Duluth Board of Trade (through 1910)

The second Duluth Board of Trade building. (Image: Duluth Public Library)

An important feature in the commercial life of Duluth is the Board of Trade. It is by the members of this organization that the vast wheat and other cereal crops of the Northwest are financed, in part, at least, and marketed. As a primary wheat market Duluth holds second place in the roll of American cities, Minneapolis alone exceeding it in the volume of receipts. As an export market for wheat Duluth is the first city in the country, and the members of the Board of Trade are in direct momentary connection with the markets of the United Kingdom and the continent of Europe. The trade in corn, oats, barley and rye is also large, while in flaxseed the Duluth market is the greatest in the country, over one-half of the entire crop of the country being handled and marketed in Duluth, and every important crusher of seed has its representatives in the city.

The operations of the Board of Trade are confined to cereals.

There is no trade on the Duluth board in lard or provisions, such as makes up a large share of the business of the Chicago board There is another important point in which the operations of the Duluth board differ from those at Chicago. In the latter there is a very large business transacted that is purely speculative in its character, and in which the commodity dealt in is never actually handled and never expected to be handled. It is a purely scalping trade, in which the speculator takes his profit, if he has been fortunate, or loses his money, if the market happens to go against him. On the Duluth Board of Trade this element of trade is a negligible quantity. There is a regular option trade, of course, in all the cereals, but this is in no sense of the word speculative. It is rather an insurance, and it is estimated that 99 per cent of the option trading done on the board is based upon transactions in the actual commodity, whether in wheat or some other cereal. The option trading enables the concerns handling the cereals to transact their business with an element of certainty that would be entirely lacking if the trade in options were to be abolished.

As an illustration: The big exporting firms in Duluth daily or at regular intervals make offers by cable to the big importers of wheat or other cereals in the United Kingdom or on the Continent.

These offers are based on the closing prices in the Duluth market, plus the transportation charges to the European port.

The European importer will at the same time have on his desk offers from all the other wheat exporting countries of the world.

Argentine will quote him such prices; India has something to offer; Canada will solicit his trade, and so on down the line.

But the importer decides that he will take the Duluth offer and wires an acceptance of, say 100, 000 bushels of wheat of a certain grade, at the price which has been quoted him. The exporting merchant hasn’t got that actual wheat, so he goes on the Board of Trade and buys an option for 100, 000 bushels or whatever quantity he may require, and then his troubles are over. The man who sells the option has the actual wheat in an elevator. He delivers to the buyer warehouse receipts for the quantity of wheat that has been bought, and is paid at once. The buyer then gives orders for the forwarding of the wheat, and the transaction becomes a cash one, and is concluded.

All transactions in cereals are cash transactions. When the farmer delivers his wheat at the country elevator he gets cash for it, and in every transaction in which the grain subsequently figures cash is always paid. It is the Boards of Trade that render this possible, and the Duluth Board of Trade practically finances the farmers in the country tributary to it. The big grain dealers send their agents out through the country when the grain begins to move from the farm to the elevators, and will buy the stocks accumulated by the latter. As soon as the wheat has been loaded on the cars a bill of lading and draft are forwarded to the Duluth buyer and the cash is at once paid. It may be two or three weeks before that grain reaches the Duluth market, but in the meantime the elevator man and the farmers have their money. To do such a business requires a large amount of capital, and many millions of dollars are profitably employed by the banks of Duluth in financing the grain dealers. The dealer, in the meantime, having bought say 100, 000 bushels of wheat in the country will sell for future delivery on the Duluth Board of Trade, adding to the price he has paid the cost of transportation and his margin of profit. By so doing he has insured himself against loss. The banks are glad to accommodate a borrower who conducts his business on these lines, but are apt to view with suspicion the dealer who does not take these obvious precautions.

The Duluth Board of Trade only dates back to 1881, and that year it numbered but eleven members. Its incorporators were George Spencer, Clinton Markell, A. J. Sawyer, Owen Fargusson, W. T. Hooker, W. W. Davis, R. S. Munger, C. H. Graves and Walter Van Brunt. Of these George Spencer and C. H. Graves are the only two who retain their membership. Clinton Markell, R. S. Munger and Walter Van Brunt are still alive, but no longer members. Mr. Graves is the present United States Minister to the Court of Sweden.

There was a grain business transacted at the head of the lakes, however, for some years before the organization of the Board. In the eight years, 1870 to 1878, wheat was the only cereal that was received, and in one year only, 1873-74, did the receipts exceed the 2, 000, 000 mark. In 1878-79 the first receipts of corn and oats are noted, 379, 000 bushels of corn and 15, 000 bushels of oats. The first year’s business of the Board of Trade after its organization, 1881-82, amounted to 3, 266, 000 bushels of wheat, 69, 000 bushels of corn, and 35, 000 bushels of oats. In 1886-87 the first transactions in barley are recorded, 23, 000 bushels, and in the same crop year receipts of 20, 000 bushels of flaxseed are noted. The total receipts of all cereals at the combined ports of Duluth-Superior for this latter year are given as 20, 051, 000 bushels of all kinds of grain. In 1888-89 the first receipts of rye appear on the records, 1, 000 bushels.

Since its foundation the business of the Board of Trade has shown an almost steady progression, the receipts, of course, fluctuating according to the conditions affecting the crops.

Wheat far exceeds in quantity any other crop handled. The year 1898-99 was the banner year for this cereal, there having arrived at the combined ports 77, 377, 000 bushels of this grain. Wheat receipts during the years have shown some wide fluctuations, ranging from less than 20, 000, 000 bushels in 1900-01 to over 50, – 000, 000 bushels in 1908-09. Corn has shown the widest fluctuation.

In 1898-99 and in 1900-01 the receipts were over 6, 000, 000 bushels in each year. In 1902-03 they were only 1, 000 bushels  while in 1908-09 they were 803, 000 bushels, but it must be remembered that Duluth is not a corn market, and neither is the territory tributary to it a corn raising country.

Oats are another widely fluctuating crop. Only in two crop years, those of 1904-05, have the receipts ever gone over the 10, – 000, 000 mark. In the first year the receipts were 10, 187, 000 bushels, and in the latter 11, 924, 000 bushels. In 1908-09 they amounted to 5, 620, 000 bushels. The receipts of barley have shown an almost steady growth, with few of the wide fluctuations incidental to other grains. In 1894-95 they first went over the 1, 000, 000 bushel mark with receipts of 2, 169, 000 bushels. The banner year on this crop was in 1905-06, when 11, 083, 000 bushels were received, while the figures for 1908-09 are 10, 149, 000 bushels. Flaxseed, however, has made the most phenomenal gain of all the farm products handled. In the twenty-three years that it has been dealt in on the Board of Trade it has jumped from yearly receipts of 20, 000 bushels to 20, 592, 000 bushels in 1906-07, while the receipts for 1908-09, which was not a good flaxseed year, were 13, 385, 000 bushels.

In the thirty-nine years that the statistics of the combined ports cover the total receipts of grain and flaxseed amount to 1, 303, 538, 000 bushels, the proportions of each being as follows: Wheat, 926, 124, 000 bushels; corn, 31, 686, 000 bushels; oats, 70, – 249, 000 bushels; barley, 90, 211, 000 bushels; rye, 14, 418, 000 bushels and flaxseed, 170, 550, 000 bushels. Since the organization of the Board in 1881 the elevator capacity of the combined ports has increased from 2, 660, 000 bushels to 32, 475, 000 bushels.

While many of these elevators are located in Superior, the entire business connected with them is done from Duluth.

There is one other cereal handled at the port of Duluth which is an important one to the farmers of the Northwest, and which the enterprise of the Duluth Board of Trade has found an outlet and market for. That is durum wheat. The peculiarity of this cereal is that it will thrive abundantly on the semi-arid lands of the Northwest, where the average grains will not. The first shipment was received about 1903 in the Duluth market, and there was considerable bewilderment as to what could be done with it. The millers of the United States did not want it, and for some time refused to have anything to do with it. They are now beginning to take it up, but not to any great extent, but its use is growing, and it is understood that one of the great firms at Minneapolis is equipping one of its mills to manufacture durum flour.

The members of the Duluth Board of Trade felt that it was up to them to find a market for this new cereal and sent agents abroad to find a market. They found that in certain countries of Europe, especially in Italy, that there was a steady demand for durum wheat and flour made from the cereal. The samples shown prove highly satisfactory, and a large trade has been built up in the cereal. There have been years when it has actually commanded a higher price in European markets than No. 1 Northern wheat, but as a rule it sells at a lower price, ranging anywhere from 17 to 9 cents a bushel under the best grade of wheat. Even at this lower price, however, the cereal is a very profitable one for the farmer to raise, as the yield will run anywhere from 50 per cent to 150 per cent per acre more than the standard wheat. In the year 1909-10 the receipts of durum wheat at the combined ports totaled 17, 963 cars, with a total of about 17, 000, 000 bushels.

The flour made from the wheat is the standard for macaroni, and the greatest trade for it is found in macaroni eating countries.

European millers and American millers also are now trying its value as a blend with the standard wheat, and durum is steadily growing in favor.

In the early years of its existence the Board of Trade occupied quarters in the old Metropolitan block, between First and Second avenues west on Superior street. In 1885 the membership and business of the board had so grown that it bought a site on Superior street, where the present Lonsdale building now stands, and there it conducted its business in its own building until burnt out on February 11, 1894. After the fire the members bought the site where its present building now stands on First street, and erected its present building at a cost for site and structure of $475, 000. This building was completed and the Board entered possession of its new quarters on March 30, 1895. There was a mortgage of $150, 000 placed on the new structure, but this was paid off in December, 1906, when the ceremony of burning the mortgage was celebrated in the pit of the trading room.

The growing business of the Board necessitated the enlargement of the new building in 1898 at a cost of $140, 000. The present officers of the Board are: President, Stephen H. Jones; vice-president, A. W. Frick; secretary and treasurer, Charles F. Macdonald; directors, Julius 167  H. Barnes, W. J. McCabe, E. -I. Smith, J. F. McCarthy, W. C.

Poehler, J. A. Todd, W. C. Mitchell, D. T. Helm and 5I. L. Jenks.

Since its organization the following members have served as president of the Board: A. J. Sawyer, 1881-82; W. T. Hooker.

1883-84; M. J. Forbes, 1885-86; Owen Farguson, 1887-88; A. D.

Thomson, 1889; John McLeod, 1889-90; Frank S. Daggett, 1892; Otto C. Hartman, 1893; George Spencer, 1894; B. C. Church, 1895; W. S. Moore, 1896-97; T. J. C. Fagg, 1898-99; G. G. Barnum, 1900-01; Ward Ames, 1902-03; E. N. Bradley, 1904; John Miller, 1905; George Spencer, 1906; Julius H. Barnes, 1907-08; Stephen H. Jones, 1909-10.

The affairs of the Board are in a most prosperous condition.

There is a slight mortgage indebtedness on its building, incurred to pay for the purchase of additional land and the extension of its building, but the value of its holdings is now figured as worth from $100, 000 to $150, 000 more than the cost. The last annual statement showed receipts from all sources of $74, 695.41, and after all expenses had been paid there remained a balance of $20, 882.20.

But for the restrictive operations of the tariff laws there would be a vast additional grain trade that would naturally seek Duluth from Canada as its outlet to the East. There is a yearly movement of a few millions of bushels as it is, but as this comes in bond there is no freedom of commerce. The Canadian railroads, naturally, under these circumstances, prefer to divert all their grain traffic to Canadian ports, but if the tariff was off a very great proportion of the trade of western Canada would naturally come to Duluth. The Duluth Board of Trade hopes for the day when this will come, and the following excerpt from the annual address of President Jones is therefore pertinent to the subject. He said: “With the greater growth of the cities and the country comes a larger local consumption of American grown grain, a smaller amount available for export each year, and a smaller amount to be handled through the port of Duluth each year unless two warnings which have been emphasized in the past year so strongly are recognized and acted upon by the American farmer and the American citizen generally. The first I refer to is the warning of Mr. J. J. Hill to the American farmer against the further abuse of the soil and instead a resort to intensified farming. The action on advice of no matter how great merit, where the body advised is composed of a very large number of people, is slow, and the percentage of acceptance each year would probably not be in excess of the country’s growth in population and consequent increase in consumption.

“The second warning I refer to is the warning from the consumer who has to pay so high a price for his living in all departments.

We have a neighbor to the north of us who raised 125, – 000, 000 bushels of wheat last year and who, I believe, in ten years will raise double that amount. A large percentage of this should not only be available to Duluth for export purposes, but to the citizen of the United States for use on his table under a greatly reduced tax. In connection with this I wish to refer for a moment only to the recent strike conditions which we have all deplored. Not in any unfriendly spirit towards union labor, but solely in the way of suggestion, I would submit that the same government that restricts the earning power of the common carriers of the country should be urged to reduce the cost of the table rather than that the railroads should be asked to pay constantly increasing wages on the one hand while the government restricts their earning power on the other.

“With respect to both of these warnings the members of this Board of Trade may be of untold benefit, not alone to the country at large, but as well to themselves as members of the grain trade.

They should in the various ways in which they come in contact with the farmer, personally and through their numerous representatives, preach the gospel of intensified farming, including as does a return to the land each year of some part of the life that crops have taken from it. In the second place, the members of this Board should extend their field of action to take in our proportion of the movement of the crop to the north of us through the port of Duluth, which, after all is said, is the natural way for this grain to move-the way of least resistance-not alone with the idea of procuring the wheat for export trade, but under fair restrictions, for use in this country. Our population has grown to such an extent that a partial failure of the wheat and corn crops in the same season would mean that prices in the United States must go to a famine basis within a very short time.

As Cleveland once said: ‘It is a condition and not a theory that confronts us. . . ‘ There is labor enough in the extension of our business in our country and the country north of us to keep us out of controversy.” 169 1 There was a time when it was confidently predicted that Duluth was to become the greatest flour milling city of the country.

In 1895 it ranked second in the country in the production of flour, and then had ten mills with a daily capacity of 19, 000 barrels. Today there are only three mills in the Duluth-Superior district with a daily capacity of 6, 000 barrels.

There was everything to justify the claims of the Duluth men for ultimate supremacy in the flour trade. The city was in close proximity to the great wheat fields of the West, it had the advantage of the cheap water haul to the markets of the East, and being able to buy its wheat on a par with Minneapolis and ship the manufactured product eastward at a lower rate, it did not appear as if its natural supremacy could ever be disputed.

Under these conditions, flour milling began to flourish. The first mill that was built in the city was in 1888, when R. S. Munger, B. C. Church, T. A. Olmstead and others organized the Imperial Mill Company and erected a plant with a daily capacity of 3, 000 barrels, which was later increased to 8, 000 barrels. This was a corporation with $500, 000 initial capital and for a time did a flourishing business. Its success incited the formation of other similar enterprises, until in 1895 there were in operation the following mills, the figures referring to their daily capacity in barrels of flour: Imperial, 8, 000; Lake Superior, 3, 000; Grand Republic, 2, 500; Freeman, 2, 000; Minkota, 750; Barclay, 600; Listman, 2, 500; Anchor, 2, 000; Superior Roller, 500; Duluth Roller, 500.

One of the writers of that time, in a review of the flour industry of the city, has left the following on record: “It is only a question of a very few years when the great bulk of the wheat grown in northern Minnesota and the Dakotas will be ground into flour at the head of the lakes. The advantages possessed by Duluth over Minneapolis as a point for milling are too plain to require elaborate illustration. A look at the map is all that is needed. The geographical position of Duluth at the head of deep water navigation is supreme. She sits in the middle of a channel through which the No. 1 hard wheat of the Northwest must naturally find its way to the markets of the East and Europe. Whatever portion of this wheat is used by the Minneapolis mills is diverted from this channel at the expense of those mills and to the proportionate advantage of the Duluth mills, so it requires no lengthy argument to show that Duluth must soon pass Minneapolis as a milling center.” It did appear as if these advantages were insurmountable, but they were finally overcome. In those days the water transportation on the lakes was conducted by independent boats, who took their cargoes to lower lake ports and delivered them to the railroads.

All the eastern railroads could get out of the traffic was the haul from Buffalo and other ports to the seaboard. This was a very distasteful state of affairs to them, and in a short time they remedied it by buying out lake lines with all their wharfing facilities in the East. Then, by an adroit manipulation of rates, they were enabled to almost wipe out the differential by which Duluth had profited. Lake rates on shipments figured as an infinitesimal part of the entire rate to the East, the rail rate absorbing the greater part of the whole. This policy made it impossible for independent carriers to engage in the trade, because even if they did carry a cargo down the lakes, they had no place at which to unload it, and the railway lines would not allow them to use. their docks. This, and “trust” methods, which gathered in the mills at the head of the lakes, caused the decay of what promised to be a vast business.

The three mills which are now in operation at the head of the lakes are the Duluth-Superior Milling Company, daily capacity 3, 000 barrels; the Superior-Listman Company, daily capacity 2, 000 barrels, and the Duluth Universal Milling Company, daily capacity 1, 000 barrels. For 1909 their production was 624, 240 barrels, almost wholly for domestic trade. Duluth still remains a great flour shipping point, however, and the mills of Miinneapolis and other flour milling towns last year sent to this port 4, 977, 050 barrels.


  • Woodbridge, Dwight and John Pardee, eds. History of Duluth and St. Louis County Past and Present Vols. 1 – 2. C. F. Cooper & Company, Chicago: 1922.
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