THE SHOWDOWN

A fight was on between the elevator interests and the commission merchants of the Winnipeg Grain Exchange a fight for existence. For, with the Commission Rule of the Exchange eliminated, those firms which handled grain on a straight commission basis would be forced to meet the competition of the elevator buyers and the chances were they would be forced to handle grain at a loss; the best they could hope for would be to cover their costs.

It will be remembered that this Commission Rule, established in 1899, was that a charge of one cent commission per bushel should be made for handling grain and that all members of the Exchange dealing in grain must show that the price paid was the price at the terminal (Fort William) less the freight and one cent per bushel commission. This commission could be neither more nor less than one cent; for at that time it was felt that business could not be done, offices maintained and an efficient and reliable service given for less. It was a charge which both farmers and grain men considered fair and reasonable.

The trouble in the Exchange started when the commission men claimed the right to have country agents and to pay them on a commission basis of one-quarter cent per bushel. The elevator companies were able to buy at elevator points through their salaried representatives but the commission men were prohibited from having country agents except on a salary basis, and this they could not afford, handling grain on commission.

For some years past there had been considerable dissatisfaction among Exchange members in regard to the operation of the Commission rule, doubt being entertained that all the members were keeping good faith in the collection of the full commission charge of one cent to non-members of the Exchange and one-half cent per bushel to members on country consigned and purchased grain. Although the Council of the Exchange had held many special meetings in an endeavor to find a remedy and to investigate the charges, the results had not been very marked owing to the difficulty of securing the evidence to support such charges.

This was given as a reason for the doing away with the one cent commission restriction altogether for a trial period of one year. Thereby the trade was put on a “free for all” basis, as the President of the Exchange then in office pointed out. It meant that Exchange members were “enabled to pay owners of grain in the country any price they desired without regard to actual market values as regularly established on the floor of the Exchange.” It was the personal opinion of the President that to preserve stable markets with uniformity and discipline amongst Exchange members a commission rule was absolutely necessary and he predicted that perhaps in a short while, after the suspension of the Commission Rule had been given a fair trial, the Exchange might see its way clear to rescind the suspension.

“Just so,” nodded the commission men among themselves. “The logical and certain result will be the weeding out of the commission men and track buyers, who give practically the only element of competition that exists in the trade! One of the curses of our Canadian commercialism is the strong tendency to monopoly and this looks like an effort to create an absolute elevator monopoly of the grain trade, which is the staple industry of the country.”

But if the small dealers on the Exchange were aroused, what about the farmers’ trading company? They did business on a commission basis only and with the elevators offering to handle the farmers’ grain for nothing, or next door to it, what would happen? Would the farmer be “unable to see past his nose,” as was predicted? Would he forget the conditions of the early days and grab for a present saving of five or ten dollars per car? If the farmers did not stand together now, they were licked! It was a showdown.

There was only one thing to do take a referendum of the shareholders as to the basis on which they wished the year’s business handled. The Board of Control of the Grain Growers’ Grain Company therefore issued the following circular letter, which was mailed to every farmer shareholder:

“This matter we now bring to your notice is the most important yet.

“At a meeting of the Grain Exchange, held a few days ago, the Commission Rule was suspended for a year. This means that there is no fixed charge for handling grain, and any company or firm can, if they wish, handle car lots for nothing. How did this come about? The Elevator Companies did it with the aid of Bank Managers and other Winnipeg men outside of the Grain Trade, who hold seats on the Exchange, and voted with them. The intention of these Elevator Companies is to handle all grain for 1/2c. per bushel or for nothing in order to take it away from the Commission Men, who have no elevators, and especially to keep it away from the Grain Growers’ Grain Company.

The Elevator Companies can handle farmers cars for nothing and still not lose anything. How? In four ways

“1st. They all buy street grain and the immense profits they make on this will make up for any loss they have in handling cars for nothing.

“2nd. The dockage they get on street grain and on car lots passed through their elevators helps them.

“3rd. The charges on the cars loaded through their elevators helps them.

“4th. When they get your car it is sent to their own terminal elevator, and they earn the storage on it there which is very profitable.

“The commission man, such as ourselves, has none of these things to fall back on. His profit is what is left out of the cent a bushel commission after all expenses such as rent, taxes, insurance, wages for office help, telegrams, telephone, etc., are paid.

“The Elevator Combine know this. They know the weakness of the commission dealers’ position and the strength of their own, and knowing it, deliberately cut out the commission and will offer to handle the farmers’ grain for nothing in order to put the only opposition they have out of business. And mark you! this is aimed at our company more than any other, though we believe they are after all commission dealers. Some of them have said so. They want to kill us and they think they have at last found a way. Their dodge is simple. By handling cars for half a cent or nothing, they are going to bribe the farmers and our own shareholders to send cars away from us, and by keeping grain from us help to kill us and plant us that deep we shall never come up again.

“In this way they hope to ‘rule the roost’ and get back the good old days they had ten or twelve years ago.

“Can they succeed? It depends on the men who ship the grain. If they support the combine by giving the elevators (or the commission houses that work for the elevators under a different name) their cars, they may soon expect to find themselves in a worse position than they have ever been before.

“As a prominent commission man said the other day, ’The elevator companies are asking the farmers to help at their own funeral.’ It is an anxious time for our own company. We have shown that with anything like fair play it may succeed. We have been growing stronger and, we believe, doing some good. Are our shareholders and friends going to take the bribe that is meant to put us out of business? We hope and believe not. For this reason we are taking a referendum vote of our shareholders.”

It was at this crisis that the Grain Growers’ Guide had an opportunity of demonstrating its value to the farmers as a fighting weapon. It seized the cudgels and waded right into the thick of the controversy without fear or favor. It came out flat-footed in its charges against the elevator interests and emphasized the warning of the Company in language that carried no double meaning.

“We have no quarrel with the Winnipeg Grain Exchange as an Exchange,” said the Guide. “It is a convenience for gathering reports from other parts of the world, market conditions, and for drafting rules that facilitate and simplify business dealings.

“As we have often pointed out, however, the Exchange is being used by the Elevator Interests that seem to dominate it, to further their own particular ends with the result that the nefarious methods of the Elevator Trust bring suspicion and condemnation upon the Exchange and its members.

“The demand for the Royal Grain Commission arose from the methods pursued by the Elevator Companies in dealing with the farmers at country points. The pooling of receipts at country points is not forgotten by the farmers; heavy dockage and unfair grading and low prices paid when the farmers were compelled to sell and could not help themselves, are also not forgotten.

“Every injustice and disturbance in the trade that has taken place since grain commenced to be marketed in Manitoba, can be traced to the Elevator Monopoly.

“The farmers of this country owe nothing to the Elevator Trust and we have confidence enough in them to believe that they will not be bought over by them now. The Commission Men and Track Buyers certainly owe nothing to this trust either. They have helped in the past to carry the suspicion and sin arising from its methods and it commences to look as if they were getting tired of carrying the load.”

Column after column of such plain talk was given place in the Guide week after week, together with reports of Grain Exchange proceedings, interviews with commission men and elevator men, pronouncements of Grain Exchange officials and comment upon pamphlets circulated amongst the farmers by the North-West Grain Dealers’ Association, etc. Everything having a bearing upon the situation was brought to light and analyzed. Letters from farmers throughout the country were published as fast as they reached the editor’s desk, and they were coming pretty fast, about as fast as the mail could bring them.

They were reaching the office of the farmers’ trading company by the bagful. The Company had asked three definite questions of the farmers in connection with the commission to be charged on grain shipped to the Company whether or not the old rate should be maintained in spite of the action of the Exchange; whether the commission should be reduced; whether the whole matter should be left to the discretion of the directors. The letters poured in by the thousand and only two per cent. of the farmers recommended any reduction in the rates; of the remainder, seventy per cent. were in favor of the Company maintaining the one cent commission and the other twenty-eight per cent. were willing to abide by the decision of the directors.

The comments contained in some of these letters revealed strong feeling. Many farmers were ready to pay two cents commission per bushel if necessary, rather than sell to “the monopolies.”

“I will pledge myself to ship every bushel of grain I grow to the Farmers’ Company,” wrote one, “even though the directors found it necessary to charge me five cents per bushel, coin.”

“No, they cauna draw the blinds ower the daylights o’ a Scotchman,” assured one old son of the heather. “I am verrà pleased to leave the hale concern in your hands as I do believe you are thoroughly plumb and always square.”

With this encouragement the directors announced that they would continue to charge a commission of one cent per bushel on wheat shipped to them, just as if the Commission Rule had not been suspended by the Exchange. Other commission merchants, they knew, intended to reduce their charges to half a cent per bushel; the elevator men, they expected, would handle the grain for the same and in many cases for nothing in order to persuade the farmers to ship their way. It would be a great temptation to many farmers who had been sitting on the fence, shouting “Sic ’em!” but never lifting a little finger to help, and it was to be expected that those with limited vision would ship their grain where they could make the biggest saving at the time.

Notwithstanding, the directors believed that the majority of the farmers would not prove one cent wise and many dollars foolish by failing to realize what the future might hold in store if the elevators succeeded in killing off competition. Finding that it was possible to handle oats on a smaller margin, they made the farmers a gift reduction of half a cent per bushel on oat shipments; otherwise the former rate was sustained.

The wheat ripened. Harvesting began. The long grain trains commenced to drag into Winnipeg across the miles of prairie. By the middle of September the weekly receipts of the farmers’ company were running to 744 cars. In 1907 they had handled about five per cent. of the crop and seven and one-half per cent. of the 1908 crop; of the total number of cars so far inspected in this year of “free for all” methods, the Grain Growers’ Grain Company handled about fifteen per cent.

When the end of the season brought the figures to a final total it was found that the farmers’ organization had handled well over sixteen million bushels of farmers’ grain. This was an increase over the preceding year of nearly nine million bushels, or 114 per cent. It was nearly one and one-half million bushels greater than all the previous years of operation and represented one-eighth of all the grain inspected during the year in Western Canada.