1911 Encyclopædia Britannica/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, and, unless the plant be sedulously cared for, the species dies out in a surprisingly short space of time. Modern General considerations. experiments in cross-fertilization in Lancashire by the Garton 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 Garton 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.

It may be stated roundly that an average quartern loaf in Great Britain is made from wheat grown in the following countries in the proportions named:—

U.S.A.	U.K.	Russia	Argentina	British India	Canada	Rumania- Bulgaria	Australia	Other Countries
Oz.	Oz.	Oz.	Oz.	Oz.	Oz.	Oz.	Oz.	Oz.
26	13	9	5	4	3	2	1	1
		Or expressed in percentages as follows:—
40	20	14	8	6	5	3	2	2

For details connected with grain and its handling see Agriculture, Corn Laws, Granaries, Flour, Baking, Wheat, &c.

Wheat occupies of all cereals the widest region of any food-stuff. 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 30s. per acre. His figures were based on the assumption that wheat was imported duty free. He calculated that the cost of carriage from Freight rates. abroad of wheat, or the equivalent of the product of an acre of good wheat land in Great Britain, would not be less than 30s. 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 15s. per ton (a ton representing approximately the produce of an acre of good wheat land in England), say from 10s. for Atlantic American and Russian, to 30s. for Pacific American and Australian; about midway between these two extremes we find Indian and Argentine, the greatest bulk coming at about the 15s. rate. Inferior land bearing less than 41/2 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 out. 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.^[1] 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, 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	14.52	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.

s.

d.

s.

d.

s.

d.

s.

d.

s.

d.

s.

d.

s.

d.

12

8

10

6

9

3

7

1

5

7

4

101/2

4

10

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 ℔.

1857–1861.	1876–1880.	1893–1897.
22.15	10.47	4.92

In Shillings and Pence per Quarter of 480 ℔.

1857–1861.		1876–1880.		1893–1897.
s.	d.	s.	d.	s.	d.
7	4	3	6	1	7

In Shillings and Pence per Ton of 2240 ℔.

1857–1861.		1876–1880.		1893–1897.
s.	d.	s.	d.	s.	d.
34	6	16	6	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 7s. 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 21/2d. per bushel, or 7s. 10d. 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 1d. per bushel, or 3s. 1d. 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 7s. per ton, 2240 ℔. In Table No. 71 the cost of transportation is compared year by year with the export price of the two leading cereals in the States as follows:—

Wheat and Corn—Export Prices and Transportation Rates compared.

Year.	Wheat.			Corn.
	Export Price per Bushel.	Rate, Chicago to New York by Lake and Canal, per Bushel.	Number of Bushels carried for Price of One Bushel.	Export Price per Bushel.	Rate, Chicago to New York by Lake and Canal, per Bushel.	Number of Bushels carried for Price of One Bushel.
		Cents.			Cents.
1867	$0.92	15.95	5.77	$0.72	14.58	4.94
1868	1.36	16.23	8.38	.84.1	13.57	6.20
1869	1.05	17.20	6.10	.72.8	14.98	4.86
1870	1.12	14.85	7.54	.80.5	13.78	5.84
1871	1.18	17.75	6.65	.67.9	16.53	4.11
1872	1.31	21.55	6.08	.61.8	19.62	3.15
1873	1.15	16.89	6.81	.54.3	15.39	3.53
1874	1.29	12.75	10.12	.64.7	11.29	5.73
1875	.97	9.90	9.80	.73.8	8.93	8.26
1876	1.11	8.63	12.86	.60.3	7.93	7.60
1877	1.12	10.76	10.41	.56.0	9.41	5.95
1878	1.33	9.10	14.62	.55.8	8.27	6.75
1879	1.07	11.60	9.22	.47.1	10.43	4.52
1880	1.25	12.27	10.19	.54.3	11.14	4.87
1881	1.11	8.19	13.55	.55.2	7.26	7.60
1882	1.19	7.89	15.08	.66.8	7.23	9.24
1883	1.13	8.37	13.50	.68.4	7.66	8.93
1884	1.07	6.31	16.96	.61.1	5.64	10.83
1885	.86	5.87	14.65	.54.0	5.38	10.04
1886	.87	8.71	9.99	.49.8	7.98	6.24
1887	.89	8.51	10.46	.47.9	7.88	6.08
1888	.85	5.93	14.33	.55.0	5.41	10.17
1889	.90	6.89	13.06	.47.4	6.19	7.66
1890	.83	5.86	14.16	.41.8	5.10	8.20
1891	.93	5.96	15.60	.57.4	5.36	10.71
1892	1.03	5.61	18.36	.55	5.03	10.93
1893	.80	6.31	12.68	.53	5.71	9.28
1894	.67	4.44	15.09	.46	3.99	11.53
1895	.58	4.11	14.11	.53	3.71	14.29
1896	.65	5.38	12.08	.38	4.94	7.69
1897	.75	4.35	17.24	.31	3.79	8.18

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 171/4 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 2s. 6d. to 7s. 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 50 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. The difference in the cost of the operation is shown in the following tabular statement, both the cost in the aggregate on a year’s imports and the cost per quarter:—

Quantity of Wheat and Wheaten Flour (as wheat) imported into the
United Kingdom from various sources during the calendar year
1900, together with the average rate of freight.

1900.

Countries of Origin.	Quantities. Qrs. 480 ℔	Ocean Freight to United Kingdom. Per 480 ℔.	Total Cost of Ocean Carriage.
		s.   d.	£
Atlantic America	11,171,100	2   3	1,257,100
South Russia	569,000	2   2	62,000
Pacific America	2,389,900	8   1	966,000
Canada	1,877,100	2   8	250,000
Rumania	176,400	2   6	22,000
Argentina and Uruguay	4,322,300	4   10	1,045,000
France	251,900	1   3	16,000
Bulgaria and Rumelia	30,600	2   6	4,000
India	2,200	4   0	400
Austria-Hungary	389,300	1   9	34,000
Chile	600	..	..
North Russia	462,700	1   6	35,000
Germany	438,700	1   6	33,000
Australasia	883,900	6   5	284,000
Minor Countries	225,100	2   6	28,000
Total	23,190,800	Average 3s. 6d.	£4,036,500

Comparing these figures with a similar statement for the year 1872, the most remote year for which similar facts are available, it will be found that the actual total cost per quarter for ocean carriage has not much decreased.

Quantity of Wheat and Wheaten Flour (as wheat) imported into the
United Kingdom from various sources during the calendar year
1872, together with the average rate of freight.

1872.

Countries of Origin.	Quantities. Qrs.	Ocean Freight to United Kingdom. Per qr.	Total Cost of Carriage.
		s.   d.	£
South Russia	3,678,000	8   6	1,563,000
United States	2,030,000	6   6	659,000
Germany	910,000	2   0	91,000
France	660,000	3   0	99,000
Egypt	536,000	4   6	120,000
North Russia	490,000	2   0	49,000
Canada	400,000	7   6	150,000
Chile	330,000	120	198,000
Turkey	195,000	7   6	72,000
Spain	130,000	3   6	23,000
Scandinavia	160,000	2   0	16,000
Total, Chief Countries	9,519,000	Average 6s. 5d.	£3,040,000

N.B.—A trifling quantity of Californian and Australian wheat was imported in the period in question, but the Board of Trade records do not distinguish the quantities, therefore they cannot be given. The freight in that year from those countries averaged about 13s. per quarter.

The exact difference between the average freight for the years 1872 and 1900 amounts to about 2s. 11d. per quarter (480 ℔), a trifle in comparison with the actual fall in the price of wheat during the same years.

The following data bearing upon the subject, for selected periods, are partly taken from the Corn Trade Year-Book:—

Year.	United Kingdom Annual Imports. Wheat and Flour. Qrs.	Ocean Freight to United ingdom. Per qr.	Aggregate Cost of Carriage.
		s.   d.	£
1872	9,469,000	6   5	3,040,000
1882	14,850,000	7   4	5,420,000
1894	16,229,000	3   9	3,041,000
1895	25,197,000	3   0	3,825,000
1896	23,431,000	2   9	3,258,000
1900	23,196,000	3   6	4,036,000

In passing, it may be pointed out that for a period of four years,

from 1871 to 1874, the price of wheat averaged 56s. per quarter (or 7s. per bushel), with the charge for ocean carriage at 6s. 5d. per quarter, whereas in 1901 wheat was sold in England at 28s. (or 3s. 6d. per bushel), and the charge for ocean carriage was 3s. 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 short 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 16s. per quarter of the fall in the price of wheat, which happened between 1880 and 1894, is attributable to the lessened cost of transport.

Wheat Prices

The following figures show the fluctuations from year to year of English wheat, chiefly according to a record published by Mr T. Smith, Melford, the period covered being from 1656 to 1905:

Price per Quarter

	s.   d.		s.   d.		s.   d.		s.   d.		s.   d.
1656	38   2	1706	23   1	1756	40   1	1806	79   1	1856	69   2
1657	41   5	1707	25   4	1757	53   4	1807	75   4	1857	56   4
1658	57   9	1708	36   10	1758	44   5	1808	84   4	1858	44   2
1659	58   8	1709	69   9	1759	35   3	1809	97   4	1859	43   9
1660	50   2	1710	69   4	1760	32   5	1810	106   5	1860	53   3
1661	62   2	1711	48   0	1761	26   9	1811	95   3	1861	55   4
1662	65   9	1712	41   2	1762	34   8	1812	126   6	1862	55   5
1663	50   8	1713	45   4	1763	36   1	1813	109   9	1863	44   9
1664	36   0	1714	44   9	1764	41   5	1814	74   4	1864	40   2
1665	43   10	1715	38   2	1765	48   0	1815	65   7	1865	41   10
1666	32   0	1716	42   8	1766	43   1	1816	78   6	1866	49   11
1667	32   0	1717	40   7	1767	57   4	1817	96   11	1867	64   5
1668	35   6	1718	34   6	1768	53   9	1818	86   3	1868	63   9
1669	39   5	1719	31   1	1769	40   7	1819	74   6	1869	48   2
1670	37   0	1720	32   10	1770	43   6	1820	67   10	1870	46   11
1671	37   4	1721	33   4	1771	47   2	1821	56   1	1871	56   8
1672	36   5	1722	32   0	1772	50   8	1822	44   7	1872	57   0
1673	41   5	1723	30   10	1773	51   0	1823	53   4	1873	58   8
1674	61   0	1724	32   10	1774	52   8	1824	63   11	1874	55   9
1675	57   5	1725	43   1	1775	48   4	1825	68   6	1875	45   2
1676	33   9	1726	40   10	1776	38   2	1826	58   8	1876	46   2
1677	37   4	1727	37   4	1777	45   6	1827	60   6	1877	56   9
1678	52   5	1728	48   5	1778	42   0	1828	60   5	1878	46   5
1679	53   4	1729	41   7	1779	33   8	1829	66   3	1879	43   10
1680	40   0	1730	32   5	1780	35   8	1830	64   3	1880	44   4
1681	41   5	1731	29   2	1781	44   8	1831	66   4	1881	45   4
1682	39   1	1732	23   8	1782	47   10	1832	58   8	1882	45   1
1683	35   6	1733	25   2	1783	52   8	1833	52   11	1883	41   7
1684	39   1	1734	34   6	1784	48   10	1834	46   2	1884	35   8
1685	41   5	1735	38   2	1785	51   10	1835	49   4	1885	32   10
1686	30   2	1736	35   10	1786	38   10	1836	48   6	1886	31   0
1687	22   4	1737	33   9	1787	41   2	1837	55   0	1887	32   6
1688	40   10	1738	31   6	1788	45   0	1838	64   7	1888	31   10
1689	26   8	1739	34   2	1789	51   2	1839	70   8	1889	29   9
1690	30   9	1740	45   1	1790	54   9	1840	66   4	1890	31   11
1691	30   2	1741	41   5	1791	48   7	1841	64   4	1891	37   0
1692	41   5	1742	30   2	1792	43   0	1842	57   3	1892	30   3
1693	60   1	1743	22   1	1793	49   3	1843	50   1	1893	26   4
1694	56   10	1744	22   1	1794	52   3	1844	51   3	1894	22   10
1695	47   1	1745	24   5	1795	75   2	1845	50   10	1895	23   1
1696	63   1	1746	34   8	1796	78   7	1846	54   8	1896	26   2
1697	53   4	1747	30   11	1797	53   9	1847	69   9	1897	30   2
1698	60   9	1748	32   10	1798	51   10	1848	50   6	1898	34   0
1699	56   10	1749	32   10	1799	69   0	1849	44   3	1899	25   8
1700	35   6	1750	28   10	1800	113   10	1850	40   3	1900	26   11
1701	33   5	1751	34   2	1801	119   6	1851	38   6	1901	26   9
1702	26   2	1752	37   2	1802	69   10	1852	40   9	1902	28   1
1703	32   0	1753	39   8	1803	58   10	1853	53   3	1903	26   9
1704	41   4	1754	30   9	1804	62   3	1854	72   5	1904	28   4
1705	26   8	1755	30   1	1805	89   9	1855	74   8	1905	29   8
Average  50  years	42   10		36   0		51   9		65   10		*42   7

 * Average for 46 years only.

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.

1. Valuable information will also be found in Bulletin No. 38 (1905), “Crop Export Movement and Port Facilities on the Atlantic 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.”