The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1875-09-02
The Conduct of the Grain Trade.

The wheat that comes to this market is
mostly shipped to Europe, and so with
large proportion of the flour, butter,
cheese, and many other products. The
mode Of shipment is as follows: The
product isconsigncd from the interior to
commission merchant here, who sells it to
the exporter nominally for cash, but really
on credit of the few days which are nee
essary to ship the produce, obtain the bills
of lading and sell the bills Of exchange,
with these bills Of lading attached, to the
banks. All this should be accomplished
in three or four days, perhaps less, but
many~causes of delay occur, and hence the
usual term of credit on these cash sales
may be week or more. In ordinary cir
cumstances, and with houses in good
standing, there is scarcely an appreciate
risk in this business, and hence produce
agents or commission-merchants seldom
or never charge q guaranteeing commits
sion; yet every now and then heavy losses
do occur, and it has always been vcxcd
question whether those losses should fall
upon the owner Of the produce or the
commission merchant who sold it, accord
ing to the custom of the port, for cash, to
some exporting merchant in fair standing,
but who failed to pay the cash. Another
class of difficult questions arises out OF
such failure to pay on the part of
the shipper. The vessel or vessels by
which he shipped the produce, and
which granted bills of lading therefor, may
not have sailed, and the party who sold the
produce for cash may seize ton shipboard.
The vessel is bound to deliver the proper
ty to the legal holder of the bill of lading,
and the question arises whether it is the
holder of the vessel or the person who sold
it and who scizcs it that is to lose it,
1t may be said that all these difficulties
would be avoided by requiring payment
On delivery, as in Chicago; but then in
Chicago credit is given for two or three
hours, and during that time all the loss
may possibly occur, the same as in two or
three days. But if all transactions were
literally for cash in hand, only large capt.
talists could engage in the shipping trade,
and, being freed from competition, they
would only pay prices to suit themselves.
AS it is, a man of little capital, but of busi-
ness capacity and integrity, may be the
largest shipper in New York; and if all
goes we'll he may make fortune. But if
his shipments 60 to alosing market, and a
balance is accumulated against him in the
books of the house or houses in Europe to
which he ships, he begins to be cramped.
lie has to cover that balance by drawing
less for shipments in proportion to the cost
and, therefore, he is not able to pay each
purchase OF produce by the proceeds OF
the bills of exchange drawn against it.
By and by he runs whole cargo or a
weeks cargocs behind, and has to pay for
them out Of next weeks shipment. When
this is the case there is obvious danger in
selling to him, for the proceeds Of AS
grain, bought and shipped this week, have
to pay B for grain bought and shipped
last week, and the payment of A depends
on the shippers being able to buy and
ship cargoes next week. We have known
the exporter of long series of losing ship
ments to get two cargoes behind, so that
the proceeds of the produce he bought
went to pay, not the last shipment, but the
one before; and in this case he had to ship
more and more, with feverish celebrity, at
any price he could buy at, and by any
ships he could find, so as to keep paying
for previous purchases within ten days or
whatever was the limit tolerated by the
custom of the port. 1t is scarcely necessa-
ry to add that any shipper who gets SO far
behind rarely RECEIVERS. In the failure at
this time of large exporting house OF
! this city several of the above-described diff
fculties have been exemplified.-N. Y
Witness.