THE GRAIN EXCHANGE AGAIN
"How many tables, Janet, are there in the Law?"
"Indeed, sir, I canna just be certain; but I think there's ane in the
foreroom, ane in the back room an' anither upstairs."
--_Scotch Wit and Humor (Howe)_.
The efforts of the elevator faction of the Winnipeg Grain and Produce
Exchange, apparently to choke to death the Grain Growers' Grain
Company, had awakened the farmers of the West to a fuller realization
of the trading company's importance to the whole farmers' movement.
The Grain Growers of the three prairie provinces had been watching
things closely and they did not propose to let matters take their
course unchallenged. A second Royal Commission had been appointed by
the Dominion Government in 1906, under the chairmanship of John Millar,
Indian Head, Saskatchewan, to probe conditions in the grain trade and
the farmers felt that certain evidence which had been taken by this
Commission at Winnipeg justified their claims that they were the
victims of a combine.
In the latter part of November (1906) the President of the Manitoba
Grain Growers' Association, D. W. McCuaig, laid formal charges against
three members of the Winnipeg Grain and Produce Exchange--charges of
conspiring in restraint of trade--and when these gentlemen appeared in
the Police Court it was evident that the Exchange intended to fight the
case every inch of the way. The farmers discovered that the legal
talent of Winnipeg had been cornered; for of the twenty lawyers to whom
their solicitor, R. A. Bonnar, K.C., could turn for assistance in the
prosecution every one appeared to have been retained by the defendants.
The case involved such wide investigation that such assistance was
imperative and finally the Grain Growers secured the services of
ex-Premier F. W. G. Haultain,[1] of Saskatchewan.
The preliminary hearing in the Police Court proved to be most
interesting and at times developed considerable heat among the battling
legal lights. The defendants and their friends were so confident that
commitment for trial would not be forthcoming at all that when the
Magistrate decided that he was justified in so ordering, the grain men
were shocked somewhat rudely out of their complacency.
Following up this preliminary victory, the Manitoba Grain Growers
turned to the Manitoba Government and demanded that the charter under
which the Grain Exchange operated be amended in certain particulars.
The deputation from the Grain Growers met the Committee on Agriculture,
the House being in session, and asked that the powers of the charter be
limited so that business would be conducted on an equitable basis
between buyer and producer. They asked that the Exchange be allowed to
set no limit as to the number of persons who might enjoy its
privileges, the question of the reputability of such persons to be
decided by a majority of the members and that a seat purchased for the
use of any firm or corporation should entitle that firm to the
privileges of the Exchange even though registration of membership was
under the name of an individual; also that the right to membership
should include the right to delegate the trading powers to anyone in
the employ of the firm or corporation.
The Grain Growers also asked that arbitrary interference with the
business methods employed by individual firms or corporations and
inquisitional inquiry into such be prohibited; also that the penalties
and disabilities against those breaking the common rules and the
maximum-price rule be abolished; that the right to define the
eligibility of a person as an employee or fix a limit to salary in any
way be denied; also that the expulsion of no member should be
considered final until assented to by the Minister of Agriculture and
that all by-laws should receive the assent of the Lieutenant-Governor
in Council before becoming legal and binding.
The farmers asked that the Government have full access to the minute
books, papers and accounts of the Grain Exchange and that provision be
made for the public to have free access to a gallery overlooking the
trading room during the sessions of the Exchange so that the
transactions occurring might be observed and the prices disseminated
through the public press. They further wished to see gambling in
futures made a criminal offence.
Roderick McKenzie, Secretary of the Manitoba Association, told how the
existing Grain Exchange had about three hundred members, of whom one
hundred were active and fifty-seven of these active members represented
the elevator interests. He said that the interests of the fifty-seven
were looked after by twelve elevator men in the Exchange and that these
twelve men agreed so well that they allowed one of their number to send
out the price which should be paid for wheat for the day.
The Committee on Agriculture promised to consider the requests and
later, when they met to do so, members of the Grain Exchange attended
in force to present their side of the case. They claimed that a great
deal of the trouble existing between the producer and the Grain
Exchange was due to misconception of the Exchange's methods of action.
The Exchange was only a factor in the grain business and under their
charter they were allowed to make by-laws and regulations, these being
necessary in such an intricate business as handling grain.
The wiring of prices to country points was done by the North-West Grain
Dealers' Association, which had nothing to do with the Exchange but was
a distinct and separate organization for the purpose of running
elevators at country points as cheaply as possible. The highest
possible prices were quoted and the plan was merely to avoid duplicate
wiring.
The grain men claimed that it was impossible to handle the wheat of the
country unless futures were allowed while to carry on its business
properly the Exchange must have the power to say who should be members
and otherwise to regulate its business. If the producer was getting
full value for his wheat why should the Grain Exchange be interfered
with?
The Exchange was willing that its membership should be extended. Their
books always would be open to Government inspection in future and they
would also repeal the rule regarding track-buyers' salaries. The press
was already admitted and it would be found that when the new building
which the Exchange was erecting was completed there would be a gallery
for the use of the public during trading hours.
If the Legislature were to amend the charter, declared the Exchange's
spokesman, the Exchange would demand that the charter be cancelled _in
toto_ and a receiver appointed to distribute the assets. The Exchange
was tired of being branded thieves and robbers and they should be let
alone to do their business. If this were not satisfactory, then they
wished to be put out of business altogether.
The Grain Growers protested that it was not their desire to have the
charter cancelled. They were not blind to the usefulness of the
Exchange if it were properly managed and all they asked was that this
organization be compelled to do what was right. The reason the
Exchange had admitted the Grain Growers' Grain Company, the farmers
claimed, was so that they could have it under discipline, being afraid
of a combination of farmers in the interests of the producer. The
farmers had lost confidence in the manipulations of the Exchange and
wanted official protection.
The question of declaring deals in futures to be a criminal offence was
outside provincial jurisdiction and the farmers withdrew that part of
the request. They wished everything else to stand, however.
At this juncture a recommendation was made that a conference be held
between the Government, the Grain Growers, the Exchange, reeves of
municipalities, bankers, railroads, etc., for discussion of everything
pertaining to the handling of wheat, including amendments to the Grain
Exchange charter. The idea appealed to the Premier and before the
Committee he pledged that the resolutions passed at the proposed
conference would be converted into legislation.
After adopting the Agricultural Committee's report the Government did
not act independently regarding the suggested charter amendments, as
the farmers had hoped they would; instead, the whole thing was shelved,
pending the suggested conference. When this conference was held in the
latter part of February, however, the Government was duly impressed by
the earnestness of the Grain Growers. Many strong speeches were made,
including one powerful arraignment by J. W. Scallion, of Virden, whose
energetic leadership had earned him the title: "Father of all the Grain
Growers." The Government promised to amend the Exchange charter at the
next session of the Legislature.
The activity of the Manitoba Grain Growers' Association was putting a
new face upon the struggle of the Grain Growers' Grain Company for the
restoration of their trading privileges on the floor of the Exchange.
It demonstrated that the farmers could act in concert if occasion arose
and that the Grain Growers' Associations were in accord with the
principles for which the farmers' trading company was fighting. When,
therefore, the Manitoba Association took a hand in the matter by
officially urging the Manitoba Government to assist in restoring the
Company to its former position on the Exchange in order that it could
enjoy the rights of the seat for which it had paid, the Government was
forced to take action.
It is doubtful if a Minister of the Crown in Manitoba ever had been
called upon to make a more remarkable official statement than that
which now appeared in print in connection with this matter. In the
absence of Hon. R. P. Roblin it became the duty of the Acting-Premier
to make it. Hon. Robert Rogers, then Minister of Public Works in the
Manitoba Government, was the official head of the Government in the
Premier's absence and in the _Winnipeg Telegram_ of April 4th, 1907,
the statement appeared as follows:
"The action of the Council of the Winnipeg Grain Exchange in refusing
trading privileges to the Grain Growers' Grain Company is regarded by
the Government as an arbitrary exercise of the powers conferred upon
them (the Exchange) through their charter from the Legislative Assembly
of Manitoba, and unless remedied by the Exchange, the Government will
call the Legislature together during the present month for the purpose
of remedying the conditions by Legislative amendments."
On April 15th the farmers' trading company was admitted once more to
the full privileges of their seat on the Exchange.
The case against the three members of the Grain Exchange, who had been
indicted under Section 498 of the Criminal Code, came to trial in the
Assize Court a week later, on April 22nd, before Judge Phippen. It was
now a matter for Crown prosecution and under direction of the
Attorney-General, R. A. Bonnar, K.C., proceeded vigorously. The Grain
Growers claimed that the Exchange had rules and regulations which had
been carried out in restraint of trade and that in combination with the
North-West Grain Dealers' Association there had been a practice of
restricting the price to be paid for grain to certain daily figures,
sent out by the parties conspiring.
Also, they expected to show that there had been a combine in existence
between the elevator companies so that there was no competition in the
buying of grain at certain points while there was an agreement that
only a certain amount of street wheat would be received at the various
elevators, the whole thing amounting to the restriction of wheat buying
within certain limits fixed by the combination of the buyers who
belonged to the combine--this to the consequent barring out of the
small buyer from the trade. The latter, the Grain Growers argued, was
prevented from buying by the rule which called for the payment of a
salary to track buyers and prohibited the hiring of men on commission;
there were points where the quantity of grain offered for sale was too
limited to justify the payment of a fifty-dollar salary to the buyer.
Another point of complaint was that the Grain Exchange membership was
restricted to three hundred, the members having agreed among themselves
that no more seats be added although all present seats were sold and
many more might be sold to eligible citizens.
Also, claimed the prosecution, there was a practical boycott of
expelled members in that the members of the Exchange were forbidden to
deal with expelled members; it was practically impossible to do
business in grain in Western Canada unless connected with the Grain
Exchange, one firm having experienced this difficulty.
The rule which barred the purchasing of grain on track during the hours
of trading on the Exchange was, they would endeavor to show, an act in
restraint of trade and the three men under indictment, the prosecution
hoped to prove, had been active in the enactment of the alleged illegal
by-laws of the Grain Exchange.
Prior to the enactment of these obnoxious laws of the Exchange the
farmers had been sought by the buyers, whereas since the rules had been
established the farmer must seek the purchaser. While the prices given
out were fixed by the Grain Exchange in what was claimed to be open
competition, the prosecution intended to show that it was a gambling
transaction pure and simple, the price-fixing being nothing more than
the guess of the men who acted for their own gain.
The trial lasted for a month, during which time a great many witnesses
were examined--grain men and farmers--and the whole grain trade
reviewed. The array of legal talent for the defence was very imposing
and the case attracted much attention because, aside from its interest
to the grain trade and the farming population, it promised to test the
particular and somewhat obscure section of the Criminal Code under
which the indictment was laid. At one stage of the proceedings the
tension in court became so high and witnesses so unwilling that upon
reproval by the court regarding his examination, leading counsel for
the Grain Growers picked up his bag and walked out in protest, willing
to risk punishment for the breach of etiquette rather than remain.
After the Grain Growers' executive and counsel had conferred with the
Government, however, the Grain Growers' counsel was prevailed upon to
resume the case.
The finding of the court did not come as much of a surprise; for it was
apparent before the trial ended that the section of the Code was
considered ambiguous by the presiding Judge. The latter held that all
restraints suggested by the evidence were agreed to, whether
justifiably or not, as business regulations and before finding the
defendants guilty these restraints must appear to be "undue," according
to his reading of the section. It was necessary to respect the right
of a particular trade or business or of a particular class of traders
to protect their property by regulations and agreements so long as the
public interests were not thereby "unduly" impaired; to the Judge's
mind there was no question that the public had not been _unduly_
affected.
After reviewing the case the Judge held that the gravamen of the whole
charge hung upon the Commission Rule of the Exchange--that one cent
commission per bushel should be made in handling grain; so that the
price paid would be the price at the terminal (Fort William) less the
freight and one cent per bushel commission, neither more nor less.
Witnesses agreed that this was the lowest profit on which the business
could live. Fort William prices were the highest the world's markets
could justify. Owing to the presence in the statute of the word,
"unduly," therefore, the Judge could not find the defendants guilty.
The Grain Growers were much dissatisfied with the decision; for they
believed that they had adduced evidence to support their case and did
not relish losing it on a technicality. Appeal was made, therefore;
but the appeal court upheld the judgment of the assize court.
Apparently, deduced the farmers, this meant that men could conspire to
create monopolies by driving all competitors out of business so long as
they did not do it out of pure malice--so long as they justified it on
the grounds of "personal interest"--so long as the things they did were
not "malicious restraints, unconnected with any business relations of
the accused!" In other words, if men merely conspired to advance their
own business interests they committed no offence under the then
existing law; to be liable to punishment they must be actuated by
malice.
So that all the turmoil and talk, court proceedings and conferences,
deputations and denunciations, evidence and evasions--all the
excitement of the past few months practically left conditions just
where they were. For the amendments to the Grain Exchange charter
would not materialize till the Legislature met again next year.
But there was one spot where the clouds had rifted and the light shone
through. The Grain Growers' Grain Company had won back its place on
the Exchange. More and more the farmers began to pin their faith to
their little fighting trading company "at the front." It appeared to
be the concentration point for the fire of enemy guns. In all
probability hostilities would break out anew, but the men in charge
were good men--loyal and determined; they could be relied upon to take
a full-sized whack at every difficulty which raised its head.
The first of these to threaten was on the way.
[1] Now Chief Justice Haultain.