grading and inspection; and now no portion of the great wheat business moves
with more ease and efficiency, a degree of care and accuracy simply amazing to the
outsider being constantly maintained. (Baker 1900, p. 46)The Northern Pacific was thus able to forge a symbiotic relation with the grain
handlers, who would compete to build elevators along the route and vast
storage elevators in Minneapolis–Saint Paul to tap the river of grain.
The theory that the private rail companies exploited line monopolies to
collude with grain traders against the interests of producers has become part of
the robber baron folk law. It is true that the high capital costs of entry present a
formidable barrier to entry, and that competition was narrowed further by
what might euphemistically be termed sharp practices. Yet the competition
between the transcontinental hauliers on both sides of the 49th parallel had a
measurable bearing on price. In Australia, where the parochial fanning of rail
networks from state capitals and eclectic mix of rail gauges enforced a form of
interstate protectionism, there would be next to no competition in rail trans-
port for another century. Australian railways were expensive to build and
expensive to run by international standards. Fraser notes the average freight
charge in NSW of 1.62d per mile was six times higher than that on the
Chicago–New York route (Fraser 1911, p. 115).
The robber baron narrative takes no account of the interest shared by
producers, hauliers, and traders in a maintaining a vigorous market for grain.
Their relationship was not, as writers like Morgan seem to insist, between the
exploiter and the exploited. It was one characterized by the mutual depend-
ency that arises with the division of labour in a modern, industrialized
economy.
Grain-handling efficiency reached its zenith in Canada where three forces—
an enlightened colonial state, a vibrant free market leeching across the border,
and entrepreneurial farmers’cooperatives—worked in harmony. Bulk hand-
ling was already established practice in the USA in the 1880s when construc-
tion of the transcontinental Canadian Pacific Railway (CPR) began, and the
requirement for grain-loading facilities influenced its physical and economic
design. The proximity of the US market introduced an element of competi-
tion, as grain was drawn south into the Minneapolis trading system. Hill’s
Great Northern pushed north of the border in search for new sources of grain,
which was funnelled from Manitoba via St Vincent into Minneapolis.
The CPR was privately built with a generous subsidy from the Canadian
government of $25 million and a grant of 100,000 square kilometres of land.
The land parcels would give the CPR a share of the uplift in land values, thus
giving the company an incentive to ensure that settlement succeeded.
The CPR issued licences to private companies for the construction of
wooden elevators along the route. It offered free land rental but enforced
Nick Cater