Page 6 



The Hlinoi* Agricultural As«ociation Record 



January 24, 1925 



BOTH SIDES OF GRAIN MERGER EXPLAINED AT BLOOMINGTON MEET 



BLOOMINGTON PANTAGRAPH'S REPORT 

 ON MEETING RE-PRINTED TO PRESENT 

 I. A. A. MEMBERS WITH UNBIASED FACTS 



McLean County Farm Bureau Called Meeting After Stock 

 Salesmen for Grain Marketing Company Had Worked in 

 County Several Week*. 



I't t-'-if 'J.'-' J-J"" f'unnu viii'tl'tTi in 

 •i^v X '.■!•-' t">tk sUli i Iff the Matting 

 fiiU d f'f Jan. lo by tkr Mel^att Cpwb/v 

 Fart but' ait If tkr- fur pose t*t {tiseusrii^ Ikt 

 fail f-'ti. I rtiiti; tki iiraiA Murkiting )C""m- 

 /•ii" • '/.' » 'f'' A /. .1. .1, ofliiiah. rrfiifttnt 

 Tti ^pi-m in pijrtiiufar. anil offiii'ili 01 ikt 

 (rV'jjfl }f,tfk'tinil Cii'upany virr invilrtti the 

 is ri printing tke rrports film nw tkr 

 f :• /*•■ Pto:'ming!nn Pnntiifraph 

 Ik' t^h it' agrituttiiral ilipurtmrnt. — F.ititi'r.) 



<iii.\v sii.vKic .\xi» »;ko. .vI 



K >\ l'l!KSi:\r \K<a>IK\Tii IN 



!U<; >ii:i{(;i-;ii ( oxriiovKltsv 



( \loiiihi.v. .Ian. ];>. I))-J.'>.) 

 ■ raiilimrii|>ir>. Auriciilliit'nl 

 Ih'iiai'tiiiont. 



nir liiiriilncl farimrs lirtaril 



n-uiiu'iits for ami arainstjtlVc 



in MarkrHim Company and its 



f lin\in^ the fai'ilitirs; ^of 



~«-(i Cliicaiio prain f^oinpaniVs. 



!»■ ini-ctinu imIIkI by tlio Mo- 



n ('<ninty Kann Tturrau in the 



otiool Saturday rvrnlns:. 



Ii oni" was jud^e and jury, tlip 



ion to 1k' wlu'tht'r or noti he 



maily will sujHtort tlift iiiar- 



i: ronofrn in its coininj: c(tm- 



pai^n to .mU stock.- ' 



ray S4\*^r, fornit-rly Washlng- 



rj'i>r(fi'ntative of tlip Ain|pri- 



Farm liiinau Fed^^ratian Snd 



pr.sid^nt of tlip drain Mar- 



nc company presptitod an ,ap- 



lor fannpr piipport. He *as 



111 



ti 



i;r: 



pla 



ni*' 



in )li 



1 



liii: 



i:a< 



d.T 

 prr 

 k 



I 



ton 

 can 

 nov 

 kct 



P' 



if ilii 

 r-nini; 



N.ii 

 of 



>iial (;iani;p, the akrak- 

 <lic fait lliat indi.siry 



had l>vi>n di'Vidopcd to a hii;li |ilain 



and aLTiri 



Ifftfd. till 



romniitt.'o 



farm buroiu moviMncnt and the 



Iturr had l)pen |npi;- 

 Koosovplt c(mnlr>^ liff 

 tlip ori-'anization of, llip 



.\niprican 



aidi d l>y IlPnry S. Ballard (a ^aw- 



1 

 ( po. A. FoN. spprptary of Jtho 

 Illinois Ai-'rictiiliiral Apsop|at(on 

 tiili why tlip statp farm bureau 

 ffd^ratifin disapproves of tlip pijop 

 r>n and rffiisps pndorsfm^nt 

 Up waS'.aidiMl by Geo. E. Fraker, 

 I lor aid Kirkpatrick and Oeo. E 

 Wiilker, all employees of the I A-A 

 Si!irle<I Last .Iul.v ! 



r. r.allard. first on the pro- 

 i^ratii. told of the developmentj of 

 the Ilrain Marketinc Company. iHe 

 is oonneptid v,ith the Ohio I'arin 

 Itnrt'aii Federation and has Had 

 r\p* rienee in co-operative wool 

 marketing. The Grain Marketing 

 Con pany was incorporated July 

 I.'. 1024. onicers were elected on 

 Jul! 29. The contract between 

 the nterein:; .;:rain conc-rns nnd 

 the company was made on July 28 

 The Grain .MarketinK Comi'any be 

 san to function on .\u;;ust 5. "the 

 folhtwin::: points were made tty ^Ir 

 > Ballard 



Tiis idan is fundameiltally ilte 

 application of business principles 

 to co-operative marketin-' by farm 

 themselves. It is a corpora 

 tion under the co-operative mnr 

 keti le act of the State of Illinois 

 or,;:anized so that the producers 

 may have absr)lute control of the 

 corporation, ortranized in such a 

 manner that the board of directors 

 ; directly responsible to the stotk- 

 holdprs. orsranized so that the 

 stoc [holders, may absolutely de 

 tern Ine the policy of the organita 

 tion 



Tie contract between the com 

 panj and the ChicaKo i-rain flrtns 

 is such that the company secufes 

 the physical properties of the three 

 lead nK grain firms in the coun 

 try and expert management of 

 thes( properties 



Tliere are l.OftO.OOO shares of 

 common stock of the value of $1 

 per share. .\nd l.noO.OOn shares 

 of Class A preferred stock of the 

 valu ; of $25 each. And 500.000 

 shar !s of Class B preferred stock 

 of t^e value of $50 each, this cl^ss 

 not lor geDer.ll sale but to be usied 

 to SI cure working capital and 

 issu« in exchange for the proper 

 icquired 

 F: rmers can't control the cotn 

 pany unless they belong, however 

 Thej must become identified wi^th 

 the concern to have any voice iin 

 its management. 



Eyerj- possible legal pre^raution 

 thatlcan be -taken to set up an Or- 

 ganiiation that wrould be inv»l- 

 neraple to attack has been takdn. 

 Ora.T SiKer Speaks 

 Gijay Silver drew a picture of 

 the background of events leaditig 

 up to the nrcanization of the Grain 

 Marketing Company. He recalled 

 the development of industry by the 

 protective system, the organization 



sufrered 

 amendment 

 wanted to 

 their own i 

 One thin 



'arm Bureau Federa- 

 tion. Thriiush it all was the evi 

 dent need pn tlip part of auricul 



at'T remuneratioi). 

 He recallpd tlu' formation of tl 

 farmers' elevator movpment.! l>ut 

 declared that farmers' elev^ltor: 

 are today cnmpetlim one witli( the 

 other. That system 

 uive the faimtrs a lar;:er share of 

 the consnmiTs" dollar, he declared. 

 What wiis needed was a central 

 or keystonf organization through 

 which all tlie t-lpvators w-ork,,and 

 that keystote oru'anizalion is ^ow 

 perfected 



firrtiii M^n Siiiw <^o-oper.'»tirc 



Com! II u 



The grair men saw the cbSmge 

 coni'ini--. he said. They knew 

 new system of marketin;! would 

 eventually succeed. They had 

 watched the leeislation for co-op- 

 ritive marketing They recalled 

 thf loss that the hrewin.g industry 



hen the prohibiftion 

 was ratified and they 

 avoid such a loss to 

 :idustry. 



is certain. Mr. Silver 



declared, and that Is that here' are 

 splendid facilities, the best of man- 

 agement, ahd at a niemberphip 

 cost of a dojlar and at a small cost 

 per bushel i you can buy it all. 

 Keep in miitd that this is the first 

 time the fatnier has had a chance 

 of serving himself in this way^ he 

 stated. 



Report Was Siippresseil 

 When tho American Farm Bu- 

 reau Federation was seriously con- 

 sidering this marketing plan last 

 June, John Coverdale. then secre- 

 tary, mentioned to oiDcials of the 

 I. A. A. that a recognized econora 

 ist had been employed to make 

 a survey o^ 



Geo. A. Fox 



formation that would warrant ap- 

 proval. We do have a good deal 

 of information that would tend in 

 the other direction." 



\ Keasoiiable lte<|iiest 

 .Mr. Fox used only a portion of 

 the 45 minutes allotted to the 

 I. \. A. He then called upon 

 <:eorge E. Frazer, former comp- 

 troller of the University of Illi- 

 nois, and consulting accountant of 

 (he I. A. A. 



Mr. Frazer promised that his 

 story would be very short and it 

 was. He was calleil in consulta- 

 tion by the I. A. .\. and asked 

 how he would secure a valuation 

 of the properties involved in the 

 merger transaction. He rpplied 

 that the information could be se- 

 cured from the audits t>f the com- 

 panies involved. .Such reports for 

 less than a five-year period would 

 he useless in determining an ac- 

 curate valuation, he declared. Mr. 

 Fox told him it would bp a sim- 

 ple matter to secure tlie audits, 

 for he had bt^en promised all pos- 

 sible Information. But the audits 

 were not available and the valua- 

 tion could not he determined. Mr. 

 I'razt-r said he had experience in 

 bank mi>rgers and accounting, 

 hjniself a certified public account- 

 ant, yet in all his exjierience ho 

 has never known a hanker to put 

 a dollar into an enterprise unless 

 the enterprise laid all the figures 

 on the table. 



Tlie Legal Side 

 Bonald Kirkpatrick. l.;;al coun- 

 spI. was then called. Hp said that 

 the spt-up of the coni|>any is le- 

 i:all.v correct with some excep- 

 tions. The state constitution gives 

 a vote to each share of stock, and 

 the Class B stock givm in ex- 

 change for the property, have vot- 

 ing power. It was au-reed. how- 

 pipr. that the Class B stock would 

 be hPld in trust and deprived of 

 votinir power so thp producers 

 would control the concern, and it 

 is quite prfd>able that this is |e- 

 u'ally possible, he said. In the 

 niain. the legal set-up cannot be 

 questioned. 



The vital question is wlnllipr or 

 not the organization is co-opera- 

 tive in that the grain will be han- 

 dled to the best interest of the 

 Iirodpcers rather than in the inter- 

 ests df returning the utmost earn- 

 inu-s on the properties, said Mr. 

 Kirkpatrick. 



Klovators Xot Necessary 

 George R. Wicker, dirpctor of 



the proposition, said , 



secretary oT the I. A. I ""^ co-operative auditin;.- depart- 



A., in presenting the other side of 1 "'*'"• "''''<" '• ■*• A., h.id ten min 



the ar=:umeit. That report was 

 received by Mr. Coverdale about 

 the middle r f June, but was never 

 made available to the Illinois .Al'- 

 ricultural .Association. Mr. Sam 

 Thompson, iiresident of the I.A.A. 

 and an exec itive of the A.F.B.F.. 

 never saw I he report until Spp- 

 teinber and then only on direct 

 request. T lat report was sup- 

 pressed. Mr. Fox declared. 

 Xo Facts .\vailnlilp 

 Mr. Fox tlien read copies of let- 

 ters between the I. .\. .\. and Mr. 

 Coverdale. ii which tlip I A. .\. 

 asked for inlormation deempd iipc- 

 essary in arriving at any conclu- 

 sions concerning the project. Au- 

 ditors' repor s of each of the merg- 

 ing concerns for the past five years 

 were definitply asked for. and it 

 was presumed that these auditors' 

 reports wou d include profit and 

 loss statemfnts and might he a 

 means of ieparating the cash 

 transactions from the speculative 

 transactions. The first request 

 was written July 2!). 1024. and 

 was acknow'edired and the audi- 

 tors' reports promised within a 

 week. No reports were received. 

 A second le ter was written .Au- 

 gust 15. and it was acknowledged 

 and the reprrts promised as soon 

 as the several other investigations 

 would perm t. A third request 

 was written Aucust 20. asking 

 that thp audits be made immedi- 

 ately available. There was no re- 

 ply. The rf ports have not been 

 received yet. 

 The I, \. A. Has Not .\piiroved 

 "We recoi nize." Mr. Fox said, 

 "that with i;2fi.nnn,nnn of stock 

 to be sold. 1 good portion of it 

 must be solfl to farmers of Illi- 

 nois. We have not. as an associa- 

 tion, approvf d of the Grain Mar- 

 keting corapiiny or the sale of itSs 

 stock, and the reason is that "we 

 do not tiaTcMn .our possession in- 



utes on the program, which he dp- 

 ilared entirely Inadequate to pre- 

 sent all his documentary evidence, 

 hut he did present the conclu- 

 sions which he claimed are backed 

 by documentary evidence. 



His survey of terminal eleva- 

 tor and grain storage ahd hand- 

 ling in all principal markets has 

 resulted in nothing that led him 

 to believe that facilities such as 

 those operated at the present ime 

 by The Grain Markeing Company 

 are necessary. Facilities are ob- 

 tainable in all markets of the 

 Fnited States with the possible ex- 

 ception of Chicago, when wanted 

 and for the period required, and 

 at less than they can he owned. 

 That is quite a general condition, 

 he declared, a day by day condi- 

 tion. And he thought that same 

 condition would be shown by the 

 audited reports of the concerns 

 involved in the merger. 



Mr. Wicker also said it is high- 

 ly necessary to avoid speculation 

 in any co-operative marketing con- 

 cern, for that has ruined more 

 co-operatives than any other sin- 

 tie thing. 



Questions and .\n.swers 



In answer to a question Mr. 

 Silver said that the Grain Mar- 

 keting Company does not specu- 

 late, but merchandises grain, and 

 is merchandising more grain than 

 any other company. 



E. J. Carmody, a member of 

 the McLean Co:inty Farm Bureau, 

 asked why the audit reports were 

 withheld from tjie 1. h. A. Mr. 

 Silver said that the information 

 upon which the negotiation was 

 based were supplied by the U. S. 

 department of agriculture, infor- 

 mation gathered by the govern- 

 ment, and those figures have been 

 free to anybody at all times and 

 always have been. It was not a 

 question of Wtiat those companies 



had earned in the past, but a ques- 

 tion of what they could earn under 

 the rules and regulations when 

 filled with grain, 



\ot Rii.vln*; .Audits 

 And in further reply to this 

 qupstion, which was prpssed by 

 sp\'pral of those present, Mr. Bal- 

 lard explained that tlie Grain 

 .Marketing Company contract was 

 to ac(|uire the elevators of the 

 nrius and the management for a 

 period of years. That is all that 

 undpr thp contract tlie firms in- 

 vohed were required to deliver to 

 the Grain Marketing Company. 

 Tlie books and recor.ds and reports 

 rpiuain the private property of the 

 vendors, they wpre not passed into 

 thp hands of tl|p Grain Markpting 

 Company and npvpr will be. "Wp 

 cannot take sonipone's private 

 property and givp it to sonipfinp 

 pIs4\" he said. Hp indicated. Iiow- 

 pvpr tlmt access to these reports 

 had been perniittpd tlip appraisal 

 conimittpp of tlie Grain Markpt- 

 :ng Company. But as far as turn- 

 ing ovpr the rpports to the I..\..\. 

 it was an impossibility, he said. 



The qupstion was pressetl still 

 furtlier by farmers present, and 

 Mr. Ballard said that in a confer- 

 ence with Mr. Fox last fall he was 

 told tliat it was impossible to turn 

 over the audits, but that lie could 

 get any infiu-mation he wanted con- 

 cprninir the finaiicps of tho grain 

 firms fr(uii pitlipr tlip tax iiiconip 

 olTicp or any of the Cliicaiio banks. 

 Mr. Frazpr answpred this prgu- 

 ment by saying that the tax in- 

 come oflice and the banks will not 

 u'ivp nut information concerning 

 any firm when forbidden by thp 

 firm to givp out such information. 

 Storage of tirniti 

 K. D. L.-iwrencp. niPinhpr of the 

 Mel. Pan County Farm Biirpau. rp- 

 called that Mr. Silvpr had said 

 that hpforp the organization of the 

 Grain Marketing Company the Chi- 

 cago plp%'ators involvpd wpre fillpd 

 only '10 ppr cent of capacity ,".s a 

 rule, while tlipy liavp hpen oper- 

 ated at 100 ppr cent c.'ipacit>- since 

 the ninrketini; company was or- 

 ganized. "How do fanners bpne- 

 fit by that chanire?" he was asked. 

 Mr. Silver's answer w-as that Ftor- 

 airp is chpappr when the full ca- 

 p.icity of a warehouse is utilized. 

 Tlirre developed many other 

 qupstif>ns and answers and argii- j 

 iiipnts. Onp w-as concerning a cer- 

 tain district in Indiana that is re- 

 ported to have been out of line 

 with seaboard prices before thp 

 iiiprgpr company started operating, 

 and is now back in- line again. 

 This was claimed to be true by 

 the merger people — they claimed 

 they did raise the price le\el in 

 that territory, but contrary argu- 

 ments were presented by Clifford 

 Gregory, editor of Prairie Farmer. 

 HOW filJAIX MEKGRft Mni-rr- 

 I\<i WAS r.AMiKD; IJKSl'I/rs 

 I'l.KASK I. A. A. OIT-'K'I.II.S 



Jan i:s. 102.'> 

 Pnnlacrapli Xe. Deparliiient 

 .\ combination of circumstances 

 and direct action on the part of 

 the Grain Marketing Company 

 thru its local representatives and 

 friends, particularly Mrs. Antoin- 

 ette Funk, resulted In calling the 

 grain merger meeting here last 

 Saturday, a reiiort of which was 

 L'iven in yesterday's Pantagrnph. 

 The ni.-iiiner of calling that meet- 

 ing is of as much general interest 

 as the meeting itself. The I. A. A. 

 (dficials who took part are well 

 pleased with the result, altlio hav- 

 ing nothing to do with the ar- 

 ranirements. 



Fp until about a month ago the 

 officers of the McLean County 

 Farm Bureau knew nothing about 

 the grain merger proposition be- 

 ing undertaken by the recently or- 

 ganized Grain Marketing Com- 

 pany except what they have read 

 in the news letters of the Ameri- 

 can Farm Bureau Federation arid 

 the farm and daily press. They 

 knew in a general way about the 

 plan and that the American Farm 

 Bureau executive committee ap- 

 proved of the plan, with the ex- 

 ception of Sam Thompson, the Il- 

 linois member. And they knew 

 that the state association with- 

 held its endorsement after making 

 as much of an investigation as was 

 permitted it. They knew that the 

 state association, the Illinois Agri- 

 cultural Association, had asked 



for information it considerid vital- 

 ly necessary and had not hpen able 

 to spcure that information. But 

 they did not know any tif the de- 

 tails. 



A strict but puhlically known 

 hands-oft jiolicy was niaiiUnin.d 

 by the I. A. A. 



Pressure Is .Xpplied 

 But the situ.ition in .McLean 

 county changed about a month 

 ago. Agentfvof the Grain .Markpt- 

 in.g Company w-ere sent here to 

 'make a survey for a stock splling 

 campaign. They visited tlip farm- 

 prs' elevators, got in touch with 

 many of the farm biiipau niemhprs 

 and officers, called at least one 

 upiieral meeting. They pre.'tpntpd 

 tlipir arguments, urgpd that it is 

 a real co-operative jilaii and that 

 it is a wonderful clianc" for farm- 

 ers to pprfpct thp bi>;~p.-^i iiKirket- 

 ing agpncy in Amprica. utilizing 

 the skilled nianageriiil ability of 

 expert grain men. "They argued 

 that the plan was properly safp- 

 guarded in the interesls of pro- 

 ducprs. Tiiey asserted that all in- 

 formation had been tiirtpd ovpr 

 to the Illinois Agricultural .\sso- 

 ciation and there was no founda- 

 tion for the I. A. A.'s stand. They 

 pointed out that the public r. fiisal 

 of the I. A. A. was sulistantially 

 a stand against the merger. Their 

 arguments were such as to cause 

 the nipmbprslilp of the 1. .\. A. to 

 demand that the I. A. .\. Pitlipr 

 take a strong stand against or for 

 the merger prop<isition. 



Confidence in the I. .\. \. and 

 its otTicers was sliaki n. Some of 

 tlip local farm bureau nipu wpre 

 "sold " on thp nieri:pr plan and 

 did not like the attitudp of the 

 I. .\. .\. in refusing to ( iidorse, 

 thus handicapping the nipri;pr 

 company by destroying confidpnco 

 of tlip farniprs. Lpttprs to the 

 I. A. A. olTicprs. and even visits 

 to the I. .\. A. office in ChicaL'o. 

 did not satisfy them. 



Their position was that tlii-y 

 saw a big and \-aluable co-ojipra- 

 tive movpment in the making, 

 backed by their national organi- 

 zation hut not by tli'-ir statp asso- 

 ciation, and they lacked informa- 

 tion that tlipy deemed tli' y should 

 have. 



Otlipr local ofiicprs and iiipmbprs 

 wpi'p by no iiipans "sold" on Ilip 

 [dan and they wpre williir- to ad- 

 lipi'p to- and support thp 1. \.^ .\. 

 stand p\tii llio tie-y did not liavp 

 all thp dptailpd information. 

 I'ariiieis Slioiilil Know .Ml 

 On Ii.cpiiibpr 27, in tlip annual 

 meetin-'- of the .Mc'Lean Count.v 

 Fanii Bureau, a resolution was 

 passed without discussion which 

 pnclorspil thp stand takpn bv the 

 I. A. A. ollicials. 



The following week, howpvpr, 

 Mrs. Anioinelte Funk became a 

 nipiiibpr of the County Farm l:u- 

 I'pau and slie di.'mandpd thp ri:;Iit 

 to appi ar beforp the executi\e 

 commitlpp. Slip argued that tlie 

 tariiiprs of .McLean county should 

 liavp an opportunitv to know all 

 tlip fads concprning thp Grain 

 .MarkPling Company and insisted 

 that a nipcting be called for that 

 imrpose. The directors, theiii- 

 .selves not knowing as much about 

 the affair a;- they w-ould like, con- 

 .sented to the meeting. It was 

 sug;;ested that the I. A. A. should 

 be rppre.spnted in that meeting, 

 and that was agreed. It wtas sug- 

 gested that the I. A. A. should 

 be asked about it before the meet- 

 ing was called, but that was 

 clainied to be entirely unneces- 

 sary by .Mrs. Funk. So the meet- 

 ing was called without previous 

 notice or conference with the 

 I. \. \ . and it was widely adver- 

 tised that the I. A. A. officers diad 

 been especially invited to apjiear, 

 .\n I'nusiml Sitiiution ' 

 Ofiiceis of the I. A. A. found it 

 advertised that they were invited 

 to appear here. They had the 

 choice of coming out in the open 

 with all their information or of 

 refusing to come at all and thus 

 letting the Grain .Marketing Com- 

 pany prespnt only its side and let- 

 ting the farmers get an unfavor- 

 able impression of the ,1. A. A.'s 

 stand. It was an unusual and un- 

 pleasant situation for them for 

 they did not want to actively fight 

 the . marketing company which 

 would mean active opposition to 



