I4 8 THE BUTTER INDUSTRY IN UNITED STATES [372 



lowed before the organization of the butter market occurs. 

 The plan does not command the respect of either the pro- 

 ducer or the dealer, and, as it is thought that it does not 

 furnish a reliable trading basis, it is very unsatisfactory. 



CAUSES FOR THE ORGANIZATION OF EXCHANGES 



The movement that resulted in the organization of the 

 producers' and middlemen's markets was due to several 

 causes. One of these was the struggle between producers 

 and commission men concerning the division of the price, 

 and another was the great need felt by both classes for a 

 reliable trading basis. 



The struggle between producers and commission men 

 concerning the division of the price paid for butter by the 

 jobbers or retailers, is not only evident from complaints and 

 bitter arraignments appearing in reports of dairy associa- 

 tions, but the basis for the trouble is also admitted at times 

 by the dealers themselves. For instance, the San Fran- 

 cisco Produce Review makes the following statement which 

 was copied by the Elgin Dairy Report of March 2, 1903 : 



The wholesale dealers in butter and eggs of Los Angeles, 

 Cal., through their organization, The Produce Exchange, have 

 decided in the future to charge eight per cent commission on 

 consignments instead of five. It is maintained by them that at 

 five per cent they can only conduct business at a loss and make 

 up by " stealing," as one dealer puts it, out of the sales account 

 or on weight. It is thought that the move will have the effect 

 to change business from consignments on commission to di- 

 rect sales by shippers under contracts. 



The trading class of Los Angeles, Cal., has been only re- 

 cently passing through the same changes of marketing 

 methods that the dealers in eastern cities had gone through 

 much earlier. In 1903, the wholesale dealers in Los An- 



