Learning Center
Plans & pricing Sign in
Sign Out
Get this document free

Paul G Adams local live stock exchanges The objectives and


									The objectives and functions of the national and
           local live stock exchanges

                     Paul G. Adams

        J Anim Sci 1936. 1936b:212-217.

   The online version of this article, along with
updated information and services, is located on the
              World Wide Web at:


        Downloaded from by on April 6, 2010.

   Summarizing some of the results of the program:
   First--it has changed the trend of lamb marketing from direct
sales in the country to the delivery of lambs to the central mar-
   Second--as it was known in advance that these lambs would
be concentrated on a terminal market, additional lamb buyers
have come to that market to get their share of the desirable
lambs, thereby introducing bonafide competition and unques-
tionably raising the level of lamb prices on the Indianapolis mar-
ket, not only for fed westerns but for natives as w e l l .
   Third--it has prevented half-fat and unfinished lambs being of-
fered for sale with consequent dissatisfaction on the part of both
feeder and buyer.
   Fourth--it has helped to establish a favorable reputation for
Indianapolis lambs at eastern points, thereby aiding both the
processor and the feeder. The ability of the supervisor to de-
liver lambs onto the market as needed has saved the buyers the
expense of going to distant points for their supply.
   Fifth--it has not worked to the disadvantage of anybody.
   Sixth--one fundamental requisite for the success of such a pro-
gram is that one Association controls the great majority of the
lambs, in fact it requires almost a monopoly but it is the kind of
a monopoly that does not pinch.
   Another requisite is that we have an intelligent group of feed-
ers who understand the value both of the grading and of direct-
ing the flow of the lambs to market, so that they are willing to
cooperate with the supervisor. I am convinced that nothing has
been done in this lamb program that could not be done with
 equal advantage by cattle feeders with the proper" cooperation
and team work of a sufficiently large group of feeders.

                        P A U L G. ADAMS
                      Executive Vice-President
                  The National Live Stock Exchange
  The National Live Stock Exchange is the national trade asso-
ciation of the old line commission men who serve the live stock
producers and feeders of the nation as their sales representatives
at our public markets. The National Live Stock Exchange was
organized in Chicago in 1885 for the following purposes, as set
forth in the rules and by-laws of the organization:

               Downloaded from by on April 6, 2010.

1.   The promotion and development of the live stock industry in
     all its branches.
 2. The protection of all interests of the patrons of the public
 3. The advancement of the welfare of its members by closer co-
     operation and united action.
   The first live stock exchange in the United States was organiz-
 ed in Cincinnati, Ohio in 1881. Colonel R. H. West, who was a
man of high integrity and who had a deep interest in the welfare
of the live stock industry was responsible for the organization of
the Cincinnati Live Stock Exchange. He believed that an asso-
ciation of men who served the producers as their sales represen-
tatives at the public markets could do much through the concert-
ed action of the group to improve conditions under which .live
stock was bought and sold by adopting a code of ethics in the
form of trading rules which would place the business of selling
livestock at our public markets on a high plane of business con-
duct, and place proper safeguards at the market to protect the
interests of all who wish to use the public market.
   The rules adopted by the first organized Exchange were in-
tended to bring about a uniform system of business transactions
in which the interests of the live stock owner would be fully pro-
tected and all patrons of the market would receive uniform treat-
ment and consideration, and at the same time be given the op-
portunity to enjoy all the privileges and benefits of an open com-
petitive market.
   The by-laws of virtually all of the organized exchanges
throughout the United States at the present time have adopted
similar rules designed to preserve the system of free, open, com-
petitive bidding on live stock at our public markets, in which the
buyer offering the best bid receives the consignment.
   Local live stock Exchanges exist for the purpose of establish-
ing, maintaining and enforcing uniform commercial usages, busi-
ness transactions and trade relationships among their member-
ship and patrons of the market. The Exchange is also concerned
with anything which will tend to facilitate the receiving, the
handling and the sale of live stock at the market. The live stock
Exchanges take the responsibility of establishing the rules gov-
erning all trade transactions at the market.
   The local live stock Exchanges are composed of commission
firms or commission men, who voluntarily agree upon becoming
members of the Exchange to abide by a stringent set of rules and
regulations which have been adopted to govern the conduct of
members who represent the producer or patron of the market
in selling or buying live stock at the market.

               Downloaded from by on April 6, 2010.

   Membership in the Exchange is not open to just anyone who
believes he is an expert in marketing live stock. The rules of
the Exchange require that an investigation be made of the char-
acter, financial responsibility, experience and competency of the
applicant. Only upon the approval of a committee appointed by
the Exchange is the applicant admitted as a member. The con-
trol of the affairs of the local Exchange is vested in its officers
and a Board of Directors.
   The rules of the Exchange are in accord with our state and
federal laws governing trade transactions. However, they go
further than governmental regulations by preventing practices
at the market which in themselves are not illegal, but which
might lead to wrong doing, dishonesty or fraud if allowed to con~
tinue. In this way the rules of the Exchange provide a means of
handling many local problems at the market which would be
much more difficult to handle through a formal complaint in com-
compliance with state or federal regulations.
   The rules of the Exchange provide that any live stock owner
may go on the market and sell his own live stock or purchase any
live stock he needs if he so desires. Under such a rule there can be
no semblance of monopoly or discrimination. Very few patrons of
the market sell their own live stock or make their own purchases,
however, chiefly for the reason that they gain by using the serv-
ices of skilled and experienced commission men.
   The Exchange maintains a "Court of Appeal" to which any
patron of the market may go without expense to himself or with-
out being required to employ an attorney in his behalf to secure
the settlement or a misunderstanding or injury. When a com-
plaint of any kind is filed, a hearing is held promptly and a ver-
dict is rendered on the evidence presented. The settlement of
any controversy is disposed of with dispatch and with fairness to
all parties concerned. This policy of the Exchange permits the
prompt settlement of any misunderstandings which may arise at
the market.
   The live stock Exchange is not in any way interested financial-
ly in the transactions of its members. Neither does the Exchange
have anything to do with prices paid or received for live stock
bought and sold through members of the Exchange. Prices are
determined by the volume of supply available, by the demand
and by competition.
   In discussing the live stock exchanges and the functions which
they perform in connection with the marketing of live stock it
would appear fitting to discuss briefly the characteristics of the
men who represent the membership of the Exchanges; namely,
the live stock commission men. As a group you will find that the

               Downloaded from by on April 6, 2010.
       THE AMERICAN SOCIETY OF ANIMAL PRODUCTION                     215

commission men are men of integrity, character, and honesty.
T h ey are men who place a high value on their word and honor,
because that is the m a nne r in which they do business. These men
engage in business transactions daily involving large sums of
money, yet all trading is done by word of mouth and there is no
signing of a written contract or agreement. Trades are made in
good faith and are kept in good faith. There is perhaps no other
line of business where trades are made in this manner and kept
so free of misunderstandings.
    Most of the old line commission salesmen have spent m any
years in preparing themselves for the work they are now doing.
Many of them have spent most of their life in some phase of live
stock marketing. A considerable n u m b e r of the commission
salesmen have served as buyers for major packing concerns.
They know both the buying and selling sides of the business.
They understand the viewpoint of the b u y e r and can talk his
language. Th ey know the buyers and what they are most likely
to want. These men have the interest of the producer or feeder
at heart and they appreciate the fact that their business depends
upon satisfactory and efficient service.
    As a rule, the buying side at our public markets is in a stronger
position to defend their actions than the selling side. Yet the
commission men constantly strive to improve the position of the
selling side of the live stock industry and are usually able to dic-
tate values quite as often as the buyers. It is their responsibility
to bring the low bidding buyers in line with market values and
t hey take this responsibility seriously.
    Live stock is generally consigned to the m arket without a sell-
ing price placed on it. This makes the job much more difficult
than selling automobiles, farm equipment and other commodities
which have a definite selling price placed upon them before they
are offered for sale. The commission man is given the responsi-
bility of placing the sale price on the sales ticket when he acts as
the representative of the owner. H er e is where he must match
skill and knowledge against that of equally well-trained repre-
sentatives of the buyer. It is at this time that the commission
salesman must know conditions and values. When a commission
man receives a bid, he must know whether the bid is in line with
t r u e values. He must know present live stock values and it is
important that he know at the psychological moment whether
to accept or refuse the bid offered. Only his knowledge of mar-
ket conditions and his experience as a live stock salesman will
give him the answer to this important question. The rule of the
mar k et is that no offer or bid is valid after the b u y e r leaves the
pen unless a sale is made.

                Downloaded from by on April 6, 2010.

   When the commission man has sold the live stock consigned
to his care, he then has the responsibility of seeing that it is
weighed and delivered to the buyer. Our public live stock mar-
kets maintain scales that are owned by the Stock Yards Company
and are operated by an experienced and reliable employee of the
Stock Yards Company who is a disinterested party in every
transaction and therefore absolutely impartial to both b u y e r and
seller. These scales are under the supervision of the government
and are thoroughly checked at frequent intervals to insure their
accuracy. Most of these scales are equipped with an automatic
scale weight beam and an automatic weight recording device
which stamps the weight on the scale ticket and thereby elimin-
ates the possibility of an error in recording weights. Copies of
the weight record are made for the b u y e r and the seller and a
copy is filed by the Stock Yards Company as a permanent record
which may be referred to at any time by any person having a
legitimate reason for reviewing the weight record.
   One of the most outstanding achievements of the Exchanges in
recent years insofar as the health of our livestock is concerned
and the preservation of the health of our people, was the in-
auguration and sponsorship of the nation-wide campaign to elim-
inate bovine and other types of tuberculosis. At present ninety-
six percent of the counties in the United States and forty-two
states are fully accredited. It is a significant fact that the human
death rate from bone, glandular, and abdominal tuberculosis,
much of which is of bovine origin, is now only one-fifth as high
as in 1917 when this work was inaugurated. The live stock Ex-
changes have also taken an active part in a campaign to elimin-
ate preventable live stock losses. By united action, the live stock
exchanges prevented processors from buying live stock subject
to post-mortem examination which would throw the loss of the
value of the animals condemned of an unsuspected disease upon
 Lhe producer or shipper. This action pevented the destruction
of our present cash market and the substitution of a credit mar-
ket therefor.
   There is perhaps no other field of endeavor where the service
rendered is so great when compared with the cost. On an aver-
age, live stock commission men receive less than one per cent of
the gross proceeds from the sale of the live stock which they sell
as their compensation for the many services which they render.
The records of the commission men are open to the Federal Gov-
ernment at all times. When the Packers and Stockyards Act of
1921 was passed, the Government, after making a careful study
 of the work of the Exchanges and the regulations formulated by
them, approved them and adopted them almost without change,

               Downloaded from by on April 6, 2010.

as the official rules for markets coming under the jurisdiction of
the Act and paid the Exchanges a high compliment by requesting
that they be continued intact as the local governing body at the
   Many of the live stock Exchanges have taken an active part in
sponsoring adult live stock and junior live stock shows, in which
4-H club members and members of the Future Farmers of Amer-
ica organization have participated. These shows are educational
institutions which have for their chief purpose the improvement
of our meat producing animals. Baby beef, pig and lamb club
shows have been sponsored by the Exchanges at many points.
   The live stock Exchanges in many instances, have aided the
agricultural colleges and universities through the Extension
Service, in their efforts to improve market classes of live stock
by sponsoring market lamb improvement work; swine improve-
ment work through ton-litter contests and pork production con-
tests; and market cattle improvement through baby beef produc-
tion contests.
   The live stock producers and feeders throughout the United
States have directly benefitted by the efforts of the live stock Ex-
changes in establishing safeguards at the m a r k e t to protect their
interests and through the constant efforts of the Exchange to
maintain favorable live stock price levels through a system of
open competitive buying at our public markets.

                          WALTER BIGGAR
                           Dalbeattie, Scotland
   The part played by grass, particularly in beef production, is so
important in Scotland that it can never be challenged. The graz-
ing season according to Iocation may be taken to run from April
1st till the end of November and a full bite of pasture capable of
carrying cattle would be fairly general by May 1st. From that
you can readily realize the importance of our pastures when we
can reckon on a period of that length from which by careful
stocking one would expect the maximum results. When I say
careful stocking I refer principally to the carrying capacity of the
various classes of land, and would not of course, expect results
from over-stocking. It has, however, to be borne in mind that
the management of pastures is just as important as that applied
to cropping, and there is nothing so conducive to deterioration in

                Downloaded from by on April 6, 2010.

To top