page_title: George Armour
section_title: Munn & Scott affair
hierarchical_section_title: George Armour / Munn & Scott affair
caption_attribution_description: 1866 view of a grain elevator on the Chicago River operated by Ira Munn and George L. Scott
context_page_description: George Armour was a Scottish American businessman and philanthropist known for his contributions to the global distribution process for commodities. He is credited with developing the grain elevator system, establishing grain trading standards as director and president of the Chicago Board of Trade, founding the Chicago, Burlington and Quincy Railroad, Commercial Club of Chicago, YMCA of Chicago, Merchants' Loan & Trust Company, the precursor to Continental Illinois, and the Chicago Academy of Fine Arts which later became the School of the Art Institute of Chicago and Art Institute of Chicago. He served as a director of several notable companies during his career.
  As founder of Armour, Dole & Co and other firms, he created the first extensive system of large mechanized grain elevators in Chicago and thus enabled the shipment of grains from the American Midwest to destinations all over the world. During his tenure, the CBT standardized the grading and selling of grains and established the first commodity futures markets. He was "popularly known as the father of the grain elevator system" or as a "rapacious, blood sucking insect."
context_section_description: The Munn & Scott grain-warehousing company was founded in 1844 in Spring Bay, Illinois, north of Peoria. By 1856, Ira Y. Munn and his partners owned a large Chicago grain elevator with a capacity of 200,000 bushels. George L. Scott joined the enterprise in 1858, and the name was changed name to Munn & Scott. By the end of the Civil War, the company owned four Chicago grain elevators with a total capacity of 2.3 million bushels, nearly a third of the total capacity of all of the city's large elevators.
  Munn served as president of the Chicago Board of Trade and as president of the city's Chamber of Commerce in 1868. Annual revenues reached about $4 million in 1867; by 1870, the company ranked as the city's leading grain warehouse.
  By 1868 Munn & Scott and four other firms – including Armour, Dole and Co – dominated the Chicago grain elevator landscape. They were interlocked in a business pool, each owning part interest in each of the others.
  Therefore, they could fix prices and carry out dirty tricks that included fraudulent grading, dishonest weighing, mixing grades, restricting competition, hiding storage information, and issuing false receipts.
  Joseph Medill, whose newspaper made warehouse regulation its cause, put it colorfully:
  The fifty million bushels of grain that pass into and out of the city of Chicago per annum, are controlled absolutely by a few warehouse men and the officers of railways. They form the grand ring, that wrings the sweat and blood out of the producers of Illinois. There is no provision in the fundamental law standing between the unrestricted avarice of monopoly and the common rights of the people; but the great, laborious, patient ox, the farmer, is bitten and bled, harassed and tortured, by these rapacious, blood sucking insects.
  The Munn & Scott firm was both a prime cause of complaints and a leader in the fight against effective control by the CBT. In the summer of 1872, the firm was exposed as having massively cheated clients using multiple methods. It was learned that Munn & Scott grain receipts totaling 300,000 bushels were not backed by grain. Had the Munn & Scott matter had been allowed to take its course, it would have created a panic which would have extended throughout the whole Northwest. Armour, a silent partner in the firm, could probably have entirely escaped, or evaded, any personal responsibility in the matter. Instead, Armour purchased the Munn interests for $10 and quietly set about purchasing grain to make its receipts good.
  When a reporter from The Tribune interviewed him on the subject, Armour declined to say anything in reference to it, but requested as a special favor that no noise be made about it in the paper. He had merely done his duty, he said, and it might interfere with the country's business if it were written up in the newspapers.
  
  By this time, the Munn & Scott firm had gone bankrupt in a grain speculation deal, and Ira Munn and George Scott both found that they were now strictly employees of Armour himself.
  In the same year, Munn & Scott was charged with violating new Illinois regulations that enabled the state to inspect and regulate the elevators. Munn and his company achieved their most lasting fame in 1876–77, when the US Supreme Court in Munn v. Illinois rejected Munn's argument that the state had no right to regulate privately owned enterprises such as grain elevators.
  Following the demise of Munn & Scott and the enactment of new laws and the addition to CBT regulations, the dislike of the "warehousemen" seemed to diminish. There continued to be fraudulent behaviors and attempts were made to corner markets but these appear to have been more the actions of rogue individuals and not due to underlying structural flaws in the warehousing system.
caption: Munn & Sccott Grain-Elevators, Chicago 1866
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