When Jones & Brown are "called" for deposit margins they drop everything and obey. They have just fifteen minutes to reach the bank with that cheque, have it "marked" and rushed to the Clearing House.
If they fail to arrive with it the Manager of the Clearing House will step into their office and if there were any "hemming and hawing" Jones & Brown would be reported at once to the Secretary of the Exchange who would call a hurry-up meeting of the Exchange Council and Messrs. Jones & Brown would find themselves posted and all trades with them forbidden.
All clerical errors in regard to trades are checked up by the Clearing House and fines paid in for mistakes. Only a nominal charge is made for its services--enough to pay overhead expenses--but the fines have enabled the Clearing House to acc.u.mulate a large Reserve Fund which gives it financial stability to provide for all responsibilities should occasion arise through failure of any firm. All futures which have not been cancelled before delivery date are negotiated through the Clearing House and with its a.s.sistance the grain can be placed just where it should go and tremendous quant.i.ties of it are handled without a hitch and with the utmost despatch.
Excitement in the Pit is not always over wheat. It may be oats. It was Canadian Western Oats which became the storm centre in 1911 when the Grain Growers got into difficulty with the "bears." Traders who attempt to boost prices are known as "bulls"; those who are interested in depressing the market are "bears." A trader may be a bear to-day and a bull to-morrow; thus the opposing groups are constantly changing in make-up and the firm which was a chief opponent in yesterday"s trading may be lined up alongside the day following, fighting with instead of against. It is all in the day"s business and the strenuous compet.i.tion on the floor, into which the uninitiated visitor reads all manner of animosity and open anger, is a very misleading barometer to the actual good feeling which prevails.
In recording what now took place in the Pit in connection with the farmers" commission agency it will be well to remember that the rest of the traders would have acted in the same way toward any firm which was fool enough to leave the opening for attack. It may be that as the thing developed some of those who were specially interested in the downfall of the farmers" organization seized the opportunity to ride the situation beyond the pale of business ethics and in their eagerness to be "in at the death" revealed special vindictiveness. But in view of the long struggle with this element it was only what the Grain Growers should have expected when they ran their heads deliberately into the noose.
The situation was this: Shortly after New Year"s the export demand for Canadian Western Oats became heavy and it looked as if in Great Britain and all over Europe, where the oat crop had been small, there would continue to be a shortage of oats. In spite of this situation, however, no sooner was the proposed reciprocity agreement reached between the Canadian and United States governments of the day, on January 26th, than market prices began to go down.
The then Manager of the Grain Growers" Grain Company came to the conclusion that this price lowering was a local condition and that the export market for oats was too strong to justify it or sustain it.
"I"ll just step into the market and buy some oats," said he. "Later on I"ll sell for export at a satisfactory figure." Accordingly, one fine morning he went into the Pit and began to buy.
The Manager"s motive in attempting to sustain the market may have been of the best; but it was the first time that such methods had been attempted by the Grain Growers--methods which were not at all in keeping with the avowed principles of the Company. The Board of Control had every confidence in their Manager and, although he was merely a salaried employee and not an executive officer, he had been given a pretty free hand in the conduct of the Company"s operations.
Apparently it did not occur to him that he should consult the Board before entering the market on a speculative basis. Had the Board known what he was about to do they would have vetoed it; but when they did discover what was afoot it was too late to prevent the situation. It developed very swiftly.
"The Grain Growers are up to the neck in May oats," was the whisper which pa.s.sed about among the other traders. That was all that was necessary.
"Sell May oats! Sell May oats!"
On every side of the Pit they were being offered by thousands of bushels--five--twenty-five--fifty thousand! The idea was to load up the Grain Growers" Grain Company to the point where their line of credit with the Clearing House would become exhausted, after which every bushel would require a marginal deposit. Then when the Company could carry no further burden the Clearing House would be forced to dump back the oats onto the market, breaking it several cents per bushel. At this lower price the traders who had obligated themselves to make these big deliveries would buy back the necessary supply of oats at a profit and everything would resume the even tenor of its way--except the Grain Growers, of course. Their serviette would be folded. Their chair would be pushed back from the table! They would be _through_!
Up until now all the troubles of the farmers in marketing their own grain may be said to have come from sources outside themselves; but in the present instance they had n.o.body to blame but themselves for the predicament. It arose at a time, too, when the other grain dealers were beginning to recognize the farmers as a force in the grain market--a force which had come to stay. It was unfortunate, therefore, that just as they were beginning to acquire a standing as a solid and sensible business concern, the Grain Growers" Grain Company should find themselves driven into a corner, their backs to the wall, the focus of pointing fingers and gleeful grins.
The fact that a salaried employee, not an officer of the Company, had acted on his own initiative without the consent of the directors was no excuse for a reliable business concern to tender as such. The first question flung back at them naturally would be: "Then your "Board of Control" doesn"t control, eh?" For although the Board of Control did not know what their Manager was doing until it was too late to prevent it, they should have known. That is what they were there for--to protect the shareholders from managerial mistakes.
However, there they were. The only thing they could do was to fight it out to a finish in the Pit and, if they survived, to see that no similar mistakes occurred in the future.
All sorts of rumors were flying about the corridors of the Exchange, gathering momentum as they pa.s.sed from lip to lip, swelling with the heat of the excitement until it was a general guess that the Grain Growers must be loaded with anywhere between five and eight million bushels of oats more than they had been able to sell.
It was only a guess, though, and a wild one. Many traders would have given a good round sum to know exactly how the farmers" company stood on the books of the Clearing House. Only the Clearing House and the Company itself knew the true figures and the Clearing House officials were men of the highest integrity who dare not be approached for secret tips.
Thanks to the splendid export connection which had been built up in the Old Country and to the equally solid financial relations with the Home Bank, the farmers" agency was selling oats for export very rapidly. It began to look as if they would get out from under the threatening avalanche without much loss, if any.
The Company"s old-time enemies apparently saw an opportunity to undermine its credit at this crisis; for attacks began to appear in print--accusations of speculation, of official negligence and so forth.
If the Grain Growers could be prevented from paying for the large quant.i.ty of oats, delivery of which they would have to take on May 1st to complete the export sales made during the winter--if they could be made to fail in filling these export orders when navigation opened, they would be smashed.
But in attacking the credit of the Grain Growers, these opponents overlooked the rapid increase in paid-up capital and the ability of the farmers to secure money outside of Winnipeg. It was not being forgotten by the Grain Growers that upon the first day of May there would be delivered to them over 2,200,000 bushels of oats.
When the day arrived, therefore, the money was on hand to meet every contingency. Every bushel was paid for immediately. Within a few weeks half of the quant.i.ty was riding the waves of the Atlantic, bound for the Old Country to fill part of the sales already made there.
Before long some of the grain companies which had sold the oats were trying to buy them back. Had the farmers" company been a speculating firm they might have turned upon the market and cornered the oats with a vengeance. It was one of those rare occasions when a corner could have been operated successfully to a golden, no-quarter finish; for the export demand was sustained and the local market could have been made to pay "through the nose" for its fun.
CHAPTER XVII
NEW FURROWS
Fishes, beasts and fowls are to eat each other, for they have no justice; but to men is given justice, which is for the best.--_Hesiod_.
The situation was changing indeed for the Grain Growers in Western Canada. In spite of all opposition the farmers had made themselves a factor in the grain trade and had demonstrated their ability to conduct their affairs on sound business principles. Co-operative marketing of grain no longer was an untried idea, advocated by a small group of enthusiasts. The manner in which the farmers" pioneer trading agency had weathered the stormy conditions of its pa.s.sage from the beginning and the dignified stand of its directors--these gradually were earning status in the solid circles of the business world.
Out in the country also things were different. Those farmers who at first had been most certain that the trading venture would crumble away like so many other organized business efforts of farmers in the past, now were ready to admit their error--to admit that a farmers" business organization, managed by farmers, could succeed in such ample measure that its future as a going concern was a.s.sured. Instead of hovering on the outskirts of its activities, like small boys surrounding a giant fire-cracker on Victoria Day--waiting for the loud bang so freely predicted--these gentlemen were beginning to look upon it as a safe investment.
The success of the Grain Growers" Grain Company was an argument for co-operation which could not be overlooked and the co-operative spirit spread rapidly among the farmers in many districts.
It will be remembered that the promoters of the grain company had intended originally to operate under a Dominion charter but were compelled by circ.u.mstances to content themselves with provincial powers. The farmers now were finding themselves too restricted and application was made for a new charter which would facilitate the transaction of business in other provinces than Manitoba. Special powers were asked for and by special Act of Parliament the charter was granted in 1911 in the face of considerable opposition at Ottawa from those whom the farmers regarded as representing the Canadian Manufacturers" a.s.sociation and the Retail Merchants" a.s.sociation.
For the trend of the organized farmers was quite apparent. No secret had been made of the views entertained by the Grain Growers regarding co-operation. To familiarize every member of the various organizations with the history of co-operative achievements in other countries had been the object of many articles in the _Grain Growers" Guide_ and much speech-making from time to time. The possibility of purchasing farm supplies co-operatively in addition to co-operative marketing of grain was being urged convincingly. And during the long winter evenings when the farmer shoved another stick into the stove it was natural for him to ask himself questions while he stood in front of it and let the paring from another Ontario apple dangle into the ash-pan.
"The fellow who made that stove paid a profit to the Iron an" Steel Trust who supplied the raw iron ore," considered he. "Then he turned around an" added a profit of his own before he let the wholesaler have it. Then the wholesaler chalked up more profit before he shipped it along to Joe Green over in town an" Joe just naturally had to soak me something before I got her aboard for home. That"s profits on the profits! It"s a hot proposition an" it"s my money that goes up the flue!"
When he added further profits which he figured might be due to agreements between supposed compet.i.tors in prices, the Grain Grower was quite ready to believe that he had paid about twice as much for that stove as the thing would cost him legitimately if he dealt with the maker direct. Here was the High Cost of Living that everybody was talking about. The remedy? The same chance as the Other Fellow for the farmer to use the resources of Nature and, by co-operation, the reduction to a minimum of production and distribution cost.
"I"ve done it with my grain. Why can"t I do it with what I need to buy?" That was what the Grain Grower was asking himself. "Why must I feed and clothe and buy the smokes for so many of these middlemen?"
So when the directors of the grain-trading company came before him with the suggestion of buying a timber limit in British Columbia in order to put in their own saw-mills eventually to supply building materials on the prairie, the Grain Grower slapped his leg and said: "Good boy! An"
say, what about a coal mine, too?"
That was the beginning of great developments for the organized farmers of Western Canada. It was the beginning of new furrows--the opening up of new vistas of emanc.i.p.ation, as the farmer saw it. And as the furrows lengthened and multiplied they were destined to cause much heart-burning and antagonism in new directions.
The timber limit which the Grain Growers" Grain Company purchased was estimated to contain two hundred and twenty-two million feet of lumber.
A Co-Operative Department was opened with the manufacture and sale of more than 130 carloads of flour at a saving to the farmer of fifty cents per cwt, even this small beginning registering a drop in milling company prices. Next they got in touch with the Ontario Fruit Growers"
a.s.sociation and sold over 4,000 bbls. of apples to Western farmers at the Eastern growers" carload-lot price, plus freight, plus a commission of ten cents per barrel. More than one hundred carloads of coal were handled in one month and the farmers then got after the lumber manufacturers for lumber by the carload at a saving of several dollars per thousand feet.
Still experimenting, the Grain Growers" Grain Company added to the list of commodities in 1912-13--fence posts, woven fence wire, barbed wire and binder twine. Followed other staples--cement, plaster, sash and doors, hardware and other builders" supplies; sheet metal roofing and siding, shingles, curbing, culverts, portable granaries, etc.; oil, salt and other miscellaneous supplies; finally, in 1914-15, farm machinery of all kinds, scales, cream separators, sewing machines and even typewriters. Of binder twine alone nearly seven million pounds was handled during this season. Thus did co-operative purchasing by the farmers pa.s.s from experiment to a permanent place in their activities.
Expansion was taking place in other directions also. In 1912 the Company leased from the Canadian Pacific Railway a terminal elevator at Fort William, capacity 2,500,000 bushels. A small cleaning elevator was acquired at the same place and, with an eye to possible developments at the Pacific Coast, a controlling interest in a small terminal elevator in British Columbia was purchased. At Port Arthur, on a six-hundred-foot lake frontage, a new elevator has just been built with a storage capacity of 600,000 bushels.
So much for terminal facilities of this farmers" pioneer trading organization. Now, what about the country elevators for government control of which the farmers had campaigned so vigorously in the three Prairie Provinces? As we have seen, the problem had been handled in Saskatchewan along very different lines to the method adopted in Manitoba. In Manitoba the 374 elevators, owned by the Provincial Government and operated by the Provincial Elevator Commission, showed a loss. It was even hinted in some quarters that the Manitoba Government had no intention in the first place of operating at anything but a loss. Whether or not there was any ground for these irreverent suspicions, the fact remained that the Government elevator system in Manitoba was beginning to a.s.sume the bulk of a snow-white elephant.
The Government, not entering the field as buyers, had tried to run the elevators as a storage proposition solely. In 1910-11 the loss had exceeded $84,000 and the year following was not much better. At last the Government said in effect to the Grain Growers:
"We"ve lost money on this proposition. We tried it out to please you farmers, but you"re still dissatisfied. Try to run "em yourselves!"
"We"ll just do that," replied the farmers, although the Grain Growers"
Grain Company was not enthusiastic over the prospect of converting the elevator failure into immediate financial success.
It was too much to expect. At many points the Government owned all the elevators in sight. In some places there was too much elevator accommodation for the district"s volume of business. In certain cases the elevators which had been sold to the Government were practically discards to begin with. However, the need for improvement in the service which the farmers were getting at country points was so very great that finally, in 1912, the farmers a.s.sumed control of the government system in Manitoba.
It was late in August when this came about. With only three or four weeks in which to prepare for the season"s crop, make repairs, secure competent managers, travelling superintendents and office staff the results of the first season scarcely could offer a fair test. Even so, prices for street grain went up at competing points. Line elevator companies began asking the farmer for his grain instead of merely permitting him to place it in their elevators.
The farmers were quick to note this and asked that the elevator service be continued by their company. With better organization the following season brought still greater improvement in service. Prices rose. The special binning service from their own elevators the farmers found genuine, not just a last-minute privilege granted to secure their grain. In spite of bad crop conditions in 1914-15, the elevators continued to succeed under the farmers" own management and, the year following, letters of highest praise from farmers everywhere marked the complete success of the undertaking. So excellent was the service now being rendered by the Company that independent Farmers" Elevators in several instances approached the Grain Growers and sought their management.
The handling of co-operative supplies at elevator points began in 1913-14. Flour houses were erected where prices were out of proportion and at other places the elevator agents began to arrange for carload shipments and proper distribution of coal among the farmers at a saving of from two to three dollars per ton.