points of origin, while the Line Elevator Companies operate their local elevators only as adjuncts of their grain-trade operations at the primary markets. The producer naturally comes in contact with the local dealers more than with the Line Elevator representatives, and the relations of the two-the producers and local dealers are not always amicable nor easily defined. The local dealer is inclined to regard himself as an indispensable feature of the trade, whereas the producer naturally desires to act independently, as in case of loading his own cars directly from the wagon. The full limit of such liberty is reached when this slower method of loading would result in car famines." A limit within which loading has to be done is set by the railroads. If that limit is too narrow, it tends to unduly favor the local dealer; if too liberal, it requires a larger traffic equipment on the part of the road. Such appears to be the situation at the entrance of grain to the distributive process.

COST OF SHIPPING CORN TO PRIMARY MARKETS.

(Part Second.)

The

On the cost of shipping corn to primary markets, the following figures show what proportion of the value in that market goes to the distributer and to the producer. The consumer's price for corn at Chicago July 25, 1900, was 39 cents. The combined expenses of distribution between producer and consumer from Hutchinson, Kans., to Chicago were 13.56 cents. The producer therefore received 25.44 cents, the distributing expenses amounting to 34.8 per cent of the consumer's cost, and the producer receiving 65.2 per cent of that value. Substantially the same result occurs in the shipment from Salina, Kans., to Chicago; that is, the expenses of distribution between farm and primary market are equal to one-third of what the consumer pays for corn in Chicago, and the producer gets the other two-thirds. The result differs little for three other shipping points in Kansas to Chicago. Of 13.56 cents, 2 cents go for local charges and the balance for freight and handling to Chicago. Shipments of corn from Illinois points to Chicago show a much lower cost of distribution. From Media, Ill., to Chicago the combined expenses of distribution on July 25 were 8 cents per bushel for corn. value of corn at Chicago was 39 cents, so that the producer received 31 cents, the expenses of distribution amounting to 20.5 per cent of the consumer's cost, and the producer receives 79.5 per cent of the consumer's cost. The shipments from Benson, Ill., show a somewhat lower cost of distribution, where the proportion is 16.3 per cent of the consumer's cost, but the two shipments show that the average expenses of marketing Illinois corn in Chicago would probably not be much higher than 20 per cent of the Chicago value-that is, one-fifth of the cost to the consumer goes for carrying the product and about four-fifths of the value goes to the producer. According to the special report of the corn movement to Chicago that market has undergone a change of great advantage to the producer. Practically all grain that comes to the central market is purchased by the dealers at the local markets. The farmers rarely ship any grain on their own account. All the dealers at these local markets are constantly in touch with the central markets. They receive quotations by wire every day, so that they know the prices of grain in Liverpool, New York, and Chicago. Formerly the majority of these buyers shipped to commission houses located at the central market, but latterly this practice has been largely abandoned. The large grain concerns deal directly with the local dealer, and their familiarity with the rapidly changing rate situation enables them to put grain into any one of the great world markets with the greatest economy in cost of transportation and handling. This is chiefly owing to the adjustment of freight rates. The difference between handling by commission through Chicago for exports and the through rate on grain is about 3 cents. This difference is sufficient to give the trade which can command it, as against any one which can not, the mastery of the whole shipping situation.

EFFECTS OF THIS SYSTEM ON PRICES.

(Part Second.)

The effect of this system of handling grain on farm-prices seems on the whole to be favorable to the producer. It has been said, with much confidence, that the consumer gets all the benefits of improvements and reductions in transportation facilities. The truth of this statement is doubtful. The system of transportation which takes the grain from the local station to the foreign consumer brings to the door of the producer the most active kind of competition on the part of buyers. The producer stands on the outer circle of the world's grain market, and the distributer meets him there by proxy in the local dealer through whom he telegraphs his bids, often hour by hour throughout the day. In those bids the pressure of the world's combined demands is reflected. A dozen leading primary markets in the field for the same grain make it practically impossible under such a state of things for the distributer to prevent the producer from profiting by the reduction in the cost of marketing this product. The effect, therefore, of reduction in the expenses of distribution under existing conditions of the competition of cities for the grain trade is to raise the level of the prices to the producer.

GRAIN, COAL, AND COTTON RATES COMPARED.

(Part Third.)

The general course of grain rates as compared with farm prices is shown in a diagram giving the tendency from 1880 to 1897 (p. 61). The average rates per ton per mile over five leading railroads connecting the grain districts with Chicago are given and then compared with the cost of prices of corn and wheat. The decline in railroad rates over the Chicago, Burlington and Quincy Railroad for all traffic was from 1.07 cents per ton per mile in 1880 to 0.784 cent in 1897, showing that railroad rates have declined almost parallel with the prices of corn and oats, and substantially also parallel with the farm prices of wheat. Very much the same may be said of rates on the Chicago and Alton Railroad and on the Chicago, Rock Island and Pacific Railway. On the Chicago and Northwestern Railway and the Chicago, Milwaukee and St. Paul Railway the rates have declined a good deal more rapidly than on the other three roads, largely because these roads have, in a measure, been influenced by conditions affecting lake traffic, which do not in a similar way influence the other roads mentioned. For example, their rates to Chicago would have to be low enough to divert grain from Duluth and Superior, from which points grain can be somewhat more economically forwarded eastward than from Chicago. On the whole, it appears that grain rates and farm prices have, during this period of 17 years, acted with a remarkable degree of sympathy. A comparison of grain-road rates with those on four coal roads and four cotton roads brings out the fact that both of these classes of carriers have reduced their rates in the period under consideration to a greater extent than have the grain roads. The Lehigh Valley road reduced its rate per ton per mile 51 per cent between 1880 and 1897; the Pennsylvania Railroad reduced its rate 54 per cent; the Norfolk and Western, 70 per cent; and the Delaware, Lackawanna and Western, 44 per cent. The greatest reduction in grain rates during this period was 42 per cent, and the difference between the level of rates on the grain roads in 1880 and 1897 is much less than the difference between the level of rates on coal roads between these two limits, 1880 and 1897. On cotton roads the rate per ton per mile has been reduced from over 51 per cent on the Seaboard and Roanoke Railroad to 86.6 per cent on the Mobile and Ohio. The Central of Georgia reduced the rate from 1880 to 1897, 60.4 per cent, and the Southern Railway 54.8 per cent. The difference in the decline of rates between grain roads on the one hand and

coal and cotton roads on the other is probably explained by the fact that the downward tendency of railway rates in grain territory had been going on from 5 to 10 years prior to 1880, whereas the reduction in rates on the coal and cotton roads has very generally been the result of influences which operated almost entirely between the years 1880 and 1897.

THE TRUNK LINE AND GULF GRAIN MOVEMENTS.

(Part Second.)

The rail movement from primary markets eastward and southward to the Atlantic coast and the Gulf ports has evidently settled down to a division of traffic between the trunk lines and the Gulf lines. The winter wheat belt has shifted southwestwardly to such an extent as to put some of the area of wheat production about as far away from the Gulf ports as from Chicago. If it is not exactly the case at present that the wheat center is equally near the lakes and the Gulf, the tendency is decidedly in that direction, and in case of a light crop on the northern side of the spring wheat and winter wheat belt, and a heavy crop on the south side the advantage in transportation is much more likely to be in favor of the roads reaching to the Gulf ports. This movement of wheat as well as corn is being aided by the increasing importance of the Gulf ports as distributing centers for such products and tropical supplies as enter the United States by way of New Orleans, Mobile, Galveston, and other Gulf ports of entry. We may, therefore, look forward to an increase in the volume of grain trade as well as flour with the ports on the Gulf of Mexico. The loss of prestige on the part of New York in the grain trade is partly apparent and partly real. New York traders handle more grain than formerly between primary markets and Europe by way of ports north and south of New York, because, commercially speaking, the grain moves more economically than it can be moved under existing charges by way of New York. Chicago relies more largely than ever on Canadian facilities to reach Europe. Taking Boston and Montreal together one wonders why grain moves at all through the port of New York with its antiquated methods of handling still maintained by leading carriers at that port. The recently formed pool to divide grain traffic among trunk lines reaching New York will avail little. The cost of traffic in grain, as in everything else, is determined by improvements in facilities for handling the grain more economically than is shown by competing lines and points of shipments. The diversion of grain traffic from Buffalo to Montreal is an illustration of this principle that the cost of traffic seeks the line of greatest commercial economy rather than that of the least physical resistance. Places may pride themselves upon natural advantages to their hearts' content, but business goes with the reduction of rates, regardless of prestige or physical position. The trunk lines of the United States will continue to carry grain, but they must be content to operate within the limits which the Canadian and the Gulf competitors are likely to determine from time to time in their progressive improvement of the systems of handling export grain.

EXPENSES OF MARKETING GRAIN AT ST. LOUIS.

(Part Second.)

On the expenses of marketing grain in the interior we have found that the producer receives for grain sent to St. Louis from 70 to 30 per cent of the price paid for consumption at that city. The percentage of value which goes to distribution varies from 10 to 30 per cent. In these expenses are included commission for selling and freight from point of origin to the St. Louis market. There does not appear to be any considerable increase in the cost of marketing from noncompetitive points, indicating that, generally speaking, the territory tributary

to the St. Louis market is virtually competitive territory, so far as the different railroads as carriers seeking the grain are concerned. This proportion of expenses to producers' value holds good for all kinds of grain. The marketing of grain at Kansas City shows a similar result, namely, that the cost of distribution varies from about 10 to 30 per cent of the price paid by the consumer.

ECONOMIC IMPORT OF A VISIBLE SUPPLY.

(Part Second.)

A conspicuous feature of the American grain market is the existence of a ' large visible supply during the greater portion of the year between harvests. Grain, especially wheat, passes out of the farmers' hands early in the season, for good and sufficient reasons, and remains piled up as surplus stock in the country for distribution during the next nine months as the consuming world may require it..

The depressing effect of this large stock of visible wheat upon the market, from the producers' point of view, is inevitable; but it relieves the consumer and the trader, who stands next to the consumer, from anxiety as to where his future supply is to come from. This is one of the causes for the low level of farm prices of wheat under the present methodical system of collecting the crop soon after the harvest and holding it ready for dispersal to whatever part of the world may want it most. Another factor in depressing American wheat prices is the fact that three-fourths of the world's wheat supply comes upon the market within 3 months out of the 12, causing a congestion of stock, which determines the price for the other 9 months of the year. The only uncertain factor in wheat prices after these 3 months is found in the harvests south of the equator, which occur midway between the beginning and ending of American harvests. The Argentine harvest, for example, is a price disturber throughout the greater portion of the year, while the American crop is the greatest factor in the world's wheat market to give stability to present and future prices for consumers. If the world's weekly demand for wheat amounted, on the average, to 7 millions, and the American market has in stock at the same time several times as much, it is evident that the existence of this stock must favor the consuming world as against the producer. The consumer, however, shares the advantage with the distributer who carries the stock and disperses it as required at such rates of compensation as the competitive conditions of modern trade, together with his individual foresight, enabled him to get for his services. It can not be shown that the producer is the victim of an uneconomical system of grain distribution. If he is the victim of speculative holdings of stocks of grain,, he is always at liberty to increase his granary capacity and take a hand in the holding of stocks on his own account. It appears, however, that both in the interior and on the Pacific coast farmers find it best to dispose of their crops of grain at an early date after harvest rather than to wait for a future rise.

Another effect of the existence of a visible supply is to favor the introduction of economies in distribution by resort to handling on a large scale where abundant capital can be applied to the purpose.

DEVELOPMENT OF DOMESTIC DEMAND.

(Part Second.)

A still wiser policy, in the long run, consists in the development of a domestic demand for the grain products of the farm. The growth of dairying and the increase of cattle feeding as a means of disposing of corn in the West and barley in California have enabled the producer to convert these cereal crops into a much more marketable form. The rise of local milling establishments, of local brew

ing concerns, and other forms of demand which render the domestic producer independent of distributers have greatly increased the income of grain-raising communities and added much to the financial power which only a few years ago was very much wanting throughout the rural districts of the South and West. In spite of centralizing tendencies in the milling interests at some places, local enterprises of this kind are increasing throughout the cereal sections.

COUNTRY CAPITAL MOVING ITS OWN CROPS.

(Part Second.)

A special inquiry into the money movement in its connection with the grain movement centering in Chicago indicates that the large money centers have less and less to do with the handling of the crop than in earlier years, and that a very great change has taken place in the financial constitution of rural districts in the past several years, both east and west of the Mississippi. More than ever the rural sections do their own banking, so far as the financiering of the grain crop and other crops is concerned.

SOUTHERN CONSUMPTION HAS RAISED COTTON PRICES.

(Part Third.)

The commercial distribution of cotton has been radically influenced by the rise of Southern centers of distribution. It has generally been taken for granted that the cotton mills of the South have to pay for raw material the New York price less the freight from the field to New York. The facts do not justify this conclusion. Cotton consumers repeatedly, if not generally, have to pay as much as or a little more than the New York price of spot cotton for what they require for their mills. Evidently, therefore, almost all of the gain resulting from the competition of Southern mills, Northern mills, and foreign mills for the cotton goes to the benefit of the Southern producer. We must remember that the 450 mills, or thereabouts, in the South, together with the 900 Northern mills, are now consuming quite as much cotton as Great Britain consumes, so that the consumption of about one-third of the crop at home increases the eagerness of the foreign buyer to command an adequate supply. The whole cotton market, therefore, has been put under increasing tension from the consumers' side of the market by reason of the progress of Southern consumption, and the producer is the heir of nearly all of this advantage. This same tension of competition among consumers has forced out of existence a number of uneconomical methods of handling .cotton, especially those of the more expensive forms of commission. A Southern buyer for foreign shipment in one of the Atlantic coast cities states that competition at times becomes so keen that the foreign buyer has simply to withdraw from the market. Buyers for Southern consumption frequently do not bid by adding a sixteenth, but increase their bids by one-eighth, and sometimes even more recklessly, when a prospect of a rapid rise in price or of scarcity threatens to leave them without an adequate supply. All these influences indicate that the distribution of cotton takes place under conditions which are favorable to the producer.

THE COST OF DISTRIBUTING COTTON.

(Part Third.)

The proportion of the value of cotton which goes to the producer and to the railroad appears to be highly favorable to the producer as well. In North Carolina the proportion that goes to the railroad for hauling a bale of cotton a distance of 20 miles is 14 per cent; the producer receives 98 per cent when he does his own shipping, as he often does. For a distance of 50 miles the railroad receives