The Nonpartisan Leader Newspaper, December 23, 1915, Page 10

TEN Sitting around the fire in a shack or a sod shanty on the prairie wheat J farm while the bleak blizzards howl - E g and, the hungry wolves and coyotes R sing their dismal lay, the wheat grower awaits the coming of another season, so that he may put in his crop and gamble once more on the outcome. Oh, it is romantic; it is heroic—this pioneering where the weather gets down to the marrow in your bones and up to the sizzling degrees of harvest heat, with now. and then a dry wind that blasts all’ before it, or a hail that lays a crop in the dirt quicker than I can tell it, or a tornado that devastates everything above' ground. Hardy Soldiers of Fortune. Yes, these and thousands of more foutunate farmers in the central 4 5 west are the hardy soldiers of for- tune who grow the stuff that makes the staff of life—and incidentally lines the avenues of Minneapolis, i Chicago and Duluth with mansions, P and the pockets of the few with gold —the gold of the golden grain har- vest. These grain growers are men who pay not alone big interest on their borrowings, but pay a tremen- dous price for the privilege of try- A ing to be an American farmer. But E I they do not complain much when ) they sell their grain at a price the i grain gamblers fix, because they have : not realized that there might be bet- ter prices until recently. In buying anything they pay what the other fellow says they shall, and they. sell at- a price some other fellow fixes for their grain. There is no escape from this and they realize it, but they are going to demand that the market value of their products be filxed by supply and demand rather than by the whims of a market dom-+ inated by gamblers. ok B They Cannot Fix the Price. The farmers are aware that some central market must set the price on: general farm products. Unless they are in a position to hold their grain or stock, they cannot fix the price themselves. They would of necessity compete with one another because the cost of production on the farms varies greatly. The farm- ers’ grain exchange at St. Paul fixes the price just as the Minneapolis ex- change does, only on a more honest basis. The farmers want a compe- titive market free from gambling, trickery and dishonest grading. ' For years the farmers have been selling their grain to cooperative ele- vators. The fight to get a foot- hold on a siding; to get cars into which to load their grain; to get bids for their grain; to get faithful ele- vator and commission men, who would not double cross them, is a story in itself. That struggle is about over— by tke aid of laws that helped the farmers to get a square deal. But there is a struggle now on to get “a look in” at the market end. Ab, there’s the rub—for the market end is where the farmers get their poc- kets picked after sweating to grow the crop. = Money Not Wiade on the Farm The grain markets are where the money is made—not at the farm end as the country is led to believe. The quotation from a September issue of the Chicago Tribune bears out this statement: ' “Huge clean-ups are reported to have been made by Chicagoans in the wheat ‘market within the last few days thru a sharp decline in prices due partly to the lack of the usual large export demand. ¥ “James A. Patten was credit:d on the board of trade yesterday with having bought about 2,000,(00 bush- els of short wheat in the Chicago and Minneapolis markets. His win- nings in these operations are said to have been in the -neighborhood of $200,000. “Patten was.a big buyer of wheat futures here early in the day.and the higher prices in Minneapolis were ascribed to his purckazes market. Big Profits for Gamblers “In the last few weeks wheat has declined about 20 cefits a bushel, and many local traders who have be:n aggressively bearish because of the prospect for big crops have made fortunes on the slump in prices. John F. Barrett’s profits are estimated at more than $100,000, and others who are reported to have made large sums are Arthur Cutten, T. D. O’Brien, Ed- ward Skillen, C. F. Schneider, Edward, McKenna, John Scott and A. J. Lich- stern. Supply and demand cut little or no figure. The price of grain is made by gamblers betting with one another on what the price will be in, the fu- ture. Of course they resort to all the tricks of the trade to raise a dust for a purpose—such as chinch bugs, rust, smut, drouth, excessive rainfall, reported crop failure in Argentine or Russia or a whopper crop elsewhere. These excuses are given for a fall or a rise in the price of grain, but they affect the price only as they affect the nerve of the grain gamblers. If buy- ers -get- seared by some rerprt, they let loase of their holdings—their op- tions -on: futures—and the priee tumbles. :If they get certain reports, they buy like mad and the price iumps up. These conflicting repprts sometimes come in one day and the gamblers are at sea. The market is unsteady. Where Does the Farmer Get Off? Where -does the farmer come in on the deal? He doesn’t come in at all. He isn’t consulted. His interests are not considered. His cost of produc- tion makes no difference to those who make the price of grain. The price is handed to him on a scoop at the local elevator—and the local elevator man gets his daily telegram or postcard from Minneapolis or Chi- cago where his commission boss" is— and all line elevator men get tha same price instructions. There could be no objection to this if the price were honestly fixed. Let me quote from the testimony of Charles A. Magnuson, Member of the Minneapo- Iis Chamber of Commerce, before the House Committee on Agriculture in the spring of 1914, and show how it is done. Fixing the Market Price. “Mr. Riley: On what do you hase your telegram to your buyer? Mr. Magnuson: On the close of the Minneapolis” or the Duluth market, which_ever is the highest, the freight rate being taken into account be- tween the points. Mr. Reilly: Then you simply send, out to that buyer the closing figure of the board of trade that you fol- low for fixing the prices? é Mr. Magnuson: In the first place, in first establishing. a price at the station, it would be éither on the basis of 10 cents under Minneapolis, if we had a seven cent per bushel |5 3 4 § I subtract the freight rate and, your commission for handling? price? price. done, from that time on it is either a reduction or an advance according to the market, accordingly as the market fluctuates from day to day. the next day the highest rates in the market? next day either a reduction if the market declines, or an advance if the market advances.—"'P. 216. buyer gets his instructions every day and he dares not pay more than the market or his company—the company he buys for in the big market—is fined and possibly expelled from the gambling crowd—the Grain Exchange. Cemmicsien’s investigation, Mr. Mar- ble, attorney for the Commission, examining George Marcy, manager of the country line Armour Elevator goes under the name of Neola Com- od of setting the prices for country buyers. THE NONPARTISAN LEADER Farming Under a Grain Gambling System By ALSON SECOR In Successful Farming. every member and make him play the game according to their rules. Let me say here that no federal or state authority can interefere with those rules either—at least not yet. You will ebserve from the testi- mony that the buying agent in your town does not give you Minneapolis, Duluth, Chicago, or Liverpool prices. Me makes you pay the freight to the big market and pay the commissions for handling the grain you have sold. So whether you sell to the local ele- * vator man, or have the nerve to ship a carload to the market and -consign it-to some commission firm, you pay the: freight and ‘commission, switch- ing ‘charges: too sometimes, and other little incidentals that go with the grain businezs. The price is so much laid, down at the buyer’s door. Competing With Grain Gamblers But that cannot .be aveided. You have done that so many years you are used to it, but tkere’s another thing that may have escaped your atten- 2 d : tion. You are in competition with in thrat freight rate figures, plus about 3 every grain gambler in the country. cents and a fraction. 7 : Your real grai nd all th 1 n Mr. Reilly: In other words you silnid it Sk is in direct competition, not so much with Canadian grain, or that from Argentine or Russia or any other grain section, but your grain is -in direct competition with millions of bushels of fictitious grain—grain that exists only on paper—gambler’s grain. Again I want to quote from a Con- gressional investigation—this -time before the Committee on Rules of the House. “The Chairman: Mr. Greely, I be- lieve you stated this morning how much more grain is sold in this coun- try than is produced. Sells Wheat that Doesn’t Exist Mr. Greeley: They sell three hund- red times more wheat in one year . than they handle on the board (board of trade, Chicago) at the least pos- sible calculation, in, the future busi- ness of the market. The Chairman: times? - Mr. Greeley: Three hundred to one. It is a low estimate. I explain- ed that a moment ago. re it Mr. Chairman: Will that be ad- mitted? Do you think that will be disputed? Mr. Greeley: I do not believe any- body interested would admit it, be- cause nobody ever tried to figure it out. It is impossible to figure it out, because it is just buying and selling all day long. 1 know what trading in grain is. I know what future trading is. I have been in it. I was brought up in it; bred in it from youth. No man on the board of trade that knows anythng will deny that in the wheat pit alone, on an average, every day of the year the to- tal amount of the purchaszs plus the total amount of the sales in the fu- ture, will at least total 25,000,000 a day, from 9:30 in the morning to 1:15 in ‘the afternoon. There -are those . who ‘have boasted that they have traded in 20,000,000 in a'day—a single firmi. Thing -of it. I myself, altho I have been a little dealer, what you might always term an “insignificant trader,” have many a day traded in 500,000 bushels to 1,000,000 bushels and never thought much about it. Don’t Know Color of Receipt. Mr. Chairman: You do not handle : the wheat, tho, in trading? Mr. Greeley: And there are men in the business today trading in millions upon millions of futures, tens of mil- lions of futures, hundreds of millions of futures; firms® that do it every year, that do not know what the col- or of a warehouse receipt is; they never saw a carload of grain, and Mr. Canby, the president of the board of ' trade, is sitting. here today, and I will challange him, before the inves- tigation by this committee is thru, to show by his records where he ever handled ten carloads of grain since he was a member.” (P, 57:58.) (Continued on phge 13.) Mr. Magnuson: Yes. Mr. Reilley: And the other is the Buyer Gets Instructions Mr. Magnuson: The other is the And, then, that having been Mr. Rielly: Well, you send out Mr. Magnuson: We send out the Thus you see than your local grain Three hundred Before the Interstate Commerce of the which elevators Comrany, pany, brought out some other meth- How Prices are Determined “Mr. Marble: How is the price de- termined which will be paid by your country elevators of the Neola Com- pany, who is that determined by? Mr. Marcy: By my:elf largely. 1 make up tke prices at the close of ’change for our bids and everything. They are passed over to the office. The people managing the Neola take those “prices and, figure off and send out their wires and card bids and in- struct their ‘agents. It is all done from my office. Mr. Marble: Have you any under- standing with any of your competi- tors or did you at any time, or have you ever, as to the amount of these bids, so as to reach an agreement with them? Mr. Marcy: Not that I have heard of. Mr. Marble: You have heard of such devices? Mr. Marcy: I have heard of them, but. I have always endeavored to steer clear of them. Mr. Marble: the oppration? | Knows of Price Fixing Mr. Marcy: Yes sir. (Pages 44-45) This manager of line elevators knows that there is such a thing as price fixing . which eliminates com- petition at, country stations, tho he says his company had no hand in it. Membership in the Chamber of Com- merce of Minneapolis, which is the grain pit of the northwest is worth around $4000. You can see how easy to hold a club ever the head of You are familiar with autd,