TRANSPORTATION AND STORAGE FACILITIES 609 



profits by coming in between the creamery and the dealers. They 

 bought butter to resell it to the latter. The immediate result was 

 one which is customary in bullish markets. Prices went up. More- 

 over, the problem of ascertaining the actual demand became more 

 complex. A false, unreal, speculative demand was created on the top 

 of the market and people became freer in their purchases, steadily 

 boosting up the price, unmindful temporarily of the work of the slowly 

 operating negative forces, such as limited demand, decreasing con- 

 sumption, substitutes, and imports, the influence of which is taken 

 up below. Dealers themselves naturally were affected they too 

 began to speculate. To their assistance came the storage houses, 

 which were, of course, anxious to increase the amount of goods put 

 away in storage. The cold-storage business became so profitable that 

 it invited serious competition, and new methods to attract the dealer 

 became necessary. Lowering the rates for storing was not enough 

 of an inducement and it would cut the profits. To begin with, they 

 took over the -very legitimate work of lending money on butter at 

 the regular banking rates. Dealers cannot usually afford to lay out 

 all the capital necessary to finance the storing of butter and they will 

 rather borrow the money from cold storages than from banks, if not 

 for any other reason than to be able to take out butter the moment 

 they need it without going for the bank's release. Then there is the 

 advantage of having a larger balance in the bank for an extra day. 



But storage houses soon began to compete as to the amount lent 

 on each tub of butter. For instance, up to 1908 the Quincy Cold 

 Storage House had monopoly over the storage business in Boston. 

 It did the legitimate business of keeping the butter in a certain tem- 

 perature, leaving lending operations to the banks. The Boston Ter- 

 minal Storage, when opening up in Boston in 1909, started at once to 

 lend money on butter. The Quincy House had to follow. From $10 

 per tub the amount lent soon went up to $13, and finally the Boston 

 Terminal, backed by capitalists, began to give $16 on 6o-lb. tubs of 

 butter. Moreover, they would allow a dealer to buy butter on drafts, 

 attending themselves to the payment of the latter and collecting from 

 the dealers the difference between $16 and the actual cost of the tub 

 of butter. Thus the dealer had to invest very little three or four 

 dollars per tub. The result was that buying became very easy and 

 dealers instead of storing the normal quantity that they were accus- 

 tomed to sell to their trade began to speculate, buying for the sake 

 of reselling to other dealers, who might go short. 



