The Young Farmer: Some Things He Should Know Part 12

In certain sections and for certain products the railroad rate varies with the season, because of difference in compet.i.tion. The railroad rate between Chicago and New York on grain is higher while the navigation of the Great Lakes is suspended. As an ill.u.s.tration of the cheapness of transportation by water, it is stated that sometimes it is cheaper to s.h.i.+p wheat from Chicago to Buffalo by boat than to store it in a grain elevator for an equal period of time.

Products may sometimes be sent by baggage to greater advantage than by express, special arrangements for which are generally required.

FACILITIES FOR FREIGHT TRANSPORTATION

American railway facilities are, perhaps, unrivaled among the nations of the world, but the United States is still behind other nations in the matter of means of local transportation, in which good roads is only a part of the problem. In France, the so-called _messagers_ are a common feature of local traffic. Thus in the Department of Touraine there are 246 towns each having from one to four _messagers_, who with their great two-wheel carts, each with single draft horse, make one or two trips to Tours each week. The _messagers_ carry freight both ways precisely in the same capacity as railroads do. While the railroads are fairly abundant these local agencies continue to thrive because delivery can be made directly to the consignee and delivery at the exact time and place is more certain. The enormous loads conveyed in these two-wheel carts by one horse is an element in this system to which the good roads of France now contribute. In 1799, France had constructed 25,000 miles of roadway. Since that time, over 300,000 miles of roadway have been completed and about 30,000 miles of railway have been constructed--ten miles of roadway for each mile of steam railway. The good roads of France are of comparatively recent origin, contributing materially to the improvement in well-being which has taken place during the same period.

CHAPTER XIX

MARKETING

Without stopping to inquire the reasons, it may be recalled that there are two rather distinct forms of trade, wholesale and retail. The wholesale trade is conducted by three cla.s.ses of persons: dealers or merchants, commission men, and brokers. The dealer is one who buys the goods outright and takes his own risk on making a favorable sale to the retailer. The commission man is one who receives the goods, sells them at such price as he may be able to obtain and remits to the seller the amount obtained less expenses and his commission. The broker is a man who effects a sale without coming in contact in any way with the materials sold. A cheese broker, for example, receives instruction from different factories to sell for them a certain quant.i.ty of cheese of a given kind and quality each week or month as the case may be. At the same time he receives from grocery stores which retail cheese orders for various amounts, kinds and quality of cheeses. With this information at hand, he directs the various factories intrusting their business to him to s.h.i.+p the kind, quant.i.ty, and quality of cheese required by his several customers. For such service he receives a brokerage, which is less than that charged by a commission man because he is not required to handle or store the material.

Since the different farm products are purchased by different cla.s.ses of retailers, and since their handling and sale require different facilities and special knowledge, there have arisen in the great centers of trade different kinds of markets, each having its particular facilities for the handling, care and sale, and each conducted by commission men or brokers with a special knowledge of the trade. Furthermore, certain cities have become, on account of their favorable position--to mention but one reason--headquarters for certain products or groups of products. Thus Petersburg, Virginia, has the princ.i.p.al wholesale market for peanuts. Elgin, Illinois, has been noted for its b.u.t.ter market. St. Louis is the leading mart for mules.

In a general way, the following five more or less distinct and important cla.s.ses of markets for farm products may be recognized: Grain, Live Stock, Produce, Cotton and Tobacco.

METHODS OF TRADE

The brokers or commission men doing business in any one of these markets usually form an a.s.sociation called a board of trade, chamber of commerce or similar t.i.tle for the purpose of a.s.sisting "each other in the pursuit of common ends." The result has been uniformity of methods and charges; but above all in importance, perhaps, has been the definition of cla.s.ses and grades of the products placed on sale.

The tendency is for the a.s.sociations in the different cities to adopt uniform rules for the grading of products, so that No. 2 red winter wheat may mean the same thing in Toledo and New York; that the quotation on prime beef may refer to the same quality of cattle in Pittsburgh as it does in Chicago; and that No. 1 Timothy hay in Baltimore and St. Louis may be alike. While the tendency is towards uniformity, much yet remains to be accomplished. The s.h.i.+pper must be on his guard lest he suffer loss through the variations in the cla.s.sification or variations in their interpretations on the different markets.

There has grown up around these markets some agency which stands as a disinterested party between seller and buyer impartially determining the weight and in some cases the quality of the object under negotiation. The State of Illinois employs agents who inspect all cars of grain consigned to the Chicago market. These inspectors determine the kind, grade and weight of the grain in each car. The car is then delivered under seal to the purchaser. If either seller or buyer is dissatisfied with the inspector's decision he may, by complying with certain regulations, have this decision reviewed by a higher authority. The decision of this higher authority is final and must be accepted by both parties. Brokers selling grain in carload lots s.h.i.+p the cars subject to the weight and grade as determined by the inspector at Chicago. Grain of a specific grade may thus be bought in Chicago or other great grain markets with almost perfect security as to weight and quality by persons living in any part of this or any other country. At Elgin the quality of b.u.t.ter is determined by a committee appointed by the Board of Trade from its own members. In the live stock markets, the stock yards company, in addition to furnis.h.i.+ng yards, shelter, food and water, acts as agent between seller and buyer in determining the weight of the animals. The purchaser or his agent must determine for himself the quality of the animals he buys.

GRAIN MARKETS

The Chicago and St. Paul Boards of Trade and the New York Produce Exchange are the three great agencies for dealing in grain in the United States. Buffalo, Duluth, Baltimore and Philadelphia are also important markets. Adjuncts to these markets are the great terminal elevators capable of holding almost indefinitely enormous quant.i.ties of wheat and other grain. On the Pacific Coast all the wheat is handled in the bags, as is the custom in the other markets of the world. Canada and the United States alone have recognized the principle that wheat and other grains will run like water, which has been a prime factor in their compet.i.tion with other nations.

Country elevators charge two cents a bushel for storage during the first 15 days and 1/2 cent for each additional 15 days. The charge for storage at terminal elevators for the first 15 days is 3/4 cent. The farmer may thus store his wheat in an elevator in place of his farm if he chooses so to do, although the wheat he thus puts in storage may have been made into flour and consumed before he sells it. This may be looked upon as a sort of intermediary step between storing wheat in one's own granary and dealing in futures.

The country s.h.i.+pper pays 1/2 cent a bushel commission for the sale of wheat. There is also a charge for inspection and insurance, and, in case there is an advance payment, for interest. After five days there are storage charges. This has given rise to the expression, gilt edge, regular and short receipts, depending upon the length of time there remains before storage charges must be paid. Every market has a grade known as contract grade, meaning the quality that must be furnished when wheat or other grain is sold without specifying the grade. In Chicago No. 2 red winter wheat is the contract grade. Where grain is sold or purchased by a broker, the brokerage is usually 1/8 cent per bushel.

HAY MARKETS

At least twenty cities have adopted the rules of the National hay a.s.sociation as to cla.s.ses and grades of hay and straw. The southern states const.i.tute an important market for the hay of the north central states, while Boston, New York and the mining towns of Pennsylvania are important markets for the northeastern states. The size of bale varies from 75 to 200 pounds. Small bales of 100 pounds each are preferred in Baltimore, medium bales of 110 to 140 pounds in Philadelphia, while New York and Boston usually deal in the larger bales. The commission charges vary from 50 cents to $1 per car. In New York, $1 pays all charges. At Chicago, $3 per car has been charged for the inspection, divided equally between seller and buyer.

PRODUCE MARKETS

Every town of any consequence has its produce market. The South Water street district in Chicago and the West Was.h.i.+ngton street market in New York are noted for their extent and variety. There are also many special markets for certain cla.s.ses of produce. Thus Elgin, Chicago and New York have b.u.t.ter exchanges. Wisconsin, Utica, Watertown and Cuba (New York) maintain exchanges where cheese is placed on sale each week during the manufacturing season. There is also a board of trade for cheese in New York City. The prices quoted upon these exchanges are made the basis of many transactions between buyer and seller, who never enter these markets. Not only do buyers and sellers agree to abide by the quotations of one or the other of these markets, but the quotations are also used as a basis of settlement for milk furnished the creamery or factory. These agencies are thus impartial arbiters in countless financial transactions.

The rate of commission varies in different markets and for different products. Generally, however, produce is handled on a 5% basis, but for individual products which are especially bulky and difficult to handle, such as cabbage, 10% may be charged. In some cases commission is by quant.i.ty instead of on a percentage basis. Thus for potatoes the commission is sometimes 10% and in other cases 4 or 5 cents a bushel.

LIVE STOCK MARKETS

While poultry and game, as well as the carca.s.ses of the smaller animals, may be handled through the produce markets, the large animals require separate facilities. The United States is noted for its large live stock markets and for the perfection and size of the packing houses which have grown up about them. The most famous example of these combined agencies is to be found at Chicago, but important live stock markets are also maintained at St. Louis, Kansas City, Omaha, Pittsburgh, Buffalo and more recently Fort Worth, Texas. The commission charges vary from 50 cents to $1 per head for cattle and from 10 to 25 cents per head for calves, sheep and hogs. In some markets, the commission on hogs is 2% of the gross returns. When located within 150 miles of a central market, it is customary to allow 50 cents per hundred pounds for cattle and 40 cents for hogs to cover shrinkage, and cost of freight, yardage, food, bedding and commission.

It is possible for an owner to sell his own live stock in these yards, but the commission man, because of his superior knowledge of existing trade conditions, is almost universally employed. Firms which handle cattle, sheep and hogs seldom sell horses. Although handled by different commission firms, important horse markets are maintained at Chicago and Buffalo immediately adjacent to the market for meat animals. In New York the horse markets are in a different section of the city, that for draft and common work horses on one street, while the American Horse Exchange, located at another point, handles high-cla.s.s light horses. The usual custom is to sell horses at auction, although they may be purchased at private treaty. In whatever manner purchased, it is essential to understand precisely the character of the guarantee.

COTTON, WOOL AND TOBACCO MARKETS

Because of their higher value per pound and the ease with which they can be stored, cotton, wool and tobacco are dealt in somewhat differently than other farm products. The two great cotton exchanges are located at New Orleans and New York, the quotations on these markets controlling the financial transactions in cotton throughout the world. The princ.i.p.al wool markets are Boston, New York, Philadelphia and St. Louis. The princ.i.p.al tobacco markets are at Richmond and Danville, Va., Durham, N. C., and Louisville, Ky.

[Ill.u.s.tration: Mr. C. W. Wald, graduate of the Ohio State University, farmer, formerly a.s.sistant horticulturist of the New Hamps.h.i.+re and Ohio Experiment Stations, is shown above in one of the New Carlisle (Ohio) greenhouses, in which three crops of lettuce occur in one bed. One crop is ready to cut, another planted and a third in pots between the other plants, to be planted in another bed when large enough. The net returns from a quarter of an acre under gla.s.s has been greater than from 160 acres devoted to general farm crops.]

[Ill.u.s.tration: C. W. Zuck & Sons, Erie, Pa. One son was a student in agriculture at the Pennsylvania State College. Father and three sons, beginning six years ago with a run-down farm of 55 acres, have built an acre of gla.s.s and a heating plant of 260 horsepower. During the period they have spent $5,000 on the place and at the end of season they will have very nearly cleared their improvements. "Tell the youthful readers of your book to get as much education as possible and then go in partners.h.i.+p with their fathers or brothers. If they do, success will be theirs."]

The country s.h.i.+pper or the young farmer wis.h.i.+ng to place his products in the ordinary channels of trade must consider and determine among other things the following: What cities have favorable markets for his products; choose some commission man or broker to handle them; calculate the expenses for freight, commission and other customary items; familiarize himself with the rules for grading his products in the market or markets under consideration; and determine what agency there may be for protecting him as to the weight and quality when sales are effected. Whenever practicable, a visit to the market in question and a personal study of the conditions under which selling is done will be wise. Having done so, and perhaps having made a number of sales through these usual channels of trade, he will be in a position to consider whether he may organize to advantage some more direct method of getting his products to the consumer.

CHAPTER XX

LAWS AFFECTING LAND AND LABOR

Thus far property has been treated as invested capital upon which interest must be charged in determining the labor income. Labor, likewise, has been considered princ.i.p.ally in its effect upon profits.

Society has thrown around the transfer of property and the use of labor certain restraints for the protection of all individuals.

Through the ages certain procedures have become fixed by custom. These legal practices are largely the inheritance of old Roman law and are usually known as common law. Various legislative bodies having jurisdiction enact from time to time other laws. This body of enacted law is called statute law and is much more variable than common law.

In the briefest possible manner it is the purpose here to state a few of the principles and applications of the law, chiefly the common law, as it affects the farmer in acquiring or disposing of his property and in his dealings with labor.

PROPERTY

Property may be defined as anything which is a subject of owners.h.i.+p.

It possesses the characteristics of being acquired, held, sold, willed or inherited and is of two kinds: (1) Real property, real estate or realty; (2) chattels or personal property. These two kinds of property are subject to quite distinct legal practices. In general, real estate consists of land, things attached to it, such as trees, buildings, fences and certain rights and profits arising out of or annexed to the land. The term land as ordinarily used includes all these things, so that when land is said to be worth so much an acre it includes all fixtures. Ponds and streams are, under this definition, land. The land not only has surface dimensions, but extends upward indefinitely and down to the center of the earth, and hence includes a right to ores, coal, oil, gas or other materials whatsoever.

An article may, however, be real property or personal property depending upon circ.u.mstances. Thus a tree growing on the land is real property, but when cut into cord wood becomes personal property. New fence posts ready for use are personal property. When set in the ground they become real estate. Just what goes with a farm or what are fixtures is frequently a subject for legal determination.

FIXTURES

The general rule is that "fixtures are any chattels which have become substantially and permanently annexed to the land or to buildings or other things which are clearly a part of the land."[D] The annexation may, however, be purely theoretical, since the keys to the house or barn, which may be in the owner's pocket, are real estate. One rule concerning fixtures is that they must be so annexed that they cannot be severed without injuring the freehold. The intention of the party making the annexation also often determines, since if the article is annexed with the intention of making it permanent, it then becomes a part of the land. Among the things held to be fixtures, and therefore a part of the land, are: (1) All buildings and everything which is a part of any building, such as doors, blinds, keys, etc.; (2) fence materials which have been once used and are piled up to be used again are a part of the land, but new fence material not yet used is personal property. (3) Growing crops are real property. They go to the purchaser of the land unless specially reserved in the deed. A verbal agreement is not sufficient. (4) Trees, if blown down or cut down and still lying where they fell, are real property; if cut or corded up for sale they become personal property. (5) All manure made on the farm is real estate and pa.s.ses with the land. (6) All the ordinary portable machines and tools are considered personal property, but certain machines held to be of permanent use upon the land are real estate. Among the things which courts have held to go with the land are cotton gins, copper kettles encased in brick and mortar for cooking food for hogs, cider mills, pumps, water pipes bringing water from distant springs. In general, motive power machinery and the shafting go with the land, but the machinery impelled may or may not, depending upon the way it is annexed. (7) If stones have been quarried for the purpose of using upon the farm, they go with the farm, but if quarried for sale they are personal property.

CONTRACTS

The difference between personal property and real property may be indicated by considering the essential features of a contract. A contract is an agreement between two or more persons. The foundation rule concerning a contract is that every man must fulfill every agreement he makes. An ethical practice grows out of this legal rule which, if strictly adhered to, will save much embarra.s.sment, viz., make but few promises and always keep your engagements.

There are seven requirements generally necessary to a valid contract.

(1) Possibility. The thing to be done must be possible. (2) Legality.

It must not be forbidden by law. (3) Proper parties. The parties to a contract must be competent. Contracts with idiots or drunken persons are not binding. Some contracts with minors are not binding, although contracts for the necessities of life are. (4) Mutual a.s.sent. A proposition not a.s.sented to by both parties is not binding on either.

(5) Valid consideration. A man is not regarded as injured by the breaking of a promise for which he has paid, or is to pay, nothing.

(6) Fraud or deceit. A contract obtained by fraud is void as against the party using the fraud, but may be enforced by the innocent party if he sees fit. (7) Written contracts. Here comes the most important difference between real and personal property. Real property can only be conveyed by a written instrument, properly executed and recorded, while personal property pa.s.ses by mere possession. Contracts relating to the sale of real estate are not binding unless in writing, while verbal contracts are sufficient for personal property if accompanied by payment of a part of the purchase price or the acceptance of the goods. For amounts under $50 verbal agreement in itself is binding.

TRANSFER OF REAL ESTATE