356 THE GRAIN TRADE 



(2) Evolution of Terminal Elevator Railroad Monopoly. 

 Following the Civil War, the competing railroads in the grain 

 States found it necessary to erect terminal storage in order to 

 secure their share of the grain business. Later these terminal 

 elevators or warehouses were also built by large grain firms on 

 the terminal markets. These firms, in many cases, then built a 

 series or "line" of country elevators along particular railroads. 

 There soon developed a form of combination between railroad 

 and terminal elevator whereby rebates or other privileges were 

 given to the terminal elevator companies, so that one firm would 

 have a monopoly of the grain business along a certain railroad. 

 Terminal elevator companies were at first mere custodians of 

 grain. But this practice failed to yield enough income, so these 

 companies became grain merchants in competition with their 

 customers hiring storage in their bins. This gave them vast 

 advantages, particularly in the mixing of grain and the manipula- 

 tion of grades. Several scandals arose out of the sale of fraudulent 

 warehouse receipts. When the terminal elevator companies had 

 well-nigh completed their railroad monop'oly of the country grain 

 trade and had entered the terminal market as grain dealers, and 

 the future market as heavy grain speculators, they were in a fair 

 way to drive out all competitors. Seats on the grain exchanges 

 fell in value. Grain commission firms were fast quitting the 

 business as a losing game. When things reached this stage, 

 reforms began to be worked out from within. The Chicago Board 

 of Trade, for instance, sent a group to the capital of Illinois to 

 lobby for a bill for a State warehouse act, prohibiting a public 

 warehouse owner to be a dealer in grain and a custodian of grain 

 in the same warehouse at the same time. Consequently any mixing 

 of grain in Illinois had to be done in private warehouses, following 

 the passage of this Act in 1871. The railroad rebate evil continued, 

 however, for many years, even after the passage of the Interstate 

 Commerce Act of 1887. It remained for one member of the Mil- 

 waukee Chamber of Commerce, trying to operate a terminal 

 elevator in that market in the face of the railway-elevator combine, 

 to bring the concrete situation to the attention of President Roose- 

 velt. The significance of this act in securing remedial legislation 

 in the form of the Hepburn Act is thus told by the editor of the 

 Price Current Grain Reporter : 5 



"Of the many things that stand to his credit as a statesman, for one at 

 least Theodore Roosevelt will be held in grateful remembrance by the American 



6 Osman, E. G., Price Current Grain Reporter, Jan. 15, 1919, p. 7. 



