siderable increase, but this increase was more than offset by the huge decline in the total investment of the two Duluth companies. The investment of these two companies in that year was barely half of what it was in 1913-14, and was from three to six and a half million below that of any one of the preceding years of the period covered.

The indicated explanation of these differences between the Kansas City-St. Louis companies on the one hand and the Duluth and Minneapolis companies on the other is the pronounced decline in the bushels sold by the Minneapolis and Duluth elevators. (Appendix Table 14.) The six Minneapolis elevator companies which sold around 15,000,000 bushels in 1912-13 and 1913-14, sold less than half this volume in 1916-17 and not quite 9,000,000 bushels in 1919-20. (Appendix Table 14.) The elevator companies at Duluth which sold above 40,000,000 bushels in 1912-13, 1913-14, and 191516, and above 30,000,000 in 1914-15, sold something less than 16,000,000 in 1916-17 and less than 8,000,000 in 1919-20.1

In contrast with the conditions at Minneapolis and Duluth, it appears that the Kansas City-St. Louis companies handled a larger volume of grain in both 1916-17 and 1919-20 than in any year except 1914-15. And as already indicated, there was an increase in the investment of the Kansas City-St. Louis companies in both these years. In view of the foregoing facts, therefore, it appears probable that the failure of the investment of the 10-company group to increase in 1916-17 and 1919-20 was due to the decline in bushels sold at Minneapolis and Duluth.

The extraordinary decline in borrowed funds for the 10-company group in 1915-16 (Table 53) was responsible for the heavy decline in the total investment recorded in that year, the proprietary investment, i. e., capital stock and surplus, being higher in 1915-16 than in any prior year. (Table 54.)

BORROWINGS OF TERMINAL ELEVATOR COMPANIES.-The large extent to which the terminal elevator business is financed by borrowed funds appears in the following table, which presents for the group of 10 identical companies and for all companies the total amounts of money borrowed in each of the six years under consideration.

1 The decline at Duluth in 1916-17 probably is a reflection of the shortage of the spring wheat crop, while the 1919-20 decrease was largely due to milling wheat being ordered to Minneapolis for milling purposes by the United States Grain Corporation.

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TABLE 53.-Amounts of money borrowed by terminal elevator companies in specified markets and years.

16 companies at Minneapolis, 2 at Duluth, 1 at Kansas City, and 1 at St. Louis.

1 additional company at Minneapolis and 1 at Duluth.

A second additional company at Duluth.

47 additional companies at Chicago and 1 at Kansas City.

Except in 1915-16 and 1916-17 for the 10-company group, and 1915-16 for the all-company group, the borrowed funds employed in the business of these elevator companies constituted more than onehalf of the total investment, thus exceeding the total proprietary investment, i. e., capital stock and surplus. This is a significant fact, since it indicates not only the large extent to which these companies employ borrowed funds in their business, but also explains in a measure the wide variations between rates of return on the gross and proprietary investment. The largest amount of money borrowed by the 10-company group, $13,110,412, in 1914-15, was practically 90 per cent greater than the minimum amount borrowed in the succeeding year. This compares with a variation in the gross investment from minimum to maximum of only 30 per cent. The great variation in the volume of borrowings, particularly as compared with the variations in gross investment, however, appears in the figures for particular markets. In the six years in question the range of borrowed funds from minimum to maximum for the Minneapolis companies was 166 per cent, for the two Duluth companies 290 per cent, and for the Kansas City-St. Louis companies 392 per cent. These ranges compare with the gross investment ranges of only 84 per cent at Minneapolis, 94 per cent at Duluth, and 152 per cent at Kansas City-St. Louis shown in the preceding subsection.

As further indication of the variability of the factor of borrowed funds, as between markets, it is perhaps worth noting that the largest volume of borrowed funds employed by both the Minneapolis and Kansas City-St. Louis companies was in 1919-20, in which year the Duluth companies borrowed a smaller amount than in any other year of the six under consideration.

It is true that lower prices, except for corn, prevailed in 1915-16 than in the preceding year (Table 1), and that a smaller number of bushels were sold in 1915-16 than in 1914-15 (Table 43). While, therefore, these factors would afford a plausible explanation of the heavy decline in borrowings in 1915-16, they do not explain the lower investment and borrowings in 1915-16 as compared with 1912-13

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and 1913-14. Prices were higher in the former than in either of the latter years and the volume sold nearly as great. This would not lead one to expect that the gross investment and borrowings in 1915-16 would be decidedly lower than in either 1912-13 or 1913-14. The year 1914-15 was an extremely prosperous one for the terminal elevator companies. These concerns earned a very high rate of return on their investment in 1914-15 and these earnings were apparently reflected in an increase in the proprietorship investment in 1915-16 and a decline in the borrowed funds. The fact that the total borrowed funds for the 10-company group were lower in 1916-17 and 1919-20 than in the first three years of the period despite the higher prices prevailing is to be attributed chiefly to lower borrowings by the Duluth companies in 1916-17 and 1919-20, occasioned by the decline in the volume of bushels sold in those years, already referred to above in the discussion of the gross investment. (Table 43). PROPRIETARY INVESTMENT.-The following table presents the proprietary investment (capital stock and surplus) of 10 identical terminal elevator companies for six years and of all companies from which results were obtained for the same period.

TABLE 54.-Proprietary investment, excluding borrowed funds, of terminal elevator companies in specified markets and years.

16 companies at Minneapolis, 2 at Duluth, 1 at Kansas City, and 1 at St. Louis. 21 additional company at Minneapolis and 1 at Duluth.

A second additional company at Duluth,

47 additional companies at Chicago and 1 at Kansas City.

The maximum proprietary investment for the 10 identical terminal elevator companies was $11,824,266 in 1916-17 and the minimum was $7,581,203 in 1912-13. The maximum proprietary investment, therefore, was about 55 per cent more than the minimum. The variations in proprietary investment were within a much narrower range than were those of borrowed funds, but were greater for the combined group of identical companies than that in gross investment. Nevertheless, the variation of the gross investment of those companies included in the 10-company group was greater at Minneapolis, Duluth, and Kansas City-St. Louis than was the variation in the proprietorship investment. The range from the minimum to maximum proprietorship investment for those companies at Minneapolis was 51 per cent, for those at Duluth, 46 per cent, and for those at Kansas City-St. Louis, 122 per cent. These variations

compare with ranges of variation in gross investment from low to high for the same companies of 84 per cent at Minneapolis, 94 per cent at Duluth, and 152 per cent at Kansas City-St. Louis. The variations in the proprietary investment for the 10-company group presented in the last preceding table were due chiefly to fluctuations in the volume of working capital. An analysis of the balance sheets of the organizations in question shows that fixed assets decreased slightly during the period. The fixed assets declined from $5,660,000 in 1912-13 to $5,143,000 in 1919-20, or approximately $500,000. On the other hand, the total proprietary investment in every year was from. one to four million dollars higher than that in 1912-13, the first year of the six under consideration. The proprietary investment of the six identical companies at Minneapolis showed a steady increase throughout the entire six years and at Kansas City-St. Louis for the first five of the six years.

Section 7. Rate of return on investment of terminal elevator companies.

RETURN ON TOTAL INVESTMENT.-The following table presents the rates of return earned by both the 10-company and all-company groups of elevators on total investment.

TABLE 55.-Rate of return on total investment, including borrowed funds, of terminal elevator companies in specified markets and years.

16 companies at Minneapolis, 2 at Duluth, 1 at Kansas City, and 1 at St. Louis.

1 additional company at Minneapolis and 1 at Duluth.

A second additional company at Duluth.

47 additional companies at Chicago and 1 at Kansas City.

The return on gross investment for both the 10-company and allcompany groups was comparatively uniform, more particularly in view of the wide variations in prices during the period (Table 1), and in volume of grain sold (Table 43). While the rate of return for both the 10-company group and the all-company group ranged from about 10 to 22 per cent, the results, excluding the maximum and minimum years, were practically 13 per cent (actual range 12.99 to 13.72 per cent) for the 10 companies, and ranged from only 13.33 to 16.56 per cent for the all-company group.

2 This decline in fixed investment was largely due to one of the Duluth companies, in 1913-14, segregat ing their investment in a line of country elevators from their terminal investment and establishing a separate corporation.

A somewhat corresponding uniformity of return appears in the figures for the Minneapolis companies, but this feature is less apparent in the Duluth figures. The results for the Kansas City-St. Louis companies were highly fluctuating. The rates of return for the Minneapolis companies for the 10-company group ranged from 7.24 per cent to 14.21 per cent, and from 7.71 per cent to 15.32 per cent for the all-company group. Results of the Duluth companies ranged from 4.60 per cent to 15.56 per cent for the 10-company group, and from 8.90 per cent to 16.09 per cent for the all-company group. In contrast to these figures, the Kansas City-St. Louis companies showed rates ranging from 13.49 per cent to 57.46 per cent, and in every › year except 1915-16 the Kansas City-St. Louis companies' operations were more profitable than those in the other markets.

The high rate of return of the Kansas City-St. Louis companies in 1914-15 is explained in part by the large profits which resulted from the cancellation of certain export contracts obtained by one of these two concerns (sec. 5). In 1916-17 and 1919-20, when these concerns also realized very large profits, there was no decline in their volume of business (Appendix Table 14), and they were in consequence able to show extremely good results in these years of rapidly increasing prices.

The year 1919-20 was an exceedingly poor one for the two Duluth companies in the 10-company group. These two concerns in this year earned a return on the gross investment of only 4.60 per cent, a rate which may probably be attributed to the extremely small number of bushels sold by these two companies in that year. (Appendix Table 14.)

RATE OF RETURN ON PROPRIETARY INVESTMENT.-The rate of return on proprietary investment for the 10-company group ranged from 15.6 per cent in 1913-14 to 42.3 per cent in 1914-15. The results for the all-company group were within the same range in all years.

TABLE 56.-Rate of return of terminal elevator companies on proprietary investment in specified markets and years.

16 companies at Minneapolis, 2 at Duluth, 1 at Kansas City, and 1 at St. Louis. 21 additional company at Minneapolis and 1 at Duluth.

A second additional company at Duluth.

17 additional companies at Chicago and 1 at Kansas City.