LUCRĂRI ŞTIINŢIFICE, SERIA I, VOL.XVIII (1)

FACT AND FICTION ABOUT GRAIN EXCHANGE OF BRĂILA

CRISTIAN C. MERCE1, EMILIAN MERCE1, CRISTINA BIANCA POCOL1 1 University of Agricultural Sciences and Veterinary Medicine of Cluj Napoca, , e-mail: [email protected]

Abstract: The slogans that have invaded the Romanian mass media after 1989 are powerful weapons of those leading a psychological warfare with the obvious intent to present a distorted image of historical realities. They had and have a common goal, the goal of suggesting that Romania before Communism was ahead of Europe in terms of economic and social development. Based on this perception, there was build the idea, the desire of returning to what was called' the 30's heaven' and, at the same time, there was cultivated the idea of hatred against everything that had been done during the communist period and the demolition of these achievements. The falsity of the slogan is proved by the history of stocks early days, including the wheat stock: Japan in 1697; Antwerp in 1531; London 1554; Paris, Lyon, Toulouse, Montpellier and Rouen in 1639; Augsburg, Nuremberg and Hamburg in 1550; Berlin 1610; Basel (1699), Paris (1724), Vienna (1761), New York (1792), Brussels (1801), Rome (1827), Madrid (1831), Milan (1833), Geneva (1850), Tokyo (1855) ; the famous grain stock in Chicago (1865). Braila is not mentioned in the history of the most important world stock markets. Moreover, until 1859, Romania was not even a country, and Braila was a stronghold of the Ottoman Empire used mainly for collecting taxes from Moldavia and Wallachia.

Key words: grain trade, slogans, psychological weapons, manipulation

INTRODUCTION

Modelling human nature, characters, manipulating the masses according to certain interests have become treacherous weapons that must be brought to light. Masters of manipulation know very well that it is a flattering practice that compensates for powerlessness, reason for which it can be easily inserted into the souls of men. "Man can be defined as being fable. Nothing more human than the power to fantasize, this endless game with everything around us, often extended to exit any tangible or demonstrable relationship" [1]. It is often heard the idea that Romania fed Europe with bread. In fact, statistics show that the country could not nourish their own people with bread. "It is widely known that , especially the peasants, were eating polenta and cornmeal in the interbellum period, but not to the full. It is ridiculous to claim that such a nation of polenta-eaters was the breadbasket of Europe. Despite this endemic poverty, Romania, through the owners of large properties, exported much of its grain production. However, the export of grain was a negative social phenomenon in the social context of the interbellum period" [7]. The frequent slogans that have invaded the Romanian mass media since 1989 represent powerful weapons for those who are manoeuvring the psychological warfare. These slogans had and have a common goal, namely to suggest that Romania before Communism was ahead of Europe in terms of economic and social development. Furthermore, the intention was to arouse, on that basis, the desire to return to the so-called interbellum heaven, and to stimulate hatred against everything that was done during the communist period and, implicitly, the demolition of all those achievements. The propagandistic act proceeds from a relative truth and transforms it into an absolute concept. In order to counteract the harmful effect of such slogans, intellectuals have the duty to reconcile the present with the past, to show the lines of continuity as well as those of discontinuity, to weigh, to analyse, but never to condemn irrevocably. The intellectual offering objective visions and approaches of social and economic phenomena is not a prosecutor or a communist, not a worshiper of the nobility, nor a European, nor a 161 FACULTATEA DE MANAGEMENT AGRICOL nationalist or internationalist. The intellectual can be all of these and any of them, provided that he is first a good Romanian with equilibrated visions in appreciating his own past and the historical global context. The exaggerated patriotism that characterized Ceausescu's times came with its exaggerations. However, now, after a quarter-century after his execution, some events of the "golden age" appear to us in a different light, and the protochronic excesses of the regime were reabsorbed into the great effort of overcoming the sad reality of our past. Ceausescu's era was an era of great tension, with impressive material achievements, achievements which an objective observer cannot overlook. Romanians must discard, however, the curse of bragging about unlimited resources and accomplishments that only the Romanian people is praising and validating. It is necessary to shift to a paradigm that reinforces the belief according to which the greatest wealth of a nation is: intelligence, wisdom, truth, work, order, discipline, punctuality, perseverance, entrepreneurship, combativeness.

MATERIALS AND METHODS

It is believed that the roots of futures trade can be traced in the medieval Japanese system of fairs, which allowed Japan to develop and organize a first futures market since 1697, nearly a century and a half before the United States. However, the first exchange, in the modern sense, was the one in Antwerp. Established in 1531, it had its own building, where there were negotiated colonial goods. Then, in 1554, in London, it had been established an exchange named the London Royal Exchange, which in 1773 focused only on the exchange of financial effects. By 1639, in Paris there are already a number of broker-dealers buying and selling securities, the presence of broker-dealers begin reported later in Lyon, Toulouse and Rouen and, by the end of the eighteenth century, in Montpellier. The first exchanges in Germany appear in middle of the sixteenth century in Augsburg, Nuremberg and Hamburg and, at the beginning of the eighteenth century, the Berlin Stock Exchange. In the meantime, in Amsterdam goods could have been traded based on options contracts. These contracts allowed the agreement upon a price under which the purchaser acquired from the seller the right to buy a quantity of goods at a fixed date in the future. Only a century later, also in this large commercial center, there was constituted a wheat exchange. Exchanges of this kind were established also in Basel (1699), Paris (1724), Vienna (1761), New York (1792), Brussels (1801), Rome (1827), Madrid (1831), Milan (1833) Geneva (1850), Tokyo (1855) etc. In 1865, some of the most skilled American grain traders decided to group and put the basis of a grain stock - what would later on become the most important grain exchange in the world, the famous Chicago Futures Exchange. With the advent of an exchange offering a centralized venue, investors saw an opportunity in building huge silos where to store the grain for full year consumption. They helped to resolve problems related to the supply of corn that existed in the past in America and helped to establish prices for grain throughout the year. In these new conditions occurred also the shift, the transformation of "spot trade" in "term trade", process first appeared in a form similar to that existing today at the Chicago Board of Trade in 1865. Chicago had become at that time the world capital of grain. This kind of trade was then extended to Liverpool, London, New York, New Orleans, Berlin etc. Over time, the range of products traded on term was extended. Industrial raw materials (oil, copper, lead, zinc), pig carcasses, live cattle, timber, citrus juice, etc., were only some of the products from this list. It is worth noting that, even though CBOT (Chicago Board of Trade) had already launched futures contracts for grain since 1865, the

162 LUCRĂRI ŞTIINŢIFICE, SERIA I, VOL.XVIII (1) first law that actually regulated "the contract market" was adopted only on September 21st, 1922 - "The Grain Futures Act of 1922". The law regulated grain futures transactions, but it did not address problems such as the regulation of the trading mechanism and the prevention of markets manipulation. The stock market crash of 1929 and the economic crisis of the early 30's rushed the adoption in 1936 of The Commodity Exchange Act. As reported by Nicolae Iorga in "History of Trade" (1937), in 1840 in the newspaper named Braila's Mercury the Code of Commerce is presented. The Code includes the first general regulation of trade exchange in Muntenia. The Code had been implemented also in Moldovia, where it was officially adopted after the unification of the Principalities. The Code of Commerce from 1840 is a reproduction of the French Commercial Code from 1807. Later on, in 1865, the newspaper Gazette - the official journal of the Romanian United Principalities appears the first bill for the establishment of trade exchanges in Bucharest, Iasi, Galati and Braila. The project regulated the organization and the functioning of these stocks. The law on intermediary stocks and commodities exchange from 1881, also adopted from French legislation, was the foundation for organizing exchange stocks for goods and values. A year later (1882) was opening the and the Grain and Goods Exchange from Braila. Indeed, ever since the late fourteenth century, under the suzerainty of the Ottoman Empire, Braila became an important commercial and crafts center. Commercial activities at that time were still controlled by Ottoman Empire. The Turks had built a formidable castle here, a castle impossible to conquer, and the treasures collected from the Romanian Principalities were send off to Stamboul through the port of Braila. "The law on trade exchanges" from 1904 redefined the stock exchange institution and the Unification Act of 1929 increased the credibility of the stock exchange institution in Romania. Although the law from 1929, also known as the Madgearu Law admitted term transactions, they were not practiced in Romania until 11 July 1997. Only then, they were released for the first time at the Stock Exchange. Due to the low volume of transactions on the market of fungible goods and the lack of a legislative framework (which was increasingly demanded by the Romanian market) Sibiu Monetary Financial and Commodities Stock Exchange (then known as Sibiu Stock Exchange) focused on launching futures contracts on exchange indices and currencies. At the Romanian Commodities Exchange grain is traded sporadically, but a specialized exchange stock with a proper terminal, it could be a success in the future. ''If, as some propagandist statements say, at the beginning of the last century Braila Exchange practically dictated the price of wheat in Europe, why would fail today a Romanian stock exchange, regardless of location, to better control a grain market overly- handed by broker-dealers ?'' [2]. The answer is actually comprised in the question. Because Romanian grain exports were at the mercy of traders, Armenians and Greeks arrived from the Ottoman Empire and the Hebrew coming mainly from the Russian Empire. With a primitive social structure formed by an overwhelming 80% of poor and illiterate peasants, ethnic Romanian could not have influenced in any way the evolution of grain trading. They remained captive suppliers of grain, generally poor quality grain, realities confirmed and explained by authors with high authority. "Especially after the agrarian reform of 1921, the Romanian peasant, the local farmer were to meet with the global market, with the producer from Canada, USA, Argentina, Australia, Russia etc. [...] How the production of Romanian peasants and other local producers stood in competition with producers from the countries mentioned above, is the painful story of our grain exports from the interbellum period, [...] the inferiority of our products was crushing"[3].

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This truth is revealed by the structure of the grain trade, structure where 80% was represented by corn and barley, and was redirected by traders towards alcohol factories.

RESEARCH RESULTS

From "At the end of the nineteenth century and beginning of the twentieth century, the grain production provided the Romanian state over 2/3 of the social income and represented 83% of the total value of its exports. In 1884 there were transited via the port of Braila 13.381 of grain wagons, 23.348 in the following year and in 1901 the exports reached 97 852 wagons. In 1888 the 648 220 tonnes of Romanian grain exported through Braila brought the country 83 million lei gold. The number of wagons in transit each day (summer and fall) was 400-500 wagons in 1891, 615 wagons in 1896, noticing a significant increase compared to 1882 when there were only 145 wagons per day. Along with wheat, through the port of Braila were exported also large quantities of flour, the main customer, the Ottoman Empire, buying 20 times more of this product than all the other states put together" [4]. In his propagandistic elan, the author forgets that the figures invoked demonstrate the primitivism of the economic structure and, implicitly, of the trade in the period referred. The share of gross products in the business structure and the high share of agriculture in calculating GDP is the eloquent proof of the country's economic primitivism. It is sufficient to remember that in countries such as England, Germany, USA, the Nordic countries, agriculture has an intake of about 1% to GDP. In Ghana this percentage is 46%. This primitive feature of the trade practiced by Romania is eloquently illustrated also by statistics from the interbellum period (Table 1).

Table 1 The structure of Romania's export between World Wars % Period Export category 1923-1925 1936-1939 Petrol products 15.0 41.7 Agricultural products 59.6 43.0 Wood, timber 16.0 9.3 Other manufactured goods 9.4 6.0 TOTAL 100.0 100.0 Source: Giurescu et al., 1977

The import/export ratio of the value for one tonne of goods shows the substantial economic gap of the Romanian economy in confront with other trading partners between World Wars. Romania exports raw materials, without any degree of processing and imports manufactured products with a high degree of intelligence included. In this sense, it is sufficient to see that Romania exported from 7 to 13 tons of raw material for importing a tonne of products with a high degree of processing (Table 2).

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Table 2 The average value of a tonne of goods Years Lei/t Import/export ratio Export Import 1929 4099 26889 1/6.56 1934 1542 20786 1/13.48 1938 2906 22859 1/7.87 Source: Giurescu et al., 1977

The synthetic presentation of statistical data provided by the Lovendal Foundation [5] highlights very well the propagandistic and manipulative character of slogan on the role played by Braila in determining the price of wheat worldwide (Tables 3 and 4).

Table 3 Europe's import of grain from Romania (mil francs) Total From Romania No. Year mil. francs mil. francs % 1 1860 811,0 35,7 4,4 Source: Secretele lui Lovendal 2008-2009.

Table 4 Europe's import of grain from Romania (mil tonnes) Total From Romania No. Years mil. tonnes mil. tonnes % 1 1913 132,6 6,2 4,7 2 1934-1938 157,1 10,3 6,6 Source: Secretele lui Lovendal 2008-2009.

Covering only 4.4% of all European imports in the pre-war period and with 4.7%, respectively 6.6%, between World Wars, Romania could have not constituted, in any case, the main source of supply with cereals for Europe, being very far also from influencing the price of wheat in Europe, much less in the world. The falsehood of the alleged role played by the stock of Braila in determining the price of wheat is confirmed by the insignificant share of grain import of Europe from Romania (Table 5).

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Table 5 Quantities of grain exported through the port of Braila Export % Years through Brăila in Europe lei lei/kg tonnes import Europe's import of 1884 133810 0,101 cereals in 1913 1885 233480 0,176

1888 648220 0,489 83000000 0,128 1891 1642500 1,239

1896 2244475 1,693

1901 978520 0,738

1933 1500000 1,131 132,6 1936 3800000 2,866 mil. tonnes 1938 185890 0,140 763500000 4,11 1939 188940 0,142 978500000 5,18 Average 1155584 0,871 * * Source: Iavorschi G., 1993

The Romanian grain export share through Braila of the total imports of Europe, between 0.1 and 1.7%, proves, beyond any doubt, the shallow and manipulative character of the slogan on "pricing of wheat worldwide was established at the market for cereals from Braila "(Table 5). It is important to specify that wheat held a share of under 50% of the total amount of grain exported (Table 6).

Table 6 Grain exported through the port of Braila between 1877-1902 Quantities of exported grains - tonnes - Years Wheat Corn Rye Barley Oat Millet Total % wheat 1877 143100 298155 23761 134163 6892 2162 608233 23,53 1882 400035 636832 78112 413665 19178 27175 1574997 25,40 1887 502165 733253 131310 206691 30692 24349 1628460 30,84 1892 771012 657680 90847 189188 25265 30401 1764393 43,70 1897 433936 781750 142683 333773 54532 35562 1782236 24,35 1902 918542 1092581 112860 333517 154966 21824 2634290 34,87 Source: Romanian Statistical Yearbook, 1908

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Figure 1 - The share of wheat within the total grain exported through Braila Source: Romanian Statistical Yearbook, 1908

Corroborating the very small percentage of Europe's import of grains from Romania with the minor percentage of wheat from the total amount of grain exported, it outlines eloquently that the share of imported wheat by Europe, from Romania, for the periods indicated, represented approximately 1% of the consumption for the entire continent, which confirms the country's minor position in influencing the stock exchange for wheat in Europe and even less worldwide.

CONCLUSIONS

The slogan according to which the price for wheat was established at the exchange from Braila is refuted by both statistical data and bibliographic sources that confirm the evolution of financial exchange stocks, commodities stocks and grain stocks worldwide: 1. Japan had developed and organized a first term stock market since 1697. 2. The first exchange in the modern sense remained the one from Antwerp founded in 1531. 3. In 1554, it was founded in London the London Royal Exchange, which since 1773 focused only on the exchange of financial effects. 4. By 1639 will appear in Paris a number of broker-dealers buying and selling securities and then in Lyon, Toulouse and Rouen, and, by the end of the eighteenth century, in Montpellier. 5. The first stock exchanges in Germany occur in middle of the sixteenth century, in Augsburg, Nuremberg and Hamburg and, at the beginning of the eighteenth century, Berlin Stock Exchange. In the meantime, in Amsterdam goods could have been negotiate based on options contracts. 6. Only in the second half of the eighteenth century, in Amsterdam, there will be constituted a wheat exchange. Such exchanges were established in Basel (1699), Paris (1724), Vienna (1761), New York (1792), Brussels (1801), Rome (1827), Madrid (1831), Milan (1833) Geneva (1850), Tokyo (1855) etc. 7. In 1865, some of the most experienced traders of grain of America had decided to group and form a grain exchange - what would later one become the most important grain exchange in the world, the famous Chicago Futures Exchange, which became from that moment on the world capital of grains. This type of trade was then extended in Liverpool, London, New York, New Orleans, Berlin etc.

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8. Statistics data reports also confirm that geographic areas populated by Romanians, namely Romania were a minor presence in grain trading, especially on the wheat market. 9. The share of about 5% that represented the grain imported by Europe from Romania and about 1% representing the import of wheat confirm the propagandistic character of the slogan regarding the role played by the exchange from Braila in establishing the price of wheat worldwide.

REFERENCES

1. BOIA, L., 2013, Jocul cu trecutul – istoria între adevăr şi ficţiune; Humanitas Publishing House, Bucharest, p. 25; 2. CALOTESCU, T., 2014, Revista Agro Business; 3. DROPU, C., 2011, Un secol de frământări agrare şi drama ţăranului român; Publishing House, Bucharest, p. 188; 4. GIURESCU, C.C., GIURESCU, D.C., 1977, Scurtă istorie a Românilor, 1977, Editura Științifică și Enciclopedică 5. IAVORSCHI, GH., 1993, Istoricul bursei de cereale Brăila (1883 - 1948); Braila's Annals, New Series, Year 1, No. 1, Braila; 6. LOVENDAL, GEORGE, 2016, (fundaţia): România n-a fost niciodată grânarul Europei; www.lovendal.net - Secretele lui Lovendal 2008-2009 , last accession date 22nd of February, 7. MERCE, E., MERCE, C., CRISTIAN, 2015, România după 1989 – de la dezvoltare la distorsiune retrospectivă, Grinta Publishing House, Cluj-Napoca, pp. 65-66. 8. ***- Romanian Statistical Yearbook, 1908, Vol. I, Bucharest, State Printing House.

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