BUSINESS & INVESTMENTS

INCUBATING THE GREATEST FARM ORGANIZATION IN WORLD—THE WHEAT POOL

JOHN NELSON May 1 1925
BUSINESS & INVESTMENTS

INCUBATING THE GREATEST FARM ORGANIZATION IN WORLD—THE WHEAT POOL

JOHN NELSON May 1 1925

INCUBATING THE GREATEST FARM ORGANIZATION IN WORLD—THE WHEAT POOL

BUSINESS & INVESTMENTS

JOHN NELSON

THE strapping son of a Ruthenian immigrant of the Great Trek of the late nineties, strode into the

sitting room of a country hotel in northern Saskatchewan, removed his gauntlet, and took a drink. The water was distinctly alkaline, but he smacked his lips in satisfaction, and then devoted his attention to rubbing his ear, the tip of which was frozen.

“Great day, isn’t it?” observed the landlord, more by way of salutation than of inquiry.

“You bet,” was the reply. “I want to tell you this is the best darned province in Canada. Look at that!”

It was an unromantic looking piece of paper, crumpled and dirty. The uninstructed would not pause to pick it up, were he to find it lying at his feet. Just an order from the agent of the Wheat Pool for an interim payment on account of the wheat which the young farmer had delivered in the fall. “I got $1 when I hauled that wheat in,” he went on, “and there is my second payment for 35 cents a bushel. And I get another—the last one—in July. Gee, it’s great.”

The significance of the incident lies in the fact that there are ninety thousand farmers between Winnipeg and the Rockies who received the same notice, smiled the same broad smile, and (what is of especial interest to the rest of the Dominion) made the same kind of remark. And that is the most important thing that the Wheat Pool of the Canadian west has done. You will get different opinions as to the influence of the Pool in causing higher prices. But the farmer at least believes that he owes this high price to the new co-operative movement. His interim receipt is a modified declaration of independence and a bill of rights rolled into one.

The psychological results are far reaching. There is no longer deep discontent on the plains. You must go to Montreal to catch the whisper of death and to Toronto to hear the counsel of concern regarding Canada’s future. Western farmers think their emancipation is at hand, and they feel the better over it because of the sense of having done it themselves. That, too, is not uninteresting to a nation which is beginning to wonder how far its obligations for the ownership and operation of gigantic enterprises, formerly left to private capital and management, is going to financially involve them and the generations that are to follow.

Through a Hard School

ALL the hopes and fears of the western farmer centre on wheat. Fears reach their maximum when the drought comes, and the frost threatens. But in the Spring, when Winter has passed with its discontent, and the freshly-turned mould gives forth a fragrance as grateful to the nostrils of a real countryman as that of flowers; when the lately sown seed is everywhere springing in the blade which forecasts the full corn in the ear— then is the time that hope and confidence run high. Visitors marvel at this incurable optimism which so readily forgets its discomforts, and rises superior to markets and hail storms.

But of recent years adversity has begun to tell on the settler. He is no longer so sure, every Spring, of a good crop “this season.” He is resentful against the East, elects Progressive members, tries new forms of organization, and sometimes even lifts the voice of “secesh.” Occasion-

ally he gets his remedies for commercial and political ills mixed. Often he tries the same specific for both.

His quest for relief centres around the grain trade. He has been at it for a quarter of a century. Starting with the old Territorial Grain Growers’ Association at Indian Head, he has expanded, developed, changed, and evolved methods, until, so far as elevator facilities are concerned, he has secured practical control of the situation.

He came to possession through a hard school. Government ownership of these elevators was tried in Manitoba, and proved a failure and the Saskatchewan government investigated the situation through a commission. Ultimately out of it all came a combination of the Manitoba and Alberta interests into what is known as the United Grain Growers, Limited. It is one of the largest farm organizations in the world. In addition to its wheat operations it has a powerful press, handles live stock co-operatively, buys farm supplies for its members, trades in lands, and writes insurance. It owns about 350 elevators in the three provinces.

Saskatchewan has its distinctive provincial organization in the Saskatchewan Co-operative Elevator Company, the largest grain elevator company in the world. There are 900 grain delivery points in the whole province and the “Co-op.” as it is colloquially known, has elevators at 450 of them. It is composed of more than 30,000 farmers. But it is largely financed by the government under an act which provides that before an elevator is built, stock equal to its cost has to be subscribed by the farmers of the district in question, and a considerable amount of acreage pledged. Only fifteen per cent, of the stock, however, has to be paid up, the government being authorized to advance eightyfive per cent, of the cost of construction, this to be repaid in twenty annual instalments.

A Financial Success

THE company has been a great financial success. At the present time it has terminal facilities at the head of the lakes of 15,000,000 bushels. It has a large export commission trade. Out of the province it handles annually 50,000,000 bushels of wheat. By reason of its favorable financial arrangement with the government it is able to comply with its repayment obligations easily, and to pay a good dividend to its members. The company’s profit in 1922-23 was $442,212.55.

This has been rather pleasing to the prairie farmer. But, by contrast, it increased his discontent with his marketing arrangements. The old war Wheat Board “pegged” the price of his wheat at a high figure. That opened to him alluring vistas. Ever since he has pined for “the old ‘un’.” He pressed his local government; brought pressure to bear on the Federal authorities; and was mightily irritated when even the men who had sponsored the pool as a war measure were shy of invoking it, and skeptical of its success under the standardized conditions of peace. But the farmers kept up the agitation.

Denmark was investigated. So was California. The report was favorable. So in 1923 after hope of a government board had passed, the farmers fell back on their own resources and decided to create, and finance an organization,

Continued on page 7

Continued from page 4.

owned and controlled by themselves to market their own product.

The movement had assumed definite form in the Spring and was slowly taking form when some one sent for Aaron Sapiro, counsel for many of the great cooperative organizations in the States. He is an evangel of co-operation. He swept across the prairies, like one of their famous fires. Great halls were packed to hear him. Reluctant public leaders were thrust into the chair and swept along in the avalanche of his eloquence and popular enthusiasm. On the heels of his meetings organizers were thrown into the field, and in a whirlwind of emotional interest, comparable to that of a Victory Loan campaign, farmers were signed up by the thousands. To refuse was to be a slacker. A new term, that of “wheat bootlegger,” indicating a man who had signed with the pool but had marketed elsewhere, was added to the already rich vocabulary of the West.

Alberta attained the required membership. But Saskatchewan, in its confidence, had set too high an objective, and had undertaken if it was not reached to return the money and destroy the contracts of those who had signed. The promoters sought fifty per cent, of their acreage or roughly 6,000,000 acres. But when the campaign closed on the night of September 12, 1923, the discouraged leaders discovered that though they had accomplished the phenomenal at a time when every able-bodied man, many boys, and women, too, were driving their binders from sun-up to sunset, they had failed. They had signed only

4,269,000 acres.

Launching 1924 Campaign

BUT Alberta went on. Before it had completed its plans much of the wheat had already gone to market. But that fall 35,000,000 bushels went through the hands of the Alberta Pool. The farmers received when they delivered their product seventy-five cents, Fort William, for No. 1 Northern. Later they received ten cents. At the close of the season they had a total of $1.02 which, it is estimated, was about two cents per bushel above that received by the nonpool member, or an advantage of $700,000.

With this experience the campaign of 1924 was launched with great confidence and great authority, and resulted in a great success. In Alberta 30,749 farmers joined it. In Saskatchewan the number was 51,318. Manitoba was somewhat harder to sell due to its being closer to market, and being able to get cars and move its grain to the Lake-head before more western parts. But in spite of this the Pool of the three provinces was able to come to the fall market of 1924 with

90,000 members, representing an acreage of 11,000,000.

Long experience with pitfalls met at other times and under other conditions has made the prairie farmer very hardheaded when he comes to co-operative organization. He no longer hesitates to pay well for the services of a competent manager. His greatest concern is to get the right man for the job.

So the farmers went about setting up their machinery with the consciousness that the whole fate of the experiment depended on their sagacity, and the judgment of the men to whom they entrusted authority. The wheat pits of the world are the graves of reputations. Well might these farm.ers tremble as they stepped into that awesome place.

So they co-ordinated the work of all the provinces. Each has its own organization for the physical handling and assembling of its product. A board of control, meeting fortnightly, supervises the work. But there is a central board meeting monthly, which clears the wheat, and directs the selling agency.

A Splendid Board

ON THIS board sit two men from each province. Saskatchewan had far more members and more acreage than the other two provinces combined, and might well have demanded a dominant membership in that council. But with a magnanimity and confidence in the others which shows how unifying is the secondary effect of co-operative effort, they asked, and were given, exactly the same representation as the others.

The individual contracts of the three

pools are practically the same. They run till 1927. The pool representative is made exclusive agent to handle all the wheat of the individual member excepting such as he requires for seed. There is a penalty clause of twenty-five cents per bushel for all wheat sold in contravention of the arrangement. Each member has a share valued at $1, with an additional organization fee of $2.

One of the first acts of the Pool was to secure control of two small terminal elevators at the head of the Lakes. This was for self-educative purposes. They passed about 8,000,000 bushels through these two elevators.

It being desirable to hoard or sell at will, and without financial handicaps, banking arrangements on a colossal scale had to be made. A credit of $25,000,000 at six per cent, was opened with the banks secured by the grain deposited in the elevators.

In operation the principle adopted was to endeavor to secure the average and not the speculative price. How much wheat has been sold, or how much is held, very few of even the Pool members know. Those who do will not tell. They are fighting a big Interest, they say, and that is exactly the information the said Interest would like to have—and use. So they are as mum as oysters.

What the ultimate price will be, the Pool directors themselves do not know and will not forecast. They paid $1 at the elevator, another thirty-five cents in March (the occasion for the Ruthenian glee already recorded) and the ultimate payment will be made in July. Great confidence prevails, and the rapidity with which new members are'signing up seems to justify the predictions of the sponsors of the movement that they will have 75 per cent, of Saskatchewan farmers in the movement this year.

Canadian Prices Higher

THERE have been several notable facts in connection with the year’s operations. One is that Winnipeg wheat has ruled at from ten to fifteen cents a bushel above St. Paul quotations for long periods. Critics say the Pool had nothing to do with it. The Pool champions ask in reply, “When did it occur before?” The same argument develops over the high price of wheat this year, and its causes. The Northwestern Miller, a none too sympathetic commentator, says:

“It is open to argument that this price movement was in no way determined by the operations of the Pool, and that the price would have risen to where it is in any event; but the fact remains that things have turned out exactly as the advocates of pooling said they would, and no one can deny that the marketing operations of the Pool have contributed to the advance in prices.”

Canadian farmers made some other discoveries. They had long known that No. 1 Northern was important in producing the best grade of flour. They now know it is indispensable. The meticulous analyses, and glutinous tests of their English-miller customers, established that. It naturally makes them firmer and more insistent on their price. They have an exclusive and indispensable article.

An interesting situation has developed through their marketing operations in France where they m.aintain a depot at Bordeaux. They sell to more than 200 French millers. Their plants run the whole gamut from rolling mills to windmills. Some transport their wheat by rail; some tow it in barges up the river. Nor is wheat going to these near-by continental ports alone. The other day a committee from the Soviet government came to Canada and bought 10,000 tons of No. 1 Northern for seed for Russia’s next sowing.

H. W. Wood, of Calgary, the pontiff of the plains, whose radical theories have brought him much criticism, but who retains in a remarkable degree the confidence of his fellow farmers, thus sums up the operation of pooling:

“The pool permits us to negotiate a price. Before, the farmer had to offer what he had to sell in competition with his fellow farmer, and with what money he was given by one trader he bought from another. The trader fixed the price in both cases. Now the farmer does not fix the price, but he at least negotiates it. The manufacturer, the laborer—every one who has anything to sell—places a valuation on his product before he attempts to market it. Excepting during the war

that is what we never did; it is what we are doing now.”

To further quote the Northwestern Miller: “The present pool may live or it may die. But whether it does or not, the idea out of which it grew will live and flourish. Its meaning is simply that at last the western farmers of Canada are coming out of the land of dreams in which they have been living, and doing for themselves what previously they asked the government to do. They have attacked their problem from the inside. The introduction of business methods into the marketing of wheat is a change that all will welcome.”

The Co-Op and the Pool

IN THIS paragraph the Miller touches on the difference between the operations of the Co-Op and the Pool. Though there are many of the latter members of the former there is a feeling among some of them that the Co-Op is no longer under democratic control, that officials are not so easily changed as is desirable, and that government aid is invoked more than it should be. Though the Pool was able to arrange for storage at one cent a bushel a month, it was compelled to concede the elevator companies the right to ship Pool wheat which they handled through their country elevators to terminal elevators which they themselves might select. The Pool management is not satisfied with this. They want a greater control over Pool wheat. They want to be able to ship their own wheat either to terminal points or to mills which they themselves will select.

And this power they will undoubtedly exercise this year. They expect to control at least 200 elevators this season. By their act of incorporation they are permitted not only to retain one cent a bushel for a reserve fund, but two cents for provision for elevator facilities. They will not be content till a comprehensive elevator system is under their direct control. The natural way would be to acquire some of the existing ones, for Saskatchewan is already generously provided with them, but the two companies are not yet close enough together to make this certain. If they do they will undoubtedly have the greatest and most powerful farmer organization in the world. Its fame already extends to the far boundaries of the province. Though Kipling held there was never a law of man or God north of 53, the Pool has a shipping post at Big River, which is at about 55 degrees.

Meanwhile the Pool people are taking pains to keep their system of elections in such form that each district elects its own

man; that the hoard remain representative and democratic; and that even at the risk of changing directors every year, there shall be no perpetuation m the cooperative movement of a ruling class of Bourbons.

One secondary effect of the system results from making three payment}-. Formerly the too general practice was to take the receipts each fall from the wheat crop and pay the expenses of the past season. Now with a considerable part of the payment deferred far into the following year there is growing up a practice of paying for this season’s expenses with the wheat of this year, instead of the next.

Heartening Remarks

IT IS heartening to hear a young farmer as he receives his payment declare: “I am going home to do what I never was able to do before; really to farm my land instead of skin and mine every acre, as I have had to do. Now I will summer fallow and graze some every year.”

It is out of that feeling that there is heard on every hand now in the West the same enthusiastic declaration as that already mentioned: “This is the best

province in the Dominion.” The prevalence of that sentiment will do much to cure sectional resentments.

Nor are the Canadian prairie farmers longer jealous of their United States neighbor, or very much bothered about some tariff features that used to give them concern. Most of them will tell you that they don’t care whether the States leaves their import duty on Northern wheat or not. Many of them have read the statement of Mr. Davis, the Democratic candidate for the presidency, that

600,000 farmers west of the Mississippi are destitute.

They chuckle that they have outSapiroed Sapiro, for their success has extracted from that flaming apostle of their principles this declaration:

“I am simply appalled to learn that Canada has done more with wheat in the last two years than the United States has done in the last twelve years. Canada bias actually done the thing that the United States thought was impossible.

“If Canada can do that, we can do it. And we will begin to guide the American farmer to that end.”

The Canadian farmer may be pardoned for seeing some significance in the fact that a fortnight after Sapiro had made that declaration under the very dome of the Capitol, President Coolidge brought before Congress a measure for aid to farmers.