" was largely abandoned, and rates from certain producing points in Kansas and Oklahoma to the Gulf became less than the combinations via Kansas City. As a result grain was frequently sold on the Kansas City exchange which was shipped direct from the country station to a Gulf point without passing through Kansas City. CONCLUSION.In general, there is sufficient evidence to indicate that transportation facilities and transportation rates are of controlling importance in establishing grain markets and a primary factor in the cost of marketing grain. No adequate conclusions can be made with reference to the grain marketing system without a detailed examination of comparative transportation costs from producing to consuming territory. Such an analysis is reserved for Volume IV. CHAPTER III. THE CHICAGO MARKET AND THE BOARD OF TRADE. Section 1. Origins. The development of a grain market at Chicago is traceable to its strategic position as a lake shipping point located in the heart of the grain growing area, and offering a natural terminal to lake and water movement. The first official record of the grain trade in the little prairie town shows the receipt of 78 bushels of wheat in 1838. The shipping business was inaugurated in the following year when a cargo of 1,678 bushels of wheat was loaded from farmers' wagons into a brig and shipped to Black Rock, Erie County, N. Y. By 1841 Chicago had become the grain market for northern Illinois and parts of Indiana and Wisconsin. The prairie farmer was interested not only in the cash price to be obtained for grain but also in the price of the supplies which he invariably purchased with a part of the proceeds. And higher prices prevailed for grain, while lower prices were asked for manufactured goods, in the lake port of Chicago than at interior points. In 1841, on the same day that Chicago was paying $1, Peoria bought wheat at 40 cents. At nearer points, during the same year, wheat was fetching 50 cents a bushel when Chicago was paying 87 cents. In September, 1842, when Chicago was paying 53 to 54 cents cash for wheat, Springfield offered but 37 cents in trade. Consequently plank roads were built out in all directions to enable producers to bring in their wagonloads over the prairie mud. Trains of wagons loaded with wheat were a frequent sight in the Chicago market and trains sometimes of 80 wagons were observed passing trough the country en route to the city.3 Such a lively traffic developed on Lake Michigan that in 1841 the arrivals and departures of lake craft for the season averaged 150 per month; but (it is recorded) the grain trade had increased so rapidly that there were not vessels enough to carry away the wheat.1 The building of railroads and canals relieved the farmers, merchants, and millers of the necessity of hauling by wagon sometimes 100 miles to find a market. The local stations on these routes became country Report of the U. S. Industrial Commission, 1900, Vol. IV, p. 404. NOTE.-The population of Chicago in 1840 was, 4,833. *See Taylor, History of Board of Trade, Chicago, vol. 1, pp. 114, 115, referring to the Chicago Press and Tribune, Jan. 6, 1859, in which the bill of lading covering the shipment is reprinted and spoken of as "the first bill of lading for wheat made out in Chicago." Also, see the American Elevator and Grain Trade, May 15, 1918, p. 706, containing extracts from the Journal of the Illinois State Historical Society, and David McCulloch in Proceedings of the Chicago Historical Society, Jan. 19, 1901. Also see p. 107, note 23. American Elevator and Grain Trade, vol. 36, p. 707, based on studies of the Illinois Historical Association. Idem. markets from which grain was shipped to Chicago. Within a few years after the completion of the Galena & Chicago Union Railroad, Clinton, Elgin, Belvidere, Rockford, and other stations became active grain centers, and Chicago the central market for that territory. The organized market at Chicago was established in the year 1848. In that year the first wheat was received in the market by rail, and the Illinois & Michigan Canal was opened with Chicago as its terminus. In that year, also, the merchants and traders of the town organized the Board of Trade, which will presently be described. Two years later connection was made with the Atlantic seaboard via the New York Central Railroad. During the subsequent decade the trade in grain outstripped that of all other commodities, and in 1858 it was asserted that Chicago had the reputation, "which she has enjoyed for years, of being the largest primary grain market in the world." "Chicago," it was pointed out, "from her position, and connection by lake, canal, and railroads, commands the trade of an extent of country controlled by no other city, and nowhere surpassed by the richness of its soil." A table was cited by the Board of Trade to show the preeminence of Chicago among western markets, as follows: TABLE 23.-Receipts of grain at Cincinnati, St. Louis, and Chicago in 1858,a The supremacy of Chicago as a distributing center for grain, which was so evident in 1858, was only strengthened by the Civil War.' And by 1864 the market claimed a like preeminence in the distribution of beef and pork: The same natural causes which made this the greatest interior grain market in the country, has also made it the greatest collecting point for hogs and beef cattle. Con • Idem. First annual statement of the Trade and Commerce of Chicago for the year ending Dec. 31, 1858, p. 44. In the critical year of 1863 the secretary of the board reported that "while our city has thus been cut off from some of its commercial points, it is generally conceded that we are gainers by the internal troubles that afflict the country." (Annual statement, Jan. 1, 1863.) The records show that the railroads running south out of Chicago were taxed to the utmost with shipments of oats to the armies in the field, and an ever-increasing number of packing houses on the Chicago River carried on a lively export trade with London and Liverpool. (1863, Board of Trade Report, p. 32, 1864, Report, p. 34.) |