CHAPTER IX

EFFECT OF EASE AND COST OF TRANSPORTATION ON PRODUCTION AND MARKETING The creation of economic utilities by the application of the mental and physical powers of man to the materials of nature is called production. Grass grew abundantly for thousands of years over the great plains of the Mississippi valley, but there was no production until it was utilized by the hand of man for economical purposes. Just so far as change came to that grass through the application of labor, physical or mental, or stored up in capital, there was production. Productive activities may be classified as those which have to do with: (1) a change in form, (2) a change in place, (3) a change in the potential time of use. Productive activities add to the materials as received other values, namely, form utilities, place utilities, and time utilities. The farmer through the processes of sowing, cultivating and harvesting, is instrumental in changing the elements of nature into grain, of adding form utility; it is transported over the roads and railways to elevators, thus is added place utility; it is there stored until needed thereby the third or time utility is attached. In the illustration just given wheat stored in the bin is considered the finished product. But a finished product of one productive activity may be the raw product of another. For instance, the wheat is taken from the bin and ground into flour, the flour transported to the place of storage, and held as a finished product until it is wanted by another productive activity in which the flour is the raw product. The baker takes the raw product, flour, molds and bakes it into bread, which is held by the merchant for sale. The wheat thus has passed through the three productive processes three different times. Other things may have passed through more before the final consumptive process occurs. Production is very commonly thought of as being only the first one of the three operations, but the changes brought about by the transporter and the merchant are productive of economic wealth through the application of human physical and mental efforts hence are as truly a part of production as is the first operation. The factors which enter into production are by some economists given as nature and labor, by others as land, labor, and capital. Under nature or land are included all natural elements, external to man, such as the forces of cohesion, gravitation, of moving air and water, and also the stored-up riches of nature. Under labor are placed all those things or utilities which have been added by the application of human endeavor, either mental or physical. Physical strength in and of itself is not sufficient, for the productive output increases with mental strength. The ox or the horse is capable of exerting greater physical force than is man, but without the guiding, directing force of man’s mind it would produce nothing. Moral qualifications are also placed under the general heading “labor” as they affect production. Temperance, dependability, prudence, frugality, etc., have in them productive elements of importance the same as the intellectual qualifications of quick perception, alertness, imagination reason and judgment. Capital has been frequently defined as stored-up labor. It is the finished product of some previous effort, but as wheat and flour may be considered as intermediate products between nature and bread, so capital may be looked upon as an intermediate product between nature and more labor necessary to produce anew. “Its own origin, its existence, its subsequent action are nothing but stages in the continuous working of the true elements, nature and labor.”[188] Capital--raw materials, tools, machines, buildings, equipment, means for transportation and selling, stored products--is absolutely essential to more production, hence may be considered as an independent factor, although it may have been the product of previous labor allied to natural powers. From what has been said it will be readily seen that transportation and marketing (selling) are a part of the process of production. Transportation can be divided into two classes: primary, transportation upon the public roads; and secondary, transportation on railroads, canals, steamboats and steamships. Marketing is likewise divided into two classes: wholesaling and retailing. The wholesaler buys goods in quantity from the manufacturer and sells them to the jobber who in turn sells them to the retailer. The jobber usually divides the larger purchased quantities into smaller or job lots in any quantity suitable to the retailer. The wholesaler and the jobber may be combined into one individual or firm. The jobber will, usually, not sell directly to the consumer; he sells only to retailers. The retailers frequently have a sort of “gentlemen’s” agreement with the jobber not to buy directly from the producer. This sort of complicated machinery often involves more expense than direct trading. After each of the transactions mentioned there is usually a change of place and a waiting in store. =Grain Exchanges.=--In the grain business there has been developed a great system of selling through commission merchants, that is, the selling agents take commissions on the sales for their remuneration. A limited number of the commission merchants of a particular city organize themselves into incorporated bodies for the purpose of providing themselves with houses and facilities for doing business and establishing rules for the transaction of the same. Such organizations with places of doing business are known as Grain Exchanges or Boards of Trade. The Board of Trade of Chicago, the most noted grain market in the world, was established in 1846. Mr. Vincent of the Omaha Grain Exchange explains the matter as follows:[189] Suppose that a group of twenty-five mule breeders in Missouri came to Omaha to sell several hundred mules, and buyers assemble from several states. The mule dealers find a vacant lot in a convenient locality and secure permission to use it temporarily. It is the mule market, or mule exchange. The buyers and sellers meet and dicker, each trying to secure the best bargain he can. Every purchase or sale is an individual transaction--between one seller and one buyer. The vacant lot or “mule exchange” has nothing to do in the transaction--it occupies no place in the trade. It is simply the location where the traders gather for their own convenience. If the traders hire a clerk to act for all in settling the trades and collecting the money, it is simply because the clerk has the knowledge of a technical nature not possessed by all traders and his employment is a convenience to all concerned. He represents the individual traders and not the mule market. Now translate mules into cars of grain and the “vacant lot” into a board of trade building erected for the convenience of traders engaged in a permanent business. The transactions held on the board of trade are the individual trades between the individual seller and buyers, just the same as in the mule market. The board of trade is simply the location where buyers come to meet sellers (or their agents the commission men.) Vincent’s theory that the board of trade is the “location where” is hardly inclusive enough, for only a favored few who have “purchased seats” or are stockholders of the incorporation are privileged to buy and sell on the board of trade, that is, are a part of an organization known as a board of trade. His own pamphlet states that he is a “Member of the Omaha Grain Exchange.” Vincent defines a commission merchant as “the agent of men (1) who do not have enough grain to sell so they can afford the time and expense to come with the grain so as personally to make the sale, and (2) who would be meeting strangers and who would not know which of the buyers might want the particular kind or grade he might have for sale.” He contends that it is not only an economy to the seller to employ the services of the commission merchant but that it is necessary to have the selling done by some one “who knows who the buyers are in the various lines--corn, oats, barley, and wheat of the different kinds and qualities,” and who knows “the inspection rules and sees that the grain is properly graded--in short” one who “does for his employer, or principal, all those things that he would do for himself if he were in the central market and acquainted with the buyers.” Vincent upholds the custom of dealing in futures, as it furnishes a sort of insurance to the legitimate dealer in grain. When the local dealer buys, say, 10,000 bushels of wheat which by ordinary methods of business may require from two to four weeks to get to the terminal marketing point, he at the same time sells on board of trade 10,000 bushels for future delivery, thus “hedging” the purchase. If wheat goes up he gains on the actual wheat in transit but loses on his hedge. If wheat goes down he loses on the 10,000 bushels in transit, but gains on his hedge; thus, either way, the one transaction balances the other so there is no gain, and no loss, except the cost of the hedge, and hence no speculation. Hedging is, in short, a sort of insurance that protects the dealer should the price of grain fall between the time he purchased it and the time of selling it at the terminal. The process of hedging when honestly carried on is a stabilizing operation and according to Vincent “effects the commercial transfers of grain from farmer to miller at a less expense than is involved in the marketing of any other product of human endeavor--at less expense than would be possible if grain merchants alone carried all the risk--the speculation.” =Coöperative Marketing.=--Coöperative marketing associations and the intermediate dealer, that is a man who buys directly from the producer and resells to other purchasers, are said to have two points of superiority over the commission merchant: (_a_) The care and solicitude of the owner replaces the zeal of the agent; (_b_) by combining the products of many they are able to handle large quantities and thus secure better shipping rates, and take advantage of other benefits of quantity business. The farmer or local dealer, or coöperative association, ships to the commission merchant only in carload lots. The freight charge, nowadays, no matter what the custom may have been in the past, is the same whether one or a dozen cars are shipped at a time. There may be some favoritism in the securing of cars when asked for by the large shipper. The inspection charges are fixed by law. The commission merchant’s fee is a percentage of the sale and thoroughly regulated by custom and the rules of the grain exchange. The commission merchant being acquainted with buyers can usually place all grain the day it is received, so the advantage, if any, of an intermediate dealer are more in name than in reality. With the idea of eliminating some of the cost of marketing coöperative associations have sprung up over the whole country. While there are many advantages of coöperation, such as by pooling interests, larger quantities can be handled in one bulk, thus getting any advantage that might come in freight rates. Also where large quantities are collected it is practically always possible to take care of buyers; or, the agency may know where to find buyers when an individual would not. The buyer for overseas exports wants to get his grain in as large lots as possible to reduce handling charges. The association usually has facilities to examine and separate the grain or other commodities into the several grades, and the buyer can rely on the grade being as stated by the seller. In the case of some perishable goods, such as fruit, the association advertises freely, spreading the cost over many raisers, and creating a desire on the part of consumers for the association’s named brand of fruit. “Sunkist” lemons and oranges and “Sun Maid” raisins are household words due to extensive advertising by their respective coöperative associations. Coöperative associations purchase from non-members and profits on these purchases go to the association and in due time are distributed to its members. The California Fruit Growers’ Exchange advertises itself as “A non-profit coöperative organization of 10,500 growers.” The object of all such associations is two-fold: (1) To decrease the cost and trouble of marketing, and (2) to increase the common desire for their products. Both of which will tend to increase the grower’s profits. The grain merchant, whether in business as a dealer for himself, or a coöperative concern must have an elevator, or place, where the grain may be collected and prepared for the larger market. Fruit dealers have houses for the collection and care of the fruit. Since these commodities are collected a little from one, a little from another, or for ripening, grading, or other purposes, they must be kept usually several days before the car is loaded. After it is loaded there is quite a little time before it reaches its destination. During this time there is money invested in these products, that is, capital is required. The local banker is called upon to help finance the purchases. The elevator company or fruit company has some capital, he depends upon borrowing for more. The banks when commodities are freely moving are frequently severely taxed to furnish the required money for the movement of crops. The banks at the terminal markets are also stressed for they are furnishing money to the buyers there, and the export commodities are paid for by money from abroad. So that many financial institutions are intimately interested in the crop movement capital. Whenever a local dealer consigns a car load of wheat to a responsible merchant he can deposit the bill of lading with his banker and draw upon the merchant for some 90 per cent of the value of the grain, providing the dealer has hedged so that there is no chance of loss. The banker will honor the dealer’s checks and hold the credit of the merchant as collateral. When grain or other food commodities have been stored the warehouse receipt is considered the best possible collateral for bank loans. Mr. Forgan, president of the National City Bank of Chicago, is quoted as saying:[190] “I have seen the time more than once when high-class stocks and bonds, and even government bonds, could not readily be sold, but I have never seen the time, nor do I ever expect to see it, when anything that has to be eaten could not be sold.” The warehouse receipts, therefore, above alluded to, constitute a collateral which is always available for the payment of debts. Furthermore, if the grain or provisions represented by the warehouse receipts are sold for future delivery, that fact adds a great element of strength to the loan, because there is a third party obligated to take the grain at a certain time for a given price.... The sale for future delivery--the ‘hedge’--is the final link in the chain that makes such loans the best in the world.” It has been shown that in the production of grain or other farm commodities the three elements, change in form, change in place, and potential change in time enter; while the factors entering are, nature, labor, and capital. These all must be present no matter which method of procedure is followed in the marketing. The cost of marketing must always be counted in the cost of production. A decrease in the cost of any element or factor will of course have its effect on the cost of the whole process. For example, it is claimed by grain merchants that where there is an opportunity to hedge there is less risk and consequently the profits of the middlemen may be less thus decreasing the cost of production. To get a concrete example of what part transportation bears in marketing the following analysis is made: _Elements Entering into the Cost of Marketing Wheat Grown in Kansas or Nebraska_ Farm Expense Cents per bushel Loading 0.25 If sacked, add about 5 cents per bushel. Highway Haulage A bulletin of the Bureau of Crop Estimates, U. S. Department of Agriculture gives the cost at 30 cents per ton-mile when horses are used and 15 cents per ton-mile by motor-car, the average distance being 9.4 miles, rough average, say 6.00 6.25 ----- Total cost of getting to local market 6.25 Local Elevator Unloading, storage, cleaning, and mixing, shrinkage. Overhead--interest on investment, taxes, insurance, office expense, depreciation, repairs, hired help, etc., and profit 3.00 3.00 ----- Total cost up to the commission merchant 9.25 Freight Terminal and hauling charge 16.00 Inspection and weighing at terminal .25 Profit of commission merchant 1.25 17.50 ----- Total cost up to the exporter 26.75 Exporter’s cost Elevation, loading into boat, etc. 1.25 Ocean freight (very variable), say 6.00 Insurance, leakage, etc., in transit .75 Overhead expenses of exporter 1.00 Profit of exporter 1.25 10.25 ----- Total to Liverpool market 37.00 The above would indicate that if all wheat were shipped to Liverpool the local price in Nebraska or Kansas should be about 27 cents per bushel below the New York price and 37 cents below the Liverpool price. As a matter of fact the Omaha and Kansas City prices are frequently equal to or exceed the New York prices because there is quite a large local demand for wheat from the mills of the Middle West. It is said nearly one-half the Kansas wheat is milled in that state. =Highway Transportation from Farm to Local Market.=--The table indicates that the highway transportation amounts to about 6 cents per bushel. Had the cost been based on all team hauling it would have been 8¹⁄₂ cents; on truck hauling, 4¹⁄₄ cents. The grand total cost of production would be the Cost of growing; Cost of transportation; Cost of marketing. Taking up only the transportation from the farm to the local market point, the question arises, what, if any, effect would a change in it have on the character and amount of farm production? Let there be considered a zone around a local market point; suppose the width of this zone limited the distance from the market at which wheat can be grown profitably when the hauling is all done by horses. Since it can, according to government authority, be hauled at half the cost by motor truck, other things being equal, the zone of profitable productions would be widened to twice its former width with no greater expense to the wheat grower. Or, looking at it another way, the size of the farm could be somewhat lessened and the farmer still make the same gross sum on his crop. This latter would allow a few more people to live in the same territory as formerly. If again by means of paved roads the cost was further reduced one-half the zone could again be doubled; it is then four times its original width. Also, since a living could be made on smaller farms the tendency would be to increase the rural population. But it is not likely that all farmers under increased advantages would continue to raise wheat. Other crops, more perishable but more profitable, would venture forth. Such perishable crops as vegetables, head lettuce, tomatoes, cucumbers, cantaloupes, watermelons, etc., require dependable marketing facilities. They must be harvested and put on the market at just the right time or they deteriorate in quality and price very rapidly. Crops that could be hauled by team only 4 or 5 miles could be hauled by truck over a hard road easily 20 miles. Near the large cities truck gardeners by virtue of the truck and the good roads have been able to go out 15 to 20 miles and secure land at a very much lower rent, or purchase it on an amortization scheme at no more annual expense for double or treble the amount of land than they formerly paid in rent near the city for the smaller tract. According to Norton outside the large cities of the East market gardening extends back 25 to 30 miles. That it is not uncommon to haul vegetables to market in trucks 40 miles, and that a New Jersey fruit farmer was accustomed to make a 65-mile trip daily to market his fruit in New York City.[191] Likewise small fruit farming. One acre of land highly cultivated this year, 1922, produced more than $1000 worth of strawberries, which were brought to the railway station every day on a small truck a distance of 15 miles. Raspberries and blackberries will give almost as good returns. Vegetables of all kinds, and cantaloupes and watermelons in favorable localities, will probably bring larger returns. Even potatoes sometimes give a gross return of from $100 to $300 per acre. It should be remembered that in every case there must be a keen, avid market and adequate transportation facilities. The market, since more than half the people of the United States live in the cities, is likely to be sufficient if the marketing machinery is ample and properly functioning. Horse-drawn wagons may answer the purpose in some places, in others the motor truck, but other crops cannot be marketed without access to the steam railway. For instance, could trucks carry cantaloupes from the Imperial Valley in California to New York City? This requires the steam railway and refrigerator cars drawn in rapid trains. The trucks will greatly widen the zone of cantaloupe culture near the shipping point. The same may be said of citrus fruits from Florida and California, tomatoes and watermelons from Texas, plums from Idaho, apples from Washington, grapes from New York and Michigan, and, indeed, some product from nearly every state of the Union, to say nothing of the non-perishable products. =Stock Raising.=--Marketing facilities and road transportation is greatly changing the character of stock raising. Not so very many years ago the great western plains were covered with large herds of cattle whose owners and caretakers were known as ranchers. The ranch usually consisted of the owner’s residence, which he also used as an office, sleeping and eating quarters for the cowboys, a corral or two for the horses and possibly cattle during the round-up and branding season, though this latter was usually on the open. The cattle ranged and fed upon the wild grass, the cowboys riding around the bunch daily in order to keep track of them. The round-up was held in the late summer while the calves were still running with their mothers and could be identified. The cattle of several ranches ran together and at branding periods had to be cut out--separated. Then the unbranded calves and mavericks were roped, thrown and branded; the bull calves were altered and the herd again turned loose upon the prairies. A little later in the fall they were again rounded-up and those to be sold selected and cut out. These were driven to the nearest railway track and shipped to market, sometimes a train load from one shipping point. During the winter season and in violent storms there were many hardships as well as loss of cattle. The cowboys also had to be on the lookout for “rustlers”--thieves who stole the cattle outright, branded unbranded mavericks they knew did not belong to them, or mutilated brands by placing their own over the rightful one. Meat from these more or less wild, grass-fed animals was seldom better than second class, and never brought on the market the equal of corn-fed cattle. However, they did furnish a reasonably cheap food and kept down the price of meat. Along with better roads and markets came a demand for other products; land that furnished the open range was fenced in, and later subdivided into farms upon which were raised grain, hogs, poultry, and perhaps a few cattle. Dairying in many places took the place of stock raising. No longer were the animals driven to market on the hoof. They were fattened upon grain and hay and carried to market in wagons and trucks. Hogs replaced cattle. The turnover is more frequent and they do well on maize, requiring no hay or straw except perhaps a very little for bedding. The corn fed to hogs usually brings about twice as much a bushel as that sold to the dealer. Since about 12 to 15 miles is the greatest distance hogs may with profit be hauled to market in horse-drawn wagons on dirt roads, there grew up at every small railway station a stock market. The railway company provided stockyards, a series of pens with a chute for loading. The dealers bought from the farmers and placed their animals in the railway pens until a car load was obtained, when they were sent on to the packing house located in one of the large cities. Therefore, between the farmer and the packer there were at least two middlemen, the local dealer and the commission merchant at the terminal stock yards which are nominally under a different corporation than the packing houses. With the good roads and the motor truck has come much marketing directly by the farmer at the packing-house yards. The Firestone Ship by Truck Bureau, a subsidiary organization of the Firestone Tire and Rubber Company of Akron, Ohio, made a careful study of the use of the truck in marketing live stock, and in 1921 issued a bulletin thereon.[192] A detailed showing of the marketing of animals at St. Joseph, Omaha, Cincinnati, and Indianapolis is given. From that bulletin will be copied some statistics and other information that may be of interest. Those wishing the full discussion should write for the bulletin. Tables are given which “show that at each yard the driven-in receipts during the years 1918, 1919, and 1920 were very much in excess of those of 1917. Of the total receipts (the tables give them each month of the four years) of driven-in hogs at the St. Joseph yards in 1917 approximately 10 per cent were hauled to the yards by motor truck. While the driven-in hog receipts at the same yard during 1918 were twice those of 1917, 40 per cent of this total was driven by truck. In 1920, 60 per cent of driven-in hog receipts were truck hauled. The St. Joseph figures clearly indicate that the truck movement commenced about 1917 and that each of the following years have witnessed decided increases. “At Omaha truck-hauled receipts appear to have commenced earlier than at St. Joseph; for during the years 1917 and 1918 the best estimates placed the truck-hauled receipts about 90 per cent of the total driven-in receipts, while the year 1919 amounted to 95 per cent of the total driven-in receipts. In 1920 virtually all driven-in receipts were truck-hauled. “At Cincinnati in the year 1918 more than 90 per cent of driven-in receipts were truck-hauled while in 1919 at least 95 per cent of all stock delivered at this yard other than by freight car came on motor trucks. In 1920 driven-in receipts which were not truck-hauled were negligible. “Indianapolis has shown the most conspicuous increase in truck delivered stock of any yard in the country. During the last year more than 95 per cent of all driven-in hogs to this yard were delivered by motor truck. It is seldom that team equipment is seen at this yard. At both Cincinnati and Indianapolis on an average day 100 trucks can be seen coming into the yards, while as many as 300 trucks have been counted at Cincinnati in one day, and as many as 450 at Indianapolis.” From tables given in the Bulletin are extracted the following data for the Omaha and the Indianapolis yards: OMAHA YARD ----+------------------+--------------+--------------------- | | |Percentage, Driven-in Year|Driven-in Receipts|Total Receipts| to Total ----+------------------+--------------+--------------------- 1916| 46,542 | 3,116,820 | 1.47 1917| 65,922 | 2,796,596 | 2.36 1918| 188,417 | 3,429,533 | 5.38 1919| 179,036 | 3,179,116 | 5.64 1920| 181,946 | 2,708,482 | 6.67 1921| ....... | ......... | .... ----+------------------+--------------+--------------------- INDIANAPOLIS YARD ----+------------------+--------------+--------------------- | | |Percentage, Driven-in Year|Driven-in Receipts|Total Receipts| to Total ----+------------------+--------------+--------------------- 1912| 110,624 | 1,824,260 | 6.06 1913| 90,821 | 1,994,624 | 4.04 1914| 96,521 | 2,099,787 | 4.58 1915| 136,441 | 2,435,319 | 5.61 1916| 173,191 | 2,576,611 | 6.74 1917| 271,994 | 2,350,730 | 7.84 1918| 462,313 | 2,749,976 | 16.8 1919| 709,584 | 2,936,493 | 23.7 1920| 787,100 | 2,896,894 | 27.2 1921| ....... | ......... | ..... ----+------------------+--------------+--------------------- A graphical representation shows the continuous increase of driven-in to the total receipts. The table of percentages and the graphical representation are not given in the bulletin. They show very clearly what happened when the motor truck began to function in 1917. The truck has made a very much more effective showing at Indianapolis than at Omaha. No doubt this is because (1) the average haul at Omaha is longer; Omaha draws from a more sparsely settled country and from longer distances; (2) the roads adjacent to Omaha are nearly all, as yet, earth-surfaced. Only a few hard roads have been built; (3) many of the farms in the Omaha territory are large and sell so many animals at a time that they can easily fill one, two, or three railway cars at a shipment. The percentage of truck-hauled stock will no doubt continue to increase until practically all hogs within the economic radius of truck operation are marketed by motor. When the time comes, if it ever will, when abattoirs are established at distances no farther apart than 100 to 150 miles, making the maximum haul 50 to 75 miles, the percentage of stock handled by the railroads to these abattoirs will be very small indeed. The larger packing houses with the advantages of great quantity production will still be able to reach out into the more remote districts and secure that proportion of animals necessary to keep them going which can not be obtained locally. [Illustration: Showing the increase of truck-delivered hogs at Indianapolis and at Omaha.] That there is still an opportunity for increases of motor-hauled stock a further quotation from the Firestone Bulletin will show: “The territory served by trucks in marketing live stock is principally within a 50-mile radius of the market center. In the course of investigation the longest haul which came under observation was 140 miles. The average haul on the days the investigators were at the markets was about 30 miles. The following table gives some idea of the length of hauls at the four different yards: ------------+--------+-------+--------+------- | No. of |Longest|Shortest|Average | Trucks | Haul, | Haul, | Haul, Yard |Observed| Miles | Miles | Miles ------------+--------+-------+--------+------- St. Joseph | 48 | 100 | 9 | 27 Omaha | 62 | 75 | 6 | 28.2 Cincinnati | 40 | 72 | 3.5 | 28.9 Indianapolis| 40 | 97 | 7 | 32.5 ------------+--------+-------+--------+------- “While the average haul is 28.95 miles, most of the trucks observed in the course of investigation use solid-tire equipment. This type of equipment had a tendency to restrict the mileage.” The bulletin also is authority for a statement that 91.3 per cent of the hogs within a 50-mile circle about the Indianapolis yards are carried by trucks, but that only 18.3 per cent at Omaha move that way, and at St. Joseph 10.8 per cent, which indicates to them that there are still great possibilities for the truck, especially as the truck has not come into as extended use at many other packing centers as at the four places treated in the bulletin. There is no doubt but that pneumatic-tire equipment, and to a lesser extent, the cushion-tire equipment will extend the average haul to 50 miles. Hard-surfaced roads will again extend it 25 to 50 miles, making a haul of 75 to 100 miles not uncommon. A further effect of the truck and the ease of marketing which it will bring about is that hogs will be marketed in smaller quantities but oftener. The farmer instead of turning off his marketable animals twice a year will send them in four times a year, possibly monthly. The tendency will be to stabilize the market over the several seasons. As yet, the stabilizing, influence of the truck is hardly noticeable. [Illustration: Average number of driven-in hogs marketed at Indianapolis each month; years 1917, 1918, 1919, and 1920 being averaged.] [Illustration: Average number of driven-in hogs marketed at Omaha each month; years 1917, 1918, 1919, and 1920 being averaged.] Diagrams on pages 290 and 291 show the average monthly number of hogs received at the yards of Indianapolis and Omaha by truck; the years 1917, 1918, 1919, and 1920 being averaged. At Indianapolis, where the roads are good the year around, the receipts from June to December are much larger than those from December to June, the peaks occurring in December and June. In Omaha, on the contrary, the greater number of driven-in hogs came in the other half of the year the peaks occurring in January and July. These may be partially accounted for, in the West, on the theory that January 1st and March 1st are regular settlement days and farmers arrange to meet their obligations then by selling off a batch of hogs. They also plan to reduce the number of their hogs to the minimum during the months of May, June, and July, so as to have few fat hogs to carry through the hot weather. In the Eastern states the farmers seem to work on a different basis. If the selling of live stock could be spread out uniformly over the year prices would be more uniform. An analysis of prices on the Chicago hog market shows that they are usually highest during the summer months, from April to August, the months when the fewest numbers are sold. The advantage which those crops which can be stored without deterioration, such as grain, cotton, wool, and lumber, is manifest. The price of meat is less fluctuating than that of live stock because meat can be kept indefinitely in the cold storage houses at a very small expense. It is quite likely that more good roads and a more extensive use of the truck will tend to a better distribution of live stock marketed throughout the several seasons of the year. One of the principal advantages of marketing by truck is the less liability of losses in transit. Dealers and owners often crowd too many hogs into a freight car and as a result some smother. Or, if hogs from different farms are placed together in a car there may be fighting, which unduly heats up the hogs with equally dire results. It is reported that at the Chicago yards in 1918 there were removed from cars 24,785 dead hogs and in 1919, 28,356. To be sure many of these cars came from a distance and were, perhaps, several days on the way. But a fat hog is a delicate animal and a stream of cold water from a hose on a hot hog will often kill him instantly. Government figures state that one out of every 319 hogs shipped died in transit; of cattle one out of every 998; of sheep one out of every 936. Losses by motor, because the animals are not crowded so many together, because they are acquainted and do not fight, because the distances traveled are usually such that only three or four hours elapse between the times of loading and unloading, and because the driver is always at hand to quell disturbances and to see that there is no undue crowding, are said to be negligible. The local buyer at points near packing houses has almost become extinct. These men formerly bought from the farmers and held the stock until they had sufficient number to fill a car. Since they would often have to hold them several days they had to buy on a wide margin to insure themselves against loss, from ³⁄₄ to 1¹⁄₂ cents a pound. Even where the farmer does not own a truck he can get the hogs hauled at a cost of ¹⁄₂ to ³⁄₄ cents a pound, or a saving of about $15 per truck load. If a return load is to be had, such as lumber or feeders the saving will be greater. One difficulty about the return load is the necessity of thoroughly cleaning the truck body. A shovel, a hose with a fair pressure of water, and a hard floor upon which to stand the truck while it is being cleaned are necessary. Incidentally it may be mentioned that the local stockyards in the way they are often kept are very unsanitary and certainly a nuisance as far as bad smells are concerned as well as a menace to health. =Shrinkage.=--The argument that there is less shrinkage in motor-hauled hogs than in rail-hauled may be as a general rule true, but, according to the Firestone Bulletin, will not net the farmer much, because buyers base the price they are willing to pay on the dressed weight and not the live weight. It is stated that the buyer from long experience is able to estimate with considerable accuracy the weight at which a hog will dress, and that he makes his price offer accordingly. The percentage loss of weight in dressing is, of course, greater for thin than for fat hogs. By grading the hogs into classes the buyer is enabled to discount the price paid enough to take care of the “fill,” which is said to range from 3 to 5 pounds per hundred weight. But notwithstanding this the fact that the animals are fresher and livelier must have some effect on the mind of the buyer. This may be the reason for the rapid increase of hogs received by truck at the packing houses, being as many as 6800 in a single day at Indianapolis. =Dairying.=--The use to which the motor truck has been put in other industries is fully as important. Many industries use several hundred trucks in their work. Creameries have already been mentioned. The very fact that trucks make regular trips along designated routes is an invitation to the farmers to do more dairying. If John Jones can draw from $50 to $75 a month from the creamery for a few hours’ work each day, Henry Smith living on the next farm is anxious to do likewise. Many good farmers find it to their advantage in the long run to allow the women folks to have all the poultry and creamery money while the men content themselves with the returns from grain, livestock, woodlot, and hay land. Thus is created a division of labor which if carried out to the limit will interest every member of the rural family in some particular part of the farm work. Without going into detail it may be said that from raising beef on the natural grass of the plains region to the raising of stock for butter, milk and cheese may seem a far cry, but with adequate markets and dependable transportation this is rapidly coming to pass. Dairying has already reached enormous proportions, and since it is estimated that dairy products should constitute for the sake of health and economy about one-fifth the average diet, it can easily be seen that dairying always will be of great importance. Over $18,000,000 a year is now received for milk and cream by Nebraska farmers, and Nebraska is not a leader in this line. No doubt with better roads and better marketing facilities that will be doubled or trebled in a few years. =Poultry.=--We have just mentioned the Nebraska income from milk and cream sold by the farmers. It may be surprising that the sum received from the humble hen is nearly twice as much (given by state authorities as $35,000,000 from the fowls and eggs produced each year). But the only way this can be successful is by quick and adequate markets. Dressed fowls and eggs are highly perishable products and must be put into the cold storage warehouses at the earliest possible moment. The motor car and the rural express, with their necessary accompaniment good roads, make this possible and thus increase the returns to the poultry industry as well as widen the territory over which it will pay to keep fowls for commercial purposes. As an illustration of the efficacy of the motor truck in the poultry business this quotation from the _New York Times_, June 8, 1920, is given:[193] At 6 o’clock one morning a motor truck was loaded at Lancaster, Pa., with 18,000 eggs in crates, and 1000 chicks a day old, and started for New York City, one hundred miles away, says the writer. At the same time a similar shipment was sent to the consignee by railroad. It took the truck twelve hours to reach New York. Four of the little chicks were dead and nine eggs were broken when the goods were delivered at the door of the consignee. The train shipment was four days in reaching Jersey City. It took another day to send a notice to the consignee that the shipment had arrived. He was then compelled to send his own truck to Jersey City for the shipment. When it reached his door thousands of the eggs had been smashed and half the chicks were dead. =Diversified Farming.=--Before leaving the farm it might be well to say that easy marketing makes for diversified farming. All eggs are not put in one basket, and in case of a failure or partial failure in one crop the effect is not felt so much because there are others from which returns will be received. Often drought will injure a wheat crop but later rains will “make” the corn crop; or, earth soaked by winter snows will mature a wheat crop while the corn may, due to a few days of hot dry weather, be a partial failure. While chinch bugs may get the wheat, it is possible to kill potato bugs by spraying. And the year the potatoes die by blight may be excellent for alfalfa and timothy. Diversified farming also allows of the rotation of crops, thus conserving the fertility of the soil. And it all can be done over a wide range from the market place because of good roads and easy marketing facilities. =Forestry.=--Realizing that the lumbering methods in vogue in this country since its earliest settlement are most wasteful and are destructive of the future usefulness of the timbered regions the United States Government has set aside as forest reserves several hundred thousand square miles. A forest crop is like any other crop. It must grow from the seed and at maturity be harvested. Those trees that have reached the point in life where years do not add materially to the lumber content are marked for cutting. So that each year brings a harvest. New trees are planted or allowed to spring up where the old were cut so that there is a continuity. It is estimated that there yet remains some 550,000,000 acres of forest land unsuited for agriculture. The older lumbering methods meant that a company gained control of a tract of timber land, sometimes they had not purchased it, it was really government owned, and cut and slashed all the trees that were upon it. No attempt was made to utilize any of the tree except the bole; the limbs, containing thousands of cords of good wood, were left with the slash to become the prey later of fierce fires, which often got beyond the bounds of the cutting and destroyed millions of acres of growing timber.[194] At a still earlier day the trees were cut so that they would fall with their tops together, then they were burned in order to clear the land for farming purposes. The only reason settlers did not go to the great prairie lands of the Middle West where such wanton destruction was unnecessary, was the lack of means for rapid transportation, and communication. Even the loggers and lumbermen were often isolated from all civilization except their own party or neighboring parties of like kind, with no roads but the trails of their own making. The highways of commerce were the streams and rivers to which the logs were rolled or snaked by oxen, mules, or horses, and down which they were floated in the spring when the flow was sufficient to carry them. When they reached the larger rivers they were often bound into rafts and floated hundreds of miles to the mills for sawing, a cheap means of transportation. As the timber was cut off near the streams it was necessary to go farther back for logs. Then developed the logging railways. Usually narrow gauge lines with small locomotives which brought logs down from the forests to the streams or to other lines of railway. But as yet scientific means of lumbering had not been adopted. Not until the government by making large forest reserves and by insisting that loggers should clean up and burn the slashes in such a manner as not to injure standing timber, and leave the ground in such a condition that new trees of good varieties would spring up to take the places of those cut, did there come any real advancement along these lines. [Illustration: © _Underwood and Underwood_ A MILK TRUCK Equipped with both Cans and Tank] [Illustration: © _Underwood and Underwood_ A LUMBER LOG TRUCK Used in the Northwest] In order that the better methods of lumbering and forest management could be successfully carried out it became necessary to supply roads of such a character that transportation would not be unduly burdensome. If the trees to be cut were to be selected hither and yon, getting the logs and wood from the tops would be a much more expensive process than the mere rolling of boles to the stream and leaving the slash to decay or burn. The Government, realizing this, is now expending millions of dollars on the forest roads making them usable not only by teams but by trucks and automobiles. The truck and trailer have rapidly made their way in the logging and lumbering industries. By the use of the trailer and the Government-made good roads the truck is able to haul logs of almost any length down from the logging grounds. Trucks and tractors are utilized in the forests, too, for snaking logs and pulling stumps. In places where the grades are steep or on the interior where the roads have not yet penetrated causeways have been built of timber; these usually being cross-ties, and under trussing across draws, with lengthwise planks for the wheels to run on and side planks or logs to keep the machine on the track. Down this causeway by means of a two-wheeled semi-trailer, immense logs are transported. As they are sometimes very steep, chains on the wheels are necessary to prevent slipping and assist in braking. The average load that a logging truck and trailer will haul is from 3000 to 5000 feet. Larger loads are hauled over snow on sleds, but when distance and time are considered the truck is claimed to be more efficient. F. W. Fenn states that a lumber camp truck to be efficient “must have maximum traction, ample clearance, and proper service and care and be stout enough and strong enough to stand the severest strains.”[195] He further claims that the truck is replacing the older means of transportation, dragging by horses and oxen, skidding down mountain sides, rafting upon rivers, not because it is cheaper but because the great stands of timber are gradually decreasing and the modern method of cutting only properly developed trees is coming into vogue. “Thus the logging industry has developed from one of independence to almost total dependence upon improved transportation facilities, with its consequent problems and expense.” The hauling of logs down to the water edge by trucks upon natural earth roads and upon specially prepared skidways is said to be cheaper than the narrow-gauge railways formerly in use in the state of Washington. One of the types of trailers worked out has four wheels, 44 inches in diameter for the front and 46 for the rear with a 10-inch tread all around. The trailer is fastened to the truck by a long pipe coupling. The most satisfactory trailer, according to Fenn, is the two-wheeled rubber-tired with wheels 40 to 44 inches in diameter. Roads which theoretically require steel tires for ironing out ruts would better be planked or otherwise hard surfaced. Proper attention and routing will greatly prolong the life of the truck. A longer smoother road is rather to be preferred to a short rough one. The depreciation of the truck is figured on a basis of 100,000 miles as its minimum life. =Other Uses of the Truck.=--But the use of the truck in the lumbering industries is not limited to logging. About the saw mills it is used for getting the logs to the saw and taking the sawed lumber away. And at yards, all over the country, for taking the lumber from the railroad tracks to the storage piles and for delivering it to customers. Special loading devices save much time. A gantry or other type of crane will pick up and handle an entire load of lumber at one time. =Amos Log Loader.=--The Amos log loader is described as an efficient loading machine in which a friction drive takes power directly from the drive shaft of the motor truck and by means of a worm gear transmits it to a long winding shaft, or small diameter drum, which extends the length of the truck bed, being mounted parallel to it just under the bed. Loading chains are attached to this drum either at the ends or middle as the driver wishes. The movement is regulated by means of a lever just over the truck step. By a small movement of his foot the driver has control of the friction drive while his hands are free to operate the engine. He can raise or lower the log or stop it at any point. Stopping it if desired so he can leave his position to make needed adjustments of the log, chains, or skids. The small diameter of the winding drum insures steady strong pull. It may also be used for skidding logs into position for loading. It is claimed the truck driver soon becomes very expert as he realizes the possibilities of the loading device. After the logs are loaded the loading chains are used to bind them to the truck. =In the Yards.=--After the logs are sawed the lumber is stacked up in yards either at the point of sawing or elsewhere. It must be hauled to the shipment point and from the cars to the yards. Trucks are applicable for all these purposes. When it comes to delivering the lumber to the consumer a wagon known as a dolly is of great assistance for collecting materials to load on the delivery truck. Most retail yards now deliver their lumber by truck even to a distance of 15 or 20 miles. When an order for mixed grades, sizes, or kinds of materials is received, a light wagon or cart having a dolly upside down for its floor, the whole known as a “dolly,” is used in the loading. The dolly has a roller placed cross-ways of the wagon bed and the lumber is piled directly upon it, care being taken that some long pieces are used for the bottom of the load. The dolly is pushed by hand from place to place in the yard until the order has been filled with the various pieces desired. The truck, which may be out during the time the selection is being made, is backed up to the end of the dolly, the floor of the truck body passing under the lower boards; then by turning the cross roller with a crank the whole load is conveyed to the truck. To facilitate the action another roller is placed in the floor of the truck near its rear end. Both rollers may be turned at the same time. The dolly may have two or four wheels. A short truck is often arranged for a semi-trailer which may be loaded in a manner similar to the dolly. With two or three of these trailers a busy yard will keep the truck and driver on the road practically all the time at a considerable saving in expense over waiting time if the lumber is loaded directly upon the truck. =Mining.=--The building of railway tracks to mines was at one time a very expensive part of a railroad’s business. It required much expert knowledge on the part of the railroad officials to determine whether or not such a road would pay. In fact a great many miles of such tracks have been abandoned and very likely the loss to the railroad has been equal to that of the mining companies. Motor trucking is to a large extent doing away with the enormous track building that formerly went on in the mining communities. This eliminates the switching charge which seldom paid the railroad, and possibly the trucking is more convenient and cheaper to the mining company. Here again the use of trailers, special bodies, and mechanical loading and unloading devices will greatly expedite the work. When the mine has grown so that the quantity of ore or coal taken out will pay for it a railroad track may be laid without risk of loss to either railroad or mine. The hauling of mine products a long distance is not altogether uncommon. Transporting borax from Death Valley, California, was formerly done by twenty-mule teams. It is now much more expeditiously and cheaply hauled by motor trucks. And the transport of supplies from point of purchase to interior and isolated mines, or to depots from which they may be continued by pack horses is common practice. =Factory Products.=--Scarcely a manufacturing industry but that owns motor trucks, some of them running into the hundreds. No doubt these trucks have had their effect on the goods manufactured just as any other machine introduced into the process might do. In some instances goods that were marketed through jobbers are being sold directly to the retailer and sent to them by routings which return to the same customer every day, every two days, twice or once a week, or once a month, or in such regular periods the customer may look forward and depend upon the coming. Packing houses by delivering meat with truck directly to the retailer’s butcher block daily have practically driven out of business the old slaughter houses with their unpleasant odors and unsanitary conditions. Special bodies have been devised for the different manufactured products. A slatted rack accommodates nearly 300 empty barrels; tanks are made to haul milk, gasoline, or other liquids; cracker factories have racks which will accommodate cardboard cartons without injury by crushing; low long-bodied trucks upon which cotton bales may be placed without much lifting lessens the time and labor of loading; different-sized drawers on the inside of a body have been used to take clothing-store goods to customers in outlying districts; plumbers fit up shops on wheels, claiming thereby to save time and expense to their patrons by not having to go back to the shop numerous times in the course of a job to get tools and supplies; furniture and automobile trucks have large roomy bodies to carry bulky but not very heavy goods. Hoists, cranes, tipping bodies, combination bodies, conveying belts and chains and many other devices facilitate rapid unloading and loading. By sending goods from factory to retailer by motor railway terminal expense is cut out. Just how far it is profitable to send goods by truck is a question depending on the relative terminal charges, the hauling rate, and the collecting charges. The collecting charges at a factory might or might not be the same for shipments by rail and by truck. If the railroad switch is such that there is no hauling from factory to car except that on the floor of the factory itself, there would be no difference, otherwise there would be the expense of hauling to the loading tracks. If the expense of selling is not affected by motor hauling the only thing to be considered is the actual cost of transportation. If this be taken to be made up of two items, namely, terminal costs, and hauling costs, the distributing charge by railway may be written: _D_ = _T_ + _Rx_ where _T_ is the railroad terminal cost; _R_, the railroad rate per mile cost per unit-package, barrel, cwt. or ton; _x_, the number of miles hauled. The distributing charge by truck would be a similar equation _d_ = _t_ + _rx_ where the letters represent the same items referred to the truck. If _D_ is made equal to _d_, there results, _t_ + _rx_ = _T_ + _Rx_ and, _rx_ - _Rx_ = _T_ - _t_ _T_ - _t_ _x_ = ---------. _r_ - _R_ Railroads do not separate the terminal and hauling charge for the good and sufficient reason that if this be done there are a number of other factors of transportation that could with equal reason be segregated. The terminal costs, and by that is considered all the expense except the actual cost of haulage, has been variously computed. G.M. Jones, Bureau of Foreign and Domestic Commerce, United States Department of Commerce, estimates “that the average expense of hauling a ton of freight 240 miles is 74 cents while the cost of handling the same freight at the terminals is 75 cents.”[196] A more definite and possibly more accurate statement is that of the Inter-State Commerce Commission, also quoted by Lane, p. 53: The combined average terminal cost at one end is shown to be 10.4 cents per hundred pounds. For two terminal buildings (origin and destination) this figure doubled results in 20.8 cents per hundred pounds; and as this figure contains no elements of overhead costs, or taxes, such costs are arrived at by dividing the terminal cost by the operating ratio. The operating ratio of the Trunk Line roads for 1915, 1916 and 1917 is 69.6, and the result of dividing the terminal cost of 20.8 cents by the operating ratio is 30 cents per hundred pounds, which covers terminal expenses and overhead for less than carload freight. An example may be worked out with the assumption that the railway terminal charge is 30 cents per hundredweight, the truck terminal charge is 10 cents, the railway haulage charge is 0.02 cent per hundredweight mile and the truck haulage charge 0.3 cent per hundredweight mile. Then the economical length of the haul must not be less than 30 - 10 20 2000 500 _x_ = -------- = --- = ---- = --- = 71 miles. .3 - .02 .28 28 7 The length of haul varies directly as the difference in terminal charges and indirectly as the difference in rates. The example given should not be applied generally, but each case must be considered by itself. If there are collecting and marketing costs, they may be added to the terminal costs and the sum treated as a terminal charge. =Construction.=--It will hardly be necessary here to take up more individual cases. The almost universal use of trucks in the handling of materials of construction no doubt has affected the quantity and cost of construction, truly a productive process. Everyone is familiar with one or more of the many devices for loading and unloading, for in this class of haulage these things have reached a very high state of development. =Other Agencies.=--It is not the intention here to claim for the motor car entire credit for the manifold changes in marketing--buying and selling--which have occurred during the past two decades. Many other factors have entered into these changes and the corresponding advancement in the average standard of living. Transportation of all kinds, upon the highways, upon the railways, upon the waters, by telegraph, by telephone, by improvements in the postal service, and by the general increase in knowledge through the schools and printed literature, have all been instrumental in the development. But the automobile directly and indirectly has stimulated each of these activities and hence deserves credit with the rest. SELECTED REFERENCES Agricultural Inquiry, Report of Joint Commission on Part IV deals with Marketing, Washington, D. C., 1922. _American Forestry_, “Forest Fires,” Dec., 1920, p. 707. BOHM-BAWERK, “Positive Theory of Capital,” Translated by W. Smart, Books I-II. Macmillan & Co., London, 1891. BOYLE, JAMES E., “Speculation and the Chicago Board of Trade,” Macmillan Company, New York; “The Chicago Board of Trade, What it is and What it Does,” Distributed by the Chicago Board of Trade. COLLINS, J. H., “Motor Transportation for Rural Districts,” Bulletin 770 of the United States Department of Agriculture. COWAN, D. R. AND HART, F. C., “Motor Transportation in Rural Ontario,” Bulletin 227, Ontario Department of Agriculture, 1920. DANA, RICHARD T., “Hand Book of Construction Equipment,” pp. 550-559, 767-772. Firestone Ship by Truck Bureau, Akron: Bulletin No. 1, “Ship by Truck among Farmers through Coöperative Associations”; Bulletin No. 2, “How and Where to Establish Truck Routes”; Bulletin No. 3, “The Motor Truck at the Coal Mines”; Bulletin No. 4, “The Farmer and the Motor Truck”; Bulletin No. 5, “Costs and Their Relation to Truck Transportation.” Highway and Highway Transport Education Committee.--“Proceedings of a Conference on the Economics of Highway Transport, Held at the University of Maryland, July 27, 1921,” Washington, D. C. Kentucky, University of, College of Agriculture Circular No. 130, “Marketing Farm Products.” Lexington, Ky., June, 1922. LANE, F. VAN ZANT, “Motor Truck Transportation,” D. Van Nostrand Company, New York. National Automobile Chamber of Commerce, New York: “Facts and Figures of the Automobile Industry, 1921.” “Factors in Food Transportation.” “A State Endorses the Motor Express.” By Arthur Capper, “The Midwest Farm Market for Motor Trucks.” By F. W. Fenn: “The Field of the Motor Truck in the Petroleum Industry”; “The Motor Truck as an Aid in Extracting Raw Materials”; “Motor Truck Operation at the Mines”; “Motorizing the Factory”; “Organization and Operation of a Rural Motor Express Line.” By R. O. Patten, “Merchandising Motor Trucks.” By R. O. Patten and F. C. Horner, “The Evils of Overloading.” NORTON, S. V., “The Motor Truck as an Aid to Business Profits,” pp. 155-156, 406-410, 484; A. W. Shaw Co., Chicago. _Power Wagon_ Reference Book. TOLLEY, H. R. AND CHURCH, L. M., Bulletin 910, “Experiences of Eastern Farmers with Motor Trucks”; Bulletin 931, “Corn Belt Farmers’ Experience with Motor Trucks”; and Bulletin 1201, “Motor Trucks on Eastern Farms,” The United States Department of Agriculture, Washington. VINCENT, C., “Letters on Grain Marketing Problems,” Privately published, Omaha, 1921. FOOTNOTES [188] Bohm-Bawerk, “Positive Theory of Capital,” translated by W. Smart, p. 96. [189] “Letters on Grain Marketing Problems,” by C. Vincent, Secretary of the Farmers’ Grain Company, Author of Nebraska Co-operative Law, and Member of the Omaha Grain Exchange, pamphlet privately published, 1921. [190] “Letters on Grain Marketing,” by C. Vincent. [191] “The Motor Truck as an Aid to Business Profits,” by S. V. Norton, A. W. Shaw Co., Chicago. [192] Bulletin No. 8. “Marketing Livestock by Motor Truck,” issued by The Firestone Ship by Truck Bureau, Firestone Park, Akron, Ohio, 45 pages. [193] From a reprint by the National Automobile Chamber of Commerce. [194] During the year 1919 there were reported 27,000 forest fires which burned over 8,500,000 acres.--_American Forestry_, Dec., 1920, p. 707. [195] “The Motor Truck as an Aid in the Extraction of Raw Products at the Source,” by F. W. Fenn, National Automobile Chamber of Commerce, New York. [196] Quoted by Lane in “Motor Truck Transportation,” p. 6. Van Nostrand Co., New York.