Federal Grain Ltd.

Federal Grain became Canada's largest private line elevator company; it eventually encompassed twenty original companies before it was sold in 1972. The “father” of Federal Grain, John C. Gage, arrived in Winnipeg in 1903 at the age of 27. That year, along with his father and Arthur Andrews he formed the Andrew-Gage Grain Company, which became the International Grain Company in 1905. In 1906 he formed Consolidated Elevator Company, with Alex Reid of the Western Elevator Company, for the primary purpose of building a terminal at Fort William. In 1922, Gage was joined by Henry Sellers and N.L. Leach, of the Searle-Peavey group, to form the Northland Elevator Company with Gage as president; Sellers' grandfather and father were involved in the early grain trade, specifically as terminal managers.

Federal Grain Ltd was formed in 1929 to take over several companies: Federal Grain Company, International Elevator Company, McLaughlin Elevator Company, Brook Elevator Company, Consolidated Elevator Company, Northwestern Elevator Company, Stewart Terminals, Union Grain Company Ltd, and Topper Grain Company Ltd. Federal also acquired Maple Leaf Milling Company, which had fifty-four elevators, and Gold Grain Company, which had fourteen elevators. Federal then had 355 elevators and a terminal: this compared closely with the Alberta Pacific Grain Company, which had 353 elevators. The three key players in the formation of Federal were James Gage, Henry Sellers and James Stewart. James Stewart, with K.B. Stoddart and William Herriot, had formed in 1912 Federal Grain Company Ltd. (not Federal Grain Ltd); born in Scotland, he had entered employment with the Canadian Pacific Railway (CPR) and joined the Western Grain Company in 1906. Considered by many the shrewdest and ablest grain man in Canada, he served on the Board of Grain Supervisors and became Chairman of the first Canadian Wheat Board when it operated in 1919-20.

By 1929 Gage, Sellers and Stewart had through their share holdings a commonality of ownership and control of these companies. There was economic pressure to combine to improve their competitive position vis-à-vis the farmer-owned Co-operatives. There was also interest in expansion, and with the large grain production and the rising stock market of the late 1920s, Federal went public and listed shares on the Toronto Stock Exchange to raise capital. The directors of Federal were closely linked with Maple Leaf Milling Company and the Alberta Pacific Grain Company, as James Stewart was president of all three companies and, through his own Stewart Grain Company, was responsible for hedging and trading operations. But Stewart made a colossal error. In 1929 there was great optimism that prices would rebound from the record wheat harvest in Canada which had driven prices lower: Stewart was so bullish on prices that he decided not to hedge the grain that the companies were buying, placing the companies in a risky speculative position. Instead of rising, prices began to fall, creating huge losses for the three partners. As he felt responsible for bringing Federal and the other companies to the brink of bankruptcy, Stewart sold his house and distributed most of his assets to the three firms. Twenty-three elevators of Stewart Grain went to Federal, and Stewart's shares went to Alberta Pacific Grain, giving it almost controlling interest in Federal Grain.

Gage became president of Federal and Alberta Pacific, but he died within a year, and Sellers became president of both companies. James Murray, who later became chief commissioner of the Canadian Wheat Board, was appointed manager of Alberta Pacific. Although the 1930s were not good years to make money in the grain trade, by the mid- 1930s Sellers and Murray had placed the companies on a sound financial footing. In 1940 the Bawlf Grain Company was purchased by Federal (getting twenty-one elevators) and Alberta Pacific (getting seventy-two elevators); in 1943, Federal purchased Alberta Pacific with its 800 elevators. In 1967 the Searle Grain Company, Federal Grain Ltd. and Alberta Pacific amalgamated as Federal Grain Ltd.; the company had more than 1,150 elevators and terminals - making it the largest private grain company in Canada.

In the 1970s there was growing concern over Rail Line Abandonment, which would force many elevator closures and compel all grain companies to build new facilities if they were to maintain their market share of the grain business. So George Sellers (son of Henry Sellers) and his associates decided to sell Federal Grain. But who could purchase such a large company? Only the three Prairie Pools were capable of the purchase: this they did in 1972 for $30 million. Only four private line companies remained in business: National, N.M. Paterson and Sons Ltd, Parrish and Heimbecker, and Pioneer.

Gary Storey

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Further Reading

Anderson, C.W. 1991. Grain: The Entrepreneurs. Winnipeg: Watson and Dwyer Publishing; Fowke, V. 1957. The National Policy and the Wheat Economy. Toronto: University of Toronto Press; Wilson, C.F. 1978. A Century of Canadian Grain. Saskatoon: Western Producer Prairie Books.