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Between the food-producer and the consumer stand intrenched private interests who do the financing, transporting to terminal storage-points, warehousing, conditioning, insuring, and distributing to mills and export trade. Their total charges, farmers' leaders explain, are so heavy that the farmer receives comparatively little return, and often has to face an actual loss.
In the case of other produce the same conditions are cited. Cabbages sold this year in the Rio Grande Valley at ten dollars a ton, were retailed in Dallas, Texas, at the rate of one hundred and ten dollars a ton. Peanuts, sold by Virginia farmers at five cents a pound, were packed and salted in Pennsylvania, and disposed of to consumers elsewhere at seventy-five cents a pound. These are only two of a large number of similar instances given. High freight rates are held partly responsible, but as wide disparities in prices paid and prices charged existed in years when freight rates were much lower than now, the main and abiding cause is laid to exacting middlemen.
The same dissatisfaction is felt by farmers regarding the marketing of live stock. This has recently been selling at pre-war prices, but freight charges are said to be seventy per cent. higher. Commission charges for selling have increased as much or more. The rate charged for selling cattle has increased eighty-five per cent.; for selling hogs, sixty-five per cent.; and for selling sheep, seventy per cent. Yardage charges have increased about fifty per cent. since 1914.
On the other hand, farmers protest that when they buy goods they find that in most cases the production and
prices of those goods are effectively controlled by great corporations. A recent comparison of the prices of fourteen leading products needed by farmers showed an increase of one hundred and thirty-eight per cent. over the prices of the same products in 1914. In contrast, the prices of fourteen of the leading products sold by farmers showed very little increase over the 1914 prices.
What are some of the consequences of the workings of such a distributive system? system? This is a question that farmers' organizers are everywhere asking. They point out that Chicago Board of Trade speculators every year deal in "futures" to the extent of eighteen and a half billion bushels of grain, which is more than fifty times the amount actually harvested. At the same time American farmers have recently suffered a loss of probably two and a half billion dollars in price declines in wheat and corn. Farmers say that they do not object to taking their losses in a period of price readjustment, but they remonstrate that their loss is out of all proportion to the much-lesser loss of other producing groups. Cottongrowers are reminded that while fortunes are made by cotton-exchange speculators, considerable numbers of Southern tenant farmers have been dispossessed because of inability to pay rent due to the low price of cotton.
Unlike previous agrarian revolts, the present movement shows little tendency to indulge in denunciation. This is one of the features of method distinguishing it from its predecessors. It sees in the exchanges selfish institutions unconcerned for the public welfare. welfare. But some of its exponents
frankly admit that under the prevailing system they are an economic necessity, and without them the grower of wheat or cotton would be even more than now at the mercy of the middle
But, these leaders contend, once the growers of wheat, cotton, and other supplies organize themselves so that they can control and direct the marketing of even half the crop, erratic exchange fluctuations will cease, and prices will be fixed and stabilized by actual supply and demand. Laws against profiteering and governmental attempts at price regulation will, they believe, always be failures. In farmers organizing to sell their products they see the only real solution. The fundamental, deep-seated trouble, they insist, is with the present pricedetermining mechanism. They urge that when farmers must sell their corn at a loss for a dollar a bushel and consumers must buy corn-food products on the basis of corn costing two dollars a bushel, it is time for both agricultural and industrial producers to recognize the possible benefits of coöperation.
It is this coöperative spirit that is the propelling force of the new agrarian movement. The American Farm Bureau Federation is pledged to the cause, as is another body having strength in certain regions, the Farmers' Union. Through its state and local leaders the federation has been encouraging the establishment of marketing associations, although, while fostering them, it itself does no buying or selling. It holds that this can be better done by separate organizations, having their own autonomy and regulative methods.
The practical model that has strongly appealed to American farmers is what is called the "California Marketing Plan." ing Plan." Its prime requirements are that selling associations must organize by commodity and not by locality, that they must be strictly business and not mere fraternal or sentimental concerns, and that their organization must not be loose, but legally welded. This plan, it is obvious, follows that of successful industrial groups of capitalists who are organized on lines of sameness of product. It also in a sense resembles that of the American Federation of Labor the different member units of which are organized on craft lines. But here the parallel stops, for the principles accompanying this plan are those which only coöperative bodies can practise. Fourteen California coöperative associations, comprising growers of fruit and raisins, have evolved eight basic principles. Summarized by their attorney, Aaron Sapiro, they are:
Because of economic and legal reasons it is essential that coöperative marketing associations should include as members only growers or landlords receiving part of the crops as rent. Thus the membership is reserved to those having products to market. Growers of a commodity are bound to long-term contracts, ranging from three to nine years. This assures certainty of products for disposal, and gives opportunity for gaging and making adequate marketing connections, development of expert financial direction, and justifies proceeding with the building of plants. The revenue from the sale of products of the same grade and quality must be pooled, so that every member receives the same proportionate return. Marketing associations
must confine themselves to the one function of marketing the products of their members only, leaving buying to separate organizations. Experience has shown that this provision wisely precludes conflict and dissension.
Further principles of the "California Marketing Plan" require a certain control of a particular commodity. This varies from thirty to seventy-five per cent., depending upon the product and marketing conditions. All marketing must be done on thorough business lines by specialists having charge of organization, finance, warehousing, transportation, and other functions. Collective credit must be made use of in order that the grower, in the case of non-perishable products, may receive a substantial payment on delivery of product. This payment is to be made even though a great part of the crop is stored for distribution throughout the marketing year. Finally, all contracts between the associations and growers must be uniform, standard, and enforceable.
But what are the precautions against non-farmers injecting themselves into these associations and manoeuvering for control? This is what happened in some farmers' societies in the past. One instance is that of the Wisconsin Society of Equity, powerful in that State a decade ago. A county judge, a packing-plant promoter, and a former railroad man gradually contrived to manipulate its control into their own hands, and it soon became sterilized.
association reserves the prior right to buy shares when the owner wishes to sell. There are other rules safeguarding the financial and other business administration. Provision is made for a reserve fund, and all available profits are rebated to members.
These principles and rules have not only been indorsed by coöperators' congresses and meetings in various States, but consistent with them a considerable number of coöperative associations have either been operating or have been recently organized.
The Equity Coöperative Exchange, formed in 1912, handles grain through a farmer-owned elevator, with a capacity of 550,000 bushels, in St. Paul, Minnesota, and in 1916 established in South St. Paul a live-stock department building which has become the headquarters for an aggregation of coöperative marketing as well as buying organizations. In 1912 the Equity Coöperative Exchange was a small affair with less than twenty-three thousand dollars of property; it now owns elevator equipment and real estate valued at more than a million and a quarter dollars, and its total net assets are rated at more than two million dollars.
Farmers have coöperative live-stock commission houses at Kansas City and St. Joseph, Missouri, South Omaha, Nebraska, and Sioux City, Nebraska, all doing a large business. The Nebraska coöperative associations did a business of a hundred million dollars in 1920, the transactions of one association alone, the Farmers' Union Coöperative Live-stock Company, amounted to forty million dollars. One Kansas coöperative association has been operating seven elevators, the same number of coal-yards, four
stores, and three stations, and in 1920 did a business of nearly two million dollars.
The Cheese Producers' Association of Wisconsin, organized in 1914 to provide a farmer-controlled service, rasised its initial capital of twenty-two thousand dollars by selling stock to farmers. It built a warehouse, and now handles the product of one hundred and thirty factories, with the prospect of adding the output of ninetyeight more factories. The Puyallup Valley Association, a coöperative marketing body of the State of Washington, is doing an annual business of two million dollars. These are some examples of farmer coöperatives in full operation.
But it is this year that farmers' marketing coöperatives have had their greatest stimulus. One great enterprise after another has been projected. The Oklahoma Cotton-Growers' Association, after a brief campaign, had by May 1, 1921, enrolled more than thirtyfour thousand members, raising four hundred thousand bales of cotton which are to be coöperatively marketed. On about the same date the Mississippi Staple Cotton-Growers' Association had contracts with its members for one hundred and eightytwo thousand bales with which to begin business. In Texas an energetic campaign has been under way to obtain a million bales of cotton for coöperative marketing. Similar movements have been pushed in Georgia, Arkansas, Arizona, and other cotton-growing States.
Virginia and North Carolina peanutgrowers have signed contracts for coöperatively marketing fifty per cent.
of their crop, and since then ambitious efforts have been made to raise the control to seventy-five per cent. Tobacco-growers in Virginia, North and South Carolina, Kentucky, and other States have been likewise signing contracts for coöperative marketing. In Virginia alone, by May, 1921, more than ten thousand tobacco-growers had signed.
It was, however, a few months ago that the greatest coöperative enterprise of all was launched. This was a plan prepared by a committee of the American Farm Bureau Federation for the marketing of wheat through a national sales agency. It was adopted at Chicago by more than three hundred delegates, representing the wheatgrowers of twenty-three States. The concrete result soon came in the organization of the United States GrainGrowers, Inc. This corporation will operate farmer-owned elevators, warehouses, sales and export corporations. To finance the plan, a farmer-owned subsidiary, the Farmers' Finance Corporation, has been organized with a hundred million dollars capital. It will be entirely controlled by the United States Grain-Growers, Inc.
This body disclaims any intention of attempting to fix prices. Its sole announced objects are to systematize the marketing of crops and to stabilize markets by helping producers hold their crops and market them when conditions are propitious. Grain-selling will be concentrated in the United States Grain-Growers, Inc., the membership and voting control of which is limited to actual grain-growers. Branches will be established at all principal markets. If found desirable, seats on boards of trade will be acquired.
An innovation regarded of the highest importance will be the providing of a complete system of gathering and interpreting statistics of world conditions affecting supply and demand.
Grain-growing authorities point out that the hazard of changing conditions of world supply and demand is used as an annual excuse for deceiving farmers and depressing market values at harvest-time, when the bulk of grain is sold. Heretofore the American farmer has had no authentic information gathered by his own agencies as to crop conditions in South America and other producing regions. He has had to accept such reports as were given out from other and hostile sources. It is planned to gather this information through farmers' representatives permanently stationed in those countries. This information will be compiled and interpreted by the central agency of the United States Grain-Growers, Inc., and circulated among farmers' local associations in order that they may have reliable data upon which to base their judgment in selling.
The plan further creates a subsidiary warehousing corporation that will supply terminal and district warehouses with clearing and conditioning machinery. Farmers complain that they have been mulcted of enormous sums by private companies falsely classifying the grades of their wheat. An export corporation, also a subsidiary of the United States Grain-Growers, Inc., will find outlets for surplus grain. Existing farmers' elevators will not be replaced or superseded. They will be combined into one great marketing company, which will be able to make the same savings at the terminals that the local elevators have made at their own shipping-points.
The plan makes no attempt to put grain marketing on a nation-wide pooling basis. It simply provides means for the development and extension of pooling as experience proves its adaptability. Members must sign a contract to deliver all surplus grain for a period of five years. All revenue received for grain will, after operating and handling costs are deducted, be apportioned among the growers. The originators of this plan realize keenly that there are many problems in the marketing of grain not applicable to the marketing of other commodities, but they believe that they have embodied the best features of all successful coöperative marketing associations.
Farmers' leaders are confident that coöperation is the equalizing, revivifying force that is fast coming to the rescue of American agriculture. As practical men, however, they have no illusions. They recognize that some phases may need revision. Did not big business enterprises, they ask, have to learn from experience in technical administration?
The leaders also foresee that some of the present ardent enthusiasm may perhaps be temporary, induced by the impetus of the ideal. They expressly warn the over-sanguine that coöperation may in some aspects encounter difficulties. They proclaim the fact that there are still large numbers of farmers to be educated and attached to its principles. Further, they cautiously declare that even if largely successful, coöperation will not end all of the farmers' troubles. But they claim that, even with all these allowances, a coöperative world will be better than one individualistic, and that whatever defects may develop, it is a system more equitable than now exists.