chamber which he pays in the country for grain purchased for the Minneapolis market?-A. That is, in carload lots; yes, sir. Q. It is? A. Yes, sir. By Mr. MANAHAN: Q. Then there is no competition in the country between members of the association operating in the country for prices paid for shipment to Minneapolis?—A. The basing price for all members Q. I say there is no competition in the country between members of the association operating in the country in the prices they pay to the farmers or dealers there for grain consigned to Minneapolis?-A. This is track purchase of grain in carload lots. Yes; on the basing price it is just the same for all. Q. In other words, out at Morris, Minn., there are two different members of the chamber in Minneapolis who attempt to buy grain there.-A. It would be at the closing price Q. One can bid against the other on that closing price?—A. For shipments to Minneapolis; no. Q. So that so far as the Minneapolis market is concerned and the enforcement of this rule, practically destroys competition in the country for members of the association for the price on track carload lots?-A. For shipment to Minneapolis, yes. Q. Probably the same rule is true in Duluth on the board of trade, as you understand?-A. I am not familiar. Q. It would be a good thing for the farmers and shippers, would it not, if there was competition between the members of the board out in the country buying their grain on track?-A. The basic price for the stuff coming to Minneapolis is the market value in Minneapolis. Q. I am talking now about the farmers in the country that have carload lots of grain for sale.-A. Yes. Q. If they could load their cars and put it up to the different members of the chamber in Minneapolis and the different members had a right to bid for that carload of grain and compete with each other, if the market justified bidding, it would be better for the farmer if they could do that?-A. I would not say so. Q. If it would be better for the farmer, what hurt could it do the chamber to have them do it?-A. I would not wish to express any opinion there. The CHAIRMAN. I think the committee will adjourn its proceedings now until to-morrow morning at half past 10. (Whereupon, at 4.50 o'clock p. m., the committee stood adjourned, to meet to-morrow, Thursday, March 5, 1914, at 10.30 o'clock a. m.) COMMITTEE ON RULES, The committee met at 10.30 o'clock a. m., Hon. Robert L. Henry (chairman) presiding. The CHAIRMAN. The committee will be in order. Mr. Drake, you may proceed. STATEMENT OF MR. BENJAMIN DRAKE. Mr. DRAKE. May I inquire, Mr. Chairman, how long this morning's session will probably last? The CHAIRMAN. I suppose the members would like to go to the House to hear the reading of the President's message, and I think we might run until 12.15. Mr. DRAKE. Now, Mr. Chairman, I had just quoted, at the last adjournment, the admission of the secretary of the Chamber of Commerce of Minneapolis, before the house investigating committee of Minnesota, to the effect that there was absolutely no competition. between members of the chamber of commerce in the purchase of grain on track at country points. I desire to say, to show that there was no inadvertence on his part in that admission, that within two weeks, before a senate investigating committee of the legislature, the secretary, after denying three or four times that he had previously made the admission to the house committee after making these denials under oath, he was forced and did admit again that there was absolutely no competition at the Minneapolis terminals, and I desire to incorporate these questions and answers in the record. This testimony was taken before the senate committee: Q. So that the rule necessitates in the bids for grain which are made for grain under these conditions a uniform price all over the State, varying only because of the varying freight charges between different points; is that true? Mr. MERCER (attorney for chamber). Objected to as calling for a conclusion and being something that this witness could not state. A. There are so many ingredients to be taken into consideration, a man could not know unless he had the actual facts, the variation in buyers and judgment, and range in values, and a lot of other things. Mr. WORKS. It strikes me the witness might state his opinion as far as his knowledge goes. A. In a general way, it is true. The rule is plain and clear. It says the bids shall be based upon Minneapolis values and those values shall be used as a basis of the bids for country prices. Of course the values fluctuate continually; but it is true so far as grain purchases in carload lots on track at country points for shipment to Minneapolis are concerned, that the Minneapolis basis is the basis all over the State, or anywhere else, for that matter. Mr. LENDE. Your answer to his question is, "Yes"? A. Yes; in a general way, it is correct. Q. Then will you tell this committee that there is any competition between buyers of grain in carload lots on track at country points at any given day and hour? (70) Mr. MERCER. I object to that. The witness has not shown himself competent to answer that no foundation laid nor proper cross-examination; that is, if Mr. Schmitt wants this to go in Mr. SULLIVAN. Let the witness state whether he knows or not. A. One member may be aware of prices-one member may not be in touch with the market at one particular moment on just what the price may be--but if the value of the grain is notorious to everyone at any given moment, that would be the uniform basis all over the State and members generally would use it in their bids; under those conditions the bids would be uniform all over the State. Mr. WORKS. Don't some buyers get their price once a day and others several times a day by use of the wire? A. Are you speaking of buyers in the country? Mr. WORKS. Yes. A. In the country some buyers use the Western Union C. N. D. service. Mr. SULLIVAN. What is C. N. D.? A. I don't know what the words mean; it simply means a service for giving market news. They report every hour or at stated periods between the opening and close. Mr. MERCER. It means commercial news dispatch. (Question read by the reporter). Mr. DRAKE. I object to anybody conversing with the witness while he is on the stand I want to examine this witness and not the president of the chamber of commerce or anybody else. That is improper procedure and I so characterize it. Mr. MERCER. I think that is a matter simply for the committee to determine. Mr. LENDE. Answer the question. (Question read). A. The basis being the same, if they all are working on the same actual price, the price that they would all bid would be the same. Mr. WORKS. Then there is no competition? A. There would be no competition; no. Q. Why didn't you say so in the beginning? (71). So that I say, Mr. Chairman, as shown by the sworn testimony of the secretary of the Chamber of Commerce of Minneapolis, twice reiterated, there is no competition to-day in the purchase of grain in the country and points tributary to the Minneapolis market. Another device by which competition has been further eliminated in the Minneapolis Chamber of Commerce's private market, is this: They have instituted there a system of subsidiary ownership, a system of interlocking directorates and officials of the various companies, the milling companies, and the elevator companies, on the one hand, and the commission houses on the other. I make the charge, and I defy any of the members of the chamber of commerce to disprove it, that the commission companies which are supposed to represent the farmers- God save the mark--at the Minneapolis terminal—the commission houses, the large ones handling more than one-half of the consigned grain that comes into that terminal, are absolutely owned by the milling and elevator interests which buy the grain. This is not an unsupported charge. But, first, the duty of a commission merchant, of course-it is almost an insult to the intelligence of this committee to suggest this but I would say, the duty of a commission merchant is one of fidelity. He is bound in law and bound in business honor to get the best price he can for consigned grain, and to sell it to the best possible advantage. He has no right to sell it as a subsidiary to a company with which he is affiliated. That is wrong. Then what is the meaning of this community ownership by big mills and elevators of Minneapolis, of the commission houses, under names which suggest no connection whatever, and which connection is absolutely unknown by reason of the secrecy by which this institution has been able to enshroud itself? I wish to make this statement on the matter. Prominent among these subsidiary groups is the Van DusenHarrington group, a group which is represented here to-day by Mr. Ewe, one of the three men who constitute the managing head of that group of subsidiaries. It consists first of the Van Dusen-Harrington commission house, which is one of the largest commission houses upon the floor of the chamber of commerce. In addition it owns all the stock of the three terminal elevators in Minneapolis-the Star, the Crescent, and the Pioneer Stcel. It also owns the National, the Atlas, the Interstate, and the Van Dusen elevator companies, all of which are old-line elevator companies, altogether comprising more than 300 line elevator companies. This concern, as shown at the Minnesota investigation, sold grain consigned to it to its own subsidiaries. During the month of January, 1913, as shown by the records of that investigation, this commission house receiving the grain impressed with this trust to secure the highest possible price for it and owing the duty of fidelity to its principal, this commission house sold to its own subsidiari s 197 cars of grain in one month. Mr. Ewe, who is here, also testified that when the miller sent in an order for grain and they were able to fill it out of their own receipts of consigned grain, they would charge a commission both for selling and for purchasing that grain. The Van Dusen Co. is one of the large companies; it owns, controls, and votes 21 of the limited memberships in this close club known as the Minneapolis Chamber of Commerce. Another subsidiary group is the Washburn-Crosby Co., of which Mr. Crosby, president of the chamber of commerce, is a prominent member. These subsidiaries include the following, which the Washburn-Crosby Co. owns or controls by a system of interlocking directors: The St. Anthony, the St. Anthony & Dakota, the Imperial, the Huhn, Rocky Mountain & Great Western elevators, and the Great Western Grain Co., the Barnum Grain Co., and the Brown Grain Co. The last two named companies are commission houses. Each is a subsidiary of the Washburn-Crosby Co., with officers practically identical with the parent company. During the past summer this company issued a statement showing that of its total assets over $100,000 was at the time owing from other Washburn-Crosby subsidiaries, which would seem to indicate a healthy and flourishing condition of business between this company and its subsidiaries. It is also probable, it seems to me, that the Heising Grain Co., another commission company, is owned by the Washburn-Crosby group. This group owns and controls 24 of the chamber's limited memberships. Another group is the Big Diamond Mills Co. This milling company owns the following subsidiaries: The Commander Mill Co. and the Commander Elevator Co., the Midway and Powers and Sheffield elevator companies. It also owns or controls the Gregory-Jennison Co., a commission house, and one of the large commission houses on the floor of the chamber of commerce. In a similar way the McCaul-Dinsmore commission house also owns or is affiliated with the McCaul-Webster and Hawkeye elevator companies. E. S. Woodward & Co., a commission house, is also in the elevator business, as the Concrete and Woodward elevator companies bear witness. E. L. Welch & Co., a commission company, is affiliated with or owns the Security Elevator Co., and is also interested in a mill at Fairfax, Minn. Mr. Welch is here to-day representing the chamber of commerce. The T. M. McCord Co. is affiliated with the Merchants' Elevator Co. The Nye, Jenks Co. is affiliated with the Itasca Elevator Co. and the Calumet Elevator Co. The Standard Grain Co. is affiliated with the Federal Elevator Co.; the Cargil Commission Co. with the Victoria, and E. E. Moers, Superior Terminal, and Montana Central Elevator Cos., as well as the Minneapolis Seed Co. and the Tri-State Implement Co.; the W. H. Poehler Commission Co. with the Pacific Elevator Co. The Kellogg Commission Co., generally speaking, is manned by the same men as the George C. Bagley, Royal, Atlantic, and Homestead Elevator Cos. W. D. Gregory, of the firm of Gregory-Jennison Co., is also president of the Carter-Sammis Co., a commission house, and is also president of the Powers Elevator Co. The Hatton Grain Co., a commission house, is owned jointly by the Northwestern, St. Anthony & Dakota, and Andrews Grain Co., and the WashburnCrosby Co. I have some others on my list, but I shall not read all of them. I will say, however, that the Quinn-Shepherdson Co., а commission firm, owns Elevator D on the C. & G. Western Railway tracks. The International Grain Co., McCarthy Bros. Co., and a large elevator at St. Louis Park are all under the same management. The Electric Steel Elevator Co. is owned by the Russell Miller Milling Co., and thereby hangs a tale. A farmer from North Dakota wrote in to the Russell-Miller Co. and asked them why it was that they refused to buy a bushel of the grain handled by the Cooperative Exchange, and why it was that all the Minneapolis mills have for months refused to buy a bushel of the grain handled by the Equity Cooperative Exchange, and this letter, which I shall offer in evidence, was received in reply. This is on the stationery of the Russell-Miller Milling Co., and is dated, Minneapolis, Minn., February 7, 1914. I will read it: DEAR SIR: We have your valued favor of February 4 and will be very glad to answer your questions in regard to our wheat buying as fully as we can. As you know, we buy at our Dakota mills a great deal of our wheat supply from Equity farmers and from Equity elevators. We feel sure no flour sold in North Dakota is manufactured so largely from Equity wheat as ours. As to our wheat supply for our Minneapolis mill will say, that we do not buy a bushel of this wheat ourselves, nor do we have any organization here for buying wheat. Our wheat here is all bought for us by the Electric Steel Elevator Co. on a brokerage basis. We simply tell them the kind of wheat and the amount we want and ask no questions as to who sells it. This arrangement is cheaper for us than to put in our own wheat-buying organization; so that as long as we are buying no wheat whatever through our own organization, we are of course not direct buyers of Equity wheat at this point, though presume much of our wheat ground here is raised by Equity farmers and shipped by Equity elevators. Very truly, yours, RUSSELL-MILLER MLG. Co. Now, I wish to offer in evidence, and I do offer in evidence, the statement of a financial agency, showing that the Electric Steel Elevator Co. is in fact a subsidiary owned by the Russell-Miller Milling Co. I offer this in connection with that letter. (The statement referred to is as follows:) ELECTRIC STEEL ELEVATOR CO., This is a Minnesota corporation organized in February, 1901, with an authorized capital of $200,000, which was increased by amendment in January, 1905, to $300,000. The corporation owns and operates a large terminal steel elevator plant on Marshall Street NE., and the company was controlled until some weeks ago by the Messrs. L. S. and George M. Gillette and associates. In the early part of August it was reported that arrangements had been made whereby the capital stock of this company would be acquired by the present officers and associates, who are the principals of the Russell-Miller Milling Co. of this city. It was reported that the plant was bought, based on a valuation of $450,000, and that former stockholders received some cash and also preferred stock amounting to $200,000 and common stock $50,000, The bond issue, amounting to $200,000, was floated and now appears against the property. Edward P. Wells has long been a resident of this city, is president of the Wells & Dickey Co., investment bankers of this city, and also president of the RussellMiller Milling Co., a man in excellent standing and of considerable means. Mr. Lyon has also been a resident of this city for several years and was formerly located in North Dakota. He was the principal of the Lyon Elevator Co., which was taken over by interests controlled by the above officers, and he is also vice president of the Russell-Miller Milling Co., and one of the important stockholders. He is also president of the Mandon Mercantile Co., a large institution of this city. Mr. Helm is prominently identified with the management of the Russell-Miller Milling Co. and has been associated with that concern for years. Also well regarded in all respects and represents some resources. This is the way in which the producers of the Northwest are hoodwinked and the way in which they are robbed by this system of |