358 



THE GRAIN TRADE 



during the early 70's. But the indications are that these all went 

 out of existence. After this there grew up two kinds of country 

 elevators, namely, the " independent " house, owned by some 

 local business man, and the "line" house, belonging to some grain 

 firm operating a number or line of country elevators. Most large 

 terminal elevator companies owned a line of country houses; so 

 did the larger mills. These elevators in each grain State were 

 loosely federated in a State Grain Dealers' Association, to check 

 irresponsible grain dealers, to fight "scoop shovelers," and for 



general protective purposes. To 

 prevent price wars and destruc- 

 tive competition the " regular" 

 elevators (as they came to be 

 called) developed a price fixing 

 scheme. A small committee,when 

 terminal price changes warranted, 

 would send out to the country, to 

 each house, a new price schedule. 

 This prevented any price war. 

 But more important yet, it guar- 

 anteed a very liberal margin of 

 profit to the terminal dealers, at 

 the expense of the farmers. The 

 State of Nebraska, for instance, 

 was divided into 13 districts, on 

 the basis of freight rates, and 

 prices were fixed accordingly for 

 each district. In Iowa the price 

 fixing was administered through 

 the Secretary of the Iowa Grain Dealers' Association, with head- 

 quarters at Des Moines. In Illinois, in a similar manner, the 

 secretary of the Grain Dealers' Association safeguarded the inter- 

 ests of the "regulars." This system of graft at the expense of the 

 farmer finally reached the breaking point. So far as our historical 

 records go, the revolt of the farmers began at Rockwell, Iowa, in 

 1889, when the first successful farmers' elevator was erected. This 

 little corporation inserted in its by-laws that very much discussed 

 provision, namely, the "penalty clause." This meant that the 

 member of the company delivering his grain to the competitor 

 must pay a penalty to his own company of so much a bushel. 

 Whether legal or illegal, it worked. And the "regular" house, 

 after securing much farmer grain by raising its price, found that 



FIG. 73. Hiram N. Sager, Ex-President of 



the Chicago Board of Trade. A type of the 



American grain merchant. 



