THE GRAIN EXCHANGE AGAIN

The efforts of the elevator faction of the Winnipeg Grain and Produce Exchange, apparently to choke to death the Grain Growers’ Grain Company, had awakened the farmers of the West to a fuller realization of the trading company’s importance to the whole farmers’ movement. The Grain Growers of the three prairie provinces had been watching things closely and they did not propose to let matters take their course unchallenged. A second Royal Commission had been appointed by the Dominion Government in 1906, under the chairmanship of John Millar, Indian Head, Saskatchewan, to probe conditions in the grain trade and the farmers felt that certain evidence which had been taken by this Commission at Winnipeg justified their claims that they were the victims of a combine.

In the latter part of November (1906) the President of the Manitoba Grain Growers’ Association, D. W. McCuaig, laid formal charges against three members of the Winnipeg Grain and Produce Exchange charges of conspiring in restraint of trade and when these gentlemen appeared in the Police Court it was evident that the Exchange intended to fight the case every inch of the way. The farmers discovered that the legal talent of Winnipeg had been cornered; for of the twenty lawyers to whom their solicitor, R. A. Bonnar, K.C., could turn for assistance in the prosecution every one appeared to have been retained by the defendants. The case involved such wide investigation that such assistance was imperative and finally the Grain Growers secured the services of ex-Premier F. W. G. Haultain, of Saskatchewan.

The preliminary hearing in the Police Court proved to be most interesting and at times developed considerable heat among the battling legal lights. The defendants and their friends were so confident that commitment for trial would not be forthcoming at all that when the Magistrate decided that he was justified in so ordering, the grain men were shocked somewhat rudely out of their complacency.

Following up this preliminary victory, the Manitoba Grain Growers turned to the Manitoba Government and demanded that the charter under which the Grain Exchange operated be amended in certain particulars. The deputation from the Grain Growers met the Committee on Agriculture, the House being in session, and asked that the powers of the charter be limited so that business would be conducted on an equitable basis between buyer and producer. They asked that the Exchange be allowed to set no limit as to the number of persons who might enjoy its privileges, the question of the reputability of such persons to be decided by a majority of the members and that a seat purchased for the use of any firm or corporation should entitle that firm to the privileges of the Exchange even though registration of membership was under the name of an individual; also that the right to membership should include the right to delegate the trading powers to anyone in the employ of the firm or corporation.

The Grain Growers also asked that arbitrary interference with the business methods employed by individual firms or corporations and inquisitional inquiry into such be prohibited; also that the penalties and disabilities against those breaking the common rules and the maximum-price rule be abolished; that the right to define the eligibility of a person as an employee or fix a limit to salary in any way be denied; also that the expulsion of no member should be considered final until assented to by the Minister of Agriculture and that all by-laws should receive the assent of the Lieutenant-Governor in Council before becoming legal and binding.

The farmers asked that the Government have full access to the minute books, papers and accounts of the Grain Exchange and that provision be made for the public to have free access to a gallery overlooking the trading room during the sessions of the Exchange so that the transactions occurring might be observed and the prices disseminated through the public press. They further wished to see gambling in futures made a criminal offence.

Roderick McKenzie, Secretary of the Manitoba Association, told how the existing Grain Exchange had about three hundred members, of whom one hundred were active and fifty-seven of these active members represented the elevator interests. He said that the interests of the fifty-seven were looked after by twelve elevator men in the Exchange and that these twelve men agreed so well that they allowed one of their number to send out the price which should be paid for wheat for the day.

The Committee on Agriculture promised to consider the requests and later, when they met to do so, members of the Grain Exchange attended in force to present their side of the case. They claimed that a great deal of the trouble existing between the producer and the Grain Exchange was due to misconception of the Exchange’s methods of action. The Exchange was only a factor in the grain business and under their charter they were allowed to make by-laws and regulations, these being necessary in such an intricate business as handling grain.

The wiring of prices to country points was done by the North-West Grain Dealers’ Association, which had nothing to do with the Exchange but was a distinct and separate organization for the purpose of running elevators at country points as cheaply as possible. The highest possible prices were quoted and the plan was merely to avoid duplicate wiring.

The grain men claimed that it was impossible to handle the wheat of the country unless futures were allowed while to carry on its business properly the Exchange must have the power to say who should be members and otherwise to regulate its business. If the producer was getting full value for his wheat why should the Grain Exchange be interfered with?

The Exchange was willing that its membership should be extended. Their books always would be open to Government inspection in future and they would also repeal the rule regarding track-buyers’ salaries. The press was already admitted and it would be found that when the new building which the Exchange was erecting was completed there would be a gallery for the use of the public during trading hours.

If the Legislature were to amend the charter, declared the Exchange’s spokesman, the Exchange would demand that the charter be cancelled in toto and a receiver appointed to distribute the assets. The Exchange was tired of being branded thieves and robbers and they should be let alone to do their business. If this were not satisfactory, then they wished to be put out of business altogether.

The Grain Growers protested that it was not their desire to have the charter cancelled. They were not blind to the usefulness of the Exchange if it were properly managed and all they asked was that this organization be compelled to do what was right. The reason the Exchange had admitted the Grain Growers’ Grain Company, the farmers claimed, was so that they could have it under discipline, being afraid of a combination of farmers in the interests of the producer. The farmers had lost confidence in the manipulations of the Exchange and wanted official protection.

The question of declaring deals in futures to be a criminal offence was outside provincial jurisdiction and the farmers withdrew that part of the request. They wished everything else to stand, however.

At this juncture a recommendation was made that a conference be held between the Government, the Grain Growers, the Exchange, reeves of municipalities, bankers, railroads, etc., for discussion of everything pertaining to the handling of wheat, including amendments to the Grain Exchange charter. The idea appealed to the Premier and before the Committee he pledged that the resolutions passed at the proposed conference would be converted into legislation.

After adopting the Agricultural Committee’s report the Government did not act independently regarding the suggested charter amendments, as the farmers had hoped they would; instead, the whole thing was shelved, pending the suggested conference. When this conference was held in the latter part of February, however, the Government was duly impressed by the earnestness of the Grain Growers. Many strong speeches were made, including one powerful arraignment by J. W. Scallion, of Virden, whose energetic leadership had earned him the title: “Father of all the Grain Growers.” The Government promised to amend the Exchange charter at the next session of the Legislature.

The activity of the Manitoba Grain Growers’ Association was putting a new face upon the struggle of the Grain Growers’ Grain Company for the restoration of their trading privileges on the floor of the Exchange. It demonstrated that the farmers could act in concert if occasion arose and that the Grain Growers’ Associations were in accord with the principles for which the farmers’ trading company was fighting. When, therefore, the Manitoba Association took a hand in the matter by officially urging the Manitoba Government to assist in restoring the Company to its former position on the Exchange in order that it could enjoy the rights of the seat for which it had paid, the Government was forced to take action.

It is doubtful if a Minister of the Crown in Manitoba ever had been called upon to make a more remarkable official statement than that which now appeared in print in connection with this matter. In the absence of Hon. R. P. Roblin it became the duty of the Acting-Premier to make it. Hon. Robert Rogers, then Minister of Public Works in the Manitoba Government, was the official head of the Government in the Premier’s absence and in the Winnipeg Telegram of April 4th, 1907, the statement appeared as follows:

“The action of the Council of the Winnipeg Grain Exchange in refusing trading privileges to the Grain Growers’ Grain Company is regarded by the Government as an arbitrary exercise of the powers conferred upon them (the Exchange) through their charter from the Legislative Assembly of Manitoba, and unless remedied by the Exchange, the Government will call the Legislature together during the present month for the purpose of remedying the conditions by Legislative amendments.”

On April 15th the farmers’ trading company was admitted once more to the full privileges of their seat on the Exchange.

The case against the three members of the Grain Exchange, who had been indicted under Section 498 of the Criminal Code, came to trial in the Assize Court a week later, on April 22nd, before Judge Phippen. It was now a matter for Crown prosecution and under direction of the Attorney-General, R. A. Bonnar, K.C., proceeded vigorously. The Grain Growers claimed that the Exchange had rules and regulations which had been carried out in restraint of trade and that in combination with the North-West Grain Dealers’ Association there had been a practice of restricting the price to be paid for grain to certain daily figures, sent out by the parties conspiring.

Also, they expected to show that there had been a combine in existence between the elevator companies so that there was no competition in the buying of grain at certain points while there was an agreement that only a certain amount of street wheat would be received at the various elevators, the whole thing amounting to the restriction of wheat buying within certain limits fixed by the combination of the buyers who belonged to the combine this to the consequent barring out of the small buyer from the trade. The latter, the Grain Growers argued, was prevented from buying by the rule which called for the payment of a salary to track buyers and prohibited the hiring of men on commission; there were points where the quantity of grain offered for sale was too limited to justify the payment of a fifty-dollar salary to the buyer.

Another point of complaint was that the Grain Exchange membership was restricted to three hundred, the members having agreed among themselves that no more seats be added although all present seats were sold and many more might be sold to eligible citizens.

Also, claimed the prosecution, there was a practical boycott of expelled members in that the members of the Exchange were forbidden to deal with expelled members; it was practically impossible to do business in grain in Western Canada unless connected with the Grain Exchange, one firm having experienced this difficulty.

The rule which barred the purchasing of grain on track during the hours of trading on the Exchange was, they would endeavor to show, an act in restraint of trade and the three men under indictment, the prosecution hoped to prove, had been active in the enactment of the alleged illegal by-laws of the Grain Exchange.

Prior to the enactment of these obnoxious laws of the Exchange the farmers had been sought by the buyers, whereas since the rules had been established the farmer must seek the purchaser. While the prices given out were fixed by the Grain Exchange in what was claimed to be open competition, the prosecution intended to show that it was a gambling transaction pure and simple, the price-fixing being nothing more than the guess of the men who acted for their own gain.

The trial lasted for a month, during which time a great many witnesses were examined grain men and farmers and the whole grain trade reviewed. The array of legal talent for the defence was very imposing and the case attracted much attention because, aside from its interest to the grain trade and the farming population, it promised to test the particular and somewhat obscure section of the Criminal Code under which the indictment was laid. At one stage of the proceedings the tension in court became so high and witnesses so unwilling that upon reproval by the court regarding his examination, leading counsel for the Grain Growers picked up his bag and walked out in protest, willing to risk punishment for the breach of etiquette rather than remain. After the Grain Growers’ executive and counsel had conferred with the Government, however, the Grain Growers’ counsel was prevailed upon to resume the case.

The finding of the court did not come as much of a surprise; for it was apparent before the trial ended that the section of the Code was considered ambiguous by the presiding Judge. The latter held that all restraints suggested by the evidence were agreed to, whether justifiably or not, as business regulations and before finding the defendants guilty these restraints must appear to be “undue,” according to his reading of the section. It was necessary to respect the right of a particular trade or business or of a particular class of traders to protect their property by regulations and agreements so long as the public interests were not thereby “unduly” impaired; to the Judge’s mind there was no question that the public had not been unduly affected.

After reviewing the case the Judge held that the gravamen of the whole charge hung upon the Commission Rule of the Exchange that one cent commission per bushel should be made in handling grain; so that the price paid would be the price at the terminal (Fort William) less the freight and one cent per bushel commission, neither more nor less. Witnesses agreed that this was the lowest profit on which the business could live. Fort William prices were the highest the world’s markets could justify. Owing to the presence in the statute of the word, “unduly,” therefore, the Judge could not find the defendants guilty.

The Grain Growers were much dissatisfied with the decision; for they believed that they had adduced evidence to support their case and did not relish losing it on a technicality. Appeal was made, therefore; but the appeal court upheld the judgment of the assize court.

Apparently, deduced the farmers, this meant that men could conspire to create monopolies by driving all competitors out of business so long as they did not do it out of pure malice so long as they justified it on the grounds of “personal interest” so long as the things they did were not “malicious restraints, unconnected with any business relations of the accused!” In other words, if men merely conspired to advance their own business interests they committed no offence under the then existing law; to be liable to punishment they must be actuated by malice.

So that all the turmoil and talk, court proceedings and conferences, deputations and denunciations, evidence and evasions all the excitement of the past few months practically left conditions just where they were. For the amendments to the Grain Exchange charter would not materialize till the Legislature met again next year.

But there was one spot where the clouds had rifted and the light shone through. The Grain Growers’ Grain Company had won back its place on the Exchange. More and more the farmers began to pin their faith to their little fighting trading company “at the front.” It appeared to be the concentration point for the fire of enemy guns. In all probability hostilities would break out anew, but the men in charge were good men loyal and determined; they could be relied upon to take a full-sized whack at every difficulty which raised its head.

The first of these to threaten was on the way.