Report of the Committee on Marketing, Transportation and Grievances

John J. Dillon, Chairman

[Proceedings of the Seventy-Third annual meeting of the New York State Agricultural Society in cooperation with the State Department of Agriculture / Department of Agriculture Bulletin - May 1913]

JOHN J. DILLON During the past year the market situation has dragged along consistently with its old economic wastes, its hardships and losses to the producer, and with its extortionate tax on the consumer. There are continued complaints from shippers that railroads fail to furnish cars for perishable products in time for shipment, and in other cases products are unduly delayed in shipment, preventing delivery in prime condition. Express companies continue to lose shipments in transit, to damage them, and to charge expressage at both ends. Commission men and buyers have continued to solicit consignments and shipments under the encouragement of high quotations and sometimes of definite prices, but when the goods are received and disposed of they make such returns as their charity prompts or their avarice permits. Milk companies have failed owing producers up to $90,000 for milk deliveries, and after going through the stereotyped processes of receivership, bought up many of the old creameries and shipping stations and continued the business free from the burden of their indebtedness, while paying the producer only a small fraction of the original obligation.

The markets and hotels in villages and cities throughout the state testify to the enterprise and organization of California and Oregon fruit growers by the display of the products of these states on their markets and tables. Many of those arc located in agricultural sections where better and fresher flavored products of our New York orchards and gardens are decaying for want of a customer.

Shipments of farm products have continued to go from inland points hundreds of miles past local markets to city terminals and are re-shipped again over the same roads back to the local centres. During the shipping season last fall carloads of peaches in western New York rotted on the ground, or perished in transit because transportation companies either neglected to furnish the cars to load the fruit when ready for shipment, or delayed the car in transit until the fruit was damaged. Growers complain that fruits and vegetables have perished on their hands because they could not sell them in the New York markets for a price sufficient to pay for the packages and transportation. Yet in every case where definite information has been available, the city consumer has been obliged to pay at retail the highest price commanded for these products in seasons of scanty production.

Still we have made some progress. This committee has received during the year 555 complaints from shippers, and accounts have been collected for them to the amount of $10,902.51. This includes complaints for damaged and lost goods against railroad and express companies for excessive freights, and excessive and duplicate express charges. Two thousand three hundred and ninety dollars and eighty-two cents has been collected during the year on these latter accounts, which the shippers themselves were unable to get; and during the three years of the existence of this committee 1,494 complaints of this kind have been filed and $32,078.59 collected and forwarded to the shippers without reduction or expense to them. During November and December alone seven overcharge express claims were adjusted that required from seven months to two years to collect.

We now have some measure of parcel post and recent orders of the Interstate Commerce Commission are intended to lessen the excess charges and duplicate collections by express companies.

During the year the State Food Investigating Commission has been created by the legislature and members appointed by the Governor to investigate the causes of the high cost of living. A sub-committee consisting of Honorable William Church Osboru, our Commissioner of Agriculture and our associate Ezra A. Tuttle, has been investigating conditions of foods and markets in New York City. They have developed information and given official expression to many of the conditions and abuses of which we have so long complained without avail, and measures have been suggested and bills are being prepared in accordance with the suggestions, to correct the abuses and eliminate some of the wasteful, extravagant, and in some eases dishonest methods that have prevailed for so long in the New York markets. Attention has also been crystallized through the investigation of this committee on the want of a system to regulate the sale of food products through tricky commission houses and irresponsible speculators in food products. A hill has already been prepared by Senator Roosevelt to regulate this traffic in the hope of eliminating many of its abuses, and we have much reason to hope that this bill will soon become a law.

Under the auspices of this society, a conference of cooperative interests was held in New York City on April 19 and 20 last. The chairman of the Cooperative Committee will probably tell yon more in detail about this committee in his report. It is enough for the present to say that provision was made for a State Standing Committee on Cooperation and this committee has been organized with a membership of 180. They held a conference in New York on December 5, to consider how the new parcel post system may be developed to distribute farm products, and effecting trade between producers and consumers; more particularly to effect means for the organization of cooperative societies among producers and consumers. The Housewives' League (a large association of New York City consumers) promises to help in the development of the parcel post trade by furnishing the names and guaranteeing the credit of members, providing the producers' organization will cooperate by guaranteeing the grade, quality and measure of the goods. It was the sense of the members of that committee that the organization of cooperative shippers in local country units must go hand in hand with the organization of a central selling agency, with headquarters in the city, representing the country associations and controlled by them. In furtherance of this measure the chairman was directed to prepare a charter for the central organization and to assist in the development of a uniform system for the organization of the local units. These local units for shipping in cooperation are held to be important because it is only through association that we can hope to have shipments made in uniform packages, in proper grades, and in full weights and measures. The guarantee of these standards will be necessary in order that the shipper may profit by the proposed commission law and the proposed food commission bill and in whatever may develop in the enlargement of the parcel post system. These shipping units could also be utilized to develop the local trade of villages and cities throughout the state, and to avoid the wasteful and extravagant practice of shipping first to the City of New York and then doubling the rate and charges back to the local market. The individual producer is unable to supply these local markets because of the expense of small deliveries, and the local caterer or hotel man is unable to patronize the producer because of his absolute need of a steady and uniform supply, but where all producers in a neighborhood are shipping through a common warehouse, this trade could be supplied and developed to the profit of the producer and saving of the consumer in a steady supply of food material fresh from the farm.

The attorneys have had some delay in familiarizing themselves with the laws already existing and with the needs of cooperative legislation, so that we have not been able to present entirely satisfactory papers at this time, but they are under development and we hope to have them ready for early use. The conference of the State Standing Committee on Cooperation also recommended that the state be requested to assist in the organization of the cooperative shipping association either through the committee or through the Department of Agriculture, there being a precedent in other states and other countries for this assistance to cooperative work in its early development. We aisk our Legislative Committee to further the interest of this request.

We are making our shipping initiative none too soon. The State of Maine already has a fast developing system of cooperation. The development of the trade in California fruits and Oregon apples is a familiar subject. Local cooperative societies for the manufacture and sale of dairy products, for the gathering and shipping of eggs, for the packing and marketing of fruits, and for the sale and delivery of milk, are meeting with great success in Pennsylvania, Indiana, Wisconsin, Minnesota and other states. In New York City and its suburbs, local communities are organizing cooperative stores to supply their members with food supplies. Only last week the large restaurant and hotel keepers in New York City organized themselves into a cooperative association with a million dollars capital for the purpose of buying foods without paying tribute to middlemen, food speculators and others. All of these consumers are chafing under the constantly advancing costs of food products. They are anxious to buy from the producer at first hand but they must have a steady supply and uniform grades. They will demand full weights and measures. The individual shipper cannot hope to supply this trade. Direct selling by the producer and direct buying by these large consumers will be possible only through cooperation in packing, grading and shipping. This is an outlet now for farm food products of every kind and description that New York State producers ought to command at once, and may command if they prepare themselves to supply it. Someone is going to have the trade and those who have it first will have the advantage in future sales. I am personally acquainted with the president of the Hotelmen's Company and I shall be glad to do everything that I can to connect producers with these eonsumers, hut it will be impossible to do anything definite until we can give them assurance of a steady and uniform supply.

For many years we have recognized the necessity of an agency in New York City to represent the shippers. One man with a clerk would save shippers thousands of dollars annually. His work would be to keep shippers advised of the conditions of markets and the responsibility of produce houses, to encourage and arrange for direct shipments, look after shipments when delayed, or when there was a complaint of quality or condition, and to supervise the collection of delayed accounts. Some of these functions will be covered by official inspectors if the bills now in preparation become laws, but in case they fail, an agency of the kind is almost a necessity for distant shippers.

Since writing the above I have had a conference with the Commissioner of Agriculture and am very much pleased to find that he is entirely in harmony with the Cooperative Committee in this matter of organizing local units and shipping in this way, and he is not only willing but anxious to use the department in connection with this society in furthering that work.

Also since this was written a committee of small restaurant keepers in New York came to see me in reference to the matter, with a paper showing that they are organized for the same purpose, that of buying their food direct from the producers.

MR, WARD: I am very much interested in the report. What I should like to know is how can we make use of it. How can we form these cooperative organizations and get in touch with some one? How are we going to get practical results?

MB. DILLON : It is simply a matter of business and it is a development - I was going to say modern development - of agricultural business that is just beginning in this country and that has been a success in every place where it has been tried and where it has been carried on in a true cooperative spirit. We have had a great deal of cooperative work in this country hut much of the work under the name of cooperation has not been cooperative at all. Wherever we have had that kind of an organization it almost invariably failed. Cooperation is a word that is used very glibly by most of us and really understood by few of us. Cooperation means that every man associated in the industry shall share equitably in the control and in the profits of that business.

We must organize the producers in the country into local associations. If the producers will organize themselves as they have in some sections of the country, good and well; but I think it will have to be done systematically. We shall need men who understand what cooperation means to go out into the country and organize these different units. Make a law so that a company or a number of men associating themselves together for collaborative work will have to subscribe to certain rules and regulations, and do not let every fakir that comes along get in under the name of cooperation. If they use the name cooperation, compel them to come in under this law. When we have our local association it may need a shipping station, it may need a cold storage plant; in the development of the work it may require an evaporating plant. You may require a plant for taking care of different kinds of waste and excess matter, but that is something that will develop. Then we have to have our central agency in the city representing all of these cooperative units and being controlled by them. This agency will keep every unit advised as to the condition of the market, products and kind of products required, and this not only in the City of New York hut of Philadelphia, Pittsburg, Boston, etc. The central agency would simply look after the selling. This thing is being done over in Denmark as a business proposition. It cannot be done in any loose-jointed associations, but must he done in an association where every man is a part of that unit and has some function and some duty to that unit. He must live up to it. It will not do if some commission man comes along and offers you one per cent. more than the association, to throw the association down and go to him. You have to pledge yourself at the beginning to sell your produce through that organization. In that way you will he doing cooperative work and will succeed.

MR. WARD: IS Senator Roosevelt's bill broad enough to cover that?

MR. DILLON: Senator Roosevelt's bill is not intended for that purpose; it is intended to regulate the sale of goods through commission merchants. But a bill is in preparation that would provide for the organization of such companies. The intention is to prepare a law by which farmers may - not compel them - organize under the term cooperative the same as men may organize in business.

TILE PRESIDENT: Let me suggest, .Mr. Ward, that you are opening up a great topic and we have addresses coining along this afternoon and again tomorrow, and as this topic develops we shall be able to see our way out.

Wo were to receive this afternoon the report of the Committee on the Development of Agricultural Resources. I was very sorry to receive a telegram from William Cary Sanger, chairman of that committee, stating that by reason of illness he would not he able to be here this week. The rest of the committee, I believe, will prepare something to give to us tomorrow.

In the absence of that report we will proceed with our program and listen now to an address on "A Successful Local Cooperative Movement, by Honorable Seth Low, Bedford Hills, N. Y., Ex-president of Columbia University.

A SUCCESSFUL LOCAL COOPERATIVE MOVEMENT

SETH LOW It may be a surprise to some of you, who have known only of my work in the city, to learn that I have been invited to address you on a subject so important to farmers, as " cooperation." The fact is, however, that in the autumn of 1905, I bought a farm of about 200 acres, in the town of Bedford, Westchester County. Since then I have been conducting a general farm. When my present superintendent, Mr. G. Brill, a native of Duchess County, and a graduate from the four-year agricultural course at Cornell University, came to me five years ago, he said to me: " Mr. Low, it will take five years to place this farm upon its feet." When I closed my books, at the end of October, 1912, the farm had become entirely self-supporting, by which 1 mean that it had earned enough in cash to meet all charges, including the salary of the superintendent and of the bookkeeper, and to pay, on account of my taxes, insurance, and painting, at the rate of $300 a year. The farm also pays one-half of the maintenance cost of my electric light and power plant and of my water system. The indications are, that, at the end of the current farm year (which with me begins on November first), the farm will have begun to pay something on the interest account. I believe that it can be made to earn five per cent, over and above all charges of every kind, on a valuation of $80,000. I am not sure that we shall not learn how to make it pay even more. We have a dairy herd of sixty head of cattle, and about twenty-five hundred laving hens. We have a young apple orchard of sixteen acres, which is six years old, and a peach orchard of eleven acres, also six years old. When Mr. Brill took charge I had barely fifty acres of land in good tillable condition, and most of that was included in the two orchards. Now I have one hundred and fifty acres of tillable land, all in first rate condition, as (he result of draining a swamp of forty acres, and of cleaning the farm of stone. I have a stone-crusher, and have spent between $17,000 and $18,000 in breaking up old stone walls and boulders that were in my fields. But in our neighborhood crushed stone can be sold; and I have sold more than $10,000, in value of this crushed stone, and have on hand, crushed and partially crushed, about $4,000 worth. When this work is entirely completed, I think I shall have cleaned up my farm, so far as 6tone is concerned, at a net cost of $30 an acre, including in this sum the work of my own teams, charged at $.[unreadable] a day.

I give you these details, because I want you to appreciate that my knowledge of the farmer's problem is not based upon farming conducted as an amusement, without regard to cost; but upon farming conducted on a business basis. I have had the advantage of whatever working capital was necessary, and what I have done could not be done without capital; but my interest has been to demonstrate,' if possible, that capital can be advantageously applied here in the East to the cultivation of the land, if the land is cultivated by modern methods and with good business judgment.

When I first began to live at Broad Brook Farm, which is the name my farm bears, I was unable to buy even a quart of milk, and until I could purchase a cow I had to import all the milk and cream used in my household. I now have a dairy herd of sixty-two cows, and sell practically all of my dairy product in the neighborhood, even during the winter. People now say that I have an exceptionally good market.. The market was there before I was; but nobody took advantage of it. It has grown, of course, with the passing years. The town of Bedford is forty miles from New York and lies outside of the strictly suburban region. It has, however, a considerable population of city people who have bought land there, and every year the tendency on the part of these people to spend the whole year in the country becomes more and more marked. This fact will enable you to realize that northern Westchester, in which my farm lies, is not a typical agricultural country. It is, indeed, in a transitional stage. Roughly speaking, about one-half of the land has been sold to city people, like myself, except that most of these city purchasers have bought simply to obtain a country home, and are not interested in farming. The other half of the land still remains in the ownership of the farmers who used to till it; but because the country is no longer entirely given up to farming, these farmers have lost the market facilities which they at one time enjoyed. As a consequence, Westchester County has practically ceased to figure as a part of the productive area of the State of .New York.

In 1880 there were 3,000 farms in Westchester County. At that time these farms not only produced a considerable part of the food used by the families occupying them, but they also produced enough cereals and other crops to be seriously taken into account in estimating the agricultural production of the state. The population in 1880 was 145,000. According to the census of 1910, thirty years later, the number of farms had shrunk from 3,000 to 2,000. The population had substantially doubled, having grown to 283,000. In the same period, the county had practically passed out of the productive area of the State of New York. I base this statement upon the fact that, in 1910, the agricultural department showed for Westchester County both very meagre production, and very incomplete returns. The county covers an area of 346 square miles. A good deal of the land is stony, and some of it is swampy; but after all, it is, as a whole, capable of producing good crops, if the land is intelligently handled. Of course, much of the increase in population in the last thirty years, is due to the growth of such cities as New Rochelle, Mount Vernon and Yonkers; and to the gradual filling own five shares or less, and one-third of whom own from five to one hundred shares. A few who are deeply interested in the project have taken more than one hundred shares. The present capital is $25,000. The company did a business the first year of $27,000 on a paid-in capital of $2,000. The second year it did a business of $44,000 on a paid-in capital of $3,500. The third year it did a business of .$00,000 on a paid-in capital of $8,500. It now has a capital of $25,000, and is doing business at the rate of $100,000 per annum. Most of its new capital has been used in buying an acre of land at Mount Kisco, with a railroad siding, and in the erection on this land of its own warehouse and office buildings, a garage, an apple evaporator and vinegar plant. The apple evaporator and the vinegar plant are related to a piece of constructive work which the association is trying to do for the region in which it operates. The figures as to its business, which I have given, relate entirely to what 1 may call its supply business. That is to say, to the supplies which it buys for its members, and sells to its members. This is the part of its business in which our experience should be useful to the ordinary cooperative association in a. purely agricultural district. No such association, of course, could command the capital which the lied ford Farmers' Cooperative Association can command. Therefore, precisely what we have done is of little value as an example. Hut some things we have learned, in doing this, which I think are vitally important to be borne in mind by any association of this kind. We have demonstrated, beyond peradventure, that such an association can buy much more cheaply than a farmer who cannot buy in carload lots. The association can buy some things more cheaply even than the farmer who is able to purchase in carload lots; but this is not true as to everything. It may be said, therefore, without fear of successful contradiction that, through well-managed cooperation, the small farmer can get his supplies at least as cheaply as the farmer with large capital. Is not this worth while?

Our association began business by cooperation in buying, because it is the easiest form in which to cooperate. We have not yet begun, in any systematic way. to cooperate in selling, because the agricultural production of our region is almost negligible. Each year, however, the association sells more produce raised by its members than the year before. The mere fact of being in business enables us to do this.

When our association began business as a supply association, we felt it to be necessary to demonstrate to our members that we could make a saving on purchases. We, therefore, bought our supplies as cheaply as we could, and re-sold them to our members at an advance of six per cent. In this way we made the demonstration complete. But, in this form, we soon discovered that we were conducting business in a manner that was disastrous to the local storekeepers, whose business we did not wish to injure. We, therefore, adopted the plan which is universal, I think, in European cooperation, of selling to our members at the market value, and of returning profits at the end of the year; first paying the current rate of interest upon the capital and making all further division upon the basis of the amount of business done with the association instead of upon the basis of stock ownership. This is true cooperation; and it is vital to the success of this system.

On the other hand, at Bedford, we have not taken one other step which I think is also vital to cooperation in an agricultural community. That is to say, we have not asked our members to buy all of their supplies through the association. This is the case everywhere in Europe. In a small community this would be essential to success; because otherwise the association cannot know how much business it is likely to do, or what expenses it can meet. In Wisconsin they do this, and I am told that they have largely overcome the conflict of interest between the cooperative society and the local store, by absorbing the local store into the cooperative society. Wherever this can be done, and proper management secured, it ought to make the pathway easy. In Bedford we have not wished to do this, because many of the cooperators are men of means from the city, and the work of the cooperative society is not vital enough to any of us to make us willing to injure the storekeepers with whom we are competing. For that reason, all of us buy more or less of our produce from the local dealers, precisely as we used to do before the association was formed. The business competition of the association, however, has resulted in making prices in the local stores more fixed, and in causing them to be much more enterprising than before; because now in each small village they have competition, which they did not have before. I wish to repeat, however, that in a purely agricultural community, I think it is essential for the success of a cooperative association that every member should give all of his business to the association. A cooperative association, pure and simple, must control all the business of its members in order to succeed; and no member should permit himself to be tempted from this policy. Many of such enterprises have split upon precisely this rock. It may justly be said that this is the very first condition of success in cooperating. It has taken three years to put the supply business of Bedford Farmers' Cooperative Association fairly upon its feet, because of the absence of this feature.

The other side of our work - what I call the constructive side - is an effort upon which we have entered to restore successful apple culture to Westchester County. It is a natural fruit region, as anyone can see who drives along the highways, but the old orchards have been neglected, and are rapidly dying where they are not already dead. Bedford Farmers' Cooperative Association, in view of this situation, has thought that it could render no better service to our neighborhood than to try to restore apple culture to Westchester County on terms that will enable it to compete with the best producing regions of the United States. To this end the association has employed an apple expert, whose advice is available for all its members. This last year, the association has taken care, in whole or in part, of twenty-one apple orchards in a region ten miles square; and it has erected the apple evaporator and vinegar plant of which I have spoken, in order to be able to make use of the poorer qualities of fruit, while the best quality is being slowly developed. It will doubtless take three years, and perhaps more, to put this part of our business on a self-sustaining basis. The present year has been a singularly hard one in which to begin, for the apple crop in the Harlem Valley was hardly more than a tenth of a crop, while very low prices have prevailed for apples by reason of the very large crop produced in the country as a whole. This sort of service to the neighborhood, however, appeals to our membership, since almost all of the city residents of Westchester County have apple trees; and every one of them will be glad, I think, to produce apples if they can be relieved of the business side of the care and production of them, and if it can be proved that they can get from their apple trees more than it costs to maintain them. Some things we have already proven through this year's experiment. We have shown, for example, that even this year we can sell really fancy apples at profitable prices.

One other thing my experience in farming in Westchester County has taught me. I put it in the words of one of my neighbors who has been growing apples for a number of years. He says that he has made shipments of apples, every now and then, to commission merchants in New York. Almost invariably the first shipment has done well, and the second shipment very poorly. He says that he never has been able to find out how the great City of New York knew that his second shipment was not a first shipment! Now, he says, he never makes more than one shipment to any commission merchant, and he begins with A and goes through the list to Z. I am far from wishing to imply that there are no honest commission merchants, but every farmer in the state knows that there are some dishonest commission merchants; and we all know that as things are now, we are practically, absolutely in the hands of the man to whom we consign. We are helpless if our shipment is reported out of condition or off in quality. This is a situation that ought not to continue. The state, in my judgment, should license all commission merchants who are authorized to deal in farm produce; and the terms of this license should be such as to protect both the commission merchant and the farmer from misunderstanding and from fraud. I have no doubt that the commission merchant, on his side, would be able to bear eloquent testimony to dishonest packing and other unworthy practices on the part of some farmers. All farmers are not dishonest any more than are all commission men. What is wanted is a system which will protect the honest commission man and the honest farmer from the dishonest commission man and the dishonest farmer. It is childish to say that things should be left as they are. What is wanted is a bill, such as has been already introduced into the legislature, to control the business involved in the sale of farm products, in such a way as to protect, through state inspectors, both the commission man and the farmer from dishonesty and fraud. If this bill can become a law, and if the bill for the formation of cooperative associations can become a law, a new day will dawn for the industry of farming not only in Westchester County but throughout the State of New York.

I wish also to say a single word in favor of the formation of credit unions. Mr. Yoakum, in a recent article in the "World's Work," pointed out that it costs the farmers of the United States hundreds of millions of dollars more to borrow the money which they need for the purchase and operation of their farms, than it costs the farmers of Europe to do the same thing. This is because the business of extending credit to farmers, like all other parts of the farmer's business, has been left completely unorganized in this country. The margin of profit, heretofore, has been large enough to make us careless as to these things; but now, the day of necessity is upon us, and we shall be wise if we learn, from what has been done elsewhere, what can be done here.

Mr. Chairman, I say again, as I close, that I am earnestly in favor of the bills now pending in the legislature, in favor of regulating the business of commission merchants in farm produce; of facilitating farmers' unions, to make credit more available to farmers; and for forming cooperative societies, so that the farmer of New York State may have the opportunity, in his own way, and with his own wit, to develop here the system which, wherever it has been tried, has been found advantageous to the farmers of the land. In speaking in behalf of these bills I do not wish to commit myself as to every detail; except to say that, so far as I have examined them, they seem to me to be, in the main, well adapted for their purpose.

THE PRESIDENT: I know that I voice the feeling of all when 1 say that we have appreciated very much this clear, concise presentation and clearing up in a way of a topic that has been running through all our minds, and I desire to thank Mr. Low personally, as I know the society does, for helping us in this program.