THE EFFECTS OF THE ST. LAWRENCE SEAMY
ON OHIO WHEAT MARKETING
DISSERTATION
Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University
By
AKHXLESH DUEEY, B. S., M. S.
The Ohio State University 1958
Approved by:
( Adviser Department of Agricultural Economics and Rural Sociology ACKNOWLEDGEMENTS
This study was made under a grant from the Ohio Agricultural
Experiment Station. Thanks are due Dr. Mervin G. Smith, Chairman,
Department of Agricultural Economics and. Rural Sociology for making it possible•
This study could not have been made without the help of Dr. John
W. Sharp. Dr. M. Eugene Cravens and Dr. Ralph W. Sherman took out time for reading the manuscript and making constructive suggestions.
Dr. Clifford L. James, Department of Economics, was helpful in earlier planning. Dr. Robert D. Patton, also of the Department of
Economics, provided encouragement.
The necessary data were made available by the managers of terminal elevators and flour mills in Ohio, and by the Toledo-Lucas County Fort
Authority. Trucking firms and railroads provided information on rates. The U. S. Department of Agriculture and the St. Lawrence Sea way Development Corporation gave kind permission to reproduce the
St. Lawrence Seaway maps.
Many other professors, colleagues, governmental agencies, and firms also whose namas have not been mentioned were very helpful, in more than one way, in preparation of this manuscript.
The author expresses his indebtedness and gratitude to all.
ii TABLE OF CONTENTS
CHAPTER PAGE
I INTRODUCTION ...... X
Purpose of the S t u d y ...... 10
II REVIEW OF LITERATURE ...... 11
III THE ST. LAWRENCE S E A M Y ...... 17
IV THE SEAWAY AND OHIO WH E A T ...... 21*
Financing and Rates ...... 28
Estimates of Freight ...... 30
Grain Traffic ...... 35
Shipping Through Toledo Port ...... 36
V EXPORT OF SOFT RED WINTER WH E A T ...... 1*3
Consumption of Wh e a t ...... 1*1*
Domestic Disappearance of Wh e a t ...... kl
Production of Soft Red Winter Wh e a t ...... 5k
Export...... 5k
Ohio Export Through Seaway ...... 63
VI THE EFFECT OF THE SEAWAY ON TERMINAL AND MILLING FACILITIES IN OHIO ...... 81*
Procedure ...... 86
iii TABLE OF CONTENTS (Continued)
CHAPTER PAGE
Terminal Facilities ...... 92
Flour Milling Facilities ...... 98
VII SUMMARY AND CONCLUSIONS ...... 102
APPENDIX...... 110
BIBLIOGRAPHY...... 121
AUTOBIOGRAPHY ...... 126
iv LIST OF TABLES
T&-RT.F. PAGE
X Estimated Production of Soft Bed Winter Wheat in Five Leading States, and United States, 1947-1956...... 6
2 Construction Cost for 27-Foot Channel Below Lake Erie, Estimated in 1952 ...... 27
3 Cost of Deepening to 27 Feet Great Lakes Connecting Channels Above Lake Erie', Estimated in 1951;..... 28
4 Freight Carried Through Welland Canal and St. Lawrence Canal, by Commodities, 1955 ...... 31
£ Canadian and United States Shipments of Major Commodities via the Great Lakes, 1950-1954 ..•••*. 32
6 Estimates of United States - Canadian Commerce on Completed Seaway, by Commodities ..... 33
7 Estimates of United States - Canadian Grain Movements on Completed Seaway...... 36
8 Volume of Wheat Handled by Terminal Elevators, by Zone, Ohio, 1955-1956 and 1956-1957 ...... 41
9 Utilization of Wheat by Large Flour Mills, by Zone, Ohio, 1955-1956 and 1956-1957 ...... 1*2
10 Production and Export of Wheat, United States, Five Year Average, 1866-1955 and 1956 ...... 45
11 Per Capita Consumption of Wheat Flour, United States, 1910-1956 ...... 46
12 Production and Utilization of Wheat in the United States and Production of Wheat in Ohio, 1925-1956 ...... 50
13 Production, Export, and July 1 Stock of Soft Bed Winter Wheat, United States, 1925-1956 ...... 55
v LIST OF TABLES (Continued)
TABLE PAGE
Hit States Producing Soft Bed Winter Wheat, Banked in Order of Production, United States, 195U-1955 • ••• 57
10 Estimated Production of Soft Bed Winter Wheat in Leading States at Five Year Interval, United States, 1919-1951* ...... 61
16 Wheat Production by Crop Reporting District, Ohio, 191*0-1956...... *...... 61*
17 Crop Eeporting Districts Ranked in Order of Wheat Production, Ohio, 1956-1957 ...... 60
18 Minimum and Maximum Prices Under the International Wheat Agreements, United States, 191*9-1956... 69
19 Guaranteed and Actual Sales Under the International Wheat Agreements, United States, 191*9-1957... 70
20 Wheat Exports Under Public Law 1*80, 83rd Congress, United States, 1955-1957-...... 72
21 Price Difference Between No. 2 Soft Red Winter Wheat and No. 2 Soft White Wheat, Toledo, 191*7-1957 »••• 71*
22 Price Difference Between No. 2 Soft Red Winter Wheat and No. 2 Hard Red Winter Wheat, Chicago, 191*7-1957 ...... 75
23 Inspection for Overseas Export, by Destination and Port, Soft Bed Winter Wheat, United States, 1955-1956 ...... 76
21* Inspection for Overseas Export, by Destination and Port, Soft Red Winter Wheat, United States, 1956-1957 ...... 77
20 Inspection for Overseas Export Through Atlantic Ports, Soft Red Winter Wheat, United States, 1955-1957 ... 79
vi LIST OF TABLES (Continued)
TABLE PAGE
26 Inspection for Overseas Export of Soft Red Winter Wheat, by Destination, United States, 1955-1957 .. 80
27 Price Difference Between Chicago and Toledo Markets, No. 2 Soft Red Winter Wheat, 191*7-1957...... 83
28 Utilization of Wheat by Flour Mills, by Market, Ohio, 1955-1956 ...... 88
29 Utilization of Wheat by Flour Mills, by Market, Ohio, 1956-1957 ...... 89
30 Volume of Wheat Handled by Terminal Elevators, by Market, Ohio, 1955-1956 ...... 90
31 Volume of Wheat Handled by Terminal Elevators, by Market, Ohio, 1956-1957 ...... 91
32 Wheat Production in Selected Countries, Ohio, 1956 .. 95
33 The Per Cent of Wheat Normally Stored by Terminal Elevators for Specified Time, Ohio ...... 96 3k Estimated Capacity of Terminal Elevators and the Total Volume Handled, by Region, Ohio, 195U-1955 • 97
35 Estimated Capacity of Flour Mills and the Actual Volume of Wheat Handled, Ohio, 1951*-1957 ...... 99
36 Flour Mills Expectation of Change in Demand, Ohio ... 101
37 All Wheat Production in Five Leading Soft Red Winter Wheat Producing States, United States, 19U7-1956 . 111
38 Soft Red Winter Wheat Acreage as Per Cent of Acreage Under All Wheat, Five Leading States, United States, 19k9 and 1951* ...... 112
39 Total Wheat Production in Leading Soft Red Winter Wheat Producing States at Five fear Intervals, United States, 1919-195U ...... 113
vii LIST OF TABLES (Continued)
TABLE PAGE
1*0 Estimated Percentage of Soft Red Winter Wheat Acreage in the Major Soft Bed Winter Wheat Producing States at Five Year Intervals, United States, 1919-1951*...... Ill*
1*1 Simple Average of Closing Cash Prices No. 2 Soft Bed Winter Wheat, Toledo, Monthly, 191*7-1957 ...... 115
1*2 Simple Average of Closing Cash Prices, No. 2 Soft White Wheat, Toledo, Monthly, 191*7-1957 ...... 116
1*3 Simple Average of Closing Cash Prices, No. 2 Soft Bed Winter Wheat, Chicago, Monthly, 191*7-1957 ...... 117
1*1* Simple Average of Closing Cash Prices, No. 2 Hard Red Winter Wheat, Chicago, Monthly, 191*7-1957 ...... 118
1*5 Inspection for Overseas Export of Soft Rad Winter Wheat, by Destination, United States, 1955-1956 .. 119
1*6 Inspection for Overseas Export of Soft Red Winter Wheat, by Destination, United States, 1956-1957 .. 120
viii LIST OF FIGURES
FIGURE PAGE ( I Great Lakes-St. Lawrence Waterway...... 23
II Great Lakes-St. Lawrence Waterway in Detail...... 26
III Production and Domestic Export of Wheat, United States, Five Year Average, 1866-1955 and 1956 «... Ii8
IV Production of A H Wheat and Soft Red Winter Wheat, United States, 1925-1956 ...... 51
V Production of Soft Red Winter Wheat, United States, and A H Wheat, Ohio, 0925-1956 ...... 52
VI Domestic Disappearance, All Wheat and Soft Red Winter Wheat, United States, 1925-0956 ...... 53
VII Production, Export, and July 1 Stock, Soft Red Winter Wheat, United States, 1925-1956 ...... 56
VIII States Producing Soft Red Winter Wheat, United States, 195U-1955...... 58
IX Production of Soft Red Winter Wheat in Ohio and Five Leading States as Far Gent of United States Production, at Five Year Intervals, 1919-195U .... 62
X Crop Reporting Districts Ranked in Order of Wheat Production, Ohio, 1956-1957 ..... 66
XI Inspection for Overseas Export, Soft Red Winter Wheat, United States, 1955-1957 ...... 78
ix CHAPTER I
INTRODUCTION
Ullheat is one of the most important cereal crops of the world.
It ranks second in total production to rice. In the non-cereal crops, only potatoes exceed wheat, and by about 1,000 million bushels. In the Western world, wheat production exceeds any other single cereal crop. The crop is scattered throughout the world.
But the Northern Hemisphere produces more than the Southern Hemi sphere, and the United States of America tops the leading countries.
It is one of the staple foods in this country and is used in every home in some form. As an edible commodity, it can be found in -the form of bread, macaroni, spaghetti, cookies, pastries, breakfast cereals, and combinations with other cereals and foods.
Wheat is one of civilization’s oldest cultivated crops. Sev eral varieties of wheat were grown in India centuries before the dawn of the Christian era. Other civilized nations also were in terested in this crop. About three centuries B.C., the Greek phi losopher Socrates remarked that nobody was qualified to become a statesman who was entirely ignorant of the problem of wheat.^
•ipaul de Hevesy, World Wheat Planning and Economic Planning in General, London: Oxford University JPress, 19hO, p. f>_.
1 2
Socrates was referring to the wheat problem for Athens only. Wheat
is now a world problem. The development of communication has brought
different parts of the world closer than ever before. At present no
problem is entirely confined to a single country. Wheat is in
exportable surplus in some countries and in great demand in other
densely populated areas.
A comparison with rice will illustrate this point. It is the
leading food of about half of the people of the world. The concen
tration of rice eating people is in Asia. At the same time, more than
90 per cent of the world’s rice is grown in southern and eastern Asia
and adjoining islands. The rice problem is, as such, localized in
that continent. Any deficit of staple food resulting from insuf ficient rice production and increasing population is generally met with the imports of wheat and wheat products. The wheat problem,
therefore, covers a wider area.
Only about six per cent of the world's food production moves in intercontinental trade.2 Wheat is by far the largest grain in such trade. It is a commodity that does not deteriorate readily in storage or in transit. It can be moved easily and is readily standardized. Therefore, it can be purchased from distant markets with confidence. In the United States agricultural exports, wheat holds an important position. Only cotton exceeds it in the dollar
\ value of exports. Wheat from the oountry moves mostly to Mexico,
2James S. Schonberg, The Grain Trade - How it Works, New forks Exposition Press, 1956, p.”5H. United Kingdom, Yugoslavia, and Holland. India, an exporting
country in the past, has also started importing wheat from the .
United States.
The importance of this commodity in national and interna
tional politics cannot be minimized. It is one of the commodities which has been frequently shipped to Allies (meaning countries not under the effects of Russian Communism) under various military and
defense pacts. In some cases, wheat shipments to the Allies were
to stabilize their economy whereby the Allies could concentrate
their attention on security arrangements. In other cases, the ship ments were in fulfillment of the United States share of the finan cial obligation in these pacts. Wheat shipments to non-communist countries, like India, which are not pro-western (not in the Western alliances for defense or other similar purposes), have been made to help these countries in their programs of economic development.
This is expected to keep these countries from falling into the grip of Russian Communism.
Wheat has also featured prominently in the domestic or national politics. Its producers have taken an active part in the various farm organizations and farm uprisings. Parity prices for wheat have been given more attention than anything else in the area of domestic farm politics. Parity prices have, in general, created a two-price system — a domestic price which is higher than the world market price, and higher than the equilibrium price. The staggering sur pluses of wheat which most economists think as resulting from the rigid price support programs have caused much furor and brought the
producers into limelight.
For two main reasons, wheat has not created many problems in
Ohio. First, wheat is not the most important crop of the state.
It ranks second in both acreage and production to corn. Second, 98
per cent of Ohio wheat is of the soft red winter variety. Flour
made from this class of wheat contains less gluten and more starch
than does flour from hard red spring and hard red winter wheats, and
so is preferred for pastry making and much of the home baking. The
demand for this class of wheat has not decreased because of change
in people's taste, increase in per capita income and export demand,
and supply has not increased to any great extent.
The United States raises many varieties of wheat, embracing
about all the classes grown throughout the world, that provide wheat
and flour suitable to the needs of all importing nations. Probably
the only other country which is able to produce all the classes of
wheat is Russia. The United States faces competition in the world
market for different classes of wheat from various countries. Ar
gentina, Australia, and Canada are the main competitors for the
international wheat markets. Australian soft wheat competes with
the soft red winter wheat of the United States.
In the United States, over half the states grow soft red winter wheat. Ohio, Illinois, Indiana, Pennsylvania, and Missouri are the five top producers. Some of the states like Texas and Oklahoma which have drier climates are shifting production from soft red winter wheat to hard wheats. In the five important states, production of soft red winter wheat during the last ten years,
191*7-1956, has ranged for individual states between 8.6 million
bushels and 67.1| million bushels.^ Pennsylvania was the lowest in
nine of these ten years and Ohio production was highest.
Wheat has been an important crop in Ohio since European settlers
started cultivating the land. The production in the state fluctuated between 29 million bushels in 1927 and 69 million bushels in 1953.
The average production for the period 1900-1909 was 29 million and for 1920-1956 it was 1*2 million bushels. The latter figure is ex cluding the unusually short crop of 9.5 millions in 1928. Because almost 98 per cent of the wheat produced in Ohio is soft red winter wheat the trend in the production of soft red winter wheat follows the general trend in all wheat production. During the ten years,
191*7-1956, the estimated production of soft red winter wheat ranged between 33 millions in 1951 and 67 million bushels in 1953, and the average was 1*9.1 millions.
Ohio wheat enjoys a high reputation for making cracker, cake, biscuit, pastry, and general purpose flours. (Almost all of this wheat is produced in the northwestern half of the state.) If an arc is drawn through Cleveland, Columbus, and Cincinnati dividing the state into two sections, the western section will represent the wheat-producing area. Most wheat is sold to country elevators and then to the terminal markets. Toledo, Columbus, and Cincinnati are
^Source ; Table 1. Estimates from all wheat production and acreage under soft red winter wheat as per cent of all wheat acreage. Table 1 Estimated Production of Soft Red Winter Wheat in Five Leading States, and United States, 19i*7-1956a (In Thousands of Bushels) H CN 191*7 191*9 1950 1951 1952 1953 1951* 1955 1956b
Ohio 1*7802 56207 58502 1*51*31 331*50 53722 671*08 1*7297 1*9299 38681*
Illinois 13360 18921* 21601 12738 15390 19563 261*13 21650 23976 271*28
Indiana 31*51*3 361*83 371*27 30777 221*91* 35331* 1*1*111* 37961* 32881 31*011*
Missouri 11852 1901*6 16989 11531* 10867 13359 19899 2061*3 23319 21*153
Pennsylvania 1237U 10186 19351 10537 101*52 10552 111*82 10987 8860 861*6
Total 119931 11*081*6 153870 111017 92653 132530 169316 1385a 338335 132925 United States0 23681*3 257613 211*1*18 165931 150898 199011* 21*2996 181*533 173000 186000
^Estimates were made as follows: The arithmetic mean of the acreage under soft red wheat as per cent of total wheat production for the years 19l*9 and 195k was multiplied by the production of all wheat for individual states* tyj. S. Department of Agriculture, AMS, Crop Production, 1956.
°U. S. Department of Agriculture, Agricultural Statistics, 191*8 and subsequent issues.
Sources Appendix Tables 38 and 39* the principal terminal markets for wheat. A part of the crop is
exported through the eastern seaports. The rest is milled for
domestic consumption and feed.
Proximity to markets decides the direction of wheat movement
toward one or the other terminal market, other things being equal,
because of differences in transportation cost. Wheat can be shipped
through one or more of the following modes of transportation: rail
ways, trucks, and waterways. Turnpike (road) was the first to be
used for freight movement in Ohio. This was followed by canals.
Since the development of railroads, the use of canals and even the
modern highways has been of minor importance.
The transportation of wheat to the local elevators is limited
to highways, by trucks or trailers. The advantages of the motor
vehicle rest fundamentally upon two factors: (1) the unit of car
riage is small and (2) the vehicle is not confined to any fixed road way. Trucks can pick up the grain right from the harvest, carry it
through the farm and country road, and dump it into the elevators.
Large and small quantities both can be handled by them. They are also more convenient than railroads for short distance hauls. Even for
long hauls, they can prove economical and be utilized efficiently in combination with waterways. Some of the grain is also shipped in
trucks directly to the terminals.
The truck is more useful in the local movement of grain to and from the farm, and it offers a greater variety of services than any other means of transportation. First, truck transportation is frequently cheaper than rail, either because the size of the shipment is small, or because railroad rates, combined with terminal charges
are relatively high for short distances, or because the cost of cartage must be added to the railroad charges. Second, trucks are speedy on short hauls because- it eliminates much rehandling and can take the quickest route, especially where carriage is on a contract or private basis. Third, trucks can operate more readily from door to door. Fourth, it can supply a comparatively frequent service
Traditionally, the movement of'grain from country elevators to the terminal markets has been by railroad. For long distance inland hauling, whether the grain was destined for domestic use or export, the railroads have been commonly used. This has been the case be cause of the many service advantages the railroads offer to shippers:
(1) Since the railroads form an interconnected net and freely inter change cars, they furnish more thorough service. (2) They provide transit and reconsignment privileges. (3) The service is more gen eralized by commodity. (U) They are fast. (5) They are less hampered by adverse weather, and have more dependability. (6) On long hauls, they are usually able to offer greater dispatch.
The waterways have a great cost advantage. The water carriers can transport at relatively low cost of movement. The cost of trans portation on rivers and canals is higher than on the lakes. But most freight is not confined to port-to-port traffic, and the economies of water transportation are reduced when the water haul must be
^Truman C. Bigham and Merrill J. Roberts, Transportation: Principles and Problems, New York: McGraw-Hill.Book Co., 1952, pp. 1U 7-149. supplemented by land carriage to interior points. Extra handlings
are necessary. In addition, rates of the land carriers for the
relatively short land hauls are higher per mile than the charge for
overland movement all the way. Some of the other disadvantages of water transportation ares (1) It is almost always much slower. (2)
Water service is not so complete as that provided by land carriers.
(3) Shippers have to arrange for cartage, (it) Because of the large capacity of the operating units, water carriers generally lack the convenience and flexibility even of railroads. (5) Service is often suspended. (6) In many cases, the water carriers assume less li ability than land carriers.
In international trade, the advantages of water carriers out weigh their disadvantages. There are two important reasons for this.
First, these are the only practical means of transportation. Second, they are cheap. All Ohio wheat destined for export (except to
Canada) moves to the eastern seaports where it is transshipped to ocean carriers. The moving of grain to the seaports, at present, is done almost exclusively by the railroads. For Ohio wheat, the opening of the St. Lawrence Seaway will provide another means of transportation to the seaports. Because the Toledo terminal market handles a large proportion of Ohio wheat, development of Toledo port will have an important bearing on the marketing of wheat from this area. If ocean carriers can come up to Toledo, the cost of trans shipping from the Seaway carriers to the ocean carriers will be elimi nated. Purpose of the Study
The purpose of this study is to estimate the effects of the St.
Lawrence Seaway on the export and price structure of Ohio soft red winter wheat. CHAPTER XI
RET/TEW OF LITERATURE
A vast amount of published work is available on wheat. Leighty and Martin (1*6) studied the characteristics of soft red winter wheats and their distribution in the United States. Foster (21*) made a study of factors affecting the movement of Ohio wheat. Jones and
Lamb's (26) agronomic study of wheat describes the quality of soft red winter wheats and their suitability in Ohio. Jasney (13) in a detailed study in grains reasoned out the substitution of one type of grain for another. He found that consumers of wheat bread and other products made of wheat insist on having the desired products in a definite form and of a definite quality to such an extent that substitution of one kind of wheat for another is materially limited.
The Wheat Studies (7) of the Food Research Institute provide a com prehensive picture of the production, distribution and consumption of wheat in monthly publications from December, 1921* to July, 191*1*.
In recent studies - Fox (1*2) made an analysis of demand for farm products including wheat. In his analysis of year-to-year changes in per capita consumption of flour, which represents the bulk of the wheat used for food in this country, he estimated an elasticity of demand with respect to the United States farm price of -0.067. His
11 12
analysis implied an elasticity of demand by dealers of about -0.5 in
this country and about -1.2 for all United States goods and services
in the foreign market from 1921; to 1939. Me inkin CU7) in his study
of the demand and price structure for wheat attempted the formulation
and statistical fitting of a system of six equations that together
describe or represent the economic forces which determine domestic
and world prices for wheat and domestic utilization during the mar
keting year for food, feed, storage, and export. The study by Salmon
and Reitz (50) provides historical data on the production of differ
ent classes of wheat in the United States.
The Fleet Owner (56) estimates that the opening of the Seaway will create a greater demand for trucking because trucks will be
preferred over railroads for short hauls. The U. S. Department of
Sommerce (36), in 191*1, made estimates of potential traffic on the
St. Lawrence Seaway. The estimates seem to suffer from a lack of
data and are lower than estimates made in the last few years. Lindsay
(31*) estimated the maximum freight tonnage capacity of the Welland
Canal on completion of the deep waterway. The estimates are based
on expectations of the size of the ships and the proportion of dif ferent sizes of ships that will use the canal. Passing reference can be made to Wisconsin and the Seaway (62), the proceedings of a special one day institute containing papers on different aspects of the Sea way. One of the papers expressed the view that the railroads will, in due time, give the same privileges to the Lake ports as are 13 provided to the Eastern seaports. Howard (21) studied some economic aspects of the St. Lawrence project as a whole.
The Bureau of Business Research, Fenn College (6 ) analyzed the impact of the Seaway on the port of Cleveland. The survey deals with various aspects, such as present and potential traffic, existing facilities and possibilities for improvement, business expectation, and the competitive position of the port of Cleveland. But the survey has been confined to general cargo. Phillips (U8) studied the Seaway as it affects the American farmers. The study is preliminary and does not go into any analysis of the effects of the Seaway.
Russell (ii9) made a more detailed study of the potentials of the Seaway for marketing United States agricultural commodities. He analyzes the short run potentials of the Seaway by studying some of the physical problems encountered and the competition for shipping space among commodities. The traffic through the Seaway will be limited by the capacity of Welland Canal. If an average of 10,000 tons of cargo were locked through for each of £>770 lockages, the capacity of the Welland Canal would be £7.7 million tons. But on the basis of the average cargo load for 1933, which was about 9,000 tons for the Upper Lake ships, the capacity will be slightly under $2 million tons. These estimates assume that all cargo will move in the larger lake ships. With the ships which are available, the loads which they carry, and the number of passages which can be made, the
Canadian estimate of J46 million tons may be reasonable. Capacity of the Welland Canal is limited, and competition from coal and Canadian grain may limit movements of the United States grain. This route is not likely to provide lower cost transportation between the midwest and the eastern seaboard. Direct overseas ship ments from the Great Lakes probably will increase. It seems un warranted, however, to visualize immediate and material changes in existing transportation channels for agricultural products from the
United States when the Seaway is completed.
The prospects for an increase in agricultural exports may be limited to the equivalent of 30 million bushels of wheat. A part of the grain shipment may be diverted from railroad to the Seaway. If it is assumed that the grain shipment will increase to 100 million bushels (and Bussell is doubtful), with transportation savings of at least 10 cents a bushel, the actual amount of savings is still modest, about 10 million dollars. Over commercial sales of 800 million bushels of United States wheat may result in average savings of 1.2^ cents a bushel. Some wheat producers will benefit more than others from Seaway transportation, but it is unlikely that all of the savings would go to wheat producers, especially so long as they find themselves selling in a surplus market.
Hartley (10) made a detailed study of the effects of the Seaway on grain movement. He estimates a four to ten ffia*Dfcte rate disadvantage per hundred pounds from Chicago as compared to rates from Baltimore to important ports in Europe, Cuba, South Africa, India, Peru, Hong
Kong, Japan, and Brazil. Cleveland has a disadvantage of two to nine cents. These are for all water rates. The existing export rail rate is 19 cents per bushel. The variable costs amount to 12 cents per bushel. The railroads can, therefore, reduce the rates to 12 cents.
The all water rate will still be lower by about six cents. The
savings will be about ten cents if transshipment is also taken into account. The rail rates are already quite low because of Great Lakes competition. Further reduction is, therefore, not likely.
The pattern of movement may be triangular with ore from Seven
Islands to Ashtabula, coal from Toledo and Sandusky to upper lake grain ports, grain to Montreal or Quebec for transshipment to ocean vessels, and an empty vessel movement on to Seven Islands. The fact that the present St. Lawrence canals to Montreal constitute the cheapest route today may be surprising in view of the fact that very little United States grain has moved over this route for export in recent years. This is because of the following reasons:
1. The canals and the canal-size vessels are inadequate to handle the seasonal flush of both Canadian and American grain in the fall.
2. The recent postwar grain surpluses have crowded the storage facilities at the Canadian transfer points on the St. Lawrence River.-
3. Most of these elevators are owned by the Canadian government.
ll. The grain rates and the use of the St. Lawrence canals are regulated by Canada.
Naturally Canadian grain has been given priority over United
States grain. The low cost St. Lawrence route has, therefore, been available to American exporters in a very limited way only. 16
The present shipping cost from Chicago to Montreal is 19 cents.
This includes cost of transfer from large lakers to small canalers
at Port Colbourne, near the We Hand Canal or at Kingston, Ontario,
near the head of the St. Lawrence canals. It is again transshipped
to ocean vessels at Montreal or other St. Lawrence ports. The Sea
way will make possible an approximate savings of five cents per
bushel. Savings of 6.7 to 8.J? cents will come from the economies of
moving grain in large ships and lakers in place of small canalers.
Savings will be greater for foreign ships. Freight savings are un
likely for Seaway intercoastal shipments because the water routes are
longer than rail routes. Also, foreign ships which could compete
with rail rates are prohibited from engaging in intercoastal traffic.
/ CHAPTER III
THE ST. LAWRENCE SEAWAY
Since the settlement of the midwest, man has been interested in transportation of grain across the mountains to the east coast and to the countries across the Atlantic. The completion of the Erie
Canal in 132£> was an important landmark in this direction. The mid-
; western grain could henceforth move directly from the cities on Lake
Michigan to Buffalo, then to Albany through the canal and finally to
New York down the Hudson River. The transportation time across the mountains was cut from 20 days to about eight days.^ The cost was also slashed overnight from about $100 to $10 for moving a ton of corn from northern Ohio to New York.2 The So© Canal, opened in
June, 1855, was another landmark.3 It connected Lake Superior to the Great Lakes system.
^■Joseph R. Hartley, The Effects of the St. Lawrence Seaway on Grain Movements, Bloomington: Indiana University, School of Business, 1*95*7, p »
2Emory R. Johnson, et. al. History of Domestic and Foreign Commerce of the.United States, Washington: Carnegie Institution, 191$, p . z z o — ;
3“Great Lakes Shipping Centennial," Cleveland Plain Dealer, June 12, 19$$, p. 7. -
17 18
As the Erie Canal neared completion in 1825, concerted agitation
for development of a seaway through the upper St. Lawrence River and
around Niagara Falls took place in Canada and a formal professional
group, the Association for the Improvement of the St. Lawrence was
formed. The political agitation of the Canadian Seaway group proved
instrumental in the opening of a nine-foot navigation channel along
the upper St. Lawrence and through the Welland Canal. The opening
of this route in 1853 proved it to be largely a failure, because the
channel was too shallow. The ocean carriers could not navigate in it. Evan the lake ships had increased in size so rapidly that the various improved connecting channels soon proved inadequate.
This, however, did not deter the enthusiasm for a seaway. In the 1870's Canada started a 30-year program, costing $50 million, to build a new canal and lock system on the upper St. Lawrence between
Montreal and Lake Ontario. The canal which was opened in 1903 has a draft of 1U feet. In combination with other similar projects in the
United States, by the beginning of this century a new through water way was available. Lake and ocean ships with a li*-foot draft could travel into and out of the Great Lakes. The Hi-foot St. Lawrence canals above Montreal are still being used today, to carry small ves sels into the Great Lakes.^
The failure of the lit-foot canals to serve as a true seaway became evident in the 1890's, long before their completion. The campaign for a deep waterway to the ocean was, therefore, renewed.
^Joseph R. Hartley, oj>. cit., p. 1*8. The International Deep Waterways Association was organized. In 189%,
the United States took its first action toward consideration of such
a project. Congress agreed with Canada to appoint a Deep Waterways
Commission to investigate the feasibility of a genuine ship canal
into the Great Lakes. The American commissioners presented a recom mendation to Congress in 1397 for a 28-foot deep lake-to-sea canal.
Congress in turn directed the Army Corps of Engineers to make a cost estimate of the whole project. The Engineers completed their work in 1900, but by this time agricultural conditions had improved and
the railroads had marshalled strong opposition.^
Not much was done until 1913. In that year the Senate passed a resolution requesting the president to negotiate with Great Britain to secure an agreement for the development of the boundary waters.
World War I prevented any action in this direction. The war, however, brought up a -new idea in favor of a seaway. The hydroelectric power potential of the Great Lakes was emphasized. The governments of both
Canada and the United States appointed commissions to investigate the feasibility of a ship channel. Their investigations were favorable and a treaty was finally signed in 1932. But the whole project was again dropped because the Senate could not muster the necessary two-thirds vote to ratify the treaty.
President Roosevelt revived the idea and sought to promote the seaway by means of an executive agreement that would require the ap proval of only a simple majority in the senate. But then came another world war and the idea could not materialize. For several years
that followed, the seaway idea remained confined to bills, hearings,
and reports and ultimately, defeats. In 19U8 New York which had
been opposed to the St. Lawrence Seaway changed its position. New
York needed cheap electricity from the St. Lawrence Elver and the
seaway was now in sight.
The New York-Ontario hydroelectric power development scheme was
considered unwise by President Truman because it divorced the power
development from navigation. The Canadians agreed with the president
but wanted some kind of action. In 1951* Prime Minister St. Laurent
stated in frustration that Canada would construct the seaway as a,
Canadian project if Congress did not pass the bill.^ In December
the Canadian Parliament proceeded to create a St. Lawrence Seaway
Authority, to construct an all Canadian seaway. For the power de
velopment, however, cooperation of the United States was essential because the necessary dam had to cross the international boundary in
the center of the St. Lawrence River.
Opinion in the United States during this period was gaining weight in favor of the seaway. The high grade ore of Minnesota was almost depleted. Labrador offered a new source of cheap ore but transportation by rail made it relatively expensive. The Korean conflict and the continuance of cold war brought the problem of national defense into the picture. The seaway will make it possible to ship arms and supplies to the allies across the Atlantic directly 21
from the center of production. The Great Lakes' harbors will pro
vide ship building facilities. Moreover, if Canada constructs the
seaway, the United States will not have a say in the calculation of
tolls, or regulation of traffic especially from unfriendly nations.
There resulted a series of Congressional hearings, bills, and debates.
The Congress finally passed a Seaway Bill on May 7, 195 The
President signed the Wiley-Dondero Act on May 13, 19 Sh and the Act became Public Law 358.
The Wiley-Dondero Act of 19$k authorized work on the seaway below Lake Erie. The Blatnik Act of 1956 provided for the deepening of the upper lake connecting channels. Both together will provide for a seaway with a minimum of 27-foot draft all the way from Duluth,
Minnesota on Lake Superior, and Chicago, Illinois, on Lake Michigan to Montreal. The 160 miles channel between Montreal and Quebec has a 32.5-foot channel. The existing channel between Quebec to the ocean, 81*3 miles, is 35 feet deep. Cooperation in construction of the seaway from the Canadian side comes tinder the St. Lawrence Sea way Act of 1951*
Work on the project will involve deepening of the channel in
St. Marys River and Straits of Mackinac covering a distance of 63 miles, connecting ports on Lake Superior by a deep channel. The channels in St. Clair River, Lake St. Clair and Detroit River have a 21-foot upbound and 26-foot downbound draft. This area of 88 miles will be deepened. The Welland Canal extending 27.6 miles is presently 22 only 2£ feat deep. The major works will be around International
Rapids and Thousand Islands sections. The former is U6 miles and the latter 68 miles. The Canadian section close to Montreal is 68 miles. Numerous locks will have to be built to maintain the desired level of water while bypassing the rapid falls. The taming of the rapids will also provide for hydroelectric power. Work has already started in some sections.
The seaway includes the Great Lakes - including Superior,
Michigan, Huron, Erie, and Ontario - Lake St. Glair, St. Clair River, and Detroit River. The St. Lawrence River is the final link to the ocean and the most important single unit. Lake Superior, the largest of the Great Lakes is 383 miles long, Lake Huron 223 miles, Lake
Erie 21^0 miles, and Lake Ontario 160 miles. Lake Michigan,which is south of Lake Superior, is 321 miles long. The maximum length of the Great Lakes waterways is thus 1,006 miles. The St. Lawrence
River adds 1,003 miles between Quebec and the ocean. The, various channels will add another 360.6 miles. The St. Lawrence Seaway with
2,369.6 miles of natural and artificial waterways, which includes all the lakes, rivers, and channels will have a tremendous effect on the agriculture, industry, and the whole economy of the adjoining areas and, thereby, on the country. Some of these (affects) will be dis cussed later. Figure I Great Lakes-St. Lawrence Waterway
Port Arthur Fort William•, - SUPERIOR* SEAWAY Montreal 42
'Superior Ogdensburg
L. HURON Toronto^-^^2> ' AR?
Buffalo
( Detroit ' ■:___ I Chicago Philadelphia*,'
Baltimore '
PO u> CHAPTER IV
THE SEAWAY AND OHIO WHEAT
While describing the economic advancement of England, the great
English economist Marshall wrote, "...the dominant economic fact of our own age is the development not of manufacturing, but of the transport industries."**" What was true in the later part of the nineteenth century, when Marshall wrote the Principles^ is still true. Lower transportation cost means lower prices to the consumers.
Any improvement in the transportation also, in the final analysis, means lower prices at retail.^ Reduction in transportation cost can be interpreted as bringing the markets or centers of consumption closer to the centers of production. This generally results in specialization and mass production, and ultimately lower prices and increased consumption.^
^Alfred Marshall, Principles of Economics, New York: Macmillan Co., 19^2, pp. 67U-675* p The first edition of the Principles of Economics was published in 1890.
3There may be a lag between reduction in transportation cost and lowering of retail prices. If the former is small, retail prices may remain unchanged.
^This may be both mass consumption as well as per capita increase.
2k The St. Lawrence Seaway will be a development, roughly speak ing, on the existing shallow waterway. It should have, therefore, some beneficial effects on the economy in general. In order to estimate the specific effects of the new waterway on Ohio wheat'* the cost of construction of the seaway^ will have to be calculated and the rates estimated. The total cost of construction of a 27-foot channel below Lake Erie as shown in Table 2 amounts to $263 million.
These estimates were made by U. S. Army engineers for the United
States cost, and by Canadian engineers for Canadian share of the cost. These estimates are for the Seaway on3y, and will provide for a waterway 27 feet or deeper from Lake Erie to the ocean. The esti mated cost of deepening the channels between Lake Superior and Lake
Erie will amount to another $110 million. The breakdown is given in
Table 3.
The cost of construction of the Seaway was estimated in December,
1952 and that of the Great Lakes connecting channels in October,
1 Because of an increase in the price level, these cost esti mates will have to be revised upwards. Also, in the original esti mates it was assumed that the United States will build the Iroquois
Lock in the International Rapids section. Since Canada has decided to perform that task, her share of the cost will be greater. The final costs will be about $90 million for the United States and
-’About 98 per cent of Ohio wheat is soft red winter wheat.
^Henceforth, unless specified otherwise, 'Seaway* means St. Lawrence Seaway. Figure XI Great Lakes—St. Lawrence Waterway in Detail AND OETROIT RIVER) OETROITAND CLAIR t S LAKE RIVER, MACKINAC,CLAIR OF ST 1ST RIVER, MARTS STRA5T3 CONSTRUCTED AND MAIN* TO 27 FEET TO27 DEEPENEDCHANNELS BE AUTHORIZED THESE THAT EH3HTT-POUR7HCONGRESS ENGINEERS, U. 6. ARMY THE CORPSTHE BY TAINE0 OF CONNECTINO CHANNELS XSIG DEPTHS: EXISTING OOWNWUNO FEET 28 21FEET UP60UND GREAT LAKES II I/O HUAD SAD SECTION ISLANDS THOUSAND SAULTSTE. SAULTSTE. MARIE INTERNATIONAL BRIOOE THOUSANDISLANDS OHIO LEXANDRIA ^ AL5E AI (7 MARIE SAULT5TE.
BUT GENERALLY FEETORMORE 700 CHANNEL FEET 0 8 WIDTH WILL 4 BE nmffimtra REMOVE WILL THE U8. SCAnERED CL DF SCALE NENTOA RPD SECTION RAPIDS INTERNATIONAL m S a ARE r [MEAN fIGWES SHOWN FORELEVATIONS) Of W HIIM m ERCO ONTARIO, r WCTMPOW s HTERNATKMALRAFBS SECTION PCWtRNOTE DEVELOPMENTN CONSTRUCTION R K N I JOINTLY r- n)L L E V LE ) in u T N O E H m m LOCKS ARE B0dxe0X3d DEERLOCKS AREB0dxe0X3d LIFT THE SEVENEXISTING FEET CHANNELS 27 TO THECANADA DEEPEN WILL PRESCOTT' -W ELLAND C A H A L- L- A H A C ELLAND -W OT"®i OUI LOCK ROOUOIS R LAKES- ROFILE O PR Y A W A E -S S E K A L T A 3RE SilKT mp AA 4 ETWD 27FOOT 7 MINIMUMWIDE -2 FEET 442 CANAL US. WILLTHE CONSTRUCT10LONG MILE NENTOA RPD SECTION RAPIDS INTERNATIONAL EWY R FILE PRO SEAWAY ROOUOIS JEA JEA WHAM / ■ e l i s S P * ' ' 41MI I S E IL M 1 I4 PEVINCENT evel e v le 26 - mmrm. CL O MILEI OF SCALE INTERNATIONAL HI3H LEVEL BRIDGETS! INTERNATIONALHI3H LEVEL BRIDGETS! OWJOHT O-ElSENHOWER iNTtmAtmAL tom.
mcmi m m ISM GRASSE RIVERt CONN. m m SAUIT SAUIT r D. EISENHOWER r 10CX
mix mi KfiSSE R.LOCK NR POOL ONER m SPILLWAYDAM REGS AE FACS SECTION FRANCIS T S LAKE w m w EE ISLANDBTOCHICAGO SEVEN ALN DSACS N MILES IN DISTANCES SAILING SADTOWi’ I ISLANDSTOOEWOiT’ OMNRA . , . TO MONTREAL IHgESl \ FROM ISLANDS SEVEN \ I f r u t r J 6LE lATLARtlC } 4 6LE 9 OtEAlil 28
...... OBRTCE 0 L ILK JO M BURNT403 CREW . 394 . . 0 SOULANGES UL U3CKSBUILD W T WILL ANDCANAL BEAUHARNOISIff DEPTHNAY FOOT WN 27 CHANNEL N © CANAOAVrlLL DREDGE r 484 600 J 189 SECTION H AN LWEC SEAWAY LAWRENCESAINT DEVELOPMENTCORPORATION RA LAKES- NT LAWRENCE T IN A -S S E K A L GREAT JuDEER Construction of the Seowoy Projtet, L oki Erie to Montraol, Montraol, to Erie oki L Projtet, Seowoy the of Construction lk LEW IS G. C A S T LE M.W .O ETTERSHAG EN EN ETTERSHAG .O M.W LE T S A C G. IS LEW The Saint Lawrence Seaway Development Corporation Corporation Development Seaway Lawrence Saint The I diitao Dpt Ad bililrolor dm A Deputy Administrator The S t Lawrence Seaway Authority ofConodo Authority Seaway Lawrence t S The DEPTH.INCLUDNGTWO is being performed oe indicated above by above indicated oe performed being is ONO AND FOOT27 MIN, ANADA WILL CONSTRUCT WNW. CHANNEL18 Ml EWY PROJECTS SEAWAY CATHERINELOCK AMN F STELAR R LLA E T S F. RAYMOND of the United Sfotee Sfotee United the of AHN SECTION LACHINE COTEST he Enginaer Chief SUD BY ISSUED MAP OF DEER |3 I MILES 1 MILES I |3 and m m iimffm CHMH&. T D 3 I l r L n l f l f LAPRAIRIE LOCK
27
$220 million for Canada, a total of approximately $310 million for 7 the Seaway portion of the construction work.'
Table 2 Construction Cost for 27-Foot Channel Below Lake Erie, Estimated in 1902 (In Thousands of Dollars)
Section Canada United States
Welland Canal $ 2,000 — Thousands Islands — 1 1,766 International Rapids — * /86,308 Canadian 172,950
Total $1714,950 #88,0714
Total of United States and Canada $263,0214
Source: U. S. Senate Committee on Foreign Relations, St. Lawrence Seaway Manual, Senate Doc. 165, 82nd Congress, 1st Session, Washington, 1955, p. 32.
^Martin Ottershagen, “Building the Seaway,1' Wisconsin and the Seaway, Milwaukee: Marquette University, October 5, 1955, pp. 25 and 36. 28
Table 3 Coat of Deepening to 27 Feet Great Lakes Connecting Channels Above Lake Erie, Estimated in 195 k
(In Thousands of Dollars)
Channel Estimated Cost
Detroit River $ i*l*,107 Lake St. Clair li,l5 8
St. Clair River 18,158
Straits of Mackinac 2,231
St. Marys River ill, 731
Total $110,1*25 Less Nonfederal and Coast Guard Costs 98
Net Cost Estimated by Army Engineers $110,327
Sources St. Lawrence Seaway Manual, op. cit., pp. 85-88.
Adjustments in the other costs estimates also will have to be moved upwards. Ohio will not be, however, concerned with the Great
Lakes channels construction in its imports and export;: trade except that the latter construction may increase the shipping in the Seaway.
The increase in shipping affecting Ohio's foreign trade is not likely to be of any great significance. Therefore, our discussion, henceforth, shall be confined mainly to the Seaway.
Financing and Rates
The Wiley-Dctidero Act specifies that the Seaway will have to be self-liquidating. The financing will be by borrowing from the 29
Canadian Treasury or loans guaranteed by the Minister of Finance.
This will provide for the Canadian expenditures for the Seaway. The
United States share of the cost will be met with revenue bonds
issued to the Treasury. The principal and the interest will be re
paid from the tolls collected from the ships using the waterways.
The federal expenditure to provide turning facilities for the ships
amounting to over $30 million will not be taken into account. No mention will be made of the expenditure for the improvement of har bors for deeper ships, because the policies of the ports is not
known yet.
The St. Lawrence Seaway Development Corporation (hereafter called the 'Corporation') will set the rates of toll in consultation with the St. Lawrence Seaway Authority of Canada. In the event that such consultations shall not result in agreement, the Corporation is authorized and directed to establish unilaterally such rules of measurement and rates of charges or tolls for the use of the works ft under its administration. In that case, the Corporation will have to give three months' notice by publication in the Federal Register and a public hearing will be held during that period. The establish ment of the tolls shall be guided by the following principles:
1. That the rates shall be fair and equitable and shall give due consideration to encouragement of increased utilization of the navigation facilities and to the special character of bulk agri cultural, mineral, and other raw materials.
Q °St. Lawrence Seaway Manual, op. cit., p. 9. 30
2. That rates shall vary according to the character of cargo with the view that each classification of cargo shall so far as practicable, derive relative benefits from the use of these facil
ities.
3. That the rates on vessels in ballast without passengers or cargo may be less than the rates for vessels with passengers or cargo.
i|. That the rates prescribed shall be calculated to cover, as nearly as practicable, all costs of operating and maintaining the works under the administration of the Corporation including depre ciation, payment of interest in the obligations of the Corporation, and payments in lieu of taxes.
5. That the rates shall provide, in addition, for the Corporation revenues sufficient to amortize the principal of the debts and obli gations of the Corporation over a period not to exceed 50 years.^
Estimates of Freight
The Seaway will not be confined to grain traffic. In the past, grain and grain products ranked first among all the commodities carried through the Welland Canal and the St. Lawrence Canals, coal and coke ranked second, and petroleum products third. Iron ores and concentrates ranked third in the down traffic as shown in Table
In the Great Lakes, iron ores formed the important part of the
^Op.9 cit., p. 10. Table I*- Freight Carried Through Welland Canal and St. Lawrence Canal, by Commodities, 195? (In Thousands of Short Tons)
Welland St. Lawrence Total Up Total Down Commodity Up town Total Up Down Total Traffic Traffic Total
Animals and. Animal Products 5 12 17 7 16 23 12 28 1*0 Grain and Grain Products 15 5313 5328 2 371*0 371*2 17 9053 9070 Other Agricultural Products 2 5 7 2 19 21 h 21* 28 Coal and Coke 15 51*21 51i36 8 1601 1609 23 7022 701*5 Iron Ores and Concentrates 1587 2810 1*397 1751 0 1751 3338 2810 611*8 All Iron and Steel 69 31*5 1*11* 21 57 78 90 1*02 1*92 Other Ores and Concentrates 35 3 38 36 3 39 71 6 77 Other Mine Products U3 111 151* 208 31* 21*2 251 11*5 396 Petroleum and Products 1017 1705 2722 1280 203 11*83 2297 1908 1*205 Stone, Gravel, and Sand 107 65 172 28 215 21*3 135 280 1*15 Salt 0 105 105 0 101 101 0 206 206 Forest Products including Pulpwood, Woodpulp, and Newsprint 727 205 932 671* 6 680 11*01 211 1612 Other 638 531: 1172 765 670 11*35 11*03 1201* 2607
Total 1*260 16631* 20891* 1*782 6665 111*1*7 901*2 23299 3231a
Source: Dominion Bureau of Statistics, Canal Statistics, Annual Report for 1955, Ottawa, 1956.
lo H 32
shipments as shown in Table 5. Some of the iron ore will move
through the Seaway when the waterway is complete. There are several estimates available as to the amount of different commodities that will move through the Seaway. These estimates indicate that iron ore movement will be greater than any other commodity. Estimates by various sources vary greatly. James C. Buckley, Inc.’*'® estimates are on the conservative side while the U. S. Department of Commerce**-! estimates are on the liberal side. The different estimates shewn in
Table 6 make one thing clear - there will be a tremendous increase of commerce on the completed seaway.
Table 5 Canadian and United States Shipments of Major Commodities via the Great Lakes, 1950-1954 (In Millions of Short Tons)
Year Iron Orea Coal Stone Petroleum . Grain Totalk 19!>0 78.2 57.6 23.1* 13.3 9.3 191.3
1951 89.1 50.9 25.9 16.3 13-2 206.0 1952 74.9 1*6.3 23.3 17.1* 15.2 186.1 1953 95.8 51.0 27.0 16.8 14.3 216.5
1951* 60.8 1*6 .1* 25.0 14.9 11.9 166.2
SGross tons. ^Includes net tons of iron ores and other commodities. Sources Lake Carriers' Association, Annual Report of the Lake Carriers' Association, Cleveland; 1954*
l°James C. Buckley, Inc., A Guide Plan for Waterfront Develop ment at the Port of Cleveland, Chio, New York, 1955. U u . S. Department of Commerce, Potential Traffic on the St. Lawrence Seaway, Washington, 1948. Table 6 . Estimates of United States - Canadian Commerce on Completed Seaway, "by Commodities (In Thousands of Short Tons)
St.Lawrence Canadian Average for James C. Buckley, Seaway Dept, of Great Lakes U.S. Dept, of Inc. Dev. Corp. Trade & St.Lawrence Commerce® Commodity 1950-1951* 1959 1965 1970 ‘ 1959 1965 Commerce3 Assn.b Min. Max.
Coal and Coke 161*6 1*000 „ 5ooo 6000 3700 1*200 6000 1*000 1*000 General Cargod 1362 61*00 8000 9000 61*00 9876 57000 11038 11038 Grain 3it8l 7500 9000 12000 12100 8200 10000 6500 11500 Iron Ore 216 8100 13000 17000 10500 20000 20000 30000 37500 Honferrous Ore 77 500 750 1000 800 - 1000 21*0 21*0 Petroleum and Products 151*7 2500 3000 3500 2300 1091 2000 6000 20000 Woodpulp and Pulpwood 550 1000 12500 i 5 oo 700 1165 1000 — -
Total 8879 30000 1*0000 5 oooo 36500 52000 l*i*532e 1*5700 57778 81*278
Estimates are perhaps for 1959. ^Estimates are perhaps for 1965* °They imply an estimate based on a period of about 10 years after the Seaway’s completion, ^General Cargo generally covers high class packaged freight. ^Revised downward to 31 million tons an April 15, 19!?!?.
Sources Reproduced with modifications from Joseph R. Hartley, op. cit., p. 93. 3h
The movement of freight through the Seaway will be limited by ] several factors. The freezing of the channels will make it impossible to use them for at least three and one half months during the winter*
The Seaway will possibly be used for only 200 days in the year. The large number of locks through which the ships will have to be ele vated from the sea level or lowered to the sea level will take time.
The greatest controversy lies around the Welland Canal. The minimum average time is U5 minutes per lockage. The Canadian Department of
Transport estimated 00 minutes per lockage. At this rate, the. total number of lockages per day, if operations were round-the-clock, will be 28. The Seaway is supposed to be navigable for a minimum of 2i4* days and a maximum of 259 days. If the average number of days is
2 0 0 , there will be 7 * 0 0 0 lockages or 3 * 5 0 0 lockages on each side.
If the capacity of the ships was 10,000 tons each, the total freight movement will amount to 70 million tons. But all the vessels will not be that large. Smaller vessels will keep on plying till larger ones are built to substitute for them. Two other points are important in this connection. First, it is difficult to arrange the movement of ships such that the Welland Canal can be operated round- the-clock without any wastage of time. The 70 million tons capacity has, therefore, to be adjusted for practical reasons* It is also unlikely that the Canal (as also the Seaway) will be used to its capacity in the very first year of operation.
The Seaway is supposed to open in Spring, 1959. This may mean that in 1959 the number of days that the Seaway will be open to traffic will be less than the average of 2$0 days mentioned earlier.
At any rate, the Great Lakes channels will not be complete before
1961. Therefore, the Seaway will not be able to get more traffic
from and to the Great Lakes ports. The Buckley IP estimate of 30
million tons for 1959, therefore, appears to be fair.* By 1965, the
Great Lakes channels will be open; a large number of smaller ships will be replaced by larger ships; and more shippers will get used to
the Seaway. The Seaway traffic is, therefore, likely to be about 57
million tons as estimated by the Corporation. It may be mentioned
at this point that none of the figures quoted here are accepted by
all.
Grain Traffic
The estimates of grain to be shipped through the Seaway also varies considerably. The U. S. Department of Commerce estimate is the lowest, 6,500,000 tons. The Seaway Development Corporation esti mate is the highest at 17,238,000 tons. 13 The different estimates are given in Table 7. The actual shipping of grain will depend on several factors, some of which will be discussed in greater details later. Cost of transportation will be, no doubt, an important factor.
Waterways are generally cheaper than other modes of transportation.^
Guide Plan for Waterfront Development in the Port of Cleveland, op. cit., p. 15L.
•^Calculated from the totals for 1959 and 1965 and the propor tion of grain in 1959 total,
l^The question of subsidy to different modes of transport has not been taken into account, because they all are subsidised to some extent. All discussions assume existing conditions. 36
Cost will be lower for larger ships, because of the difference in fixed as well as operating costs. Rates will be higher if the ships are loaded less than capacity or if cargo is available only one way of the trip.
Table 7 Estimates of United States - Canadian Grain Movements on Completed Seaway (in Thousands of Short Tons)
Average for Estimate by 1950-1951: 1959 1965 1970
James C. Buckley, Inc. 3lt8la — —
St. Lawrence Seaway Development Corporation — 12100 17238b —
Canadian Department of Trade and Commerce — 8200 — —
Great Lakes St. Lawrence Association —__ 10000 —
U.S. Department of Commerce — — 6500 U5oo
Agricultural Statistics.
^See footnotes, Table 6, p. 33* Source: Table 6 .
Shipping Through Toledo Port
The present cost of shipping wheat from Chicago to Montreal via the existing channels is 19 cents per bushel.^ If it is even one cent cheaper to ship from Toledo, the cost will be 18 cents per
Joseph R. Hartley, op. cit., p. 178. bushel through the waterway. The present export rate by railroad to
the eastern seaports from Toledo is 1;6 cents per 100 pounds, which
will amount to 27.6 cents per bushel. The saving in shipping through
the existing waterway is 27.6 minus 18 or 9,6 cents per bushel. The
existing waterway also involves transshipping charge from large
lakers to small canalers at Port Colbome near the Welland Canal or
at Kingston, Ontario near the head of the St. Lawrence canals, and
then to ocean vessels at Montreal or other St. Lawrence ports. The
Seaway will eliminate these two transshipments at an approximate
savings of five cents per bushel.^ Soma grain moves all the way to
St. Lawrence ports in small canalers. One transshipment is thus
eliminated, but the diseconomies of the canalers offset the savings.
The total savings through the waterway from Toledo thus amount
to approximately U4.6 cents per bushel. Of course, it is not only
cost that determines shipping through one way or the other. Further
discussion of cost will be, therefore, postponed for the present. A
dearth of cargo should not happen in the Seaway. Shipping companies
have already started taking advantage of the existing waterway. More
firms are interested and have shown desire to operate ships when the
Seaway opens. There are other factors besides transportation cost which are swinging decision in favor of the Seaway. The goods will
not require as many handlings as has been the case with the existing
facilities. Domestic packing will be, therefore, sufficient. Goods 38
can be loaded near the place of origin and delivered near the market.
This will cut down some of the red tape. Financing of the export
will also be easier.
The railroads are likely to oppose the waterway. But this should
not be of great significance. The U. S. Maritime Commission in its
decision in 1939* docket 513* made it clear that the railroads can
not penalize the shippers for shipping part of the goods through the
Great Lakes-ocean route.^ ^he decision, however, does not prevent
rate-cutting. The eastern and northern railroads have already made
some rather startling rate slashes* in the effort to hold export
traffic for their lines and for the ocean ports they serve.Given
time* the whole thing should work out normal, because the railroad
serving the Seaway and Great Lakes ports also may start rate slash ing. Moreover, the intelligent railroad management is likely to understand the benefit of the waterway to the total economy and to railroads themselves and give it full support.
No one has yet doubted the increase in grain movement on the waterway. How this increase will coma about has been a point of discussion and conflicting opinions. The export of wheat* taking a specific case, will be made through the waterway, subject to the limitations discussed later in this chapter. The domestic movement, from one port to another in the Great Lakes-St. Lawrence Watarsay will be affected by the following factors-
17Wisoonsin and the Seaway, op. cit.* pp. 6i±-65.
^Ibid.* p. 66. 39
X. The distance between the domestic ports is generally greater through the waterway as compared to railroad and therefore waterway rates are sometimes higher than rail rates.
2. Transshipment is needed at the origin point from truck or rail cars to ships. In many cases, similar transshipment is needed at the port of destination. Each transshipment increases cost. Also the short haul rates by rail or truck are proportionately higher than longer hauls.
3* Most of the ships operating in the waterway will be foreign.
These foreign ships are smaller than American ships and are better suited to the waterway. But they are not permitted to engage into intercoastal traffic.
it. Ships prefer to take a complete load of wheat at one port unless part of the space is filled up with other goods.
£. Short hauls will be comparatively more costly than long hauls•
6. In case of short hauls, when wheat is being carried between intercoastal ports there will be difficulty in finding cargo in the return trip.
These and other factors adversely affect intercoastal traffic, and no significant increase can, therefore, be expected. There is, however, the possibility that the eastern seaport mills will get wheat through the waterway, especially if the commodity is stored in one of the terminal facilities located on the harbor, and when the mills are also located on the waterway.
A Ohio has several ports on Lake Erie. Toledo and Cleveland are the two major ones. Other ports like Port Clinton, Sandusky, Lorain, and Ashtabula do not have a large volume of business. TTheir port facilities also are not well developed. Each of these ports has its locational advantage. Toledo has its advantage in grain trade. As was pointed out earlier, the northwestern half of the state is more productive, agriculturally, than the southeastern half. Most of the agricultural products are, therefore, confined to within 150 miles radius from Toledo. As shown in Table 8 about half of Ohio’s wheat is handled by terminal elevators in Toledo and places within 25 miles from Maumee^ which will have a 27 feet deep channel to Toledo Port.
More than half of Ohio’s wheat milling is also in this area, as shown in Table 9.
Toledo has a natural advantage in shipping wheat or wheat pro ducts. The port is well equipped to handle the existing wheat trade.
It is also suited to take care of increased trade.^ Several firms are planning to build terminal facilities on the Maumee River channel so that grain can be loaded in the ships directly from the elevators.
The Toledo Port Authority is also planning similar facilities which could be used by all terminals on a fair basis. Toledo is already served by 11+ railroads, including nine long lines, two short lines, and three terminal or switching lines. An equal number of highways, including the Ohio Turnpike, six U. S. highways, and seven state highways serve Toledo.
l^Maumee and Toledo have been considered together. 20statement made by E. 0. Jewell, General Manager, Toledo-Lucas County Port Authority, during a personal interview, December 10, 1957. Table 8 Volume of Wheat Handled by Terminal Elevators,3 by Zone, Ohio, 1955-1956 and 1956-1957 (In Thousands of Bushels)
Distance of Terminal Destined for Elevators from Wheat Purchased** Receipt by Export hy Toledo*3 Zone® Capacity Total - In Ohio Sail truck Rail Water 1995-1996 0 to 39 miles 1 31200 11*71*2 12027 121*61 2281 31*33 1200 36 to 109 miles 2 31*00 1921* 121*8 , 1507 1*17 100 - 106 to 200 miles 3 111*00 12579 11917 10977 1602 1163 -
Total 26000 2921*5 29192 21*91*5 1*300 1*696 1200
1956-1957
0 to 39 miles 1 11200 11*702 21297 12366 2336 31*81 1200 36 to 109 miles 2 3U00 231*2 1671* 1617 725 265 — 106 to 200 miles 3 llhOO 9980 9336 8869 1111 2381 -
Total 26000 27021* 23167 22892 1*172 6127 1200
aIncludes^terminals with a capacity of 2*50,000 bushels or more. bln some cases, from Maumee, about 10 miles from Toledo, which is. connected to the waterway by deep channel of Maumee River. cThe basis is truck ratej and also to prevent identification of individual firms. ^Estimates, based on the past, were used when actual figures were not available.
Source: Original data Table 9 Utilization of Wheat by Large Flour Mills,a by Zone, Ohio, 1955-1956 and 1956-1957 (In Thousands of Bushels)
' " S o n He'd ■ ' ” Exports through Distance of Mills Daily .. Total Winter Wheat Other Wheat Atlantic Gulf from Toledo^ Zone0 Capacity Volume** Qiio Other States Soft White Hard Ports Ports 1955-1956
0 to 35 miles 1 690 15180 1131*9 1232 1582 1018 70 36 to 105 miles 2 31 5921* 5655 81 183 mm 53 mm 106 to 200 miles 3 7 2050 2020 30 391
Total 728 23151* 19021* 1313 1795 1018 5H* -
1956-1957
0 to 35 miles 1 690 151*30 11315 1231* 1612 1269 70 36 to 105 miles 2 31 6550 6363 56 206 -- 1*1 106 to 200 miles 3 7 11*58 11*33 - 25 28 -
Total 728 231*38 19111 1290 181*3 1269 98 ill
aAnnual milling 200,000 bushels or more, bln some cases from Maumee, which is a part of Toledo, on Maumee River having deep channel to the waterway. cThe basis is truck rate; and also to prevent identification of individual firms. %hen actual-figures were not available, estimates based on the past were used.
Source: Original data. CHAPTER V
EXPORT OF SOFT RED WINTER WHEAT
The United States of America is the world's largest wheat pro
ducing country.^ In the year 1951* > this country produced more wheat
than the total production in three continents- Africa, South America,
and Oceania combined. It out-ranked France, the second largest pro
duce r^ by over half a billion bushels. Of the total estimated world
production of 6,960,000,000 bushels^ H*.l5 per cent or about one-
seventh comes from the United States. The production increased eight fold from a low of 170 million bushels in 1866 to 1359 millipn bushels in 191*7• During the periods 191*1*-1950 and 1952-1953 the production was well over a billion bushels. The average production for 1868-1956 has been 69I* millions and for 191*1-1956 it has been a billion bushels. In spite of governmental control on acreage and marketing, technological advancement and high prices have, in the recent past, kept wheat production at a high level. Unless radical measures are taken, the trend is likely to show increased production.
lU.S.S.R. is possibly the second largest producer.
^Excluding U.S.S.R. and other communist nations.
^The figures a w from Agricultural Statistics which generally excludes the communist bloc.
1*3 kk
Consumption of Wheat
Progress and utilization has some bearing on the consumption of wheat. Bennett^ says, nIf at the outset a country used little wheat per capita, it has a low standard of living and strongly prefers wheat as the cereal food. Growth of per capita food use of wheat is likely, with a continuously rising standard of living, up to a level ranging around six to eight bushels. At some point, in time, per capita use of cereals will represent use of wheat almost exclusively, but the dietary maximum intake of roughly 12 bushels is unlikely to be reached because so high an intake itself reflects not prosperity but lack of it. After the point when wheat has become practically the exclusive source of cereal foods, with continuing advance of living standards, a decline in per capita food use of wheat will set in.” In the United States the per capita consumption of wheat declined k6 per cent during the period 1910-1956 from 212 pounds in 1910 to 119 pounds in 1956. This has been followed by an increase in fruits and vegetables, meats, and dairy products.
An increase in per capita consumption of wheat is likely to cause increased production. Decrease in production is, however, a painful process. The high fixed capital investment in agriculture makes it difficult to cut down production. The readjustment of the farm population is more difficult than to cut down production. First, the people have to be made to understand the need of taking up
%heat Studies, Vol. 10, No. 10, p. 379. 1*5
Table 10 Production and Export of Wheat, United States, Five Year Average, 1866-195# and 1956
(In Thousands of Bushels)
Five Tear Average toet. Domestic Beginning July 1 Production Export® Export*3
1866 231*162 33803 35032 1871 307027 66037 1876 1*23058 133926 131*161 1881 1*73616 123795 123830 1886 1*76316 118375 118350
1891 575837 171*026 171*552 1896 630351* 201692 201715 1901 671*81*3 11*3308 11*3886 1906 661*299 118286 118801 1911 801080 188689 191386
1916 790773 217951 21*1*057 1921 787082 189985 207237 1926 8661*70 158331* 171*765 1931 680868 291*51 50211* 1936 795913 51366 67879
191*1 981*080 51816 99150 191*6 1181*71*5 398965 1*06686 1951 1077667 312771*. 1956° 997207 51*6021** » 91 Year Average 693826 151*998 161*537
®Net export is total export less imports for domestic consumption.
^Domestic export is total export plus export of flour from im ported wheat.
cGrop year July 1, 1956 to June 30, 1957
^Figures for 1956-1957 are total exports.
Source: U. S. Department of Agriculture, Agricultural Statistics, 1952 and 1956} and Wheat Situation, W156, October, 1957. 1*6
Table IX Per Capita Consumption of Wheat Flour, United States, 1910-1956 (In Founds)
Tear Consumption Tear Consumption Tear Consumption
1910 212 192$ 177 191*0 11*7 1911 207 1926 178 191*1 152 1912 212 1927 173 191*2 156 1913 206 1928 177 191*3 163 1911* 207 1929 173 191*1* 162
191$ 200 1930 169 191*5 361* 1916 20$ 1931 160 191*6 151* 1917 198 1932 1$7 191*7 137 1918 161* 1933 153 391*8 13$ 1919 197 1931* 053 191*9 131*
1920 186 1935 1$0 1950 133 1921 178 1936 1$8 1951 131 1922 181 1937 1$3 1952 130 1923 176 1938 153 1953 126 1921* 17$ 1939 151 1951* 121*
195$ 121a 1956 139a
*
aPreliminary.
Source: U. S. Department of Commerce, Bureau of Census, Historical Statistics of the United States 1789-191*!? and Supplements 19l*6-195>§T and Statistical Abstracts of the United States, 19$7« k7 alternative professions. Second, expensive training has to be pro vided to facilitate relocation. These will be, of course, dependent on the availability of an alternative source of employment. Then there are wars, natural disasters, and the needs of foreign countries.
In such cases, farm production is encouraged through various means— patriotic appeal and bonus and governmental measures, including price supports. Price support can also be instituted as a welfare measure, to raise the income of the agricultural sector of the economy so as to bring it at par with the per capita income in other sectors of the economy.-^
Domestic Disappearance of Wheat
The above factors have contributed to the coninued rise in wheat production in this country as shown in Figure III. The domestic dis appearance of wheat, which includes human consumption, feeds, seed and some wastage has not kept up with production. The domestic consumption (meaning human food) has remained almost the same, be cause of the rise in living standards. This is so because the in creased demand, due to the increase in population, has been offset by the decrease in per capita consumption of wheat, as stated earlier.
During the period 1925-1956 the domestic^ disappearance of wheat in the United States was at its lowest, Slh million bushels in 1956 and
^Opinion is divided on this issue. This paper does not intend to support or reject the validity of the governmental policy measures, as they stand, at this point.
^The term domestic stands for continental United States. Figure III Production and Domestic Export of Wheat, United States, Five Year Average, 1866-1955 and 1956 (In Millions of Bushels)
1200
Production Domestic Export
900 ■
750
600
300
250
1866 1876 1886 1896 1906 1916 19361926 1956 Five Year Average beginning July 1, 1866 and Crop Year beginning July 1, 1956
Sources Table 10.
4 1*9
highest, 1,17k million bushels in 191*3. In 191*5, it exceeded 800
million bushels and in 191*2 and 191*1*, 900 million bushels. In only
three years - 1925, 19$h, and 1955 - besides 1956, it was less than
600 million bushels* In the other 21* years, the domestic disappear
ance remained at the 600 to 800 million level*
During the years 191*2-191*5, in the domestic disappearance, the utilization of wheat for feed was very high. In 191*3 feed amounted
to 507 million bushels; in 19kk, 302 millions; in 191*2, 301 millions to* and in 191*5, 297 million bushels. The use of wheat for industrial purposes was also the highest, 108 million bushels, in 191*3* In 191*1*,
82 million bushels were used for industrial purposes and in 19l*2, 51* million bushels. The year-to-year variation in the quantity of wheat processed for food has been comparatively low. In 1933, it was 1*65 million bushels, the lowest during this period, and in 1927 the highest, 51*1* million bushels. The32 year average was 1*86 million bushels. It appears from the trend that the change in the quantity of wheat processed for foods is insignificant. If it is assumed that only the wheat processed for food is used for human consumption, it will be safe to state that the human consumption of wheat in the
United States has remained almost the same over this period. Figures for human consumption of soft red winter wheat are not available.
The total domestic disappearance follows a trend similar to that of all wheat. It has gone down from 198 million in 19kk? 133 million bushels in 1956*
?Data for earlier period is not available. 5o
Table 12 Production and Utilization of Wheat in the United States and Production of Wheat in Ohio, 1925-1956 (In Thousands of Bushels) ■ — ------:— Production domestic Disappearance Soft Red Soft Red Winter Processed Winter Ohio Tear All Wheat Wheat Total for pooda Wheat Production 1925 6^8700 162962 5^1265 474223 - 23404 1926 832213 215709 613916 496391 — 40384 1927 875059 166592 678462 544091 - 29068 1928 914373 127393 654071 513842 — 9475 1929 824183 1614400 619427 477305 — 30403 1930 886522 179692 747137 499756 - 28712 1931 941540 262006 753842 497912 — 50744 1932 765307 109214 719579 508493 - 32456 1933 552215 162313 727073 464692 - 34812 1931* 526062 188602 655433 474544 - 33401 1S3$ 628227 204256 659313 483750 46892 1936 629860 207410 688132 489474 a m 40278 1937 873914 257838 702706 485433 — 46136 1938 919913 236800 713742 495855 — 46420 1939 741210 194910 663428 490415 - 37150 1940 814646 207405 676051 491845 m m :42121 1941 941970 204031 651515 473266 m , 48978 1942 969381 148723 920638 499986 - 36205 1943 843813 125216 1173929 481876 - 26449 1944 1060111 203635 936534 471895 189000 46805 1945 1108224 213350 874398 473518 150000 57483 1946 1153046 195711 744705 483329 155000 48522 1947 1367186 236843 762383 488752 157000 49028 1948 1313534 257613 690223 479938 169000 57648 1949 1141188 214418 718130 484400 155000 60002 1950 1026755 165931 693458 489827 135000 46596 1951 980810 150898 661930 481545 135000 34308 1952 1298957 199014 680626 474187 131000 55100 1953 1169484 242996 618955 473667 143000 69136 1954 983900 184533 598134 474079 143000 48510 1955 934731 173000 589203 469413 137000 43384 1956 997207 186000 573951 468231 133000 39676
aIncludes foods and commercial feeds until 1929* Sourcet Agricultural Statistics and Wheat Situation. Figure IV Production of All "Wheat and Soft Red Winter Wheat, United States, 1925-1956 (In Millions of Bushels)
All Wheat
1200 Soft Red Winter Wheat
900
600
300
1930 1935 191*0 1950 1955
Sources Table 12. Figure V Production of Soft Red Winter Wheat. United States and All Wheat, Ohio, 1925-1956 (In Millions of Bushels)
21*0 -
180
120
United States Ohio
1930 1935 19Uo 1950 1955 Source: Table 12. Figure VI Domestic Disappearance, 111 Wheat and Soft Red Winter Wheat, United States, 1925-1956 (In Millions of Bushels)
1200 Total domestic disappearance Processed for food
■ Domestic disappearance of 900 soft red winter wheat
• • 600
300 -
1925 1930 1935 19l|0 1950 1955
Source: Table 12. Sk Production of Soft Rad Winter Wheat
The production of soft red winter wheat hit a record low of 125 million bushels in 191(3 and a high of 262 million in 1931* The 32 year average is 19h million bushels. There does not seem to be any appreciable change in production. Ohio wheat production, about 98 per cent of which is soft red winter wheat, on the other hand, showed a slight increase. Excluding 1928 when Ohio had an unusually short wheat crop, 9,1(75,000 bushels, the production ranged between 2k million bushels in 1925 and 69 million bushels in 1953. This also compares favorably with the United States soft red winter wheat pro duction.
Export
The possibility of increasing domestic consumption as human food is not great; utilization as seed has gone down since yield per acre doubled; and, in order that more wheat can be used as feed, the price must be lowered to a level where wheat can compete with other com petitive concentrate feeds. Export is one of the important outlets for the United States wheat. The net export of wheat from the
United States in 1866 amounted to only 11 million bushels. It rose to 501 million bushels in 191(8 and 51(6 million bushels in 1956.®
The five year average for the period 1866-1955 varied between a low of 29 millions to a high of 399 millions. Only in four years the total import exceeded the total export. Buring the years? 193k > 1935,
8x956 figures are for total export. ?A11 figures are for crop years beginning July 1 of the year mentioned, and ending in June of next year. Thus 1866-1956 is 91 crop years. 55
Table 13 Production, Export, and July 1 Stock of Soft Bed Winter Wheat, United States, 1925-1956 (In Thousands of Bushels)
Year Production Export July 1 Stock8
1925 1631*62 2600 m m 1926 216111 331*00 — 1927 167778 12800 m m 1928 12831*5 3000 - 1929 165969 2700 19900 1930 178791* 2600 26900 1931 251*1*80 2200 22300 1932 11*0567 b 59000 1933 11*7689 b 30600 1931* 16821*1 b 36000 1935 202220 b 31300 1936 201*321* b 26000 1937 21*9769 5000 31*000 1938 226053 5000 36000 1939 193331 3000 27900 191*0 20631*9 3000 33900 191*1 209398 2000 39600 191*2 159821 1000 55300 191*3 133297 2000 31800 1910* 221*983 10000 18900 191*5 207921 66060 19000 191*6 183061 32000 11000 191*8 2111*1*5 1*1000 8000 191*9 202720 35000 16000 1950 162221 30000 29000 1951 11*8080 23000 26000 0952 1931*10 1*0000 16000 1953 231237 56000 38000 1951* 181*533 62000 70000 1955 173000 69000 50000 1956 186000 60000 17000
Average 193732 20228® 32050
aFigures are not available for 1925-1928. kjaess than 500,000 bushels. °Exelading the years 1932-1936, the average is 23971*000 bushels. Sources Agricultural Statistics and Wheat Situation. Hgure VII Production,Export and July 1 Stock, Soft Red Winter Wheat, United States, 1925-1956 (In Millions of Bushels)
2h0
180
120 Production Export
July 1 stock
60
0 1930 1935 1950 1955
Sources Table 13 57
Table ll* States Producing Soft Bed Winter Wheat, Ranked in Order of Production, United States, 195U-1955 (In Thousands of Bushels)
Soft Red Winter Wheat Soft Red Total Wheat as Per Cent of Total Winter State® Production Wheat Acreage Wheatb Ohio 1*8510 98.6 1*7831 Indiana 39711 95.2 37805 Missouri 1*2563 1*1* .8 19068 Pennsylvania 19796 96.1 19021* Illinois 1*6961* 31*.5 16203 North Carolina 7525 99.9 7517 Virginia 6931* 99.9 6927 Kentucky 51*00 96.1* 5206 Michigan 30385 16.9 5135 Maryland 1*972 100.0 1*972
Tennessee 3959 97.1* 3856 South Carolina 3081 100.0 3081 Georgia 2072 100.0 2072 New Jersey 1621* 95.7 1551* Arkansas 1638 87.7 11*37 West Virginia 1176 99.3 1168 Delaware 81*0 100.0 81*0 Mississippi 781* 100.0 781* Texas 30891* 2.2 680 Alabama 528 100.0 528
Washington Kansas Wisconsin New York Oklahoma Nebraska Minnesota Iowa Oregon Wyoming gotal______185688°
aFigures for states producing less than 500,000 bushels are omitted. States producing less than 1,000 bushels are not mentioned. ^Calculated from columns 2 and 3* cThere will be some rounding error. Sources S. C. Salmon and L. P. Reitz, Distribution of the Vari* eties and Classes of Wheat in the United States in 1951** Ag."Handbook No. 10B, Washington: U. S.“department of Agriculture, 1957-
* Figure VIII States Producing Soft Red Winter Wheat, United States, 19E>1*-1955
States producing less that 500,000 bushels are not reach&d'.. Those producing less than 1,000 bushels are not mentioned. oo Source: Table Uj, 1937, and 19l;3 there were net imports of I4 , 31, 26, and 96 million bushels respectively* The average net export for the period, 1866-
1956, was 155 million bushels*
Net export is, however, misleading in a sense* Net export is the difference between export and import. A negative figure denotes excess of import over export. Domestic export, on the other hand, denotes total export*. It also includes export of flour from some imported wheat* Domestic export may, therefore be considered a better indication of export than net export. Domestic export also has increased during the century. From 13 million in 1866, it went up to 505 million in 19l;8. In the recent past, between 1932 and 19hk domestic export was at a low level, generally less than 100 million bushels. The average domestic export was above I6I4. million bushels.
The production of soft red winter wheat went up from 163 million bushels in 1925 to 186 million bushels in 1956. The fluctuation in production was wide - 128 to 251; million bushels - bringing the simple average to 191; million bushels. Exports show a marked increase from three million bushels in 1925 to 60 million bushels in 1956* In the period 1932-1936 exports were less than 500,000 bushels. The average export excluding these lean years was 21; million bushels. Export reached a high of 69 million bushels in 1955. A sizeable quantity of soft red winter wheat was neither exported nor used for domestic consumption. The July 1 stocks represent the un-utilized portion*
The average July 1 stock*10 of 32 million bushels plus over 20 million
*-PFigures were not available for 1925-1928* 60
bushels1^ export leave about liil million bushels, representing
domestic disappearance in the form of food, feed, seed, and wastage.
Figures for domestic disappearance of soft red winter wheat are
available since 19iUi, and they show a downward trend. The d ernes tic
disappearance was 189 million bushels in 19i4i, but only 133 million
bushels in 1956.
About two-thirds of the states in this country produce soft red
winter wheat. In 195U» 30 states produced soft red winter wheat in
a significant quantity. This does not include states producing less
than 1,000 bushels. Ten of these 30 states produced less than half
a million bushels. The five leading states— Ohio, Indiana, Missouri,
Pennsylvania, and Illinois— together produced liiO million bushels or
three-fourths of the total soft red winter wheat produced in this
country. Ohio, with one-fourth of the total production, ranked first.
In Table lit the various states, excluding those producing less than
1,000 bushels are ranked in order of total soft red winter wheat
production in 295ii«
The estimated production of soft red winter wheat in the five
leading states for the years 1919*1951;, at five year intervals, is presented in Table 15. Ohio has been in first place in all these years. The five leading states produced most of the soft red winter wheat grown in this country. Figure IX shows the production in the five leading states combined and Ohio as percent of total production
xxThe average also includes the period 1932-1936 when exports were less than 500,000 bushels. Table 1$ Estimated Production Of Soft Red JFinter Wheat in Leading States* at live Tear Interval, United States, 1919-19*1* (In Thousands of Bushels)
1919 1921* - 1929 ' 1931* 193 9 191*1* 191*9 19*1* Ohio **31*1* 32911 31*80 321*32 3*961 1*6337 5781*2 1*7831 Illinois 398*7 17930 181*9 17726 21*31*1* 18669 27036 16203 Indiana 39329 2*293 21901 26976 2330* 22*91* 37623 3780* Missouri *2391* 19206 1*830 19889 26*9* 201*36 18320 19068 Pennsylvania 21i375 18*91* 19977 11*729 1931*3 19862 33088 19021*
Total 211299 113931* 1071*1*7 1117*2 129*1*8 127898 173909 139931
United States 286*81 18*660 161*1*00 188602 191*910 20363* 2U 1J1I8 181**33
Ohio as Per Cent of United States 19.3 17.7 19.2 17.2 18.* 22.8 27.0 2*.9 live States as- Per Cent of United States 73.7 61.1* 6*.l* *9.3 66.* 62.8 81.1 7*.8
^Figures for the states are calculated from total wheat production and the acreage under soft red winter wheat. United States figures for 1919 and 1921* ire calculated similarly.
Sources Appendix Tables 39 and 1*0. Figure IX Production of Soft Red Winter Wheat in Ohio and Five Leading States as Per Cent of United States Production, at Five Year Intervals, 1919-1951*
80
60
bP
20
Five States
Ohio
0 1919 1929 1939
Source: Table 15 in the United States, Ohio's share of production during this period
has gone up even though the percentage for the five leading states
combined has remained virtually the same, Ohio has, therefore, a
greater stake in soft red winter wheat than any other state,
Ohio Export Through Seaway
The total wheat production in Ohio during the period 191*5-1956
has fluctuated between 3k million bushels and 68 million bushels.
The production in different crop reporting districts also fluctuated
widely during this period. The Northwestern district always ranked
first and the Central district second in production. About 90 per
cent of all wheat was produced in six crop reporting districts-- I,
XI, III, IV, V, and VII, The Ohio wheat production for 19145-1956,
by crop reporting districts, is shown in Table 16 and Figure Z. In
Table 16, production in the six leading districts has also been com
pared with the total, the total for each year being taken as 100
per cent. In Table 17 the crop reporting districts are ranked in
order of production in the crop year 1956-1957, Figure Z shows the
different crop reporting districts and their ranking in production
during the same crop year.
As pointed out earlier, almost all, or 98 per cent, of the wheat
produced in Ohio is of the soft red winter variety. Therefore, in f the pages that follow, the discussion will generally include total wheat production in the state. Host of the wheat in the state is
raided in six out of nine crop reporting districts. From the trans portation angle, this area stretches up to 200 miles from Toledo. 61*
Table 16 Wheat Production by Crop Beporting District, Ohio, 191*5-1956 (In Thousands of Bushels)
191*5-191*9 Districts Average. 1950 1951 1952 1953 1951* 1955 1956
I 11315 10262 6761* 12299 161*77 9717 791*5 10389 II 8596 751*6 571*0 8337 10375 6920 7076 6801 III 5761* i*6o5 1*831* 5377 5785 1*590 1*588 3592 IV 771*7 6920 1*1*82 781*6 91*00 6795 6577 5209 V 9711 8279 6322 10228 12810 8867 8721* 7126
VI 2515 2005 2101* 2169 2581 1928 1937 1575 VII 501*9 1*090 2030 5255 6322 1*731 1*062 2737 VIII 1263 1637 989 2068 2338 1939 1331* 1190 IX 1736 1252 101*3 1521 1856 11*93 111*1 1057
Total Districts I-V and VII 1*8187 1*1702 30172 1*931*2 61169 1*1602 38972 33851*
Ohio 51*301 1*6596 31*308 55100 6791*1* 1*6980 1*3381* 37676
Production in Districts I to V and VII Combined as Per cent of Total 88.7 89.5 87.9 89.5 90.0 88.6 89.8 89.9
Source: Ohio Agricultural Experiment Station, Ohio Agricultural Statistics, Wooster, 1957• 61
Table 17 Crop Reporting Districts Ranked in Order of Wheat Production, Ohio, 1956-1957
(In Thousands of Bushels)
Orop Reporting District District Number Production
Northwestern 1 10,383
Central 5 7,126
North Central 2 6,801
West Central k 5,209
Northeastern 3 3,592
Southwestern 7 2,737
East Central 6 1,575
South Central 8 1,190
Southeastern 9 1,057
Sources Table 16. Figure X Crop Reporting Districts Ranked in Order of Wheat Production, Ohio, 195>6~195>7
Northwestern
North Central Northeastern
West Central
/South Central
Sources Table 17 If other factors remain the same, cost will determine the mode of
transportation which will be used for transporting wheat* For short
hauls, rail rates are higher than truck rates. Therefore, wheat will
be shipped to Toledo by trucks. The truck rates as calculated by one
of the trucking firms is five cents a bushel up to 35 miles and an
additional cent per bushel for each ten miles, or fraction thereof.
The area within 35 miles radius from Toledo lies in li6 cents per 100
pounds export rate (by rail) to the eastern seaports, which means
27.6 cents per bushel. If the waterway rates are lower by more than
five cents a bushel wheat will move through the Toledo Port. Terminal
elevators in this area handled over 50 percent of the wheat handled
by all terminal elevators in Ohio. An export of 1,200,000 bushels
by water from this zone is an indication of the fact that the water
way can be used profitably.
If the truck rates remain as maintained by this one firm, every
additional ten miles or fraction thereof will add one cent per bushel
more to the trucking cost. Therefore after a certain distance the
waterway and truck rates combined will be greater than rail rates to
New York and shippers will find it less costly to ship by rail. If
the waterway rate is 13 cents per bushel from Toledo, as discussed
earlier, the saving will amount to lit.6 cents minus trucking cost.
Wheat can be, under these conditions, shipped to Toledo for export
from over 125 miles. In the central and eastern parts cf the state where the export rate is 1*3 cents per hundred weight, or 25.8 cents
per bushel, the saving will amount to 12.8 cents minus trucking cost. 68
In this case the area within a XXO miles radius only may export through ToXedo.
The area which will be greatly affected by the waterway is also the major wheat producing area in the state. Moreover, it is very likely that with bulk movement there will be more trucking firms engaged in wheat hauls and that the rates will be reduced. Any re duction in truck rates will increase the area from which shipments to Toledo will take place. The shipments discussed herein are for exports. The railroads are likely to maintain the inland— from one port to another on the waterway— freight movement, as pointed out in an earlier section. There has to be, therefore, export demand for wheat in order that these stipulations hold. An important factor in export through Toledo will be the handling facilities at the port.
The Toledo Fort Authority is trying to modernize its facilities. It claims that even the present facilities are adequate.^
The lowering of transportation costs may increase the area of supply but not the area of demand. Export demand for Ohio wheat will move up and down closely with the export demand for United States wheat. The export of wheat from the United States, in the recent past, has been dependent on the following factors:
1. When the production in importing countries is lower than the normal consumption, these countries will have to import wheat from some surplus^ producing country.
^Statement made by E. 0. Jewell, General Manager, Toledo-Lucas County Port Authority, during a personal interview, December 10, 1957.
13Surplus at the existing domestic price level. 2. The production of substitute products will affect and may even offset the demand for export of wheat.
3. Most of the importing countries are also suffering from dollar shortage. Their import exceeds export. In case they have a favor able balance of trade, they prefer to buy capital goods from the
United States and not agricultural products, except for emergency periods.
1*. When the United States wheat price (for export) was lower than prices in other exporting countries more wheat was exported from this country.
The United States was able to maintain a high level of wheat export by adopting various measures. The International Wheat Agree ments of 191*9, 1953, and 195*6, in which the United States has been participating, has resulted in stabilization of exports. The prices per bushel agreed upon are shown in Table 18.
Table 18 Minimum and Maximum Prices Under the International Wheat Agreements, United States, 191*9-1956
Crop Year Minimum Price Maximum Price 191*9-1950 #1.^0 ■#1.80 1950-1951 . 1.1*0 . 1.80 1951-1952 1.30 1.80 1952-1953 1.20 1.80 1953-1956 1.55 2.05
Source: Annual Reports of the International Wheat Council. 70
The United States guaranteed sales and actual sales under the
program has been as shown in Table 19* Guaranteed sale is the obli
gation on the exporting country to sell subject to the terms and
conditions of the agreements.
Table 19 Guaranteed and Actual. Sales Under the International Wheat Agreements, United States, 191*9-1957
(in Thousands of Bushels)
Crop Year® Guaranteed Sale Actual Sale
19U9-1950 235,858 162,000
1950-1951 21*8,163 250,000
1951-1952 255,11*9 257,000
1952-1953 253,128 .250,000
1953-1951* 193,652 106,000
1951*-1955 195,572 11*0,000
1955-1956 196,523 131*,000
1956-1957 128,01*5 122,765
1957-1958b 128,1*93 65,137
aIWA crop year is August to July.
/ bup to January 10, 1958
Source: Annual Reports of the International Wheat Council, and Weekly Press Releases on International Wheat Agreement Sales, by U. S. Department of Agriculture, Commodity Stabilization Service. Under Public Lair i*80, 83rd Congress and the amendments to that
law the United States sells wheat and other agricultural commodities
to friendly nations, for foreign currencies, to the extent to which I foreign currencies can be mads to serve purposes acceptable to the
United States. A part of these sales are not sales in the real mean ing of the term because the sales proceed- is ploughed back in the importing country for economic development, without any repayment obligation. Over 333 million bushels of wheat have been exported under this law as shown in Table 20.
Table 20 Wheat Exports Under Public Law 1*80, 83rd Congress, United States, 1955-1957
Period Export in Thousand Bushels
January, 1955a *" June, 1955 23,757
July, 1955 - June, 1956 91,1*78
July, 1956 - June, 1957 X95,655
July, 1957 - October, 1957 52,61*9
Total 333,539
aTha Law was passed in 1951*, but actual exports started in January, 1955*
Sources U. S. Department of Agriculture, Press Releases 6a Title X, Public Law 1*80, Export Shipments.
Exports have also been made under Mutual Security Programs for helping the friendly nations to maintain their economic stability. 72
The monetary value of such exports is questionable. Exports in the form of gifts and outright grants will fall under the same category*
Sales under all heads involve subsidy in one form or the other.
The reduction in transportation cost of wheat to Toledo will mean that a large quantity of the wheat which would have gone to the eastern seaports by rail will be exported through the Seaway* In the very short run, the shippers will gain from the lower transportation cost. Competition will, however, force them to increase farm prices.
The benefits will accrue to the farmers, also, for only a short period. Ultimately, the saving will be passed on to the buyer. Lower price will result in an increase in quantity demanded. But wheat has an inelastic demand,^ about -0.08. If it is assumed that the elas ticity of export demand for wheat is higher than domestic demand, as is true for all United States goods and services^ the export elas ticity for wheat will be -0 .192^ . The increase in quantity of wheat
•^According to Karl A* Fox, The Analysis of Demand for Farm Products, Tech. Bulletin No. 1081, Washington: “Tf.S. department of Agriculture, 1953, p. 69, elasticity is -0.067. According to Kenneth W. Meinken, The Demand and Price Structure for Wheat, Tech. Bulletin No. 1136, Washington: U.S. Department of Agriculture, 1955, p. 21, elasticity is 0.078; Frederick L. Thomsen and Bichard J. Foote, Agricultural Prices, New fork: McGraw-Hill Book Co., 1952, p. Ii67, figure elasticity at less than -0.1. The figure used here, -0.08 is the simple average for all the three estimates.
3SKarl A. Fox, op. cit., p. 70. Elasticity of demand by dealers of about -0.5 i n .this "Ubuntry and about -1.2 in the foreign market from 192U to 1939.
•^The ratio of foreign demand to domestic demand will be -2.it. This ratio multiplied by elasticity of domestic demand for wheat -0.08 equals -0.192, the export demand elasticity for wheat. which can be sold with any price decrease can be calculated from the
formula dfl / dg - elasticity. Because of the inelastic demand the q p increase in quantity will be small.
The popular opinion is that soft red winter wheat will demand
a premium price over other classes of wheat in the coming years.
This has not been the case in the past. The price of soft red winter wheat in Toledo market was lower than the price of soft white wheat
in h8 months during the crop years 19h7-1957. In 1*5 months both
classes had the same price. In only 27 out of the 120 months soft
red winter wheat was higher. A comparison of prices at Chicago shows
a similar result. Soft red winter wheat was lower than hard red winter wheat in 6 0 months, equal in 26 months, and higher in only
3h months. The buyers appear to be price conscious. This is more so in the case of foreign buyers. They substitute one class of wheat for another class if the former is higher priced.-*-7
In 1955-1956 Yugoslavia received 39*8 per cent of all the soft red winter wheat exported from this country. United Kingdom, includ ing Scotland and Ireland, received 15«9 per cent. Egypt was third with 13*7 per cent. Exports to Holland amounted to six per cent.
South and Central Americas, and Italy imported less than 0.05 per cent. Yugoslavia was the leading importer,with 33•! per cent of the
^Prospects of Foreign Disposal of Domestic Agricultural Surpluses, p. 9k• Table 21 Price Difference3 Between No, 2 Soft Red Winter Wheat and No. 2 Soft White Wheat, Toledo, 191*7-1957 (In Cents per Bushel)
Year July Aug. Sept. Oct. Nov. Dec. Jan. Feb. March Apr. May June Average
191*7-191*8 -2 -1 -1 -1 -1 0 -2 -1 0 0 0 0 -1 191*8-191*9 0 0 0 0 0 0 0 0 0 0 0 0 0 191*9-1950 -1 -2 00 0 0 0 0 0 1 1 1 1 0 1950-1951 -1 -1 0 0 0 0 0 0 0 0 0 0 0 1951-1952 0 0 0 0 0 0 0 1* 2 3 -1 -1 0
1952-1953 -2 -2 2 1 -2 -3 2 2 2 3 3 9 1 1953-1951* -2 -3 -1* -2 -2 -1* 0 3 3 2 2 1 -1 1951t-1955 -1 -1 -1 -5 -6 -5 -2 -1* -10 -7 -5 -6 -1* 1955-1956 -6 -5 -3 -7 -8 -6 -1* -1 1 3 -i -3 -3 1956-1957 0 0 -2 -2 -2 1 1 2 2 0 l 0 0
aMinus sign indicates that soft red winter wheat was lower.
Source: Appendix Tables 1*1 and 1*2, Table 22 Price Differencea Between No. 2 Soft Red Winter Wheat and No. 2 Hard Red Winter Wheat, Chicago, 191*7-1957 (In Cents per Bushel)
Year July Aug. Sept. Oct. Nov. Dec. Jan. Peb. March Apr. May June Average
191*7-191*8 -3 1 11* 2 3 2 5 5 8 5 1* 2 1* 191*8-191*9 0 1 0 1 0 0 12 0 1 11 7 8 3 191*9-1950 -2 -3 -1 -1 -1 -3 -5 -9 -9 -It 0 0 -3 1950-1951 -2 -3 -1 0 0 1* 0 -1 -2 -2 -1 0 -1 1951-1952 0 -1 0 0 0 0 0 1 1 1 0 0 0
1952-1953 -1* -5 -5 -9 -7 -1* -1* -1* -1* -6 -8 -7 -5 1953-1951* -5 --1* l -7 -8 -11 -10 -10 -1* -1 -3 -2 -6 1951-1955 -7 -6 -l -5 -8 -6 -6 -5 -6 -8 -7 -1* -6 1955-1956 -7 -3 2 1 3 - 1 0 0 -1 0 1 0 1956-1957 0 1 9 0 1 1 1 l 0 -2 -1* -3 0
aMinus sign indicates that soft red -winter wheat was lower.
Sources Appendix Tables 1*3 and 1*1*. (NUniwmis uwj
66961109 i i w i i w
88008609 9891-11 m w i n
1899999 0919966 H ill 1996191 999969! !19!il»l M M M * M M I6NMI W8IS30I M M « » ■ * Mint m iiw iiw;*pb. .own ® «» • M l 10908 (61916 (61(16 m ill) m 999996 9I0I8SI 4 « » l W ' « ® m m m m m 1J618 90186 18*891 669916 91196 Hffl «m 98101 H86696 6601106 9011608 lit ® M l '19 199906 99196 99196 ^ n i m iw m m ms# « « «w JJf JJf JJf • 1916 199996 1! 990986 990986 m i n i 1( 01(61 MRIWK ™ II8W 6 I «38 9l # i l l 6S I H - M ® * * 99081 M l 8(9)5 W m n m q ' t o ■ 090611 0096H M i l l OHK m 069666 036666 IM I It ll lO 669009 1!9SES HID 699816 699816 000696 W til M l 199)19 819166 819166 » 09689 09699 M M i j 11)11 m Mt • ■ V 11IIII M i M i
161 96886 169921 99991 961S8I 861001 40 ■ . ■ IIIIIS 199911 199)11 199911 3" ...'“ 'A MJ ■ 95966 90066 SI6S96 9I6S96 0068661 0098661 ' l l i l l 196361 196961 0960966 0360968 0i68!0l 18(1161 Itl 16699 918(6 91886 m in i! M6I06 666106 t i l l t i l l M M « II 680 9691 m u m 'o n 1 m Ml IIIO) mil JIM wi wo "wi !1IM 1,101 !1,M 1,1,1 f m - .... i itiiwnlll m lllllUt ______hm 'h aimitf — > !M L a m m aimny mm i i m u i 68 ^ 68 11111111 A1IP mm Mwiipj' wiwf - li im m Tiiiiii tllino" inr mi nm l(siiMil) ", 9SSI-SS8I 'whs ,!ll|9 111,1111119 U1SI 'nod in NOimiuJO Ntimiujo«'mi» tow m nnwn 1 t! m il run 24 . lmm '■ 0m!!,s Ew"' ■ » El"(: ter to tow tor, tow tern, m i |ll Mil Jill I i i T ri"""feT(«iii m i" TiiT f l l M M l i s T Mil H ir IT M u m M ims Mims M i m s Minis MlINC : ^ -EiWI11^ -E W I; ^ ^ < l f M l i f t l t l !lin JW L M f«rt i |ffll p(|1[ JB|t fl||I| Ptcj W pt|tl f)|t] p(m
130! l" "ri“ "...... r i 1...... 1s i r ......
S. 4 Cl M usis • M 11920 56• m u r n im m M 190000 M l M l us m m m
C m
fm ti ! i l | ! 2249012 900009 OMOO • V, filiMUy 1092294 1943301 1(03040 323522 137131 10007 I65S7 (6667 M ■ • ■ i l l l l l l 2940000 1711410 3I9S042 2305214 434650 400545 511546 409137 111 221601 340622
DM 90090 •
■ « P s n m i l M » i i i
M i l M f l l i i i n 57 * * mill U.K., Isonur • 20410 2041! 40402 40402 l l l l l l l U l 10007 100(7 321044 321144 324020 324020 20020 27! 759545 750043 2207900 2207!!! 3504240 731034 yiiittim 431001 491031 ...... ^ 303199 37)032 20017 0040 7(045 39200 • m (M M 11(7000 741730 1321! 19233 04722 14722 M l 30270 130007 130007 03207 406001 2104294 2094301 J ill I 2300234 0442702 0400117 Z84 l 4072013 1405275 M 1151740! M 072 1130430 023001! 1003247 034414 3239007 11124 1700000 I f 112 2053030 27092911
Id. MU 5M040 |
M i n n f m i 39
StSllli OlIU U M Il M l. i Figure XI Inspection for Overseas Export, Soft Red Winter Wheat, United States, 1955-1957 (In Millions of Bushels)
15.0
12.5 • # • • «
10.0
7.5
5.0
2.5
July Aug. Sept. Oct. Nov. Dec. Jan. Feb. March Apr. May June
Source: Tables 23 and 2li. Table 25 Inspection for Overseas Export Through Atlantic Ports, Soft Red Winter Wheat, United States, 1955-1957 (In Thousands of Bushels)
Export Through Export Through Atlantic Ports Atlantic Forts as Per Cent of as Per Cent of Month 1955-1956 Total 1956-1957 Total
July 3969 93.0 8 9 8 7 78.0 August 1321 95.7 5299 61(.7 September 355 71.3 631* 6 0 . 2
October 231* 28.9 1985 61.3
November 2281 66.5 1597 93.9
December 1(132 89.3 2759 96.7
January 3503 96.3- 1(003 89.7
February 3559 89.6 2095 99.6
March 10U03 98.2 2355 99.2
April 10939 95.3 61(05 99 .U
May 31(173 96.1 1(573 99.9
June 58UU 99.9 131(6 77.2
Total 60713 93.0 32868 83.7
Source: Tables 23 and 2i*. 80
Table 26 Inspection for Overseas Export of Soft Red Winter Wheat, by Destination, United States, 1955-19!?7
1955-1956 1956-1957 Bushels Per Cent Bushels Per Gent
South & Central Americas 28326 a 25766 0.1 Belgium 1584693 2.4 4940604 9.9 Egypt 8920706 13.7 - France 1937869 3.0 3478612 7.0 West Germany 871267 1.3 4148330 8.3
Greece 298667 0.5 : 228093 0.5 Holland 3937635 6 . 0 10288481 20.6 Israel 79951*0 1.2 701269 1.4 Italy 4 0 0 0 a 196333 0.4 Portugal 1460045 2.2 517500 1.0
Spain 2472701 3.8 Switzerland 336933 0.7 Turkey 943126 1.4 3128973 6.3 U.K., Scotland 10373948 15.9 3416094 6.8 and Ireland Yugoslavia 25954033 39.8 16538560 33.1
Others 5769065 8.8 2 0 4 5 9 6 8 4.1
Total 65285522 100.0 50000846 100.2
aLess than 0.05 per cent.
Source: Tables 23 and 24. 81 total, again in 1956-1957; Holland was second with 20.6 per cent;
Belgium third with 9*9 per cent; and United Kingdom fourth with 6.8 per cent. For the two crop years combined, Yugoslavia was the main importer with 36.9 per cent. Figures for Holland, United Kingdom, and
Egypt were 12.3, 12.0, and 7*7 per cent respectively.
A substantial quantity of soft red winter wheat is exported to
Europe. Table 23 shows the inspection for overseas exports for
1955-1956. Over lit million bushels were exported in May and 1(98
thousand bushels in September. During the crop year 1956-1957 the maximum export, as shown in Table 2U, was in July and the minimum in
September. These reflect demand in foreign countries rather than
supply in the United States. The major importing countries were
United Kingdom (including Ireland and Scotland), Yugoslavia, Turkey,
and Holland. Most of the exports were through the Atlantic ports.
The Gulf and Pacific ports combined handled only seven per cent of
the exports in 1955-1956 and 16.3 per cent in 1956-1957. The Seaway may cause more exports through the Atlantic ports. This will mean
a shift in the direction in which soft red winter wheat moves for
export rather than an increase in the total amount exported.
Toledo offers buyers a great advantage in price. The price of
No. 2 soft red winter wheat is higher in Chicago than in the Toledo market. In the years 191*7-1957 the average price in Toledo was seven
to 12 cents lower than in Chicago. The domestic rail rate from
Chicago to New York is also 20 cents higher, 71.U cents from Chicago 82 and $1.$ cents from Toledo. Toledo's advantage, at the present, lies in the fact that Chicago and Toledo have the same export rate to New
York, 1*6 cents per hundred pounds. The Seaway will not give Chicago such a favored rate • At the time the Seaway opens Toledo will have a lower price than Chicago, and also lower transportation cost. The exact Seaway rates are not decided yet, and therefore, no accurate estimate of Toledo's advantage can be made. One thing is, however, clear - that under the conditions listed above, the wheat from the
Toledo area will be shipped for export before that from Chicago. Table 27 Price Difference3 Between Chicago and Toledo Markets, No. 2 Soft Red Winter Wheat, 1917-1957 (In Cents per Bushel)
Tear July Aug. Sept. Oct. Nov. Dec. Jan. Feb. March Apr. May June Average
191*7-191*8 -1* 5 10 15 18 10 10 11 9 12 12 9 10 191*8-191*9 7 7 5 6 5 7 9 8 9 13 9 0 7 191*9-1950 13 12 10 10 12 13 11 13 9 9 13 18 12 1950-1951 16 H* 11* 11* 12 11 12 7 5 6 8 H* 11 1951-1952 13 8 6 7 9 5 2 3 5 5 9 19 8
1952-1953 17 17 16 17 H* 9 11 11 10 9 5 8 12 1953-1951* 15 11 10 7 6 1* 2 1* 7 1* -1 8 7 1951**1955 8 9 12 8 6 13 11 10 11 8 9 6 9 1955-1956 10 11* 13 12 10 7 9 10 11 9 8 -5 9 1956-1957 7 9 11* 9 5 5 8 12 10 7 9 5 9
aMinus sign indicates that the price in Chicago was lower.
Source: Appendix Tables i*l and h3. CHAPTER VI
THE EFFECTS OF THE SEAWAY ON TERMINAL AND MILLING FACILITIES IN OHIO .
After a long controversy extending over a century, the St. Lawr ence Seaway is becoming a reality. It has been now generally accepted that the 2LOO miles Great Lakes-St. Lawrence waterway is the greatest marvel in the history of water transportation. The waterway will bring the midwestero center of production, both agricultural and industrial, closer to the markets on the other side of the Atlantic, and vice versa. This will cause greater export of American goods.
The value of this increase in trade will not be known till the Seaway is opened. The world trade is likely to increase tremendously. Even if the increase in trade is not large, its effects on the American economy will be significant. Halcrow ^ sayss
The effect of world trade on the demand for farm products must be interpreted broadly. One cannot merely add up the export shipments that have taken place, multiply them by the average selling prices, and then conclude that the resulting value represents the income impact of trade. The effect reaches much further than this. With
^“Harold G. Halcrow, ;ricultural Policy of the United States, New York* Prentice Hall, m r f r z x r . — * —
8U both demand and supply for faxm products being highly inelastic, a billion dollars increase in export ship ments, for example, is likely to have an effect on total farm receipts of several times that amount, at least in the short run. The high income levels achieved by American agriculture after World War II were not unrelated to the federally-supported export relief and rehabilitation programs that followed.
The quickness with which the use of the Seaway reaches popular expectation will depend on general business conditions as well as on the economies which its operation may bring. A survey of the terminal elevators and flour mills in Ohio was therefore made. In the survey, only those terminals were contacted which handled more than 250,000 bushels of wheat during each of the crop years 1955-1956 and 1956-1957.
The terminal elevators are classified as buying most of their grain from local elevators although they sometimes buy directly from the farmers or producers. All flour mills milling 200,000 bushels or more of wheat were contacted. The personal interview method was used instead of mail questionnaires so that the nature of the project could be explained to the managers and subjective replies, where ap plicable, could be properly tabulated.
The purpose of the survey was —
1. To detexmine the capacity of the terminal elevators.
2. To determine the total volume of wheat handled by these
terminals.
3. To detexmine the amount of wheat purchased from the elevators
or farmers in Ohio. 86
li. To determine the amount of wheat received by different modes
of transportation - rail and truck.
5* To determine the extent of export and the mode of transpor
tation employed for exporting wheat.
The survey of the flour mills was made with the following ob- jectives -
1. To determine the daily capacity of the mills
2. Todetermine the total volume of wheat milled..
3. Todetermine the volume of Ohio soft red winter wheat milled.
U. Todetermine the volume of other classes of wheat, soft white
and hard milled.
5. To determine the extent of flour exports and the ports through
which it is exported - Atlantic or Gulf ports.
6. To determine whether the terminal elevators and flour mills
expect any inorease in exports with the opening of the Seaway.
Procedure
The survey consisted mainly of personal interviews with one or more visits made to each of the firms. All 15 terminals were visited.
One of these handled less than 250,000 bushels and was, therefore, eliminated because of definition. The number of visits required was as follows s
1 visit each 8 terminals
2 visits each 5 terminals
3 visits each 1 terminal 87
The managers were very cooperative. The survey of flour mills was also made and all 12 mills were contacted. Two of these mills milled less than 200,000 bushels of wheat and were eliminated by definition.
The data from the survey are presented in tabular form.
In most oases, figures were available in bushels and when figlares were in hundred pounds, they were converted into bushels. When exact figures were not available estimates were then used in consultation with the manager of the firm. In all cases, figures were rounded to the nearest thousand bushel. Current figures from two terminal ele vators were not available. Their past figures, except capacity, were multiplied by the ratio of Ohio wheat production in the year for which data was needed to the production in the year for which data was available. Several firms could not furnish all the details.
Their per cent estimates were used for the breakdown figures. In case of one flour mill and two terminals even estimates were not available• The breakdown was made on the assumption that their business will be similar to that of other comparable firms. Careful attempt was made to make available the data as clearly as could be possible without disclosing the identity of the individual firm. All data on flour are in wheat equivalents. The result of the survey is presented in the four tables that follow. Table 28 Utilization of Wheat by Ho u r Mills, by Market, Ohio, 1955-1956
(In Thousands of Bushels)
Total Soft Red Winter Wheat Other Wheat Export through Market3 Volume Ohio Other States Soft White Hard Atlantic Ports Gulf Ports
Ab 1748 1717 31 B 880 880 — - - 389 - C 3180 171*9 32 382 1018 70 - D 1866 1773 - 93 - -- E H*oo 1300 -■ 70 - — -
F 930 900 30 _ _ G 21*0 21*0 - - — 2 — H 650 575 5o- 25 - 1*1 — I 260 260 - -— 12 - J 12000 9600 1200 1200 - - —
Total 23151* 19021* 1313 1795 1018 511* -
aThe flour mills are combined marketirise so as not to disclose identity of individual firms. For the same reason markets are identified by letters rather than names.
Estimates based on previous years were used where current figures could not be obtained.
Source: Original data. Table 29 Utilization of Wheat by Flour Mills, by Market, Ohio, 1956-1957 (In Thousands of Bushels)
Total Soft Red Winter Wheat Other Wheat Export through Market3 Volume Ohio Other States Soi't White hard Atlantic Forts Gulf Ports
A 2021* 2018 6 m m rnm B 518 1*98 — 20 —— _ G 31*30 1715 31* 1*12 1269 28 - D 1866 1773 m m 93 - 70 - E 1750 1662 - 88 -- -
F 670 665 mm 5 ___ G 270 270 -- — -- H 650 575 5o 25 —— 1*1 I 260 260 m m - —- J 12000 9600 1200 1200 - Mi -
Total 231*38 19111 1290 181*3 1269 98 1*1
aSee footnotes Table 28.
Source: Original data. Table 30 Volume of Wheat Handled by Terminal Elevators, by Market, Ohio, 1955-1936 (In Thousands of Bushels)
Wheat Purchased Destined for.j from Ohio Receipt by .Export by Market3 Total Elevators Rail Truck Rail Water
A 2638 2371* 221*2 396 396 - B 8330 7932 7932 1*18 767 C 283 283 • “6 279 - - D 3627 3627 31*1*6 181 73 E 152U 898 1107 1*17 100
E 1306 1306 797 309 — G 1*00 330 1*00 - - - H 11113 81*00 9013 2100 3360 1200
Total 2921*3 23192 21*91*3 1*300 1*696 1200
aSee footnotes Table 28.
Source: Original data. Table 31 Volume bf Wheat Handled by Terminal Elevators, by Market, Ohio, 1956-1957
(In Thousands of Bushels)
Wheat Purchased Destined for From Ohio Receipt by . Export by- Marketa Total Elevators Rail Truck Rail Water
A 976 878 830 11*6 1*88 B 7i*i5 6869 7072 31*3 1893 C 366 366 11*8 218 - — B km ii717 1*1*81 236 566 E 1917 1299 1192 725 190
F 1223 1223 819 i*Dl* _ _ G 325 375 1*25 - 75 H 9985 7kh0 7885 2100 2895 1200
Total 27021* 23167 22852 1*172 & 2 7 1200
^ e e footnotes Table 28.
Source; Original data. Most of the wheat utilized by the flour mills is of the soft red winter type. In both 1955-1956 and 1956-1957 o-ver 80 per cent of the wheat milled for flour was of this class. The millers substitute some
soft white wheat for soft red winter wheat when the former is favor
ably priced and the latter is in short supply. But consumers of wheat bread and other products made of wheat insist on having the
desired products in a definite form (bread of certain kinds, crackers,
pastes, etc.) and of a definite quality, to such an extent that
substitution of one type of wheat for another is materially limited.^
Several statistical analyses dealing with relative prices for the various classes indicate that most of the variations in relative prices can be explained by variations in relative supplies and by special factors that affect relative demands.3 Any increase in the export demand for Ohio soft red winter wheat will cause a propor tionate decrease in the quantity available for domestic consumption.
If substitution of another class of wheat for soft red winter wheat is materially limited, the price of Ohio soft red winter wheat is likely to go up in case of increased export demand.
Terminal Facilities
The amount of wheat received at the terminal elevators by rail was far greater than the amount received by truck. But it shows that
^Naum Jasney, Competition Among Grains, Stanford; Food Research Institute, 191*0, pp. 93-9i*-
3Kenneth W. Meinken, The Demand and Price Structure for Wheat, Tech. Bulletin No. 1136, 1955/ P* 9 3 trucking facilities are being used by terminal elevators, for short hauls, truck rates are generally lower than rail rates. If the water rate is lower than rail rate for export, the terminals can use the
trucking facility in conjunction with the Seaway, for the export of wheat.
The ratio of total receipts for 1955-1956 hy rail and by truck was about six to one. Hie ratio of export shipment^ by rail and by water was about four to one. For the year 1956-1957 the ratios were about 5.5 to one and five to one. It is not possible to make any trend study from data for only two years, but it is clear that receipt by railroad was greater than receipt by truck and export by rail was greater than export by water. Actually, rail was. About the only economic means at that time. There also appears to be some relation ship between receipt by truck and export by water. Because rail rates are higher than truck rates for short hauls, highway transportation will have to be utilized in conjunction with the Seaway to avail of the maximum benefit in wheat export.
The area in Ohio which will be greatly a££ected by the Seaway lies within 125 of Toledo or Maumee, both of which have facilities for loading wheat on the water carriers. All the area within 125 miles radius is not within the 1*6 cents per hundredweight or 27*6 cents per bushel export rate. The northeastern district and a part of the central district lie in the 1^3 cents export rate zone. As discussed earlier, under the present truck and rail rate structures
^Destined for export. In many cases, the firms did not know whether the wheat was actually exported. 9k wheat is not likely to be shipped to Toledo for export through the
Seaway from over 105 miles in the 1*3 cents export rate zone. The 1*3
cents export rate zone (1*6 cents export rate zone where applicable)
includes 39 counties. This includes any county more than half of
which was in this area. In 1956, two-thirds of all the wheat produced
in Ohio earns from this area.
Most of the terminal elevators in Ohio store wheat for a period
up to two years. Some of the wheat is handled without bringing it to
the terminal elevators. The average length of time wheat is normally
stored by these elevators is shown in Table 33* The turnover as
calculated in Table 33 is 3«3. Considering the fact that actual
operations may be less than the optimum calculated here, it will be
reasonable to assume a turnover of three times the actual capacity,
even if the terminal elevators were operating to their capacity during
the period under consideration.
The total volume of grains handled by terminal elevators in
Toledo in 195^-1955 was 36,1*77,000 bushels. Some of the grain was merchandised without any storage. Therefore, the difference between
the estimated volume that the terminals can handle and the actual
volume handled, when positive, was considered as the extra volume that
the terminals oan handle. As shown in Table 3h> terminals in Toledo
could handle at least 2.8 million bushels more, in 195U-1955• Another
6.1 million bushels more could be handled by terminals which can profitably export through Toledo Port. The total volume, over and
above the volume actually handled, which the terminals within this 95 Table 32 Wheat Production in Selected Counties,a Ohio, 19^6 (In Thousands of Bushels)
District County Production District County Production
Allen 705 III Cuyahoga 27 Defiance 750 Medina 39k Fulton 958 Wayne 865 Hancock 1218 Henry 1107 IV Auglaize 5W) Lucas 1)71) Champaign 575 Paulding 729 Clark 515 Putnam 111)6 Darke 681) Van Wert 869 Hardin 687 Williams 772 Logan 10)8 Wood 1661 Mercer 655 Miami 639 Ashland 580 Shelby 1)62 Crawford 728 Erie 1)1)2 V Delaware 1)1)3 Huron 81)1 Franklin 597 Lorain 39k Knox 502 Ottawa 1)1)8 Marion 601) Richland 565 Morrow 375 Sandusky 822 Union 516 Seneca 1151 Wyandot 830 Total 26272
aThe counties are within 125 miles radius of Toledo to the south up to Franklin County and within 10$ miles of Toledo in the east, where the 1)3 cent export rate is applicable.
Source: Unpublished data, Department of Agricultural Economics and Rural Sociology, Ohio State University. Table 33 The Per Cent of Wheat Normally Stored by Terminal Elevators for Specified Time, Ohio
Number of Storage Storage in Period Average Storage Period in One Tear One Tear a
Under 3 Months 1.5 Months 30.00* 8.00 2 l40.005g
3 - 6 1*.£ 15.83 2.67 1*2.21
6 - 12 9.0 30.00 1.33 1*0.00 S CM 1 18.0 214..17 0.67 16.11
Total 338.32
aThe storage period has been averaged as shown in column 2 and calculations have been made for a period of one year. The number of storage period multiplied by the storage per cent gives storage in one year. The figure 338.32 denotes that on the average, for every 100 bushels capacity the average amount of wheat actually passing through the storage will be 338.32 bushels. The annual turnover is therefore, 338.32 ~ 100 or 3.38 times storage capacity.
Source; Adopted from John W. Sharp and Cecil E. Fuller, Marketing Grain Through Terminal Facilities, Research Circular 38, Wooster: Ohio Agricultural Experiment Station, 1956, p. 6.
i VO On 91
Table 3k Estimated Capacity of Terminal Elevators and the Total Volume Handled, by Region, Ohio, 195k-19$5
(In Thousands of Bushels)
Column a Less Total 3X Column 2 When Area Volume Capacity Capacity Positive® 1 2 3 a
Toledo 36a77 9$00 28500 2773
Within 125 Miles of Toledo a658a 13730 a w o 6081
Total 83061 23230 69690 885a
®Where the volume was greater than three times the capacity it was assumed that the excess was handling without storage.
Source: Unpublished data, Department of Agricultural Economics and Rural Sociology, Ohio State University. 98
area could handle is more than 8.8 million bushels. Unless a trans
portation bottleneck is expected during the export season, an increase
in terminal facilities cannot be justified on the basis of capacity
above terminal facilities in Toledo or enlarge the existing ones for
other reasons like control over facilities.
Flour Milling Facilities
The volume of wheat handled by flour mills in Ohio in 19514-1955
was 2$,k million bushels, about two million bushels more than in
either of the two following crop years. If the flour mills operate
five days a week, the number of working days in a year will be 260.
Ten more days were deducted from this number to make provision for
legal holidays and other time loss. The actual working days will,
therefore, be 250. The annual milling capacity of the flour mills was
obtained by multiplying the daily capacity with 250. Where the volume
handled exceeded the calculated capacity, the excess was considered
as merchandising. The difference between capacity and volume was
considered as unused capacity. As shown in Table 35, the flour mills,
on the average, operated at only 89*5 per cent of their capacity.
Wheat production in Ohio has decreased since 195U* Therefore it
can be assumed that the flour mills are operating at less than 89 per cent of their capacity if they use soft red wheat, from Ohio. Any
increase in export will further reduce the quantity available for milling. If the flour mills cut down their operation, their cost may increase. They may, therefore, find it profitable to bid against
i 99
Table 35 Estimated Capacity of Flour Mills and the Actual Volume of Wheat Handled, Ohio, 195U-1957
(In Bushels)
Unused Volume in Capacity- 1951*-1955 Volume Column 5 as 1951*- 1955- 1956- Daily Capacity Less Far Cent 1955 1956 1957 Capacity 2 Column 2a of 1 2 1* 5 Capacity
25390000 23151*000 231*39000 1 1 0 , 5 0 0 26627000 2982000 89.5
aThis is the sum of positive figures only. Where the volume was greater than estimated capacity it was assumed that the excess was merchandising and not milling.
Source: Unpublished data, Department of Agricultural Economios and Rural Sociology, Ohio State University. 100 export demand. The net result, in the short run, will be increased priee for flour.
During the two years, 1955-1956 and 1956-195?* wheat flour also was exported from Ohio. Shipment was made by one mill through Gulf ports in 1956-1957. This appears to be unusual. Transportation costs to the Gulf ports are generally considered prohibitive. The avail ability of a cheaper means of transportation through the Seaway will be a major deterrent to export through the Gulf ports. Flour was also exported through the Atlantic ports. But flour easily deterior ates in quality and requires special handling as compared to wheat.
Therefore any significant change in the flour export pattern is not anticipated as a result of the Seaway. Wheat can be shipped in any kind of ship other than petroleum tankers. This is not true of flour.
Wheat also gets preference over other bulk goods to fill in any empty space available in scheduled liners. These liners carry high value general cargo and cannot be delayed. The net effect of the Seaway may be to give the export of wheat an even greater advantage over that of wheat flour than it has at the present.
The flour mills do not anticipate any change in export demand for flour with the advent of the Seaway. They expect no increase in export demand for soft red winter wheat flour either. The questions asked were; (l) Do you expect increase in the export de mand for soft red winter wheat flour? and (2) Do you expect the de- mand to change with the advent of the St. Lawrence Seaway? The replies to the questions are presented in Table 36. 101
Table 36 Flour Mills Expectation of Change in Demand, Ohio
Increase in Export Change in Demand Demand for Soft Bed with the Advent of Expectation Winter Wheat Flour the Seaway
Same 2 t m
No 1 8
No Idea 7 2
Source: Original date.
The terminal elevators were asked a similar question - Is your
export business in soft red winter wheat on the increase? The reply was as follows: Yes - 3, Same - 1, No - kt No idea - 1|. The firms
expecting increase in demand or expecting demand to remain unchanged
are terminals handling large volumes. Smaller firms are not expected
to engage in export trade and, therefore, the anticipation of in
crease in export demand tallies with the expectation of the firms.
The flour mills did not expect any increase in export demand for soft
red winter wheat flour as a result of the Seaway. The inelastic de mand for wheat flour was further confirmed by the millers' anticipation
of no shift in domestic demand for flour with the advent of the Seaway. CHAPTER VII
SUMMARY AND CONCLUSIONS
In 1895 the United States took its first action toward consider ation of a deep waterway to the ocean. The next decades marked a period of controversy, inaction and mors agitation. In 1951 Canada created the St. Lawrence Seaway Authority. The United States followed suit and in 1951* the Congress enacted the Wiley-Dondero Act, authoriz ing work on the seaway below Lake Erie. The Blatnik Act of 1956 pro vided for the deepening of the upper lake connecting channels. The
St. Lawrence Seaway down Lake Erie and the Great Lakes waterway up will provide a deep waterway with channels 27 feet or deeper, all the way from Duluth, Minnesota on Lake Superior and Chicago, Illinois on
Lake Michigan to Montreal. The St. Lawrence Seaway is expected to be open for navigation in 1959 and the Great Lakes waterway in 1961.
The 2,1*00 miles long waterway is an important landmark in the history of artificial water route. Like other transport develop ments it is expected to have a great effect on the adjacent states and the nation as whole. The capacity of the Seaway is limited hy the depth of the channels. Ships with only up to 27-foot draft can make use of the Seaway. Further deepening of the channels will be better, but the cost will be prohibitive. The capacity of the
102 103
Welland Canal will limit the total tonnage moving through the Seaway.
In 1955 the total freight movement through the Welland Canal amounted to 20.9 million tons. When the new looks come into operation in
1959 the freight is expected to increase to about 30 million tons.
Efy 1965 the Seaway traffic as estimated by the St. Lawrence Seaway
Development Corporation will reach 57 million tons.
The estimates for grain movement through the Seaway vary between
6.5 million tons and 17 million tons. The figure is likely to be close to 17 million tons as estimated by the Corporation. Water trans portation rates are lower than all other modes of transport for grain.
Water transport, however, takes more time. Therefore water transport will be favored for goods that do not require speed. Iron ore and steel, coal, stone, forest products, petroleum, and grain are the important commodities which fall into this category and have been shipped through the shallow Great Lakes-St. Lawrence waterway.
The estimates of freight movement on the Seaway when it opens in
1959 are much less than the capacity as estimated. The question, therefore, is not one of competition between the different commodities.
The estimated tonnage for 1965 is 57 million short tons. This is also less than the capacity of the Welland Canal. When the Welland
Canal is used to its capacity the question will arise - which com modity will get preference in, shipping through the Seaway. Grain, especially wheat, is likely to remain in a favorable position for several reasons. Wheat can be shipped in any ocean or lake carrier except tanker. Wheat can be used as ballast. It is also readily 10l*
available at the port and liners which run on schedule carrying
general cargo can fill up the empty space with wheat as long as the
return from wheat shipping meets the operating cost and part of the
fixed costs*
Wheat is one of civilization's oldest cultivated crops and the most important cereal crop of the world, except for rice. In non
cereals only potatoes exceeds it. The United States produces more wheat than any other country in the world. In the domestic crop production wheat ranks second only to c o m . The five year average production of wheat for 1866 - 1955 ranged between 231* and 1185 million bushels. Domestic export also showed increase during this period.
Domestic exports ranged between 35 and 1*06 million bushels during the years 1866 - 1955* In 1956,production was about one billion bushels and domestic exports over half a billion bushels. The 91 year averages were 691* and 165 million bushels, respectively.
The production of wheat in the last 21 years, 1936 - 56 has averaged over a billion bushels. Domestic disappearance during the period 1925-1956 ranged between 571* and 1171* million bushels. This includes food, feed, seed, and spoilage. Ihe amount of wheat pro cessed for food has not, however, varied greatly. The figure has been between 1*65 and 51*1* million bushels. In spite of increasing population total consumption is not likely to increase because the per capita consumption decreases with rise in standard of living.
Increased export could take card of the surplus left over after do mestic disappearance. The International Wheat Agreements, Mutual
Security programs and Public Law 1*80 have been of great help in 105 increasing exports. Under the International Wheat Agreements the
United States has on the average, within a guaranteed prioe range, exported 1,1*67 million bushels starting from 191*9-1950. Another 33U million bushels were exported between January, 1955 and October, 1957 under Public Law 1*80.
Soft red winter wheat constitutes about a fifth of all wheat production. Soft red winter wheat production has increased over the period 1925-1956 but not at the same rate as all wheat production.
The domestic disappearance of soft red winter wheat since 19liU has decreased and has followed the pattern for all wheat. Stocks on
July 1 and exports of soft red winter wheat increased during this period. Yugoslavia, United Kingdom, including Ireland and Scotland,
Turkey, and Holland were responsible for the major part of United
States export. In the years 1955-1956 and 1956-1957 exports were low in June and October to February. This may be due to demand in im porting countries rather than a seasonal pattern. About 90 per cent of the soft red winter wheat was exported through the Atlantic ports.
In 195U only 30 states produced soft red winter in any significant quantity. Twenty of these states produced more than 500,000 bushels.
Ohio, Indiana, Missouri, Pennsylvania, and Illinois ranked at the top and produced more than ten million bushels each. During the period
1919-195U these five states produced between 59 and 81 per cent of the total soft red winter production in the United States. Ohio alone produced between 17 and 27 per cent. Ohio ranked first in soft red winter wheat production during the last ten years. About 98 per cent 106
of wheat produced in the state is of the soft red winter varieties,
and six crop reporting districts account for 90 per cent of the
state’s production. Factors affecting the domestic disappearance of
export of the country's soft red winter wheat have, therefore, im
portant bearings on Ohio wheat production.
Wheat production in Ohio averaged 1*2 million bushels between
1925 and 1956. This includes the extremely short crop of 9,1*75*000
bushels in 1928. Terminal elevators within 35 miles radius of
Toledo (Maumee included in Toledo) handle over 50 per cent of all the wheat handled by terminals in Ohio. This area lies within 27*6 cents
per bushel rail rate zone. The waterway rate from Toledo to Montreal will be about 13 cents. Shipping via the waterway will be, therefore,
H u 6 cents lower than rail rate. If the truck rate is five cents
for the first 35 miles a combination truek-watar rate will be lower
than the all rail rate. The truok-water combination rate for export will be lower than the all rail rate in an area up to 125 miles of
Toledo. In the 25.8 cents rail rate zone, which will cover part of
the north central, central, and eastern districts, the difference will be only 11.8 cents and the truck-water combination rate will
offer competition over an area extending up to 1 0 5 miles only.
The area within 125 miles of Toledo in the 27*6 cents rail rate
zone and 105 miles in the 2 5 * 8 cents rail rate zone produced two-
thirds of all the wheat produced in Ohio in 1956. There are several terminal elevators in this area. These terminals store wheat as well as handle it without storing. If as estimated, the average turnover 107 is three times the capacity, any excess over this will be of wheat handled without storage. On this basis, terminals in Toledo could, therefore, handle another 2.8 million bushels in the crop year
1951*-195>5 which had a normal wheat crop, and the terminals outside
Toledo but within the 125 miles and 105 miles area could handle 6.1 million bushels more. Therefore, unless a transportation bottleneck is expected during the export (by waterway) season, the building of new facilities or enlarging of the existing facilities for storage cannot be justified on the basis of needed capacity. Other consider ations, such as control of facilities and facilities at least cost locations will however, affect the individual firm1s decision in building new facilities or enlarging existing facilities, to a great extent.
In 195U-1955, a normal wheat crop year, the flour mills wet's on the average, operating at 89.5 percent of their total capacity calcu lated on the basis of 250 working days in the year. An increase in export and a rise in wheat price to the flour mills in the Toledo area may make the operation of some of the marginal mills unprofitable.
The per unit cost will increase and the millers will bid against exporters, so that they can maintain the volume of operation. In either case, the price of flour and flour products is likely to rise.
However, with the downward trend in domestic consumption of wheat it is possible that there will be no effort to increase the volume of flour unless the export demand for flour also increases. But this is not anticipated. Under these conditions, therefore, the less efficient 108 mills may* go out of business. During the last three years, Ohio did not have a wheat surplus. The increase in export demand will, there fore, result in higher prices at the farm level. If production is increased, the benefit will be in the form of increased exports.
During the years 191*7-1957, at Toledo, the price of soft red winter wheat was generality lower than the price of soft white wheat.
At Chicago, during the same period, hard red winter wheat was priced higher than soft red winter wheat. The lower price may be the reason for foreign demand for soft red winter wheat. The domestic consumer wants the wheat product of a definite quality and therefore domestic demand is not likely to decrease to any significant degree, in the short run. Lowering of transportation cost for export through the
Seaway via Toledo Port, will mean lower price at the destination and consequently an increase in export demand for wheat from an area within 125 miles of Toledo.
Businessmen's expectation plays an important role in the success of any project like the St. Lawrenoe Seaway. A survey of 15 terminal elevators located in eight markets and 12 flour mills in ten markets was therefore made. In 1955-1957 about 88 per cent of the wheat milled for flour by the ten mills included in the analysis was soft red winter wheat, most of which came from Ohio. Most of the exports were through the Atlantic ports. The flour millers, in general, have not given any serious thought to the probabl-e effects of the new Seaway. The large millers expect increase in export demand.
None of them expect change in domestic demand. 109
Over 85 per cent of the wheat handled by terminal elevators was from Ohio elevators or producers. About three million bushels were destined for export in each of the two years under study. The large terminals expect an increase in export demand. Most of the wheat was received by rail and destined for export also by rail. There seems to be a positive relationship between receipt by truck and export shipment by water. With the opening of the Seaway the proportion of receipt by truck is likely to increase considerably. Intercoastal traffic is not likely to increase. But during the period the Seaway is open shipment of wheat for export from an area within about 125 miles of Toledo is likely to be through the Seaway in conjunction with truck transport.
\ APPENDIX 1X1
Table 37 All Wheat Production In Five Leading Soft Red Winter Wheat Producing States, United States, 191*7-1956
(In Thousands of Bushels)
State Tear Ohio Illinois Indiana Missouri Pennsylvania
191*7 1*9028 28980 36133 21*1*30 22296 191*8 5761*8 1*101*9 38162 39270 18351* 191*9 60002 1*6856 39150 35028 31*866 1950 1*6596 27632 32193 23782 18986 1951 31*308 33383 23529 221*06 18832
1952 55100 1*21*35 36980 2751*1* 19012 1953 69136 57291* l*6ll*l* 1*1028 20688 1951* 1*8510 1*6961* 39711 1*2563 19796 1955 1*3381* 52008 31*391* 1*8081 15961* 1956 39676 591*96 35580 1*9800 15579
Sources Agricultural Statistics and Crop production, 1956. 112
Table 38 Soft Red Winter Wheat Acreage as Per Cent of Acreage Under All Wheat, Five Leading States, United States, 1969 and 1956
State Tear Ohio Illinois Indiana Missouri Pennsylvania
19h9 96.6 57.7 96.1 52.3 56.9
195k 98.6 36.5 95.2 66.8 56.1
Average 97.5 66.1 95.6 68.5 55.5
Source i Distribution of the Varieties and Classes of Wheat in the United States in 1956. Table 39 Total Wheat Production in Leading Soft Red Winter Wheat Producing States at Pive Year Intervals, United States, 1919-1951*
(In Thousands of Bushels)
State 1919 1921* 192 9 193k 1939 191*1* 191*9 1951*
Ohio 58196 31*1*6 32093 231*01 37150 1*6805 60002 1*8510
Illinois 70170 37988 36537 291*95 1*11*72 21*31*0 1*6856 1*6961*
Indiana 10.751 28972 27723 32152 27612 261*88 39150 39711
Missouri 61568 21388 17300 21181 301*29 21998 35028 1*3563
Pennsylvania 21*898 18710* 20138 11*759 191*21 20288 31*866 19796
United States 952097 81*0091 822180 1*96929 71*11*35 1072177 111*1188 983900
Source: Agricultural Statistics and Yearbook of Agriculture. Ill*
Table 1*0 Estimated Percentage of Soft Bed Vinter Vheat Acreage in the Major Soft Bed Vinter Wheat Producing States at Five Year Intervals, United States, 1919-1951*
1919 1921* 1929 1931* 1939 191*1* 19U9 1951*
Ohio 95.1 98.1* 98.it 97.1 96.8 99.0 96.U 98.6
Illinois 56.8 1*7.2 1*9.7 60.1 58.7 76.7 57.7 3it.5
Indiana 9l*.2 87.3 79.0 83.9 8ii.it 85.3 96.1 95.2
Missouri 85.1 8 9 . 8 91.5 93.9 87.it 92.9 52.3 aa.8
Pennsylvania 97.9 99.1 99.2 99.8 99.6 97.9 91**9 9 6 . 1
Source: Distribution of the Varieties and Classes of Wheat In the United States in 1951*. Table ip. Simple Average of Closing Cash Prices Ho. 2 Soft Red Winter Wheat, Toledo, Monthly, 191*7-1957 (In Cents Per Bushel)
Crop Year July Aug. Sept. Oct. Nov. Dec. Jan. Feb. March April May June Average
191*7-191*8 236 239 266 286 290 301 303 250 21*7 21*7 239 232 261 191*8-191*9 222 a 5 220 222 231 231 225 217 221 226 226 212 222 191*9-1950 183 181 198 198 196 201* 203 203 215 221 219 199 202 1950-1951 207 205 201* 201 210 226 231* 21*7 238 21*2 233 223 222 1951-1952 221 232 235 239 21*8 258 255 251 21*9 21*1* 235 211* 21*0
1952-1953 206 211 215 213 217 221 218 215 217 211 208 190 212 1953-1951* 177 176 182 187 193 200 210 211* 221 209 201 187 196 195U-1955 196 202 201* 207 218 218 223 218 210 207 209 202 210 1955-1956 190 180 186 193 197 205 205 211 218 228 216 219 201* 1956-1957 203 207 210 217 231* 238 236 221* 218 216 205 201 217
Source: U. S. Department of Agriculture, AMS, Grain Market Hews. Table 1*2 Simple Average of dosing Cash Prices, No. 2 Soft White Wheat, Toledo, Monthly, 191*7-1957
(In Cents Per Bushel)
Crop Year July Aug. Sept. Oct. Nov. Dec. Jan. Feb. March April. May June Average
191*7-191*8 238 21*0 267 287 291 301 305 251 21*7 21*7 239 232 262 191*8-191*9 222 215 220 222 231 231 225 217 221 226 226 212 222 191*9-19# -181* 183 198 198 196 201* 203 203 211* 220 218 198 202 1950-1951 206 206 201* 201 210 226 231* 21*7 238 21*2 233 223 222 1951-1952 221 232 235 239 21*8 258 255 21*7 21*7 21*1 236 215 21*0
1952-1953 206 213 213 212 219 221* 216 213 215 208 205 181 211 1953-1951* 179 179 186 189 195 201* 210 211 218 207 199 186 197 1951*-1955 197 203 205 212 221* 223 225 222 220 211* 211* 208 211* 3.955-1956 196 185 189 200 205 211 209 212 a 7 225 217 222 207 1956-1957 203 207 212 219 236 237 235 222 216 216 201* 201 217
Source: Grain Market News. Table 1*3 Simple Average of Closing Cash Prices, No. 2 Soft Red Winter Wheat, Chicago, Monthly, 191*7-1957
(in Cents Per Bushel)
Crop Year July Aug. Sept. Oct. Nov. Dec. Jan. Peb. larch April May June Average
191*7-191$ 232 21*1* 276 301 300 3 1 1 313 261 256 259 251 21*1 271 191*8-191*9 229 222 225 228 236 238 231* 225 2 3 0 239 235 212 229 191*9-1950 196 193 208 208 208 217 211* 216 221* 230 232 217 211* 1950-1951 223 219 218 215 222 237 21*6 251* 21*3 21*2 2 la 237 233 1951-1952 231* 21*0 21*1 21*6 257 263 257 251* 251* 21*9 21*1* 233 21*8
1952-1953 223 228 231 230 231 230 229 226 227 220 233 198 221* 1953-1951* 192 187 192 191* 199 201* 212 218 228 213 200 195 203 195i*-1955 201* 211 216 216 221* 231 231* 228 221 215 218 208 219 1955-1956 200 191* 199 205 207 212 211* 221 229 237 221* 211* 213 1956-1957 210 216 221* 226 239 21*3 21*1* 236 228 223 211* 206 226
Source: Grain Market News Table 1*1* Simple Average of Closing Cash Prices, No. 2 Hard Red Winter Wheat, Chicago, Monthly, 191*7-1957
(In Cents Per Bushel)
Crop Year July- Aug. Sept. Oct. Nov. Dec. Jan. Peb. March April May June Average
191*7-191*8- 235 21*3 262 299 305 309 306 256 21*8 251* 21*7 239 267 191*8-191*9 229 221 225 - 227 236 238 222 225 229 228 228 201* 226 191*9-1950 198 196 209 209 209 220 219 225 233 231* 232 217 217 1950-1951 225 222 219 215 222 233 21*6 255 21*5 250 21*2 237 231* 1951-1952 231* 21*1 21*1 21*6 257 263 257 253 253 21*8 21*1* 233 21*8
1952-1953 227 233 236 239 238 231* 233 230 231 226 221 205 229 1953-1951* 197 191 196 201 207 215 222 228 232 211* 203 1 9 7 209 195U-1955 211 217 221 222 232 237 21*0 233 227 223 225 212 225 1955-1956 207 197 199 201* 201* 212 213 221 229 238 221* 213 213 1956-1957 210 215 223 226 238 21*2 21*3 235 228 225 218 209 226
Source: Grain Market News. Table i|5 Inspection for Overseas Export of Soft Red Winter Wheat, by Destination, United States, 1955-1956
July Aug. Sept. Oct. Nov. Dec. Jan. Feb. "March April May June Per Cent
S. & C» Americas a 1.9 2.1 Belgium 0.7 6.3 17.9 38.5 — —— 0.1 1.9 2.0 6.9 Egypt — —— — — 35.7 30.3 9.6 16.7 12.6 Prance 1.0 9.5 8.5 W. Germany 2.7 8.5 — 35.ii — — - — — 3.1 —
Greece __ 3.3 3.6 __ —— —— — — — — Holland k . k 5.5 11.2 0.9 3.5 2.2 5.2 7-1* 10.8 Israel — — ll.ii —————— 9.6 — — Italy — — — — ————— 6.5 a Portugal 2.1 — — — —- — 9.6 — 9.7 — — —
Spain lii.O ii2.0 30.8 __ 6.5 ____ 3.1* ij.. 2 —__ Switzerland — — — ' —————— — --- — Turkey 2.6 ————— — —— 3.2 3.0 0.1* U.K., Scotland and Ireland 6.9 20.8 m m m m 20.5 21.8 1.7 lit. 5 19.8 11.1 22.9 16.7 21.2 Yugoslavia 55.9 15.2 21.8 — 59.3 86.7 67.ii 30.ii 36.1 29.6 33.9 22.8
Others 9.7 1.9 ii.9 3.5 15.1 0.6 5.1 12.0 3.8 9.it 10.9 16.9 Total 100 Per Cent
Source: Table 23 Table I4.6 Inspection for Overseas Export of Soft Red Winter Wheat by Destination, United States, 1956-1957
July Aug. Sept. Oct. Nov. Dec. Jan. Peb. March April May June Per Cent
S. & C. Americas ————— .... MM ■ M M _____ 1.7 Belgium 10.9 23.0 6.1* 29.0 3.8 15 . 3 0.8 0.2 — 0.6 — lit.2 Egypt — — — — — — — — — — —— Trance 22. k 11.0 W. Germany 16.3 20.3 13.1 1.6 — 13.3 — — — — 0.1* 1.3
Greece k.9 1.7 —MM Holland 25.6 39.0 ia.3 23.3 30.1 11.3 23.8 —— 7.7 k»9 22.9 Israel — — — 10.5 21.3 — —— — — — — Italy — — — — — — 2.2 ——— 2.1 —
Portugal 3.2 — — l*.6 —— — — ——— —
Spain __ Switzerland — — —— 19-8 10.3 — — MBM* ——— Turkey —— —— — — — — 33.9 1+5*9 —— 8.0 — U.&, Scotland and Ireland n.u 0.2 31.1 28.5 17.0 9.7 3.5 — 1.1 0.6 — 3.1 Yugoslavia — 6.0 —— — 38.7 35.5 36.X 93.0 88.2 81*.l* 56.8
Others 1 0 . 1 0.2 8.0 2.5 8.0 1.9 0.3 18.2 1.1 1.2 0.1 —
Total 100 Percent
Source: Table 21*. BIBLIOGRAPHY
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55. "Will the Seaway Affect Your Fleet," Fleet Owner. May, 1956. 125
F. Miscellaneous
56. American Association of Fort Authorities. Proceedings of the U5th Annual Meeting. Philadelphia, September.lb-2l, 1956.
57. International Wheat Council, Annual Report. 1952-1953 and subsequent issues.
58. International Wheat Council. The World Wheat Situation and the International Wheat Agreement" "London, 1951* •
59. Lake Carriers1 Association. Annual Report of the Lake Carriers1 . Association, -1991*. Cleveland, 1955. * _
60. League of Nations, "Conference of Wheat Exporting and Importing Countries," Economic and Financial. 1933. II. B. 1, Geneva, September 21, 1933.
61. Marquette University. Wisconsin and the Seaway. Proceedings of a Special One-Dhy Institute. Milwaukee, October 5> 1955.
V> AUTOBIOGRAPHY
I, Akhilesh Dubey, was born in Manupur, Saran, India,
January 7* 1-929. I received my secondary school aduoation in
Seyani High English School, Dighwara. I recaivad my Bachelor of
Science degree from Bihar University in 195>2. From the Oklahoma
State University, I received the Master of Science degree in 1955*
While in residence there, I was assistant to Professor Adlowe L.
Larson during the years 195>3-19£fi>. In April, 19$$, I was appointed
Research Assistant in the Department of Agricultural Economics and
Rural Sociology, the Ohio State University, where I specialized in
International Trade. I held this position while completing the
requirements for the degree Doctor of Philosophy.
126