Wheat Week

BUSINESS & FINANCE

When the august managers of the Canadian wheat pool take snuff, the whole world sneezes. Last week in seven major markets on three continents grain traders were confounded by the most extraordinary piece of news about the Dominion pool since it was started in 1924. The moment the news was known a dark storm of selling broke over the Chicago, Minneapolis and Kansas City markets, tumbling prices the limit of 5-c- in one day. In Liverpool, Rotterdam, Buenos Aires and Winnipeg, wheat also went down in confusion. Other commodities, notably corn and rye, slid off sharply. The news: After weathering years of economic crises, farm unrest, public criticism and political skulduggery, the Canadian Wheat Pool was about to unload its holdings on the world. If the job was executed recklessly, then world wheat was in for a grand smash.

Pool Unplugged, Like Herbert Hoover's hapless Federal Farm Board, the Dominion Pool was created to solve a problem that looked simple, on paper. Since Canada produces about 400,000,000 bu. of wheat annually and consumes only 110,000,000 bu., all the pool had to do was to buy surplus wheat from Dominion farmers and, after a little good-humored waiting, sell it abroad at its own price. Trouble was that Canada does not control the wheat export market single handed. While the pool sat on its wheat waiting for the right price, European bread-eaters bought their flour elsewhere, notably in Argentina, or turned to cheaper substitutes like rye, barley, potatoes.

Last week, therefore, the Dominion was prepared to tackle its wheat problem from a different angle. Passed by both houses of Parliament and approved by Governor-General the Earl of Bessborough was a bill whose provisions represented a complete policy somersault. The measure abolishes the present pool, substituting for it a three-man wheat board appointed by the Prime Minister. The Board is not to continue the present wheat price-peg (80-c-) but has the power to fix a minimum price at which it will buy wheat from Dominion farmers. Since the minimum price may often be less than the market price, wheat farmers are to receive participating certificates entitling them to share in the Board's profits, if any. More important than these provisions is the declaration of a new policy of "continuous sale" of wheat. The Board is specifically forbidden to hoard grain or conduct stabilization operations. It must pour its holdings, old and new, into the export market as speedily and profitably as possible, "at any price" it can get. Since the pool's holdings are 226,000,000 bu. and since another 250,000,000 bu. surplus will be coming in from this year's crop, the worst fears of grain exporters appeared to be justified last week.

One who thought differently was Prime Minister Richard Bedford Bennett. The portly, pious Herbert Hoover of Canada uprose in the House of Commons to sputter: "There is no intention that this country should offer its surplus of grain at fire-sale prices or throw its surplus on the markets of the world so long as this Government exists." But recognizing that his belated New Dealish Government may go out of existence at the general election next autumn, Prime Minister Bennett added: ''It may well be that other policies may prevail, but they will prevail at the expense of this country."

Prime result of Canada's new policy will be to put the Dominion on a sounder competitive basis with Argentina, Australia, Russia and the Balkans in supplying the world wheat market. Its effect on the U. S., where the tariff is 42-c- a bu., will be negligible, unless the U. S. has enough surplus to go after the world market too.

Rust. Almost forgotten in last week's excitement over Canadian wheat were two big questions about U. S. wheat which have been bothering domestic experts for many a week. One was the old one about how much wheat the U. S. will produce this year. The other concerned the effect of rust on the U. S. crop. About rust and its ravages little is known except that winter wheat is seldom damaged by it because the stalks grow tough before the blight appears. But tender spring wheat is particularly susceptible this year because of late seeding. Rust reports flowed into Chicago from all important spring wheat districts last fortnight, giving a fillip to the wheat futures market. Some estimated a loss of 20,000,000 bu., nearly 10% of the spring crop. Last week the Department of Agriculture declared reports were greatly exaggerated but admitted that rust damage was "difficult to measure."

Estimators. No one knows precisely how much wheat the U. S. will produce this year. Even the Federal Government has never essayed the tremendous task of making an actual harvest count. But the Department of Agriculture never grows tired of guessing. Nor do dozens of private wheat experts who devote their days & nights to the delicate and exacting business of crop forecasts. Last week five reliable independent forecasters reported that as of June 25 the U. S. wheat crop was 707,000,000 bu., 80,000,000 bu. more than domestic consumption. Their estimates of winter wheat averaged 451,000,000 bu. against the Department of Agriculture's 441,000,000 bu. June 1. But every grain trader knows that the guesses of good private forecasters are just as apt to be accurate as the Government's. And every speculator finds them much more useful for the simple reason that the Government's reports, while dated the first of each month, do not appear until ten days later. Private forecasts, also dated the first of the month, are in the hands of clients by the second at the latest.

Basically the technique of all wheat forecasts is the same. While the Government collects its information from between 50,000 and 100,000 farmers, private forecasters get theirs from a smaller number of correspondents all through the wheat belt--farmers, bankers, professional men, grain brokers, millers. Every correspondent receives a questionnaire each month asking the condition of the crop in his neighborhood. Before answering he generally takes a spin in his car through the fields, carefully inspecting the stand for blight, damage from drought or rain, condition of the kernel. He makes his report to the forecaster on the basis of percentage of normal--normal being the long-range average yield. Since the forecasters already know how many acres have been planted, the estimate of yield is arrived at by multiplying the normal yield by the percentage of normal reported by the correspondent.

Best known private forecasters are the five who published their reports last week. Though the public seldom hears of them, they have spent most of their adult lives guessing the size of each year's wheat, corn, rye and other crops. They are:

Nathaniel C. ("Nat") Murray, 72, crop estimator for Clement, Curtis & Co., Chicago brokers. Slender, scholarly, pipe-sucking, he inherited his eye for crops from his father who was editor & publisher of the Cincinnati Price Current. Forecaster Murray started with the Department of Agriculture, whose crop reporting section he headed from 1920 to 1923. The Canadian wheat pool is said to have considered Nat Murray's crop estimates better than the U. S. Government's. His record for accuracy is best illustrated by the fact that the average of. his final crop predictions over an eight year period matched the Government's final estimates almost to a bushel.

Bernard Willis ("Barney") Snow, when not estimating crops for Bartlett Frazier Co. of Chicago, is playing politics or golf. Dean of forecasters, he has also served as bailiff of the Municipal Court and member of the Chicago City Council. Portly, bald-pated and 70, he sports a white military mustache, wears his hat tilted over one eye. He began as a Tennessee farmer, joined the Department of Agriculture as a day laborer in 1884. Nine years later he became the first commercial crop forecaster. He collects his information from 5,000 correspondents. Barney Snow has one eccentricity. He never selects a grain dealer for an agent.

When 65 crop experts met in Chicago to form the Grain Analysts' Club, one of their number was a woman: comely, redhaired, blue-eyed Eileen Henington Miller. Selfconscious, Mrs. Miller offered to withdraw, but her male colleagues would not let her. One of the country's most brilliant crop forecasters, she has worked as a salesgirl in a department store and a stenographer in a Memphis cotton house where she began writing crop reports in 1919. As estimator for James E. Bennett & Co., Mrs. Miller does not rely solely on the reports of her 5,000 agents but travels personally through the grain and cotton belts. (Cotton estimating is one of her specialties.) Last year she covered 40.000 miles. At 34 she is a divorcee, fond of dancing and poker, mother of a two-year-old son.

Richard O. (for nothing) Cromwell, crop estimator for Lamson Bros. & Co., is the most learned member of his profession. An authority on plant pathology, he is credited with discovering the black chaff and yellow stripe rust which attacks Argentine wheat. During the growing season (May through September), he spends 20 days out of every month in the field. La Salle Street is more impressed by his scholarly approach than by his estimates, which tend to be ambiguous though his basic figures are generally accurate.

Saltiest forecaster is Septuagenarian Henry C. Donovan of Thomson & McKinnon. No college graduate, he speaks ungrammatically but picturesquely. His thick white hair falls in bangs to his eyes. Born and raised a farmer, he went to work as a commercial traveler with International Harvester. Forecaster Donovan collects his information not by sending out formal questionnaires to agents, but through a voluminous correspondence with friends he made as a farm machinery salesman. Because he is a poor speller, his secretary rewrites most of his letters. Says Forecaster Donovan with a shrug of the shoulders: "The typewriter always spells it right."

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