COOPERATIVES, 1920-32 3 01 



the "rising tide for cooperative marketing" was going to drive the private 

 grain traders to the wall. Their reasoning ran something like this: "The 

 farmers have got the cooperative bug. It's going to break us. Why not 

 organize a farmers' cooperative marketing concern, and sell to the farm- 

 ers our elevators before they build warehouses of their own. We know 

 that the farmers will never pay large enough salaries to get the brains neces- 

 sary to handle such a monstrous corporation and eventually the company 

 will fail. The cooperative idea will die, and we'll get our elevators back." ! 



Whatever the motives were, the fact is that the Grain Marketing Com- 

 pany was on the road to failure from the start. Very little of its stock was 

 sold. Funds were lacking. Wheat growers, in particular, failed to buy stock 

 in it. Also, in order to qualify under the state and federal laws for coopera- 

 tive associations, the company had to be farmer-owned and do as much 

 business for its members as it did for the outsiders. This it failed to do. 35 



It appears that the company functioned until the latter part of June, 

 1925, but then its difficulties rose to the surface. The options to purchase 

 the properties expired and the terminal facilities were returned to their 

 original owners. Charges and countercharges followed. In 1926 the ques- 

 tion was turned over to an arbitrator, who reported a fraud of $2,700,000. 



Public opinion was shocked when the award of the arbitrator was an- 

 nounced. The bitterness of the farmers grew. There quickly rose a 

 demand, especially in Illinois, to punish the guilty parties and to take 

 safeguards against similar acts in the future. An appeal was also made to 

 the Illinois legislature, and in 1927 the speaker of the house appointed a 

 committee to investigate grain warehousing in Chicago and look into the 

 causes for the failure of the Grain Marketing Company. This led to the 

 uncovering of other fraudulent acts. 36 



The third major attempt at large-scale marketing reform, the Farmers' 

 National Grain Corporation, differed from the other two by virtue of its 

 longer life and by its being a government-sponsored agency. It came into 

 being in 1929 shortly after a call was sent to farm groups to meet in 

 Chicago to organize a national marketing agency. There were in the 



34. F. Boselly, "The Armours Betray the Farmers," The Nation, CXXV (August 

 31, 1927), p. 196. 



35. Saturday Evening Post, CXVIII (October 3, 1925), p. 30. 



36. Goldstein, Marketing: A Farmers' Problem, pp. 241-56. 



