St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1892-10-13
REFORM DEMANDED.
Continued From First Page.

us COec6ue, IOr til6 sake OF the dTSu-
ment, that this is the fact; that owing
to the frosted wheat in 1856 the eleva-
tors lost money. 1t is incredible that
this should be true, because the general
practice of the elevators is to so grade
the wheat purchased that the possibl-
ity of loss is too remote to enter into
the calculation. But, making this con-
ceSSiOn to the friends of the elevator
combine, we have this condition of
things: That prior to the termination
OF the fiscal year 1858. which, suppose,
will be commended to be in August. 1889,
the elevator companies represented by
Mr.. Pillsbury had made an average for
six years of little over 80 per cent
profit OH their elevators.
Thirfy-FIve Per Cent Profit.
The other companies had made dur
ing the same time from % per cent to 50
per cent on their investment. 1t would
be safe under the statements of the one
letter to average the profits of the ele-
vator combination of the Northwest for
the six years at 35 per cent per year
upon their Investment.
Let US look at this for one moment.
1t is claimed l.y the Minneapolis Jour
nal that Mr.. Pilsbury meant to say
when he answered before the invesri-
eating committee that he had only made
"a per cent. that such profit was calcu-
lated upon the valuation of the wheat
handled by the elevator companies. and
not upon the basis of the capital in
vested in the operation. Now, MIR.
Pillsbury is too good business man
to think for a moment that the
investigating committee was inQuir-
ing IN the direction indicated.
1t is usually considered in business cir
cleS That the profit of business is de-
termined by the ratio of what is left
after deducting the operating expenses
to the capital invested. If, for instance,
10 use broad illustration, a railroad
company was asked how much it was
making in the operation of its lines, if
the answer were truthful it would de-
termine the amount of profits by first
finding out how much capital was in
vested i'll its construction, rolling stock,
terminals, etc. :; it would then determine
what its operating expenses, including
wear and tear and cost OF repairs,
amounted to: it would then find out
what its gross earnings were, and, de-
Quoting the operating expenses from
the gross earnings, the remainder would
be the profits. The per cent of profit
Oh the capital invested could be readily
determined.
Will Not Avail.
But suppose the manager of the rail
road company should answer to the in
vestigatiug committee that the road had
only made one-half of per cent profit
for given year, and still it were deter
mined by investigation it had paid per
cent dividends on its stock. What
would be thought of that railroad
manager if he were to attempt to ex-
plain the discrepancy by saying: "By
q / n "a OF re
only represent one-halt of 1 per cent
on the value of the freight we have
received for transportation and hand
ling?" 1t would be rather difficult even
for the astute Mr.. Pillsbury under
similar circumstances to determine the
value of the passengers that travelled
over the road. Such evaSionS as this
will never avail.
Now, it has been determined by the
highest court in the nation that an ele-
vatOr company is quasi-public inStitu-
ton, subject to Legislative control in the
same manner as railroad corporation:
that they are entitled to receive reason
able compensation for the service they
render, in the same manner as a railroad
corporation is entitled to such reaSona-
bic compensation. There is no fair
minded person who will not concede
That these elevator companies are en-
titled to fair compensation for grading
and handling the grain that is brought
to them. When they receive more than
that, it ceases TO be just reward for
labor, and
Becomes an ExtOrtion
upon all who are obliged to deal with
them. and it is to these questions that
inquiry should be directed:
FirSt-Is there in existence a combine
or agreement between these elevator
companies whereby they control the
market and fix the price to their inter-
est and the detriment of the farmers?
And | may state this. that they have no
right, in law or III morals. to enter into
any such a combination whatever. The
market should be free and open 10 COM
petition, and it is not for them to deter
mine what is to the best interest of the
farmers. That is something that the
farmer should nave his say about when
he sells his wheat.
Second-Have these elevators been
receiving. by reason of such cOmbina-
ton. more than reasonable payment
for the services they are called upon to
perform?
Both of these questions. under the
concessions made by the friends of the
elevator interest, must be answered in
the affirmative. You need not go to
outside testimony. though there be
plenty of it, because the letters written
by PillSbury and others, in RESPONSE to
inquiries made by Stuart, show, first,
the existence of combination, and,
second, the receiving of an exorbitant
and unreasonable reward for services
rendered.
TO show the excessive charges that
must have been made IN order that the
l,,kk b
reason for moment. Taking the Great
Northern road as an example to test this
by. we find that that road. with an in
vestment of S79.000,U00, divided among
its stockholders 100000, and paid out
in the form of interest On its bonds
about $1.930,000; that is, the road after
paying its operating expenses had left
remaining to meet its interest and pay
in dividends to the stockholders less
than s3.U00.000.
A FEELING Comparison
If we figure Oh the ordinary business
basis, that interest upon its capital stock
is part of the expenses, we can exclude
this amount. for tine money paid as in
terest on bonds represents interest on
the capital invested in the business.
We will place the stock issued by the
Great Northern against that issued by
this elevator combination. 1t is stated
i'll the letter of Mr.. Pillsbury that the
Minneapolis IL Northern Elevator com
pany is capitalized at 1925. 900 and the
Northwestern Elevator company at
100000. In regard to the others the
letter gives no information. But taking
these two companies, we find that upon
an investment of $1,525. 900 they have,
for more than SIX years, divided among
their stockholders, i'll round numbers,
S535. 00u,or about go per cent of the divi-
| dend paid by the railroad corporation on
an investment of S20,000,G0O.
Now, the manner in which this result
is accomplished is decribed to a certain
extent in the Wolcott pamphlet and in
certain facts brought out in the Hurley
trial, wherein it was proved by the teS-
timony of Mr.. Ainsworth, sworn as
witness III open court, that while the
elevators referred to were public ware
houses and operating under state laws.
wheat had been mixed time after time
To Vol II