which are not exported, such as eggs, butter, and vegetables, are fixed in this country-not in Liverpool, as the price of wheat is, in competition with the cheap labor of other countries—and that by reason of the development of manufacturing, mining, and transportation, and the increasing city population, the farmers, especially those who produce vegetables, poultry, dairy products, fruits, etc., have an increasingly valuable home market. It is suggested that the relief of agriculture must come partly through an increased consumption of luxuries, such as fruits, which represent a relatively large amount of labor, and that the increased demand for these luxuries in the United States is of as much importance to the farmer as increased exports. In Minneapolis fruit sales are said to have doubled once in three years, or eight times as fast as the population.

Speculation.—It is explained that speculation in grain has a legitimate function, and is a good thing if the buyers are on an equal footing with the sellers, because when the price gets too low some one will take the grain as an investment, and this will tend to check the fall in price. Several witnesses are of the opinion that corners in wheat, such as that of 1898, are an advantage to some of the farmers.3 The sale of fictitious grain, however, is considered an injury to the farmer. When large quantities of grain which do not really exist are offered for sale, it is thought that foreign markets may be influenced by creating an impression that there is actually a large supply, so that grain may be sold at prices lower than the supply would warrant. It is said that warehouse and insurance charges are often paid on fictitious grain, and that the burden must ultimately fall on the farmer. The fact that the prices of oats, corn, and barley are more satisfactory than the prices of wheat is explained by their comparative immunity from fictitious sales. It is pointed out that the sale of great quantities of wheat for delivery at future dates makes it necessary for those who have to deliver the wheat to attempt to keep the price down. Mr. Dye expresses the opinion that grain and cotton gambling is injurious both to the producer and to the consumer. Some witnesses condemn dealing in futures generally, without distinguishing between bona fide and fictitious sales. In particular, it is charged against speculators that their activities tend to depress prices at and after the time of harvest, from September to about January, when most of the farmers are compelled to sell their grain. Another charge against speculation is that though it may have a steadying effect on prices, it demoralizes cotton planters by leading them to speculate, and that the people of the South lose large sums of money by betting on cotton.'

Seasonal fluctuations of prices.—Statistics appear to show that the price of wheat is usually lower for three or four months after harvest than at other times, but in considering the advisability of holding wheat for higher prices allowance must be made for interest on its value, damage by mice and rats, shrinkage, etc. It has been calculated that by buying cash wheat September 1 and holding it until May one would lose, on the average, 2 cents a bushel, the boards of trade in the Northwest usually having their prices in the fall a little higher than the situation really justifies. The Minneapolis millers seem to realize that the fluctuations in the price of wheat would, in the long run, cause them more loss than gain, and so protect themselves against loss by selling a future against grain when they buy it. The best time to sell grain appears to be immediately after thrashing, at least for the farmers who get to market first, though it is suggested that there is a better

Brigham, 24-26; Dye, 97; Norris, 331; Wilson, 253, 254; Moran, 723, 727; Wedderburn, 632; Lovejoy, 75, 76; Prom, 794.

"Peek, 461; Stevens, 916; Graham, 435.

Dye,97; George, 225.

7 Hammond, 831.

chance of gain by holding grain until the following summer than by holding it for a shorter time. One witnesss, however, remarks that farmers generally wili not sell while prices are going up, but wait until they go down.1

In the case of cotton, also, the average price is lowest between cotton-picking time and the 1st of January, when the bulk of the crop is marketed. The Southern practice of giving crop mortgages forces the greater part of the cotton into the market within a short time in the fall. It is estimated that 90 per cent of the farmers of Georgia are compelled to sell their cotton at that time. There is evidence, however, that even planters who are not pressed for money market their cotton in the fall rather than take the risk of storing and holding it. One witness thinks the prices are as good at the beginning of the season as later. Another expresses the opinion that speculation on the exchanges has no effect on the price of cotton.1

ELEVATORS.

In the Northwest.-Bitter complaints are made of combinations among the grain warehousemen, not only at such important transfer points as Chicago and Buffalo, but also throughout the wheat-growing region of the Northwest. Some witnesses claim that there is no monopoly among the Northwestern elevators, since more than one company is usually represented in each town of importance; but it is not denied that the elevators along a given railroad often form a system or "line" owned by one company, and there is abundant evidence of an understanding between the different elevator companies regarding the prices to be paid for grain.3 It seems that the price of wheat for the territory tributary to Minneapolis is fixed by a board or committee in which the Minneapolis Chamber of Commerce, the elevator men, and the commission men are represented. Any increase or diminu tion in the price of wheat is telegraphed to the representatives of the elevator companies at the principal towns, who in turn send out postal cards to the smaller places, or in some cases send the prices by telegraph or telephone, if so instructed from Minneapolis. It is alleged by one witness that when the price goes up the notice is sent out from Minneapolis by mail instead of by wire. The elevators endeavor to keep the price of wheat to farmers about 3 cents (plus the freight) lower than the cash price of wheat on track in Minneapolis. It is explained, however, that neither the elevator companies nor their buyers are bound by the card prices, but that they pay more than the card price for wheat of especially good quality, or when it is necessary in order to get the wheat.'

It is alleged that the elevator companies have discriminated between localities in buying wheat by grading the wheat too low at a given place. There is said to be a community of interest between the railroads and the elevators, though their operation is entirely distinct. The northwestern elevators were originally built either by the railroads or railroad officials, or by large shippers of grain; but they are not thought to be owned at present to any great extent by those who control the railroads.' The system of railroad rebates to the elevators, which is said to have been general at one time, is thought to have been discontinued, at least on the Great Northern Railroad, at noncompetitive points, but is believed to be still in existence where there is competition; but even those who are closely connected with the shipping of grain are unable to ascertain definitely what the facts are. 10 One instance is reported in which the proprietor of an inde

pendent elevator is said to have received a rebate in the form of a check for labor which he had not performed.'

Independent shipments.—In order to avoid the alleged oppression of the elevator combination the farmers of the Northwest sometimes ship their grain independently, consigning it to commission merchants in Minneapolis or Duluth, who sell it for what it will bring. There is said to be a decided advantage in doing this, at least with wheat of unusually good quality. In some cases, where shipments have happened to be made on rising markets, farmers have made $50 or $60 a car by shipping independently. Difficulty is sometimes experienced in getting cars for these independent shipments, but this is, perhaps, because the elevator companies have ordered cars in advance of the private shippers. Shippers are said to be more apt to get cars at competitive points than elsewhere.

Farmers' elevators.—As another means of securing independence from the line elevator companies the farmers of the Northwest have organized stock companies and built a large number of independent elevators in Minnesota and the Dakotas. These elevators are under some disadvantage in having no connection with a terminal elevator at Minneapolis or Duluth, but they ship to commission merchants. The farmers' elevators allow a margin of only 2 cents for operating charges. These independent elevators have sometimes had difficulty in securing sites on the railroad right of way, especially at noncompetitive points, but the Great Northern Railroad now allows them sites, and other roads have been obliged to do the same. South Dakota has a law compelling the railroads to give these facilities to independent elevators on the same terms for ground rent as to line elevators. It is charged that the line elevators actively oppose the independent elevators by outbidding them for wheat until they are driven out of business, after which the loss is made up by lower prices.5

Grain inspection in Minnesota.-There is some complaint about the grain inspection at terminal points in Minnesota. This is said by one witness to be the greatest evil from which the farmers of North Dakota suffer. It is alleged that the grades given North Dakota wheat are too low, and that the grain inspectors are unduly influenced by the elevator men." Mr. Prom suggests that the appointment of inspectors should be taken out of the hands of the Governor of the State, and that the inspectors should be appointed for their fitness and allowed to appoint their own deputies. As a still more thoroughgoing remedy it is proposed that a system of interstate inspection be established by the States of North and South Dakota, Minnesota, and Wisconsin.'

The Chicago elevator system.-Even more definite charges are brought against the Chicago elevators than against those in Minnesota and the Dakotas. There appears to have been little difficulty in the handling of grain in Chicago between the enactment of the Illinois railroad and warehouse law of 1871 and about 1887. It is said that prior to the passage of the interstate-commerce law rebates were given to individual shippers to bring grain to the Chicago market, but that the

1 Moran, 722.

* Prom, 795, 796, 799,800; Jumper, 737-739; Budge, 853-855. Hanley, 279, 280; M. F. Greeley, 939, 940.

4 Jumper, 736.

* Moran, 717; Prom., 798, 799.

* Mr. Teisberg, secretary of the Minnesota Railroad and Warehouse Commission, expresses the opinion (Vol. IX, p. 371) that there is no combination among the Minneapolis elevators, and that the price of wheat sent out daily is merely the closing quotation for the day. Many independent elevators have been established in Minnesota under a State law providing for the condemnation of sites on railroad rights of way for elevator purposes; and farmers can often load their grain directly into the cars. Mr. Teisberg also discusses the Minnesota system of grain inspection, and denies that inspectors are unduly influenced by the warehousemen. (Ibid., pp. 378-370.).

passage of that act made it necessary for the railroads to give rebates more cautiously, and that they chose the public warehousemen as the ones to be favored. Within a few years the system of handling grain in the Chicago elevators changed, and the elevators passed into the hands of persons who at once embarked in the business of dealing in grain, the proprietors of the warehouses being now the most extensive grain dealers, and owning a large part and in some cases all the grain stored in their elevators. The chief advantages of the warehouseman in competition with the public are said to be (1) that he pays no storage on the grain, or pays storage to himself, so that the possession of the elevator operates as a rebate; and (2) that he is able to select the best grain of a given grade and keep it for himself as merchant, giving the public the line" grade, or grain just good enough to pass inspection. The result has been that the public is unable to compete with the elevator managers, so that grain going to Chicago elevators finds but one buyer-the elevator proprietor.' It is declared that there is a grain monopoly in Chicago, the elevators acting together and demanding premiums on the wheat they sell. Most Chicago elevators are said to be owned by the railroads and leased to the warehousemen under an agreement that the lessees are to pay so much a car for all grain going through the elevators. The accumulation of grain in Chicago for the purpose of earning storage charges is said to have resulted in such a congestion as to depress prices. It is explained that when a warehouseman gets possession of grain he sells it ahead for future delivery, so that some one else pays storage charges on it, then waits for the buyer to sell out, and stands ready to take the grain back and sell it ahead again. This is said to have produced an endless chain of forced liquidation on the part of the buyers. It is charged that in 1894 the elevator proprietors sent buyers into the country and brought large amounts of grain to Chicago, solely for the purpose of making it earn storage. This swelled the visible supply to such a great extent as to depress prices in the markets of the world, besides throwing the grain into the control of the elevator interests.4

3

These practices on the part of the warehousemen,' while they are said to result

1 Hill, 295-297,313; S. H. Greeley, 227, 228.

2 Hill, 312-317; Richards, 203, 204, 215, 216; S. H. Greeley, 227–235.

S. H. Greeley, 227–229, 233, 234.

* Hill, 316.

"A large amount of testimony concerning the Chicago elevators appears in the first volume on Transportation (Vol. IV). The evidence is clear that the great terminal elevators at Chicago, and to a less degree in other grain markets, are owned by comparatively few men or firms; that the owners of public elevators, where grain may be stored at fixed charges by any holder, also control great private elevators; that they themselves buy a very large proportion of the grain which comes into the public elevators; and that the business of handling grain on commission has been very greatly reduced by this practice. The elevator owners admit that they are very large buyers of grain. It is claimed by their opponents also, although the evidence is less definite, that these same owners of terminal elevators own or control most of the country elevators and warehouses; that in fact practically all the elevators along the lines and at the terminals of each railway system are in the hands of a single organization.

The opponents of these large dealers admit that the elevator owners pay more for grain to the local dealers and farmers than the commission merchants and small dealers can pay, but they declare that this is due to various unfair advantages. Thus, the elevator owners themselves are exempt from the terminal storage and transfer charges which must be paid by other persons-three-fourths of a cent for transfer and the first 10 days' storage-which is alleged to be much more than the actual cost. It is further declared that the elevator owners receive great advantages from the railways in the forms of allowances for handling grain and of direct freight discriminations. In fact, it is held by many witnesses that the railway companies or their officers are largely interested in the elevators and in grain buying. The evidence as to discriminations in favor of the elevators is chiefly indirect, based either on general belief or on the known fact that the elevator owners often pay more for grain at country stations than the price at Chicago, Kansas City, or Milwaukee, minus the full freight rate, would warrant The excess in the price offered was shown to be sometimes as high as 2 or 2 cents on both wheat

in the greatest damage to the farmers by the depression of prices,' are complained of most bitterly by Chicago grain dealers, who say that Chicago has been greatly injured as a grain market, and that the grain is now going to other points, the amount shipped from Chicago growing less year by year.2

It is pointed out that when a man is custodian both of his own grain and of other people's at the same time, he is subjected to great temptation to manipulate the grades and weights. It is said that the warehouseman can by mixing two cars of No. 2 wheat with three cars of No. 3 make five cars of No. 2 wheat.' The mixing of grain has become so important a matter that nearly every terminal elevator in Chicago has a mixing house connected with it, in which grain of high quality is mixed with that of a lower grade to bring it down to the lowest point at which it will pass in the same grade as before. One case is mentioned in which a warehouseman called for reinspection of 50 cars of corn, in order to have it sent into his elevator at a lower grade and have it inspected out at the original grade.

Complaint is made that elevator proprietors are able to exercise espionage over the business of other dealers in grain and flaxseed. Complaint is also made of

and corn. It is also stated that in 1890 a rebate of 5 cents per hundred was proved before the Interstate Commerce Commission to have been granted to certain elevator owners.

It is also alleged that the Eastern railways have largely leased their transfer elevators to private companies which also deal in grain, and that the charges made by these companies are excessive, so that they have an advantage over competitors.

The elevator owners deny that the charge of three-fourths of a cent for handling grain is excessive; the law permits 14 cents to be charged, while the actual charge is the lowest known anywhere. They deny also that the railways operate elevators directly, or, in the cases where they own them, have given special favors in leasing them to the present operators; though no very detailed evidence is presented. Mr. Webster, of the Armour Elevator Company, claims that that company actually owns most of its numerous elevators and pays high rentals for the remainder, while Mr. Counselman declares that the elevators on the Rock Island were built and paid for by his own firm. Mr. Webster also denies that the elevator owners receive discriminating rates from the railways.

In view of the quite general acknowledgment among railway men that discriminations in favor of large shippers are still conspicuous, there seems to be a considerable probability that the claim that these large elevators receive favors from the railways, in one way or another, has some basis.

The elevator men explain further the reason for their buying grain and for their advantages over competitors. They claim that the establishment of through rates on grain from the Mississippi River and other Western points to the seaboard lower than the sum of the local rates from those points to Chicago and from Chicago east gave an advantage to Eastern commission merchants and buyers, so that Chicago elevator owners found it necessary to buy grain on a large scale and handle it in the same way, on through rates, in order to keep their ware houses from standing idle. Moreover, the competition of the newer markets of the West forced these men to buy grain to protect Chicago as a market. The advantages which have made it possible for them to compete successfully with other markets, and largely to take business away from commission merchants, arise from their large capital, which enables them to carry large quantities of grain in anticipation of favorable markets, from the elimination of commis sion and other intermediate charges, and from the ability to forego a part or all of the normal charge for actual elevator service. The elevator owners have the same advantage over commission merchants that any business man who furnishes himself with all accessory materials and facilities, instead of obtaining them from others, especially from his competitors. One or two witnesses, however, claim that, as regards local buying, the small dealer, who has perhaps other business during the season when there is little grain buying, can handle the grain business more cheaply than a great concern.

Effect on prices.-The opponents of the elevator owners declare that there is a growing monopoly of the local elevators; and that while there is still competition at times, and while in such cases the large buyers pay the higher prices, sooner or later all competitors will be driven out and the farmer will be at the mercy of the great elevator owners. It is maintained, moreover, that where different elevator owners operate along the same line of railway they do not actively

1S. H. Greeley, 234.

Richards, 202, 211.

S. H. Greeley, 232, 233.

4 Richards, 202–205.

Hill, 318, 319.

Hill, 304-308; Richards, 204.