Deep Furrows Part 10

Roderick McKenzie, Secretary of the Manitoba a.s.sociation, 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' a.s.sociation, 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 members.h.i.+p 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 a.s.sets. 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 munic.i.p.alities, 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 pa.s.sed 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 leaders.h.i.+p had earned him the t.i.tle: "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' a.s.sociation 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' a.s.sociations were in accord with the principles for which the farmers' trading company was fighting. When, therefore, the Manitoba a.s.sociation took a hand in the matter by officially urging the Manitoba Government to a.s.sist 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 a.s.sembly 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 a.s.size 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' a.s.sociation 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 compet.i.tion 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 quant.i.ty 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 members.h.i.+p 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 compet.i.tion, 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 cla.s.s 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 a.s.size court.

Apparently, deduced the farmers, this meant that men could conspire to create monopolies by driving all compet.i.tors 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.

CHAPTER X

PRINTERS' INK

The fewer the voices on the side of truth, the more distinct and strong must be your own.--_Channing_.

As the farmers saw it, there was no reason in the world why the bank should do what it did. The Company had closed its first year with net profits sufficient to declare a seven per cent. cash dividend and the profits would have been augmented greatly had it not been for the heavy interest payments which accrued on the unusual overdrafts imposed by special conditions. In spite of their extremely limited resources and the handicaps forced upon them, the volume of business transacted had exceeded $1,700,000 during the first ten months that the farmers had been in business; their paid-up capital had been approximately eleven thousand dollars of which over seven thousand had been required for organization outlay. The number of shareholders had nearly doubled during the ten months and everything was pointing to rapid advancement.

The Company had been a good customer of the bank, which had received about $10,000 in interest. The security offered for their line of credit was unquestioned.

Yet the new directors had scarcely settled into place for the approaching busy season before, without warning, the bank notified them that they wished to close out the account.

When men set themselves up in business they expect to have to compete for their share of trade. The farmers did not expect to find their path lined with other grain dealers cheering them forward and waving their hats. They expected compet.i.tion of the keenest. What they could not antic.i.p.ate, however, was the lengths to which the fight might go or the methods that might be adopted to put their Agency out of business altogether.

Hitherto the grain grower had been in the background when it came to marketing and handling grain. He was away out in the country somewhere--busy plowing, busy seeding, busy harvesting, busy something-or-other. He was a Farm Hand who so "tuckered himself out"

during daylight that he was glad to pry off his wrinkled boots and lie down when it got dark in order to yank them on again, when the rooster crowed at dawn, for the purpose of "tuckering himself out" all over again. It was true that without him there would have been no grain to handle; equally true that without the grain dealers the farmer would have been in difficulty if he tried to hunt up individual consumers to buy his wheat. The farmer interfering in the established grain trade was something new and it was not to be supposed that when the surprise of it wore off things were not liable to happen.

The farmer was quick to infer that the action of the bank in cutting off the trading company's credit without apparent cause was another move of the opposing forces. It was so palpably a vital spot at which to strike.

This time, however, the threatening cloud evaporated almost as soon as it appeared. The manager, W. H. Machaffie, resigned and a.s.sumed the management of another bank. He was a far-sighted financier, Mr.

Machaffie, and almost the first account he sought for the Home Bank was that of the Grain Growers' Grain Company. The Home Bank was new in the West and in the East it had been an old loan company without big capitalistic interests, its funds being derived mostly from small depositors; but while at that time it was not among the wealthiest banking inst.i.tutions of the country, it was quite able to supply full credit facilities.

The opportunity for the farmers' company and the young bank to get together to mutual advantage was too good to be overlooked. Under the banking laws of Canada valuable special privileges are granted in view of the important part which the banks play in the country's development. Government returns indicate that the greater part of the business done by banks is carried on upon their deposits. If the working people and the farmers, as is generally accepted, form the majority of these depositors of money in banks, then were not many loans which went to monopolistic interests being used against the very people who furnished the money? If the farmers could acquire stock in a bank of their own, would they not be in a position to finance their own requirements rather than those of corporations which might be obtaining unreasonable profits from the people at large? Such an investment would be safe and productive at the same time that it strengthened the farmers' hands in their effort to do their own trading.

With all this in view the directors of the Grain Growers' Grain Company made a heavy investment in Home Bank stock and were appointed sole brokers to sell a large block of the bank's stock to Western farmers, working men and merchants. On the sale of this they were to receive a commission which would, they expected, be enough to cover the expense of placing the stock. As the business expanded the Company would be a.s.sured of an extended line of credit as it was needed.

And the business certainly was expanding. Although the prospects for the new crop were not as bright as they had been the year before, a substantial increase in the amount of grain they would handle--owing to the increase in the number of shareholders--was antic.i.p.ated by the management. They were not prepared, however, for the heavy volume that poured in upon them when the crop began to move; it was double that of their first season and the office staff was hard pressed to keep pace with the rising work. There now seemed no reason to believe that the success of the farmers' venture was any longer in doubt so far as the commercial side of it was concerned.

But the President and directors had in mind a much broader objective.

It was not enough that the farmer should receive a few more cents per bushel for his grain.