spected every bushel of it. Judge Tuley in the case, Central Elevator Company vs. the People of the State of Illinois, gives an accurate description of conditions prior to 1897. He says in part:

The court finds that the defendant is a public warehouseman of Class A in Chicago and at such times was and is now engaged in the business of a public warehouseman and in the operation of two public warehouses of Class A, known as Alton Elevator and Alton Elevator B, having a total capacity of 1,850,000 bushels; that grain has been heretofore and at and since the commencement of this suit, and now is bought by said elevator company, and when so bought has been and is now stored in said warehouses of said elevator company, and has heretofore been and now is mixed with grain of others therein stored; that the Railroad and Warehouse Commission of Illinois many years ago established the different grades of the different kinds of grain; . . . the said grades are still in force in Chicago and the grades so established for the different qualities of grain are not such that, under such inspection and grading thereof all the grain of each grade is of exactly the same quality nor is it practicable to establish grades of grain which will comprise grades of grain of exactly the same quality, but it always has resulted and always must result that in the inspection of grain coming to the Chicago market carloads of grain of different qualities have been and must of necessity continue to be graded into the same grade, the difference in the market price at the same time of the different qualities of the same grade of grain varying from two cents per bushel in the upper grades to fifteen cents per bushel in the lower grades; that the great bulk of the grain brought to Chicago, is brought by rail, and in carloads, and is inspected by the state inspectors while on the track and before being transferred to the public warehouses of said defendant; that there did not exist in or prior to 1871 in Chicago or in Illinois any well known general or uniform custom or usage among grain warehousemen to deal in or buy or sell grain or to store grain owned by them in their own warehouses, or to mix grain bought by them with that of their customers, and the proprietors of public warehouses of Class A did not to any general extent begin to buy and sell grain and store or mix their said grain in these said warehouses with the grain of their customers there stored until about 1885; that since that year the practice has continued to grow, until the last two or three years the defendant, Central Elevator Co., and the proprietors of Class A warehouses in Chicago are the principal buyers and sellers of grain in the Chicago market and on the Chicago Board of Trade, and by reason of the advantages they possess, and certain charges in the grain trade, they have practically driven out of business the class of persons who were before that time engaged in buying and shipping grain in the Chicago market, and said Central Elevator Co. and said warehouse proprietors are fast monopolizing the business of dealing in grain in the Chicago market; 13 that upon some of the

1 That there had been a terminal elevator combine previous to this time has been pointed out by Professor Boyle in his Speculation and the Chicago Board of Trade, p. 104 ff.

lines or systems of railroad entering Chicago the proprietors of the public grain warehouses along the lines of said railroads are practically the only buyers of grain received in Chicago over said lines or systems and at the time of filing of said information said Central Elevator Co. and said warehousemen owned at least three quarters of all the grain stored in the public warehouses in Chicago; that there now are in Chicago twenty-nine warehouses of Class A, with an aggregate capacity of 41,000,000 bushels and the amount of grain received into them was 73,000,000 bushels in 1895 and 61,000,000 bushels in 1896 and nearly all of said proprietors of said warehouses in Chicago also deal in futures, that is in the class of contracts for the future delivery of grain which are dealt in on the Chicago Board of Trade; that said defendant and other proprietors of Chicago warehouses of Class A exact established rates of storage from others, and while so doing, said Central Elevator Company and the proprietors of the other warehouses of Class A often overbid other buyers of grain in the Chicago market and elsewhere, and are enabled to do this because said defendant and other proprietors of warehouses of Class A in Chicago yield a portion of the established storage rates charged to others upon like grade; that the buying of grain by said Central Elevator and said proprietors of Chicago warehouses of Class A tends to crush competition in the Chicago grain market and to foster in said Central Elevator and in the proprietors of Class A warehouses in Chicago, a monopoly of the grain trade which is hurtful to the people of Illinois, and it is unlawful for a proprietor of a public warehouse of Class A to store his own grain in said warehouse. It is therefore ordered, adjudged, and decreed that from and after five months from the date of entry of this decree, said defendant and his agents, servants, employees and officers be perpetually enjoined from storing in his public warehouses any grain directly or indirectly owned by or belonging to said Central Elevator Company, or in which said Central Elevator Company has any interest other than as warehousemen.14

These were the conditions in the late eighties and early nineties which led to determined efforts on the part of the producers to free themselves from such a pernicious monopoly. These efforts were evidenced in the determined attempts to build and run farmers' elevators; in the demand for the abolishment of trading in options; and in the organization of a large number of farmers' associations, including the Alliance, the Northwestern Alliance, the Agricultural Wheel, the Farmers' and Laborers' Union and the Gleaners, together with further attempts at independent action in politics as evidenced by Populism and Bimetalism.15 These farmers' associations

14 Findings upheld by the Illinois Supreme Court, 174 Illinois Reports, p. 203.

15 Frank Drew, "The Present Farmers' Movement," in Political Science Quarterly, vol. vi, pp. 282-310; O. M. Kile, The Farm Bureau Movement, p. 3.

were either political or semi-political, and relied more upon legislative remedies and political coercion than upon the building up of an organization to combat the elevator combination in its own element. Their efforts, however, were not entirely pointed towards the securing of legal remedies. This is evidenced by the determined attempts made by the farmers during this period to get control of the country markets.

A flurry of endeavor along this line had been evident during the early seventies sponsored, as has been pointed out, by the Grange. The failure of these early attempts at cooperative marketing had further discouraged similar endeavor on any large scale. It was not until the operations of the state elevator associations began to make themselves felt that any effort was directed again towards the securing of a better market.

Because of the complete control of the grain trade by the state associations, the first few farmers' companies that began to appear were quickly put out of business, either by raising the price above the market level or by depending upon the railroad companies to refuse to furnish cars. However, in spite of this procedure the farmers were able to deliver considerable grain to the terminal markets.16 Abuses seemed too

10 75 Nebraska 655 gives clearly the methods by means of which these associations were able to carry out their plans. This case brought out the fact that there was not only an agreement among the several elevators in each locality but that the agreements were state-wide and that the associations had gone so far as to form a price committee to determine the price of grain to be paid in the State and to send out cards stating what such price should be. Any elevator which refused to come into the association and become regular" house was quickly brought into line by coercive methods. In case of an agreement a division of the business at the several stations was also taken care of by the associations, the company purchasing more than its share being penalized. These associations also made it their business to watch the legislatures and see to it that no unfavorable laws should get on the statute books.

a

Penalties exacted for overbuying were at the rate of:

great and a free market too much to be desired to permit him to desist from attempts to free himself from the power of the associations.17

It was not, however, until 1889 that a successful plan was evolved to combat the grain associations. This plan, which was first developed by the farmers at Rockwell, Iowa, was simple, and consisted in no more than an agreement among the farmers subscribing to the stock of the farmers' elevator to penalize themselves one cent a bushel for every bushel of grain which they sold to any competitor. By virtue of this agreement the farmers' company would not be obliged to pay a price for grain equal to or above that of its competitors, should those competitors attempt to deprive it of its business by offering higher prices. Even though it did not handle a bushel of grain, the farmers' company could in this manner more than make expenses.1

18

The organization of the cooperative elevator at Rockwell came at the time when the Alliance-Populist movement had focused a great deal of attention upon itself. The Alliance, through its members, had been able during the first half of the last decade of the nineteenth century to emulate the example of its predecessor, the Grange, in organizing cooperative enterprises, the most numerous of which were grain elevator associations. The investigation of the grain trade in 1917 by the Federal Trade Commission brought out the fact that there

17 It was with the greatest difficulty that the farmers were able to secure elevator sites from the railroad companies since the railroads would only grant sites at junctions, and then only in the hope that such action might gain some of the traffic that would otherwise go to the other road. We therefore find the first farmers' cooperative elevators at railroad junctions.

18 O. N. Refsell, "The Farmers' Elevator Movement," in Journal of Political Economy, vol. xxii, 1914, pp. 889-890. O. M. Kile, in The Farm Bureau Movement, says in discussing the causes for the rise of agrarian organizations: "It was simply the same old story again, of a people or a class cornered and harassed to the point where they begin to strike back. They used only the tools they found at hand, namely, combination and cooperation. In this they had a good example through observation of the power and force secured by combinations of capital and management on the part of commercial and financial interests,-the very groups they sought to fight."

were then thirty-eight cooperative elevators doing business in all the western grain-growing States, in buildings built prior to 1890. The inference may safely be drawn that these elevators were occupied by cooperative associations from the time of their construction.19 There is ample ground for supposing that at any given time during this period there existed in the grain-growing States more than this number, for in North Dakota, a new State, just being settled by poor immigrants, there existed in 1891, ten, and in 1892, eleven, cooperative elevators whose.origin may be ascribed directly to the influence of the Alliance.20 The number decreased to two the next year, and for the next decade we find a general lack of interest in cooperative associations in North Dakota. This does not seem to have been the case in the older Western States where the number of cooperatives had risen in 1900 to 133,21 a large number of which made use of the penalty clause.

22

The increase in the number of farmers' elevators, slight as it was in comparison with other types of elevators,2 brought about a determined effort on the part of the state associations to rid themselves of this form of competition. Not only was this class of elevator subjected to all manner of competition and discrimination at local points but the state associations went into the terminal markets and there informed the commission men that those who dealt in grain shipped by farmers' companies would be deprived of the business of all the members of the association.23 Lists of those

19 Federal Trade Commission Report on the Grain Trade, vol. i, P. 47.

20 See Appendix VI.

21 Federal Trade Commission Report on the Grain Trade, vol. i, p. 47.

23 There were probably some 15,000 grain elevators in the western area composed of the Dakotas, Montana, Minnesota, Iowa, Kansas, Nebraska and Wisconsin.

23 O. N. Refsell points out that this action of the state associations, though aimed at all farmers' elevators, was directed especially at those associations which had adopted the penalty clause as part of their by-laws, since they were by far the most dangerous (The Farmers' Elevator Movement, Journal of Political Economy, vol. xxii; see the American Cooperative Journal, Sept. 1907, p. 16; Sen. Doc. No. 278, 59th Cong., 2nd sess., p. 678).