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to show that combinations between elevators and railroads have practically eliminated competition. Many of the railroad officials are stockholders in elevator companies.
The History of the Primary Market has been the history of the terminal elevator systems. In the control and operation of these systems lies the key to a proper comprehension of the functions of the primary market in grain distribution. The terminal elevators, operated on such a stupendous scale, receive, store and transfer all grain that flows from the local markets to the primary market. They contain by far the larger portion of the country's visible grain supply. The importance of a primary grain market like Chicago, the historic storm center of the competitive conflict for control over the Mississippi valley grain movement, is augmented by the fact that its supremacy as a distributing center for manufactures depends largely upon its capacity to command the agricultural products which are exchanged for the manufactured products. Herein lies the ultimate explanation of the consolidation of the distributive agencies engaged in the grain trade.
The Pacific coast warehouses, located on the railroads and rivers, are generally operated in the interest of milling, exporting or speculative dealers. In recent years, many farmers have shipped directly to the coast cities and placed their grain in storage there. Each farmer makes certain of securing the return of his own wheat by marking his sacks and piling them together, for the wheat, coming from the dry interior, usually gains enough in weight to pay for storage. The large wheat dealers of Portland and San Francisco have local buyers to represent them at the railroad stations and steamboat landings.
The Inspection of Wheat.—The rigid system of grain inspection and grading maintained by various states and trade organizations not only simplifies and facilitates the movement of wheat to a surprising extent, but it also tends to minimize fraud in the grain trade. In wheat inspection the greatest care and accuracy are always maintained. The procedure at Minneapolis is approximately as follows: One man, passing along the cars, records their numbers and initials, and takes note whether their seals have been tampered with; another man breaks the seals and opens the doors; the third man is the wheat expert who is the official deputy inspector of the state. Quick
and keen from long experience, the inspector looks for foreign matter mixed with the wheat, examines the quality of the grain, and smells for smut. Sometimes the cars are loaded fraudulently by placing inferior wheat in portions of the car where the cunning shipper imagines it will escape detection. Such cars are said to be “plugged." The inspector thrusts a brass plunger deep into the wheat in different portions of the car and brings up samples for the purpose of discovering improper loading. The elevator and commission houses have a sampling bureau, representatives from which accompany the official inspector. The samples which they secure are marked with the number and initials of the car from which they were taken. At the opening of the chamber of commerce, these samples are set out in pans, and form the basis of the day's trading. The state secures complete records and samples of all cars inspected. These are kept until the grain has passed out of the market, so that any dispute as to the quality of the grain could be easily settled. After the inspector has finished his work, the cars are resealed with the state seal. The wheat is rarely delayed more than a day in the cars in which it arrives.
Should an inspector make a slight error in judgment, it might make a difference of a grade in wheat, and a gain or loss of $25 per car. In comparison with this, the cost of inspection is nominal. If there is dissatisfaction with the inspector's decision, appeal may be made to a state board which is especially appointed to hear such complaints. Unless the grade of the wheat is changed, the expense of the second inspection must be borne by the objector. In 1889, 30 to 40 cars were inspected in Minneapolis in an hour. A decade earlier 60 to 90 cars could be inspected in an hour, because the wheat was cleaner. The exporting of wheat from the interior of the United States involves from three to six inspections of any given lot of grain.
At the six terminal points of Minnesota, Minneapolis, Duluth, St. Paul, St. Cloud, New Prague and Sleepy Eye, 125,564 cars of wheat were inspected “on arrival” during 1905, and for the same year there were inspected “out of store" 59,963 cars, and 19,692,490 bushels shipped in vessels. Out of 11,009 appeals coming before the Board of Grain Appeals on all grain, in 7,859 the decisions of the chief deputies were confirmed.
The Weighing of Wheat.—A few years ago the average weight of the loads weighed at Minneapolis was 20 tons. Now monstrous weighing machines weigh 50 tons at a time. Some states have a state weighing department. That of Minnesota, located at Minneapolis, has given service which steadily grows in public confidence and favor. In 1902, it employed 68 persons, and supervised weighing at 42 elevators and 17 flour mills, besides 4 feed mills, 5 oil mills, and 3 railroad yards. It weighed 233,127 car loads and 5,564 wagon loads, which included 152,810,383 bushels of wheat. The revenue was nearly $60,000, and the disbursements were about $4,000 more. It is the intention of the law that the service shall be self-sustaining. The department has also removed from the field a notorious class of men known as grain thieves. Only 81 errors were made in weighing 259,996 cars of grain, and 6,000,000 bushels of grain have been weighed with an average shortage of only 40 pounds per car.
The Commercial Grading of Wheat.-The value of wheat varies with its quality, and with the purpose for which it is to be used. In the school of competition, manufacturers of cereal products and large consumers of raw cereals learned that it is essential to know the relative values of different lots of grain. The experience of these men, aided by science, determined the kinds of wheat that are best adapted for various purposes, and the methods of distinguishing them. This was the origin of the commercial grades of wheat. The grading of wheat consists in examining the various lots or cargoes to determine their quality and uniformity, and in assigning them to the proper grades. The principal characteristics which aid in fixing the grade are weight per bushel; plumpness; soundness; color; and freedom from smut, foreign seeds and other matter, and from mixture with a different type of wheat. These characteristics vary so in degree and combination that they are not reasonably distinct, and consequently they are difficult of measurement and definition. Gradations are continuous, and if lines are drawn to mark the limits of the grades, it is difficult to determine the grades in cases close to the lines. Consequently, grade requirements have been couched in obscure and indefinite terms and phrases, and the responsibility for their interpretation has been left largely with the grain inspectors.
Formerly wheat was sold by sample, and grading was in effect merely the determination of the value of the grain. In storage, particular lots of grain, even if of the same grade, had to be kept separate, and when called for, they had to be delivered to the proper owner. The receipts or warrants issued for the grain by the storehouse became the equivalent of the grain in the market. In the early fifties, the movement of vast crops from scattered sources became very unwieldy and difficult under the old methods of selling by sample. It was necessary to store in bulk enormous quantities of grain. The difficulties of delivering on demand particular lots of wheat to individual owners became very great. As a result, the grain trade made the most important advance of its history. Storage in bulk of all grain of the same grade was made without preserving the identity of particular lots, and general receipts were issued for the specified amount of grain of a certain grade. These receipts could be delivered in fulfillment of contracts, and when grain was withdrawn from storage, a specified amount instead of a specified
lot of a particular grade was delivered by the warehouseman. | Most of the wheat in Chicago was thus graded by 1860, but
general receipts were not adopted in New York until 1874. In some markets, the inspection and grading of grain have reached such a degree of honesty and efficiency that şamples are dispensed with entirely.
Contract Grades.—Trade organizations whose members deal in grain exist in nearly all of the larger cities of the United States. These organizations have an important function in the grain trade, for they afford means for easy communication between producer and consumer, and they aid in avoiding acute conditions of supply and demand. They have adopted rules of
trade which aim at a maximum of business with a minimum of | expense and friction. The established grades of grain form
a part of these regulations. The trade organization of each market establishes a “contract grade" for its own market. The contract grades are understood in all contracts not specifying otherwise. There may be several contract grades on the same market, and there may be a difference of several cents in the actual milling value of a contract grade designated by the same name in different markets. This variation arises from a difference in the rules which regulate the respective inspecting bureaus,
and is the cause of some confusion. Where there is no state inspection, the trade organizations manage their own inspection departments.
The Need of Uniform Grades.Great as has been the value of inspection and grading to the grain trade, the service is not without its shortcomings. The greatest difficulty is lack of uniformity in grades. The different states and trade organizations m establish their grades quite independently of each other, and this does not tend to give the uniformi grades which the inter: market, interstate and international grain trade demands. The inspector begins with indefinite standards. He is buffeted about by opposing interests which are vitally concerned in his del cisions. He must work rapidly. Sometimes the weather and light place him at a great disadvantage. Frequently he lacks apparatus for deciding doubtful If reinspection is called for, he rarely knows when a change of grade is made, and why. In many cases, not only do the inspectors grade with their unaided judgment, but they also have little opportunity for correcting this judgment. The demands of the domestic and foreign wheat trade for more uniform grades are imperative.
Interest in the exact and uniform grading of wheat and other grains has come mainly from two sources, the grain dealers and the United States department of agriculture. The general concensus of opinion has been that existing difficulties can best be removed without governmental control, which, however, has some advocates. The grain-inspection work of the department of agriculture has had for its principal objects the study of methods used in the determination of different varieties of wheat, and the study of commercial grades of cereals. The work of the grain dealers has found expression in the national organization of the chief inspectors. This organization established grades of wheat which it recommended to the grain trade for uniform use.
Commercial Classes and Grades of Wheat officially recognized and adopted at Chicago and New York are given below. Wheat may be of such poor quality or condition as to be graded "rejected," or "no grade.” Wheat that is wet, in a heating condition, burned, or badly smutted generally falls into the lowest grades.