HD9419.W4T"""''"'"'"-""''^ * '{j9'''j*aj American industry; the story 3 1924 013 865 864 fHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHt^HHHHJ ^BANKERS MAGAZINE IITLL RIOIBTtRID IN U. ■. PATENT ORFICI SEVENTY-THIRD YEAR A Big, Vital American Industry The Story of Swift & Company By L. D. H. WELD Reprinted from THE BANKERS MAGAZINE, New York n ^^ it B I A\\j/K\\j/fi\\r/A\\j/tn\J/K\\f/ti\^J>A\\jjn\\ir/A\\jj>i\\j/n\\}j)^\\j/fi\\j/A\\jin\xf'A\\J « » * FUBLISHED MONTHLY BY THE BANKERS PUBUSHING CO. W. 0, W/IRREN, PREa, W. M, BUTT, VICE-PREa. K. F. WARRIN, TREAS. -• J. R. OUFFIELO, DEO. BOSTON NEW YORK Chicago Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013865864 A Big, Vital American Industry The Story of Swift & Company By L. D. H. WELD, Manager Commercial Research Department, Swift & Company Jieprinted Sept. 19W from THE BANKERS MAGAZINE New YORK Editorial Comment from THE BANKERS MAGAZINE Big Business and the Public FOR many years politicians have obtained popularity by attack- ing the large business interests of the country. These attacks were generally based upon isolated cases of wrongdoing by a few corporations or of small groups of exploiters who had obtained temporary control of some transportation line or industry. It was the habit of politicians to seize upon these outstanding examples of corporate transgressions and to magnify them to the greatest extent possible while concealing all the great and beneficent services which many corporations were rendering to the public. It thus came about that gradually the people grew to look upon every industry of large proportions as a monster monopoly engaged in exploiting the public and at the same time oppressing the laborers and producers. For a long time the great industries of the countiy remained silent under the attacks above mentioned, which caused the people to conclude that these accusations were true and unanswerable. And worse yet, many people regarded this silence in the nature of a con- temptuous indifference toward public opinion, and this greatly tended to aggravate the hostility of the people toward the big business enterprises of the country. This hostility did not stop with personal expressions of opinion, with attacks in the news- papers and magazines, or with mere declarations in political ; soeeches and platforms. It was soon translated into legislative acts and administrative decrees, together with court actions in some ; cases, which restricted the conduct of large business undertakings by private enterprise and even threatened the extinction of some important concerns. Finally the executives of the railways and of the more important industrial organizations awoke to the necessity of taking the people into their confidence and telling them the facts of the situation. ''They saw that if their organization and methods of operation were honorable and sound, the American sense of fair play could be relied upon once the truth was fully presented and understood. It is exactly in line with bringing about a better understanding between the people and the great and vital industries of the country that The Bankers Magazine publishes in this number a carefully prepared article— furnished on the personal request of the editor — dealing with the organization and operations of one of the country's large packing industries. Clearly the attitude of the public toward what is generally called big business will depend, in the last analysis, upon the practices of THE BANKERS MAGAZINE big business itself. If those practices are economically unsound, and especially if they are unfair or dishonest, they will be con- demned, as they should be. But, on the other hand, if they rest upon sound principles, and are regardful of the public interests and of labor, they will be sustained by public opinion. While it is proper that all evils with which big business — or httle business, for that matter — may be charged should be brought to light and corrected, it is equally important and in the public interest that the valid services which the great industrial establish- ments are rendering should be recognized and protected from unjust Governmental restrictions originating in public prejudices created without regard to the facts. The attitude of the Government toward business, and the rela- tions of labor and capital — these constitute problems of immediate and transcendent importance, and there can not be too much of candid discussion of these weighty matters, so that the situation of all parties in interest may be fairly presented and well understood — conditions indispensable to a just determination of the grave problems which we must face without delay. This article appeared originally in the January, 1919, issue of THE BANKERS MAGAZINE. It has been revised to conform to the changed conditions since the date of first publication. A Big, Vital American Industry The Story of Swift & Company By L. D. H. WELD, Manager Commercial Research Department, Swift & Company SWIFT & COMPANY'S sales for 1919 were the largest in its his- tory. As measured by volume of business this makes Swift & Company second only to the United States Steel Corporation^ and yet this company, as well as the other companies in the pack- ing industry, has developed within prac- tically a single generation. ORIGIN OF THE BUSINESS Swift & Company is managed by a remarkable family of brothers — six of them, sons of Gustavus Franklin Swift, who started the -business in Chicago in 1875, and who had developed it into a business of two hundred million dol- lars a year when he died in 1903. The story of G. F. Swift's first ex- perience in the meat business on Cape Cod bids fair to become one of the classics of American industrial history. It was in the town of Barnstable,. Massachusetts, that he went to work for a butcher for $1.00 a week when he was fourteen years old. After he had learned the business, his father loaned him $20.00, with which he bought a heifer, which he killed and dressed himself. He peddled the meat around Barnstable and made a profit of $10.00, which is a far larger profit per head than Swift & Company has ever been able to earn since that time. As a result of his experience in buy- ing cattle for his local meat business, Mr. Swift soon became a cattle dealer, and began to frequent the stock yards around Boston. From Boston he fol- lowed the live stock industry west as far as Buffalo, and finally moved on to "Chicago in 1875. Mr. Swift began in Chicago as a cattle dealer, but he soon conceived the idea that the proper solution of the meat business was to be found in the slaughter of animals in the Middle G. F. SWIFT Founder of Swift & Company West and West, where they could be most economically produced, and the shipment of the dressed meat to eastern markets. In order to do this, there were numerous obstacles to be over-, come. In. the first plac& a refrigeratorf- car that would carry dressed meat ha(l not been perfected; in the second place, THE BANKERS MAGAZINE Original Plant, Barnstable, Mass. the people of the East were naturally prejudiced in favor of home-killed meats, and it was necessary to educate them to the superior quality of western dressed meats ; and then there was the opposition of all the vested interests, such as the railroads which supplied stock cars for the carriage of live ani- mals, the dealers and shippers who made a business of shipping cattle, and the stock yards and local slaughtering interests of the East, who naturally did not care to have their business taken away by western slaughterers. Mr. Swift's indomitable will made it possible for him to triumph over all of these obstacles. He perfected a re- frigerator car that would carry dressed meats to eastern markets in prime con- dition. He built his own refrigerator cafs for this purpose because the rail- roads refused to build them. He ;got dealers in the East interested in the business, and they helped to overcome prejudice among eastern consumers. CAPITALIZATION The business of Swift & Companj' in Chidago was at first developed under a series of partnerships. It was not until 1885 that the present corporation was organized with a capital of $300,- 000. Measured in terms of capital stock, the growth of Swift & Company shows a continuous and steady develop- ment. By 1893 the capitalization had reached $15,000,000; by 1902 it had reached $25,000,000; became $50,000,- 000 in 1906; $75,000,000 in 1911; and $100,000,000 in 1916. In 1918 the capital was further increased to $150,- 000,000. EXPANSION WESTWARD Although Chicago is still the largest live stock and packing center, the rais- ing of live stock soon began to develop in the Southwest and Northwest, and to carry out the principle of slaughter- ing animals at points in or near pro- ducing sections and shipping the dressed meat by rail, it was necessary for the packers to follow this westward move- ment of the live stock industry. Swift & Company, for example, established plants in Kansas City and Omaha in 1888. In 1893 St. Louis was entered; and in 1898 St. Joseph. In 1897 a plant had been established in St. Paul> and in 1902 Fort Worth was entered. In 1912 Swift & Company took over the plant of the Western Packing Co. in Denver, and in 1917 two small plants were taken over in Alabama and Georgia, indicating Swift & Company's belief that live stock production has begun in earnest in the South. In addition to these large plants in THE BANKERS MAGAZINE Partial View of Present Chicago Plant of Swift & Company This and the preceding illustration show in a striking way the development of a great industry from modest beginnings to its present importance the producing sections^ Swift & Com- pany still operates some plants in the East, especially around New York. These eastern plants draw their supply of live stock partly from local sources, and a part of the supply is shipped on from Chicago and other western points. Two important reasons why slaughter- ing is still carried on in the East are: first, a preference among some people for locally dressed meats, and second, what is much more important, the cus- tom of the orthodox Jews, which re- quires that they, eat freshly killed beef. Slaughtering establishments in the Bast are also necessary to take care of the calves marketed bv dairy farms, and of the sheep raised in eastern states. On the whole, however, the packing business in the East is extremely small as compared with the business as it has developed in the West. SOUTH AMERICAN INTERESTS One other highly interesting feature of the development of Swift & Com- pany's business is its entrance into the South American field in 1907. It was found that beef could be produced in Argentine at a lower cost than in the United States and that this Argentine beef was largely taking the place of American beef in Eurooean inarkets. : Swift & Comwany had been doing a large export business and had developed an organization to take care of this business, especially in England. In order to continue to use this sales or- p-anization, and in order to hold the trade that had been developed in Europe, Swift & Company found it necessary, not only as a matter of protection, but as a matter of far- sighted business possibilities, to intro- duce American methods of slaughtering into Argentine. RAPID GROWTH IN RECENT YEARS The growth of the company, as meas- ured by volume of sales, has been very rapid during' the past twelve years. In 1908 the sales were about $240,000,000; by 1912 they had increased to $S00,- 000,000, and by 1916 they had jumped to $500,000,000. They increased to $875,000,000 in 1917 and amounted to over one billion, two hundred million dollars in 1919. The tremendous in- crease in sales during the past four years has, of course, been due more to high prices than to an increase in ton- nage, although the tonnage has also shown substantial increases. It is not generally realized that the prbdiiction of live stock increased very rapidly in' the United States from 191'! ' THE BANKERS MAGAZINE to 1919. It is true that from 1907 to 1914 there had been a slight decrease in the production of cattle, and that hog production, although it had contin- ued to increase, had not quite kept pace with the population. The situation even then, however, was not so serious as many people thought, because we were L. F. SWIFT President of Swift & Company still producing live stock in such quan- tity as to enable the United States to be the leading meat eating nation in the world, outside of Australia and New Zealand, and to allow a certain amount for exportation. Ten and fifteen years ago the prices of live stock were so low that in these days it does not seem possible that live stock production could have been profitable to farmers at all, and it is no wonder that other forms of agriculture were found more attrac- tive. The live stock situation was also affected by the breaking up of the larger ranches in the West, and the substitu- tion of small-scale mixed farming. From 1914 to 1919, however, live stock production increased more rapidly than population. The number of cattle and hogs on farms on the first of each year since 1914, as estimated by the United States Department of Agricul- ture, was as follows: Cattle Swine on Farms on Farms 1914, 56,592,000 58,933,000 1915 58,289,000 64,618,000 1916 61,920,000 67,766,000 1917 63,617,000 67,453,000 1918 66,830,000 71,374,000 1919 67,866,000 75,687,000 Before the war, although we still ex- ported some pork products, the United States was practically on a self-sufficing basis. From that time until several months after the signing of the Armis- tice, we exported larger and larger quantities for the American Army abroad and for the Allies. During. 1918 nearly one-third of the outpiit of the big packing houses was sent overseas. The tremendous increase in exports dur- ing the period is shown by the follow- ing figures, which are for the fiscal years ending June 30th of each year given : Beef Products Pork Products (Pounds) (Pounds) 1914 148,487,828 921,913,029 1915 383,533,055 1,106,180,488 1916 . . 444,440,400 1,459,532,294 1917 411,473,025 1,499,476,444. 1918 590,359,769 1,691,454,529 1919 ...... 596,705,326 ' 3,707,312,520 Since the early part of 1919 exports of beef have practically ceased, and pork exports have also materially de- clined. This reduction in foreign demand caused a decline in livestock prices and has resulted in a slight fall- ing off of livestock production during 1919. WAR ACHIEVEMENTS This vast increase in exports gives some idea of what the packers were able to do in the fulfillment of war demands. There is probably no indus- try in the country that was able to play its part in the great war so effectively, so promptly, and so efficiently "as t^e packing industry. This is due to the THE BANKERS MAGAZINE fact that the industry had become or- ganized on such a large scale basis, both with regard to the packing plants themselves, and with regard to its sell- ing organization, which is not only national but international in scope. It is little realized how great the needs of the Allies and of the American Army abroad were, and how dependent the Government was on the packers dur- ing the war crisis. All orders for our own Army and Navy and for the armies and civilian populations of the Allies were allotted through the United States Food Administration, thus eliminating duplication of effort, and simplifying the placing of huge orders, the fixing of prices, and the shipment of the goods. The uncertainties of ocean shipping greatly complicated the situation both for the Food Administration and for the packers. Meats had to move over- seas in refrigerator vessels, and cargo space with convoys was available at irregular intervals. The Food Ad- ministration would often find that it would have cargo space available at a certain time a few days in advance of sailing, and it would suddenly notify the packers that they must have a cer- tain quantity of meats, often amounting to millions of pounds, at the seaport within a certain length of time. When such orders were received, the packers often began moving the goods from their plants within a few hours. Swift & Company, alone, shipped as many as 800 carloads of meat products in a single week for overseas shipment, and at the same time was able to take care not only of the domestic canton- ments, but also the population at home. POSITION OF THE PACKER IN THE MARKETING SCHEME The position of this big, vital indus- try in the economic organization of the country will be better understood by describing the steps through which live stock passes on the way from producer to consumer, and by describing the functions actually performed by the packer in this process. To begin with, live stock is shipped from country points in a variety of ways. The farmer who has enough ani- mals to fill a car may ship direct to a large live stock market; or, especially if he has less than a carload to market at one time, he may sell to a local stock buyer who consolidates the offerings of L A. CARTON Treasurer of Swift & Company individual farmers into car lots; or the farmers at a country point may have a cooperative shipping association. The railroads provide stock pens at country shipping plants to care for the animals until time for loading, and op- erate special trains of live stock cars to the principal markets. Owners of stock or their representatives, who are given transportation on these stock trains, generally accompany tlie animals to market to see that they are properly fed and cared for. Most of the live stock shipments of the country move to certain large live stock markets in the Central West, where the backers have their plants. THE BANKERS MAGAZINE Each of these markets has stock yards, where the animals are unloaded, fed and watered and held until ready for slaughter, or in some cases until ship- ped to markets farther east. The live stock comes to the stock yards con- signed to commission merchants who attend to feeding and watering and who are expert salesmen. They attend to these matters more efficiently than the shippers could themselves, and their charges average about fifty cents per head for cattle, and twelve cents per head for hogs. The buyers in the stock yards are the packers (large and small) ; ship- pers, who buy for reshipment to other markets; and dealers and speculators. Thin cattle are sold as "stockers and feeders" to be sent back to farms to be fattened; fat cattle and hogs are bought by the packers for immediate slaughter. Many of the stock yards are owned wholly or in part by the large packers, who have plants in conjunction with the yards — a matter that has been sub- ject to criticism by the Federal Trade Commission, and by many stock raisers. In fact, the Federal Trade Commission has recommended that these stock yards be taken over by the Government. Swift & Company has no particular objection to the Government's taking them over, especially if there is any way in which the present high standard of efficiency can be maintained. Swift & Company feels that it has rendered a public serv- ice by the part it has played in develop- ing stock yards. Especially in the newer and smaller markets the maintenance and operation of efficient stock yards offers no great inducement to outside capital, and the packers have been practically forced to finance and operate these yards so that they will be furnish- ed with adequate and sanitary facilities, and so that the farmers' stock will be properly taken care of until it is ready for slaughter. The stock yards companies derive their revenue from the charging of yard- age fees and from the sale of feed. These charges are the same to all, and furthermore, the whole operation of stock yards has been under the super- vision of the Bureau of Markets of the United States Department of Agricul- ture since July, 1918. Financial inter- est in stock yards gives the packers ab- solutely no control over prices of live stock or over the trading methods of the commission men who represent live stock shippers in the sale of their prod- ucts. The packer has to maintain a buying organization to properly select the ani- mals bought. They are then taken to the "killing floor," where they are slaugh- tered; during the dressing processes which follow United States inspectors thoroughly inspect every carcass. Those condemned are used for other than food purposes. The good carcasses, after being thoroughly washed, are placed in the "cooler" long enough to become thoroughly chilled before shipment. Hog carcasses have to be cut up after slaugh- ter and chilling, and such cuts as hams and bacon go through the additional process of curing and smoking. When ready for consumption, the meats are shipped to various parts of the country in refrigerator cars. THE DISTRIBUTIVE SYSTEM Swift & Company sells direct to re- tailers all over the country. It does this in two ways: first, through branch houses, of which there are about 400 in the United States ; and, second, by means of "car routes." The appearance of branch houses is familiar to all, because they are located in all the principal cities of the country. These branch houses have refrigerating facilities, corps of expert meat handlers and cutters, sales, accounting, and crfedit organizations, and delivery equipment, in order to carry the goods (except in a few cities) direct to the retailer's store. There are probably no indus- trial concerns in the country that have such elaborate and well developed sales organizations. Meat is a perishable commodity and cannot well be entrusted to the care of wholesalers, although in a few cities there are found brokers and j obbers who assist in getting meats into the hands of retailers. THE BANKERS MAGAZINE 03 c 5 > a. < The car routes reach small towns that are not served by branch houses. Salesmen go from town to town along the line of a railroad and take orders from retailers. These orders are filled direct from the packing plants, and products are loaded into refrigerator cars which make regular semi-weekly or weekly trips and drop the shipments required by the various towns along the route. This is an exceedingly ex- peditious and economical method of reaching retailers in all parts of the country. THE RETAILER The last step in meat distribution is occupied by the retailer. He buys whole carcasses or sides, or various cuts, depending on the size of his business and the class of people to whom he sells. Because of the fact that he has to do a small-scale business, and be- cause in most instances he has to per- form services such as deliveries and the granting of credit, his expenses are rela- tively high. He also has to charge varying prices for the different cuts, because if porterhouse and sirloin were sold at the same price as the stewing cuts everybody would demand the choice cuts and the others would become a drug on the market. Furthermore, the choice cuts constitute only a small per- centage of the total animal. Tests made in Chicago in December, 1917, and re- vised to 1919, show that where retailers buy sides of beef from the packers -at twenty cents a pound, they have to charge as high as forty-five cents or more a pound for porterhouse and sir- loin in order to get an average price of twenty-five cents a pound for the whole side. This is because the stewing cuts, which constitute a large propor- tion of the meat, do not bring above twenty cents a pound. In other words, it is absolutely unfair to compare the price of porterhouse alone with the wholesale price of whole carcasses or withthe price of live stock. Swift & Company does not sell at retail. THE BANKERS MAGAZINE COSTS AND PROFITS IN THE PACKING BUSINESS Because of large-scale operations and a high degree of specialization in man- ufacturing, the packers are able to con- vert and distribute meats at very low unit costs and at astonishingly small margins of profit. During 1919 Swift & Company's whole expense for killing and dressing, freight to market, and operation of branch houses, amounted to less than two and one-half cents per pound of dressed beef. It is also true that the packer sells the meat from a steer for a less amount than he pays for the live animal. For example, in 1919 Swift & Company paid an average of $102.82 per head for the live cattle, and received an average of $88.21 per head for the meat. The other revenue was derived from by- products, which, in 1919 amounted to $25.59 per head. From the sale of the meat and by-products together. Swift & Company received a total margin of $10.98 per head over the price paid for cattle. In 1919 this resulted in a loss of 70 cents per head; but this was unusual. Our profit has averaged about $1.00 per head the past few years — in- cluding the return from cured hides and other by-products. It is perfectly ob- vious that if this profit were eliminated altogether, there would be practically no effect on the price of meat or the price of live stock. Another way of showing how little effect the profit has on prices is to com- par.e profit with sales. The following table shows the percentages that Swift & Company's profit was of its total sales for the past seven years : Percentages of Earnings Sales to Sales 1913 $400,000,000 3.31 1914 425,000,000 2.21 1915 500,000,000 2.81 1916 575,000,000 3.5fi 191T 875,000,000 S.9r, 1918 1,200,000,000 1.76 1919 1,200,000,000 1.15 The significance of figuring profits on a per pound basis, or as a percentaaie of sales, is merely to show that profits have practically no effect on prices, a fact which is not generally understood by the public. The question of profits on investment is an entirely different matter, and although Swift & Company and other packers have been criticized for the profits they have made during recent years. Swift & Company, at least, is perfectly willing not only to defend the profit it has made, but to show that it has not been any more than necessary to pay fair returns to stockholders and to finance the business during times of uncertainty and high prices. Swift & Company's profit of $13,- 800,000 in 1919 amounted to about 11 per cent, of the capital stock, and to only six and three-fifths per cent, of capital stock and surplus ; and surplus is invested in the business just as much as the capital stock. Even capital stock and surplus together, however, do not represent the full value of assets on which Swift & Company is ju.stified in figuring its profits from a purely in- vestment basiSj, M'The company is not only under-capitalized, but its proper- ties are carried on its' books at less than present-day market values, and the company is certainly entitled to earn something on the vast quantities of money that it borrows from banks all over the country. Otherwise there would be no sense in borrowing money to carry on its large-scale operations. During 1919 eight per cent, divi- dends on its capital stock were issued to shareholders ;. the remainder of the profit remained tied up in the business, largely in exceedingly heavy inventories at abnormallv high cost prices. Where- as Swift & Company normally carried about $50,000,000 worth of goods in process of manufacture and on the way to market, before the war, it has been carrying inventories of more than $175,- 000,000 during 1919, and has also con- tinuously had accounts receivable amounting to another $150,000,000. The larger war profits were only partly realized in cash, and the part which was derived from increases in inventory values was but a reserve to meet the decline which has been taking THE BANKERS MAGAZINE place for over a year. During the spectacular decline in hog and pork prices last summer and fall,^ Swift & Company lost over $10,000,000 in six weeks on its stock of pork products. The 1919 profits were dangerously low and show the necessity for higher profits during the uncertainties of a war period. Even the larger war profits were not sufficient to finance operations at the time, and additional capital stock had to be issued during 1918 to raise more cash for this purpose. LABOR PROBLEMS Swift & Company has been con- fronted with labor problems during and since the war similar to those encount- ered by other industries. Beginning in 1916 the wages have been rapidly ad- vanced, and since early in 1918 ques- tions of wage adjustment have been left to arbitration. The rate of wages paid by Swift & Company to common labor has increased about 202 per cent, since early in 1916, and the wages of all packing house labor have increased about 128 per cent. This is, of course, a much greater increase than has oc- curred in living expenses. For several years Swift & Company has been taking active steps to bring about an improvement in labor condi- tions. New methods of employment management have reduced the turnover of labor. Improvements have been ef- fected in the physical conditions of plants by installing safety devices, etc. Medical offices, with competent , phy- sicians, attend to sickness and injuries at the plant and in the home. The com- pany maintains an Employees' Bene- fit Association which provides sickness and death benefits, and it; has a liberal pension fund which takes care of re- tired employees in their old age. Sav- ings are encouraged by making it possi- ble for employees to invest in Swift & Company stock under a partial pay- ment plan. A continuation school gives office and messenger boys instruction for eight hours per week out of regular working time. Attendance at night school is encouraged, and those who attend reg- ularly are rewarded by being given vacations at a camp maintained by the company at Fish Lake, Indiana. A troop of boy scouts has been organized. Women employees are also sent to Fish Lake camp for vacations at the expense of the company. There is also in Chicago an organ- ization of office emplo3'ees which helps fellow employees in times of trouble. The Military Welfare Association sent comforts and remembrances to the 7,389 employees who joined the colors. An attempt is being made in cooperation with other packers to improve living conditions in the community around the Chicago Stock Yards through a central clearing-house. Swift & Company is also taking active steps to bring its labor problem in consonance with the spirit of the times, and to develop a feeling of cooperation between em- ployees and the management, through its recently organized Employees' Re- lations Department. GOVERNMENT REGULATIONS DURING WAR TIMES From November I, 1917 to Novem- ber 2, 1918, the packers were licensed by the Pood Administration . and op- erated under regulations which limited their profits. This limitation amounted to nine per cent, of the capital employed (including borrowed money) in the meat departments of the business. There were also other regulations promulgated by the Food Administration which af- fected the packers ; as, for- example, the promise of the Food Administration to maintain, so far as possible, a minimum price for hogs, and the establishment of maximum prices which the packers might receive for pork products. Swift & Company did not have to artificially lower its profits in order to fall within the maximum profit allowed, because its profit in the, meat departments during the period of regulation did not amount to nine per cent, of the capital em- ployed. This result was partly brought about by the fact that the Food Ad- ministration set the prices on all orders THE BANKERS MAGAZINE for the Government and for the Allies, and these prices, although they allowed profits to the packers part of the time, at other times required the packers to fill Government orders at substantial losses. In other words, the packers' profits were probably not so large dur- ing 1918 as they would have been if prices had been left to the unrestricted working out of the forces of supply and demand. FEDERAL TRADE COMMISSION INVESTIGATION During a large part of the years 1917 and 1918 the Federal Trade Com- mission were investigating the pack- ing industry, and a summary of its re- port was issued in July, 1918. The in- vestigation itself was an ex-parte one, and the packers never had an oppor- tunity to present their side of the case. The report shows bias and prejudice, and an unfair and unscientific way of handling figures. Swift & Company has issued published statements which point out the weakness and unfairness of the Trade Commission's report. The Federal Trade Commission ac- cused the packers of having a monopoly in restraint of trade, but a careful anal- ysis of its report shows that it has no ground for such a conclusion. Swift & Company is in open and keen com- petition with all other packers, and there are plenty of evidences, not men- tioned by the Trade Commission in its report, which clearly prove that com- jjetition exists. The Federal Trade Commission did not recommend that the Government take over the packing industry itself, as so many people seem to believe, but recommended only that the stock yards and refrigerator cars and live stock cars owned bj"^ packers should be taken over, and that branch houses also be appropriated by the Government as public markets. The stock yards have been taken care of by the recent con- sent decree ; as for the refrigerator cars. Swift & Company does not believe that the present high standard of efficiency of operation and service would continue under Government operation. In fact, the Interstate Commerce Commission has recently expressed its opinion in connection with private cars that it would be unwise to attempt to change the present system, that the packers' methods of handling refrigerator cars result in benefit to the public at large, and that the operation of such cars has not been profitable to the packers dur- ing the past few years. As for the taking over of branch houses by the Government in order to operate them as public markets. Swift & Company- be- lieves this proposal to be impractical, although it has no serious objection to the Government's operating public mar- ket facilities, if it is found necessary to provide distributive machinery for the small packers who cannot afford coun- try-wide sales organizations of their own. CONSENT DECREE Under the provisions of the recent consent decree, issued by the Supreme Court of the District of Columbia, February 27th, 1920, Swift & Company and the other large packers are required to dispose of their interests in stock yards, stock yard terminal railroads, and market papers, and to discontinue the handling of canned fruits and vege- tables, and a few other articles that are commonly sold by wholesale grocers. This arrangement was agreed to by Swift & Company with the definite un- derstanding that through this action the packers are not adjudicated guilty of any violation of law, and that it im- plies no acknowledgment of guilt. This condition is definitely stated in the first paragraph of the decree. Swift & Company consented to the decree in order to help satisfy the pre- judice that has been developed from such attacks as those of the Federal Trade Commission. We not only had a perfectly legal right to handle other products than meats, but there was very good economic justification for our do- ing so. They added to volume with- out commensurate increase in expenses, and hence tended toward lower unit selling costs for all products sold THE BANKERS MAGAZINE through the .regular sales organizations of the packers. THE PUBLIC SHOULD KNOW MORE ABOUT THE PACKING INDUSTRY Because of ignorance of the packing industry, and because the packers them- selves have never taken the public into their confidence, there has developed in some quarters a prejudice against this big, vital industry. Swift & Company has decided that this is not a healthy situation, either for the packing indus- try itself, or for the country at large, and wants the public to know about its business. For this reason. Swift & Company has been trying to give some of the fundamental facts to the public in the form of paid advertisements — since this is the only way that it can adequately present its case. One of the important reconstruction problems of the United States is the de- 'velopment of a proper attitude toward large industrial corporations. If the prejudice which exists against big busi- ness, as such, is allowed to continue, the results may be disastrous to American business. Swift & Company feels that in its educational advertising it is per forming a service to American business and industry in general, and it believes that large corporations must more ard more take the public into their confi- dences. The Swift Dollar '^ SSrtXrorUveSlod «*\\ *? (ftmefPaBs UFqePart '-''|| Ubor, Freight /of Ttlisfw "S J and Other /f Producing ^^ i r. .«<• K Expenses^ a;iiiMjH(e(ii)5 -'^Z 5FW/?,g,\|3%^ Costs) * This Shows '^ What Becomes of The Average Oollar Received By ^Swift&Companyi FromTh*5ale of Mvot And By Products eS-'t'CQnts ta PaFd For Tha Liva Animal 13 Centa For Labor exp^DBAsAnd Fraljht L6 Cent* Ramalns With Swift &Company. '' - s Profit The Swift Dollar shows you what becomes of the money we get for meat and all by-products. It is interesting to study and to show to others, and helps you to understand the outstanding and fundamental fact of the packing business— a ^mall unit profit on a large volume of sales. It is light, the size of a dollar, and makes a satisfactory pocket piece. One was made for you. Send for it Swift & Company Union Stock Yards Chicago, 111.