(The paper referred to is in the words and figures following, to wit:) Chicago public warehouses in control of the trust. [Including every public elevator except one, in the grip of five concerns.] [Being known as "hospitals," where the poorly inspected grain may be doctored into poorly inspected grain of a higher grade, then loaded into their public houses and "gold bricked" onto the public. These in control of the same five concerns which control the above public elevators.] Mr. CONROY. Would your argument against this pool here be construed as against the farmer's pool, to pool their own wheat and keep it in their own warehouses? Mr. GREELEY. That is a distinction as to what this pool would be as related to any other pool. Our simple contention is that it did exist in restraint of trade, and that these parties were connected with it. Now, in relation to the methods of this monopoly and the character and nature of their business, I want to quote a statement of Mr. James A. Patten, a member of the firm of Bartlett, Frazier & Carrington, at one time and now a prominent member of the board of trade, who has received some notoriety recently in the papers on account of his payment of a $4,000 fine in connection with a cotton deal. Mr. Patten, for many years, was a part of this monopoly in the city of Chicago, but before he joined this trust, and at a time in the Chicago market when he was a commission merchant and a grain shipper and did not enjoy the privileges of being a public warehouse man, he made this statement, found at pages 299, 306-307, of the abstract of record to the Supreme Court in the Elevator Case. The following is Mr. Patten's testimony: I found difficulty in securing enough grain and found the elevator companies were going around amongst the tables bidding one-eighth to a quarter of a cent more than the prices bid in the car-lot market. He refers now to the same system of public warehouses to which I have referred. I also found they were willing to sell that grain to me at a quarter of a cent less than they were paying for it. In the course of time I found I couldn't buy anything in the car-lot market and that I had to buy all my grain from the elevators. Then, again, in the course of time I found that I couldn't buy anything from the elevator companies only when they pleased to sell. I found that they were offering grain in the East to my own customers at prices that they asked me. There was no money in it for me to buy grain and sell it at the same price. It grew worse from 1890 down to the time I quit the business. There is no car-lot trade left now. Bear in mind, gentlemen, the fact that he is speaking as an independent shipper. I said something about competition of elevators in the eastern markets. I was affected by competition to a certain extent. The New England trade makes a specialty of yellow corn. There are grades in our markets of 2 and 3 yellow. Those elevator companies also had private elevators which were not under the control of the State inspection. They would buy both grades to go to store and sell the No. 2 yellow in New England. I noticed from the inspection sheets that these companies very rarely inspected any 3 yellow corn out of store. It always came out No. 2. That is through their practices of mixing. And I noticed I had that competition to meet at the other end, from the elevator companies. "The other end" means when he shipped east to his customers. In other words, they adulterated their goods, to be plain. They didn't give the trade East what they claimed to, although they gave them the inspection certificate of out-inspection. Mr. Patten evidently thinks it better to get in the trust than stay out of it and pay tribute to it; and when he found that his interest could not be properly conserved as an independent grain merchant he went into the elevator business and has advised us, in his deliberations and discussions of this matter in public meetings held in the city of Chicago, that if we wanted to meet the competition of the elevator trust we ought to own an elevator and get in the same line of business. That is the statement of Mr. Patten. We want to give you the statement of Mr. John J. Stream, connected with and manager of and I presume a partner of J. C. Shaffer & Co., who are also at the present time and were at the time I have referred to in this connection, in 1908, a part of that elevator trust or combine, according to this trust agreement which was unearthed, given before the Interstate Commerce Commission. The following is the testimony of Mr. Stream: Mr. MARBLE (attorney for the commission, examining Mr. Stream). Explain what you mean by "forced" into the public elevators. Mr. STREAM. We generally buy grain on the basis of futures. That backs up the contention that I have made right along, that cash grain is based upon the course of these transactions, which we declare are nothing more nor less than illegitimate trades, and not backed up by real grain. The elevator monopoly itself does take the position: We generally buy grain on basis of futures. The price of the future is established on the floor, and we base the price of the cash on the future. That is the way the trust does business. They pay for cash business grain a price to the farmers of this country based upon the futures, which, in their monopolies, they make upon the floor of the exchange. So when we send out our bids to the country any acceptance we get we sell for future delivery. When the grain comes in if it grades we sell it out and buy back the future." If it grades means contract grades or better grade. If it does not grade we put it into the cleaning house, and if we can ship it to better advantage we ship it without putting it into the public house. If we can not If it is not good enough to ship—that is, not a commercial demand for it that permits them to realize a profit we make it into contract grade and sell to a member of the board to go into a public house, immediately buying back our future. That is the sworn statement by one of this elevator monopoly present here at this session at this moment, Mr. John J. Stream, as backing up the contention which I make that this grain is taken from the producers of the country, so mixed and hoarded and so dominated with a system of future trade that the markets of the world are established, not upon the basis of cash grain, but upon the basis of the future as outlined by Mr. Stream himself. Now, then, as further evidence of the methods pursued by these men in the mixing of grain, I want to present to this body a report of a committee which found on August 4, 5, 7, 8, and 9 a report of the committee of the board of trade appointed to investigate a certain report in reference to a certain public warehouseman in the city of Chicago who was accused of this practice of indiscriminate doctoring, mixing, hoarding, and selling futures, and that committee saw fit to bring back to the board of directors of the Chicago Board of Trade a report, a portion of which I will read, and all of which, to show the methods of these men, I desire to enter into the record. But before offering it for the record I desire to read a part of that report: Mr. MANAHAN. What year was that? Mr. GREELEY. I do not believe I have here the exact date of that report, but I believe it was in 1908. Your committee finds that on August 4, 5, 7, 8, and 9 about 125 cars of wheat loaded from the Irondale elevator, purporting to be No. 2 red winter wheat, and intended to be unloaded in Rock Island elevator B, were "plugged". This is from the private elevator, Irondale, to the public elevator, Rock Island elevator B, coming out of the hospital and going, for the "benefit" of the public, into public storage were "plugged" with screenings of very low-grade wheat. The quantity of such screenings or low-grade wheat in each car varied from less than 50 bushels to 250 bushels, according to the capacity of the car; that the screenings were loaded on the bottoms of the cars and loaded with so large a quantity of good wheat that about 100 cars were passed as No. 2 red by the State grain inspection and the board of trade grain samplers before this method of "plugged" was discovered. Another illustration of the very efficient State inspection department and board of trade regulation of Illinois: That of the cars so "plugged" about 60 were received and stored in Rock Island elevator B without protest from the superintendent thereof, and a like number (about 60) were returned to the Irondale elevator and taken back into that house, and from the bottom of the 60 cars so taken back into the Irondale elevator there was recovered about 10,000 bushels of "screenings." The evidence appears conclusive to your committee that the cars unloaded in the Rock Island elevator B contained an aggregate of at least 10,000 bushels of "screenings" or low-grade wheat. Neither of these employees of the Irondale elevator had control of the loading of grain other than to allow it to drop into a car when so notified from the loading floor, and to drop only such grain from such scales as these instructions name. Each "plugged" car showed two drafts, one being the screenings or poor wheat in the bottom, showing about 10 per cent of the load, the other 9 per cent of the load being wheat supposed to pass the inspection department as No. 2 red. Now, then, that occurred under the direction of the management of Joseph Rosenbaum, a man whose name appears as one of this elevator combination, and controller of a public warehouse, or several of them, perhaps at least one, at that time. Mr. MANAHAN. Was he a member of the board at that time? Mr. GREELEY. He was a member of the board of trade, and his elevator was licensed by the board of trade to be a regular house, where the public should have the privilege of receiving its grain on future contracts, and where the elevator men themselves delivered grain on future contracts. Mr. Stream stated that they mixed their grain in storage on a basis of the plan I have outlined. Mr. James Patten says that they adulterated their goods. They were caught in this pooling agreement, which became public. That has been known on the board of trade ever since the J. Rosenbaum Grain Co. was a party to the mixing of the grain, as referred to in the report which I have just read as an official report of the board of trade, and still, with all this authority, coming from the elevator men themselves, and the knowledge of the conditions existing on the board of trade, the board of trade itself, as an institution, has loaned its approval to this method of doing business every year, constantly, without interruption, and in that manner has become a party to the present methods of general debauch in the grain business of this country. They have done that in this way: That every year, on the 1st day of July, or thereabouts, they make "regular" which means that they have permitted a license to be issued whereby, in this licensing system, a privilege is granted to these public warehousemen that their elevators shall be used as public elevators on all contracts made for grain for future delivery on the floor of that exchange. The question arises if a monopoly exists in the public warehousing of grain as outlined by Judge Tuley and sustained by the supreme court, and if these men continue to operate as law violaters, as outlined by the supreme court of the State, and if the board of trade in the conduct of its business in the usual routine of its business, licenses, permits, aid, abets, and assists this monoply by the privileges extended by that exchange, is not the board of trade itself a party in interest in the creation and maintenance of this monopoly? Now, am I talking dreams to the people in this Congress Hall when these hundreds of thousands of farmers represented here come to you and ask you that these methods prevalent in the market shall be published, and that the strong arm of the Federal Government shall be invoked to enter these large market places and furnish for the shippers of this country protection for their products, as I have said, running into the billions of dollars a year-offer to these producers and shippers the privilege and opportunity of nothing more nor less than a fair, honest, open market for grain, where producer, shipper, consumer, miller, exporter, and every one may be offered the opportunity of entering that market and using the public warehouses where the rate of storage which I pay is the same rate of storage which is paid by my competitor, the man in charge of the elevator. It is impossible for me to pay the same rate of storage that he pays, because he pays storage to himself, while I have to pay my competitor storage for the privilege of doing business in a what?-a public elevator. Have we arrived at that point in the history of this country when the word "public" shall have attached to it everything that partains to private graft? I ask that all the testimony on page 5 of reference called "Bulletin No. 1" in regard to the mixing of grain by the J. Rosenbaum Grain Co. be entered into the record. (The paper referred to is in the words and figures following:) [The following illustrates how grain may be moved from a private mixing house or "hospital," mixed with inferior "stuff," and unloaded into their public elevators, and "buncoed" onto the public. The following is an exact copy of a portion of the report of a special committee appointed by the Chicago Board of Trade to investigate the alleged fraud perpetrated by the J. Rosenbaum "outfit." Read it carefully. The Irondale elevator is the "hospital.' The Rock Island elevator is the public house. Will millers and merchants have confidence in public officials whose warehouse receipts stand for such rot as is represented by from 50 to 250 bushels of screenings to the carload? Did the penitentiary ever yearn for rascals more than for such as would obtain money under such pretenses? Note what the board of trade committee says in the closing paragraph: "The unsatisfactory quality of grain offered shippers, when drawing grain from public elevators, has been the subject of much unfavorable comment for years. Who suffered punishment for this rascality? Nobody.] Your committee finds that on August 4, 5, 7, 8, and 9, about 125 cars of wheat loaded from the Irondale elevator, purporting to be No. 2 red winter wheat and intended to be unloaded into Rock Island elevator B, were "plugged" with screenings or very low-grade wheat. The quantity of such screenings or low-grade wheat in each car varied from less than 50 bushels to 250 bushels according to the capacity of the car; that the screenings were loaded on the bottom of the cars and covered with so large a quantity of good wheat that about 100 cars were passed as No. 2 red by the State grain inspection and the board of trade grain samplers before this method of "plugging was discovered; that of the cars so "plugged" about 60 were received and stored in Rock Island elevator B without protest from the superintendent thereof, and a like number (about 60) were returned to the Irondale elevator and taken back into that house, and from the bottom of the 60 cars so taken back into the Irondale elevator, there was recovered about 10,000 bushels of "screenings." The evidence appears conclusive to your committee that the cars unloaded into Rock Island elevator B contained an aggregate of at least 10,000 bushels of "screenings," or low-grade wheat. Neither of these employees of the Irondale elevator had control of the loading of grain other than to allow it to drop into a car when so notified from the loading floor, and to drop only such grain from such scales as these instructions named. Each 'plugged" car showed two drafts, one being the screening or poor wheat in the bottom, showing about 10 per cent of the load, the other 90 per cent of the load being wheat supposed to pass the inspection department as No. 2 red. 66 The board of trade weighman was requested to make his reports show in a similar manner—that is, one draft instead of two-but upon consulting his superior officer he was ordered to keep a memorandum in his book showing exactly the number of drafts, etc., so that this committee was able, by reference to the records of the board of trade weighing department, to ascertain to a pound just how much of this so-called dope was loaded out during the five days mentioned. While both Forsaith and Bevan knew that these cars were being "plugged," they were simply following instructions of their superior officers, and as Supt. Sayre employed them, and they knew that he was cognizant of the "plugging," and both testified that it was a custom at the house not only to "plug" cars, but cargoes, they were in no wise to blame, in the opinion of the committee, for this method of loading. Both Forsaith and Bevan were discharged on the Saturday afternoon following the discovery of the "plugging," and on the afternoon of August 18, when the first com |