• 1 LCTA merged with the Cattle Food Trade Association to form the Grain and Feed Trade Association (G (...)

1The London Corn Trade Association (LCTA) was established in 1878 by British merchants in the international grain trade to further and protect their interests.1 Its primary aim was to ensure the adoption of standard contracts in the international grain trade and to settle disputes between buyers and sellers by arbitration. LCTA’s quality measurements, rules of sampling, uniform contract rules and use of standards in arbitration made it the most important European produce exchange in international grain markets of the late-nineteenth and early twentieth centuries. Its activities provide an ideal case to study the dynamics of how measurements and governance helped in the transformation, expansion, and globalization of agricultural markets between c1880 and 1914.

• 2 Y. Barzel, 1982; D. C. North, 1990; A. Greif, 2000.
• 3 S. Ponte & P. Gibbon, 2005.

2Measurements have historically functioned as technologies of coordination as they form a crucial part of the monitoring and enforcement mechanisms in international trade. They facilitate economic exchange by helping to reduce transaction costs and mitigate fundamental problems in exchange.2 Measurements also help to overcome the element of “time inconsistency” in an economic transaction, whereby it may be difficult for individuals to ensure that other parties remain committed to their contractual obligations at some future date. Reliable measurements help to overcome time inconsistency. Such arguments are especially relevant in the case of agricultural commodity markets, where transactions involving large quantities of goods purchased upon inspection of samples, usually for delivery at some future date, rely upon accurate measurements of quality, based on internationally accepted standards and robust inspection mechanisms.3 Measurement standards potentially solve many of the transactional issues stemming from the large varieties of agricultural commodities traded across social, cultural, political, and legal jurisdictions.

• 4 B. Latour, 1987, pp. 232-257.

3These basic arguments require further refining if we are to understand the role of measurements and governance in the globalization of agricultural markets after c1880. Although measurement standardization during the nineteenth and twentieth centuries in most parts of the globe is often taken to be a historical fact, it is an institutional phenomenon that deserves to be confronted and probed. Metrological standardization is often seen as a conjoined process of state formation, alongside the establishment of centralized state bureaucracies.4 However, the measurement and standardization activities of trade associations and produce exchanges such as LCTA provide a fresh perspective on the information infrastructures created by non-state actors and allow us to question the extent to which they aided, hindered, or otherwise shaped economic globalization.

• 5 S. Ville, 2007, p. 298; A. Velkar, 2012, pp. 171-217; K. J. Lipartito, 1983; R. J. Bennett, 2011.
• 6 Term borrowed from P. Gibbon, 2001, p. 351, who writes that international commodity chains tend to (...)

4Trade associations, such as LCTA, were important third-party or bridging organizations that provided strong structural and cultural properties to market exchange. In the context of globalization of agricultural commodities, this meant that LCTA, funded by members of the grain trade, exercised “associational governance” by virtue of certain rights that its members delegated to it.5 These rights included the ability to set rules – and obligations upon its members and to bind its members to these rules – and the willingness of members to accept the judgement of peers based on the association’s rules to settle disputes. According to this view, LCTA thus functioned as a market-strengthening institution, providing a solution to the various governance issues that characterized the international grain trade and its “filamented” value chains.6

• 7 R. B. Forrester, 1931, p. 196.
• 8 P. Johnson, 2010; A. Stanziani, 2012.

5The analysis needs to be further deepened by locating LCTA’s activities in the context of the accelerated establishment of commodity exchanges in the latter part of the nineteenth century and the associated institutional changes to the nature of contracts surrounding produce traded in these exchanges. In Britain, the growth of organized produce exchanges can primarily be linked to its extensive and varied overseas trade, rather than to domestic changes in food or agricultural production.7 London exchanges such as the Baltic and Corn Exchange and other mercantile or shipping exchanges can be traced back to the sixteenth century. However, a series of regulatory changes to mercantile and financial law (especially around incorporation and speculative activities) in the nineteenth century encouraged a rapid rise in the establishment of both securities and produce exchanges.8 Of particular relevance here is the rise of forward contracts in international produce markets – or “virtual trade” as Alessandro Stanziani terms it – which accelerated the development of standardized contracts. The standardized terms often related to the specification and measurement of product quality around future delivery of produce.

• 9 A. Stanziani, 2012, pp. 115-144.
• 10 A. Velkar, 2012; L. Brunt & E. Cannon, 2015.
• 11 L. D. Hill, 1990; A. H. Garside, 1935.

6Thus, as the definition of quality became an important element in contracts, whether a contract represented a more formal legal relationship or informal norms or customs, the quality of the product on which the contract was based became central to the fulfilment of the contract.9 Traditionally, within agricultural markets, individual commercial transactions were based on inspection of samples of the season’s produce, as in the case of domestic British grain markets.10 Buyers would inspect the commodity, ascertain its quality, and, accordingly, determine the price they were willing to pay for it. With globalization of agricultural markets, there was a shift towards standardized measurements of many agricultural commodities predicated upon standardized measurements, especially grain and cotton.11 “Official” standards established by commodity exchanges were better able to guarantee quality on forward delivery contracts than reliance on sample inspection alone.

• 12 L. D. Hill, 1990 for details of US grain grades.
• 13 S. C. Pirrong, 1995.

7Nevertheless, the case of LCTA helps to sharpen the focus on the limits of influence that a single produce exchange could exert on the larger international trade, compared to the collective influence of the different grain exchanges in North America, Europe and elsewhere. Curiously, LCTA’s so-called standards, as we shall see later, were highly contingent upon seasonal inspection of grain imports rather than the codified, permanent grades developed by North American produce exchanges.12 LCTA’s “fair-average-quality” or FAQ standard for wheat was determined annually based on samples collected at various ports. This measurement system was an alternative to the standardized grades that North American grains could be sorted into, such as Red, White, Winter or Spring wheat. The argument that follows from this is that LCTA and its measurement infrastructure, with its emphasis on the importing trade rather than producer markets, was predicated upon connecting a different part of the grain market – the distributive trades (primarily wholesale importers and exporters) – in contrast to the North American exchanges which connected grain producers with the distributive trades.13 Both quality conventions were acceptable in European trade, and this case study shows how LCTA facilitated this acceptance through its work.

• 14 L. Bernstein, 2001.

8Notwithstanding this, the case of LCTA shows how quality measurements helped to standardize contract terms by potentially eliminating the need to negotiate commercial terms for each individual transaction. They significantly lowered the overall economic cost of repeated transactions involving bulky, relatively homogenized commodities by eliminating the need to negotiate contract terms apart from quality and price. Uniform contracts, commodity grades, and centralized measurement systems aided the arbitration of disputes and mitigated the limitations of state legislation. These systems effectively introduced a “private legal system” that allowed the markets to internalize the governance and control of product quality.14

• 15 H. Barty-King, 1978, p. 16.
• 16 R. Tadman, 1947, pp. 7-8.
• 17 S. Dumbell, 1925; C. R. Fay, 1925.
• 18 H. Barty-King, 1978, p. 16.

10As the international grain markets expanded after c1860, exchanges for buying and selling grain in Britain, which had existed since the fifteenth century, multiplied quickly. The Baltic Exchange, which opened in Mark Lane in 1749, was an important meeting place for brokers, buyers, sellers, and shippers of grain where they could meet and “strike bargains”.15 It was soon followed by similar exchanges and grain associations in Liverpool (1808), Glasgow (1841), Hull (1888), Bristol (1889), Leith, Scotland (1890) and Ireland (1912).16 Most of these exchanges and associations dealt with the distribution of domestic grain before the repeal of the Corn Laws in 1846. It was simpler to sell grain in the domestic markets than to handle the increasing volume of imported grain flowing into Britain after c1860, which tended to be bulky and involved greater transportation and financial risks.17 Also, with the increased use of forward transactions, grain merchants became increasingly dependent upon merchant bankers to finance their international trading activities. These bankers had their own forms of shipping contracts that they obliged the traders and shippers to use. Eventually, the grain traders sought to establish standard contracts and international trading practices of their own rather than use those of their bankers and financiers.18

• 19 The Times, 16 May, 1878, p. 6.
• 20 R. Tadman, 1947, p. 10.
• 21 H. Barty-King, 1977, p. 177.
• 22 The archival records of LCTA are held at the London Metropolitan Archives. They primarily consist (...)

11LCTA emerged from this changing structure of the grain markets in London, specifically the internationalization of the grain trade, as well as the emergence of London as an important financial centre in the last quarter of the nineteenth century. In May 1878, four leading grain merchants, John Ross, John Kressman, Richard Duck, and William J. Harris (all members of the Baltic Exchange), met to discuss the formation of LCTA. Later, at a larger more “crowded” meeting attended by the wider trading community, its formation was approved.19 Its stated objectives were to standardize new contract forms for grain shipments, protect the interests of the grain trade in general, and select “a limited number of gentlemen of matured judgement and honourable character with practical knowledge of the corn trade to act as a final Court of Appeals in Arbitrations”.20 It is unclear exactly how these “gentlemen of honour” were appointed to various executive roles, but in the initial years at least, the elected chairs of various committees within the exchange were merchants from prominent London-based firms and members of the Baltic Exchange. Seventeen of the initial 50 members were appointed to the executive committee governing the association.21 For the first few years, LCTA had no premises of its own and committee meetings were held in members’ offices. It eventually moved to its own premises in the early 1880s.22

• 23 O. E. Williamson, 1979, pp. 248-250.
• 24 S. C. Pirrong, 1995; J. Stewart, 1923; J. C. F. Merrill, 1911.
• 25 A. Stanziani, 2012, p. 104.

12This case study of LCTA shows that the problem of enforcement of quality and contracts is better understood from the perspective of “associational governance” mentioned earlier than Oliver Williamson’s transaction cost based “market governance” perspective.23 LCTA’s primary roles as a standard-setter and arbitrator distinguished it from the earlier incarnations of grain exchanges in Britain. Its significance as an institution was less to provide a marketplace of exchange – the Baltic and other exchanges had historically fulfilled that function – but rather to act as a meta-level institution which, by standardizing contracts, was able to provide a “visible hand” of a third-party to govern private contracts between grain traders. Such associational governance was required in international markets for agricultural produce such as grain where buyers (based in the UK) did not always share the same quality convention as sellers (mostly non-UK based firms). Even when they did share the same convention – when, for instance, a contract specified the product grade that both parties could agree to, such as no. 2 Winter Wheat – there was a need for robust monitoring mechanisms to measure the deterioration of grain quality during transportation and storage.24 Bi-lateral governance through repeated transactions (Williamson’s “market-based governance”) was simply unable to cope with the complexities of agricultural commodity standardization that globalization and forward contracting entailed. This was particularly important in Britain as it became a major importer of food and industrial commodities in the latter part of the nineteenth century. Consequently, commodity exchanges, such as those in the grain and cotton trade, developed mechanisms not just to ascertain product quality but crucially to standardize contracts. In other words, the aim of the standard contract was to render the contract itself fungible, as well as the product that had become abstracted, alienable, or “virtualized” with the growth of forward contracting in commodities.25 As is argued here, the function of LCTA’s standard contracts was to standardize transactions to cover situations where grain grades existed – as in the case of North American wheat – but also in cases where no standardized grades existed – as in the case of grain imported from almost everywhere else.

• 26 H. Barty-King, 1978, p. 27.
• 27 See the GAFTA’s website for arbitration in the 21st century, URL: https://www.gafta.com/Arbitratio (...)
• 28 L. Tongeman, 1947, p. 78.

13LCTA’s activities quickly multiplied in the first two decades after 1878. The only other British exchange performing a similar role was the Liverpool Corn Trade Association, but by 1900 it was evident that LCTA had clearly taken the lead on standardization and arbitration activities in the UK. From an initial number of 50 member firms, the association had grown to many hundreds by the end of the nineteenth century. Prominent grain merchants such as the firm of Ralli Brothers and James Findlay were active members of LCTA. By 1903, the association had more than 250 European (i.e. non-British) firms and exchanges amongst its members. The international use of the association’s forms of contracts steadily expanded so that “the major portion of the world’s grain business was done upon the LCTA forms”.26 These standardized contracts were used throughout the twentieth century and are also used today in the international markets.27 New grain traders were commonly advised in 1947 that “anyone who handles contracts should make themselves conversant with the LCTA contract terms” as they were well-known all over the world and shippers were familiar with them.28

• 29 London Metropolitan Archives (hereafter LMA), Records of the London Corn Trade Association, variou (...)
• 30 J. Yates & C. N. Murphy, 2019.

14LCTA followed several strategies to ensure that their standardized contracts remained relevant to current economic circumstances and were widely adopted within the trading networks centred around Britain. The standard contracts were periodically reviewed and amended, usually in consultation with those involved in the grain trade. This included both the intermediaries (brokers, shippers, etc.), buyers associations (e.g. National Association of British and Irish Millers), as well as other grain exchanges such as Liverpool Corn Trade Association and other non-UK exchanges (including those in North America).29 Since most of the prominent merchant firms in the trade were LCTA members, and were represented on the various committees of the association, their adoption of the standard contracts helped LCTA to push for its contracts to be more widely used. Although it was not mandatory to use LCTA forms to trade in Britain, firms outside the immediate network would have found themselves compelled to use the standardized contracts to continue trading with the larger UK firms. The standard contracts, along with similar contracts used by Liverpool Corn Trade Association, are an example of “voluntary” standards that historians have studied in the manufacturing sectors.30

• 31 R. B. Ferguson, 1980.
• 32 LMA, CLC/B/103/MS23172/002, Minutes of Executive Committee, 1903 Annual Report.
• 33 LMA, CLC/B/103/MS23198/001, Official Arbitration Awards, 24 March 1903.
• 34 LMA, CLC/B/103/MS23172/001, Minutes of Executive Committee, 14 June 1892.

16Arbitration of disputes between buyers and sellers, in return for a fee, was one of the most important functions of LCTA throughout its existence. Arbitration was – and remains – a highly cost-effective means of settling commercial disputes compared to more formal means of adjudication or other legal processes. This method was a non-legislative response by the commercial community to the limitations posed by the legal system and provided a means to settle commercial disputes quickly and inexpensively.31 By the early twentieth century, LCTA was dealing with 2,000-3,000 arbitration cases annually.32 Most of the arbitration and appeals cases concerned quality of grain, although there were several cases involving disputes about “non-fulfilment of contracts”, including failure to ship consignments.33 The arbitration system was designed to offer non-UK based sellers protection as well. LCTA revised some of its early standard contract terms to state that “difference in quality shall not entitle the buyer to reject the shipment except under the award of arbitration”.34 The decisions at the appeals were made by merchants associated with the grain trade, just as the arbitrators were selected from amongst the members of the trade. The scope of LCTA’s arbitration activities was broad, extending beyond the British import trade alone, and covered a large share of buyers and sellers from Western Europe, often where both parties to the contract were non-UK-based (Figure 5). The standardized contracts and the measurement and sampling rules that LCTA devised were indispensable in this function.

• 35 H. Barty-King, 1977, pp. 167-171.
• 36 H. Barty-King, 1978, p. 24.
• 37 LMA, CLC/B/103/MS23175, Minutes of sub-committee to revise white wheat and other contracts, with p (...)
• 38 LMA, CLC/B/103/ MS23172/002, Minutes of Executive Committee, 22 January 1901.
• 39 LMA, CLC/B/103/ MS23172/001, Minutes of Executive Committee, 24 November 1891.
• 40 C. Chattaway, 1907; R. B. Ferguson, 1980.

17Although there was general support within the trade for LCTA’s activities, several firms were originally opposed to LCTA’s formation, questioning its arbitration activities especially.35 There were often disagreements between traders and merchants about how the association should be run, about specific clauses in the standard contracts, or the need for uniform contracts per se. Prominent Greek merchants, such as Stephen Ralli, were sometimes a voice of dissent regarding the need for arbitration, although Ralli had been a part of LCTA since the very beginning.36 Specifications of contract terms were another potential source of conflict or disagreement. The minute books contain several examples of suggestions made by merchants or grain buyers for alterations to the standard contract forms which were “not entertained” or rejected by the executive committee: most suggestions were accepted, however. Rejected suggestions included, for instance, changes to the allowance for dirt in grain cargoes, or whether insect damage to grain during transport should be covered by insurance.37 Other sources of conflict included remuneration to merchant members for services rendered on behalf of the association.38 There is also a record of the sudden resignation of the LCTA president in 1891 which the executive committee “regretfully” accepted, although the reasons for this departure are not recorded in the minutes.39 We can also discern potential sources of conflict concerning rules of measurement, as reviewed in the following section. Nonetheless, LCTA was generally successful in developing standard contracts, quality measurements, standardized rules for sampling and inspection, and in settling disputes through arbitration.40 In addition to merchant traders, LCTA’s work was important to shipowners, insurance companies (such as Lloyds) and other financial intermediaries who were involved in the grain trade more broadly throughout the period covered in this article.

• 41 For analysis, A. Velkar, 2012, pp. 210-212; S. C. Pirrong, 1995, pp. 237-239.

18A central component of LCTA’s standard contracts was the specification of the grain quality that the contract covered. Where grain was graded at source, such as wheat in North America and later in Australia, the contract form required its grade specification as part of the terms. The contracting firms could enter the grade specification in the blank spaces provided in the printed form (Figure 3). However, grains such as barley, rye, oats, wheats, etc. from other parts of the world (South America, India, Egypt, Central Asia, and Europe) were usually not graded at source (or at least the grades were not recognized in the UK).41 The quality of these non-graded grains still had to be accounted for in LCTA’s contracts. This was the case for most of the contract types enforced by LCTA, such as those shown Figure 1. In such contracts the quality of grain was specified as “of fair average quality” (see Figures 2 and 4). If these contracts were to serve as a guarantee of quality for future deliveries, they had to be backed up by rules dealing with differences in quality contracted and delivered. Standardized contracts therefore specified how these differences were to be handled, including arbitration rules. Legally, while contracts could be enforced under UK’s broader legal infrastructure and institutions, the market nevertheless needed to develop a trade-specific measurement infrastructure for either party to enforce the contract. For the grain trade, like for cotton, this was left to private institutions in the UK, unlike in the US or Canada. Thus, contracting occurred based on acceptance of the “official” quality certification that accompanied North American grains, or according to LCTA’s rules for sampling and testing the “fair average quality” in the UK itself. This section reviews in some detail LCTA’s FAQ measurement activities that allowed its contracts to become accepted as the standard in international grain markets. The next section considers the problems around acceptance of North American quality grades and certification in Europe.

• 42 S. Dumbell, 1925, p. 144. For historical measurement practices, including why grain density was im (...)
• 43 J. R. Walton, 1999.

19Historically, in the UK domestic grain markets, quality was measured by inspecting samples for presence of impurities, moisture content, texture and, most importantly, the density of grain or its natural weight.42 Grains with higher natural weights were more expensive than grains with lower natural weights.43 In the latter part of the nineteenth century, exchanges such as LCTA began using the “fair average quality” or FAQ method to measure grain quality. Under this method, samples of all wheat imported into the UK, including samples directly obtained from several European ports, were collected before determining the FAQ for a given type of grain for any given season. The FAQ acted as a de facto standard for a given season only, until the process was repeated for the next season’s produce. In other words, FAQ standards were developed on a responsive basis, based on samples inspected frequently (often monthly). They were unlike the fixed or permanent grade descriptions, such as No 2 Winter Wheat, used by North American grain exchanges.

• 44 J. C. F. Merrill, 1911.

20FAQ measurement practices in Britain by exchanges such as LCTA differed greatly from those in North America where, after 1860, commodity exchanges, such as the Board of Trade of the City of Chicago (CBT), attempted to classify grades of grain into distinct and permanent categories according to descriptions of colour, quality, and general condition.44 By the 1900s, a national system of grading the various varieties of Red, White, Winter, and Spring wheat had begun to emerge in the US. These North American grain grades were increasingly accepted in the UK based on “official certificate of inspection to be final as to quality”, i.e. quality was guaranteed by the inspection certificates issued based on grades developed by North American exchanges (Figure 6 below). Commodity exchanges and port authorities in the US thus developed measurement methods distinct from those of the British FAQ to measure the quality of grains traded, including wheat, barley, rye and, to some extent, oats.

• 45 LMA, CLC/B/103/MS23177/001, Minutes of The American Grain Committee, 31 July 1894.
• 46 LMA, CLC/B/103/MS23186/002, Minutes of East India Grain Committee, 4 August 1898.

22Making FAQ standards was anything but straightforward. LCTA’s approach was to procure numerous samples of imported grain in a given year or season and for a subcommittee to mix them together after rejecting those “which are palpably too good or palpably too inferior”.45 The mixed sample would then form the standard, based on the reasoning that it represented the “average” quality of that grain (e.g. East Indian wheat) for that year/season. Even so, there was considerable internal debate regarding how the inspection samples should be drawn, how the samples should be mixed to determine the “average”, and which FAQ standards were reliable. From LCTA’s minute books we can observe the “considerable discussion” amongst East Indian Committee members concerning standards of soft white Karachi wheat and differences of opinion as to whether samples of “old” crop should be used alongside “new” crop to make up the standard for May 1898. Following extensive debate, it was decided that the standard for that month would be determined based on the new crop samples by “throwing out those samples that were undoubtedly old crop.”46

• 47 LMA, CLC/B/103/MS23177/001, Minutes of The American Grain Committee, 9 April 1891.
• 48 LMA, CLC/B/103/MS23177/001, Minutes of The American Grain Committee, 9 April 1891.

23LCTA claimed the “right of using its discretion as to which samples shall be considered fit” and thereby to make an “independent decision” rather than relying upon samples sent by the shippers or consignees.47 This approach was prudent as, according to LCTA, consignees or shippers did not always supply LCTA with “reliable samples”. For LCTA’s committees “to form a judgement” they needed to collect as many samples as possible, including from those shipments on which there was no “claim” or dispute regarding quality. If shipments were sold in the UK on inspection sample basis “without any description of quality” (forward contract terms not specifying exact grain quality) LCTA found it difficult to gauge their quality in relation to the FAQ standard but could maintain reference samples on behalf of the contracting parties in case of any arbitration. This was the essential difference between the grain samples it maintained purely for arbitration and those it maintained to make the FAQ standards for that year/season. In its correspondence with Spillers & Bakers (buyers in one particular transaction involving New Zealand wheat), an LCTA subcommittee stressed that if a contract specified quality based on “the season’s shipments at time and place of shipment” (without reference to a FAQ quality) then the test samples from successive shipments were “simply mixtures representing a number of shipments for the guidance of arbitrators”.48 In other words, samples from a single source (even across multiple shipments) were not a sufficient basis for defining FAQ standards. The exchange required a greater range of samples to be included (see below for sampling rules). Such instances enabled LCTA to push trading firms to adopt its standard contract forms which, at a minimum, made a specific reference to a quality standard even if it was the FAQ standard rather than North American-style grades.

• 49 LMA, CLC/B/103/MS23177/001, Minutes of The American Grain Committee, 14 November 1895.
• 50 LMA, CLC/B/103/MS23172/001, Minutes of Executive Committee, 17 October 1891.
• 51 LMA, CLC/B/103/MS23177/001, Minutes of The American Grain Committee, 14 November 1895.

24In another example of LCTA’s influence on international markets, British importers were concerned about the quality of wheat being imported from ports along the La Plata River of South America. The Liverpool Corn Trade Association had informed LCTA that they had “discontinued making La Plata wheat standards”, given the trouble its members had with grain quality from that region.49 William Goodwin, an executive member of LCTA and who had travelled to South America to advise the local port authorities based in the La Plata region, reported back in 1891, outlining various reasons for the variable quality of cargoes shipped from that region. While a system of grain inspection and certificate of quality was introduced (like that in North America), the higher cost of storing wheat in elevators (which prevented quality degradation) and the fees charged for inspection and certification meant that buyers often did not make use of this facility. “When good wheat is scarce there is great temptation for a shipper to fill up [the steamer] with inferior wheat,” wrote Goodwin.50 As the practice of certification did not satisfactorily address the quality problems, British importers were “dependent upon London” (i.e. LCTA) for ways to assess quality of grain from this region.51 In other words, the failure to introduce a reliable system of grading and certification like those used in North America, meant that La Plata grain had to be imported into the UK on LCTA’s FAQ basis, as shown in Figure 4.

• 52 Miller, 5 May 1879, p. 193. Specific gravity measurements refer to the density of individual wheat (...)
• 53 HC, Vol VII, 1834, Cmd. 517. A. Velkar, 2012, pp. 201-208 for an analysis of natural weights in do (...)

25Natural weights or grain density formed the most important criteria for LCTA’s determination of the FAQ standards for different grains. Wheat of least density or specific gravity was known to yield a lower quality of flour and vice versa.52 The proportion of albuminoids or flesh formers, the determinant of the quality or fineness of flour, was found to increase as the density of grain increased. “More flour is produced from [grain] of higher specific gravity, and more bread from such flour, than from inferior [grains]”, a government report from 1834 had claimed.53

• 54 LMA, CLC/B/103/MS23172/002, Minutes of Executive Committee, 22 January 1901.

26Providing standardized rules for measuring the natural weights of a given sample was a vital role that LCTA performed. It published detailed rules for measuring natural weights, specified the sampling method, and set out instructions concerning the obligations of both parties to the transaction when quality delivered showed variation from quality guaranteed.54 All of this formed an implicit part of LCTA’s standard contracts. Contracts could be based on guaranteed natural weight at the time of shipment as part of FAQ quality standards. The rules specified that test samples for determining the natural weight of delivered shipments should be drawn from “the sound portion of the cargo or parcel”. These samples, sealed in the presence of representatives from both sides, would then be sent to LCTA where the association would then issue a “certificate of mean natural weight” based on the measurements made at LCTA. The principle here was that the quality of the sample, based on its natural weight, was taken to be the quality of the entire cargo of shipment. This certification of quality by LCTA was to be final and binding on both parties to the shipping contract.

• 55 The other methods of selling grain in domestic markets were based on volume-only or weight-only me (...)
• 56 HC, Vol XLIX, 1834, Cmd. 105, Returns from Corn Inspectors of the Customs or Practices of Selling (...)
• 57 HC, Vol XLIX, 1834, Cmd. 105.
• 58 S. L. Kaplan, 1984, pp. 52-53, for similar practices in France.

28Such rules governing measurement and guaranteeing of quality by LCTA in the international grain markets were based on historically established customs and norms, especially in the British domestic grain markets. Historically, selling according to natural weight was the most common method used by British grain producers. Using natural weight as the proxy measure for quality of produce was also the most straightforward and practical way of quickly determining quality based on tools widely available to producers and market traders.55 For example, a “pay or be paid” contract for wheat from c1830 guaranteed delivery weight to be 18 stone per quarter. In other words, the farmer was to make a “proportionate allowance” to the merchant in case the net weight on delivery was under 18 stone 4 lbs, and conversely the farmer was to receive an allowance from the merchant in case the net weight on delivery was found to exceed 18 stone 4 lbs.56 Markets would often distinguish between natural weights of grain shipped from different locations across the country. For example, wheat sold in Sheffield grain markets that was transported from Gainsborough and Lynn was sold by the quarter weighing 504 lbs, whereas wheat delivered from Hull was delivered based on 480 lbs per quarter.57 Grain inspectors reported that most domestic grain markets in the UK sold wheat according to natural weight throughout the nineteenth century.58

• 60 LMA, CLC/B/103/MS23183/001, Minutes of Black Sea Grain Committee, 2 October 1894.

30The visible hand of LCTA was also evident in terms of standardizing rules for sampling. Inspecting samples of grain was often problematic in a practical sense as samples often did not reveal the extent of variation in the quality of the grain shipment, especially as cargoes tended to be bulky when shipped internationally. There were numerous discussions within LCTA about the advantages and disadvantages of various methods of measuring and weighing grain to ascertain the quality while the consignment was still on the ship. Thus, for shipments of rye, LCTA’s subcommittees for Black Sea Grain decided that to determine the natural weight of this grain, the volumetric measurements would be done while the grain was still in the “hold of the vessel” and that the weighing would be done on the deck.60

• 61 LMA, CLC/B/103/MS23172/001, Minutes of Executive Committee, 28 June 1887.
• 62 LMA, CLC/B/103/MS23172/002, Minutes of Executive Committee, 13 September 1892.
• 63 LMA, CLC/B/103/MS23172/003, Minutes of Executive Committee, 23 April 1904.

31The need to specify and codify sampling rules emerged from disputes regarding sampling methods used for the purposes of analysing quality of shipped grain. Thus in 1897, a subcommittee noted that “disputes have arisen between buyers and sellers of Barley in bulk” regarding the proper method of taking samples of cargoes “for arbitration or analysis”. This prompted LCTA to draw up detailed “Rules for the sampling of barley in bulk” which could be made binding on the contracting parties by referring to them in the standard contract forms.61 Clauses regarding the mode of sampling were subsequently routinely inserted into contracts recommended by LCTA, and became common practice in other locations such as Bristol.62 In 1904, a sub-committee reported that they had “completed the preparation of rules for sampling of wheat, maize, barley and rye” but not for oats and other grains.63 These rules directed “sealed samples” to be kept “for standard (making) purposes” and specified a clause to be added to all standard contract forms as follows:

• 65 LMA, CLC/B/103/MS23172/001, Minutes of Executive Committee, 8 May 1884; 22 July 1884.
• 66 LMA, CLC/B/103/MS23186/001, Minutes of East India Grain Committee, 6 June 1889.
• 67 LMA, CLC/B/103/MS23172/002, Minutes of Executive Committee, 10 January 1901.

33During the 1880s, the Liverpool Corn Trade Association was also an important trade organization engaged in very similar work to LCTA. Whilst the two associations did cooperate on the interchange of grain samples for FAQ measurements, LCTA was keen for London’s standard contracts to become the main trading instrument rather than those of Liverpool. Thus in 1884, LCTA members rejected a proposal to adopt the Liverpool contract as a standard within the UK and instead pressured the Liverpool traders to adopt the LCTA contract used with the Californian Grain Trade Association as the standard to be used by other non-LCTA traders.65 In 1889, Liverpool suggested a “friendly discussion” aimed at agreeing the “best practical solution to the difficulties” surrounding the standards of Indian wheat. LCTA was open to receiving “a deputation” from Liverpool to “take into consideration” their views on these standards.66 The rivalry between the Liverpool and London associations is especially visible in the correspondence between sub-committees of the two associations on the adoption of rules for grading and standard contracts and determining the natural weight of wheat. Ultimately, LCTA bluntly asked the Liverpool association to stop using their own standard and adopt the LCTA one instead.67

• 68 LMA, CLC/B/103/MS23172/001, Minutes of Executive Committee, 13 September 1892.

34LCTA’s relations with other UK associations such as the Hull Corn Trade Association were less fraught. In fact, the Hull association, which was considerably smaller and less influential in the trade than either Liverpool or LCTA, was willing to take LCTA’s lead with regard to quality measurements and sampling rules. In 1892, Hull asked LCTA to supply it with monthly standards of Indian wheat in return for which they undertook to supply LCTA with samples of shipments imported into Hull for incorporation into the LCTA standards. Furthermore, the Hull association requested that it be “placed on the same terms as the Liverpool Association” for future consultation on standard contracts and other work on revising trading rules.68 In addition to Hull, grain trade associations from other UK port cities such as Bristol and Glasgow were also willing to follow LCTA’s lead. Thus, by the end of the first decade of the twentieth century, LCTA had consolidated its position as the premier grain exchange in the UK.

• 69 See note 40.
• 70 LMA, CLC/B/103/MS23172/002, Minutes of Executive Committee, 8 February 1901.

35LCTA’s influence extended to other western European ports as well, including Antwerp, Mannheim, and Hamburg. Under the Association’s leadership, European traders could collectively influence the problem of quality certification of grain imported from North America. By the late nineteenth and early twentieth century, imports of grain from North America were based on inspection certificates issued at American ports which were accepted by LCTA contracts to be “official and final” (Figure 6 for example). In other words, these deliveries were not subject to the FAQ standards and measurements described in the previous section. Instead, quality was measured at the exporting ports in US and Canada and not the importing ports in UK and Europe.69 However, European importers continued to complain about the quality of grain shipped from North America. In 1901, LCTA gave evidence to the Royal Commission on Grain Inspection in Canada detailing suspicions about fraudulent certificates of quality that issued by inspectors at Montreal. British and European traders raised serious concerns about the reliability of Canadian inspection certificates, expressed doubts about sampling methods used by the inspectors and questioned whether standard contracts for grain shipped from Montreal should be based on these inspection certificates at all.70

• 71 LMA, CLC/B/103/MS23172/002, Minutes of Executive Committee, 16 March 1902.
• 72 LMA, CLC/B/103/MS23172/001, Minutes of Executive Committee, 11 May 1904.
• 73 LMA, CLC/B/103/MS23172/002, Minutes of Executive Committee, 11 May 1904.
• 74 LMA, CLC/B/103/MS23172/003, Minutes of Executive Committee, 8 November 1906.
• 75 LMA, CLC/B/103/MS23172/004, Minutes of Executive Committee, 10 May 1911.
• 76 LMA, CLC/B/103/MS23174/003, Minutes of Sub Committees, 17 April 1913.
• 77 LMA, CLC/B/103/MS23172/002, Minutes of Executive Committee, 8 August 1902.

36The problem of quality certificates was not confined to Montreal but extended to other locations in the US. In 1902, LCTA’s executive committee members travelled to North America to “impress” upon the US and Canadian authorities the importance of “greater caution” regarding the issue of inspection certificates.71 They continually raised questions about the control of the various North American trade organizations over the inspectors responsible for inspecting grain and issuing quality certificates. LCTA members stressed that the grain inspectors employed by the port authorities may not be under the control of the various North American Boards of Trade, and specifically cited the problem with Montreal quality certificates. Apparently, not much was done to immediately address this problem, since in 1904, LCTA members once again wrote — this time to the New York Produce Exchange – regarding continuing complaints from British and Continental traders about the unsatisfactory and inaccurate methods of grading and inspection adopted at various shipping ports in the US.72 The LCTA correspondence detailed inconsistencies between inspection certificates at different ports for the same description of grain. European traders objected strongly to the declaration by the New York Produce Exchange that grain containing 20% of “old wheat” (i.e., previous seasons crop) could nevertheless be certified as “new crop”. LCTA members claimed that such actions only served to “destroy confidence in inspection certificates on which contracts for American grain were based”.73 In voicing these concerns and the continuing complaints about American quality certificates, LCTA claimed to represent the views strongly expressed by associations in Liverpool, Hull, Bristol, Glasgow, as well as associations in Paris, Mannheim, Antwerp, Hamburg, etc. In 1906, LCTA organized an “important” international conference in London where representatives of all the influential grain associations from Europe and UK were present to agree on how to negotiate with US and Canadian associations regarding the problems with the American certificates of quality.74 In 1911, the Liverpool association informed LCTA that they were suspending the use of “official certificates” from Philadelphia due to the serious complaints about quality of shipments and their “previous experience” of inspection conducted at the port.75 In 1913, LCTA wrote to the Board of Grain Commissioners in Winnipeg about adopting standardized definitions for “permanent grades” of wheat and barley and stressed that inspection certificates issued in America should either print or stamp the description of the grade upon which the inspection certificates were issued.76 Despite the problems with the “official” inspection certificates for American grain, European traders continued to use the quality guarantees they provided rather than other quality standards. For instance, when the New Orleans Maritime and Merchant’s Exchange queried whether LCTA members would accept their quality certificates, they were told that LCTA would only accept New Orleans Board of Trade certificates as “official and final” as to quality.77

• 78 L. D. Hill, 1990, p. 76.

37Whether due to the pressure from LCTA or not, in 1905, one of the chief inspectors of grain in Illinois, William Cowan, proposed to establish a Department of Sampling within the Chicago Board of Trade. The department was supposed to employ additional men, whose work would then be examined by expert inspectors to ascertain their level of competence. Nonetheless, the problem of sampling, inspection and certification of quality based on discrete descriptions of grain standards in the US persisted until the mid-twentieth century.78 For instance, in 1953, a report of the Uniform Grades Committee Grain Inspection Survey attempted to address this issue at the annual meeting of the Grain and Feed Dealers National Association