Potatoes -- F.O.B. Eastern Shore: What Their Produce Exchange Did for the Virginia Growers.

The princess Atalanta of classic myth lost her foot race by pausing to pick up a golden apple or two which her long-headed though short-winded lover had placed in her path. He won the race and captured her for the prize.

An Eastern Shore of Virginia modern version of this myth substitutes Miss Prosperity for Atalanta, an army of long-headed farmers for the short-winded lover, and in lieu of golden apples a veritable empire of potatoes. The point here is that potatoes won.

But prosperity never came tripping lightly to the Eastern Shore, she was very much delayed in her arrival and made her first timid appearance back in the year 1900. For eleven years thereafter she stayed conditionally, took fright and all but escaped in 1911, but today has settled down in permanent quarters.

In pre-prosperity days on the Eastern Shore, the farmers knew how to grow potatoes, and grew them. But they didn't know how to market them, and so they weren't marketed. They were consigned to their fate, which more often then not was a tragic one. In 1900 the Eastern Shore of Virginia Produce Exchange was organized for the purpose of putting system and sanity and safety behind the Shore's greatest potential asset -- potato production.

From 1900 to 1911 the Exchange grew and prospered. Better potatoes of better grades went out in better packages to better markets at better prices than ever in the history of the two counties comprising this area -- Accomac and Northampton. New banks sprang into being and deposits swelled, land values took a slow but steady rise. The slipshod potato industry of the Eastern Shore had become a unified, high-geared institution

Why the Insurgents Failed.

But in 1911 something happened which, as I said, frightened Miss Prosperity almost out of her wits and caused her to wait with one foot all set for a swift exit. Internal strife threatened the existence of the Exchange, the only machinery which had ever been designed to put the potato industry on its feet.

There was dissatisfaction with the Exchange's system of voting, which was by shares. Also there was the claim that the Exchange was playing favorites to the extent of giving one shipper better price for his crop than his neighbor received for the same grade. Also 1911 was a year of adverse weather conditions when potatoes spoiled in the cars, and this but added fuel to the smoldering fires.

Then came the flare-up and fully fifty per cent. of the members walked out and formed another exchange. Before they walked out, however, they sent a certified expert accountant to make microscopic examination of the original Exchange's books. Incidentally, he reported that not one penny was out of place. They selected a good manager, gave notes to raise their capital stock and went to shipping on their own.

The old guard of the Exchange sat tight if uneasily. The insurgents were red-headed and the man leading them was a strong man. "If he had played just a few cents behind our prices to members," General Manager Burton of the present and original Exchange was telling me, "they would have won out for even at that his members would have stuck to him through thick and thin."

But this is what the new exchange didn't do. It paid prices way higher than the old Exchange was paying. This looked good to the insurgents, but they were juggling a bubble. To make a long story short, the bubble burst, the notes came due and had to be paid at a dead loss, and the "new" exchange floated off in thin spray.

That was eight years ago. To-day fully ninety-five per cent. of the insurgents are back as members of the old Exchange, and with a loyalty to it stronger because of this and because of the new members who have come in after witnessing this practical test of the Exchange's stability.

The potatoes which now are being handled by the Exchange for the grower-members to the extent of above $8,000,000 gross sales in a single year come from these two counties, comprising a section seven miles wide and fifty miles long, between the Atlantic Ocean on the east and the Chesapeake Bay on the west. The soil is sand and clay, just like the average Tidewater soils of Virginia, requiring fertilizers and humus to make them produce. There are no manufacturing industries on the Eastern Shore. The only other source of revenue worth mentioning is the fish and oyster industry which this year, for example, does not amount to more than $300,000. The soil and not the shoal is the Eastern Shore's bank account.

The Produce Exchange has but one object, to get for the farmers of the Eastern Shore the utmost possible measure of money returns for their produce. To attain this object, two dominant ideas are in active force and have been ever since 1900: to prevent frantic and ruinous competition among the sellers at home and to stimulate a normal and healthful competition among the buyers abroad; to prevent the disastrous glutting of any one market and the consequent demoralization of all markets available.

To get the benefit of these working principles, the grower who becomes a member of the Exchange gets his membership on condition that he will sell 100 per cent of his produce through that organization. He may be an owner of capital stock, he may be a tenant living on land of a stockholder, or he may be a small grower who merely has the privilege of shipping through the Exchange but who does not have a vote and who does not own stock.

This third class of members pays a dollar for a certificate entitling them to shipping privileges. Stockholders own shares of five dollars par value each, and in addition to having shipping privileges, share in guaranteed ten per cent dividends on their stock as well as receiving "patronage dividends." These "patronage dividends" are made up of fifty per cent of the sum left on hand after the close of the year's business of the Exchange when the regular ten per cent dividends on stock have been paid. The remaining fifty per cent of this balance is set aside for a surplus fund. A brief summary of 1918's business will fit in well here:

It's a point worth remembering that the "patronage dividends" are paid to all patrons, whether stockholders or not. The small tenant farmer -- possibly a negro -- who pays the fee of one dollar for his shipping privilege, in addition to getting the best possible price for his produce, at the end of the season gets his share of the patronage divided just as does the large stockholder growing produce on his own land.

Each share of stock is entitled to one vote when electing general officers of the Exchange, following the Virginia law under which the Exchange was organized, but in choosing inspectors for the produce shipped by the Exchange the procedure is on the one-man-one-vote basis.

The nominal capital under which the Exchange was incorporated is but $50,000. As a matter of fact the capital stock today is exactly $41,915, which has been paid in by the more than 2000 members. But each year the Exchange borrows something like $1,000,000 from local banks to carry on its operations, and borrows this on a $300,000 working capital. Because it sells practically every grade of produce f.o.b. shipping point, it experiences a quick turnover on this borrowed money, which accounts for the fact that in a single season it can do an $8,000,000 business on $1,000,000.

Cheap Business Insurance

The greatest drawing card the Exchange holds is its system for carrying all accounts for the farmer members. Nearly everything is sold f.o.b. and the Exchange makes immediate settlement with its grower patrons. All the farmer has to do is to grade and pack in accordance with the rigid rules of the Exchange, deliver his produce to one of the Exchange's thirty-three loading stations scattered over the two counties, and within twenty-four to forty-eight hours get his check from the Exchange. That's the end of his worries, for in nearly every case requiring a claim against the railroads or an adjustment with the buyer, the Exchange handles the entire matter for the grower.

For this service the Exchange charges the grower a five per cent commission on the gross selling price, provided that this commission never totals more than twelve and a half cents a package. On all produce consigned through the Exchange, of which there is precious little, a commission of three per cent is charged in addition to a general fixed rate paid the Exchange's authorized selling agents. In the case of cull sweet and Irish potatoes sold in bulk, a flat charge of five cents a barrel is charged.

Now when you subtract from the grower's commission charges the rebates he has received in the form of stock and patronage dividends, you will find that this service is costing the Eastern Shore potato growers an average of two and a half per cent on their gross remittances, which surely is cheap business insurance. I say "Eastern Shore potato growers" simply because today the Exchange is handling seventy per cent of the Shore's white potatoes and eighty-five per cent of the sweets.

When the growers dig their potatoes they are graded on the farm, hauled to the nearest receiving station, and there inspected and branded, or unbranded should they fail to measure up to the standards set for the Exchange brand. And they are packed in U. S. Standard barrels, properly filled.

The highest grade, the one for which the Exchange is fighting to make synonymous with potato perfection, is the famous "Star Brand." This is no other than U.S. Grade No. 1. It was "Star Brand" on the Eastern Shore long before our Department of Agriculture promulgated potato grades; in fact, when said promulgation was being promulgated the Department wrote to the Exchange for this grade specification. Today it holds as U.S. No. 1. Under this brand you will find sound potatoes free from dirt and all manner of blemish, of a minimum diameter of one and seven-eights inches.

For sweet potatoes the Exchange "Red Star" stencil goes only on barrels containing tubers of a minimum diameter of one and three-quarters inches, nor can this measurement be greater than three and a half inches. They must not be less than four inches long nor more than ten. An unbranded class of sweets is as good as "Red Star" save that they are not less than one and a half inches in diameter and can run as long as twelve inches. No. 2's are culls and are so reported and shipped out. They are not culls in the sense that they are blemished in the slightest degree, but only because they are allowed to run as low as one and a quarter inches in diameter.

The tubers are graded on the farm and strict inspection of them is made at the receiving station. Then the brand goes on and they are reported to Exchange headquarters at Onley, Virginia, from which office they are sold by wire, f.o.b. the loading station.

The inspectors for the Exchange are all level-headed farmers who are thoroughly trained in the work of enforcing grading rules. They are paid good salaries, and this one feature of the work costs about $45,000 a year.

Each day reports come in to head-quarters and the Exchange works the telegraph and telephone lines twelve to fourteen hours a day during the rush periods, placing cars where they will land the highest prices. All sales are made through authorized selling agents who are scattered about the country in touch with the biggest markets. The Exchange will average 200 to 250 cars of potatoes a day during the shipping season, with some days as many as 700 rolling out.

A picked list of reliable buyers in the largest market centers is kept and to these most of the potatoes go. The fourteen sales representatives of the Exchange are advised daily by telegraph or long-distance telephone at what price they may quote Eastern Shore potatoes to the trade. The orders come by wire and telephone and the cars are sent rolling.

"Exactly ninety-three per cent of the orders are sold f.o.b.," said C.R. Waters, the Exchange sales manager, a live-wire individual who has held his present job for the past fifteen years.

"The Keller section of the Eastern Shore is an exception to this f.o.b. rule. There they are raising a particularly fancy grade of sweets which have established a special market of their own. As a result many cars of this crop are sent out on consignment."

Each day sales of the same grades of produce are averaged and the growers paid accordingly, so that grower Smith may deliver a car of "Red Star" Irish potatoes and that day have them sold for $3.90 a barrel, but a day or two later get a check at the rate of four dollars a barrel. Say on June twenty-fifth two hundred cars of potatoes are sold. On June twenty-sixth all the local agents will be notified of the price at which each car was sold. But if 190 of those cars were sold on the twenty-fifth and the remaining ten on the twenty-sixth, the average price will not be taken until the twenty-seventh. Yet every car of like grade sold on the twenty-fifth will be pooled and all potatoes of like grade paid for at the same price.

Warehouses and potato storage houses on the Eastern Shore are very conspicuous by their absence. The Exchange owns none, rents none. Eastern Shore potatoes are taken right out of the ground, graded and rushed to market in the shortest possible time.

The chief reason for this speed is the fact that just north of the Eastern Shore lie Long Island and New Jersey, with their crops maturing close on the heels of the peninsula spuds. The Eastern Shore growers' obsession is to dig their crops and get it on the market before the other fellows begin to crowd. The first crop of Irish potatoes is planted in February and marketed in June, July and August. Sweets are marketed August to December. Then with a rush comes New Jersey to get her crop marketed before the Northern crop matures.

Top Prices for Its Patrons

As a matter of fact, all the potatoes marketed by the Eastern Shore Exchange are "green." There is no sweating and curing of sweets, practically no maturing of white potatoes. These are perhaps the most highly perishable spuds to be found on our markets.

Aroostook County, Maine, gets most of the money spent for seed by the Eastern Shore growers, though Wisconsin has come in for a share of this business. Between twenty-five and thirty per cent of the seed used to come from Maine, the rest being home grown. The Eastern Shore is not a seed-potato producer.

General Manager Burton, himself a potato grower, tells me though that the second Cobbler crop planted in July or August and harvested in October develops into the best seed stock to be found in the country. But he couldn't get the growers to enthuse over this, nor does he try to.

There is nothing complicated about the methods used by these growers to produce their crops. Of course they fertilize and spray and plant good seed. But incidentally they spray against insects but not against diseases. They have the idea that the use of fungicides has a tendency to delay the growth of the tubers and so militate against early marketing.

The growers generally use German clover and wheat as a cover crop when growing sweet potatoes, cutting the clover high for feed and turning under the stubble for humus. They follow their crops of white potatoes with corn for feed. Some plant potatoes in the spring with corn between every other row, then in the fall sow black peas or rye in the corn. In late fall or spring the peas and rye are turned under.

All these men consider forty barrels of three bushels each a satisfactory average crop to the acre.

From several sources I gather information which set the price received for potatoes by Exchange patrons at between twenty-five and fifty cents a barrel on the average above prices receive by individual shippers. Last year when the market stood at six and seven dollars a barrel, Exchange patrons got one dollar a barrel more than nonpatrons.

In the Cape Charles section, comprising the southernmost part of the peninsula, the Exchange controls only about fifty per cent of the output. The remaining fifty per cent goes to individual buyers who make it a practice to advance seed, fertilizer and money for the crop which they handle when it is marketable. Last year the Exchange's agent for the Cape Charles region shipped 103,471 barrels of potatoes; for this year he already has ordered 150,000 barrel covers, which, incidentally are bought by the Exchange for its members and patrons, along with barrels, burlap covering and seed potatoes.

I was talking with a railroad official who, because his road is now under government control, pointedly asked me not to identify him with anything I quoted from his conversation.

"Back in 1907," he said, "sweet potatoes on this peninsula used to give us hauling of 700,000 barrels a year, and now we're getting 1,200,000. And back in those days we used to experience a little chill of joy up and down our spinal columns if we could see a million barrels of white potatoes promised at harvest; if we don't get 3,000,000 barrels now we feel sick"

From an Accomac County banker I learned that fifteen years ago the total bank deposits of both Accomack and Northampton Counties would not have totaled more than $1,000,000; his latest reports showed today $3,000,000 on deposit in Accomack, $2,000,000 in Northampton. This was in May.

"These are low-water-figures," he explained; "the average for the two counties is $7,000,000, and by summer this will run up to $10,000,000."

From June twentieth to January each year there is practically no demand for money from the banks on the Eastern Shore, so they follow the procedure of shipping it out -- often to other states -- and investing it through brokers.

As early as ten years ago there was practically no standardization of the barrels used by the patrons of the Exchange. The local coopers vied with one another to put the least amount of material into a barrel and sell it at the lowest price. Round hoops predominated. This was before the passage of the U.S. Standard Barrel Act, remember.

Manager Burton decided to take an unmistakable stand on the question. He called a mass meeting of the patrons and read them a sermon on the advantages of better containers. "Now," he concluded, "you men are at liberty to put your potatoes into anything you like -- nail kegs, if you wish, and the Exchange will order the kegs. But any barrel of potatoes not a flat-hoop barrel that comes through the Exchange won't get the Exchange brand stenciled on the cover!"

In 1910 the Exchange patrons were covering their barrel potatoes with old fertilizer sacks and almost anything corresponding to burlap. Now the Exchange imports from India the finest light burlap for covers and prints the brand mark on these instead of using a stencil.

Assistant Secretary-Treasurer Taylor is scratching his head for an answer to the question how best to advertise the Exchange's produce to reach the ultimate consumer. The obstacle here is that potatoes are shipped in bulk and lose their identity as soon as they are put on the retail market. About all the advertising the Exchange puts out now is through trade papers.

Mr. Taylor also tried to build up a fancy market for the Spanish sweet potato, which is grown on the Eastern Shore well-nigh exclusively for home consumption. This potato has a high sugar content; when properly baked it is a most delicious product. But its appearance works against its popularity.