MARKETING
In the last chapter we have followed the growing of the wheat from
seed time to harvest. But when the farmer has harvested his corn his
troubles are by no means over. He has still to thrash it, dress it,
sell it, and deliver it to the mill or to the railway station. In the
good old times a hundred years ago thrashing was done by the flail,
and found work during the winter for many skilled labourers. This
time-consuming method has long disappeared. In this country all the
corn is now thrashed by machines, driven as a rule by steam, but still
in some places by horse-gearing. The thrashing machine, like all other
labour saving devices, when first introduced was bitterly opposed by
the labourers, who feared that they might lose their winter occupation
and the wages it brought them. In the life of Coke of Norfolk, the
first Lord Leicester, there is a graphic account of the riots which
took place when the first thrashing machine was brought into that
county.
Only the larger farmers possess their own machines. The thrashing on
the smaller farms is done by machines belonging to firms of engineers,
which travel the country, each with its own team of men. These
machines will thrash out more than 100 bags of wheat or barley in a
working day. The more modern machines dress the corn so that it is
ready for sale without further treatment. After it is thrashed the
wheat is carried in sacks into the barn and poured on to the barn
floor. It is next winnowed or dressed, again by a machine, which
subjects it to a process of sifting and blowing in order to remove
chaff, weed-seeds and dirt. As it comes from the dressing machine it is
measured into bags, each of which is weighed and made up to a standard
weight ready for delivery. In the meantime the farmer has taken a
sample of the wheat to market. The selling of wheat takes place on
market day in the corn hall, or exchange, with which each market town
of any importance is provided. In the hall each corn merchant in the
district rents a small table or desk, at which he stands during the
hour of the market. The farmer takes his sample from one merchant to
another and sells it to the man who offers him the highest price. The
merchant keeps the sample and the farmer must deliver wheat of like
quality. In the western counties it is sometimes customary for the
farmers to take their stand near their sample bags of corn whilst the
merchants walk round and make their bids.
But unfortunately it too often happens that the struggling farmer
cannot have a free hand in marketing his corn. In many cases he must
sell at once after harvest to raise the necessary cash to buy stock
for the winter’s feeding. This causes a glut of wheat on the market
in the early autumn, and the price at once drops. In other cases the
farmer has bought on credit last winter’s feeding stuffs, or last
spring’s manures, and is bound to sell his wheat to the merchant in
whose debt he finds himself, and to take the best price offered in a
non-competitive market.
These are by no means all the handicaps of the farmer who would market
his corn to the best advantage. Even the man who is blessed with plenty
of ready money, and can abide his own time for selling his wheat, is
hampered by the cumbrous weights and measures in use in this country,
and above all by their lack of uniformity. In East Anglia wheat is sold
by the coomb of four bushels. By common acceptance however the coomb
has ceased to be four measured bushels, and is always taken to mean 18
stones or 2¼ cwt. This custom is based on the fact that a bushel of
wheat weighs on the average 63 pounds, and four times 63 pounds makes
18 stones. But this custom is quite local. In other districts the unit
of measure for the sale of wheat is the load, which in Yorkshire means
three bushels, in Oxfordshire and Gloucestershire 40 bushels, and in
parts of Lancashire 144 quarts. Another unit is the boll, which varies
from three bushels in the Durham district to six bushels at Berwick.
It will be noted that most of the common units are multiples of the
bushel, and it might be imagined that this would make their mutual
relations easy to calculate. This however is not so, for in some cases
it is still customary to regard a bushel as a measure of volume and to
disregard the variation in weight. In other cases the bushel, as in
East Anglia, means so many pounds, but unfortunately not always the
same number. Thus the East Anglian bushel is 63 pounds, the London
bushel on Mark Lane Market is the same, the Birmingham bushel is only
62 pounds, the Liverpool and Manchester bushel 70 pounds, the Salop
bushel 75 pounds, and in South Wales the bushel is 80 pounds. Finally,
wheat is sold in Ireland by the barrel of 280 pounds, on Mark Lane by
the quarter of eight bushels of 63 pounds, imported wheat in Liverpool
and Manchester by the cental of 100 pounds, and the official market
returns issued by the Board of Agriculture are made in bushels of 60
pounds. There is, however, a growing tendency to adopt throughout the
country the 63 pound bushel or some multiple thereof, for example the
coomb or quarter, as the general unit, and the use of the old-fashioned
measures is fast disappearing.
The farmer of course knows the weights and measures in use in his own
and neighbouring markets, but unless he takes the trouble to look
up in a book of reference the unit by which wheat is sold at other
markets, and to make a calculation from that unit into the unit in
which he is accustomed to sell, the market quotations in the newspapers
are of little use to him in enabling him to follow the fluctuations
of the price of wheat. Thus a Norfolk farmer who wishes to interpret
the information that the price of the grade of wheat known as No. 4
Manitoba on the Liverpool market is 7/3½, must first ascertain that
wheat is sold at Liverpool by the cental of 100 pounds. To convert
the Liverpool price into price per coomb, the unit in which he is
accustomed to sell, he must multiply the price per cental by 252, the
number of pounds in a coomb of wheat, and divide the result by 100, the
number of pounds in a cental; thus:
7/3½ x 252 ÷ 100 = 18/4½.
It is evident that the farmer who wishes to follow wheat prices in
order to catch the best market for his wheat, must acquaint himself
with an extremely complicated system of weights and measures, and
continually make troublesome calculations. The average English farmer
is an excellent craftsman. He is unsurpassed, indeed one may safely say
unequalled, as a cultivator of the land, as a grower of crops, and as
a breeder and feeder of stock, but like most people who lead open-air
lives, he is not addicted to spending his evenings in arithmetical
calculations. The corn merchant, whose business it is to attend to
such matters, is therefore at a distinct advantage, and the farmer
loses the benefit of a rise in the market until the information slowly
filters through to him. No doubt the time will come, when not only
wheat selling, but all business in this country, will be simplified by
the compulsory enactment of sale by uniform weight. The change from
the present haphazard system or want of system would no doubt cause
considerable temporary dislocation of business, and would abolish many
ancient weights and measures, interesting to the historian and the
archaeologist in their relations to ancient customs, but in the long
run it could not but expedite business, and remove one of the many
handicaps attaching to the isolated position of the farmer.
Having sold his wheat the farmer now puts it up in sacks of the
standard of weight or measure prevailing in his district. If the
merchant who bought it happens to be also a miller, as is frequently
the case, the wheat is delivered to the mill. Otherwise it is sent
to the railway station to the order of the merchant who bought
it. Meantime the merchant has probably sold it to a miller in a
neighbouring large town, to whom he directs the railway company to
forward it. Thus the wheat directly or indirectly finds its way to a
mill, where it will be mixed with other wheats and ground into flour.
We have now followed wheat production in England from the ground to
the mill. But at the present time home grown wheat can provide only
about one-fifth of the bread-stuffs consumed by the population of
the United Kingdom, and any account of the growing of wheat cannot
be complete without some mention of the methods employed in other
countries. The extensive methods of wheat-growing in the more thinly
populated countries have already been shortly mentioned. But though
their methods of production are of the simplest, the arrangements for
marketing their produce are far more advanced in organisation than
those already described for the marketing of home grown produce.
For thrashing in Canada and the Western States, travelling machines
are commonly used, but they are larger than the machines in use in
this country, and the men who travel with them work harder and for
longer hours. It is usual for a Canadian travelling “outfit” to thrash
1000 bags of wheat in a day, about ten times as much as is considered
a day’s thrashing in England. Harvesting and thrashing machinery has
evolved to an extraordinary extent in the West on labour saving lines.
On the Bonanza farms of the Western States machines are in use which
cut off the heads of the wheat, thrash out the seed, and bag it ready
for delivery, as they travel round and round the field. Such machines
of course leave the straw standing where it grew, and there it is
subsequently burnt. Since wheat is grown every year, few animals are
kept beyond the working horses. Very little straw suffices for them and
the rest has no value since its great bulk prohibits its profitable
carriage to a distance.
After being thrashed the grain is delivered, usually in very large
loads drawn by large teams of horses, to the nearest railway station,
whence it is despatched to the nearest centre where there is a grain
store, or elevator as it is called. Here it is sampled by inspectors
under the control, either of the Government or the Board of Trade, as
the committee is called which manages the wheat exchange at Chicago
or other of the great wheat trading centres. The inspectors examine
the sample, and on the result of their examination, assign the wheat
to one or other of a definite series of grades. These grades are
accurately defined by general agreement of the Board of Trade or by
the Government. Each delivery of wheat is kept separate for a certain
number of days after it has been graded, in case the owner wishes to
appeal against the verdict of the inspector. Such appeals are allowed
on the owner forfeiting one dollar per car load of grain if the verdict
of the inspector is found to have been correct. At the Chicago wheat
exchange 27 grades of wheat are recognised. The following examples show
the methods by which they are defined. The definitions are the subject
of frequent controversy.
No. 1 Northern Hard Spring Wheat shall be sound, bright, sweet, clean,
and shall consist of over 50 per cent. of hard Scotch Fife, and weigh
not less than 58 pounds to the measured bushel.
No. 1 Northern Spring Wheat shall be sound, sweet and clean; may
consist of hard and soft varieties of spring wheat, but must contain
a larger proportion of the hard varieties, and weigh not less than 57
pounds to the measured bushel.
No. 2 Northern Spring Wheat shall be spring wheat not clean enough or
sound enough for No. 1, but of good milling quality, and must not weigh
less than 56 pounds to the measured bushel.
No. 3 Northern Spring Wheat shall be composed of inferior shrunken
spring wheat, and weigh not less than 54 pounds to the measured bushel.
No. 4 Northern Spring Wheat shall include all inferior spring wheat
that is badly shrunken or damaged, and shall weigh not less than 49
pounds to the measured bushel.
When sampling wheat for grading, the inspectors also estimate the
number of pounds of impurities per bushel, a deduction for which is
made under the name of dockage. At the same time the weight of wheat in
each car is officially determined. All these points, grade, dockage,
and weight, are officially registered, and as soon as the time has
elapsed for dealing with any appeal which may arise, the wheat is
mixed with all the other wheats of the same grade which may be at
the depot, an official receipt for so many bushels of such and such a
grade of wheat subject to so much dockage being given to the seller or
his agent. These official receipts are as good as cash, and the farmer
can realise cash on them at once by paying them into his bank, without
waiting for the wheat to be sold.
As each delivery of wheat is graded and weighed, word is sent to
the central wheat exchanges that so many bushels of such and such
grades are at the elevator, and official samples are also sent on
at the same time. The bulk of the sales however are made by grade
and not by sample. The actual buying and selling takes place in the
wheat exchanges, or wheat pits as they are called, at Chicago, New
York, Minneapolis, Duluth, Kansas City, St Louis, and Winnipeg, each
of which markets possesses its own special character. Chicago the
greatest of the wheat markets of the world passes through its hands
every year about 25 million bushels of wheat, chiefly from the western
and south-western States. It owes its preeminence to the converging
railway lines from those States, and to its proximity to Lake Michigan
which puts it in touch with water carriage. New York has grown in
importance as a wheat market since the opening of the Erie Canal. It
is especially the market for export. Minneapolis is above all things
a milling centre. No doubt it has become so partly on account of the
immense water-power provided by the Falls of St Antony. It receives
annually nearly 100 million bushels of wheat, its speciality being the
various grades of hard spring wheat. Duluth is the most northern of the
American wheat markets. It receives and stores over 50 million bushels
annually. It owes its importance to its position on Lake Superior,
which is available for water carriage. Kansas City deals with over 40
million bushels per annum, largely hard winter wheat, which it ships
down the Missouri River. St Louis deals in soft winter wheats to the
extent of about 20 million bushels per annum. Winnipeg is the market
for Canadian wheats, to the extent of over 50 million bushels per
annum. It has the advantage of two navigable rivers, the Red River and
the Assiniboine, and it is also a great railway centre. Its importance
is increasing as the centre of the wheat-growing area moves to the
north and west, and it is rapidly taking the leading position in the
wheat markets of the world.
It has been stated above that Chicago is the greatest wheat market,
but it will no doubt have been noticed that this is not borne out by
the figures which have been quoted. For instance, Minneapolis receives
every year nearly four times as much wheat as Chicago. The reason of
this apparent discrepancy is that the sales at Minneapolis are really
_bona fide_ sales of actual wheat for milling, whilst nine-tenths
of the sales at Chicago are not sales of actual wheat, but of what
are known as “futures.” On this assumption, whilst the actual wheat
received at Chicago is 25 million bushels, the sales amount to 250
million bushels. Such dealing in futures takes place to a greater or
less extent at all the great wheat markets, but more at Chicago than
elsewhere.
The primary reason for dealing in futures is that the merchant who
buys a large quantity of wheat, which he intends to sell again at some
future time, may be able to insure himself against loss by a fall
in price whilst he is holding the wheat he has bought. This he does
by selling to a speculative buyer an equal quantity of wheat to be
delivered at some future time. If whilst he is holding his wheat prices
decline, he will then be able to recoup his loss on the wheat by buying
on the market at the reduced price now current to meet his contract
with the speculative buyer, and the profit he makes on this transaction
will more or less cover his loss on the actual deal in wheat which
he has in progress. As a matter of fact he does not actually deliver
the wheat sold to the speculative buyer. The transaction is usually
completed by the speculator paying to the merchant the difference in
value between the price at which the wheat was sold and the price to
which it has fallen in the interval. This payment is insured by the
speculative buyer depositing a margin of so many cents per bushel at
the time when the transaction was made. Speculation is, however, kept
within reasonable bounds by the fact that a seller may always be called
upon to deliver wheat instead of paying differences.
The advantage claimed for this system of insurance is that whilst
it is not more costly to the dealers in actual wheat than any other
equally efficient method, it supports a number of speculative buyers
and sellers, whose business it is to keep themselves in touch with
every phase of the world’s wheat supply. The presence of such a body of
men whose wits are trained by experience of market movements, and who
are ready at any moment to back their judgment by buying and selling
large quantities of wheat for future delivery, is considered to exert
a steadying effect on the price of wheat, and to lessen the extent of
fluctuations in the price.