Reviewing all this, the Grain Commissioners came to the conclusion that it was time to consider seriously the erection of Government terminal facilities nearer the grain fields. Especially in Alberta was the need great for inspection and terminal storage to be nearer the producer. It would relieve congestion, benefit the whole grain trade and provide for the future possibility of alternate shipping routes via Hudson Bay or the Panama Canal.

It was true that the Royal Grain Commission of 1906-7 had raised objections to interior terminals and inspection, such as the extra expense of handling, the extra loss to the grain in handling and re-handling, the possibility of the railways solving the car shortage problem, the difficulty of getting shippers to send their grain to such elevators and so forth. But the Board considered that, in view of other possible routes than the Eastern, these objections were not strong enough to balance the benefits. Accordingly they recommended the Government to take action, the elevators to be regarded as public terminals in which mixing of grades would be forbidden.

While the farmers in all three Prairie Provinces were busy with these vital matters, the Grain Growers' Grain Company meanwhile was wading along through all the difficult seasons of car shortage, expanding its usefulness and trying its best to give the maximum of service the while it was reaching out into the export field in an experimental way.

Then, in 1911, a situation arose unexpectedly that caused turmoil among the officers of the pioneer company and led to considerable anxiety among the Grain Growers all over the West. For, through an excess of zeal upon the part of an employee, the Grain Growers' Grain Company suddenly found itself dragged into the maelstrom of "The Pit." It was accused of trying to corner the oat market and was forced to fight for very life.

So that at last it looked indeed as if Chance had delivered the farmers into the hands of those who preferred to see them eliminated altogether from the market.



CHAPTER XVI

THE GRIP OF THE PIT

Now, infidel, I have thee on the hip! —Merchant of Venice.

The visitors' gallery is an excellent vantage point from which to view the trading floor of the Exchange. It runs the full width of the south wall. The chairs entrenched behind the rail have acquired a slippery polish from the shiftings of countless occupants just as the wall behind has known the restless backs of onlookers who have stood for hours at a stretch.

It is here that the curious foregather—good people from every walk of life except the grain business. The tourist who is "just passing through your beautiful city" and has heard that Winnipeg has the largest primary wheat market in the world—the tourist drops in to see the sights. Friend Husband is there, pretending to be very bored by these things while fulfilling his promise to take Friend Wife "some day when there's something doing." Young girls who only know that bulls hate anything red and that bears hug people to death—they are there, thrilled by the prospect of what they are about to witness with but a very vague idea of what it will be. A dear old lady from the quiet eddies of some sheltered spot has been brought in by the rest of her party to see "goin's on" of which she does not approve because gambling is a well-known sin. She is somewhat reassured by noting a few seats away a man who wears the garb of a clergyman; presently he will take notes for his forthcoming sermon on "The Propinquity of Temptation and Its Relation to the Christian Life." The two young women who whisper together in the corner have been reading stockmarket stories in the magazines and they are wondering which of the traders, assembling on the floor below, will have his coat and collar torn off and which will break down and give vent to those "big, dry man-sobs" when his fortune is wrecked!

Not the least of the sights at the Grain Exchange is the Visitors' Gallery!

Two tanned farmers are discussing quotations and general conditions in a matter-of-fact way. War demands, the unfavorable United States Government report and rumors of black rust are making for a bullish condition. Cables are up and the market promises to be wild this morning. The gong will go in five minutes.

"The Pit" is out in the middle of the floor. There is an octagonal platform, raised a couple of feet from the floor level. In the centre of this platform three wide steps descend to floor level again; so that the traders standing on the different steps are able to see over one another's heads and note each other's bids. On the west side of the Pit is an elevated, built-in desk like those seen in court-rooms, somewhat resembling an old-fashioned pulpit; here three men sit throughout the session. One keeps his fingers on the switch-box which operates the big clock on the north wall where the fluctuations of the trading are flashed on a frosted dial in red-light figures. At his left sits a second man whose duty it is to record the bidding on an official form for the purpose. At the right is a telegraph operator who sends the record of the trading as it occurs to other big Exchanges—Minneapolis, Chicago, New York, etc.

The telegraphic report registers in several instruments attached to the big blackboard that occupies the entire north wall. Operators with chalk and chalk-brush in hand move about the platform at the base of this blackboard, catching the quotations from the clicking instruments and altering the figures on the board to keep pace with the changing information. A glance at this great blackboard will furnish the latest quotations on wheat, oats, barley, flax, corn, etc., the world over.

Ranged along the entire east wall are the clacking instruments of the various telegraph companies for the use of the brokers and firms trading on the Winnipeg Exchange. Telephone booths at the north, seats for friends of members on the west side, weather maps, etc., beneath the gallery—these complete the equipment of the big chamber.

The group about the Pit, waiting for the market to open, grows rapidly as 9.30 approaches. Members of the Exchange saunter in from the smoking-room, swap good-natured banter or confer earnestly with their representatives on the floor. In response to the megaphoned bellow of a call boy, individuals hurry to the telephone booths. Messengers shove about, looking for certain brokers. The market is very unsteady; it may go up or down. The men are clustering about the Pit now; most of them are in their shirt-sleeves and they are on tip-toe like sprinters who wait for the starter's pistol. Some of them have instructions to dump wheat on the market; some have been told to buy. Hundreds of thousands of bushels will change hands in the first few minutes. The market may go up or it may go—

Bang goes the gong! They're off! Above the red abbreviation, OCT., at the bottom of the big clock the blood-red figure 5 indicates the opening of the market at $1.45 even. With a mad swirl the trading begins in a roar of voices. A small forest of arms waves wildly above jostling bodies. Traders dive for each other, clutch each other and watch the clock. The red figure 5 has gone out and 7/8 has in turn vanished in favor of 5/8—1/2—3/8—4—(?) Instead of going up, she's falling fast. Before the market closes the price may rebound to $1.55. Somebody will make a "clean-up" to-day and many speculators will disappear; for margins are being wiped out every minute.

To the Gallery it is a pandemonium of noise, unintelligible in the volume of it that beats against the void of the high chamber. Only one shrill voice flings up out of the roar:

"Sell fifty Oc, sev'-eights!" He offers 50,000 bushels of wheat for October delivery at $1.43 7/8 per bushel. It's that fellow down there with the blazing red tie half way up his collar. He hits out with both hands at the air as he yells. A surge of buyers overwhelms him. They scribble notes upon their sales cards and go at it again.

Down there in the melee those men are thinking fast. With every flash of the clock the situation changes for many of them. Some pause, watching, listening; others who have been quiet till now suddenly break in with a bellow, seemingly on the point of punching the noses of the men with whom they are doing business. Lightning calculation; instantaneous decisions! "Use your discretion" many of them have been cautioned by their firms and they are using it. A moment's hesitation may cost a thousand dollars. Trading in the Pit is no child's play; rather is it a severe strain even upon those who know every trick, every firm and the character of its dealings, every trader and his individuality, his particular methods—who know every sign and its meaning, who can read the coming shout by the first movement of the lips. And always, in and out, are darting the telegraph messenger boys with yellow slips that cause upheavals.

"Why don't they take their time and do their trading more quietly and systematically?" ventures Friend Wife up in the gallery.

"And lose a cent a bushel while they're turning around, eh?" laughs Friend Husband. "On a hundred thousand bushels that'd only be a thousand dollars. Of course that's mere car-fare!"

The dear old lady from the quiet eddies of Shelterville is shaking her head in disapprobation and communing with herself upon the iniquities of gambling.

"My, oh my! What won't men do for money! Jt-jt! Just look at 'em! Fightin' like that for money they ain't earnt! An' that nice lookin' young feller with the intelligent gold specs!—Dear me, it's enough to make a body sad!"

She could not know that but comparatively few of the traders below were representatives of brokerage firms which were trading on margins for speculating clients—that most of the traders were negotiating legitimate deals in futures for firms who actually had the grain for sale, for exporters who would take delivery of the actual wheat for shipment, for milling companies who would grind it into actual flour.

Because trading for delivery in future months affords opportunity for speculation, it is not to be condemned necessarily. It is the balance wheel which steadies the entire grain business. Even the speculating element is not without its uses at times and the layman who ventures to condemn This or That out of hand will do well to make sure he understands what he is talking about; for the business of the grain dealer is so subject to varying conditions and so involved in its methods that it is one of the most difficult to be found in the commercial world.

Trading in futures finds birth in the very natural disinclination of Mr. Baker to buy his flour by the warehouseful. He does not want to provide storage for a year's supply, even if he could stand such a large bite out of his capital without losing his balance. So while the bakery man is anxious to order his flour in large quantities for future use, he is equally anxious to have it delivered only as he needs it, paying for it only as it reaches him—say, every three months.

Before contracting for the delivery of the flour on this basis Mr. Miller must look to his wheat supply on a similar basis of So-Much every So-Often and he, too, has an eye on storage and, like his friend the baker, he "needs the dough," as they say on the street, and he does not want to part with any more hard-working money than he can help. Accordingly he looks around for somebody who has wheat for sale and will sell it right now at a fixed price but defer delivery and payment to a future date. With the price of his wheat thus nailed down, Mr. Miller can set the future price on his flour to his customers, taking delivery and paying for the wheat as he requires it for filling his flour orders.

In the meantime where is the wheat? Out near the fields where it was grown, in country elevators perhaps, ready for transportation to market as the law of supply and demand dictates instead of the whole crop being dumped at once and smothering prices below the cost of production. Or perhaps it is in store at the terminal where Mr. Exporter can handle it. It will be seen that the mutual arrangement to buy and sell for future delivery simplifies matters for everybody in the grain trade.

The manner in which the legitimate trader in futures protects himself from price fluctuation is easily understood. While a deal in cash wheat would refer to a definite shipment as shown by warehouse receipts, a deal for future delivery is merely an obligation involving a given quantity of grain at a given time at a given price. Being merely a contract and not an actual shipment, the seller does not require to produce the grain immediately nor is the buyer required to hand over the purchase price when the trade is made. Thus it is possible to buy a thousand bushels to-day for October payment and sell a thousand bushels to-morrow for October delivery, cancelling the obligation. The trade can be balanced at any time before October 1st. Again, a thousand bushels of October wheat may be bought (or sold) to-day and the future switched to May 1st by the sale (or purchase) of a thousand bushels for May delivery.

Take the man with the blazing red tie half way up his collar, the man who this morning offered to sell fifty thousand bushels for October delivery at $1.43 7/8. Suppose that he represents a company with a line of elevators at country points. To his office at Winnipeg has come word from country representatives that fifty thousand bushels have been purchased for the company. At once he enters the Pit and sells fifty thousand bushels for delivery at a future date, thereby "hedging" the cash purchase out in the country. Once this future of fifty thousand is sold the company no longer is interested in market prices so far as this grain is concerned. If the market goes up, their cash grain is that much more valuable, offsetting the loss of an equal amount on the future delivery; if the price goes down, what is lost on the cash wheat will be gained on the future. So that the difference between the price paid for the grain at the country elevators and the price at which they sold "the hedge" is the only thing which need concern the grain company and it is here they must look for expenses and profits. This method of hedging enables a grain company to make purchases in the country on much smaller margins than was possible in the early days when the marketing machinery was less completely organized. It eliminates to the greatest extent the necessity of speculating to cover risks.

The speculator's opportunity comes in connection with the fluctuations of the market in deliveries. He merely bets that prices will go up or down, as the case may be. He is not dealing in actual wheat but in margins. He buys to-day through his broker, who has a seat on the Exchange, and deposits enough money to cover a fluctuation of say ten cents per bushel. If October wheat to-day is quoted at $1.45 his deposit will keep his purchase in good standing until the price has dropped to $1.35. He must put up a further deposit then or lose the amount he has risked already, the broker selling out his holding. If the speculator is on the right side of the market—if he has guessed that it will go up and it does go up—he can sell and pocket a profit of so-many-cents per bushel, according to the number of points the price has risen. If he has bet that the market will go down the situation merely is reversed.

The machinery for handling the huge volume of business transactions in a grain exchange must be complete and smooth running to the last detail, so designed that every contingency which may arise will be under control. For simplicity and efficiency in this connection the Winnipeg Grain Exchange occupies a unique position among the great exchanges of the American continent; in fact, it is a matter for wonder that its methods have not been copied elsewhere.

The Winnipeg Grain and Produce Exchange Clearing Association is a separate organization within the Exchange and to it belong all the Exchange members who deal largely in futures. Each day the market closes at 1.15 p.m. By two o'clock every firm trading on the floor must hand in a report sheet, showing every deal made that day by the firm—the quantity of wheat bought or sold, the firm with whom the trade was made, the price, etc. If on totalling the day's transactions it is found that they entail a loss, the firm must hand over a cheque to the Clearing House to cover the loss; if a gain in price is totalled the Clearing House will issue a cheque for it to the firm so gaining. Thus, if Jones & Brown have bought wheat at $1.39 and the market closes at $1.35 they lose four cents per bushel on their purchase and must settle the difference with the Clearing House. All differences between buyers and sellers must be settled each day and if the volume of trades has been heavy, the Clearing House staff work on their books—all night, if necessary—until everything has been cleared for next day's business. The firm which loses to-day may gain by to-morrow's trades, maintaining good average business health. Any private trading which may take place after official trading hours is known as "curb" trading.

The rules of the Clearing House are very strict. Any firm which fails to report by two o'clock is fined. The Clearing House assumes responsibility for all purchases and sales and, being actually liable, keeps close tab on every firm. Each firm has a certain credit on the books of the Clearing House, allotted impartially, according to its standing, and this credit forms the fixed basis of that firm's dealings. If its activities exhaust the line of credit, the Clearing House calls for "original margins" at once—a deposit of so-many cents per bushel for every bushel involved and for every point which the market drops. The amount per bushel called for is entirely at the discretion of the Clearing House authorities and if the quantity of grain reaches dangerous proportions the deposit required may be set so high that it becomes practically equivalent to cash purchase. To "corner the market" under these conditions would require unlimited credit with the Clearing House.

When Jones & Brown are "called" for deposit margins they drop everything and obey. They have just fifteen minutes to reach the bank with that cheque, have it "marked" and rushed to the Clearing House. If they fail to arrive with it the Manager of the Clearing House will step into their office and if there were any "hemming and hawing" Jones & Brown would be reported at once to the Secretary of the Exchange who would call a hurry-up meeting of the Exchange Council and Messrs. Jones & Brown would find themselves posted and all trades with them forbidden.

All clerical errors in regard to trades are checked up by the Clearing House and fines paid in for mistakes. Only a nominal charge is made for its services—enough to pay overhead expenses—but the fines have enabled the Clearing House to accumulate a large Reserve Fund which gives it financial stability to provide for all responsibilities should occasion arise through failure of any firm. All futures which have not been cancelled before delivery date are negotiated through the Clearing House and with its assistance the grain can be placed just where it should go and tremendous quantities of it are handled without a hitch and with the utmost despatch.

Excitement in the Pit is not always over wheat. It may be oats. It was Canadian Western Oats which became the storm centre in 1911 when the Grain Growers got into difficulty with the "bears." Traders who attempt to boost prices are known as "bulls"; those who are interested in depressing the market are "bears." A trader may be a bear to-day and a bull to-morrow; thus the opposing groups are constantly changing in make-up and the firm which was a chief opponent in yesterday's trading may be lined up alongside the day following, fighting with instead of against. It is all in the day's business and the strenuous competition on the floor, into which the uninitiated visitor reads all manner of animosity and open anger, is a very misleading barometer to the actual good feeling which prevails.

In recording what now took place in the Pit in connection with the farmers' commission agency it will be well to remember that the rest of the traders would have acted in the same way toward any firm which was fool enough to leave the opening for attack. It may be that as the thing developed some of those who were specially interested in the downfall of the farmers' organization seized the opportunity to ride the situation beyond the pale of business ethics and in their eagerness to be "in at the death" revealed special vindictiveness. But in view of the long struggle with this element it was only what the Grain Growers should have expected when they ran their heads deliberately into the noose.

The situation was this: Shortly after New Year's the export demand for Canadian Western Oats became heavy and it looked as if in Great Britain and all over Europe, where the oat crop had been small, there would continue to be a shortage of oats. In spite of this situation, however, no sooner was the proposed reciprocity agreement reached between the Canadian and United States governments of the day, on January 26th, than market prices began to go down.

The then Manager of the Grain Growers' Grain Company came to the conclusion that this price lowering was a local condition and that the export market for oats was too strong to justify it or sustain it.

"I'll just step into the market and buy some oats," said he. "Later on I'll sell for export at a satisfactory figure." Accordingly, one fine morning he went into the Pit and began to buy.

The Manager's motive in attempting to sustain the market may have been of the best; but it was the first time that such methods had been attempted by the Grain Growers—methods which were not at all in keeping with the avowed principles of the Company. The Board of Control had every confidence in their Manager and, although he was merely a salaried employee and not an executive officer, he had been given a pretty free hand in the conduct of the Company's operations. Apparently it did not occur to him that he should consult the Board before entering the market on a speculative basis. Had the Board known what he was about to do they would have vetoed it; but when they did discover what was afoot it was too late to prevent the situation. It developed very swiftly.

"The Grain Growers are up to the neck in May oats," was the whisper which passed about among the other traders. That was all that was necessary.

"Sell May oats! Sell May oats!"

On every side of the Pit they were being offered by thousands of bushels—five—twenty-five—fifty thousand! The idea was to load up the Grain Growers' Grain Company to the point where their line of credit with the Clearing House would become exhausted, after which every bushel would require a marginal deposit. Then when the Company could carry no further burden the Clearing House would be forced to dump back the oats onto the market, breaking it several cents per bushel. At this lower price the traders who had obligated themselves to make these big deliveries would buy back the necessary supply of oats at a profit and everything would resume the even tenor of its way—except the Grain Growers, of course. Their serviette would be folded. Their chair would be pushed back from the table! They would be through!

Up until now all the troubles of the farmers in marketing their own grain may be said to have come from sources outside themselves; but in the present instance they had nobody to blame but themselves for the predicament. It arose at a time, too, when the other grain dealers were beginning to recognize the farmers as a force in the grain market—a force which had come to stay. It was unfortunate, therefore, that just as they were beginning to acquire a standing as a solid and sensible business concern, the Grain Growers' Grain Company should find themselves driven into a corner, their backs to the wall, the focus of pointing fingers and gleeful grins.

The fact that a salaried employee, not an officer of the Company, had acted on his own initiative without the consent of the directors was no excuse for a reliable business concern to tender as such. The first question flung back at them naturally would be: "Then your 'Board of Control' doesn't control, eh?" For although the Board of Control did not know what their Manager was doing until it was too late to prevent it, they should have known. That is what they were there for—to protect the shareholders from managerial mistakes.

However, there they were. The only thing they could do was to fight it out to a finish in the Pit and, if they survived, to see that no similar mistakes occurred in the future.

All sorts of rumors were flying about the corridors of the Exchange, gathering momentum as they passed from lip to lip, swelling with the heat of the excitement until it was a general guess that the Grain Growers must be loaded with anywhere between five and eight million bushels of oats more than they had been able to sell.

It was only a guess, though, and a wild one. Many traders would have given a good round sum to know exactly how the farmers' company stood on the books of the Clearing House. Only the Clearing House and the Company itself knew the true figures and the Clearing House officials were men of the highest integrity who dare not be approached for secret tips.

Thanks to the splendid export connection which had been built up in the Old Country and to the equally solid financial relations with the Home Bank, the farmers' agency was selling oats for export very rapidly. It began to look as if they would get out from under the threatening avalanche without much loss, if any.

The Company's old-time enemies apparently saw an opportunity to undermine its credit at this crisis; for attacks began to appear in print—accusations of speculation, of official negligence and so forth. If the Grain Growers could be prevented from paying for the large quantity of oats, delivery of which they would have to take on May 1st to complete the export sales made during the winter—if they could be made to fail in filling these export orders when navigation opened, they would be smashed.

But in attacking the credit of the Grain Growers, these opponents overlooked the rapid increase in paid-up capital and the ability of the farmers to secure money outside of Winnipeg. It was not being forgotten by the Grain Growers that upon the first day of May there would be delivered to them over 2,200,000 bushels of oats.

When the day arrived, therefore, the money was on hand to meet every contingency. Every bushel was paid for immediately. Within a few weeks half of the quantity was riding the waves of the Atlantic, bound for the Old Country to fill part of the sales already made there.

Before long some of the grain companies which had sold the oats were trying to buy them back. Had the farmers' company been a speculating firm they might have turned upon the market and cornered the oats with a vengeance. It was one of those rare occasions when a corner could have been operated successfully to a golden, no-quarter finish; for the export demand was sustained and the local market could have been made to pay "through the nose" for its fun.



CHAPTER XVII

NEW FURROWS

Fishes, beasts and fowls are to eat each other, for they have no justice; but to men is given justice, which is for the best.—Hesiod.

The situation was changing indeed for the Grain Growers in Western Canada. In spite of all opposition the farmers had made themselves a factor in the grain trade and had demonstrated their ability to conduct their affairs on sound business principles. Co-operative marketing of grain no longer was an untried idea, advocated by a small group of enthusiasts. The manner in which the farmers' pioneer trading agency had weathered the stormy conditions of its passage from the beginning and the dignified stand of its directors—these gradually were earning status in the solid circles of the business world.

Out in the country also things were different. Those farmers who at first had been most certain that the trading venture would crumble away like so many other organized business efforts of farmers in the past, now were ready to admit their error—to admit that a farmers' business organization, managed by farmers, could succeed in such ample measure that its future as a going concern was assured. Instead of hovering on the outskirts of its activities, like small boys surrounding a giant fire-cracker on Victoria Day—waiting for the loud bang so freely predicted—these gentlemen were beginning to look upon it as a safe investment.

The success of the Grain Growers' Grain Company was an argument for co-operation which could not be overlooked and the co-operative spirit spread rapidly among the farmers in many districts.

It will be remembered that the promoters of the grain company had intended originally to operate under a Dominion charter but were compelled by circumstances to content themselves with provincial powers. The farmers now were finding themselves too restricted and application was made for a new charter which would facilitate the transaction of business in other provinces than Manitoba. Special powers were asked for and by special Act of Parliament the charter was granted in 1911 in the face of considerable opposition at Ottawa from those whom the farmers regarded as representing the Canadian Manufacturers' Association and the Retail Merchants' Association.

For the trend of the organized farmers was quite apparent. No secret had been made of the views entertained by the Grain Growers regarding co-operation. To familiarize every member of the various organizations with the history of co-operative achievements in other countries had been the object of many articles in the Grain Growers' Guide and much speech-making from time to time. The possibility of purchasing farm supplies co-operatively in addition to co-operative marketing of grain was being urged convincingly. And during the long winter evenings when the farmer shoved another stick into the stove it was natural for him to ask himself questions while he stood in front of it and let the paring from another Ontario apple dangle into the ash-pan.

"The fellow who made that stove paid a profit to the Iron an' Steel Trust who supplied the raw iron ore," considered he. "Then he turned around an' added a profit of his own before he let the wholesaler have it. Then the wholesaler chalked up more profit before he shipped it along to Joe Green over in town an' Joe just naturally had to soak me something before I got her aboard for home. That's profits on the profits! It's a hot proposition an' it's my money that goes up the flue!"

When he added further profits which he figured might be due to agreements between supposed competitors in prices, the Grain Grower was quite ready to believe that he had paid about twice as much for that stove as the thing would cost him legitimately if he dealt with the maker direct. Here was the High Cost of Living that everybody was talking about. The remedy? The same chance as the Other Fellow for the farmer to use the resources of Nature and, by co-operation, the reduction to a minimum of production and distribution cost.

"I've done it with my grain. Why can't I do it with what I need to buy?" That was what the Grain Grower was asking himself. "Why must I feed and clothe and buy the smokes for so many of these middlemen?"

So when the directors of the grain-trading company came before him with the suggestion of buying a timber limit in British Columbia in order to put in their own saw-mills eventually to supply building materials on the prairie, the Grain Grower slapped his leg and said: "Good boy! An' say, what about a coal mine, too?"

That was the beginning of great developments for the organized farmers of Western Canada. It was the beginning of new furrows—the opening up of new vistas of emancipation, as the farmer saw it. And as the furrows lengthened and multiplied they were destined to cause much heart-burning and antagonism in new directions.

The timber limit which the Grain Growers' Grain Company purchased was estimated to contain two hundred and twenty-two million feet of lumber. A Co-Operative Department was opened with the manufacture and sale of more than 130 carloads of flour at a saving to the farmer of fifty cents per cwt, even this small beginning registering a drop in milling company prices. Next they got in touch with the Ontario Fruit Growers' Association and sold over 4,000 bbls. of apples to Western farmers at the Eastern growers' carload-lot price, plus freight, plus a commission of ten cents per barrel. More than one hundred carloads of coal were handled in one month and the farmers then got after the lumber manufacturers for lumber by the carload at a saving of several dollars per thousand feet.

Still experimenting, the Grain Growers' Grain Company added to the list of commodities in 1912-13—fence posts, woven fence wire, barbed wire and binder twine. Followed other staples—cement, plaster, sash and doors, hardware and other builders' supplies; sheet metal roofing and siding, shingles, curbing, culverts, portable granaries, etc.; oil, salt and other miscellaneous supplies; finally, in 1914-15, farm machinery of all kinds, scales, cream separators, sewing machines and even typewriters. Of binder twine alone nearly seven million pounds was handled during this season. Thus did co-operative purchasing by the farmers pass from experiment to a permanent place in their activities.

Expansion was taking place in other directions also. In 1912 the Company leased from the Canadian Pacific Railway a terminal elevator at Fort William, capacity 2,500,000 bushels. A small cleaning elevator was acquired at the same place and, with an eye to possible developments at the Pacific Coast, a controlling interest in a small terminal elevator in British Columbia was purchased. At Port Arthur, on a six-hundred-foot lake frontage, a new elevator has just been built with a storage capacity of 600,000 bushels.

So much for terminal facilities of this farmers' pioneer trading organization. Now, what about the country elevators for government control of which the farmers had campaigned so vigorously in the three Prairie Provinces? As we have seen, the problem had been handled in Saskatchewan along very different lines to the method adopted in Manitoba. In Manitoba the 374 elevators, owned by the Provincial Government and operated by the Provincial Elevator Commission, showed a loss. It was even hinted in some quarters that the Manitoba Government had no intention in the first place of operating at anything but a loss. Whether or not there was any ground for these irreverent suspicions, the fact remained that the Government elevator system in Manitoba was beginning to assume the bulk of a snow-white elephant. The Government, not entering the field as buyers, had tried to run the elevators as a storage proposition solely. In 1910-11 the loss had exceeded $84,000 and the year following was not much better. At last the Government said in effect to the Grain Growers:

"We've lost money on this proposition. We tried it out to please you farmers, but you're still dissatisfied. Try to run 'em yourselves!"

"We'll just do that," replied the farmers, although the Grain Growers' Grain Company was not enthusiastic over the prospect of converting the elevator failure into immediate financial success.

It was too much to expect. At many points the Government owned all the elevators in sight. In some places there was too much elevator accommodation for the district's volume of business. In certain cases the elevators which had been sold to the Government were practically discards to begin with. However, the need for improvement in the service which the farmers were getting at country points was so very great that finally, in 1912, the farmers assumed control of the government system in Manitoba.

It was late in August when this came about. With only three or four weeks in which to prepare for the season's crop, make repairs, secure competent managers, travelling superintendents and office staff the results of the first season scarcely could offer a fair test. Even so, prices for street grain went up at competing points. Line elevator companies began asking the farmer for his grain instead of merely permitting him to place it in their elevators.

The farmers were quick to note this and asked that the elevator service be continued by their company. With better organization the following season brought still greater improvement in service. Prices rose. The special binning service from their own elevators the farmers found genuine, not just a last-minute privilege granted to secure their grain. In spite of bad crop conditions in 1914-15, the elevators continued to succeed under the farmers' own management and, the year following, letters of highest praise from farmers everywhere marked the complete success of the undertaking. So excellent was the service now being rendered by the Company that independent Farmers' Elevators in several instances approached the Grain Growers and sought their management.

The handling of co-operative supplies at elevator points began in 1913-14. Flour houses were erected where prices were out of proportion and at other places the elevator agents began to arrange for carload shipments and proper distribution of coal among the farmers at a saving of from two to three dollars per ton.

These co-operative lines at elevator points soon were enlarged with much success. In addition to the elevators leased from the Manitoba Government the Grain Growers' Grain Company bought outright, erected or leased sixty elevators of its own.

Those who were watching all this steadily grew more restive. The Farmers' Movement in the West was fast becoming a subject of bitter debate.

"When farmers advance to the last furrow of plowed land on the farm they breast the fence which skirts the Public Highway," argued many Men of Business. "They are climbing over the fence!"

But the organized farmers were not inclined to recognize fences in restriction of honest competition. They believed they were on the Open Range and held unswervingly on their way.



CHAPTER XVIII

A FINAL TEST

We sometimes had those little rubs which Providence sends to enhance the value of its favors.—Vicar of Wakefield.

While developing co-operative purchasing of farm supplies the pioneer business organization of the farmers had continued its policy of expansion in the grain business. The ideal of the farmers had been to reduce to the lowest possible point the cost between the producer in Western Canada and the Old Country consumer who bought most of the Western grain. By engaging in the export business they hoped to become an influence in keeping export values—the price at Port William, in other words—at a truer level.

Prior to 1912 the export activities of the Grain Growers had been restricted necessarily to an experimental basis; but on January 1st, 1912, the "Grain Growers' Export Company," as it was called, was organized for business on a larger scale.

It now becomes necessary to record a final test of the Grain Growers' Grain Company inasmuch as it demonstrated the mettle of the farmers in a significant manner—the test of serious internal disagreement. Of all the threatening situations through which this organization had passed none was more critical than this later development.

The trouble was a brew which simmered for some time before the steam of it permeated beyond directors' meetings. It began early in 1912 as an aftermath of the unfortunate deal in oats, bubbled along to a boil with the fat finally in the fire at the annual meeting of the shareholders. The consequences were ladled out during 1913 and the bill was settled in full at the annual meeting that year with a cheque for nearly a quarter of a million dollars.

Like most internal troubles in business organizations the personal equation entered into it. Certain of the directors were inclined to criticise other directors and to be somewhat dictatory as to how the farmers' business should be conducted. With the idea of improving the system of management, the directors at this stage abolished the Board of Control and the President was made Managing-Director with supervisory and disciplinary powers.

Not long after this, at a special meeting of the directors to consider future management, four of the nine directors introduced a resolution to declare the position of Managing-Director vacant. They failed to carry it—and promptly resigned.

This occurred in March. In the June columns of the Guide these four directors addressed an open letter to the shareholders, urging full representation at the forthcoming annual meeting in order that their criticisms might be threshed out. President Crerar joined in the request for a full meeting of shareholders. If the loyalty or ability of any director was to be questioned because he refused to surrender his judgment to other directors who might disagree with him on certain matters, it was time to have an understanding. So far as he was concerned, he could not agree to become a mere speaking-tube for others who might want their own way against his own convictions of what was in the best interests of the farmers.

When the annual meeting opened, on July 16th, there was a record attendance of shareholders and during the routine preliminaries it was evident that expectancy was on tip-toe among the farmers. The split in the directorate was a vital matter.

In delivering his annual address the President detailed the business of the organization for the past year, referring but briefly to the facts which had led up to the resignation of the four directors. The Shareholders' Auditor followed with the balance sheet, giving detailed accounts of receipts, expenditures, assets and liabilities; he answered all questions asked. Then came a resolution, expressing the thanks of the shareholders to the President—and this moment was chosen by the leader of the revolt to spin his pin-wheels.

The debate began at three o'clock in the afternoon. It did not end until ten at night. The President retired from the chair and the Auditor was called on for detailed information, covering a period of several years past. In the long speech which was then made by the leader of the critics the President was declared responsible for all the alleged mismanagement and his retention in office undesirable.

To the surprise of everyone a fifth director now took the floor and joined the attack. Not having been one of the four directors who resigned, this new criticism was unexpected and the tension of the meeting grew. After amusing himself and the audience for awhile with a humorous speech, No. 5 ended by suggesting that the President was not sufficiently wicked to be driven from office.

Arose the remaining three members of the resigning quartette and, one after another, had their say. Finally, when words failed them and they rested their case, the President spoke briefly.

In the annual address, which he had delivered that morning, no attempt had been made to deny the inadequacy of the Company's office organization to cope with the exceptional crop conditions of 1911 and 1912. The latter season particularly had been very trying owing to the lateness of the crop and the wet harvesting conditions. Twenty-five per cent. of the grain, which started for market a month late, was tough, damp or wet. The arrival of snow had prevented hundreds of thousands of acres from being threshed and, on top of it all, railway traffic had become congested so that cars of grain got lost for weeks and even months and there were long delays in getting the outturns of cars after they were unloaded. Money was scarce and farmers who were being pressed for liabilities to merchants, banks and machinery companies found it hard to get cars; naturally, once they had shipped, they were in no mood for further delays.

Owing to the condition of the grain, too, the grading was so uncertain that exceptional care had been necessary in accepting bank drafts on carloads of grain for amounts nearly double their possible value under the unusual current crop conditions. Even with the greatest care the Company found that in many instances they had given greater advances than were realized when the cars were sold. The refusal of drafts, passed by some local banks for amounts the managers should have known could not be met, led to many hard things being said against the farmers' agency.

Under these conditions it was only to be expected that the work in the office would become congested badly for weeks at a stretch. Double the amount of work was entailed in handling a given quantity of grain, compared to the season before. The Company was handicapped for office space also and errors were bound to occur in a business involving so much detail that a simple mistake might lead to infinite trouble. Correspondence had not been answered as promptly as it should have been, the necessary information regarding shipments being unavailable.

All of these things had been met frankly in the President's annual address and now when he brought the day's animated debate to a close he added merely a word or two regarding the strong financial position to which the farmers' pioneer trading organization had won its way in the commercial world. He pointed out the future that lay before it. Upon personal attacks he did not comment at all.

Immediately a unanimous vote of thanks for his untiring work and loyalty was tendered Mr. Crerar. The debate was over. The following morning the officers for the ensuing year were chosen and only one of the four directors who had resigned from the old Board was re-elected. He withdrew and the whole incident was closed.

But the real test was yet to come. The withdrawal of the four directors had left but five to cope with the difficult situation of the Export Company. It had found itself with a large amount of ocean freight on its hands—freight which had been secured on favorable terms from shipping agents for use later in transporting grain which the farmers' agency expected to sell in the Old Country. It was decided to cut off the export business entirely for the time being and to re-let the ocean shipping space to other exporters. The price of ocean freight fluctuated to such an extent, however, that rather than accept an immediate loss it was thought better to use the freight, after all, making shipment to fill.

At the time of the sixth annual meeting the Export Company had stood about level on the books; but during the two succeeding months the grain shipped from Fort William went out of condition while crossing the ocean and when it arrived in port the Old Country buyers refused to look at it. Heavy charges had to be met in treating to bring it to sale condition and very heavy losses were incurred. Before the matter was cleaned up finally these losses totalled more than $230,000.

When a quarter of a million dollars has been expended in a direction where tangible results have not been in evidence—when it has been sacrificed apparently for the sake of a principle—then does the manner in which such a loss is accepted become significant. The exporting of grain had begun to receive particular attention from the shareholders of the Grain Growers' Grain Company following the season of 1907-8 when they discovered the apparent margin of profit in the export business during much of the season to be from eight to twelve cents per bushel. This had been due, no doubt, to the fact that it was a time of financial stringency and only a few exporting firms could get the money necessary to carry on the business. The export value of grain, the farmers had figured, should be its value in the world's markets, less the cost of delivering it. By engaging in the export business, obtaining their cable offers regularly from the Old Country, they felt that their competition would be a factor in governing the prices paid the farmer, thereby benefiting every farmer in the West.

That this had been accomplished the shareholders of the trading company were convinced. Therefore, instead of losing their heads as well as this large sum of money, they examined the situation coolly and sanely, making up their minds that the loss was due to the grain going out of condition because of the unusual weather which had characterized the season. No doubt the executive and directors had been handicapped by their lack of knowledge as to the methods and manner in which the export business was done; but that was to be expected and only by experience could they learn.

"Can the export part of our business be developed successfully with a little more time?" asked the farmers.

"Yes, we believe so," replied their officers.

"That's all we want to know. Write a cheque to cover this loss, reorganize the Export Company and stick to it."

This faith in their officers, in themselves and in the cause they had at heart was justified within the next two seasons when success was achieved with the subsidiary concern and the farmers were able to congratulate themselves that they had been sufficiently level-headed not to allow themselves to be stampeded from the exporting field altogether to the great weakening of their influence.

The accomplishments of the Grain Growers in marketing their own grain cannot be dismissed with careless gesture. Their severest critic must admit that the manner in which the farmers conducted themselves in the face of the situation that threatened entitles them to respect.



CHAPTER XIX

MEANWHILE, IN SASKATCHEWAN—

An old man on the point of death summoned his sons around him to give them some parting advice. He ordered his servants to bring in a faggot of sticks, and said to his eldest son: Break it. The son strained and strained, but with all his efforts was unable to break the bundle. The other sons also tried, but none of them was successful. Untie the faggots, said the father, and each of you take a stick. When they had done so, he called out to them: Now break; and each stick was easily broken. You see my meaning, said their father. Let affection bind you to one another. Together you are strong; separated you are weak.—Aesop.

Eventful years, these through which the Grain Growers of Western Canada were passing. While the Grain Growers' Grain Company was undertaking the initial experiments in co-operative purchasing of farm supplies, showing the Manitoba Government that farmers could run elevators satisfactorily and fighting its way forward to success in the exporting field, how were things getting along in Saskatchewan? With $52,000 and another four or five hundred in loose change tucked away in its hip pocket as the net profit of its first season's operations the new system of co-operative elevators had struck out "on a bee line" for Success and was swinging along at a steady gait, full of confidence. The volume of business handled through these elevators the first year had been affected by the failure of the contractors to finish construction of all the elevators by the dates specified. Even so, the new company had handled 3,261,000 bushels of grain, more than half of it being special binned.

In planning to build eighty-eight new elevators in 1912 and to purchase six, thereby bringing the total to 140 co-operative elevators, the directors thought it wise to form a construction department of their own instead of relying upon outside contractors. Also it was decided to open a commission department of their own at Winnipeg, the volume of business in sight being very encouraging. This move was not made, however, because of any dissatisfaction with the Grain Growers' Grain Company's services as selling agent; on the other hand, although crop conditions had been perhaps the most unfavorable in the history of Saskatchewan and the grain with its diversity of grades therefore very difficult to market satisfactorily, the Board of Directors acknowledged in their annual report that the wisdom of the arrangement with the Grain Growers' Grain Company had been proved by the satisfactory working of it.

The volume of business handled by the 137 elevators in operation the second year jumped to 12,900,000 bushels with a net profit of approximately $168,000, and it was apparent that the general acceptance of the co-operative scheme throughout the province would mean organization upon a large scale. This was emphasized during the 1913 grain season when 192 elevators were in operation and about 19,500,000 bushels of grain were hauled in to the co-operative elevators by farmers.

This rapid expansion of the Saskatchewan Co-Operative Elevator Company was entailing such an increase in staff organization that it became necessary to provide special office accommodation. Accordingly a site for a permanent building of their own was purchased in 1914 at Regina and the following year a modern, fireproof building was erected. It stands two storeys on a high basement, with provision for additional storeys, occupies a space of 9,375 square feet, has interior finish of oak and architecturally it is a matter of pride to the farmers who own it. This building has become the headquarters of the Saskatchewan Co-Operative Elevator Company and likewise the Saskatchewan Grain Growers' Association, the offices of the latter occupying the entire top floor.

While the erection of this building afforded visible proof of financial progress the Saskatchewan farmers were warned by the directors and the general manager of the "Co-Op" that co-operation which was allowed to degenerate into mere production of dividends would but reproduce in another form the evil it was intended to destroy. The ideal of service was the vital force which must be kept in mind and the work of the Grain Growers' Association in fostering this ideal must be encouraged.

"The Association has its great work of organization, education and agitation," stated Charles A. Dunning, the elevator company's manager, "and the company the equally great work of giving practical effect to the commercial and co-operative ideals of the Association, both institutions being branches of one united Farmers' Movement having for its object the social and economic uplift of the farming industry."

Not a little of the early success of the Saskatchewan Co-Operative Elevator Company was due to the energy and business ability which Dunning brought to bear upon its organization and development. The story of this young homesteader's rise from the ranks of the Grain Growers is worth noting. It was back in 1902 that he first reached the West—a seventeen-year-old Englishman, "green" as the grass that grew over there in Leicester. He did not know anything then about the historic meeting of pioneer grain growers which Motherwell and Dayman had assembled not long before at Indian Head. He was concerned chiefly with finding work on a farm somewhere and hired out near Yorkton, Saskatchewan, for ten dollars a month. After awhile he secured one of the Government's 160-acre slices of homestead land and proceeded to demonstrate that oxen could haul wheat twenty-five miles to a railway if their driver sat long enough on the load.

There came a day when Dunning, filled with a new feeling of independence, started for Yorkton with a load of wheat and oats. It was along towards spring when the snow was just starting to go and at a narrow place in the trail, as luck would have it, he met a farmer returning from town with an empty sleigh. In trying to pass the other fellow Dunning's sleigh upset. While helping to reload the farmer imparted the information that oats were selling for eight cents and all he had been able to get for his wheat was something like thirteen cents in Yorkton the day before! The young Englishman's new feeling of "independence" slid into his shoe-packs as he stared speechless at his neighbor. Right-about went his oxen and back home he hauled his load, angry and dismayed and realizing that something was wrong with Western conditions that could bring about such treatment.

When a branch of the Grain Growers' Association was formed at Beaverdale, not far from his homestead, it is scarcely necessary to say that young Dunning joined and took an active part in the debates. Finally he was chosen as delegate for the district at the annual Grain Growers' convention at Prince Albert on condition that he could finance the trip on $17.50. The story is told that Dunning figured by making friends with the furnace man of one of the hotels he might be allowed to sleep in the cellar for the week he would be in Prince Albert and manage to get through on this meagre expense fund! At any rate he did find a place to lay his head and, if reports be true, actually came back with money in his pocket.

It was at this convention that the young man first attracted attention. The delegates had deadlocked over a discussion in regard to a scheme for insuring crops against hailstorms in Saskatchewan, half of them favoring it and half opposing it. The young homesteader from Beaverdale got up, ran his fingers through his pompadour and outlined the possibilities of co-operative insurance which would apply only to municipalities where a majority of the farmers favored the idea. He talked so convincingly and sanely that the convention elected him as a director of the Association and later when the co-operative elevator scheme was broached he was elected vice-president of the Association and the suggestion was made that he undertake the work of organizing the new elevator concern. Incidentally, the man who suggested this was E. A. Partridge, of Sintaluta—the same Partridge who had fathered the Grain Growers' Grain Company and who already had located T. A. Crerar, of Russell, Manitoba.

Out of Dunning's suggestion at Prince Albert grew the Saskatchewan Hail Insurance Commission which was recommended to the Provincial Government by the Association in 1911 and brought into operation the following year. The legislation provided for municipal co-operative hail insurance on the principle of a provincial tax made operative by local option. Twenty-five or more rural municipalities having agreed to join to insure against hail the crops within the municipalities, authority would be granted to collect a special tax—not to exceed four cents per acre—on all land in the municipalities concerned. Administration would be in the hands of the Hail Insurance Commission, which would set the rate of the special tax. All claims and expenses would be paid from the pooled fund and all crops in the respective municipalities would be insured automatically. If damage by hail occurred insurance would be paid at the rate of five dollars per acre when crop was destroyed completely and pro rata if only partially destroyed. This co-operative insurance scheme was instituted successfully in the fall of 1912, soon spread throughout Saskatchewan and was destined eventually to carry more than twenty-five million dollars of hail insurance.

Shortly after the launching of co-operative hail insurance the discussions among the Saskatchewan farmers in regard to the co-operative purchasing of farm commodities for their own use came to a head in a request to the Provincial Government for the widening of charter powers in order that the Association might organize a co-operative trading department. In 1913 authorization to act as a marketing and purchasing agent for registered co-operative associations was granted and next year the privilege was extended to include local grain growers' associations.

Thus the Trading Department of the Saskatchewan Grain Growers' Association takes the form of a Central Office, or wholesale body, through which all the Locals can act collectively in dealing with miners, millers, manufacturers, etc. The Central sells to organized Locals only, they in turn selling to their members. The surplus earnings of the Central are distributed to the Locals which have invested capital in their Central, such distribution being made in proportion to the amount of business done with the Central by the respective Locals.

During its first season of co-operative purchasing the Association handled 25,000 tons of coal and in a year or two there was turned over in a season enough binder twine to bind fifty million bushels of grain—about 4,500,000 pounds of twine. When the Western potato crop failed in 1915 the Association imported four and one-half million bushels of potatoes for its members, cutting the market price in some cases a dollar per bushel. Flour, apples, cord-wood, building supplies, vegetables and groceries likewise were purchased and distributed co-operatively. The savings effected by the farmers cannot be tallied alone from actual quantities of goods thus purchased through their own organization but must include a large aggregate saving due to reduction of prices by outside dealers.

Such commodities as coal and flour being best distributed through local warehouses, it is likely that eventually the Saskatchewan Co-Operative Elevator Company will take a hand in helping the Association and the Locals with the handling of co-operative supplies by furnishing the large capital investment needed to establish these warehouses.

The necessary financial strength to accomplish this is readily conceived to be available after a glance at later developments in Saskatchewan. The co-operative elevators now exceed 300. The figures for the season of 1915-16 show a total of more than 39,000,000 bushels of grain handled with an additional 4,109,000 bushels shipped over the loading platforms. Without deducting war-tax the total profit earned by the Saskatchewan company within the year was in the neighborhood of three-quarters of a million dollars. The Saskatchewan Co-Operative Elevator Company in 1916 began building its own terminal elevator at Port Arthur with a capacity of 2,500,000 bushels. By this time there were 18,000 shareholders with a subscribed capital of $3,358,900, of which $876,000 was paid up.

In these later years a remarkable development is recorded also by the Saskatchewan Grain Growers' Association until it is by far the largest and best organized secular body in the province with over 1,300 Locals and a membership exceeding 28,000.

The Secretary of the Association—J. B. Musselman, himself a farmer—has done much hard work in office and looks forward to the time when the Locals will own their own breeding stock, assemble and fatten their own poultry, handle and ship their eggs, operate their own co-operative laundries and bakeries, kill and cure meat in co-operative butcher-shops for their own use—have meeting places, rest rooms, town offices, libraries, moving-pictures and phonographs with which to entertain and inform themselves. To stand with a hand on the hilt of such a dream is to visualize a revolution in farm and community life—such a revolution as would switch much attraction from city to country.

Whatever the future may hold in store, the fact remains that already much valuable legislation has been secured from the Government of Saskatchewan by the farmers. Perhaps in no other province are the Grain Growers in as close touch with the Government, due to the nature of the co-operative enterprises which have been launched with Government support financially. Three members of the cabinet are men who have been identified closely with the Grain Growers' Movement. Hon. W. R. Motherwell has held portfolio as Minister of Agriculture for many years. Hon. George Langley, Minister of Municipal Affairs, helped to organize the farmers of Northern Saskatchewan in the early days. Finally in 1916 C. A. Dunning[1] resigned as general manager of the Saskatchewan Co-Operative Elevator Company to become the youngest Provincial Treasurer in Canada; for already the Saskatchewan Government had called upon him for service on two official commissions to investigate agriculture and finance in most of the European countries and his services were valuable.

Langley has been a prominent figure in Saskatchewan affairs ever since his arrival in the country in 1903. He was forty-one years old when he came and he brought with him long training as a public speaker, a knowledge of human nature and a ready twinkle in his eye for everything humorous. According to himself, his first job was chasing sparrows from the crops. After leaving the English rural life in which he was reared, he had worked on the London docks and as a London business man. In politics he became a disciple of the Cobden-Bright school and was one of the first members of the Fabian Society under the leadership of the redoubtable Bernard Shaw. It was Langley's habit, it is said, to talk to London crowds on side thoroughfares, standing on a soap-box and ringing a hand-bell to attract attention.

In becoming a Western Canadian farmer it did not take him long to slip around behind the problems of the farming class; for there was no greater adept at poking a cantankerous problem about with a sharp stick than the Honorable George. It was natural for this short, stout, bearded Englishman to gravitate into the first Legislature of the newly-formed Province of Saskatchewan and just as naturally he moved up to a place in the cabinet.

As one of the sponsors of the co-operative elevator scheme, by virtue of his place on the commission which recommended it, Langley has taken much interest in the co-operative activities of the farmers and on many occasions has acted as their spokesman.

With the relationships outlined it was to be expected that now and then opponents would hint that the Saskatchewan authorities had played politics with the farmers. Such charges, of course, are refuted indignantly. Knowing the widespread desire among the farmers themselves to keep free from political alliances, it would be a foolish government indeed which would fail to recognize that not to play politics was the best kind of politics that could be played.

Other leaders of sterling worth have contributed to the acknowledged success of co-operation in Saskatchewan, not forgetting John A. Maharg who came from Western Ontario in 1890 to settle near Moose Jaw. From the very beginning J. A. Maharg has worked for the cause of the farmers. A pioneer himself, he has a deep understanding of the Western Canadian farmers' problems and his devotion to their solution has earned him universal appreciation among the Grain Growers of Saskatchewan. Year after year he has been elected to the highest office in the gift of the Association. He has been President many times of both the Saskatchewan Grain Growers' Association and the Saskatchewan Co-Operative Elevator Company.

The Grain Growers' Movement, then, in this Province of Saskatchewan where it had its beginning, has grown to wonderful proportions with the passing of the years. Co-operation has been a pronounced success. The old conditions have passed far back down the trail. The new order of things has been fought for by men who have known the taste of smoky tea, the sour sweat of toil upon the land, the smell of the smudge fires on a still evening and the drive of the wind on the open plain. Out of the pioneer past they have stepped forward to the larger opportunities of the times—times which call for clear heads and wise vision.

For as they build for the future so will the Sons of the Movement watch and learn.



[1] The Union Government at Ottawa decided in February, 1918, to replace the office of Food Controller by the Canada Food Board, organized as a branch of the Dominion Department of Agriculture under Hon. T. A. Crerar. Hon. Charles A. Dunning was selected as Director of Production. The other members of the Canada Food Board were: H. B. Thomson, Chairman and Director of Conservation; J. D. McGregor, Director of Agricultural Labor. (Mr. McGregor resigned after a year in office.)



CHAPTER XX

WHAT HAPPENED IN ALBERTA

Beyond the fields we plough are others waiting, The fallows of the ages all unknown. Beyond the little harvests we are reaping Are wider, grander harvests to be grown. —Gerald J. Lively.

Out in the great Range Country all this time the United Farmers were lickety-loping along the trail of difficulties that carried their own special brand. The round-up revealed increasing opportunities for service and one by one their problems were cut out from the general herd, roped, tied and duly attended to for the improvement of conditions in Alberta. Here and there a difficulty persisted in breaking away and running about bawling; but even these finally were coralled.

Along with the Grain Growers of Manitoba and Saskatchewan the United Farmers of Alberta had campaigned consistently for government ownership of elevators, both provincial and terminal. They had received assurance from Premier Rutherford that if a satisfactory scheme could be evolved, the Provincial Government was prepared to carry out the establishment of a line of internal elevators in Alberta. It looked as if all that remained to be done was to follow the lead of Manitoba or Saskatchewan.

But on careful consideration neither of the plans followed in the other two provinces appeared to fit the special needs of the Alberta farmers. The province at the western end of the grain fields accordingly experienced quite a delay in obtaining elevator action.

In the meantime the discussion of terminal storage facilities was going on at Ottawa. The need for such facilities at Calgary and Vancouver was pressed by the Alberta representatives on various farmer delegations and finally the Dominion Government declared its intention of establishing internal elevators with full modern equipment at Moose Jaw and Saskatoon in Saskatchewan and at Calgary in Alberta; a Dominion Government terminal elevator at the Pacific Coast likewise was on the programme.

By this time the government operation of the Manitoba elevators had proved a complete failure and they had been leased by the Grain Growers' Grain Company. In Saskatchewan, however, the co-operative elevators were proving successful.

A close study of the co-operative scheme adopted in the province just east of them enabled the United Farmers of Alberta to work out a plan along similar lines. This was presented to the Premier, whose name meanwhile had changed from Rutherford to Sifton. The Act incorporating the Alberta Farmers' Co-Operative Elevator Company, Limited, was drafted in the spring of 1913 and passed unanimously by the Legislature. The new company held its first meeting in August, elected its officers[1] and went to work enthusiastically.

It had been decided by the United Farmers that full control and responsibility must rest in their own hands. They proposed to provide the means for raising at each point where an elevator was built sufficient funds to finance the purchase of grain at that point from their own resources, at the same time providing for the handling of other business than grain.

Under the Act the Provincial Government made cash advance of eighty-five per cent. of the cost of each elevator built or bought by the Company, but had no say whatever as to whether any particular elevator should be bought or built at any particular place, what it should cost or what its capacity or equipment should be. In security for the loan the Government took a first mortgage on the elevator and other property of the Company at the given point. The loans on elevators were repayable in twenty equal annual instalments.

The Company started off with the organization of forty-six Locals instead of the twenty which the Act called for and the construction of forty-two elevators was rushed. Ten additional elevators were bought. Although construction was not completed in time to catch the full season's business the number of bushels handled was 3,775,000, the Grain Growers' Grain Company acting as selling agent. By the end of the second year twenty-six more elevators had been built and the volume of grain handled had expanded to 5,040,000 bushels.

Now, this progress had been achieved in the face of continuous difficulties of one kind and another. Chief of these was the attempt to finance such a large amount of grain upon a small paid-up capital. The Company found that after finishing construction of the elevators they had no money with which to buy grain nor any assets available for bank borrowings. It was impossible to obtain credit upon the unpaid capital stock. The Provincial Government was approached for a guarantee of the account along the lines followed in Saskatchewan; but the Government refused to assume the responsibility.

It was at this juncture that the enemies of co-operation were afforded a practical demonstration of the fact that they had to deal not with any one farmers' organization but with them all. For the Grain Growers' Grain Company stepped into the breach with its powerful financial assistance.

The Alberta farmers were clamoring for the handling of farm supplies as well as grain; so that the young trading company in Alberta had its hands more than full to organize a full stride in usefulness from the start. The organization of the United Farmers of Alberta was growing very rapidly and the co-operative spirit was tremendously strong throughout the province. There was a demand for the handling of livestock shipments and soon it was necessary to establish a special Livestock Department.

It will be recalled that one of the subjects in which the Alberta farmers were interested from the first was the possibility of persuading the Provincial Government to undertake a co-operative pork-packing plant. Following the report of the Pork Commission upon the matter, however, official action on the part of the authorities had languished. The various committees appointed from year to year by the United Farmers gradually had acquired much valuable data and at last were forced to the conclusion that the development of a packing industry along co-operative lines was not so simple as it had appeared at first. Even in much older settled countries than Alberta the question, they found, had its complications. The first thing to discover was whether the farmers of a community were able and willing to adjust themselves to the requirements of an association for shipping stock together in carload lots to be sold at the large markets. Until such demonstration had been made it seemed advisable to defer the organization of a co-operative packing business.

After the formation of the Co-Operative Elevator Company, therefore, the Alberta farmers proceeded to encourage the co-operative shipment of livestock on consignment by their local unions. The Livestock Department entered the field first as buyers of hogs, handling 16,000 hogs in the first four months. The experiment bettered prices by half-a-cent per pound and the expansion of the Department began in earnest the following season when nearly 800 cars of hogs, cattle and sheep were handled.

On top of all the other troubles of the first year the farmers lost a valuable leader in the death of the president of the Co-Operative Elevator Company, W. J. Tregillus. Complete re-organization of the Executive was made and the question of his successor was considered from every angle. It was vital that no mistake be made in this connection and two of the directors were sent to study the business methods and policies of the Grain Growers' Grain Company and the Saskatchewan Co-Operative Elevator Company and to secure a General Manager. They failed to get in touch with anyone to fill the requirements and the management of both the other farmers' concerns expressed grave doubts as to the wisdom of a farmers' company looking for a manager whose training had been received with line elevator companies and who had not seen things from the farmer's side.

One of the remarkable features of the advance of the Farmers' Movement has been the manner in which strong leaders have stepped from their own ranks to meet every need. It has been a policy of the organized farmers to encourage the younger men to apply themselves actively in the work in order that they might be qualified to take up the responsibilities of office when called upon. There are many outstanding examples of the wisdom of this in the various farmers' executives to-day; so that with the on-coming of the years there is little danger that sane, level-headed management will pass. Several of the men occupying prominent places to-day in the Farmers' Movement have grown up entirely under its tutelage.

So it turned out that in Alberta the man the farmers were seeking was one of themselves—one of the two directors sent out to locate a manager, in fact. His name was C. Rice-Jones. His father was an English Church clergyman whose work lay in the slum districts of London. This may have had something to do with the interest which the young man had in social problems. When at the age of sixteen he became a Canadian and went to work on various farms, finally homesteading in Alberta, that interest he carried with him. Out of his own experiences he began to apply it in practical ways and the Farmers' Movement drew him as a magnet draws steel. He became identified with the Veteran district eventually and there organized a local union. It was not long before he was in evidence in the wider field of the United Farmers' activities.

Fortunately the new President and General Manager of the Alberta Farmers' Co-Operative Elevator Company was not a man to lose his sense of direction in a muddle of affairs. Into the situation which awaited him he waded with consummate tact, discernment and push; so that it was not long before his associates were pulling with him for the fullest weight of intelligent effort. The difficulties were sorted and sifted and classified, the machinery oiled and running true, and with a valuable directorate at his back Rice-Jones "made good."

The third season of the Alberta Farmers' Co-operative Elevator Company brought the final proof that the farmers knew how to support their own institutions. For through the 87 elevators that the farmers operated in Alberta flowed a total of nearly twenty million bushels of grain, with well over ten and one-quarter million bushels handled on commission. The Livestock Department in the face of severe competition achieved a permanent place in the livestock business of the province with offices of its own in the stock yards at Calgary and Edmonton. By this time livestock shipments had amounted to a value in excess of two million dollars. The Co-Operative Department had handled farm supplies to a total turnover of approximately $750,000.

As in the case of the Grain Growers' Grain Company and the Saskatchewan Grain Growers' Association's trading department the list of articles purchased co-operatively by the Alberta farmers grew very rapidly to include flour, feed, binder twine, coal, lumber and fence posts, wire fencing, fruit and vegetables, hay, salt, etc. In 1915-16 a thousand cars of these goods were purchased and distributed co-operatively, besides which a considerable volume of business was done in less-than-carload lots. Coal sheds were built in connection with many elevators, the staff increased and the entire Co-Operative Department thoroughly organized for prompt and satisfactory service.



[1] See Appendix—Par. 13.



CHAPTER XXI

IN THE DRAG OF THE HARROWS

"I see the villain in your face!" "May it plaze yer worship, that must be a personal reflection, sure." —Irish Wit and Humor (Howe).

The "good old days" when the Farmer was a poor sheep without a shepherd, shorn to the pink hide with one tuft of wool left over his eyes—those "good old days" are gone forever. It is some time now since he became convinced that if a lion and a lamb ever did lie down together the lamb would not get a wink of sleep. As a matter of survival he has been making use of the interval to become a lion himself and the process has been productive of a great roaring in the Jungle.

All this co-operative purchasing of commodities in the three Prairie Provinces has not been developed to its present great volume without arousing antagonism in the business world. The co-operative idea in merchandizing is not confined to the West by any means. From the Atlantic to the Pacific various organizations have been formed to carry on business along co-operative lines. A Co-Operative Union has been formed to propagate the movement and the subject is vast.

But the establishment of an extending network of elevators under the control of the Western farmers has brought about possibilities which threaten to revolutionize the whole established commercial system. Farmers' Elevators in Dakota, Minnesota and Alberta have proved that it is practical to utilize the same staff at each point to manage the distribution of farm supplies as well as looking after elevator operation during the grain season. This being so, it is not difficult to visualize a great distributing system under centralized management with tremendous purchasing power.

There are those whose imaginations stretch readily to the extreme view that the Grain Growers are a menace. Such are filled with foreboding. They see the country merchant out of business and the whole business fabric destroyed.

"The farmers are talking everlastingly about 'a square deal,'" it is argued. "Why don't they practice what they preach and give the country merchant a square deal? What about the times of poor crops and money scarcity? Where would the farmer have been if the country merchant had not carried him on the books for the necessities of life?"

"It didn't cost the merchant anything to carry me," denies the farmer. "He just raised his prices to me and got credit from the wholesaler."

"Then what about the wholesaler?"

"Raised his prices and got credit from the manufacturer and the bank."

"Then the banks——"

"Refused to give me the credit in the first place!" interrupts the farmer resentfully. "Do you dare to blame me, Mister, for cutting out all these unnecessary middle charges when by proper organization I am able to finance myself and take advantage of cash discounts on the cost of living?"

That is the Farmer's motive for taking action. He wants to improve his scale of living for the sake of his family. By making the farm home a place of comfort his sons and daughters will be more content to remain on the land. He does not seek to hoard money; he intends to spend it. If middlemen are crowded out of his community it will be because there are too many of them. Instead of having to support parasites the community will be just that much more prosperous, the farms just that much better equipped, the land just that much more productive and thereby the country's wealth just that much greater.

That is how it appears to the Farmer.

"If the Farmer is to be a merchant, a wholesaler, a banker and all the rest of it he is no longer a farmer. Is nobody else to have a right to live?" enquires the Cynic. "Did these Grain Growers fight the elevator combine of the early days in order that they could establish a Farmers' Combine? Is one any better than the other?"

The inference is that the Grain Growers are bluffing deliberately and aiming at all the abuses conjured by the word, "combine." The slander is self-evident to anyone who examines the constitution of the Farmers' Movement, so framed from the first that any possibility of clique control was removed for all time. It is impossible to have a "combine" of fifty thousand units and maintain the necessary appeal to the cupidity of the individual. It is not possible for designing leaders, if such there were, to take even the first step in manipulation without discovery. It simply cannot be done. Woe betide the man who even exhibited such tendencies among his fellow Grain Growers! These organized farmers have learned how to do their own thinking and every rugged ounce of them is assertive. They are not to be fooled easily nor stampeded from their objective. And what is that objective?

"To play politics!" explodes the hidebound Party Politician knowingly.

"To get a share in the Divvy and eventually hog it!" suggests the Financial Adventurer.

"Equal opportunities to all; special privileges to none," the Grain Grower patiently reiterates.

He believes in doing away with "the Divvy" altogether. He believes that "the spoils system" is bad government and that no stone should be left unturned to elevate the living conditions of the Average Citizen to the highest possible plane. He believes that the status of a nation depends upon the status of its Average Citizen and in that he does not consider himself to be preaching Socialism but Common Sense.

Come back to the country store—to the Country Retailer who is pulling on the other end of the whiffle-tree with the Farmer for community progress. Each is necessary to the other and it is a vital matter if the co-operation of the Farmer is going to kill off a teammate, especially when tandeming right behind them are the Clydesdales of Commerce, the Wholesaler and the Manufacturer. With the Farmer kicking over the traces, the Retailer biting and squealing at the Wholesaler every little while and the Manufacturer with his ears laid back flat this distribution of merchandize in Western Canada is no easy problem. It is bringing the Bankers to their aristocratic portals all along the route and about the only onlooker who is calm and serene is the Mail-Order Man as he passes overhead post-haste in the Government flying machine.

"I'd get along alright if the Farmer would pay up his debts to me," cries the Retailer. "I've been giving him too long a line of credit and now he's running rings around me and tying me up in a knot. When he gets some money he goes and buys from my competitors for cash or he buys more land and machinery. If I shorten the rope he busts it and runs away!"

"I'd be alright if everybody else would mind their own business," grumbles the Wholesaler. "Just trot along there now! Pay your bills, Farmer. Improve your service, Retailer. Don't ask me about high or low tariff. I've got my hands full with established lines and it's my business to supply them as cheaply as is consistent with quality. I want to see everybody succeed and it isn't fair to include me in any mix-up. Only the humming of that confounded flying-machine up there—Can't somebody bring down that Mail-Order bird? He isn't paying his share of the taxes while I've helped to finance this country."

"We shall come rejoicing, bringing in the sheaves," sings the Manufacturer. "Giddap, Dobbin!"

"'Money makes the mare go,'" quotes the Finance Minister, taking another look out of the window at the War Cloud. "'Money comes from the Soil,'" and he push-buttons a buzz-bell over in the Department of Agriculture.

"Send out the choir and let's have that 'Patriotism and Production' song again," is the order issued by some deputy sub-chief's assistant in response to the P. M.'s signal. "We must encourage our farmers to even nobler efforts."

And all the while the Unearned Increment loafs around, studying the Interest Charges which are ticking away like a taxicab meter, and the "Common Pee-pul" gaze in frozen fascination at the High Cost of Living flying its kite and climbing the string!

Seriously, though, the situation demands the earnest thought of all classes. The argument has so many facets that it is impossible within the limits of a few pages to present an adequate conception of all the vital problems that surround the Farmers' Movement. Each interest has its own data—packages of it—and it is difficult to know what to select and what to leave out and at the same time remain entirely fair to all concerned. There is some truth in many of the accusations which are bandied about. No new country can do without credit facilities. What about the homesteader or the poorer farmer who is starting on meagre resources? They will win through if given a chance. Who is to give it to them if business is put on a cash basis? On the other hand, is the man who has the cash to receive no consideration?

The trouble with our banks is that their system falls down when the retailer or the farmer need them most—in times of stringency. It is true that the wholesaler has done much for the country, that the retailer is often at the mercy of careless or selfish customers who abuse credit privileges. It is true that the mail-order houses also have performed good services in the general task of making a new country. The solution can be arrived at only by co-operation in its true sense—getting together—everybody. Also, while one may joke about "Patriotism and Production," the fact remains that much has been accomplished by these campaigns.

Asked if the organization of the farmers meant that the retailer would be forced out of business, the well posted Credit Manager of a large Winnipeg wholesale establishment admitted that it would not mean that necessarily.

The same question put to C. Rice-Jones, President and Manager of the Alberta Farmers' Co-Operative Elevator Company, brought the same denial.

"The only men who would be weeded out," said he, "are those who have gone into the local store business without knowing anything about it and who can remain in it only because the present system allows them to charge any price they like. The men who know their business will remain. Those who are objecting to us are objecting to the very thing they have been doing themselves for fifty years—organizing."

"We want to farm, not to go into business," remarked H. W. Wood, President of the United Farmers of Alberta. "The local merchant gives us a local distribution service, a service which has to be given. We cannot destroy one single legitimate interest. But if there are four or five men living by giving a service that one man should give in a community and get just a living—that is what we are going to correct and we are absolutely entitled to do so. The selfishness we are accused of the accusers have practiced right along and these very things make it necessary for us to organize for self-protection. If they will co-operate with us to put their business on a legitimate basis we are willing to quit trying to do this business ourselves."

That is straight talk, surely. It is a challenge to the business men to meet the farmers half way for a better understanding. No problem ever was solved by extremists on either side. Enmity and suspicion must be submerged by sane discussion and mutual concessions bring about the beginnings of closer unity.