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THE ECONOMIC RESULTS OF THE SPECIALIST 
 PRODUCTION AND MARKETING OF WHEAT 
 
 ^M 
 
 m 
 
 JAMES MAYOR 
 
 REPRINTED FROM POLITICAL SCIENCE QUARTERLY 
 Vol. XXVI, No. 4 
 
 NEW YORK 
 
 PUBLISHED BY GINN & COMPANY 
 
 1911 
 
THE ECONOMIC RESULTS OF THE SPECIALIST 
 PRODUCTION AND MARKETING OF WHEAT 
 
 UY 
 
 JAMES MAYOR 
 
 REPRINTED FROM POLITICAL SCIENCE QUAi ERl.Y 
 Vol.. XXVI, No. 4 
 
 NEW YORK 
 
 PUBLISHED BY GINN & COMPANY 
 
 1911 
 
THK ECONOMIC RKSULTS OF THE SPECIALIST 
 PRODUCTION AND MARKETING OF WHEAT 
 
 THE increase of |H>pulatiun in western Europe, especially 
 in Great Britain and Germany , during the past tifty 
 years and the contemporaneous advance in the general 
 standard of comfort have led to an increased consumption of 
 wheat, absolutely and per capita. The increased consumption 
 of wheat lias promoted, and it has been promoted by, the en- 
 largement of the area devoted to wheat production. The list 
 of countries exporting' wheat to western F^iirope has now be- 
 come a long one mi tlie < »(eci A wheat importation into 
 E!u rope has been > inciean^ ilu a' igtion of agricultural cap- 
 ital to wheat production in these ntries and to check it in 
 Europe. Although the yield p' r .u -e of wheat in England and 
 in Germany is vcrv* much greater ''=? the yic Ui m other coun- 
 
 v^liert, which do not 
 general kept the price 
 teased demand for it, 
 in western Euroj-e un- 
 to be making either 
 Km >;h\ which would 
 ' c< ,. )rt. c . alter- 
 vhrai, «hitl. would 
 ■i«iu<iiri,t! read- 
 
 tries, the growth of 'vhcat upon 
 need or do not receive enrichmcn 
 of wheat down, in spite of the va.s 
 and has thus rendered wluat farn 
 profitable. Two factors, liowt vt i - 
 for a check in the increase of demai t. 
 mean a change of diet or a dimin' tic 
 natively, for further advances in the prici 
 probably be accompanied by commerria 
 justments and crises. 
 
 ( 1 ) The first of these factors is the incre., n in 
 
 the wheat-producing areas themselves. Thisi ■ < ial 
 
 importanre in the United States and in Canad . > ht ..p- 
 
 I'lation has been increasing rapidly; and it n^ I, • »or- 
 
 tance in Russia, if in that country there car ;( a hi^rhrr 
 
 standard of comfort among the peasantry ihe 4<ivernin« i. 
 changed its railwa\' policy with regard to wh_ ,i ? mrts. 
 
 (2) The second factor is the limitation imj^Hj-ncd uj..m proiiuc- 
 tion (a) by the limitation of the area, no mater how larf^e it may 
 be assumed to be, which can be devoted to wheat cultivation ; 
 
 659 
 
5r^ POLITICAL SCIkSii: QVAHThHLY [Vol. XXVI 
 
 (/!>) by the progressive exhaustion of the areas devoted to the 
 cultivation of wheat; and (r) by the possible diversion of agri- 
 cultural capital and labor from the pro.luctio: of wheat to the 
 })roduction of other cr^ !>». 
 
 Both ot these factors make for a situation in which, the 
 precise period being matter of speculation, the Wc^t-European 
 farmer may once more find wheat a profitable crop, although 
 the profit t.. be derived from this as compared with other 
 crops would determine to what extent it might be advantageous 
 
 to cultivate it. 
 
 As a countervailing factor it is necessary- to take into account 
 a probable, and possibly considerable, increase in the prou. 
 tivity ot the wheat areas. As the price of wheal advances, 
 there will be an increasing tendency to divert to wheat culti- 
 vation lands which are now used for other purposes and to en- 
 rich lands now uninttnsively cultivated. 
 
 Meanwhile the enormous European demand tor wL.al and 
 the relatively high price which at present is secured for it. have 
 resulted in the specialist growth of wheat, the chief incidents 
 of which it is the purpose of this paper to describe. 
 
 I 
 
 The development of wheat production to meet the almost 
 continuous increase of demand has involved the application of 
 a great mass of agricultural, industrial and commercial capital 
 to the production, storage, tra.isportation and distribution of 
 whe:^^ So vast is this mass of capital that it is almost impos- 
 sible to form even an approximate estimate of its amount. 
 The utmost that can be done is to analyze it into its various 
 
 elements. 
 
 ( I ) ^ ' hough the whole capital invested in railway construc- 
 tion and equipment within the areas in which wheat is the pre- 
 dominant crop cannot be charged (so to say) against wheat, 
 yet there can be no doubt that a very large part of it must be 
 so charged. Main lines and branches have been and are being 
 constructed in the United States and .r. Canada, primarily with 
 the view of bringing out the wheat crop. Thus at least a large 
 part of railway construction and equipment, not mere ly within 
 
y... 
 
 PXOnt 1/ IO\ .l\/> MAtKtTINti "I- n III- it 
 
 &n 
 
 \u /hcat-prodiicing area but bctwern that area and th sea- 
 board, must be reijarded as having been broii^»IU into existence 
 for the sake of the cx[)ortation of wlieat. 
 
 (2) Similarly at least a portion of the costs of canalization, 
 dock accommodation ant! shippinj;. with the eontinj^rnt costs of 
 lighting, buoying ami improving the navigation of inland waters 
 and estuaries, must be charged au'ainst the movement of \vhe.it 
 to the seaboard ; and a portion of the co.sts of ocean navigation 
 must be similarly debited to wheat exportation. 
 
 (3) The provision of elevators, grain warehouses </< at local 
 stations within the whe.it area and at shipping and receiving 
 ports must be simih. .y charged against the wheat trade. 
 
 These three large items may be regarded as representing the 
 mass of industrial capital devoted to the collection, transporta- 
 tion and distribution of wheat; but thi- enumeration of the dif- 
 ferent forms of capital employed in th< total process is not yet 
 exhausted. 
 
 The primary form is of course the agricultural capital ex- 
 pended by the farmer in preparing the land, in .seeding and in 
 harvesting, as well as the capital invested in agric nral in- -•- 
 ments and in animals for the conduct of farming opemtions. 
 In an isolated region, where agriculture is carried on by primi- 
 tive methods under a system of natural economy, agricultural 
 capital slowly accu- 'ulated in seed and in animals i.-. the only 
 capital employed ; jut when production for sale is undertaken, 
 and particularly when specialist production has practically ex- 
 tinguished natural economy, the reinforcement of agricultural 
 capital by commercial capital comes in practice to be a necessity. 
 
 The amount of agricultural capital required by a whv^at 
 farmer in the Ca.iadian Northwest is very small. A farmer 
 may take i6o acres on homestead terms by means of a pre- 
 liminary payment of $io. He may arrange with another 
 farmer or with a ploughing contractor to plough his land for 
 him. The payment exacted for this service will depend upon 
 the acreage to be brought under cultivation. For $200, or 
 thereabouts, he can have 30 acres of new land broken and 
 sown.- When the harvest time comes, he may again contract 
 for harvesting and threshing, which will cost him about $120 
 
^^2 POUTJCA*. SClkNCE QUAHTERLY [Vol. XXVI 
 
 more. When Ihe crop is threshed, he may obtain payment for 
 it from the elevator in time to pay his contractor for the har- 
 vesting and threshing. He may thus manage to get his crop 
 in and out for an advance, on his own part, of little more than 
 $200. Or he may buy a plough, seed and harvesting imple- 
 ments on credit, devoting his own capital exclusively to the 
 maintenance of himself and his family while the crop is grow- 
 ing. In this case the entire agricultural capital, properly so 
 called, actually employed in field operations, will be supplied 
 by others, while all the labor will be supplied by himself. If, 
 as indicated above, the case of a new settler is taken, a house 
 will have to be built ; but the cost of a dwelling is not strictly 
 chargeable as agricultural capital, and in any case it is too 
 variable to be taken into account. The cost of a second year's 
 cultivation by a settler will be much less than that of the first 
 year; it may indeed be only one-half as much. 
 
 The great bulk of the agricultural capital employed in the 
 Canadian Northwest is in fact supplied by railway companies, 
 loan companies, banks, implement companies and general 
 dealers. It is only in this way that farmers having little or no 
 agricultural capital at the outset »^ave been able to establish 
 themselves. Moreover, the natural fertility of the unexhausted 
 soil is so great that a very small amount of capital is required 
 per acre. It has consequently been possible to bring a vast 
 area under cultivation by means of a relatively small amount of 
 agricultural capital. 
 
 If industrial and agricultural capital alone were employed in 
 the process described, the return of these capitals would be 
 relatively slow. The farmer, the elevator company, the railway 
 company and the steamship company would be compelled to 
 wait until the wheat reached not only the miller but the con- 
 sumer, were it not for the organization of commercial capital, 
 which forms the connecting link between the successive stages. 
 Commercial capital enables the farmer to obtain payment in 
 cash for his wheat as soon as it is harvested. Commercial 
 capital brings the wheat to the elevator and defrays the cost of 
 storage. It pays all transportation charges until the wheat or 
 flour is finally delivered to the distant consumer. In this way 
 
No. 4] 
 
 PRODUCrUKS AM) MAKKEIING Ol- WHEAT 
 
 663 
 
 commercial capital greatly increases the velocity of re^irn, not 
 alone of agricultural capital, but of the industrial c ^.lal invested 
 in the means of transportation. This increase in velocitj- of 
 return implies increased efficiency ; indeed it renders the round 
 of cooperative activities possible. Without it, specialist pro- 
 duction for sale at distant places, above all production for 
 export, could not be effected on a scale of any magnitude. 
 Not only does this application of commercial capital enable the 
 farmer to sell his wheat for cash, it also enables him, if he 
 wishes to do so, to borrow upon the security of his wheat and 
 to keep it for an advance in price. This anticipated advance 
 does not always occur; but in any case the farmer is not 
 obliged, through the absence of such faciliiies, to sell his wheat 
 at once for what it will fetch. Moreover, Jie extensive organi- 
 zation of credit in the western United States and in northwest- 
 ern Canada and the competition of the numerous banks and 
 financial companies enable the farmer to borrow at a rate of 
 interest which cannot, as a rule, be regarded as exploitative. 
 
 The mechanism by means of which agricullural capital is 
 raised by the farmer on the security of his land is provided by 
 loan companies established for the purpose. These companies 
 are so numerous that the business is competitive and the rates 
 of interest are relatively low. The land itself is conveyed to 
 the settler either on homestead terms or on credit on the instal- 
 ment plan, and his house is usually an inexpensive structure, so 
 that nearly the whole of his liquid personal capital may be 
 regarded as available as agricultural capital. Additional capital 
 may sometimes be obtained by the farmer, either through credit 
 extended by the agricultural implement makers or by means of 
 the discount of the farmer's notes by them or by a bank. 
 
 The elevator companies that purchase the grain from the 
 farmer and organize its transportation to the seaboard, and the 
 merchants who organize its exportation, while having a certain 
 amount of their own capital involved in their respective opera- 
 tions, draw upon the banks for most of their enormous require- 
 ments, thus interposing their credit while the capital is really 
 furnished by the banks. Every year large amounts are with- 
 drawn from their liquid funds by the banks in the United States 
 
664 
 
 I'UUTICAI SCIE\CE QVAtirEKLY 
 
 [Vol. XXVI 
 
 and in Canada and are devoted temporarily to the various opera- 
 tions which have been described and which are known collect- 
 ively as " the movement of crops." Until a few years ago, a 
 large amount of Canadian capital was employed in this way by 
 the banks, in financing crop movements in the United States. 
 At present, not only is a comparatively small amount of Cana- 
 dian capital used in this way outside of Canada, but bankers in 
 the United States lend large sums to elevator companies for the 
 movement of the crops in Canada. As the population of the 
 United States increases and the surplus of wheat for export 
 from that country diminishes, there will doubtless be further 
 competition of American with Canadian capital in the crop- 
 moving operations in the more northerly country. 
 
 Thus the development of the universal wheat market and the 
 internal commercialization of the financial and industrial opera- 
 tions which constitute crop movement have enormously in- 
 creased the efficiency of agricultural capital and have enabled 
 the farmer to conduct his business on a scale which, without 
 these agencies, would be impossible. This gigantic mechanism 
 has been built up gradually. Upon the smooth interaction of 
 its intricate parts depends the '* living " of the American and 
 Canadian farmer and of the European consumer alike. 
 
 It is true, in a sense, that under this system the farmer works 
 for the broker ; and the farmer is no doubt sometimes under the 
 impression that the whole of the difference between what the 
 consumer pays and what he himself receives is so much taken 
 out of his pocket by a ;j;roup of remorseless capitalists, whose 
 mere possession of money enables them to exploit the frugal 
 but necessitous riiltivator. While occasionally the state of the 
 market ma>' hi- such as to give at least an apparent advantage 
 to the commercial capitalist, whose representative for the 
 farmer is the elevator company to which he sells his wheat, this 
 is not always the case, and in general the competition is so great 
 that excessive commercial profits are very unusual. The Cana- 
 dian farmer, wlio enjoys very great political influence, has been 
 able, through the Grain Acts,' to protect himself against any 
 
 ' Ksperially 6? and 64 Victoria, rh. 30. <ec. ^%. 
 
No, 4J PROOUCnON ASD MAKKh.Tim: OF WHEAT 665 
 
 overt forms of exploitation by the yrain companies ; but here 
 as elsewhere the most effective check upon unfair charges is 
 of course to be found in competition. The collection, trans- 
 portation and distribution of wheat have come to be conducted 
 on so vast a scale, demanding the industry of so immense an 
 army of persons and employing so large a capital, that monop- 
 olization has in effect become impossible. The circumstance 
 that a great mass of capital is required at a certain time for 
 only temporary use renders the application of monopolistic 
 methods more difficult than in other branches of business. En- 
 grossing of wheat is indeed occasionally attempted upon a cer- 
 tain scale; and at moments when, owing to deficiency of crops 
 or other cause, there is a relatively sle.ider surplus of wheat, 
 ' and still more when there is a real shortage, the first persons 
 who apprehend the situation are not unlikely to benefit. The 
 prospect of certain though relatively small seasonal gains has, 
 however, undoubtedly been a more important influence in 
 drawing into the wheat trade an amount large enough to con- 
 duct it upon its present scale than the prospect of large adven- 
 titious gains. 
 
 It should be noted that both farmers and millers may, and 
 that very many of them do, speculate in their own or in other 
 wheat. The farmer who stores his surplus grain instead of sell- 
 ing it speculates in it. The farmer who sells all his grain with- 
 out retaining sufficient for seed speculates in it. The farmer 
 who sells his grain in the face of an advancing market and buys 
 grain for future delivery speculates in it. The miller who, after 
 he has bought grain sufficient for his flour-milling require- 
 ments, sells grain for future delivery in order to protect himself 
 against a falling price, so that should he lose upon flour he 
 could recoup himself upon wheat, also speculates in wheat. 
 
 The fact that wheat is at any moment convertible into cash, 
 its highly liquid character as a security, its great mobility and 
 the rapidity of its movement depend primarily upon the univer- 
 sality of its market and in second instance upon the efficiency 
 of the mechanism of its exchange. Speculation is probably 
 quite inseparable rom these conditions. If the speculative 
 element were wholly eliminated from the wheat market, some 
 
666 
 
 POLITICAL SCIENCE QUARTERLY 
 
 [Vol. XXVI 
 
 of the mobility which characterizes the system would inevitably 
 be sacrificed. 
 
 The two factors that determine the price o* wht it on the 
 supply side are the crop, quantity and quality jeing taken into 
 account, and the reserves from previous years. These together 
 make up the total visible supply when the harvest of a new 
 year is reaped. And, considering each year by itself, price;, are 
 relatively at their lowe.st point at the moment of harvesting, 
 unless some climatic cataclysm suddenly affects the crop ; and 
 prices are relatively highest in the spring, \vhen the demand for 
 grain for seed and for consumption appear as concurrent 
 phenomena. 
 
 Immediately after harvest, the alternative presented to the 
 farmer and the contingencies which he must consider in solving 
 his all-important problem may oe stated as follows : 
 
 ( 1 ) If he sells his wheat at once to the elevator, he obtains 
 immediate cash, a portion or all of which he needs to replace 
 his impaired or exhausted agricultural capital oi to repay ad- 
 vances of such capital." 
 
 (2) If he sells his wheat at once, he avoids the necessity of 
 storing it. If he has a large barn he may regard this as an 
 unimportant element; but, if he has a small barn or none at all, 
 the cost of storage has to be considered. If he needs cash, he 
 may store his grain and borrow upon it ; but in that case the 
 interest upon the loan must be taken into account in additioa 
 to the cost of storage. 
 
 (3) If he sells his whe^t at once, he will under normal cir- 
 cumstances have to accept a lower price than he will receive 
 later if he holds it and if the price pursues its custo-nary 
 fluctuations. 
 
 (4) If he holds his wheat, he takes the risk that the usual 
 advance of the price in spring may not occur. Since the price 
 is not. determined - xclusively by the supply of wheat in those 
 c<^ .itries in which the crop is reaped in precisely the same 
 
 ' The elevator companies usually strre wheat > thirty days free of charge, so that 
 the farmer has this period wherein to make up nis mind what to do. The farmer 
 whose operations are conducted on any conside;aMe scale, watches closely the move- 
 ments of wheat-prices, sor—'.imes having them telegraphed to him. 
 
 1 
 
 1 
 
 4 
 
No. 4] 
 
 PRODUCTION ANP MARKETING OF WHEAT 
 
 667 
 
 1 
 
 
 season of the year, and since the price is influenced by many 
 factors other than those that operate on the side of supply, his 
 calculations, however astute, may be upset, and he may secure 
 no higher price than he would have obtained by an immediate 
 sale 
 
 (5) The sp«.cial conditions of the grain trade in the Canadian 
 Nor;nwest involve further considerations. In order to procure 
 rapid delivery of wheat for export, so that in transporting the 
 crop full advanta' ° may be taken of the relatively cheap water 
 transit through the Great Lakes, the price of wheat is suddenly 
 lowered towards the end of the season of water transportation, 
 that is, in November. This drop in price is intended to offset 
 the cost of storing the wheat at the ports or at interior points 
 until the openin of the next season of navigation, or to make 
 up the difference between the cost of moving the wheat wholly 
 by rail and that of moving the wheat partly by water to the 
 ocean port. The farmer must therefore consider the facts that 
 in September he can get so much for his wheat, certa'nly; in 
 November so much less, probably; and in May probably so 
 much more, any profit realized in May being diminished by the 
 cost olding the grain throughout the vvinter. November 
 
 and \.-j sales are problematical as re^^rds return. Neverthe- 
 less. <-onsiderable quanvities of wheat in excess of those required 
 for seed are customarily held over the winter by the Canadian 
 farmers, either in the elevators or in their owr> barns. The 
 mills in Winnipeg and the local mills are of course purchasers 
 throughout the winter, unless they have fully stocked them- 
 selves before the winter sets in. 
 
 (6) A further co.isid'^ration that influences sales of wheat is 
 associated with th.o determination of quality. As a matter of 
 experience the farmer is seldom satisfied with the grading of his 
 wheat at the elevator. He customarily regards his grain as 
 being all of " number cne" quality. If it seems probable that 
 it will not be so graded, he may decide to use it for feeding 
 purposes for his animals, if he has any, rather than sell it for 
 what he regards as too low a price. 
 
 Having considered the nature ( f the mechanism, we may now 
 turn to the more important econom ^. results of its operation. 
 
668 
 
 UTICAl. SLlENih QIARTERLY [Vol.. XXVI 
 
 II 
 
 The chief economic results of the devc.opment of specialist 
 wheat production may be set forth as follows. 
 
 Railways have been built in advance of population into 
 regions known or supposed to be possible wheat-producing 
 areas. In such railway enterprises, even when population fol- 
 lows the railway and wheat production results, the traffic must 
 for a long time be a one-way traffic, and the freight upon wheat 
 must contribute at least a large percentage of the revenue of the 
 line. This question of one-way traffic during the wheat-export- 
 ing season is a very serious one for the railway companies. 
 Every year enormous numbers of cars must be concentrated in 
 the West to meet the demands of the wheat traffic, and ir.any 
 of these must be sent empty. The regulation of railway rates 
 and the sharpness with which discriminations are watched and 
 punished in the United States and in Canada render il difficult 
 for the railways to make concessions in order to secure traffic 
 by inducing traders to anticipate their requirements ; and the 
 variability of the seasons renders it difficult to estimate, within 
 a week or ten days, the date at which the cars will begin to be 
 
 required. 
 
 The reason why the grain trade is so strictly a seasonal trade 
 is that the most economical means of transport is partly by rail 
 and partly by water. The freezing-up of the lake ports early 
 in December and the closing of lake navigation places a limit 
 upon the duration of the season. After the lake ports are 
 closed, the grain can be carried to the seaboard only at an 
 additional expense. Thus the season is a short one. Beginning 
 in the first days of September, it practically ends, for the farmer, 
 early in Nov'ember ; because a month before the actual close 
 of navigation the elevator companies cease to buy for shipment 
 in order to allow time for transportation to the ports and loading. 
 The increased production of wheat in new areas induces the 
 provision of facilities other than those offered by the railways, 
 viz. elevators, docks, steamships etc. Industrial and commercial 
 capital is drawn into these enterprises also. The seasonal 
 character of the grain trade exercises an important influence 
 upon the movement of capital. There is, for example, at the 
 
Ni..4] PkODlCnO.S A.\D MAKKhllNC OF WHEAT 
 
 669 
 
 i 
 I 
 
 season of the movement of crops, a steady stream of commercial 
 capiUl in the form of cash and credits from New York, Mon- 
 treal and Toronto to the West, especially to Chicago and 
 Winnipeg. This stream of funds has its source in European 
 credits which begin to be created as soon as shipment of the 
 crop begins. Regularly, although not quite invariably, exchange 
 rises so high, in consequence of the creation of so great a 
 mass of " one-wa>' " credits, that gold is shipped from Europe 
 in the " autumnal drain." It goes without saying that New 
 York provides exchange for both the United States and Canada. 
 The reactions upon the money markets of both continents need 
 not be pursued in the present study. 
 
 The entrance of the new wheat into the universal market, un- 
 less it merely suffices to satisfy the increased demand due to the 
 increase of population and the rising standard of comfort, must, 
 other things being equal, contribute to the fall of price. This 
 fall of price must in succeeding years tend to drive out of the 
 market those producers who are unable to offer their wheat at 
 the market price without loss. The value of the wheat lands of 
 such producers must fall as wheat lands and they must be 
 abandoned or devoted to other uses.' 
 
 On the other hand, so lon^ as the demand increases in pro- 
 portion to or in excess of production, and the price is main- 
 tained or rises, the inducement to engage in specialist production 
 of wheat, even on land relatively less suited to such production, 
 is invincible. The farmer will usually cultivate the crop which 
 is most immediately profitable. The value of land so situated 
 that it can be used for the production of th-j profitable crop will 
 tend to advance uiore or less rapidly. It will tend to increase 
 sharply when transportatio;- facilities first bring it within reach 
 of the market, and it will tend to advance still further with the 
 
 ' Thus the opening up of the wheat areas in the United States caused a fall in the 
 value of agricultural land in England, and the opening up of '.le Northwest of Canada 
 caused a fall in the value of agricultural land in Ontarir. Even in Manitoba the 
 value of farm lands has been affected by the development of Alberta tnd Saskatch- 
 ewan There can lie no doubt that advance of the price of land in the United .Slates, 
 particularly in the Middle West, has been checked by the migration of Ameri-an 
 farmers to Canada. 
 
670 
 
 POLITICAL SCIENCE QUARTEIiLY [Vol. XXVI 
 
 development of contingent facilities until these are fully pro- 
 vided, after which it will tend to remain stationary. 
 
 The richer new lands, upon which wheat may be grown with 
 a relatively small amount of labor and of agricultural capital, 
 enjoy, so 'ong as these conditions continue, an advantage. This 
 advantage is further secured by the development of a financial 
 mechanism which increases the velocity of the return of such 
 aKriciltural capital as is employed and thereby increases its 
 economic efficiency. The establishment of this mechanism for 
 the marketing of wheat and the absence of any equally efficient 
 arrangements for the marketing of other agricultural products, 
 for which the demand is not so great or so universal, induces 
 specialist production of wheat. This specialist production may 
 be and often is carried so far that the wheat producer pro- 
 duces nothing else." 
 
 At the present time the specialist wheat farmer finds that by 
 cultivating his land to the fullest extent he may in many cases 
 obtain so high a return as entirely to recoup the cost of his land 
 by the sale of two or three crops. Although the land is ex- 
 hausted by this successive cropping, and its productive value 
 seriously diminished, the farmer finds himself in possession of 
 from 160 to 640 acres of land which have rost him almost 
 nothing, in a country in which the price of lai. J is rising rap- 
 idly. The successful practice of such " mining." as it has come 
 to be cal d, is one of the elements to be taken into serious ac- 
 count in estimates of the future. So long as it is possible for 
 the farmer to make a considerable sum of money in a few years 
 and then to sell the partially exhausted land at a good price, 
 recommendations of summer fallowing have little practical 
 effect. In spite of the obvious and proved advantages of this 
 system, summer fallowing, although it is increasing, is as yet ap- 
 
 ' In Russia, the wheat fanner sells his wheat and buys potaties and .liar f-od- 
 stuffs relatively inferior. Cf. L. E. Lyalschenko. Agrarian Evolution in ku.-. m 
 Russian: St. Petersburg. .908), vol. i, p. 401. In Saskatchewan th: wheat f......r 
 
 at Brandon sells his wheat and buys poultry and eggs brought from Ontario. I am 
 informed, however, that, owing to the high prices prevailing in Ontario for these 
 products due partly no doubt to the extension of the area of the market, the farmers 
 in the Northwest are turning their attention to the economy of producing them, at 
 least in quantities sufficient for their domestic requirements. 
 
N... 4] PRODI CriOS A.\n MARKETISa OF WHF.A T 67 I 
 
 plied in Canada to a comparatively small proportion of the total 
 area devoted to wheat production. Meanwhile, the new lands 
 are ceasing to be new. and the differential advantage which their 
 ..nexhausted fertility gave then» is diminishing. Unds which 
 formerly produced abundant crops without the exercise of any 
 considerable farming skill or the employment of any consider- 
 able farming capital are beginning to require both. The r61e 
 played by the natural resources of the land itself is becoming 
 less important and the rdle played by skill and capital more im- 
 portant. The effect of these changes upon the value of land, 
 as well as upon the earnings of the farmer as cultivator, in dis- 
 tinction from his earnings as landowner, must be studied seri- 
 ously in the immediate future. 
 
 In the preceding discussion the economic influence of climate 
 has not been taken into account. This matter, indeed, cannot 
 be considered apart from the question of skill and of capital. 
 At times, no doubt, climatic cataclysms may involve skilled and 
 unskilled, poor and wealthy farmers in co.nmon ruin; but the 
 normal variations of climate affect these classes very unequally. 
 The skilful farmer is not merely weatherwise ; he knows how to 
 adapt his system of cropping to the exigencies of the climate of 
 his locality. But after all i- said that may be said upon this 
 topic, there remains the patent fact that the regions 01 equable 
 climate are better suited to competitive farming than are those 
 regions that are subject to great and severe alterations of tem- 
 perature and of moisture. It is quite true that wheat and other 
 cereals may be grown in very high latitudes, but it is not true 
 that ir these latitudes wheat is so certain a crop as it is in more 
 southerly regions. If it is assumed that the demand for wheat 
 will constantly increase, the area devoted to wheat production 
 will tend to increase, up to the limits of physical availability and 
 possible colonization. These limits may shift from time to time, 
 but they are insuperable. Wheat will not grow everywhere and 
 men will not live everywhere. As the price of wheat rises, the 
 lands which have gone out of wheat cultivation owing to the fall 
 of price may return to it ; and thus it may reasonably be ex- 
 pected that, a. some point in the price scale, the lands of west- 
 ern Europe will return to the competitive market as wheat pro- 
 
67* 
 
 mUTICAI. MIENCE QUAHTEkl.y 
 
 .OL. XXVI 
 
 ducers and help to check the advance of price. This resump- 
 tion of wheat growing will occur first on the lands that are on 
 the margin of cultivation, whether by reason of fertility or be- 
 cause of nearness to markets. 
 
 Specialist farming of wheat involves, among other economic 
 incidents, the employment during harvest of a number of 
 laborers in excess of those needed during the remainder of 
 the year. It is clear that such temporary labor can be procured 
 only when there is a surplus of labor in the neighborhood or 
 when the wages offered by farmers are such as to draw laborers 
 from other employments or from a distance. If laborers are 
 to be drawn from a distant center of supply, the wages must 
 include the cost of transportation ; and since in this case the 
 labor is required for a short period only, and since as a rule 
 employment cannot be obtained in an agricultural district after 
 the harvest is ove"-, the wages must also include the cost of the 
 laborer's return to the place from -hich he came. Such condi- 
 tions have for many years produced an annual migration of 
 Italian field laborers from Lombardy and Piedmont to southern 
 France and of North-Irish laborers to the southern Scottish 
 counties. In Canada also, during recent years, regular har- 
 vesters' excursions at reduced fares have been organized by the 
 railways, bringing laborers even from the Maritime Provinces 
 to harvest th*; crop in the Northwest. Such occurrences 
 emphasize the obvious fact that the total crop of wheat that 
 can be harvested in any region is limited by the number of 
 laborers who reside in the region or who can be temporur" 
 drawn to it for the period of harvesting. The increase in ti 
 total yield mu.st therefore inevitably depend upon an increase 
 of population within the farming area, or upon a price so 
 high that the farmers can afford to pay very high wages for 
 assistance drawn from other areas. 
 
 A further and important effect of specialist wheat production 
 for export has been the growth of small towns and of a class of 
 small merchants. The census returns both of the United States 
 and of Canada show a progressive increase in the proportion of 
 urban to rural population. This is a tendency neither new nor 
 confined to wheat-producing regions ; but specialist wheat pro- 
 
 \ 
 
li- 
 the 
 pic 
 
 he 
 
 in hifs 
 nt of 
 oi.ndin 
 
 duclion certainly furthers it. Under a system of nat 
 
 omy, isolation on the farm or in the agricultural villii 
 
 rule ; under the system in which production of a sinj 
 
 is carried on for sale and in which everything cls< 
 
 farmer consumes is purchased by him, the rise oi 
 
 town, parasitically attached, as it were, to the afjricn 
 
 trict. is an economic necessity. Here the farmer wli 
 
 attention to general production gains in the establi?<' 
 
 local market. He gains also in variety of social su 
 
 and his children enjoy educational advantages \*' ich c-a, 
 
 without disproportionate cost be obtained in spar .-Iv ^eitl' i 
 
 districts. 
 
 The practical outcome of the foregoing con rati« 
 be stated as follows: The specialist wheat farm who 1 »- 
 
 vating new land must consider thai, in the hij;lt!v comi 
 market for which .c is producing, his rich soil gives hii. 
 time a certain advantage, but that this advantage is not pen*.^ 
 nent. and that he should insure himself against fluctuati** ^ 
 prices and variation of climatic conditions by setting a i>Of on 
 of his farming profits aside as a reserve fund. There is special 
 reason for so doing if his locality is one in which climatic varia- 
 tions are more or less frequent. The specialist wheat fanner 
 who cultivates in a high latitude or in a dry region must there- 
 fore provide for the continuance of his productive capacity by 
 the creation of a strong insurance fund out of the yield of favor- 
 able years. The increase of the local valuation of his land does 
 not constitute such a fund ; for this increase is uncertain of re- 
 alization, and it depends upon the non-occurrence of the very 
 co; -ngcncies against which it is necessary tor him to secure 
 himself. The form which this insurance should take may well 
 be subject to variation, but it is not impossible that the farmer 
 may find it to his advantage to give it an agricultural form by 
 introducing some modification of his specialist production. 
 
 Some sort of insurance against falling prices is no less neces- 
 sary than insurance against an unfavorable season. The special- 
 ist farmer is so entirely dependent upon the price of his pro- 
 duct in the universal market that whatever affects that price 
 
674 
 
 POLITICAL SCIENCE QUAKT EHtV [Vol. XXVI 
 
 aflccu him ; and yet he has no more control of the market than 
 of the weather. 
 
 Ill 
 
 Part of the price which the farmer has to pay for the huge 
 commercial mechanism 'vhich has brought the elevator to his im- 
 mediate reigh' rhood. and which brings the cash for his wheat 
 into his pocket the moment his crop is reaped, is a certain sac- 
 rifice of his independence. Formally, with his farm home- 
 steaded and paid for, or purchased upon fixed terms of pay- 
 ment, he is the proprietor of his land iti fee simple and is there- 
 fore in a sense independent, but he is nevertheless dependent 
 upon the very mechanism which serves him. The price of wheat 
 at Liverpool or at Cliicago is «>f more interest to him than an\- 
 thing else. The quantity of his crop and his yield per acre are 
 of less importance ; for in a year of abundant harvests and low 
 prices he may have a small return, and in a year of scarcity and 
 high prices he may have a large return. His fortunes th ^ de- 
 pend by no means exclusively either upon the natural resources 
 of his land or upon his own skill or industrj-, alth')ugh of course 
 they depend in some measure upon all of these. The only 
 method by which, within the limits of his business as a farmer, 
 he can diminish his dependence upon the external conditions 
 that affect his market, is to produce for more than one market, 
 that is, to have more crops than one. At all events, he can to 
 a large extent insure himself against a disastrous year by 
 producing all the supplies required for the maintenance of 
 his family that can be produced on a farm. In favorable 
 seasons it may appear to be an economical policy to sell every- 
 thing he produces and to buy everything he needs, but in the 
 long run he may find that this policy may be pushed too far, 
 and that in committing himself completely to the tender mercies 
 of the wheat market he has compromised his economic position 
 and has imperiled the continuance of h -. production. 
 
 In spite of mutual dependence, a struggle between industrial 
 and commercial capital on the one side and agricultural capital 
 on the other must always be going on in a more or less acute form 
 under the conditions of ,"»ecialist production. In the United 
 
No. 4) 
 
 PMODVCTION AND MARKhriSC OF WHEAT 
 
 675 
 
 States and in the Northwest of Canada this antagoniHrn has man- 
 ifested itself in the Grang '1 FopuHst movements and in hos- 
 tility to the railways an'* *' . elevator companies. The farmer 
 has had enough poli; ,'Ower to secure legislative aid, and in 
 Canada the Grain Acts "re passed, compelling the railway com- 
 panies to send to any railway siding for the use of a farmer a 
 car for loading grain. Much objection was expressed by the 
 railway companies to this legislation; and in certain years, 
 when cars were in demand, it has increased the difficulty of con- 
 veying the crop to the lake ports before the close of navigation. 
 The farmer looks upon the railway company and the elevator 
 company as his natural enemies, and there is undoubtedly fun- 
 damental cause for the striggle between them. This struggle 
 is determined in its intensity by the presence or absence of ob- 
 vious competition in transportation and in marketing ; but the 
 antagonism is rendered inevitable by the dependence of the 
 specialist producer upon the agencies that carry his produce to 
 market. He is inevitably dependent upon the series of middle- 
 men who stand and must stand between him and the European 
 consumer. The production of wheat for export, which forms 
 an increasing proportion of the total production, and the com- 
 mercialization of the entire process are at once the source of 
 the farmer's profit and the cause of an economic dependence 
 from which no legislation can fully free him. So long as the 
 production of wheat was only slightly in excess of the require- 
 ments of the local mills, and even during the periods when this 
 production was only -lightly in excess of the requirements of 
 Canada for domestic consumption, the competition of the local 
 mills and of the agencies of export was sufficient to secure the 
 farmer against exploitation by one or the other. This security, 
 however, did not necessarily involve greater profits to the 
 farmer ; on the contrary, his periods of large profits have un- 
 doubtedly been concurrent with the diminishing importance of 
 his local market and the increasing requirements of the export 
 
 market. 
 
 James Mayor. 
 
 Univbrsiiy or ToiONnc. 
 

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