Read about it...
Back
Rural grain elevators — bumper crop spoils at rail sidings as a result of infamous CPR wheat blockade
Feb 07, 2013
by Bruce Cherney (part 4)
Prairie farmers may have harvested a bumper wheat crop in 1887, but when the year 1888 began, they were unable to ship their grain to eastern markets due to what they termed the Canadian Pacific Railway’s (CPR) “wheat (grain) blockade.” It was a blockade brought about more by poor planning and rather than intent, although some suspect CPR practices arose during the blockade. 
Westerners believed that the Montreal-based railway company had intentionally instituted the grain blockade to retain its monopoly on rail lines in Western Canada and to reap greater profits.
With the absence of railcars, wheat sat piled up at sidings in the open air, got wet when the spring arrived and then began to rot. The glut of wheat on the market meant buyers ceased purchasing grain. Elevators that were able to get boxcars for eastward shipments of grain were quickly refilled once emptied. The overall result was a drop in wheat prices.
John H. Taylor, a Glenboro-area farmer, said he was unable to sell his grain and thus was paying a steep interest rate on what he owed to banks and merchants. Other farmers said they were losing two-cents, three-cents or four-cents per bushel as a result of the delay in obtaining railcars to ship their wheat. 
The Deloraine Times reported on February 23, 1888, that 40,000 bushels of grain that couldn’t be shipped filled the town’s one elevator and various warehouses. “Piles of bags were lying around everywhere and a careful estimate of the amount of wheat in bags not under cover (thus, lacking protection from the elements) reaches 10,000 bushels.”
Boissevain-area farmers sent a March 13 telegram to Manitoba Premier Thomas Greenway, which sounded like a plea for help from a town under siege by an invading army: “Elevators (3) full. Cannot take in another bushel on the street today’s delivery, and loads arriving every hour. No cars on the road and no prospect of relief.”
The Ogilvie mill in Winnipeg, which had been portrayed as a villain four years earlier by the Manitoba Farmers’ Union, gained a measure of public sympathy when it began to feel the effects of the grain blockade and was placed in the same position as the wheat growers and merchants. The Ogilvies had to shut down and lay off workers due to the lack of railcars to deliver its flour to market. All the storage bins in the plant, which normally contained wheat to be milled, were instead filled with flour.
Negotiations between Greenway and Canadian Prime Minister John A. Macdonald indicated there was some relief in sight. But it was the CPR that would eventually buckle under mounting political and public pressure. 
A February 9, 1888, editorial in the Brandon Sun said: “A wail commenced by the farmers, taken up by the storekeepers, and sounded by the public generally, has commenced in the province, over the tremendous grain blockade ... Universal stagnation and serious despondency are two results of the state of affairs ...”
The editorial claimed the CPR may have been doing its best to ship the wheat, “but they are not moving a thousandth part of what is desired. The statement is made on excellent authority ... that there are at present over 800 cars of wheat lying (on the ground) in the CPR yards here (Brandon).
“But one story is sent in from the towns and stations along the railway: No cars, every available place filled with wheat, and thousands of bushels stacked about the station and in the streets. This latter is unprotected, exposed to the weather, and liable to destruction.”
The editorial predicted that the CPR’s public relations nightmare in the wheat-growing region would result in the monopoly being “swept to the four winds.”  
Finally, the CPR relented and the monopoly clause was voluntarily dropped in return for a cash bond guaranteed by the federal government. Other railways could build lines across the southern prairies. As the number of rail lines serving prairie communities increased, so did the number of elevators.
With the monopoly at an end, “most companies were building the standard, or traditional, 30-40,000-bushel elevator with a gable roof and a gable-roofed cupola” (Canadian Encyclopedia). “Dimensions varied according to bushel capacity, but were typically 33x32 feet, which gave the elevator a height of more than 80 feet. No other building dominated the skyline as did the elevator.”
In many cases, permanent or temporary annexes were built to increase grain storage capacity.
“It is satisfactory to note that the facilities for handling grain in Manitoba and the Northwest Territories keep pace with production,” said J.A Mitchell, president of the Winnipeg Grain and Produce Exchange at the exchange’s annual meeting in 1892. “Probably no other country enjoys more prompt erection of elevators. 
“Wherever a point on a line of railway presents a sufficient quantity of grain tributary to a market, such buildings are immediately erected, thus affording an easy and equitable market for our farmers. Nothing is better calculated to assist in the prompt development of this country than the extension of a good elevator system.”
In 1899, of the 447 elevators in the West, 256 were owned by three  large companies, 95 by two milling companies and only 146 by independent local millers, grain dealers or groups of farmers (The Country Elevator in the Canadian West, by William Clifford Clark, 1916). 
Among the line elevator companies was one in which Rodmond Roblin was its first president. Roblin was the premier of Manitoba from 1900 to 1915. Formed in 1897, his partners in the Dominion Elevator Company Limited were brothers Daniel and William McMillan. Daniel was the first president of the Winnipeg Grain and Produce Exchange (later, the Winnipeg Grain Exchange), as well as a Manitoba MLA.  
The Winnipeg Tribune began voicing the opinion of grain  farmers when it reported about the existence of “a giant combination ... to defraud the farmers of Manitoba and the west in connection with the wheat crop (September 14, 1897). The newspaper said an “ominous growl” arose “over the agitated question of elevator monopoly and combine of grain  companies.”
Newspapers across Western Canada complained about a “syndicate of syndicates” in the grain trade that was allegedly fixing prices and denying competition at country points (A History of the Canadian Grain Commission, by Jim Blanchard).
“Short of an Archangel Gabriel at the wheel,” commented Clark about the syndicates, “evils were bound to develop.”
“The mood amongst the grain farmers of the west during 1897, 1898 and 1899 was one of outrage, indignation and frustration,” according to Blanchard. “There was no doubt in their minds the CPR, the grain dealers and the milling companies were formed into a monopoly designed to cheat them.”
By this time, the Liberal government of Premier Minister Wilfrid Laurier and Clifford Sifton, the MP representing Brandon and then serving as the federal interior minister, recognized the strong leadership of the grain growers’ associations across the prairies, and began to throw their support behind farmers’ causes. It was a natural outcome, since grain was by then becoming Canada’s No. 1 export, which was primarily sent overseas to Great Britain. 
As well, the government was actively encouraging Europeans and Americans to take up farmland  in Western Canada. Prospective immigrants had to be assured that they could make a decent living as hard-working farmers. Tales in foreign publications of grain monopolies cutting into farmers’ profits didn’t serve the interests of the government.
The policy of the CPR of denying  railcars to individual farmers and rail siding sites to flat warehouse operators was targeted by the federal government.
“The high cost of putting up a standard elevator made it impossible for small companies to consider them,” wrote Blanchard. “The net effect of the policy, if it had been allowed to continue would have been to concentrate more and more business in the hands of large enterprises — to encourage monopoly.”
Then there was the situation of three grain prices (Fair Treatment for Western Farmers Began 100 years Ago by Ron Friesen, AGCanada.com, April 7, 2012): the “street price” (offered by the elevator on delivery), the “track price” (received after loading a rail car and then selling it), and the “spot price” (the one at the terminal where grain was sold on the world market).
Gerald Friesen in The Canadian Prairies: A History, wrote that farmers were angered by the spread in prices between street and track prices, which was between three to four cents a bushel. Farmers were usually forced to accept street prices, as “they could not fill a boxcar within a particular variety and grade of grain within the limited time permitted by the rail companies.”
It should also be noted that the Western Canadian farmers’ anger over the threat of a monopoly came during an era of similar protests in the U.S. In his 1901 novel, The Octopus, Frank Norris attacked the American grain trade, comparing “the large grain companies to an octopus” that was “squeezing the life out of honest farmers” (Blanchard).
“The farmer’s profits were the object of attack from a score of different quarters,” wrote Norris in his book. “It was a flock of vultures descending upon a common prey — the commission merchant, the elevator combine, the mixing-house ring, the banks, the warehouse men, the labouring man, and, above all, the railroad.”
The outcry from farmers against perceived monopolistic practices became so intense that Laurier appointed a Royal Commission comprised of Manitoba farmers, W.F. Sirett, of Neepawa, William Lothian of Pipestone and Charles C. Castle of Foxton, to investigate the elevator system. The commission found that “there being no rules laid down for the regulation of the grain trade other than those made by the railway companies and the elevator owners, we think it of great importance that laws be enacted and that rules should be made under power given by such laws, which will properly regulate the trade.”
Clark said the findings of the commission marked an end to indifference to grain producers by governments and forced them to act.
To address the complaints of a monopoly being formed, the Laurier government passed the Manitoba Grain Act in 1900, which was continually revised to address more farmers’ concerns until 1912. The CPR knew the act would soon be passed, so to come to terms with the inevitable, it voluntarily withdrew its policy of restricting flat warehouses in 1899, and promised to assign railcars to allow farmers to do their own loading for shipping. “But farmers who lived more than four or five miles from the shipping points could not draw in their grain fast enough to load a car within the time allowed by the railway; so that the situation, so far as these farmers were concerned, remained practically unchanged” (Deep Furrows, by Hopkins Moorhouse).
To offset the gains made by farmers in the Manitoba Grain Act, the line elevator companies formed the North-West Elevator Association (later, the North West Grain Dealers’ Association) in 1901, which was closely linked to the Winnipeg Grain Exchange and controlled two-thirds of the elevators on the prairies. Moorhouse wrote that by agreeing on the prices they would pay for wheat out in the country and by pooling receipts, the members of such an organization, the farmers suspected, would be in a position to strangle competition.
Farmers believed the association acted as a monopoly to keep prices artificially low. 
Since the act technically — but not in practice — only applied to the “District of Manitoba” (Alberta and Saskatchewan were then part of the North-West Territories and didn’t become provinces until 1905)  farmers in other jurisdictions began to lobby the federal government to expand  the protection found in the Manitoba Grain Act. 
The landmark Sintaluta Case, as it was popularly dubbed, in the North-West Territories (Saskatchewan) came on the heels of a bumper crop in 1901 and insufficient railcars to move the harvest to market. As a result, farmers lost nearly half of their wheat harvest to spoilage because of the lack of railcars.
The newly-formed Territorial Grain Growers’ Association (TGGA) in 1902  “requested amendments to the Manitoba Grain Act of 1900, which parliament passed before the session ended. Under the new clauses, every railway agent was to maintain an order book that allocated boxcars on a first-come, first-served basis. Despite these amendments, the CPR continued to allot all of its boxcars to the elevator companies, and another record crop was at risk of being spoiled” (Holden Stoffel, The Encyclopedia of Saskatchewan).
Farmer A.W. Armis had signed a request for a railcar in October 20, but had not received it. On the other hand, The Dominion Elevator Company and McLaughlan & Ellis Company received railcars during the period that Armis was waiting to receive a railcar. 
The defendant in the case was A. V. Benoit, the CPR station agent at Sintaluta, who, among other charges, was accused of refusing to allow the farmer to load his grain when railcars were available at a siding where a loading platform was located and for ignoring the order of applications and distributing the cars out of turn.
The agent was found guilty and ordered to pay a fine of $50 plus court costs, or serve one month in jail, for disobeying the terms of the Manitoba Grain Act. 
“The Judgement gives general satisfaction,” according to the December 8, 1902, Manitoba Free Press. “The action of the officers of the Territorial Grain Growers’ Association in bringing a specific case looking to an authoritative decision on the disputed provisions of the Manitoba Grain Act, is highly commendable ...”
The case was appealed and appeared before the Supreme Court of Canada, which upheld the Sintaluta magistrate’s conviction.
Despite the amended act and the victory in the courts, a Royal commission appointed in 1906, which published its findings in 1907, determined that little had changed for prairie farmers. The commissioners found that the railways were continuing to pay scant attention to farmers’ requests for more railcars, and that line companies establishing terminal facilities at the Lakehead “was detrimental to the interests of the (grain) trade.” Such facilities had been the exclusive domain of the CPR, but after 1904, private companies with lines of elevators on the prairies began to build their own terminals. 
The commissioners believed that the operators of terminal facilities had gained such power that they could manipulate grain grades to their own benefit. 
The commission also found that at a single railway delivery point (hamlet, village or town) where more than one company had elevators, the practice was to divide grain evenly among the elevator companies, although one company might have more grain delivered by farmers to its elevator than another company.
At a Winnipeg police court trial in 1906, when the Manitoba Grain Growers’ Association accused the Winnipeg Grain and Produce Exchange of price fixing, the practice was described by a witness as: “At one of these points, say there were three elevators, and the receipts for the month were, say 9,000 bushels. Elevator A secured 4,000 bushels, elevator B 3,000 bushels and elevator C 1,000 bushels of grain. Elevator B had received its share and elevator C was entitled to receive 1,000 bushels that elevator A had taken in.”
This collusion among members of the North-West Grain Dealers’ Association was known as pooling receipts, and it was a practice that assured the price of grain would be dictated by the elevator companies at each point. In effect, it eliminated competition — a type of a restraint on trade.
(Next week: part 5)