The San Francisco call., 1898-01-12

consumers were the intending pur- chasers. So jealous were the friends or this act to insure its benefits to the small actual consumers that the num- Der any one person might purchase an nually was limited to 5000 sacks in the original bill The Senate amended this provision so as to allow of maximum annual purchases of 5000 pieces.
 The law was designedly hedged in with restrictions but the board were not at a loss to find a loophole when they concluded to embark on the pc culair enterprise about to be described. It will be noted that in section l of the act it is made the duty Of the state prison authorities to confine the sale of iute goods to consumers direct, put no order shall be filled for any one ln- dividuaI or firm during any one year for more than 5000 grain bags, except on request of the Warden and the unanimous approval of the board.
 In section it is provided that "on and after the 18th day of June each year. by and with the consent of majority of the board" the Warden may fill orders for larger quantities to actual consumers"
 While these two provisions would
  ciIabIe in intent Obviously the power and duty expressed in the first section is this: When an applicant appears before the Warden prior to June 15 the Warden must satisfy himself that the person in question is an actual con- sumer, approximately in the quantity of sacks applied for, because it is on the Warden's recommendation that the board are to act. Nor Is the approval of one or a majority of the board suf- ficient. They must unanimously" consent, on the assurance that the goods are for consumption direct, be- fore the order of the applicant can be filled. This clause affords the board the chance of accommodating a wheat raiser who needs more than 5000 sacks It was not intended as a cover for con- tracts for sacks in great numbers, to be delivered at the option of the appli- cant.
 Greater latitude is given the board under the clause in section 2, since, ac- cording to this, they may dispose of more than 5000 sacks to any single ap- plicant by consent of a majority" of the members. But even here they are required to take every precaution that no person other than an actual con- sumer should be favored.
 On July 1, 1893, the beginning of the first fiscal term in which the Ostrom act operated, the San Quentin ware house contained a surplus of grain sacks in the number of 1 1,259, 300. This surplusage increased until it registered on February 3. 1897, 3,220, ,o0O sacks. The board about that time, under a preteXt seemingly sound from a busi- ness point of view. adopted a resolu- tion nullifying the law. They resolved to sell sacks in any number within the limit of 1000, 900, for future delivery. as wheat and other commodities are sold on change for speculation in margins. One of the very first individual sales under this decision was of 100000 sacks. Evi- dently a coterie of friends mostly wealthy middlemen and farmers with large estates, were quietly apprised of the illegal departure on the part of the board, for in the brief period of fifteen days to- tai of 2,O90,OOO sacks had been con- tracted for delivery, any number of the applications, which came with a rush from certain quarters, ranging from 10000 to 100000 sacks.
 A second resolution was made to cloak the sale of the second million and meanwhile, on February 5, the board, acting by virtue of the power vested in them had fixed the price at s4 75 per hundred sacks February 20th, when 2,000, 900 sacks had been contracted for, they advanced the price to s5 per hun dred, and at this rate under resolutions disposed of 100000 sacks. at this point +o n oly Two days later they resolved, on the same terms, to sell an additional 75O,- 900 sacks. Two weeks afterward they advanced the price to s 40 per hundred. and placed the limit of applications ac- cording to law again, at 5000 in each case.
 It will be observed that the larger or ders were accepted at the lesser price fixed by them, and that they chalked up the value of the product to the early and favored applicants, in six weeks, on stock still in the State warehouse but bargained for delivery, from $4 75 per hundred sacks to s 40 per hundred Be- fore these sacks were called for the board had by private legislation, after the fashion that corners in shares and industrial products are manipulated fattened the value of the total pur- chase to the applicants by s1S000, and begged up the price to the thousands of small consumers who depend on.local storekeepers and dealers, from s4 D to $5 40-just 65 cents per hundred.
 One not accustomed to figuring margins might be puzzled to see how such could be the result. Here is the easy sleight- of-hand manner in which 1t is worked out: Two million grain sacks in the penitentiary warehouse on February were rated as worth s4 75 per hundred A comparatively few per- sons contracted to buy this number at the price given, but had no call for them until the period of their use in the fall had arrived.
 March 13 the board fixed the price at $5 40 per hundred, making the sacks -