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The Commercial Exchange 



Of Philadelphia, and Remedies for Same. 


P 53 ra. 


<"raio. Fi.M.Fv & Co., Printers and Lithographers, 
No. 1020 Arch Street. 











The Commercial Exchange 



Of Philadelphia, and Remedies for Same. 


Craig, Finley & Co., Printers and Lithographers, 
No. 1020 Arch Street. 

At a meeting of the Board of Managers of the " Philadelphia 
Commercial Exchange," held on Wednesday August 17th, 1881, 
the following resolution was adopted : — 

Resolved, That a Committee of Five, of whom the President shall be Chairman, be 
appointed from the Exchange by the Chair, to investigate the facts connected with the 
subject-matter involved in the call now under the consideration of the Board, vrhich 
Committee shall have power to call upon the Inspection Department and the Grain 
Committee for facts and int'oTmation appertaiuing thereto: that the said Committee 
also shall report upon the general subject of the recent marked decadence of the 
"Grain Trade" of Philadelphia, as compared with other export cities, involving ofi&- 
cial comparative statistics of receipts and exports, the probable cause of such deca- 
dence, and the possible remedies therefore : to be submitted to the Board at their 
earliest convenience. 

This Committee was duly appointed' by the President, and at a 
meeting held on Thursday, November 10th, 1881, the following 
resolution was adopted : — 

Resolved, That a Committee of Three be appointed to recommend a plan of action, 
and a Council of Fifteen, to be appointed by the President, with the approval of the 
Board, each year, to look after the interests of the trade of the Exchange. 

Under the above authority, the Committee has made a report, rep- 
resenting by very interesting maps and statistics, (furnished by the 
Chief Grain Inspector), the flow of grain to the three principal export 
points on the Atlantic Sea-board; supplemented by their otvn views as 
to the possible remedies required. 

The report was unanimously adopted by the General Committee, and 
approved by the Board of Managers, but was not submitted' to the 
Members of the Exchange, at a meeting of the Association, for general 
approval, before distribution, and need not, therefore, necessarily imply 
a universal ratification of the document. 

It was ccrtaiul}' the moral right of our merchants, actively engaged 
in the grain trade, to enjoy the privilege of having answered, on the 
floor of the Exchange, the following queries suggested by the re- 
port "on Decadence" — before its publ'tC distribution, as their opinions 
and belief officially expressed, viz : — 


1st. Does not the business record of the "manner-born" merchant of 
Philadelphia, refute the Committee's theory (page 8), of his insignifi- 
cance as an " important " factor for the " prosperity" of this " trade 

2nd. Whether we propose to stay in the grain trade at the Port of 
Philadelphia, or fly with the " important," " migratory," " cosmopoli- 
tan," " typical," "American grain operator," "straightway" "down to 
Egypt," and "lease" the "Pyramidical" elevators, without charge, under 
"suitable terms from the Pharaohs," unless we can have the "differen- 
tials" and "abated elevator charges" added to our diet. 

3rd. Whether it was judicious to assume and assert, on both the 
outside and inside of a printed pamphlet, that our Grain Trade had 
reached a state of "Decadence," at a time when one of our trunk lines 
has just completed initial elevator storage facilities, and the other is 
suffering the misfortune of loss of elevator facilities by fire, but is hard 
at work trebling their former capacity with two new elevators now being 
pushed to completion ? 

4th. Whether the agricultural resources of this country are not 
large enough to afford the merchants of New York, Philadelphia and 
Baltimore sufficient grain for business ? 

5th. Was the remedial Committee correct in its conclusions to 
"differential-ly^^ attack one of their Trunk lines, and "deferentially and 
inferentially assail the other Trunk line ? 

6th. Will the Committee's report cause anyone to have a highei^ 
opinion of us ? 

7th. Will it attract trade to our city to print a report on " Deca- 
dence," for public distribution f 

I hold no office in our Association, and will confess, that I was fortu- 
nate in becoming an accidental recipient, for a short time, of the printed 
report before distribution. I wondered, upon the hasty judgment at once 
formed, why the family wash was hung out on the public promenade, 
and, after individual protest was unavailing, concluded as there was more 
room on the same line, that I would, in the name of "all recognized 
principles of fair competition," (page 5) hang up my wash also. 

I propose to speak plainly /or the grain merchants' interests, and 
shall classify my remarks under three divisions, viz : — 

1st. A review of the defects in the Report of the Committee. 

2d. The "responsibilities" of our grain merchants. 

3d. The "possible remedies." 


I would preface with the opinion, that it was a primary error, in assum- 
ing conckisions upon so important a subject, and particularly where the 
power of regeneration is so awphatically laid upon the Railroads, that the 
Committee did not consistently work out their theory, by corresponding 
with the Managers of both of the Trunk lines, requesting their 
views at length as to what they considered necessary and remedial meas- 
ures ; also by receiving from any other of our grain interests, con- 
tributions on the subject, and after the communications had all been in 
hand — to then prepare their report, adding as an appendix the corres- 
pondence received. 

This course would have left the Committee free to express their oion 
views, but at the same time, would have given us perhaps more enlight- 
enment as to the policy and requirements of the Railroads than will 
probably be otherwise evoked. 

An examination of the report (page 5), shows that the Committee, 
after stating the fact, that by "vigorous methods, {i. e. energy) New 
York rivalry (i. e. competition), sustained by Railroad protection (a 
misnomer) is wresting from this city benefits which Philadelphia's un- 
surpassed geographical advantage w^ould otherwise naturally secure to 

This should have been their text, but they preferred to create a 
supposititious one, probably for dramatical effect, for they state (page 5), 
"If the Railroads centering in New York rebate the entire elevator 
charges, or should offer any other tempting inducement to New York, 
that are not given t(5VBaltimore or Philadelphia, in the name of all 
recognized principles of fair competition, let the Baltimore and Phila- 
delphia lines grant the same, or at once give up the fight, as it will 
be practically impossible for Baltimore and Philadelphia to compete at 
such fearful odds." And they assume from what a Railroad company 
might, could, or would do, our privilege of drawing checks upon the 
Pennsylvania Railroad Company for our deficits of energy, and in con- 
sideration of the aforesaid "naturally secured geographical advantages" 
to- our credit; as they confidently state (page 5), "The needed reme- 
dies, we are sure can only be reached through the earnest and zealous 
co-operation of the Pennsylvania Railroad, and this, we believe, would 
be secured by presenting to the road, with proper force, the true facts 

and strong arguments that may be urged in behalf of a more liberal, if 
not a more protective, policy towards the City of Philadelphia," and 
further recommend that the exchanges be made through a Clearing 
House of fifteen of their number. 

They further state (page 5), "Your Committee has no idea of even 
suggesting any special line of policy to the able management of the 
Pennsylvania Railroad, &c.," and immediately proceed (page 6) to argue 
against the policy that established " a most serious divei'sion of the 
trade from Philadelphia to Baltimore ;" and argue away, "in these days 
of low freight," sufficient justification for "the one cent per hundred 
charged less to Baltimore," established "in accordance with conventional 
arrangements hitherto made with other Trunk lines," and finally argue 
away all the trade from Baltimore, owing to Philadelphia's "geographi- 
cal advantages" and her " far greater capital" and "larger import 
trade," and seriously state (page 7), "All these sacrifices have been made 
(by the Pennsylvania Railroad Company), simply to get into Baltimore," 
concluding with the summary (page 7), "We think there is not a 
particle of the grain traffic, that is now moved to Baltimore, over the 
lines and connections of 'the Pennsylvania Railroad, that could not, 
with better results to the interests of that road, be restored to Phila- 

Proceeding, we find stated (page 8), "The policy that has diverted 
from Philadelphia so large a part of the traffic to New York, we think 
equally unfortunate," that " the difiference two cents per hundred in 
freight, is, no adequate compensation for the enormous additional ex- 
penses incurred to reach New York, and to pay her extravagant termi- 
nals," and the Committee invite the Pennsylvania Railroad "in the 
sha7p cortipetition for business, to fight the New York lines on her own 
great vantage ground of Philadelphia, they feel appalled lest the Penn- 
sylvania Railroad should be a factor in "Augmenting the power 
(i. e. competition) at work to abolish entirely the differential rates to 
the sea-board" "in these days of low freights," which differentials, to quote 
again, "were established in accordance with conventional arrangement, 
hitherto made with other Trunk lines." By some serious blunder, the 
Committee entirely omit any allusion to the "strong arguments" that 
were to be so effective in producing the rediversion of trade from 
Baltimore to Philadelphia, and the previous manner of handling the 
"differential," (pages 6 and 7). 

They however, urge that if this "heresy" of abolition is to be, how 

much more apparent becomes the economy of developing Philadelphia, 
instead of New York, notwithstanding the Pennsylvania Railroad's 
enormous additional expenses inourred to reach New York, and which 
expenses are to be annually provided for. 

The Committee present (page 8), as main elements of success, cheap 
grain, and cheap port charges, and urge the Railroads to a similarly 
cheap policy, asking them (page 9), " To abate the terminal elevator 
charges at once," and the Pennsylvania Railroad Company "promptly" 
to meet, if not lead the New York lines in all measures intended to 
specially favor their own termini " ignoring the fact that the said 
road has its" "oivn termini " in New York, as well as here, obtained by 
"enormous additional expenses incurred," then "THEY BEG them 
(the Penna. R. R.) to " rigidly maintain the two cents per one hundred 
difference in favor of Philadelphia, below New York, and to consent 
to no terms of peace with the New York lines, unless the heresy of 
equal rates to New York is expunged from all protocols "in these days 
of low freights," and notwithstanding that said differentials "were es- 
tablished in accordance with conventional arrangements hitherto made 
with other Trunk lines," and summarize (page 9). In view of the 
unwarrantable circumstances under which we find the trade of Phila- 
delphia has been diverted, we would most earnestly BEG the manage- 
ment of the Pennsylvania Railroad that they shall so modify their 
present policies, as may best accord to Philadelphia, her just and rea- 
sonable expectations, (as shown with proper force by these "true facts" 
and "strong arguments,") as the natwal terminus of the road, and as 
possessing the "6es^ general geographical advantages on the sea-board," 
and further bind the necessity on the Pennsylvania Railroad, because 
(page 8), "We do not consider they (the Philadelphia merchants) are 
in any sense, responsible for the situation," and (page 9) the "causes 
which have contributed to the banishment of the "Cosmopolitan" "typi- 
cal" "grain operator" are entirely outside of the merchants (of Phila- 
delphia) themselves." 

To the question asked by the Committee (page 7), "Was there ever 
such an anomaly ?" as applied to these good strong arguments, I think 
"when this subject is dispassionately reviewed in all its bearings," 
there is justification for the use of the reply, "No, NEVER." 

Seriously, in a brief space, to combat the arguments used, is a for- 
midable task, and would not have been attempted, had it not been for 
a public distribution of such (to me) heresies." I shall proceed as 
briefly as possible. 

1st. One of the chief burdens of the report is the "differentials," 
and I propose to reply with a personal "uninspired" opinion of the 
subject, and to show our relief from the "responsibility" of considering 

I would premise with the fact, that certainly has been lost sight 
of by the Committee, that differentials are conceded in the general 
policy adopted by Railroads, quite as often for the disadvantages to be 
overcome in cultivating and developing trade, as for any other cause, 
and all of the arguments (on pages 6 and 7) of Philadelphia vs. Balti- 
more, if true, would be the most potent, possible factors, to concede the 
differential, to the city laboring under such great disadvantages. 

Proceeding, however, I think the question of the maintenance of 
" differentials " as a sine qua non, is as much removed from the arena 
of mercantile discussion, for all the influences thereby exerted as is the 
establishment of passenger fares to Chicago, or any other question 
strictly determined by the power and responsibilities delegated to the 
President of a Railroad and his Board of Managers. It was as natural 
for the Pennsylvania Railroad Co. for her interests, after having pri- 
marily gained control by enormous expenditures and obligations, for 
lines into the three cities of New York, Baltimore and Philadelphia to 
assert the necessity of a formula called geographical differences, that 
would yield to her the largest percentage of tonnage, and returns from 
the freight pooling system as it is now for the New York lines for their 
inierests to decline to further contribute their larger aggregated rolling 
stock to the disadvantageous (to them) arrangement ! 

As I understand it after a full and unsatisfactory trial, the New 
York lines insist upon their right to manage their own business, and by 
refusal to make arbitrary allowances, called differentials, in favor of the 
rival route, are not handicapped by the enormous obligations which 
were assumed by the aforesaid rival route in reaching all three compet- 
ing centres under the full expectation that the said arbitrary allowances 
or differentials in her favor would be allowed to be maintained undis- 
turbed thereafter. 

It is therefore unnecessary for our Committees to BEG the Pennsyl- 
vania Railroad Co. to maintain the differentials. 

The Pennsylvania Railroad Co. demands that preceding any readjust- 
ments of freight rates (i. e. advance of freight rates to the highest possi- 
ble figures to which she can gain the mutual consent of the other Trunk 
lines,) she must have conceded the right to "cut rates" to two large cities, 


a profitable operation for her interests under a high tariff, and required to 
offset the aforesaid enormous obligations. As there are " millions in it," if 
they (the Penna. R. R. Co.) can succeed, they desperately hope to force 
the point by enormous losses, on the through grain business, and, to 
to wear out their competitor, <mt freights to New York City, under the 
ho|)e that by centering the fight there, the sentiments of the Southern 
Cities, and of their stockholders, will throw the onus of the fight on 
the New York roads. 

Do any of our merchants, for a moment, suppose that the Penn- 
sylvania Railroad, aftc naming a competing rate to New York, 
would make a still further reduction of two cents per hundred pounds, 
in favor of Philadelphia, "in these days of low freight." If the afore- 
said "conventional arrangement" could be made binding hereafter, as 
well as " hitherto,'^ there would be some chance, under the immediate 
advance of all freight rates, to secure this, but ice had better not wait 
for that, rather relegate the subject entirely where it belongs, to the Rail- 
roads and their Managers, and let them solve the conundrums asked 
by their stockholders. 

2d. We had better abandon, as a narrow and unprofitable argument, 
the suggested " closing up shop " by the Pennsylvania Railroad at 
Baltimore and New York, and concentrating business entirely at Phil- 
adelphia, none of us can aiford it. 

We are not yet prepared to receive all this business, as less 
than four months ago, when we had not " decayed " quite as much, 
about three million bushels of grain was enough to compel both the 
Philadelphia and Reading Railroad and the Pennsylvania Railroad to 
refuse further shipments of grain for Philadelphia; this was an ex- 
pensive luxmy, and particularly so to the Elevator and Railroad 

It would be considered as poor business policy for a Railroad Com- 
pany to place her entire reliance upon one terminal as for any one 
'* to put too many eggs in one basket ;" but more than all this, 
" on the general and broad principles of commerce," I for one am 
fully satisfied that none of these cities in question have yet nearly 
reached the zenith of their grain trade. Should we rather not vnsh 
them all to develop into the importance which they will reach as grain 
centres, when all the Trunk lines will dev^elop competing connections at 
all three cities f 

3rd. I consider the committee unjust to the Philadelphia and 


Reading Railroad Co. and iis connedions, when they conclude that the 
Pennsylvania Railroad is the only factor at their command, and that 
they must BEG /rom them an alteration to a subsidized policy in favor 
of the merchants of Philadelphia, as the only remedy. 

They very eloquently prove by their statistics, the value to Balti- 
more of the competing Railroad ; but the committee dismiss in two or 
three lines without any seeming perception of its value the competing ele- 
ment offered by the Philadelphia and Reading Railroad Co. and the 
advantages offered by her connections with the New York lines extend- 
ing into all large Western grain centres, as well as into territory not 
accessible even by the Pennsylvania Railroad. The growth and worth 
of this competing trade is shown by the comparative statistics, and had 
Elevator facilities, only completed last spring, been erected earlier, they 
would have been relatively much greater. 

We are wholly indebted to this same competition for the introduc- 
tion and establishment here of a number of our representative grain 

4th. I consider the report unjust to the Pennsylvania Railroad 
Co., to our city, and to our comparative statistics, in not alluding to the 
fire, by which was destroyed the principal elevator facilities of the Penn- 
sylvania Railroad at Girard Point. 

If the committee can not, our merchants can testify that this defi- 
ciency alone was responsible for a large decline in the receipt of grains 
at this port. 

1 consider the report still further unjust to the Pennsylvania 
Railroad Co. in not even alluding to their construction (pro- 
gressing at Girard Point) of ttoo elevators aggregating over two 
millions of bushels storage capacity, and if the committee cannot 
see with said completion, and with this port, in the possession of 
between four and five million bushels grain storage capacity, and 
with two competing Trunk lines, any hope or any " remedy " for the 
future I for one consider that they are not a representative Committee, 
and for one believe that the grain trade will, in the future, not- 
withstanding their protest, gro\^' larger than ever. 

5th. I consider the Committee were unjust to themselves and to their 
faith, in accepting without protest the word "decadence," and 
expecting as a "Committee on decadence," to be able to treat \vith a 
lively Trunk line. 

6th. Regarding statement K, of the Committee's report, it would 


lead a casual observer to believe that the whole charges on grain at 
New York were only (^l) one-quarter of one cent per bushel, and at 
Philadelphia and Baltimore, one and one quarter cent (1^) per bushel 
for the same service. 

If the Committee has arrived at this conclusion, I would respectfully 
request th .. to merely read through the elaborate works on the termi- 
nal charges, (not yet perfected) performed at various times by the spe- 
cial committees of the New York Produce Exchange. 

In New York almost every steamer has its special dock, and while 
to the receiver it costs one-quarter of one cent (J) per bushel, to get 
his grain unloaded and stored in Railroad Elevator and obtain an 
Elevator certificate, yet, the transfer from the Elevators to the aforesaid 
steamers at their docks, is not done for nothing, as the Committee's 
statement would imply. It will require a brief reference to the New 
York system for explanation. 

Originally all deliveries of grain in New York were afloat, and all 
grain received by rail at Jersey City required delivery into barge 
before certificates were issued and sales could be effected. 

It was only after the successful development of Railroad Elevators 
at Philadelphia and Baltimore, (to the credit of the Pa. R.R. Co.) that 
development of Railroad Elevators followed in New York. The in- 
troduction of the new system, led by the New York Central R.R., 
opened a war with the "afloat" interests, and with the addition of the 
Erie and Pa. R. R. Companies' Elevators, resulted, after considerable 
difficulties, in a readjustment, by which grain would thereafter be sold 
on a basis of "in store," instead of "afloat." 

It required the recognition of three separate and distinctive forms 
of deliveries of grain, viz : 


"Brooklyn Stores," 
Railroad Elevators, 
and the establishment of various tariffs of charges. 

The Railroad Elevator system was the cheapest form of handling 
grain, and to equalize the conglomerate tariffs under one uniform and 
harmonious system, so that call-board sales could be filled with grain 
held under any one of the three systems, it was by agreement decided 
that all sales of Railroad Elevator Certificates should have an "equal- 
ization" charge of one half cent (|^) per bushel added to the bill — a 
premium indirectly added to prevent injury to the competing systems. 


But this Railroad Elevator grain is purchased " in store," and as 
perhaps ninety (90) per cent, of deliveries are viade to steamers lying at 
their own docks it requu'es the assistance of barges and floating eleva- 
tors with additional costs : 


Railroad Elevator charge, ^. per bus. 

Floating Elevator transfer, Jc. " 

Weighing, - - ^. " 


Also floating elevator charges for trimming seven-tenths {-^) of one 
cent per bushel. 

The other systems cost more and I, therefore, do not introduce them. 

I have inserted in full what the Committee in another part of their 
report (page 8) are pleased to call her "extravagant terminals," in argu- 
ing away from Xew York her grain trade, via Pa. R.R. If I do adver- 
tise a Xew York firm, without their knowledge or permission (for 
want of time), I ti'ust they will excuse the liberty taken, — but I want 
to give them full credit for the cai'e with which the work was per- 
formed by them. 




Terminal charges upon grain at this port are, until understood, the 
source of so much perplexity to grain shippers, and inquiry has so fre- 
quently been made of us in regard thereto^ u-e have decided to present these 
charges to our friends, in tabulated form, hoping it may lead to a clearer 
understanding of the same. 

All grain in this market is sold upon the basis of a free delivery, the 
seller payiny cost of delivery to ship or dock within the port. 

J. H. H. & CO. 

Unless otherwise ordered, all graded grain, in good order, ai'ri\dng 
by rail, is stored in elevators connected with the several roads. The 


New York Central, Erie, and Pennsylvania Railroad Companies now 
have elevators at their termini in this city, storage in which is charged 
at the rate of | of 1 cent per bushel for each 10 days or parts thereof, 
until delivered. Upon such grain the terminal charges are as follows : 

Elevation, . . , Jc. per bushel. 

Weighing, . . . . :^c. " 


ic. " 


. 20c. per car. 


20c. " 

Fire Insurance, 




New corn, or other graded grain, in doubtful condition, is not stored 
in R. R. elevators, but is transferred, upon arrival, to barge, in which 
it can lay 4 days, subject to — 

Elevation, . . . Jc. per bushel. 

Weighing, . . . . ^. " 

Inspection, . . . 20c. per car. 

Sampling, .... 20c. " 

After 4 days, this grain is subject to a charge for demurrage of ^ of 
1 cent per bushel per day. In some cases it may be desirable to sell 
such graded grain by sample; in this case an additional charge of $6.00 
is incurred, for towing, on lots of less than 4,000 bushels. (The buy- 
er of grain in this market has 3 lay-days in which to put aboard of 
vessel free of storage ; hence, to save demurrage to seller, grain must 
be sold on or before the second day after transfer, the second day 
counting as one of the three. Insurance upon grain in barges is cov- 
ered by the R. R, companies). 

Graded grain, inspecting unmerchantable or no established grade, 
is also transferred to barge, is kept separate, and can there be held 3 
days subject to — 

Elevation, . . . ^c. per bushel. 

Weighing, . . . . Jc. " 

Towing, . . * . $6.00 on each lot. 

Inspection, .... 20c. per car. 

After 3 days, a charge of $10 per day demurrage is incurred, re- 
gardless of size of lot. 


Grain shipped Teack is not graded, and can remain on track 48 
hours, subject only to — 

Weighing, . , . Jc. per bushel. 

Sampling, .... 20c. per car. 
Ajter 48 hours, if not previously unloaded, the R. R. companies 
transfer to barge, and is there kept separate. It is then, in lieu of the 
above, subject to — 

Elevation, . ^c. per bushel. 

Weighing, . . ;^c. " 

Sampling, . 20c. per car. 

Lighterage, . 2Jc. per bus. on lots of 1,000 bus. or less. 

" . 2c. " " over 1,000 and under 2,000. 

« . lie. " " " 2,000 '•' '* 5,000. 

" . Ic. " " " 5,000 


It can lay in barges 3 days at these rates, after that demurrage is 
charged at the rate of $10 per day. 

On grain arriving by Canal, the terminal charges are — 

Measuring, \g. per bushel. 

Towing, $12.00 to $20.00 per boat load (according to distance 

Inspection, $2.00 per boat load. 
Marine Insurance, Free first 5 days, | of 1 per ct. for each 10 days 

Demurrage, Free first 3 days, 2 per ct. per day on canal freight 

list thereafter. 
The above items cover all costs for the delivery of grain. 


If desired to store canal or other grain not held by R. R. Elevators, 
it is transferred to Brooklyn warehouses, in which the charge (in addi- 
tion to those heretofore mentioned) is J cent per bushel, which includes 
storage 10 days, elevating, and weighing in and out. After the first 
10 days, storage accrues at the rate of |^ cent per bushel for each 10 
thereafter until delivered. 


Storage in R. R, Elevators, as above stated, is J cent per bushel 
each 10 days, or parts thereof, whether for a longer or shorter period. 

The quantity of all sound grain is guaranteed from elevators and 

The charge of turning grain (for preservation) is 20 cents per 100 
bushels, and for blowing and screening J cent per bushel. 

In shipping grain int'cnded for grade, it is not necessary to insert in 
Bills of Lading the clause " To be Graded,'' as all grain consigned to 
New York, now, is graded, unless otherwise specified. 

It is not necessary to ship grain in five-car lots. The present N. Y. 
system of grain inspection provides for handling single cars upon the 
same basis as large lots. 

All grain option trades in this market are made upon the basis of 
boat-load lots (8,000 bushels), except oats, which are 5,000. Contracts 
for the future delivery of car lots are upon the basis of 450 bushels to 
the car of wheat, 500 to the car of corn and rye, and 800 to that of 
oats. Deficiency or overrun settled at the market price on day of 


Selection is made of what should, perhaps, otherwise have been the 
concluding division of the subject, but for the necessity required to 
discuss the Philadelphia grain merchants, as the Committee state (page 
8), "They do not consider, they (the Philadelphia merchants,) 
are in any sense responsil)le for the situation/' and also (page 9), "The 
causes which have contributed to the limited development in our midst 
of the migratory," "Cosmopolitan" typical "American grain operator," 
"are entirely outside of the merchants themselves." I propose to 
ascertain whether so sweeping an assertion can be complacently main- 
tained under an analysis of <iur own records. Very much of course, 
depends upon the standard, we set up for ourselves, the care and 
judgment with which vexatious problems affecting our business rela- 
tions are studied out to correct solution, and the power and influence 
with which such solutions are successfully applied. 

Is it in accordance with such an exalted standard, to imply that our 
Trunk lines "owe us a living?" It is perhaps, considerably nearer to 
the truth, that when our propositions are not accepted, they are some- 
where wrong, and had better be remodeled, to show a mutual and 
probable profit with some responsibility resting on the merchant for 
their success, if adopted. 


The best and highest illustrations that can be shown of this power 
and interest exerted with the Railroads by the grain merchants, as a 
body, is in the negotiations of the Trunk lines with the Xew York 
Produce Exchange. We have never yet heard of those merchants 
ignoring their responsibilities, on the contrary, it is positively 
asserted that they rest even heavier on the merchants than on the Trunk 
lines, and they demand and receive the support of the Railroads. 

But let us proceed with the delicate task of introspection ; our Asso- 
ciation (the Commercial Exchange), includes a very large number not in 
the grain business, nor directly affected by it, the general aim being 
to include the mercantile community in good standing of all 
branches of trade, and from these associated interests the Board 
of Management, Arbitration Committee, etc., etc., are selected. 
Our grain merchants are therefore, only a part of a large Asso- 
ciation, and our grain problems must be explained to some mem- 
ber, as of the Board for instance, when resolutions affecting grain in- 
terests, etc., are oifered for action, and the side npon which the not 
directly interested Manager will be found, will depend, I may 
fairly say, upon his reliance upon ^some one, probably in the grain 
trade, for whose judgment, he entertains great respect. It is therefore, 
apparent that this interest, which is always the balance of powei\ is an 
uncertain factor, and may see through one pair of glasses, that the 
color of the resolution is rosy red, and through another pair, the 
same color as a very deep blue, it depends upon whose spectacles 
have been most borrowed, as to whether the resolution declares the 
color to be red or blue. In addition to this, the original organization 
was largely composed of successful and influential grain merchants, 
doing business in their own warehouses, after their old-fashioned 
methods, and indiv^idually were strong representative men. 

The introduction of the comparatively sweeping reforms demanded 
by the modernized grain business, was chiefly through the young men 
and has been of slow development, each successively advanced step — 
(in every case not introduced until in successful operation by our com- 
peting sister cities) was (and is) met by opposition, and in the opposition 
was (and is) generally to be found the old fashioned grain merchant, (not 
a few of them influential and representative houses,) fearful either of the 
effects of the'innovations, or of the increasing area of competition offered 
to the younger firms. 

This was not however the only battle — the same young blood 


had another one outside, with our money matters. Elevator 
Receipts attempted to be eompuisorily delivered by one ele- 
vator in 1874, on grain as received, in order to introduce cash system 
with deliveries of the grain, and chiefly to assist young firms of limited 
capital, with collateral for increasing their business opportunities were 
mercilessly " sat down upon." 

Our banks had a good old fashioned way too, they knew all about 
discounting " double named " paper, and the old fashioned grain 
men had great advantages, from their long known reputation and 
worth. It was not an unusual thing, however, for young firms in 
those days to be compelled to check additional consignments of grain 
because they were " locked up " in their finances, their stocks in hand, 
of no available collateral value, and their outstanding bills sold on time, 
collectable at convenience of buyers. Many a time financial plans for 
the day were " knocked higher than a kite " by unexpected Sight 
Drafts or expected payments deferred, or both. With the increased 
facilities, of another elevator, came the absolute necessity for 
additional relief, and shortly after, elevator receipts were made regular 
and Bank recognition of their value followed : but the delay cost our 
grain business of Philadelphia thousands of dollars of profit, and tens 
of thousands of bushels of grain in the course of legitimate business, and 
restricted opportunities for increased business of many of om- 
young firms. This reminds me that it will never do to slight 
so important a branch of the subject, as it is still a soi'e not healed, as 
the illegitimate grain business of Philadelphia transacted at the Open 
Board as so considered by a very large, and highly respectable portion 
of our Association, who either do not understand the subject, or else have 
had their look at it through a pair of borrowed blue spectacles. 

I must admit active influence in urging the resolution passed at 
the meeting of the Board of Managers of " The Commercial Ex- 
change," held February 8th, 1877. 

" Resolved, That a committee of tive be appointed by the President to prepare suita- 
ble Rules and Regulations for the establishment and government of a Call Board for 
the sale and purchase of grain in this market, and report either at the next stated 
meeting of the Board, or at a special meeting for that purpose." 

The rules presented by the Committee were approved by the Board, 
March 12th, and adopted at a meeting of the Association^ held March 
21st, 1877. 

After a struggle, in which opposition was largely made by members 
who never intended to avail themselves of the Board, we were permit- 


ted to have "a trial." We were obliged shortly thereafter to with- 
draw the " call/' the ridicule and eeih-<ure it met, being too great, and 
the opposition vote again coming to the front overwhelmed us. 

AVe ''saved the pieces" however, that is, we retained without any- 
regular '• calls," the Call Board rules governing grain, and made sales 
under the same. 

These rules were an advance over the old system, as they gave us 
cash for our sales of spot grain, and some opportunities for sales of 
grain to arrive. 

The only cause for a return of the Call Board to the floor of the 
Commercial Exchange was (under a resolution oifered at the meeting 
of the Board of Managers, September 13th, 1877,) as the growth of the 
grain trade under these Call Board rules in the rooms of " The Phila- 
delphia Maritime Exchange," under the generalship of yoimg blood, 
was of such rapid proportions as to menace the interests of the old 
Association, and a siniple statement of the facts was sufficient to give 
us a unanimous return on a more civil and respectful basis. 

I feel called upon here to divert somewhat from my subject, to use 
the only probable public opportunity to briefly explain, through this 
channel to the large and respectable portion of our Association who do 
not understand nor approve the operations of the "call, or open board," 
the necessity for its existence for legitimate purposes. At every grain 
centre in the United States, there is established some form of a call or 
open board. 

Theii' existence is necessary for a number of causes, prominent 
among which are : — 

1. That we may obtain daily, at regular stated times, a uniform 
value for grain, regulated by demand and supply, and shown by the 
bids and otters. 

2. Ability to buy or sell larger quantities of cash grain at greater 
uniformity of price, and with less distm'bance of value than by any 
other method. 

3. Ability to find all buyers and sellers, and what they will bid or 
take for stock m the shortest possible time, and with greater advan- 
tage than by any other method. 

4. A fundamental requirement by all banking institutions in accept- 
ing elevator grain receipts as collateral. 

These are the chief advantages that readily occur to me, although 
there are many others, incidentally ma}' be mentioned, less disputes 


and arbitrations, than by any other method of purchase and sale, — and 
the advantage of a public distribution of marked values by telegraph, 
avoiding the old fashioned way of informing each correspondent by 
mail. The restoration to equilibrium, if one market has been dis- 
turbed (from its general plane of relative equality Avith other mar- 
kets,) by any very large transactions, follows through orders by wire 
from correspondents to sell grain for future delivery if the market is 
relatively too high, or perhaps to buy for their account, if the market 
is relatively too low. 

The chief argument for attack is, however, on " the futures," but 
these in their turn govern the value of cash, and are the largest factor 
in determining consignments or sales of grain from western points requir- 
ing time for their arrival. 

Beyond this is the argument that the temptations are offered to 
young firms to speculate beyond their means, but these temptations we 
cannot control. Young men or young firms unable to withstand specu- 
lative temptations would not be restricted by the abolishment of the 
" open board " from the floor. We might as well, and with far more 
numerous illustrations point to the losses made by firms (not engaged 
in the grain trade) in Railroad, Mining, and other stocks, at the Stock 
Exchanges, and urge abolishment of the Stock Exchanges. 

Let us now inquire after the whereabouts of the '' migratory," " cos- 
mopolitan," " typical," " American grain operator," the man (page 9) 
" whose enterprise and adventure are without bounds." This element 
is scarce here, and why have we not more of it amongst us from 

Simply for the reason that our good old fashioned Constitution and 
By-Laws decided that Philadelphia was for Philadelphians, and any 
inquiries at the doors of our Association by outside capital and energy 
were met by the following notice, which I extract from one of the an- 
nual reports. " Any respectable individual or firm, having a place of 
business in Philadelphia, and being regularly licensed to do business 
therein, shall be eligible for membership," also " No others shall buy 
or sell in the rooms of the Association, or exercise any of the rights of 

The affiliations by Baltimore (where a liberal spirit prevailed) with 
New York, Chicago, Toledo, and elsewhere, added hundreds of thou- 
sands of bushels and dollars, both to the growth and importance of 
Baltimore as a grain export centre, and created interested sympathies 


for her success; although it is but justice to state that the prospective 
benefits expected from the competition of two Trunk lines, one of which 
had no connection with New York, exercised the chief influence, and 
we had no competition here to olfer the same inducements. 

On January 18th, 1881, The Commercial Exchange of Philadelphia 
advanced initiatory membership fees to ^250, and opened her doors to 
universal membership. 

This change will in time produce benefits ; but it is regretted that 
it was not done at least ten years ago. 

A comparison of the present value of memberships of the Grain As- 
sociations is as follows : — 

New York Produce Exchange, $2,800. 
Baltimore '' 500. 

Philadelphia " 250. 

Are our Railroads, or our merchants responsible for this difference ? 

Now as to our Annual Reports, — I will confess it has been a weak- 
ness of mine for some time back to endeavor to have our report show 
an increased attention to the Grain statistics, values, etc., and was par- 
ticularly surprised with the growth in value of the Baltimore Grain 
Reports, — last year's edition, showing so great an advance, and so 
many valuable statistics as to be a model : — we make a very unfavora- 
ble comparison. We have had a general desire expressed among our 
grain merchants for an alteration of policy without producing any of- 
ficial effect, — and the thought never struck me until I penned these 
lines, that the grain interest may be arrogating to itself too much to 
expect that an annual report of a mixed association representing so 
many interests should be in bulk absorbed by grain statistics, etc. 

The report, in truth, with the exception of the figures officially fur- 
nished by the Chief Grain Inspector is not a grain report, and is of no 
value to the grain interests. 

I do not mean, by this assertion, to make the slightest reflection upon 
our worthy Secretary, as he is amply competent and able to discharge 
any duties exacted of him. His office is simply an executive of the 
will and policy of the management, and reports are their's, not his. 

As to active work and regular attendance of members of important 
Committees, I would respectfully request the Board of Managers to 
reply by " showing up," in their annual report, the number of meetings 
and work accomplished, as is done, by the New York Produce Ex- 


The state of general looseness in their corporate business, among a 
class of men of more than active intelligence, more than average relia- 
bility and especially attentive to all business confided to their hands, as 
individuals, simply shows that the corporate business is pretty much 
" left to run itself." There never was a greater mistake, as the pro- 
gress of our merchants, as a body, is gauged almost entirely by the 
progressive measures developed by their corporation and its executive 
boards and committees. The Association is a " pooling " of each in- 
dividual needs, and treats for them with Railroad Companies and other 
corporate bodies, and expresses their sentiment upon public measures 
affecting their interests. 

Too great an indifference has prevailed and I ascribe it chiefly to the 
fact that leading firms negotiate as with Railroad Companies, for their 
own individual needs, and are indifferent as to whether the remainder 
of the trade can corporately attain by negotiation the same benefits. 
Further, the mixed interests, generally composing our Committees, 
make too often an indifferent majority, and the one or two working 
members are more than probably subjected to the imputation, not ne- 
cessarily expressed, of " having some axe to grind." 

I consider I have said enough, without further prolongation of the 
subject, or more specific details, to prove that progress must not be ob- 
structed, and more responsibilities and work must be assumed by our 
members individually and officially for our Association, if we would 
" reap the harvest." 


The possible remedies for a return to our relative position in the 
percentage of gi-ain receipts and shipments are all within the grasp and 
'power of our merchants if they choose, through unity, energy and cour- 
age, to work out the requirements. 

I would briefly call attention to : — 

1. Insufficient ^levator Storage facilities. At first glance, it is 
apparent beyond dispute, that in the creation of Elevator facilities 
we have not kept pace with the active developments of Baltimore 
and New York, and the percentage of our decline in grain re- 
ceipts is not nearly so great as the reduced ratio, (in the compar- 
ative exhibit of growth of elevator facilities) of our ability to take 
care of large stocks of grain. Hammer and nail have been used with- 
out cessation by our competitive neighbors, New York and Baltimore, 


and one elevator is scarcely finished before another one upon a still 
larger scale is planned and in course of construction. Since the erec- 
tion of the Girard Point Elevator at Philadelphia — Baltimore has 
created three elevators, and Xew York still larger storage capacity, and 
they are still at it — fulfilling their " manifest destinv" of creating on 
the Atlantic seaboard the chief markets and speculative grain centres in 
the United States. 

A full proportion of this same destiny belongs to us, and although 
we mav be somewhat slower, im shall accomplish it too. In my 
opinion, the day will come when the three cities will be able to 
store fifbv' million bushels or more of grain. Our merchants have 
always waited for the Penna. Railroad Co. to develop the whole eleva- 
tor system here, and as rapidly as elsewhere, and have officially begged 
regularly and continuously for this investment by the Railroad. I 
must do the Managers of the Penna. Railroad the justice, to state that 
they liberally offered our merchants long ago, sites and foundations 
for the additional elevators, so urgently demanded by them, if they 
would "raise" the funds to complete the superstructure, and we made, 
perhaps, errors, in not accepting the offers, as certainly we should have 
had faith enough, and certainly would have had trade enough to have 
made them profitable. We preferred, however, that the Penna. Rail- 
road Managers should manage that, and waited for them to "see it to 
their interest," but we waited and pleaded in vain ; and why ? Because 
our official committees lost sight of a very important and dominant 
factor, viz : — 

2. The value to the merchant of competition between Trunk lines. We 
certainly ought to know something about this element, as competition 
decides every transaction we make, and the value of every bushel of 
grain. After waiting in vain, /or a competitor here, our Penna. Rail- 
road deserted " the best geographical advantages on the sea-board " 
(page 9), and "the great vantage ground of Philadelphia" (page 8) 
for competition at Baltimore — to prevent a rival there from, gaining too 
great an advance, and the battle resulted, as such battles always do, to 
the advantage of the merchants of the place, while the "sinews of war" 
were drawn, according to the tone of the Committee's report, from our 
life's blood .'f- Again, our Penna. Railroad, waiting in vain here for a 
foeman, comparatively deserted us to find a new field of glory in New 
York, and more "sinews of war" and life's blood were drawn from us. 
See the beautifully illustrative maps. Letter I (of Committee's Report), 


and the colors, RenfimentaUy representing- the views of the Committee. 
On comparison of maps I with H, the flow of arterial blood (red), of 
the Pennsylvania Railroad has considerably ina^eased ! I ! ! ! and the 
puny arm to New York, and almost as ]>uny leg to Bahimore, map H, 
show wonderful growth and strength, subsequently in map I. 

See, by comparison, how lusty the leg has grown from kicking, and 
the arm, from striking. The Committee have sentimentally colored 
the "diversions," the leg green, as it is walking away frohi, and has 
forsaken us, and the arm black, as it funereally carries away their hopes 
of the " great vantage ground of Philadelphia '' (page 8). 

If the Pennsylvania Railroad Managers were arguing their interests 
with us, which they u-on't ! ! ! and were illustrating by these maps, they 
would have painted the arm and leg red, and would tell us that it was 
all arterial blood to them, and the arm and leg necessary to tlieir aggress- 
ive policy, completely demolishing the Committee's deductions on the 
leg (page 7), and the arm (page 8). 

There are, however, in the maps, two other coloi-ed limbs — the true 
blue, to Baltimore, true, because she has not yet had a chance to grow hei' 
arm and leg ; and a jealous colored (yellow) puny leg with us ! ! ! ! ! 

Our Committee are evidently old school professionals; I would sug- 
gest to them, instead of their remedy of the knife (page 5), the trial of 
the homoepathic doctrine "similia similibus curantur." Can our mer- 
chants not see that this yellow colored leg loith us will grow lusty with 
exercise here, on the same principle as the leg grew strong at Balti- 
more, and that if they can get an arm of that true blue here, it will do 
the same thing, and further that then the flow of the old aiterial red 
to this city, will increase wonderfully, not because of the pleadings 
and differential supplications, but because of the necessity created by 

This is the whole secret, and will explain every mystery, and I pro- 
pose to give some illustrations. Do our merchants remember when 
The Baltimore d' Ohio Bailroad hatl not created any elevators at Bal- 
timore, but was about going into the grain trade in earnest, and were 
anxious to develop facilities? Do they remembei- how this city, with 
its natural advantages over Baltimore, was first looked at ? Can any 
one assert that it would not have been a grand development for us to 
have had all the capital, life and energy she would have brought here, 
if she had developed here, instead of at Baltimore? That was the time 
for Its to strike hard, and to plead and beg with dignity, to circulate 


pamphlets and petitions, and organize committees for the expression 
of a healthy public sentiment. But it was not done. I have always 
believed that it was the original intention of the Baltimore and Ohio 
Railroad to come here and develop this trade, and that the reason it 
was not done, w^as the chilling Pennsylvania Railroadism, that 
silenced almost every merchant, our Board of Trade, our Commercial 
Exchange, and capitalists. Let us put the best construction we can 
on our weakness. Were we all afraid of the Fenna. Railroad f Well, 
no — but fearful that the competition would hurt the interests of our own 
Penna. Railroad, and we lost our first opportunity. In my opinion, 
the Penna. Railroad would never have gone to Baltimore had our mer- 
chants have made successful inducements to the Baltimore and Ohio 
Railroad, to establish her competition at Philadelphia. The next step 
as has been stated, was that of our Penna. Railroad to Baltimore, and 
large investments for grain storage facilities to compete there with the 
Railroad successfully driven from us. 

Do our merchants remember since the Pennsylvania Railroad grain 
developments at Baltimore, how we pleaded and begged in vain for 
some of that low rate grain, from St. Louis, that so persistently went 
down that " diverted " Pennsylvania Railroad Co. leg, and do they not 
know why ? That it was simply because we had no other leg to stand 
upon, — and that if the Pennsylvania Railroad Co. " hedged " the " cut 
freights " to Baltimore which competition forced her to make on our 
freight rates here, where no competition prevailed, it was perfectly na- 
tural and defensible under the circumstances. 

Now let us see what comparative value a "typically" aggressive 
Railroad places on competition. To prevent the merchants of Philadel- 
phia and New York from having the benefit of competing rates by an- 
other trunk line, A whole railroad was purchased at a seemingly 
big price, and the purchasers can doubtlessly justify the investment as a 
paying operation to them /or the interests of their road, but I am argu- 
ing for the merchants, and not the railroad or stockholder interests. 
This again was the opportunity and it is not too late yet to plead, and 
beg with dignity to the competifig railroad, to try ogoin, and that she 
would have our sympathies for her successful entrance and establish- 
ment with us, and official pamphlets, petitions, etc., to that efiect would 
be " in order." 

Again, a " typically " aggressive railroad, in order to control the 
whole connection between the two largest cities of this country, places 

25 i 

lUeif under enormous obligations for a ivhole network of railroads, sup- 
posing it could thereby bar co:>rPETiTiON, and if it cannot since justify- 
by tigures that it was a paying operation, it is in my opinion only beca'use. 
of one reason — that competition was not barred out as expected. Again 
taking a look at competition from the merchants, not the Railroad or 
stockholders' interest, see how that very unexpected competition pro- 
duced lower freights, loioer passenger fares and reduced time between 
the two cities in question. 

We finally did get established in Philadelphia a competing trunk 
LINE, starting under great disadvantages, and until the ])ast few months, 
with no elevator facilities, but still, nevertheless, competition, and the 
most important contributory element to our grain trade for the past few 
years has been derived from that very competition, and yet our Official 
Committee although they occasionally use the word "competition" in their 
report, fail lamentably to apply it to their own benefit, for they refer 
their hopes and trusts to one road, as their " only remedy " with no 
past successful record as their reason for doing so, and wander into the 
labyrinth of "dilFerentials," — a subject, so enigmatical, that every man 
has the right to conjecture his own opinion of it, and even Railroad 
Managers can be lost in endeavoring to unweav^e its mysteries, or to 
conceal a hidden interest in explauat'ons. 


This remedy is so clearly in need of establishment, as the ^iain 
more than the assertion. Our Committee ARE RIGHT, when they state 
(page 8), " The City of New York is a free port for steamers and for 
lines of steamers, and offers to them opportunities for the fullest and 
fairest competition, HENCE, the business in this important branch 
has in late years, increased in enormous proportions," 

This statement is so clear that I will not combat the error of their 
inmiediately succeeding paragraph, for the "steadier line remedy," 
is of itself so necessary here on the same competing basis, that if the 
whole report of the Committee had been on this one subject alone, it 
would not have been treating it with too great an importance. It may 
be asserted as a positive fact, that our grain trade will only 


I would recommend as an important initiatory step in that direction, 
that our incoming; administrations of the Commercial and Maritime 



Exchanges will ascertain whether our competitive Trimk line will not 
early establish suitable wharf and terminal facilities to afford opportu- 
nities for the establishment "for a full and fair competition" of another 
steamer line. With the needs of our city of a million of people, and 
for our " large import trade," (the last fiscal year, upwards of $11,- 
168 000 paid in customs revenue), we would, with our grain, be enabled 
to insure freights at once. As soon as the second line is fairly estab- 
lished let us look around for "opportunities for the full and fair compe- 
tition" of a third line to compete against the other two, and so on. 

What do the grain merchants of Philadelphia care for the " differ- 
entials," whether they are maintained or abolished — if we can establish 
plenty of steamer lines. Under such conditions, we could best afford 
to pay the Railroads the same rates of freight as to New York, as our 
competing rates of ocean freight would enable us to sell to the same 
markets at the same prices, and the tendency would be at once indepen- 
dent of any "differentials" to advance our "cheap grain" to its relative 
value with New York market. 

4. Reorganization of our grain interests in the Commercial Ex- 
change^' organization so that the grain trade may obtain a unity of 
purpose and power to alone control every question strictly relative to the 
grain interests. 

I do not pretend in the hurried course of a brief reply to attempt 
any more than the general suggestion. 

In conclusion, I must state, that I have had no officious desire to 
interfere with regular official work, but have ventured to present views 
that appear to me necessary for promulgation and adoption, if we 
would control the " main element of success," and avoid the apparent 
necessity of " Committees on the decadence of the Grain Trade of 

The next public reports " in order " are from the Committee on the 
establishment of compe^tVfve freight steamer lines. "The Committee 
on encouragement of competitive Trunk lines," and " The Committee 
on the compe^ii!t?;e development of increasing elevator storage and siii})- 

ping facilties." 

If these Committees are successful, the Philadelphia Grain Mer- 
chant has in my opinion all the required remedies. 


Philadelphia, 1st 3To., m, LS82. 

N.)s. 15 A 17