Grain Trade
GRAIN TRADE. The complexity of the conditions of life in the 20th century may be well illustrated from the grain trade of the world. The ordinary bread sold in Great Britain represents, for example, produce of nearly every country in the world outside the tropics.
Wheat has been cultivated from remote antiquity. In a wild state it is practically unknown. It is alleged to have been found growing wild between the Euphrates and the Tigris; but the discovery has never been authenticated, enera ' and, unless the plant be sedulously cared for, the species dies out in a surprisingly short space of time. Modern experiments in cross-fertilization in Lancashire by the Carton Brothers have evolved the most extraordinary " sports," showing, it is claimed, that the plant has probably passed through stages of which until the present day there had been no conception. The tales that grains of wheat found in the cerements of Egyptian mummies have been planted and come to maturity are no longer credited, for the vital principle in the wheat berry is extremely evanescent; indeed, it is doubtful whether wheat twenty years old is capable of reproduction. The Carton artificial fertilization experiments have shown endless deviations from the ordinary type, ranging from minute seeds with a closely adhering husk to big berries almost as large as sloes and about as worthless. It is conjectured that the wheat plant, as now known, is a degenerate form of something much finer which flourished thousands of years ago, and that possibly it may be restored to its pristine excellence, yielding an increase twice or thrice as large as it now does, thus postponing to a distant period the famine doom prophesied by Sir W. Crookes in his presidential address to the British Association in 1898. Wheat well repays careful attention; contrast the produce of a carelessly tilled Russian or Indian field and the bountiful yield on a good Lincolnshire farm, the former with its average yield of 8 bushels, the latter with its 50 bushels per acre; or compare the quality, as regards the quantity and flavour of the flour from a fine sample of British wheat, such as is on sale at almost every agricultural show in Great Britain, with the produce of an Egyptian or Syrian field; the difference is so great as to cause one to doubt whether the berries are of the same species.
For details connected with grain and its handling see AGRICULTURE, CORN LAWS, GRANARIES, FLOUR, BAKING, WHEAT, etc.
Wheat occupies of all cereals the widest region of any foodstuff. Rice, which shares with millet the distinction of being the principal food-stuff of the greatest number of human beings, is not grown nearly as widely as is wheat, the staple food of the white races. Wheat grows as far south as Patagonia, and as far north as the edge of the Arctic Circle; it flourishes throughout Europe, and across the whole of northern Asia and in Japan; it is cultivated in Persia, and raised largely in India, as far south as the Nizam's dominions. It is grown over nearly the whole of North America. In Canada a very fine wheat crop was raised in the autumn of 1898 as far north as the mission at Fort Providence, on the Mackenzie river, in a latitude above 62 or less than 200 m. south of the latitude of Dawson City the period between seed-time and harvest having been ninety-one days. In Africa it was an article of commerce in the days of Jacob, whose son Joseph may be said to have run the first and only successful " corner " in wheat. For many centuries Egypt was famous as a wheat raiser; it was a cargo of wheat from Alexandria which St Paul helped to jettison on one of his shipwrecks, as was also, in all probability, that of the " ship of Alexandria whose sign was Castor and Pollux," named in the same narrative. General Gordon is quoted as having stated that the Sudan if properly settled would be capable of feeding the whole of Europe. Along the north coast of Africa are areas which, if properly irrigated, as was done in the days of Carthage, could produce enough wheat to feed half of the Caucasian race. For instance, the vilayet of Tripoli, with an area of 400,000 sq. m., or three times the extent of Great Britain and Ireland, according to the opinion of a British consul, could raise millions of acres of wheat. The cereal flourishes on all the high plateaus of South Africa, from Cape Town to the Zambezi. Land is being extensively put under wheat in the pampas of South America and in the prairies of Siberia.
In the raising of the standard of farming to an English level the volume of the world's crop would be trebled, another fact which Sir William Crookes seems to have overlooked. The experiments of the late Sir J. B. Lawes in Hertfordshire have proved that the natural fruitfulness of the wheat plant can be increased threefold by the application of the proper fertilizer. The results of these experiments will be found in a compendium issued from the Rothamsted Agricultural Experimental Station.
It is by no means, however, the wheat which yields the greatest number of bushels per acre which is the most valuable from a miller's standpoint, for the thinness of the bran and the fineness and strength of the flour are with him important considerations, too often overlooked by the farmer when buying his seed. Nevertheless it is the deficient quantity of the wheat raised in the British Islands, and not the quality of the grain, which has been the cause of so much anxiety to economists and statesmen.
Sir J. Caird, writing in the year 1880, expressed the opinion that arable land in Great Britain would always command a substantial rent of at least 305. per acre. His figures were based on the assumption that wheat was imported duty free. He calculated that the cost of carriage from abroad of wheat, or the equivalent of the product of an acre of good wheat land in Great Britain, would not be less than 305. per ton. But freights had come down by 1900 to half the rates predicated by Caird; indeed, during a portion of the interval they ruled very close to zero, as far as steamer freights from America were concerned. In 1900 an all-round freight rate for wheat might be taken at 155. per Ion (a ton representing approximately the produce of an acre of good wheat land in England), say from los. for Atlantic American and Russian, to 303. for Pacific American and Australian; about midway between these two extremes we find Indian and Argentine, the greatest bulk coming at about the 153. rate. Inferior land bearing less than 45 quarters per acre would not be protected to the same extent, and moreover, seeing that a portion of the British wheat crop has to stand a charge as heavy for land carriage across a county as that borne by foreign wheat across a continent or an ocean, the protection is not nearly so substantial as Caird would make but. The compilation showing the changes in the rates of charges for the railway and other transportation services issued by the Division of Statistics, Department of Agriculture, U.S.A. (Miscellaneous series, Bulletin No. 15, 1898), is a valuable reference book. From its pages are culled the following facts relating to the changes in the rates of freight up to the year 1897.' In Table 3 the average rates per ton per mile in cents are shown since 1846. For the Fitchburg Railroad the rate for that year was 4-523 cents per ton per mile, since when a great and almost continuous fall has been taking place, until in 1897, 1 Valuable information will afso be found In Bulletin No. 38 (1905), " Crop Export Movement and Port Facilities ontheAtlantic and Gulf Coasts"; in Bulletin No. 49 (1907), "Cost of Hauling Crops from Farms to Shipping Points"; and in Bulletin No. 69 (1908), " European Grain Trade."
the latest year given, the rate had declined to -870 of a cent per ton per mile. The railway which shows the greatest fall is the Chesapeake & Ohio, for the charge has fallen from over 7 cents in 1862 and 1863 to -419 of a cent in 1897, whereas the Erie rates have fallen only from 1-948 in 1852 to -609 in 1897. Putting the rates of the twelve returning railways together, we find the average freight in the two years 1859-1860 was 3-006 cents per ton per mile, and that in 1896-1897 the average rate had fallen to -797 of a cent per ton per mile. This difference is very large compared with the smallness of the unit. Coming to the rates on grain, we find (in Table 23) a record for the forty years 1858- 1897 of the charge on wheat from Chicago to New York, via all rail from 1858, and via lake and rail since 1868, the authority, being the secretary of the Chicago Board of Trade. From 1858 to 1862 the rate varied between 42-37 and 34-80 cents per bushel for the whole trip of roundly 1000 m., the average rate in the quinquennium being 38-43. In the five years immediately prior to the time at which Sir J. Caird expressed the opinion that the cost of carriage from abroad would always protect the British grower, the average all-rail freight from Chicago to New York was 17-76 cents, while the summer rate (partly by water) was 13-17 cents. These rates in 1897, the last year shown on the table, had fallen to 12-50 and 7-42 respectively. The rates have been as follows in quinquennial periods, via all rail: Chicago to New York in Cents per Bushel.
1858- 1862.
1863- 1867.
1868- 1872.
1873- 1877.
1878- 1882.
1883- 1887.
1888- 1892.
1893- 1897.
38-43 31-42 27-91 21-29 16-77 14-67 I4-52 12-88 Calculating roundly a cent as equal to a halfpenny, and eight bushels to the quarter, the above would appear in English currency as follows:
Chicago to New York in Shillings and Pence per Quarter.
1858- 1862.
1863- 1867.
1868- 1872.
1873- 1877- 1878- 1882.
1883- 1887.
1888- 1892.
1893- 1897.
s. d.
12 8 s. d. 10 6 s. d. 9 3 s. d.
7 I s. d. 5 7 s. d. 4 ioj s. d. 4 10 s. d. 4 3 Another table (No. 38) shows the average rates from Chicago to New York by lakes, canal and river. These in their quinquennial periods are given for the season as follows: In Cents per Bushel of 60 Ib.
1857-1861.
1876-1880.
1893-1897.
22-15 10-47 4-92 In Shillings and Pence per Quarter of 480 Ib.
1857-1861.
1876-1880.
1893-1897.
s. d. 7 4 s. d. 3 6 s. d. i 7 In Shillings and Pence per Ton of 2240 Ib.
1857-1861.
1876-1880.
1893-1897.
s. d. 34 6 s. d. 16 6 s. d. 7 6 This latter mode is the cheapest by which grain can be carried to the eastern seaboard from the American prairies, and it can now be done at a cost of 73. 6d. per ton. The ocean freight has to be added before the grain can be delivered free on the quay at Liverpool. A rate from New York to Liverpool of 2jd. per bushel, or 73. icd. per ton, a low rate, reached in Dec. 1900, is yet sufficiently high, it is claimed, to leave a profit; indeed, there have frequently been times when the rate was as low as id. per bushel, or 33. id. per ton; and in periods of great trade depression wheat is carried from New York to Liverpool as ballast, being paid for by the ship-owner. Another route worked more cheaply than formerly is that by river, from the centre of the winter wheat belt, say at St Louis, to New Orleans, and thence by steamer to Liverpool. The river rate has fallen below five cents per bushel, or ;s. per ton, 2240 Ib.
The farmers of the United States have now to meet a greatly increased output from Canada the cost of transport from that country to England being much the same as from the United States. So much improved is the position of the farmer in North America compared with what it was about 1870, that the transport companies in 1901 carried 175 bushels of his grain to the seaboard in exchange for the value of one bushel, whereas in 1867 he had to give up one bushel in every six in return for the service. As regards the British farmer, it does not appear as if he had improved his position; for he has to send his wheat to greater distances, owing to the collapse of many country millers or their removal to the seaboard, while railway rates have fallen only to a very small extent; again the farmer's wheat is worth only half of what it was formerly; it may be said that the British farmer has to give up one bushel in nine to the railway company for the purpose of transportation, whereas in the 'seventies he gave up one in eighteen only. Enough has been said to prove that the advantage of position claimed for the British farmer by Caird was somewhat illusory. Speaking broadly, the Kansas or Minnesota farmer's wheat does not have to pay for carriage to Liverpool more than 23. 6d. to 73. 6d. per ton in excess of the rate paid by a Yorkshire farmer; this, it will be admitted, does not go very far towards enabling the latter to pay rent, tithes and rates and taxes.
The subject of the rates of ocean carriage at different periods requires consideration if a proper understanding of the working of the foreign grain trade is to be obtained. Only a very small proportion of the decline in the price of wheat since 1880 is due to cheapened transport rates; for while the mileage rate has been falling, the length of haulage has been extending, until in 1900 the principal wheat fields of America were 2000 m. farther from the eastern seaboard than was the case in 1870, and consequently, notwithstanding the fall in the mileage rate of 30 to 75%, it still costs the United Kingdom nearly as much to have its quota of foreign wheat fetched from abroad as it did then.
In passing, it may be pointed out that for a period of four years, from 1871 to 1874, the price of wheat averaged 565. per quarter (or 73. per bushel), with the charge for ocean carriage at 6s. sd. per quarter, whereas in 1901 wheat was sold in. England at 285. (or 35. 6d. per bushel), and the charge for ocean carriage was 35. 6d. per quarter; the ocean transport companies carried eight bushels of wheat across the seas in 1901 for the value of one bushel, or exactly at the same ratio as in 1872.
The contrast between the case of railway freight and ocean freight is to be explained by the greater length of the present ocean voyage, which now extends to 10,000 miles in the case of Europe's importation of white wheat from the Pacific Coast of the United States and Australia, in contrast with the shoit voyage from the Black Sea or across the English Channel or German Ocean. It is largely due to the overlooking of this phase of the question that an American statistician has fallen into the error of stating that about i6s. per quarter of the fall in the price of wheat, which happened between 1880 and 1894, is attributable to the lessened cost of transport.
Thus, whatever the cause of the decline in the price of wheat may be, it cannot be attributed solely to the fall in the rate of rail or ocean freights. Incidental charges are lower than they were in 1870; handling charges, brokers' commissions and insurance premiums have been in many instances reduced, but all these economies when combined only amount to about 2s. per quarter. Now if we add together all these savings in the rate of rail and ocean freights and incidental expenses, we arrive at an aggregate economy of 8s. per quarter, or not one-third of the actual difference between the average price of wheat in 1872 and 1900. To what the remaining difference was due it is difficult to say with certitude; there are some who argue that the tendency of prices to fall is inherent, and that the constant whittling away of intermediaries' profits is sufficient explanation, while bi-metallists have maintained that the phenomenon is clearly to be traced to the action of the German government in demonetizing silver in 1872.
Note - this article incorporates content from Encyclopaedia Britannica, Eleventh Edition, (1910-1911)
