CHAPTER XIX
MARKETING
Without stopping to inquire the reasons, it may be recalled that there are two rather distinct forms of trade, wholesale and retail. The wholesale trade is conducted by three classes of persons: dealers or merchants, commission men, and brokers. The dealer is one who buys the goods outright and takes his own risk on making a favorable sale to the retailer. The commission man is one who receives the goods, sells them at such price as he may be able to obtain and remits to the seller the amount obtained less expenses and his commission. The broker is a man who effects a sale without coming in contact in any way with the materials sold. A cheese broker, for example, receives instruction from different factories to sell for them a certain quantity of cheese of a given kind and quality each week or month as the case may be. At the same time he receives from grocery stores which retail cheese orders for various amounts, kinds and quality of cheeses. With this information at hand, he directs the various factories intrusting their business to him to ship the kind, quantity, and quality of cheese required by his several customers. For such service he receives a brokerage, which is less than that charged by a commission man because he is not required to handle or store the material.
Since the different farm products are purchased by different classes of retailers, and since their handling and sale require different facilities and special knowledge, there have arisen in the great centers of trade different kinds of markets, each having its particular facilities for the handling, care and sale, and each conducted by commission men or brokers with a special knowledge of the trade. Furthermore, certain cities have become, on account of their favorable position—to mention but one reason—headquarters for certain products or groups of products. Thus Petersburg, Virginia, has the principal wholesale market for peanuts. Elgin, Illinois, has been noted for its butter market. St. Louis is the leading mart for mules.
In a general way, the following five more or less distinct and important classes of markets for farm products may be recognized: Grain, Live Stock, Produce, Cotton and Tobacco.
METHODS OF TRADE
The brokers or commission men doing business in any one of these markets usually form an association called a board of trade, chamber of commerce or similar title for the purpose of assisting each other in the pursuit of common ends. The result has been uniformity of methods and charges; but above all in importance, perhaps, has been the definition of classes and grades of the products placed on sale. The tendency is for the associations in the different cities to adopt uniform rules for the grading of products, so that No. 2 red winter wheat may mean the same thing in Toledo and New York; that the quotation on prime beef may refer to the same quality of cattle in Pittsburgh as it does in Chicago; and that No. 1 Timothy hay in Baltimore and St. Louis may be alike. While the tendency is towards uniformity, much yet remains to be accomplished. The shipper must be on his guard lest he suffer loss through the variations in the classification or variations in their interpretations on the different markets.
There has grown up around these markets some agency which stands as a disinterested party between seller and buyer impartially determining the weight and in some cases the quality of the object under negotiation. The State of Illinois employs agents who inspect all cars of grain consigned to the Chicago market. These inspectors determine the kind, grade and weight of the grain in each car. The car is then delivered under seal to the purchaser. If either seller or buyer is dissatisfied with the inspectors decision he may, by complying with certain regulations, have this decision reviewed by a higher authority. The decision of this higher authority is final and must be accepted by both parties. Brokers selling grain in carload lots ship the cars subject to the weight and grade as determined by the inspector at Chicago. Grain of a specific grade may thus be bought in Chicago or other great grain markets with almost perfect security as to weight and quality by persons living in any part of this or any other country. At Elgin the quality of butter is determined by a committee appointed by the Board of Trade from its own members. In the live stock markets, the stock yards company, in addition to furnishing yards, shelter, food and water, acts as agent between seller and buyer in determining the weight of the animals. The purchaser or his agent must determine for himself the quality of the animals he buys.
GRAIN MARKETS
The Chicago and St. Paul Boards of Trade and the New York Produce Exchange are the three great agencies for dealing in grain in the United States. Buffalo, Duluth, Baltimore and Philadelphia are also important markets. Adjuncts to these markets are the great terminal elevators capable of holding almost indefinitely enormous quantities of wheat and other grain. On the Pacific Coast all the wheat is handled in the bags, as is the custom in the other markets of the world. Canada and the United States alone have recognized the principle that wheat and other grains will run like water, which has been a prime factor in their competition with other nations.