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THE NEW YORK PRODUCE EXCHANGE
By E. R. Carhart,
President of the New York Produce Exchange.
A history of the New York Produce Exchange as a chapter
in an economic study of the produce markets of the country
involves far more than the mere story of an individual trade
organization. In connection with its legitimate ancestry it may
be noted that it is easily the oldest commercial institution on the
American continent; its history is wrapped up in the history of
the agricultural trade of New York, having its beginnings away
back in the days of Dutch occupation, when trading in wheat by
cargoes at a price per bushel was inaugurated. In such a paper
as this, however, which must necessarily be brief, and which has
to do in the main with the exchange as an exchange, we must
content ourselves with only a very general statement so far as trade
history is concerned.
In 1626 the Arms of Amsterdam carried the news to Holland
that Peter Minuet, as director-general of New Netherland, had
made formal purchase of the island for sixty guilders, or about
twenty-four dollars of our currency. She carried a cargo of eight
thousand beaver and other skins, as well as oak and hickory timbers.
It is also a matter of record that in 1643, three large vessels arrived
at New Amsterdam from the West Indies to take on cargoes of
wheat, and thus began the commerce of America, illustrating in its
beginning the general characteristics of its after history, and also
the rapidity with which the fruit of the field followed and displaced
the spoil of the forest. From the day when trade was an ever-
unfolding romance down to the present when trade has become a
fixed science, New York has been the gateway of American com-
merce. Her natural advantages gave her easy ascendancy over all
her competitors, and it is interesting to note the part these advan-
tages have played in the development, not only of the trade of
New York, but of the commerce of the country itself and the
history of the nation as well. Its magnificent harbor, capable of
sheltering the commerce of a continent, has of course always been
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The New York Produce Exchange 207
the chief factor in the development of the trade of New York. It
not only allured to its shores the trade of the outside world, but it
enabled the little colony to utilize its other natural advantages at a
time when those advantages meant much more than they now do.
Its great harbor, together with its situation at the entrance to
Long Island Sound, gave it an entry to the most fertile and easily
developed part of New England ; its location at the mouth of a
navigable river penetrating one hundred and fifty miles into the
interior, offering at several places in its course easy access to the
cross-country and having at its head a rich country easily cleared
and developed, opened a pass at almost tide level clear across the
state to the Great Lakes and so on to the Far West; all these
advantages made New York the natural center for the immense
volume of trade which early began to flow back to it through these
channels.
In 1678 Governor Andros reports that "Our produce is land
provisions of all sorts, as of wheate exported yearly about 60,000
bushels, pease, beefe, pork, and some fish, tobacco, etc."
In 1774, according to Governor Tryon, the exports to Great
Britain amounted to 160,000 pounds sterling, and consisted of
"wheat, Indian corn, oats, rye, peas, barley, buckwheat, live-stock,
timber and lumber, flour, pork, beef, etc."
These reports indicate exactly the character of New York's
early trade, and were the story continued in detail year by year, it
would simply be told in the same terms but in larger figures, until
the day when the products of mine and factory were added to those
of forest and farm.
Confining our study entirely to the agricultural trade of New
York, we find that New York soon had added to her natural
advantages other advantages almost as powerful in their deter-
mining influence on the trade of the country in favor of the
metropolis. We need mention but two of these : First, New York
became the financial center of the country; she had control of
resources that enabled her to make immediate advances on all
produce seeking its ultimate market through her. And, second,
the completion in 1825 of the Erie Canal.
Soon after the canal was completed and in actual use there
began that great demand for American foodstuffs which resulted
in the development of extensive milling interests, the building up
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208 The Annals of the American Academy
of a fast clipper service between New York and Europe, and all
the wonders that accompanied the growth and development of
American agriculture.
Looking at trade history from the standpoint of the produce
markets of the country, there began at this time a period of
uninterrupted progress and development lasting for over fifty years.
It was a period of intense activity, of almost superhuman endeavor,
of colossal enterprise, and of constant adjustment and readjustment
to the needs of enlarging trade ; and during the whole period New
York proudly maintained her supremacy. She was aided in this by
the advantages already referred to. The open line of communica-
tion through her port with every part of the world, and her ability
to finance the movement of the crops of the country, gave her easy
ascendancy in the grain trade, and made her master of the flour
and provision trades.
The provision trade illustrates the situation. There were
scattered all through the West packing houses whose operations
were confined mainly to the "packing season" beginning November
ist and ending March ist, during which period all products had
to be put down in cure in order to be "regular" for delivery. These
houses depended upon the surrounding territory for their supply
of live-stock and constituted the natural market for that live-stock.
The result of their operations was the accumulation by the end of
the "packing season" of practically the full supply of pork, beef
and lard for the year. This product gradually found its way to
the markets, and New York obtained the principal share. Great
quantities were shipped in and stored in the great provision inspec-
tion yards of New York conducted under rules of the New York
Produce Exchange, where it remained until started on its final
journey to the consumer. Some of this product was shipped in for
delivery on sales made in advance of its packing, which fact made
its packing possible ; and some of it on consignment for storage, in
order that it might be where it could be well cared for and easily
financed, and where quick advantage could be taken of favorable
market conditions. It all formed the basis of the trading on the
exchange. The period, as a whole, developed the produce exchanges
of the country as we now have them, and before its close they
had become what they have always remained — the great clearing-
houses of commerce.
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The New York Produce Exchange 209
In the eighties, however, the commerce of New York began to
feel the effect of the great economic and industrial changes that
were taking place throughout the country. These changes revolu-
tionized trade everywhere, and in no place more than in New York.
The advent of steam on the ocean; the extension of railroads on
the land; improved financial conditions and facilities throughout
the country; refrigeration and the introduction of the refrigerator
car ; the use of the telephone ; the growth of the great milling and
packing-house corporations, with their immense capital, splendid
organization and extensive sales and distributive departments — all
contributed toward the revolution in trade methods, and resulted
in opening up many new channels for the steadily enlarging trade
of the country.
The exchanges of the country, as trade centers, were materially
affected by the new order of things. Some of the changes were
fundamental, and affected them all alike, while others affected them
favorably or unfavorably according to their location and to the
nature of the business transacted on their floors. To New York
it all meant an active fight to hold the trade that formerly came to
her without an effort on her part. Other ports began actively to
compete for a share of her export trade. Western states began to
assert themselves as trading centers. Canada became a formidable
competitor. And, to cap it all, the railroads, pushed to the limit
of their capacity by the enormous export trade of New York and
by the demands of her constantly enlarging local business, sought
to divert some of her heavy export traffic by establishing differential
rates against her in favor of other cities where it could be handled
at less expense to themselves, and with less interference with high-
class freights. The result has been that while New York still
remains the great center of international trade, she has not made
the relative trade gains that other ports have in those articles named
by Governor Tryon in 1774. Nor is this all. In some articles,
principally those in which the products of the farm have been
processed or manufactured, such as flour and provisions, New
York has lost her importance as a trading center, having become
to a large degree a point of transfer on through shipments. She
has thus held her traffic, but has lost her trade. On the other hand,
her own home trade has increased enormously. Looking at the
magnificent city of to-day, with its millions of people whose needs
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210 The Annals of the American Academy
form the basis of a trade so vast as to make it the object of rivalry
on the part of the nations of the earth, it is difficult to realize that
less than seventy years ago a ship sailing from its port for Liverpool
with a cargo of ten thousand barrels of flour marked an epoch in
the history of American trade. New York City's consumption of
flour now amounts in one day to more than that whole cargo, while
the metropolitan community, of which the city proper is only a
part, consumes each day almost two such cargoes. For the year
ending June 30, 191 1, the total exports of flour from the port of
New York, reduced to barrels, amounted to 3,446,616 barrels. It is
estimated that New York City proper consumed over 4,000,000
barrels in the same period of time. For the same year the total
exports of flour from all Atlantic ports amounted to 7,400,282
barrels. According to estimates, what is known as the metropolitan
district consumed nearly, if not quite, 7,000,000 barrels. These
figures will give some idea of what New York's own trade means
to its mercantile community.
As another offset against the losses mentioned, new trades and
interests are constantly developing throughout the country, and
when they reach a state of importance they seek a place on the
exchanges. The chief example we have of this in New York is the
cotton seed oil trade. The production of cotton seed oil for the
year 1910 amounted to 167,970,000 gallons. New York has become
the primary market of the cotton seed oil industry, and prices of
cotton seed oil everywhere are based upon the quotations resulting
from trading therein on the floor of her exchange.
This brief outline of trade history will give some slight concep-
tion of the general conditions out of which the New York Produce
Exchange sprung into existence, and under which it has maintained
itself and carried on its work. It really constitutes an outlined
history of the exchange itself — aside, of course, from its organiza-
tional life.
Exchanges such as the New York Produce Exchange are
merely organized trade. They are not organized for the purpose
of making money. They, as institutions, have nothing to do with
the making of prices of commodities dealt in on their floors. They
are simply organized market-places. By gathering the latest
information of trade interest, they simply enable their members to
come to a quick decision as to what prices ought to be, and, by
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The New York Produce Exchange 211
disseminating that information abroad, perform a like service for
the general public. The result is that their quotations, which are
simply a record of trades made, represent the average opinion of
all those interested in a given article as to what the value of that
article really is at the time the trade is made. They do not control
trade. They regulate it, being trade's own self-imposed check upon
itself, in order to prevent congestion and chaos. Such exchanges
are never organized in any community in advance of the coming
of trade, for the purpose of developing trade. They are the out-
come of trade itself, and trade conditions write their history. This
all holds good of the New York Produce Exchange. Descended
from a long line of market-places, a trade ancestry of two hun-
dred and fifty years is proudly claimed for it. The record of
direct succession is not perfect, and might easily be disputed, but
from the standpoint of the efforts of trade to meet changing con-
ditions with facilities for the care of new needs thus created, the
claim is fully substantiated.
The first depot, or market-place, in New Amsterdam was
located in the "Company's Stores." These stores were erected in
the early days of the colony, and occupied a part of the site of the
present produce exchange building. They stood facing Fort
Amsterdam, with an open space about one hundred feet wide
between. This space ran about parallel with Whitehall Street, and
was used as a public market field or place. From it the little alley
known as Marketfield Street, closed in part by the erection of the
produce exchange building, took its name.
In 1658 a market-place was built in front of the fort, on the
present site of Bowling Green, in front of the present exchange.
This was known as the "Broadway Shambles," and was used as a
market-place until 1707, when it was removed — only to be restored
again, however, in 1720, when it was ordered that "The old market-
place in the Broadway be and is hereby held as a public market-
place until further notice."
In 1656. at the "Strand," on the site of the old building of the
produce exchange, on the east side of Pearl Street, between Moore
and Whitehall Streets, then the water front, a market was estab-
lished. For it, in 1675, the High Court of Assize ordered that a
"fitt house be built." This market was known as the "Custom
House Bridge" market. It did not have a very long life, for in
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212 The Annals of the American Academy
May, 1684, it moved to the market-field at Bowling Green. Two
hundred years later, almost to a day, in May, 1884, the New
York Produce Exchange made the same move, leaving its old
building on the site of the Custom House Bridge market for its
new building on the site of the old market-field. These markets,
however, did not in any way take to themselves the character of
an exchange. The market-field was the general meat market and
assembly place, and the Strand was the meeting place for country
wagons. They serve to identify the site of the present exchange
with the early traditions of the trade of New York, but that
is all.
The first building known as an exchange was erected in 1690-91
at the foot of Broad Street, to which place the scene of water front
activity was shifted from the Strand at the foot of Whitehall
Street. This building was first erected as a Shambles, but with
the closing and moving of the other markets became the resort of
all sorts of traders, and gradually became known as "The
Exchange." This was followed by the erection in 1752, on the
same site, of a much more pretentious structure known as the
Royal Exchange, and sometimes called the Merchants' Exchange.
In connection with the erection of this building the city records
of 1752 contain the following:
Whereas, Several gentlemen, in this city, having voluntarily subscribed
toward the erection of an exchange, at the lower end of Broad Street, near
the Long Bridge, Mr. John Watts appeared before the board with a plan
thereof, and desire their approbation, to which plan they unanimously agreed,
and for the encouragement of so laudable an undertaking, voted that Mr.
Mayor issue his warrant to the treasurer to pay one hundred pounds toward
carrying on the work on said building. (Valentine's Manual, 1858.)
This exchange was a general exchange for all commodities,
foodstuffs included, as was the old market house which preceded it.
Previous to the erection of the Royal Exchange, however,
there was erected a little shed at the foot of Wall Street, known as
the Meal Market. This was the first real grain exchange or
market in New York. The corporation records of June, 1727, refer
to it as follows:
It is ordained that the market house at the lower end of Wall Street is
appointed for the sale of all sorts of grain, corn and meal, and none of such
articles are to be sold in public market at any other place.
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The New York Produce Exchange 213
This establishes it as an official grain exchange, and as the
direct pioneer of the present exchange. It continued in active
existence until 1762, when its business scattered to the Royal,
or Merchants', Exchange, the Broadway Market, and to the various
assembly places on Wall Street, which had even at that time
assumed its character as the financial center of the city.
The exciting political events of the period, together with the
Revolutionary War, had much to do with the making of trade
history in New York. The Royal Exchange and the Meal Market
passed out of existence. In their place came the Wall Street
Coffee Houses, the Merchants' Coffee House first, then the Down-
town Coffee House, in which the commercial exchange met. The
coffee house system had its origin in private enterprise, as well
as public need. The idea was not at all new, for even the Royal
Exchange had its coffee room upstairs.
More room was soon needed, and a more perfect organization
demanded, and in 1825 the erection of a building for the Mer-
chants' Exchange was begun. This building was finished in 1827,
and next to the City Hall was the most imposing and costly building
in the city. It was destroyed by fire in 1835, but was immediately
rebuilt. In its later years it became the United States Custom
House, and now, remodeled, is occupied by the National City Bank.
The new building had a frontage of 200 feet on Wall Street, a
depth of 160 feet on Hanover Street and William Street, and was
seventy-seven feet high. Its rotunda had a height of eighty feet,
and the dome was "supported on eight pilasters of fine variegated
Italian marble." New York always took a pride in its classical
front of eighteen Doric columns of Quincy granite, each thirty-eight
feet high and four and a half feet in diameter. As an illustration
of how deep that pride was, we have only to note that these columns
have all been preserved in the new building of the National
City Bank.
The merchants' exchange was a general commercial center and
embraced all branches of trade. Merchants in all lines of commerce
met here daily to consider questions incident to their trade, gather
the latest news and transact their business. The grain merchants
met in this exchange every day at two o'clock. The center of the
flour and grain trades, however, remained at the corner of Broad
and South Streets, where the flour men met daily on the sidewalk
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214 The Annals of the American Academy
for the transaction of business before assembling at the regular
exchange. It was at this time that the great European demand for
American foodstuffs set in and business began to grow with leaps
and bounds. It was not long before the South Street merchants
became tired of the journey to Wall Street for the nominal settle-
ment of contracts already entered into, and out of the sidewalk
gathering there was organized in 1852 the New York Corn
Exchange. This exchange was chartered in 1853 and leased the
store at No. 16 South Street. It soon became crowded for room
and leased other adjoining property until it had control of two
buildings on South Street and two buildings on Broad Street, out
of which a single "L" shaped room was created for exchange needs.
But makeshifts would not suffice for growing needs, and in
i860 out of the members of the corn exchange there was formed a
corporation known as the "New York Produce Exchange Com-
pany" for the purpose of erecting a suitable building for a produce
exchange on the block bounded by Water, Pearl, Whitehall and
Moore Streets, the site of the old Custom House Bridge Market.
This building was completed in 1861.
A second body known as the "New York Commercial Associa-
tion" was organized by members of the corn exchange and others,
and this body was the real exchange. It occupied the new building
as tenants, but managed its own affairs, adopted its own rules, etc.
In 1862 the new association was granted a charter so broad
and comprehensive that it still remains unchanged in any of its
essentials and has frequently been used as a model in the organiza-
tion of other exchanges. At the close of the first year the member-
ship numbered 1,238. In 1870 the membership had increased to
2,023. In ^68 the name was changed to the "New York Produce
Exchange," and in 1872 the exchange took over the building as
owner. Because of the immense amount of business transacted
and controlled by its members, all of which was carried on under
its rules and regulations, it became at this time the wealthiest and
most influential exchange in the country, and it exerted all its
power and influence for the development of the highest standards
in business life. It continued to grow rapidly in prestige, influence
and importance, and in 1878 its membership numbered 2,468. Its
building, with both floors given over to exchange use, became too
small for its needs and a movement for a new building began.
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The New York Produce Exchange 215
Funds were gathered by passing a by-law in 1880 limiting the
membership to 2,700 and fixing the initiation fee at $1,000. Later
300 additional memberships were issued at $2,500 each. These
were quickly taken and a new building was assured.
The story of the new building enterprise is the story of
strong men working for an ideal and succeeding. The present
site at Bowling Green, including a part of the old Market-Feldt,
was secured in 1880, and. on May 6, 1884, the members of the
produce exchange took triumphant possession of their present
building. This building has never lost its place as one of the finest
buildings in the world dedicated to commerce and trade, and in the
eyes of many people its trading floor, as such, has no rival in the
world. The building has a front of 312 feet on Whitehall Street,
150 feet on Beaver Street, 148 feet on Stone Street. The main
building is 120 feet high, the tower rising to a height of 225 feet.
The main floor consists of 31,680 square feet, the dimensions being
220 by 144 feet. The stained glass skylight overhead has an area of
one-fifth of an acre. The girth of the outside walls of the building
is one-fifth of a mile. Other adjoining property has since been
acquired, the value of the whole being now variously estimated at
from $6,000,000 to $8,000,000.
Thus we see that the New York Produce Exchange is the out-
growth of the needs and necessities of the commerce of the port of
New York. It was not manipulated into existence; it was not
organized out of hand. It began on the sidewalk and has grown
to its present magnificent proportions because it is the best possible
expression of those needs and necessities. In fact, it is those needs
and necessities in the concrete.
The New York Produce Exchange is a great big market-place,
nothing more, nothing less. On its floor wheat, corn, rye, oats,
barley and other grains, flour, meal, hops, hay, straw, seeds, pork,
lard, all sorts of meat food products, tallow, greases, cotton-seed oil
and various other animal and vegetable oils, naval stores of all
kinds, butter, cheese and other commodities are bought and sold in
quantities ranging from a single package to whole cargoes. It is
a place where men engaged in various mercantile pursuits and
in allied industries, manufacturing or otherwise, gather for various
purposes ; to keep in touch with each other and thus in touch with
all that is going on in the business world ; to gather daily informa-
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216 The Annals of the American Academy
tion concerning growing crops, stocks of merchandise, movements
of produce, current quotations for all sorts of produce in all markets
of the world ; to trade with each other as principals and for others
as brokers and commission men ; and to make initial arrangements
for the care of all the details incident to business transactions,
such as freight engagements, insurance, inspection, warehousing,
delivery, etc. It is, moreover, a market-place where all transactions
are safeguarded ; where men must deliver what they sell and pay for
what they buy; where, by force of all the circumstances, honesty
must prevail, for here customs of trade have crystallized into rule
and regulation, all grades and qualities are carefully defined and
all trade terms and phrases clearly understood.
Each one of the various trades, such as the flour trade, the
grain trade, the cotton oil trade, the steamship trade, etc., is to all
intents and purposes an exchange by itself. Its members meet
together in a given place on the floor. It is presided over by a trade
committee, which interprets its rules and decides all disputes under
the rules. It makes its own rules and regulations, subject to the
approval of the board of managers; and in the making of its rules
every trade member has a vote, thus making its rules the composite
judgment of all interests concerned therein — great corporation,
small dealer, buyer, seller, broker, commission man, exporter, etc.
Over and above these rules are the by-laws and rules of the
exchange itself, which apply to all trades alike and have to do
largely with the internal affairs of the corporation and its member-
ship.
Hence the exchange has come to be a meeting place, not only
of the man who handles cargoes for world distribution, but of the
butcher, the baker, the grocer of New York city and vicinity, who
recognizes the conveniences it affords, the opportunities it presents
and the safety it gives.
The exchange itself is merely the organized machinery of a
great maket-place. Its main chartered purposes are: to maintain
a suitable room for such market-place; to inculcate just and equit-
able principles in trade; to establish and maintain uniformity in
commercial usages ; to acquire, preserve and disseminate valuable
business information; and to adjust controversies and misunder-
standings between persons engaged in business — and this is all that
it does.
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The New York Produce Exchange 217
In discharging its functions it appoints and licenses, on the
nomination of the various trades concerned, inspectors and
weighers; maintains a grain inspection bureau, a flour inspection
bureau and a chemical bureau for the official analysis of certain
food products. It provides machinery for the adoption of trade
rules and their enforcement. These trade rules apply to the non-
member as well as to the member, and the non-member as well as
the member has the privilege of using the machinery provided by
the exchange to compel their enforcement. Through its rules for
the handling of business, large economies of labor and expense
are effected, and it virtually becomes a great clearing house of
commerce.
It has general agreements with warehousemen, with great rail-
road lines, with various steamship and other maritime interests,
covering the general needs of the trade at large, and in many
instances these agreements have resolved themselves into forms of
bills of lading, charter parties, etc., and are used generally in the
commerce of the port. Agreements with the railroad companies also
provide for the grading of grain at the railroad terminals in such
manner as to effect large economies in labor, expense and terminal
space. In the matter of grain, even the charges for receiving,
weighing, discharging, towing, lightering, blowing, screening or
dusting, etc., are subject to general agreements entered into by the
exchange and the various interests concerned therein.
The regulated conduct of business on the New York Produce
Exchange and similar exchanges accomplishes in a very natural way
what the congress and the courts have been seeking to accomplish
by force of law; that is, by the free and unrestrained use of an
open market it prevents combinations in restraint of trade. The
great monopolistic corporation is the one great foe of the com-
mercial exchanges. An open market in which all the world may
trade is just what such corporations do not want. It may be
of further interest to note a fact that all merchants are well aware
of — that an open market in which there is large trading tends
to minimize fluctuations in value. A narrow market means violent
fluctuations, but a great, broad market, capable of absorbing all busi-
ness thrown into it, reduces fluctuations in values to a minimum.
Of course, in the same degree that the exchange makes trading
easy and safe for the merchant, it makes trading easy and safe for
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218 The Annals of the American Academy
the man of a speculative turn of mind who wishes to act on his
judgment as to values in precisely the same way that the title
guarantee and trust companies, in combination with great estates
and other financial interests making it easy and safe for a poor man
to buy a home or for anybody to buy real estate, make it, in the
same degree, easy and safe for the man of a speculative turn of
mind to buy and hold real estate for an advance in value. In this
connection it should be remembered that, though by the perfection
of its machinery for the handling of business transactions, it
enables men to make speculative purchases and sales, it also, by the
same perfection of machinery, enables merchants to remove entirely
the element of speculation from their business.
An indication of the great variety of interests represented
on its floor is found in the fact that an attempt to make up a
classified business list of its present membership resulted in a list
of eighty-four headings, and one of these was miscellaneous with
202 members included therein ; 297 members are identified with the
flour industry; 256 with grain; 374 are receivers and shippers of
general commodities.; 133 are connected with transportation inter-
ests, 91 of these being identified with the steamship trade, showing
the great importance of the export trade on the floor; 131 are
provision men, 88 are concerned in the various lines of oil, 64 deal
in stocks and bonds, 54 are bankers, 50 are insurance men, 38 are
brewers, 37 are grocers, 63 are executives of corporations, etc. Hay,
seed, feed, elevating, inspectors, weighers, measurers, tallow,
greases, fertilizer, naval stores, millers, custom brokers, lawyers,
bakers, coffee, lumber, vinegar, dried fruits, beans and peas are all
included in the list, and so it goes on.
Even this partial list will, no doubt, surprise those whose only
conception of a produce exchange is that it is a place where a few
men meet for the purpose of speculating in wheat for themselves
and for others. It is quite true that there is a wheat pit on the
floor of the exchange; the grain business of the port could not be
transacted without it. There is also a lard ring and a cotton oil
ring. The trading in lard is insignificant. In cotton oil the trading
is heavy, but is practically all confined to those whose business is in
some way or other related to it. In wheat alone is the trading at
all general, and this is because it is an article of universal interest.
How small a figure the speculative business as such counts in the
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The New York Produce Exchange 219
business of the whole membership is shown by the fact that only
256 members are identified in any way with the chief article of
speculation, and of these many are not at all concerned with the
speculative side of the business and do not even use the future
market in their business transactions. Over 100 of the 256 credited
to the grain trade are in this class. No record is kept in New York
of daily transactions in "futures in wheat." The business is largely
contingent on the stock of wheat carried, and this in turn, aside
from local needs, is contingent on the exportable surplus of the
current crop and on whether Europe is buying our wheat or not.
European interests trade largely in the New York market, and their
operations are mostly of that hedging character so essential to the
safe conduct of legitimate business.
The New York Produce Exchange is a semi-public institution.
Its charter is a broad one and the state expects a full return in
service to the community. Its functions are not alone to maintain
a room for its own use and to establish uniformity in commercial
usages for its own benefit. It must gather and disseminate valuable
business information. This it does. Instantaneous quotations are
shown on its blackboards in wheat, corn and oats from Chicago,
Toledo, St. Louis, Kansas City, Minneapolis, Duluth and Winnipeg ;
in provisions and oils from Chicago; and cables are shown from
Liverpool, Paris, Antwerp, Berlin, Budapest and Buenos Ayres,
and all this information is given to the public through arrangement
with the telegraph companies. Its statistical department is main-
tained at an expense of between $40,000 and $50,000 per year, and
renders very valuable service to the whole community.
One of the chief functions of the exchange in connection with
its public service is to foster and develop the commercial interests
of the port of New York. In this the exchange itself is vitally
interested, for anything affecting the commercial interests of the
port, either favorably or unfavorably, is instantly felt by its
members. While it interests itself in all legislation affecting
commercial interests, probably its chief service to the port at large
lies in its constant effort to keep open all avenues leading to New
York. Under this head may be placed the efforts of the exchange
to force the withdrawal of differential railroad rates against New
York and its splendid work in connection with the new barge canal,
for which it is largely responsible.
(537)
220 The Annals of the American Academy
An illustration of the public value of its work along these lines
may be found in the result of its recent single-handed contest
against the practically prohibitive railroad rates on ex-lake export
grain at-and-east of Buffalo. It succeeded in its efforts in May
last, and as a result New York grain exports in May and June
doubled over last year, practically all at the expense of Montreal,
which port had been profiting at the expense of the Atlantic
seaboard ports for several years by the railroad rates in its favor.
In its effort to adjust controversies and misunderstandings
between persons engaged in business, its arbitration committee plays
an important part. This committee has large powers in all matters
submitted to it. It has the power to subpoena witnesses within
certain districts, and all its decisions have the same force and
power as a decision of the supreme court, and upon proper filing
and proving the clerk of the supreme court will issue a judgment
thereon. The arbitration committee has always been held in high
regard by the business world. It has been extensively used, and by
its splendid service has done much to advertise and popularize
arbitration as a means for the settlement of business differences.
The complaint committee is the grand jury of the exchange
and is the key to the enforcement of all its rules. All trade differ-
ences not submitted by agreement to some one of the trade com-
mittees or to the arbitration committee for settlement may be
brought to an issue by a complaint. This results in an inquiry by
the complaint committee, whose first aim is to conciliate the dis-
putants. Failing in this, it either dismisses the complaint or refers
it to the appropriate trade committee for settlement or to the board
of managers for discipline. Non-members may use the committee
or may be proceeded against in any case arising in connection with
a transaction entered into with or through a member. Disciplinary
action against non-members may result in their being denied repre-
sentation on the floor of the exchange and members prohibited from
trading for them. Many agreements to arbitrate are reached and
many cases are settled out of court by threatened use of the
complaint committee.
In common with many other exchanges, the New York Produce
Exchange maintains a gratuity system making provision for the
families of deceased members. When it was first established,
membership in the gratuity system was made optional with existing
(538)
The New York Produce Exchange 221
members but compulsory on all future members. As the system
soon grew to be very expensive, it raised many serious membership
problems, causing a gradual withdrawal of memberships for which
the owner had no further active use, and preventing many whose
use of membership would be merely nominal from uniting with the
exchange. These problems have been wisely handled, and by means
of an associate membership class it is now possible to join the
exchange without assuming gratuity obligations if one so elects.
There are one hundred associate members on its list of member-
ship. Gratuity matters have played an important part in the history
of the internal affairs of the exchange during the last fifteen years,
but, as they have nothing to do with the history of the exchange as
a market-place, or with its economic position as such, they have not
been referred to at length in this paper.
Because of its large property holdings the exchange is very
strong financially, and after providing for all its work has a yearly
surplus of $60,000 to $70,000, half of which is paid into the gratuity
fund, the remainder being used for the purchase and cancellation
of surplus memberships, thus keeping the membership an active
one and gradually settling the gratuity problem. The present
membership is 2,055, including associate members.
(539)
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