I also submit an address delivered by J. Kennedy, second vice president of the Grain Growers' Grain Co. This address was delivered at Fargo, July 3, 1913, and describes the desperate but successful fight of the farmers' company to free itself from the grain combine of Canada. It also alludes to the episode growing out of which John J. McHugh was indicted for criminal conspiracy to throttle the farmers' organization.

PROGRESS MADE IN WESTERN CANADA.

J. Kennedy, second vice president of the Grain Growers Grain Co., tells of the struggles and achievements of the farmers terminal market company-Fierce fight with the Winnipeg Grain Exchange-Government intervenes in farmers' behalf-Combine using same line of attack in Canada as in fighting farmers in the American Northwest-Urges farmers to be on guard against misrepresentation by combine's solicitors and servants-Speech delivered at meeting of Farmers' Elevator Association of North Dakota, July 3, 1913.

Mr. Kennedy said in part:

The farmers of western Canada, 10 or 11 years ago, found, from the heavy toll imposed upon them by local elevators and many other tricks in the trade, that they were forced to organize to get a square deal.

Our grain growers' association of the three provinces is just an educational body, not a trading concern. It is used practically for legislative purpose. It costs $1 a year to become a member, 50 cents going to the local association and 50 cents to the central to defray working expenses.

We worked along under this association until 1905, when it was plainly seen that the mysteries and intricacies surrounding the grain trade were such that it made it necessary that we should enter the grain trade as a company owned and controlled by the farmers themselves.

STARTED IN 1906 IN DEBT.

We started this company in the spring of 1906, by selling stock to the farmers at $25 per share; and by July 15 we had 1,000 shares sold and 10 per cent paid. We called a meeting of our shareholders and held our meeting on the exhibition grounds during the exhibition of 1906. We secured a tent 16 feet square and the management of that exhibition taxed us $50, just the same as it would any side show or a little circus, although notwithstanding the fact that it was purely a farmers' meeting for the improvement of conditions. The company was formed and officers were elected, myself being made vice president.

THROWN OUT OF WINNIPEG GRAIN EXCHANGE.

On the 5th of September we started handling grain. When we paid $2,500 for a seat in the grain exchange, furnished our office, and met several other expenses, and we were about $1,700 or $1,800 in debt. We proceeded along very nicely until late in October, when we were ordered out of the grain exchange; the charge against us was that we were doing business on a cooperative plan, which was contrary to the rules of the grain exchange. The only way it could be construed that we were doing business contrary to the rules of the exchange was the fact that we issued a circular in which we stated that we would divide the profits, when we had them, on the cooperative plan; but at this time we were heavily in debt and had no profits to distribute; but that was sufficient reason for this very august body to throw us out on the street. We were then posted in the grain exchange and no member of the exchange was allowed to buy a bushel of grain from the farmers' company, the penalty attached being expulsion from the grain exchange. This embraced all the purchasers for grain in Canada worth speaking of. You may plainly see we had a struggle for existence when the farmers were consigning from 20,000 to 30,000 bushels per day to us and nobody would buy it from us at any price. We finally secured two expert grain men, sent them away East, and by the following January and February we were getting sales for most of our grain.

ATTACKED THROUGH THE BANK.

The bank at this time began making it hot for us. The head office in Toronto received friendly advice from many men in Winnipeg and the West that the sooner they closed out the Grain Growers' Grain Co.'s account, the better they would be off

and the less money they would lose. The head office continually kept boring the manager in Winnipeg, calling upon him to reduce our account. He finally came in one morning in February, 1907, and said: "It is all up unless I can get additional security." We asked him what he would suggest. He said, "I will suggest that the president, vice president, and secretary give us a note and sign a contract protecting the bank against loss on the full amount of their holding." We met his desire and in a very short time we were marketing our grain more successfully in the East, so relieving us of any particular danger on this point.

GOES TO GOVERNMENT FOR SQUARE DEAL.

In the meantime we worked hard with the Government of Manitoba, demanding reinstatement on the Winnipeg Grain Exchange. This was a long and hard-fought battle with the Government, the grain exchange pleading their cause and we, with the farmers at our back, fighting our cause; but in April, 1907, we were reinstated through the power of the Government, by abolishing those words in our circular which said we would distribute the profits on the cooperative plan. We now have to distribute our profits based on the amount of stock each individual holds and not on the amount of grain he contributes to the company, which is abolishing the true cooperative spirit; but I am glad to say this is working out better with us under the present form than we expected. This ends our battle of our first year's experience so far as opposition from the outside is concerned.

GRAIN EXCHANGE TRIES ANOTHER ATTACK-REDUCES THE COMMISSION.

In 1908 or 1909 another action was taken by the grain exchange which they believed would put us out of existence. They decided to reduce the commission for handling grain from 1 cent to one-half cent, giving as their reason that is to their own friendsthat if they handled grain for one-half cent we couldn't charge any more and that would put us out of existence, because, they said, "Those men can not handle grain for less than one-half cent; then they will have no profits to pay fat salaries with and create fat officials. Once more equal to the situation, we took a referendum of our shareholders, which was in the neighborhood of 8,000 or 9,000 at that time, with the question, "Will we reduce commissions to one-half cent, or will we stay with the one cent."

SHAREHOLDERS REMAIN LOYAL.

About 75 per cent of our shareholders replied, and about 97 per cent of those signified by the remark on the referendum, "Stay with the 1 cent commission and we will stay with you. We know what this gang is after; they want to drive our agency out of existence, then God help us when they have accomplished it.' We stayed with the 1 cent commission in every particular. The others went out howling for grain at onehalf cent commission and some of them no commission, pointing out to the people in the country, "See your farmers' company now, charging double the commission we will handle your grain for." Notwithstanding all this our business doubled and trebled and kept increasing all the time, and when the next annual meeting of the grain exchange came around they quietly went back to the old commission, "1 cent a bushel,' while we fought to have oats reduced to one-half cent. We were beaten out just the That shows plainly where the farmers' friends are.

same.

COMBINE AGAIN ATTACKS THROUGH THE BANK-IS ROUTED.

Up until this time there was great influence used by the powers that be, from a financial standpoint, and strong efforts were made to cut us out of a line of credit. Finally the first bank that carried our account called the Winnipeg manager down to head office and told him that he must reduce the Grain Growers' Grain Co.'s account to one-third of what it had been in the past. The Winnipeg manager, who has always been friendly to the farmers' company, said, "If you are going to run the western business, I can not run it, therefore you will have my resignation. In a day or two after he was made manager of the Home Bank of Canada, so far as the western business was concerned, and we entered into a working arrangement whereby we took a large block of the Home Bank stock and secured the line of credit desired, and from that date to this we have been masters of the situation from our standpoint. Our effort is to make the Home Bank of Canada the great farmers' bank of the West. We have opened a number of branches throughout the West and it is admitted at any point where one of our branches is now in effect that the farmers generally are getting better treatment than the farmers are where we have no branch. I hope to see the whole West covered by branches of the Home Bank of Canada.

SPLENDID RECORD AND STANDING OF THE FARMERS' COMPANY.

the

The standing of the Grain Growers' Grain Co. to-day is as follows: We have $700,000 paid up capital, nearly $900,000 subscribed; with something over $300,000 of a reserve fund. The strongest grain institutions fear us, and we are respected by the strongest financial institutions. The grain institutions fear us because they plainly see handwriting on the wall," that if this farmers' company continues to grow in the future as it has done in the past, that very soon the millions of easy money they were making out of the grain trade will be a thing of the past. We are respected by financial institutions because of the fact that to-day we have a line of credit exceeding sometimes $5,000,000, arranged chiefly through our own bank, the Home Bank. An evidence of this is the fact that when we leased the Manitoba Government system of line elevators we required $1,250,000 capital to take care of the street purchases of grain. Now, our bank was not capable of handling that line, our commission business and our export business being all that they were able to take care of; and the other banks in Canada did not care to advance money on country warehouse receipts; therefore, we were compelled to go to New York, where we were successful in getting a line of credit of $1,250,000 to take care of the street buying of grain. This will give you some idea as to whether we are respected by the financial institutions or not when we were compelled to leave Canada and go to New York City and get this accommodation.

PROFITS GO TO THE FARMERS.

Now, I have pointed out to you our financial standing and our ability, our paidup capital and our reserve fund, and I would like to point out to you that all this great movement that I have pointed out, all this paid-up capital and reserve fund has never cost the farmers one fraction of a cent. It is true the farmers bought the stock and it is true they paid for it, but it is also true that they never received less than 10 per cent dividend in cash on the par value of their stock. It is also true that their $700,000 worth of paid-up stock all lies intact; and it is also true that something over $300,000 is added to that in a reserve fund. It is also true that were we to wind up the company to-day our shareholders would receive about $47 for every $25 share that they hold. Then am I not correct in saying that all this has never cost the farmers 1 cent? That they simply loaned the money to themselves for the purpose of improving conditions, and that their money is still there for that purpose, while they are receiving not less than 10 per cent interest on their investment; and when they want to withdraw the money they subscribed for, they will get more with it. Therefore, I am absolutely correct in stating that it has never cost the farmers 1 cent, as this is their own company; they own it and control it, and in it they have direct legislation in the true sense of the word in the fact that when their management does not suit them they can remove them and put men of their choice in their place.

A BIG YEAR'S BUSINESS.

Again, in the last year's business we handled 28,000,000 bushels of grain. We came forward with $142,000 profits after paying all expenses of every description and nature-advertising and pushing the work in the fields. Out of that $142,000 we donated several thousands to our provincial associations. We also donated several thousands to the maintenance of our own farmers' paper, The Grain Growers' Guide, a weekly journal, a journal that is recognized by all interests, and feared by many because it fearlessly tells the truth. We then came to our annual meeting with $121,000 left. The shareholders at that annual meeting declared a 10 per cent dividend on the paid-up capital, which amounted to $50,000 and a fraction; therefore, leaving $60,000 and a fraction to go to the reserve fund; therefore, the shareholders really received 21 per cent on their investment, but they only took 10 per cent of that in cash as a dividend, and 11 per cent went to the reserve fund.

Now, where did this money come from? is another important question. Did it come from the farmer? No; not in the true sense of the word. It came from the 1-cent commission; and had that 28,000,000 bushels of grain gone through any other course-I care not what course that might be the $142,000 profits wolud have gone with the 28,000,000 bushels and would have gone into the pockets of men who are working against the interests of the farmer. Therefore, I am again correct in saying that this $142,000 profits this year was not contributed by the farmer, but he placed that much money into his own company by not giving the grain to other men in the business, as it takes about half of that 1 cent commission to handle the grain, and we preserve the other half for the matters just outlined.

BE ON GUARD AGAINST THE COMBINE'S MISREPRESENTATION.

In conclusion I would say, do not expect too much from the men at the head of affairs in our farmers' movements. They have much to contend with that the local men can not see. Do not pay attention to statements made that your own organization is not getting as much for grain as others are. Those matters are easily misrepresented for a cause and a purpose. We have seen this every year, and particularly this year. We belive the interests against us have spent $5 this year to the $1 they ever spent in other years, in order to keep the grain from coming to the farmers' company. They had a large number of men traveling in the country, bidding strong for the grain; and where they knew that men would sell their grain to us in any case, they would go to him and offer him more than the grain was worth, knowing that they could not get him; but when his grain was shipped and sold through his own company, the farmers' company, he found he had not got as much as he had been offered by the other people; and thousands of farmers would turn around and use this and give it to the other agencies and to the thousands who were ready and willing to knock the farmers' company. In doing this those foolish farmers never go on to the real meaning of their act.

We have suffered very much by this misrepresentation, but we have suffered more from the short-sightedness of our farmers and from the lack of confidence of our farmers than we have from all other causes; farmers by the thousand coming to conclusions based on false reports, coming to conclusions before any investigation takes place, coming to conclusions without having all the facts properly placed in the scales of justice; but I am glad to say we are outgrowing this fact, and a great deal of the misrepresentation that has been directed against us is coming out in its proper colors and is now reacting, helping us and hurting the others; and I wish to say to the farmers of this great country to the south of us that if you have not already met those things that I have outlined in these lengthy remarks, you certainly will meet them in the near future, and I trust that my few remarks may help to guide you and protect you, making you stronger in the defense of men who honestly work for your best interests, but are so cleverly misrepresented by men who are not working in your best interests.

The Equity Cooperative Exchange came into existence as a competitive force in the Minneapolis terminal in August, 1912. It is a cooperative organization; its by-laws providing that all earnings above expenses and interest upon capital stock shall be repaid to patrons of the institution. From the very first the cooperative exchange has been the object of the bitterest attacks of the grain combine. To-day, as already shown, the milling and elevator interests of Minneapolis, acting under agreement, refuse to buy or handle a bushel of grain coming through the cooperative exchange. They have established a complete boycott of the Equity Cooperative Exchange and its grain. There are in the neighborhood of 400 traveling solicitors of the chamber, and this small army has been employed in falsely accusing the officers of the Equity Exchange of dishonesty, embezzlement, uncommercial conduct, and almost every conceivable misdemeanor. They and the members of the chamber whom they represent have falsely stated that the cooperative exchange had no adequate financial backing and that all shippers dealing with it were taking perilous chances; this in spite of the fact that the exchange is bonded to the extent of fully $50,000, and in spite, also, of the fact that the aggregate wealth of its backers amounts to nearly a million dollars. They have falsely circulated the report that the Equity Exchange charges two commissions for the sale of grain and that all grain received by the exchange is sold to members of the chamber of commerce at a discount equivalent to the regular commission. Frequently, when the exchange is regularly handling the business of a farmers elevator, members of the chamber or their representatives

will offer the particular elevator in question a price in excess of that which can be obtained for the grain under actual marketing conditions then existing. This overbidding of the market is accomplished by false statements regarding the inability of the cooperative exchange to secure the market price for the grain and is so frequent in occurrence as to amount to a general practice. Through the subservient press and subsidized trade organs the grain combine carries on a constant campaign of villification, falsehood, and abuse against the cooperative exchange.

For example, one of its organs is known as the Cooperative Manager and Farmer and is published at Minneapolis. In a late issue this organ proposes that an organization of traveling representatives of the chamber be formed which should make it the systematic business of the organization to exert every means to dissuade the directors of the farmers' elevators from ordering shipments to the Equity Cooperative Exchange. In case such efforts were not successful, the organization purposes to then go to the manager of such elevator and persuade him to quit his post as manager by offering him another position wherein he would not be obliged to ship grain to the Equity Cooperative Exchange. The chamber of commerce induces the managers of farmers' elevators whom it controls to ship carloads of grain to the Equity Exchange which are "plugged," in order that the claim may be made that the Equity Exchange can not obtain market price for grain. For example, a carload of wheat was received a short time ago which had 8 inches of screenings in the bottom of the car. Other cars have been received which have been short in weight and where the shipment was shown to be a "plant" on the part of the chamber. Every car of grain marketed by the cooperative exchange is traced by the members or employees of the grain combine. This is done in the hope of showing that the grain was not sold for the full market price, or that some irregularity may be discovered or that in some way trouble can be made between the Equity Exchange and the shipper. Below I submit a letter requesting such information over the signature of E. S. Hughes, assistant secretary of the chamber of commerce. In this case as in practically all cases the shipper of the car mentioned had made no request whatever that the chamber of commerce investigate the sale of the car. The statement contained in this letter that the shipper has requested an investigation is, of course, false.

CHAMBER OF COMMERCE OF MINNEAPOLIS, February 2, 1914. OSCEOLA MILL & ELEVATOR CO.,

Osceola, Wis.

GENTLEMEN: We have a request from the shipper of G. N. car 102764 to trace the car and find out to whom it was sold and the price paid. This car was reported purchased by you on January 22 from the Equity Exchange. Will you kindly advise the price which you paid for the same by return mail, and oblige.

Yours, truly,

E. S. HUGHES, Assistant Secretary.

In every way possible and by every method of unfair competition and price discrimination the combine is seeking to destroy the Cooperative Exchange.