CHAPTER III

THE COOPERATIVE ELEVATOR MOVEMENT

We have seen that the cooperative elevator movement in the older States was furthered, not by the activities of the farmers, although they furnished the capital and shouldered whatever risk might be entailed, but by a few commission men who saw the possibilities the movement offered, and risking what little they had, entered energetically upon a campaign to establish a large clientele composed of cooperative grain elevators. The cooperative elevator movement in North Dakota offers no modification of this procedure. The movement itself was influenced by several other factors and also by the gradual decrease in the profits returned from the soil and the gradual increase in the value of the land. Aside from the economic, the most important of these factors were three in number, first, the federal and state investigations of the grain trade together with the demand for federal inspection; second, the Duluth-Superior controversy, and finally the American Society of Equity and the Equity Cooperative Exchange. In the consideration, then, of the transition of the methods of marketing in this State from that of the individual shipping of grain over the platform to the group marketing of farm products through local cooperative associations we must consider the factors mentioned above more minutely.

Previous to the consideration of these last named political influences, as we shall designate them, it will be necessary to consider briefly the location and economic condition of the State.

When North Dakota was settled, industry had long since gone out of the home and farmers were working and producing for the market, not for their own needs or even for their own consumption. Often the land holdings were very large and the new settlers were landed proprietors rather

than crofters or cottagers. Their crop had to be sold in the East and their supplies of every kind had to be bought in the East, and the money which was needed to develop the land and move the crops must have the same origin. Millions were necessary for the development of this new territory, and not only had these millions to be borrowed that the settlers might produce but outsiders must themselves own and construct the main arteries of trade. Small grain in the eastern part of the state and cattle in the western part were the settler's only stock in trade. These must be sold at the terminals, Minneapolis, St. Paul and Duluth, and these terminals were in Minnesota, outside the jurisdiction of the government of the State of North Dakota. The entire business of the whole commonwealth was centered in these foreign terminals.1

In the early years of the history of the State the business of buying grain was carried on by independent buyers and elevator companies so that the farmer did not come into contact with the commission men, boards of trade and millers of the terminal cities. It was probably for this reason that the Alliance plan of state-owned elevators was lost sight of so quickly, and it was more than likely due to the same cause that the movement for better grading and fairer treatment at the terminals, which was sponsored by the Superior Board of Trade in 1895 and 1896, failed. The farmer, as we have noted above, did not understand the marketing system, and further, he did not care to be drawn into any dispute between the local buyer and the terminal. He probably reasoned that if the terminal was able to cheat the country elevators that was their own affair. He felt that he was being dealt with unfairly by the local dealers and anything that might tend to even the score was probably a good thing. He did not perceive that any sharp practices on the part of the terminals

1 C. E. Russell, The Story of the Non-Partisan League, p. 17; A. A. Bruce, The Non-Partisan League, pp. 23-27.

The Cooperative Manager and Farmer, September, 1914, p. 33.

would reduce the price he was paid for grain. It might, however, be claimed that the farmer maintained his connections with the terminals by means of the practice of shipping over the platform. This does not seem to be the case, since the platform was used only as a means of forcing the local elevators to bid closer to the market. The farmer's objective had been achieved when he had raised the local price by local pressure.

We have previously noticed that the State of North Dakota, since it had been settled subsequent to the establishment of the milling centers, was developed by the railroads as a territory dependent upon those terminals. Since those terminals were both distant and beyond the jurisdiction of the State the majority of the producers did not interest themselves with their activities. The period now under consideration concerns itself with the awakening of the producers to the influence of these terminals upon the market value of their crop and can be divided into two parts, the first, the years from 1896 to 1903 and the second from 1903 to 1915. The first we can describe as a period of dormancy or quiet as compared with the second which we shall term a period of agitation.

The years 1896-1903 with the exception of 1900 had been

The number of farmers' cooperative elevators operating in the State in this period gives one a fairly accurate idea of the number of connections the farmer maintained with the terminals:

Number of Farmers' Elevators in North Dakota 1891-1905 1891 1892 1893 1895 1896 1897 1898 1899 1900 1901 1902 1904 1905 10 11 2 6 5 3 4 5 4 8 13 13 41 This is all the more striking when it is known that at no time was the number of privately owned elevators less than seventeen hundred. The table includes only those elevators whose owners appeared to be an association of farmers. It does not include a number of elevators operating under the corporate name, "Farmers' Elevator Company," but which from all appearances were controlled by interests other than farmer associations. See Reports of the Board of Railroad Commissioners 1891-1905. The fact that less than five per cent of the grain sold on the floors of the exchanges was sold for the producer is an indication of the entire separation of the producer from the terminal market. It took him a long time to perceive that his price ought to be the terminal price less freight and handling charges.

good crop years with fair prices. At no time did the average value of the wheat crop fall below $6.50 per acre. Yet during this period the yield per acre in the older sections of the State decreased materially, but the farmers extended their operations to larger and larger areas with the net result of a greater per capita production than at any prior date. They were therefore able, for a time, to command a larger gross profit with a smaller margin per bushel than ever before. The size of the average farm had increased from 277 acres with 169.8 improved in 1890, to 342.9 acres with 212.8 improved in 1900, and to 382.3 acres in 1910 with 275.1 acres improved. Whereas in 1890, 91.5 per cent. of the farms were between 100 and 499 acres in size with the great majority probably of 160 acres, we find in 1900, 40.8 per cent. were of about 160 acres, and 32.4 per cent. between 260 and 499 acres, probably the greater number of which were of 320 acres. In 1910 we find that 72 per cent. were between 100 and 499 acres, and that of the 74,360 farms in the State, 12,662 were between 500 and 999 acres and the percentage of smaller farms had decreased. Where in 1900, 40.8 per cent. of all the farms were of about 160 acres, we find, ten years later 30.9 per cent. were of this class, a decrease of almost ten per cent. The number of farms having an acreage of from 260 to 499 had more than doubled, being 46.3 per cent. of the total number of farms.

From the above we may imply that the land, which was first obtained for nothing or else for a small charge was now rapidly becoming capitalized, since any increase in the size of the farm meant the acquisition of additional land by purchase. In 1890 the average value of farm land was $13.10 an acre. This had increased to $16.50 in 1900 and to $34.30 in 1910. The richer and more fertile Red River Valley land was quoted at from $20 to $25 an acre in 1890 and had increased to about $50 in 1910. When it is understoood that the capitalization of the land carried with it high interest

United States Census Bureau Reports on Agriculture, 1890, 1900, 1910; Appendix VII.

charges, ranging from 7 to 12 per cent., it can readily be seen that the net income per acre to the farmer would be materially reduced. As long, however, as the value of the land was small and the yield large, which was the case in the newer sections, the interest rate and the capitalization did not materially or for any length of time affect the net income or the expansion of the holdings of the individual farmer.

The tendency was towards expansion, and in the first part of the period it is safe to say that this expansion implied extensive wheat farming. However, in the second part of the period this does not seem to be the case. Where in 1891 the ratio of cultivated acres to horses was 29.7 and in 1899, which seems to be the peak of the extensive farming movement, the ratio was 31.3, by 1903 it had decreased to 19.5 and to 15.3 in 1908, and did not rise again above 21.3 during the remainder of the period under consideration. When we compare this ratio with the ratio of land sown to wheat to horses we notice, with the exception of the two years 1905 and 1906, that there is a gradual rise in the difference of the two ratios. This fact seems to imply that the land sown to wheat in proportion to that sown to other crops was de

* Plates I and II, which show respectively the ratio of acres of land sown to wheat to horses and the ratio of cultivated land to horses, are based on statistics contained in Appendices I and II. The ratio for the years 1890 to 1900 from all information obtainable was higher than that shown, since the number of horses includes from 25,000 to 50,000 range horses or bronchos, not used for field work. In addition the farmers during this period were extremely reluctant to divulge the extent of their plantings, the tendency being to under-rate the size of their fields. For these reasons the acreage per horse should be considerably higher than it is. Because of the lack of statistics the acreage cultivated by tractors is not available. It would therefore appear that the ratio for the years 1913 on should be much lower than they are. Tractors used in field work increased in number up to 1921 when it began to be unprofitable to use such expensive power. These observations bring out the fact that the trend towards intensive cultivation has been much steeper than the actual figures make it appear.

The rise in the acreage in 1905 and 1906 seems to have been affected by both the higher prices for wheat and the expectation that the American Society of Equity's campaign for "dollar wheat" would again be successful. See Plate III.