The United States has never, thus far, been a great manufacturing country. Its commerce and wealth are chiefly based upon the products of the soil. Its mining and lumbering interests have been small compared to its agriculture. It is the great food producing nation of the world. Europe is directly interested in the success of agriculture in the United States and is dependent largely upon American produce. The development of agricultural interests has been a potent factor in the growth and development of our cities. New Orleans became the greatest city of the south chiefly because the products of the cotton fields found their natural outlet there. Chicago had its growth in the fact that it is the center of a vast agricultural domain, Buffalo and other cities of the lower lakes assumed importance as the transportation of farm products by water to New England and the seaboard became a necessity. Later, Galveston in the far southwest, Minneapolis and Duluth in the northwest sprang up and became thriving cities because they were natural geographical outlets for agricultural products of the expanding and developing west. Agriculture has also been the moving incentive to the building of railway and steamship lines. It was to meet cargoes from the Illinois and Iowa prairies that the first railroad lines were pushed westward to the struggling trading center at the foot of Lake Michigan, - afterwards to become the greatest grain market in the world.

The produce exchange is an outgrowth of our agricultural development. It is a carefully devised business system for handling, storing, and distributing annually millions of bushels of grain and millions of dollars worth of animal products in the form of meats, lard, etc., at important points in the United States. It is a grain and produce market, the creature of our necessities as an agricultural and commercial people. It differs from a stock exchange in that its members deal in realities, even though they handle nothing but warehouse receipts or promises to deliver, while the stock broker deals in the evidences of credit, or securities which may or may not have a tangible value back of them.

Produce exchanges are usually located in those cities which have important agricultural sections, tributary to them, where railroads center or where rail and water commerce have natural connections at a navigable port. The most important produce exchanges are therefore at the seaboard, on the lakes or on navigable rivers. On the Atlantic coast the exchanges are at Boston, New York, Philadelphia and Baltimore. On the Gulf of Mexico the princi-pal exchange points are New Orleans and Galveston, and on the great lakes are Chicago, Milwaukee, Duluth, Detroit, Toledo and Buffalo. St. Louis, Kansas City, Cincinnati and Minneapolis are examples of exchanges in close touch with producing regions but not having advantages of lake or ocean navigation. San Francisco is the most representative exchange point on the Pacific coast. These cities furnish the natural outlet for the distribution of the products of their several sections.

Each exchange is a corporation controlled by a general or special charter under which its acts are legalized by the state in which it is located. It must be governed by certain officials elected from and by its members. These officials are usually a president, one or more vice-presidents, a body of directors and various standing committees to attend to the details of official business. Each exchange adopts for itself rules and by-laws which govern both officials and members in all their acts. These rules prescribe the requirements of membership, the terms and conditions under which a member may transact business, and provide rigid methods of discipline for violations of the laws of the exchange. It must be kept in mind that the exchange, as such, transacts no business - of a commercial nature, - does not receive or ship, buy or sell during its existence a bushel of grain or a pound of produce of any kind. It simply furnishes the facilities for trading to its members and so hedges them about with restrictions that every contract made is binding under its rules and under the laws of the state and nation. Any digression from the strict letter of exchange law is promptly followed by a charge of uncommercial conduct and this by suspension, expulsion or other penalty.

The members of an exchange may be divided into several classes according to the special features of the business adopted. "Receivers" are those who make a business of receiving grain or other produce direct from the country shipper. Their business is to carry out the instructions of the shipper either in storing the grain in a warehouse or offering it for sale in the open market to the elevator owners who may wish to carry it to a future time, to the miller who may want wheat to grind, to the distiller, the brewer, the cereal company or perhaps the eastern shipper or exporter. "Shippers" are those who make it their business to arrange for the forwarding of grain to still other exchange points or to eastern distributers and consumers. "Carriers" give special attention 'to financing this class of property by supplying the necessary capital, furnishing storage, insurance and all needed protection until there is a demand for its shipment. This class of business has. given rise to extensive systems of private elevators. Public warehousemen are those who own or lease from railroads great storage houses the contents of which they generally do not own. They are required to issue warehouse receipts for all grain stored in such houses and the state, through a board of warehouse commissioners, regulates the storing, carrying and delivery of this grain to its owners who pay a fixed charge per bushel to the warehousemen for the warehouse service.

In the workings of the Produce Exchange no class of members occupy so prominent a place as Commission Merchants. As a rule they outnumber the grain receivers, the shippers, the elevator owners and the independent traders, who are without a commission business. Ordinarily the best class of commission merchants do not trade on their own account, but confine themselves to the proper execution of customers' orders. For the handling of a trade in grain there is established by each exchange a regular commission charge, usually 1/8c a bushel for opening and closing the trade. The business is most profitable, when conducted on a large scale, the largest houses in the largest markets of the country frequently executing orders for many millions of bushels of wheat, corn and oats in a day. This presupposes a very extensive office force, a big private wire system reaching to other exchange points and a wide acquaintance backed by a most excellent reputation for handling all orders instantly and accurately. Where a few houses of this kind exist in a large trading center there are hundreds of smaller concerns doing a limited business, but under the same rules and restrictions of the exchange. The first province of the commission man is to exe-cute orders in any or all markets on the exchange. He must know his customers, or the people who entrust him with orders. If he has not a personal acquaintance with his principal, (the man giving or sending the order,) he must have what is the equivalent of personal acquaintance and confidence - a financial guarantee from the principal

This brings up the subject of margins or security on trades ordered. The favored commission house may have a number of customers whose financial prominence is such that they have carte blanche privileges at the order window. In such cases the commission merchant knows that whatever is bought or sold for such account is as "good as gold" without the scratch of a pen. This class of customers is the exception. For the ordinary trader the first step is to be properly presented to the head of the commission house as a reputable gentleman. The second requisite is for him to deposit with the house such sum of money or certified checks as will cover ordinary obligations in the trade. Then his orders to buy or sell are carried out by the machinery of the fully equipped commission house. If his orders exceed in volume the credit he has with the house, the credit clerk is quick to notify him that more funds are needed. The rules of most exchanges permit the commission merchant, if any unusual action is taking place in the market, to call margins on trades to the extent of ten per cent of the ruling value or price of the article bought or sold. As an example: The customer has wheat bought at 80 cents for a future month. Ten per cent of this price is 8 cents. The commission man if he fears a bad break in the market may ask the trader to put up enough funds to protect the trade on a break of 8 cents or down to 72 cents. If the wheat is sold at 80 cents and the market looks so strong that it may make a big advance, the margin is called the other way, - the trader putting up the funds to protect the house on a possible upturn in price to 88 cents. When the market has covered half this ground a break of 75 cents or an advance to 84 cents, the commission man may again call for margins to the full limit above or below the ruling price. Thus, on a very excited market or during panicky conditions, margin calls on customers may come thick and fast.