fr^.t^^- — «V?-iA^-v'».Y^ r^ -y ■ ■ V--^' *^,*^ ^.■'4^^ So-p^.x o^3^ocaL"xwe"niCs COHNELL UNIVERSITY LIBRARY 924 092 565 922 Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924092565922 FOOD INVESTIGATION REPORT OF THE FEDERAL TRADE COMMISSION ON THE MEAT-PACKING INDUSTRY PART IV THE FIVE LARGER PACKERS IN PRODUCE AND GROCERY FOODS June 30, 1919 WASHINGTON GOVERNMENT PRINTING OFFICE 1920 FOOD INVESTIGATION REPORT OF THE FEDERAL TRADE COMMISSION ON THE MEAT-PACKING INDUSTRY PART IV THE FIVE LARGER PACKERS IN PRODUCE AND GROCERY FOODS June 30, 1919 WASHINGTON GOVERNMENT PRINTING OFFICE 1920 A -4 ^^ !.!':> FEDERAL TRADE COMMISSION. William B. Colver, Chairman, John Franklin Poet. Victor Mitbdock. Huston Thompson. J. P. YoDER, Secretarjf^ CONTENTS. Letter of transmittal "^^ Chaptbb I.— The Packers' Entky Into Uneelated Lines. Sec. 1. Purpose and direction of the packers' expanding activity 13 Sec. 2. The packers' entry into unrelated food lines 15 Variety of unrelated foods and specialties manufactured or handled 15 Classified list of unrelated food lines of the five larger packers ig Extent of packer control 19 The packers' undue advantages and unfair practices in com- petition 21 Packer activity and the public interest 22 Sec. 3. Packer food specialties 22 Packer activity in food specialties reaching out from dis- tribution to manufacture 27 Ohaptee II. — Advantages of the Packers in Buying and Marketing. THE marketing POWER OF THE PACKERS. Sec. 1. Alarm at their competitive power 29 Their buying power 30 Their carrying power 31 Their selling power 32 Sec. 2. Marketing agencies : The branch houses 32 Number and distribution 32 Branch-house organization . 34 Strategic position of the branch house 36 Substocks 37 " Storage and delivery " houses 37 Sec. 3. Hotel-supply companies and the hotel trade 37 Purchase of hotel stock 38 Sec. 4. Other marketing agencies 41 Wholesale, commission, and brokerage houses 41 Selling agencies of controlled companies 42 Foreign outlets 42 Retail markets 43 Sec. 5. Branch-house turnover and expense as bearing on branch-house economy 44 Analysis of sales 44 Turnover 46 Branch-house expense 49 Sec. 6. Continued expansion to be expected 53 3 4 CONTENTS. ADVANTAGES IN TRANSPORTATION FACILITIES: A. The peddler-car system. Page. 50 Sec. 7. The peddler-car service . General character of the service ■' Method of operation ' Scheduled refrigerator service '^ Sec. 8. The peddler-car .rules Western trunk-line rule Peddler-car rule in other territories ^1 Sec. 9. How the system works Unequal operation of the rules as between large and small packers "^ How the peddler-car service affects other shippers of food— 64 " Contraband " shipments ; provisions as to " other articles " In the general rules *55 " Contraband " provisions in other rules 66 Discrimination in rates 67 Discrimination in service 69 B. Carload shipments and the mixing rules. Sec. 10. Unequal car service TO Inadequate sujiply of cars 70 Slow movement of cars 72 Inadequate icing in ti'ansit 72 Sec. 11. Inequality through special mixing rules 73 The official classification mixing rule 7-1 (1) Packing-house products 74 (2) Packing-house products, provisions, and fifth-class articles 7.5 (3) Fresh meat and fresh-meat mixtures 77 (4) Dressed meats, provisions, packing-house products, and fifth-class articles 77 Mixing rules in other territories S'.) Sec. 12. Summary and conclusions SI Service discriminations through the peddler-car rules 81 Service discriminations through special mixing rules 84 COLD-STORAGE FACILITIES. Sec. 13. Nature and functions of cold storage 8.5 Sec. 14. Possible abuses 85 Sec. 15. Operation and occupancy of cold-storage space in the United States S7 Sec. 16. Operation and occupancy of cold-storage space in large cities 90 Sec. 17. Plants operated by the big packers 98 Sec. 18. The big packers and the cold storage of butter, cheese, eggs, and poultry . 101 Sec. 19. Conclusions l lOi Chapter III. — Poultry Products. Sec. 1. Buying and selling operations of the five greater packers 131 Buying operations 133 Selling operations 137 CONTENTS. 5 Page. See. 2. Position of the five greater packers In the poultry-products trade— 139 Sec. 3. Packer competition in poultry and eggs 141 Local price discrimination 141 Bogus independents 143 Misbranding and adulteration 143 Effect of packer competition on producer 147 Effect of packer competition on consumer 147 Chapter IV. — Daiby Products. Sec. 1. Character and extent of packer activity 149 Purpose of activity 149 Cream and butter 150 Condensed, evaporated, and powdered milk 158 Cheese 159 Sec. 2. Concentration promoted by creamery methods 166 Introductory 166 Influence of the hand cream separator 166 Existing types of creameries 167 Disadvantages of the cream-buying stations 168 Sec. 3. Effects of packer concentration on product and competition 168 Lowering the quality of butter 169 Cutting off cream and milk supply from independents 169 Local price discrimination in cream and milk purchases 171 The Missouri case against cream price discrimination ^^_ 172 Price agreements 175 Rebates to farmers 179 Sec. 4. Packer division of milk-producing territory 180 Absence of genuine interpacker competition 180 Holding territory against outside competition 184 Sec. 5. Concealing packer activity under trade and subsidiary company names 187 Reasons for such names 187 Packers' use of trade names in the dairy-products field 188 Sec. 6. Methods and practices in cheese making and marketing 191 Cheese factories 191 Marketing of cheese 193 Packer buyers versus Independent cheese dealers 194 Sec. 7. The packer and the cheese boards J.94 What the independent cheese dealers think of the cheese boards 194 Packers' influence over cheese-board prices 195 Packers' cheese prices not always board prices 197 Tying cheese factories to one cheese distributor on the board- 198 Sec. 8. Limiting the market and fixing prices to the producer 203 Conquest of the market 20.'} Shifting markets and diverting supplies from independent produce dealers 205 Securing the output of local independent creameries at fixed prices 207 Absence of packer competition through understandings 210 Price manipulation 211 Page. 213 213 6 CONTENTS. Chaptee V. — Gbocebt Foods : Canned, Packaged, and Bttlk. Sec. 1. Cereals and cereal products Armour Grain Co.'s grain and packaged-cereal business Klce 21T Sec. 2, Lard and butter substitutes Crude oil 22i Refined oil Lard compounds and lard substitutes 221 The great packers' position iu lard-compound and lard- substltute production 223 Big packers' position in lard-compound and lard-substitute distribution ■^"^ Butter substitutes 227 Big packers' position in the production of oleomargarine 227 Big packers' position in the distribution of oleomargarine— 229 Sec. 3. Vegetables and vegetable products 230 Extent and growth of packer distribution 230 Manufacturing and producing 232 Methods of the packers 234 Sec. 4. Fruits and fruit products 236 Extent of packer distribution 236 Manufacturing and producing 240 Methods of the packers 243 Sec. 5. Canned and cured fish 245 Extent of packer distribution 245 Manufacturing and producing 247 Methods of the packers 250 Sec. 6. Condiments, relishes, etc 252 Range of packer activity 252 Packer companies manufacturing condiments, relishes, etc 252 Merchandising 253 Unfair and questionable practices 254 Sec. 7. Sundries : Peanut butter, coffee, syrups, etc 259 Peanut butter 259 Coffee 259 Syrups and molasses 260 Other grocery specialties 261 Sec. 8. Soda-fountain supplies 261 Extent of packer distribution 261 List of soda-fountain supplies sold by Armour & Co 262 Manufacturing and producing 265 LIST OF TABLES. Page. Tiible 1. Sales of certain specialty lines and proportion total sales, Armour & Co., fiscal years 1916 and 1918 24 Table 2. Big packer control of capital 30 Table 3. Branch-house and car-route sales of the five large packers, by companies, 1916 33 Table 4. Operations of sis branch houses comprising one eastern district of one of the big packers for the six months ending April 30, 1919 44 Tables. Sales — Weight and amount — Six branch houses comprising one eastern district of one of the five large packers— Sales by classes of goods with ratio of each to total sales for the six months ending April 30, 1919 45 Table 6. Sales — Amount and proportion — Six branch houses comprising eastern district of one of the five large packers — Sales by classes of goods and by branches for the six months ending April 30, 1919 45 Table?. Sales, average inventory, and turnover — ^Weight and amount — Six branch houses comprising one eastern district of one of the five meat packers for the six months ending April 30, 1919 — Yearly turnover estimated on basis of the six months' turnover 46 Table 8. Sales, average Inventory, and turnover — Canned goods and groceries — Six branch houses comprising one eastern dis- trict of one of the five large packers for the six months end- ing April 30, 1919 — Yearly turnover estimated on basis of the six months' turnover 48 Table 9. Sales — Amount and vreight — And expenses per dollar and per 100 pounds — Six branch houses comprising one eastern district of one of the five great packers for the six months ending April 30, 1919 49 Table 10. Classified expenses per dollar of sales — Six branch houses comprising one eastern district of one of the five meat packers for the six months ending April 30, 1919, and a group of wholesale grocers for the year 1916 50 Table 11. Operation of peddler-car rule in central freight-associaition ter- ritory; examples of charges and penalties collected July, 1916 59 Table 12. Operation of peddler-car rule In central freght-association ter- ritory ; proportion of Swift & Co.'s cars paying penalties January, March, and May, 1916 59 Table 13. Operation of the peddler-car rule in western trunk-line ter- ritory ; examples of load, minimum charge, earnings, and deficit or penalty charge for Illinois and Wisconsin points 60 Table 14. Operation of the percentage-peddler-car rule in southwestern lines territory during the month of March, 1916 62 7 g LIST OF TABLES. Page. Table 15. Relative rates on packing-house products when **P^^ "° ®^ the peddler-car rule in certain southwestern t^"""'^ .^ class rates for the same distances, in cents per lOU pou j^ ^^ on single-line traffic " ~Z,vpfl Tabl^ie. Cold storage of five greater meat packers-Leased and occupie space in percentages of operated space in cities with an esu^ mated population of 100,000 or more in which one or more of the five operated a private cold-storage warehouse, but in which none of them operated a cold-storage warehouse ^^ open to the public Table 17 Cities with an estimated population of 100,000 or more on July 1, 1917, classified by the number of the five larger meat packers operating cold-storage plants, with names of packers, if operating, and the number holding space by lease or occupancy without lease on November 30, 1917; March 31, 1918 ; or July 31, 1918 97 Table 18. Ab.-^olute and relative holdings of butter, cheese, eggs, and poultry in cold storage on November 30, 1917; March 31, 1918 ; and July 31, 1918 — The five larger meat packers and all other storers 102 Table 19. Relative cold-storage holdings for November 30, 1917; March 31, 1918; and July 31, 1918, of butter, cheese, eggs, and poultry — The five great packers and all other storers 103 Table 20. Cold storage in the United States— Capacity operated by the five meat packers and by independent concerns, 1917-18 106 Table 21. Cold storage in the United States— Space leased and occupied by the five large packers, 1917-18 106 Table 22. Cold storage in the United States— Space In which the big packers were interested, 1917-18 106 Table 23. Cold storage in cities with an estimated population of 100,000 or more — Capacity operated by the five large packers and by outside concerns, 1917-18 107 Table 24. Cold storage In cities with an estimated population of 100,000 or more — Space leased and occupied by the five larger packers, 1917-18 111 Table 25. Cold storage In cities with an estimated population of 100,000 or more — Space in which the five large meat packers were interested, 1917-18 116 Table 26. Cold-storage plants operated by and under the name of Swift & Co 121 Table 27. Cold-storage plants operated by companies controlled by Swift & Co 122 Table 28. Cold-storage plants operated by and under the name of Ar- mour & Co 124 Table 29. Cold-storage plants operated by companies controlled by Ar- mour & Co 125 Table 30. Cold-storage plants operated by and under the name of Morris & Co J26 Table 31. Cold-storage plants operated by companies controlled by Mor- ris & Co -27 Table 32. Cold-storage plants operated by and under the name of Wilson & Co., Inc .|2o LIST OF TABLES. 9 Page. Table 33. Cold-storage plants operated by companies contronecl by Wil- son & Co., Inc 129 Table 34. Cold-storage plants operated by and under the name of The Cudahy Packing Co 130 Table 35. Cold-storage plants operated by companies controlled by The Cudahy Packing Co 131 Table 36. Number big packer poultry and egg-packing plants and buying stations, grouped by States, 1918 133 Table 37. Reported tonnage sales of dressed poultry and eggs for 1918 by Swift & Co., Armour & Co., Wilson & Co., Inc., and The Cudahy Packing To., and percentages of these sales based upon total estimated quantities of poultry and eggs shipped in the United States 140 Table 38. Number big packer butter-renovating plants and buying sta- tions, grouped by States, 1918 151 Tiible 39. Number big packer creamery plants and cream-buying stations, grouped by States, 1918 153 Table 40. Profit and loss on produce. Armour & Co., 1912-1917 204 Table 41. The Armour Grain Co. — ^Net earnings, dividends and per cent of dividends on capital stock, by years, 1913-1917, and yearly average 213 Table 42. Crude cottonseed-oil production — Three big packers' proportion, so:ason of 1916-17 220 Table 43. Refined cottonseed-oil production — Big packer proportion, sea- son of 1916-17 221 Table 44. Lard-compound and- lard-substitute production of interstate slaushlerers and cottonseed-oil manufacturers — The five great parkeis' proportion, 1916, and January 1 to June 30, 1917_^_ 223 Table 45. Lard-sub-^ritute sales of the five greater packers, -with percent- ages of increase, 1916 and 1918 226 Table 46. Oleomargarine production of five great packers and all other manufacturers, with packer proportion, 1916 and January 1 to June 30, 1917 228 Table 47. Oleomargarine sales of the five greater packers, with percent- ages of increase, 1916 and 1918 229 Table 48. Armour's and Swift's pack of kraut, cabbage, and asparagus, 1917 232 Table 49. Sales of certain condiments by LIbby, McNeill & Libby (a Swift concern), with percentages of increase, 1915 and 1918 254 LIST OF EXHIBITS. Page. Exhibit I. Packer unrelated commodities Exhibit II. Armour's sales, In value, of dressed poultry, eggs, butter, and cheese, 1915-1918 273 Exhibit III. Number of principal marketing agencies, by cities, of the five largest packers and their controlled companies, as far as ascertained, including domestic branch houses, substocks, storage and deliveries, consignees, foreign branch houses, and foreign selling companies 275 Exhibit IV. Big packer companies producing or handling foods not de- rived from the slaughtered animal 289 Exhibit V. Peddler cars on sections of the Southern Railroad 300 Exhibit VI. Sources and methods used in compiling cold-storage tables 308 Exhibit VII. Big packers' poultry and egg-packing plants, names of companies operated under, relation of companies to packers, locations of plants by State groupings, and buying stations, 1918 310 Exhibit VIII. Trade estimates of packer control over poultry and dairy products 320 Exhibit IX. Big packer (Morris excepted) tonnage sales of dressed poultry, eggs, butter, and cheese, 1915-1918 322 Exhibit X. Big packers' butter-renovating plants, names of companies under vi^hich operated, relation of companies to pack- ers, locations of plants by State groupings, and buying stations, 1918 325 Exhibit XI. Big packers' creameries, names of companies under which operated, relation of companies to packers, locations of creameries by State groupings, and buying stations, 1918 332 Exhibit XII. Trade estimates of packer control over canned and packaged foods 371 Exhibit XIII. Rice sales by Armour & Co., accumulated by months, March, 1917, to January, 1918 376 Exhibit XIV. Rice purchases by Armour & Co., in stated periods, 1917-18- 377 Exhibit XV. Tonnage sales of lard substitutes by the five big packers, 1915-1918 377 Exhibit XVI. Tonnage sales of oleomargarine by the five large packers, 1915-1918 378 Exhibit XVII. Tonnage sales of canned foods by the larger packers, 1915-1918 378 Exhibit XVIII. Canned and dried vegetables distributed by certain of the five large packers, sl;o\ving range in kinds and brands oon Exhibit XIX. Canned and dried fruits, preserves, jellies' syrup'sretc'dis"- tributed by certain of the five great packers, showing' range In kinds and brands ogo Exhibit XX. Canned and cured fish distributed by certain of the five big packers, showing range in kinds and brands oqq 10 ^^ LETTER OF TRANSMITTAL. Federal Trade Commission, Office of the Chairman, Washington, 30 June, 1919. Sir : I have the honor to submit herewith Part IV of the Eeport of the Federal Trade Commission on the Meat Industry, being a part of the Commission's food investigation undertaken at your direction. Other parts of the food-investigation report will be presently transmitted- By direction of the Commission. Your very truly, .WiiitiAM B. Colver, Chairman. The President, WhiU Houstk 11 REPORT OF THE FEDERAL TRADE COMMISSION ON THE MEAT-PACKING INDUSTRY. Part IV. THE FIVE LARGER MEAT PACKERS IN PRODUCE AND GROCERY FOODS. CHAPTER I.— THE PACKERS' ENTRY INTO UNRELATED LINES. Section 1. — Purpose and direction of the packers' expanding activity. The meat packer originally confined his activities to the slaughter of live stock and the sale of meat and animal products. Gradually these activities widened to include both the fabrication of the animal products into by-products and the sale of these by-products. With the development of the refrigerator car and of cold storage came the packer's branch house, and the packer became the competitor of his one-time customer, the wholesaler, in both main products and by- products, and more latterly and in increasing degree competitor of the manufacturer of such food and other specialties as compete with or substitute for his meat products and by-products. Growing concentration of the packing industry into the hands of the five larger packing concerns, each having its principal office at Chicago, to wit, Swift & Co., Armour & Co., Morris & Co., Wilson & Co., Inc.,, and The Cudahy Packing Co., marks historically its de- velopment from this point. Parallel with the growth of concentra- tion runs the exercise of increasing monopolistic control over meat and its by-products and a rapid expansion into the foods unrelated to the packing industry. Especially important among the unrelated foods thus brought within the field of packer operations are those used as substitutes for meat and for animal fats. From foods unrelated to the main industry of meat packing as either products or by-products, the five great packers have extended their operations to the production and distribution — and in some cases to the near control — of many commodities other than foods like- wise unrelated. The packer's entry into all these unrelated fields, whether covering foods or not, has proceeded along definite and rather intelligible lines (see Exhibit I for classified lists, including 13 14 MEAT-PACKING INDUSTRY. unrelated nonfoods). It is the unrelated foods, however, to which it is proposed to confine this volume of the report. . First, there are those commodities unrelated to the main maust^^ of meat packing as either products or by-products which compete with packing-house products. The packer, recognizing canned Hsli and vegetables, and poultry, dairy, and cotton-oil products as sub- stitutes for meat and animal fats, began manufacturing them or buying them for resale. Intensive use of equipment and organization no doubt was one motive for this widening of activity. But only by a control over these substitutes could he hope to retain any advantage he might have in control over meat supplies. The same would hold true of the substitutes for the packer's other products. Second, there are those lines unrelated to the main industry of meat packing as either products or by-products which go to the same markets to which the packer's established lines go. Instead of con- fining the salesman to beef extract and bouillon cubes on his visits to the soda-fountain trade, the packer gave him a full line of the supplies needed by that trade — the various flavoring extracts, fruit and nut syrups, and prepared drinks. The packer began the manu- facture of some of these and the purchase of others and established the soda-fountain department. The packer had an established trade iu meats and other packing-house products with the grocer through the branch-house and peddler-car route. He added breakfast foods, breadstuffs, coffee, and other unrelated groceries of a similar charac- ter. Here again economy in the use of the selling organization was the alleged purpose, but a firmer hold on the trade for established lines by supplying it with all other lines called for resulted and seems to be the controlling purpose. In some cases control of the lino appears to have been the goal. Third, there are those lines unrelated to the main industry of meat packing as either products or by-products which are used m the manufacture and handling of packing-house products and of which the packers were at first large purchasers for their own use only. The advantages of having a regular, adequate, and altogether satisfactory supply and of securing the manufacturer's profit led the packer into the manufacture of some of these lines, for example, salt and ice, used in the packing and handling of meats, and later, in order to reduce the unit cost of their manufacture by increasing the output, into selling them. Other of these lines, for example, such seasoning ingredients as cinnamon, cloves, and nutmegs, used in the preparation of foods, he continued to buy, but instead of buying for use he bought in increasingly larger quantities for resale. Reduction in overhead unit selling costs on established lines was an additional incentive to engage in the manufacture or purchase for sale of these outside lines though MEAT-PACKING INDUSTRY. 15 perhaps not always achieved. In some cases an attempt to secure control over the lines in question was in evidence. Of the three groups, an examination of Exhibit I shows this to be the least impor- tant from either the packer's or the public's point of view. Section 2. — The packers' entry into unrelated food lines. The publicly most significant direction in which the five larger meat packers' outside activities are reaching is indicated by their entry into that group of unrelated lines (see preceding section) which they found to be in competition with packing-house products. And of these unrelated lines the public's first concern* is with respect to the substitutes for meat and other food products of the slaughtered animal. Variety of unrelated toods and specialties manufactured or HANDLED. — The Commission's investigation of the meat industry and of perishable, canned, and packaged foods has developed that the large packers are rapidly securing a strong position in the produc- tion of many and in the distribution of nearly all kinds of foodstuffs. This expanding movement is at present perhaps more marked in the direction of the manufacture of food specialties. It has already gone far in the distribution of most foods. The numerous branch and sales houses of the five larger packers located at every vantage point of consumption and distribution throughout the country are no longer used for the exclusive sale and distribution of meats and by- products for which they were originally established. (For packers' selling agencies see Exhibits III and IV.) These packers have entered the wholesale grocery trade, and in practically all the more important centers of distribution they bid fair to dominate a field which a few years ago was almost exclusively occupied by the independent provision jobber and wholesale grocer. With the exception of sugar and flour, the profits on the marketing of which are, without the control of their supply, relatively small and the control of which by the packers has not yet been secured, and with the exception of fresh fruits and vegetables, into the marketing of which the packers have never ventured far, the five larger packers are now large distributors of almost all the commodities originally handled exclusively by the regular wholesale grocery, provision, and produce trade. These include dressed poultry, eggs, butter, cheese, condensed and evaporated milk, butter and lard substitutes, dried fruits, rice, coffee, breakfast and other packaged foods, jellies, pickles, and canned fruits, vegetables, and fish. The list below, while no doubt incomplete, gives these commodities in greater detail and is classified on the basis of trade usage. This trade classification is followed in the treatment of the subject in later chapters. 16 MEAT-PACKING INDUSTBY. The following food commodities, unrelated to the m^^}:^^^^'^^-' meat packing as either products or ^y-Producte^ ^are^^^^^^ ^^^^^^^^ _ manufactured and sold or bought and sold by one or more ' „T,™ T iKGEB PACKEES. CLASSIFIED LIST OP TJNBELATED TOOD LINES OF THE FIVE i^^J^ I. Poultry and game products' Canned poultry : Boned chicken. Boned turkey. Chicken-gizzard linings. Chicken loaf. Chicken pat6. Chicken soup. Chicken tamales. Deviled chicken. Deviled turkey. Potted chicken. Potted and deviled chicken, as- sorted. Potted turkey. Egg albumen. Eggs (canned). Eggs (desiccated). Eggs (-frozen). Eggs (In case) : Duck. Hen. Goose. Eggs (whites). Eggs (yolks). Poultry and game (frozen) t Chickens. Ducks. Geese. Guineas. Pigeons. Rabbits. Squirrels. Turkeys. II. Dairy products^ Butter (creamery). Butter (process). Butter (renovated). Canned milk : Condensed. Evaporated. Powdered. Cheese. III. Grocery foods (canned, packaged, and bulk). 1. Cereal and cereal products .(includ- ing breakfast foods) : Buckwheat. Corn flakes. Corn grits. Corn meal. Corn flour. Hominy (samp). Macaroni. Noodles. Pancake flour. Rice. Rolled oats. Spaghetti. Wheat flour. 2. Lard and butter substitutes: Butterlne. Cooking oil. Cottonseed oil. Lard and butter substitutes — Cont Lard substitute (vegetable). Oleomargarine (vegetable). Peanut oil. Vegetable shortening. Vegetable stearin. Vegetole. Vegetable and vegetable products: Canned vegetables — Asparagus (green). Asparagus (white). Asparagus tips (green). Asparagus tips (white). Beans (baked). (golden wax), (lima), (red), (string). Beans Beans Beans Beans Beets. ' These products are to some extent, the by wholesale grocers. canned products to "^ J"ge extent, handled MEAT-PACKING INDtJSTRY. 17 3. Vegetable and vegetable products — 4. Fruit and fruit products — Cont. Continued. Canned fruit — Continued. Canned vegetables — Continued. Cherries — Cabbage. Black. Celery. Red sour. Corn. Royal Anne. Mixed vegetables. Red pitted. Okra. 1 Cherry juice. Peas. Cold-pack cherries. Pumpkin. Cold-pack peaches. Sauerkraut. Cold-pack raspberries. Spinach. Figs. Squash. Gooseberries. Succotash. Grapes. Sweet potatoes. Grapes (white muscat). Tomatoes (pulp). Jams — Tomatoes (solid). Apricot. Vegetable soup. Blackberry. Dried vegetables — Blackberry-apple. Bean flour. Cherry-apple. Beans — Fig. California lima; Grape. California small white. Orange marmalade. Red kidney. Orange-apple marmalade Mexican garbanza. Peach-apple. Soya. Pineapple. Pinto. Plum. Brown Swede. Raspberry-apple. Pink. Strawberry-apple. Navy. i Jellies-— Michigan pea. Apple. Celery (powdered). Currant. ,, Peas. Grape. ^ Soya bean oil. Grape-apple. 4. Fruit and fruit products : Plum. Apple butter (in glasses). Raspberry-apple. Apple butter (in pails). Strawberry-apple. Apple cider. Cranberries. Loganberries. Canned fruit — Oranges. ' Peach butter. Apples. Apple bulcter. Peaches — Sliced. Apple s)Huce. ^Yhite cling. Apricots — Yellow cling. In water. Yellow free. Peeled. Sliced. Fears. Solid packed. tJnpeeled. Blackberries. Pineapples — Broken slices. Grated. Blueberries. Sliced. 140361° 18 MEAT-PACKING INDQS-XEY. . Fi-iiit and fruitproducts-^Continueil. Canned fruit — Continued. Plums — Egg. Green gage. Purple. Pre.serves^ Blackberry. Cherry (red sour). Currant. Gooseberry. Pineapple. Plum. Raspberry. Strawberry. Prune.?. Strawberries. Raspberries — Black. Red. Raspberry pulp. Rhubarb. Cherries ( imported ) . Cherries (imitation creme menthe). Cherries (red crushed). Cherries (white). Cherries (whole red imitation maraschino flavor). Grape compound. Dried and evaporated fruit (in box and bulk) — Apples. Apricots. Figs. Grapes. Peaches. Prunes — Italian. French. California. Raisins. Canned and cured fish: Canned fish — i Herring. Oysters. Salmon. Sardines (in mustard). I Sardines (in oil). I Shrimp. Tuna. Frozen Fish. Herring (cured). 5. Caained and cured fish-CoiitinueJ. Mackerel (salt). Salmon (barreled). Sardines (smoked). 6. Condiments, relishes, etc.: Allspice. Catsup. Cinnamon. Chill sauce. Chow chow. Cloves. Ginger. Horseradish. Marshmallow topping. Minced clams. Mustard. Rlustard and cream. Nutmeg (ground). Olive oil. Olives (cured). Olives (ripe). Olives (stuffed.). Oyster cocktail sauce. Pickles (cucumber). Pepper (ground). Pepper (red). Pepper (white). Pepper (whole). Pimento. Sage. Salad dressing. Salad oil. Salt. Tabasco sauce. Table sauce. Tomato puree. Tomato relish. Tomato sauce. Vinegar. Worcestershire sauce. 7. Sundries: Cocoa. Coconuts. Coffee (bulk). CofEee (packaged). Honey. Molasses. Peanut butter. Peanuts. Syrup (cane). Syrup (corn). Syrup (maple blend). IV. Soda-fountain supplies (see Chap. V. sec. 8, for list and discussion) MEAT-PACKING INDUSTRY. 19 Extent of packer control. — ^The proportion of the trade in the above list of commodities handled by the five larger packers will vary with the commodity, the locality, and the dealer whose busi- ness is being absorbed. Owing to the maze and secrecy of the packer's method of conducting much of his business, exact statistics on many of these commodities are not available for the country as a whole which will show just how far the packer's control has reached. Many companies manufacturing or handling these commodities aie controlled by packer interests, no hint of which is disclosed by the names under which they operate, and even a thorough-going exami- nation may fail to uncover the packer connection in every case. Again, a considerable volume of the business may be covered by agent's buying and selling contracts, by brokerage or other similar arrangements, or by dealings on the board of trade, no adequate or straightforward records for which are kept or disclosed. It is shown in this report that the packers are large wholesale dealers in produce. Four of the big packers, Swift, Armour, Wil- son,^ and Cudahy, handled in 1918 through their principal and subsidiary companies, not including family-controlled companies, 136.190.550 pounds of dressed poultry, or 4:9.5 per cent of the esti- mated shipped dressed poultry, and 202,984,2T8 dozens of eggs, or 33 per cent of the estimated shipped eggs (see sec. 2, Chap. Ill, and Exhibit IX). The figures for Morris were not available. If products handled by all companies in any way controlled by the five great packers were included and if returns were available from all the five, it would probably be shown that the proportion of control over the estimated shipped poultry products would for 1918 equal tlie trade's estunate of 65 per cent for 1917. The same four members- of the packer group handled in 1918 through their principal and subsidiary companies, but not including family-controlled companies, 155,962,975 pounds of butter and 186.691.551 pounds of cheese (see sec. 1, Chap. IV, and Exhibit IX). Returns from Morris were not available. If dairy prod- ucts of all the five great packers, including all their controlled companies, were included in these totals they would be materially increased. However, such part of the packer sales of cheese as was reported for 1918 amounted to 49 per cent of the country's total factory-made cheese of that year. Of the total packs of canned milk (in cases) for 1917 and 1918 Libby, McNeill & Libby, a Swift concern, alone distributed re- spectively 9.2 and 10.4 per cent (see sec. 1, Chap. IV). » Some duplication is involved In the Wilson sales owing to the inclusion ot cevtain interplant shipments and shipments between plants and branch houses, which the com- pany reports as being unable to exclude. 20 MEAT-PACKING INDUSTEY. It is also shown in this report that Armour, through the Armour Gn^n Co is a large factor in the cereal and breakfast food busmess, on the producing as well as handling side; and that Armour & Co within the year 1917 became "the largest rice dealer in the world, handling more than 30,000,000 pounds during the 11 months ending Tebruary 2, 1918, though dealing in but little prior to that period (see sec. 1, Chap. V). Production of lard compounds and substitutes by the five great packers, including all their affiliated companies, was, for the first six months' of 1917, 49.4 per cent of the total output of interstate slauo-hterers and cottonseed-oil manufacturers, constituting the great bulk of the production of the United States. Production of oleomar- garine for the same period was 51.1 per cent of the total produced in the United States. The percentages representing the amounts han- dled are, for both lard substitutes and oleomargarine, somewhat larger than those given above, since they include outside purchases. Direct comjiany sales in tonnage figures for 1918 (including sales by prin- cipal and subsidiary companies but not by family-controlled com- panies) for the five packers ' showed an increase in lard substitutes of 43 per cent over corresponding sales for 1916, and in oleomargarine of 119 per cent (see sec. 2, Chap. V). In the handling of canned fruits, vegetables, and fish and of other foods both wide range of product handled and rapid growth by the five packers are shown. In some items a large proportion of the total pack is indicated. The canned-food sales of Libby, McNeill & Libby alone amounted in 1915 ^ to 138,068,844 pounds and in 1918 to 449,290,822 pounds, an increase of 225 per cent. For the four- year period 1915 to 1918 these sales of the Libby company reached the enormous total of 1,179,074,122 pounds (see Exhibit XVII A). In 1917 Libby sold 33 per cent of the total pack of asparagus and 11.5 per cent of the total pack of kraut and in 1918, 27 per cent of the total pack of pineapple and 9.7 per cent of the total werld pack of salmon (see sees. 3, 4, and 5, Chap. V). Sales for the other packers segregated by commodities, if available, would show a high packer total. Armour's tonnage sales of canned vegetables and sundries, in- cluding condiments, evaporated milk, rice, canned and dried fish, and peanut butter, but not including canned fruits and preserves, tonnage sales for which were not avail able, were, in 1916, 61,386,920 JveaTn ITA^^T^:, TZ r^I^V^r?^- ■ r "^ ^"^"^^*^°° '^ '"- ..ip^ents between p.ants ana .-ane. .o.r^ 1 '^ ^^-^^ afl^^r "e ' After the report had gone to press Libby, McNeill & Libby revised it, .., = for 1915 and 1916 on canned pineapple, salmon, milk, tomatoes and kraut ^l"^ ^™^ figures, except those for tomatoes for 1016, are larger than the earlier fl^ revised by the company. See Exhibit XVII A and note 3 of that exhibit. """^^^ reportefl MEAT-PACKING INDUSTRY. 21 pounds, and in 1918, 196,066,848 pounds, a gain of 219 per cent. For the years 1916, 1917, and 1918 the total tonnage on these items amounted to 365,213,661 pounds (see Exhibit XVII B). Wilson's tonnage sales ^ of condiments and preserves and canned fish, fruits, and vegetables were, in 1915, 6,822,242 pounds, and in- 1918, 121,648,154 pounds. The sales of 1918 were almost 18 times Ihose of 1915. The total sales for the four years on these items amounted to 172,931,943 pounds (see Exhibit XVII C). In addition to the minimum statistics for the country as a whole on packer activity in these various commodities, estimates are pre- sented which have been furnished the Commission by many indi- viduals covering their own localities or business, and these are con- clusive as to the strong tendency. (See Exhibits VIII and XII). The packers' undue advantages and unfair practices in com- petition. — That the packers have extraordinary buying and market- ing power — due to certain advantages, perhaps not always unlawful, but certainly often unjustifiable — is pointed out in detail in Chap- ter II, which treats of their selling agencies, transportation ad- vantages, and storage facilities. It is there shown that the packers have, through their more or less monopolistic business of slaughter- ing, secured nation-wide buying and selling outlets, a constant sup- ply of funds at a lower rate of interest than is open to their com- petitors, preferred transportation services, and, in some cases, lower transportation rates for their nonmeat lines, and a control, direct or indirect, of 44.8 per cent of the total cold-storage space of the country ; that these advantages are being made use of in establishing themselves in the business of handling groceries and produce; and that their claim of superior efficiency in merchandising these com- modities under equality of privilege and opportunity has never been established. Numerous complaints of questionable competitive practices on the part of the five larger packers in the production and handling of these unrelated foods are presented. In, the buying of pro- duce these practices appear most often as local-price discrimina- tions, price agreements, manipulation of prices through operations on produce boards, division of buying territory, and operating under bogus names. (See Chaps. Ill and IV) . In the handling of produce and groceries in wholesale receiving and distributing centers ques- tionable competitive practices complained of run to forcing full packer lines on retailers, eliminating wholesale dealers by securing control of their supplies or outlets, misbranding, selling short weight, operating under trade and bogus independent names, manipulating prices on boards of trade, local price discrimination, and speculating in food commodities. (See Chaps. Ill, IV, and V.) ' Some duplication is involTed in the Wilson owing to tlie inclusion o£ certain Interplant shipments and shipments between plants and branch houses which the company reports as being unable to exclude. 22 MEAT-PACKING INDUSTKY. TItp extent to which Packer activity and the public interest. — J-iii- 1=^ ^^^^^ the packer should be permitted to enter these unrelated i ^ ^^.^^ (even assuming legitimate competitive methods) is a ma e the public interest alone should determine. Two questions, p- marily economic, are involved : Does this widening ot activity suit in additional economies of production and distribution . -Uoes it result and will it continue to result to the public in lower prices and better quality of product and service? A third question, not here discussed, relates to the ultimate effect of such vast and power- ful organizations on the political and social fabric of American institutions. It is probable that a centralized control over an entire industry with full coordination of all its parts would, assuming equal efficiency of labor and equipment, show results in the production and dis- tribution of goods superior to the results flowing from a control widely distributed, such as is characteristic of the competitive system. But it is also probable that unless in some way a considerable element of the tonic of competition could be infused into such a system a certain flabbiness of industrial tissue would result. Fur- thermore, unless this control rested in those responsible to the public at large, not only would any advantage in cheaper production result- ing from centralized control be likely not to go to the consumer but the consumer would always be in danger of an actually higher monop- olistic price. Adequate and comparable cost records of production and distribu- tion have not been kept by the packers nor by their competitors in these unrelated food lines, and without these records relative efficiency can not well be conclusively determined. There are at least two possi- bilities: The packer's volume of business under centralized manage- ment may give him lower unit costs, which, with or without unfair competitive practices, are employed to squeeze out or discipline com- petitors, and which during the time of this process inures to the benefit of the consumer in lower prices. Competitors out or whipped into line, the way is open to such rise in prices as the traffic will bear. On the other hand, the packer may have no lower costs, but through unfair practices, possible because of his financial power and widely distributed operations or through special privileges not yet pro- nounced legally unfair, competitors are consecutively by localities put out of business. H Jiwf™ T' ^iirl'^'T '' ""t^^-^^d. Competition is substan- tially lessened, and the tendency is toward monoply. Section 3. — ^Packer food specialties. The packers have made rapid growth in recent vears in thp 1, ^i • of food specialty lines. These will be treated at greater lengthTn sub" MEAI-PAGKING -INDUSTKY. 23 sequent chapters. It is desirsble here, however, to point out that most of these specialties are now or were once carried by the wholesale grocers; that the packers' disproportionately rapid growth in han- dling them has been at the expense of the grocer ; and that the pack- ers have failed to include many of their specialties when reviewing their activities. Nor would it be particularly enlightening to make comparison of the total volume of the wholesale grocery business in the United States with the total volume of the packers' specialty lines. The tot^l vol- ume of the wholesale grocery business includes the two items of sugai' and flour, not largely carried, if at all, by the packers, but constitut- ing about 35 per cent of the grocers' volume. On these items there is little net profit and often loss. It is in the specialty lines where lies the possibility of largest profit, and in these lines the packer is par- ticularly active. Armour & Co. has widely announced in its newspaper advertising of recent months that " our participation in grocery lines represents only 4.6 per cent of our total business." Inquiry on the part of the Commission elicited the explanation that this statement was for the fiscal year 1918, and that these grocery lines included the following four groups : (1) Canned fish, canned vegetables, and sundries (including can- ned fish of all kinds, cured fish, barreled salmon, canned vegetables of all kinds, sauerkraut, rolled oats, spaghetti, noodles, pancake flour, corn flakes, rice, raw beans and peas, bean flour, coffee, corn syrup, molasses, evaporated milk, solid tomatoes, and table condiments). (2) Canned and dried fruits (including all fruits so packed). (3) Fruit preserves (including extracts, phosphates, syrups, crushed fi'uits, nuts in shell, and all soda-fountain supplies). (4) Grape juice (including grape juice only). The follovsdng items, not primarily related to meat packing, all of which are gix)eery items and all of which are handled by Armour & Co., were not included in the lines comprising the 4.6 per cent of the company's total sales: Compound lard (vegetable), cooldng oils (vegetable), oleomargarine (vegetable), salad oil (vegetable), canned fowl (chicken and turkey boned), and peanut butter. On these items, with the exception of peanut butter, Armour & Co. stated that it was unable to furnish its sales. The sales of peanut butter alone, one of. the items of lesser importance, amounted to $575,000. Nor did the 4.6 per cent include the four produce items — but- ter, cheese, eggs, and dressed poultry, all food specialties, though not all now carried by wholesale grocers. For the fiscal year 191S Armour & Co. reported the sales on these items as amounting to $77,853,268.22, or 9 per cent of the company's total sales of $860,- 861,838.17 for that year. 24 MEAT-PACKING INDXJSTKY. Thus, if the sales figures for the specialty itx^ms abo^-e "^"*^f not included in the 4.6 per cent (all primaialy "Y"^''*' ,* ^ ' Prt packing and all now or once handled by wholesale grocers) were available and included, the percentage would be many times greater. In addition to the above it should be noted that many meat Imes such as cured meats of all kinds, canned meats, ancl mixed canned meats and vegetables, as well as lard and lard substitutes (animal), were formerly handled largely by wholesale grocers and are now distributed wholesale by the packers. As showing the rapid increase of percentage of the grocery specialty sales referred to in Armour's advertisements to total sales for the year 1918 over 1916 and of produce specialties not included in Armour's advertisments, the table below is given. (For Armour's produce sales of 1915 and 1917 see Exhibit II.) Not all specialties which were handled are included, as pointed out above. For some of the items Armour & Co. reported the 1918 sales unavailable. Table 1. — Sales of certain spcrialty lines and proportion total sales, Armour £ Co., fiscal years ]91(i and 1918. [For prodace sales ot 1915 and 1917 see Exhibit II.) 1916 1918 Dollars. Per cent. Dollars. Per cent. Total sales, all lines 525,000,000.00 100.0 860,861,838.17 100 '4,231,622.62 507,294.10 1 1,103,024.70 1.554,095.31 0.8 .1 .2 .1 29,356,000.00 6,845,000.00 3,595,000.00 1,025,000.00 3.4 Fruit preserves (soda-fountain supplies) 4 Grape juice . . I 6,396,036.73 1.2 39,820,000.00 4.6 Dressed poultry 6,266,131.73 8,943,538.68 9,639,467.07 10,922,797.86 1.2 1.7 1.8 2.1 8,694,788.00 24,542,966.41 23,861,822.35 20,753,691.46 1.0 2.8 2.8 2.4 Butter Cheese Total above produce specialties 35,771,935.34 6.8 77,853,268.22 9.0 Total specialties and produce specialties 42,167,972.07 8.0 117,673,268.22 13.6 1 The 1916 sales of canned flsh and vegetables and sundries, ot fruit preserves and grape juice, are for bran* houses only. The sales for 1918 are for all selling a-en^ies. For all selling agen=i%s the sales for the fruit-preservm- aul grape-^iuice departments combined were, for 1916, $1,942,427.28. But these sales were not available separately for the two departments. ... =■ "">■ ""^'s ." The above table shows that the two groups of specialties, on which alone sales figures in dollars were available, constituted 13.6 per cent of the total sales in 1918. Other nonmeat-food specialities would increase this percentage. For the group covered by Armour's adver- tisements the percentage for 1918 was nearly four times that for 1916. One of Swift & Co.'s specialities is poultry and dairy products, lor the fi!^^i far 1918 this company reports total sales of dressed FoTnn^' ^^'*^f'^^° P°":i^5 ^gg^' 91,621,980 dozens; butter, 66,- 621,000 pounds; cheese, 64,072,000 pounds. To arrive at what ner- centage this represents of Swift's money sales, average prices mnv be applied to these quantities. The average wholesale prices ^ at Chicaoro 1 Those prices were furnished the Commission by the Bureau of I -n; United States Department of Labor. ^-Juur Statistics, MEAT-PACKIKG INDUSTEY. 25 for 1918 were, for dressed poultry, $0.2734 per pound; for butter (creamery first), $0.4728 per pound; for eggs (fresh firsts), $0.4431 per dozen; and for cheese (whole milk American twins), $0.2641 per pound. In each case the Chicago price is several cents lower than the New York price, at which much of Swift & Co.'s products sold, and the grade of butter for which the price above is given is the lowest of the three grades for which prices are furnished. Moreover, these prices are the average for the year, the low price being of equal weight to that of the high. But the heavy sales of a concern having large storage facilities, such as Swift & Co., would occur in seasons of high prices and its weighted average selling price would run higher than the weighted average of all sales, including those of wholesale houses which do not hold their products for any long period. On this basis a minimum sales figure for these four products of $110,500,000 for Swift & Co. is arrived at. The total 1918 sales for all products for this company as published in its Year Book for 1919 were $1,200,- 000,000. This gives for the sales of the four products a minimum percentage of the total sales of 9.2 per cent. "Wilson & Co., Inc., states that its specialty — the canned food, preserve, and condiment business — was less than 4 per cent of its business in 1918. But if other specialties handled were included this percentage would be greatly increased. In a representative branch- house district of this company embracing six branch hpuses the sales of dressed poultry, eggs, butter, and cheese during the six months ending April 30, 1919, amounted to 21.2 per cent of the total sales and almost 30 per cent with the items of lard compound, butterine, canned goods, and other groceries included. It should be pointed out again that each percentage given in the above discussion is on the total volume of business in all lines for the one company and not on the country's total volume of sales for the one specialty or group of specialties. It should be remembered in considering this section that any fig- ures herein given as representing the total volume of business in produce and grocery specialties controlled by any packer interest should be taken as minimum. Various selling companies whose ownership and control have been completely divorced from or have never been vested in the packer company and whose sales are there- fore not included by it are nevertheless absolutely dominated by the identical interests that dominate the packer company. Thus the sales of Libby, McNeill & Libby, engaged wholly in the manu- facture and sale of so-called specialty lines of foods, and one of the largest concerns of its kind, would not, being ostensibly sepa- rated from Swift & Co., be reported by that company as included in its sales, although the interests that control the one control the other. 26 MEAT-PACKING INDUSTBY. The sales of many other companies not ^^''^f\'!^^^llZvBiny, packer company, but controlled in the interest ot a pao ^^^^^ ^^^ should be included to determine the total volume oi i ^^^^^^^ grocery business under the control of the five gf^at ^^^^ 1/ -^t^^. It has been announced ' recently that Wilson & Co., J-nc, ing to get out of the canned food and grocery busmess, m that it is selling its stock interests in the Fame Canning Co ^^i^jh it owns entire? and in the Wilson Fisheries Co., in which it has a controlling interest, to Austin, Nichols & Co., Inc., wholesale grocer, New York City, which is beikg reorganized with a capital stock increased to 300,000 shares authorized, 150,000 of which are common, with ex- clusive voting rights and without par value.^ The preferred shares have a par value of $100. Under the plan as announced ^ the holders of the common stock of Wilson & Co., Inc., receive the privilege of subscribing for four shares of the Austin, Nichols & Co. stock at $25 per share for every 10 shares of Wilson common stock owned. There are 200,000 shares of Wilson & Co., Inc., common stock outstanding. The plan, as announced, thus gives to the Wilson stockholders an option on 80,000 shares, or a majority interest, in the authorized vot- ing stock of the new Austin, Nichols & Co., Inc. Moreover, the entire issue of common stock is placed in a voting trust* consisting of five trustees, trust certificates being given the owners of the stock in exchange therefor. These five trustees, a . majority of whom control the policy of the reorganized company, represent the financial interests involved." The president of the reorganized company, it is announced," will be C. W. Patterson, former head of the Wilson & Co., Inc., canned goods department and president of the Fame Canning Co. The directing and financing interests are in part in common with those of Wilson & Co., Inc.^ ' Journal o£ Commei'ce and Commercial Bulletiu, New York, September 15, 1919. = Certificate of Incorporation, Austin, Nichols & Co., Inc., dated August 23, 1919. ' Moody's Manual, Industrials, 1919, p. 2949. * See Voting Trust Agreement, dated August 25, 1919. 6 The following are tlie voting trustees : Harry Balfe, former president ot Austin, Nichols & Co. ; Maitland F. Griggs, former director of Austin, Nichols & Co. ; Gates W. McGarrah, president Mechanics & Metals National Bank, New York City, and until re- cently associated with Thos. E. Wilson, on the board of directors of the Guaranty Trust Co., New York City ; C. W. Patterson, former president ot the Wilson subsidiary, the Fame Canning Co. ; and M. A. Traylor, associated with packer representatives on the hoards ot directors of the following Chicago banks (see pp. 359-360 of Part I ot this Report) : First National, First Trust & Savings, Chicago Cattle Loan Co., Live Stock Exchange National, Stock Yards Savings, and Central Manufacturing District. « Statement of Harry Balfe, former president of Austin, Nichols & Co., August 1, 1919. in announcement by William Salomon & Co. ' The same four New York hanks which are so intimately related through a common Doisnnnel and a financial interest to Wilson & Co., Inc., (see pp. 341-343 of Part I of this Report) are also in the same way related to the reorganized Austin, Nichols & Co. f . nf ■ '' >f I directors, consisting ol 12 members, are C. J. Schmidlapp, vice president Chase National Bank ; J. R. Swan, vice president Guaranty Trust Co • Albert Uotcbartb, Hallgarten & Co. ; and Jacques Weinberger, WUliam Salomon & Co 'sfrylng also on this board are M. A. Traylor, president First Trust & Savings Bank, Cliica™ and associated on the bank's board of directors with Thos E. Wilson, Nelson Mnrv.^T* Spoor, and James B. Forgan, all identified with packing Interests- C W PotV ' Wilson president of the Fame Canning Co., which is now being taken o'vei- . "f^°' Austin, Nichols & Co., and Lee H. Wakefield, holder of 49 per cent o£ the WiL J;, "'''" Co., the majority interest of which is being absorbed by the new company '^'sheries MEAT-PACKING INDUSTRY. 27 Under the public announcement of this arrangement, acts under the arrangement itself will show whether there has been actual divorce- ment of Wilson & Co., Inc., from its grocery business. That the specialty field is divided is evidenced by the statement of Swift & Co. that it does not handle any coffee, rice, or cereals, and does not intend to do so, and by the statement of Wilson & Co., Inc., that it has handled a little rice and beans, but is not handling them now and does not propose to handle them again. While Mr. Armour claims for his company the largest business in cheese in the country, he concedes this place to Swift & Co. in butter and also in poultry. In cheese there is a division of factories and in butter and poultry a division of territory, but in the latter there is an apparent relinquish- ment of a considerable portion of the field by Armour & Co. to Swift & Co., as shown by the relatively small number of egg and poultry packing plants and buying stations as compared with that of Swift &Co. If Armour's grocery specialties are largely concentrated along such lines as rice, cereals, certain kinds of canned foods and cheese, and each of the other of the five greater packers concentrates his specialties along a few other well-chosen lines, the profitable fields become pretty well covered and pretty well ruled by the five. Meanwhile, that the packer is shouldering on the wholesale grocer the burden of the flour and sugar sack is made evident by the follow- ing letter to the Commission, written by the president of a large wholesale grocery company in the South : When we read in the papers over a week ago, Armour's statement that the packers were handling a lot of goods outside of tlieir line because the trade could not get them elsewhere, we thought we would write you, but concluded that it would not be of any service to you. However, we just can not get the thought from our mind. It seems to us that their handling these goods just to give the people something they could not get through the wholesale grocers, is well illustrated by the fact that before the Food Commission went into effect nearly all the packers' branch houses on this market had started handling flour and sugar, but as soon as the Food Commission pvit a maximum margin of profit on these two articles that did not cover the actual cost of handling the goods, the packers immediately discontinued handling both sugar and flour. This seems to us an excellent illustration of how much they cared to give the people goods. The wholesale grocers had always been handling these goods, as well as everything else the packers tried to handle outside of their own line, and have taken good care of the trade. They did it in good shape when the packers quit handling them, just as they did before. Packer activity in food specialties reaching out feobi distribti- TiON to manufacture. — The discussion in this section has been con- fined almost wholly to the distribution of specialty foods by the five large packers. The fact, however, should not be lost sight of that, though this expansion in distribution has already gone far and is therefore more apparent, the more marked and more significant 28 MEAT-PACKING INDUSTKY. movement jnst at present is in the manufacture of these specialty foods. More significant because all that is manufactured by the packers will, in addition to what is purchased, be distributed by them, and because also control over the distributive processes becomes more certain the nearer to the sources of production control reaches. This movement in the direction of the manufacture of specialty foods appears in the packing of poultry products obtained directly from the grower, in the manufacture of dairy products from milk bought from the producer, in the putting up of cereals and breakfast foods in packaged form, in the manufacture of butter and lard sub- stitutes, and in the canning of fruits, vegetables, fish, pickles, condi- ments, etc. In the manufacture of all these specialty lines this report shows the packers' increasing activity. In the canning of foods, the one most recent and outstanding development is Armour's proposal to finance a cooperative fruit-packing plant in California (see p. 241) and his organization in 1919 of the National Fruit Can- ning Co., Seattle, Wash., a subsidiary of Armour & Co. CHAPTER II.— ADVANTAGES OF THE PACKERS IN BUYING AND MARKETING. The Marketing Po^^eu of the Packers. Section 1. — Alarm at their competitive power. There can be no doubt about the general alarm felt by wholesalers in all sections of the country at the competitive power displayed by the packers in the marketing of foods other than those which natur- ally emanate from the packing house. Jobbers now make no com- plaint of the loss of their trade in cured meats and other packing- house products, such as canned meats, the marketing of which goes more or less naturally with the marketing of fresh meats. It is the advent of the packers in lines not related to the slaughtering business that causes so much anxiety among jobbers. This anxiety is felt, not merely by weak and inefficient firms, but by the strongest and most efficient as well. The complaint is general that the field of their operations has been restricted, that they can not hope for that natural expansion to which their energy and ability entitle them, and that, if the present development continues, they must more and more be confined to supplying their immediate localities. Among produce dealers these complaints are general ; among whole- sale grocers they are well-nigh universal ; among the manufacturers of food and related specialties there is an awakening apprehension that, distribution having been seized, manufacture will be the next field to be occupied. This fear is based upon a large number of nota- ble instances of invasion into the manufacture of prepared cereal foods, fish, spice, canned goods, and the like. The complaint is not merely that new competitors have entered these lines of trade; new jobbers may appear and new jobbing cen- ters arise without causing alarm. It is not because of superior abil- ity in packer salesmen or buyers that packer competition is feared. Hundreds of jobbers are willing to match their skill and their judg- ment under free market conditions against the skill and judgment cf the packers. What they fear is the manipulation of market con- ditions through the large buying power which comes from large con- trol of capital and credit, and through the speculative buying which often characterizes packer dealings ; they fear the packers' control of storage facilities, the superior transportation service which they have been permitted to build up for themselves, the power which comes from numerous controlled outlets and markets reached by their ped- dler-car system, their branch-house organization and kindred selling agencies. Any one of these factors would, other things being equal, make the packers strong competitors ; the combination of them gives to the packers such a power in the marketing of foods as will, in 29 gQ MEAT-PACKING INDUSTRY. the opinion of the best informed jobbers, make them ^'"^^^^""^^^Hy^^I field ttiey may choose to enter, if that' power remains unc ^^^ ^^^^ So, too, in manufacturing, the greater the packer control o ^^ ^^-^^ tribution and the outlets of trade, the easier their entry i ' conquest of the field of manufactured specialties; a movement tnai is now well under way. . Their buying power.— What the buying power of the great pack- ers is, so far as it rests upon their control of capital, is indicated by the consolidated balance sheet of the five companies, as of November 2, 1918. It shows outstanding stocks of the par value of $307,201,800, surplus and undivided profits, $248,104,223, or a total of $555,306,023. Their combined borrowings of this date amounted to $746,841,740. The details of these outstanding obligations are shown in the follow- ing table: Table 2. — Biff packer control of capital. (From the Consolidated Balance Sheet as of Nov. 2, 1918.] Armour &Co. Swift &Co. Morris &Co. Wilson &Co.,In3. The Cudsihy Packing Co. Big Five (total). 1132,674,410 18,593,422 106,280,600 1188,865,284 69,504,073 31,368,000 $44,769,959 3,420,215 10,730,000 $54,719,601 17,932,251 15,645,186 $31,455,608 12,306,886 8,585,245 $452.475, 882 Accounts payable Bonds and mortgages. . . 121,756,847 172,609,031 Totalliabilities 237,548,432 289,728,357 58,920,174 88,297,038 52,347,739 746,841,743 3,725,400 100,000,000 "3,413,816 10,476,400 20,000,000 15,802,119 8,550,500 11,449,500 15,467,283 22,752,300 150,000,000 96,912,933 3,000,000 46,508,065 284,449,500 Surplus and undivided profits . .... 248,104,223 Total net wortii 177,139,216 246,912,938 49,508,065 46,278,519 35,467,285 555,306,023 Totalliabilities and net worth... 434,687,648 535,541,295 108,428,239 131,575,557 87,815,024 1,302,147,703 It is little wonder that jobbers and manufacturers of foods so fre- quently point to the " unlimited funds " of the packers as one of the sources of their competitive power. No one can question the right of the packers to enjoy the advantages which come to them because of good standing in the money markets. It is important to note, how- ever, that their position has not been gained by success in merchan- dising in groceries and produce or manufacturing of specialties, but by success in the more or less monopolistic business of slaughtering, and that the power so gained is being used to establish themselves in other lines of trade. There are two ways in which the strong financial position of the packers may give them an advantage: (1) In secur- ing a lower interest rate than their competitors have to pay and (2) in having a more constant supply of funds, and generally " unlimited " funds, for carrying out a buying policy once embarked upon. The average rate of interest paid by the Big Five for their fiscal year 1918 on all interest-bearing obligations was 5.9 per cent. While doubtless there are jobbers in favored localities who enjoy as low a rate of interest as this, there are many who have to pay a substan- MEAT-PAGKING INDUSTRY. 31 tially higher rate. The jobber is confined to his own communitj^ for his supply of funds; if the rate of discount is high, he has no recourse but to pay it ; if there is a stringency, he must curtail his operations. But not so with the packers ; they borrow in every market at home and abroad ; their banking connections provide an advantageous con- tact with finance at widely distant points, so that if the interest rate is high in one market and low in another, they may take advantage of the lower market; if there is a stringency in one market and money is easy in another, they can turn to the more favorable market. These are advantages which follow naturally from permanently successful operations on a large scale, extending over a wide territory, and the packer has as good a right to them as he has to carry on the larger scale operations out of which they grow. But these successful large-scale operations, it may be noted again, are due in no small part to the packers' monopolistic position in meat packing. Another source of buying power is found in connection with the organization built up for selling fresh meats and packing-house prod- ucts. The packers have access to all the marketing agencies open to the jobber, such as the brokerage and conunission houses, and in addi- tion they have their own extensive organizations through which pur- chases as well as sales are made. Under such conditions the large concern is likely to have a distinct advantage over small competitors in securing early information about goods offered for sale. In periods of short supplies, such as the last three or four years have been, this advantage is often decisive. So, too, at such times is the advantage which comes from extensive credits. " They can simply buy us off our feet," said a leading wholesale grocer in the Middle West. In periods of short supplies and rising prices it has been usually a safe policy to buy heavily, and the more nearly a monopolistic control is secured," the safer becomes a bold buying policy, "A notable example of such operations is seen in Armour & Co.'s rice dealings, described in another part of this report. Their carrying power. — In the intermediate stage of merchan- dising, between buying and selling, the packers have points of ad- vantage. Here agam their large control over capital is effective; sales are not likely to be forced upon them because of a lack of funds. Their control of storage facilities constitutes another advantage in the holding of stocks for favorable market conditions.^ The control of suitable handling and transportation facilities gives distinct and measurable advantages, as has been shown elsewhere, and it is neces- sary here only to point out that the transportation system of the packers magnifies their buying power, their holding power, and their selling power. > See sees. 13 to 19 of this chapter. 32 MEAT-PACKING INDUSTBY. Thexh SE..ING POWKH.-The packers regard at as h^gWy ^^^^re ,nenta.y to the efficiency of their marketing o^gam^at on that ^hei e should be so much alarm over their progress m marketmg nonmeat foods. If, it is said, no "unfair competition " is f o^^^;' ^^e plaint against them resolves itself into a charge that the P^^ke ^ aie fficient merchants; that they can sell goods more f '^^P/y /^ *^\%^°^; sumer than their competitors can. While no For further details of the regional distribution of branch houses, see rt. Ill, Chap. Ill, See also tor their location by cities Exhibit III. The difference in numbers given in the two lists is due mainly to the fact that the tables in Pt. Ill were made to show the out- lets for meat, while the figures in the present chapter and in the exhibit include all known outlets with a branch-house organization engaged in the wholesale handling of foods. In a few instances those reported as " retail markets " have also been included. The figures for the Big Five in this chapter are for 1910, unless othei'wise stated. MEAT-PACKING INDUSTRY. 33 Table 3. — Bmnch-house and car-route sales of the five large packers, by com- panies, 1916. -.1103 • Domestic branch house and car route. Domestic branch house. Car route. Swift & Co 4360,363,646 206,006,904 120,505,514 83,317,056 84,328,292 5302,389,590 247, 143, 503 97,613,613 65,824,591 70,372,254 $57,974,056 18,863,401 Morrls&Co Wilson & Co., Ino 17,492,495 13 956, 038 The Cudahy Packing Co 914,521,442 783,343,651 131,177,891 The branch house is a natural outgrowth of concentration in the packing industry. With the disappearance of local slaughterers and the development of the refrigerator car, the need arose for some kind of marketing agency for handling fresh meats at the consuming centers. The need was at first met by a body of commission mer- chants and independent wholesalers. The wholesale grocers had long played a conspicuous part in the distribution of cured meats and other products of the packing houses, but not being fitted for handling fresh meats they soon lost their trade in cured meats. As time has gone on the packers have more and more assumed the function of wholesaler, not only of their own products, but of purchased goods as well. The advance beyond distribution into manufacture is a later development, and since it has begun the two have progressed together toward monopoly. It has not always been easy to determine among wholesale agencies which were packer controlled and which were not, but by 1888 the Armour interests were known to be operating 11 branches, Morris 9, and Cudahy 1. The number of Swift's branches at that date is not known. Beginning the next year the number of these establishments began to increase rapidly, and by 1899, the first year for which the number belonging to Swift & Co. is available, the Big Five were operating 544, by 1908 the number had risen to 887, and in 1912 it stood at 1,110. As already stated, the number operated by the Big Five and their controlled companies in 1916 was 1,188. The invest- ment involved in this number of branches is not available ; but it can be given for those operated by the Big Five and their 100-per-cent- owned subsidiaries in 1918. The " branch-house investment," as shown by the consolidated balance sheet for these companies Novem- ber 2, 1918, stood as follows: Armour & Co $98, 22.5, 023 Swift & Co 82, 669, 274 Morris & Co 18, 504, 133 Wilson & Co., Inc 20. 986, 912 The Cudahy Packing Co 19, 667, 092 Total Big Five 240, 052, 434 140361°— 20 3 g4 MEAT-PACKISG INDUSTRY. The spread of ttose investoent figures can not be given for aU the companies, but the large items in fee branch-house inTestment oi Armour & Co., for August 22, 1918, can be given as follows^:^ ^^^ ^^^ Fixed investment ^' ggg' oj^q Equipment '_'_~___V_ I 4o' 831,' 570 Products - — ___ 21,744,260 Acaoionts receivable ' „„„ g„ Bills receivable — ^^^ Q^g Miscellaneous supplies Beat«^ch-hotjse orgaotzatiox.— These branches are something more than selling agencies. They are factories in a way, where, for ex- ample, meats are cared and sausage manufactured^ they are cold storages for holdiog stocks for limited periods; and, so far as goods are withdrawn fi'om them to ship to siuTOunding territory or for sup- plying car- route cars, they may not improixsriy be called warehouses; but primarily they are wholesale marliets. Each branch house has its own manager, oifice force, and sales and delivery organization. The branches are grouped into districts and placed under the supervision of a district manager or superintendent. While some apparent independence in the management is given by the methods foJJowed by various companies, each branch is just what the name implies, not an independent, self-directing organization but an integral part of a ^'ast system of distribution acting under a common authority. Tlie meats, especially carcass meats, are often handled by the branch on a commission basis, the commission ranging from 48 to 65 cents per hundred, but this does not mean that the man- ager is acting in the capacity of commission merchant. He, like all the other branch-house employees, works on a salary basis, and the commissions merely supply means for paying the expenses of the hoTise. It is desirable from the company's point of view to make the mana,ger feel that the business is his in the sense that he must make it pay. Wilson & Co., Inc., since 1916 has followed the plan of assigning a definite capital for each branch, according to its needs, and charging interest thei-eon. The circular announcing this changed pel- icy illustrates the way in which this sense of independence is en- coui-aged : Effective with the Jnne, 1916, period, all branches * * * of this compaay will ibe put on a capitalized basis. Under tJiis new system all branches will I3a.v interest on the capital used in operating the business. Tliis, jou understand, In- cludes investment in the huildlng, fixtures, equipment, etc. Wliere 'buildings are not owned by the company, branches will be diarged with the rent and wlH pay interest on the fixtures equipment owned by the eoaipaHy. Hie company will draw drafts on branches for product shipped as follows : A. products : ' Full amount of invoices. B. products : An Arbitrary Amount. Tliis will make it necessary for all branches to watch their collection^; vei-y closely, so as to have money in tlie hank and be prepared to meet drafts as they arrive. • " B. pi-oUncts " TTtth this company ini!aiis mainly ta-roass meats ; " A. proa-nrt.; " nthPr than carcass meats. f'^um-ts otaer MEAT-PACKING INDUSTRY, 35 Tlie administrative cliarge wliicli lias been paid in the past will be discon- tinued. Under this system the company will furnish yon with building, equipment and capital with which to do business. I will expect you to handle your branch on a profitable basis. Every branch will be operated on the same basis as an in- dependent concern. Every item of expense is under control of the manager. Any losses shown by the branch will be an actual loss to the company. We will expect all managers to carefully consider every item of expense. We fls'ure, on this system, the results sliown by the branches from now on will be due entirely to the management of the same. We have confidence in the managers and are looMng forward to profitable results for the balance of the year. This new system has been adopted on the recommendations of Mr. Wilson, who feels with this system a manager is in a position to handle his branch in -the same manner in which he would if he owned the business, as he controls the capital involved and tlie necessary expense, to operate his business. On the new system you wUl be charged 5% on the capital invested. In addition to this all operating expenses will be taken care of by the branch as in the past. We figure this new system is going to be a great help to our business in several ways. We figure in doing away with this administrative expense that branches are in better position to take on some business on a small margin of profit, which will not only enable them to increase their volume of business, but it will increase their earning as their future expenses in tlie future will not be affected, as they have been in the past, by increased volume, due to the basis of figuring our administrative charges. ^ * * An example of the way the capital of the hranch is determined by Wilson & Co., Inc., is shown in the following extract from a report of the General Auditing Department on the " Capital Hequire- nients of the 45th St. [New York] Provision Department," dated February 18, 1918 : We have surveyed the figures covering business done by the 45th St. Provision Dept., for the year of 1917 and report as follows: Total sales for the year wer'e $974,652.93 The average days outstanding were 8.06, thus making a turnover of 45.28. This gives us as capital required to carry outstanding accounts, the sum of $21,525.00 The average inventory for the year was $41,375.93, which figure is not true at the present time, inasmuch as the freezer inventory has been reduced. We have therefore based our calculations of average inventory on the figures for the last 6 months of 1917, which results in an average of $28,060.56. We thus find a net capital required of $49,585.56 ; for our purposes $50,000.09. We believe these figures will be satisfactory to all concerned and suggest that they be continued until the close of .Tune period, at which time the re- quirements are to be again reviewed and any necessary adjustments made. * * * But, as a matter of fact, no real independence exists. The branch- house manager is charged or "pays" prices fixed absolutely by his company for goods of the company's production. He is not at liberty to buy where he will; lie is not free to pursue his own selling policy; but is subject to instructions from the district superintendent, the district inspector, and the managers of tlie various departments from which he draws supplies at the plant. The coordination of the sell- ing organization within itself and with the manufacturing end of the business is made an objective of the packers. This is illustrated in a 3(3 MEAT-PACKING INDUSTKY. circular of Morris & Co. to its branch house managers and sales- men announcing a visit of the department managers m IJH ■ The success of Morris & Company and therefore yonr success, '■.®f_*® '"g^°"^ hands. It Is at your end of the business we have to depend to mc ^^^_^ volume. We can buy our products and manufacture them on as go o as anyone giving equal quality. One strong point in your ^"°^«^^^^^^ °"^ success is cooperation. The reason for this trip our Department Man.i^ers are making is to get better acquainted with you, so they can cooperate wi^ you more closely and in this way increase your sales and prohts^ It is necessary to Iveep in close personal touch with our different Department Manageis. If om products are not arriving In first-class shape, if the quality is not what it should be, if YOU are out of line on prices, if competitors are selling products that we do not at the present time manufacture, it is necessary that you should tal^e the.se matters up with our Department Managers, so they can put you in line to do business. Our District Managers are in close touch with all houses and therefore are able to see things on a broader scale and give profitable advice to Bi'ancli House Managers. Strategic position of the bramch house. — These houses are some- thing more than branches. They constitute an important part of a great system of production and distribution. To say, therefore, that Swift & Co. has 415 branch houses and that Armour & Co. has 370 such houses and employs in connection with them more than 2,400 salesmen does not disclose the full strength of the big packers' posi- tion in the wholesale market. The manner in which the houses are located and supplied to meet every grade of want, the opportunities they furnish for gathering market and trade information, the way in which they are connected by every means of communication with one another through the district superintendent and with the central office by private wires, the mails, the telephone, and by weekly and monthly reports, give them a selling power more than proportioned to the number of outlets they furnish. Accepting the fact of con- centrated control over the production of meats, no one will raise any objection to the size or efficiency of the organization built up for marketing products of the packing houses ; but developed for the pur- pose of making outlets under their own control for their fresh meats and packing-house products they have become also the centers of dis- tribution for other foods, many of which they have only recently begun to produce and many others which they do not produce at all. During a period when the general tendency has been to increase the number of wholesalers and to restrict the area within which each house operates there has grown up in competition with these more or less localized dealers the most wide-spread and powerful sellin<' organization in the world. The big packers do not hesitate to say that the branch house has been an essential factor m the expansion of their industry and i<= IS now essential to the maintenance of it. The important thing to be noted here IS the position in which the competitors of the packers who do not handle meats are placed by reason of this widespread ovJZy^ tion. Some discussion of its economies is given below. ''^ MEAT-PACKING INDUSTRY. 37 SuBSTOCKS. — In addition to the full-fledged branch houses some of the companies have outlets closely associated with the branches and subsidiary to them. Swift & Co., for example, has a considerable number of " Sub-stocks "• — that is, houses with an organization in all respects like the branch house, except that they have no accounting department. Sales tickets and reports of all kinds are sent to a neighboring branch, through which all accounting to the district office and the Chicago office is done. In 1918 the company had 39 of these " Sub-stocks ", 24 of which were located in the South and Southwest.^ " Stobage and delivekt " HOUSES. — Still another outlet closely asso- ciated with the branch house system is found in the " storage and delivery " houses. These are merely the establishments of local merchants who enter into contract with the packing company to store goods as shipped and to deliver them to customers secured by the company's salesman attached to a branch house having juris- diction of the territory. The " storage and delivery " service is performed on a percentage basis. The merchant, in addition to performing this service, may buy and sell on his own account, but he may be regarded as acting essentially for the packer. He is not an ordinary commission merchant. The company secures the orders and makes collections. This arrangement enables the company to reach regularly, at carload rates, consuming centers which could not support a branch house or could not do so without cutting into the sales territory of neighboring houses.'' Section 3. — Hotel-supply companies and the hotel trade. In addition to the branch-house system the packers have access to the markets by all the avenues open to their competitors such as the hotel-supply companies, some of which they own, and wholesale, commission, and brokerage houses. The hotel and restaurant trade seems to be a part of the food distributor's business that requires special care. It stands midway between the retail and the whole- sale trade. In character the hotel is an ultimate consumer and might be expected to buy its supplies from retailers, as other con- sumers do; from the point of view of volume and economy in de- livery it may, and often does, surpass all but the largest retailers and may claim the right to buy at wholesale prices. There is every indication that the buyers of this class understand the strength of their position and that the packers, like other distributors, employ •i good deal of strategy in securing these important outlets for their goods — primarily for their meats, but for other lines as well. In recent years the packers have acquired or organized special houses under the name of hotel-supply companies in the larger cities for handling the hotel and restaurant trade. Examples of ' For a list o( those houses, see Exhibit III B. " For a list of the " storage and deliveries " of Swift & Co., see Exhibit III C. 38 MEAT-PACKING INDUSTRY. these in New York are the Metropolitan Hotel Supply Co., owned and operated by Swift & Co.; the Atlantic Hotel Supply Co, operated by Armour & Co.; the Gotham Hotel Supply Co., by Wil- son & Co., Inc., and the National Hotel Supply Co., operated by Morris & Co. In Philadelphia, Boston, Washington, D. C, Los Angeles, and Jacksonville, Fla., similar selBng agencies are em- ployed by the packers for securing the hotel, restaurant, and lunch- room trade. Purchase or hotel stock. — Just as half a century ago the an- thracite carriers embarked on a scheme of securing tonnage for their roads by the purchase of mines, so some of the big packers seem to be embarlring on a policy of huying stock in hotel companies as a means of securing these important outlets for their tonnage. The agents of the Commission found it difficult to secure admissions from the managers of hotels in which packers own stock that such stock ownership in anj way influences the purchasing policy of the hotel ; stewards, it was held, buy where they can get the best terms. The correspondence of Swift & Co. leaves no doubt, however, as to the object that company has in buying stock in hotels, or what its opinion is of the purpose of other packers in making such pur- cliases. On June 16, 1917, Edward F. Swift wrote to L. F. Swift as follows : I am not In any way agitating tlie question of Swift & Company taking stock in hotels to influence their supplying the same, but as a matter of informatiOB will he pleased to have you advise me what youn understand Swift & Company'^ policy is. Also, irrespective of the above, what you know about new New York Central Hotel that is being l>iiilt in New York City near the New York Central Station, as to whetlier any outsiders have been asked to take stock in this hotel, and if you know whether the sui^plies will be bought on the open market or otliei-wise. On June 20, 1917, L. F. Swift replied as follows : Answering your letter of the 16th eoncemmg Swift & Company's policy in connection with taking stock in hotels, I will go back to 1910, Which was' the time this first came up. McAlpin: I highly recommended taking $50,000 stock in the McAIpin Hotel, which carried with it their entire business. It was strongly objected to by C. H. S. and L. A. Carton, and you voted with them, so that I, unfortunately, retracted my position. I should have forced it through. Sol, Zahn the hotel man in New York took what we refused and I don't doubt Jiis profits are $50,000 annually. No contract for supply. Batmore: The next was the Biltmore Hotel. Armour took stock to the amount of $200,000, but we had no opportunity. No contract to supply their ^::ed'$50.io rnnuX'* '"*' '''' '"'' *'' '"'^- ' ^^'''^ '''^'' "^'^^ Commoaore: The new hotel you speak about on 42nd Sti-eet is the Com- modore. Edwards, Moon, and I have seen Mr. Bowman five or six times and begged hmi o let us become stockholders, but he has recused dairn' tt^^e stock IS all sold or something of that kind. Armour has, I think $500000 While there as no contract to supply the meat, it is assumed he ^ets t There Mnn° ^°'"\* '^^^that the stocks in both of the above hotels ^vilf be m^ofitabr Moon sees Mr. Bowman almost every day. inontaDle. MEAT-PACKING INDUSTKY. 39 Manhattan: The same owner has taken on the Manliattan Hotel which the Metropolitan [a Swift concern] supplies to the extent of about $500 per week, which is quite small. We are trying to get more but can not get it away from Armour. Ansonia: » » * Capital — $100,000, 7% cumulative preferred, $50,000 com- mon. John McE. Bowman, President, and Wm. J. Cummings has recently acquired a stock ownership, and in order to assist him and Mr. Bowman to straighten out the affairs of the hotel, Swift & Company have loaned them $75,000, and some of the individuals $25,000 additional, with the understanding that we will get their business. Pennsylvania: The Pennsylvania Hotel in New York City is to be run by Mr. Statler. Mr. George Edwards and I have seen him several times and have a partial promise of his business. But he does not ask anybody to take stock. Equal Commodore in size. Policy: As to our policy ; I should say every opportunity we can get to do any- thing like the above, we would better do It. There are a good many questionable hotel enterprises which I think should be turned down, and I have recently turned down three or four ; The remainder of the letter reviews the facts about four well- known hotels — two in New York, one in Boston, and one in Balti- more. It may be said that according to information given the agents of the Commission by the secretary of the Beau-site Co., which oper- ates the Biltmore Hotel, Mr. Armour owns only $70,000 of preferred stock out of a total capital stock of $3,000,000 ; that he owns $750,000 preferred in the Bowman Hotel Corporation, which operates the Commodore Hotel ; and that he is interested in the Manhattan Hotel through ownership of stock in the Armbow Operating Co., which operates the hotel — a name suggestive of the sole and equal owners, Mr. Armour and Mr. Bowman. The following extracts from the Swift correspondence throw fux*- ther light upon- the Ansonia Hotel transaction referred to in L. F. Swift's letter. On April 11, 1917, L. F. Swift wrote L. A. Carton, treasurer of Swift & Co., that for personal reasons he and other mem- bers of the firm had advanced $25,000 in connection with the Ansonia, and that he found when he got into it — That Mr. Jolin McE. Bowman, head of the Biltmore, Commodore, and Man- hattan Hotels was behind the Company. He now puts up a proposition for us to take $75,000 cumulative preferred stock, to be retired $10,000 each year, in return for which we will receive the Ansonia Hotel business and it seems to rae quite necessary that we do it. You know that I tried to make an investment in the Biltmore and Commodore Hotels, hoping to get their business, but it was impossible; Armour had ar- ranged it in advance. On April 18, 1917, instructions were sent to the company's repre- sentatives in New York — to approach Mr. Bowman and make the best terms you can so as to secure Swift & Company in their advance to him of Seventy-five thousand dollars and to get his trade in return. Satisfactory terms were made and the $75,000 advanced; but it was not till toward the end of the year that arrangements were per- fected for starting the hotel under the new management. On Sep- 40 MEAT-PACKING INDUSTRY. tember 24 James P. Moon, for S^vift & Co., wrote the vice president of the hotel company : , c, „w m YOU have met Mr. T. P. Kidd. Manager of the Metropolitan Hotel S^PP fj'-' through Whom Swift & Company would ^^'\^Z"\\'lZZXt^o7nnLn Swift's products to the Ansonia Hotel; and Mr. J. P. ^^^^"P"'^*' ^°;, „^^ „ yo^ Street, New York, manager, Libhy, McNeill & Libby, for such supplies as you may require from them. On the 28th the vice president replied : * * * The moment our new company is started, I will notify Mr. Kidd and Mr Davenport to call on m^then we will commence giving you some sure enough " business. In fact, every dollar's worth that the Ansonia. buys m your line— will be bought from you. The correspondence of Swift & Co. shows that the purchase of stock in other hotels was considered as a means of securing these im- portant outlets for their products. During the summer of 1917 the question of taking stock in the United Hotels Co. was considered. This company is the owner of a line of hotels in medium-sized cities, and planned to supply their own and other hotels with all kinds of furnishings. On September 18, 1917, L. F. Swift wrote E. F. Swift as follows: I think the time has come when Swift & Company have got to adopt a decided policy about their hotel business and not have any more of this happy-go-lucky way. * * * Now comes the question of the United Hotels Company, who have hotels in the following cities; Birmingham, Ala., Erie, Pa., Hamilton, Ont, Newark, N. .T., Peoria, 111., Syracuse, N. Y., Utica, N. Y., Worcester, Mass. I understand we can get their business by taking $100,000 preferred stock. * * * Here are eight hotels fairly started. It is quite different from a new hotel which has not started yet,— a good many of which I suppose we would, from necessity, have to turn down; but anything with the right earmarks, like the " Washington Hotel " now being built, should, in my opinion, be ac- cepted. * * * A conference a day or two later convinced Mr. Swift of the sound- ness of the Hotels Company, but there were important questions of trade policy that caused further hesitation. Some of Swift & Co.'s customers, two of which there had been serious talk of taking over, were selling the Hotels Company and probable complaints were fore- seen. Mr. L. F. Swift suggests on September 20 : * » * ^ve might take this investment, giving them the cash by October 1st, which is the time they want it, and form a policy on the other questions open in the meantime. We need not try to press any advantage from this stock during the months of October and November if we didn't want to, and use it when we needed it and had a policy formed. * * * Mr. Charles H. Swift was in full accord with other members of the firm as to the purpose of stock purchase in hotels and as to the de- sirability of having a definite hotel policy. On September 18 he wrote L. F. Swift as follows: MEAT-PACKING INDUSTRY. 41 * * * I agree fully that Swift & Company should decide upon a policy in regard to these investments. The opportunity before us of the United Hotels Company is a good illustra- tion to work on. I do not know of any other field where we could get as much liotel business for as moderate an investment as is indicated in this case. I understand they would like us to take $150,000 preferred stock instead of $100,000, as you suggest ; and I shall be very glad indeed to see the policy worked out accordingly. In the light of the Swift letters quoted above and in the absence in this voluminous correspondence of any conditions as to prices upon which the packer secures the trade of a hotel, it may be assumed that, so far as this form of control over outlets for goods extends, it places distinct limits upon the field of competition. It is a matter of concern, therefore, to other dealers in foods whether markets are to be secured in this way. It is also a matter of concern to other stockholders in the hotel companies who have nothing to sell. It is a matter of concern to consumere that the supplies for the hotel they patronize are arranged for on the basis of stock ownership of a little stock rather than on the basis of competition. Under such circum- stances the limits set upon prices are those to which monopoly every- where is subject rather than those fixed by competitive forces. Section 4. — Other marketing agencies. Wholesale, commission, and brokerage houses. — Historically, these were the agencies first employed to sell the products of the packing house when the process of centralization and shipment un- der refrigeration began to lengthen the radius of the market for sucn products. For the small packers and other manufacturers of foods they are still the main outlets to market; and, notwithstanding the elaborate system of distribution built up by each of the big packers, they, themselves, also continue to make extensive use of them. While no extended study of sales through these channels has been made, a few details will illustrate their use. Armour & Co. reports consignment sales in 1916 amounting to $15,498,494, of which $9,716,736 represented edible products. A list of the company's consignees as far as ascertained, 22 in number, is given in Exhibit III D. The list for Swift & Co. in 1918 shows 17 regular consignees, and Morris & Co. reports 7 such consignees in addition to those bearing the name of the company. The packers also make use of the brokerage houses, though no information is available to show how extensive it is. The corre- spondence of Armour & Co. shows that in such dealings they expect and sometimes receive preferential treatment. In February, 1918, the district superintendent of branch houses in an eastern district wrote the canned food department that he had been buying through a broker who had control of the output of 200 canneries, but had been unable to get any commission rebate : Our people nere Via\e had up Che question of a split of commission without success. It occurs to me that one reason they are so arbitrary about It 42 MEAT-PACKING INDUSTKY. is that they are sending it to you direct. * * * if they won't split the commission, we are naturally going to throw all this business we can to peo- ple who do. By the end of March the brolrerage company, which had never be- fore given a trade discount, agreed to give to Armour & Co. a discount of 1 per cent on all purchases made througli this particular office on the understanding that their brokerage should be paid in full by Armour & Co. and the rebate settled each month by check direct to Armour & Co. in order that the deal might " be kept confidential." The board of trade offers another avenue to market. This outlet is relatively more imiDortant to the small jDackers than to the big companies. The big companies use this agency freely for making purchases as well as for making sales. The deliveries of Armour & Co. amounted in 1914 to $769,328, in 1915 to $507,142, in 1916 to $4,867,363, while their purchases for the same years were $568,657, $2,724,160, and $158,976, respectively. The deliveries of Swift & Co. in 1916 amounted to $1,030,198, and purchases to $10,070,305. The Cudahy Packing Co. in 1914 purchased 15,162,749 pounds and de- livered 1,046,673 pounds on the board of trade, and in 1916 the pur- chases and deliveries stood at 3,408,113 pounds and 3,282,370, respec- tively. Selling agencies of conteolled companies. — The sales of many of the products of the packers are made by controlled companies which manufacture or buy them and sell direct to the trade. If the company manufactures, the products may be handled through branch houses or other selling agencies of the principal packer company. A list of Big Five companies producing or handling goods not de- rived from the slaughtered animal is shown in Exhibit IV. Foreign outlets.— The information collected concerning the for- eign outlets for the Big Five is incomplete, but some data are avail- able to illustrate the importance of the foreign marketing organiza- tion. Exhibit III E gives a list of foreign selling companies and a list of foreign branch houses as far as reported by the companies, but the 1st of branch houses especially is known to be incomplete. A British Board of Trade report of 1909^ shows that at that time Armour & Co. was known to have four branches, the Swift Beef ?'w Curvv^T' ?M 2?- *^'''' *^' Hammond Beef Co. three, and J W. Curiy & Co., Ltd., then supposed and now known to be a Swift concern, had five shops in Smithfield Markets in London. Thi was a total of 21 stalk out of 344 stalls in that market. In 19lT SwSt Bfefco r °^"1 n^°^' '' *^" ^^^^-^ Government,-' the bwitt Beef Co., Armour & Co., and the Morris Beef Co had 27 ^'^^^ii^ii^^^ii^^!^!!^^^^^ trust quesdon 1 = A report by Mr. Cabbul^trtt h?gh "— "sVn t Z^^^ '"'■ ""'^- '^°^- the Central Markets Committee of the CorooTt „n °f t'., .! "?? ^ '^*"''" Prepared by ioi^^cr^s^erit.^-' oommis.o^.-ortbrM:ft!r.;i^^ ^^:t^^i -- MEAT-PACKING IKTDUSTEY. 43 Great Briiaiii, published by the British Oovernmeiit in 1919, in speaking of the control of imports by combinations abroad, shows a much, larger number of outlets controlled by American companies ijian had previously been reported. The report says: Imported meat is au outstanding exampla In the year before the war neai-Iy 60 per ceat of the imported beef supply of the United Kingdom was controlled at its places of origin by the American Meat Trust which furtlier had a consideralile liold on tlie meat distributing trade in this country, having 144 wholesale branches in 64 to^vns, and about a thousand retail shops.' Eetail markets. — An interesting feature of the situation in the United Kingdom is the development of a large number of outlets through retail houses. No such development has been found to have talcen place in this country. The packers do maintain retail marliets at a numher of their plants primarily for the convenience of their employees, and a few authenticated cases liaA'e come to the aitention of the Commission of packer ownership of retail stores elsewhei^. The Union Meat Co., controlled by Swift interests, re- ports that it owned and operated three retail markets in Portland, Oreg., in 1918. The Cudahy Packing Co. reports the operation of a refaiil store at Los Angeles, Calif., under the name of the Palace Market, Meat »* ^e common or t,T>ical figure re- an actualexpense or cost. comparative purposes, though -not m all cases to be regarded as * Figure represents yearly turnover. In attempting to consider these figures one is met by the difficulty tenXrThI bT'h r ""'^^" °' '''' ^'^^ accounts iS^ tempted. The branch houses are part of a great system of pi-oduc- MEAT-PACKING INDUSTRY. 51 tion and distribvition, and their expenses do not represent the com- pany's cost of marketing the goods which pass through them. The expenses given above, for example, do not include the cost of maintaining the district superintendent's office, nor any part of the expense of the branch-house department at the main office. These six branches "purchase" three-quarters of a million of goods per month, but no buying expense is shown. This is due, in part, to the fact that nine-tenths of the purchases are plant purchases. And to the extent that these plant purchases are company products there is a clear merchandising advantage; neither the company nor the branch has the expense of seeking out and inspecting supplies. But a considerable portion of these purchases are outside products in- volving a buying expense not shown in the branch-house figures. In the same way the omission of advertising expense is noticeable. This is not usually a heavy item for wholesalers in foods, but, so far as the packers' advertising campaign of the last year or two is in- tended to attract purchasers, the expense is a merchandising cost, no part of which is shown in the branch-house figures. Another item of more weight in the list of expenses is the so-called interest charge, which, though not in all cases to be regarded as a cost or actual expense, is included here for comparative purposes. This item for the six houses amounts to $23,150 for the six months and con- stitutes 0.497 of a cent per dollar of sales. The common figure for the wholesale grocers is three times as great (1.5 cents). This, for the grocers, is the real imputed interest expense. The branch-house figure shows the branch-house but not the company expense. The branch is charged interest on the branch-house plant, when owned, on equip- ment and on working capital employed. The interest on working capital is the heavy part of this item, even when rent is interpreted as interest. At Branch No. 1, with average sales of $170,000 per month, the outstanding accounts average somewhat less than one-half that amount. But the branch is charged interest on the goods only while they are in its possession and during the period pending collection; the interest charge on goods while in possession of the company, fre- quently during the far greater part of the life of the commodity, does not appear anywhere as a merchandising cost. If the exact truth could be shown, however, it would doubtless appear that the grocers' interest charge for merchandising is greater than that of the packers, on account of the longer credit given by the grocers. The practice of giving long credits results not only in a heavy in- terest charge but in a considerable expense in another direction. The grocers are at a disadvantage with the packers, if the figures in the table may be regarded as typical, in losses from bad debts. They lose 0.3 of a cent per dollar of their sales, while the branch houses lose 52 MEAT-PACKING INDUSTRY. but half that amount (0.157 of a cent per dollar). Wholesale grocers sometimes complain that the packers by reason of their position in tne meat industry have been able to force upon retailers a promptness in settling accounts ^Yhich they, owing to the traditional credit relations between jobber and retailer, can not secure. But, it must be said, it the monopoly power of the packers is used in no more socially injurious way than to shorten the term of credit from a month, three months, or six months, to seven or eight days their power would not be a menace. It is one of the hopeful signs of merchandising every- where that dealings are approaching more nearly a cash basis. Other items are open to criticism similar to that passed upon the interest charge. The rent and storage charges of the branch houses combined (0.333 of a cent per dollar) almost equal the rent of the grocers (0.-4 of a cent per dollar). If the cost of housing goods before they reach the branch were added, the cost to the packer would doubtless exceed that to the grocer. Refrigeration, already a heavy merchandising expense for the branch house, would be mate- rially increased if the company expense properly chargeable to mer- chandising were added. A wide disparity in taxes between the grocers (0.2 of a cent per dollar) and the branch houses (0.039 of a cent per dollar) is to be noted; though it is possibly explained in part by the larger ownership of plant on the part of the grocers, an interpretation which might more readily be adopted but for the large item of rent in the grocers' expenses. After all allowances are made, however, the facts if fully known might well show that on the average a given volume of sales can be made at less expense by the packer than by the wholesale grocer ; but even so, the efBciency of the packers in handling nonmeat prod- ucts is not established. The packers do not keep cost figures for handling specific lines of goods in their branch houses. The cost of handling meats is doubtless lower than that for other lines. The prices at which they sell groceries have frequently caused the jobbers to raise the question whether the packers load their meat with much more than its proper proportion of expense. Nq statistical informa- tion has been secured on this point, but it is clearly implied in a recent statement by the president of Morris & Co. that the jobbers are right in their surmise. He says : It is a fact, if that be an ofEense, that the pacl£ei-s have an efficient means of distribution, and as they already have a fixed carrying charge at their branch houses, additional lines of goods can be carried and sold very cheaply. This and similar utterances from other packers seem to show tliat they do not rely upon their efficiency in handling groceries to win for them a footing in the marketing of these foods, but upon the organization built up for marketing products which naturally appeal MEAT-PAGKING INDUSTRY. 53 for favorable treatment from the carriers and over which they exercise a more or less monopolistic control. Low prices to the consumer made possible in such ways are not a social advantage, but may readily be made the instrument for secur- ing a dominating control of successive lines of goods, after which it may be confidently expected that such lines will be made to bear at least their proper marketing expense and that prices will be raised accordingly. But aside from that no lowering of price has been found to result from the adventure of the packers, from time to time, into new lines of manufacturing and merchandising. The manu- facturers of foods, and of food and other specialties and their pur- veyors are, generally speaking, determining price levels through competition. As their positions are undermined, monopoly looms. Section 6. — Continued expansion to be expected. The reason given by the packers for taking on the merchandising, and, more lately, the manufacture of new lines of goods is that it is done in the interest of efficiency — presumably greater social efficiency. As the number of lines a car-route salesman has to sell -is increased his cost per unit of sales is lowered; when for seasonal or other reason there is a falling off in the main lines of business the way is open to keep down costs by pushing the sale of specialties. It often happens that a packer salesman visiting a town having only one or two meat markets will, by including the groceries, drug stores, and soda fountains in his calls, reach more dealers than any other class of traveling salesmen. The packers seek a better utiliza- tion of their branch houses. Having expensive refrigeration for fresh meats, it is in the interest of economy, it is said, to utilize it by keeping it as fully employed as possible. It may be suggested at this point that it is easy to mistake what is economical for the individual firm for a social economy. For example, if a packer's taking over the cheese business simply means the transfer from a jobber's cold storage, owned or leased, to his own, there may be an increase of the packer's efficiency without any corresponding social economy. Again, it is said that new lines of goods make possible a better utilization of their refrigerator cars, both those in the car-route service and those serving the branch house. The same caution against mistaking an advantage to the firm for one to society, as is indicated above, should be observed at this point also. But upon this matter further discussion will be had in subsequent pages. Quite aside from the question of social usefulness or benefit or harm to the general business world, it is fully appreciated by the packers that the side lines do perform a useful function in the are man 54 MEAT-PACKING INDUSTRY. packer economy by keeping up the tonnage and helping at weak spots. A circular sent out by Morris & Co. in 1916 to branch-house niiinagers says : Our business lias ceased to be exclusively a Beef and Pork business. We the natural distributors of many other products and a Manager or Sales- can't hope to be a real success, unless he sells the full line. A member of the firm of Swift & Co. wrote the president of the company that its branch house at Spokane was not paying and sug- gested a means of improving conditions : >= *• * I suppose half his volume is smoked meats; lard, both pure and compound, coming second in volume ; sausage, mostly summer sausage, coming third; soup [soap?], produce aud Lihby'w goods making up the balance. It is costing him about 10% to do business, which looks very high; soap and Libby goods being about the only things he is getting as much as 10% on. Looks as if he will have to handle more specialties if he makes the house pay. Armour & Co. sent out a circular to branch-house managers and car-route salesmen on July 2, 1918, which indicates the advantage of having a varied line of goods in keeping up tonnage : Your business with hotels, clubs, restaurants, dining cars and like insti- tutions is going to show up very badlj- iu view of tlie recent ruling of tlie Food Administration in regard to the use of beef cuts, so it is up to you to increase your sales on offal products, also canned vegetables, rolled oats, and our other added lines. No doubt a great many of these institutions will use increased quantities of fresh pork cuts, also hams and bacon and we are not going to accept the Beefless Days as an excuse for decreased volume on hotel business. Be initiative aud go after all the accounts in your territory with added energy and see if you can not keep up your volume. An officer of Wilson & Co., Inc., recently explained to a canners' association the philosophy of expansion in the following way : For years these branch establishments have been operated without profit and some means to absorb these losses through increased volume necessarily had to be found; therefore, the packers first turned to the produce lines— butter, cheese, eggs, poultry— which could be handled to advantage on account of these houses being equipped with refrigerated facilities. Even with these added lines, it was found that the volume yet would not absorb Uieir losses, so canned foods, preserves and condiments, etc., were added, thereby absorbing all the working time of each individual manager aud each organization, lowering the cost to operate and largely absorbing the losses that had been going on through these houses. These extracts seem to be notice that the limit of packer expansion into new fields has not been reached. The " losses " shown for the six branch houses cojisidered in this chapter show how far these establishments are from having "absorbed branch-house losses." MEAT-PACKING LSTDUSTRY. 55 The method of arriving at profit and loss results at the branches makes it possible, if this line of argument is accepted, to justify indefinite expansion. Losses may be shown whenever necessary. Likewise there will always be marginal branch houses like that at Spokane, needing new lines of trade to Iteep them going; there will always be marginal car routes whose averages will need fattening. With such a situation continually renewing itself, and with the continuance of the meat-animal industry in a practically stationary condition as it has been during the last few years, the only way of securing- continually increasing tonnage will be to embark in new lines of manufacture and selling. If this can be done by virtue of real economy in distribution it would perhaps be staying the wheels of progress arbitrarily to block their path even though the danger of monopoly lay along that path. If, on the other hand, expansion into new fields is in large part due to special privileges, or to ex- ternal economies which the packers do not create but are able to utilize — it may be, practically monopolize — rather than to internal economies representing the packers' contribution to efficiency, such expansion constitutes a menace to producer, to manufacturer, to mer- chant, and to consumer. Moreover, if real economies result from the large scale of the packers' operations, it is all the more imperative that they be stripped of all those advantages which have been gained without adding to the social efficiency in the production and distribution of foods. Such advantages are found most clearly in connection with the transportation facilities which the big packers have in part created and in part secured by concession, voluntary or forced, on the part of the carriers. Advantages in Transportation Facilities: (A) The Peddler-Car Sxstem. In other parts of this report ^ there have been set forth the growth and extent of private control of special cars in tlie transportation system, the extent and geographical distribution of peddler-car routes for the delivery of fresh meats to country towns, the amount of such sales, and the way the ownership of private cars operates to the disadvantage of the small packers in their competition with the big packers. It remains to show how, through such ownership, advantages have been secured which affect others engaged in the manufacture and distribution of perishable foods and of other food and nonfood commodities. The subject naturally divides itself into two parts, one dealing with, the packers', arrangement for the delivery of less-than-carload „Pt. I, pp. 133-154. See also Commission's Report on Private Car-Lines, 1919. 56 MEAT-PACKING INDUSTRY. shipments— the so-called pedcUer-car service; the other witlv carioad shipments, especially to branch houses. Section 7.— The peddler-car service. The car-ronte sales of the great packers (exclusive of Morris & Co., not available) amounted to 775,482,743 pounds of foods during 1916. A relatively small portion of this was delivered by express or other equipment supplied by the carriers; but the bulk of it was delivered to thousands of towns in all sections of the country by refrigerator cars, mostly owned by the packers, in which, whether owned by them or not, they had the exclusive right of shipment. Some evidence was introduced in the peddler-car cases before the Interstate Commerce Commission in 1916, going to show that occasionally goods not belonging to the packer were placed in such cars. But the use of a peddler car is essentially an exclusive use. No complaint of this is made so far as the cars are confined to the carrying of meats; but the practice has grown up, with the expansion of the packer activity in the manufacture and distri- bution of other lines of food, of shipping such foods in the "meat cars " ^yith the result of securing to the packers a frequency of service and a speed of service in the delivery of these goods which give them an advantage over their competitors, which is in no sense a reflection of their own industrial efficiency. It is the inequitable rules of the carriers which give them this advantage in marketing, and not at all the alsility or skill of the packers either as manufacturers or mer- chants of products other than packing-house products. General character of the service. — The term " peddler car " had its origin in an early practice of selling meats and other perishable foods from cars en route — a practice no longer folloAved, so far as the distribution of meat is concerned, though it still persists in some sec- ', tions in the marketing of other kinds of food as fruit and vegetables. The contents of the peddler cars of the packers are, in theory at least, sold before loading, are way-billed to the various consignees along the route, and handled at the unloading stations in much the same way that other ordinary less-than-carload shipments of way freight are consigned and handled. Railroad men often refer to all way cars as peddler cars; but the better usage is to confine the term to those cars assigned for exclusive use, moving under refrigeration, on schedule time for the delivery of perishable foods, and especially fresh meat and packing-house prod- ucts. In fact, such cars are generally called " meat cars." Railroad- owned cars open to all shippers, though performing the same kind of service, even when they contain shipments from the packing houses, as they often do, are not called peddler cars. The term prop- MEAT-PACKING INDUSTRY. 57- erly belongs only to the privately owned or exclusively operated cars,' used by the packers for delivery to towns on regular routes. Method or operation. — The peddler cars are loaded in station order by the packer's employees at the loading clocks of the packing house with orders secured by traveling salesmen, through the mail, or otherwise." The contents should be checked, according to the rule, by railway employees. The cars are iced by the packer and when re- icing is necessary it is done at his expense. Loaded cars are switched to the interchange tracks of the receiving carriers. If, as is usually tlie case, the car is not to>break bulk until some distance from the point of shipment has been reached, it is put into a train with other cars entitled to expedited service and forwarded to or near the town where the peddling route begins. The train may thus carry several meat.,cars 200 or 300 miles as time freight, and then be broken up at a division point to go into way-freight trains, each with its ore or more meat cars. The consignments to the various stations are mi- loaded by the railroad employees. The haul for a route car varies greatly in length, from 25 or 30 miles to 900 or more. A typical car route in the central West involves a hard from 250 to 300 miles in length. The number of towns on the peddling route varies from 2 or 3 to 15 or 20 or more. Many towns not reached directly by the packer's car are served by it nevertheless by transshipment at junc- tion points or to points beyond the final destination of the car. From the end of the route the car is hauled back to the plant, usually empty, the packer receiving mileage on the movement of the car both loaded and empty. Scheduled eefrigekator service. — Somewhat analogous to the extensive car service furnished by each of the big packers for his exclusive use is the scheduled refrigerator service provided by many 'carriers on some part of their lines for the general public, including the packers who often make use of it. A great variety of perish- able freight may be offered by many shippers to be loaded at the 'There. are a few cases where cars, in all essentials peddlers, are used jointly by two or more packers, tut this is unusual. At Omaha three packers ship over the Rock Island in this way. Each packer uses his own refrigerator car for loading at the plant and for delivery at the railroad freight house in Council Bluffs. Here the contents of the three cars are loaded into one car for peddling mainly to points west of Fairbury, Nebr. While there is nothing in the rule to prevent shippers of perishable freight at Omaha from draying it to Council Bluffs for shipment in these cars, it seems that this is not done, and while shipments other than those of the packers are sometimes included, the service pro- vided for these jointly used " line-run " cars is essentially an exclusive packer service. Similar service is provided by other carriers out of Omaha. In the peddler-car cases referred to later a difference of opinion was expressed by carriers and by the packers as to whether the rules permitted the carrier to place other than packer goods in a peddler car, and a few cases were cited where such goods were so placed en route after the car was opened for peddling; but in spite of such occasional use of peddler cars the fact remains that one of the essential features of these cars is their exclusive use by the packer, and there are but few cases where the packers make a joint use of cars such as that found at Omaha. (See Interstate Commerce Commission, I. & S. Docket No. 419, Heinemann's testimony, pp. 231-233.) 58 MEAT-PACKING INDUSTRY.- railroad freight house by railroad employees. Icing and reicing are done at the carrier's expense. The cars move and their contents are handled in much the same way that peddler cars move and their contents are handled. The cars move on announced days, once,, twice, or oftener in the week, according to traffic conditions. In some cases, the cars are run only when a specified tonnage has been offered for shipment. The freight rate is the same whether shipment is moved in a peddler car or in a railroad scheduled car. In all cases the rate on each consignment is the less-than-carload/'rate from place of origin to destination. In nearly all cases this is a class rate, though in a limited territory to be noted later peddler-car rates are a percentage of the carload-commodity rates in force. In order, however, for the packer to secure the special service that goes with the exclusive use of tlie peddler car he gives certain guarantees as to weight or earnmgs, or both. This guarantee varies with the traffic territory through which the car moves and to some extent with the railroad over which it moves. Section 8. — The peddler-car rmles. In central freight-association territory the general rule is that the minimum charge per car shall not be less than the carload rate on dressed beef for a minimiun weight of 20,000 pounds from origi- nal point of shipment to final destination of the car. Tliis merely fixes the minimum charge. The freight is paid on the contents of the car at the L. C. L. rates and in most cases this amounts to more than the mmimum charge. If the shipper is not able to load his car m such a way as to make it earn this minimum at L C L rates he must pay the difference in the form of what he calls a " penalty," and the carrier calls a "deficit" charge, matever the name given to the charge it simply measures the extent by which the packers' fall short of the conditions fixed by the carriers for the special privileges granted in the rule. The operation of this, on' ST simplest of the peddler-car rules, is illustrated in the f oUowL tab howing the weight, charges, penalty, and dressed-beef rate on ce' Sly m.'^'^' '™™ "^'"^^^ °^'^^^ '""^ ^i^^i^-" CentrS dL ng ' Compiled from I. & s. Docket No 807 I r <- t? 7~~^ 110. ooi, 1. c. C, Rowley's Exhibit No. 1 (1916). MEAT-PACKING INDXJSTKY, 59 Table 11. — Operation of peddler-car rule in central freight-association terri tory ; examples of charges and penalties collected, July, 1916. Weight. Charges, at less-than-car- load rates on each ship- ment, Chicago to destination. Penalty. The earload- dressed-heef rate, Chicago to final des- tination of car,perowt. 23,410 12,13S. 31,14S. 11,916. 9,159. 8,466. 18,273 15,652 20,496 $49. 28 36.50 62.94 50.92 19.28 28. 95 35.84 39.04 34.07 S5.50 12.08 21.72 13.05 2.90 SO. 21 .21 .21 .315 .205 .21 .168 .21 .168 It will be noted that a penalty was paid on tlie second car in the table. The earnings on the various consignments amounted to only $36.50, while the minimum charge at 21 cents per hundred on 20,000 pounds was $42. The difference had to be made up. It may happen that a car with less than 20,000 pounds will earn more than the minimum charge, as in the case of the seventh car; and on the other hand a car carrying mostly low-class freight and unloading rapidly on the early part of the route may yet have to pay a " pen- alty " charge. A large proportion of the peddler cars in this ter- ritory pay such charges. The total number of peddler cars handled out of Chicago during the month of July, 1918, by the Michigan Central was 73, with an average loading of 17,199 pounds, 37 of which paid a penalty charge. During the same month the Pennsyl- vania Co. moved -28 peddler cars, with an average loading of 13,836 pounds, an average distance of 303 miles, and collected a " penalty " on 17 of them. The operation of the rule is further illustrated by the following table showing penalties paid on peddler cars in cential freight- association territory by Swift & Co. and its subsidiaries for the months of January, March, and May, 1916.^ Table 12. — Operation of peddler-car rule in central freight-association terri- tory; proportion of Swift & Co.'s cars paying penalties January, March, and May, 1916. Location of plant. Total peddler cars op- erated for 3 months. Number of cars paying penalties. Percent- age of oars paying penalties Total pen- alties paid. Ai'erage penalty per car. G. H. Hammond Co., Chicago, m. Swift & Co., Chicago, 111 Swift & Co., East St. Louis, 111 Plankinton Packing Co., Milwaukee, Wis.. 419 754 137 37 267 193 7S 11 55.9 26.2 53.2 29.7 t2,769.06 1, 56D. 81 917. 12 60.ii4 ilO.36 8.08 12.55 5.48 1,347 S44 40.3 5,307.33 9.75 » I. & S. Docket No. 867, I. C. C, Owen's Exhibit No. 2. 60 MEAT-PAGKING INDUSTRY; Western trunk-line rule. — In -western trunk-line territory the, general rule is that peddler cars will not be accepted unless they contain 10,000 pounds or more of freight, which must be made up of fresh meats, packing-house products, as defined in the rules, and certain other enumerated commodities. If the actual tonnage of 10,000 pounds is not loaded the railroad collects freight on the deficit in weight at the fourth-class rate to the first station for which the car contains a shipment. Provision is also made that " the total freight charges for the movement of such cars must not be less than the charge for 10,000 pounds, at the fourth-class rate from the point of shipment to final destination of the car." ^ This rule provides for a so-called " double minimum "—a minimum revenue and a minimum weight. Under it the packer does not find it difficult to load his cars in such a way as to make them earn the minimum revenue. If a fair proportion of the load is fresh beef, which in this territory moves at first-class rate, the car may be loaded far short of 10,000 pounds and yet earn far more than the minimum revenue. In such cases, however, there is a " penalty " charge due to the weight minimum. The operation of the rule will be seen from the following table, showing the weight loaded, the minimum charge, the actual revenue earned, and the " deficit on account of minimum weight '' as to certain cars shipped by Morris & Co. from Chicago during the early part of 1914.^ Table 13. — Operation of the peddler-car rule in western tnmlc-line territory; examples of load, miniinnin eliarge, earnings, and deficit or penalty charge ' for Illinois and Wisconsin points. Break bulk point. M Car made empty. Minimum weight. Actual weight loaded. Minimum charge. Actual revenue earned. Deficit ac- count of weight. Oconto, Wis 10,000 10,000 10,000 10,000 10,000 10,000 10,000 7,263 7,099 9,686 7,781 8,088 7,656 7,299 $25.00 10.90 18.20 15.60 13.20 25.00 12.00 157.61 13.15 29.79 26.56 19.55 34.18 14.91 $6.30 1.68 .41 3.34 2.01 5.39 2.83 Zion City, 111.. Dwight.Ill Lincoln 111.... Dixon, 111 Rochelle 111 Oconto, Wis Daggat Mich Waukegan, III Kenosha Wis The "penalty," Avhile usually not heavy, has, under traffic condi- tions existing in western trunk-line territory, to be paid in a large number of cases. In the case cited Armour & Co. testified that they paid it on about 25 per cent of their peddler cars shipped in this territory; Swift & Co. paid on from 20 to 25 per cent; the smaller packers, even among the Big Five, pay on from 30 to 35 per cent of their cars. On the whole, taking into account the sparser popula- 1 Boyd's W. T. L. Circular No. 12-C., I, C. C, No. A-656 "Rules gOTerning shipments of packinghouse products and other freight shipped in peddler cars. 1. & S. Docket No. 419, I. C. C. Helnemann-s Exhibit No. 5. MEAT-PACKING INDUSTRY. 61 tionjlo»ger tlistances, aiifl lo^A'er meat consumption in western trunk- line territory as compared with central freight-association terri- tory, the conditions as to guarantee are more favorable to the packer in the former territory than in the latter. In both regions it is held by the Interstate Commerce Commission, in the two cases cited above, that the peddler-car service was, under existing rules, remunerative to the railroads. In each case the carriers had attempted to increase the minimum charge for the service, and in each case the Interstate Commerce Commission held that the change had not been justified. Peddlek-cae rule in other territories. — The general peddler-car rule in southern classification territory provides for a minimum weight of 12,000 pounds, made up of " less carload shipments of pack- ing-house products " or " less carload shipments of packing-house and other commodities," to be carried at the regular class rates, and the deficit in weight to be charged for at L. C. L. rate on packing- house products, generally fourth class, to the point where the car breaks bulk. Tlie Louisville & Nashville rule provides for a 10,000- pound minimum of " packing-house products, fresh meats, and other commodities shipped by packing houses," and the deficit in weight is charged for at the fresh-meat rate to the point where the car breaks bulk. The Southern Eailway Co. and some others in this territory have a rule similar to that of the Louisville & NashVille Railroad.^ The carriers in trans-Missouri territory follow the general rule of the western trunk lines.^ In southwestern lines territory peddler cars move under two quite different plans. The older rule is similar to that in force in western trunk-line territory described above, providing for both a minimum weight and a minimum charge. A second plan Avas established by the Interstate Commerce Commission in 1912,* intended to apply primarily to Wichita, Fort Worth, and Oklahoma City, from which no peddler-car routes had down to that time been established. The order was that siich routes should be established and that the rates should be 130 per cent in the case of packing-house products and 150 per cent in the case of fresh meats of the carload rates on these commodities to their 'several destinations. These products moved in this territory in carloads under very favorable commodity-mileage rates, and it thus came about that the peddler-car traffic shared in these favorable rates, not only from these new packing centers but from Kansas City and East St. Louis also, as to the traffic destined to points in Arkansas and Louisiana and other southwest territory.* > See Exhibit V-A and V-B for a statement of the peddler-car routes operated over the Southern Eailway Co.'s lines in 1918. = Boyd's, I. C. C. No. A-786, Items 1430-C and 1440-C. » In the matter of the investigation of advance rates by carriers for the transporta- tion of paclting-house products, 23 I. C. C, 650 ; I. & S. Docket No. B48, Leland's testi- mony. * F. A. Leland's testimony, I. & S. Doclset No. 548. 62 MEAT-PACKING INDUSTRY. The carriers prescribed for cars moving under this plan a minimum charge equal to the charge for 10,000 pounds of fresh meat at the L. C. L. distance-commodity rate. The following table shows the operation of the rule upon the cars moving out of the cities named in March, 1916, under the conmiodity- mileage-percentage-rate plan : *• Table 14. — Operation of the percentage-peddler-car rule in southn-estern lines terriiory during the month, of March, 1916. Fort Worth- Dallas. Oklahoma City. Wichita. Kansas City. St. Louis. Average. 1 Number of cars . 34 9 11,221 $50.23 15 44.1 227 $73. 08 17 10 13,308 $79. 17 4 23.5 387 $101. 55 46 13 11,699 $59.15 28 60.9 375 S82. 18 116 11 12,931 $75. 03 61 52.6 466 $81. 17 50^ 11 16,604 $88.51 12 24.0 420 S101.24 53 ? 12 3 13,153 4 $70. 43 6 6 7 Number of cars paying minimum. . . Pot cent of cars paying mimmum.. . 24 15.3 375 8 Average revenue if L, C. L. class rates had been charged. . .. ' $89 10 An important effect of this percentage arrangement was to create the discrimination in rates as between shippers in peddler cars and other shippers described in the next section. Section 9, — How the system works. The vaine of the service performed by the peddler car is generally recognized. It is important to the packing industry. The service is not only one of the concomitants of concentration in that industry, but one of its causes, and it is vital to the maiutenance of concentra- tion. One incident vx the growth of centralization has been the prac- tical disappearance of the local slaughtering plant, and with its elim- ination commimities everywhere are dependent upon the regular re- frigerator service. It is held to be pi-ofitable to the railroads. The car- riers have generally been ready to liaul peddler cars over the ixjutes prescribed by the packers. Where they have not been willing, the Interstate Commerce Commission, recognizing the need of the service, has in recent years, several times, ordered the carriers to establish routes.^ The rates and conditions under which the service is performed make the business remunerative for the carriers. Several cases where the carriers have sought to increase their earnings by changes in rate or in the minimum requirements have been before the Commission since 191-1 and have been, decided against the carriers.'' In all these cases the peddler-car system has been dealt with purely as though the only interests involved were those of the packer and those of the carrier; any arrangemeut » Leland's Exhibit No. 11, I. & s. Docket No. 54S. ^23 I, C. C, 656 (1912) ; 48 L C. C, 525 (1918). '32 I, C. C, 428 (1014) ; 30 I. C. C, 02 (1015) ; 43 I. C. C. 139 (1917). MEAT-PACKING INDUSTEY. 63 that was mutually satisfactory to these parties was, in the absence of complainants, regarded as fair to everybodj'. UxEQtTAl OPERATION OF THE RULES AS BETWEEN LAECE AND SMALL 3'AtKERS. — The system does not work equitably as between the bip; packer and the small packer. In Rules Governing Shipments of Packing-House Products and Other Freight Shipped in Peddler Cars (32 I. C. C. 428) it developed that the two largest packers were not averse to an increase in the minimum weight from 10,000 to 12,000 pounds, provided all limits on the kind of goods to be included were removed. It was the smaller members of the Big Five group who protested. Morris & Co. in its pratest said : Tliis concern liandtes but very little of the so-called contraband Ireiglit in these peddler cars, our .shipments consisting almost exclusively of fresh meats, butterine, itiincemeat, lard and cured packing-house products. We are at present experiencing a great deal of difficulty in loading to the i-equirod minimum of 10,000 pounds, by reason of the severe comioetition on this class of traffic, and to place a further burden of 2,000 pounds per car will undoubt- edly serve to drive all except tlie strongest shippers out of this line of business. The Cudahy Packing Co. testified that that company would gain but little if any by being permitted to include " other goods •' in the weight minimum. The small packers did not appear in the case, but it is evident that they must find it more difficult to load to the increased minimum than Moiris & Co. This point was illustrated in tlie peddler-car minimum case arising in central freight- association terri- tory in 1917 (43 I. C. C. 139). There it was proposed to increase the weight upon which the minimum revenue was to be computed from 20,000 to 21,000 pounds. The Cleveland Provision Co. joined in the protest against the increase. This company in 1916 operated 15 car routes, served 75 towns, and marketed by these routes 8,000,000 pounds of products. From the testimony in this case it was shown that the average loading during the month of July, 1916, on cars moving out of Chicago for this territory over the Michigan Central was 17,199 pounds, and on the Pennsylvania 13,836 pounds, while the average loading of the Cleveland Provision Co. during a period of 15 weeks was 9,964 pounds, and on four of its routes the average was less than 8,200 pounds. Armom- & Co. presented figures to show that from August, 1915, to July, 1916, inclusive, 152 of its cars out of a total of about 5,000 shipped to tMs territory in a year paid " penalties " amounting to $1,806.52, while the Cleveland Provision Co.'s exhibit showed that it paid an average of over $12,000 a year in " penalties," tihough shipping probably not more than a quarter the number of cars shipped by Armour & Co. The small average load was explained by the fact that out of a total of some 32 articles commonly shipped by the big packers in peddler cars tie Cleveland Company . shipped only 7. g4 MEAT-PACKING INDUSTRY. It can safely be deduced that the larger the packing company the greater the ease, other things being equal, with which it can meet the guaranties required by the carriers. Mere size is an advantage in utilizing the peddler car. HOAV THE PEDDLER-CAE SERVICE AFFECTS OTHER SHIPPERS OF FOOD.— The packer can have a refrigerator service over a way-freight route whenever he has a tonnage that warrants his undertaking to meet the railroad requirements as to minimum weight or minimum earn- ings. The grocer requires refrigerator service six or seven months in the year for marketing certain perishable foods. He is dependent on the cars provided by the carriers. Two Idnds of service are open to him— (ffl) a service similar to that provided by the packers for shippers who can guarantee a specified load and (&) the service of the regular-scheduled refrigerator cars. The western trunk-line rule' will illustrate the conditions under which the first form of service will be provided. Carriers in this territory announce that they will furnish, upon reasonable notice, or allow shippers to use, refrigerator or insulated cars, with or without refrigeration, for loading by one shipper at one station with freight to be transported at less-than-cai'load rates. The charges on such cars are at less-than-carload rates on each article to point of destina- tion, but the minimum charge is 15,000 pounds at the fourth-class rate, and should the weight be less than 15,000 pounds the deficit is waybilled at fourth class to the destination where imloading "begins. Icing and reicing are at the carrier's expense. This rule does not apply to 23eddler cars loaded with fresh meats and packing-house products. The packers would not, however, be likely to use it, since the minimum charge is 50 per cent higher than the peddler-car rule in this territory provides for. It is obvious, moreover, tliat this service can be used only occasionally by even the largest wholesale grocer or provision house. It is upon the sclieduled refrigerator service that the grocers and shippers other than the packers must mainly depend for shipping perishables. Many, but by no means all, carriers announce the serv- ice betM'een certain points upon their lines. The widespread, almost universal complaint, however, is that it is less frequent and that it reaches a smaller number of towns than the packer-car service does. Moreover, any packer may, and does, make use of the railroad re- frigerator service upon which the grocer solely depends for ship- ping on days his own car does not move. This cause, it is held, is alone sufficient to account for the successful competition of the packers in the handling of such commodities as butter, cheese, and '^gg^- During a considerable part of the year, both winter and sum- > Boyd;s Circular No. 12-F, for the western trunk lines, I. C. C. No. A-821, Item 450. MEAT-PACKING INDUSTRY. 65 mer, these require refrigeration. The packers with their more fre- quent and reguhxr service take the orders the grocers or produce dealers can not fill at the required time. This inequality extends to the marketing of nonperishable foods. These, too, may be shipped in peddler cars, under cover of a service that has been created for marketing fresh meats. " COMTRABA^'D " SHIPMENTS ; PBOVISIONS AS TO " OTHER ARTICLES " IN THE GENERAL RULES. — Attention is again called to the provisions in the peddler-car rules relative to the contents of the cars. In western trunk-line territory the minimum weight .of 10,000 pounds must be made up of fresh meats, packing-house products as defined by the rules, and butterine, dressed poultry, mincemeat, neat's- foot oil, lard oil, and tallow oil. But this does not mean that only these enumer- ated commodities can be loaded in the cars. It has long been the prac- tice to ship other commodities in peddler cars as "contraband," paying on them, of course, the regular L. C. L. rates, with the understanding that their weight could not be included in the required minimum weight. It seems that as the rule formerly stood it was open to question whether the earnings on " contraband " could be counted toward making up the minimum charge, but as it was amended in 1916 such "contraband" shipments are not permitted under the general rule in this territory to count toward either the minimum weight or the minimum charge. And yet the privilege of sending them is an im- mense advantage to the packer and a corresponding disadvantage to other dealers in foods. The packer's salesman can assure the country dealer that the " meat car " will arrive at his door on a given day at a given hour and that an order placed for rice or coffee or dried beans will reach him with the same promptness and certitude that his meat does. Efficient management on the part of the jobber can not per- manently overcome the handicap under which such a service places him. In southwestern lines territory the general rule as to " contraband " is similar to that of the western trunk lines. In 1915 the carriers filed certain changes in the rule which, but for their suspension, would have had the effect of increasing the charges, but at the same time giving the shippers the privilege of loading " other articles " not requiring refrigeration in peddler cars up to 25 per cent of the total weight loaded. This only means that the weight of these " other arti- cles " and the earnings upon them would have been counted toward making up the required minima, for they always have been and are now allowed to be carried as " contraband." In southern territory the rules allow the shipment of fresh meats, packing-house products, " and other commodities shipped by pack- 140361°— 20 5 gg MEAT-PACKIKG lUDUSTEY. ing houses," which is as liberal a rule as the paela^rs could as^^^^ ^^^ ^ central freight-association territory the general ''>^^? P. whatever relatively high minimum charge and places f^ 1"^'7' t toward on the kind of goods that may be carried, and they all co making up the minimum charge. , '• Contraband " provisions in otiier rules.— So much ±01 m^ S«"- eral rules as to contraband in force in different sections ot the coun- try. But there are many exceptions to these rules in every territory. The Toledo, St. Louis & Western Railroad. Co., for example, has a rule applicable to shipments from St. Louis and East St. Louis to certain specified destinations which permits the k)ading of fresh meats, packing-house products, " and otlier articles forwai'ded from packing houses in refrigerator cars," and all count toward the mini- mum, which in this case is a fixed amount per car. A joint tariff applicable on several Texas roads permits the load- ing of any " other articles " and the charges on them are included in the minimum chai'jsje.^ The Baltimore & Ohio has a rule '■" applicable to shipments from East St. Louis to specified destinations on its line, the Chesapeake & Ohio, and the Big Four. It permits the inclusion of dressed poultry, eggs, butter, and cheese, which do not in central f reiglii-association territory have any carload rating, " and otlier articles taking less than carload commodity or class rates," the earn- ings on which are included in the minimmn charge, under this rule a lump sum for each group of towns named m the rule. These ex- amples illustrate the numerous variations from the general rules found in the exceptions of individual carriers or groups of carriers, not only in respect to " contraband," but in other features of ped- dler-car traffic. The aijn of the packers is to secure the removal of all restrictions on what they majr include in their peddler cars, and to- have all com- modities count towai-d making up the required minima. Mr. Corn- wall, testifying for The Cudahy Packing Co., in the western trunlc- line peddJer-car case, expressed the view that there sliould never have been any restriction on the contents of peddler cars: If you put refrigepator freigkt in a car and you pay for the icing and re- icing, I can not see that it makes any difference to the carriers if we pit sometliing in there that does not require refrigeration. It is better for the carriers. They have heavier loading, and it forces less penalties on us, and .n a spirit of fairness, I think the carriers ought to grant that we can load anything in there that we ship. The same view was expressed in the Southwestern case bv a reu- resentative of Swift & Co., who testified before the Interstate Com- merce Commission as follows : -^''terstate Com » Fondas' Texas Line tariff, No. 2-C I p r rri t* ~' = 1. C. C. No. W. L. 7836. ' ^' ^^' "™ 31G0. MEAT-PACKING IBTDTISTKY. 67 JMi'. Frederick : We have been for a long time trying to persuade the Western Trimlv Lines to open up and have the charges applying on these so-called con- traband articles make up the minimum, the SBme as they do in other territory, for example, in Ceuti-al Freight Association Territory, and down in Oklahoma on State business down there. We never were successful until the question came up of the 15,000 pounds minimum. We conferred with the railroads, with other packers, we conferred with the railroads individually and person- ally argued the thing^ baclcward and forward. i Finally the proposition was made by several of the carriers that we make the minimum 12,000 pounds, and allow these so-called contraband articles to apply to make up the minimum. That sounded all right to us. We said if they would publisli such a tariff as that, that we would not protest against the ad- vance of the minimum. * * • We are probably better able to stand thut minimum than anybody else, by reason of the large so-called contraband tonnage we handle. * * *' Examiner Bbown l. Yon can. go to the local merchant and you can offer hira something in about everything he sells? Mr. Fbedekick: Yes, Sir. Examiner Brown: Is that the idea? Mr. Frederick : Yes Sir ; and there is no man too small for us to trade with and no hamlet too small for us to stop at and say how do you do. * * * Mr. Boyle : So that the thing that you are chieJfly concerned wiUi is getting. into the tariff, or into the rule, some provision that will allow you to take ac- count of the contraband freight in arriving at your minimum per car eaxnings or minimum weight. Mr. Fbederick: That is correct.* It will thus he seen that the tendency has been to give greater and greater freedom to the packers in the matter of including nonmeat products^ and it seems clear from evidence, of which Mr. Frederick's testimony is a sample, that their aim is to have the rules so changed that all restrictions oil the character of the contents of their cars shall be removed. DlscEiMiNATioN IN. RATES. — ^As pointed out in previous pages the peddler-car rates are generally the same as those paid on less-than- carload shipments by other shippers. The peculiar situation in southwestern territory already referred to has, however, given rise to rate discriminations in that region in favor of peddler-car ship- ments of certain articles classed as paeking-house products. This situation rose in 1912 when the Interstate Commerce Commission ordered the- carriers to establish a peddler-car service, with a mini- mum weight of 10,000 pounds and with less-than-carload rates on fresh meats equal to 150 per cent and on packing-house products at less-than-carlbad rates equal to 130 per cent of the existing carload rates. This arrangement gave to packing-house products a flat rate when shipped in peddler cars lower than the rate on the individual arti- cles making up the list. Most of these articles are rated at fourth » stenographic notes in I. & S. docket No. 410, pp. 390-401. 68 MEAT-PACKIJSra iinxnsTKY. class, some at third class, and a few at second class. The packing- honse-products rate is substantially lower than the class rates which apply on other than peddler-car shipments of these products/ The table which follows shows for selected distances what this differ- ence is: Table 15. — Relative rates mi packing-house products when shipped under the peddler-car rule in certain southwestern territory and class rates for the same (listanccs, in cents per 100 pounds, on single-line traffic. OKLAHOMA INTRASTATE TRAFFIC. Distance (miles). Peddler-ear rate on packing- house products. Class and rate. 2 3 4 5 25 .. . ... 17.5 23 32 43.5 54.5 28 37 49 75 95 23 30 41 62 78 20. 26 35 53 67 16 60 .. 20 100 27 200 41 300 53 TEXAS INTRASTATE TRAFFIC. 25.. 50.. 100. 200. 300. 14 31.5 25 21.5 20 39 32.5 27.5 29 64.5 45 39 40 82 67.5 67.5 50 97.5 80.5 69 17.5 22 30.5 46.5 55 The list of packing-house products is very variable and can be changed at the will of the carrier. Many of these products are handled by distributors of food who do not operate peddler cars. The disadvantage of such distributors is indicated by the compai-ative figures given above. What that disadvantage is, is made more con- crete by showing the difference in rates on specific commodities they handle. Following are the less-than-carload class rates on a few commodities from Fort Worth, Tex., to Shreveport, La. : Cents per 100 pounds. Clilli con carne 204 Cotton-seed cooking oil ^2 5 Canned meats with vegetable ingredients 62. 5 Dried meats g9 - I.ard .substitutes go 5 Mincemeat „r - fcausage ,j.2 g All these articles are included in the list of packing-house products which may be shipped in peddler cars between these points, and when so shipped pay a flat rate of 42.5 cents. In the same way these commodities have a peddler-car rate of 55 cents from Oklahoma City, another packing-house center, to Temple, Tex., while shipments under nlLT^^*; lo'^ arrangement gives rise to discrimination between shippei-s - and between places IS recognized by the .an-iers. See F. A. Leland's testimony in I c C t I s aocket No. 548 (1915). stenographic notes, pp. 17 and 269 '"""""^ '" ^- ^- ^- ^- * ^^ MEAT-PACKING INDUSTRY. 69 the class rates pay 72.5 cents on mincemeat, canned soups, canned meats with vegetable ingredients, and lard substitutes, 85 cents on sausage and cotton-seed cooking oil, and 121.5 cents on chili con came. These rate discriminations have grown up under peculiar circum- stances and are confined to southwestern territory. But there are discriminations of another kind growing out of the peddler-car ar- rangement quite generally felt throughout the country and becoming more acutely felt as the packers make larger and larger use of the ped- dler cars as an instrument in aid of their invasion of the fields of manufacture and distribution of nonperishable products. Discrimination in service. — The practical advantages to the pack- ers of shipping nonperishable foods in peddler cars are obvious. A car loaded at Kansas City to break bulk at Thayer, Mo., for ped- dling to Jonesboro, Ark., containing dried beans, dried fruit, rice, rolled oats, corn flakes, prepared mustard, and coffee, along with perishable foods, reaches Thayer in 25 hours and 30 minutes, leaves Thayer 33 hours and 15 minutes, and arrives at Jonesboro 40 hours nnd 30 minutes from Kansas City. Box-car shipments may reach Thayer by the same through freight train which carries the meat car, but, according to information furnished by the Federal manager of the St. Louis-San Francisco Eailroad, " L. C. L. freight loaded in an ordinary box car requires approximately 65 hours from Kansas City to points Thayer to Jonesboro," as against, say, 34 to 40 hours, for peddler-car shipments. A car loaded by Armour & Co., in May, 1919, contained the fol- lowing commodities generally handled by jobbers: 240 pounds evaporated milk. 230 pounds family cereal. 16 pounds corn flakes. 50 pounds coffee. 300 pounds butterine. 10 pounds butter. 63 pounds cheese. 12 pounds condiments. 240 pounds canned meats.. 60 pounds sauerkraut. These shipments went through to their destination under the rules for handling "meat cars." A Chicago jobber in delivering the san:e goods would have been dependent for shipping the items requiring refrigeration upon the sclieduled service provided by the railroads, with the chances against him of reaching the towns reached by the packer's car. The nonperishable part of the ship- ment, if sent by a jobber^ would be subject to all the- numerous and serious delays incident to the movement of ordinary freight. r^Q MEAT-PACKLNG INDUSTRY. One prolific cause of delay in the movement of less-than-carload shipments is the need of reworking en route. This involves damage and deterioration in the goods and an mevitable, and sometmaes pro- lonoed, delay. Perhaps the most serious aspect of the situation is twJment of uncertainty as to when such freight wiU reach its destination. PedcUer cars are not subject to such reworkmg, thou.^ part of theii- contents are frequently transshipped at junction points or for shipment beyond the final destination of the car.^ Under such circumstances car-route salesmen do not have to otter oToceries at a lower price than the wholesalers do to secure the trade; other things being equal, they can make sales because of the supe- rior service they can assure in the form of frequent and prompt de- liveries. Trade won in this way is not to be credited to the indus- trial efficiency of the packers, but to privileges gi'anted them by the carriers, and to this alone. (B) Carload Shipments and the Mixing Etjles. Section 10. — Unec|,ual car service. It is not through the peddler-car system alone that the packers enjoy a transportation service superior to that of their competitors in the distribution of foods. They enjoy advantages also in shippiug the far more important part of their traffic, whick moves under car- load rates. These advantages arise in part from inequalities in the supply of refrigerator cars and in the methods of operating such cars and in part to the special mixing rules under whick the packers secure carload rates., Inadequate supply op caks. — It is complained that shippers re- quiring refrigerator cars for carload shipment can not secure them at times when the packers seem to have plenty of cars, and that the trade of the small shipper is thus circumscribed. An example of this is found among the wholesale dealers in provisions in New York City during the last few years in connection with the handling of imports of fresh meats from Australia and South America. Because of an inadequate supply of cars for shipment to tlie interior, the sales of these importers were largely confined to New York City and vicinity. Some shipments were made to the interior, some of them in packers' cars; but in the case of one importer 65 per cent and in case of another 90 per cent of the imports were consuined in greater New York. The imports of these shippers frequently arrived on the same ship with those of the big packers. If there were enough refrigerator cars for aU sliippers, the small importer might be ac- commodated ;. when there was a shortage, the packers' iuiporta were taken care of first. It was not infrequently the- case that the smail • See ExMblt V, Slowing tile car routes on tbe Southern Railway for lUUstraUon o£ these pedaier-car shipmenta beyond final destination of the car. MEAT-PACKING INDUSTRY, 71 dealer would have care taken away from liim after they had been placed alongside for liis use.^ Importers of canned meats suffer under the same handicap; they, like the importers of fresh meat, can not rely upon a regular and adequate supply of cars, while their largest competitors can. In the Frankfeld case the Interstate Commerce Commission, while asserting that " it would be difficult to name a more direct or effective method of discrimination than that of preference in providing equip- ment or in distributing it among shippers," did not feel warranted, in view of the uncertainty of traffic conditions existing at the time, in requiring the carriers to provide the special equipment requested for the transportation of chilled meats. But the facts as to unequal sei'v- ice for different shippers were not denied, and they were made the basis of a strong dissenting opinion by Commissioner McChord, in which he said : The defendants not only liold tlieuaselves out to carry dressed meats generally, but specifically publish carload ratings on frozen and chilled Argentina meat west bound from ship side at New York. Holding themselves out as common caniers of dressed meat, the common law charges them with the duty of provid- ing safe and suitable equipment in which to transport this commodity. * ' * * TJiere is no duty upon a shipper under the act or at common law to furnish the car in which his commodity must be shipped.. The holding out of tlie defendants in their tariifs is not limited to the transportation of dressed meats loaded In cars belonging to shippers. For the defendants to publish rates applicable only to the movement in cars furnished by shippers would undoubtedly be unlawful discrimination under the principle of the Train Lot Rate Cases {Anaconda Copper Mining Co. v. C. & E. R. R. Co., 19 I. C. C, 592, 596; ^Vells Lumber Co. v. C, M. d St. P. Ry. Co., 38 I. C. C, J/G/f), because only certain of the larger ship- pers could avail themselves of the transportation, and the ordinary shipper, who does not own cars, would not he able to compete with them. This diserimiua- tion, however, is accomplished as a result of the conclusion reached in the ma- jority opinion. Although holding themselves out unqualifiedly in their tariffs as common carriers of dressed meat, the decision in this case in effect excuses these defiendants from the discharge of their duty as common carriei-s to transport shipments of dressed meat offered by complainants. At the same time the rates are permitted to remain in effect, making it possible for the larger American meat packers, who own their own cars, to import frozen and chilled meats from Argentina and to secure markets for those meats at which complainants can not compete. TIius the decision in this case permits indirectly a result which the parties themselves could not lawfully accomplish. It is contended by the packers that they, too, frequently want more care than they can get. But it is to be remembered that they own and absolutely control all the ears suitable for the transportation of frozen meats and a large proportion of those suitable for shipping chilled meats, while because of the important position they occupy as shippers, they also have more than an equal chance at the equipment ■ B. Frankfeld & Co. u. New York Central Eailroad Co. et al., 40 I. C. C, pp. 555-556 (1916). This case was decided while the Paraffin case, In which the Supreme Court held that the Commission had no power to compel the carriers to supply an adequate number of tank cars, was still pending. 72 MEAT-PACKING INDUSTBY. belonging to the carriers. When the packers suffer from a shortage of cars, it may be assumed that there is a shortage for their competi- tors as well, while the contrary does not hold true. Whoever under- takes to ship goods requiring refrigeration must do so under ail the restrictions implied by these conditions. Slow movement or cars.— As has been pointed out in the Commis- sion's Private Car Report, the big packers maintain a force of men at junctions and other strategic points whose business it is to see that the cars of their employers are kept moving and that they are not diverted to uses other than those of the packer. The small shipper operating a few cars, or one dependent on cars supplied by the ear- lier, can not afford to keep men on the road to perform this service ; they must rely upon that furnished by the carrier. The result has long been an inferior service for the small shipper. The Interstate Commerce Commission has recognized this as a violation of the principle of equal treatment. The failure to return cars to small shippers is due, says the Commission, to the " neglect of a lawful duty by carriers. The obligation to treat each shipper fairly, no matter how small his shipments may be in comparison with those of another shipper, is one carriers can not escape." ^ The Commission suggests in the case just cited that " if the carriers were required to publish in their tariffs a rule to the effect that private cars when unloaded at destination, unless otherwise ordered by an owner or lessee, will be promptly transported, loaded or empty, in the direction of the plant of the owner or lessee, doubtless much of the apparent injustice hereinbefore referred to would be avoided." But it is not at all certain that the publication of such a rule would remove the inequality of which complaints are made so longas the large shippers keep their agents at strategic points to expedite the movement of their cars while the cars of the small shipper are left to take their chances under the operation of a rule executed by railroad employees. Inadequate icing in transit.— Another way in which inequality of service is produced by the packers' transportation arrangements is found in the icing service. The fact that the smaller private-car owners or lessees and even shippers in refrigerator ears owned and operated by the railroads have had to rely upon the large owners of refrigerator cars for icing service has long been a cause of complaint. Many of the old abuses have been eliminated or checked by the regulation of charges exercised by the Interstate Commerce Com- mission under authority granted by the Hepburn Act, 1906; but only now are the zcing plants hitherto operated by the large private-car owners being taken over by the railroads in accordance wi^^h a recent ^^^^^^^il!'!!^^!!^^'^!^^ iSerred to MEAT-PACKING INDUSTRY. 73 " The carriers only," says the Commission, " should perform the service of reicing and making charges therefor, and that shippers of these products should not be permitted to perform the service of reicing their own and competitors' shipments en route, either directly or through corporations controlled by them." In the interest of fairness and equality it is obvious that this much should be done; but it will not eliminate inequality of service so long as the large owners of refrigerator cars are permitted to. supervise or inspect the icing of their own cars, even at railroad-owned icing stations, while leaving to railroad employees all discretion in the icing of their competitors' cars; Such gratuitous service for the large shippers' cars is more than likely to lead to neglect by railroad employees of the relatively small number of cars belonging to the small shippers ; and it seems that the only way to secure equality of treatment in the matter of reicing and in the expedition with which cars are returned, is to make the carriers responsible for handling in the same way the refrigerator cars of all shippers, and for performing all the services connected with the movement of perishable freight. This would give practical assurance that the influence of the most powerful shippers of perishable freight would be enlisted to secure the im- provement of the carriers' service, an improvement in which all shippers would share alike.^ Section 11. — Inequality through special mixing rules. A far more prolific cause of complaint by wholesalers and jobbers of food products is that under cover of liberal mixing rules de-. signed to encourage the shipment of fresh meats the packers have secured an undue advantage over them in the distribution of other foods in carloads. Mixing rules are published by the carriers for the purpose of giving to shippers and dealers who can not meet the rigid requirements as to minimum weight for straight carloads an opportunity to ship in the same car a variety of commodities os- tensibly of the same general nature in less-than-carload quantities at carload rates. The three important things to be considered in all mixing rules are: What may be included in the mixture; what shall be the weight necessary to make a carload; and what rate or rates shall be applied. Such rules vary with the traffic territory in which the freight moves and, by means of " exceptions," to a certain extent with the carrier within a given territory. There are mixing rules for grain products, for iron and steel products, etc. ; and it is under such rules that fresh meats and packing-house products largely move in carloads. In view of the widespread complaint against the operation of these rules among distributors of foods, an examination of their chief provisions seems necessary. > For a fuller treatment of this topic and the one which precedes it, see the Federal Trade Commission's Report on Private Car Lines. H^ MEAT-PACKING INDUSTRY. TlIE orFICIAL CLASSIFICATION MIXING EULE.— The ™°^^/™P°' fjL territory to be considered from the point of view both ot ^i^eramy of the mixing rules and of the volume of traffic is that co^eled by the official classification.^ The general rule, Kule 10, tor ^i^^a cais in this territory, like the carload rule elsewhere, requires tnat tne shipment shall be at one time by one consignor to one consignee ana one destination. The rule is very generous so far as the articles that may be included are concerned. There is practically no limitation on what may be included in the mixture. The two important things to be determined in shipping the mixed carload are the rate to be applied and the minimum weight of the load. Rule 10 provides for charoing the highest carload rate applicable to any article in the mixture. The determination of the important matter of the mini- mum weight is not so simple. If all the articles take the same class or rate in carloads, the minimum carload is the highest provided for any of the articles ; if the articles included take different classes or rates in carloads, the minimum carload weight is the highest provided for any article taking the highest carload class or rate, pro- vided the weight of such article is 10 per cent or more of the weight of the articles taking the highest carload class or rate. If they con- stitute less than 10 per_cent of the weight of the highest minimum carload weight provided for such articles, they are not entitled to be in the mixture and are charged separately at their less-than-carload rates. There is also a provision, common to all mixing rules, giving the shipper the option of paying the carload rate on one or more of the highest-rated articles included in the mixture and less-than-car- load rates on the remainder if his total charge is thus reduced. It ^'\ ill be noted that the plan of the general rule is to apply a common rate — the highest carload rate represented in the shipment— to the whole load, and that there is a virtual guaranty of revenue by fixing a minimum weight for the carload. The special rules made by the carriers by way of exceptions to the official classification for fresh meats and packing-house products are framed on a different plan.2 They permit a variety of mixtures of products handled by the packers, and they fix definitely the minimum carload for each mixture while each class in the mixture takes its own rate, instead of there being a common rate for the whole load as under the general rule. (1) Packing-house products.— Rule 1 provides for mixing "pack- ing-house products." This t erm is by no means exact in its general cM^r ^d1t:^oS: '■°"'"'' '""''' °' "^^ °'^'° ^"-^ '""^ ^o'"-- «-- --J «=-' <" = The rules described below are those Issued by the Pennsvlvanin R n f„ -^ o • . Rulings, etc., as I. C. C. P. 1180, Items 2040 to lofl sS '?1\ te Is.ue^'L S roads In this territory, as by the Baltimore & Ohio In Its Exceptions to oSfV?'^ "« tion. I c C. No. 15273, Items 538 and 039. The rule numbers are thot^ ?^f "" sylvania Issue, I. C. C. P. 1180. "u'"ucii, are tnose of the Penn- MEAT-PACKING INDUSTEY.. 75 applieation, but as used in any particular rule it applies to certain specified) products packed in specified ways. In this rule, for example, some 3S items are enumerated/ the saane product, however, being enumerated sometimes more than once, in different Itinds of packing. The minimum aggregate weight is fixed specifically at 30,000 pounds, and each article takes its own carload rate. If this minimum is not loaded, sufficient weight is added to make it up, and is charged at the fifth-class rate, which is the prevailing but not exclusive rate for packing-house products in this territory. Other articles not enu- merated may be included in the car as contraband — i. e., their weight is not counted to make up the minimum weight, and they are reqiiired to pay the L. C. I/, rates applying to them. This permission, it may be said, is given by all the rules described below applicable to ship- ments in packing-house cars, and, as will be seen,, is a source of com- plaint by other shipi^ers. (2) Packing-house products, provisions , and fifth-class articles. — A second rule opens the door to a verj' general mixture by per- mitting the addition to the packing-house products of a few meat products, such as salted green hams and dried, salted, smoked, or sweet pickled meats, and " any articles taking fifth class, in carloads." ' The ilenis are as follows: Beef, pickled, in bbls. or tierces. Casings, beef or hog, in one-eighth Barrels, kegs or tubs, not crated or boxed-. (See Rule 11, Item 2055.) Casings, sausage, beef, in bbls., tierces, one- Quarter bbls., one-eighth bbls., one-eigh.th. bbls,_ crated or boxed, kegs, tubs or pails, crated or boxed. Casings,, sausage,, hog. In bbla.^ tierces, one- quarter bbls., one-eighth bbls., one-eighth bbls. crated or boxed-, kegs, tiubs or pailS) crated or boxed. Grease, N. O. S., in bbls., boxes or tierces. Guts (sheep, beef or hog), in bbls., half- hbls.^, tierces or casks. Hogs, Rinds, salted or pickled. Lard: (except leaf lard)i. Lard Substitutes, N. 0. S. Liver, pickled, in bbls., tierces or casks. JTeata, canned,. N. O. S. boxed. i Meats,, CQoied,. in: barrels, baskets (-with- out handles and with solid tops), boxes or crates. Meats, desiccated. In cans, boxed. Meats, atied, N. O. S., in boxes, bbls. or Meats, dried, salted or smoked, In crates. Meats, dried, sliced, In paper boxes, packed in cases. Meats (lightly salted, not cuned)^ viz.: Chucks, Boneless ; ITog Hearts and Hog Necks; Cheek Meat;. Shank Meat; Beef or Pork. Trimmings and Veal, Boneless.; In boxes or barrels. (See Rules 8, 9 and 10 Meats (lightly salted, not cured), viz.: Chucks, Boneless ; Cheek Meat ; Hog Hearts and Hog Necks ; Shank Meat ; Veal, Bonelflss ; and Beef or Pork Trim- mings ; in boxes or barrels. When ship- ped in mixed car loads by themselves, or when in straight car loads, the minimum car load weight will be 30,000. lbs. (See Rules 9 and 11 of Item 2055.) Meats, potted,, in cans, boxed. Meats, potted, in glass or earthenware, boxed. Meats, salted, boxed. Meats, smoked (except tongue), In bbls., boxes or casks. Ollj oleo, in bbls. or tierces. Oil, tallow, in bbls. or tierces. Oil,, red, in bbls. or tierces. Oil, lard, in bbls. or tierces. Gil, tanners', in bbls. or tierces. Pigs' Feet,, pickled. Pigs' Feet, packed. Pork, pickled, in bbls. or tierces. ] Sausage, bologna or smoked. In bbls., bas- kets, boxes, casks or kegs. Sausage, canned. Steartne, in bags, bbls. or- tierces; Tails (cattle, ox or pig), edible, salted, pickled or dried, in boxes, bbls. or casks. Tallow, in bbls. or tierces. Tongues, pickled, in bbls. or tierces. Tongues, smoked, in bbls., boxes, casks or kegs. Tripe, pickled, in bbls.,. kegs or kits. Yg MEAT-PACKING INDUSTKY. This mLxture requires the same minimum Wght of 30/)00 pounds as in the preceding rule, and, as there, the -f^^^,;;^;:^ ^'^^car load rate of each article. If bulk meats should be loaded ^n^he^^^ the deficit .veight, if any, is charged at fourth-class rate, otherwise ^*t1;: fono^S J loading of a car shipped from Clncago to Wash- ington, D. C, in January, 1918, is a sample of the kind of carload that can be made up under Eule 2 : Sample loading of pacVuuj-house products and fim-class articles. I'ounds. 22 boxes chili con carne 686 1 barrel salt pickled tripe 112 14 boxes caiinecl meats- 278 200 boxes iiork and beans 20, 800 33 boxes mincemeat 633 ]3 boxes peanut butter 270 13 crates fniit jelly 988 55 boxes preserved cherries 3, 080 1 keg preserved cherries. 67 192 boxes toilet soap 4, 160 Dunnage 225 31, 299 at fifth class ($0.33) — $103. 29 2 boxes beef extract in glass 60 5 boxes fruit syrup in glass 370 430 at first class ($0.87) __ 3. 74 Total weight 31,729 Total freight 107.03 This loading illustrates the advantages of the packer over his com- petitor, who does not handle meats, secured under Eule 2 of the Exceptions for the movement of mixed carloads of packing-house products and fifth-class articles. All the items in the car except the last two are rated at fifth class in carloads, and at this rate the ship- per paid freight on 31,299 pounds. But some of the items making up this weight take a 36,000-pound minimum, and if he had shipped under the general rule to which the jobbers are confined he would have had to pay the fifth-class rate on that weight — i. e., on 4,701 pounds at $0.33, or $15.51 more than he actually paid. Both the packer and the nonpacker would find it advantageous under their option to pay the L. C. L. rate on the last two items. The only " packing-house products " in the list are the barrel of pickled tripe and the 14 boxes of canned meats, both of which take a 30 000-pound minimum. All the rest take 36,000 pounds. Under a rule which was designed to facilitate the movement of packing-house products in carloads are loaded 30,909 pounds of nonpacking-house products generally handled by wholesale grocers and provisioners upon MEAT-PACKING INDUSTRY. 77 which, under their most favorable conditions, they would have had to make up the deficiency below 36,000 pounds; but, leavened by 390 pounds of packing-house products, the minimum load becomes only 30,000 pounds, and the shipper need pay on that weight only, or as much above it as he actually ships. A large proportion of gro- cery items take fifth class in carloads of a minimum weight of from 30,000 to 40,000 pounds or higher, the most frequent minimum, how- ever, being 36,000. (3) Fresh meat and fresh-meat mixticres. — Straight carloads of dressed meat and other specified fresh meats move under a, strict minimum-charge requirement of 21,000 pounds at the dressed beef rates (Rule 5). Apparently, the shipment of packing-house prod- ucts and fifth-class articles is not permitted under this rule, though there is the usual provision for carrying " any other articles " in the straight fresh-meat cars as contraband at their les-s-than-carload rates, the revenue therefrom not counting toward making up the minimum charge. (4) Dressed meats, provisions, packing -house products, and fifth- class articles. — Ample provision, however, is made for mixing fresh meats and other products by a sort of omnibus rule (Rule 3) for the mixture of " dressed meats and provisions, packing-house products, or fifth-class articles." The dressed-beef rate is charged against at least 3,000 pounds in this mixture, whether that rnuch dressed meat is included or not, and the other articles mentioned, packing-house products and fifth-class articles, take their respective carload rates. The same minimum charge is made as for a straight fresh-meat car — an amount equal to 21,000 pounds at the dressed-beef rate. A sam- ple loading under this rule for a car shipped from Chicago to Wash- ington, D. C, in 1918, is as follows : Pounds. 104 quarters dressed beef- 12, 377 100 dressed sheep 4, 055 1 barrel fresh beef 375 2 boxes fresh beef 144 99 boxes fresh offal 4, 694 1 box fresh offal 355 51 crates fresh pork 1, 824 4 crates fresh pork 522 24, 346 at dressed-meat rate ($0.65)— $158. 25 1 box stationery 210 1 box color capsules 6 216 at first class ($1.09) 2.35 16 cases oleo 615 at second class ($0.95) 5.84 1 crate smoked meat 119 1 case chill sauce 40 10 cases mustard — 240 1 keg olives 54 78 MEAT-PACKING INDUSTRY. 4 cases canned fruit — 8 cases canned veget 2 boxes fresh pigfeet— 4 crates cooked meat — 1, 368 at fifth class ($0.415) $5.68 TotaUveight 26,545 Total freight 172.12 The earnings on this car from the fresh meat alone are more than tliG guaranteed mminium. The loading is introduced to show the small shipments of groceries at carload rates. There is no way by which a grocer could ship a keg of olires, a few cases of canned goods, and the other grocery items in this load each at its own carload rate and under so low a minimum. He would have to furnish at least 36,000 pounds in order to get a carload rate at all, and that rate is a common one on the total weight of the car and can not be lower arid may be higher than the carload rates on these particular com- modities. If in making up a consignment it became necessary to include a few hundred pounds of an article requiring 40,000 pounds for a load that becomes the minimum for his mixture. The packers' low minimum is fixed arbitrarily and not changed by the character of the articles included in the mixture. An important peculiarity of Rule 3 is seen in the way the earnings from articles shipped in the car, though not specified in the mixture, are treated. Such articles are in the other rules treated as contra- band—that is, they must pay L. C. L. rates, and the weight is not counted toward making up the minimum weight or the minimum charge. Thus Rule 2 already described provides that : Any otlier articles loaded in tlie same car with those described above includ- ing those taking Fifth Class, carloads, as per current Official Classification or as provided herein, will he charged for at the less-than-carload rate authorized for such articles, and the weight thereof shall not be applied toward making up the required minimum weight of 30,000 pounds. The fresh-meat rule. Rule 5, has a similar provision : Any other articles than those specifically enumerated [in rules referred to] may be taken at the less-than-carload rate authorized for such articles, but the weight . thereof and the charges thereon shall not be computed toward making up the authorized minimum weight or charge on the dressed fresh meats in the car. Rule 3, under consideration, however, has this variation in the cLiuse highly favorable to the shipper of such a mixture : Any other articles than those enumerated below, and articles, taking Fiftli Class, in carloads, * * * may be loaded in the same car, but such other arti- cles will be charged for at the less-than-carload rate applying thereon. The minimum charge shall in no case on the entire contents of the cor' be less than 21,000 pounds, at the dressed-beef rate. *The italics are the Commission's. MEAT-PACKING rNDUSTRY. 79 A loading of a car shipped from Chicago to Washington, D. C, in October, 1918, illustrates how the rule operates. Pounds. 247 packages ft-esh meat 17,176 at dressed-beef rates ($0.65) __ .fill. 6] 300 cases poultry 6,1691 4 barrels poultry 665 6,859 at first class ($1.09) 74.70 1 bundle cotton cloth 25, 15 cases butter 1,440] 1 bag garlic [ 1, 990 at second class ($0.95) IS W \ 1,990 J 3 bnn-els spice 550, Total weigM 26,025 Total freight 20.^80 In this car the " any other articles " are the poultry, cotton clotli, butter, garlic, and spice, since they are not enumerated in the rule or in rules included by reference and do not take the fifth-class rate iu carloads. Dressed poultry and butter, it may be noted, move at an " any quantity " rate — ^that is, the rate is the same in car loads as in less than carloads. If the usual method of dealing with " contraband " where there is a minimum charge were applied to this load, the freight charge would, instead of $206.30, be $230JL6, made up as fallows : 21, 000 pounds at $0.65 $136. 50 6,859 pounds at $1.09 74.70 1, 990 pounds at $0.95 i IS. 90 Total freight '__ 230. 16 The advantage of this provision is still greater when the proportion of dressed meats to packing-house products and fifth class is less than in the above car. This is illustrated by the following load shipped from Chicago to Wasliington in March, 1919 : Pounds. Fresh meats, various kinds .5,554 at dressed-beef rate ($0.65) $36.10 10 boxes meat, slightly salted— 3, 880 at fourth class ($0.49^) 19.21 25 cases D. S. meats 8,1661 „ „.,. . ..,, _ ,«.r> ^n^ n. ^c , , ,, , J 8, 210 at fifth class ($0.42) 34.48 1 case cooked ineatsi 44), 4 boxes stationery 428 at first class (.$1.09 J) 4.69 55 cases oleomargarine 5,250 at second class ($0.96) 50.40 2 crates cheese 1, 774 at third class ($0.72) 12.77 Total weight 25, 096 Total fi-eight 157. 05 Under the usual method of treating the " any other aiticle " class, only the first items would be counted toward the minimmn charge; the earnings from the last three items wouJd be added to the minimum charge of $1S6.50 (21,000 pouads at 65 cents), making a total of $204.36. The minimum charge of 21,000 pounds at (Jressed- beef rates appears on the surface rasther a severe requirement, but no difficulty seems to be experienced in meeting the requirements of the rule in. making up loads to moderate-sized branch houses. The following loading of a car shipped by Armour & Co. from Chi- cago to Huntington, W. Va., in April, 1918, illustrates still further gQ MEAT-PACKING INDUSTRY. the variety of goods shipped in meat cars and the method of applying to each article its own class and rate: Contents. 9 quarters dressed beef 6 pieces fresh beef cuts fi boxes fresh beef cuts 2 boxes fresh beef prod 7 boxes fresh pork cuts 2 boxes fresh sausage 1 box shelled edible nuts, in glass . . - . . - .,- - - --••■■■ 3 bundles printed paper, general advertising matter. . 1 box beef extract, glass 1 box drugs 15 boxes butter... 40 packages oleo. 4 boxes cheese 1 box dried peaches. 1 box dried prunes . . 1 box lard, in tin - 7 boxes peanut butter, in glass. . . 2 boxes canned evaporated milk. . 1 box canned fruit 7 boxes canned, meats 1 box smoked beef IS boxes smoked pork 12 boxes boiled ham 1 barrel pickled sausage — 5 lioxes sliced bacon 9 boxes dry salt meat 3 barrels salt pickled pork 129 packages lard 10 packages lard substitute 5 boxes cooked sausage-. 32 boxes smoked sausage 1 box dry sausage..- 2 kegs crushed fraits 12 boxes toilet soap 1 box common soap Dunnage Weight. 1,100 161 1,017 34 363 02 — 3,333 60 170 62 25 307 085 1,520 291 58 58 2 2,105 407 12 126 120 42 163 02 2,038 886 110 98 976 1,026 8,286 2,331 100 1,222 8 246 1,086 47 ■ 210 Class. (>) -5 19,196 25,348 $0,234 .390 Freight. $9.47 1.80 1.59 .205 39.35 $62.03 > The items for which no rating is given move on a commodity rate. 2 An error of 100 in addition is noted by the Commission. sAn error of 2 in addition is noted by the Commission. Mixing rules in other territories. — The western classification has no such elaborate scheme for mixing as that in force in eastern territory. The minimum carload weight for fresh meats rated at third-class is 20,000 pounds; cooked, cured, or preserved meats are rated at from third to fifth-class, and the minimum requirements are from 30,000 to 36,000 pounds; mixed carloads of fresh meats, cooked and cured meats, and other packing-house products are shipped sub- ject to the general rule that they will be " taken at the highest rating provided for carload quantities of any article in the shipment," and that "the minimum weight shall be the highest carload minimum weight provided for any article in the shipment." Under an excep- tion, however, joined in generally by the western trunk lines,, provi- sion is made for mixing fresh meats and packing-house products at the carload rate on each subject to a minimum weight of 24,000 pounds, with a minimum charge based on 20,000 pounds at the MEAT-PACKING INDUSTRY. 81 higher rate, whether fresh meat or packing-house product. There is also the option for the shipper to pay the carload rate on the meat and less-than-carload rates on the packing-house products, or vice versa, if such a method of computation gives a lower total charge than the carload rate on each would give.^ There is no provision, however, for the inclusion of general classes of articles, such as the fifth-class provision in official-classification territory; nor is there any provision for the admission of contraband articles. The western classification also provides for shipping a mixture of fresh meats and dressed poultry at the carload rate on each com- modity, subject to a minimum charge of 20,000 pounds at third-class, which is the minimum and the rate for both fresh meats and dressed poultry. The rules are equally liberal for shippers of produce, since dressed poultry or eggs may be shipped in mixed carloads with butter, butter grease, and oleomargarine under the same conditions as to minimum and rate. In southwestern lines territory there is operative a rule for the mixture of fresh meats, packing-house products, oleomargarine, and butterine. The minimum weight is 24,000 pounds, and each article pays its own carload rate. The charge on the entire load can not be less than would accrue on the basis of the lowest rated packing-house product in the car and the minimum weight applying to such commodity.^ The carriers in southern classification territory follow a mixing policy similar to that followed by the western roads. Section 12. — Summary and conclusions. It is against the shipping conditions set forth above that complaints are made by jobbers and shippers in all sections of the country. The transportation advantages enjoyed by the packers go far to explain why they are successful merchandisers of commodities they do not produce and to explain their advantage as manufacturers of non- packing-house products. The chief objection to the private-car sys- tem formerly was that through liberal allowances for mileage the owners received, virtually lower rates than their competitors. Since 1906 the enforcement of effective regulation has tended to remove this form of rate discrimination, though, as pointed out in section 9 above, it is still a factor of importance in the Southwest ; but dis- criminations in service continue everywhere, and these are quite as evil in their effects on competitors as discriminations in rates. Service discriminations through the peddler-car rules. — It is clear from the foregoing sections that in the shipment of less-than- ' Boyd's Circular, No. 1-N. of W. T. L., I. C. C. No. A-874, rule 355. ' Leland's Southwestern Lines' Classification, Exceptions and Rules, Circular No. l-H, I. C. C. No, 1244, Item No. 318. 140361°— 20 6 82 MEAT-PACKING INDUSTRY. carload quantities the paijkers have substantial advaatages ^v«r ii competitors in the distribution of foods,' especially over whole^er,' of produce and of groceries. These advantages exist in the shipmenl of both perishahle and nonperishable foods. They consist in re- frigerator service to towns which the wholesalers can not reach as frequently with their perishables as the packers can and m many cases can not reach at all. Nonperishable foods shipped in the pack- ers' cars receive the same special service that is given fresh meats and is far superior to the box-car service, upon which jobbers must de- pend for such shipments. The exclusive service of the packers wiUi its attendant advantages grew up naturally enough. A modern packing house turns out so large a tonnage requiring regular and frequent shipment as to make necessary the building up of a well- organized special service. As the volume of traffic to outlying towns grew the usual method of handling less-than-carload shipments hj assembling them at the railroad freight house by means of drays and trap cars was abandoned, and in the various packing centers the practice was generally established and now exists of making such shipments from the plant. All interests require the prompt switch- ing of packer cars to the transfer tracks and the expedited serFicc they receive. It was natural, too, for the packers, as they extended the field of their operations in manufacturing and merchandising, to secure the privilege of including in the "meat car" other items of traffic — butterine, butter, cheese, poultry, canned goods, cereal foods, and other groceries and specialties. It is true that under most of the peddler-car rules these added lines are carried as "contra- band," but the packers have succeeded in keeping down the minimum load requirements in these rules to such a point that they find no great difficulty in meeting the requirements and still have room in their cars for carrying commodities not specifically named in the rules. In securing favorable shipping rules the packers have been aided by the fact that they were the owners of the cars, and no doubt also by their influence as powerful shippers. The inequalities in service which have thus grown up were probably not anticipated by the shippers or carriers. The handicap, however, under which it places the manufacturers and wholesalers who compete with the packers is serious. To remedy the situation it has been proposed to c^en the re- frigerator service of the peddler cars to all shippers— that is, to deprive the packers of the exclusive service they now have for L. C. L shipments. This does not seem a practicable solution of the problem. The plan of loading the cars at the packing plant has advantages «« <=learly m the public interest that it is not iMy any regulating body would order a departure from it To permi MEAT-PACIilNG INDUSTEY. 83 outside shippers to deliver tlieir goods at the plant for shipment, would in most eases, owing to the already crowded condition at the packing house, be found impracticable. Even if this difficulty could be removed the plan would probably be found unworkable, for these reasons: (1) The proposal assiunes that the space in the peddler cars is not fully utilized. This is frequently, but not al- ways, the case; and if the advantage which comes from exclusive use were called in question, the packers, rather than admit foreign goods, could make sufficient effort to fill their cars to the limit, very likely by increasing their sales of groceries; or, where no other way is open they could defeat such a plan by shipping to some weak routes less frequently and abandoning others. (2) If jobbers were permitted to ship in peddler cars, each packer would need to have the right to ship in the cars of any other packer in order to avoid giving to jobbers the same kind of advantage they now complain that the packers enjoy ; and this would involve a complete reorgani- zation of a system of distributing fresh meats which has met with the hearty approval of the Interstate Commerce Commission. (3) The kind of service a jobber would get from opening to his use peddler cars routed as they are, to suit the convenience of particular packers, could never be satisfactory to him. The interests of the two classes of shippers can not be met advan- tageously by the same service. The jobbers do not complain of the service the packers have for shipping products of the packing house. What they object to is that the special privileges which the packers have secured from the carriers for the delivery of such products are used for shipping goods in no way related to the packing industry, some of which are in no way entitled to the special service they receive. When the jobbers ask for as good service as their powerful com- petitors have they are told that they do not supply sufficient traffic to warrant its installation. The answer to the jobbers suggests, the remedy. It may be said that under existing conditions there is little motive for the carriers to extend their refrigerator service. As car- riers it is not important to them that jobbers lose orders for perish- ables if those same orders are filled by a packer and pass over their lines in peddler cars. The self-interest of the carriers can not be re- lied upon to remove the discrimination. If the packers were re- quired to ship their "added lines," their cheese, eggs, and other products requiring refrigeration in cars furnished by the carriers, whether owned or leased by them, they would be placed on a foot- ing of equality with other sliippers, there would be more traffic to support a scheduled refrigerator service, and such service would be improved for the equal benefit of all. Likewise, if the packers were 84 MEAT-PACKING INDUSTRY. required to ship their nonperishables from the railroad freight house in box cars such as the jobbers are compelled to use, not only would that equality of service be secured which it is the first duty of car- riers to provide, but there would also be an improvement in service by lessening the delays incident to making up carloads at points of origin and transfer, in which all shippers except those now favored by special rules would be gainers. Service discriminations through special :mixixg rules. The packers have likewise secured the adoption of highly favorable rules for mixed carloads of fresh meats and packing-house products against which no complaint is made, but, in official classification terri- tory especially, they have secured special rules permitting them to include in their mixture a great variety of goods, foreign to their slaughtering business, with resulting discriminations in service, as destructive to competitors as rate discriminations would be. Every shipper is interested in keeping as low as possible the minimum weight he must guarantee to secure carload rates. The competitive advantage of a low minimum is substantial. Under special mixing rules the packers may ship groceries of almost every description un- der minimum load requirements from 6,000 to 10,000 pounds less than a jobber can ship the same goods. The jobber's minimum for a straight load of canned goods is 36,000 pounds, and any mixture con- taining such goods will have at least that high a minimum ; the pack- ers can ship any quantity of canned goods in cars requiring a mini- mum of only 30,000 pounds, or in a fresh-meat mixture requiring only 21,000 pounds charged at the fresh-meat rate. This rate in official classification territory is a commodity rate, somewhat higher than fourth class. If the grocer includes in his mixture rice or dried beans, his minimum rises to 40,000 ; the packer may include these in his car without affecting the minimum. Another substantial advantage the packers have in the transpor- tation of these " added lines " of goods lies in the speed and certainty with which they are moved. The more highly organized a marketing system becomes the more important become the elements of regu- larity and promptness in the movement of goods. In both these re- spects the advantage arising from the packer's transportation serv- ice is decisive. His groceries may receive what is essentially an ex- press service as against the slower freight service of his competitors. The regularity with which his cars move makes it possible to keep lower stocks on hand at branch houses than Avould otherwise be re- quired, thus adding to the apparent efficiency of the branch house. Until the packers are shorn of the transportation advantages granted them by the carriers, there is no way of measuring their true industrial efficiency. meat-packing industry. 85 Cold-Storage Facilities. Section 13. — Nature and functions of cold storage. A cold-storage warehouse may be somewhat arbitrarily defined as a place artificially or mechanically cooled to a temperature of 45° Fahrenheit or lower. (This definition follows, in the main, that of the Food Administration, but does not include the idea that the goods put therein are held for 30 days or more.) It should be noticed, how- ever, that good management implies more than the keeping of the temperature below 45°. For some things freezing means ruin; for others it is highly desirable, if not necessary. Besides this it is im- portant that fluctuations in temperature be avoided. Humidity and ventilation are likewise matters that must receive attention if the best results are to be obtained. All this implies properly-built rooms, specially equipped, and well managed. Under the circumstances it is not surprising to find that most of the dealers in food products, including some whose volume of business is large, are without any- thing like adequate cold-storage facilities of their own. The chief legitimate function of storage is to save goods from a time when they are less wanted to a time when they are more wanted. The production of foodstuffs is, in the main, a seasonal occupation, and by means of storage it is possible to equalize what would other- wise be seasons of relative plenty and of relative scarcity. The first are ordinarily seasons of low prices and the second of high prices; and in this fact is to be found the motive for storage. In some cases the profits resulting from the storage of goods may be very large; but in the absence of certain abuses they are ordinarily simply a pay- ment for the service rendered in the saving of goods from a time of less to a time of greater need. The price may indeed be higher at the time the goods are put into storage than it would be if they were all sold to consumers ; but if they are eventually sold the price, under free competition, will then be lower than it would have been had no storage taken place. It must be remembered, moreover, that the fact that goods can be put into storage when prices are low, instead of being sold at a sacrifice, is itself a stimulus to production ; and for this reason it can not safely be said that prices need normally be higher in time of plenty than they would be if modern storage methods were unknown. Indeed, it is quite possible that the con- trary would be the case. Section 14. — Possible abuses. Some of the most important abuses that may arise in connection with cold storage are closely related to monopolistic control of facil- ities. Unfortunately, the monopolist can make goods or services valuable by making them scarce. This applies no less to the use of cold storage than to other things, though the profits may be secured 86 MEAT-PACKING INDUSTRY. from the prices of the goods stored instead of from a high charge for the use of storage facilities. Competition in the use of storage normally tends to reduce the difference between the prices of the goods at the time they are put into storage and at the time they are sold to an amount suiEcient to fairly cover all the costs of storage, in- eluding a profit sufficient to give a competitive return on the invest- ment in the articles stored. By limiting the amount of goods stored, however, or by controlling the release of stored goods, or by with- holding such goods from use, a monopoly can make the difference greater than this and so can secure a larger profit for itself. Limitation of the quantity of goods stored, very largely at the ex- pense of competitors, can be accomplished either by such a control of cold-storage facilities as will make them unavailable to independents or by such a manipidation of prices as will make it unduly danger- ous for independents to make full use of such facilities as are at their disposal. The first of these is so obvious as to need no further dis- cussion as far as the underlying principles are concerned. Price manipulation is, of course, not necessarily connected with a monop- olistic control of cold-storage facilities, but it may be iised in such a way as to accomplish very much the same results. A cut in price at a time when independent dealers have large stocks of goods in storage may result in heavy losses to them and may make them hesitate in the future about putting goods in storage when it would otherwise seem desirable. The matter is complicated by tlie fact that the sale of storage goods at prices which mean a loss to many dealers is not necessarily the result of manipulation in any proper sense of the word, but may be fully reconciled with market conditions. Under such circumstances price cutting, in an objectionable sense, is partic'u- lax'ly difficult to detect. In connection with price manipulation it should be noticed that the use of col* storage makes it relatively easy to detennine at what times and in what quantity goods shall be put on the market, and for that reason greatly facilitates such manipulation. If, for ex- ample, it be decided that a heavy cut in prices is desirable, for the purpose of injuring competitors or for any other reason, the manip- ulator may begin by disposing of a large part of his stocks of goods m storage at satisfactory prices, retaining only enough to make his operations effective when the time for a heavy cut comes. The cost of the operation to him may thus be reduced to a minimum, and the use of storage may be made less attractive to his competitors. In like manner, he may hold goods for a rise when it is the object of his manipulation to bring about an increase in prices, leaving his competi- tors to take care of the market before the full measure of the increase appears. Such a control of cold storage as will make it impossible, tor rivals to know what is being done is naturally an important' aid to any who are attempting such manipulation. MEAT-PACKISrC ISTBUSIKS, 87 AmotSaer .possible ■••aSjuse that shffluld te jaentiaiied .arises out of the fact that goods may be allowed to remain in storage mntil they are spoiled rather than be put on the maxlcet, where their presence will caiKe a reduction in pri-ces. The circumstances under which tliis is ^ofitable will be considered in the Commission's ifeport on The "^^liolesale Marlseting -of Food. Here it need only be pointed out that such a praetioe will rarely be profita^ble under competitive conditions and oMy nader certain circiumstances if the business is in tlie hands of a moiiopioly. In v«w of the complaints thai are somethnes made that the big mea1>packing companies make verj' large profits by storing goods when prices ai'c low, it can not be too strongly emphasized that stor- age tends to reduce the price diflferences on which such profits are fcpeoadent. Heal abuses -of storage are possible, but in .their absence TMireasonably large profits obtained in this way ordinarily point rathei' to a deficient than to an excessive use of storage and raise the qiufistion of whether or not there is some obstacle in the way of its use by those who are iatenesfced in the handling of foodstuffs. Section U. — Operation and occupancy of cold-storage space in the TTnited States. In order to ascertain the extent to which the &ve large meat- packing houses bave an advantage in the use of coldTstoirage facilities, tike Cofflffliiission made a survey of the capacity of the cold-storage waatehoiises -oi the country in which food products are kept and of the extent to which space in them was leased or occupied without lease by meanbers of the Big Five, including companies controlled by th«m. The examination covered private cold-storagfe facilities as weU as those that were -open to tlie public. This was obviously necessary wheise the puipose was to determine the extent to which these five concerns have an advantage as a result of their ability to hold perishable f oodstufe for more thaja a very short period of time. Betiurns w«re secured from all cold-storage warehouses licensed by the Food Administration which were still in business, and a num- ber of others were found which clearly belonged in the same class. Unlike the Food Administration tlie Commission included ware- hom-ses that stored goods for a period of less than 30 days, but only a few of this Boxt were found. Tlie results, it is believed, include not less than M per cent of the concerns that can reasonably be regarded as engaged in the business of cold storage of iood products, either for thransdves or tor others, and an even larger percentage of the ^aee available. Table 20, on page 106, shows tlie capacity in the late summer or early autumn of 191S of all the cold-storage warehouses investigated, 88 MEAT-PACKING INDUSTRY. together with the proportion operated by the Big Five (in all cases in which the Big Five or any of them are mentioned in connection with Tables 20-25 controlled companies so far as known are included) and by others. The former together operated 44.8 per cent of the cold-storage capacity of the country. They controlled in this way nearly half of the nonfreezing and a trifle less than a third of the freezing space. Swift & Co. alone controlled 14.9 per cent of the total cold-storage space, with 15.3 per cent of the nonfreezing and 13.8 per cent of the freezing. For Armour & Co. the figures were 13.3 per cent of the total, 14.6 per cent of the nonfreezing and 9.2 per cent of the freezing. The figures for the other three members of the Big Five, while large in amount, were relatively unimportant. The proportion of the cold-storage space of the country operated by the Big Five is hardly large enough to give them any substantial degree of direct monopoly control, at least under ordinary conditions. As will presently be pointed out, this is not true of all the places at which they do business. Here, however, it should be noticed that, taking the country as a whole, their position is strong enough to give them a material advantage at times when the conditions of demand and supply are such as to make it necessary that practically all of the cold-storage facilities open to the public be fully used if the needs of the dealers are to be satisfied. Even though there be no deliberate attempt to exclude others from the use of cold-storage facilities, the operation of a large amount of space by a packing-house company gives it the assurance that a con- siderable proportion, at least of its own goods, can be cared for at all times. . In so far as its own facilities are inadequate it can bid for additional space in other warehouses. Much of this advantage can, of course, be secured by the packing companies individually; but a very effective measure of combination need imply little more than that each of the big packers regards the others as preferred customers. This preference need not show itself in the rates charged. It is enough if space is furnished to such customers at times when there is not enough for all. Table 21, on page 106, shows the amoimt of cold-storage space leased or occupied without lease by the Big Five on November 30, 1917, and on March 31 and July 31, 1918. (The figures do not include certain commodities reports on which were not required. They are there- fore somewhat too small, but it is believed that the errors can not be great. See Exhibit VI.) It includes space in their own and in each other's warehouses, as well as in those operated independently. It is, of course, possible that some of the space leased was not occupied, but there is no reason to suppose that this constituted any considera- able proportion of it, and in any event the amount of space held MEAT-PACKING INDUSTRY. 89 under lease is but a small part of the total with which this table is concerned. For these reasons the figures may be taken as showing approximately the amount of space occupied. It should be remem- bered, however, that, strictly speaking, they show the maximum' that might have been so used. From a comparison of Tables 20 and 21 it appears that even on March 31, 1918, when the figures were larger than on either of the other two dates considered the amount of space occupied by the Big Five, assuming that it includes all the space leased by them, was much less than the total amount they operated. This is true not only of the Big Five collectively but of each of them. It does not mean, of course, that they had more cold-storage facilities than they could use in every city. As will presently appear, there are some cities in which they had no such facilities of their OAvn, and a few in which their own facilities were apparently inadequate. It should be noticed that the concern that operates public or combined public and private cold-storage facilities is in a particularly good position to be well posted as regards the supplies of various commodities that are avail- able at any particular time. Where such a concern is also a dealer in those commodities it would seem to give it a decided advantage, un- less, of course, the information is published at frequent intervals and thus made available to all who wish to make use of cold storage; It is entirely reasonable to suppose that some, at least, of the Big Five, controlling warehouses in different parts of the country, can gain information as regards the whole situation that would hardly be available to the operator of a small number of cold-storage houses, all of which were located in a single district. As will presently appear, many of their warehouses were reported as private. In so far as their private character is not merely temporary they are of less value as sources of information than if they were used by outside producers. There are, however, a considerable number of cold-stor- age warehouses operated by the big packers that are public or com- bined public and private. (SeeTables26-3o, pp. 121-131.) This ad- vantage, it should be noticed, is like that of always having space avail- able for one's own goods, a natural result, rather than abuse, of the operation of a public or a combined public and private cold-storage business widely distributed. In so far as it is an evil it is with the principle itself that it is necessary to deal. Table 22, on page 106, shows the amount of space operated by the Big Five and its members plus the amount leased or operated without lease in independent warehouses on Noa ember 30, 1917, and on March 31 and July 31, 1918, the figures givenin Table 20 for the amount of space operated being assumed to be correct for all three dates. This is not a violent assumption, for the amount of space operated .90 MEAT-PACKIKG INDUSTRY. represents tKe amoimt available, amd this is much more coustaait ,than the amount of space occupied- TaWe 22, therefore, allows for the five large packers as a wholfi the iunount of .space in whijch they were interested by opei^tion, by I«ase and by occupancy without lease. Care should be taken to avoid any assumption .tliat this table means more than it .does. It does not, for eacample, show the amount fii space utEized. Tha;t, so far as the members of the Big Five them- •selves are concerned, is shown in Table 21. It does not necessarily demonstrate the aanount withheld from use, for some of the space ©jDei-ated hj members of the five large packers was actually occupied by otlier concerns, though, as will appear later, many .of the houses operated by the five lar^e packers are private in character, and ai^e apparently far from being fully accupiecL Meither does this table of itself show that tlie &ye packers secured space in independaat ware- houses when they had facilities of their oavu availaisle, since the cities in wJaich space in independent warehouses was seom'ed mwhi. have been those in whicli their own facilities were inadequaiie. As will soon be seen, however, when the iurge cities axe considered, there are manj localities in which they secured space in independfiitf warehouses when their own were a.23parently far from filled witla their own goods. The table does, however, help to give .some idea of tl>e extent to which the five great meat packers are a factor in the cold-storage business of the esuntry. Section 16. — ^Operation and occupancy of cold-jstorage space in large cities. Table S3, on pages 107-111, shows the capacity of cold-.storage plants in cities having an estimated population in 1917 in excess of 100,,OOQ, the am&unts operated by theouts-ide concerns and by the five ijreat packers, indiv.idually and collectively, .being given separately. It will be noticed that the percenta.ge of cold-storage capacity op- erated bj members of the five is spread very unevenly over tlie dties here considered. In 12 ' >aut of the .59 cities imcluded in the table they operated more than one-half of the total capacity. The number would be .somewhat reduced if ^ Paul and Minneapolis were classed together, as for some purposes ,fchey should be. In only four cities- Dallas, Milwmkee, Pittsbua-gh, and Worcester-— did the members of tlie B.ig Five operate more thaja 25 but less thaji 50 per cent of thf total capacity. In a considerable number of cities the perceHta,ge of the total capacity .that was operated by them was,smaU; andin nwrc than 20, includmgsome very important c ities (e. ,g., Atlanta, Balti- St L™r'a?^p!^? r^^T'J°" ^''"^' ^'"'*''^ ^"y' ^«^*. New m^eu, Omsim, ■New Yo,k wl T^Tf" " *''" *''°*°°^'= '° ^""^ t'^^1^. i^ t^'^tea =^ t-bongb it wSe in I'lve in the latter tcity .would lie only 23.!G. = «■ j ~^ MEAT-PACKIHG INDUSTRY. 91 more, Cincinnati, Columbus, Providence, Eichmond, and "Washing- ton), they had na facilities of their own. The total capacity of the cold-storage plants of the country was 424,968,313 cuIbc feet. Of this members of the Big Five operated 190,2&1,848 ^ cubic feet, or 44.8 per cent. Confining attention to cities having in 1917 an estimated population of 100,000 or more, the capacity of the cold-storage plants was 318,233,224 cubic feet, and of this members of the Big Five operated 153,231,542 cubic feet, or 48.2 per cent. It follows that in cities of less than 100,000 population the capacity of the plants was 106,735,089 cubic feet, and of this mem- bers of the Big Five operated 37,030,306 cubic feet, or 34.7 per cent. The influence of membei'S of the Big Five on the cold-storage business of the country, so far as it was dependent on operation, was therefore relatively greater in cities with a population of 100,000 or more than it was in the rest of the country. Table 24, on pages 111-115, shows the total amount of cold-storage space leased and occupied without lease by members of the Big Five on November 30, 1917, and on March 31 and July 31, 1918, in the cities included in Table 23. (It should be clearly understood through- out the discission of space occupied that the figures do not include certain commodities, and are therefore somewhat too small. See Exhibit VI.) From this it appears that in nearly all of these cities in which members of the Big Five operated cold-storage plants the amount of space which they occupied, including all space leased by them, was less, and commonly much less, than the amount of space they operated. Chicago, Fort Worth, Kansas City, Omaha, St. Louis, and St. Paul were all important packing-house centers for at least some of the members of the Big Five. For this reason it is not stu:- prising to find that the percentage of cold-storage space operated by them in those cities was large, but it should be noted that it was much larger than the amount of space they utilized. Considering the five packers separately, there are few of those cities in which one or more opetated a cold-storage plant and fully occupied the apace in it. Turning to the cities in which the five operated one or more cold-storage plants but together controlled in this way less than 50 per cent of the cold-storage facilities, the situation is found, in a majority of the cases, to be much the same as those in which the percentage of control was larger. Some of the cities, however, in which the great packers occupied more space than they operated are of great importance. Taking these five pack- ers as a whole, they are Philadelphia, Detroit, Hartford, Springfield (Mass.), Syracuse, and Memphis. This is partly explained by the " Revised figures, slightly less tlian given in Part III, page 129. Tlie percentage as there given and the total for the United States remain unchanged. 92 MEAT-PACKING INDUSTRY. fact that in these cities some of the big packers had goods in storage, though operating no plants of their own. In these cities, however there were but a few cases in which any one of the five operated storage warehouses and at the same time had facilities that were inadequate for its own needs. In New York Swift & Co. leased or occupied without lease at the end of March and July, 1918, more space than it operated, and the same is true of The Cudahy Packmg Co. for all of the dates considered. The surplus of the three other big packers, however, was greater than the deficiency of these two. In Philadelphia Morris & Co. had apparently insufficient space of its own for all three dates, and in Boston this was true of Armour & Co. for the end of July. The same principle applies in a few other cases of less importance. As a general rule, the amount of space occupied by any one of the five is very much less than the amount operated by it. This is shown, somewhat inadequately, by Table 16, opposite page. In this table are included all cities with a population of 100,000 or more in which any of the five large meat packers operated a private cold-storage warehouse, but in which none of them operated one that was open to the public. For each of the packers in each city the amount of space oiserated is regarded as 100 and the amount oc- cupied calculated as a percentage of it. The space occupied may be somewliat larger than that reported, for certain commodities were not included in the returns that the cold-storage companies were asked to make. It is believed, however, that the discrepancy on this account is not serious. (See Exhibit VI.) On the other hand, the figures for space occupied may include space in warehouses of other of the Big Five or of independents. Assuming that they are approximately correct, they show that a very large amount of space was vacant on the three dates considered. (In many cases the companies reported that no space was unoccupied. The difference between the capacity operated and the amount of space reported as occupied is, however, so great in many instances that it has seemed impossible to account for it. It must be remembered that all the warehouses here considered were reported as licensed by the United States Food Administration as private warehouses, so that the space not occupied by the owners could not have been occupied by anyone else.) MEAT-PACKING INDUSTRY. 93 Table 16. — Cold storage of five greater meat packers — Leased and oecupied space' ■in percentages of operated space' in cities with an estimated population of 100,000 or more in tchich one or more of the five operated a private cold- storage warehouse, but in which none of Ihcm operated a cold-storage loare- house open to the public. Operated Leased and occupied spacei in percentages of operated space. Nov. 30, 1917. Mar. 31, 1918. July 31, 1918. Birmingham, Ala.: ATOnrarr& Ck» Cndahy Packing Co Cleveland, Ohio, Swift & Co Dallas, Tex., Armour & Co ;... Denver, Colo.; Swift &Co Armour & Co Des Moines, Iowa, Swllt & Co Detroit. Mich., Cudahy Packing Co Fort Worth, Tex.: Swift &Co Armour & Co Hartford, Conn., Swift & Co Indianapolis, Ind., Armour & Co Los Angeles, Calif.; Swift & Co ;.... Wilson & Co., Inc Cudahy Tacking Co : . . . Louisville, Ky., Armour & Co Lowell, Mass., Swift & Co Memphis,rTenn., Armour & Co Milwaukee, Wis., Swift & Co Newark, N. J.: Smft &Co Cudahy Packing Co New Haven, Conn., Swift & Co; Pittsburgh, Pa.: Swift & Co Armour & Co Rochester, N.Y., Swift & Co St. Louis, Mo.< Swift &Co Armour & Co Morris & Co St. Paul, Minn., Swift & Co Salt Lake City, Utah, Cudahy Packing Co. San Antonio, Tex., Armour & Co San Francisco, Calil.,5 Swift & Co Seattle, Wash. , Swift & Co Spokane, Wash., Armour & Co Syracuse, N. Y., Swift & Co Worcester, Mass., Swift & Co 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100- 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 10.0 .7 22.5 7.6 13.2 14.0 24.9 49.2 11.7 12.0 69.2 24.1 )2.0 11.4 9.7 21.1 (') 20.9 70.3 8.8 13.2 18.9 39.2 37.5 36.2 10.1 68.3 5.0 29.0 27.5 8.8 30.0 29.3 19.0 6-9 .4 75.9 19.1 30.6 27.7 2.3 88.0 16.1 16.6 19.1 40.6 13.9 47.2 29.2 11.3 (») 21.2 77.9 14.7 2.9 38.4 27.4 15.0 76.2 33.9 35.7 59.1 15.2 26.8 29.7 .8 28.0 03.8 30.-6 3LS 11.2 47.0 13.7 n.3 17.8 68.0 .1 10.9 12.8 72.7 33.4 19.4 37.3 27.6 41.9 (') 63.9 62.2 14.4 1.7 48.9 -6.7 15.8 4l:l 61. S 37.1 23.9 61.2 16.0 34.9 39.5 30.9 19; 6 11.2 65.3 ^Includes space oecupied in packer's own plant and leased and occupied in other plants. 2 Figures forcapacity operated in cubie-feet will be found in Table 23; for capacity leased and occupied in Table 24. Private character is shown in Tables 26-35. n Company reports none stored. < Includes East St. Louis, 111., and National City, 111. 'Includes Oakland, Calil. Table 25, on pages 116-120, shows for the cities and dates included in Tables 23 and 24 the amount of space operated by any of the five packers plus the amount leased or occupied without lease by them in independent warehouses, and the same thing for all of them considered as a unit. For these five concerns collectively it shows the amounts of space in which they were interested on the dates and in the cities given. For the individual packers, however, it does not include the amount of space leased or occupied without lease in each other's ware- houses. A few concrete illustrations will help to make clear the char- 94 MEAT-PACKING INDUSTRY. acter of this table. In Boston, for example, Armour & Co. operated 1,393,376 cubic feet of space. On November 30, 1917, it leased or occupied without lease 743,189 cubic feet. Of this, however, only 63,665 cubic feet was in its own warehouses, and 679,524 cubic feet was in warehouses belonging to none of the Big Five. The amount, therefore, entered in Table 25 is 2,072,900 cubic feet (l,393,376-f-_ 679,524). On the same date Morris & Co., which operated no cold- storage space in Boston, leased or occupied without lease 77,464 cubic feet, of which 17,650 cubic feet was in a warehouse belonging to Armour & Co. and 59,814 cubic feet was in independent warehouses. Since the f oi'mer amount has already been entered in Table 25 as space operated by Armour & Co., only the latter is now entered. The treat- ment of the other members of the five is similar. The sum of the amounts set opposite the names of the individual packers for Boston on November 30, 1917, or 10,269,914 cubic feet, represents the amount of space in which the Big Five were interested on that date in Boston. In so far as the figures showing occupancy are too small by reason of the failure to include certain commodities, they are too small here, and the figures showing the amount of space in which the five packers were interested should probably be larger. From Table 25, in conjunction with Tables 23 and 24, it appears that in a large number of instances the big packers were securing space in independent warehouses when the total amomit they held under lease or occupancy without lease, including space in their own warehouses, was less than the amount they operated. This is true whenever the nmnber of cubic feet or the percentage shown in Table 25 was greater than the corresponding figures in Table 23, and these in turn were greater than the corresponding figures in Table 24. While the showing for the five great packers as a whole is not without significance, save on the assumption that they are entirely independent of each other, the figures for the separate concerns should be examined in all cases in which it appears that the five are unneces- sarily occupying space in independent warehouses. The tables may show that the five, taken together, are interested in more space than they either operate or occupy, but on close examination it may be seen that some operate much more space than they use but occupy little or none in outside warehouses. In Birmingham, Ala., for ex- ample, the Big Five, considered as a whole, operated 24.8 per cent of the warehouse space in the city. On July 31, 1918, they occupied only 11.4 per cent, but were interested through operation, lease, or occupancy in 30.5 per cent. It would appear, therefore, that they occupied a considerable amount of space in independent ware- houses. Considering these five packers separately, however, it ap- pears that Armour & Co. and The Cudahy Packing Co. were the only MBAT-PACHCING INDUSTRY. 95 ones who operated cold-storage plants, and; though they occupied some space in independent warehouses when their own were evidently far from filled, it amounted to only 0.9 per cent of the total amount in the city in the case of Armour & Co. and 0.1 per cent in the case of The Cudahy Packing Co. Even if the two be taken together, the amount in which they were interested was only 25.8 per cent, or 1 l)er cent more than tliey operated. The other three of the five all occupied space in the city but had no facilities of their own. As will appear from Tables 28 and 34, the Armour and Cudahy plants were both private, so the other three had to occupy independent space. There is little reason to doubt, however, that these private plants con- tained much vacant space. There are a considerable number of cases in which the big packers occupy some space in independent warehouses when their own ap- pear to be far from full. In most cases the amount so occupied is not very large, even when considered as a per cent of the space available to concerns that are not among the five largest meat packing concerns, and in some cases it is partly offset by the fact that the big packers' own warehouses are open to independent goods. A very striking case, however, is that of St. Louis. Here the Big Five together operated 63.9 per cent of the total capacity. They occupied, assuming all space leased by them was fully occupied, but 19.6, 30.3, and 26.2 per cent on the three dates considered, but the amoimt of space in which they were interested was 70, 74.6, and 71.2 per cent of the total. Swift & Co., Armour & Co., and Morris & Co. were tlie only ones of the five who operated any space and all their plants were private. Swift & Co. operated 17.6 per cent of the space, occupied 6.6, 13.4, and 10.8 per cent on the three dates, but controlled through operation, lease, or occupancy without lease 20.4, 23.9, and 21.5- Armour & Co. operated 25.4, occupied 8.9, 8.6, and 9.4 per cent, and controlled 26.1, 25.9, and 26. Morris & Co. operated 20.9 per cent, occupied 2.1, 7.5, and 5 per cent, and con- trolled 21.6, 24, and 22.7 per cent. All three seem to have had "a fairly large amount of vacant space, but notwithstanding this Swift & Co. and Morris & Co. occupied a considerable amount in independent warehouses. Taking these tliree together they operated only 63.9 per cent but controlled 68.1, 73.8, and 70.2 per cent. The space they occupied in independent wardiouses was 11.6, 27.4, and 17.5 per cent of the amount available to others than themselves. Kansas City is in some ways more worthy of notice than St. Louis. Here the Big Five operated 92.8 per cent of the cold-storage space. They were interested through operation, lease, or occupancy without lease, on July 31, 1918, in 94.6 per cent. All of the big packers operate some ^ace in Kansas City and the amount occupied 96 MEAT-PACKING INDUSTRY. was in all cases much less, on the three dates in question, than the amounts operated. Most of the space operated by Armour & Co. was public, or combined public and private, but the plants operated by the other big packers were all private. The situation in Omaha is very similar to that of Kansas City. Here Wilson & Co., Inc., had no space of its own, and all the space operated by Armour & Co. was combined public and private. The space operated by the others was private. None of the four which had a plant of its own occupied nearly as much space as it operated. On March 31, 1918, the four of them together controlled through operation, lease, or occupancy without lease, 95.2 per cent of the cold-storage space in the city. Of this 3.6 per cent was in independent warehouses. It does not look like a very large amount, but it was more than half of the space independently operated. The cities that have just been considered are all important pack- ing-house centers and it is to be expected that a large percentage of the space should be under the control of the five dominant packers. It would appear that in all of them the five have much more space than they could occupy on the three dates selected, and these were all during the war when the pressure on the cold-storage facilities of the country seemed to be especially great. Attention is chal- lenged, therefore, by the fact that notwithstanding the large amount of space which they operated, they seem to have leased or occupied without lease a very large proportion of the independent space. An interesting point in connection with the extent to which the five packers exercise an influence on the cold-storage plants of the country is the number operating and the number using cold-storage facilities in each of the large cities. This is shown in Tables 23 and 24, for all cities having an estimated population in 1917 of 100,000 or more, the numbers using cold storage being available for three dates only. It is more clearly brought out, however, in Table 17 below, which is derived from Tables 23 and 2-i, with the estimated population of each city added. From* this table it appears that it is only in New York, Chicago, and Kansas City that all five operated cold-storage warehouses. Four were similarly represented in Omaha, and three in St. Louis and Los Angeles. In 7 cities but two of the Big Five had cold-storage facilities of their own, and in 24 but one. There were 22 cities in which there was no cold-storage warehouse operated by a member of the Big Five. As throwing some light on the relative importance of the five great packers m the cold-storage business, it should be noted that of the 37 cities in which one or more operated a warehouse of this sort, bwift & Co. was represented in 27, Armour & Co. in 17, The Cudahy Packing Co. m 9, Morris & Co. in 6, and Wilson & Co., Inc., in 4 MEAT-PACKING INUUSTEY. 97 Table 17. — Cities with an estimated population of 100,000 or more on July 1, lUn, classified ty the number of the five larger meat packers operating cold- storage plants, with names of packers, if operating, and the number holding space by lease or occupancy without lease on Nov. 30, 1917; Mar. 31, 1918; or July 31, 1918. City.i Estimated population Names of Big Five operating. Number of Big Five using Albany, N.Y Atlanta, Ga Ballimore, Md , Bridgeport, Conn Bullalo, N. Y Cincinnati, Ohio Columbus, Ohio , Dayton, Ohio Fail River, Mass Grand Rapids, Mich... Minneapolis, Miim Nashville, Tenn New Bedford, Mass Providence, K. I Beading, Pa Richmond, Va Scranton, Pa Tacoma, Wash Toledo, Ohio Trenton, N.J Washington, D. C Yonkers, N.Y , Cleveland, Ohio Dallas, Tex Des Moines, Iowa Detroit, Mich Hartford, Conn Houston, Tex Indianapolis, Ind Louisville, Ky , Lowell, Mass Memphis, Tenn Milwaukee, Wis , New Haven, Conn New Orleans, La Portland, Oreg Rochester, N.Y St. PauljMiim Salt Lake City, Utah. San Antonio, Tex San Francisco, Calif.^. , Seattle, Wash Spokane, Wash Springfield, Mass Syracuse, N. Y , Worcester, Mass Birmingham, Ala , Boston, Mass.' Denver, Colo Fort Worth, Tex. Newark, N. J Philadelphia, Pa. Pittsburgh, Pa... Los Angeles, Calif. 106, 196, 594; 124, 475, 414, 220, 12s, 129, 132, 373, 118, 121, 259, 111, 158, 149, 117, 202, 113, 369, 103; 692 129: 104; 619, 112, 116; 283, 240, 114, 151, 445, 152, 377, 308, 264, 252, 121, 128, 677, 366, 157: los: 158! 166; 189, 716 970, 724 268, 439 109,597 418, 789 1,735,514 586, 196 535, 485 Swift &Co Armour & Co Swift &Co CudahY Packing Co. Swift & Co do Armour & Co do Swift & Co Armour & Co Swift&Co do Armour & Co Swift &Co do ,..>.do Cudahy Packing Co. Armour & Co Swift & Co , do Armour & Co , Swift&Co do do Armour & Co iCudahy Packing Co. Switt&Co Armour & Co 'Swift&Co Armour & Co Swift&Co ■ Armour & Co 'Swift & Co CudahY Packing Co. 'Swift&Co Morris& Co 'Swift&Co , I Armour & Co , 'Swift&Co , Wilson & Co., Inc.. ICudahy Packing Co. ' No public cold-storage plants were reported for Camden, N. J., Lawrence, Mass., Lynn, Mass., Pater- son, N. I. Schenectady, N. Y., or Youn/stown, Ohio. They are therefore not included in this table. ■'Includes Oakland, Calif. 'Includes Cambridge, Mass., and Somerville, Mass. ^ ,^ ^ ' The sane urju nstanoes that made it nesessary to classify alarge independent cold-storage warehouse In Newark with tbofee of New York in Tables 23-25, make it impossible to say whether four of the Big Five or all of them make use of the facilities in Newark. 140361°— 20 7 98 MEAT-EACKING INDUSTRY. OfABL,. n.-Cities. with an estimatea l'<'V^'l''''^''ji^^^^^^^ ''^^' 1917, classiflei Dy the ■numUer of the live ^f ^«; "f *' ^g^c.-Gontmued. starane plmits, with names of paclcers, if opeiatmj, City. !■ Estimated 'population. Names ot Big Five operating. St. Louis, Mo.i. Omaha, Nebr. .. Chicago, 111 - 2,547,201 Kansas City, Mx>.' . ,|Swift&Co.; 845,a42.K Armour &L0 - I Morris & 1-0 (Swilt&Co - Armour & Co 177,777!r^'^„is&Co.,-p--- i CudahvPaokmgCo.. 'iSwilt&Co Armour &yo . Morris* Co... ---•-■ Cudahv Packing Co. iWilson & Co., Inc.-. Switt &Co - Armour & Co Morris & Co. NumBer o( B.ig. Five using space. 407, 912 Now York.N. Y.< 6,050,049 Cudahy Packing Co^ . Iwili ■ " ' Wilson & Co., Inc.. (Swift & Co-.. _, Armour cSi Co. ■I Morris A. Co Cudahy Paddng Co. lWiIsoii&Co.,Ine... 1 Includes East St. Louis, III., and National City, 111. 2 Population of National City which was 253 ia 1910, not included. Burflau. of the Census does not estimate its 1917 population. > [n?ludes Kansas City, Kans. ' Includes Jersey City, N. 3. Section 17. — Plants operated by tte big packers. Kor tke purpose of showing more clearly tKe position of the Big Five ill the cold-storage business, Tables 26-35, on pages 121-lSl,kEve boon compiled. These show for each of the big packers the plaBts operated, either in its own name or in that of companies under its control, together with the location of each plant,^ its capacitj, its public or private character, the class of commodities for which it was used (i. c^ the commodities reported for the three dates- vtAr consideration) , and, in the case of tliose indirectly operated, the iMttm of the controlled company, the location of its head oiSce, and tlie method of control. As regards this last point, a company was re- garded as controlled by one of the big packing companies when ihf latter, or any of the individuals prominently identified with it a- owners, held 50 or more per cent of the stock, directly or thraugk control of the stockholder.. For example, 99.9 per cent of thfi stack of ho Butchers' Slaugrhtering & Melting Co., of Brighton (Bos- ton), Mass., IS OAvned hy the New England Renr^o, V? ^i i„t ter is controlled hj a stock ownership of 51 ^^^^^^S' ^0. The lat- dated Rendering Co. Tliis in turn is contmll !.\°'"' ^^ ^^^ ^°''"'^'' who own 77 per cent of the stock. ^^^^^ed by the Swift family, In these tables the relative importanr-p ^* *i tJie Big Five, so far as the cold-storaJL?* different members of appears. Swift & Co. heads the list ^th ^r' i^ '"' ^«"««™ed, clearly <^oW-storage warehouses, MEAT-PACKING INDUSTE.Y. 99 having a capacity oi 63,575,237 cubic feet. Of these, 43 warehouses, with a capacity of 41,492,606 cubic feet, were operated in the name of Swift & Co., and 49 warehouses, witli a capacity of 22,082,631 cubic feet, in the names of other organizations. Armour & Co. con- trolled only 52 warehouses, with a capacity of 56,425,502 cubic feet, of which 29, with, a capacity of 36,472,864 cubic feet, were operated ill its own name and 23, with a capacity of 19,952,638 cubic feet, in the names of other concerns. The other three companies fall far be- hind, Wilson & Co., Inc., controlling only 13, with a capacity of 23,266,913 cubic feet, of which 6, with a capacity of 18,595,247 cubic feet, were operated in its own name and 7, with a capacity of 4,671,666 cubic feet, in the names of other concerns. One of the things most strikingly brought out by the tables is the large number of cold-storage warehouses that were reported as pri- vate in character. This means that such a plant is available only for goad's belonging to the company by which it is operated. Strictly, it would seem that a distinction should be made between any of the Big Five and a company under its control. In practice, however, a plant was often reported as private when it contained goods belonging to ' the packer by which it was operated or to any of tiie com,panies under its control. From the tables it would appear that only 14 of the 92 cold-storage plants operated by Swift & Co., or a capacity of 12,416,908 cubic feet out of a total of 63,575,237 cubic feet,, were open to concerns that were not members of the Swift group. Thirteen of the 52 cold-storage plants operated directly or indirectly by Armour & Co., or a capacity of 17,223,215 cubic feet out of 56,425,502 cubic feet, were open to concerns that were not members of the Armour group. For Morris & Co. the figures ure 8 out of 20, or a capacity of 3,538,699 cubic feet out of 28,458,258 cubic feet, and for The Cudahy Packing Co. 3 out of 15, or a capacity of 217,867 cubic feet out of 18,535,938. All of the cold-storage plants controlled by Wilson & Co., Inc., were private. Taking the five packers together, only 38 plants, with a capacity of 33,396,689 cubic fieet, out of 192, with a capacity of 190,261,848 ^ cubic feet, were open to independent con- cerns. One hundred and fifty-four were private. It is not here contended that, considered by itself, there is neces- sarily anything objectionable in the operation of a private cold- storage plant by one of the five, or by any other concern that has the need for such facilities. From one point of view a cold-storage warehouse may be regarded as a legitimate part of the packing-house or branch-house equipment. When, however,, one iaterest, or a closely related group of interests, control's a very large percentage of the im- portant facilities of any kind in the country it becomes a matter of 1 Kevised figures, slightly less than given in Part III, page 129v 100 MEAT-PACKING INDUSTRY. public concern. As has already been shown, the five packers together operate 44.8 per cent of the cold-storage space of the country. From the facts just considered it appears that 82.4 per cent of this, or 36.9 per cent of the total, is reported by them as private, being divided among them in definite proportions. A very important point, on which, unfortunately, no thoroughly satisfactory information can now be secured, is the extent to which cold-storage warehouses that are now private in character were private when the pressure on the storage facilities of the coun- try was not as great as it is now and how far they will continue to be private when the pressure is relieved in the future. In so far as their private character is only temporary, it means that the facilities available to the public are smallest when the need is greatest, and the owners of cold-storage plants have a decided advantage. So long, however, as it is permissible for a user of cold storage to operate a plant that can readily be changed in character from public to private or that may be operated as a combined public and private plant, the advantage can hardly be regarded as illegitimate, however strong may be the tendency to a high concentration of individual control. The remedy, in so far as a remedy is needed, would seem to be a sepa- ration of the operation and use of cold-storage plants open to the public. This applies, of course, to the independent dealers as well as to the great packers, though the size of the latter, and especially of Swift & Co. and Armour & Co., is such as to make the principle, in their case, of greater practical importance. Assuming that the private character of the'great majority of the plants controlled by the five packers is permanent, and not merely a result of a passing pressure on the cold-storage facilities of the country, the great extent of their control, while it emphasizes their importance in the production and distribution of foodstuffs, is in some respects less significant than would be a similar control of the facilities open to the public. There is, for example, less opportunity or temptation for discrimination against their rivals. Facilities which are private in time of pressure will not become a part of the public supply when the need is small, thus rendering less profitable those which are public at all times. Nevertheless, the ownership of private cold-storage facilities may give important competitive ad- vantages. A large amount of space is available at all times, and the owner is at no disadvantage in competing for space in the public warehouses when he has more goods than he can find room for in his own warehouses. The tables already presented seem to show, how- ever, that there are not many cases where any of the big packing companies, having facilities of its own, finds it necessary to bid for outside space. MEAT-PACKING INDUSTRY. 101 It will be noticed that Swift & Co. and Armour & Co. have a number of cold-storage warehouses in relatively small places in nearly all parts of the country. It is quite possible that in order to have these facilities available they were compelled to provide them. This is one of the points that should be borne in mind in considering the large number of instances in which the facilities owned are private. Many of the private cold-storage facilities, how- ever, are located in the large cities. It is, of course, not implied that criticism necessarily attaches to the packer for the existence of a sit- uation whereby he controls so large a proportion of a necessary food- holding facility ; but the situation is fraught with danger, as in the case of any public utility which is unseparated from private in- terests and unregulated in the public interest. Section 18. — The big packers and the cold storage of butter, cheese, eggs, and poultry. From the table below it appears that many of the cold-storage ware- houses operated directly or indirectly by the five great meat packers contained butter, cheese, eggs, or poultry, and some of them contained nothing else. It is, of course, well known that the members of the Big Five are large dealers in products of this sort, and many inde- pendent dealers fear that eventually nearly all of the business will fall into the hands of the big packers. Table 18 (A, B, C, D), on page 102, shows for butter, cheese, eggs, and poultry the total amounts in cold storage on November 30, 1917, and on March 31 and July 31, 1918, together with the amounts owned by the five, collectively and individually, and the percentages which the holdings of the five were of the total. It will be noticed at once that the five packers, taking them together, controlled a very large percentage of the business in each of these products, so far as cold-storage goods were concerned. In all cases their percentage of the amount in cold storage was larger on March 31 than on either of the other two dates. At the end of March they owned 42.77 per cent of the poultry in cold storage, 34.66 per cent of the cheese, 38.80 per cent of the butter, and 20.26 per cent of the eggs. Except for ' eggs, this is more than a third of the total amount of each com- modity held in storage on that date. Of butter and cheese their per- centage was smallest on November 30, being 19.18 per cent for but- ter and 33.35 per cent for cheese. Of eggs and poultry it was small- est on July 31, being 11.67 per cent for eggs and 29.54 per cent for poultry. This is more than a third of the cheese held in storage, more than a fourth of the poultry, a little less than a fifth of the butter, and only a little more than a tenth of the eggs. 102 MEAT-PACKIKG INDUSTRY. TABLE 18.— Absolute and relative holdings of Hitter, chee»e, eggs, and poultry in corn storage on Nov. 30, 1917; Mar. 31, WIS; and July 31, 1918— The five larger meat packers and all other storers. (A) BUTTER. Swift Armour Morris Wilson. Cndahy ThcBijFive All otlier storeis... Grand total. Not. 30, 1917. Pounds. 3, 718, 532 6,267,193 1,034,607 1,454,695 2,001,907 14,466,934 60,941, 984 75,408,918 4.93 8.30 1.37 1.93 2.65 19.18 80.82 100.00 Mar. 31, 1918. Pounds. 821,729 2,856,945 453,112 380,239 749,278 6,261,303 10,304,851 16,566,154 6.28 18.36 2.91 2.44 4.82 33.80 66.20 100.00 Judy 31, 1918. Pounds. 6,287,982 7,33-1,897 2, 561, 571 2C 144, 559 3,177,482 21,503,491 69,465,700 90,969,191 Per cent. 6.91 8.06 2.82 2.36 3.49 23.64 76.35 100.0ft (B) CHEESE. Swift 3,907,301 14,038,049 2,424,482 930,358 4,323,292 5.08 IS. 27 3.16 1.21 6.63 1,067,968 7,900,440 1,017,290 434,282 3,027,399 2.97 22.00 2.83 1.21 5.65 2,855,309 8,157,877 1,037,768 1,062,368 3,549,451 5.84 Armour 19.69 Morris 3.13 Wilson 2.17 Cudahy 7.26 25,683,482 51, 210, 410 33.35 60.65 12,447,379 23,470,621 34.66 66.34 16,662,773 32,210,262 34.09 65.91 76,83.3,892 100.00 36, 917, 900 100.00 48,873,035 100.00 (C) EGGS. Swift .. 264,575 409,059 42,673 28,208 95,014 5.32 8.23 .86 .57 1.91 46,201 144,296 12,383 6,283 ^,644 4.04 12.61 1.D& .55 1.98 662,814 1,069,125 166,431 186,780 • 221,2»8 3 35 Wilson 95 CudatLy L12 Ttie Big Five . 839,529 4,132,005 1B.89 ' 83.11 231,817 912,384 20.26 79.74 2,30Bi378 17,450,508 11 67 Grand total . , 4,971,534 100. 00 1, 144, 181 100.00 19, 756, 886 100.00 (D) POULTRY. Swift 6,776,677 5,376,543 1,617,695 94-9,704 605, 894 15.25 12.10 3.41 2.14 1.36 6,642,094 5,430,916 525,089 2; 863, 790 713,687 17.67 14.37 1.39 7.55 1.80 ■ 1,917,791 l,82I,9a 222,089 517^433 307,169 .11.84 11. » 1.S7 3.B 1.90 Aimour. Korris Wilson Cuda&y The Big Five 15,226,513 29,214,805 34.26 65.74 16,165,576 21,632,560 42.77 67.23 4,786,396 U,4ia,042 AU otlier storers Grand total 44, 441, as 37,798,120 100.00 16,204,438 It is -worth noting that, taking the five packers together, their pro- portions of the total quantities in storage were largest in all cases, except that of poultry, when the amounts on hand were the smallest, both for themselves and for others. Moreover, the stocks vrhich they had varied less, as between the three dates, than did the stocks held by the independents. This is shown by the following table, which is derived from Table 18: MEAT-PACKING IISDUSTRY. 103 Table IQ.-^Relative cold-storage holdings for Kov. 30, 1917; Mar. SI, 1918; and July 31, 1918, of 'butter, cheese, eggs, and poultry — The fire great packers and all other storers. Swift Armour Morris Wilson Cudahy The Bis Five . All other storers.. - Grand total. Butter. Nov. 30, 1917. P. ct. 59.14 85.34 40.39 67.83 63.00 67.28 87.73 Mar. 31, 1918. P. ct 13.07 38.97 17. 17.73 23.68 24.47 14.83 July 31, 1918. P. ct. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Cheese. Nov. 30, 1917. P. ct. 100.00 100.00 100.00 87.57 100.00 100.00 100.00 Mar. 31, 1918. P.ct. 27.33 56.28 41.96 40.88 46.89 48.58 45.83 July 31, 1918. P. ct. 73.08 58.11 42.80 100.00 82.10 65.03 62.90 Eggs. Nov. 30, P. ct. 39.92 38.26 25.64 16.10 42.94 36.40 23.68 Mar. 31. 1918. P. ct. 6.97 13.50 7.45 3.36 10.23 10.05 6.23 6.79 July 31, 1918. P. ct. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Poultry. Nov. 30, 1917. P. ct. 100.00 99.00 100.00 33.28 84.90 94.19 100.00 100.00 Mar. 31, 1918. P. ct 98.01 100.00 34.60 100.00 100.00 100.00 74.05 July 31, 1818. P.ct. 28.30 33.55 14.63 18.13 43.04 29.61 39.03 36.46 In this table the largest holdings of any commodity are called 100, and the holdings of the same commodity at any other date are calculated as percentages of the largest holdings. The holdings of butter, for example, were in all cases at a maximum on July 31. On November 30 the holdings of the five packers were 67.28 per cent of their maximum and the holdings of the independents 87.73 per cent of the independent maximum. This is one of the two instances in which the percentage of the five was smaller than that of the inde- pendents, though the maximum, medium, and minimum did not fall on the same dates for both classes of dealers. The high percentages which are generally found in the case of the five show a smaller degree of variation between different dates than do those of the other con- cerns. March 31 is in all cases, except that of poultry, near the end of the cold-storage season, and sales by the big packers must be relatively large in the month or two following if the carrying over of goods into the next season is to be avoided. Upon the whole it would seem that the big packers play a larger part in the ruling of. the market from season to season than do their competitors. This is accomplished partly by the purchase of goods that were put into cold storage by others. It is proper to point out that the fact that the percentage of own- ership, so far as butter, cheese, and eggs are concerned, is largest for the big packers when the amounts held by both themselves and their competitors are smallest seems to indicate that the command- ing advantage of the former does not lie in the control of cold- storage facilities. It is true that the evidence on this point is not conclusive, since the facilities available to outside concerns may be less in March than at other times. The only evidence that this is the case is found in the fact that, as shown in Table 21, the storage facilities of the country seem to have been more fully occupied on 104 MEAT-PACKING INDUSTRY. March 31 than at either of the other dates for which information has been secured. It will be noticed that in butter, cheese, and eggs the stoclis which Armour & Co. held in storage are larger than those of any other of the five. In poultry Swift & Co. has the largest stocks. In all of these commodities the -others of the five are of minor importance. Section 19. — Conclusions. There is little room for doubt that the control of cold-storage facil- ities by the fire great packers is sufficient to give them a substantial advantage in the handling of many kinds of food products. Part of this is to be attributed to the fact that they have facilities of their own which seem to be ample for their needs, at least under ordinary circumstances, if not in times of great pressure. It is clear, however, that in a number of cases they secure space in independent ware- houses, and apparently there are instances in which this is done when they have space of their own available. During the past year or two there have been complaints from many cities that the space available is inadequate,^ and some of the dealers feel that this is at least partly due to the fact that much space is take by the members of the Big Five. So far as has been learned, however, there are not many com- plaints that space is taken by them when they have no use for it. It should be realized, however, that abuses are not necessary to give the Big Five a very substantial advantage. . The operation of approximately 45 per cent of the cold-storage facilities of the coun- try, with the opportunity to bid for a share of most of the rest, can not but help to strengthen the probability that their goods will be cared for at any time. The confidence that this is so gives them an advantage in bidding for goods to put into storage. Their right to have private plants of their own can hardly be questioned under pres- ent conditions, but wherever they exercise this right they furnish little or no demand for public cold-storage facilities. There are probably a number of places in which the demand of the independ- ents is not sufficient to warrant the establishment of a public cold- storage plant, though the combined demand of the independents and the big packers would be. Under such circumstances the building of a cold-storage plant by one of the big packers means that it will have adequate facilities, but not necessarily that anyone else will In somewhat larger places the fact that the big packers do not share to any great extent in the demand for cold-storage facilities may affect, not the existence, but the adequacy of facilities available to independ- ent dealers^^^he^totaUimount of the facilities needed in any one ' See Commission's Eeport on '^^yfholes^^Tii^i^e^I^r^t^^;-^^^^-^--^ MEAT-PACKING INDUSTRY. 105 place is less when they are available to all than when part of them are available to but one dealer or group of dealers. Upon the whole, it would seem that the only way in which opportu- nities can be equalized for all dealers is to bring about a separation of the use and the operation of cold-storage facilities in much the same way as the use and the operation of the railways have been sepa- rated. The problems of cold storage may be, in a degree, less serious than those of the railroads, but it will hardly be denied that a prob- lem affecting the conditions under which a large part of the food supply of the Nation is furnished is of first importance both to pro- ducer and consumer of foodstuffs. The reasons for the separation are very similar in the two cases. From many points of view the cold-storage warehouse should be regarded as a public utility, with facilities available to all on equal terms. Such equality is hardly to be expected when those who operate a cold-storage 'warehouse are among those who wish to make use of it. From a practical point of view such equality is impossible when a large proportion of the cold- storage facilities are private in character. In the application of the principles involved any plan for the sepa- ration of the operation and use of cold-storage facilities would differ considerably in details from the plan adopted for the separation of the operation and use of the railroads. In particular, the problem presented by the strictly private cold-storage warehouse is of great importance, whereas the cases in which an industrial concern would wish to establish a strictly private railroad are exceptional, and when they do occur are not ordinarily of great importance. If the furnishing of the food supply of the Nation is to be regarded as a strictly private business, it is difficult to see how any prohibi- tion of the private cold-storage warehouse could be justified. It may be seriously questioned, however, whether such an important indus- try, especially in view of the large proportion of control that is now established and exercised by a few large concerns, should be regarded as a strictly private business. It is fully realized that in the application of any particular plan many details would have to be considered. The private operation of cold warerooms, such as would be needed for use from day to dav in any establishment dealing in perishable goods, would be recognized. While technically such a wareroom may be included under the head of cold stoirage, a distinction sufficient for practical purposes is not difficult to make. 106 MEAT-PACKING INDUSTRY. Tabfe 20}— Cold storage in the United States— Capacity operated by the five meat packers and hy independent concerns. 1917-18. Nonfreezing. Freezing. Total. Cubic reet. Per cent. Cubic feet. Per cent. Cubic feet. Per cent. United states 321,130,227 "100.0 103,838,086 100.0 424,968,313 100.0 Independent concerns Big Five concerns 16^269,918 155,860,309 61.6 48.5 69,436,547 34,401,539 66.9 33.1 234,706,465 2 190,261,848 55.2 44.8 Switt & Co . . 49,244,607 46,842,644 21, ,519, 036 21,482,692 16,771,430 16.3 14.6 6.7 6.7 5.2 14,330,630 9,68^.858 8,939,222 1,784,321 1,764,508 13.8 9.2 6.7 1.7 1.7 63,575,237 58,426,602 28,458,258 23,266,913 18,635,938 14.9 13.3 6.7 Wilson & Co., Ino Cudaliy Packing Co. . . 5.5 4.4 1 See Exhibit VI, p. 308. „, ^ ^^ . ^ .v , , . 2 Revised figures, slightly less than given in Pt. Ill, p. 129. The percentage as there given and the total for the United States remain unchanged . Table 21.' — Cold' storage in the United States — Space leased and occupied' Tiy the five large packers, 1917-18. Nov. 30, 1917 (cubic feet). Per cent of total capacity. Mar. 31, 1918 (cubic feet). Per cent of total capacity. July 31, 1918 (cubic feet). Per cent of total capacity. 41,451,585 9.8 60,145,316 14.2 .54,500,148 12.8 Switt &Co 15,412,109 13,218,429 6,221,192 3,883,227 2,716,628 3.6 3.1 1.5 .9 .7 21,886,739 18,066,291 7,759,780 7,026,383 5,416,123 5.2 4.2 1.8 1.7 1.3 21,252,212 16,725,369 "5,832,167 6,416,373 5,274,027 5.0 3.9 1.4 Wilson & Co. Inc . 1.3 Cudahy Packing Co 1.2 iSeeExhibit VI, p. 308. ' Includes space occupied in packers' own plants and leased and occupied In other plants. •Table 22.' — Cold storage in the United States — Space in which the big packers ^cere interested,' 1917-18. Nov. 30, 1917 (cubic feet). Per cent of total capacity. Mar. 31, 1918 (cubic feet). Per cent of total capacity. July 31, 1918 (cubic feet). Percent of total capacity. 201,226,025 47.4 204,463,125 48.1 204,334,823 48.1 swiri &co 65,970,623 69,368,790 31,786,093 24,881,623 19,219,898 15.6 14.0 7.5 5.9 4.5 68,261,658 68,562,497 32,044,066 25,681,670 19,923,334 16.1 13.8 7.5 6.0 4.7 67,922,750 60,081,420 30,807,934 25,100,065 20,422,6.54 16,0 14.1 7.3 5.9 4,S Morris & Co Wilson & Co., Inc Cudahy Packing Co 1 See Exhibit VI, p. 308. 2 Includes all space operated by the Big Five, and in plants not so operated the space leased or occupied without lease by them. MEAT-PACKING INDUSTRY.. 107 Table 23.' — Cold- storage in cities •with am, estimated population of 100,000 or more' — Capacity operated hy the five larffe packers and by outside concerns, 1911-18. Nonfceezing. Freeiing. Total. Cnbicfeet. PerceBt. Cnbiofect. Per cent. Cubic feet. Per cent. 336,645 336,645 100. 0' 100.0 240,597 240,597 lOO.O 100.0 577,242 577,242 Outside concerns. Bi^Five 100.0 434,011 434,011 loao 100. 47,000 47,000 100.0 100.0 481,011 481,011 Outside Goncenas. - - . ... lOO Bit' Five Baltimore, Md . 1,223,500 1,223,500 loao 10O.O 1,006,520 1,006,520 lOO.O 100.0 2,JHO,020 2,230,020 100 Outside concerng Big Five 100.0 RirTnipghfi''Tij Ala ... . . 720,052 518,127 201,925 154,000 47,925 100.0 72.0 28.0 21.4 6.6 180,373 159,109 21,264 18,909 2,364 100.0 88.2 11.8 10.5 1.3 900,425 677,236 223,189 172,900 50,289 100 Big Five 24 8 Armninr A- Cn 19 2 Cudahy Packing Co... 5.0 Boston, Mass.3' 8,846,788 4,002,261 4,844,527 4,292,770 551,757 100.0 45.2 54.8 48.6 6.3 9,426,643 4,906,422 4,520,221 3,678,602 841,619 100.0 52.0 48.0 39.0 9.0 18,273,431 8,908,683 9,364,748 7,971,372 1,393,376 100 Outsid© concerns 48 8 51.2 Swift & Co 43. G Armnnr Jir Cn 7 53,168 53,168 100.0 100. 1,980 1,980 100.0 100.0 55,148 56,148 lOO.O ^uWde concerns 100.0 Big Five,. ., BKSalo,N. Y 2,142,907 ' 2,142,907 100.0 100.0 2,652,076 2,662,076 100.0 100.0 4,794,983 4,794,983 100.0 OTitrPidfl '^T'l'^em^ 100.0 Big Five i3ilcago,Ill 74,279,132 18,369,216 55,909,916 18,767,988 20,966,207 8,653,698 7,384,400 137,623 100.0 24.7 75.3 25.3 28.2 11.7 9.9 .2 22,823,341 11,753,469 11,069,872 3,343,007 3,969,859 2,953,341 789,100 14,565 100.0 51.5 48.5 14.6 17.4 12.9 3.5 .1 97,102,473 30,122,685 66,979,783 22, 110,995 24,936,066 11,607,039 8,173,500 152,188 100.0 31.0 Big Five 69.0 Swift & Go 22.8 25.7 11.9 Wll3oa<&Co.,Infi Cudahy Packing Oo . . . 8.4 .2 1,621,517 1,621,517 100.0 100.0 410,685 410,685 100.0 100.0 2,032,202 2,032,202 100.0 100.0 Big Five 16,440,983 15,806,155 635,808 635,808 100.0 96.1 3.9 3.9 687,135 635,875 151,260 151,260 100.0 78.0 22.0 22.0 17,128,098 16,341,030 787,068 787,068 100.0 95.4 Big Five 4.0 Swift & Co 4.S ColiinTihuf?, Ohif> 779,000 779,000 100.0 100. G 319,100 319, 100 100.0 100.0 1,098,100 1,098,100 100.0 Outside concerns .... 100.0 Dallas^Tex 1,201,0» 746,043 455,000 455,000 100.0 62.1 37.9 37.9 52,000 20,000 32,000 32,000 100.0 38.5 61.5 61.5 1,253,043 766,043 487,000 487,000 100.0 61.1 Big Five 38.9 Armour & Co ... 38.9 Dftvtrwi- Ohio. 241,200 241,200 10O.0 100.0 241,200 241,200 100.0 100.0 Big Five ' emer, Colo 3,262,149 992,812 2,269,337 1,458,750 810,587 100. 30.4 69.6 44.7 24.9 l,0ffi2,676 645,000 357,676 263,000 94,676 100.0 64.3 35.7 26.2 9.5 4,264,825 1,637,812 2,627,013 1,721,750 905,263 100.0 38.4 Big Five 61.6 Swift&Co 40.4 Axinotir& Co 21.2 I See EiehilHt VI, pp. 308, 309. », , , ». , », n ,™ 'No puBllficolii.3torasB plants wererepOTted for Camden, N. J., Lawrence, Mass , Lyrai, Mass., Jr-ater- son, N; jr., Sclienfictady, R Y., or Youngstown, OMo. ' Boston, li&sB., includes Cambridge and Somerville. 108 MEAT-PACKING INDUSTRY. TAUI.E 23.~Cold storage in cities with an estimated VovnlationollOOO^(yor more— Capacity operated t>v the fire large packers and by outside concerns, j(j^7_jS— Continued. (For qualifying footnotes see p. 10^.) Nonfreezing. Freezing. Total. Cubic feet. Per cent. Cubic feet. Per cent. Cubic feet. Per cent. 1,172,288 1,068,730 103,558 103 558 100.0 91.2 8.8 8.8 136,038 136,038 100.0 100.0 1,308,326 1,204,768 103,558 103,658 100.0 92.1 7.9 7.9 Outside concema Big Five 1,125,854 1,111,811 14,043 14,043 100.0 98.8 1.2 1.2 896, 748 896,748 100.0 100.0 2,022,602 2,008,559 14,043 14,043 100.0 99.3 Cudahy Packing Co... .7 Fall River Mass 26,400 26,400 100.0 100.0 8,000 8,000 100.0 100.0 34,400 34,400 lOO.O 100.0 Fort Worth Tex . 5,897,008 357,418 5,539,590 2,494,920 3,044,670 100.0 6.1 93.9 42.3 51.6 1,811,612 373,583 1,438,029 667,080 770,949 100.0 20.6 79.4 36.8 42.6 7,708,620 731,001 6,977,619 3,162,000 3,815,619 100.0 9.5 90.5 41.0 49.5 420,000 420,000 100.0 100.0 30,000 30,000 100.0 100.0 450,000 450,000 100 Hartford Conn ... 289,066 260,819 28,237 28,237 100.0 90.2 9.8 9.8 70,057 70, 057 100.0 100.0 359, 113' 330,876 28,237 28,237 100 92.1 Big Five . 7 9 Swilt & Co 7 9 Houston, Tex 407,446 390,000 17,446 17,446 100.0 95.7 4.3 4.3 153,602 100,000 53,602 53,602 100.0 65.1 34.9 34.9 561,048 490,000 71,048 71,048 100 87.3 Big Five 12.7 Swift & Co 12.7 Indianapolis, Ind 6,633,220 6,452,115 181,105 181,105 100.0 97.3 2.7 2.7 885,280 879,920 5,360 5,360 100.0 99.4 .6 .6 7,518,500 7,332,035 186,465 186,465 100.0 97.5 2.5 Armour & Co 2.5, Kansas City, Mo.i 18,782,880 1,495,812 17,287,068 3,321,933 2,476,026 2,693,672 4,145,000 4,660,437 100.0 8.0 92.0 17.7 13.2 14.3 22.1 24.7 3,639,211 130,679 3,528,532 1,677,562 1,023,409 89,600 405,000 432,961 100.0 3.6 98.4 43.1 28.0 2.4 11.1 11.8 22,442,091 1,626,491 20,815,600 4,899,495 3,499,435 2,783,212 4,550,000 5,083,398 100.0 7.2 Big Five 92.8 Swift & Co 21.8 15.6 12.4 Wilson* Co., tnc Cudahy Packing Co. . . 20.3 22.7 Los Angeles, Calif 4,202,690 3,136,348 1,066,342 101,067 387,288 577,987 100.0 74.6 25.4 2.4 9.2 13.8 730,590 620, 180 110,410 14,490 18,600 77,320 100.0 84.9 15.1 2.0 2.5 10.6 4,933,280 3,756,528' 1,176,752 115,557 405,888 655,307 100.0 Outside concerns. . . 76.1 Big Five 33.9 Swift & Co 2.4 Wilson & Co., Ino Cudahy Packing Co. . . 8.2 13.3 Louisville, Kv 1,554,021 1, 193, 577 360,444 360,444 100.0 76.8 23.2 23.2 198, 643 143, 571 55,072 55,072 100.0 72.3 37.7 27.7 1,752,664 1,337,148 415,516 415,5X6 inn Outside concerns 76.3 23.7 23.7 Big Five Lowell, Mass Outside concerns 26,460 100.0 26,460 100.0 BigFive switt&co ;;;;;.' 26,460 26,460 100.0 100.0 26,"460" 26,460 ioo'o 100.0 Memphis, Tenn... 793,49-, 750,000 43,495 43, 495 100.0 94.5 5.5 5.5 256,384 254,800 1,584 1,584 100.0 99.4 .6 .6 1,049,879 1,004,800 45,079 45,079 Outside concerns.. 100.0 Big Five 95.7 Armour & Co... 4.3 4.3 Milwaukee, Wis 1,555,092 971,000 584,092 584,092 100.0 62.4 37.6 37.6 403,083 296,000 107,083 107,083 100.0 73.4 26.6 26.6 1,958,175 1,267,000 691. 175 691. 176 Outside concerns 100.0 BigFive ■■ 64.7 Swift &Co 35.3 35.3 ■ 'Includes Kansas City, Kans. MEAT-PACKING INDUSTEY. 109 Table 23. — Cold storage in cities with an estimated population of 100,000 or more — Gapacitv operated by the five large packers and by outside concerns, 1917-18 — Continued. (For qualifying footnotes see p. 107.) Nonfreezlng. Freezing. Total. Cubic feet. Per cent. Cubic feet. Per cent. Cubic feet. Per cent. 1,327,415 1,327,415 100.0 100.0 642,634 642, 634 100.0 100.0 1,969,949 1,969,949 100.0 Outside concerns 100.0 Big Five Nashville Tenn 1,236,696 1,236,596 100.0 100.0 90,424 90,424 100.0 100.0 1,327,020 1,327,020 100.0 100.0 129, 292 129,292 100.0 100.0 129, 292 129,292 100.0 100.0 rewark.N..!.' 272,772 25,000 247, 772 226,212 21,660 100.0 9.2 90.8 82.9 7.9 67,460 46,000 21,460 21,460 100.0 68.2 31.8 31.8 340, 232 71,000 269,232 247,672 21,560 100.0 20.9 Big Five 79.1 Swift & Co 72.8 Cudahy Packing Co... 6.3 847,778 272,223 575, 555 675,555 100.0 32.1 67.9 67.9 234, 180 210,050 24,130 24,130 100.0 89.7 10.3 10.3 1,081,958 482,273 699, 686 599,685 100.0 44.6 Big Five 55.4 65.4 Kew Orleans, La 1,670,499 1,352,352 218, 147 218, 147 100.0 86.1 13.9 13.9 101,694 100,000 1,694 1,694 100.0 98.4 1.6 1.6 1,672,093 1, 452, 352 219, 741 219,741 100.0 86.9 13.1 Armour & Co 13.1 New York N. Y. (Greater)". . . Outside concerns 20,315,691 15,611,181 4, 704, 510 36,635 1,613,566 997, 188 1, 965, 090 92,032 100.0 76.8 23.2 .2 7.9 4.9 9.7 .6 13,895,289 11,870,172 2,025,117 1, 326, 823 332,808 172,176 193,310 100.0 85.4 14.6 9.6 2.4 1.2 1.4 34,210,980 27, 481, 353 6, 729, 627 1,363,468 1,94b, 373 1,169,364 2, 158, 400 92,032 100.0 80.3 Big Five 19.7 Swift & Co 4.0 6.7 3.4 Wilson & Co., Inc Cudahy Packing Co... 6.3 .3 15,380,009 678,655 14,701,354 2,760,530 3,683,179 3,221,875 6, 135, 770 100.0 4.4 96.6 18.0 23.3 20.9 33.4 3,662,068 534,077 3, 127, 991 1,385,194 756,797 408,320 577,680 100.0 14. C 85.4 37.8 20.7 11.1 15.8 19,042,077 1,212,732 17,829,346 4, 145, 724 4, 339, 976 3, 630, 196 5,713,450 100.0 Outside concerns 6.4 Big Five 93.6 Swift & Co 21.8 22.8 19.0 Cudaliy Packing Co. . . 30.0 Philadelphia, Pa 4,545,162 4, 526, 122 19, 040 7,040 12,000 100.0 99.6 .4 .1 .3 3, 693, 899 3,535,109 158,790 158,790 100.0 95.7 4.3 4.3 8,239,061 8,061,231 177,830 165,830 12,000 1 00.0 Outside concerns 97.8 Big Five 2.2 STOft&Co 2.0 Morris* Co .2 Pittsburgh, Pa 3, 029, 983 1,638,255 1,391,728 116,728 1,275,000 100.0 54.1 46.9 3.8 42.1 463,386 428,708 24,678 100.0 94.6 5.4 3,483,369 2,066,963 1,416,406 116,728 1,299,678 100.0 69.3 Big Five.. 40. Swift & Co 3.4 Armour & Co 24,678 6.4 37.3 Portland, Oreg. 636,902 565, 013 71,889 71,889 100.0 88.7 11.3 11.3 641,167 682,849 58,308 58,308 100.0 90.9 9.1 9.1 1,278,059 1,147,862 130,197 130, 197 100.0 89.8 Big Five 10.2 Swift&Co 10.2 Providenoe,R.I 1,266,011 1,266,011 100.0 100.0 241, 162 241, 152 100.0 100.0 1,607,163 1,507,163 100.0 Outside concerns 100.0 Big Five Reading, Pa. . . 219,215 219,215 100.0 100.0 130,785 130,785 100.0 100.0 350,000 360,000 100.0 100.0 Big Five :===== ' One independent plant with a capacity of 800,000 cubic feet is tabulated under New York City as its contents could not be segregated for Newark. , „ x -.^t i . onn nnn > Includes also Jersey City, N. J., and one independent plant at Newark, N. J., with a capacity of 800,000 cubic feet, the contents of which could not be segregated tor Newark. 110 MEAT-PACKING INDUSTRY, TviiiJi 23 Cold storage in cities with an estimated population of 100,000 ar more-capacity operated ty the five large packers and by outside concerns, ;9;7_iS— Continued. (For ctualifying footnotes see p. 107.) NonJjeezing. Freezing. Total. Cubic feet. Per cent. Cubic feet. Per cent. Cubic feet. Per cent. 1,782,208 1,782,268 100.0 100.0 150, 571 150,571 100.0 100.0 1.932,779 1,932,779 100.0 180.0 Outside concerns, Big Five Rocliester.N. Y Outside concerns, Big Five 1,436,975 1,363,675 73,300 73 300 lOO.O 94.9 5.1 5.1 256,625 256,625 100.0 100.0 1,693,600 1,620,300 73,300 73,300 100.0 95.7 4.3 4.3 13,090,120 3,256,328 8,833,800 2,572,549 3,286,640 2,974,611 100.0 26.9 73.1 21.3 27.2 24.6 3,089,200 2,230,557 858,643 89,899 566,858 201,886 100.0 72.2 27.8 2.9 18.4 6.5 15, 179, 329 5,486,»77 9,692,413, 2,662,448 3,853,498 3,176,497 100.0 Rwlft & Co 17.6 25.4 Morris& Co 20.9 2,788,430 697, 660 2,090,770 2,090,770 100.0 25.0 75.0 75.0 668,072 606,028 62,044 62.044 100.0 90.7 9.3 9.3 3,«6,502 1,303,688 2,152,814 2,152,814 100.0 Outside concerns 37.7 Bie Fi-ve SwiaA Co 62.3 62.3 603,580 130,500 373,080 373,080 lOB.O 25.9 74.1 74.1 94,280 69,800 24,490 24,480 100.0 74.0 26.0 26.0 597,860 200,308 397,560 397,560 100.0 33.5 Big Five Cudahy FactlngCo... 66.5 66.5 247,637 220,514 27,123 27,123 100.0 80.0 11.0 11.0 7,056 7,056 100.0 100.0 254,693 227,570 27,123 27,123 WO.O 89.4 10.6 Armour &. Co 16.6 San Francisco, CaHf ^ . . 4,464,824 3,610,709 854, IW 854,115 100.0 80.9 19.1 19.1 1,418,691 1,179,770 238,921 238,921 100.0 83.2 16.8 5,883,515 4,790,479 1,093,036 100.0 Outside coneems 81.4 18.6 ■ Smtt&Co 16.8 1,093,036 18.6 453,092 453,092 100.0 100.0 385,362 385,362 100.0 100.0 838,454 838,454 100.0 Ontsidic concerns 100.0 Seattle, Wasli. 2,991,633 2,941,643 49^990 49,990 100.0 98.3 1.7 1.7 1,344,621 1,325,296 19,326 19,326 100.0 98.6 1.4 1.4 4,336,254 4,288,938 69, 3K 69,316 100.0 Outsidle concerns Big Five . 98.4 1.6 Swift &Co V 1.6 628,478 133,673 494,895 494, 805 100.0 21.3 78.7 78.7 416,036 176,260 239,776 239,776 100.0 42.4 57.6 57.6- 1,044,514 309,933 734,581 734,581 100.0 Outside concerns Big Five 29.7 70.3 70.3 692,990 .591,020 101,970 101,970 100:0 85.3 14.7 14.7 339,051 318,051 21,000 21,000 100.0 93.8 6.2 6.2 1,032,041 909,071 122,970 122,9W 100.0 88.1 Big Five 1L9 Swift & Co.. 11.9 Syracuse^ N. Y 981,937 913,279 6S,65S 68,658 100.0 93.0 7.0 7.0 396,904 395,904 100.0 100.0 1,377,841 l,309vl83 68,658 68,668 100.0 95.0 Big Five 6.0 Swift&Co 5^0 Taooma, Wash Outside concerns. .59, 344 59,344 108.0 100.0 247,725 247,725 100.0 100.0 307,069 307,069 100.0 100.0 Big Five Toledo, Ohio 13S,000 138,000 100. 0' lOO.O 76,964 76,964 100.0 100.0 214,964 214,964 100. Outside concerns. , mo.o Big Five.. 4,360 4,360 100; 100.0 1,560 1,560 loao 100. 5,920 5,920 100.0 Outside concerns KI0.0 Big Five Washington, D. C 1,311,980 1,311,989 100.0 100.0 193,433 193,422 100.0 100.0 1,505,411 1,505,411 100.0 loao BigFive 'Includes ICasl St. Louis, III., and National City, 111. "Includes Oakland, Calif. MEAT-PACKING IKDUSTEY. Ill Table 23.: — Cold storage in cities with em estimated population of 109,000 or more — Capacity operated by the five larffe packers and hy, outside concerns, 1911-18 — Continued. (For qualifying footnotes see p. 107.) , Nonlree^ing. Freezing. Total. Cubic feet. Per cent. Cubic feet. Per cent. Cubic feet. Per cent. 853,276 457,066 396.220 396,220 100.0 53.5 46.4 46.4 389,599 378,499 11,100 11,100 100.0 97.2 2.8 2.8 1,242,875 836,555 407,320 407,320 Outswe-concems BigFlTe Swiffi&Cto 07.2 32.8 32.8 Yonkers.N.Y 21,000 21,000 100.0 100.0 120,000 120,000 100.0 100.0 141,000 141,000 100.0 100.0 Big Five Table 24.' more ^- —Cold storage in cities ieitli an estimated poptilation of 100,000 or- -Space leased and occupied' by the five larger pacliers* 1!)I7-18. Not. 30, 1917. Mar. 31, 1918. Tilly 31, 1918. * Cubit feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. Albany, N. Y 22,491 7,955 11,397 2,101 1,038 3.9 1.4 2.0 .3 .2 43-, 061 16,905 20,959 225 4,972 7.5 2.9 3.6 .1 .9 20,840 7,105 5,970 4,796 2,969 3.6 Swift & Co 1 2 Armour & C(j Morris & Co LI .8 Wilson & COk Inc. .5 Atlanta, Ga 23,806 6,263 4,061 U,804 1,178 499 4.9 1.3 .8 2.5 .2 .1 35,065 6,140 4,104 6,290 17,818 1,713 7.3 1.1 .8 1.3 3.7 .4 68,724 9,301 4,617 19,718 24,339 749 12.2 Swift&Co 1.9 1.0 4.1 Wilson & Gq..^ Inc. . 5.1 Cudahy Packing Co .1 31,115 16, 662 11,911 1,481 1,661 1.4 .7 .5 .1 .1 21,093 4,752 16,705 258 378 .9 .,2 .7 (=) 57,013 20,411 35,815 500 289 2.6 awift&Co . .9 1.6 Morris&Co .1 Wilson &Ca., Ino (?) 2-1,718 1,111) 17,280 4,528 1,418 376 2-7 .1 1.9 .5 .2 (?) 11,378 994 10,200 1.3 .1 1.2 102,619 27,878 64,422 8,8-15 6,830 5,644 n.4 Swift&Co 3.1 Armour & Co 6.0 1.0 Wilson & Co.^Inc Cudaby Packing Co .7 184 « .6 Boaton, Mass."* 2,194,706 1,271,371 743,189 77,484 S,341 79,341 12.0 7.0 4.1 A .1 .4 2,864,390 2,217,315 486,617 134,994 26,844 18,620 15.7 12.1 2.6 .7 .2 .1 4,742,648 2,970,880 1,560.840 105; V62 36,470 78,696 26.0 Swift&Co 16.3 Aimour&Co Morris&Co. _ 8.5 .6 Wilson & Co. , Inc .2 Cudahy Packing Co .4 Bridgeport Conn- 2,500 2,S00 4.3 .. . 4.6 Buffalo, N. Y 652,789 15,380 5,174 318, 152 297,843 16,240 13.6 .3 .1 6..6 6.2 .4 1,023,475 157,374 6,101 316,438 543,562 21.3 3-3 .1 6.& 11.3 203,993 50,938 12,594 41,471 98i373 617 4.3 Swift&Co 1.1 A rrnm-l-r -fr Co . , . .... .3 Morris&Co Wilson & Co. , Inc .9 2.0 Cudaby Packing Co (') 1 See Exhibit VI, pp. 308, 309. 2 No public coM-storage plants were reported from the following cities: Camden, N. J.; I.iawrence, Mass.; Lynn, Mass.; Paterson, N. J.; Schenectady, N. Y.; or Youngstown, Ohio. 'Includes space occupied in packer's own plant and leased and occupied in other plants. ' No cDld-storage space was reportedr as occupied hy aay olthe Big Five in plants in the Ibllowmg cities: Daytjn, Ohio; Lowell, Mass.; Trenton, N. J.: or Yonkers, N. Y. ' Less than one-tenth of 1 per cert. * Boston, Mas;., includes Cambridge and Sormerville. 112 MEAT-PACKING INDUSTRY. Table 24. — Cold storage in cities vnth an estimated population of 100,000 or more — i^pace leased and occupied hy the five larger packers, 1917-18 — Cont. (For qualifying footnotes see p. 111.) Nov. 30, 1917. Mar. 31, 1918. July 31, 1918. Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. 16,310,797 5,002,765 5,814,928 3,543,305 1,885,393 64,406 16.8 6.2 6.0 3.6 1.9 .1 21,252,145 5,857,901 9,611,386 2,836,164 2,836,670 111,034 21.9 6.1 9.9 2.9 2.9 .1 17,430,783 5,329,258 7,338,545 2,131,562 2,282,622 348,796 18.0 Swift & Co 5.5 7.6 2.2 2.3 Cudahy Packing Co .4 Cincinnati, Otio 3,353 3,211 100 42 .2 .2 (') m 4,351 1,680 2,671 .2 .1 .1 7,685 7,606 79 .4 Swift & Co .4 (') Cleveland, Oliio 188, 906 177,476 2,688 5,362 3,489 1.1 1.1 608,611 597,395 2,197 496 8,523 3.6 3.5 a,. 387,210 370,071 1,523 213 15,403 2.3 Swift & Co 2.2 Armour & Co 0) (■) .1 140, 816 1,661 30,039 108, 577 639 12.8 .1 2.7 9.9 .1 146,916 1,762 27,066 114, 923 2,174 13.3 .1 2.5 10.5 .2 110,026 857 10.0 Swift & Co .1 103,T65 5,404 Wilson & Co., Inc .5 Dallas, Tex 39,581 3,258 36,323 3.2 .3 2.9 93,049 192 92,857 7.4 (■) 7.4 88,069 11, 799 66, 670 9,600 - 7 Swift Less than oue-tenth of 1 per cent. MEAT-PACKING INDUSTRY. 113 Tabi:e 24. — Cold storage in cities mth an estimated population of 100,000 or more— Space leased and occupied by the five larger packers, 1917-18 — Cont. (For qualift'lng footnotes see p. 111.) Nov. 30, 1917. Mar. 31, 1918. July 31, 1918. Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. 3,190,054 1,549,723 609,891 180,336 280, 937 669,167 14.2 6.9 2.7 .8 1.3 2.5 5,460,369 2,050,997 689,887 637,085 934,942 1,147,458 24.3 9.1 3.1 2.8 4.2 5.1 4, 733, 943 1,516,789 979,673 462, 284 626,380 1,148,917 21.1 4 4 2.1 Wilson & Co., Inc 2 8 Cudahy Packing Co 5.1 139,057 13,888 14,439 1,166 46,211 03,353 2.8 .3 .3 .9 1.3 427,223 16,028 28,024 8.7 .3 .6 414,368 22,438 59,330 8 4 Swilt&'Co 4 Armour & Co 1 2 191,776 191,396 3.9 3.9 161,580 181,020 Cudahy PacMng Co 3.7 Louisville, Ky 88,613 290 87,774 5.1 6.0 47,923 307 46,926 2 689 2.7 2.7 m m 182,360 8,293 174,057 10 4 Swift & Co Morris & Co Wilson & Co., Inc 649 .1 Mompllis Tpirn 50,278 347 9,418 16,315 3,151 21,047 4.8 (=) .9 1.6 .3 2.0 51,114 858 9,577 9,483 18,689 12,507 4.9 .1 .9 .9 1.8 1.2 87,626 12,432 24,292 14,085 20,926 15,891 8 3 Swift' «& Co 1.2 2.3 Morris & Co 1 3 2.0 Cudahy Packing Co 1.5 Milwaukee, Wis 514,374 486,031 26,943 1,400 • 26.3 24.8 1.4 .1 581,661 538,423 43,228 29.7 27.5 2.2 419,086 360,499 54,543 4,044 21 4 Swift&Co 18.4 Armour & Co 2.8 Wilson & Co., Inc. . . . .2 90,223 67,178 27,223 4.6 2.9 1.4 86,637 76,285 3,394 4.4 3.8 .2 175,394 98,395 49,193 2,140 7,934 17,732 8.9 Swift&Co 5.0 2.5 Morris & Co .1 1,466 4,357 .1 .2 6,380 1,578 .3 .1 .4 Cudahy Packing Co .9 Nashville Tenn . . 27,085 11,383 2,128 6,600 8,074 2.0 .8 .2 .4 .6 12,361 2,811 313 3,620 6,617 .9 .2 m .3 .4 140,093 44,623 10.0 S\idft& Co 3.4 Morris & Co . . . . 23,148 69,242 13,180 1.7 4.5 1.0 New Bedford, Mass 390 .3 4,191 218 2,557 1,416 3.2 .1 2.0 1.1 4,761 223 4,538 3.7 Swift&Co .2 Armour & Co 390 .3 3.6 Newark, N.J.> Swift & Co 24; 085 21,833 2,852 7.3 6.4 .9 37,080 36,465 616 10.9 10.7 .2 36,036 36,678 357 10.6 10.5 Cudahy Packing Co .1 New Haven, Conn 114,680 113,277 490 296 617 10.6 10.5 234,101 230,272 2,056 686 1,187 21.6 21.3 .2 m .1 294,136 293,544 70 26 496 27.2 Swift&Co 27.1 r«i Wilson & Co., Inc Cudahy Packing Co .1 New Orleans, I.a 25,953 3,085 4,393 13,980 4,495 1.6 .2 .3 .8 .3 28,061 5,924 635 17,547 4,046 1.7 .4 1.1 .2 94,889 12,668 1,373 17,564 63,284 6.7 Swift&Co .8 Armour & Co .1 Morris & Co. 1.0 Wilson & Co., Inc 3.8 ■ Includes Kansas City, Kans. ' Less than one-tenth of 1 percent. , , „ ,, , „.^ 1 One independent plant, with a capacity of 800,000 cubic feet, is tabulated under New York City, as its contents could not be segregated for Newark. 140361°— 20- -« 114 MEAT-PACKING INDUSTRY. TABLE 24.-Cold storage in cities with an estimated I^^VumionoflOOOOOw rmre-Space leased and occupied hy the five larger packers, X9n-18-Cont. (For qualifying footnotes see p. 111.) Nov. 30, 1917. Mar. 31, 1918. July 31, 1918. Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. 2,917,501 684,459 1,108,774 672,821 269,648 281,799 8.5 2.0 3.2 1.7 .8 .8 3,721,410 1,731,748 869,143 407,977 406,094 307,448 10.9 5.1 2.5 1.2 1.2 .9 3,346,188 1,412,961 678,702 455,399 226,558 .574,568 9.8 4.1 2.0 1.3 Wilson & Co., Inc Cudahy Packing Co 1.7 2,135,107 446,813 731,038 348,066 76 610,115 11.2 2.4 3.8 1.8 '\2 4,550,930 969,393 1,360,1.58 889,176 6 1,332,197 23.9 5.1 7.1 4.7 «7.0 3,707,280 940,697 1,082,108 691,861 6,930 985,694 19.5 Swift Includes Oakland, Calif. 116 MEAT-PACKING INDUSTKY. Table 25.' — Cold storage in cities with an estimated population of 100,000 or more' — Space in which the five large meat packers were interested' 1917-18. Not. 30, 1917. Cubic feet. Per cent of total capacity. Mar. 31, 1918. Cable feet. Per cent of total capacity. July 31, 1918. Cubic feet. Albany, N.Y Swift&Co Armour & Co Morris & Co Wilson & Co., Inc.. Atlanta, Ga Swift&Co Armour & Co Morris & Co Wilson &Co,, Inc.. Cudahy Packing Co . Baltimoie, Md Swift&Co Armour &Co Morris & Co Wilson & Co., Inc. Birmingham, Ala Swift&Co , Armour&Co Morris & Co Wilson & Co., Inc. . Cudahy Packing Co. Boston, Mass. 5 switt&co ; Armour & Co Morris & Co. . . Wilson & Co., Inc.. Cudahy Packing Co. Bridgeport, Conn Cudahy Packing Co. Buffalo, N.Y Swift&Co Armour&Co Morris & Co Wilson & Co., Inc.. Cudahy Packing Co. Chicago, 111 Swift & Co "'. Armour & Co i Morris & Co. Wilson* Co., Ino!" Cudahy Packing Co.. Cincinnati, Ohio. . Swift&Co.... Armour&Co. Morris & Co... Cleveland, Ohio Swift&Co ', Armour & Co '.[ Morris & Co. .. Wilson & Co., Inc. Columbus, Ohio. . Swift&Co... Armour & Co . Morris & Co Wilson & Co., Inc.. 22,491 7,955 11,397 2,101 1,038 23,805 6,263 4,061 11,804 1,178 499 31,115 16, 662 11,911 1,481 1,061 3.9 1.4 2.0 .3 .2 4.9 1.3 .8 2.5 .2 .1 1.4 .7 .6 .1 .1 25. 6 .1 19.2 .5 .2 5.6 66.2 44.0 11.4 .3 .1 .4 652,589 15,380 5,174 318,152 297,843 16,240 70,649,183 22,775,930 25,559,879 13,389,380 8,707,400 216, 594 3,363 3,211 100 42 806,847 795,418 2,588 5,352 3,489 140,816 1,561 30,039 108,577 639 43,001 16,905 20,959 225 4,972 7.6 2.9 3.6 .1 20,840 7,105 5,970 4,796 2,969 35. 065 5,140 4,104 6,290 17,818 1,713 7.3 1.1 .8 1.3 3.7 .4 58,724 9,301 4,617 19,718 24,339 749 21,093 4,752 15,705 258 378 (0 57,015 20,411 35,815 500 289 224,367 994 172,900 24.9 .1 19.2 50,473 6.6 13.6 .3 .1 6.6 6.2 .4 72.8 23.6 26.3 13.8 9.0 .2 .2 .2 4.7 4.7 12.8 .1 2.7 9.9 .1 10,056,740 8,344,123 1,534,936 132,891 26,844 17,946 55.0 45.7 8.4 .7 .1 .1 274,877 27,878 180,819 8,846 5,830 51,505 1,023,475 167,374 6,101 316,438 543, 562 949, 167 061,676 453, 187 084, 510 086, 672 263,222 4,351 1,680 2,671 803,867 792,651 2,197 496 8,523 145,915 1,752 27,066 114,923 2,174 21.3 3.3 .1 6.6 11.3 73.1 23.7 26.2 13.6 9.4 4.7 4.8 13.3 .1 2.6 10.5 .2 11,671,870 8,631,588 2,833,392 105, 762 28,498 72,630 2,500 2,600 203,993 50,938 22,061 32,004 98,373 69,610,478 22,366,292 25,376,780 12,564,606 8,811,816 600,984 7,685 7,606 79 829,048 811,909 1,623 213 15,403 110,026 857 103, 765 6,404 ' See Exhibit VI, pp. 308, uu. Lyn^!Ott™^^t1o^^^^^^^^^^ cupi?d wftho^ ?eL1 bTthem X^l^^fV'^" '"'^ '° Pl»°t™ot°so operated the space leased or oc thiBie PivB?n nw?f„ S, ; , No cold-storage space was reported as operated, occupied, or leased by < Lefs fhin one^l'enth of 1 ?e?c'enl'"« "'""'■ °'^""'' °"'»' ^^""'o"' ^- ^- orYonk^rs, 'n. Y."^ 'Boston, Mass., includes Cambridge and Somervillo. MEAT-PACKING INDUSTRY. 117 Table 25. — Cold storage in cities wth an estimated population of 100,000 or more — Space in which the five large meat packers were interested, 1911-18— Continued. (For qualifying footnotes see p. 116.) Nov. 30, 1917. Mar. 31, 1918. July 31, 1918. Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. Dallas Tex 490, 292 3,258 487,034 39.1 .2 38.9 487,213 192 487,021 38.9 (') 38.9 611,444 11,799 490,046 9,600 40.8 Swift&Co Wilson & Co. Inc g Denver, Colo 2,627,013 1,721,750 905,263 61.6 40.4 21.2 2,638,773 1,733,610 906, 263 61.9 40.7 21.2 2,627,013 1,721,760 905,263 61 6 Swift , 996, 633 97.2 22.9 22.8 20,0 (') 31. ■: 18,135,441 4,296,722 4,341,510 3,691,041 6,9,30 5,799,238 95.2 Swift&Co 22.6 Armour & Co 22 8 Morris & Co 19.4 Wilson & Co., Inc (') 30.4 Cudahy Packing Co Philadelphia, Pa 424, 451 211,075 69,430 30,043 60,799 63, 104 5.2 2.6 .8 " .4 .7 .7 449, 794 260,620 97,402 33, 548 54, 870 13; 354 5.5 3.0 1.2 .4 .7 .2 577, 247 302,642 161,921 38,258 31,600 42,826 7 Swift&Co 3.7 Armour & Co 2 Morris & Co 4 Wilson & Co., Inc 4 Cudahy Packing Co .6 Pittsburgh, Pa 1,463,923 ]:5,0!14 1,323,675 42.0 3.6 38.0 1, 503, 682 140, 790 1,328,074 43.2 4,1 38.1 1,482,431 136,786 1,338,180 Swift&Co Armour & Co 3S.4 1 Less than one-tenth of 1 per cent. MEAT-PACKING INDUSTRY. 119 TABLE 25. — Cold storage in cities vyith an estimated population of 100,000 or more — Space in which the five large meat packers were interested, 1917-18 — Continued. (For qualifying footnotes see p. 116.) Nov. 30, 1917. Mar. 31, 1918. July 31, 1918. . Cubic feet. Per cent of total capacity Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. Pittsburgh, Pa.— Continued. Moms&Co . ... 8,620 4,116 2,418 0.2 .1 .1 8,698 21,749 4,371 0.3 .6 .1 2,862 3,953 660 1 Wilson & Co., Inc .1 Cudshy Packing Co (') 138,507 135,4.12 2,380 695, 10.8 10.6 .2 133,329 133,329 10.4 10.4 136,469 134,769 1,700 10.7 Swift&Co 10.6 Morris & Co 65,017 16,374 16,931 3,046 12,252 6,414 3.7 1.1 LI .2 .8 .5 64,482 20,755 19,835 1,.520 4,737 7,635 3.6 1.4 1.3 .1 .3 .6 139,160 20,810 77,856 2,363 18,081 20,050 Swift &Co Armour & Co 5 2 Cudahy Pacldng Co 1.3 736 600 136 .2 .2 2,025 1,679 346 .6 .5 .1 8,534 8,434 100 2 4 Swift&Co Wilson & Co., Inc (') Richmond, Va 26,073 9,808 9,112 1,254 5,899 1.3 .5 .5 «.3 46,121 16,557 14,385 1,541 12,638 2.3 .9 .7 .1 .6 71,367 28,876 29,094 3 7 Swift & Co 1 5 Morris & Co Wilson & Co., Inc 9,920 3,477 5 Cudahy Packing Co 2 Rochester, N. Y 87,376 84,542 1,070 212. 1,552 5.2 6.0 .1 ".1 84,934 75,138 3,207 6.0 4.4 .2 97,855 84,811 5,615 5 8 Swift &Co 5 3 Morris & Co Wilson & Co., Inc 6,689 .4 7,429 5 St. Louis, Mo. 2 10,626,622 3,089,438 3,964,366 3,276,140 295,223 455 70.0 20.4 26.1 2L6 1.9 11,321,127 3,033, 158 3,925,207 3,636,964 125, 798 74.6 23.9 25.9 24.0 .8 10,804,972 3,268,577 3,939,847 3,442,3,50 120,320 33,878 71.2 Swift &Co Armour & Co 26 22.7 .8 Cudahy Pacldng Co .2 St Paul, Minn 2,209,139 2,177,069 21,069 2,978 2,059 5,964 63.9 63.0 .6 .1 '\2 2,299,664 2,253,482 38,784 15 4,748 2,635 66.6 65.2 1.1 (') .1 .1 2,283,634 2,261,459 9,798 2,040 6,055 4,282 66 1 Swlft&Co 65.4 Armour & Co .3 .1 .2 Cudahy Packing Co .1 Salt Lake City, Utah 397,560 397,560 66.5 66.5 407,816 407,816 68. 2 68.2 401,324 401,324 67.1 Cudahy Packing Co 67.1 36,653 39 31,012 2,615 2,887 14.4 (') 12.2 LO 1.2 31,383 12.3 34,377 2,688 29,043 13.5 Swift&Co 1.1 Armour &Co 30,439 11.9 11.4 Morris & Co ....... 944 .4 2,646 1.0 1,145,111 1,115,291 13,959 278 7,122 8,461 19.5 19.0 .2 .2 1,226,831 1,121,724 15,893 3,200 2,107 82, 907 20.8 19.1 .3 1,267,136 1,167,693 64,516 4,860 21.4 Swift&Co 19.9 .9 Morris&Co .1 Cudahy Paddng Co 30,067 .5 5,465 .7 23,738 6,814 3,392 8,124 3,837 1,571 2.8 .8 .4 1.0 .4 .2 60,327 19,584 758 13,194 17,122 9,669 7.2 Swlft&Co 2.3 .1 Morris & Co 1.6 Wilson & Co., Inc 6,465 .7 2.0 1.3 — ■ 1 Less than one-tenth of 1 per cent. ' Includes E:ist St. Louis, 111., and National City, 111. > Includes Oakland, CaliL 120 MEAT-PACKING INDUSTRY. Table 25. — Gold storage in cities with an estimated population of 300,000 or more — Space in which the five large meat packers were interested, 1911-18 — Continued. (For qualifying footnotes see p. 116.) Nov. 30, 1917. Mar. 31, 1918. July 31, 1918. Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. Cubic feet. Per cent of total capacity. Seattle, Wash 77,265 69,862 6,380 1.8 1.6 .2 75,532 69,316 4,000 1.7 1.6 .1 122,448 82,680 30,818 40 8,910 2.8 1.9 .7 P) .2 Cudahy Packing Co 1,023 (') 2,216 (■') Spokane, Wash 750,084 2,304 747, 780 71.8 .2 71.6 736,181 70.5 737,503 1,581 735,922 70.8 .1 736, 181 70.5 70.6 161,437 123,975 14,956 1,140 1,113 20,253 15.6 12.0 1.4 .1 .1 2.0 162,913 123,120 14,420 2,280 2,354 20, 739 16.8 12.0 1.4 .2 .2 2.0 231,977 151,214 31, 182 9,458 6,931 33,192 22.5 Swift & Co 14.7 Armour & Co 3.0 Morris & Co g Wilson & Co., Inc. 7 Cudahy Packing Co 3.2 237,653 84,686 66,941 20,898 14,499 50,629 17.2 6.1 4.9 1.5 1.0 3.7 161, 589 108,237 19,405 2,265 11.0 7.8 1.4 .2 194,937 71,676 74,164 5,282 14,373 29,442 Swift&Co Morris & Co 4 Wilson & Co., Inc 1 Cudahy Packing Co 21,682 1.6 2.1 57 57 t^ 11,133 935 10,198 Swift &Co .3 3.3 Armour & Co 629 405 224 .3 .2 .1 17,756 16,116 14,443 173 24 8.3 7.5 .7 .1 (') 54,339 52,848 1,480 11 25.3 24.6 .7 W Swift & Co Morris & Co Wilson & Co., Inc Washington, D. C 55, 226 3^132 26,138 12,651 9,224 4,081 3.7 .2 1.7 .9 .6 .3 40,248 4,111 10,585 3,323 14, 129 8,100 2.7 .3 .7 .2 1.0 .5 77,683 1,276 27,373 16,761 25,186 7,087 5.2 .1 1.8 1.1 1.7 .5 Swift&Co Armour & Co Morris iT5 6 d d d 6 d 6 d o o o o OS p oaS'pspta^ ■♦^OOOOOOOO O O O'! 1.& « i-i o6^.-HCqos thOCOCO t-IW rH .-t 00 t-l i-H 00 Meowi^ jHOW II )-• a -ll§'§S'S|aSo- : ii^aiaiOmB2;-«!BO . 03 O TO M^ [H tH V. !C>-]e5 fe c3 O ^ ® tn ''!onaii OOOBZtD ■to ■y M >J en i:§XXXX^^§§^§§§ii§§is^££S:^eS sssfssss If o9S9 bSbS ■ ^ 3 " 3 * ga OS JMMCQ a". •3 S3 Mg ■ajjo" :::::::::: .'s - ::: :g asjesoj- mM 5f o o o o o o o oo o o b S o o o o-S SS'a'ogS 9 f> ?^'0'3'3'3'3'3'3'3'3'3'3'3 3'3'3'3'd'£i "S S g KS-S gjl ;;:;•.;;•. ; : ; Bg ; ; ; -.^ B-glf^g |1si sags a sis' , O O O^^ ft . w ^- o o o a o . o Si: ^•S-3po d'C 3-35 d d d d d dflj 3m 61 wS^i 'b;"S . o o o o o o(ii gmcom 9 SdnjaoaJwa^'' '|w|^.««««««3|d^-| III 3|s g^lJ MEAT-PACKING INDUSTRY. 123 s s s ^ ■§•0 3 ■pS 8 9 ^ihH if <; -g « x) l-l -g •« •" 13 •d -g 124 MEAT-PACKING INDUSTRY. Table 28. — Cold-storage plants operated by and under the name of Armour & Go. Location. Birmingham, Ala ■Waterbury, Conn Jacksonville, Fla Chicago, 111 National City, 111 Indianapolis, Ind Rochester, Ind Sioux City, Iowa Kansas City, Kans Louisville, Ky Alexandria, La Lake Charles, La Monroe, La New Orleans, La Shreveport, La Owosso, Mich Omaha, Nebr Jersey (ity, N. I Brooklyn (197 Fort Green Place), N . Y . Brooklyn (Sixth Street), N . Y Brooklyn (162 Fort Green Place), N. Y. Brooklyn (Thirty-ninth Street), N. Y . . New York City (Armour Terminal Freezer), N. Y. Pittsburgh, Pa Memphis, Term Fort Worth, Tex San Automo, Tex Spokane, Wash Total (29 plants) Cold- storage capacity in cubic leet. 172, 900 161,380 406,932 17,367,687 3,853,498 186, 466 49,004 2,606,550 730,669 415, 516 18,960 2,160 4,664 219,741 30, 870 72,340 4,339,976 389,687 160,287 163,916 116,457 18,835 38,096 274,976 63, 197 45,079 3,815,619 27, 123 734,581 36,472,864 Character of storage business. Private or public. Private... do2... do.... do.... do.... do.... do.-.. do.... Combined. Private . . . do.... ....do.... ....do.... Combined. Private. .. ....do.... Combined. Private. . . ....do.... ....do.... ....do ....do...- ....do.... ....do.... .do .do .do .do .do Class of commodities.' Produce, meat, lard. Do. Meat, lard, produce. Fruit, produce, meat, lard Produce, meat, lard. Meat, lard. Produce. Produce, meat. Produce. Produce, meat. Fruit, produce, meat, lard. Not reported. Produce. Fruit, produce, meal, lard, vegetables. Frmt, produce, meat, lard. Produce. Produce, meat, lard, fruit. Meat, lard. Produce, meat, lard. Fruit, produce, meat, lard. Lard, meat, produce, fruit. Lard, meat. Produce, meat, lard. Produce, meat. Fruit, produce, meat, lard. Fruit, lard, meat, produce. Produce, meat, lard. Produce, meat. Meat, lard. fish. 1 Produce here includes poultry, eggs, frozen eggs, butter, cheese, etc. held on Nov. 30, 1917, Mar. 31, 1918, or July 31, 1918. ' Except for unexpired leases. The commodities listed are those MEAT-PACKING INDUSTBY. 125 59 a a S> u Oi Isi — S3'-0 hJ o C a§3 ill i^M III I R l§^ "111 ill dS^l ao-b ySoa lillllf =a||aSf & 126 MEAT-PACKING INDUSTRY. Table 30. — Cold-storage plants operated by and under the name of Morris £ Co. Location. Cold- storage capacity in cubic feet. Character of storage business. Private or public. Class of commodities.! Chicago, 111 East St. Louis, 111 Kansas City, Kans St. Joseph, Mo Omaha, Nebr Oklahoma City, Okla. Total (6 plants)., 11,630,559 3,176,497 2,783,272 2,231,074 3,630,196 3,081,872 Private do do do do Combined.. Produce, meat. Meat, lard. Do. Do. Do. Produce, meat. 26,433,469 1 Produce here includes poultry, eggs, frozen eggs, butter, olie«w, eto. The commodities Ust«d are those held on Not. 30, 1917, Mar. 81, 1»18, or July 31, 1»18. MEAT-PAOKING INDUSTRY, 127 0) i^a> o b S " SO JJoog ^.as ■g «a0 o o o o o ^ O IB S qT t-i a f-i PhOCU o d o d*3 d-*i*2 d d d s-^oo moo -5 Seooo ■* WT 3 -^f OU3 ■«*< .-Ht ■-N00 cqeor-WTtH eoM-* i- iill sgK3Kc !2;PM|z;-?M3oara ^loS SoS^r^eoSSSSioS as? ■S PC OS'S a t>^ t4 o o 0) ■ 043 O IH »4 M f III •^ a 1^ •3 .g o •3 .g •a ® H a .ggg^S. 3 S 3 «^ ■a o«'g3 SgSSa O CD 6-1 w a> o S d f S-3 S 128 MEAT-PACKING INDUSTRY. Tarle 32.— Coia-storage plants operated by and under the name of Wilson & Co.. Inc. Location. Cold-storage capacity in cubic feet. Los Angeles, Calif Chicago, 111 Kansas City, Kans New York, N.Y New York (45th Street plant freezer), N.Y. Oklahoma City, Okla Total (6 plants). 405,888 8, 173, 500 4, 550, 000 2, 132, 626 11,374 3,321,859 18,695,247 Character of storage business. Private or public. Private . ...-do.. ....do.. ....do.. ....do.. ....do.. Class of commodities.! Produce, meat. Do. Produce, meat, lard. Do. Meat. Produce, meat. ' Produce here includes poultry, eggs, frozen eggs, butter, clieese, etc. he;,-; on Nov. 30, 1917, Mar. 31, 1918, or July 31, 1918. The commodities listed are those MEAT-PAGKIWG INDUSTBY* 129 it o ca R a a i| P'&d d ftS ft rj (S ffi C3 OS ea s-sa •§■2 •a S gf^ TP -^ O (O lO ".g P3 00 © w c' "" ^ "' i4 d 6 u.S.SodSi 140361°— 20 ^9 ■33 °> 00 o a^ go 3 n ■sg ^1 o a H 3 St; tun bCQ> 0)0 ■O-t-s ISO MEAI-PAOKING- INDUSTRY. TAIiLE 34.- -Cold-storage plants operated hy and under the name of The Ci(dahy Packing Co Location. Cold-storage capacity in cubic feet. Character of storage business. Private or public. Class of commodities.! Birmiugham, Ala Los Angeles, Calif Jacksonville, Fla Chicago, 111 Sioux Citv, Iowa Kansas City, Kans Wicliita, Kans Omaha, Nebr Nashua, N. H Salt Lake City, Utah.. Total (10 plants) 50,289 055,307 40,337 152,188 4,713,973 5,083,398 1,383,934 5,713,450 40,834 397,560 Private... do.... do do.... do...., do..... ....do do Combined Private... Meat. Produce, meat, lard. Meat. Not reported. Meat, lard. Produce, meat, lard. Meat, lard. Do. Produce, meat, lard. Do. 18,237,270 > Produce here includes poultry, eggs, frozen eggs, butter, cheese, etc. The commodities listed are thos? held on Nov. 30, 1917, Mar. 31, 1918, or July 31, 1918. MiEAT-PACKING INDUSTRY. 131 006 , P O rt (-1 Ph-S •a : ^ 0)1313 8 Q 03 3 "if ^1 CHAPTER III.— POULTRY PRODUCTS. Section 1. — Buying and selling operations of the five greater packers. The five greater meat packers, with their affiliated and allied com- panies, engage in every phase of the poultry products trade. Their operations cover practically every section of the United States and reach even into foreign countries. Buying operations. — They secure a large part of their poultry products through the poultry and egg buying stations and packing plants which they control. The Commission located 102 poultry and egg packing plants which are controlled by them and 247 buying sta- tions through which these plants secure their supplies. These buying stations and packing plants are located largely in the Middle West, principally in the States of Iowa, Missouri, and Kan- sas. Some of them are operated by the meat-packing companies direct, and some of them are operated by subsidiary, affiliated, or allied companies. For example, a great number of the Swift buying stations and plants are operated by subsidiary and affiliated com- panies of W. F. Priebe Co., a Swift subsidiary, whereas many of the Armour stations and plants are operated by the Kentucky Creameries, Aaron Poultry & Egg Co., A. S. Kininmonth Produce Co., and Nicholson Ice & Produce Co., Armour concerns. The locations of the 102 controlled poultry and egg packing plants and the 247 buying stations through which supplies are purchased, with the names under which they are operated and their exact rela- tions to the packers are given in Exhibit VII. The following table is a summary of that exhibit : Table 36.- -Nuniber My packer ponltrij and egg-packing plants and huying stations, grouped hy States, 1918. Swift & Co. Armour & Co. Morris & Co. Wilson & Co., Inc. The Cndahy Packing Co. Total, big packers. State. f 5 1 Mo-: S E s g 1 1 1 Massachusetts 1 1 2 1 1 1 3 4 12 3 2 New York " 1 1 1 1 1 District of Columbia Ohio i 2 11 2 1 1 4 31 9 6 2 1 3 3 4 1 IG 2;i lUinoip 1 1 32 "Mioh \oa^ 1 1 9 WiscoDsin 3 9 133 134 MEAT-PAOKING INDUSTRY. Table 5e.~Number Mg packer poultry and egg-vacUng plants and -buying statwna grouped by States, iSiS— Continued. Swift & Co. Armour & Co. Morris & Co. ■Wilson & Co., Inc. The Cudahy Packing Co. Total, big packers. State. bam .91 1 11 1 1 ft at B 1 Is 1 ft .^1 m 2 15 6 6 71 24 2 3 4 ...... 6 1 2 I 1 3 3 2 1 1 '"'i' ...... 9 23 11 1 3 9 1 1 1 5 1 1 1 2 3 s Iowa 76 Missouri 3U South Dakota 2 3 19 3 1 6 1 211 8 5 11 S Tennessee. 1 1 ...... 1 Texas 1 1 1 1 Oklahoma 4 1 1 2 Colorado. 1 Utah 1 1 1 2 Washington , . 1 12 3 1 Oregon ^.,.. 1 1 12 CaJiromia 3 Total 50 192 25 41 4 9 7 3 16 2 102 247 It will be seen from the exhibit that in many cases poultry and egg-packing plants are not given as having any buying stations. In some cases this may be due to the fact that the buying stations for the plants were not returned to the Commission. It is often due to the fact that the plants have no buying stations as such, but buy regularly from certain country dealers. In many instances these country dealers sell all of their products to the packer's plant, and in some cases these dealers are financed by the packer plant, and in other cases they buy from- producers and sell to the packer plants on a commission basis. So the packers' plants in reality have a larger number of buying stations than is indicated by this exhibit. The packer buying stations buy most of their poultry products directly from the producers. Many of them also buy from country collectors and local grocers who have bought from the producers, and some of them also buy from local poultry and egg shippers. In addition to buying poultry products through their controlled poultry and egg-packing plants and buying stations, they also buy as well as sell through their regular branch houses and slaughtering plants. This is particularly true in the Southern States and on the Pacific coast, where they have few specialized poultry agencies. The branch houses, like the poultry-packing plants and buying stations, buy from producers, country collectors, local grocers, and local dealers. Tlie following excerpt from a letter by W. F. J. (Jackson) of Swift & Co. to M. G. Middaugh, dated February 21, 1918, deals with Swift & Co.'s policy of buying and selling poultry products through branch houses: MBAX-EACKING IITDUSTRT. 135 Sales in Mr. Grafft's territory for 1917 compared to 1916 show a decrease of 20%, which is badly out of line with our egg volume for total United States which shows an increase of better than 12%. Considering the facilities that Swift & Company have for buying, handling and shipping eggs, we see no reason why the egg volume should not be grown iu this particular territory as well as in any other. It has been the opinion of some Branch House Managers that eggs could not be sold by Branch Houses during the early Spring Months, when same ai.- plentiful. However, we have found in recent years that Branch Houses right iu the producing sections maintain a fair volume, by keeping in constant toucli with both the producers and retailers, shipping where necessary to convenient outside markets, any surplus production. We feel it is simply a question of good business principles regulated by supply and demand and we should expect natural growth In the particular product the same as we experience in other lines. How Swift & Co. buys poultry products through branch houses and other agencies in the far West is shown by the following letter and memorandum from the files of Swift & Co. : May 7, 1917. Mr. Louis F. Swift, Fow-th Floor. Phoenix, Ariz. Answering your letter of May 4th we are represented at Phoenix, Arizona by a selling house managed by Mr. Mayfield. We are working the situation out with Los Angeles and El Paso houses us well as drawing Phoenix out on the matter. Mr. Mayfield, the manager at Phoenix, has hardly shown the aggressiveness we think he should have sho\vn in getting hold of this produce for his own territory and for outside territories. It is .our general feeling at this time that the Phoenix house must show aggressiveness in this respect — in getting hold of the stock, not only for their own local use but also for shipment to these other territories. Don't believe we are in po.sition yet to recommend our own creamery or produce house near Phoenix. Imperial Valley. Swift & Company, Los Angeles, work the Imperial Valley direct from Los Angeles, i. e., buy dressed poultry in the winter time, especially turkeys, also work the country shippers, during few months in the early spring, for eggs. The writer, while out there, also encouraged them to make some connections for creamery supply from some of the small creameries although at that time were all pretty well hooked up with an outlet. Climatic conditions in the Imperial Valley most of the year are against a successful handling of produce and it is our opinion that we should not at- temj)t anything down there at this time other than encouraging Swift c& Com- pany, Los Angeles, to work territory pretty thoroughly. H. B. C* R. H. B. Collins. The following is the memorandum referred to above : 1st Los Angeles There is no country district around Los Angeles where the production is sufficiently heavy or railroad facilities sufficient to concentrate at any point sufficient poultry or eggs to justify a produce plant. 136 MEAT-BACKING INDUSTKY. The railroads and Interurban lines practically all lead ^^^°'^°^J'^^^^ Also, the heavy production Is rather close to Los Angeles and large perc ge comes in by trucks. - ATisreloo Los Angeles house is able to buy eggs for direct shipment Into 1.0s ivngeies in very satisfactory manner. The live poultry also centralizes in Los Angeles. Five years ago poultry feeding station was started in the Los Angeles house but this did not work out satisfactorily to them and feeding was discontmued, 2nd San Francisco While there Is a larger production of poultry and eggs adjacent to San Fran- cisco, the San Francisco house Is in position to buy eggs for shipment direct into San Francisco and there are no country points where the production of lioultiy is sufficient to justify a poultry feeding station. Further, a larger percentasie of the poultry is of the Leghorn light weight variety, making it expensive to handle and very large number to be handled to make any volume. Large percentage of the poultry centralizes in San P''rancisco. There are three feeding stations in the city of San Francisco run by others, including Western Meat Company [controlled by Swift interests] and one station at Petaluma run by McCullougli Provision Company, in crude limited way for limited time during the year. AlKjut five years ago feeding station was started in the San Francisco house but results did not prove satisfactory to thenl and it was closed. Srd Portland Production of eggs and poultry is showing a large Increase in and around Portland. The Union Meat Company [controlled by Swift & Co.] opened a creamery and feeding station in their wholesale market about five years ago and while the management was not good on the start, they now have a compe- tent manager and material progress is being shown in the handling of poultry. They are not only able to supply their requirements but have supplied approxi- mately eight cars of satisfactory frozen poultry to our San Fraucisco house during the past season — one car for Los Angeles — small amount for Seattle and Spokane and few of our smaller houses. The poultry is nmch larger breed than in California and most salisfactory to handle. Believe the Union Meat Company are going to grow their business successfully and in addition to taking care of their requirements will be quite a source of supply for San Francisco and Los Angeles. ith Seattle The -Seattle house buys eggs direct from the country. Also have creamery in operation in their house as well as poultry feeding and dressing department which is working out satisfactorily. We are furnishing them with another man and it is our estimate they will hugely increase their handling this year at satisfactory results and produce sufficient supply of all kinds for their trade even including broilers. The situation, tlieref ore, resolves itself to a supply for San Francisco and Los Angeles and in view of the fact that proper results were not secured by theJr feeding stations and fact there is no other point that appears to justify u produce plant at this time, it is our recommendation that the matter be al- MEAT-PACKING INDXJSTBY. 137 lowed to stand for the present. These two houses to draw their supply of poul- try either from other local trade, Union Meat Company, or East as conditions will permit. The above memorandum is initialed H. B, C, obviously meaning H. B. Collins, manager of Swift & Co.'s produce department. Each of the big packers also buys poultry and eggs from appar- ently independent packers who run their own poultry and egg pack- ing plants. Some of the " independent " poultry packers sell all or a large part of their output directly to one or the other of the meat packers or to their affiliated companies. For example, the Cleaver Produce Co., of Moberly, Mo., in 1917 sold 93 per cent of its eggs and 79.42 per cent of its poultry to W. F. Priebe Co. and its affiliated companies. Morris & Co. marketed in 1917, 99.84 per cent of the entire dressed poultry of A. E. Loomis & Son, Fort Dodge, Iowa. Swift & Co. marketed in 1917, 61.93 per cent of the entire egg supply of the Hooper Produce Co., Chariton, Iowa. Wilson & Co., Inc., dis- posed in 1917 of 65.78 per cent of the entire egg supply of A. Baird & Co., Lohrville, Iowa. The Wadley Co., Indianapolis, Ind., sold in 1917 to Morris & Co., 27.95 per cent of its dressed poultry and 10.72 per cent of its eggs; to Swift & Co., 23.15 per cent of its dressed poultry and 1.6 per cent of its eggs. , The five packers are also large buyers of dressed poultry and eggs in wholesale markets in the large consuming centers. In Chicago, St. Louis, New York, and other large cities, through their subsidiary and allied produce and meat packing firms, they buy. large quanti- ties of poultry produce from commission men, speculators, and cat- lot dealers. The big packers are the largest customers of some of the largest wholesale poultry and egg dealers. Morris & Co., Wilson & Co., Inc., and The Cudahy Packing Co. buy very heavily from the wholesale trade. Several of these wholesale dealers have contracts with the big packers to sell to them a certain number of, cars of packed poultry and eggs each week. The Greencastle Products Co., with offices at Chicago and Lafaj^ette, Ind., in 1918 had a contract with Wilson & Co., Inc., to ship one car of eggs per week to Wilson's New England branch houses, which eggs were to be paid for on the basis of one-half cent less than the quotation for fresh-gathered .firsts on the date that the cars of eggs arrived at the destination. Selling operations. — The branch houses and car routes are the principal channels through which the five packers sell poultry products. However, a large proportion of dressed, poultry and eggs handled by them is disposed of through various other channels. Swift & Co. maintains several " produce houses " in the various large cities through which poultry products are bought and sold. 138 MEAT-PACKING INDUSTBlf. The poultry and egg buying and packing firms enumerated above sell large quantities of products to wholesale dealers in the large cities, as well as supply the produce departments of the packers. These sales to independent wholesalers are made when the supplies are not needed by the produce departments. Some of the large packers have representatives on the produce ex- changes who sell poultry products to car-lot dealers and speculators who want to buy. The Harold L. Brown Co., Inc., represents Armour on the different produce exchanges. They also sell large quantities of poultry products to the retail trade through their family-controlled meat packing companies and selling agencies. This is particularly true of the Swifts. The fol- lowing letter refers to sales by Swift through the Western Meat Co. : July 12, 1915. Messrs. W. F. Jackson, W. B. Hesdebson. Suggest you consider, within the next few days, the question of putting up broilers or any other poultry the Western Meat Company want, under their brand. Looks to the writer as though might do this to very good advantage to both. Prefer, however, to niaintaim exactly same style of boxes and packing and grading on any of their brands that we maintain on our present brand. HBO HBC*R Copy to E R Patterson, office. All of the big packers are large exporters of poultry products. As a matter of fact, they, through their controlled firms, handle practi- cally all the dressed poultry and eggs which are exported from the tlnited States. Tlie following letter from the files of Swift & Co. shows how that company, through one of its subsidiaries, in 191'5 did a large and profitable export business in poultry products : JuLT 13, 1915. Mr. Louis F. Swift, Fowrth Floor. Answering yours of the 12th, Export Frozen Poultry, the season is over tor export frozen poultry. It extends in Great Britain from about first of Pehru- fu'y to first of July, wMch is time the Irish and EngUish chickens are not available. From the first of July until first of January English and Irish chickens are very plentiful. There are a few French chickens come in but they are toppy quality and sell high and we are of the opinion they are now coming. We did the largest ftozen poulti? business with Gfreat Britain this j-ear that we have had for several years from the XJ. S. Stock consisted of % of our own packing and J outside packing, such as Priebe's and other good packs. We sold at outright price to Swift Beef Company at profit to us and they in turn sold to the trade all over Great Britain at profit. Brill came over early last fall and bought large amount poultry, bought it faifly cheap, engaged his space before rates went up and we understand made- very bine ifinel profit. MEAI-PACKING IHDUSTEY. 139 Other small dealers did some btrsiness but not as ext-ensive as previous sea- sons on account of unsettled conditions, shipping facilities, space, etc. Cudahy is in the produce business. They do a very small poultry business with some eggs, cheese, and butter. Think their cheese business is largest item. Maurice Mandeville, brother of Paul Mandeville, we understand, is their produce man. Do not think Cudahy is exporting any poultry. If tliey are it is in very small way. We have some light fowl in our freezer (that is not spring chickens) that we have been offering to export but don't think there are any prospects of selling for export. H. B. Collins Section 2. — Position of the five greater packers in the poultry-products trade. The five big packers are the dominant factor in the wholesale han- dling of dressed poultry and eggs. Estimates by individual mem- bers of the trade on the extent to which their own firms or localities have suffered in recent years at the hands of the packers run from 60 to 90 per cent and frequently include the expression that for the firm's locality they have substantial control (see Exhibit VIII). For the country as a whole trade estimates place the quantities of dressed poultry and eggs shipped by the packers in 1917 at over 65 per cent of the total shipped from producing areas to consuming centers. To arrive statistically at the proportion of Big Five control at the point of wholesale distribution both the total sales and the packer sales at this point must, of course, be known. Total sales of poultry products in wholesale distribution have never been ascer- tained by any governmental agency, and packer sales are only par- tially known. A fairly close calculation of the fixst figure, however, may be made and a known minimum figure for the second makes it possible to arrive at a minimum packer percentage. This percent- age, which is for 1918, confirms the trade estimate for 1917. As reported by the United States Census Bureau, the producers sold 31 per cent of the poultry and .58 per cent of the eggs which they produced in 1909. Since that date the quantities sold have not been reported. The quantities produced in 1918 are estimated by the Department of Agriculture as 589,000,000 head of poultry and 1,921,000,000 dozens of eggs.^ Assuming that the same per- centage of producers' sales held for 1918 as for 1909, there were sold by producers in 1918, 182,590,000 head of poultry (547,770,000 pounds) and 1,114,180,000 dozens of eggs. Obviously these quantities " sold " include much more than whole- sale shipments from producing areas to consuming centers over ^ Circular No. 125, U. S. Department of Agriculture, p. 7. 140 MEAT-PACKING INDUSTBt. which packer control is in question. They inchicle the sales direct from producer to consumer to local country and city retail store, and even to wholesaler for local consumption. Not more than 55 per cent of the poultry and eggs sold by producers is shipped to wholesale centers. Of the poultry shipped 5 to 10 per cent is not " dressed," but is shipped alive. So in 1918 there were probably not more than 275,000,000 pounds of dressed poultry and 615,000,000 dozens of eggs " shipped " in the United States. Sales of poultry products for 1918 have been reported by four of the big packers. Swift & Co., Armour & Co., Wilson & Co., Inc., and The Cudahy Packing Co. (for sales as reported for other years see Exhibit IX). Sales by Morris & Co. were not available. The sales figures reported to the Commission by the four companies as o-iven below are minimum. They include the sales of the principal companies and their subsidiaries only. Throughout the country, however, but especially in the great consuming markets of New Eng- land and elsewhere in the East, there are many concerns conducted under names other than those of the big packer companies which are not directly subsidiary to those companies, but which are owned or controlled by members of families controlling those companies. These concerns do not secure all their supplies through the big packer companies or their subsidiaries, but purchase also from independent packers and handlers of dressed poultry and eggs. The quantities so pui'chased and handled would not be included in these figures. The following table shows the reported sales of dressed poultry and eggs for 1918 by Swift & Co., Armour & Co., Wilson & Co., Inc., and The Cudahy Packing Co., together with their respective direct subsidiaries, and the percentages of these sales to the total estimated quantities of these products "^hipped." TAUI.E 37. — Reported tonnage sales of dressed poultry and eggs for 1918 by tiwift <(■ Co., Armour d Co., Wilson & Co., Inc., and The Cudaliy Packing Co., and percentages of these sales hased upon total estimated quantities of poultry and eggs shipped in the United States. [Note. — Total far the packers in this table inciudes sales by subsidiaries but does not include sales by companies controlled by family affiliation or sales by Morris, neither ol which were available.] Dressed poultry. Eggs. Pounds. Per cent. Dozens. Percent. Estimated shipped, total United States 275, 000, 000 100.0 615,000,000 100. 0^ Reported sales, total Swilt, Armour. Wilson and Cudahy 136,190,560 49.5 202,984,278 33.0 Reported sales, Swilt & Co 78,683,000 27,221,160 '22,396,390 7,890,000 28.6 9.9 8.1 2.9 91,621,980 61,949,895 '34,139,070 25,273,333 14.9 &4 5.6 4.1 Reported sales. Armour & Co Reported sales, Wilson & Co. , Ino Reported sales. The Cudahy Packing Co 'Some duplication is involved in the Wilson sales owing to the inclusion of certain intBn>l»nt ^hinments and shipments between plants and branch houses which the companv reoofk Srh5.?S,,?f *,?Iffl^ the company reports as being unable to exdudt. MEAT-PACKING INDUSTBTi 141 T^ie above -reported sales for the four packers probably do not in- clude more than two-thirds of the poultry products directly and indirectly handled by the Big Five in 1918. The pes-eentages ■ of the total stocks- of- poultry products held in cold storage by the five on the three dates reported to the Commis- sion, November 30, 1917, March 31, 1918, and July 31, 1918, together with other data, are given in Chapter II, Table 18, page 102. For dressed poultry these percentages for the five packers taken together were for the three dates, respectively, 34.26, 42.77, and 29.54. For eggs they were for the three dates, respectively, 16.89, 20.26, and 11.67. These percentages, while comparatively large, do not in themselves represent the proportion of packer sales in wholesale distribution. Independent dealers are relatively large storers of produce, especially of eggs, while the big packers are relatively large buyers of these products as they leave storage. The packers, therefore, handle a much larger proportion of the products stored on a given date than they are reported as holding on that date. Section 3. — Packer competition in poultry and eggs. The big packer places the independent dealer in poultry products at a competitive disadvantage through certain questionable practices and through certain marketing advantages. This handicap, which is primarily borne by the independent as competitor, works back to producer and down to consumer in distinct burdens or losses. These practices of packers and these losses to producers and consumers are here discussed. Marketing advantages are treated in Chapter II. Local price discrimination. — The packers dp not hesitate to raise prices in a locality in order to take the business away from inde- pendent buyers, and equally unhesitatingly lower the prices in those localities where they have eliminated local competitiop. J. E. Hoban, a country buyer and shipper of produce at Carroll- ton, Mo., testified that on the same dat«, February 6, 1918, F. M. Stamper Co., of Moberly, Mo. (controlled by W. F. Priebe Co.), paid through its agent, J. P. Quick, 45 cents a dozen for eggs and 20 cents a pound for hens at Dalton, Mo., where there were no competitive buyers, while at Carrollton, Mo., and at Hardin, Mo. (through its agent, W. A. Templeton), where there are independent buyers, Stamper paid 54 cents a dozen for eggs and 24J cents a pound for hens.i This testimony was confirmed by T. A. Buchanan, a produce dealer of Hardin, Mo.^ The following letter by F. M. Stamper to W. F.- Priebe indicates that local price discrimination in buying is a common practice with Stamper. » Chicago Hearings, p. 2803. " Chicago Hearings, p. 2827. 142 MEAT-BACKING IN0USTBY. August 15, 191T. Mr. W. F. Peikbe, Chicago, III. Dear Sib : I have been up ia the western part of the State the last two days. Had to go to Richmond to see the Prosecuting Attorney as those fellows are just about to start action about us paying different prices at Hardin and Nor- borne. Don't amount to anything— just one of those aggravating eases gotten up by complaints of little competition. Am going bacli to CarroUton to-morrow or next day as I am trying to straighten out this CarroUton proposition and will probably stay up there the remainder of the week. Will run up to Macon this afternoon as the Board has a meeting there. Yours very truly, (Sgd.) F. M. Stampeb. FMS— H Local price discrimination is a general practice with the big packers throughout the producing territory as shown by the state- ments of independent poultry and egg dealers. H. Morgan Co., of Cleveland, Ohio, stat^ that: Swift, Armour and other packers have monopolized buying of butter, eggs, etc. forcing up prices when we try to compete to prohibitive levels, and re- ducing price unreasonably as soon as we are driven out of the competition. Arthur Franz, of St. Louis, Mo., who buys poultry in the pro- ducing areas, said to an agent of the Commission: When the packers get ready to buy they get the poultry regardless of tlia price they have to pay. Chabrow Bros., of Philadelphia, independent egg dealers, state that Swift & Co., and other packers are bidding up the price or over, bidding them, especially in the spring, when eggs are being placed in storage. W. A. Tuttle, a produce dealer at Buffalo, N. Y., said to an agent of the Commission : The packers at present are going to shippers and are paying so much for poultry that the shipper can get more by seUing locally to the mieat packer who ships the poultry to this plant and dresses same, than by shipping to Buffalo. The following extract from a letter of June 26, 1916,. by F. S. Hayward to Edward F. Swift in reference to competition in the produce business at Cadillac, Mich., shows with complete frankness the method and power of the big packers to bring local competitors to terms: The first year we would probably have to operate at some loss, but while we were doing this Oie probabilities are that the other people would be losing more than we would and we think in the course of time this would bring tliem around to a reasonable view of the matter. MEAT-PACiEING INDUSTEY. 143 BoGtTS DfTDEPEKDENTs. — Comparatively few of the buying stations controlled by the big packers are ran under their own names, as is shown by Exhibit VII. Most of them are operated under the names of the local managers or of subsidiary or allied companies whose connections with the big packers are unknown to producers or to local competitors. This enables the packers to practice local price discrimination and other unfair methods of competition without the knowledge of their competitors. Through these bogus firnxs the big packers secure poultry and eggs from dealers who would not otherwise sell to them. Through them they also secure knowledge of their competitors' business, particularly the prices at which th^ offer to sell. In many cases if country dealers do not favor the packers by selling to them the latter will put a dealer in the territory who will favor them, as iadicated by the following letter of H. B. Collins to L. E. Dunker, of Swift & Co. : Mat 31, 1916. JMessrs. L. B. Dunkee, J. Y. Mabshail Produce dealers Think we should instruct otit managers, where there Is not a good reliable produce dealer or produce dealer that favors us with their product, that we try to grow or make a produee dealer in eacli town in our territory. HBC-K Misbranding and adulteration. — Misbranding of poultry prod- ucts on the part of the big packers may go as far as actual adultera- tion, as shown by cases tried by the inspectors of the Bureau of Chemistry of tlie Department of Agriculture. The Swift produce department detected misbranding of poultry by Armour & Co., as shown by the following letters: Ateie 21, 1913. Mr. Chaeees H. Swift, Office. The writer was in Philadelphia some few days ago and one of our branch houses, Dock St., had just purchased some frozen poultry of Armour & Company. The stock consisted of some #1 fowl (old birds not fatted) but they were marked " English Fatted Surrey " and each bird had a celluloid tag at- tached to the leg, reading " Armour's Helmet Fatted Poultry." Other of the boxes were marked "Armour's Helmet Fatted Poultry" and contained #2 quality fowls (old birds not fatted). Tlie placing of tags and these high-sounding names on poultry of this chiss do not indicate very good handling. H. B. Collins. Produce Dept. H B C — R Copy of Mr. Louis F. Swift, Fourth Floor Mr. A. D. White, Advertising Dept. l4'4 meAt-packing industry. Mr. L. F. Swift sent the above letter with a note to Mr. G. F. Swift, who obtained an opinion from the legal department of Swift ^ ^°- Chicago, April S3, 1913. Mr. G. P. Swift, Je. Armour Frozen Poultry. Referring to the attached: Can you tell how Armour can do this under the law? Awaiting your reply— Louis F. Swift Diet. L F S MSB The following pencil remark appears on the bottom of the above note : Mr. G. F. Swift He can't do it lawfully— it is misbranding under U. S. Pure Food Law. R C M [McManus] 4/24/13. That this misbranding was not a mere slip or casual neglect on the part of Armour & Co. is indicated by the following report of Swift & Co.'s manager at Creston on the poultry packed for Armour & Co. by the' Aaron Poultry & Egg Co., an Armour concern : Ckeston, Jan. 1^, 1914. G. S. Rex, Swift & Company, Chicago, III. Dear Sik : It has come to our knowledge that Aaron Packing Company here are packing all springs in boxes which are stenciled "milk fed chickens." We are unable to find out, at this time, whether they are stenciling their fowls this way or not but we believe they are and will try to find out in the near future. It is quite a hard matter for us to do much to those fellows when we are pack- ing same grade of poultry and selling as regulars, really, we believe, grading it better and making a better package and selling ours for regular stock and those fellows selling regular killed poultry right out of the shipping coops, as milk fed. We positively know they are feeding nothing there and if those chickens they are selling ever had any milk, it was down on the farm. This poultry as we have informed you before is all packed in Armour & Company boxes stenciled " Armour & Company " with the different grades. AVe do not know how it is possible for them to sell this poultry as milk fed and not see how Armour & Co. could afford to, handle this stuff. Do not know whether there would be anything in this or not but we are giving you this information as we thought possibly if Armour & Co. knew what kind of poultry they were getting as milk fed, it would make a difference in the prices they paid these people. We are giving you this information to handle according to your judgment.. Yours respectfully. Swift & Company, Per R P Aaron Co. Tagging fowls and springs on wing. Grade to compare Golden West and Premium, Armour brand. MEAT-PACKING INDUSTRY. 145 The Swift produce department thanked its manager at Creston for the above information and made the following inquiry of its legal department: January 15, 1914. Mr. R. C. McMantjs, Legal Department. We attach herewith letter from our Creston manager and copy of our reply. This indicates that the Aaron I'acking Co., who we think is a part of Armour & Company, are packing ordinary poultry at Creston and branding it " Milk Fed," which would seem to us a violation of the Pure Food Laws and would come under misbranding. There is considerable deception being practiced in the way of misbranding produce such as branding half fed chickens " Milk Fed " and chickens that have not been fed at all " Milk Fed." We do not think we shall stand for this in the Produce business any more than we would in the Packing business and would be glad if you would advise us what action you think we could take in the matter. However, do not wish you to take any action without hearing from us further. Wo are especially interested in this case, as case was brought to the atten- tion of Mr. L. F. Swift where Aaron was misbranding their poultry and ho seemed quite interested in the deal at that time. Please reply The following reply was furnished by E. C. M. [McManus] of the legal department: Chicago, January 17, lOUi. Mr. H. B. Collins, Second Floor, FRAUD IN MILK FED LABELS Answering yours of the 15th, nobody owns the words " Milk Fed." If Aaron Packing Company is branding chickens " Milk Fed " which are not so fed, then any shipments they may make interstate violate the National Food Law. and a complaint to the Department of Agriculture would no doubt result in sending an inspector to seize the goods and prosecute the company for fraud. R C M-I O B. R. C. M. The following record of a case of the United States attorney for the northern district of Illinois against Armour & Co. for adultera- tion of desiccated eggs indicates that this company is not always careful about the quality of its eggs : 4037. Adulteration of desiccated [evaporated] eggs. U. S. v. Armour & Co. Plea of guilty. Fine, $200 and costs. (F. & D. No. 2690. I. S. No. 1778-c)' On January 26, 1912, the United States attorney for the northern district of Illinois, acting upon a report by the Secretary of Agriculture, filed in the dis- trict court of the United States for said district an information against Armour & Co., a corporation, Chicago, 111., alleging rhipment by said company, in viola- tion of the food and drugs act, on May 7, 1910, from the State of Illinois into the State of Washington, of a quantity of desiccated [evaporated] eggs which were adulterated. Bacteriological examination of a sample of the product by the Bureau of Chemistry of this department showed after 3 days' incubation 610,000,000 ' U. S. Department of Agriculture, Bureau of Cbemistry, Sei fice and Kegulatory An- nouncements, p. 47. 140361°— 20 10 146 MEAT-PACKING INDUSTRY. organisms per gram developing on plain agar at 25° O. ; 540,000,000 at 3^ 0. : 100,000 B. coll type organisms. The appearance of the product was fair, odor bad, and some dirt was present. Adulteration of the product was alleged In the information for the reason that it consisted in part, the exact proportion whereof was to the United States attorney unknown, of a filthy animal substance, the exact character whereof was to said United States attorney unknown ; for the further reason that the article consisted in part, the exact proportion whereof was to the United States attorney unknown, of a decomposed animal substance, the exact character Whereof was to the United States attorney unknown ; and' for the further reason that the article consisted in part, the exact proportion whereof was to the United States attorney unknown, of a putrid animal substance, the exact char- acter whereof was to the United States attorney unknown. On October 28, 1914, the defendant company withdrew its plea of not guilty theretofore entered, and entered a plea of guilty to the information, and the cause was taken under advisement by the court. On March 26, 1915, the court Imposed a fine of $200 and costs on the plea of guilty entered as above stated. Cabl Vkooman, Acting Secretary of Agriculture. Washington, D. O., November 4, 1915. That Armour & Co. is not the only big packer who adulterates eggs is shown by the following record of a case of the United States attorney for the district of Kansas against The Cudahy Packing Co.: The oificial report on the case follows : 3942. Adulteration and misbranding of eggs. U. S. v. Cudahy Packing Co. Plea of guilty. Fine, $400 and .costs, (F. & D. No. 5618. I. S. No. 6701-e.).' On October 31, 1914, the United States attorney for the district of Kansas, acting upon a report by the Secretary of Agriculture, filed in the district court of the United States for said district an information in 2 counts against the Cudahy Packing Co., a corporation organized under the laws of the State of Illinois, with principal offices at Chicago, 111., and doing business In Kansas, alleging shipment by said defendant, in violation of the food and drugs act, on or about January 25, 1913, from the State of Kansas Into the State of Missouri, of a quantity of eggs which were adulterated and misbranded. The products was labeled: (On one end of cases) "Meadow Grove April Extra." "J 1" (On other end) "Meadow Grove April Extra." (With blurred stamp) " Spots." (On top, in blue pencil) "No. 2." An examination of a sample of the product by the Bureau of Chemistry of this department showed the following results: Number of eggs examined 72 Absolutely rotten, consisting of yellow or brown mass 52 Black " rots " 9 Blue mold 2 Spots and stale eggs, yolks breaking 8 Spot egg, fairly firm 1 Not an egg examined was fit for food. Odor of most of samples very offensive. Appeared worse than usual candled out " Rots." Product consists of rotten, moldy, and spot eggs, which constitute filthy, decom- posed, or putrid animal matter. ' U. S. Department o£ Agriculture, Bureau of Chemistry, Service and Regulatory An- nouncements, p. 547. MEAT-PACKING INDUSTRY. 147 Adulteration of the product was alleged la the Information for the reason that it consisted In part of a filthy, decomposed, and putrid animal substance, that is to say, the cases, when shipped and delivered for shipment, contained a large number of rotton eggs, nfoldy eggs, spot eggs, and eggs affected by black rot. Misbranding was alleged for the reason that the statement " Meadow Grove April Extra No. 2," borne on the package, was false and misleading, because It was calculated to mislead and deceive the purchaser into the belief that the eggs were of extra quality and were suitable for human food, whereas, in truth and in fact, the eggs were not of extra quality and were unfit for human consumption. On January 11, 1915, the defendant company entered a plea of guilty to the information, and the court imposed a fine of $200 on each count of the in- formation, making a total fine of $400, and costs. Cabl Vbooman, Acting Secretary of Agriculture. Washington, D. C, June 30, 1915. In the above two cases the packers admitted their guilt and paid fines and costs. Effect of packer competition on peodttcee. — ^Many producers are not in a position to protect themselves against the growing power of the packers in the poultry and egg business. In several produc- ing sections there are no dealers other than the packers' agents to whom they may sell. Probably the majority of the producers who sell to the packers do not know that they are selling to the packers. This is true because few of the agencies buying for the packers are operated under their names, but are operated under local trade names or under the names of the representatives who run them. Again many of the nominally independent buyers sell all or a part of their supplies to the packers, and manj' of them do this on a contract commission basis, so that they are merely packer agents. Therefore the producer has no way of knowing when he is selling to the big packers' agents. Few producers have a means or an outlet to ship directly to whole- sale markets, but must depend on the local buyers. As the local inde- pendent buyers are eliminated or become the agents of the big pack- ers, the producers have no choice but to sell to the packers at prices set by the latter. The channels of trade through to the retail trade must be opened up so the producers can have their goods offered in a free and open market. Effect of packer competition on consumee. — 'Consumers equally with producers are in a disadvantageous position in reference to the packers' power in the poultry trade. Producers in many localities must sell their poultry products to packers, if they sell at all ; consum- ers in many centers must buy packer poultry, if they get poultry. It is generally conceded in the wholesale poultry trade that the packers determine wholesale prices for dressed poultry and eggs. As 148 MEAT-PACKING INDUSTRY. meat substitutes their prices are kept in line with meat prices, and by having the dominant position for both poultry products and meat products the packers are able to get the maximum prices for both classes of products consistent with the supply of both. Belief for the consumer can come by opening up the channels of wholesale trade so that poultry products pass more directly to him through channels other than those controlled bj the meat packers. CHAPTER IV.— DAIRY PRODUCTS. Section 1. — Character and extent of packer activity. Eapid growth of the big meat packers in the manufacture and Avholesale handling of dairy products has characterized this division of the food industry. In some of these products wholesale handling particularly has reached large proportions, with one packer leading for the entire country. Estimates of the trade on the extent to which this part of the produce business for various localities and firms has been absorbed by the packers are given in Exhibit VIII. Evidence of combination of the five greatest meat packers in these lines through price agreements and division of territory has been presented in Part II of this Eeport.^ Purpose of activity. — Perhaps the most important of the factory dairy products is butter, the substitute for which originally was the packer's oleomargarine, the chief ingredient of which was the oleo oil of the beef animal. More recently vegetable oils, especially cot- tonseed oil, have been largely supplanting oleo oil in the making of oleomargarine, and the packer to retain his position of dominance OA'er the substitutes for butter began the manufacture of vegetable substitutes.^ To secure, however, the maximum benefits of control over the sub- stitutes of butter, the packer was prompted to reach out extensively into the manufacture and distribution of butter itself. Thus com- modities of widely different origin, yet supplying the same general want and therefore normally competitive in both production and consumption, are in production no longer strictly competitive. This situation works progressively to throw both butter and its substitutes into the hands of the packer. If the price of butter goes too high, the trade will go more largely to butter substitutes, and the butter manufacturer devoted exclusively to butter making loses his trade to the packer maker of substitutes. Moreover, the higher the price of butter goes the higher the price that the packer can charge for his butter substitutes, and the additional gain on substitutes will compensate him for any losses in volume or margin he may be com- pelled to take in his butter business, while the manufacturer devoted exclusively to butter, unable to recoup in this way, may be forced to the wall. The clear tendency is to place the trade both in butter and in butter substitutes more and more in the hands of the packers. With the packer interest controlling both butter and its substitutes, 'Pages 134-156. 'See sec. 2, Chap. V, for a discussion of paclser activity in butter substitutes. 149 150 MEAT-PACKING INDUSTRY. the public interest will suffer because there will no longer be any real competition between these commodities, and it will make little difference to the packer which commodity the public buys. Further, the more lines of milk products (butter, cheese, condensed milk) the packer enters to an important degree the greater his con- trol of the use to which the milk supply shall be put, and the greater his power to influence the competition of butter with butter substi- tutes produced from his packing-house and cotton-oil-refinery invest- ments. Cheese containing a considerable proportion of the same nutritive elements as found in lean meat becomes an important substitute for meat. For the packer to hold a commanding position in the produc- tion and distribution of cheese strengthens the packer's position in meat and as in the case of butter and its substitutes secures for him an important advantage over the manufacturer of only one of the commodities- Cream and butter. — Butter handled by the meat packer is either bought from the farmer or small country producer through buying stations and renovated in the packer's plants, or manufactured in the packer's own creameries from cream bought by the packers through buying stations, or bought from outside butter manufacturers. About one-half of the butter handled by Swift & Co. and a much larger per cent of that handled by each of the other big packers is secured from outside manufacturers. Butter made by the farmer and known as packing-stock butter, collected from the country merchant and from the farmer direct, is handled by buying stations, many of them buying at the same time poultry, eggs, and cream. This butter is taken by plants, which also usually buy direct, and is renovated, standardized as to quality, packed in merchantable form, and shipped. Often these plants are equipped also to manufacture creamery butter and to pack poultry and eggs. There were 123 stations engaged in bujdng butter and 66 renovat- ing plants as reported by the Big Five in 1918. (See Exhibit X.) These were distributed by States and by packers as follows: MEAT-PACKING INDUSTRY. 151 Table 38. — Nvmber tig packer butter-renovating plants and buying stations, grouped by States, 1918. Swift & Co. Armour &Co. Morris & Co. Wilson & Co., Inc. TheCudaliy Packing Co. Total, big paclfors. State. 1 II 1 1^ a a i .Si 1 s as s a a 1 a a 1 1 1 3 2 7 2 1 5 19 5 1 8 1 1 1 5 1 1 1 Ohio 1 i 2 1 3 3 Indiana 1 16 19 rilinois 6 1 20 5 1 5 27 10 1 1 1 1 21 1 ... .| .... Wisconsin 1 1 2 11 1 2 3 4 1 6 1 1 3 Iowa 2 1 2S 6 10 Nebraska 1 2 Kansas 2 1 5 6 1 1 1 Texas 1 1 1 4 1 1 1 Colorado 1 1 Oregon 12 1 ■■ 12 Washington 1 California 1 1 Total 29 85 24 27 3 6 7 3 3 2 66 123 Included in the above table are many renovating plants operated under names other than those of the big meat packing companies. Swift & Co. controls through affiliations the Western Meat Co., San Francisco, and by direct ownership the Union Meat Co., Port- land, Oreg., both of which operate such plants, W. F. Priebe Co., whose stock is owned by Swift & Co., operates plants at Hum boldt, Hampton, Waseca, and Muscatine, all in Iowa, and the Mor rison Produce Co., Morrison, 111. The Priebe Co. also operates one plant through each of the following companies: The Atlantic Produce Co., Atlantic, Iowa; the Manning Produce Co., Manning, Iowa; the W. B. Parrott Co., Carroll, Iowa; T. D. Winders, Aledo, 111. ; W. H. Schreitling, Monmouth, 111. ; the W. A. Schwartz Produce Co., Lanark, 111. ; the L. G. Grampp Produce Co., Sterling, 111. ; and Martin Schulze, Bushnell, HI. F. M, Stamper Co., financed by the W. F. Priebe Co., its selling agent, operates a plant at Moberly, Mo. Armour & Co. operates a renovating plant through each of the following companies: Kentucky Creameries (trade name), Louis- ville, Ky.; A. S. Kininmonth Produce Co., Winfield, Kans.; Nichol- son Ice & Produce Co., Denison, Iowa; Aaron Poultry & Egg Co., Kansas City, Mo. ; and Enid Poultry & Egg Co., Enid, Okla. Morris & Co. operates through Sherman White & Co., a renovating plant at Fort Wayne, Ind. The Cudahy Packing Co. operates such a plant at Sioux City, Iowa, through the Sunlight Produce Co., and 152 MEAT-PACKING INDUSTRY. Wilson & Co., Inc., at Altamont, 111., through the Altamont Pro- duce & Packing Co. A steady movement in the direction of concentration in the creamery business has been apparent during the last 20 years. While there has been a constant increase in the quantity of butter manufactured, each census since that of 189-9 shows a decrease in the number of bntter-making establishments and an especially note- worthy decrease in the number of proprietors and firm members. During the five years from 1909 to 1914, the year of the latest census, there was an increase of butter manufactured by establishments frohi 624,764,653 pounds to 769,809,781 pounds, a gain in quantity manu- factured of 23 per cent. During the same period the number of such establishments decreased from 4,783 in 1909 to 4,356 in 1914, a loss of 8.9 per cent, while the number of proprietors and firm members decreased from 3,855 to 2.543, a decrease of 34 per cent. An increase of 23 per cent in quantity of output and a decrease of 34 per cent in number of proprietors and firm members during a period of five years indicate a rapid movement toward the elimina- tion of the smaller manufacturer. While other large firms have played a part, the entry of the meat packers into the collection of cream and the operation of creameries has been an important factor in this concentration of both the buying of cream and the manufacturing and marketing of creamery butter. Their activities in these lines, therefore, become of prime interest to the producer, the manufacturer and distributor, and the consumer. Cream-buying stations for the packers' creameries are thickly dis- tributed throughout the great producing section of the Middle West and widely scattered elsewhere. Fifteen hundred and sixty-four sta- tions engaged in buying cream, and 57 creameries were reported by the big packers in 1918 (see Exhibit XI). These were distributed by States and by packers as follows : MEAT-PACKING INDUSTRY. 153 Table 39.- -Numher Mg packer creamery plants and cream-luying stations, grouped hy States, 1918. [Wilson & Co. Inc. reported no such stations oi plants. Swift * Co. Armour & Co. Morris .4 Co. The Cndahy Packing Co. Total, four comxjdilit'S. state. Cream- erips. Buy- ing sta- tions. Cream- erics. Buy- ing sta- tions. Cream- eries. Buy- ing sta- tions. Cream- eries. Buy- ing sta- tions. Cream- eries. Buy- ing sta- tions. Ohio.. 2 2 2 2 91 19 115 125 6 11 220 282 50 95 2 1 3 2 4 4 2 2 10 1 10 6 1 4 1 94 Indiana 1 61 82 niinois 116 Michigan 125 Wisconsin 7 i 29 5 21 3 35 Ulimesota 1 9 6 1 3 16 241 Missouri 1 51 333 NebraslrB 50 1 1 75 2 60 26 196 Kentucky 24 12 128 4 1 10 3 1 2 15 15 14 Oklahoma 2 2 188 ^kansas 4 1 ColoradoT 1 1 10 New Mexico 3 1 1 1 Washington 2 1 6 1 7 15 California 1 15 Total. . 38 1,205 12 277 4 82 3 57 1,£64 The above table includes not only the creameries operated in the name of the meat-packing companies, but those of the various com- panies thus far identified as being controlled in the interest of the meat-packing companies. In the latter group appear the following : The Western Meat Co., San Francisco, whose operations are controlled by the Swift interests, reports 3 creameries in California and 1 in Nevada, and 10 buying stations in the two States. The Union Meat Co., Portland, Oreg., now owned by Swift & Co.. operates a creamery at Portland, having 17 buying stations in Oregon and Washington. Libby, McNeill & Libby, 99.8 per cent of vphose stock was owned by Swift & Co. until 1918, when it was reported as prorated among the stockholders of Swift & Co., operates a combination condensery, creamery, and' dry- milk-powder factory at Loleta, Calif. The W. F. Priebe Co., Chi- cago, whose entire stock is owned by Swift & Co., operated, at the time of the Commission's investigation, under lease from the Western Packing Co., a creamery at Spirit Lake, Iowa, having nine buying stations in Iowa. The F. M. Stamper Co., Moberly, Mo., a majority of whose stock is owned by W. F. Priebe, and whose operations are financed by the W. F. Priebe Co., its selling agent, owned in turn by Swift & Co., operates a creamery at Moberly, having eight buying stations in Missouri and Iowa. The Centralia Butter Co., Centralia, 111., having a selling arrangement with the W. F. Priebe Co., for the 154 MEAT-PACKING INDUSTBY. bulk of it. output, op».... . cre.»er, .t CentraH. with .0 buying Stations in Illinois. Armour & Co. in the table above, in The creameries -P-^.^^^^^.ttCcompany's own name, include a :^^l^%^:::o:^CcSl o,.J.^ by Armour . C. under the tTaS name of Oakdale Creamery; a creamery at LomsviUe, Ky., op rated by "he Kentucky Creameries, a trade name of Armour & a> of Kentucky, whose entire stock is owned by Armour & Co., the creamery having 24 buying stations in Kentucky ajid 22 in Indiana; 6 creameries at various points in "Wisconsin operated by the Eau Claire Creamery Co., Eau Claire, Wis., which is controlled by Ar- mour & Co. through stock ownership and financing, and which has 29 buying stations in Wisconsin and 5 in Minnesota ; a creamery at Winfield, Kans., operated by the A. S. Kininmonth Produce Co., 50 per cent of whose stock is owned by Armour & Co. and which has 13G buying stations in Kansas and Oklahoma and 2 in Texas ; a creamery at Denison, Iowa, operated by the Nicholson Ice & Produce Co., 50 per cent of whose stock is owned by Armour & Co. and which has 21 buying stations in Iowa. Morris & Co. controls Sherman White & Co. through ownership of 52 per cent of the stock, and also has an arrangement by which it is given preference in handling the controlled company's products. This company operates a creamery at Fort Wayne, Ind., which has three buying stations in that State. The Cudahy Packing Co. owns the D. E. Wood Butter Co., which operates a creamery at Evansville, Wis. The latter company hiis an arrangement by which the entire output of the W. M. Peacock concern, Fennimore, Wis., is taken. The volume of butter distributed by the big packers is, of course, much larger than that manufactured in their own and controlled plants and in other plants under a fixed arrangement to take the output. While Swift & Co. manufactures approximately one-half of what it handles, and Armour & Co. somewhat less, Morris & Co. and The Cudahy Packing Co. make only a small proportion of what they handle, and Wilson & Co., Inc., so far as reported to the Commis- sion, none at all. The distribution of tlie packer's butter, both manufactured and purchased, some to wholesale firms but largely to retail firms and to hotels, is effected through branch houses of the parent company and those of controlled meat-packing companies, through controlled sell- ing companies, including produce and hotel-supply firms,^ and by cludedTZ wf " ":i" 'JT ^r'^'^ °^ ^*«^^g« to the trade. In- rout '' distribution by the so-called peddler-car MEAT-PACKING INDUSTRY. 155 In the distribution of butter, as well as its manufacture, Swift & Co. leads not only the big packers but all other dealers. The growth of this company in this particular has been rapid. As showing its sales in 1914 and the proportion of these sales arising from its own manufacture, as well as the selling methods and profitableness of the business, the following paragraphs are taken from a letter dated Au- gust 6, 1915, by the manager of the produce department to Mr. Louis F. Swift, president : Last year, Swift & Company, through all channels sold about 45000000 # butter (25000000# of which was manufactured by ourselves) about 14-15000000# we estimate went out in pound packages, with our Individual brand thereon. We are working on little different lines, i. e., establishing creameries only in connection with produce plants, where we get advantage of increased efficiency out of our investment and butter milk for feeding. We sell through our gen- eral branch houses and have not yet advertised. The business has averaged profitable on the manufacturing end and to branch-house selling end has been very profitable. Consider we have made a fine start in the butter business and expect to show better financial results and materially larger Increase in the business during next year. HBC*R H. B. CoiiiNS. The above sales of 45,000,000 pounds were made " through all chan- nels," not only through branch house, but by car route and direct consignment to wholesale and retail trade, though doubtless they do not include sales by many affiliated companies and those otherwise controlled. The letter below, dated almost a year later, gives the estimated sales and relative standing of the leading butter distributors. Swift & Co. is 40 per cent in advance of the largest independent manufac- turer and 100 per cent of any other meat packer. Swift & Co. is 150 per cent in advance of the second largest independent. June 27, 1916. Mr. Louis F. Swift, Fourth Floor. Butter Business Answering yours of the 23rd Inst, asking if Blue Valley comes third on sales of butter to retail dealers aad who comes first and second, we give below our best estimate : standing. Name. Estimated yearly sales. 1st.. 2nd. 3rd . 4th.. Swift & Company . /FoxKiver \Beatilce Creamery . ArmourA Co Blue Valley Founds. 60,000,000 35,000,000 26,000,000 20,000,000 156 MEAT-PACKING INDUSTRY. You will note, In our revised estimate we have put Armour & Company ahead of Blue Valley. It is [a] little hard for us to [get a] very good line on Armour's butter business but believe the guess a fair one. We are doing practically no advertising on our butter business. We are showing healthy growth and have the situation pretty well lined up for ma- terially inci-eased butter business the last six months of the year. ^H. B. Collins — Produce Dept. HBC*R Copy to Messrs. Edward F. Swift. F. S. Hayward. The branch-house sales are much smaller than the total sales as given above. For the fiscal year closing September, 1916, Swiit & Co., including subsidiary and affiliated companies, reported sales of butter through branch houses of about 38,000,000 pounds. In the calendar year 1917 these sales had increased more than 22 per cent over those of 1916, and the sales of December, 1917, vrere 28.3 per cent greater than those of December, 1916. Not content with this record of growth. Swift & Co. was pushing for still larger results for 1918. The following paragraphs are from a letter dated December 5, 1917, by W. B. Henderson to W. F. Jackson, both assistant managers in the produce department: During my visit at Washington Mr. Collins offered the following suggestions : That every effort be made to rush completion of the new creameries in Ohio, Illinois, Indiana, etc. That we begin laying our plans to increase our butter sales next year, figuring to show increase of 25% 1918 over 1917. How well Swift & Co. was able to realize upon these plans appears from the report of the company that its sales in 1918 amounted to 06,621,000 pounds. Armour & Co. reports sales of butter for the fiscal year ending October 28, 1916, of 30,528,177 pounds and for the fiscal year end- ing November 2, 1918, 51,016,876 pounds, an increase of 67 per cent. AA'ilson's sales '■ for the same years were, respectively, 14,341,827 and 21,565,099 pounds, a gain of 50 per cent. The Cudahy Packing Co. reports butter sales for 1917 of 12,290,000 pounds and for 1918 of 16,760,000 pounds, an increase in one year of 36 per cent. (For greater detail on the sales of the four companies see Exhibit IX.) The combined butter sales for Swift, Armour, Wilson, and Cudahy for the year 1918 were 155,962,975 pounds. These figures include sales not only by the branch house, but by all other selling agencies controlled directly by the principal company or its subsidiaries, such as direct consignment, car route, and produce houses. Sales by the branch houses of slaughtering companies and by other selling » Some duplication Is Involved In the Wilson sales owing to the Inclusion of certain interplant shipments and shipments between plants and branch houses which the com- pany reports as being unable to exclude. MEAT-PACKING INDUSTRY. 157 agencies controlled through affiliation, however, are not included. No sales figures on butter for Morris were available for 1918. A table showing among other things absolute quantities of butter held in cold storage by each of the Big Five and by all collectively and by independents, together with the percentages of the totals, for November 30, 1917, March 31, 1918, and July 31, 1918, was' given in the discussion of the packers' buying and marketing advan- tages (see Chapter II, p. 102) . The percentages of the totals held by the great packers collectively on these dates were, respectively, 19.18 33.8, and 23.64. ' These percentages while comparatively large do not yet represent the full strength of the packers' position in the handling of butter. The Commission found in its investigation evidence that inde- pendents were relatively heavy storers of both provisions and produce, but that the big packers -were relatively heavy buyers of these goods as they came out of storage or buyers of the warehouse receipts while the goods were yet in storage. In the latter case the warehouse companies usually found it difficult, if not impossible, to report the true owners on the dates in question, the original storers being given as the owners on those dates. Under these two con- ditions the percentage of stored goods handled by the Big Five after leaving storage would be much larger than the percentage of stored goods reported as owned by them. It is difficult, if not impossible, to secure the data by which to determine a percentage which will reflect the true degree of control by the big packers over the wholesale distribution of butter. No recent figures for the total production including that made on the farm are available except estimates. Of this total only estimates can be had for the amount sold. If it may be assumed that all the factory-made butter is sold, yet of this amount only estimates can be made to arrive at that part which finds its way into wholesale distribution. The slightly more than 90,000,000^ pounds distributed through branch houses by the big packers in 1916 is a minimum figure which should be increased more than 30 per cent^ to cover sales by agencies other than branch houses, by subsidiary companies, and by companies controlled through affiliation. Thus, both a reduction of the factory output, which in 1916 was 760,030,573 pounds,^ and an increase of the packer sales should be made before an adequate basis is arrived at for determin- ing the big packer proportion in the wholesale distribution of butter. » This per cent Is based upon the excess of total sales by Swift & Co. for 1916, as disclosed by a letter from its flies (see p. 155), over its reported branch-house sales. This percentage, howerer, falls short since the sales disclosed in the letter are for Swift & Co. and its subsidiaries but do not inclnde those for companies controlled through affiliation. Armour & Co. reported branch-house sales of butter for 1917 of 28,431,856 pouuds and total sales of 43,470,476 pounds, an excess of total over branch house of 52 per cent. ' Figures furnished by the Bureau of Markets. 158 MEAT-PACKING INDUSTRY. Similar adjustments in the 1918 factory output of 793,275,309 pounds^ and the packer sales of 155,962,975 pounds would be re- quired, except that it should be remembered that the sales of Morris & Co., which were not available, are not included in the above figure and that while the packer sales of agencies other than branch houses are included the sales of companies controlled by affiliation are not. Condensed, evaporated, and powdered milk. — Plants for the manufacturing of condensed, evaporated, and powdered milk have been and are being established by some of the big packers. By means of these plants they are obtaining a position of importance in a field which competes with the creameries and cheese factories for the milk output of the country. In this field they are relatively new- "comers and are not yet proportionately as important national factors as they are in the purchase of cream and the manufacture of butter and cheese, but wherever the condensery of the packer is established it becomes for that district the controlling element in the purchase of milk from the farmer. Swift & Co., through Libby, McNeill & Libby, an affiliated com- pany, operates the following plants and buying stations: Plants. Buying stations. Location. Product manufactured. Location. Product bought. /Condensed and evaporated \ milk. CnnrlftTlspd TnllV Chad wick. Ill Fresh milk. 1 Fen ton. III Concentrated milk. Capron, III (Prophetstown, HI Fresh milt. Fav-Areo. Ill do Union, m ; Condensed and evaporated miUc. do SharonJWis .....io.......... Daiien, Wis Fresh milk. Whitewater. Wis . WfvnpnT^, Wis . ...do Pox Lake, Wis do Perrinton, Mich /Condensed and evaporated \ milk. Condensed, evaporated, and powdered milt. Sheridan, Mich Ithaca, Mich Fresh millr Do. Maple Rapids, Mich. . . Ashley, Mich . . . Do. Do. Loleta, Calif Swift & Co. is the largest packer manufacturer of condensed and evaporated milk, having a pack in 1917 of about 1,500,000 cases out of a total of 27,100,000 cases, or 5.5 per cent of the country's total pack. Armour & Co. owns and operates, under the trade name of the Pacific Creamery Co., a plant at Tempe, Ariz., which manufactures evaporated milk and which has one buying station at Glendale, Ariz. A second plant, located at Stoughton, Wis., manufactures evap- orated milk and is operated by the Wisconsin Dairy Products Co., * Figures furnished by the Bureau of Markets. MEAT-PACKING INDUSTRY. 159 a majority of whose stock is owned or controlled through pledges by Armour & Co. The plant has buying stations at Oregon, Utica, McFarland, Edgerton, Sparta, and Genesee, Wis. A plant at Bloomer, Wis., manufacturing both condensed and evaporated milk, is owned and operated directly by Armour & Co. The Meadow- brook Condensed Milk Co., Issaquah, Wash., manufacturing evapo- rated and condensed milk until the destruction of its factory by fire in May, 1918, delivered its output of evaporated milk to Armour & Co. on contract. The original contract dated December 5, 1916, was on the basis of 100,000 cases of 48/16 at price of $3.60 per case f. o. b. Issaquah, but this was later revised to a basis of cost plus 5 per cent. None of the other big meat packers was reported to the Commis- sion as being engaged in the manufacture of condensed, evaporated, or powdered milk. The handling of these forms of milk through branch house or other selling agency is common to most of the packers, and a much larger total is therefore sold than manufactured by them. The sales of canned milk' by Libby, McNeill & Libby (a Swift concern) amounted in 1915 to 20,890,459 pounds, in 1916 to 47,122,425 pounds, in 1917 to 112,533,725 pounds, and in 1918 to 153,480,638 pounds. The tonnage sales in 1918 were 635 per cent greater than in 1915 and the total sales for the four years were 334,027,247 pounds. Of the country's total pack of evaporated and condensed milk in cases, amounting in 1917 to 1,211,016,000 pounds and in 1918 to 1,470,672,000 pounds, Libby sold 9.3 and 10.4 per cent, respectively. Libby's sales for 1917, as will be noted from a comparison with its pack as given above, considerably exceeded the latter. Other Swift sales or the sales of others of the five packers are not available. Cheese. — The cheese-making industry is decentralized in its own- ership and operations. While there is a pronounced movement toward concentration in these particulars, the number of owners and the number of establishments declining and output increasing from 1909 to 1914, the census of the latter year still shows 3,082 establish- ments engaged primarily in the manufacture of cheese, only 11.1 per cent of which were owned by corporations. This decentralization in the manufacture of cheese renders control over the industry by control of the manufacture difficult, and under the present highly competitive conditions in cheese-making the small manufacturing profit is scarcely sufficient to attract the packer's capi- tal. This, as well as the difficulty the big packer has in dealing di- rectly under his own name with the farmer, is emphasized by the ' After the report had gone to press Libby, McNeill & Libby revised Its sales figures for 191S and 1916 on canned milk. See Exhibit XVII A, Note 3. 160 MEAT-PACKING INDUSTRY. following letter from the Neenah Cheese & Cold Storage Co., a trade name of Armour ■& Co. Dec. 4, 1917. Jlr. Harold L. Bbown, % Ai'inour & Company, Chicago, 111. Dear Sir : We have one factory at Mineral Point known as the Barrelltown factory where we own the machinery and hire a cheese makers. We are receiv- ing 2iiEehasing the cheese from other companies. It is, next to Morris & Co., the largest distributor of the cheese of tlie C. A. Straubel Co., taking in 1917 over 22 per cent of its total output. It will be seen from the foregoing that the big packers are in direct contact with 935 cheese factories in Wisconsin which have commercial dealings with the thousands of farmer patrons in the districts contributing to these factories. And both Swift & Co. and Annoiu" & Co. have this direct contact with many 'cheese factories and their patrons in New York. Moreover, it was found that in addition to this direct contact with produ<;ers through ownership and control of these concerns, the packers were such large regular customers for the output of still other cheese companies as to make it doubtful if they could well be true competitors, even though the packers had no financial interest in tlie companies. In practically every case of large sales to the packers that came to the Commission's attention, it was found that, even where sales were made to more than one of the five big packers, some one of them was the chief customer as distinctly as in the ease of a company owned and controlled by a single packer. Practically, these dealers are divided- among the packers, only one large outlet being open to each. ThuSj F.. C. Westphal, Eandolph, Wis., operating 19 factories for the farmer owners and selling tlie cheese produced^ handled a total of 2,421,454 pounds in 1917, of which 58.87 per cent went to the five packers. Morris & Co. alone, however, received 40.87 per cent of the total output, while Cudahy, Swift, Armour, and Wilson obtained, respectively, 7, 5.5, 5, and 0.5 per cent. The Farmers' Cheese Co., Watertown, Wis-, selling 2,216,659 pounds in 1917, sold 24.85 per cent to Swift & Co. and not as much as 1 per cent to any other packer. N". Simon Cheese Co., Inc., Appkton, Wis., selling 4,658,306 pounds of cheese in 1917, sold 60.61 per cent to Morris & Co., while the combined sales to Swift,^ Armour, and Wilson were 7.42 per cent. Sclunitt Bros., Blue Eiver, Wis., selling 4,510,937 pounds of cheese in 1917, sold Morris & Co. 59.33 per cent, Wilson & Co., Inc.^ 11.96 per cent, The Cudahy Packing Co. 3 per cent, and Swift & Co, 1.34 per cent. 164 MEAT-PAeKIWG INDXJSTKY. Wuethrich Bros., Doylestown, Wis., disposing of 1,088,999 pounds of cheese during 1917, sold to Swift & Co. 44.27 per cent, Morris & Co. 18.29 per cent, Armour & Co. 12.18 per cent, and Wilson & Co., Inc., 1.24 per cent, over 75 per cent of total sales going to four of the Big Five, one of them as usual being preeminently the largest customer. The largest independent Avhose total sales were obtained, collected in 1917 only 6,201,631 pounds from 65 factories' in Wisconsin and 23 in Michigan. Of this amount 243,795 pounds, about 4 per cent, were sold to the big packers. Wisconsin, vAih more than half of the cheese factories in tho United States, produced in 1914, 55.6 per cent of the cheese of the country. Whatever interest or combination of interests dominates this great cheese-producing section is the dominating factor in the cheese markets of the United States. How important a factor the big packers are in the cheese business of Wisconsin is suggested by the figures in the foregoing paragraphs. Considerably more than one-half of its factories are dependent for their principal markets on concerns owned or controlled by the packers. Nearly another quarter of these factories look for their chief buyer to concerns which, so far as known, independent in ownership, are yet dependent- for their main outlet on the packer's distributing system. That the Big Five are in a position to control 75 to 80 per cent of the cheese of the State is generally conceded. During the fiscal year 1916 Swift & Co., including its subsidiary and controlled slaughtering companies, sold through branch houses 28,692,101 pounds of cheese. These figures, however, do not include sales made by other methods, as by direct consignment or through other selling agencies, as the car-route and provisions sales houses. The increase in this company's branch-house sales of cheese for the calendar year 1917 over 1916 ".was better than 19 per cent," and for December, 1917, over December, 1916, was 61.2 per cent. In 1918 the total cheese sales of Swift & Co., not including companies controlled by affiliation, amounted to 64,072,000 pounds. Armour & Co., the largest packer distributor of cheese in tho United States, sold through its branch houses in its fiscal year 1916 nearly 29,000,000 pounds. Sales by branch houses of slaughtering companies controlled through affiliation are here included, but not the sales through selling agencies other than branch houses. Armour & Co. reports sales by all selling agencies (not including branch houses of slaughtering companies and other selling agencies con' trolled through affiliation) for the fiscal year ending October, 28, 1916, 60,709,609 pounds and for the fiscal year ending November 2, ' MEAT-PACKING INDTJSTKY. 165 1918, 77,379,232 pounds, an increase of 27 per cent. Wilson's sales » for the same years were, respectively, 12,730,372 and 21,140,319 pounds, a gain of 66 per cent. Cudaliy. reports sales of cheese by all selling agencies for 1917. of 15,900,000 pounds and for 1918 of 24,100,000 pounds, a gain of 52 per cent in one year. (For greater detail on the sales of the four companies see Exhibit IX). No sales figures for Morris were available for 1918. The combined cheese sales, as severally reported for Swift, Armour, Wilson, and Cudahy for the year 1918, were 186,691,551 pounds. The total pro- duction of factory-made cheese in the United States in that year was 380,423,652 pounds.^ In addition to this, some cheese is doubt- less made on farms, but this would hardly be a real factor in inter- state trade or in competition with packer-sold cheese. As in the case of butter, the reported packer sales fall short of the full selling strength of the Big Five, since they do not include the sales by branch houses of slaughtering companies and other selling agencies controlled through affiliation, and the sales of Morris are entirely lacking. This deficiency must be reckoned with before a basis can be found to arrive at the true packer proportion of cheese distributed. The current estimate of the trade, however, that the Big Five handle at least one-half of the interstate commerce in cheese would appear to be understated, since such part of the packer sales as was reported for 1918 amounted to 49.1 per cent of the total factory-made cheese of that year. The packer percentages of the total stocks of cheese held in cold storage on the three dates November 30, 1917, March 31, 1918, and July 31, 1918, are uniformly high. These, together with other data, are given in the discussion of the packers' buying and marketing advantages. (See Chapter II, p. 102.) For the three dates these percentages for the Big Five, taken together, were, respectively, 33.35, 34.66, and 34.09. Again, it should be noted that these percentages fall below what appears to be the actual position of the Big Five in the wholesale distribution of cheese, and for the same reasons as those stated in the discussion of their distribution of butten That they should be found to hold a minimum of one-third of all the cheese in cold stor- age is significant in that practically this entire amount is handled by them in wholesale distribution on its leaving the warehouse, while, in addition to this amount, large quantities held in storage on these dates by independents are bought and distributed by the p.ackers. • Some duplication i.s involved in the Wilson sales, owing to the inclusion of certain intei'plant shipni«em:s and shipments between plants and branch houses which tlie com- psLBy reports as being unable to exclude. •Figures furnished- by the. Bureau of Miurfeets. 166 MEAT-PACKING ISDUSTBY. Section 2. — Goacentration promoted by creamery methods. Inteodtjctoet. — It should be mnderstood, of course,, that the packers conduct this part of their busiiuess in mucli the saroe wajf as da other large butter manufacturers and butter wholesalers; Their competitive relations to the producers: of cream and to the manu- facturers of butter are affected in no smaH degree by the fact that they are large merchants doing business on a national scale. Their large size gives them, up to a certain point, great advantage over their smaller competitors^ an advantage, as has been pointed out in an earlier chapter, not always in the public interest. Being packers with a great distributing system already in opera- tion, they have other advantages over small and large butter manu- facturers and dealers which they otlierwise would not have ; notably tkeir control over cold-storage facilities and refrigeTator ears, over numerous branch houses with storing and distributing facilities, and particularly their command of almost unlimited capital. These ad- vantages make them superior in competitive warfare to their smaller rivals. Likewise their thorough knowledge of and control over but- ter substitutes and otlier f oodstuifPs give them additional powers over the market. Influence of the hand cream separator. — Prior to the introduc- tion of the hand separator the creamery was of necessity a small crossroads shop drawing its supplies from surrounding" farms. The farmer had to cart his whole milk to the creamery, have the cream, taken off by the power separator, and bring the skhmmed milk back to the farm, or else sldm the cream by liand aaid briiag it to the creamery. Because of the time consumed and the cartage expenses,, the cream;- ory obtained milk from Avithin only a few miles, 10 miles being about the extreme- radius. Any farmers beyond such radius were compelled to utilize their cream in making dairy butter wliieh was taken to the country store, thence shipped to a manufacturer of packing-stock butter. Throughout the live-stock country there were vast areas which had no creameries and hence no available method of market- ing cream as cream. The introduction of the hand separator, invented by De Laval in 1879, g-ave the farmer a method of separating his cream with prac- tically the same efficiency as could be obtained by the creamery. Inasmuch as butter fat constitutes only from 2.8 to 5. per cent* of the body of milk, a large savi-ag was possible in elimin^ng the carrying of the residue both ways. Obviously much larger areas could be di*awn upon for the supply of cream than for the supply ■ IMiiladelphia Chamber ot Commerce, Milk and Its DistributJou, in Philadelphia^ 19.17. p. 9. ■' : -'. MEAI-PACKING INDUSTEY. 167 of milk, tlie cost of transportation being the only limit on the dis- tance, which in some sections is several hundred miles. This made the large creaijiery. possible. ExisiiNG TYPES OF CREAMERIES. — To-day there still exist numerous local individual creameries receiving their cream from nearby farms, and producing a high-grade butter for an established patronage in the local town. The individual creamery may be conducted on the plan of buying tlie raw material outright and making it into butter, or the raw material may be made into butter and sold for the farmers at a fixed charge or toll for the service performed by the creamery.^ The price paid for raw material is generally fixed by agreement or contract to pay for butter fat the price of butter currently quoted on a selected market, such as Elgin or New York, or an agreed num- ber of points above or below the current butter quotation on the market selected. Local cooperative creameries are owned jointly by the farmers of the surrounding community, a few shares sometimes being held by local merchants and others. The farmer members furnish the raw material in the form of milk or cream. The secretary and the man- ager have charge of the marketing of the butter and of the settling of the accounts with the farmers. The butter maker and other help are hired by the manager. In cooperative creameries the price paid for raw material depends upon the net returns from the sale of the butter. An intermediate class of creameries consists of those which by favorable location (on good transportation routes from producing districts) receive their cream from farmers direct as well as cream brought to them by haulers who gather milk daily or cream two or three times a week from farmers. These creameries can not receive their cream in as fresh a state as caii the local creamery and are gen- erally compelled to use some neutralizer. Each farmer's material is weighed and a sample is taken. Upon arrival at the creamery the samples are tested, each farmer's butter fat is computed, and a record is made of the amount of butter fat in the cream or milk which he furnishes. The usual custom is to pay the farmer for the number of pounds of butter fat furnished, but in some instances he receives pay on the basis of the proportionate number of pounds of butter made from the material supplied. The " centralizers," or large creameries, draw their supply of cream from a wide territory, collecting it through numerous buying stations. Instead of returning the buttermilk to shippers of cream, they sell or utilize it in some way, or throw it away. The buying stations may be located near local creameries and may engage in » U. S. Dept. of Labor, Bureau of Labor Statistics, BuUetin 164, 1915, p. 19. 168 MEAT-PACKING INDUSTRY. sharp competition with them for cream, or they may be located in phices remote from local creameries where competition is less active. The large creameries of the Fox Eiver Butter Co., of the Beatrice Creamery Co., of the Fairmont Creamery Co., and of the big packers, especially of Swift and Co., are centralizers. The A. S. Kininmonth Produce Co. of Winfield, Kans., 50 per cent owned by Armour & Co., is a typical packer centralizer. It buys and collects and sells cream, packing-stock butter, poultry, and eggs. It has one creamery at Winfield, Kans., but has 135 buying stations in Kansas and Oklahoma and 2 in Texas. The average local creamery makes about 120,000 pounds ^ of but- ter a year, while the large centralizer creamery drawing its supply of cream from large areas makes several thousand pounds daily. Tlie dairy division of the United States Department of Agriculture estimates that the cost per pound for the manufacture of butter de- creases as the quantity manufactured increases up to 200,000 pounds a year, after which there is a slight increase. On this basis, the advantage to the centralizer in manufacturing cost, has been over- estimated, though there still might be some economic explanation of its existence in lower handling, storing, and distributing costs. DisADVA>'TAGEs OF THE CKEAM-BUYiNG STATIONS. — The statiou Sys- tem of collecting cream is not one Avhich encourages the development of the best possible quality of cream, nor is the centralizer with col- lecting stations a creamery which can produce a standard of butter wliich will grade up to that of the local creamery. The cream buyer is usually a local storekeeper who does not always insist on the proper grading of the cream or criticize the product brought in by his customers. Moreover, it is very difficult to keep buying stations in proper sanitary condition. The usual station will take almost any grade of cream and in any quantity. The cream collected by the cream stations and shipped to the centralizer is not merely sour, but generally has progressed so far from its fresh state that it has to be thoroughly neutralized with an alkali before it can be made into butter. The packers' centralizers continue also to buy cream by the car- load direct from dealers and from large milk farms, as do the Ken- tucky Creameries, of Louisville, Ky., owned and operated by Armour & Co. of Kentucky. Section 3. — Effects of packer concentration on product and competitidn. The concentration of the packers' butter manufacture into a copi- paiatively few large creameries has far-reaching efl'ects both on the quality of the product and on the packers' relations with their competitors. ^ ,. , .,: l> , ^___ ' U. S. Dept. of Lfiljcr, DulJctiu 164, lOlo, p. 13. MEAT-PACKING INDUSTRY. 1&9 LowEEixG THE QCALiTY OF BUTTER. — The Creameries of the large packers are located at great distances from many of their buying stations. Tims the creamery of Swift c^ Co., at Hutchinson, Kans., has buying stations as far away as Hugoton, Kans., 207 miles distant; Midwell, Okla., where the nearest railroad station, Texhoma, is 250 miles distant; Logan, N. Mex., 370 miles distant; Hooker, Okla., 210 miles ; and Optimo, Okla., 220 miles. The creamery of Swift & Co. at Wichita, Kans., has a cream-buying station at Canadian, Tex., 247 miles; and Hereford, Tex., 392 miles distant; the creamery of Swift & Co. at Denver, Colo., has cream shipped from Farmington, N. Mex., 492 miles by rail. Shipping the cream over long distances is an important factor not only in concentration in butter production but, as pointed out in the foregoing section, in lowering the quality of the product. Moreover, coinbining too many businesses under one roof, in order to make the whole a paying proposition, tends to insanitary condi- tions. Thus, of 47 cream-buying stations reported by one of Swift & Co.'s creameries, only 8 were operated exclusively for cream; 8 were in connection Avith poultry and egg buying; 10 with general stores, 5 with groceries, 7 in flour and feed establishments, 2 in meat markets, 2 operated by butchers, 1 in an oil dealer's store, 1 in a shoe shop, and 1 in a pool room. Cutting off cream and milk supply from independents. — Sev- eral methods are used by the centralizers to cut oil the supply of the raw product from the independent creameries. One method is to accept from the farmers for a while all cream at, a good price, irrespective of its quality. As soon as the packer's centralizer gets free rein in the district the cream prices become lower and the quality test more rigid. Another method is to pay higher prices for cream, offering at the same time better receiving facilities and cheaper hauling. A strik- ing example of this was the elimination of the Oregon Creamery Co., Oregon, Wis. This company was a farmers' cooperative organization which drew its milk supply from the neighborhood and made butter or cream which it marketed through the Brooklyn branch of the Boav- man Dairy Co., which agreed to take its products. On the completion in June, 1917, of the condensery of the Wiscon- sin Dairy Products Co., an Armour concern, located at Stoughton, some 9 miles from Oregon, F. T. Paddock, the Armour milk solici- tor, came to. Oregon and tried to induce the local company and the liiilk producers in the vicinity to close the creamery and sell to him at Stoughton prices. The Oregon people were not disposed to agree to this arrangement. But Mr. Paddock declared his company would 170 MEAT-PAGKING INDUSTRYr have milk anyway. He thereupon erected a receiving platform in the public square at Oregon and announced that he would receive milk there at Stoughton prices and would assume all expense of the cross-country hauling to Stoughton. This detached some of the patrons of the creamery. Mr. Paddock also had a platform built very near the farm of one of the creamery's largest patrons and got his milk. People were given to understand that if necessary to get the milk the Stoughton wagons would even call at the farms. The cooperative creamery continued against this kind of competition for a month and kept losing patrons. They did not have capital or wagons and equipment for sending for the milk. Finally they saw it was a losing game and in order to get some income on the investment, on August 1, 1917, they rented the factory to the Stoughton company for a year and the latter company now use it as a receiving station from which they dispatch milk in wagons to Stoughton, 9 miles away. The former creamery patrons have become Armour patrons because there is no one else to buy their milk. The temporary plat- forms put in during the fight are no longer used. The farmers bring milk to the Oregon plant as before, under the Armour manage- ment, and with no assurance that any permanent benefit has been gained. Analysis of the above practice shows that Armour & Co.'s success was due primarily to its command of capital and also in no small measure to the farmers' lack of solidarity and foresight. Farmer patrons of the Oregon cooperative creamery were more interested as individuals in the immediately higher prices for their own milk than in the success of their cooperative enterprise and in prices in the more distant future. Hence their desertion when Armour & Co. offered them inducements in the way of a shorter haul, a nearer receiving platform, or a higher price. This inlierent weakness of the cooperative enterprise as commonly organized and conducted is ever present and acts as an invisible aid to the packers in their effort to cut off the supply of the raw product from the small creamery. Again the packers adapt their competitive methods to fit the cir- cumstances. Thus, at Ceres, Calif., the Swift & Co. cream-buying station picks up all cream on routes by its own trucks, saving the milk producers a trip to the cream-buying station. At Stratford, Calif., about 280 miles distant from Los Angeles, Swift & Co.'s Hard wick house takes all cream delivered there by the members of the Stratford Portuguese Dairy Association at a price 5 cents per pound in excess of the Los Angeles quotations to the Asso- ciation. At Seattle, Wash., Swift has solicited butter fat by en- deavoring to hold his price above the Seattle market. MEAT-PA0KLN6 mmJSTBY. l7l The same situation appears to exist at Reno, Nev. A letter written from Eeno, December 30, 1918, is here reproduced in part : In line with onr letter to you of recent diate, regarding the unfair business conipetitioa of the Nevada Packing Company, and Swift & Co., both of whicli linns are- owned and controlled by Swift & Co., will say that both of llies;> firms maintain traveling representatives throughout this state and California sell rug butter, eggs, and cheese. Not alone do they have duplicate competition against us here in Reno, but they also have their representatives throughout the country section near here. .\t present time they are paying 75^ for butterfat, which is 9^ over the top San Francisco Wholesale Produce Exchange quotation for extra butter, being quoted today at 66«S. Inasmuch as the San Francisco market is quoted 5^% higher than the jobbers pay for butter, you can see that they are paying extreme prices in this seetiou for their raw materials for butter manufacture. Good, legitimate competition is what we want here, and we hope that yoa will see that this is what we liave. We are at present competing with two com- panies in this City of Reno, both of which should have tlie same name and be known to the merchants and people as one firm. Local price disceimiivAtion in creaji and milk fdrchases. — ^The direct outcome of this securing of the cream supply from competitors by unduly high prices is price discrimination. Tlae packer who over- bids the independent creamery for cream or milk in one locality may in other places where there are no competitors pay below the market to make good liis losses. This procedure inevitably undermines the small independent, wlio must rely on the local market for the cream it buys and the butter it sells. It is almost impossible to proA'e any bad intent in tlie offering of temporarily higher prices to the milk producer, who is ever ready to accept them. But, in the long run, the effect oi suoh a policy on the part of the packer's centralizer is almost always disastrous to the small independent and to the producer. Rudolph Miller, operatitig-the Macon Creamery Co., at Macon, Mo., testified at a hearing of the Commission in Chicago, Feb. 26, 1918, that during the past 10 yeairs Swift lias taken most of the bittter busi- ness in thattem-tea-y'by esta-blishing cream-buying stations and get- ting the cream from producers by paying them higher prices than local independent creameries couM pay without a loss. At non- competitive points Swift & Co. does not pay similar prices to the producer. It was further stated by Mr. Millei' that at Macon, Mo., the S. P. Pond Co.j of Keokuk, Iowa (owned by Swift) , paid 30 cents per pound for cream- and at the same time paid only 27 cents per pound at New Cambria, Mo., 26 cents at. Bucklen, Mov, 25 cents at Brook- fieldf Mo., 24 cents at Browning, Mo.,, and 24 cents at Medina, Mo. At tlie time Swift was paying 3Q cents per pound for cream at Macon he was shipping butter to that point and selling the same to the 172 MEAT-PACKING INDUSTEY, retail trade for 27^ cents per pound in competition with the Macon Creamery Co. W. A. Kloepper operating the Decatur Ci'eamery Co., at Decatur, Ind., also testified at the same hearing that Armour & Co. in competi- tion with his company at Markle, Ind., pays more for butter fat than at any other buying station or at the Armour creamery ; that Armour & Co. has absorbed much of the business of the Decatur Creamery Co. by paying high prices for butter fat. After having obtained the business and eliminated competition the prices for butter fat were reduced. The Decatur Creamery Co. has three creameries, viz., Decatur, Huntington, and Markle, Ind. In the neighborhood of these three creameries there are five plants and 150 buying stations operated by Armour, Swift, and Morris. Swift's creameries are at Lima, Ohio, approximately 45 miles from Decatur, with 9i buying stations, and at Marion, Ind., approximately 42 miles from Decatur, with 15 buy- ing station's. Swift has also a condensery at Berne, Ind., operated by Libby, McNeill & Libby, 12 miles from Decatur. Armour & Co. has a plant at Eochester, Ind., approximately 40 miles from Huntington, with 39 buying stations, and Morris & Co. has a plant, operated by Sherman White & Co., at Fort Wayne, Ind., approximately 20 miles from Decatur, with two buying stations. Of all the towns in which these 150 buying stations are found, in only one do the packers report that more than one of their number has a station. Though a few of these stations buying for different packers are located in towns not far apart, no instance has been brought to the attention of the Com- mission where more than the market price of cream was paid at such stations, unless an independent was buying or operating in their neighborhood. The Missouri case against cream price discrimination. — The cream price discrimination case prosecuted by the Attorney General of Missouri during 1914, 1915, and 1916 was started at the instance of complaints made by the Macon Creamery Co. The price discrimi- nations cited by that company go back as far as 1908. The case ended with a fine of $5,000 for Swift & Co. The first complaint was made by the ISIacon Creamery on July 20, 1911, claiming unfair competition on the part of their big competitors and asking legal protection. On July 28, 1911, the Macon Creamery repeated its charge and made the following statement in support of its charges : - ' Elgin market was 24«( last week, we paid that price for cream f. o. b. Macon on Friday July 21st. we took a sample of cream and had it delivered to Pond Co. [a Swift subsidiary] and tliey paid us 25<^ for it a part of MEAT-PACKING INDUSTRY. 1T3 tiie same cream -was delivered to the same concern in New Cambria and there we received 21^ for it on Saturday July 22nd. the same company paid 26^ in Macon, 22^ in Callao ; 21^ in New Cambria ; 21^ in Bucklin and 20 in Brook- field. * * * * The Macon Creamery Co. said it had several times been invited to pool prices with its competitors, which it had declined to do. On January 20, 1912, Eudolph Miller, president and manager of the Macon Creamery, again appealed to the Attorney General, stating that "the big creameries have been paying our prices or more at Macon, and wherever we get cream and at other places they pay from two to five cents less," and that they could not stand such competition. On January 22, 1912, the complaint Avas repeated, and supported by new instances of price discrimination on the part of the S. P. Pond Co., of Keokuk (Swift). On June 4, 1914, the Attorney General of Missouri filed a petition before the supreme court of the State for the appointment of an examiner to take testimony in the case of the State v. Swift & Co. for violation of the antidiscrimination laws of the State regarding the purchase and sale of milk and cream and manufacture, purchase, and sale of butter. Although butter-fat prices dropped immediately upon the filing of this petition, they became stronger again very soon, Swift & Co. paying 28 cents at Macon for cream, while at other places in the vicinity only 26 cents to 27 cents. In November of the same year a suit was filed against S^vift & Co., which continued paying 30 cents. for cream at Macon and 27 cents at Clarence, a point about 12 miles from Macon. In the spring of 1915 Mr. Miller of the Macon Creamery was urged by Mr. Kent of the Meriden Creamery and by the State Dairy Commission " to come together on a cream grading basis," which he declined to do. A little later Mr. Miller began to feel somewhat uneasy about the workings of the antidiscrimination law and reported to the Assistant Attorney General that Swift was still paying 26 cents for cream at Macon and only 23 cents in Clarence ; that at Callao, where Miller was buying some cream, the Camp Point people of Quincy, 111., were paying even 28 cents and that Swift & Co. was buying the Camp Point butter, which Mr. Miller regarded as an attempt to put him out of business. He also reported certain price discriminations on the part of the F. M. Stamper Co., controlled through the W. F. Priebe Co., a Swift subsidiary. 174 MEAT-PACKING INDUSTRY. That Swift & Go, admitted its guilt during the above investigation is shown by the following letter to the Swifts by R. C. McManiis, their attorney : Chicago, July hi IStJf. Messrs. Lours F. Swnr, Edwaed F. Swift, Chaeles H. SWIJFT, L. A, Carton, F. S. Hat WARD, Alleged Violation Anti-discrimination Laios Missouri, The Attorney General of the State of Missouri, according to the morning papers, lias started ah inctuiry as to the method of Swift & Company in con- nection with the purchase of Butter Fats in Mlssonri. From the telegrams, it would appear that the complaints arise through trans- actions of Swift & Company, Kansas City. Missouri has a law, penalizing any purchaser of butter fat who for the pur- pose of injuring the business of the competitor pays more for the butter fat at any point in the State than is paid at other points in the State. The penalty Is a fine up to $5000. and revocation of the permit of the guilty corporation to do business in the State. It is also imprisonment not to exceed one year for any guilty individual. /* is a fact tliat ice have raised the price' of hutter fats at different points in the State of Missouri, and paid more than tJic market price at other points} The newspaper accounts would indicate that the operations of Swift and Company, Kansas City, are complained of. We think, however, that the trouble probably arises through purchases by stations under Swift & Company, Keokuk, Iowa, as we heard rumers [rumors] to that efEect and had some correspondence. In view of the seriousness of the penalties and the possibility of revocation of Swift & Company's license to do business in the State of Missouri, the writer is having Mr. H. B. Collins, who is at Ottumwa, lown, today, interview all the Iowa Managers who attend the meeting, and requesting him to send the facts in to Chicago to-night ; also to be prepared to discuss same at Sedalia, Missouri, to-morrow, where its [it] has a meeting of the Missoviri Managers. I am sending Mr. C. J. Tressler to attend this meeting. The matter has been discussed with Mr. Henry A'eeder, who approves of this course. E. C. McManus RCM/IOB In view of the above admission by Swift's attorney of the price discrimination and in view of the repeated evidence submitted to the Assistant Attorney General by the Macon Creamery Co., the impo- sition of a fine is not to be wondered at. Swift & Co. had every reason to arrive at a settlement with the Attorney General, which was consummated on June 26, 1915, on the basis of a fine of $5,000 plus costs. But this fine imposed on Swift & Co. did not greatly help the Macon Creamery. During the winter of 1915-16 the Macon Creamery Co. again pointed out to the Attorney General that the F. M. Stamper ■ ' Italics by the Commission. MEAT-PAGKESrc INDUSIEY. 175 Co. was paying 1 cent less at La Plata than at Jacksonville, and stil! later, 5 cents less at La Plata than at Cairo. On May 26, 1916, the Assistant Attorney General advised Mr. Miller that the F. M. Stamper Co. had been investigated by him per- sonally and that he found that this firm paid the same prices to all local cream buyers, although the latter varied their prices and m«d(> different profits. Mr. Miller maintained that the higher prices could not possibly be paid by the local buyers, all men of small means, without laelp from their big customers, fie pointed out that these buyers were getting commissions on the highest priced cream from their customers. Price discriminations, so it was testified, continued after the imposition of this fine. Obviously it was more profitable to Swift & Co. to pay the fine and continue its jprice-discrimination policy than to desist from it. Peice agreements. — Another aspect of the competitive situation is seen in the direct or indirect price agreements^ between packers' agents or packers' subsidiaries and their so-called competitors. Such price agi'eements really wipe out the last vestige of a free inde- pendent market. The markets for milk, cream, and butter then be- come what the big packers desire them to be. The letters from the Henry Veeder files and a memorandum given below, while apparently part of a campaign by Swift & Co. to induce its agents to eliminate price agreements, show the methods actually used in fixing prices for cream. Advertisements, card prices, and telephone calls are used with a view to keeping the prices agreed to. Swift & Company Union Stock Yakds Chicago. Law Department July 24, 1014. Messrs. Albert H. «& IIenky Veedeb, Attorneys & Counselors at Law, American Trust Building, Chicago. Gentlemen : Herewith letter from Swift & Company, Hutchinson, Kas., en- closing advertisement of our cream buyer at Kingman. Notice that tlie adver- tisement is signed by agents of four creameries, and that they have agreed on butter fat price. Is it your recommendation that our name be removed entirely from such ads or that we merely eliminate prices? Please advise. Yours respectfully, R. C. McManus, CJT [C. J. Tbessler] C,TT-A0. ' l''ui-tlier tJisciiBSion-of this sul>,1«ct-anil evWeiwe showing tbe prevalence of sucb agroe- meots are fonnd in Pt. Jl ci( this report, pp. 14ri-ir)4. 176 MEAT-PAGKING INDUSTEY. JtJLY 27-1914.' E. C. McManus, Esq., . . : % Swift and Company. Chicago. Deae Sie: — I herewith return newspaper clipping and letter covering adver- tisement to creamery patrons fixing prices and grades for cream. I certainly think that such an advertisement as this should, not be published by the parties jointly. I can see no harm in the parties agreeing upon grades for cream, but would think it better that they publish such grades for cream separately than that they do so together. It certainly is not advisable for the parties jointly to publish their prices, and I believe it would be better for them not even to pub- lish the same prices separately. It would be better If prices were not referred to in any open advertising matter. In advertising some expression could be used to the effect that prices may be obtained upon inquiry, but I would not think it advisable that the same prices be published at the same time by all the parties, even if such prices are, in fact, offered by the parties at the same time. Sincerely yours, HV-NA L FEBEUARY 10, 1916. Mr. H. B. Collins, Second Floor. Attached hereto is a copy of a report of Auditor Fahey in regard to the method used by Lincoln, Keb., in purchasing cream. Conferring or writing to a competitor to find out why their agent is exceed- ing the card price and the subsequent instruction to the agent to have his prices correspond with the cards and the agent's compliance therewith, is in itself a violation of both State and Federal laws. This practice should be stopped immediately. In this connection will say that our recent investigation disclosed that prices paid by creameries in Nebraska are more nearly uniform in price and date effective than those of any other state, indicating that Lincoln has not been properly instructed or that they are not following instructions. Will you please take up and correct, advising what has been done. (Signed) R. C. McManus, F. L. H. Law Dept. FLH*W Copies to Messrs. F. S. Hayward E. L. Ward Henry Veeder. Unsigned memorandum from Swift & Company's files : Branch House correspondence has been inspected from 7/31 to date, and none of tlie correspondence violates instructions as outlined in your circular of Juno 26tli. The following Is method of keeping prices in line here. Our card goe.s out the'skiy after competitors card, bearing same price. Elgin market is supposed to control this. MEAT-PACKING INDUSTRY. 177 When we find that a certain station Is not following card price they call him up to find reason and his statements in most cases are, that competitor is paying the price, and he has to do the same to get the business. In order to keep station on profitable basis, this office confers with com- petitors to find why their agent is exceeding card price, and competitor in- structs his agent to get his price to card basis. I believe this method is used among all these produce houses, altho In most cases managers and solicitors wont admit it. BeUeve it would be an easy matter for an outsider to get evidence that it is pretty well understood between our houses and competitors as to what prices are to be. Mabch 1, 1916. Mr. H. B. Collins, Second Floor. Below is an extract from Auditor Fahey's report on conditions at Spring- field, Mo. " Branch House correspondence has been Inspected from 7/13/15 to date, and none of the correspondence violates instructions as outlined in your circular of June 26th. There is a definite understanding between this plant, the Springfield Creamery and the Meriden Creamery at Kansas City, as to what butter- fat prices will be. This is handled by having Springfield Creamery call up the Meriden, find out what this price is to be and then call our office. Understand other creameries call the Meriden the same way. In other words, The Meriden Creamery makes the prices which govern the others." This should be corrected and stopped. This same situation has been com- ing up at Springfield, to the writer's knowledge, since the time of taking testimony there in our Anti-Discrimination suit. We tried to get conditions changed then, but have heard repeatedly of the continued violation along this old line. It should be stopped at once. For your Information again repeat that Mr. Morgan, who was formerly manager at Springfield, insisted on relating a transaction similar to the one mentioned in the above report in his testimony taken in our Anti-Discrimination c.ise. He did not seem to know that there was anything unusual In this trans- action, and I do not believe he ever got it through his head that there was any- thing wrong. CJT*LL Law Dept. Cc-HV A careful reading of the first two letters pertaining to the price agreements practiced by Swift & Co., of Hutchinson, Kans., shows that actual price agreements have existed. The advice of Mr. Henry Veeder, attorney of Swift & Co., is not to discontinue such price agreements, but merely to stop advertising them. Mr. Veeder's advice is to comply with the letter, not the spirit, of the law. He says, " I would not think it advisable that the same prices be pub- lished at the same time by all parties, even if such prices are in fact, offered by the parties at the same time." 140361°— 20 12 178 MEAT-PACKIlirG INDUSTBY. The unsigned memorandum deals with the Swift circular of June 26, and the other two letters deal with the card-price system as practiced by Swift & Co.'s purchasing agencies. This corre- spondence establishes the fact that cream prices are arrived at jointly by Swift & Co. and its so-called competitors. Incidentally it is interesting to note that in this instance it is Swift & Co.'s manager who is complaining of his " competitor's " higher prices. It is reasonable to assume that wherever the packers have established their grip on the market they no longer are willing to indulge in raising the prices of cream to the farmer ^rather they use their iniluence over their so-called competitors to keep these prices down. The memorandum and the last letter, dated March 1, 1916, ad- dressed to Mr. H. B. Collins, manager of Swift & Co.'s produce department, lay bare the price-fixing machinery in its simplicity. It shows that such price-fixing agreements among two or more cream- eries in any place need not be recorded or advertised in any shape or manner in order to be effective. Mutual phone calls "to find out what the butter fat price is to be" is all that is necessary to carry such an understanding into effect and actually to make the market. The local market need not be " made " even by the big packer's creamery. It may be made by another creamery which has, how- ever, previously called up and consulted the packer's creamery as to its ideas about the price. If it can not be held that the packers' creameries make the prices of cream, it surely can be said that these prices are set with their advice and consent. The price-fixing power of the packer cream-buying stations and their lowering influence on cream prices paid by Swift & Co.'s competitors are established conclusively by instructions of April 11, 1916, addressed by a local office of Swift & Co. to its Eldora, Iowa, branch, and reading as follows : Deab Sir : — Would like to have you make your station price 32c upon receipt of this letter. Eastern butter markets are all lower and we must get our station prices to a lower basis. If for any reason our competitors will not go to this basis, please call us up. Yours respectfully, Swift & Compant On the other hand, the milk producers have encountered consider- able difficulty when they tried to fix the prices of milk. The southern Wisconsin farmers, for instance, tried to fix the prices for milk at $3.42 for October, 1917, an increase of $1.22 per hundred- weight over the September price of $2.20. Immediately the distribu- tors made complaints and a criminal action was started against the farmers under a Wisconsin statute for conspiracy in restraint of MEAT-PACKING INDUSTRY. 179 trade. The matter was finally settled by a milk committee appointed by the Food Administration, the interested parties agreeing to abide by its decision. That committee fixed the milk prices for February, 1918, at $3.07 and for March, 1918, at $3.10. Rebates to earmees. — Little is known about packer's buying stations giving rebates to farmers on cream. As price discrimina- tion, for which secret rebates are generally a cover, is forbidden by Federal statute and the laws of many States,^ all such matters are handled in the most confidential manner. The two letters quoted below give a glimpse of what has been done by certain packers' stations to undermine their competitors. Particular attention is drawn to the second paragraph of the second letter, from the buying station at Wakeeney, Kans., describing the different methods of settling the rebates . March 2, 1916. Swift & Company, Denver, Colo. We have a letter from Swift & Company, Hutchinson, Kansas, saying that you have been rebating to the extent of l-Jc at Wakeeney, that the matter has come before the Attorney General of Kansas and that he is about to start an investigation. Please give us full particulars. Awaiting a prompt reply, Swift and Compant Per Chableb J. Tbessleb CJT*LL Cc-H. V. • H. B. 0. waltbb p. swiggett Wa-keenet, Kansas. Swift and Compant, 6/21/15. Denver, Colo., Gentlemen: At the out-set let me correct a statement I made over the 'phone this morning when I said the Farmers' had published a 2# guarantee on cream. I was in error and cannot find anything in the papers out of line. It is a fact however that they talked a 2«f rebate or dividend. Their station has not been very profitable and I do not know for sure that they have paid a dividend at all from the cream dept. You will find that I began paying the li(* about June 26th last. The Jensen company here had on June 1st, either to meet this 2\'ard for approval to close a purchase for this prop- erty at the lowest price possible, provided, after inspection and valuation of our representative of the Construction Department, we feel that the equipment is satisfactory and represents a fair value. We are willing on account of the eptabllshed business to pay more than the present valuation of the plant. MEAT-PACKING INDUSTRY. 187 After the matter has been passed upon, I would like to have you wire me and I will have the matter' handled further by Mr. Hopkins. Tours respectfully, (Signed) H. B. Collins. P. S. I covered the commercial end fairly well but I am arranging that Mr. Wilson, our creamery manager at Hardwick, spend two or three days on the territory to get a more detailed report on the routes, volume available, com- petition, etc., and have wired you today asking that you arrange with the Oon- sti-uction Department to have one of our Pacific Coast representatives inspect and value the Ceres equipment and buildings. Dictated by H. B. Collins Chicago, March 2, 1917. Mr. W. F. Jackson, 2d Floor. Creamery for San Francisco. Referring to yours of the 27th ult. You have my O. K. to go ahead with the purchase of the creamery at Ceres California, as outlined by Mr. Collins. Presume, if necessary, you will wire him promptly. Lotns F. Swift. MS Mat 29, 1917. Messrs. Louis F. Swift, Edward F. Swift, L. A. Carton, Charles H. Swift, G. F. Swift, Jr., F. S. Hayward, E. L. Ward. — Purchase of Ceres Creamery, Ceres, OaBf. — File 18. Purchase of the business and property of the Ceres Creamery, Ceres, Cali- fornia, has been completed. The purchase prlQp exclusive of what was paid for supplies and products on hand was $19,865.75 This price Included the Cream- ery property located and tract of land, 139 x 852', together vrtth all the fixtures, personal property. Improvements, goo will of the Creamery Company ; also the 10 acre tract of land formerly used as a hog ranch. B. C. McManur HWT Real Estate Dept. HWT : L JL Section 5. — Concealing packer activity under trade and subsidiary com- pany names. Reasons foe such names. — When the big competitor crowds the smaller, he often forces a sale of the latter's business on his own terms. In some instances he handles this business through his own concern or a branch organized under the name of his concern to take care of tho additional patronage. In other instances, having acquired the cor- 188 MEAT-PACKING INDUSTRY. porate ownership of the firm, he retains, with or without corporate dissolution, the firm name together with established brands. In either case the big competitor may, to facilitate his purposes, secure the services of his former opponent in the capacity of manager, buyer, or salesman. If the name of the acquired company is retained without dissolu- tion of the company, it stands as a subsidiary. If dissolution is effected or the company made inactive, the name may be retained as a trade name. Any one of several purposes may be served by the use of the name of a company taken over. A business is less amenable to the courts and to investigation by Government agents when conducted under a trade name. A trade name may be easily attached to an individual or to a mere branch. At the same time it lends itself to an easy control of the business by the central office. Ketaining the old firm name may assist in holding for the acquiring firm an established patronage. It may aid in concealing from' the public at large the fact that an independent has been absorbed. Subsidiary companies under names that do not reveal their con- trol may be set up to push certain new brands or to talce care of certain trade lines and absorb part of the profits so that they do not appear unreasonably large. There may be further reason for retain- ing trade names and subsidiary companies with names that hide their control, namely, to avoid giving information either for taxa- tion, regulation, or other purposes. Packers' use of trade names in the dairy-products eield.^ — The following statement by an independent western creamery company throws some light on the trade-name and brand policy pursued, sometimes jointly, by the big packers in- the produce business: ^^'e have as competitors here in Portland, as manufacturers of butter, among the meat packers, tlie Union Meat Company. This concern, we understand is controlled by Swift & Company, with other meat packers holding an interest. At the same time, all the principal meat packers have branch houses in Port- land and are dealing in dairy products as a side line. The Union Meat Com- pany is known to have spent thousands of dollars in their effort to break into the butter, cheese and egg business. Originally they marketed dairy products Tinder their firm name but seemed to make no head-way for reason that the community sentiment is decidedly against meat packers dealing in butter and cheese. They then decided to adopt a subterfuge name, called the Oold Crest Creamery and under this name and brand and backed by an advertising cam- paign running into many thousands of dollars they have established their trade name on butter, cheese and eggs. The advertising campaign alone would have crippled, if not broke, any ordinary concern, for reason that the margin is not in the creamery business to warrant same. Quite a few creameries in this ' For a detailed list of packer subsidiary, alHliated, and trade-name companies manu- facturing or handling dairy products, togetlier wltli similar companies In othei lines, see Exhibit IV. MEAT-PACKING INDUSTRY. 189 vidnlty have ceased doing business altogether, giving way to the above aggres- sive campaign, and it is generally conceded that no creamery in this territory has prospered for a number of years. One claim that the management of the Union Meat Company's Creamery Department makes is that they have no ex- pense in connection with conducting their creamery business, something that is entirely misleading, and not the fact, but if they are permitted to operate their creamery department by using earnings made elsewhere to cover losses and the expense of developments then no business can survive them. The situation summed up locally Is as follows:- The Union Meat Company is supposedly owned and controlled by Swift & Company with other meat packers holding interests. These same packers operate independent branches in this market. The creamery end of the Union Meat Company is operated under a third name ; the object is obvious. Similar conditions exist as regards the Western Meat Company of San Francisco and the Nevada Packing Company of Reno, Nevada. Both of above companies are also supposed to be controlled by Swift & Com- pany. The activity of the Western Meat Company in an endeavor to control the butter business in the California market is even more pronounced than what is taking place here. Meat packers seldom compete amongst themselves, but invariably meet any competition no matter how destructive. This invariably results ruinous to smaller concerns and demoralizes trade conditions generally. It can only be followed by companies having unlimited financial backing, and the obvious aim from all appearances Is to get control of the markets. , Another firm in a Pacific Coast State writes the Commission as follows : Swift & Co. and Nevada Packing Co., Reno, Nevada both controlled by Swift & Co., operate under different names in same city. Both concerns sell butter, eggs & cheese in competition against us. We consider this unfair. Have cut prices trying to eliminate us from this section. As illustrative of how the packers are conducting certain lines of their produce business under trade names and through bogus inde- pendent companies in order to mislead the public as to the true owner- ship of the business, attention is again directed to the following state- ments of J. B. McCready, manager of the Neenah Cheese & Cold Storage Co. (subsidiary of Armour & Co.), to Harold L. Brown, manager of the produce department of Armour & Co., under date of December 4, 1917, as quoted on p. 160 : We have one factory at Mineral Point known as the Barrelltown factory where we own the machinery and hlrea cheese makers. We are receiving 211 it matters little what the weekly quotation for cheese is when it comes to packer interbranch sales. The packer-controlled cheese company is willing to make " a special price to the packers department, as the following brief correspondence between A. J. Lit- tle, manager of Armour & Co.'s wholesale market, Chicago, 111., and J. B. McCready, of the Neenah Cheese & Cold Storage Co., shows: Chicago, III. Dec. 1 1911. Nbenah Cheese & Cold Stoeage Co., 125 West South Water Street, VJiicdi/o, III. Att. Mr. MoGrevy [McCready] Gentlemen : Referring to the attached Invoice : it is our understanding that the pi'ice of the cheese should be twenty-three cents per pound. Will you kindly check over your records and advise your decision in tlic matter. Your prompt attention will be very much appreciated. Yours truly, Aemoub & Company, (Signed) A. J. Little. To this J. B. Mc [McCready] replied as follows : Dec. 6, 1917 .AjtMOUK & Company, Whoijssale Market, Chicago, III. Attention Mr. A. J. Little. Gentlemen : Re yours of the 4th, we are enclosing you corrected invoices on our sale of Nov. 7th. The price charged you, 23|^ Is the price we were charg- ing that week, but I remember distinctly having made you a special price on these 25 boxes and our records show that this is correct Tours very truly, ^„., , Neenah Cheese & Cold Stobaige Company JBMc/ Tying cheese factories to one cheese distributoh on the board.— There is enough evidence to justify the conclusion that in cheese ri.arketing the packers try to limit each cheese factory to one dealer. Thjs IS achieved through a general understanding among packer dea ers not to interfere with factories delivering to other packer dealers by offermg more than the cheese-board price. When some independent dealer or packer subsidiary breaks the established cus- tom and takes the output of some factory which "belongs" to an- MEAT-PACKING INDUSTRY. 199 other dealer, or bids in some lot of cheese on the board which custom- arily is taken by another, there is occasion for correspondence. The letters given below show the existence of the rule through the criticism of dealers violating it. The following letter, complaining that the Blodgett company was taking part of the cheese from a factory which had been delivering to the Neenah Co., was written by the manager of the Neenah branch to the head office in Chicago : neenah cheese & cold stobaqe co. neenah, wis. Mae. 20, 1917. NEENAH CHEESB & COLD StOBAQE Co., Chicago, III. Gentlemen : I just got in from Weyauwega and found that the Blodgolt Cheese Co., has been getting part of the cheese from our Wyawega factory. Now If Mr. Blodgett Is not satisfied to stay in his own territory don't you think It would be all right for us to go into his? About two years ago a factory from Marshfield shipped us his cheese and when Blodgett found it out he had a fit about It. We did not know that the factory was going to send us hi.s cheese until they came in and we immediately called Blodgett up and told him about it but this is not the case with him. He has been down to Weyauwega and by doing so has got two shipments but I don't think he will get any more from what they told me today. He is getting as bad as Straubel [a Blorris man]. Wants all the cheese in the country. We did not say anything to Blodgett about this and won't if you think best not to. Find enclosed letter from Mineral Point which belongs to you. Tours truly, Neenah Cheese & Cold Storage Co. per S. D. Cannon. SDO/ Upon receipt of the above letter, Mr. J. B. McCready, manager of Neenah Cheese & Cold Storage Co., Chicago, 111., wrote to the Neenah branch and to Mr. C. E. Blodgett, manager of C. E. Blodgett, Cheese, Butter & Egg Co., the following letters : March 21, 1917. Neenah Cheese & Cold Storage Co., Neenah, Wis. Gentlemen : Answering yours of the 20th will say that I have just taken it up with Mr. Blodgett. Think that after he receives our letter he will find his way clear to keep out of the way of our factories. Tours very truly, JBMc/ Neenah Cheese & Cold Storage Company. March 21, 1917. Mr. C. E. Blodgett, Marshfield, Wis. My Dear Sir : I am In receipt of a letter from our Neenah Wis. branch in which they state that they find you are taking part of the cheese from a fac- tory at Weyauwega that has been shipping us right along. 200 MEAT-PACKING INDUSTRY. I sincerely hope that you are not going, to work on any of our factories for the reason that we have given up more now than we can ever hope to get back this year. I have heard notlung whatever from Blanke and believe he will have to get a rap or two before he will stand without hitching. Cannon teUs me that a year or two ago one of your factories in Marshfield shipped some cheese and that you were very much put out about it. He as- sures me that he was not aware that this factory was going to ship the cheese at all until the cheese came in. Trusting that there will be no interference with one another's factories, we remain, Yours respectfully, JBMc/ Neenah Cheese & Cold Stobage Co. That the understanding to leave the factories of one another alone is broken occasionally is indicated by the letters below, which disclose other methods than that of openly taking the output. There are methods by which the Neenah people " will not be known in the deal at all." Mr. J. B. Linzmeyer, referred to below, is secretary of the Wis- consin Cheese Dealers' Protective Association. In an interview with a representative of the Federal Trade Commission he asserted that of the two matters on which members of his association con- centrate their efforts one was to prevent the packers from getting control over all the cheese factories and thus wiping out the inde- pendent dealers. The letters given below seem to indicate that his efforts were not wholly in this direction. He appears to be helping Mr. S. D. Cannon, manager of the Armour-controlled Neenah' Cheese & Cold Storage Co., to secure the output of more cheese factories. Geeen Bat, Wis. Mar. 23, 1911. Mr. S. D. Cannon: Fedend Sam : I am going to Fond du Lac the first of next week and will stop of£ at Neenah to see you about buying some cheese. I know of several fac- tories that I could get on the Green Bay Road if you could use them that way. Expect to be at Neenah Monday or Tuesday morning. Yours truly, J. B. LlNZMEYEK 625 So. Jackson St. After Mr. Linzmeyer had called, Mr. Cannon wrote to the Chicago office of the Neenah company as follows : Neenah, Wis. March 27, 1911. Neenah Cheese & Cold Storage Co., Chicago, III. Gentlemen : Mr. Joe Linzmeyer was in this afternoon and as we did not feel like taking this all on our own shoulders thought best if you were going to be at Plymouth next Monday that Mr. Linzmeyer and the writer would MEAT-PACKING INDUSTRY. 201 come over and we could talk this matter over together. Please let us know If this will be satisfactory. From what he told us today we think he will be able to get 8 or 10 fac- tories and from the way was put it up to him we will not be known in the deal at all, we to pay him J^ brokerage. Think it is worth looking after. He seemed to think that he would not want to put it ofE any longer than next Monday as they all have their annual meetings from the 10th to the 15th of April and he would like to see them before that. Tours truly, Neenah Cheese & Cold Stobage Co. S. D. Cannon. The following letter was written by the Sheboygan County Cheese Co. to P. J. Schaefer Co., who forwarded it to Mr. C. E. Blodgett, the Armour man. Mr. Blodgett sent it to Mr. J. B. McCready, of the Neenah Cheese & Cold Storage Co., with the notation at the bottom. SHEBOYGAN COUNTY CHEESE COMPANY SHEBOYGAN, WIS. Oct. S, 1917. P. J. SCHAEFEE Co., Marshfleld, Wis. Gentlemen : We sold yesterday on the Plymouth Board for .the account of Mr. Blodgett 350 Daisies at 26^ to B. W. Rowe 150 " 26 for buying cheese from Marsh- field that we could buy ourselves at flat market if we wanted to. Now we w.int you to work with us and not against us. Everytime you bid on the Board or have anyone else bid on the Board you are working against us and this does not look very much like co-operation. Just think this over now and see if we are not right. You Can't very well expect dealers around Ply- mouth and Sheboygan that are only getting a few Longhorns, to sit idly by and watch you bid on the Board without helping to try and make you pay for them-especially when (hey know you are getting at least two cars of Long- tZ"Lir ■n'f,"' "^^^ '° "^'"^ t"^^* '^'^y "»"« >ve want you to buy on tlie Board we will tell you. MEAT-PACKING INDUSTRY. 203 The cheese market Is entirely too high. We have not made a penny on any of your Longhorns in three weeks. In fact, by the time you figure interest on our money that we have to tie up by paying you promptly, waiting for the other fellow to pay his bills, we are really money out. Now I want you to take this In the spirit it is given — in all fairness. You are making a nice thing on what cheese you have coming in — you have no risk ; no matter where the market goes, your stufE is cleaned up, so kindly work with us. Yours very truly, Neenah Cheese & Cold Storage Co. JBMc/ P. S. — On the order we sent you yesterday — the flats from Neenah and 200 Longhorns^in case you are short 20,000# add a few more Longhorns. Section 8. — Limiting the market and fixing prices to the producer. Conquest of the market. — ^The claim is made by the packers that they are able to pay higher prices to the producer and to sell at lower prices to the retailer than can their competitors because of their more efficient and direct handling. This contention, however, is not borne out by the books. The books do show in the case of Armour & Co., taking at its face its own profit and loss showing on its produce business as a whole, that it is able to sustain continuously heavy losses over a period of years in the expectation of recouping when the market is once secured and that it has done this in recent years despite individual cases of subsidiary produce companies op- erating at considerable profit. Out of the six fiscal years ending October 27, 1917, two, according to the books, showed a net loss for Armour & Co. on butter, six on eggs, five on poultry, and one on cheese (see Table 40 below). For the year 1912 there was a net gain on the four items of $48,135.22 for 1913, a net loss of $84,707.41 ; for 1914, a net loss of $337,601.56 for 1915, a net loss of $308,905.15 ; for 1916, a net gain of $541,845.76 and for 1917, a net gain of $113,232.14. Even with cheese, the most profitable item, included, there was a net loss for the entire period. If cheese is excluded, only in one year, 1916, was there a net gain on the three remaining items taken together, and the net loss for the period was over $800,000. For the six years as a whole there was a net gain on butter of $166,033.99, a net loss on eggs of $404,161.79, and a net loss on poultry of $594,231.28. No produce firm dependent for its profits on these three products alone, as many of Armour's competitors are, could survive such continuous and heavy losses. Either the books do not show the true profit or the losses are tem- porarily carried by other commodities. 204 MEAT-PACKING INDUSTRY. Table 40. — Profit and loss on produce, Armour & Co., 1912-1917, [Unaudited and unverlfled figures from the company's books.] 1912 1913 1914 1915 1016 1917 Total net profit or loss for the six years. $3,422.80 ■6,317.20 ■34,480.97 84,510.59 $56,295.77 ■24,776.11 ■50,494.99 ■65,732.07 ■$30,797.75 ■164,457.66 ■189,905.62 47,659.37 ■$117,843.91 ■60,442.26 ■181,660.61 51,041.62 $224,022. 39 ■17,562.60 8,090.06 327,295.92 $30,934.69 ■131,606.07 ■146,779.14 359,682.66 $166,033 99 Eggs ■404,161.79 Poultry ■594,231.28 804,368.09 Total net profit or loss fertile period 48,136.22 ■84,707.40 ■337,601.66 ■308,905.15 541,845.76 113,232.14 "28,000.99 'Loss. The Commission is not in a position to certify to the correctness of these profit and loss statements as furnished by Armour & Co., but if they truly set forth the financial results of its operations in pro- duce they indicate that these years were dedicated to a conquest of this field and not to the making of a profit; that the company was overbidding its competitors in the purchase of milk, cream, and poultry products, and underselling its competitors on poultry and dairy products until both buying and selling markets ahould be won. If margins were not thus vmduly narrow, what else do these losses (still taking the profit and loss statements as furnished by Armour & Co. at their face) show but grave inefficiency? The facts show that the tendency has been ruinously to compete with commission men and country shippers for the producer's output, thereby elimi- nating these middlemen. Such eliminations would appear to make for directness and lower handling expenses, but the process is a costly one, and once accomplished prices are lowered to the producer with no benefit to consumer from lower buying prices or reduced handling expense, if there be such. With fewer independent commission men and country shippers, the competition of the wholesale receiver and distributor in consum- ing centers who must rely on these independents for their supplies is more easily stifled and the market at both ends of the distributive process comes under control. Chicago wholesale produce houses report that competition is being eliminated by the big packer interests by securing their supplies directly from the producers at prices unreasonably low and by selling goods to the retail trade at prices out of proportion with their buying prices. A wholesale produce house in Philadelphia, Pa., stated that its traveling representatives have been frequently told that the main reason why shippers were not giving them a greater amount of business was on account of Swift & Co.'s prices for live poultry. MEAT-PACKING INDUSTET. 205 This incident was mentioned as typical : After having sold Swift & Co. some 20 cars of turkeys one season recently an official of the Anderson Produce Co. told a representative of the Philadelphia house that Swift or any one else could have bought every turkey in the territory for 2 cents per pound less had it not been for the prices put out originally by Swift. The Anderson Produce Co. became a Swift concern on or before February 7, 1918, having been bouglit for $17,952.64. Complaints against the big packers doing produce business on im- duly low margins where competition still prevails are voiced by several commission men. A southwestern wholesale commission firm wrote the Federal Trade Commission as follows: We used to enjoy a great deal of trade In Butter, Cheese and Eggs years ago, but since the Packing Houses are handling these commodities we sell very little for the reason that there is hardly any margin left, and the writer is of the opinion that the above mentioned items as well as a great many items in the AVholesale Grocery line are handled by the Packing Houses for the purpose to increase their volume of gross sales to enable them to show a smaller per- cciitnge of net profits, calculated on the volume of gross sales. Shifting markets and diverting supplies from independent PRODUCE DEALERS. — To bring about distribution on a national scale it is the policy of the packers to keep apart the local producer and the local consumer. This, of course, benefits the large organization that can draw on supplies in one part of the country and ship them to another. This policy in some cases may be in accord with industrial develop- ment. For instance, New York State has ceased to be the large butter producer it once was and has become dependent almost exclusively on western butter, supplied largely by the packers. Yet this condi- tion can not be attributed solely to the packers, but in large measure is due to the fact that in the State of New York milk for the city trade sells for more than it is worth for making either cheese, butter, or condensed milk. Aside from this, the dependence of the producer and the consumer on the packer as a distributor is manifesting itself in different ways. For instance, in Wichita, Kans., it was found that Swift & Co. would not sell to the local dealers any butter, though it had large quantities in store, and there was urgent local demand. Its butter was being shipped out or held for shipment. Similar policy was being pursued by Swift & Co. elsewhere in Kansas. The Commission's examinei-s have found that in some eastern mar- kets one or the other packer predominates, and the jobber or retailer has little if any choice as to his source of supply. Morris & Co., for instance, appears to be a large factor in the Charleston, S. C, butter business and local dealers find themselves compelled to buy from it or contract their business. 206 MEAT-PACKING INDUSTRY. Wholesale dealers in dairy products in eastern cities have com- plained to the Commission that their business has been greatly re- duced because of their inability to obtain from the producing terri- tories the products in quantities desired, as the packer competitors outbid them for the commodities. Such competition works to the ultimate benefit of neither producer nor consumer. An examiner of the Commission interviewed a merchant in a Mis- souri town, who for years has been engaged in wholesaling eggs, but- ter, and live poultry, and reported the following : That Swift & Co. had repeatedly attempted to put his firm out of business. That Swift & Co.'s local manager made a practice of calling his customers on the phone, and after finding that they had sold poultry or eggs to this firm, offered them a price much higher than the market price in order to make them dissatisfied. Swift & Co. often pay at , Mo., a higher price for live poultry thau dressed poultry Is bringing on the New York Market. The Commission has testimony from dealers in the New York market to the effect that " whatever line the packers go into, nobody can compete with them." Another merchant in Wisconsin has stated that "wherever the packers went after anything they rode rough shod over everything and got what they wanted." With the growth of the packers' produce business independent pro- duce dealers have been ousted from many localities. During the past few years all but one of a dozen independent poultry, butter, and egg dealers at Hutchinson, Kans., have discontinued their business ; Swift & Co., having established a large poultry-killing plant and feeding station, together with cold-storage warehouse facilities, at Hutchin- son, these were unable to withstand the competition. An eastern concern reported that the firm came into competition with the Chicago packers and goods were sometimes bought from and sold to their branch houses. Those relations were said to have been satisfactory, but it was felt that the growth of the packers con- stitutes a menace. Due to competition with packer methods, the re- port went on, the resident salesman in an outside town in which heavy sales had been made would have to be withdrawn and the business there given up. Another produce dealer in a large eastern city stated that — The packers . are in some districts paying more for produce than the Inde- pendent believes Is necessary and the packers' branch house will receive the goods and sell them below the prices which the independent can make, and this in spite of better business methods and men with the independents. This is believed to be due in part to certain advantages held by the packers as pointed out in an earlier chapter ^ and in part to their » See Chap. II. MEAT-PACKING INDUSTRY. 207 ability to sell certain goods at a loss, charging it up to the profit on items in which there is no longer the same competition. A Charleston, S. C, dealer told the Commission's examiner that since the big packers established branches in Charleston his business had been materially reduced : Canned vegetables and fruits, 33^ per cent; canned meats of all kinds, 50 per cent; breakfast foods of all kinds, 30 per cent ; rice, 33^ per cent ; cheese, 75 per cent ; butter, 100 per cent. In the Chicago market a large percentage of the poultry business is handled at present by the five big packers. Each packer has his store on South Water Street, and certain other firms there seem to be controlled by them. If the independent produce dealer handles a well-established brand of an independent producer the packers try to secure the dis- tribution of such desirable brand and so gradually displace the in- dependent distributor. Quite recently Morris & Co.'s branch house in Washington, D. C, took over the distribution of the Fox River Butter Co.'s butter from R. L. C. Cochrane & Sons, former local agents of the Fox River Butter Co. On the other hand, the packers are careful not to compete with each other or with their bogus independents in the produce business. Hotel men in Jacksonville, Fla., have said : Therd has been no competition on the part of the packers, — absolutely none — against Smith, Richardson & Conroy [an Armour subsidiary hotel supply com- pany]. Armour and Swift, have never attempted to compete with them; Morris & Co. did for a little while, but have not recently. When Wilson & Co. came here they made an energetic attempt to secure our business, but it did not last long, as their stuff was not up to quality. * * * The opinion prevails among hotel men generally here that the large packers will not cater to our trade on account of the big trade which they receive from Smith, Bichardson & Conroy. Another hotel man corroborated this testimony by saying: We buy very little from Armour & Co. and they seem to be out of the market, as their men do not call on us at all. Swift, Morris, and Wilson men do call occasionally, but none of the larger packers appear to cater to the hotel trade here in Jacksonville ; I very seldom see any of them — Mr. Livesey, Manager of Armour & Co., was formerly of Chattanooga, my home town, and even he does not seem to care much to get our business. It looks as if the large packers had left the field entirely to Smith, Bichardson and Conroy. Securing the output or local independent creameries at fixed PRICES. — Along with the elimination of many independent butter dealers the packers are securing the finished product of local cream- eries at stipulated prices and marketing it under their own brands at their own prices. The product is acquired either by a written contract or through a verbal understanding. The marketing of the local creamery's butter 208 MEAT-PACKING INDtTSTRT. may apply to a definite quantity or to a so-called surplus -whicli pre- sumably can not be disposed of locally. The prices at which the creamery turns oAer its product to the packers are fixed on the basis of some given market, such as Chicago, Elgin, or New York. The Bell-Jones Co., Davenport, Iowa, a typical independent as respects the ownership of its plant, marketed in 1917 over 42 per cent of its entire packing-stock butter and 43.6 per cent of its creamery butter through Armour & Co. C. F. Bishop, Inc., Quincy, 111., sold in 1917 its entire butter output to Swift & Co. The Concordia Creamery Co., Concordia, Kans., sold in 1917, 42.99 per cent of its entire butter output of 2,075,054 pounds to Wilson & Co., Inc., under an arrangement whereby the latter took all of the Concordia's surplus butter. During the full grass period from May 15 to July 1 settlement was made at top quotations for extras, Chi- cago market, date delivered, f. o. b. Chicago. From July 1 to No- vember 1, one-fourth of a cent below top Chicago market for extras, date delivered, Chicago, f. o. b. there. For the balance of the year each shipment was sold according to markets at that time. The Freeport Dairy and Produce Co., Freeport, 111., with an- nual sales of butter for 1917 of 1,108,000 pounds, had a similar con- tract for its surplus butter with Wilson for 1918. It estimated its probable sales to Wilson & Co., Inc., for that year at 600,000 pounds. The Hanford Produce Co., Sioux City, Iowa, sold 57 per cent of its entire 1917 butter output of 9,964,529 pounds to Armour & Co. The Farmers' Co-operative Creamery, Milaca, Minn., sold in 1917 to Swift & Co. 644,616 pounds, or 79 per cent of its entire output of 815,265 pounds of butter. Morris & Co. had a contract for marketing over 1,000,000 pounds of the American Butter Co.'s butter output for 1918, as shown by the following letter of Morris & Co. dated February 20, 1918 : MOKKIS & COMPANY Packers USA Peovisionebs Pkoduce Depabtment Chicago, Feb. SO. 191H. Ajieihcan Butter Company, Kansas City, Mo. Attention Mr. Carpenter. Dbak Sie : Confirming our conversation today, we understand you are to ship us for a term of one year commencing March 1st, 1918, your surplus make of your best grade of Creamery' Butter ; this surplus being estimated at about one million pounds and will probably move tn quantities approximately in line with the figures shown below : MEAT-PACKING INDUSTRY. 209 Month Estimate Basis March,1918 70,000tt 15* AprU, 1918 75,000# li« May.lQlS 100,00(W }« June,1918 180 OOOtt jt 7uly,1918 150,00^ U August,1918 125,0004 h September, 1918 100,00(w U October, 1918 100,00^ IH November, 1918 60,000it IJ* December, 1918 50,000* ij* January, 1S18 |1919) 40,000* li* February, 1918 [1919] 40,0001 li« 1,090,000* Same Is to be packed In standard 60/63# White Ash Butter Tubs, usual stj'le of packing and to be priced to us on basis of the Chicago market for Extras as follows : During the months of March and April 1918 price to be lj Sec. 6, chap. 2, Pt. I of this Report. MEAT-PACKING INDUSTRY. 221 eeason of 1916-17 were Southern Cotton Oil Co., producing 10.8 per cent of the total ; American Cotton Oil Co., producing 9.3 per cent ; and Proctor & Gamble, producing 7 per cent. The packers' posi- tion, however, in the production of refined cottonseed oil is far more significant than in that of crude. Refined oil. — The total production of refined cottonseed oil for the United States in the season of 1916-17, as reported by producers to the Federal Trade Commission, was 201,389,368 gallons. All five of the big packers are active in this field. In 1917 they owned 15 refineries, the combined output of which amounted to almost' one-third of the country's production of refined oil for the season of 1916-17. The production, by companies, was as follows : Table 43. — Refined cottonseed-oil production- 1916-17. -Big packer proportion, season of Crude oil. Refined oil produced. Gallons. Gallons. Per cent. Total, all companies 216,590,373 201,389,308 100 Swift .Si Co 22,104,135 17,443,372 15,207,176 9,139,418 4,450,958 20,805,862 16,272,101 14,220,823 8,526,491 4,174,477 10.3 Armour &Co 8.1 Wilson & Co. Inc. 7 1 4.2 Tlie Cudahy Packng Co 2.1 Total, Big Five . 68,345,059 63,999,754 31.8 High concentration in (cttonseed-oil refining is indicated by the percentage of the combined output of the big packers as shown above and the three chief companies in refining. Proctor & Gamble, the Southern Cotton Oil Co., and the American Cotton Oil Co. This percentage for the season of 1916-17 for the eight companies was 74.4. The significance of these production figures becomes more apparent when taken in connection with the big packers' production and distribution of the foods in preparation of which the cottonseed oil is largely used. Lard compounds and lard substitutes. — ^Lard compounds are formed of a mixture of rendered hog fats and other animal or vege- table oils. Lard substitutes are composed of refined, deodorized cottonseed oil and stearin in the proportion of 80 to 85 per cent oil and 15 to 20 per cent stearin. The stearin may be beef or vegetable. The vegetable stearin is tending to supplant the animal stearin, and lard substitutes are in many instances wholly of vegetable substance. Cooking oils composed entirely of refined, deodorized, and hydro- genated vegetable fats, generally of cottonseed origin, are also being considerably used as a substitute for the animal shortening. Peanut oil for this purpose has recently been widely advertised. 222 MEAT-PACKING INDUSTRY. Lard compounds are of relatively small importance, and in the statistics of production are included with lard substitutes. Lard substitutes, on the other hand, are being produced in growing volume and are even crowding lard itself for supremacy. The production of lard by slaughtering and meat-packing firms (comprising 98 per cent ^ of the production of all firms) declined 10 per cent from 1909 to 1914.^ For the latter year the production by all firms amounted to 1,142,029,260 pounds.' Prior to the census of 1914 no statistics were collected by the Census Bureau for lard compounds and lard substi- tutes, but for that year the output of slaughtering and meat-packing establishments was 396,397,950 pounds.* This should be more than doubled (see Table 44 below) to secure the total production by all firms. The lard compound and substitute production by slaughtering and meat-packing establishments as given above includes the manu- facture not only of slaughterers but of meat packers not slaughter- ers and of those engaged not only in interstate trade, but in intra- state exclusively as well. On the other hand, it does not include the output of establishments which are operated or controlled by meat-packing firms, but which are not engaged in slaughtering or meat packing. The figures are therefore not strictly comparable with those secured by the Federal Trade Commission for the year 1916 showing an output by interstate slaughterers of 420,637,592 pounds of lard compounds and substitutes (see Table 44 below) or 6 per cent increase over 1914. The latter figures, while including the output of establishments which are operated or controlled by interstate slaughtering firms but which are not engaged in slaughter- ing or packing, do not include the manufacture of meat packers not slaughterers or of those engaged in intrastate trade only. From a total output by all interstate slaughterers and all cotton- seed-oil manufacturers of 550,073,835 pounds (exclusive of Armour's output^) in 1912, the production increased to 839,399,031 pounds in 1916. Excluding Armour's output from the 1916 total, the percent- age of increase was 34.4. The output of lard compounds and substitutes by interstate slaughterers for the first half of 1917, as reported to the Federal Trade Commission, had increased over the average half-yearly out- ' Census of Manufactures, 1914, Slaughtering and Meat Packing, p. 33-1. This percent- age, while applying to value, closely approximates the percentage in terms of quantity. ' Census of Manufactures, 1914, Slaughtering and Meat Packing, p. 332. " Lard com- pounds and substitutes are now used largely for culinary purposes and this in a measure accounts for the decrease in lard production," = Calculated on the assumption that the output of slaughtering and meat-packing estab- lishments equals 98 per cent of the production by all firms. This output, as given by the Census of Manufactures, 1914, Slaughtering and Meat Packing, p. 333, Is 1,119,188,675. * Census of Manufactures, 1914, Slaughtering and Meat Packing, p. 333. ' Armour's output for 1912 was not available. MEAT-PACKING INDUSTRY. 223 put of 1916, 29.5 per cent.* Firms engaged primarily in the pro- duction of cottonseed oil are also large manufacturers of these com- modities. Though their output for the first half of 1917 declined as compared with the average half-yearly output of 1916, the total out- put of this group and of interstate slaughterers showed an increase of 14.3 per cent ^ (see Table 44 below). Thus there is a rapidly growing manufacture of lard substitutes and in their production and distribution the five packers are largely interested. The great packers' position in lard-compound and lard-substi- TUTE PRODUCTION. — The Federal Trade Commission has collected the statistics of production by all slaughterers doing an interstate business, and by all cottonseed-oil manufacturers. The following table shows the production of these two groups and of the Big Five packers individually and collectively : Table 44. — Lard-compound and lard-siibsUtute production of interstate slaugh- terers and cottonseed-oil manufacturers — The five great packers' proportion, 1916, and Jan. 1 to June 30, 1917. 1916 Jan. 1 to June 30, 1917. Pounds. Per cent. Pounds. Per cent. 420,637,592 50.1 272,364,789 Big Five, total I 356,425,708 42.5 236,836,185 49 4 143,773,024 99^736,105 44,164,386 39,565,769 29,186,424 17.1 11.9 5.3 4.7 3.5 94,029,815 68,256,493 28,710,614 27,996,345 17,842,918 19.6 6 Wilson & Co., Inc All other interstate slaughterers 61,211,884 7.6 35,528,604 7 4 418,761,439 49.9 207,186,164 43.2 Total interstate slaughterers and cottonseed- 839,399,031 100.0 479,550,953 100.0 1 Includes production by the five packers in their cottonseed-oil plants. " Excludes production by the five pacljers in their cottonseed-oil plants. This table shows the output of only two groups of producers; it does not cover the total production of the country. The output of slaughterers doing only intrastate business and that of such pro- ducers as are not engaged in slaughtering or in cottonseed-oil pro- duction are not included. Nevertheless, out of this large proportion of the total production by all firms, the five packers, it will be noted, had 42.5 per cent in 1916 and 49.4 per cent in the first half of 1917, an increasing percentage of an increasing output. ' Segregated figures for the first half of 1916 are not available. Since there is some seasonal variation in output, the percentage of increase of the first halt of 1917 over the first half of 1916 would no doubt vary somewhat from that given in the text. 224 MEAT-PACKING INDUSTRY. In 1912 the output of the big packers (excluding Armour*) to- gether with their cottonseed-oil plants, was 183,179,846 pounds, and in 1916, 256,689,603 pounds, an increase of 40 per cent. The output of the whole industry (excluding Armour) increased in the same period 34.4 per cent, as shown above. The nonpacker output in- creased only 31.6 per cent as against the four packers' 40 per cent increase. The manufacture of lard compounds and lard substitutes by the packers is usually carried on at their packing plants. In addition, some of the five operate directly or through subsidiary companies cottonseed-oil refineries where these foods may be produced. The following plants at which compounds and substitutes are manufactured by the big packers are grouped by packer interests and by primary character of the plant : Swift packing plants : Swift & Co., Chicago, 111. Swift & Co., Kansas City, Kans. Swift & Co., South Omaha, Nebr. Swift & Co., East St. Louis, 111. Swift & Co., South St. Paul, Minn. Swift & Co., Port Worth, Tex. Swift & Co., Jersey City, N. J. Swift & Co., Denver, Colo. North Packing & Provision Co., Somerville, Mass. Nevada Packing Co., Reno, Nev. Western Meat Co., San Francisco, Calif. Oakland Meat & Packing Co., Emeryville, Calif, Union Meat Co., North Portland, Oreg.' Swift cottonseed-oil refineries: Swift & Co., Harvey, La. Swift & Co., Atlanta, Ga. Swift & Co., Memphis, Tenn. Swift & Co., Charlotte, N. C. Armour packing plants : Armour & Co., Chicago, 111. Armour & Co., Kansas City, Kans. Armour & Co., South Omaha, Nebr. Armour & Co., Bast St. Louis. 111. Armour & Co., Fort Worth, Tex. Armour & Co., Jersey City, N. J. Armour & Co., Hamilton, Ont. Fowler Packing Co., Kansas City, Kans. Hammond Packing Co., South St. Joseph, Mo. Colorado Packing & Provision Co., Denver, Colo. Armstrong Packing Co., Dallas, Tex." > Armour's output for 1912 was not available. = Manufactures lard substitutes, but not lard compounds. « Controlled by Armour-FUppen interests. See Part I, p. 285. MEAT-PACKING INprSTKY. 225 Armour cottonseed-oil refineries : Lookout OH & Refining Co., Chattanooga, Tenn. East St. Louis Cotton Oil Co., East St Louis, 111. Morris packing plants : Morris & Co., Chicago, 111. Morris & Co., K.-isl St. 7>onis, 111. Morris & Co., Kansas City, Kans. Morris & Co., South Omaha, Nebr. Morris & Co., Oklahoma City, Okla. Other Morris plants : Morris & Co., St. Louis, Mo. Wilson packing plants : Wilson & Co., Inc., Chicago, 111. Wilson & Co., Inc., Kansas City, Kans. Wilson & Co., Inc., New York City. Wilson & Co., Inc. (Okla.), Oklahoma City, Okla. Wilson & Co., Inc. (Tenn.), Chattanooga, Tenn, Wilson & Co., Inc. (Calif.), Los Angeles, Calif. T. M. Sinclair & Co., Cedar Rapids, Iowa. Mississippi Packing Co., Natchez, Miss. Cudahy packing plants : The Cudahy Packing Co., Omaha, Nebr. The Cudahy Packing Co., Kansas City, Kans. The Cudahy Packing Co., Wichita, Kans. The Cudahy Packing Co., Los Angeles, Calif. The Cudahy Packing Co., Sioux City, Iowa. Cudahy cottonseed-oil refinery : The Cudahy Packing Co., Memphis, Tenn. Big packers' position in LAEO-COMPOtrND AND LARD-STJBSTITT7TE DIS- TRIBUTION. — The sales of lard compounds and lard substitutes by the big packers (excluding Armour^) amounted in 1912 to 143,203,653 pounds and in 1916 to 212,787,964 pounds, an increase of 48.6 per cent. This, however, does not represent the full strength of packer distribution, since the sales of subsidiaries engaged primarily in the manufacture of cottonseed oil and its products were not available. The production of such subsidiaries amounted in 1912 to 33,602,381 pounds of lard substitute and in 1916 to 42,427,539 pounds. This would approximately represent the sales of these subsidiaries for those years, though on the one hand there may have been sales to other members of the Big Five group during the year or larger inventories at the close of the year than at its beginning, or on the other hand there may have been outside purchases during the year or smaller inventories at the close of the fiscal year than at its begin- ning.'' 'Armour's sales for 1912 not available. " The figures in the text were, returned to the Commission on a date and a form different from those for the figures in Table 45. The 1912 and 1916 figures of the text are strictly comparable. The 1916 and 1918 figures of the table are similarly comparable. Were the 1916 sales of the table substituted for 1916 sales of the text or yice versa, the figures would not be strictly comparable. 140361°— 20 15 226 MEAT-PACKING INDUSTRY. The percentage of increase of sales points to a rapid growth in vol- ume of packer sales even during the period prior to America s en- trance into the war when the use of substitutes was less marked than in the period following. During this period, 1912-1916, while four of the big packers' sales increased 48.6 per cent, the total production of interstate slaughterers and cottonseed-oil manufacturers (exclud- ing Armour) increased, as pointed out above, only 34.4 per cent. The growth in lard-substitute sales for the two-year period 1916- 1918 for the Big Five is shown by the following figures (for sales of other years see Exhibit XV) : Tabm: 45. — Lard-substitute sales of the five greater packers, with percentages of increase, 1-916 and 1918. 1916 191S Pounds. Pounds. Per cent increase over 1911). 1122,040,400 07,933,531 42,998,410 M8, 248, 030 27,630,000 1188,973,200 137,619,132 56,071,311 '61,929,532 51,090,000 ., Armour & Co. . 40 3D 8 The Cudahy Packing Co ; 85 Total. 338,850,371 485,683,175 43 1 Production figures; sales figures not available. 2 Some duplication is involved in the Wilson sales, owing to the Inclusion at certain interplant shipmenta and shipments between plants and branch houses which the company reports as being unable to exclude Sales of compounds and substitutes by the five big packers are made through producing plants, branch houses, hotel supply com- panies, produce houses, subsidiary selling agencies, car routes, and brokers. Plants as follows were reported as handling, although not produc- ing, compounds and substitutes : Packing plants of the following Swift companies: Swift & Co., St. Louis, Mo. ; Swift & Co., South St. Joseph, Mo. ; Omaha Packing Co., Chicago, 111.; G. H. Hammond Co., Chicago, 111.; Plankinton Packing Co., Milwaukee, Wis.; John P. Squire & Co., Cambridge, Mass.; Springfield Provision Co., Chicopee, Mass.; also the Under- wood Market (trade name of Omaha Packing Co.), Chicago, lU. The packing plant of Armour & Co., Sioux City, Iowa, the Fried- man Manufacturing Co., Chicago, 111. (Armour owned), and the Pittsburg Provision & Packing Co., Pittsburgh, Pa. ( Armour- Aller- ton owned.) The packing plant of Morris & Co., New York City, opor.atod under the name of Joseph Stern & Sons, Inc. " The packing plant of the following Wilson company : Albert Lea Packing Co., Inc., Albert Lea, Minn. MEAT-PAOKIKG INDUSTBT. 227 Butter substitutes. — ^Among the several commodities that may be used as substitutes for butter and are manufactured and sold is oleomargarine (including butterine and all kinds of nut margarines). Oleomargarine, as its name suggests, had originally as one of its components oleo oil from the beef animal. This was combined with neutral lard, vegetable oils, or butter. While the oleo oil is still thus used in the making of oleomargarine, it is being largely re- placed by vegetable oils, and oleomargarine, sometimes called but- terine, is often now wholly of vegetable substances, the principal ingredient being the oil of the cottonseed, coconut, or peanut, though a butter flavor may be imparted by mixing or churning the ingredients with milk. Other vegetable oils used are derived from the soy bean, corn or maize, and mustard seed. Oleomargarine is fast becoming a food of common household use. According to the returns made to the Commissioner of Internal Revenue, the total production of oleomargarine, colored and un- colored, for the year ending June 30, 1909, was 92,282,815 pounds ^ ; and for the fiscal year ending June 30, 1918, 326,528,839 pounds.* The annual output had increased during the nine-year period 253.8 per cent. In the calendar year of 1909 the production of creamery- made butter amounted to 624,764,653 pounds,^ and in the calendar year 1918, 793,275,309 pounds,* an increase during the nine-year period of 27 per cent in the annual production as against 253.8 per cent increase in oleomargarine production during approximately the same period. Big packers' position in the peoduction of oleomargarine. — ^As presented elsewhere in this report," the production of oleomargarine by the packer members of the Oleo Legislative Pool for the fiscal year closing June 30, 1916, was 63,597,823 pounds, or 41.7 per cent of the total production in the United States.* These packer members included all the Big Five except The Cudahy Packing Co. The big packers' production of oleomargarine from January 1 to June 30, 1917, as reported to the Commission was 65,962,208 pounds. For the same period the total production for the country as a whole ' was 129,123,918 pounds, thus giving the five 51.1 per cent of the total (see Table 46 below). The manufacture of the Big Five is in the main confined to slaughtering plants, though a few factories are equipped primarily for the making of this product. •Annual Report of the Commissioner of Internal Kevenue, 1909, pp. 87-88. ' Annual Report of the Commissioner of Internal Revenue, 1918, pp. 123-124. " Census of Manufactures, 1914, Butter, Cheese, and Condensed Milk, p. 354. ' Figures furnished by the Bureau of Markets. Neither these figures nor those for 1914 include butter made on the farm, which is a relatively declining quantity. ' See Report of the Federal Trade Commission on the Meat Packing Industry, Pt. I, Chap. V, sec. 10. • Total for the United States, 152,509,913 pounds. Annual Report of the Commissioner of Internal Revenue, 1916, pp. 154, 155. ' Annual Report of the Commissioner of Internal Revenue, 1917, pp. 148, 150. 228 MEAT-PACKING INDUSTRY. The following table shows the total production of oleomargarinfe by all manufacturers for the calendar year 1916 and the first six months of 1917 and the big-packer production collectively and by companies. The figures for the total production are from the pub- lished reports of the Internal Eevenue Bureau. Not only are high percentages shown for the five for both periods, but, with the rapidly increasing total output for the country as a whole, as indicated by the figures, the five are not only holding their own but are consid- erably increasing their proportion. Table 46. — Oleomargarine production of five great packers and all other mami- facturers, with packer proportion, 1916 and Jan. 1 to June SO, 1917. (Total, all manufacturers, from Annual Reports of the Commissioner of Internal Revenue, 1916 and 1917.) 1916 Jan. 1 to June 30, 1917 Pounds. Per cent. Pounds. Per cent. rive great packers, total 80,403,174 42.9 65,962,208 51.1 Swift interests 34,978,792 22,607,670 16, 804, 707 6,325,693 686,312 18.7 12.0 8.4 3.4 0.4 26,148,217 24,230,419 11,725,181 3,858,391 « 20.3 Armour interests 1&7 Morris interests 9.1 Wilson & Co., Inc. . 3.0 ThQ Cudahy Packing Co . 107,160,069 57.1 63,161,710 48.9 "187,563,243 100.0 < 129,123,918 100. D 1 None reported. i By subtraction. " Annual Reports of the Commissioner of Internal Revenue, 1916, pp. 164, 155,° and 1917, pp. 148, 150. < Annual Report of the Commissioner of Internal Revenue, 1917, pp. 148, 160. Oleomargarine is manufactured by the five at some of their packing plants and at other plants specially equipped for this pur- pose. The following were reported by the five packers or by com- panies controlled in their. interest at which the output included in the foregoing table was manufactured: Swift packing plants : Swift & Co., Chicago, 111. Swift & Co., Kansas City, Kans. Swift & Co., South Omaha, Nebr. Swift & Co., Bast St. Louis, 111. Swift & Co., South St. Paul, Minn. Swift & Co., Fort Worth, Tex. Swift & Co., Jersey City, N. J. Swift & Co., Denver, Colo. G. H. Hammond Co., Chicago, 111. Other Swift plants: Swift & Co., Butterine Factory, Bast Oambrldge, Mask Armour packing plants : Armour i^i Co., Chicago, 111. Armour & Co., Kansas City, Kans. MEAT-PACKING INDUSTEY. 229 Other Armour plants: Anglo-American Provision Co., Chicago, 111, Friedman Manufacturing Co., Chicago, 111. Morals packing plants : Morris & Co., Chicago, 111. Morris & Co., East St. Louis, 111. Morris & Co., Kansas City, Kans. Morris & Co., Omaha, Nebr. Morris & Co., Oklahoma City, Oklu. Other Morris plants : Morris & Co., St. Louis, Mo. Holland Butterine Co., Jersey City, N. J. Wilson packing plants: Wilson & Co., Inc., Chicago, 111. Other Wilson plants : Union Lard Corporation, New York City, N. T. Cudahy packing plants: The Cudahy Packing Co., Kansas City, Kans. Big packers' position in the distribution of oleomargarine. — The total oleomargarine sales by the Big Five in 1912 were 45,230,288 pounds, and in 1916, 79,928,788 pounds, an increase of 76.7 per cent.^ These figures, as in the case of lard substitutes, are minimum, since they do not include the output of big packers' plants engaged prima- rily in the manufacture of cottonseed oil and its products. They do serve, however, to show the rapid growth in these packers' sales. The -rapid growth of the five packers for more recent years is shown by the following oleomargarine sales for 1916 and 1918 and the percentage of increase (for sales of other years see Exhibit XVI) : Table 47.- -Oleomargarine sales of the five greater packers, with percentages of increase, 1916 and 1918. 1916 1918 Pounds. Pounds. Per cent increase over 1916. Swift & Co 2 28,892,700 21,396,440 15,612,929 111,543,745 851,482 '77,210,600 42,972,840 30,963,654 '17,912,565 2,680,000 167 Morris ^'r^^^:^ztti7:^^::^ ical supplies, through ownership of 57^ per cei"- and 40 per cent of the Pr^Jf^^^^f/f.^ operated by Libby, McNeiU The fruit canning Pl^fj^^Jfts leased), with the fruits handled & Libby (that at Nimbus, Calit., is le^ ), \T^.Z^ Oreg ^^pSng apples, apricots, cherries, peaches, pears, blacl:- berries, "^'^ "^SnheTrle^B; raspberries, and strawberries ' ^ V -^n Wash packing apples, apricots, cherries, peaches, pears, and North YaKiina, vvb^u., ^ "l^nt, wash., packing blackberries Sacramento, Calif., packing apricots, cherries, peaches, pears, and plums. Nimbus, Calif., packing ripe olives. Selma. Calif., packing grapes, apricots, peaches, pears, and plums. Sunnyvale, Calif., packing apricots, cherries, peaches, pears, and plums. Kahulum, Kallki, and Island of Oahu, Hawaii, packing pineapples. Buyers of fruit for Libby, McNeill & Libby are located at each cannery and in each fruit district in which the company might be interested and are controlled by a head buyer in San Francisco. These buyers are continually traveling among the growers. Con- tracts are made for periods varying from six to ten years with indi- viduals and concerns raising the fruit desired. Officers of the com- pany state that it is their intention to have under contract with the growers each year sufficient acreage to supply the raw material for about 70 per cent of the estimated pack of the season, any balance needed being bought on the open market at the best spot price obtainable. In the case of pineapples Libby has gone even farther back and the pineapples packed by Libby, McNeill & Libby are for the most part produced through their own farming operations in the Hawaiian Islands on land leased for a long term of years. Only a small per- centage of the raw pineapples used are secured by direct purchase from the grower, no contracts being made for this product from any acreage or for any term of years. The fruit packed by Libby, McNeill & Libby in 1917 in its own plants amounted to 1,463,082 cases, including cans of various sizes, nearly one-half consisting of their pineapple pack. The pack re- ported is as follows: Kinds of fruits. _ Cases. Pears Egg plums ' gg Green gage plums ii in Black cherries "" J, Red cherries _ 29,5^- Apricots ~ _ ~ 103,184 Apples ~ -— ~'_~~I 168,736 Yellow cling peaches I "_ ~ ^'^'t^^ Yellow free peaches- __ 339,516 71,682 MEAT-PACKING INDUSTRY. 243 Elnds of fruits. Cases. White cling peaches ^ 2, 233 Prunes 80 Strawberries 1, 212 Grapes 12, 115 Pineapples 617,798 These quantities refer only to those canned fruits packed by Libby, McNeill & Libby at its own plants. In addition large purchases were made from other canners. The invasion of the canning industry by the big meat packers is just reaching the stage where the independent canners see reason to feel concern for their future. To enter the distributive field has been comparatively easy and to this the packers have given chief attention in the past, but if the same tactics are pursued as in other lines, the entry into production is but the beginning of an ever in- creasing control until the packers will here also be the dominant factors in the industry. Methods of the packers. — The strongest competition which the wholesale grocer has to meet in marketing his canned fruit is that of the branch houses of the five big meat packers which are engaged in wholesaling to the retail trade all kinds of canned and dried fruits. The elaborate organization of the big packing companies gives them a great advantage through their branch-house and car- route marketing facilities. Having their own line of cars they are enabled to load quantities of such products as canned goods with their meat, obtaining thereby a more frequent and a more speedy delivery than can the wholesale grocer and at no greater expense. While at first their energies were devoted entirely, with the ex- ception of Swift & Co. through Libby, McNeill & Libby, to obtain- ing supplies from the plants of others and establishing their power of distribution, they are now entering the field of production, removing from the market former sources of supply of the regular distributor and in some lines have already made it extremely diffi- cult for even the largest wholesalers to secure goods for their trade. So complete has become the control, especially by Libby, McNeill & Libby, over the pineapple supply, that one of the largest wholesale grocers in the country was unable in the summer of 1918 to secure any supply whatsoever. With the exception of part of the pack of Libby, McNeill & Libby, the meat packers distribute their own pack of canned fruit, as well as the canned and dried fruit purchased from others, through their own branch houses and car routes directly to the retail dealers. Swift & Co. in the same manner distributes a large part of the pack of Libby, McNeill & Libby, but the latter firm also distributes its goods, especially where its brands are not already known, through wholesale grocers. This method of distribution has been used in 244 MEAT-PACKING INDUSTRY. some instances merely to get its goods introduced. Thereupon Swift & Co.'s branch house, in competition with the wholesale grocer who has bought and is distributing the goods of Libby, offers the same poods to the retail trade at a lower price than the wholesaler paid to Libby, McNeill & Libby. It is also complained that when Libby, McNeill & Libby is over- stocked with any line of goods, the surplus is sold at reduced prices by Swift & Co. in order that Libby can claim that it is not cutting prices. The meat packers are large speculators. With their control of capital and credit they are enabled to buy as much of the output of canneries as is available, withdrawing this supply from other dis- tributing channels, and then reselling upon a market in which their purchases have forced up the price. They purchase direct from the producers and through brokers they buy futures and in the spot market. Armour & Co. has begun to be a large distributor of dried fruit and has caused the wholesale grocer to fear that here also he would soon find his source of supply shut off. Although it has handled large amounts, Armour & Co. has not yet succeeded in this conquest, and the strong cooperative marketing organizations of California may prevent it. In 1917, Armour secured 10 carloads of dried peaches from the California Peach Growers, but only obtained two carloads in 1918. When he asked for 10 additional cars, the order was refused. Dur- ing the year ending October 1, 1918, Armour & Co. purchased $102,- 783.60 of raisins direct from the California Associated Raisin Co. and secured $154,368.13 of raisins which were supplied by the California Associated Eaisin Co., but sold and shipped to Armour & Co. by other packers of raisins. Armour & Co. expressed to a representative of the California Associated Eaisin Co: the desire to buy 800 car- loads of raisins of the 1918 crop, about 20 per cent of the total marketed by this company, which controls about 88 per cent of the entire crop of the country. These raisins were to be put up under Armour's own brand. As the company feared that any such ar- rangement would make it easy for Armour & Co. to get control of the distribution of this crop, the California Associated Eaisin Co. at once adopted a policy, which had been under consideration, by which it would no longer put up its raisins under the private labels of distributors. Because of this Armour & Co. did not make the large purchase contemplated. It did, however, buy 609 tons of raisins. The attitude of independence of these and other growers' organiza- tions indicates that there may be a few lines of foodstuffs of which even the enormous power of the meat packers can not gain control. MEAT-PACKING INDUSTKY. 245 Section 5. — Canned and cured fish. Extent of packer distribution. — Four of the five big meat pack- ers, viz, Armour & Co., Swift & Co., Wilson & Co., Inc., and Mor- ris & Co., have become important distributors of canned fish, espe- cially of salmon. With the general movement toward packer con- trol of foods, which even indirectly compete with meat for the money of the consumer, the entry by the meat packers into this field was inevitable. (For trade estimates of packer control see Exhibit XII.) Canned salmon is a most important food product, with a high pro- portion of protein and fat. The production of canned salmon in the United States has increased faster than the population, and hence could become a real rival of meat products. The salmon pack had in- creased from 2,000 cases in 1864, when the first salmon cannery was started in Sacramento, Calif., to 2,485,002 cases in 1900, while in 1917 the pack reached a total of 8,584,615 cases.^ Most salmon canners maintain no sales departments, do little or no advertising, and dispose of the bulk of the pack through brokers or selling agents. A notable characteristic of the industry is the prevalence of the general sales agent, who handles all or a large part of the output of one or more canneries as exclusive agent throughout the United States or certain sections of the country.* Such a system makes comparatively easy the acquisition of a can- ner's entire output by any such large distributor as one of the big meat packers. The exclusive sales agent naturally prefers to dispose of the entire pack of the several canneries whose output he controls or to dispose of a large proportion of such pack to one buyer in one transaction than to sell in smaller lots to many wholesalers and job- bers. The fish canners themselves make direct arrangements with the meat packers in some cases. Thus, the Booth Fisheries Co. for several years has set aside a large portion of the pack of its sub- sidiary, the Northwestern Fisheries Co., for the use of Armour & Co. This was done against the wishes of the Kelley-Clarke Co., which was the exclusive sales agent for this canned-salmon pack, and which resigned the account in December, 1917, partly because of this reser- vation for Armour. Thus, the supply of the former distributors is cut off by the big meat packers, who have the additional advantage of widespread marketing facilities, extensive control of capital, which secures the best cash discounts, and an ability to withstand a loss if such is necessary to secure the business of the wholesaler. In addition to distributing large quantities of all varieties of canned salmon, the meat packers also purchase and distribute, through their branch houses and car routes, canned tuna fish, canned > Sec Report of tbe Federal Trade Commission on Canned Salmon, p. 7. 'Ibid., pp. 8 and 9. 246 MEAT-PACKING INDUSTRY. T . „,a+or(1 sardines in tomato sauce, lobster, sardines in oil, sardmes ^/^f ^^^^^^^^^^^ olive oil; herring smoked sardines, Norwegian sardmes^^^^^^ g in oil, in mustard, -^^J^^^^'l^'^Zh mZt of various qualiti^ haddies, oysters, -^^-^fj^S'^f through its selling agencies, also dS^rSLlevri kfnds of salt, spiced ^oked, and dried fish, i. eluding mackerel, herring, salmon, anchovies, sardines, bloaters, and dfish Although Mr. Louis F. Swift, president of Swift & Co., has asserted that his firm has nothing to do with fish, the cured fish mentioned above are carried in the price lists of Swift & Co., as well as a considerable line of canned fish, and in addition the Com- mission discovered that cold-storage plants in St. Louis, Buffalo, Milwaukee, and Chicago had frozen as well as smoked fish in storage for Swift & Co. or one of its subsidiaries. The extensive range of canned and cured fish handled by four of the big meat packers is indicated by the condensed lists shown iii Exhibit XX. Because of the system of accounting by which the volume of sales of fish is included with other items it is difficult to ascertain tlio quantities or value of canned fish distributed or to make a close esti- mate of the packers' increase of business in this field. During tl\a fiscal year of 1916 Armour & Co.'s books record sales through branch houses entered under " K C Salmon " to the amount of $336,447.03, and under " Canned Fish and Vegetables " to the amount of $2,709,903.92. How much of this latter item should be credited to fish there is no method of learning. Under the 1918 method of accounting Armour & Co. carries these items under "Canned Fish, Vegetables, and Sundries," with no subdivisions. The total of items in 1916 branch- house sales which would now be carried under this title amounted to $4,231,622.62; the total in 1918, through all selling agencies, amounted to $29,355,000. Tonnage sales of canned and dried fish were not segregated for 1916. For 1917 these amounted to 15,274,423 pounds, and for 1918 to 20,346,164 pounds, an increase of 33 per cent (see Exhibit XVII B). Libby, McNeill & Libby (a Swift concern) deals heavily in canned salmon. Its sales on this product show a rapid increase. These in 1915 were 16,698,062 pounds, and in 1918, 47,195,682 pounds, a growth of 183 per cent.^ The total sales for the four years 1915-1918 were 124,375,647 pounds ^ (See Exhibit XVII A). Segregated sales on canned and cured fish are not available for any other big packer. Wilson & Co., Inc., includes sales of canned fish with canned f ruits and vegetables (see Exhibit XVII C). f„>' tai r"^ '""I y^?"'' '^^'^ *°°® "> P'^®»s, Libby, McNeill & Libby revised Its sales flEurai tor 1815 and 1916 on canned salmon. See Exhibit XVII A, Note s! MEAT-PACKING INDUSTRY. 247 That the proportion of the total pack of canned salmon distributed by the packers not only is large but is rapidly growing is illustrated by Libby's growth in the sale of salmon. Out of a total world pack in 1915 of 7,539,592 cases, this concern's sales were 347,876 cases, or 4.6 per cent. In 1918 this percentage had increased to 9.7 per cent of the world pack, which amounted in that year to 10,100,127 cases. Since Libby represents only a portion of the Swift interests and since others of the big packers are large distributors of salmon, the percentage of packer sales would run high were figures available. Manufacttjeing and producing. — The control of such a com- modity as canned fish is more easily secured during distribution than at the stage of production, and before the advent of the meat pack- ers there were already strong organizations in the field of produc- tion. Hence the first steps of the meat packers into the fish business were in the way of securing the output of canneries and distributing this through their marketing agencies. Only two of the big meat packers have as yet become important factors in the fishing and canning industry. Swift & Co.'s ownership of Libby, McNeill & Libby has made it an important operator, and Wilson & Co., Inc., which entered the salmon business in 1917, dominates the Wilson- Wakefield ^ group of salmon interests. These two interests are among the five large groups of salmon canners, who together packed over 53 per cent of the total American output of salmon during 1917 and who dominate the entire industry.^ Libby, McNeill & Libby purchased the North Alaska Salmon Co. in November, 1916, and took over its plants. These, with the plants previously owned, made the company one of the largest canners of salmon. In 1917 Libby, McNeill & Libby sold the entire pack of the Taku Canning & Cold Storage Co., of Seattle, with a cannery at Taku Harbor, southeast Alaska, and received a 10 per cent com- mission as selling agents. Officers and stockholders of the Taku Can- ning & Cold Storage Co. control the Auk Bay Salmon Co. with a plant at Auk Bay, Alaska. Thus in addition to its own pack Libby, McNeill & Libby had practically complete control of the output of both companies which together packed 128,163 cases of salmon in 1917. The pack of Libby's own plants in 1917 amounted to 435,077 cases, or 6 per cent of the country's total output. With the packs of the two companies mentioned, Libby, McNeill & Libby controlled at the production point a total of 563,240 cases, or 6.5 per cent of the total output of the year,^ a percentage exceeded only by that of three other salmon interests. ' See sec. 3, Chap. I, for a discussion of change and ownership of the Wilson Fsherlea Co. icportcd to be In progress. ' See Report of the Federal Trade Commission on Canned Salmon, pp. 70-74. •Ibid., p. 73. 248 MEAT-PACKING INDXJSTBY. Libby, McNeill & Libby now control canneries at Ekuk, TJgaguk, Kvichak, and Lockanok, western Alaska, which were formerly owned by the North Alaska Salmon Co., and plants at Nushagak, Koggiung, Yakutat, Kenai, and a saltery at Egushik. In connection with its canning business the company owns and operates the Yakutat and Southern Railway and a fleet of sailing vessels. The interest of Swift & Co. and Libby, McNeill & Libby in the canning of fish has heretofore been confined to the packing of salmon. It may be expected, however, that as soon as any other lino of fish canning has been sufficiently established by others to demonstrate its money-making possibilities, this organization will make plans to en- ter that field. This is illustrated by the following letter from the president of Libby, McNeill & Libby suggesting the advisability of canning tima fish and sardines: Louig F. Swift, Oct. 16, 1917 Chicago, October IC, 1911 Mr. L. F. Swift, ]\rr. Edwakd F. Swut, Swift & Company, V. 8. Yards, Chicago. tuna fish (also sardines ). Deab Sirs : — The total pack of Tuna this year will probahly exceed (Packed in cases 48 cans to a case) 500,000 c/s The pack for the last five years has been as follows 1916 370, 000 c/8 1915 340,000 " 1914 320,000 " 1913 130, 000 " 1912 40, 000 " Tuna are caught with a hook and line and it would seem that sooner or later some plan would be devised whereby they could be caught in traps or nets. The supply seems Inexhaustible. They are not caught during the spawning season, and only mature fish are taken. The United States Bureau of Fish- eries are on record that there is no possible chance of the supply of fish being depleted so long as they are caught with hook and line. The supply of Tuna is the most dependable in the waters around Long Beach, Wilmington and San Pedro, California, although there are some Tuna, also Sardine factories, In San Diego. An effort Is also being made by Southern California canners to can Yellow Tail Mackerel, Barracuda, Sea Bass, and Rock Cod, but the canning of Sardines has assumed large proportions, and it is the opinion of our Mr. Fay that the Sardine industry is more important than any of these, including Tuna. If we should go into the Tuna packing business, it would be with the idea of also packing Sardines In Southern California: In 1916 about 600,000 cases of Sardines were canned. In 1917 the pack will reach 2.000,000 cases, provided they can be sold. The waters abound in Sar- MEAT-PACKING INDUSTRY. 249 dines and packers feel they will have no difficulty in getting a supply of sar- dines to take care of all the orders they can get. Both the packs of Tuna and Sardines in Southern California need stand- ardizing, as there are many canneries which have sprung up rapidly and a good many ideas are being expressed in the individual packs. Understand Mr. Gorrell, of the National Canners Association is now on his way to California to standardize these packs. We had our Mr. Fay investigate the packing of Tuna In Southern California, and in talking with Mr. Houssels, President of the Long Beach Tuna Packing Company, Mr. Houssels offered to sell his plant and equipment for $60,000.00. Upon receipt of Mr. Fay's report I sent Mr. Larmon to investigate further, and especially the Long Beach Tuna Packing Company plant, and I enclose here- with copy of a telegram received from Mr. Larmon. Mr. Fay says the value of the products of the fish canning industry of Southern California, including by-products, it is estimated will reach $12,000,000 this year. It seems to me there is an opportunity to make some money In the Tuna Fish business and Sardine business, and I would be perfectly willing to tackle it, if we did not have so many other irons in the fire, and were not spending so much money in other plants. Also Mr. Mc Dougall and I agree that we would like to get into the vegetable business before we go into the Tuna or Sardine business, but I would like your opinion on this. Yours truly, WFB W. F. BURROWS. Wilson & Co., Inc., owns 99.9 per cent of the stock of the Pa- cific Fisheries Corporation and 51 per cent of the stock of the Wil- son Fisheries Co.^ Mr. Lee H. Wakefield is president of the Wilson Fisheries Co. and owns the remaining 49 per cent of the stock. The Pacific Fisheries Corporation is the owner of 99.5 per cent of the capital stock of the J. L. Smiley Co., with canneries at Ketchikan, southeast Alaska, and Blaine, Wash. The Wilson Fisheries Co. owns 98 per cent of the capital stock of the Alaska Herring & Sar- dine Co., with canneries at Port Walter, Baranof Island, southeast Alaska ; 79 per cent of the stock of the Lisianski Packing Co., which has a new plant exceptionally well located on Stag Bay, Lisianski Strait, Alaska ; and 100 per cent of the stock of the Apex Fish Co., with a cannery at Anacortes, Wash. The Apex Fish Co. in turn owns the Alden Banks Fish Co., the Brownie Fish Co., the Migley Fish Co., and the Superior Fish Co. Mr. Lee H. Wakefield, the president of the Wilson Fisheries Co. and owner of 49 per cent of its capital stock, owns 100 shares of the Northland Fish Co. of which he is president. The entire remainder of the stock of the North- land Fish Co., amounting to 200 shares, is held by men who are directors in one or more of the companies in this so-called Wilson- Wakefield group of fish canners. » See Chap. I,- sec. 3, for discussion of a change in ownership of this company reported to be In progress. 250 MEAT-PACKING INDITSTBY. The control of the output of fish canneries by sales agents is so much greater than the control of brokers in other commodities mat the ownership of the brokerage firm of Wakefield & Co. by the wu- son Fisheries Co. is important in connection with the control of pro- duction. This brokerage firm, formerly unincorporated and owned by Mr. Lee H. Wakefield, was incorporated and its entire capita] stock acquired by the Wilson Fisheries Co. in 1919. This firm is the exclusive selling agency for the Pure Food Fish Co., the Shaw Island Packing Co., the Beegle Packing Co., the Liberty Packing Co., and for E. L. Cole. The total pack of the Wilson-Wakefield plants and of those whose output was controlled by this group in 1917 consisted of 353,704 cases, or 4.1 per cent of the total American pack in 1917. This pack in- cluded nothing from the Lisianski Packing Co. whose plant was not in operation until 1918 and which will increase their proportion. Armour & Co. is not known to be directly interested in canning plants on the Pacific coast. It holds a small part, 4.41 per cent, of the stock of the Seacoast Canning Co., of Eastport, Me., which is engaged in packing sardines and other fish. When the Booth Fish- eries Co. was reorganized in 1909 P. A. Valentine, of Armour & Co., and F. C. Letts composed the reorganization committee and the latter became the first president of the reorganized company. This is tlie principal company in a group of canners that, in 1917, packed 1,112,586 cases of salmon, or 13 per cent of the total pack. Morris & Co., too, is not largely engaged in production of canned fish. It owns a controlling interest, 67 per cent, in the Barataiia Canning Co., with plants at Biloxi, Miss., and New Orleans, La., which can shrimp and oysters. Members of the Cudahy family are among the stockholders of the Pacific-American Fisheries Co., in which F, C. Letts is also a stock- holder and director. These smaller interests of meat packers in canning factories have significance only in connection with the more important holdings of Swift and Wilson through their subsidiary and affiliated companies, respectively, Libby, McNeill & Libby and the Wilson Fisheries Cor- poration, and in the fact that these acquisitions have been made within the space of two or three years and have been accompanied by a corresponding expansion in the field of distribution. Methods of the packers.— The investigation of salmon canning' discloses a separation of the industry into groups of factories domi- nated by certain interests which exercise control principally through their command of the selling organizations. It was also disclosed th at in the two groups^minated by the meat packers there is not pp! TO-74. "' *"' ^'''"'" '^"■'"'^ Co^^I^^i^ToT^an^ Salmon, Decemberri»li MEAT-PACKING INDUSTBY. 251 only the highest degree of control of distributing agencies but abso- lute ownership of factories as well. The fish are caught principally in nets, traps, and seines often at considerable distances from the canneries. The districts of greatest production are southeast Alaska, west Alaska, Puget Sound, central Alaska and the Columbia Eiver section, each varying as to species of salmon produced. Throughout these districts, located at the most strategic points, are the plants of the salmon packers. The fish are sometimes caught by independent fishermen and sold by them to the canneries, but it is estimated that 70 per cent of all the fish packed are caught by the employees of the canneries. Some canneries main- tain large investments in fishing fleets.^ Libby, McNeill & Libby, for example, reports that the company's own boats and tackle are furnished to the fishermen. Therefore, concerns like the meat pack- ers, with extensive distributive agencies, have control of the fish they pack from the moment the fish enter the traps in Alaska until they are sold through a branch house to a retailer. As has been indicated, the meat packers' control at the point of production is as yet far less in extent than is their control of dis- tribution. Here they differ from some other large salmon packers, who, while controlling a large pack at the source, dispose of this through brokers to wholesale grocers and other distributors. The meat packers, on the contrary, are in the market as buyers of the packs of others. They buy from brokers representing fish packers and also use brokers as buying agents to represent them in securing the output of salmon plants. From the canners' or brokers' point of view the meat packers are classed as most desirable customers, since they buy enormous quantities of goods. It is, therefore, not a difficult matter for the meat packer to secure a large supply in addition to his own pack and to step between the wholesale grocer and the latter's former source of supply. It has been estimated by brokers, who are in the best position to judge the extent of distributive control, that of a pack of approxi- mately 10,000,000 cases of salmon packed on the Pacific coast during the year 1917 the meat packers secured control of almost 4,500,000 cases. The Commission's inquiry on salmon canning indicated that a large control over prices has already been exercised by a few dominant interests. The general practice in this industry is for one or two concerns to announce the opening prices each season, and these are followed by the canners producing the great bulk of the pack. With- out control of distributive agencies these concerns have at least a slight check put upon their tendency to raise such prices to a high '■ Report of the Federal Trade Commission on Canned Saimon, December, 1918, p. 8. 252 MEAT-PACKING INDXJSTBY. distributive orgamzrtion "■i t» °8 'J^''^, ^^u^^ b, rtrengthea f:: -t.srt-;;rpoir:f ss^'o.» .?» »„.>.» ^na^t.,. Section e.-Condiments, relishes, etc. CKER ACTIVITY.— The hand of the large meat packer is hTnTtZ by manufacturers, wholesale grocers, and jobbers in the production and distribution of condiments and relishes which em- bi-^ce a considerable list of nonmeat food products faUmg in the specialty manufacturer's and the wholesale grocer's realm. The packer's advantage of regular, frequent, and quick transportation by means of highly specialized cars, of sufficient and well distributed storage facilities, of control over sources of supply through subsidi- ary companies, and of ability to distribute these products through a selling agency whose expense is largely borne by the meat prod- ucts decisively handicaps his less favored competitors. The growth and range of the packer's activities in the manufacture and distribu- tion of this class of food supplies is noticeable. Included in this group of foods which are manufactured and sold or bought and sold by the big packers are the following: Allspice (ground). Catsup. Cinuaiiion. Chili sauce. Chow clidw. Cloves (ground). Ginger. Horseradish. Marshmallow topping. Minced clams. Mustard. Mustard and cream. Nutmeg (ground). Olive oil. Olives (cured). Many of these materials, such as spices and seasonings, are re- quired as ingredients in the preparation, seasoning, and preserva- tion of meat products, and the packers were originally large pur- chasers of such materials solely for this use. From being buyers of these materials for the sole purpose of manufacturing meat by-prod- ucts, they have gone a step further, and have become buyers for the purpose of their resale. And finally they have become buyers of both these and other nonmeat materials for the purpose of manu- facturing and selling all kinds of nonmeat condiments and relishes. Packer companies manufacturing condiments, relishes etc.— Four of the five great packers are engaged in manufacturing these Olives (ripe). Oyster coclitail sauce. Pickles. Pepper (whole and ground). Sage. Salt. Salad dressing. Salad oil. Tabasco sauce. Table sauce. Pimento. Tomato purge. Tomato relish. Worcestershire sauce. MEAT-PACKING INDUSTBY. 253 products either directly or through their subsidiary and affiliated companies. Libby, McNeill & Libby, now affiliated with Swift & Co., is a large manufacturer and distributor of many food products, including con- diments and relishes. They maintain 114 pickle salting stations in Indiana, Wisconsin, and Michigan, and others in Colorado. In 1918 the Libby Company bought outright from MuUen-Blackledge-Nellis Co., Indianapolis, Ind., its plants located at Brazil, Ind., Effingham, III., and Paducah, Ky., manufacturing catsup, chili sauce, and other tomato products. This company also owns 50 per cent of the Stet- son & Ellison Co., Camden, Del., which cans tomato products. Swift & Co. controls Consumers Cotton Oil Mills (not Inc.), Chicago, 111., which manufactures cotton-oil products, and jointly with Armour & Co., the Independent Salt Co.,, Kanapolis, Kans., which manufactures salt. Armour & Co. is interested in several condiment manufacturing companies. The Loudon Packing Co., Torre Haute, Ind., 50.3 per cent of whose stock is owned by Armour & Co., manufactures catsup, cliili sauce, etc. The Fremont Kraut Co., Fremont, Ohio, 51 per cent of whose stock is owned by Armour & Co., manufactures kraut and pickles. The Independent Salt Co., Kanapolis, Kans., 50 per cent of whose stock is owned by Armour and 50 per cent by Swift, produces salt. The East St. Louis Cotton Oil Co., East St. Louis, 111., entirely owned by Armour & Co., manufactures cotton-oil products. Wilson & Co., Inc., operates a plant at Whiteland, Ind., which manufactures tomato products, chili sauce, and catsup. Wilson also owns Fame Canning Co.,^ Indianapolis, Ind., which manufactures tomato products including catsup. The Red Wing Co., Inc., Fredonia, N. Y., controlled in the interest of The Cudahy Packing Co., manufactures among other products catsup, chili sauce, and vinegar. Meechandising. — Condiments are sold and distributed by the packers to the retailer through their branch houses, hotel supply com- panies, and car routes and sometimes through wholesale grocers, par- ticularly when salesmen secure orders from retailers who arc cus- tomers of the wholesale grocers. In addition to their own manufacture they handle considerable quantities of these products which they buy, store, and sell as compe- tition makes it to their advantage to do. Olives, olive oil, spices, and other condiments are imported, prepared, packed, and distrib- uted. ' See Chap. I, sec. 3, for dlBcussion of a change In ownership of this company reported to be in progress. 254 MEAT-PACKING INDUSTRY. The following table shows the sales of several condiments by Libby, McNeill & Libby (a Swift concern) for the years 1915 and 1918 with percentages of increase (see Exhibit XVII for sales for other years) : Table 49. — Sales of certain condiments hy Libhy, McNeill £ lAbhy (a Swift con- cern), with percentages of increase, 1915 and 1918. 1915 (pounds). 1918 (pounds). Per cent increase 1918 over 1915. Pickles . . , Olives . . . Catsup . . Mustard. Vinegar.. 22,547,433 1,540,948 2,479,300 1,025,480 318,330 37,020,675 16,024,243 7,682,654 3,564,168 167,602 64 875 210 247 147 Totals. 27,911,491 ^, 459, 242 1 Decrease. Combined with the sales of other items the sales of condiments by Armour and Wilson arc shown in Exhibit XVII. For none of the packers other than Swift's Libby are segregated sales figures avail- able. Unfair and' questionahle practices. — The packers are versatile in the methods employed to secure control of the markets. The purchase of canning factories, to remove from the field a com- petitor who is dependent on such factories for supplies, is at least questionable even though it complies with the strict letter of the law. An example of this occurred in the purchase of the physical prop- erties of MuUen-Blackledge-Nellis Co. at Brazil, Ind., Effingham, 111., and Paducah, Ky., by Libby, McNeill & Libby, whereby a number of wholesale grocers were deprived of supplies of catsup, chili sauce, and kindred tomato products, especially manufactured for these firms for sale under their own labels. The following letter to one of the former wholesale grocer customers of the factories attempts to smooth over the announcement that a competitor of the customer is to get the latter's supply in the future. William F. Mullen Albert S. Blackledge Milton C. NelUs MULLEN-BLACKLEDGE-NELLIS CO. Packers of TOMATO EBODUCTS AND POOD SPECIALTIES "Worth While" Brazil, Ind., April 19th, 1918. Harvet & Eddy Co., Troy, N. Y. Gentlemen : It Is a matter of greatest moment and regret to advise that we will be deprived of the usual satisfaction of booking and caring for your valued MEAT-PACKING INDUSTRY. 255 order for RUBY Brand Pure Food Tomato Products, the packing of which has been entrusted to us for so many years, having sold our plants to the good house of Libby, McNeill & Libby. We trust that a most suitable and satisfactory source of supply may be found by you, and that our pathways may find another crossing in some future year, and our erstwhile pleasant business associations renewed with even greater mutual satisfaction, should such be even a remote possibility. We enclose memorandums showing RUBY Labels which we have on hand, and which we will be pleased to ship to you promptly at our last year's cost, which Is much lower than the price at which they can be duplicated now. We also enclose samples of labels. Kindly let us hear from you promptly regarding this. Again thanking you for the abundance of genuine good will and friendship accorded us, and prayingsour further kind thoughts and favors, we are. Very truly yours, MON/WT Mullen-Blackledge-Nellis Co. Misbranding is not to be excused. The following is a case in point in which the Department of Agriculture under the Food and Drugs Act issued notice of Judgment No. 472 against Swift & Co. for mis- branding a preparation of cottonseed oil as olive oil, labeled "Speci- alta Olio di Prima Qualita." Misbranding of Olive Oil. — On or about June 18, 1909, Swift & Co., a cor- poration of Chicago, 111. shipped from the State of Illinois to the State of Massachusetts a consignment of a food product labeled " Specialta Olio di Prima Qualita." Samples from this shipment were procured and analyzed by the Bureau of Chemistry of the United States Department of Agriculture, and as the findings of the analyst and report thereon indicated that the product was misbranded within the meaning of the Food and Drugs Act of June 30, 1906, the Secretary of Agriculture afforded Swift & Co., and the dealer from whom the samples were purchased, opportunities for hearings. As it appeared after hearings held that said shipment was made in violation of the act, the Sec- retary of Agriculture reported the facts to the Attorney-General, with a state- ment of the evidence upon which to base a prosecution. On March 14, 1910, a criminal information was filed in the District Court of the United States for the Northern District of Illinois against the said Swift & Co., charging the above shipment and alleging that the product was misbranded within the meaning of the act, in that the label quoted was false and misleading, because said preparation was not an oil of the first quality, that is to say, an olive oil for table use, but, on the contrary, was an artificial preparation consisting of cotton-seed oil. On March 19, 1910, the defendant entered a plea of not guilty to the above information, but subsequently withdrew said plea and substituted therefor a plea of nolo contendere. The case came on for hearing on May 24, 1910, and the court imposed a fine of $200 and costs. This notice Is given pursuant to Section 4 of the Food and Drugs Act of June 30, 1906. ■James Wilson, Secretary of Agriculture, Washington, D. C, June 25, 1910. Wilson's catsup is widely advertised under " Certified Brand " and over the legend " The Wilson Label Protects Your Table." 256 MEAT-PACKING INDTJSTKY. In 1916 Franklin MacVeagh & Co., of Chicago, issued a pamphlet with the caption " How Club House Catsup is Made," setting forth in comprehensive detail the process and care used in the prepara- tion of this condiment from the raw tomato to the finished com- modity ready for distribution to its customers. In the summer of 1918 Wilson & Co., Inc., distributed at a food show at the Sherman Hotel, Chicago, 111., a pamphlet with the caption " How Certified Catsup is Made," using the identical language in the text employed by MacVeagh & Co., except in a few minor particulars. Comparison in parallel columns below is striking : How Club House Catsup is Made. How t&rtified Catsup is Made. From the Vine to the Bottle. When our packing of " Club House " Catsup is under way again next August at our factory at Clark's Hill, Indiana, the most critical visitor, whether gov- ernment expert, state factory inspector, customer or consumer, will be wel- come as usual, and will be cheerfully shown every nook and corner of the factory and the whole process of manufacture. If our visitor should come at seven o'clock In the morning, he will find an almost idle and rather empty look- ing factory, for all of the tomatoes received the day before will have been made into Catsup, the greater part of which will have been labeled and cased and already on its way to mar- ket. But everything arounu the fac- tory and in it will be clean and orderly, because the last important work of each day is to scrub every cement floor and thoroughly clean every machine and kettle for the work of the day following. We shall be glad If our visitor is early, because we will want him to see and smell the inside freshness and sweetness of every machine or kettle before any material Is put into it ; to note that every foot of space used In manufacturing and bottling is protected by screened doors and win- dows ; that the machines and kettles are all connected one to the other by sanitary glass-lined pipes, so that the freshly extracted juice and pulp can pass safely from all danger of con- When our packing of Certified Catsup is under way at our factory at Whiteland, Indiana, the most crit- ical visitor, whether government expert, state factory inspector, cus- tomer or consumer, will be wel- come and will be cheerfully shown every nook and corner of the fac- tory and the whole process of manufacture. If our visitors should come at seven o'clock In the morning, they will find an almost idle and rather empty look- ing factory, for all of the tomatoes received the day before will have been made into Catsup, the greater part of which will have been labeled and packed, and already on Its way to mar- ket. But everything around the fac- tory and in it will be clean and orderly, because the last important work of eacB day Is to scrub every cement floor and thoroughly clean every machine and kettle for the work of the day following. We shall be glad If our visitors are early, because we will want them to see and smell the inside freshness and sweetness of every machine or kettle before any material Is put into it; to note that every foot of space used in the manufacturing and bot- tling is protected by screened doors and windows; that the machines and kettles are all connected one to the other by sanitary glass-lined pipes, so that the freshly extracted Juice and pulp can pass safely from all danger MEAT-PACKING INDUSTRY. 257 taminatlon and untouched by a single hand through all the process of man- ufacture from beginning to end. We will also want to show him how care- fully the empty bottles are cleaned and how thoroughly they will be sterilized in the dry-room just before they are to be filled. After the inspection of the building and machinery, we will take the vis- itor just across the road to one of the tomato fields, where he can observe the results of thorough, painstaking cultivation, and see the early pickers at work, taking the sound, red-ripe tomatoes from the vines and placing them in crates for delivery to the factory. Coming back to the factory a little before eight o'clock we will find wagon loads of tomatoes being received on the covered cement platform, where each crate is inspected as it comes from the wagon and where none but sound, red- ripe tomatoes are accepted. The interesting process of manufac- ture then begins. Immediately after the tomatoes have passed the inspec- tor, they are dumped Into a rotary scalding machine. This machine is a long cylinder with one end higher than the other. The tomatoes going into the lower end, gradually work upward through a steady stream of hot water, pure and fresh from our own artesian well, and come out thoroughly cleansed from all sand or other foreign matter. From the " Scalder " the tomatoes are automatically fed into the " Cyclone " Crusher, which is a double jacketed cylinder, the outer cylinder being of solid metal and the inner one a line sieve, through which all the pulp and juice is forced into the space between the cylindei's. From here the pure pulp and juice with all seeds and peeling removed, is pumped through glass-lined pipes direct to the large copper kettles on the floor above. At this point the skill of the cook Is called forth, and the visitor can stand and watch the large kettles of of contamination and untouched by a single hand through all the process of manufacture from beginning to end. We will also want to show them how carefully the empty bottles are cleaned and how thoroughly they will be sterilized just before they are to be filled. After the inspection of the building and machinery, we will take the vis- itors just across the road to one of the tomato fields, where they can observe the results of thorough, painstaking cultivation, and see the early pickers at work, taking the sound, red-ripe tomatoes from the vines and placing them in crates for delivery to the factory. Coming back to the factory a little before eight o'clock, we will find wagon loads of tomatoes being received on the covered platform, where each crate is inspected as it comes from the wagon and where none but sound, red-ripe tomatoes are accepted. Immediately after the tomatoes have passed the inspector, they are dumped into a Sprague scalding machine. The tomatoes vrork upward through a steady stream of hot water, pure and fresh from our own wells and come out thoroughly cleansed from all sand or other foreign matter. From the " Scalder " the tomatoes are automati- cally fed into the " Cyclone " Crusher, which is a double jacketed cylinder, the outer cylinder being of solid metal and the inner one a fine sisive, through which all the pulp and juice is forced into the space between the cylinders. From here the pure pulp and juice, with all seeds and peeling removed, is pumped through glass-lined pipes direct to the large cooking kettles on the floor above. At this point the skill of the cook is called forth, and the visitors can stand and watch the large kettles of 140361°— 20- -17 258 boil down, and as and salt are red, juicy pulp and- as salt are added to the goodness of it all as tue fina MEAT-PACKING. INDUSTEY.. red, juicy -Pulp boil ^owa spices, sugar, vinegar and added to the product, they can smell the goodness of it all as the final state of cooking is completed. The delicious fi^graiice of this perfectly blended combination will not be en- joyed by the visitors alone, for the fullness and richness of it will extend a distance of a half mile. From the kettles the bubbling hot catsup is drawn through glass- lined pipes into a glass-lined receiving tank, from which it immediately passes through another glass-lined pipe to the finislung machine, which is some- what like the " Cyclone " Crusher and which removes any piece of spice or any other thing that may have passed the crusher. From the finishing machine the Catsup, though still hot, passes down through another glass-lined pipe to the Sterilizing Kettle, where it is thoroughly sterilized by greater heat and then goes to the Filling Machine. From the Filling Machine the hot catsup goes instantly into the thor- oughly cleaned and sterilized bottles. The full bottles, then so hot that the operators have to wear gloves, are passed to the Capping Machine, which takes care of them as fast as they can come. After being capped, the bottles are first thoroughly cleansed, then neatly labeled, then cased and put on fonr- vvheeled trucks, on which they are carried at once to the waiting cars alongside the platform, so that within three hours from the time our visitors see the fresh, red ripe tomatoes being picked In the field, they can see the finished product from these same tomatoes being loaded into the cars. This is the way Wilson's Certified Tomato Catsup is made. All who taste and use it are delighted with Its rich flavor. There is no better catsup made — none better is possible. vMT^mth^tnr ^"' ?* ""* °^1^ ""d-r advertising appro- delicious fiagiance iXessU" cbness of it will extend n distance of half a mile. ' iCm the kettles the bubbling hot c-itsup is drawn through glass- lined pipes into a glass-lined receiving tank, from which it immediately passes through another glass-lined pipe to iho finishing machine, which is some- what like the " Cyclone " Crusher and which removes any piece of spice or any other thing that may Stiave passed the Crusher. From the finishing machine the Catsup, though still hot, passes down through another glass-lined pipe to the Sterilizing Kettle, where it is thoroughly sterilized by greater heat and then goes to the Filling Machine. From the Filling Machine the hot catsup goes instantly into the thor- oughly cleaned and steriEzed bottles. The full bottles, then so hot that the operators have to wear gloves, are passed to the Capping machine, which takes care of them as fast as they can come. After being capped, the bottles are first thoroughly cleansed, then neatly labeled, then cased and put on four- wheeled trucks, by which they are carried at once to the waiting cars alongside the platform, so that within three hours from the time our visitor sees the fresh, red ripe tomatoes being picked in the field, he can see the finished product from these same tomatoes being loaded into the cars. This is the way "Club House" Tomato Catsup is made. All who taste and use it are delighted with its rich flavor. There is no better catsup made— none better is possible MEAT-PACKING IND0STEY. 259 On March 6, 1919, the manager of the Washington, D. C, branch house of Wilson & Co., Inc., was tried in the police court of the Dis- tj'ict of Columbia and was convicted and fined for selling this catsup m packages represented to contain five gallons and which were shown to be short. These packages were the original containers as marked and shipped by the Wilson factory. The prosecution was based on the sale of four cans to an agent of the sealer of weights and measures purchased from the branch house manager. Three of the cans purchased by inspectors of the depart- ment of weights and measures of the District of Columbia were found to contain, respectively, 4 gallons, 2 quarts, and 14 ounces ; 4 gallons, 2 quarts, and 15 ounces ; and 4 gallons and 2 quarts, or a shortage of 4 quarts and 3 ounces in what were represented to be 15 gallons. The fourth can was not opened and measured, the prosecution pre- senting it in court and ofiFering to let its case stand or fall on the contents of the unopened can, but the defense failed to take advan- tage of the offer. It was shown to the satisfaction of the judge hearing the case that the containers of the catsup would not hold five gallons of liquid as represented in the bill of sale. Each can was packed in a crate on which was stamped " 5 gals. — Wilsco Tomato Catsup — Wilson & Co. Washington, D. C." More than 150 cans of this catsup were sold in Washington, D. C. Section 7. — Sundries : Peanut butter, coffee, syrups, etc. Peanut butter. — The meat packers have recently become impor- tant factors in the handling of peanut butter. Swift & Co., through its branch houses and car routes, distributes two brands in three sizes of jars and in tins of 15, 25, and 50 pounds. Both of these brands are manufactured by the E. K. Pond Packing Co., Chicago, 111., a subsidiary of Swift & Co., which packed in 1916, 612,595 pounds. Wilson & Co., Inc., distributes peanut butter under one of its own brands in tins from 2 pounds to 55 pounds in weight. Morris & Co. carries this commodity under two of its own brands in packages ranging from small jars to casks containing 500 pounds. Armour & Co. sells seven sizes of packages under one of its own brands. The total sales of peanut butter by Armour & Co. during the fiscal year of 1918 amounted to 2,539,181 pounds, for which roundly $575,000 was received. A production of 682,552 pounds was reported for the fiscal year 1916. Coffee.— Both Wilson & Co., Inc., and Armour & Co. are han- dling coffee on a large scale, one of the grocer's most profitable lines. Wilson in its grocery department carries in packages two brands of coffee, each prepared in three styles (steel cut, whole bean, and pulverized) and two brands of blended coffee in 100-pound bags and 260 MEAT-FACKING IITDUSTEY. clriiras, both steel cut and whole bean. Wilson is especially pushing its coffee business through all its selling agencies. At the close of its fiscal year, November 2, 1918, at which time the packers aim to carry the smallest stock of goods, the inventory of Wilson & Co., Inc., showed the following quantities on hand : At Chicago, green coffee 654,809 pounds, valued at $90,766.14, and roasted coffee, 64,099 pounds, valued at $11,318.94; at Los Angeles, Calif., 7,853 pounds, valued at $1,625.33 ; at Kansas City, 5,859 pounds, valued at $1,331.33 ; and at Oklahoma City, Okla., coffee valued at $5,016.98. These in- ventories showed some rather wide differences in valuation. Thus " Blue Label " coffee, whole bean, was valued at 20J cents a pound in Chicago and 24| cents a pound at Oklahoma City, a difference far greater than Justified by freight charges. "Red Label" coffee, whole bean, on the contrary, showed a difference of- only seven- eighths of a cent, being valued 18 cents in Chicago and 18f cents at Oklahoma City. Armour & Co. is the only other meat packer who is as yet known to have become interested in this field. The following items from its branch house price list indicate the range of coffees carried: l-pound Veribest brancl, fiber cases. ■ 1-pound Veribest brand, wood cases, i 3-pound Veribest brand, fiber cases. 3-pound Veribest brand, wood cases. 50-pound drums, Veribest brand. 100-pound drums, Veribest brand. 1-pound Helmet brand, fiber cases. 1-pound Helmet brand, wood cases. 3-pound Helmet brand, fiber cases. 3-pouu,N. Y " AiagjBta, Ga . 1 1 1 1 1 r2 i" as Augusta, Ma 1 1 I BAMBnArR.M(l »2 1 1 1 1 1 Baraoi Uft ' . ... Bataria, N.'Y."II."11. '. 1 ai 1 1 TllLfitlMrrpnlr MwH BanHme,N.J 1 1 1 1 1 1 1 1 1 1 1 l 1 BaddBuS-Me:; "::' ."I!.'- i 1 Oparated. under the name o£ Swift & Co.,. Inc., ail the stock, of wMeh a owned by Swjft & Co. = Operated under the name ofSwiltA Co., Ltd.,all the stoct of which Is owned by Swift &Co. s Operated imder the name ol Hammond Beef Co. (Mich.), all thei stock of which is owned by Swiri, ' Formerly operated by the Union Meat Ca,. a Swift interest. Swift & Co.. in 1319, acquired 100 per cent control of thij company.. . _ . „ * ^, «. t-ti, tt*- -vt -it * ti-^u.. s Tnp.liwimg one operaStJur the Atlanta Supply Co., controlled through Libby, M^eiH & Libby tMaHIe>„9ft8p6r ceirt of the stock of which is owned fry Swift & Co., and is understood to have beea aSshfliufed reoeotly pro rata to the stockholders of Swift & Co. . „ _, »,«,..,, •Inofadrng one operated under the name of Friedman Manufacfurmg Co.,75pcrcentonihe stock of which is owned by ArinoUE & Co.. branch discontmued in iai7. , , , - i^ . .»t- .i, 'Incftidln^oneconfronedbyJohn P. Squire &Cq.,93 per cent of thestockof whichisownedby the Swift family i»terestSv .-,^^ „ ,t •„ »■ t -iw^™ fIncludinR one operated under the name of Lihby, McNeill &LiWJy. , _u- 1, ■ j » Tn/.i..rtiirg one ofierated under the name of the Armour Packmg Co., aH the stock of which is ownod ByAemour £ Co. 276 MEAT-PACKING INTJUSTBY. Nnmler of principal marketing agencies, iy cities, of the five largest packers and their controlled companies, e Including one operated under the name of Libby, McNeill & Libby. ! Operated by the Blusfleld Provision & Produce Co., which is controlled by Morris & Co., through ownership of 375 out of a total of 800 shares; not acquired till 1917. ' Operated under the following names: Swift Beef Co., G. F. Swift & Co., E. C. Swift & Co., N. E. Hol- lis ck Co., and Clinton Market & Provision Co., trade names of Swift Beef Co., of whose stock-Swift &Co. owns 66S per cent; John P. Squire & Co., New England Dressed Meat & Wool Co., and 2 branches of the North Packing & Provision Co. (1-operated under the name of the Chicago Provision Co.), in whichthe Swift family have a majority control; the George E. Skinner Co., in which Swift & Co. owns 42 per cent of the voting stock; the Vermont Supply Co., controlled through the G. H. Hammond Co., the entire stock of which is owned by Swift & Co.; the Sturtevant & Haley Beef & Supply Co., all the stock of which is owned by Swift & Co., and Libby, McNeill & Libby. < Including one operated under the name of the Hyde Wheeler Co., all of the stock which is owned by Armour & Co.; one operated under the name of the T. H. Wheeler Co^ 97 per cent of the stock of which is owned by Armour & Co.; one operated under the name of the New England Beef Co., a trade name of Armour & Co.; and oneoperatedby Friedman Manufacturing Co., branch reported discontinued Novem- ber, 1916. i Including one operated under the name of Corwin- Wilde Co. and one operated imder the name of Donnelly & Co., Inc., all the stock in both these companies being owned by Morris & Co.; including also six branches operated by Chamberlain & Co., Inc., and four by the John N. Ladensack Co., pra^ tieally all the stock ol which was owned by Chamberlain & Co., Inc., with which it was coosohdatea in 1917. "Including one operated under the name of the Standard Beef Co., all the stock of which is owned by Wilson & Co., Inc.. and one operated under the name of the Sinclair Sales Co., all the stock, excepting 3 directors' qualifying shares, being owned by T. M. Sinclair &'Co., Ltd. All the common stock of th« latter company, except 7 directors' qualifying shares, is o^^•nod by the Central Products Corporation, in which Wilson /u v»,., -o- •» Includingone operate* under the trade name of S. Hess, one under the trade name of Hess & Co., and one under the name of Glenn & Anderson Co., in which MOTris&Co..has,a nSjoTttv craito^ 1' Not includmg the Wilson Commission Co., the Drexel Packing Co., and EmpSe Pro^ioi & Product Co. (the latter reported inactive smce June 1, 1917), ail the stock of elch being owne?lby WiSn & Co ™c. MEAT-PACKING INDTJSTKT. 277 yumT)er of principal marketing agencies, T>y cities, of the five largest packers and their controlled companies, etc. — Continued. A.— DOMESTIC BRANCH HOUSES— Contlnned. City. Cincinnati, Ohio Clarksdale, Miss. Cleveland, Ohio Clinton, Iowa Clinton, Mass Coeur d'AIene, Idaho. . Cohoes,N.Y Colorado Springs, Colo. Columbia, B. C Columbus, Ga Columbus, Ohio Concord, N. H Cordele, Ga Corpus Christi, Tex Corsicana, Tex Corning, N.Y Cortland, N.Y Crosson, Fa Cumberland, Md Dallas, Tex Danbury, Conn Danville, 111 DanvflIe,Va Davenport, Iowa Dayton, Ohio Deadwood, S. Dak Decatur, 111 Denison, Tex Denver, Colo Derby.Conn Des Moines, Iowa Detroit, Mich Donaldsonville, La Dover, N.H Dover, N. J Dubois, Pa Dubuque, Iowa Dulutn, Minn Durham,N.C East Liverpool, Ohio... Easton, Pa East Orange, N.J East St. Louis, 111 Elizabeth, N. J Elkhorn, W. Va Elmira.N. Y El Paso, Tex Erie, Pa EuIaula,Ala Evanston, 111 Fall River, Mass Fargo.N. Dak Faust.N.Y Fayetteville, N. C Fitchburg, Mass Florence, B.C Total big packers. 1 1 S 2 1 1 2 2 5 4 3 2 1 3 2 1 1 1 2 4 1 2 1 2 1 2 2 1 5 1 5 7 1 2 1 1 2 6 1 1 1 2 123 3 1 3 4 3 1 I 5 2 1 1 Swift. 13 1 1 1 "1 1 1 1 1 10 2 1 Armour. 1 1 ID 2 Morris. »1 " 1 1 I Wilson. Cudaliv 1 81 » Not formally taken over from the E. H. Stanton Co. till the spring otl917. .. ,»v . , . ' Including one operated under the name of the Friedman Manufactiirmg Co., 75 per cent of the stock of which is owned by Armour & Co.; branch discontinued in 1917. •„*„„.*,„,„„ 00 • Operated by the Pittsburg Provisidn & Packing Co., m which the Armour-Allerton interests own 99 per cent. • Including one operated under the name of Libby, McNeill & Libby. „„„„j,„ ' Includmg one operated by the Colorado Packing & Provision Co., all the stock of which is owned by Armour & Co. . . ^ ^ .. . li-n » The Lindner Packing & Provision Co., in which Morris & Co. has 60 per cent mterest; not acquu-ed till 1917 ' Operated by T. M. Sinclair & Co. , Ltd., all the common stock except seven directors' qualifying shares behig owned by the Central Products Corporation, in which Wilson & Co. , Inc. , owns 100 per cent. » Operated by the Nagle Packing Co., m which The Cudahy PackmgCp. owns 65 per cent of the .stock. • Operated under the name of Swift & Co. , Ltd., all the stock of whi* is owned by Swift & Co. ■ « Operated by the c'ondit Beef & Provision Co., all the stock of which is owned by Morris & Co. " Including National City, 111. " The paeking-house market. , . ^. ^ . j v. c -w f ,-.« " Operated under the name of Swift & Co., Inc., all the stock of which is owned by bwift & Co. ■5 Including one operated by the Pittsburg Provision & Packing Co. • " Including one operated by John P. Squire & Co., in which the Swift family owns 93 per cent of the stoek. MEAT-PAGKING IKDUSTBY. 278 v» 7)1/ cities of the five largest packers mmler of P^'^^jf^"^, -^^f'^^XoZr// cS»-^«- efc.-Coatiaued. A.— DOMESTIC BRANCH HOUSES— Continued. City. Total big packers. Swift. Armour. Morris. Wilson. Cudahy. 1 1 2 1 2 1 2 1 3 3 1 1 1 2 2 1 I 1 2 2 3 2 1 1 2 2 4 2 1 1 1 1 1 2 6 2 1 1 3 2 2 2 6 1 1 1 2 2 2 4 1 1 2 3 1 . 2 3 n i' I n i" Flushing, N.Y Forest I'aA, 111- ::;; 1 Fort Smith, Arlc Fort Wayne, Ind 1 1 • 1 1 I 1 1 1 1 1 1 1 1 1 1 1 u 1 aipTi Falls N.Y Gloversville, N.Y 1 1 1 1 Grafton, W. Va 1 1 I 1 n Grand Rapids, Mich 1 1 Great Falls, Mont ^ 1 Greenfield, Mass 1 1 1 1 1 Greensbnrg, Pa 1 Greenvill«, Miss 1 1 1 Greenville, S, C 1 J Greenville, Tex Greenwood , Miss Gulfport, Miss 1 1 Hammond, Ind 1 1 1 «3 1 1 1 1 1 1 Haverhill, Mass 1 1 1 1 1 1 n 1 1 »3 1 Hoboken, N. J «1 1 i 1 1 10 1 ' 1 Homell N Y 1 I Houghton Mich 1 1 HouFtoii Me 1 1 1 1 Houston Tex 1 1 1 Hudson, N. Y Huntington, W Va 1 1 Huntsville, Ala 1 "2 Indianapolis, Ind 1 1 Iron Mountain Mich ironwood, Mich 1 1 ishpeming, Mich ."." 1 1 1 ' Operated under the name of Swift & Co., Inc. I The packing-house market. ' Operated by the Western Meat Co. , in which each of the Big Five has an interest Swift & Co. owns 44.5 per cent of the stock, r,,..!,- ^'^.™'S? '^^^^ *^® °^™e of Swift Coates Co., in which Swift & Co. owns SO per cent of the stock, and Tn^JZ'^t A- ''®,?,^°i"'' * P®' ^™' are s'^en to a Swift agent by the Coates interests. 8 IrSinrfiSl'.? '"^' '"^' i''P'"'f"''J «'osed June 30, 1917. the ^tnPk nnS ^^ operated under the name of H. L. Handy Co., in which SwUt & Co. owns 60 per cent of ' OperkTd >m/»??h''^*®'' under the name of Libby, MolJeill it Libby. , „ . A c^P®"*^'' "™er the name of the Morris Packing Co. (Maine), all the stock of which is owned by Morns • toS'ne OM m.S? h'^^'^^ S°a ™ '''"<* The Cudahy Packing Co. owns 55 per cent of the sto(*. family inter^fi''o^^P?,^''^, cjufotlhe fe™ ^"-'""^ °°^ ^' Spri^eld ProyisioSco., in which Swift cont^olTfttLTompa"'' "'^ "^""'° ""** <'°- " S«'"' interest. Swift & Co., in 1919 acquired 100 per oont " Including one operated under the name of Libby, McNeill & Libby. MEAT-PACKING INDUSTRY. 279 Numier of principal marlceting agencies, ly cities, of the five largest packers and their controlled companies, etc. — Ooatinued, A.— DOMESTIC BRANCH HOUSES— Contimied. City. Total big packers. Swift. Armour. Morris. Wilson. Cudahy. Ithaea, N. Y Jackson, Mich Jackson, Miss Jackson, Tram JacksonTille, Fia... jaoksonrillB.ni Jamaica, N. Y Jamestown, N.Y... Jormyn, Pa JersByCity,N. J.... Johnstown, Pa JoUet,Ill Kalamazoo , Mi(di . . . Kansas City, Kans. Kansas City, Mo — I, N. H, Keene, . Keokuk, Iowa.. Key West, Fla Kingston,N. Y Knoxville, Tenn Laconra, N. H La Crosse, Wis Lake Charles, La Lake Providence, La.. La Salle, m Lawrence, Mass Lead, S. Dak , Lehighton, Pa Lewiston, Me Lexington, Ky Lima, Ohio Lincoln, Nebr Little Falls, N. Y Little Rock, Ark Long Branch, N. J Los Angeles, Calif Louisrille, Ky Lowell, Mass Lynchburg, Va Lynn, Mass MTcAlestor, Okla McICoesport, Pa Macon, Ga. Maianoy City, Pa. Malore.N.Y Manchester, Coim . . Manchester, N. H. . Mankato,Minn Marion, Ind Marlboro, Mass Marquette, Mich . . . Marshall, Tex MaishHold, Oreg . . . Memphis, Tenn '1 1 1 "3 U 1 1 02 82 1 13 1 22 10 1 ..... 1 .... "iVi ""i > Operated under the name of Swift & Co., Inc. ' Including one operatad raider the name of Litiby, McNeill & Libby. ' Including one operated by Smith, Kichardson & Conroy (hotel sr^ply company), in which Armoiu- & Co. has a majority interest. * Including the packing house market of the Nagle Packing Co. '' Inoluding_ one branch owned by the Pittsburg Provision & Packing Co. » The paefing-hoose market. ' . . , , ' Including the wholesale market, the "retail market," and the Fowler Packing Co., the entire stock o. wHch is owned by Armonr & Co. ... ' Operated under the name of Libby, McNeill & Libby, 99.8 per cent of the stock of which is owned by Swift & Co., and is understood to have been distributed recently pro rata to the stockholders of Swift & Co. ^ Tncluding one operated under the name of John P. Squire & Co. "Operatedby the Morris Packing Co. (Maine). „ , , ^ , . . . . . " Including one operated under the name of the Omaha Hotel Sraiply Co., all the stock of which is owned by Swift & Co., and one operated under the name of Libby, McNeill* Libby. _,. „ , v 1= Operated by the Palace Meat & Provision Co. , 60 per cent of the stock of which is owned by The Oudahy PackinjrOo., reported as doing a retail grocery and other market business. . _, „„ '•i Formerly operated by the Union Meat Co., a Swift interest. Swift & Co. m 191£1 acquired 100 per cent coatrol in this company. 280 MEAT-PACKING INDUSTRY. «„i^^ 7ni rities of the five largest packers number of Prir^Hval^^^Sr^'^^^r^olZT^^^ A.— DOMESTIC BRANCH HOXJSES-Continued. City. Total big packers. Switt. Armour. Morris. Wilson. Cudahy. 2 2 1 2 1 2 1 6 1 6 1 1 3 3 4 1 1 1 1 1 1 1 1 2 1 2 2 3 1 1 7 4 2 2 3 1 2 4 3 6 2 3 1 46 7 2 3 2 2 1 1 1 1 1 1 Meridian , Miss Miami, Fla....... 1 Middletown.N. Y 11 Milford , Mass i" M 1 1 1 1 !2 1 1 1 1 1 <1 1 1 1 1 1 1 1 1 1 1 Mount Carmel , Pa 1 1 1 1 Muskegon, Mich 1 1 1 1 1 Nanticoke, Pa 1 1 1 1 1 1 '2 «1 1 <1 1 Nashua, N . H 1 Nashville, Tenn 1 1 Natchez, Miss «2 1 1 1 1 1 1 1 B2 New Britain, Conn Newburgh.N.Y 1 Newburvport, Mass New Castle, Pa 1 1 I 1 1 1 i 1 1 I .0 1 1 1 82 1 1 n 1112 15 2 1 "2 New Orleans, La 1 1 1 New York, N.Y >M2 i«2 1 1 1 1 13 7 1 "7 1 8 1 Northanipton Mass Northfork. W. Va 1 1 1 Operated by the Middletown Beef & Provision Co., 67 per cent of the stock of which is owned by Mo^ ris & Co. ' Including two owned through' the Planldn ton Packing COy all the stock of which is owned iy -Swift & Co., and one operated under the name of liibby, McNeill & Libby. ' Including one operated by Libby, McNeill & Libby at Minnesota Transfer, Minn. < Operated under the name of Swift & Co., Inc. 5 Including one owned by the Armour Packing Co. ' Including one operated by the Nagle Packing Co. ' Including one operated by John P. Squire & Co. ■Operated under the name of Andrews, Swift & Co. , 67 per cent of the stock of which is owned by Swift & Co. » Including one operated under the name of Swift & Co., Ltd., and one operated under the name of Libby, McNeill & Libby. i« Operated under the name of Wilson & Co., Inc. (Louisiana) , all the stock of which, e-xcept the directors' 'lualifying shares, is owned by Wilson & Co., Inc. ^^LiA^J' '■'jjMurray Hill Market, operated in 1916, but reported discontinued June 30, 1917, and one ^1? T , "?*'*'' *''° ''^™* °' Libby, McNeill & Libby. r.v,-,?.'?™^"^ °?,^?.*°?^ through the Armour Packing Co., one owned through the German-American P m« Cn » ?;'oHi „ ° stock of wTiich is owned by Armour & Co.; one operated under the name of Adams 1 0.° also a trade uam™° Armour & Co. ; and one operated under the name of the Atlantic Hotel Supply '? iSclSdtai ons oSttrt ''/ *?S ^§*'»™.' Hotel Supply Co. , all the stock of which is owned by Morris & Co. one each oMfatedhTth«r^fi,!™&'°,°',*? Sa es Co., owned through the T. M. Sinclair- Co., Ltd.; and Wilson &ff,lM.^ Gotham Hotel Supply Co. and Stiefel O'tfara Co., both of which are owned by i'» In^Ju^Pg one operated under the name of Libby, McNeill & Libbv "SSSfZ-oK'tl^dttt'htnrmTorS-Z^hil^^^^^^^^ ■MEAT-PACKING INDXJSTKY. 281 Tfumler of principal marketing agencies, ly cities, of the five largest packers and their controlled companies, etc. — Continued. A.— DOMESTIC BEANCH HOUSES— Continued. City. Total big packers. Swift. Armour. Morris. Wilson. Cudahy. 2 3 1 2 3 1 10 1 1 1 1 2 1 1 1 2 3 1 2 3 2 1 4 4 1 26 1 1 3 1 2 12 1 3 1 1 1 2 1 1 1 7 8 1 1 1 2 6 2 1 >2 1 nulrlinrt Call! 1 OFdflnsbure. N. Y 1 1 1 1 '3 1 Okiahdma City, Okla »1 1 Olean N. Y ^ Omaha Nebr 32 »1 1 1 3 Oneonta, N. Y Orange, N.J ' Oshkosh, Wis 1 1 Oswego, N.Y '1 ttumwa, Iowa 1 Faducah, Ky 1 1 Panama 2 1 1 1 1 1 1 1 1 Pari s, Tex 1 1 Parkersburg, W. Va Passaic, N.J 1 1 Pawtucltet . R.I 1 Peel!Si-ill, N. Y Fensacola, Fia 1 1 1 '9 1 1 1 1 »1 \ Peoria, 111 Perth Amboy . N. J 88 95 3 Philipsbuig, Pa Pliillipsbnrg, N. J Phoenix, Ariz 1 1 1 "5 1 Pine Blufl, Arlt 1 10 2 3 1 1 1 Pittsileld.Mass Pittston.Pa 1 Plainfleld, N. J 1 PlattsbOTg, N. Y 1 1 Plymouth, Mass i 12 1 1 SI 13 4 H3 1 Port Chester, N.Y port Jcrvis, N. Y 1 1 1 1 1 16 1 pottstown. Pa 1 1 pottsville, Pa poughlceepsie, N. Y 1 1 I'l 1 1 16 2 1 1 pueblo, Colo ' Including one operated by the Western Meat Co., ■ — t of the in which all the Big Five have an niterest. Swift Operated under the name of the George Nye Co. , one half the stock of which is owned by Swift & Co. 2 Operated i«idcr the name of Swift & Co., Inc. s Operated by the Western Meat Co., in which all the Big Five have an interest. Swift & Co. owns 14.6 per cent of the stock. ' Formerly operated by the Union Meat Co., a Smft interest. Swift & Co. in 1919 acquired 100 per cent control in this company. 6 Not formally taken over from E . H. Stanton Co. until the spring of 1917. • Including one operated under the name of Libhy , McNeill & I/ibby. ' Including one operated by Wilson & Rogers, a subsidiary of Libby, McNeill & Libby. ' Including one operated imder the name of Columbia Hotel Supply Co., a trade name ol Armour & Co. ' Including one operated by John F. Squire & Co. 284 MEAT-PACKING INDITSTRY. B. — SUBSTOCKS AND SUB-BRANCHES. Swin & Co.: Bellows Falls, Vt., under branch at Brattleboro, Vt. Fort Kent, Me., under branch at Houlton, Me. Calais, Me., under branch at Bangor, Me. Plttsfield, Mass., under branch at Springfield, Mass. Eumford Falls, Me., under branch at Lewiston, Me. Dunkirk, N. Y., under branch at Elk Street Market, Buffalo, N. Y. Meadville, Pa., under branch at Oil City, Pa. Suspension Bridge, N. Y., under branch at Elk Street Market, Buffalo, N. Y. Williamson, W. Va., under branch at Elkhorn, W. Va. Hannibal, Mo., under branch at Quincy, 111. Appleton, Wis., under branch at Oshkosh, Wis. Escanaba, Mich., under branch at Ishpeming, Mich. Green Bay, Wis., under branch at Oshkosh, Wis. West Superior, Wis., under branch at Duluth, Minn. Winona, Minn., under branch at La Crosse, Wis. Miami, Fla., under branch at Jacksonville, Fla. Sheffield, Ala., under branch at Albany, Ala. Tuscaloosa, Ala., under branch at Birmingham, Ala. Bonham, Tex., under branch at Denison, Tex. Leon Springs, Tex., under branch at San Antonio, Tex. San Marcos, Tex., under branch at San Antonio, Tex. Temple, Tex., under branch at Waco, Tex. Bay City, Tex., under branch at Wharton, Tex. Brady, Tex., under branch at Brownwood, Tex. Cisco, Tex., under branch at Abilene, Tex. Clovis, X. Mex., under branch at Amarillo, Tex. Douglas, Ariz., under branch at El Paso, Tex. Eagle Lake, Tex., under branch at Wharton, Tex. Gonzales, Tex., under branch at Yoakum, Tex. Lubbock, Tex., under branch at Amarillo, Tex. Marfa, Tex., under branch at El Paso, Tex. Quanah, Tex., under branch at Amarillo, Tex. Roswell, N. Mex., under branch at Amarillo, Tex. San Angelo, Tex., under branch at Brownwood, Tex. Stamford, Tex., under branch at Abilene, Tex. Tucson, Ariz., under branch at El Paso, Tex. Victoria, Tex., under branch at Yoakum, Tex. Klamath Falls, Oreg., under branch at Ashland, Greg. Tacoma, Wash., under branch at Seattle, Wash. Armour £ Co.: Danville, Va. Lorain, Ohio. Merrill, Wis. Rumford Falls, Me. Staunton, Va. Terre Haute, Ind. MEAT-PACKING INDUSTRY. 285 C. STOBAGE AND DELIVERIES. Swift & Co.: Van Buren, Me., under branch at Houlton, Me. Burlington, N. C, under branch at Durham, N. 0. Mount Airy, N. C, under branch at Winston-Salem, N. 0. Statesville, N. C, under branch at Salisbury, N. C. Dawson, Ga., under branch at Macon, Ga. Dublin, Ga., under branch at Macon, Ga. Elberton, Ga., under branch at Atlanta, Ga. Greenwood, S. C, under branch at Augusta, Ga. Hawkinsville, Ga., under branch at Macon, Ga. Ingleside, Ga., under branch at Atlanta, Ga. Laurens, S. C, under branch at Spartanburg, S. O. Waynesboro, Ga., under branch -at Augusta, Ga. Eutaw, Ala., under branch at Meridian, Jliss. Lufkin, Tex., under branch at Houston, Tex. Navasota, Tex., under branch at Houston, Tex. Alice, Tex., under branch at Corpus Christi, Tex. Big Springs, Tex., under branch at Abilene, Tex. Bowie, Ariz., under branch at El Paso, Tex. Deming, N. Mex., under branch at El Paso, Tex. Douglas, Ariz., under branch at El Paso, T«x. Lordsburg,- N. Mex., under branch at El Paso, Tex. McAUen, Tex., under branch at Brownsville, Tex. Plainview, Tex., under branch at AmariUo, Tex. Rio Grande, Tex., under branch at Brownsville, Tex. Silver City, N. Mex., under branch at El Paso, Tex. Holbrooke, Ariz., under branch at Albuquerque, N. Mex. Elko, Nev., under branch at Reno, Nev. French, N. Mex., under branch at Trinidad, Colo. Baker, Oreg., under branch at Boise, Idaho. Bandon, Oreg., under branch at Portland, Oreg. Burley, Idaho, under branch at Pocatello, Idaho. Coquille, Oreg., under branch at Portland, Oreg. Dillon, Mont., under branch at Butte, Mont. Helena, Mont., under branch at Missoula, Mont. Idaho Palls, Idaho, under branch at Pocatello, Idaho. Kalispell, Mont, under branch at Spokane, Wash. Livingston, Mont., under branch at Billings, Mont Marshfield, Oreg., under branch at Portland, Oreg. J.tyrtle Point, Oreg., under branch at Portland, Oreg. Ontario, Oreg., under branch at Boise, Idaho. Shoshone, Idaho, under branch at Boise, Idaho. Twin Falls, Idaho, under branch at Pocatello, Idaho. Vancouver, Wash., under branch at Portland Oreg. Washington, Idaho, under branch at Spokane, Wash. Weiser, Idaho, under branch at Boise, Idaho. Walla Walla, Wash., under branch at Portland, Wash. 28Q MEAT-PAGKEKG I35DUSTEY. D. — CON 8IGNEE8. Swift & Co.: Auburn, Me E. W.. Penley. Bay City, Mich. (Tlie Cornwell Co.) J. J. Wolfttt. Boston, Mass j J. V. Fletelie-r Co. Carbondale, Pa Carbondale Beei Coi Chicago, 111 TlioSi Fennesey & G&. Flint, Mich. (The Corn well Co.) C. MeMorris. Hartford, Conn Canaeeticut Beef Co. Haverhill, Mass -E. H. Moulton. Co. Houghton, Mich F. Wieber. New Haven, Conn Strong, Barnes, Hart & Co, Paterson, N. J D. Pullerton & Co. Pittsfield, Mass Edgar P. Wood. Providence, R. I J. F. CcMiiastoelsr & Sons Co. Saginaw, Mich. (The Cornwell Co.) N. W. Simpson. Sault Ste. Marie, Mich. (The Cornwell Co.) ^W. G. Taiert. Taunton, Mass , A. White & Co. Traverse City, Mich. (The Cornwell Co.) R. D-. Bradshaw. Armour & Co.: Bay City, Mich Hammoad, Standish & Co. Boston, Mass . Adams-Chapman Co. Boston, Mass W. F. Woodbridge €o. Bridgeport, Conn J. R. Woed'hill. Brooklyn, N. Y 1 D. Mayer; Burlington, N. J L. H. Stein. Chicago, 111 R. J. Collins. Dubois, Pa Morris Beef Co. Harlem, N. Y D. Maj^er. Lawrence, Mass George Bancroft. Middletown, Conn D. L. Briggs & Cou Newark, N. J Coffin Bros. New Bedford, Mass J. W. Bannister. New York, N. Y D. Mayer. Nyack, N. Y G. Hotchkfes. Plainfield, N. .T .Union Beef Co. Portland, Me Cummings Bros. Providence, R. I Whatcheer Beef Co. Punssutawney, Pa Morris Beef Co. Ridgeway, Pa _ Morris Beef Co, Saginaw, Mich Hammond, Standlsh & Co. Trenton, N. J _L. H. Stein. Morris & Co.: Cleveland, Ohio Housom-Grace €3ck, Greenville, Ala A. Steiabart. Milwaukee, Wis J. J. Salmeck. Newbern, N. C JD. W, Roberts & Go. Pulaski, Va H. M. Van Doren. Raleigh, N. C Capitol Feed & Grain Co. Washington, N. .F. F. Wooland & Co. MEAT-PACKING INDUSTRY. 287 E. FOREIGN BRANCH HOUSES.^ Bivift: Swift & Co.'s. Cuban branch house : Havana. Swift & Co.'s Canadian branch hoiisps : Calgary, Alberta. Kdiuonton, Alberta. Ft. William, Ont Montreal, Que. (Place Viger Market). Montreal, Que. (Bonaventure Market). Moose Jaw, Sask. Nelson, B. C. Ottawa, Ont. St. Catherines, Ont. Toronto, Ont. (St. Lawrence Market). Vancouver, B. C. Victoria, B. C. West Toronto, Ont. (Packing house market). Winnipeg, Man. Libby, McNeill & Libby (Maine) : " Libby, McNeill & Lihby of W. Va." Vancouver, B. C, Can.* Winnipeg, Man., Can.' Libby, McNeill & Libby, Ltd. : London, England. Manchester, England. Liverpool, England. Birminglaam, England. Bristol, England. Newcastle-on-Tyne, England. Glasgow, ScotlaiKl. Armour <& Co.: Havana, Cuba. Morris <£• Co.: Morris Packing Co., 111. : Paris, Prance. Rotterdam, Holland. Christiania, Norway. Hamburg, Germany. Antwerp, Belgium. Morris Beef Co., Ltd. : London, England. > The list ot foreign branch houses here given is incomplete. According to a recent report puhli.shed by the Uritish Government American packers have 144 wholesale branches in the United Kingdom. Most ot these probably belong to the Big Five. (Report of the Committee on Trusts, Ministry of Reconstruction, 1919 [Cd. 9236].) ' In 1919 the following subsidiaries also operated branches : Societe Anonyme Libby, McNeill & Libby, Paris, France, and Compania Libby McNeill & Libby de Cuba, Havana. Cuba. = Operated a branch at St. Johns, N. F., in 1919. ' Operated by Libby, McNeill & Libby, Canada Limited, in 1919, as were also the following additional branches in Canada : Halifax, St. John (N. B.), Toronto, and Chatham. 288 MEAT-PACKING INDUSTK"?. F. FOREIGN SELLING COMPANIES. Armour d Co.: Allen & Crom, Ltd London, England. Armour & Co., A. S Copenhagen, Denmark. Armour & Co., Ltd London, England. Armour & Co., A. G.' Frankfort, Germany. Armour et Compagnie, Socifite Anonyme Paris, France. Armour Societa Anonima Itallana Milan,' Italy. Fowler Bros., Ltd London, England. James Wright & Co.' London, England. Swift d Co.: Curry & Co., Ltd London, England. Fort Garry Market Co., Ltd Winnipeg, Canada. Namayo Market Edmonton, Alberta. Garner, Bennet & Co., Ltd Liverpool, England. Lane & Co., H. A., Ltd London, England. Libby, McNeill & Libby, of London London, England. Swift, H. L., Stall London, England. Swift Beef Co., Ltd London, England. Swift Packing Co Paris, France. Wilson & Co., Inc.: Archer & Co., Ltd London, England. Nuttall Provision Co., Ltd Liverpool, England. Morris S Co.: Morris Beef Co., Ltd London, England. The Cudahy Packing Co.: Cudahy & Co., Ltd Sidney, New South Wales. The Cudahy Packing Co., Ltd London, England. » Inactive since August, 1914. • Incorporated under tlie laws of West Virginia. MEAT-PACKING INDITSTRY. 289 a K H O (>< Q > Q H o z n o o . < 2^ go bj EC §1 Q O P4 Plh cc I— I Z < Oh o u o Pm C! I— I n •a S O •a H I ^ 1 I 6 CO 3 m I— t "* ' •3 |o83 ^ ? gaod . im' §ll^ Boh S b^ o 6 |£^ oi ^o ps^-^fail 2§^2 H tee SB n O CO • bi) ■33' m ■5^.g5s&ss§S' •j bo ■"■a .:.9 51 SS 55 .as 15 I ^ a 5 ? cfl o m^fi 3 S S O • ■ ~ . ^ JD O t^ O P^ ■SS,g0^ = S-gS ■■dS -■°aM2 ©•S « fl-s ® •8 ■"Is CO -gS °c=i |SS SS&H« s s o •T-H ^ — ■S.9 S| -I tan ■ S a o' >S ©n*aw)9 2 ,2 ft 5 FMoowSWa W M H 5fe o ■§ S M •8 I ! a fe •s ? MEAT-PACKING INDUSTKY. 291 >, * •ss ■§§. n fi ^.• ftg Si. S8^ g a S •m fi« ■9'S II s§ u »i as a o-a o e 6 ph c '3 g o •8 'r5 r 1 M .y ij 1^ 1^ ^ ■« ^ O n S S-BO ^ a . S -s a . iiS.S-3 S-COsO -Mt, 'O 9 S.'fl ft fe Ij d « « f=< ^ I o :) ^ S SI'S. Ph ■ ■a : bao go ■gs aJS I .1 is I Iss © .s • ° a ifl 5 II ^" a.s feS Si . o © ■a ■ p e ^ o sgSPM •§» 3 • S^Ph^O wB « d • qSS) p." g -3 292 MEAT-PACKING INDUSTRY. ^ -3 (0 5 OJ fSflAl sins m S 2 3 ^ 3 o'-P a a P5CQH mm •d o O (D 3X1 I?" O'O . ■"§§ ta -^^ o ■ o"S P< h>! ;'g'3 OS p, S-. >>.— ■a —J t3 B3 ^ ls.i , Ih'O gft'oS • £ ft£ fto S S :3 3 3 S ft ip^M :o o FQwcppa mm 11 p. , il s. ►.^ as >f ogHa» MSo- « a ■ao O £■0 g a ■S a - = 11 QOOOO OOO -2j 43 "3^ S3; I"aa- ^ " -a PRRIs) WPi, C! oteWM aZ ^.^ _____ OOO 03 OQ CQ OO OOO 6666 6 6 6 oooo o MJIAT-PACKING INDUSTRY. 293 II On n Qi o o to o pggo 3^ 3 o t> • o p. >;>P. ■P.O •1 1 Sb 1^ b g 3( * is s e' Ban nm g-.x> a3Sss4sSS ea ots sis ,(3 ojs g P.3 Q S 'S ^3 ' «|3s ^£P.S mo B m :n 83 as •gss, 3 ! ^1 •it; < ° s-.a g °'3 0) OS.+S rt g s ■§ s S a; 00 1^. V tA'^ s >> d© is ii4 ti-s ^ o'oM 3J S m tn E-( o 3 OS'S o MO g s o ifl o o y a-tJ -^ B §3 &I Si Pa il :« 5 ^ <5.S.S So £ £ S M 3 Ph ^Oisjn ss ^i3a"g ■s^- '^■a ^A a • Ota ►^1^ SM MM MiJjjSS ^^ 00 PMAi mmromak com § 00 00 00 00000 00 00 00 00000 00 on pfi 00 nnpoQ o« on no npnoo en n 000 nnn na o a El 294 MJSAT-PAGKING INDUSIBV. a a a oT .a 1, J §•9 . .'9 S t^ "5S.SP' Mh30 1^ .g I I d Sooga ^ o • = S "^ a a aw CJSjg 00-2 '3^ oS o n ■9 3 t;3 -.Sou.'? .o^»ja i_ ^a'-'Sg Oil •■"S. - >.>'S, 5« Om la 3'"1^ "a to PW S sf^ I- t 3 u> & fi ■ ; •aos >,t5§. I? *Jp; -o «^9 s S*^s n ^m> t<" a otoos-a «i " a mS o o c a M 3.= >, at"a o*^ o a*© 9 §f!g ft'So. - :3 ~s ,2 : 03 o^ o o ;;3 o a w o ar3 a^ -I ^ a Mff e3 a , t^.s ia 2 ® Q -^ "S5" ills >. bT §§,■81° ° (OS Ji O U O O A -rH .J3 S .•§ S gS • BS3a3§pgs £ * : So-" a " Ki" gs Sa ^M j3 a o .„ ^O >.X3x: >.^- 2 S S E! ' o rt "■So k1 o *.a m ft ■o-B ^ *=a P4C3 330 0000 Quo cq 00 ( •i-iiriO sc'So ti boco r^ © © tin liag r,,^ Pi 00 •3 Si's I o w S fl^ 07 t « h O.O'rt OJ o"0 o S|S'd +i gj^ o ft.c ;; g "a^ 5 d © S S S ©-co si I So g, Bt3 _ OS) 5 "a 5 toW 50 So u •3 „ 66660^ ;!s a 0[~. bjj o . 298 JMEAT-PACKIErG INDUSTBY." •o a •o.a P4C3 3 » ■"5 S3 Bit g S; O PH I S :ii -4^ Xi^ gi S a ci a ab » 3 si SS . a«?s a s ® s^n •9 is i >-i -s OtS-S p.an.SsSO'9 S«« oSS'='goSS ^*« o*oj _ Soo n. * SOjot-t-oo-O ft - oo ^J ^g IS li il- pa &3g "I? ■a°.a as . !« O h U B 3TJ list g ■gSStO -^ S.°SgBg aSpgoo a ■s» is O 3^ m •a 1^ "S a S^ ^ ig a).SJ y S t5 3 3 ^jg .2 asslo 3d fM •so a ■"S3 - ® S « Jh |2 ^ Hi p.! a E4 ^.4 CQ CQt-k QQ CQ S 2 ■ " tdS 5lg MEAT-PACKING INDUSTRY. 299 00 3^3 SS §■3 S-3 o o as fl-s O OS- O 03 ■O S 55t3 2 cguE g I"! I --. Out*!-.. O rt'-'rt tu^'C^Ti.rt O b^ o baa ^ ■; ^^ P3 O •^ 03 fl CO .Q3. O o §■0 a.9 55 S so '.go ^ i a p o S *i S I I i o !z; ra ■33 oo oo do odd no 00 Ogg O ■3 g ^^ ^ •43 - 3 ft ■S'S o o S I B 3 +3 +» +a +* M CQ m .;t:S -o ■« -a g w a fl fl M-o A oS A PI d m m m*i °z S'Co o'«5 fxS i^"' o<§ §. jg o,Q 3 <« mm! om . ^ ID •> .'^ •s«S'g3.a§ a g ^ ■a o .9 d !2; M g" •5? g 9 p Southern Railroad Unesi, Hickory, N.C., and Caro- lina & North- western R. R. SouthemRy.lines. Mobile & Ohio R. R., Corinth, Southern Rail- road lines. Southern Railroad lines. do do o o c d c d •a TS X) 302 MEAT-PAOKISTG INDUSTRY. "I Si oSMm „ „-«CQ ° is.? -s - •go •« Eh,.-™ ■S A rTSSS Sssa g « tn Fj o^3 S^ BS dS Horn Sm _r-j Sapi"§§ i ^r90 iB&" - ,S§SB ^■3 3 _5S;2° §•9^1 oSge issa ^i|i|::2i |4 hmis ft ^ a ft nfo ofaSiS''g.gai >.>>g . o B D >>t»g MMg . „ > a 03 a ,„^ Fag g Eh O fl o a 2 a I tB t o •a n a MEAT-PAGKISG INDUSTEY. 303 oSssSs SsSo iiSSp i«§°iisdl« *fl o3 „ w l^|e|ii:iili-i«-i o as* a o ll ^^ .■^1^ ■ad tfi ^*d ^i^ "'^.a gst^ csa h o F cl ca a e ■2«aSg •Eg . o ;?■ a" 3 as ^ g d O 9 &H !?; Z a ■{f ^ oO t o is E4 •^ 5 < am •a I CQ m J. 13 ^a ■sfc^ ft ffl a S HO ;:g OXI . ■C^Tl ■-r.fi j^a o?,w o o 304 III a .-I MEAT-PACKING INDUSTRY. oggg •33 11 s-^" -I a&sgssilg 4>i K > X ? 3 rt □ «T3 "Ma > s .2 3 o t O P5 (2 o I o Pi 3 o p g p. •g o oC-sSo_j 2-"a !^teggss'«.9ge tn CO *s a a S .^ K«SS«Pi O (h O «U Q h a •53 MEAT-PACKING INDUSTEY. 305 Pi^.^l! fin «Pi--*iHS»20S'<» §QQ d oj^r g .a '? te. §* V. d 'B 35 § 5 H ,£1 6 MM li go g« .5 "6 "-.-^ ■§ j^'g ■g2«f o o o So . 2 .■giarto E; ^? 15 ^ o ta D X rt 3 & rt 7 bl{ P «S "O S9 a 2 G 3 a "^ d"^ 3 SP-12 ^ o o ft 1^ o 'SS o 6 .? 3 ; •a ^. :?. a a" I ■§ IS, osSasoss oa| a 3.3 to 09 ;d So o-|<.2 Mfi'o .Sag. a -g « ja .g o S ■go? O'c^S o"s ffiiJpS ffiS p4 s g t4 o •a I 140361°— 20 ^20 5 3 ■a , ■e" EG -13 u 5 •3 •8 5 ■iXE.Ktr -EA^KITSG XSTiVS-SBX- am •a tfc cS I ^ s •» o < CS c3 "3 a 1^ m I IJS slsl -ills <» ,-fp „ff iiS3i« 5 ■3- tomu :o o :o ■ : . :cQ tn ■SS|s s ■•I'S ■ cS O ? POQOP flflPPB MEAI-BACKING KS^DUSTBY. ao7 II i-p. 2.P St 3 £■0 •r 1 =•■5 'I M H S2 •as age fa ;::!::;; _v-sCQ sir 5^ l! g« ■£5 '3,9 BK OH 3 tl'SS H Ho ffl -San o n « a) o 3 '.-a ;i^ g.s (V o 'O'^ :3 ^ E-iOiJKHWP5fe.aWWmH ■iS'a .?S3 3 OKI M Cl «. ;9u ; : j5 3 2*H ES S CO s . ffi^&.'-s^'W n ' aSW srt!-feo„-H^e< .3 cd •ao ►33*! o •a S6 &Ph -a- §1 p. 3 go o MEAT-PACKING INDUSTBY. 317 u UOOOQO tJo'dw Ph Ph ^ &H Ph ^ (Li Ph wp3p;wmw OUCJOOOO ft-(. til -w oo 13 .O t-i i-t s ta o s Of) a ^ a ■s fO-- S'S M. a iS e a> ■*^ ff a » s o B Co S » 00 e e Co e Si a & K * O a tf. » fe as Pi a.g. B-g. n o m « Ph H oooo Hf4ww a w 2; a o gal s 3,g S :^| • 'iU0S S3 So aOiga ■8 1 ■S ■a s o 9' ■8 ■a 1:4 i I a o ■a MEAT-PACKING INDUSTBY, 319 oooouoooo 1^ i,' Ph' C4 P+Ph P^* P^Pk I ■ i : i i ; i S ^ : : ; : : ; :? ; I'S^ ; /ft ;■'' s^g§ ; ;| ^. flfis&iii ^jaKlf^ H* o rt o Ph'WW ■S gs g °3 ., t4 O F^ y (B to 0) ssfg wo n S^ t^SS p. 3 3 •a oa J3 & 320 MEAT-PACKING INDUSTRY. Exhibit VIII. TRADE ESTIMATES OF PACKER CONTROL OVER POULTRY AND DAIRY PRODUCTS. [For additional estimates see Chapters III and IV.] Martin, Walt & Co., wholesale commission merchants in butter, eggs and poultry, Memphis, Tenn., state that in the past few yeaj-s their business has fallen off more than 60 per cent, which they at- tribute to the big business firms, among which the five packers are important factors in the handling of produce; Gridley, Maxon & Co., wholesalers and jobbers j Chicago, say that the big packing houses are getting the business and that in poultry it is only a question of time when they will have it all. The S. A. D. Parker Co., wholesale dealers in poultry, eggs, and butter, Norfolk, Va., state that the packers are gradually acquiring the great bulk of the egg, poultry, and butter business. The Fidelity Fruit & Produce Co., Atlanta, Ga., reports that until 1916 many of the local produce dealers were also extensive dealers in poultry and eggs, but the Big Five have gradually taken the busi- ness away from them until now the packers together handle probably 75 per cent of the poultry and 90 per cent of the eggs sold in the Atlanta market. The statement of McCuUough Bros., wholesale dealers in produce, Atlanta, Ga., made independently of the preceding statement, is that the packers together handle 75 per cent of the poultry and 85 per cent of the eggs sold in that market. H. F. Battermen, of Battermen & Koelling, poultry dealers, Chi- cago, says that the big packers are cutting into the poultry business very materially. At present about 66 per cent of the Chicago trad© is sold by the Big Five. Augustus J. Bartlett, wholesale dealer in butter, cheese, eggs, and poultry, Boston^ Mass., says that the packers are cutting into the business of the independents constantly. H. R. Aiken, jobber and wholesaler of butter, eggs, and poultry, Philadelphia, Pa., says that the packers are getting control of the country shippers or forcing them out of business and that very few small independent shippers are left. George Collins, jobber in dressed poultry, Philadelphia, Pa., says that the packers have become so large in poultry business that the only chance for a small dealer in the poultry trade is to do a scalping business, and estimates that they have injured the independent poul- try dealers in that city until they are doing only one-third of their former business. He expects the meat packers to drive all inde- pendents out of business. MEAT-PACKING INDUSTRY. 321 Eobert Kay, president of the Farm Products Exchange Co., Wichita, Kans., says that over 90 per cent of the. poultry and egg business in the Wichita territory is now absolutely in the hands of the packers. Carl Nelson, jobber and packer of poultry, butter, and eggs, Hutchinson, Kans., says that he is the only independent buyer and distributor of egg's in that city, where formerly there were many prosperous independent dealers. He says that Swift & Co. have secured the business. Marshall, Jordan & Keith, wholesale produce dealers, Birmingham, Ala., report that the Big Five have the bulk of the trade there on eggs; that seven or eight years ago their firm had a good business in eggs, but that it has gradually dropped off until it is now practi- cally nothing. Mr. Keith, of the firm, saj'S that the packers have practically all the cheese business in Birmingham, and about two- thirds of the egg business, and all the frozen-poultry business. E. V. Mandel & Co., wholesale produce, Louisville, Ky., reports that in its immediate section Armour & Co., through ownership of the Kentucky Creameries Co., Louisville, Ky., and the Kentucky Creameries Co., New Albany, Ind., is, in its opinion, the biggest fac- tor in eggs and poultry. Dan B. Dougherty, of the Latshaw Feerst Co., Pittsburgh, Pa., says that the packers have become such large factors in the handling of butter and eggs that it is possible for them to manipulate the market at will. He believes that they could force the independent dealers out of business if they cared to do so. W. J. Hartzell Co., 205 Perry Street, Pittsburgh, Pa., says that tlic packers " absolutely control the egg business " and that they make the price and eventually, in its opinion, will monopolize the poul- try business. F. K. McFall, of Gleason & Lansing, wholesale dealers in butter and eggs, Buffalo, N. Y., gives it as his opinion that the meat packers control the supply of eggs at the present time throughout the United States, and cites as evidence that the British ministry in the summer of 1918 went into the open market and endeavored to buy 700 cars of eggs, but were able to secure but little in this way. Mr. Bode, vice president of Eeid, Murdock & Co., Chicago, whole- sale grocers, says: "I am sure that they [the packers] control the cheese business of the United States. I think they control the cream- ery butter business of the United States. They will eventually control the rice business of the United States. I think they are the largest handlers of eggs in the United States. That has all been taken away from somebody." 140361°— 19 ^21 322 iMilAT-PACKia'G INDUSTRY. Mr. Seymour H. NeumaiiQ, editor and western manager of the Chicago Produce News, in testimony before the Commission stated that, " according -to the best estimates we have from the country— we have to get our reports from shippers, the small shippers, such as you had here yesterday talking to you — Swift & Co. handle 30 per cent of the Missouri, Iowa, Oklahoma, and Texas crop ; that is, with their subsidiaries." Exhibit IX. BIG PACKER (MORRIS^ EXCEPTED) TONNAGE SALES » OF DRESSED POULTRY, EGGS, BUTTER, AND CHEESE, 1915-1918. A.— SWIFT & CO., lOlS. [Sales for 1915, 1010, and 1917 reported as not available. For bi-anCh-IiousB sales- lor 1916 see text (pp. 156, 164) and Part I of this report, Table 61, p. 233.J Poultry (pounds). Eggs (pounds) .1 Butter (pounds). eheiso (pounds). Total 78,383,000 137,433,000 66,621,000 04,072,000 * Approximately 45 pounds are equivalent to one case, or 30 dozens. B.— AEMOUE & CO. 1 — Yea« Exoixg Octoeee 28, 1916. [Sales for 1915 reported as not available. Classificatiou of sales is Armour's.] Poultry (pounds). Eggs (pounds). Butter (pounds). Cheese . (pounds). Totals- (pounds). 184.356 685,331 107,902 468,046 1,395,816 739.366 913,920 35,614 427,022 822,886 1,642,969 3,452,962 8,389,308 Export" - 3,759,730 4,727,252 Total '. 977,589 1 2,603,228 1, 376, 556 5,918,817 10,876,190 13,549,289 1 36,923,335 6,122,427 2_871.24.'i 24,064,915 3,748,466 26,805,469 1, 579, 391 101,343,008 14,321,529 Total 19,671.716 39,794,580 27,813,381 28,384,860 115,664,537 5,455 398,585 427,363 152, 052 94,070 52,269 34,058 29,267 42,513 30,956 21,234 2,454 253,207 2,165 144,203 481,810 482,655 183,773 253, 207 Noen^ Cheese* Cold Storage Co 21,424,727 4,979,040 21,424,727 C. E. Blodgett Cheese, Butter & Egg Co... 4,979,040 11,781,377 077, 001 8,432,624 3,046,328 302,425 677, 001 8,450 Eaii Claire Creamery Co ^ 4,085 32,584 45,119 Total 9, 420, 164 3,288,576 1,338,240 26,405,932 40,462,912 30,069,469 45,686,384 30,528,177 60,709,609 166,693,639 1 Morris reported sales figures not available. See Part I of this Report, Table 61, p. 233, for branch-bouse sales for 1916. = The sales given in this exhibit do not include those made by companies or selling agencies controlled through means other than stock ownership by the principil packer companjf. Sales, for example, made by afBliated companies controlled through stock ownership by the principal family interested in the packer compaliy are nat Sadoded. MEAT-PACKING INDUSTKY. 323 Bi'i packer (Morris excepted) tonnage sales of dressed poultry, eggs, butter, anel cheese, i9i5-iWS— Goutinued. B. — ARMOUR & CO. — Conlintiea. 2. — Yeah Ending Octobee 2T, 1917. [Classiflcatlon of sales is Armonr's.] Poultry (pounds). (pounds).i Butter (pounds). Cheese (pounds). Totals (pounds). Packiughouso direct Exportand domostlcoonsignment. . Car route 291,932 7S6,984 92,347 Total., 1,141,263 1,207,640 365,484 691, 160 2, 264, 284 1,011,447 • 274, 352 501,497 2,225,676 667,830 3,169,514 4,736,695 2,064,650 4, 454, 518 1,787,298 6^063,020 11, 235, 863 Friedman Manufacturing Co. . . Branch liousos..., Greom\icli Street Cortland Boof Co H. L. Brown Co., Boston H. I... Brown Co., Provldenoe.. 12,257,006 5,122,856 15,085 9,886 1,206 356,005 39,315,085 2,004,133 422, 122 493, 778 410,044 2,188,255 28,431,856 4,359,025 344,089 834, 936 334,504 . 545,528 25,585,040 -871,928 596.332 98,213 99,357 3,086,788 105,588,987 12,367,942 1,377.628 1,436,812 845,111 Total. 17,406,039 42,645,162 34,304,409 27, 250, 870 121,606,480 Louisville Owosso Rochester Sprlugfleld Clinton Boonvlllo Deuison , Neenah Cheese & Cold Storage Co. (5/1 to m/27) Mankato 381,044 16, 767 1,842 405,971 415,821 101,006 33,120 11,400 81,396 8,742 15.804 48, 760 19,236 15,147 19, 942 27,924 198, 142 101 2,759 744 11,249 87, 831 6,655 83 13, 383, 125 600, 217 132, 742 208,726 421,876 467,340 120, 986 59, 516 13, 383, 125 91 Total. 1, 355, 654 200,493 260, 861 13,477,611 15, 294, 619 Grand total. . 19,902,956 45,464,944 38,538,821 47,337,029 151, 243, 750 Subsidiary curporaUons: Aaron Poultry & Egg Co C.E.Blodgett Cheese, Butter & Egg Co A. S. Kininmonth Produce Co Eau Claire Creamery Co Barold L. Brown Co., Inc 4,132,644 576,434 '286,137' 1,149,678 81,833 1,393,087 147,642 3,067,364 1,283,640 438, 742 3,072,631 7, 534, 969 159, 231 4,637,107 5,429,964 7,616,802 3,253,161 597, 973 11,063,239 Total Grand totalincluding auxiliaries. 4,996,215 5,691,962 4,942,655 12, 331, 307 27, 661, 139 24,898,171 51, 156, £06 43,481,476 »59,668,336 179,204, 883 1 Approximately 45 pounds are equivalent to one case, or 30 dozens. ' This total includes the sales for the Neenah Cheese & Cold Storage Co. for only one-half the year, which amounted to 13,383,125 pounds. Estimating the year's sales at double this quantity, Armour's 1917sal63 amounted roundly to 73,000,000 pounds. 3. — Yeae Ending Novembee 2, 1918. [Classification of sales is Armour's.] Poultry (pounds). (pounds). Butter (pounds). Cheese (pounds). Totals (pounds). Packinghousesales direct Buying houses Branch houses Total Armour sales tb trade Subsidiary corporations Grand total 2,607,827 431,617 18, 700, 193 2,130,508 204,004 62, 901, 812 2,018,455 217,419 40,900,122 11,892,809 4,986,699 51, 238, 551 21,739,637 I 05,238,324 6,481,523 12,688,519 27, 221, 160 43, 135, 998 7, SSO, 880 77, 924, 843 51, 016, 876 08,118,059 9, 261, 173 198,230,016 35, 312, 095 77,379,232 233,642,111 MEAT-PACKING INDUSXKY. 324 C— WILSON & CO., INC. [Classifleation ■ of sales is Wilson's.] Poultry (pounds). Eggs (cases).' Butter (pounds). Cheese (pounds). 206,308 375,000 3.336,714 6,740,467 1915. riaius^ 2,978,356 7,345,963 3,746,378 6,507,288 10,324,318 .581,308 9,077,181 10,263,661 1916. rlanls2 3,245,579 8,979,024 225,256 514,516 5,380,944 8,960,883 3,197,948 9,532,424 Total > 12,224,603 739,772 14,341,827 12,739,372 1917. Mants » Branches 4,634,017 11,601,838 241,582 676,622 5,462,412 11,076,143 3,988,883 9,174,877 Total' 16,295,856 917,204 16,538,555 13,163,760 1918. 7,936,271 14,460,119 346,302 791,667 8,071,233 13,493,866 8,175,557 Branches 12,964,762 qiQtal ' 22,396,390 1,137,969 21,565,099 21,140,319 1 Some duplication is Involved m the Wilson sales owing to the inclusion of certain interplant shipments and shipments between plants and branch houses which the company reports as being tmable to exclude. 2 The sales o( three plants only are included: Chicago, Kansas City, and Oklahoma City, a One case is equivalent to 30 dozens, or about 45 pounds net. D— THE CUDAHY PACKING CO.' [Sales forl915 and I91fl are reported as not available. See text Part I. of this Report, Table 61, p. 233 for branch-house sales for 1916.] Poultry (pounds). (pounds).' Butter (pounds). Cheese (pounds). 1917. Total ••-- 3,130,000 28,965,000 12,290,000 15,900,000 1918. Total "•■ 7,890,000 37,910,000 16,760,000 24,100,003 1 Sales through all Cudahy plants, car routes, and branches and the following subsidiary companies are included: The Dow Cheese Co., Sunlight Produce Co., and the D. E. Wood Butter Co. 2 Approximately 45 pounds are equivalent to one case, or 30 dozens. MEAT-PACKING INDUSTRY. 325 M *v O Z H & n m (A Pl4 00 CC a (1 !3 « & >» * §r/T !> ^ H bi ,5-M s 1^ TJ n o u Ph W CQ O M .d S fi> "S 3 « 1 1 ■g s "m U} s •-' S^ 1 1 1 a g Bid t; la o 1 3 c « (» a . i II 1 Is 11 ■e o oa O i c 1 •a o o +j u CO 1 t ^ s -^ o 1 o o 1 -H i "S « IH CD rt s. ^ s &^ ja u 2 fe h (0 •o . 3t> i»£ S2 o ^ |l o u ■T3 -• Z ri o U _^ 5 .s b 1. 1 c w c 1 Sr >.2 SB'S o t4 d •5d« J'iirW dSfflg'^f^ siS Sir^.c.2' ^^ 3 l>>d rt d ©M^ dSS«, a o o.a.a g.2 •g o •y ss 3 §•8 a o^ a £ S ^ , ■/ ,o If ifi •« i : .> ^ g§i g j 1 .^•.1- . It III II =1 ,■3 •s 1: : 1 3 1 III s gill C 3 s^y c ji « 5 f-' f p 1 ^ ' t>. k. o ii fe U 9 o -a o o o a s '$ >> ■< -^ CQ ^ - S a ■^ "S 1 e o g o o o • O s « 1° ^ ^ S S.IS *« S few o M p. ftig I ^ ■■ 3 ^^ o d O o 3-0 M O cuo bO >.s w ™ 0^ W » cd ^ =y ^ o II 5' s o H S o c ■3 IS •3 -° 1 ^ o •a 1 9 a O 'Ok § g ■$ M .^ r- f ■3 m m p ^ ■■ d M • 3 3 a 5 1 i CO « ,5 MEAT-PACKING INDUSTRY. 331 •1 3 fi-S'"'*''N'a"»r' m " b^ d 60 c)0_ o .-© OS W-*J o b'wss tH fl t. OQ 332 M-EAT^PACKING INDUSTRY. 10 fH ^ z ExHI COM ONS Sg /-W S;< CO 1H w ^ OJ I-l ., 1— 1 02 Z O 1— 1 K ^ H W &, (/J Wg C'J o o >■ a< >H rH^'^ SOM fl o & ^ 1^ ■§ 1 1 A to s s S ft II a S 1-9 o o a I'd i oooooooooo '^'C, '.^'^"S'S' St:,- i -SsJi. 3J g^fest -1 /" -^ :% -^3 .2 -K J3 J3 ; a 3 n MEAT-PACKING INDUSTRY. 333 ddduddooooooooooooooooooooooouoooouQOouoooQOoocouco .=3 OS' •S3>« oooRR .16 GPO g.s«S3gaS-§ B i^SaSassa;3^;z;o< OrtKBiiKW 334 MEAT-PACKING INDUSTKY. O - a §■9 g 1^ t J3 t a OS S ■a MEAT-PACKI2SE& INDUSTRY. '665 P^ ft." p4 w WWHSIB o" d d d dd ooooootjoooooooocjnsfQMooodnddfflddtodBdddddcipqd wJ3 « S3N : d Or- aJ rt ct «tt.S 3J3 S w ? • aii2g'§^s|-5£">;g.§sse-g||.Sigsgf||o;2s&fSs ■ sSQo.-t?rtt?t^ooaSo»aj:«,i«!3o ci^?S d £.&o aS 3 3=3^3 S a 3 ;Qp;fHO<^a^igft,>4go«B ■sis o d o ■ 1 = 1 i 01 I 336 MEAT-PACKING INDUSTET. fL,p.,CM ^ CJO u d d d d d d pq m m d M d w w oooooooooooooooooooo s is is PhP5 4^ S O SS. il 3m g o'ftp= .9 '3''; 2=3 ,ffS.S- ..„ ;:.q^-da;S£.&o ■.sgag'^HgaS «3«-S|ia|| §.9 o o I e o as a 3 •8 3 o a t-i MEAT-PACKING INDUSTRY, 337 dcJ oddddddddddddddddddddddddddo'ddddddddddddddddddddd ,s I £■3 No S S H;^i5d^^Bg-=oo gSSafrJKa!mtotnmE-i> ■•da j^^.9 ffl.9is5s SSgi Hill 140301°— 1!) 22 338 MLAT-PACIiING IJSrDUSTH¥i OOOOOOOOOOOOOOOO OOOOODOOO ooouooooo ■<)-; "^7 ■ §!•§« n ._: ^ ■;^--* ? St ci » ■ t- -^ £3 3 cj lIllllEpSallP 1 c- ■ ;6 ; :" 'd ©^ ^5) 1:3 -^ 2f3 ;b,s .-g ; 6 da S^'^S. 15 s^'*-^ sag IS 9-S i-« It a I eq FQ pq fa >> . t! w '^S it li s 1 £ is |l E 3-° «S < t4 <» ^ o ca A o t>» n (d A a o u o *■ C o • >H +3 S "S rt - ,q « a e^ b 9 • "^ B'd IxS §i t& c ) c o C C (D •5 •a i t 03 iz; 1 K ^ S e ■1^ .a t~t a> ,^ « 1 1 a m MEAT-PA.CKXNG IKDUSXSY. 339 « m w H Ph d; dddddddddddddudddddddddduddddddddddddddddddo'^ rt£S|ds "O S 3 p o M^ fl a fl o >« >va "•- M fi^S a: mKHmS ?i. ■s.^ .2 S + 3^ -op s.t>,ya, . 2 o fe o §l§ a) w-% ■g'3 2 «8 d w Q "Z © S ^ Sg -■^'-ijj.-O'a WooZo o ■3 I 342 MEAT-PACKUfG INDUSTByi OOOOOOOOOOQOOO t'o'd pp'ria" £1 3 c3 tH o ffl-r « ta e sfgsS - ■a 3 U QJ n c3 gjg II = §■5 ma* 344 MEAT-PACKING INDUSTRY. AhPhPhPh Ph P^ &h Cm Ph Ph (1h Ph Ph P^ MIh Ph ^( P^P^ CUflHp^ dddo'ddddddo'dddddddddddddddddddddddd d I S S 3S = go ' 3 ■ ^d ■■3 S ■=?3W BSS •o f-f ® S^ i43 w S o J^ C3 7; .r 1-3 ^ R o CD (U la bo o :>3 I a ce o i5£ gs=." OKr- 1=1 a « :6 ■ a"dS^«E^-S ,te|S§^.5-|ona moKW6i>S;ovA l||lil:l|s.^.|l: *** el's <8 ».Si23ai.SS-as3r2 OOOOShOH ,=!2..So I3i4 H rfl H t-l J-l I CC- El -— S "=1 ci •--co p., o' Mm HH^ b e3 ca fl (D :3 .s .H +2 stj t: *^ ^ ■illlllll Ph P^ Ph P^ Ph 02 CO m ; 346 MEAI-PACKIKG INDUSTBY; .... - • - J - - o o ot) aoo CO do-oo-o-ouoo ooodoooooooouodoo o p. §s 3. a I". S • a So lof ^gv ^d^-^ Iw . M s-H "S M -a r ., -_ t>,3 ftOi-H C^^ff O M <» 03 3 s.a 2. a 9® ■? 3 O ^ Bg o •a MEAT-PACKING INDUSTRY. 347- odddo'o'o'do'ddo'cddddo'dddpo'dcdddddc'ddc'do'ddddddo'o'ddddo'o'd 7^ j*^ '•2'm •Ik. iiP^ llili •d^^>|il -S'^'-' 'SB Bra . . - a a, 3 mpqfqcBfaw I 348 MEAT-PACKING INDUSTRY. uooouoooooooooooooooooooooooooooooooo a" ss I?. . g o „ "f. &a3 w^ ■E-j -J 5 BR O O V OfiP op .' Uj E 03 W gSg-C •S.9g i O o3 iH oM oO.oS , - o £ o o" _r5 ^g« ■r-H'— I 00 , _ 5 S O •; :o Sa3l^:;|wwg C3 « 9 V O o (1 3 'g H a mS"^ 3DQ dj a» 30 I d o ai;t,d 352 MEATHFACKING INDTJSTEY.' ■dddddddd dddddddaddd dddddddddddddddd S3 I as Pi H O ^ ® S M-"-y 03O KJJ a I'S'S'S « « fe g o^ I'd E.'z:.'^ (fl s ■§«§ 1^ Mrs . ■^s|g 's ia ;& a S-i^ a .■a Swas wS 2 3 (^ « (Dl^ s s.sPo s.g WWMWW do •3 I. Iff gag it .9 3 ■31 •if p< a >,s as- a * I MEAT-PACiaNG INDUSTRY. 353 OOOOOOOOOOOO t)0000 oooocooo uoooooocooo ooooooooooo ■ o o si's Hi ■ S es^.^^Mwrg ssgaass^iiaoPMfe a -a S fee. Ifliil 3 "5 3 5 ts^-g^^"^ o is 2 a "£"3 1- S 2 ; ea S c3 p p 'KWWM a 3ii^ a s >-<^ aB« ^^^ .SM SS'OSu^C i Sibling Is r~ a. K *^ 4j n pjHfe d^d-J ^ O K §■"-'>*' C3 Q. 51 1^ a o CO MEAT-PACKING INDUSTRY. 855 PhPh !^ WW W ddddo'ddddddddddddddddoV'o'dddddo'dddddddddddddddo'dddo'd c oca ■SoW S| ^■OPh, 3 W g r- ■ ■siting BoKon« •§&>." .fid &il^s is gills .2 ° 4J O a n a •a o 356 MEAT-PACKING INDUSTRY. OOOOCJOOOOOOOOOOO OOOOOOOOOQOOOOOOOOOOU 3 pq a Pi ",9 ■ o if- hW I a Hz, 3 tiS o.Sj=ic o « o imnpQooooooonPiP ■J ^ ,-^-o I" , i ^ OS ffi ^ "S O i^.° I " ii »^ ^ a 3-d a& o a m3 a MEAT-PACKING INDUSTRY. 357 ooooooooouoooooooocoooooooooo ooo H HH H W W !k Ai'Ph iu m' ^ ddddddddddcjdddo a ^ * B w be a •c te . -^ bO 'lt?^«iss d +a O w ^- -- "^ "- - ^^^ ..|S 1 8 1 all . I a||| Sos H.§C~§eJS=".fe:^g&t3:SS'„-gS^S£S'a|.2S^ l3 t> ^&^. eg ■o a 0! t! 1?f^;i 3 ^ .■3 ti-J-S 3 e ^.Tj S g S V5n :rso -H '^J^ OOP^P^PSm ^SjS ;.a25g S3'" « •isr' " a "S ^ S m cj tJ-'^ r — ^ J a»; :a3>S; 360 MEAT-PACKING INDUSTBY. OOOOOOOOOOOOOOOO OOOOOOOOOOOOOOOOOCjOOO ■s I §? 1 cj n rti u V E5 o i«F. nnSij S^ q3 o -- £ i« MR &.^ iJ k'^j-; . ■-^ -O (U . O O !=I _ - 0)1-, +a^ ea o B fi p'-S t^ "C "o ■ ^ _ ;,iSO 5 " fc 2j ■^ O ^-^ ^' " rt -o .^^gS Wo " rt «J 03 c5BSE ■'7od i^eid &3 II , ^1 "39 1.9 a .5 I MEAX-PACiaiTG INDUSTRY. 363 OOUOOOOOOOOOOOOOQOOOOOOOOOOOOOOOOOOOUOOOOOOOO^OOUO o --= in . c-l t, L, ^ltg§pi&|^|||ilglat|i||| t(H.SCe3oS<»ejSc3gOrt O pi ^ £ © 3 glc x: rt '^ --S 364 MEAT-PACKING INDUSTRY. 0< (14 doddduddodoo oooPhoooooooooo oqoocodoo I I * J3 ■^ "O Jl ^ ^ t^ C*® 2"c: S^ cT U .a ca 03 e3 O TfJ i« ,1 15 s S ^ I&5 M y rT CL Cd ta t^^ r^ K o pf Bac3".a i>>SS 5 S > g3 ^ I, o ^^ P^ '^ oa'O WJ •a ■■3 a ■ s o S3 a g 5 3 o g I 111 MEAT-PACKING INDUSTRY. 365 oododd dddd dddddd dddd odd - OOOOOOOOOOOQOOOO i S^ gSi.. — Z2 C3 P-.Q ^p, ^ s a a ■«) i^fg sg°l ■a 3t:.S ■8 tifi'O ville Hil 1(S Henry Co.) Rooky Harne Sellers eries Altoon Ames Anada Arnetl ■cJt: o(l

d 3Br :S,sw '.SSS^S- ►q >:! g S a X fmi, PM > li, Ph H IIIISS; I a o 368 MEAT-PACKING INDUSTEY. ocoooooouoooo oooooooo ooooooooo iH^m ftp's ri ffl (She-' i-S.sS'SSsSfoS oMsaaofMms I? "^ a *? e e « g g-ft MEAT-PACKING INDUSTKY. 869 ocooooo a i'^l.- □ u C C3 O -rt .-^ H, 0, &. B<,!1, PL, &4 0, Ph (l^ A,' Cq 1, £■9 n-'" niPdl ■S -"•'r-I.Sfari .S c « J O P /R/S est; ® 3 « c> M^ ■"--'"■=^-.3-S.H o uoouu I I 3' a .fB ■ ■a J S S.26£^Hgo ' a c> c o 2 t CO rf o i^ R s '3 « p: ^ s 1 .-,§ ■ =3 : ^ S^Hq'a ■s c^-^t^f^ o '='C!„'^-- a " " t .-p. s '"' 1 ' O S sit.I •a •a 140361°— 19— 24 370 MEAT-PACKING INDUSIEY. "■a © QJ e.f 00 Si,'* ddoddd 13 - 3 § IS Bo a oj ^ to ^-fl ^ s MEAT-PACKING INDUSTRY. 371 Exhibit XII. TRADE ESTIMATES OF PACKER CONTROL OVER CANNED AND PACKAGED FOODS. The following are a few summarized statements from representa- tive firms : H. T. Quinlan & Co., St. Paul, Minn., says that Armour & Co., has bought up tlie entire catsup output of Louden & Co., Terre Haute, Incl., and tlio entire output of corn canners and other foodstuffs from other manufac- turers. Thomas S. Vallette, of Francis H. Leggett & Co., wliolesalc grocers, New Tork City, says that Armour, Swift, Wilson, and the other packers are huge speculators, controlling an enormous aggregate of capital, and where they don't luanufacture themselves they buy up as much as possible of the output and resell. Last year they bought all of the canned goods they could and .sold them for less prices than the wholesale jobbers. J. T. Griffin, of GrifBn Grocery Co., wholesale grocery firm, BIcAlester, Okla,, reports that one of the proprietors of the Atlas Cereal Co., Kansas City, packers of rolled oats, advised them that Armour & Co. spent more for .advor- Uaing their rolled oats last year than their total sales of rolled oats. Henry C. Perkins, of Barber & Perkins, wholesale grocers, Philadelphia, Pa., says that they are beginning to feel very keenly the hand of the meat- packing combine on a great many staples in the grocery line outside of meats. This covers primarily almost all kinds of canned goods and many of the cereals, if not all. They say they were compelled to buy their sup- plies of canned pineapples from the Swift concern, Libby, McNeiU & Libby, which should have come either from first hands or froja suJrplus stocks held by the grocery-shipping trade. The same was true last yeftr with tomatoes in cans, the meat packers controlling the tangible supply at the end of the season. So also rolled oats and corn meal sold by the Buffalo Cerei).! Co., of Buffalo, N. Y., a subsidiary of the packers. - . Kobert L. Montgomery, of William Montgomery & Co., wholesale grocers, Philadelphia, Pa., says that in the prior 60 or 90 days they had been unable to buy a pound of rice, yet the meat packers, had large supplies and had been selling to retail grocers for 1 cent to li" cents per pound less than the regular market price. Also that Armour & Co. bought over 1,000,000 cases o;f can- ned tomatoes last year at from $1.20 to $1.35 per case, taking them out of the market and saying they would not sell them until the market price reached $2 per case. When the price reached that figure, he says, Armdur & Co. sold tomatoes to their customers at* $2 and that they were obliged to pay the same price for what they needed to fill their orders. He also says that the meat packers entered the grapejuice business a few years ago, and in a short time formed a holding company with which most of the jobbers of grapejuice became affiliated. James Hewitt, of H. Kellogg & Son, importers and wholesale grocers, Phila- delphia, Pa., reports that the packers now control the canned-tomato market, and that as to fruits, pineapples, cherries, and condensed milk they have cither bought out or built a sufficient number of canneries to control the supply. He says that this policy of the packers crushes the small canners, and that if they arc allowed to go on with their activities they will eventually control and manipulate all of these products. He further says that they are 372 MEAT-PACKING INDU&TKY; graduallj' encroaching on the grocery trade generallj', driving dealers out of business and forcing them into the position of becoming their employees and distributing agents for them. William J. Young, broker and commission merchant, Philadelphia, Pa., re- ports substantially the same with regard to Armour & Co.'s control over canned tomatoes as Robert L. Montgomery, of Montgomery & Co., Philadelphia, Pa. He reports also that the packers are in the distribution of rico, controlling the supply and refusing to sell to wholesale grocers. William G. Bonstedt,- of the Wm. G. Bonstedt Co., brokerage and commission merchants, Philadelphia, Pa., reports that the packers are both buying and put- ting up their own canneries in Philadelphia for fruit, vegetables, and fish ; that Armour & Co. lately bought an oatmeal mill from Kern Bros., Milwaukee, Wis., and the Buffalo Cereal Co., Buffalo, N. Y. He complains of this company's forcing its way into the pineapple business, and where it was unable to buy the output of canning comijanies, of its attempting to compel them to sell their plants. He says that if the large meat packers are not taken care of they will eventually control all of the food products of the United States. William D. Mullen & Co., wholesale grocers, Wilmington, Del.,- reports that of all the large packers, Armour & Co., is most active in its territory ; that Armour & Co. purchases tomatoes very largely in this territory for its own labels. Mr. D. F. StiUing, of Reid, Murdoch & Co. (Inc.), Chicago, 111., says that at the Cleveland convention in 1917 Libby, SIcNeill «& Libby had one buyer for each of the important items in the canned-food line, who had positive instruc- tions to buy every case of goods they could from the packers who attended the convention. They not only bought at the prices offered, but they bid up the price to the canner in order to get these goods away from the regular wholesale channels. All during 1918, he further states, brokers said that the stockyards packers have given them carte bliinc to buy at any price all the goods their canning accounts had to offer, and that Swift and Armour attempteil to buy a large portion of the pineapple pack of 191S. AValter Birldn, of the American Groceries Brokerage Co., Chicago, III., says that the effect of the large packers on his field — evaporated milk and pickles — is marked, the tendency being to cut out all middlemen through the control of the source of supply. Arthur Williams, of R. 0. Williams & Co., wholesale grocers. New York City, says that' Wilson' '& Co. bought out the vegetable packing concern of Grafton Johnson, of Indiana, from which Williams & Co. formerly bought as high as 17,000 cases of caiined goods per annum. This not only cut off one source of supply of Williams & Co., but Wilson & Co. by this move became an active competitor. Libby, McNeill & Libby, a Swift concern, bought out the tomato catsup, and chill sauce manufacturer, Mullen-Blackledge-Nellis Co., of Brazil, Ind. After this purchase he says they refused to sell goods except under their own labels, and this cut off the source of supply of the Royal Scarlet, the best brand of catsup sold by Williams & Co. E. C. Lavender, of the Wichita Wholesale Grocery Co., Wichita, Kans., reports that a local broker visited him on October 23, 1918, and told him that lie had been empowered by Armour & Co., to buy from the Wichita Wholesale Grocery Co. all the canned corn which that company , had on hand or had contracted for upon a basis of 7J per cent profit over the cost at canning factory. He further says that the proposition was turned down for the reason that the merchandise had been bought for his own trade. He said he had rea.sons to believe that every wholesale grocer in' his' territory was made a similar proposition. MEAT-PACKING INDUSTRY. 373 F. A. Aplin, of J. K. Armsby, broker, New York City, estimates that the packers at the present time control one-fifth of the salmon canneries of the United States, and believes that they will " murder " the small businesses, one by one, in the most heartless fashion until they reach their goal — complete domination. The salesmen of E. C. Williams & Co., importers, exporters, and manufacturers of food products. New York City, were asked in August, 1918, by the company certain questions with respect to the competition of the big packers. These questions, with a synopsis of the replies, were furnished the Commission and appear below. Question (a) . To what extent has the grocers' wholesale business been cut into by the big packers in the locality in which you travel ? (1) H. G. Hcwey, 597 Main Street, Lewiston, Me.: 50 per cent at least— con- stantly growing — wholesale grocers out in 20 years. (2) W. L. Jackson, 32 West Eighty-second Street, New York City: No reply., (3) Fred W. Vauderheive, 11 Warwick Boulevard, Jamaica, Long Island: Very much — Every week they have some Special which opens up business for their otlier foods. (4) Vernon R. Hallock, Riverhead, Long Island: 15% to 20% — not in- cluding butter, eggs, meat, etc. (5) G. F. Williams, box 21. Sayre, Pa. : No reply. (6) H. B. Strait, 74 Wallkill Avenue, Middletown, N. J. : Cut heavily, par- ticularly canned goods and cereals. (7) C. R. Fielding, 915 Louisiana Avenue, Washington, D. C. : No reply. (8) F. E. Handy: 25%. (9) William Murphy reports: William II. Jordan, 116 Riverdale Ave., Yonkers, bought formerly large amount of us. Now buys full line from Armour right down to coffee. ' ' ■ (10) F. S. & R. D. Mumma, Mechanicsburg, Pa. : 10%. ((1) Geo. W. Hennison, box 1223, Belmar, N. J.: 20%. (12) E. AV. Kibbe, 19 Warrenton Street, Hartford, Conn.; 50% on canned goods and other items. (13) W. J. Amerman, Moravia, N. Y. : 25%. (14) W. P. Thomson, box 445, Spartanburg, S. C. : Not less than 25%. . (15) Harry G. Seitz, 323 East Sixty-sixth Street, New York City: 25%.. (16) Harry NolV 301 Bast One hundred and ninety-third Street, New York City: 25%. (17) T. K. Potter, 267 Park Place, Brooklyn, N. Y. : 10 to 15%. (18) H. W. Artimr, Smithtown Branch, Long Island: Taken practically whole business in canned meats and cereal goods. (19) L. W. Lyon, 43 Central Avenue, Dover, N. J.: Fully 25%. (20) Theo. F. Arfsten, 375 Hancock Street, Brooklyn, N. Y. : P'ully 25%. ' C21-) P. J. Cawley, 3140 Kingsbridge Terrace, N. Y. : Inroads big — selling everything but sugar and flour and a few other nonprofltable items. (22) L. Feuerberg, 889 St. Nicholas Avenue, New York: 50% canned goods. (23) F. C. Magie, Boonton, N. J.: 10%. (24) L. R. Clom, box 276, Scranton, Pa. : Canned goods, 30%. (25) N; H. Suirberian, 56 Hudson Street, New York City: Let packers com- bine as now and in few yekrs no jobbers. (26) J. D. Haviland, 27 Greene Avenue, Norwich, Conn.: In meats, pickles, cereals at least 50%. (27) Harry Freedman, 1625 Forty-second Street, Brooklyn, N. Y. : About %. (28) H. P. Osment, 226 Chamber of Commerce, Birmingham, Ala.: 25%, including dairy products. 374 MEAT-PACKING INDUSTEY. Question (&). Can you give concrete figures from your own busi- ness? (1) No. (2) No reply. (3) At least 2,000 per month. (4) No reply. (5) No reply. (6) No reply. (7) No reply. (8) No reply. (9) No reply. (10) No reply. (11) No reply. (12) No reply. (13) No reply. (14) No reply. ( 15 ) Approximately $1,250.00 per month. (16) No reply. (17) No reply. (18) No reply. (19) No reply. (20) No reply. (21) 25% if not more. (22) No reply. (24) No reply. (23) No reply. (25) All instances packers' prices under wholesale grocers; if this were per- manent condition, it would be blessing to retailer and consumer, but their object is to gain ascendency and then make up for past sacrifice. (26) No reply. (27) No reply. (28) No reply. Question (c). What is tlie explanation of such inroads by the big packers as have come to your notice ? (1) Branch houses in all districts — can supply trade short notice. (2) Prices some canned goods, rice, cheese, etc., close to our cost — They plan to first secure the business then increase the profit, which they must and will do. The existence of their plants in all cities and delivery service. (3) Local houses and delivery— lower prices. Memo: Wilson & Co. selling Evap. milk $5.06 case : 50^ lower than our present cost on " Royal Scarlet." (4) Principally price. (5) No reply. (6) Cut prices with eventual object of killing all competition. (7) Packers claim to handle additiohal articles at no extra expense, thereby selling cheaper. [However, if this is true, overhead is charged wholly to meat or other lines in which the packers are established, whereas it should, under a proper distribution of expense, be apportioned In part to these added lines.] (8) Branch houses sell and hold goods, delivering as wanted for several months, canned goods, cheese, etc. (9) No reply. (lb) Side issue and selling expense not increased materially. (11) Selling at most ridiculous prices, regardless of market. MEAT-PACKING INDUSTRY. 875 (12) No reply . ■ (13) No reply. (14) Buying up by the packers of goods ana storing in warehouses which they have in every town of any consequence — they have goods when others have none. (15) Selling much lower than I can offer. (16) Combination sales. (17) No reply. (18) Sell goods at same prices as sell dealers and prepay freight. (19) Special prices, special deliveries — store deliveries in sections where we sell f. o. b. New York. (20) Lower Prices. (21) No reply. (22) Impressing the retailers that they are manufacturers and packers, and giving them opportunity of direct buying. (23) Lower prices & giving of free storage on perishable goods. (24) Cut prices. (2.5) Government having controlled profits on meats and their by products, the packers are entering field of approximately 9000 different articles, most not under regulation. (26) Koads are full of their specialty men — They bring their goods to their branch houses without expense, by loading them into their meat cars, no extra freight being charged. (27) Unfair cutting prices. (28) Their Salesmen state they could not sell enough fresh meats to jus- tify, and they sell groceries to get volume — Many times sell at less than fair margin to get business. Question (d). What measures of a constructive or remedial na- ture would you suggest? (1) Nothing but Government interference. Armour controls practically all food "products in country to-day. (2) Go after best trade — This appreciates services and these will always be enough to keep us busy. (3) No reply. (4) Stop direct selling. (5) Jobbers not to sell packers' brands. Memo : Packers, especially Armour, working hard putting in pkg. oats, corn flakes, co. milk, etc. Take one thing at time and sell every store. (6) Government regulation of minimum as well as maximum price — or limiting trusts to their original or one line, as has'been done in other coun- tries — or complete severance of different branches, so they would really com- pete. (7) No reply. (8) Not allow to store and hold goods sold at branch houses— making their goods !ill on same terms. (9) No reply. (10) Equal competition. Memo : We are handicapped by their local stor- age facilities — Armour, Wilson & Dold getting fair distribution of canned goods and other lines. (11) Law prohibiting meat house monopolizing food product business. (12) Divorce packing, from, wholesale business^or yyill put all small whole- sale grocers out of business in a short time. 376 MEAT-PACKING INDUSTRY. (13) No reply. (14) No reply. (15) Their methods of combination sales are such that merchant is easily tricked. Eggs frequently used as a leader to put over canned goods. (16) Hold them to meats exclusively. Memo: They handle and undersell us in practically everything: All canned vegetables and fruits, dried fruits, coffee, sardines, Worcester sauce, etc. One of Wilson & Company's salesman iTrged Marry Noll to come with their organization, saying he would make $85 to $90 a week, adding " Do you know the Guarantee Trust Co. is behind Wilson & Co." ( 17 ) No reply. (18) Take off their men and sell direct to dealers. (19) Refuse to sell sugar and unprofitable goods to customer of packer- tell him to buy that line of packer also. (20) No reply. (21) Confine them to meats. Unless curbed, packers will have 100% profit- able business. (22) No reply. (23) Restrict them to the packing business, where they belong. (24) Confine them to meat business and its by-products. (25) By ordering meat packers to stick to their own line, or having them make distribution through legitimate channels. (26) No reply. (27) Only one real and constructive remedy, that is Gov't control and opera- tion. The trade do not like Armour's goods, but if they give them away the trade buys. (28) See that they pay regular freight rates and are not allowed to send groceries and glass goods at meat rates in same cars with meat products. Have them pay, wholesale gi-ocers' licenses.^ Exhibit XIII. RICE SALES BY ARMOUR & CO., ACCUMULATED BY MONTHS, MARCH, 1917, TO JANUARY, 1918.^ Montli. Pounds sold. Amount re- ceived. March.. April... May 1917. Hay.. June .Iu!y August September. October November. December. . 1918. .January.. I 286, 111 '2,100,560 14,634,649 16,048,691 1 8, 743, 697 1 10,315,710 1 11,113,201 112,558,983 11,502,783 1 2,435,296 3,581,208 Total to Oct. 27, i317. Total, 3 months Grand total . 12,658,983 3,581,208 16, 140, 191 $13,809.07 117,236.18 290,053.43 396,471.07 688,857.90 706,622.34 766,737.88 876,559.26 119,250.92 194,387.97 286,747.67 876,569.26 286,747.67 1,163,306.93 1 Each month includes all previous months' aecumulated sales up to end of fiscal year ending Oct. 27, 1917. New year's figures begin with November sales. MEAT-PACKING INDUSTEY. 371 -Exhibit XIV. RICE PURCHASES BY ARMOUR & CO., IN STATED PERIODS, 1917-18. Grade of rice. On Sept. 17, 1917. From Sept. 18 to October, 1917. From Oct. 2 to Oct. 24, 1917. Total from Sept. 17 to Feb. 2,1918. Pounds. Price. Pounds. Price. Pounds. Price. Pounds. Price. Cwt. 1,259 2,355 535 1,440 4,380 8,142 4,460 1,315 425 25,614 2,580 855 3,080 240 Cerits. 9-9J 8^9J 8F8i Cwt. Cents. Cwt. 90 130 50 770 2,877 634 10,220 2,860 10,895 " 15,355 160 160 100 120 Cents. Cwt. Iy340 2,616 636 - 2,210 9,477 "11,346 ' 3I,'76r Jl,345 15, 305 103,639 8,330 2,605 6,815 540 Cents. V B . Blue Rose 150 9 83-9 7-7i 5}-6 5i 6 1,S00 2,070 13,550 4,650 3,700 16,620 2,700 600 2,050 7-73 ■ 53-6 6^7i 5J-6 • 6i 9-9i Fancy No. 1, Honduras, in pock- ets 7 -SI . ■5^6i 5i-6 Fancy screenings Fancy Blue Rose, in pockets Fancy Blue Rose, No. 2, in pock- ets - 6f7i ■ 5f-7 Fancy Blue Rose screenings , 6J-6 7 V. B, natural brown, in pockets-. 81 Total 56,671 46, 790 44,301 206, 863 Exhibit XV. TONNAGE SALES 1 OF LARD SUBSTITUTES BY THE FIVE BIG PACKERS, 1915-1918. 1915 (pounds). 1916 (pounds). 1917 (pounds). 1918 (pounds). Swift &Co 2 '■■:,'• . .'.'•. ■ 145, 992, 600- 1QJ",!946,548, • 49,804,830 46,257,591 ■ l22'0«),i00 97., 933,631 42,99S,410' 48,248,030 164; 947,600 113^381,121 "61,092 "g^s- 63,110,636 ■il^)9Vi,20O - 137,619,132 56,071,311 61,929,532 Armour No sales reported. 380 MEAT-PACKING INDUSTRY. Exhibit XVIII. CANNED AND DRIED VEGETABLES DISTRIBUTED BY CERTAIN OF THE FIVE LARGE PACKERS, SHOWING RANGE IN KINDS AND BRANDS. FROM AEMOUE & CO.'S 1917 PRICE LISTS. Canned Vegetables. Asparagus, large white, Veribest brand. Asparagus, green giant, Veribest brand. Asparagus, large green, Veribest brand- Asparagus, mammotli white, Veribest brand. Asparagus, medium white. Helmet brand. Asparagus, medium green, Helmet brand. Asparagus, small white. Fowler brand. Asparagus, small green. Fowler brand. Baked beans, Veribest brand. Beans, cut string. Helmet brand. Beans, Tiny Refugee, Veribest brand. Corn, standard' sweet. Fowler brand. Corn, Country Gentlemen, - Veribest brand. Corn, extra standard, Helmet brand. Hominy, Helmet brand. Hominy, Hoosier Bell brand. Peas, fancy tiny sifted Early June, Veribest brand. Peas, Early June, Helmet brand. Peas, fancy Alaska, Veribest brand. Peas, extra standard Alaska, Helmet brand. Peas, Calhoun, soaked. Peas, Belleflower, soaked. Pumpkin, in water. Sauerkraut. Spinach, Packers' brand. Spinach, Helmet brand. Tomatoes, standard. Tomatoes, Veribest brand. Tomatoes, Helmet brand. Tomatoes, extra standard, Veribest brand. Tomato pur^e, in cans. Vegetable soups. Beans in Bags. Soja beans, 100-pound sacks. ' Pinto beans, 100-pound sacks. Brown Swedes, loO-pound sacks. Pinks, 100-pound sacks. Choice hand-picked Navy beans. Choice hand-picked Michigan beans, 100-pound sacks. Lima beans, 80-pound sacks. pea Dried California Lima beans, 100- pound sacks. RapidSj; 165-pound bags. California small whites, 100-pound Hsu, I Choice red kidney beans, 145-pound sacks. Cranberry or Roman beans, 100- pound sacks. Mexican Garbanzo beans, 220-pound Hacks. FROM 1917 PRICE LIST OF WILSON & CO., INC. Canned Vegetab]:i;s. Asparagus, mammoth white peeled. Asparagus tips, medium white, Certi- Certified brand. fled brand. Asparagus, mammoth green peeled. Asparagus tips, medium green, Certi- Certiiied brand. fied brand. Asparagus, largo white. Certified Asparagus tips, medium white, Wilsco brand. brand. Asparagus, white, Wilsco brand. Asparagus tips, medium green, Wilsco Asparagusy large green, Wilsco brand. brand. > ■ Asparagus, cut, Wilsco brand. Asparagus points. Advance brand. MEAT-PACKING INDTJSTRY.- 381 Canned and dried vegetables distributed, etc. — Continued. FROM 1017 PRICE LIST OF WILSON & CO., INC. — Continued. Canned Vegetables — Continued. Beans, Eefugee, stringless cut, Certi- fied brand. Beans, Kefugee, stringless whole, Cer- tified brand. Beans, Refugee, stringless small whole. Certified brand. Beans, Refugee, stringless extra small whole. Certified brand. Beans, golden wax, cut, Certified brand. Beans, golden wax, whole small, Certi- fied brand. Beans, golden was, extra small whole, Certified brand. Beans, cut string, Wilsco brand. Beans, whole Refugee, Wilsco brand. Beans, cut golden wax, Wilsco brand. Beans, whole golden wax, Wilsco brand. Beans, Refugee, Advance brand. Beans, cut string. Advance brand. Beans, whole string. Advance brand. Beans, Lima, small green, Certified brand. Beans, lima, tiny. Certified brand. Beans, lima, medium, Wilson brand. Beans, lima, ripe. Advance brand. Beans, red kidney. Certified brand. Beans, red kidney, Wilsco brand. Beans, red kidney. Advance brand. Beets, small red, Certified brand. Beets, tiny red. Certified brand. Beets, Wilsco brand. Beets, cut, Advance brand. Beets, whole, Advance brand. Corn, Maine, Certified brand. Corn, sweet. Certified brand. Corn, fancy, Wilsco brand. Corn, Advance brand. Hominy, Wilsco brand. Hominy, Advance brand. Oitra, whole small. Certified brand. Okra, with tomatoes, Certified brand. Okra, cut, Wilsco brand. Okra, with tomatoes, Wilsco brand. Okra, cut, Advance brand. Peas, early June, tiny sifted. Certified brand. I'eas, early June, superfine. Certified brand. Peas, early June, small sifted. Certi- fied brand. I'eas, early June, fine. Certified brand. Peas, early June, sifted. Certified brand. Peas, early June, extra sifted, Wilsco brand. Peas, early June, sifted, Wilsco brand. Peas, early June, Advance brand. Peas, early June, sifted. Advance brand. Peas, sweet, fine sifted. Certified brand. Peas, sweet, wrinkled. Certified brand. Peas, sweet, sifted. Certified brand. Peas, sweet, wrinkled, Wilsco brand. Peas, sweet, sifted, AVilsco brand. Peas, sweet melting. Certified brand. I'eas, telephone. Certified brand. Peas, marrowfat style, Wilsco brand. Peas, marrowfat, Advanc'e brand. Pork and beans. Certified brand. Pork and beans, with tomato sauce, Certified brand.- Pork and beans, Wilsco brand. Pork and beans,' with tomato sauce, Wilsco brand. Pumpkin, Certified brand. Pumpkin, Wilsco brand. Pumpkin, Advance brand. Sauerkraut, dry packed. Certified brand. Sauerkraut, solid pack, Wilsco brand. Sauerkraut, California pack. Advance brand. Spinach, Certified brand. Spinach, Wilsco brand. Spinach, Advance brand. Squash, Certified brand. Succotash, Certified brand. Succotash, Wilsco brand. Succotash, with ripe limas, Advance brand. Sweet potatoes, Certified brand. Sweet potatoes, Wilsco brand. Sweet potatoes. Advance brand. Tomatoes, extra fancy. Certified brand. Tomatoes, fancy, Wilsco brand. Tomatoes, Advance brand. Tomatoes, concentrated or purge, Cer- tified brand. 382 MEAT-PACKING INDUSTR'S. Canned and dried vegetaUes diatrihuted, etc. — Contmue TKOM SWIFT & CO.'a 1016 PRICE LIST, Canned Vegetables. Asparagus, Asparagus, Asparagus, Asparagus, Asparagus, Asparagus, Asparagus Asparagus Asparagus Asparagus Asparagus giant white, giant green, mammoth white, mammoth green, large wliite. large green, tips, mammoth white, tips, mammoth green. tips, large white, tips, large green, tips, medium white. to- Asparagus tips, medium green. Asparagus tips, small white. Asparagus tips, small green. Beans and pork, Libby's plain. Beans and pork, Libby's with mato sauce. Kraut, Libby's, canned. Pimentos, Libby's, Spanish. Sweot potatoes, Libby's. Tomato soup, Libby's, concentrated. Vegetable soup, Libby's, concentrated. Miscellaneous Vegetable Pkoducts. Sauerkraut, Libby's, solid packed, in casks. Sauerkraut, St. Louis. As the number of items on their price lists indicates, these con- cerns had in 1916 and 1917 already well extended the range of vege- tables handled. The rapidity with which the range in kinds of vegetables and brands is extended when once the packers enter a new line is indicated by a comparison of the items carried in Morris & Co.'s Car Route Department Wholesale Weekly Price List of Septem- ber 17, 1917, and of June 9, 1919. Five items are given in the 1917 price list and 43 in the 1919 list. rEOM MORRIS & co.'s 1917 PRICE LIST. Supreme pork and beans. Matchless early June peas. Slatchless Blanchurian red beans. Sugar corn, Iowa standard. Tomatoes, Arkansas standard. FROM MORRIS & CO.'S 1919 PRICE LIST. Eegina small green asparagus tips. Armona medium green asparagus tips. Pratt low medium green asparagus tips. Supreme large white asparagus. .Supreme large white asparagus tips. Matcliless small white asparagus. Surpassing kraut. Supreme cut stringless beans. Supreme cut golden wax beans. Supreme whole golden string beans. Lily cut beets. Supreme small whole beets. Supreme whole beets. Supreme quartered beets. Matchless \A'hole beets. Matcliless sliced beets. Supreme boiled cabbage. Supreme red kidney beans. Supreme pork and beans. Supreme sugar corn. Supreme Country Gentleman corn. Matchless sugar corn. Matchless sweet corn. Farmer's favored hominy. Home State kraut. Supreme kraut. Farmer's favored pumpkin. Supreme pumpkin. Supreme extra sifted tiny peas. MEAT-PACKING INDTJSTEY. 383 Canned and dried vegetables distrM)utcO, etc. — CoiUinuecl. FROM MORRIS & co.'s 1919 PRICE LIST — Continued. Supreme sifted early June peas. Supreme extra sifted sweet peas. Supreme sifted wrinkled peas. Matchless sifted early June peas. Matchless early June peas. Matchless sifted sweet wrinkled peas. Matchless sweet wrinkled peas. Matchless sweet peas. Supreme tomatoes. Matchless tomatoes. Supreme spinach. Supreme mixed .vegetables. Del Monte spinach. Choice hand-picked Michigan beans. dried Exhibit XIX. CANNED AND DRIED FRUITS, PRESERVES, JELLIES, SYRUPS, ETC., DISTRIBUTED BY CERTAIN OF THE FIVE GREAT PACKERS, SHOWING RANGE IN KINDS AND BRANDS. FROM ARMOUR & CO.'s 1917 PRICE LIST. Canned ITbuiis and Bebeies. Apples, In water. Apricots, solid packed Apricots, in water. Apricots, unpeeled, Veribest brand. Apricots, unpeeled. Helmet brand. Apricots, peeled. Helmet brand. Apricots, sliced, Veribest brand. Apricots, sliced. Helmet brand. Blackberries, in water. Blackberries, Veribest brand. Blackberries, Helmet brand. Blueberries, in water. Cherries, black. Helmet brand. Cherries, red sour, in water. Cherries, Royal Anne, Veribest brand. Cherries, Royal Anne, Melrose brand. Cherries, Royal Anne, Helmet brand. Gooseberries, in water. Loganberries, in water. Loganberries, Veribest brand. Loganberries, Melrose brand. Loganberries, Helmet brand. Peaches, yellow free, Veribest brand. Peaches, yellow free. Helmet brand. Peaches, yellow free, Melrose brand. Peaches, yellow free, in water. Peaches, yellow cling, Veribest brand. Peaches, yellow cling, Helnfet brand. Peaches, yellow cling, Melro.se brand, Peaches, yellow cling, in water. Peaches, sliced, yellow Cling, Veribest brand. Peaches, sliced yellow .cling. Helmet brand. Peaches, sliced yellow cling, Melrose brand. Peaches, sliced yellow cling, in water. Pears, Bartlett, Veribest brand. Pears, Bartlett, Helmet brand. Pears, Bartlett, Melrose brand.' ^ "■ ' ■ Pears, Bartlett, in water. Plums, egg. Helmet brand. Plums, egg, Veribest brand. Plums, green gage. Helmet brand. Plums, green gage, Melrose brand. Plums, green gage, Veribest brand. Plums, purple, in water. Prunes, in water. Pineapple, sliced, sweet Hawaiian. Pineapple, grated, sweet Hawaiian. Pineapple, broken slices. Pineapple, crushed or grated. Pineapple, extra crushed. Pineapple, standard crushed. Raspberries, red, extra fancy. Raspberries, red, in water. Raspberries, Veribest brand. Raspberries, Helmet brand. Raspberries, Melrose brand. Rhubarb, strawberry, in water. 384 MEAT-PACKING INDUSTRY. Canned and dried fruits, preserves, etc., distributed, etc. — Continued. TEOM AEMOUR & co.'s 1917 PRICE LIST — Continued. Peuit Pbesekvbs. Blackberry preserves. Cherry, red, sour, preserves. Currant preserves. Gooseberry preserves. Crushed apricots. Crushed cherries (red). Crushed cherries (special). Crushed peaches. Blackberry-apple jam. Cherry-apple jam. Orange-apple marmalade. Applo jelly. Grape-apple jelly. . IJaspberry-apple jelly. Pineapple preserves. Raspberry preserves. Strawberry preserves. Cetjshed Fktjit. Crushed peaches, sliced. Crushed pineapples. Crushed raspberries. Crushed strawberries. Feuit Jams. Peach-apple jaut. Raspberry-apple jam. Strawberry-apple jam. Fktjit Jellies. Strawberry-apple jelly. " Pancake." CONCENTEATED FeUIT SyHUPS. Apricot syrup. Banana syrup. Cherry (red) syrup. Cherry (wild) syrup. Grape (Concord) syrup. Limeade. Lemon syrup. Orange syrup. Orange (blood) syrup. Orangeade. Peach syrup. Pineapple syrup. Raspberry (red) syrup. Stravvberry syrup. Miscellaneous Fktjit Pkoducts. Apple butter. Helmet brand. Apple elder, Melrose brand. Cherries, red, imitation Maraschino lUivor. (.:!lierrles, red, crushed, imitation Mar- aschino flavor. , Cherries, red, broken, imitation Mar- iischino flavor. Clierries, white, imitation Maraschino Ihivor. Dkied Apj)]os, choice evaporated. Apples, fancy evaporated. ,\pricots, choice evaporated. Apricots, fancy evaporated. Fis's, choice white. Cherries, imitation creme de meuthe. Grape compound. Grape juice. Olives, ripe, Veribest brand. 01ives,;.ripe, Helmet brand. Olives, green, Veribest brand. Olives, green, Helmet brand. Whips, lemon, lime, maple, orangt peppermint, and vanal. Fkuits. Figs, choice black. Figs, fancy black. Grapes, dried. Peaches, choice evaporated. Peaches, fancy evaporated. MEAT-PACKING INDTJSTEY. 385 Canned and dried fruits, preserves, etc., distributed, etc. — Continued TROM AHMOUE & co.'s 1917 PRICE LIST — Continued. Deied Fbuits — Continued. Peaches, fancy Elberta. Raisins, Peaclies, choice Muir. Raisins, Peaches, arrow M\ilr. less. Peaches, fancy yellow. ■ Raisins, Fears, choice evaporated. Raisins, Pears, fancy evaported. Raisins, Prunes, Italian. Raisins, Prunes, French. Raisins, Prunes, California. Raisins, Raisins, 3-crown London layers. Raisins, Raisins, 4-crown cluster layers. Raisins, Raisins, 6-crown imperial cluster lay- Raisins, ers. Raisin.«, Raisins, clusters. fancy sulphur bleached, loose muscatels, floated seed- muscatels, 2-crown. muscatels, 3-crown. muscatels, 4-crown. seedless, bleached sultanas, seedless, unbleached sultanius. Thompson's seedles.s. choice seeded, bulk, fancy seedrd. Sun Maid, freshly seeded. Sun >Iaid. FROM 1917 PRICE LISTS OF WILSON & CO., INC. Canned Fbuits and Berries. Apples, no syrup, Certified brand. Apples, no syrup, Advance brand. Apple sauce, no syrup. Certified brand. Apricots, Certified brand. Apricots, peeled. Certified brand. Apricots, sliced, Certified brand. Apricots, Advance brand. Apricots, Wilsco brand. Blackberries, heavy syrups, Certified brand. Blackberries, no syrup. Certified brand Blackberries, Wilsco brand. Blackberries, Advance brand. Blueberries, no sirup, Certified brand. Cherries, black. Certified brand. Cherries, black, Wilsco brand. Cherries, black. Advance brand. Cherries, Royal Anne, Certified brand. Cherries, Royal Anne, Wilsco brand. Cherries, Royal Anne, Advance b'-and. Cherries, red pitted, heavy syrup Cer- tified brand. Cherries, red pitted, no syrup, Certified brand. Cherries, red pitted, Wilsco brand. Cherries, red pitted, Advance brand. Cherries, red pitted, no syrup, Advance brand. Gooseberries, heavy syrup, Certified brand. 140361°— 20 25 Gooseberries, no syrup. Certified brand. Gooseberries, Advance brand. Grapes, white Muscat, Certified brand. Grapes, white Muscat, Wilsco brand. Grapes, white Muscat, Advance brand. Loganberries, heavy syrup. Certified brand. Loganberries, no syrup. Certified brand. Peaches, yellow free. Certified brand. Peaches, yeUow cling. Certified brand. Peaches, yellow cling, sliced. Certified brand. Peaches, white cling. Certified brand. Peaches, yellow free, Wilsco brand. Peaches, yellow cling, Wilsco brand. Peaches, yellow cling, sliced, Wilsco brand. Peaches, yellow free, Advance brand. Peaches, yellow cling. Advance brand. Peaches, yellow cling, sliced. Advance brand. Pears, Bartlett, Certified brand. Pears, Bartlett, Eastern, Certified brand. Pears, Bartlett, Wilsco brand. Pears, Bartlett, Eastern, Wilsco brand. Pears, Bartlett, Advance brand. Pears, Bartlett, Eastern, Advance brand. 386 MEAT-PACKING INDUSTRY. Canned and dried fruits, preserves, etc., distributed, etd — Continued. FROM 1917 PRICE LISTS OF WILSON & CO., INC. — Continued. Canned Fbuits and Beeriks — Continued. Pineapple, Hawaiian, sliced, Certified brand. Pineapple, Hawaiian, grated, Certified brand. Fini-apple, Hawaiian, crushed, in own .iuice. Certified brand. Pineapple, Hawaiian, sliced, Wilsco brand. Pineapple, Hawaiian, grated, Wilsco brand. Plums, egg. Certified brand. Plums, gage, Certified brand. Plums, egg, Wilsco brand. Plums, gage, Wilsco brand. Plums, Eastern, syrup, Wilsco brand. Plums, egg, .\(lvance brand. Plums, gage, Advance brand. lias])berries, black, heavy syrup. Cer- tified brand. Raspberries, black, no syrui), Ceititied l)rand. Raspberries, black, Wilsco brand. Raspberries, black, Advance brand. Raspberries, black, no syrup. Advance brand. Raspberries, red, Cuthberts, heavy syrup. Certified brand. Raspberries, red, Cuthberts, no syrup, Certified brand. Raspberries, red, Wilsco brand. Raspberries, red. Advance brand. Raspberries, red, no syrup, Advance brand. Rhubarb, enamel lined tin, no .syrup, <^ertifled brand. Rhubarb, enamel lined tin, no syrup, Wilsco brand. Rhubarli. enamel lined tin, no syrup, -Vdvance brand. StraAAberries, heavy syrup, Certified brand. Strawberries, preserved, extra heavy syrup. Certified brand. Strawberries, Wilsco brand. Strawberries, Advance brand. Fbuit Preserves. [Varieties not given — Styles of containers anfl brands.] Pride preserves, glasses. I'ride preserves, glass jar. Pride preserves, weir jar. Colonial preserves, glass. Pride jams, glasa. Pride jellies, glass. Pride jellies, glass jar. Pride jellies, weir jar. Pride jellies, pails. Colonial jellies, glass. Colonial preserves, glass jar. Colonial preserves, pails. Century preserves, glass jar. Fetjit Jams. Seneca jams, gla.ss. FstJiT Jelhes. Colonial jellies, glass jar. Colonial jellies, weir jar. Colonial jellies, pail. Century jellies, glass jar. Century jellies, pails. MiSCELtANEOTJS FkUIT PkODUCTS. Apple butter, Pride, glass. Apple butter, Pride, tin. Apple butter. Pride, weir jar. Apple butter, Pride, pall. llaraschino cherries, glass. MEAT-PACKING INDUSTRY. 387 Canned, and dried fruits, preserves, etc., distributed, etc. — Continued, TEOM SWirr & CO.'S 19 1 6 PRICE LIST. Canned Fbuits. Apricots, Smilax extra. Apricots, Hostess extra standard. Apricots, Bee standard. Apricots, Campus. Apricots, Smilax. Cherries, Royal Anne, Smilax extra. Ciierries, Royal Anne, Hostess extra standard. Cherries, Royal Anne, Bee standard. Grapes, Muscat, Smilax extra. Grapes, Muscat, Hostess extra stand- ard. Peaches, lemon cling, Smilax extra. Peaches, lemon cling. Hostess extra standard. Peaches, lemon cling, Bee standard. Peaches, lemon cling, Campus. Peaches, lemon cling, Smilax. Peaches, yellow free, Smilax extra. Peaches, yellow free, Hostess extra standard. Peaches, yellow free. Bee standard. Peaches, yellow free. Campus. Peaches, yeUow free, Smilax. Pears, Bartlett, Smilax extra. Pears, Bartlett, Hostess extra stand- ard. Pears, Bartlett, Bee standard. Pears, Bartlett, Bee. Plums, egg, Smilax. Plums, egg, Hostess extra standard. Plums, egg, Bee standard. Plums, green gage, Smilax extra. Plums, green gage. Hostess extra standard. Plums, green gage. Bee standard. Pineapple, Llbby's Hawaiian, grated, Smilax. Pineapple, Libby's Hawaiian, sliced, Smilax. Pineapple, Llbby's Hawaiian, crushed in juice. Pineapple, Libby's Hawaiian, sliced, Hostess. Pineapple, Libby's Hawaiian, grated. Hostess. Pineapple, Libby's Hawaiian, grated in syrup, Hostess. Libby's Preserved Fruits. Blackberry preserves. Cherry, red, preserves. Plum preserves. Apricot jam. Blackberry jam. Fig jam. ■Grape jam. Orange marmalade. Apple jelly, Libby's. Apple jelly. Maple brand. Blackberry jelly. Maple brand. Currant jelly. Maple brand. Raspberry, red, preserves. Strawberry preserves. Libby's Fruit Jams. Pineapple jam. Plum jam. Raspberry jam. Strawberry jam. Fruit Jellies. Grape jelly. Maple brand. Plum jelly. Maple brand. Raspberry jelly. Maple br.-ind. Strawberry jelly, Maple brand. Miscellaneous Fruit Products. Apple butter, Libby's, 3 sizes. Olives, imported Spanish Queen, 10 sizes. Olives, pimento-stuffed Manganilla, 7 sizes. Olives, Libby's Extra Quality Queen, 3 qualities. 388 MEAT-PACKING INDUSTRY. The rapid expansion of this phase of the packers' business and the enormous increase of the range of goods handled is well illus- trated by growth in this field of Morris & Co. In the " Wholesale Weekly Price List " of Morris's car-route department for September 17, 1917, only one fruit product appears. This was " Sliced Hawaiian Pineapple, Troubadour brand." In the price list of the same depart- ment for June 9, 1919, however, there is almost as complete a list of canned and preserved fruits as a regular wholesale grocer would have. It contains the following: Canned Fruit. Apples, Supreme brfind. Apples, Climber. Blackberries, Supreme brand. Blackberries, Matchless braud. Blueberries, Matchless brand. Gooseberries, Matchless brand. Peaches, sliced, Supreme brand. Peaches, yellow free, Supreme brand. Rasjiberries, black. Supreme brand. Rasiiberries, black. Matchless brand. Itaspberries, red, Supreme brand. Strawberries, Supreme brand. Strawberries, Matchless brand. Cherries, Royal Arue, Supreme brand. Cherries, black. Supreme brand. Loganberries, Supreme brand. Pineapples, grated. Cherries, red pitted, Supreme brand. Cherries, red pitted. Matchless. Gooseberries, Supreme. Muscat grapes. Supreme. Muscat grapes, Matchless. Muscat grapes, Casa Loma. Jellies and Presei«'es. Fruit and apple jelly, assorted. Fruit and apple preserves, Matchless Imitation jelly, a.ssorted. brand.' Pure fruit preserves, assorted. Apricot jam. Pure preserves with apple base. Fig jam. Imitation preserves, assorted. Peach jam. Pure apple butter. Orange marmalade. Pure peach butter. Pineapple jam. Fruit and apple jelly, Matchless brand. Dbied Fkuits. Apples. Pears. Apricots. Prunes. Peaches. Exhibit XX. CANNED AND CURED FISH DISTRIBUTED BY CERTAIN OF THE FIVE BIG PACKERS, SHOWING RANGE IN KINDS AND BRANDS. FROM SWIFT & CO.'S CANNED GOODS AND FISH PRICE LIST, JUNE 21, 1919. Canned Fish. Primer red Alaska salmon. Smilax red Alaska salmon. Sniilax Chinook Alaska salmon. Smilax King Alaska salmon. Hostess medium red salmon. Bee pink salmon. Happy vale pink salmon. Banjo chums. MEAT-PACKING INDUSTRY. 389 Canned and cured fish distributed, etc. — Continued. FROM SWIFT & CO.'S CANNED GOODS AND FISH PRICE LIST, JUNE 21, 1919- Continued. Canned Fish — Continued. Sunset Chinook salmon. Gen. white tuna fish. Hawaiian striped tuna. Albacore tuna, light and dark. Yellow tail tuna. Red lobster. La Rose sardines, olive oil. Napoleon sardines, p. and o. oil. Napoleon sardines, c. s. oil. Napoleon sardines, mustard. California sardines, tomato. California sardines, mustard. C;\lifornia sardines, spiced. Packet brand kippered herring. Security fat herring, i'rlde of Gulf shrimp. Golden brand baddies. Salt, Spiced, Smoked and Drikd Fish. Fat breakfast mackerel. Fancy shore mackerel. Salt-water medium split herring. Norway melt and roe herring. Holland style herring. Lake Superior herring. Blood-red Alaska salmon. Pink Alaska salmon. Spiced anchovies. Spiced herring, Hamburg style. Spii-eil herring, Norway style. Spiced roll mops. Russian sardines (fireflsh). Cut lunch herring (gaffelbitar). Smoked pink Chinook salmon sides. Kohinoor tag bloaters. National fancy bloaters. Security smoked bloaters. Golden buck bloaters. Boneless and skinless herring. ■\'ictor brand codfish. Talisman codfish. Seafldwer codfish cakes. Harmony codfish bricks. Talisman codfish middles. Seaflower white shore middles. Talisman threaded codfish. Household codfish cakes. Portland brand codfish. FROM GROCERY DEPARTMENT PRICE LIST OF WILSON & CO., INC., JUNE 9, 1919. Canned Fish. Certified fancy red sockeye salmon. Wilsco fancy red Alaska salmon. Rex nied. red salmon. Red E lunch salmon. Soo Pere Yor pink salmon. Advance Cohoe salmon. Tall Advance Cohoe salmon. Tall Tennis (pink) salmon. Tall Aunt .Jemima (chum) salmon. La Belle wet shrimp. Sea Maid wet shrimp. Sea Maid dry shrimp. Certified dry shrimp. Cotton Bale dry shrimp. Record tuna fish. Willapa razor minced clams. Izuma Japan crab meat. Namco crab meat. Certified lobster. Standard sardines, oil. Little Queen-wrapped sardines, oil. Balboa sardines, oil. Std. dec. tins, sardines, mustard. Ambassador sardines, mustard. Beaumerchand sardines, tomato sauce. Ambassador sardines, tomato sauce. Wakefield sardines, smoked. Oval Wakefield kippered herring. Wilsco oysters. 390 MEAT-PACKING INDUSTRY. Conned and cured fish distributed, fi/c.-Oantlnuea. FROM ARMOXJK & CO.'8 BRANCH-HOUSE PRICE LIST OF JUNE 16, 1919. Canned Fish. Voi-ibest flat salmon. Veribest tall salmon. Veribest flat Chinook salmon. Veribest tall Chinook salmon. A. & Co. flat red salmon. A. & Co. tall red salmon. Sih er Hook tall red salmon. Sterling flat medium salmoa Sparton medium red salmon. Sterling tall medium salmon. Yo-Ho tall medium red salmon. Patrol brand flat pink Salmon. Atlantis tall pink salmon. Titan chum salmon. Veribest tuna fish. A'eribest dry shrimp. ■\'eribest wet shrimp. NiiKsau, brand wet shrimp. Barataria brand wet shrimp. Eden brand sardines, oil. La Moine sardines, oil. Togo sardines, oil. Penobscot sardines, oil. Holmes sardines, oil. Coat of atms sardines, oil. Gouldsboro sardines, oil. Red Seal sardines, oil. Pilot Boat, Norwegian sardines, oi!. Clyde sardines, mustard. Red Seal sardines, mustard. Touralne sardines, mustard. Blue Sea sardines, Portuguese style, olive oil. Helmet sardines, olive oil. Helmet California herring, tomato sauce. Booth's California herring, tomato sauce. Security herring, oil. Security herring, mustard sauce. Veribest lobster. Biloxi brand cove oysters. Helmet brand cove oysters. FROM MORRIS & CO.'S CANNED-GOObS PRICE LIST, JUNE 9, 1919. Canned Fish. Supreme red Alaska salmon. Supreme sockeye salmon. Matchless chum salmon. Matchless pink salmon. Ocean spray pink salmon. Mercury red Alaska sabiion. Equity red Alaska salmon. Trolling chum salmon. American sardines. Mustard sardines. Ben Sen oval tomato sardines, saussed. Ben Sen California mustard sardines. Ben Sen tomato sardines. California fruit kernel oil sardines. Victory sardines. Lubec saijdlnes. Gouldsboro sardines, Cascoe sardines. Biloxi light oysters. Bilo.xi chief oysters. Gibraltar oysters. Epicure oysters. Broadway dry shrimp. Elk dry shrimp. Pride of Gulf dry shrimp. Surf dry shrimp. Ready lunch wet shrimp. Santa Glaus wet shrimp. ■«- — ■ .. ^r jAM*— i— I n W W il *^M|«.^Mer pound of meat, tend seriously to confuse the real issue of profit taking. That their profits per pound, could they be computed with complete accuracy, would not exceed a very few cents, if averaged over long periods of time, is readily apparent when total earnings and total pounds sold are comparatively studied. In 1918 the five great companies slaughtered some 14 billion pounds of live animals and sold over 10 billion pounds of meat and other ani- mal products. They reported profits of some $84,000,000 for the year,' covering not only live-stock but nonlive-stock activities as well, and even if this figure were raised by intensive analysis to $100,000,000 this total applied to animal products alone would not exceed a cent per pound for all such products. If a sound cost sys- tem were in existence, whereby the profit could be allocated to the several meat products, it might well appear that certain products, such as cured pork, averaged considerably more than a cent per pound, while other products, such as fertilizer, averaged consider- ably less; but in any event, packer profits per pound of meat can not exceed a very few cents, and sometimes are undoubtedly less than a cent. In their advertisements the packers make use of the words " cent," " fraction of a cent," " only a few cents," per pound or per dollar of sales, in the knowledge that the public regards a "■ cent " as a very small element of value. The packers seek to capitalize this habitual attitude of mind on the part of the public and insist that their profits are, accordingly, negligible. This practice obscures the real facts as to profits. As a matter of fact a profit of a cent per unit far ft-om being a small profit, may be an exorbitant profit measured in terms of return upon capital invested. The only sound method whereby the reasonableness of a profit of a cent per poiffld 1 Including a period of 13 months for Swift & Co. MEAX-PACKISTG INDUSTRY. 13 may be determined is by aggregating such a profit and comparing it with the capital invested in the enterprise. If the resulting rate of profit on capital invested is moderate, a profit of a cent per pound is ipso facto moderate; if the resulting rate is unduly high or unduly low, judgment as to rate per unit must vary accord- ingly. The packers, by attempting to concentrate public attention upon the rate per unit of output, seek to escape all criticism for what may be in fact indefensible profit taking. In 1&18 the total net worth of the great packers (capital stock and surplus combined) was reported as being in the neighborhood of half a billion dollars. A profit of 1 cent per pound on the 10 billion pounds of live stock products sold during the year gives an aggre- gate return of $100,000,000. Even were this doubled, the resulting rate — namely, 2 cents per pound — ^would still tend to be a "neglig- ible " amount in the public mind. Yet this difference of 1 cent would mean, for the five great companies, $100,000,000 in possible dividends, or about 20 per cent on the capital stock and surplus combined ($500,000,000). Thus while the packers' profits per pound may appear to the public to be small, they are in reality large, due to the enormous tonnage produced on the basis of a relatively moderate investment. The same objection can be raised against the packers' practice of advertising as small, and therefore reasonable, their profit per dollar of sales. In 1918 according to their reports to the United States Food Administration, this rate averaged for the five great com- panies, 2.2 cents for each dollar of sales. This is the equivalent of 15 per cent on capital stock and surplus — a high return on in- vestment. If the profit for the year were doubled, the rate per dollar of sales might still appear to the public to be small — i.i per cent — and might be advertised as such though the rate on investment would be 30 per cent, a manifestly exorbitant return. It is interesting to note that 117 independent packers (see Chap. IV) in 1918 earned on the average precisely the same rate per dollar (2.2 cents) as that reported by the great packers, while the rate of return on net worth for the independent companies averaged the high figure of 18.1 per cent. Thus it is clear that the packing busi- ness, as such, does a large volume on a small investment, and that the resulting rate of profit per dollar or per pound may seem small. Section 5. A uniform accotmting system for tlie great packers. At the instance of the President's meat committee and of the United States Food Administration, the Commission made a survey 14 MEAT-PACKING INDUSTRY. of the possibility of introducing a uniform accounting procedure for the great packers. It was found that in order to ascertain ac- curate costs and profits, not only on specific products, but on the business as a whole, sweeping revisions in the accounting methods now followed by the several companies would have to be adopted. Accuracy of departmental or specific product costs turns upon the introduction of a sound cost system whereby the exact cost of the live animal can be allocated to the several departments handling different products derived from that animal, thus charging each product with a share of the original cost, instead of charging the original cost as at present to the carcass meat department, and crediting by-products thrown off from the animal, on the basis of ill defined " market values." If transfers between departments, and the pricing of inventories can be reduced to a cost basis, the problem of accurate profit finding is largely solved. In addition there should be adopted a uniform classification of accounts for assets, liabilities, income, and expense ; a uniform defini- tion of packing plant departments and^' sections ;" uniform methods for distributing overhead expense, and charging depreciation; uni- form fiscal periods; and a uniform system of billing packing plant products for ultimate sale at the branch house or car route distribut- ing points, thus bringing about as clear a distinction as may be be- tween the manufacturing and selling functions. All of these matters are at present in a hopelessly confused condi- tion with respect to the several companies, and the desirability of bringing about a sound cost system, uniformity of accounting meth- ods, and consequently dependable and comparable figures whether for the public and the Government, or for the packers themselves, needs no argument. Section 6. The profits of the independent packers and the profits of the five great packers. The earnings of 117 independent packers for the fiscal year 1918 have been analyzed from a variety of angles, including the effect of size on profitableness, the effect of character of business (whether beef, pork, or mixed), and the effect of Government allotments for meat products. The several companies have also been grouped in accordance with their rate of return on net worth (capital and sur- plus). It appears that these 117 packers as a class earned 18.1 per cent on net worth for the year 1918, a manifestly high return. Eighteen beef packers averaged 18.4 per cent, 70 pork packers 18.1 per cent, and 29 " mixed " packers 17.8 per cent. Arranging all companies by size measured in sales it appears that 6 independent packers doing a business of over 25 millions each, earned on the average 19.3 per cent on net worth; that 11 packers doing a business between 10 and 25 millions averaged 23.6 per cent MEAT-PACKING INDUSTRY. 15 on net worth, while 100 smaller independents, doing a business of less than 10 millions each, averaged 14.1 per cent. It is evident that the larger independents were the more profitable companies. Figures are also presented for 65 independent packers in the j'ears 1914, 1915, and 1916. In the first year these companies averaged 12.6 per cent on net worth, in the second 13.1 per cent, in the third 22.1 per cent. It was not found practical to group the companies, by sizes, or by character of business. The effect of the war is very apparent in the large increase in the 1916 rate. Turning now to a comparison of the profits of the independent packers with those of the five great packers, the following rates on net worth are to be noted : Year, Inde- pendent packers. KV9 g.reat packers. 1914 Pet cent. 112.S 113.1 122.1 2 1&1 Per cent. 8 3 1915 12 8 1916 18 5 1918 = 15.0 1 Sixty-five independent packers. 2 One nundred and seventeen independent packers. Per reports to U. S. Food Administration. ' Per reports to United States Food Administration. ■' Thus in every year the independent packers tabulated averaged a higher rate of return than the great packers. No conclusion can be drawn from these figures, however, until certain qualifications are presented. Initially the independent packers shown are a selected group comprising only those companies whose accounts were so clearly kept that reliable tabulations could be made from them. Practically all the large independents are included, but scores of small companies have been excluded. In the second place it should be remembered that it is the larger independents who show a rate of earnings greater than that exhibited by the Big Five, and that most of the smaller independents tabu- lated showed lower rates of profit, the figures of the large companies exerting a preponderating influence on the group rate. In the third place, the activities of the great packers and of the independent packers are not entirely comparable. The former oper- ate branch houses, car routes, and have invaded many fields not con- cerned with the production of live-stock products, while the latter are almost exclusively meat packers selling locally or through brokers. If it were possible to segregate the live-stock business of the great packer from his other activities, more accurate comparisons with the independents might be made, but failing such segregation, deduc- tions therefrom are not conclusive. 128911°— 20 2 16 MEAT-PACKING IWDUSTBY. If it can be assumed that the great packers make as much on the meat end of their business as do the larger independents, it would follow that they must make considerably less on the nonlive-stock end, in order to get a lower average rate on the whole business. There is some reason to believe that the great paclcers are under a frequent burden of low profits and perhaps even losses by reason of their invasion of new fields. In other words high profits on meat may be used to finance new activities pending the establishment of the latter on a firm basis, meanwhile keeping down the average return on the total business to a level less than that shown for the larger independents. On the other hand, if the great packers are actually earning less on their meat business than the larger independent companies, it would seem that their asserted operating efficiency and hence the practical business advantage of such great industrial conglomerations may be seriously questioned. CHAPTER II. THE PROFITS OF THE FIVE GREAT PACKERS. Section 1. Introductory. In this chapter a general inquiry is made into the total profits of the fire chief packing companies — ^Armour & Co., Swift 8a Co., Morris & Co., Wilson & Co., Inc., and the Cudahy Packing Co. The distinction between a complete audit and an inquiry is a wide one. The Commission has not made a complete audit of the books of these companies. The accounting records of the great packers covering scores of packing plants, hundreds of branch houses and multifarious related activities, could not be examined indi- vidually, year by year. A complete audit, as undertaken by the professional accountant, includes a thorough examination of all books, accounts, vouchers, and records, and the verification of results as accumulated by the bookkeeping system, while the work of the Commission involved an examination and comparison of final results only, with such tests of the bookkeeping machinery and such scrutiny of individual accounts as special circumstances required. The figures and facts hereafter presented are largely drawn from the packers' own summaries and statements, with occasional adjustments made by the Commission as a result of certain special analyses. A study has been made of the accounting methods (see Ch. Ill), and final profit and loss accounts have been analyzed, as well as various underlying accounts, covering the years 1912 to 1918. The revisions resulting from these various studies are presented as more accurate than the packers' statements, but in no event can they be taken as the result of an audit. Section 2. Financial history — General comment. The following tables, with accompanying text, show, so far as data have been available, the growth and development of the great companies measured in terms of reported earnings, dividends, capi- talization, surplus, and rates of profit on net worth (or stockholders' equity). While these tables are drawn directly from the packers' records with no adjustments of any kind (except for the addition of Federal income and excess profit taxes to profits in 1917 and 1918), 17 18 MEAT-PACKING INDUSTRY. and while it is known that profits in certain years are not accurately reported by the packers, nevertheless, it is believed that these figures give a broad general view of historical development and present the essential features of the story. The Commission has secured figures for the whole period of development for Armour & Co. (1868-1918) and for the Cudahy Packing Co. (1887-1918). For Swift & Co., founded in 1885, only dividend and capitalization figures for the first 10 years through 1895 have been secured ; earnings and surplus figures were available only from 1896 to 1918. ' For Wilson & Co., Inc., figures beginning with 1894 have been secured, at the time of legal incorporation (then known as Schwarzschild & Sulzberger Co.), although it appears that the business was founded as a partnership in the year 1853. For Morris & Co. figures could only be secured for the last 10 years, beginning with 1909; prior to that time, ac- cording to statements of officers, no balance sheets were prepared, though the company itself was founded in 1859 and incorporated in 1903. Thus, unfortunately, tables of financial history are not com- plete for all companies, but even so, they present an interesting pic- ture of development and growth. One outstanding feature of these exhibits is the fact that the several companies have reached their present great proportions largely by reason of earnings put back into the business, rather than from new stock subscriptions sold for cash. To a large extent they have grown from profits over and above reasonable divi- dend requirements, added annually tp the surplus account. From these accumulated profits, stock dividends have been repeatedly de- clared (except apparently in the case of Morris & Co.). The following summary table recapitulates the growth in net worth (capital stock and surplus) for the five companies combined covering the years under review. It is to be understood that the period varies for each company, so the table does not represent a specific number of years and is only a summary of the available facts. Taisle I. — Summary of historical development, five great packers, on the basis of available facts. Net worth, beginning of known periods $42,838,000 Reported net profits over known periods 504,298,000 New cash capital 126,638,000 Surplus increased by appraisals 68,186,000 Total 1 741, 960, 000 Less divideiKls and drawings $163, 013, 000 Sundry surplus adjustments (net) 44,070,000 Total deductions 207, 083,000 Not worth, close of 1918 534,877,000 MEAT-PACKING INDUSTRY. 19 Of the $504,298,000 earnings, $163,013,000 was paid out in divi- dends and drawings, leaving $341,285,000 of the earnings in the busi- ness, or nearly three times as much as came in from new cash capital ($126,638,000). Thus the great packers as a class have grown mainly from invested profits rather than from financing involving new cash contributions. ; In respect to the $68,186,000 increase in surplus due to '' Appraisals of properties " it is known that a part at least of this total is due to excessive depreciation charges and the failure to capitalize new con- struction in former years, which was later taken up on the books. In so far as this is true, profits as here shown are correspondingly under- stated. It is further known that a part of this increase in surplus due to appraisals can be accounted for by a desire to value fixed assets on the basis of reproduction cost. The data on hand did not allow the Commission to determine the share of the total increase attributable to each of these two factors. In respect to the item of $44,070,000 deducted for "sundry surplus adjustments," it will be found that most of this amount is accounted for by income tax reserves on the part of all of the packers deducted in 1917 and 1918. There are also a number of other small adjust- ments both debit and credit included in this item. It is interesting to note that the great packers have not generally issued stock for good will. A significant exception is the item of $12,000,000 for good will added to the assets of Wilson & Co., Inc. (then Sulzberger & Sons Co.) in 1910, common stock being issued therefor. (See p. 30.) The surplus of this company had reached proportions in 1918, however, where this item might have been charged off and still leave a large credit balance in the surplus account. The probable reason for the general avoidance by the great packers of this practice lies in the fact that the companies were closely held by family groups, and there was no incentive to, nor any particular gain to be made by capitalizing good will. During the years under consideration, the following total issues of stock dividends, or their equivalent, declared out of accumulated surpluses, were made : Armour & Co., 1868-1918 $100, 000, 000 Swift & Co., 1885-1918 50, 000, 000 Morris & Co., 1909-1918 None. Wilson & Co., Inc., 1894r-1918 20,000,000 Cudahy Packing Co., 1887-1918 12, 777, 000 Total ^- 182, 777, 000 The 20 millions shown for Wilson & Co., Inc., was not technically a stock dividend, as the company was reorganized at the time, but 20 MEAT-PACKING INDUSTEY. practically it amounted to the same thing. It must be remembered, however, that over 12 millions of tliis stock had nothing behind it ex- cept good will. Similarly, Armour & Co. , when it was incorporated in 1900, issued its first 20 millions of stock out of partnership surplus, ■ which, though technically not a stock dividend, is practically identi- ' cal. Swift & Co., in addition to a 25 million stock dividend in 1918, ; declared in 1917 an extra cash dividend of 25 millions, increasing its | capital stock by a like amount, and giving stockholders the right to ' subscribe therefor. Thus, the stockholders in effect were presented i with the money with which to purchase new stock, and a practica?, i stock dividend was effected. Similarly, in the first 10 years of Swift's history (1885-1895) extra cash dividends were declared jusfc prior to new stock issues, and stock dividends were substantially ! effected, though no allowance has been made therefor in the above table. Care must be exercised in using the last column of the following tables of financial history entitled " rate of profit on net worth." It purports to show the return on total stockholders' investment, and thus is a sounder figure than rates computed on capital stock or on sales. But two facts must be pointed out in connection therewith. First, appraisals of property were made by these companies which, by adding large values to surplus account, seriously affect comparability of rate, not only as between different companies, but also as between the years preceding, and the years succeeding, such appraisal in the single company itself. Second, when, in addition to reasonable divi- dends, large additions are made to surplus out of profits, such addi- tions to surplus as well as the dividends actually paid are to be kept in mind in considering fair subsequent returns, because such increases tend to depress the rate of return on net worth. Profits as shown on the following tables of financial history for the years 1912-1917 are not always identical with " adjusted profits " as shown for the same years in the latter part of this chapter. The financial history tables have followed as nearly as may be the pack- ers' own published reports. The " war profits " tables exhibited later have been adjusted to some extent after an analysis of the profit and loss accounts for the years in question. In the following discussion of the financial growth of these companies there is no reference made to their bond issues which, however, are shown in detail in Exiiibit I. MEAT-PACKING INDUSTRY. 21 Section 3. Financial history of Armour & Co. Table 2. — Financial history of Armour rf- Co., 1S6S-1918. [Per company figures unaudited by Commission.] Fiscal year. Reported net profit. Drawings or dividends. Beginning of fiscal year. Capital stock, common. Surplus. Net wortli. Rate of profit on net worth. Original investment. . 1869 1870 1871 1872 1873 1874 1873 1876. 1877 1878 1879 1880 (15 months) 1881 1882 1883 1884 1885 1886 1887 1888 1890 1891 1892 1893 1894 1895 1896 1900 (3 J years to Apr. 24). 1900 (6 months to Oct . 27) 1901 1902 1903 1904 1905 1906 1907 1908 1909 : 1910 19U 1912 1913 1914 1915 1916 1917 1918 1919 Total, 50 years. $120,000 49,000 18,000 69,000 199,000 120,000 300,000 500,000 430,000 524.000 705,000 2,000,000 1,850,000 1, 705, 000 510,000 1,618,000 1,100,000 1,050,000 1,000,000 1,700,000 1,550,000 1,550,000 1,100,000 1,886,000 2,000,000 729,000 1.400,000 2,070,000 •8,105,000 725,000 5,736,000 2,500,000 2,250,000 1,850,000 2,800,000 3,000,000 3,100,000 7,800,000 7,500,000 6,500,000 2,510,000 5, 702, 000 6.028,000 7,510,000 11,000,000 20,100,000 « 26, 929, 000 • 19, 747, 000 $80,000 9,000 18,000 31,000 49,000 34,000 50,000 50,000 130,000 34,000 205,000 250,000 600,000 705,000 260,000 868,000 600,000 800,000 250,000 700,000 1,050,000 1, 030, 000 850,000 1.136,000 1,000,000 479,000 650,000 70,000 791,000 1,000,000 179,270,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,037,000 29,866,000 ■ t20, 000, 000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 80,000,000 5100,000.000 100,000,000 6 103,725,000 2*13,439,000 14,164,000 18,900,000 21,400,000 23,650,000 25,500,000 28,300,000 31.300,000 34,400,000 42,200,000 49,700,000 54,300,000 56,710,000 3 80,195,000 84,223,000 89,733,000 98,733,000 6 36, 833, 000 56,127,000 69,367,000 5160,000 160,000 200,000 240,000 240,000 258,000 408,000 500,000 750,000 1,200,000 1,500,000 2,000,000 2,500,000 4,250,000 5,500,000 6,500,000 6,730,000 7,500,000 8,000,000 8,250,000 9,000,000 10, OOO, 000 10,500,000 11,000,000 11,250,000 12,000,000 13,000,000 13,250,000 14,000,000 16,000,000 33,439,000 34, 164, 000 38,900,000 41,400,000 43,650,000 45,500,000 48,300,000 51,300,000 54,400,000 62,200,000 69,700,000 74,200,000 76,710,000 100,195,000 104,223,000 109,733,000 118,733,000 136,833,000 156.127,000 173,092,000 Per ceTii. 75.0 24.3 7.S 28.8 77.1 30.9 60.0 66.7 37.3 34.9 35.3 64.0 43.5 31.0 7.8 24.0 14.7 13.1 12.1 18.9 15.5 14. S 10.0 lii. S 16.7 5.6 10.6 14.8 16. 8 6.4 5.4 42 6.2 62 6.0 14.3 12.1 9.3 3.4 7.4 60 7.2 10.0 16. 9 19.7 12.6 • Individual years not available. • Company incorporated $20,000,000 common stock issued against surplus, no new cash. Kansas City plant valuea at $10,125,000 added to surplus. ' Property appraised, and $19,783,000 added to value of fixed assets, and credited to surplus. < Fronts DBtore deducting Federal income and excess profit taxes (as estimated). • Capital stock increased oy an $80,000,000 stock dividend. Surplus decreased by like amount. • Capital stock increased by cash sale of $3,725,000 preferred stock. With an investment of $160,000 at the beginning of the fiscal year 1869. Armour & Co., a partnership, commenced business. It is not clear that this $160,000 was in cash, for it may well have been in part due to the earlier trading of P. D. Armour, the founder of 22 MEAT-PACKING INDUSTRY. the house. The first year of the partnership yielded a profit of $120,000, or 75 per cent upon the original investment, and for the next 15 years, until 1884, a very high rate of earnings on partner- ship investment (net worth) was maintained in nearly all years. The year 1885 seems to mark the end of the period of such profit rates, for in no year thereafter did profits exceed 20 per cent on net worth. After 1885 the development, while continuous, and often reflect- ing large earnings, was, in terms of rate on net worth, steadier, with- out the peaks and great fluctuations of the earlier period. Mean- while, profits in dollars (not in rate) generally increased, and as the partnership drawings were invariably less — usually consider- ably less— than the annual earnings, the net worth, or partnership investment, rapidly accumulated, passing the ten million mark in 1889 without a dollar of additional capital being subscribed. The increment came entirely from undistributed profits. Unfortunately, details for the years 1897, 1898, 1899, and 1900 are not available, par- ticularly so in that the Spanish War occurred during this period. All that the company records show is a total profit of $8,105,000 for three and a half years, or an average of about $2,300,000 per year, the most profitable period (in dollars) to that date. Both 1901 and 1908 were unusually profitable years, while 1911 shows a remarkable decrease in earnings. Beginning with 1916, the upward sweep of profits both absolutely and measured in terms of rate on net worth has been extraordinary. In the years 1917 and 1918 Armour & Co. has not reported the very large profits known to have been made in its South American business. This business was divorced from the controlling Ameri- can company, and organized as a separate corporation, but the same direction continues, and in order to secure real compara- bility of profits, these earnings should be added to the profits re- ported above. It being impossible to secure exact figures for South America, the profits as reported on the historical table, understate the true earnings of the Armour interests for 1917 and 1918. Ac- cording to a statement made by J. O. Armour before the Senate Committee on Agriculture and Forestry in January, 1919,^ a part of the present South American investment is included in the assets of Armour & Co., as shown above, although the profits in 1917 and 1918 are not included in the income. The grand total of profits as reported for the 50 years through 1918, is at least $179,270,000, of which $29,866,000 has been paid out in drawings and dividends, the balance being retained in the business, except for Federal income and excess profit taxes deducted in 1917 1 See hearings S. 5305, Part I, p. 604. MEAT-PACKING INDUSTRY. 23 and 1918. While 29 millions out of 179 millions may appear as a moderate amount to withdraw, nevertheless, when compared with the original $160,000 invested, with no new additions of cash capital subscribed (except for $3,750,000 of preferred stock issued in 1918, and the Kansas City property valued at $10,125,000 added in 1900) it is seen that the Armour family and the early partners, the sole recipients of this $29,866,000, received large dividends compared with their original investment. In 1900, the partnership was incorporated under the laws of Illinois, the net worth having accumulated to $23,314,000 at that lime. The Kansas City packing plant and property heretofore con- ducted as a separate business (but operated by the Armour interests) was then merged with the main company, a value of $10,125,000 being added to the assets and to surplus therefor, bringing the total net worth up to $33,439,000. Against this surplus, $20,000,000 of com- mon stock was issued to members of the Armour family, leaving $13,439,000 in the surplus account at the time of incorporation. Xo new cash was subscribed. The capital stock remained at 20 millions until the beginning of the fiscal year 1917, when, with the surplus standing at $116,833,000, an $80,000,000 stock dividend was declared out of surplus, raising the capital stock outstanding to 100 millions and leaving $36,833,000 still in the surplus account. In 1918, 60 millions of bonds were issued with a clause providing that they could be converted into nonvoting preferred stock. At the beginning of the fiscal year 1919, $3,725,000 had been so converted and the total stock capitalization stood at $103,725,000 on that date (Xov. 2, 1918). The surplus, meanwhile, had rapidly increased, in spite of the 80-million stock dividend, and by the beginning of the fiscal year 1919 amounted to $69,367,000, giving a total net worth on that date of $173,092,000. Thus, the financial history of Armour & Co. presents one of the most striking examples of American industrial development. Start- ing 50 years ago with a capital of $160,000, the business has earned $179,270,000 *to 1919, of which $29,866,000 has been paid out to partners and stockholders, the balance being invested in the business and constituting the preponderating proportion of the $173,092,000 of stockholders' equity remaining on November 2, 1918. The actual contributions of the stockholders were limited to the original invest- ment of $160,000; the Kansas City investment of $10,125,000 in 1900, which was largely property, built on some unknown original cash in- vestment ; and $3,725,000 of cash received for preferred stock in 1918. Thus, the total stockholders' contributions in cash or property did not exceed $14,000,000 in 50 years, and probably were less. 24 MEAT-PACKING INDUSTRY. Apart from profits, tlie net worth was increased in 1911 by $19,- 783,000 added to the surplus account for appraisal of physical prop- erties. This may well have been due in part to excessive depreciation charged off in the past. It was the custom of P. D. Armour to treat new construction most conservatively, charging it off against earnings in large amounts at the time of its addition to the plant. The following table recapitulates the financial history of the company : Recapitulation of financial history, 186S-1918. tPer company figures unadjusted by Commission.] Original investment, 1868 ?160, 000 Add: Reported net profits, 50 years $179, 270, OOO Capital stock sold for cash, 1918 3, 725, 000 Kansas City property added to surplus, 1900 10, 125, 000 Appraisal of property value added to surplus, 1911 19, 783, 000 Total additions 212,903,000 213, 063, 000 Deduct : Cash dividends and drawings paid, 50 years $29, 866, 000 Sundry surplus adjustments 10, 105, 000 Total deductions 39, 971,000 Net worth of stockholders' equity Nov. 2, 1918 173, 092, 000 Section 4. Financial history of Swift & Co. Table 3. — Financial history of Swift & Co., 1S86-1918. [Per company figures unaudited by Commission.] Fiscal year. Reported net pi'ofitfl for year. Cash dividends paid. Beginning of fiscal year. Capital stock, common. Surplus. Net wortb. Eate of profit on net varth. 1885. 1886.. 1887. 1888. 1889. 1890. 1891. 1892. 1893. 1894. 1895. 0) (') (') (') 21691,006 360,000 650,000 400,000 2,060,000 600,000 600,000 2,518,000 1,098,000 826,000 (?) $300,000 300,000 300,000 3,000,000 5,000,000 5,000,000 7,500,000 7,500,000 7,500,000 13,767,000 13, 767, 000 Total dividends paid first 10 years 9, 793, 000 * Figures not available. ' From earnings for first 18 months' business. 8 Stockholders' original investment. P.ci. MEAT-PACKING INDUSTRY. 25 Table B.—Fhunicial history of Swift & Co., 1886-1918 — Continued. • Eeported net profits for year. Cash dividends paid. Beginning of fiscal year. Bate of proflt onneS worth. Fiscal year. Capital stock, common. Surplus. Net worth. 1896 $1,198,000 977,000 1,199,000 2,085,000 1,854,000 2,676,000 3,063,000 3,000,000 4,025,000 4,200,000 5,738,000 6,204,000 6,300,000 8,025.000 7,050,000 6, 138, 000 8,250,000 9,250,000 9, 450, 000 14,088,000 20, 465, 000 •44,650,000 144,364,000 $826,000 826,000 882,000 1,236,000 1,334,000 1,376,000 1,563,000 1,7.W,000 2,275,000 2,450,000 3,238,000 3,500,000 3,500,000 4,025,000 4, 200, 000 4,988,000 5,250,000 5, 250, 000 5,250,000 6,438,000 6, 000, 000 2 35,000,000 9,000,000 $13,767,000 13,707,000 13,767,000 15,000,000 20,000,000 20,000,000 20,000,000 25,000,000 25,000,000 35,000,000 35,000,000 50,000,000 50,000,000 50,000,000 60, 000, 000 60,000,000 60,000,000 75, 000, 000 75,000,000 75,000,000 75,000,000 75,000,000 2100,000,000 3150,000,000 $238,000 609,000 760,000 1,077,000 1,926,000 2,446,000 3,746,000 5,246,000 6,496,000 8,246,000 9,996,000 12,496,000 15,200,000 18,000,000 22,000,000 24,850,000 26.000,000 29,000,000 33,000,000 37,200,000 45,850,000 60,315,000 69,965,000 <84,576,000 $14,005,000 14,376,000 14,527,000 16,077,000 21,926,000 22,446,000 23,746,000 30,240,000 31,496,000 43,246,000 44,996,000 62,496,000 65,200,000 68,000,000 82,000,000 84,850,000 86,000,000 104,000,000 108,000,000 112,200,000 120,850,000 135,315,000 159,965,000 234,576,000 8.6 1897 6.3 1898 8.3 1899 13.0 1900 S.S 1901 11.9 1902 12.9 1903 9.9 1904 12.8 1905.. 9.7 1906 12.8 1907 9.9 1908 9.7 1909 11.8 1910. . 8. S 1911 7.4 1912 9.6 1913 8.9 1914 8.8 1915 12.6 1916 16.9 33.0 1918 (13 months).. 26.2 1919 214,249,000 109,157,000 1886-1917 . . 118,950,000 ■ Profits before deducting Federal income and excess-profits taxes (as estimated), a Extra dividend of 33J per cent paid November, 1917, amounting to $25,000,000. Capital atock Increased by like amoimt simultaneously. » Capital stock increased $60,000,000, of which $25,000,000 was stock dividend. ' Includes an addition of $30,746,000 for appraisal of properties. Swift & Co. incorporated in 1885 with a capital stock issue of $300,000. Gustavus F. Swift had been in the cattle business for some time before this. Less than two years after organization dividends amounting to $691,000 were paid, which more than reim- bursed the stockholders for the principal of their original cash con- tribution. Particulars of the profits of the company during its first 10 years of operation have not been obtained, but that those profits were large is evidenced by the fact that $9,793,000 was dis- tributed in dividends. During this early period various extra cash dividends were paid and immediately thereafter capital stock was increased. The stockholders were thus supplied with cash which might be devoted to the purchase of new stock. The amount of cash thus made available to buy new stock was probably sufficient to purchase at least 40 per cent of the new stock issues at par and these were to that extent practically stock dividends. Since 1896 the profits of the company have grown steadily. As in the case of Armour & Co., earnings both in dollars and in rate, beginning with 1916, have been extraordinary, reaching $44,650,000 in 1917, or 33 per cent on net worth — ^by far the most profitable year 26 MEAT-PACKING INDXJSTEY. shown. Dividends since 1896 have increased steadily in amoimt, .holding to an average rate of about 8 per cent, with a special 33J per cent cash dividend in 1917. The capital stock, which is all common, has increased regularly since 1896 (when it stood at $13,767,000) to $150,000,000 at the close of 1918. During this period the increments have all been paid for in cash with the exception of a $25,000,000 stock dividend in 1918 (one-half the increase during that year) and what amounted to a stock dividend in 1917, when a cash dividend of $25,000,000 was declared, stockholders being given the right forthwith to subscribe to $25,000,000 of new stock. During the last 23 years Swift & Co.'s profits were reported as $21J:,249,000, out of which dividends amounting to $109,157,000 have been paid, leaving $105,092,000 in the business (or reserved for in- come taxes in 1917 and 1918).^ The financial history of this period is recapitulated as follows : Recapitulation of financial history, 1S96-1918. [Per company figures unadjusted liy Commission.] Net worth, 1S9G $14, 005, 000 Add: Reported net profits 23 years $214,249,000 Capital stock sold for cash during period ^111,233,000 Appraisal of property value added to surplus, 191S 30, 746, 000 Total additions 356, 228, 000 370, 233, 000 Deduct : Cash dividends paid 23 years $109, 157, 000 Sundry surplus adjustments 26, 500, 000 Total deductions 135, 657,000 Xet worth or stockholders' equity Nov. 2, 1018 234,576,000 In that $25,000,000 of " Stock sold for cash " in the above table was furnished the stockholders by the company in the form of a special cash dividend of 33J per cent in 1917, it is possible to reconstruct this table, deducting 25 millions from " Stock sold for cash," leaving the figure $86,233,000, and deducting 25 millions from 1 It should be remembered, however, that these figures are as reported by the company and have not been subject to adjustment of any kind. That such adjustments should be made is well illustrated by the fact that in 1915, Swift & Co. wrote off net to annual profit and loss !f3,349,O0O from the book value of " securities," without disposing of any of the investment so held. This necessarily resulted ini a decrease in the statement of tarnings for that year, without any real loss having been sustained. = .'il2o.000,000 of this amount was provided by an extra dividond of .S3j per cent declared in 1317. MEAT-PACKING INDUSTRY. 27 " Cash dividends paid," leaving the figure $84,157,000, and arriving at the same figure for net worth, November 2, 1918, of $234,576,000. Under this construction, it would appear that net worth during the last 23 years had been accumulated as follows : Reported profits $214, 249, 000 Less casli dividends paid 84, 157, 000 Xet profits reinvested in business 130,092,000 New casli capital 86, 233, 000 or considerably more by reason of profits put back into the busi- ness than by reason of new cash capital. From an original investment of $300,000 in 1885, Swift & Co. has grown in 33 years to a position where the stockholders' equity is now valued at $234,576,000, and more than half of this increase (taken at $130,092,000) has come from profits (over and above reasonable dividends) invested in the business, and $30,746,000 by reason of an appraisal of the property account in the fiscal year 1918. Section 5. Financial history of Morris & Co. Table 4. — Financial history of Mon-is & Co., 1909-1918. [Per company figures unaudited by Commission.] Reported net profits. . Cash dividends paid. Beginning ot fiscal year. Rate of Fiscal year— Capital stock. Surplus. Net worth. on net worth. 1909 J2,071,000 1,659,000 1,037,000 1,813,000 1,917,000 2,206,000 2,321,000 3,632,000 > 7,242,000 14,796,000 »4S0,000 360,000 180,000 180,000 360,000 360,000 750,000 1,000,000 160,000 300,000 $3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 820,229,000 20,944,000 22,137,000 22,994,000 24,626,000 26,183,000 27,939,000 29,510,000 32,142,000 37,292,000 2 52,822,000 823,229,000 23,944,000 26,137,000 25,994,000 27,626,000 29,183,000 30,939,000 32,610,000 35,142,000 40,292,000 65,822,000 Per cent. 8.9 1910 6.9 1011 4.1 1912 7.0 1913 6.9 1914 7 6 1915 7.5 1916 11.2 1917 20.6 1918 11.9 1919 Total, 10 years 28,694,000 4,090,000 1 Profits before deducting income taxes (as estimated). » Surplus increased by appraisal estimated $11,612,000. The financial history of Morris & Co. can only be presented for the past 10 years, 1909-1918. Officers of the company state that before 1909 balance sheets were not prepared. Strange as this may seem for so large an organization (an incorporated company since 1903), the fact remains that no such statements could be found. From 1903 to 1909 it is understood that Morris & Co., a Maine corporation, held the stock of the Fairbanks Canning Co., and in 1909 the latter was dissolved and its properties merged with Morris & Co. Nelson Morris Co. was first organized in 1859, nine years before Armour & Co. commenced business as a partnership, but no records b 28 MEAT-PACKING INDUSTRY. could be found covering the long period of development. In 1903 Xelson Morris Co. seems to have been incorporated under the name of Morris & Co. In view of these circumstances, it is extremely improbable that the three millions of capital stock (now outstanding) was paid in in cash at the time of incorporation, but represents rather a part of the surplus of Nelson Morris Co., which surplus grew out of reinvested earnings from a very much smaller original cash investment in the remote past. It is to be noted that Morris & Co., so far as the records show, has not followed the practice of the other great packers in capitalizing its surplus account by the issue of stock dividends. Thus, the latest balance sheet of the com- pany (Nov. 2, 1918) exhibits more clearly than in the case of the balance sheets of the other companies the part which reinvested earn- ings have played in the building up of present net worth. Capital stock $3, 000, 000 Surplus 52, 822, 000 Total net worth Nov. 2, 1918 55,822,000 In 1909 the surplus stood at $20,229,000, presumably accumulated from reinvested profits, and by the end of 1918, this surplus had increased to $52,822,000, the bulk of the increment having come from earnings reinvested over the 10 years ending in 1918. Of the in- crease, however, $11,612,000 is estimated to have arisen from an appraisal of properties in 1918, when fixed assets were written up by that amount. The earnings of Morris & Co. over 10 years, totaling $28,694,000, have been large, showing, as in the case of the other companies, a marked increase during the war period, 1915-1918. The falling off in 1918 over 1917, is not explained except as it may be accounted for by failure to take up foreign profits in that year, Morris & Co. having followed the example of Armour & Co., and Swift & Co., in divorcing its South American companies from the controlling company. Divi- dends over the ten years have varied from 5 per cent on capital stock in 1917 to 33^ per cent in 1916, the total amount being $4,090,000 for the period. The following table recapitulates the financial history of Morris & Co. so far as records are available : Becapituhitiau of financial history, 1909-1918. [Per company figures unadjusted by Commission.] Net worth, 1909 $23,229,000 Add: Reported net profits, 10 years $28, 694, 000 Capital stock sold for cash Appraisal of property value added to surplus, 1918 11, 612, 000 Total additions 40, 306, 000 63, 535, OOQ MEAT-PACKING INDUSTEY. 29 Deduct : Cash dividends paid, 10 years . $4, 090, 000 Sundry surplus adjustments 3, 623, 000 Total deductions |7, 713, 009 Net worth or stockholders' equity, Nov. 2, 1918 55, 822, 000 Section 6. Financial history of Wilson & Co., Inc. Table 5. — Financial history of Wilson & Co., Inc., 1894^1918. [Per company figures unaudited by Commission, except as shown in footnote 2.] (Deficit in Italics.) Fiscal year- Reported net profit. Cas& divi- dends paid. Beginning of fiscal year. Capital stock, com- mon. Capital stock, pre- ferred. Capital stock, total. ■ Surplus or deficit. Net worth. Hate of prof- it on net worth. 1S95.. 1S96.. 1897., 1900.. 1901.. 1902.. 1903.. 1904.. 1905.. 1906.. 1907.. 1908. 1909. J^JJ}(21 months) 1912. 1913. 1914C15months). 1915 1916 1917 1918 1919 Total, 25 years S163,000 36.3, 000 364,000 401,000 710, 000 927,000 719.000 1,059,000 902, 000 805, 000 701,000 511, 000 923, 000 913, 000 1,645,000 2,302,000 1,644,000 l.^OOO i; 364, OOO 1, 512, OOO 2,464,000 4, 914, OOO '8,126,000 '9,832,000 S175, 000 175,000 87,000 131,000 1703,000 1700,000 1700,000 1692,000 1684,000 1701,000 ■713,000 1733,000 $4, 434, 000 4,375,000 4,375,000 4, 373, 000 4, 3<3, 000 4, 373, 000 4, 373, 000 4, 373, 000 i, 373) 000 4,373,000 4, 373, 000 4, 373, 000 4, 373, 000 4,373,000 4, 373, 000 4,373,000 4,373,000 220,000,000 20,000,000 20,000,000 20, 000, 000 20,000,000 20,000,000 20,000,000 20,000,000 44,390,000 6,358,000 2*10,000,000 10,000,000 10,000,003 9.835,000 9, 706, 000 10, 133, 000 10,476,000 10,4-76,000 $4,434,000 4,375,000 4,375,000 4, 373, 000 4, 373, 000 4, 373, 000. 4,373,000 4, 373, 000 4, 373, 000 4, 373, 000 4, 373, 000 4, 373, 000 4, 373, 000 4, 373, 000 4,373,000 4,373,000 4,373,000 ,30,000,000 30,000,000 30,000,000 29, 835, 000 29,706,000 30,133,000 30,476,000 30,476,000 J260, 000 248,000 436,000 711,000 982, 000 1, 692, 000 1,619,000 1,338,000 2,397,000 3,299,000 4,103,000 4, 645, 000 4, 792, 000 5, 71.5, 000 7,876,000 9, 124, 000 10,808,000 m Si, 694, 000 4, 623, 000 4,810,000 5, 084, 000 S, 355, 000 6,065,000 5,992,000 5,711,000 7,170,000 7, 672, GOO 8,476,000 9,018,000 9, 165, 000 10, 088, 000 12,249,000 13,497,000 15,181,000 20,350)000 20, 976, 000 21,640,000 22, 294, 000 23,945,000 28,083,000 34,120,000 38,894,000 Per ct. 3.5 7.9 7.6 7.9 13.3 15.3 12.0 18.5 12.6 10.5 8.3 5.7 10.1 9.1 13.4 17.1 6.5 6.5 S.6 11.1 20.5 28.9 28.2 ' Dividends on preferred stock only. ^ Figures for sm-plus account omitted from table so as to prevent confusion which would be caused through exclusion of good will from the assets and consequent exclusion of a similar amount of UabiHty. As surplus account would be the balancing entry on the books the excluded amount would naturally be looked for in that column, but in this case it affects the capital stock issued and wo-uM force a real surplus to an apparent deficit by not being able to ad,iust the capital-stock column to actual instead of par value. Amount so excluded, $12,591,000. = Profits before deducting li'ederal income and excess profits taxes (as estimated). In 189S, the business of Wilson & Co., Inc., theretofore operated as a partnership (founded in 1853), was incorporated under the style of Schwarzschild & Sulzberger Co. The original cash invest- ment is unknown, but it is doubtful if any new cash was added at the time of this incorporation, stock probably being issued out of the partnership surplus. At the beginning of the fiscal year 1894 the 30 MEAT-PACKING INDTJSTKY. total common stock outstanding amounted to $4,434,000 and the account changed but little to the time of reorganization in 1910. Profits from 1894 to 1918 have aggregated $44,390,000, the in- crease during the war years 1916-1918, being especially marked both in dollars and in rates of profit on net worth. Dividends during the period aggregate $6,358,000. Since 1911 dividends at the rate of 7 per cent have been paid on preferred stock only. (In. May, 1919, the first dividend on common stock since the reorganization in 1910 -ivas declared.) Dividends from 1894 to 1910, were irregular, having been passed altogether in 11 of the 16 years. Thus the surplus account grew very rapidly, but even had a 10 per cent dividend been declared regularly there would still have remained in every year after 1897 a large amount of earnings over and above such dividend, to be reinvested in the business. In 1910 Sulzberger & Sons Co. was organized under the laws of the State of New York with an authorized capital stock of $32,000,000 (consisting of $20,000,000 common stock and $12,000,000 6 per cent preferred stock — the rate of which was raised later to 7 per cent) and acquired the business of Schwarzschild & Sulzberger Co. Thirty million dollars of this stock was immediately issued in exchange for the -assets of the old company and $4,730,000 in cash, this cash repre- senting sales of preferred stock. In making this transfer of ownership a virtual capitalization of the surplus of the old company amounting to $10,808,000 was effected, which together with the capital stock outstanding, $4,373,000, represented the book value of the old company, namely, $15,181,000. The amount paid (in stock of the Sulzberger & Sons Co.) for these assets, $25,270,000 ($30,000,000 stock issued less $4,730,000 sold for cash) was therefore $10,089,000 in excess of the amount shown by the books of Schwarzschild & Sulzberger Co. and represents the amount of value attributed to the company as a going concern. To cover this apparent excess value an intangible asset (good will) was created and incorporated in the books of Sulzberger & Sons Co., but valued at $12,591,000, a difference of $2,502,000 which must have been credited to surplus. (See Exhibit A.) In 1916 the Sulzberger & Sons Co. changed its name to Wilson & Co., Inc., and the Sulzberger interests gave way to Thomas E. Wilson and a group of New York bankers (see Part II of this report). No legal reorganization of the company took place, but simply a change of name and of stock ownership. After the change of management the company began to issue additional preferred stock, and by the end of the fiscal year 1918 $10,476,000 was outstanding, the 4,760 additional shares over and above those outstanding in 1914 having been issued for cash. Adding this $476,000 to the $4,730,500 of pre- MEAT-PACKING INDUSTRY. 31 ferred stock issued for cash up to 1911, the cash contributions to the company since 1910 on the part of all stockholders amounted to $5^07,000. Thus of a capitalization amounting to $30,476,000 in 1918 only $5,207,000 is known to have been contributed in cash, the balance being made up by the original cash investment of the old partnership (probably a relatively small item) and accumulated earnings reinvested in the business. The balance sheet of December 28, 1918, still shows a good will account of $11,371,000 among the assets (sundry credits having been made to it since 1911, but the surplus account of the same date is reported as $19,789,000. In preparing the foregoing table of financial history for Wilson & Co. good will has been arbitrarily deducted from the assets and from net worth, in order to follow the practice of the Food Ad- ministration in determining rates of profit, and to make the figures as comparable as may be with those of the other packers who carry practically no good will on their balance sheets. The following table recapitulates the financial history of Wilson & Co., Inc. : Recapitulation of financial history, ISOJj-lOlS. [Per company figures unadjusted by Commission, except by the elimination of good will.] Net worth, 1894 $4, 694, 000 Add: Reported net profits, 25 years $44,390,000 Capital stock sold for cash during period 5, 207, 000 Appraisal of property value added to surplus, 1907- 1914 3, 652, 000 Total additions 53, 249, 000 57, 943, 000 Deduct : Cash dividends paid, 25 years $6,358,000 Sundry surplus adjustments 12,691,000 Total deductions 19, 049, 000 Net worth or stockholders' equity, Dec. 31, 1918 38, 894, 000 Thus it appears that Wilson & Co., Inc., passed through a period of extensive reorganization which affected dividend payments, but its financial fortunes, measured in terms of net profit, have increased steadily during the past 25 years, and, as in the case of the other packers, the major share of its present net worth is derived from reinvested profits, rather than from new cash contributions on the part of the stockholders. 128911°— 20 3 32 MEAT-PACKING INDUSTRY. Section 7. Financial history of Cudahy Packing Co. Table Q.— Financial Jiistorn of Cudahy Packing Co., 1888-1918. [Per company figures unaudited by Commission.) Reported net profit for year. Cash dividends paid dur- mg year. Beginning ol fiscal year. Rate of profit Fiscal year— Capital stock, common. Capital stock, preferred. Capital stock, total. Surplus. Net worth. on net worth begin- ning of year. 1888 S50,000 150,000 500,000 825,000 720,000 800,060 114, 000 300,000 440,000 275,000 414,000 690,000 483,000 803,000 1,400,000 103,000 928,000 882,000 946, OOO 1,251,000 3,009,000 2,201,000 1,019,000 379,000 1,129,000 1,329,000 1,402,000 724,000 3,011,000 '5,521,000 '6,777,000 $750,000 750,000 760,000 750,000 750,000 750,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,500,000 3,600,000 3,500,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000 •5,450,000 U, 450, 000 11,450,000 $750, 000 750,000 750,000 760,000 750,000 750,000 3, 500, 000 3,500,000 3,500,000 3,500,000 3,600,000 3,500,000 3,500,000 3,500,000 7,000,000 7,000,000 7,000,600 7,000,000 7,000,000 7,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 «U, 000,000 20,000,000 20,000,000 $730,000 800,000 950,000 1,450,080 2,273,000 2,995,000 3,600,000 3,500,000 3,600,000 3,500,000 3,500,000 3,800,000 3,800,000 5,009,000 7,7^,000 8,423,000 8,526,000 9,214,000 9,976,000 10,802,000 12,431,000 14,319,000 15,461,060 15,660,000 15,919,000 16,529,000 17,038,000 17,920,000 18,529,000 20,456,000 27,730,000 32,493,000 Per ant. 6.7 $60,000 200,000 700,008 1,525,000 2,245,000 18.8 1890 92.6 1891 66.9 1892 31.6 $800,000 114,000 300,000 440,000 275,000 114,000 690,000 222,000 120,000 720,000 26.7 1894 1895 3.3 8 6 1896 12 6 7.9 11.8 1899 300,000 300,000 1,600,000 743,006 1,423,000 1,526,000 2,214,000 2,9^6,000 3,802,000 431,000 2,320,000 3,461,000 3,660,000 3,919,000 4,529,000 5,O'8,000 5,920,000 6,529,000 6,456,000 7,730,000 ■ 12,493,000 18.2 1900 . . 12.7 1901 17.3 1902 1903 $2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,800,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 >8, 556,000 8,660,000 8,550,000 18.1 1.2 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919-.. 240,000 120,000 120,000 820,000 1,120,000 1,120,000 820,000 120,000 520,000 820,000 520,000 114,000 749,000 1,164,000 1, 380, 000 10.9 9.6 9.5 11.6 24.2 15.8 6.6 2.4 7.1 8.0 8.2 4.0 16.3 27.0 20.9 Total 31 years. 37,695,000 13,542,000 1 Profits before deducting Federal income and excess profits taxes. ' Total capital stock increased by $2,000,000 stock dividend; $6,650,000 of common stock converted into preferred. « Surplus increased by appraisal of properties, $2,393,000. The concern now known as the Cudahy Packing Co. was first in- corporated in Illinois with a capital stock of $750,000 under the name of the Armour-Cudahy Packing Co. The two members of the Cudahy family, Michael and Edward A., together with Philip D. Armour (founder of Armour & Co.), were the sole subscribers to the original capital stock. The name was changed in December, 1890, to the Cudahy Pack- ing Co., the Armour interests in the original corporation having at that time been acquired by the Cudahy family. The family exer- cised practically sole ownership until the end of 1915, when the company was reorganized under the laws of Maine and a policy adopted looking toward a wider distribution of capital stock. This policy by no means removed the control of the company from the MEAT-PACKING INDUSTEY. 33 hands of the Cudahy family, who still continue to be the principal stockholders. The annual profits of the company during the period of its ex- istence from 1888 to 1918 show considerable variation, ranging, in rate of profit on net worth, from 1.2 per cent in 1903 to 56.9 per cent in 1891. Profits in dollars and in rate, covering the last three war years, 1916-1918, have been extremely high, reaching the rate of 27 per cent on net worth in 1917. In spite of a few low profit years the growth of the company has been steady, and the rates of return on net worth generally high. The total reported earnings for the 31 years aggregate $37,695,000, of which $13,542,000 were paid out in dividends, the balance (after deducting income taxes in 1917 and 1918) being reinvested in the business. In the period under review $12,776,000 of stock dividends were declared as follows : 1893 $2, 750, 000 1901 — 1,500,000 1907 3, 802, 000 1916 2, 000, 000 1917 2, 724, 000 Total 12, 776, 000 Of the $20,000,000 of capital stock outstanding on November 2, 1918, $11,450,000 was common stock and $8,550,000 preferred stock. As is readily seen from the above summary, $7,224,000 of this total capitalization was issued for cash at various times, including the original investment of $750,000, the balance having come about through issuing stock dividends. Of the total issue of preferred stock, $2,000,000 was subscribed for in cash in 1902, the balance, $6,550,000, being issued at the beginning of the fiscal year 1916, in exchange for an equal amount of common stock (for detailed dis- cussion of this transaction see Exhibit B). Thus it is seen that the bulk of the preferred stock does not represent an obligation assumed by the company in return for any cash contribution made to it, but represents rather the capitalization of accumulated surplus. The following table recapitulates the financial history of the company : Recapitulation of financial history, 1888-1918. [Per compaBy figures unadjusted by Commission.] Original Investment, 1888 $750, 000 Add: Reported net profits 31 years $37, 695, 000 Capital stock sold for cash during period 6, 473, 000 Appraisals of property, 1918 2, 393, 000 Total additions 46, 561, 000 47, 311, 000 34 MEAT-PACKING INDUSTEY. Cash dividends paid 31 years ^'^^'^^^'nnn Sundry surplus adjustments 1, 276, OOP Total deductions $14, 818, OOP Net worth or stockholders' equity, Nov. 2, 1918 32, 493, 000 Thus it appears that while the net worth of the company grew from $750,000 in 1888 to $32,493,000 in 1918, about $24,000,000 of this increase came out of surplus profits reinvested in the business, $6,473,000 from the stock sold for cash, and $1,117,000 was accounted for by sundry surplus adjustments, showing that the Cudahy Pack- ing Co., as in the case of the other great packers, has grown prima- rilj' from profits reinvested in the business. Charts A and B exhibit graphically the growth in the earn- ings of the five great companies over the historical periods just reviewed. Section 8. Earnings in recent years. As already explained the figures presented in the foregoing his- torical tables have not been submitted to analysis or adjustment^ but follow the actual reports of the packers. Coming now to a closer analysis of earnings, a study has been made of the accounting methods of the packers as reflected in their final profit and loss accounts, and balance sheets for the six years, 1912 to 1917. This study has necessitated making a number of ad- justments in earnings as shown in the historical tables for these years, and accordingly figures of profit on the tables about to be presented will be found not to agree with those shown on the histori- cal tables in all cases. Without, at this point, going into the spe- cific reasons for adjustments made (for this analysis see Ch. Ill) it may be said in general, that changes have been necessary because of the manner in which income) and excess profits taxes, inventory and other reserves, subsidiary company earnings, surplus adjust- ments, and depreciation have been handled on the books of the packers, and the erroneous methods used in treating these items for reported statements of annual earnings. (For a reconciliation of the original figures and the figures as adjusted by the Commission, see Exhibit C.) Adjustments have been made in accordance with certain obvious principles of modern accounting so far as those principles apply to a proper definition of " annual earnings." No complete audit of the books was made for the six years in question, and it is probable that ' Income and excess profits tax reserves are not deducted from earnings in 1917 and 1918, and thus constitute the only adjustment made In earnings as reported l)y the packers. ^^5, 000^)0 40,600,000 55.000,000 50,000,000 IJ.OOO.OOO XQOOQOOO 15,000000 Chart A. — Net proflts and dividends of Armour & Co. and Swift & Co., 1885-1918. Total rectangle show.s net profit, black portion shows dividends paid. (See Table.s 2 and 3 for actual figures.) 45,000 000 .40. 00a 000 ARMOUR & CO. I8&5 -i9ia lo.ooaooo s, oca 000 1,000.000 SWIFT &ca 1696- 1915 I. u~i ^J) t~~ eo a\ o — tv-rn-^j-ioNfi t^ oo ^- OO oO ^ Ot ^i acklng Co., X888-1918. Total rectangle sbows net profit, black portion shows dividends paid. (See Tables 4, o, and 6 for actual figures.) 4,000,000 3,000,000 2.000,000 1,000,000 en — c^ rO • 1-— CO 128911*'— 20. (To face page 34.) n o o lO o<3 3; o" § o" g o o CS o o o <5 o o o MEAT-PACKING INDUSTRY. 35 had such an audit been made, more instances calling for adjustment would have come to light. Furthermore, as will be disclosed in Chapter III, a large part of the accounting theory and system of the great packers rests upon an un- tenable foundation, and accordingly the reliance which can be placed on reported earnings even as adjusted, in any given year, is ex- tremely problematical. The case is so serious that only a sweeping revision of accounting methods and practices can at some future date provide reliable figures of cost and profit. Adjustments made in figures compiled under the existing methods can do little except to bring' about a somewhat nearer approximation to the actual underlying facts than the packers' reported figures now exhibit, and in no sense can these adjusted figures be taken as final. With these limitations in mind the following study of the earn- ings of the great companies from 1912 to 1917, inclusive, is presented. In the year 1918 the profit regulation of the Food Administration was put into effect. There are a number of definitions in use as to what constitutes " profit " or " earnings," and accordingly it is desired to make clear exactly what definition the Commission follows in the accompanying tables. Table 7 shows adjusted earnings. The word " adjusted " signifies that these figures depart from the historical tables of packers' profits already shown, by reason of adjustments and cor- rections made by the Commission. For the purposes of this report, " earnings " are arrived at substantially as follows : From the sales of the company, raw material costs, direct operating costs, selling expenses and administrative expenses are deducted, and to tliis re- sult is added miscellaneous income derived from rents, interest, dividends, etc., and from it are deducted all miscellaneous charges except interest paid on borrowed money, and income and excess profits tax payments. Out of such profit, the bondholder and the banker must be paid, the Government receive its share in the form of income and excess profits taxes, the balance accruing to the stock- holders for such disposition as they may elect to make of it. Table 8 shows adjusted net profits. This figure only departs from "earnings" shown on Table 7, by the deduction of interest on borrowed money as an item of expense. Items affecting the opera- tions of other years, and special distributions of, or accretions to, surplus account, are excluded altogether from " net profits," as from " earnings." Out of " net profits " as thus defined, the Government receives its share in income and excess profits taxes, the balance accruing to the stockholders for such disposition as they may elect to make of it. Table 9 shows balance of net profits available for dividends or surplus, which is the amount of net profits remaining after income 36 MEAT-PACKING INDUSTRY. and excess profits taxes are paid, and extraordinary distributions in the form of pension funds, special bonuses, etc., provided for. ^ Thus the following tables exhibit earnings from three points of view, viz: (1) From the standpoint of the industry, or earnings de- rived from all capital invested whether borrowed or otherwise (earn- ings) ; (2) from the standpoint of the incorporated company con- sidered as an entity (net profit) ; and (3) from the standpoint of the individual stockholder (balance available for dividends or surplus). Table 7. — Earnings of the five great packers, 1912-1917, before deducting inter- est (as adjusted by Commission). Armour. Swift. Morris. WUson. Cudahy. Total. $8,659,000 10,342,000 12,201,000 16,051,000 27,430,000 « 34,283, 000 $10,883,000 13,535,000 13,512,000 26,541,000 26,732,000 62,963,000 $2,707,000 2,934,000 3,057,000 3,368,000 6,879,000 9,884,000 '$1,658,000 1925,000 13,642,000 4,161,000 6,957,000 10,761,000 $1,821,000 2,318,000 2,416,000 1,883,000 4,417,000 6,484,000 $25,728,000 30,054,000 34,828,000 51,994.000 71,415,000 114,376,000 1915 1916 . .. . , 1917 108, 966, 000 144,166,000 27,819,000 28,104,000 19,339,000 328,394,000 Operating profits in 3 prewar years, 1912-13-14 31,202,000 77,764,000 37,930,000 106,236,000 8,698,000 19,121,000 6.225,000 21,879,000 6,555,000 12,784,>000 '■ — — " 90,610,000 237,784,000 Operating profits in 3 war years, 1915-16-17 Excess war years Per cent of excess 46,562,000 149 68,306,000 180 10,423,000 120 15,654,000 251 6,229,000 95 147,174,000 162 ' As figured by Price, Waterhouse & Co., certified public accountants, before charging depreciation. ' Not including South American profits. From this table it appears that the "earnings" of the five great packers combined for the six years 1912-1917 were $328,394,000, of which $90,610,000 was earned in the first three years, herein designated as " prewar " years and $237,784,000 was earned in the last three, or " war " years, 1915-1917. This shows an excess of the war years over the prewar years of $147,174,000, which is an increase of 162 per cent. The greatest per cent of increase for this period for individual companies is shown by Wilson & Co., Inc. (251 per cent), the smallest per cent of increase by. the Cudahy Packing Co. ( 95 per cent) . The former may be explained by the fact that earnings in 1912 and 1913 were abnormally low (even before charging depreciation) , while the latter is explained in part by the relatively poor "war" year of 1915. While the European War began in August, 1914, the fiscal year 1914 for the packers extended from the fall of 1913 to the fall of 1914, and accordingly that fiscal year falls almost wholly within the prewar period. The consider- able margin by which Swift & Co. exceeded Armour & Co. (180 per cent as against 149 per cent) is noteworthy, but it is explained in part by the fact that Armour & Co. did not report the great profits of its South American companies in 1917 (said to be abouti $6,000,000), although the earnings accrued to the same stockholders. MEAT-PACKING IKDUSTEY, 37 Table 8. — Net profits of the five great packers, 1912-1917, after deduct in ff hi- ierest (as adjusted by Commission). (l/oss In Italics.) Armour. Swift. Morris. ■Wilson. Cudaliy. Total. 1912 15, 702, 00ft 6,158,000 7,640,000 11,156,000 22,849,000 '27,137,000 $8,745,000 9,449,000 9,651,000 20,720,000 22,672,000 47,236,«)0O $1,813,000 1,917,000 2,206,000 2,321,000 4,890,000 8,012,000 11646,000 1«7«,(W0 11,995,000 2, 464,000 5,314,000 8,319,000 $1,129,000 1,329,000 1,402,000 724,000 3,511,000 4,935,000 $18,03.5,000 18,581,000 22 894 000 1913 1914 1915 37,385,000 59,236,000 95,639,000 1916 1917 Total,6years 80,642,000 118,473,000 21,159,000 18,466,000 13,030,000 251,770,000 Net profits in three prewar years, 1912, IMS, and 1914 .. . Net profits in three war years, 1916, 1916, and 1917 ... 19,500,000 61,142,000' 27,845,000 90,628,000 5,936,000 15,223,000 2,369,000 16,097,000 3,860^000 9,170^000 59,510,000 192,260,000 Excess war years 41,642,000 214 62,783,000 225 9,287,000 167 13,728,000 576 5,310,000 138 132,750,000 223 1 Betrare charging depreciation. ' Not including South American profits. Net profits for the great packers for the six years aggregate $251,770,000 according to this table. Of this- total $59,510,000 wa.s earned in the three prewar years, and $192,260,000 in the three war years, giving an excess of 223 per cent over the prewar total. Com- paring this per cent of increase with that shown for earnings (Table 7) of 162 per cent, it appears that as earnings grew larger, interest charges in proportion to total earnings grew less, and where in the prewar years a relatively large amount of total earnings had to be turned over to bankers and bondholders, in the war years this propor- tion had shrank greatly, the stockholders retaining a very much greater share of the total. In other words the increase in profit has been much greater than the increase in interest charges. Wilson & Co., Inc., again shows the largest increase in per cent of excess (576 per cent), due as before to low earnings in 1912 and a positive loss in 1913. Chart C shows graphically the net profit for the five companies combined, for the six years tmder review. Table 9. — Net profits of the five ffreat packers available for dividends or surplus 1912-1917 (as adjusted by Commission). (Loss in italics.) Armour. Swift. Morris. Wilson. Cndahy. Total. 1912 $5,702,000 6,028,000 7,510,000 11,000,000 22,108,000 2 31,294,000 $8,250,000 9,250,000 9,450,000 19,595,000 18,943,000 34,650,000 $1,313,000 1,917,000 2,206,000 2,321,000 4,690,000 6,162,000 11646,000 l«7»,000 11,998,000 2; 464, 000 5,314,000 6,698,000 $1,129,000 1,329,000 l,4(B,00O 724,000 3,511,000 3,985,000 517,540,000 18,252,000 22,583,000 36,104,000 53,958,000 72,789,000 1913 1914 1915 1916 1917 Total, 6 years 73,634,000 100,138,000 19,109,000 16,845,000 12,080,000 221,806,000 Profits .retained 3 prewar years, 1912-13-14 19,240,000 54,394,000 26,950,000 73,188,000 5,936,000 13,173,000 2,369,600 14,476,000 3,860,000 8,220,000 58,355,000 Profits retained 3 war years, 1915-16-17 163,451,000 Excess war years 35,154,000 183 46,238,000 171 7,237,000 122 12,107,000 511 4,360,000 113 105,096,000 ^ Be/ore chargizig depreciatjon. * South Americaaz)rofits sot included. 38 MEAT-PACKING INDUSTRY. The foregoing table shows the amount of net profit estimated to have been retained by stockholders which can either be distributed in the form of dividends or left as a part of their equity ia the busi- ness. The "per cent of excess" for individual companies in the war MEAT-PACKING INDUSTRY. 39 years are not as great as in the case of "net profits" (Table 8), due mainly to the fact that in 1917, the Government collected a heavy income and excess profits tax which came out of net profits before the stockholders' equity accrued. While these Federal taxes in 1917 have undoubtedly operated to hold down retainable profits, it is clear that, taken as a whole, the three war years (and even the year 1917 itself) were extremely profitable to the stockholders, giving them an increased eqviity far in excess of what they had enjoyed in the years immediately preceding the war. Section 9. Bates of profit in recent years. While the increase in packers' profits measured in dollars has been very large, it is desirable to make certain further comparisons before passing ultimate judgment as to earning power in recent years. Chart D shows the ratio of increases in net profits, net worth, and sales for four of the great packers in the six years under review. The sales curve is added as a matter of general interest. The greater increase in profits curve than in net worth curve, is par- ticularly noteworthy. Preliminary to exhibiting tables on which actual rates of profit are calculated, it will be well to discuss briefly the significance of rates or percentages as criteria of profit taking. A number of bases are used upon which to calculate profit rates — for instance, the percentage of profit to stockholders' equity or net worth; the percentage of profit to investment including borrowed money; the percentage to capital stock; the percentage to actual investment in cash or property at actual value; the percentage to sales; the percentage to total costs; or, to shift the ground, the amount of profit per unit of product (per head or per pound in the packing business), and so forth. The packers themselves, it is to be noted, confine the bulk of their public announcements to profits per dollar of sales, or profits per head of animals, or per pound of beef products. As to the proper basis for the purpose immediately in hand, there can be no question but that the rate of profit on investment fur- nishes the only sound criterion of packers' profits. Profits per pound, per head or per dollar of sales, while interesting from cer- tain angles of study, are irrelevant to the main query, which can only contemplate the rate of return to capital invested in the packing business. If such capital is being unreasonably rewarded, the earn- ings per unit of output, or per dollar of sales have little or no sig- nificance. The rate per dollar of sales, furthermore, is especially misleading in that an unchanged return on investment in a sharply rising market (like the past three years) is bound, when figured in terms of profit on sales, to show a decreasing ratio, and hence to be 40 MEAT-PACKIKG INDUSTRY. emphasized by interested parties as an argument for ableness of earnings. ffreater reason- O Rate of profit on investment is then the best index, but the problem remains of defining " investment " — shall it be capital employed in the business, including borrowed money, net v^orth or capital stock! MEAT-PACKING INDUSTRY. 41 Furthermore, as the definition of " investment " varies, so must the definition of what constitutes " profit " vary also. There seems to be no complete consensus of opinion, governmental or private, as to what constitutes the one best definition of " investment " for the pur- pose of judging the reasonableness of the rate of earnings thereon. Some authorities urge total investment, including borrowed money (such was the basis of the United States Food Administration's profit regulation of the packers in 1918), some urge net worth, and some capital stock outstanding. The Treasury Department in its excess profit tax law takes a figure closely approximating net worth, yet not quite identical therewith. Under these circumstances the Commission does not desire to select one definition of investment only. It has accordingly, for the tables about to be presented, selected two definitions of in- vestment, and shows the rate of profit estimated to have been earned by the packers in the six years under review, applicable to each. The two selected bases are as follows : (1) Total investment, i. e., net worth plus borrowed money, or, stated in another way, total assets less accounts and accrued items payable. Obviously, under this definition of investment, profit must be taken before interest is deducted as an expense, or as shown under the caption of " Adjusted earnings " on Table 7. (2) Net worth, i. e., capital stock and surplus or stockholders' equity. Under this definition of investment, profit must be taken after interest is deducted as an expense, or as shown under the caption " Adjusted net profit " on Table 8. There is also presented a third series of rates, based on the second definition of investment, i. e., net worth, these rates measuring the actual return to stockholders after income and excess profits taxes and special distributions of surplus have been allowed for. Strictly speaking this series (Table 14) does not represent a rate of profit actually earned by the company, but rather the rate upon that portion of the profit earned which is available for dividends or surplus. No figures are presented showing the rate of profit on investment defined as "capital stock outstanding," as this gives in many cases a misleading view as to the reasonableness of the return. Such a rate would mean very little in the case of the packers because of the varying policies which the several companies have pursued in respect to issuing stock dividends. Morris & Co., whose surplus is now some 14 times greater than its capital stock, would show an enormous rate, while Armour & Co. which has capitalized surplus to a large extent ■would show a much lower rate — though the earnings of the two com- panies based on net worth or on total investment were not very dissimilar. The following table exhibits in dollars, so-called "total invest- ment " for the five companies for the six years under review. Theso 42 MEAT-PACKING INDUSTKY. figures have been adjusted by the Commission to the extent of allow- ing for any adjustments already made in "net profits' which are reflected on the balance sheet. T\Bi.E 10— Total investment of the five great packers, including horroioed money, 1912-1917 (as aajwited hy Commission). Beginning of fiscal year. Armour & Co.: 1912 1913 1914 1915 19in 1917 Morris & Co. : 1912 1913 1914 1915 1916 1917 Cudahy Packing Co.: 1912 1913 1914 1915 1916 1917 Swift &Co.: 1912 1913 1914 1915 1916 1917 Wilson & Co. 1912 1913 1914 1915 1916 -. 1917 Five paclcers combined: 1912 1913 1914 1915 1916 1917 Net worth (capital and surplus). S76, loo; 104 109; lis; 137, 25, 27, 29, 30, 32, 36, 15, 16, 17, 17, 18, 20, 86, 104, 108, 112, 125, 138, 16, 16, 15, 22, 23, 28, 221, 265, 274, 292, 319, 301, 710,000 195,000 223,000 733,000 733,000 335,000 994,000 626,000 183,000 939,000 510,000 000,000 919, 000 529,000 038,000 920,000 529,000 956,000 000,000 000,000 000,000 000,000 873,000 815,000 813,000 759,000 787,000 294,000 945,000 383,000 436,000 109,000 231,000 886,000 590,000 489,000 Bonds. $30,000,000 30,000,000 30,000,000 30,000,000 30,000,000 60,000,000 12, 100, 000 11,900,000 11,700,000 11,500,000 11,300,000 11,100,000 4,538,000 4,272,000 4,020,000 3, 780, 000 3,519,000 3,274,000 5,000,000 5,000,000 5,000,000 10,000,000 24,500,000 31,311,000 5,145,000 9,844,000 9,300,000 8,689,000 8,099,000 15,000,000 56,783,000 61,016,000 60. 020, 000 63,969,000 77,418,000 110,685,000 Notes pay- able. $10,255,000 15,523,000 25,815,000 40,914,000 38,865,000 27,866,000 6,936,000 7,366,000 9,815,000 10,134,000 8,648,000 9,249,000 6,995,000 8.042,000 10,502,000 13,793,000 17,238,000 16,501,000 15,883,000 24,649,000 39,160,000 39,539,000 32,933,000 38,873,000 8,200,000 4,986,000 6,652,000 17,034,000 14,514,000 18,207,000 48,269,000 60,566,000 91,944,000 121,414,000 112,198,000 110,696,000 Total invest- ment. 1116,965,000 14^718,000 160,038,000 180,647,000 187,698,000 216,201,000 45,030,000 46,892,000 50,698,000 62,573,000 52,458,000 56,349,000 27,452,000 28,843,000 31,560,000 35,493,000 39,286,000 40,731,000 106,883,000 133,649,000 152,160,000 161,639,000 183,306,000 208,999,000 30,158,000 31,589,000 31,739,000 48,017,000 46,558,000 61,690,000 326,488,000 386,691,000 428,195,000 478,269,000 509,206,000 682,870,000 Based on Table 10, Table 11 has been prepared, which shows the rate of " earnings " on total investment. Table 11. — Rate of "earnings" of the five great packers on total investment, 1912-1917. Armour. Swift. Morris. Wilson. Cudahy. Five com- panies. 1912 Per cent. 7.4 7.1 7.6 8.9 14.6 115.9 Per cent. 10.2 10.1 8.9 16.4 14.6 25.5 Per cent. 6.0 6.3 6.0 6.4 11.2 17.5 Percent. 5.5 2.9 11.5 8.7 14.9 17.5 Per cent. 6.6 8.0 7.7 5.3 11.2 15.9 Percent. 7.9 1913 7.8 1914 . 8.2 1915 10.9 1916 14.0 1917 19.6 10.8 15.2 9.2 11.3 9.5 12.1 Average 3 prewar years, 1912-13-14 . . 7.4 9.7 6.1 6.7 7.5 8.0 Average 3 war years, 1915-16-17 13.3 19.2 11.8 14.0 11.1 15.2 ' South American business not Included. MEAT-PACKING INDUSTRY. 43 It appears from this table that rates of earnings on total invest- ment generally increased sharply for all companies during the last two war years. Where the five companies combined were earning 8 per cent on total investment in the prewar years they earned 15.2 per cent or nearly twice as great a rate in the war years, the year 1917 showing a rate of 19.6 per cent, or nearly two and one-half times the prewar average. Swift & Co. leads all other companies in both the average for the war years (19.2 per cent) and in the year 1917 (25.5 per cent). The following table shows the composition of " net worth " for the beginning of each fiscal period under review. Table 12. — Net worth (capital and surplus), of the five great packers, 1912-1917, as adjusted ty Commission. Beginning of fiscal year. Capital stock. Surplus or deficit. Net worth. Armour& Co.: 1912 J20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 100,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000 14,000,000 60,000,000 76,000,000 75,000,000 75,000,000 75,000,000 75,000,000 30,000,000 30,000,000 30,000,000 29,836,000 29,706,000 30,133,000 125,000,000 140,000,000 140,000,000 139,836,000 139,706,000 222,133,000 $56,710,000 80,195,000 84,223,000 89,733,000 98,733,000 37,335,000 22,994,000 24,626,000 26,183,000 27,939,000 29,610,000 33,000,000 3,919,000 4,529,000 6,038,000 6,920,000 6,529,000 6,956,000 26,000,000 29,000,000 33,000,000 37,000,000 60,873,000 63,815,000 (') [:i 0) (■) (') (■) (') (') 0) (') (') $76,710,000 100,195,000 104,223,000 109,733,000 118,733,000 137,335,000 25,994,000 27, 626, OOO 1913 1914 1915. 1916 1917 Uorrls & Co.: 1912 1913 1914 . 29,183,000 30,939,000 32,510,000 1916... 1916 1917 36,000,000 15,919,000 Cudaliy Packing Co.: 1912 1913 16,629,000 1914 17,038,000 1915.... .. 17, 920, 000 1916. 18,629,000 1917 ■ 20,956,000 S-vpift & Co.: 1912 _ 1913. 86,000,000 104,000,000 1914 108,000,000 1915.... .. ■ 112,000,000 1916.. . 126,873,000 1917 138,815,000 Wilson & Co, Inc.: 1912.... 16,813,000 1913 16,759,000 1914 16,787,000 1915 22,294,000 1916.... 23,945,000 1917 28,383,000 Five packers combined: 1912 221,436,000 1913... 266,109,000 1914 274,231,000 1915 292,886,000 1916.... 319,590,000 1917... . 361,489,000 ■ See footnote 2, Table 5, p. 29. The Commission, as already explained (see p. 31), has eliminated good will in arriving at Wilson's net worth, in order to bring the company into line with the other companies. Based on Table 12, Table 13 has been prepared which shows the rate of net profit on net worth. These rates are not altogether pure in that they are based on a net worth or stockholders' equity, after 44 MEAT-PACKING INDUSTBY. income and excess profits tax reserves have been deducted, and a net profit taken before such taxes have been deducted, but m so far as this basis closely approximates that of the Treasury Department in determining excess profits, it is felt that it can be used as one significant index of measuring i>rofit. Table I.3. — Rate of net profit of the five great packers on net worth 1912-1911, (Loss In Italics.) Armour. Swift. Morris. Wilson. Cudahy. Five com- panies. 1912 Per cent. 7.4 6.1 7.3 10.2 19.2 119.8 Per cent. 10.2 9.1 8.9 18.6 18.0 34.0 Per cent. 7.0 6.9 7.6 7.5 15.0 22.3 Per cent. 2 3.8 2 1.6 2 12.6 11.1 22.2 29.3 Percent. 7.1 8.0 8.2 4.0 18.9 23.5 Percent. 8.1 7.0 8.3 12.8 18.5 26.5 1913 1914 ]915 1916 1917 12.5 17.5 11.6 14.9 12.2 14.5 Average, 3 prewar year Soutb American business not included. ' Eate before charging depreciation. MEAT-PACKING INDUSTRY. 45 In Table 14 is exhibited the rate of the portion of the annual profits actually accruing to the stockholders, on net worth. This method of comparison can not, of course, show the true effect of the war on packers' profits, in that the profit does not include income and excess profits taxes. Had the net profits been less, such taxes would have been relatively reduced and the proportionate share retainable by stockholders increased. Even on this basis, however, it appears that the war years re- warded stockholders with profits at a rate over twice that obtaining before the war for Armour & Co., Swift & Co., and the Cudahy Packing Co., a little less than twice for Morris & Co., and about four times the prewar average for Wilson & Co, Thus it appears from a variety of angles that packers' profits have greatly increased during the first three years of the war, and this increase holds true not only in dollars but in rates of return on in- vestment. If the five great companies were making reasonable profits in the three prewar years, 1912, 1913, 1914, it is evident that their war profits for the years 1915, 1916, and 1917, were from two to three times a reasonable return. CHAPTER III. THE GREAT PACKERS' ACCOUNTING SYSTEMS AND THE COSTS AND PROFITS OF MEAT. Section 1. Introductory. For a number of years the great packers, especially Swift & Co. and Armour & Co., have been giving wide publicity to the statement that their profits on meat, particularly beef, are low. These profits, they say, range from one-eighth to one-half cent per pound of prod- uct sold, and such figures are quoted in yearbooks, in letters to Mem- bers of Congress, in newspaper advertisements, in congressional hearings ; in fact, whenever the packers' profits are under review. To announce a profit on any given product, such as carcass beef, implies that the cost of that product is accurately known. It ought to follow, therefore, that the packers, in quoting these figures, do maintain a system of accounts which convincingly exhibits carcass costs and other meat-product costs period by period. The Commis- sion has made an intensive study of the packing-house cost systems as a part of its economic inquiry into the industry. The results of these studies show that — 1. There has never been developed an accurate cost system for the meat-packing industry, and the cost theory which the packers use in compiling their figures for specific products and departments does not, and can not, give reliable results. 2. The various methods of determining costs and profits in vogue among the several packers were found to be subject to severe criticism on the score of accounting, inconsistency, even if the theory upon which they are .based could be assumed sound. The difficulty is further increased by the lack of uniformity which was found to exist between the companies, and accordingly figures of cost and profit as shown by one packer can not be compared satisfactorily with those of another packer. 3. Only a thorough revision of the whole cost accounting pro- cedure can bring about a situation where costs and profits of specific packing-house products will become known quantities, and figures furnished upon which the public, the Government, and the packers themselves can place genuine reliance. 46 MEAT-PACKING INDUSTRY. 47 Section 2. The packers' accounting system. Strictly speaking, each of the great companies has an accounting system which varies from that of the other companies in many im- portant respects, except that all companies follow the same general theory of so-called costs, and all departmentalize their packing-plant accounting to a high degree. It is proposed, in the interests of brev- ity and clarity, to treat the accounting system as a unit for all com- panies wherever possible in the following discussion. When such treatment is impossible reference will be made to individual vari- ations. Primarily it is advisable to relate the present accounting system to the economic functions performed by the packers. These eco- nomic functions include: 1. The meat business, including the slaughtering of animals, and the cutting and merchandising of the principal meat products, both fresh and cured. 2. The primary by-product business, including the curing of hides, the boiling and preparation of fats, the disposal of edible offal such as hearts, livers, tripe, etc., and the simple processing of by-products in the form of sausages and canned meats. (Nearly all well-estab- lished independent packers carry their processing to this point.) 3. The specialty by-product business, including the manufacture of glue, soap, leather, commercial fertilizer, fiddle strings, glycerin, bone products, serum, mincemeat, pepsin, butterine, and other more intensively manufactured products in which a large part at least of the raw material comes from slaughtered animals. (Few inde- pendent packers engage in these businesses at all.) 4. Entirely unrelated food business, including the meat-substi- tute business, covering the production or merchandising of products such as poultry, eggs, cheese, butter, lard substitutes, canned fruits, and vegetables, canned fish, grape juice, rice, and groceries. 5. Services and supplies, including the operation of stockyards, cold-storage plants, feeding stations, car lines, power plants, box factories, tin shops, mechanical supply companies, salt mines, and water companies. The carcass of a slaughtered steer is sold as dressed beef in class 1 ; the fats derived from that steer are refined and sold as oleo oil in class 2; some of this oleo oil is, however, transferred to class 3 and there mixed with dairy products and sold as butterine. Chart E has been prepared to show graphically the departments of ii packing plant. In connection therewith, the separation existing between the manu- facturing and selling functions of the great packers' business should be noted. The former is I'epresented by packing plants, tanneries, 128911°— 20 i 48 MEAT-PACKIKG INDUSTRY. produce plants, cannery establishments, etc., and the latter by a widely spread net of branch houses, and car routes. B\CK>N&HQUSfc ^ rUNCT40NS UVE CATTLE _n CATTLE KIU-VNG- LIVE CALVES LH LIVE shee:p LIVE HO&3 BEEF SECttoN CAJJrid- Bca^ V£AL ■SECTION Dressed. \fea.i , ^ "U HOG lls/£ STOCK SPECIAL-TIES ■^ MWED SECTION canned. Mea)-& TallowJPBregSC MUTTON SECTIOK -> Dressed Muitttii-i Woo).Pelfe.E>»:.f A^ OTHER, R,^W MATEW.IA\- PoaKSEa\oN Dressed. fbrK Dru Sai> fbrk. Swiat FK> fbfK SrnoKed f&i-K LarcL Eeo ^' Lfcartiar Cutrted. riair SrooK.Foo,©u/rter Chsfcae. Ca-vMTvacL f^iVK CannaoL FisH C-anirvacl. vfege+oble.^ CavxnedL Frw,iV* Rice, <.o|(fe.e, Efo. OTHER, PLAW MATERIAL OTHEMMON-UVEST(XKP*>(»C^ MaohinarM Tanniirg EyhacjV SuwWWvjWTAC Ac»<4. Saif. CoopnragB, Eto. 1 . r... p THE PACKING PLANT DEPARTMENT. To give bookkeeping effect to these varied economic functions, the great packers have all adopted a highly departmentalizied system of MEAT-PACKING INDUSTRY. 49 accounting. Every packing plant as soon as it grows to a sufficient size is divided for accounting purposes into a number of depart- ments, sometimes as many as 50 or 60. Each of the departments deals with a ^ecific product or group of allied products, such as dressed beef, hides, pickled pork, canned goods, etc. In addition to these so-called " operating " departments, the packing plant is fur- ther divided into " nonoperating " or " service " departments, which keep separate account of their inventories, purchases, expenses, etc. These service departments sell no product to the outside world, as a rule, and only furnish the operating departments with supplies and services of one kind or another. (Typical of these service depart- ments are motive-power department, box factory, laundry depart- ment, printing department, freezer department, carpenter shop, mechanical department, etc. See p. 51.) Each department records its own purchases, sales, inventories, and expenses, as well as its transfers to and from other departments, together with services supplied and received, in such a manner that, as a rule, the service departments leave no net balance, neither a loss nor a profit, the component items being distributed on a certain basis to the operating departments. At the end of a given period a profit and loss account of the plant is prepared which shows the net result of each operating department and the balances of such service departments as are not closed out, and a few general items of mis- cellaneous income and outgo. Although the packers publish statements concerning them, the total sales, the total purchases, the total classified expenses, of a given plant or of the company as a whole, nowhere appear on the books of account and can only be arrived at by aggregating such items from the departmental records. The Cudahy Packing Co. is the only great packer which prepares an aggregated statement of this kind. (See Exhibit D.) It is pertinent to inquire what are the functions of the numerous operating and nonoperating departments, and why have the great packers carried their accounting to this highly specialized degree. The independent packer seldom departmentalizes his accounts so intensively. The reason for the difference in accounting method be- tween the two is partly based on the difference in economic function. The independent packer slaughters and cures and does little else. Generally he sells his product either locally or through a broker without the assistance of a car-route or a branch-house system. But the great packer was driven to departmentalization because of the ramified manufacturing processes and varied lines he is engaged in, and because of the novelty of the selling facilities he employs. The great packer, besides producing meats, manufactures or dis- 50 MEAT-PACKING INDUSTRY. tributes glue, soap, fertilizer, butterine, poultry, eggs, cheese, gro- ceries, rice, grape juice, etc. The following table shows the packing-plant departments found on the books of Armour & Co. The operating departments are ar- ranged, where possible, in accordance with their relation to a given kind of animal. Not all the operating departments derive their raw material from one class of animals only, and departments of this character are grouped under the designation of "mixed section." The departments that submit the material derived from the animal to a further processing with a considerable admixture of foreign in- gredients, thus carrying it beyond the stage of primary by-products, are grouped under the name of " specialty by-products." The packers also operate departments that have no relation to live stock, and these are grouped under the caption of *' nonlive-stock products." The list of operating departments is followed by the emmieration of certain of the service departments. Table 15. — Packing plant departments grouped, by sections. (As found on the books of Armour & Co.) Beef section : Cattle slaughtering. Dressed beef. Hides. Oleo. Fresh beef cuts. Beef casings. Beef curing. Fresh beef products. Dried beef. Pickled beef. Beef tanljs. Hog section : Shipping hogs. Packing hogs. Dressed hogs. Fresh pork cuts. Smoked meats. Sweet pickled meats. Boiled hams. Barreled pork. Dry salt meats. Hog casings. Vinegar-pickled pork. Hog tanks. Sheep section : Sheep slaughtering. Dressed sheep. Sheep casings. Wool and pelts. Calf section : Calf slaughtering. Dressed calves. Mixed section : Canned meats. Sausage. Butterine. Tallow and grease. Sterlized meats. Specialty by-products : Animal fertilizer. Soap. Glue. City fats. Curled hair. Ammonia. Serum. Pepsin. Mincemeat. Gut strings. Pork and beans. Sandpaper. Animal oil. Beef extract. Lard substitutes. Nonlive-stock products : Poultry. Butter. Eggs. Cheese. MEAT-PACKING INDXJSTBY. 51 Nonllve-stock products — Continued. Canned fish. Canned vegetables. Canned fruits. Grape juice. Soda-fountain supplies. Peanut butter. Service departments: Motive power. Cooperage. Box. Tin. Bagging. Wagon shop. Harness shop. Mechanical. Laundry. Service departments — Continued. Sewing. Stables. Automobiles. Icing. Freezer. Railways and yards. Street cleaning and crematory. Packing and shipping. Paper baling. Laboratory. Printing. Restaurant. Storeroom. Stationery. Milling. Plant protection, etc. BRANCH HOUSES AND CAR ROUTES. A very large part of the products of the big packers are not sold to the outside world at the point where the packing plants are located, but are shipped to branch houses, which make the final sale to the retailer, or are transferred to the various car routes, which sell in towns where no branch house is located. Dressed carcasses, including dressed beef, veal, mutton, and pork, are shipped to the branch house on two different bases. Armour and Swift ordinarily " consign " their carcasses, without billing, to their selling agencies, the dressed-meat department in the packing plant receiving the final result from the sale after allowing the branch house a commission to cover the estimated expense of selling. Wilson and Cudahy, on the other hand, " sell " dressed carcasses outright to the branch house, the packing-plant department only receiving a credit for the selling price charged to the branch house at the time of shipment. Morris & Co. " consigns " about half of its dressed car- casses and " sells " the other half to its branch houses. There is some variety in the handling of shipments of products other than carcass meats to the branch houses. These methods may be broadly summarized as follows: Armour, Morris, Wilson, and Cudahy " sell " such products to branch houses. Swift & Co. " sells " the bulk of such products, but " consigns '■ oleomargarine and dry-salt meats, as well as certain fresh and frozen cuts. Varying methods are found in the treatment of profits as they appear on the branch-house books. Armour distributes back to packing-plant departments all branch-house profits on the basis of sales value. In 1918 Wilson adopted a similar method. 62 MEAT-PACKIHG INDUSTBY. Swift, Morris, and Cudahy, on the other hand, bring their branch- house profits direct into the final profit and loss account without attempting to allocate them to plants or to departments. In respect to car-route sales, Wilson, Morris, and Cudahy operate a car-route department to which material from the operating de- partments is either " consigned " or " sold," the profit or loss on the car-route department beii^ transferred direct to the plant profit or loss account. Armour and Swift have no car-route departments but include all such results in the operating department from which the shipment originates. TOTAL, COMPANY PROFITS. In order to arrive at the profit or loss for the whole company in a given accounting period, the main office at Chicago picks up the profit for each packing plant (as locally compiled), adds to this aggregate the results from branch houses (when such results have not already been distributed back to individual packing plants), and from other commercial activities which are not conducted in the packing plants (such as the results from tanneries, fisheries, foreign business, etc. ) , makes certain adjustments for interest, taxes, special reserves, dividends received, and other overhead items only found on the books of the main office, and thus the net final balance for transfer to the surplus account is arrived at. The following table is a condensed statement of the final profit and loss account of Wilson & Co., Inc., for the fiscal year 1917, as found in the main office: Table 16. — Wilson & Co., Inc., profit and loss account, year ending Dec. IS, 1917. Gains. Packing-plant results: Chie^o New Yorlc Kansas City Subsidiary companies: Domestic packing houses Foreign packing nouses Domestic producing plants Foreign producing plants Mercbxndlse companies Domestic branch nouses" Foreign selling companies Car lines Keal-estatCf storage, and iuTestment companies . Proportion of profits, affiliated companies Sundry overhead items: Discount on preferred stock Dividends received. Interest received Interest undistributed Other miscellaneous income Sundry reserves Commission on bonds Balance, proflt carried to surplus Total., $3,072,987 542, ISl 127,048 1,157,706 179,669 60,296 9,818 282, 667 9,710 71,687 820,143 2,000 13,700 6,438 7,774 8,363,744 $351,530 1,076,565 23,827 396,150 11,250 6,504,422 8,363,744 ' In 1918 branch-house profits were allocated back to packing plants. MEAT-PACKING INDUSTRY. 63 Section 3. Critical analysis K>i packers' accounting methods. THE DEPARTMENT. Haying reviewed broadly the scope of tlie accounting procedure of the great packers, it is now proposed to subject this procedure to critical analysis. It is evident that the packing-plant department is tlie foaindation upon which the whole accounting framework is based. The department is tiierefore the logical starting point for analysis. In general each packing-plant department carries the following seven main accounts: 1. Sales «r slLipments. < Credit.) -2. Transfei-s out to other departments. (Credit.) 3. Inventories, end of period. (Credit.) 4. Inventories, beginning of period. (Debit.) 5. Purchases of raw material. (Debit.) 6. Transfers in from other departments. (Debit.) 7. Expenses, including overhead. (Debit.) Each of these items requires examination, and will be discussed in turn under the corresponding headings. SALES AND SHIPMENTS (ITEM 1). There are three chief methods whereby the packing-plant depart- ment may dispose of its products. It may sell them direct to the outside trade, it may ship them to branch houses, or it may ship them over company car routes. The packing-plant department sells only a relatively small portion of its products direct to the outside trade, the bulk of the material going to branch houses or over car routes for final disposition. From the standpoint of sound accounting the packing-plant de- partment should be a unit comprehending both manufacturing and selling costs together with the final sales credit, and thus present the final profit and loss on the products originating therein. The great packers with the exception of Armour & Co. (which en- deavors to bring back all selling results to the packing plant depart- ment), do not follow this sound accounting procedure, but in numer- ous instances exhibit only a part of the profit on a specific product in the originating department, the remainder being shown on the books of the selling agency, and never finding its way back to the depart- ment at all. The disposition of the products of a given department, from the accounting viewpoint, is made by (1) direct sale to the outside trade ^ (2) intercompany sales to branch houses or car routes or other: packing plants; (3) consignments to branch house, ear route, or broker. The first transaction is self-explanatory. The second in- volves the fixing by the department of a billing price based either 54 MEAT-PACKING UsTDTJSTKY. on the preA'ailing market or calculated at ^Yhat is termed test cost, the latter applying to carcass meats. Consignments are also made chiefly in the case of carcass meats, the department receiving the entire profit on the final sale after allowing the branch house a commission which is only estimated to cover selling expenses, and which the packers claim does not include an element of profit. It is interesting to note, furthermore, that in the case of consignments the great packers adopt the practice of burying the outward freight and estimated branch-house expenses (or commission) on such con- signments, so that these expenses nowhere can be identified on either the branch-house books or on the departmental books, with the result that no analysis can be made of the legitimacy of these charges as deducted. The above explanation of the disposition of departmental products makes it clear that where the department sells direct to the outside trade, or where it consigns products it retains the profit; where it bills to branch houses on the basis of market it retains only a portion of the profit. Armour & Co. and Wilson & Co., Inc. (since 1918), realizing the shortcomings of departmental profits computed on the above basis, attempt to bring back to the departments all profits made by branch houses. This procedure, of course, renders the billing price at which products were shipped from the packing plant to the branch house theoretically of no effect, as it cancels out when the profit is returned. Armour & Co. also brings back to the department the profit made on car-route sales, but Wilson & Co., Inc., does not, allowing such profit to go directly to the plant profit and loss account. Swift, Morris, and Cudahy do not bring back their branch-house profits to the department from which the products originated, but credit such profits direct to the final profit and loss account of the whole company. Swift brings back car-route profits to the depart- ments, but Morris and Cudahy credit such profits direct to the plant profit and loss account. Thus it may result, depending upon the method of disposition in use by the five great companies, that the total profit made on any given class of products may rest either in the originating department, in the plant profit and loss account, in the company profit and loss account, or in any combination of these three. Before leaving this question a word should be said concerning the method whereby Armour & Co. allocates its branch-house profits back to the operating department. The basis of this allocation is sales value. It is obvious that the sales value is not a sound basis for allocating profits between departments, as it is a fact that products with a high selling value may yield a relatively low profit, or vice versa. MEAT-PACKING INDUSTBY. 55 When profits are not brought back to departments the billing price placed on the product by the packing plant becomes the final credit to the department account and thus determines to a large extent the departmental profit or loss. By varying the billing price depart- mental profits are affected and also branch-house profits. It is quite possible under the methods now pursued by the great companies (with the exception of Armour & Co.) to profoundly affect depart- mental profits by changing the billing price, in that this price is founded upon a more or less obscure " market." An example of the possible effect of billing price on departmental and conversely branch- house profits and losses is found in the 1916 and 1917 statements of Wilson & Co., Inc., as follows : Total reported profit, 1916 $4, 913, 872. 78 Total reported profit, 1917 6, 504, 421. 76 Domestic branch-house profit, 1916 148, 066. 96 Domestic branch-house loss, 1917 1, 076, 564. 97 In other words, with a reported profit on the entire business of some $1,500,000 more in 1917 than in 1916, the branch houses are re- ported to have earned $148,000 in 1916 and lost over a million dollars in 1917. It is difB.cult to reconcile any such statement with what nuist have been the underlying facts. The probable reason for the branch house loss in 1917 as against the profit in 1916 would be found in a change of policy covering billing prices and other ar- rangements between the plants and the branch houses, and not in any lapse of efficiency on the part of the selling organization. Billing prices can be so adjusted as to throw profit into the plants or into the branch houses, as circumstances may dictate. If profits are errone- ously thrown into branch houses, they never find their way back to the department at all, thus bringing about an understatement of de- partmental earnings, unless, as in the case of Wilson in 1918 and Armour, branch-house profits are allocated back to the departments instead of going direct to the company profit and loss account. In the latter case, furthermore, the basis of allocation must be a sound one if accurate departmental profits are to be obtained. TRANSFERS OUT AND TRANSFERS IN (ITEMS 2 AND 6). The second item on the departmental list of accounts is "trans- fers out " and may be considered in connection with " transfers in," item 6. Transfers of raw material from department to department within the plant constitute a large factor in packing plant account- ing. From the slaughtering department all products, except car- cass meat, are transferred to certain primary by-products or to " specialty " by-product departments. The former includes such departments as hide, offal, lard, and oleo, while the latter includes such departments as soap, fertilizer, glue, and butterine. The pri- mary by-product departments in turn may transfer a great deal of MBAT-PA.<3Km« INDUSTRY. ^^ , . 1 ,„ "siDecialty" departments. Transfers in and a^ix^al --- "^"2nd il^-er aL constitute a part of this procedure, ""iiosr^thout exception these transfers are based on "market" valuation, not on the actual cost of the items transferred. The efieet of such transfer valuation on the departmental accounts is two-fold : First, the compilation of accurate costs is rendered impossible, and second, the final results of any given department are thus based in part on prices that have not been actually realized — prices repre- senting anticipated profits or losses. The departmental account accordingly shows a bookkeeping rather than an actual final result. Furthermore, on much of the material transferred, such as blood, bones, tankage, glue stock, etc., there is no ascertainable outside market, and the packers must perforce place quite arbitrary valua- tions on this material having no probable relation to either cost or market. Again certain products are in the green stage when trans- ferred, and an outside market only obtains for the finished stage, with the result that arbitrary deductions must be made from the finished market, estimated to establish a nonexistent "green" market. The certification of internal transfer prices presents, accordingly, an almost interminable problem to any outside reviewing body. Thus transfer prices not being based on cost, provide a technique whereby profits may be arbitrarily thrown from one department into another in much the same fashion as arbitrary billing prices (based on "market" quotations) for products shipped from plants to branch houses throw the profit from the former to the latter, or vice versa. It is a notable fact, that according to the present method of departmental accounting, the packers are in the habit of showmg low profits or even positive losses in the carcass-meat departments, while at the same time exhibiting large profits in the by-products or " specialty " departments, the chief reason for this somewhat extraor- dinary state of affairs being found in the valuations placed upon transfers. Armour & Co., for instance, in the profitable year of 1917 showed a loss in its dressed-beef department of $3,500,000, while the oleo department showed a profit of $1,248,000. In the same year the dressed-sheep department showed a loss of $798,000 while the wool and pelt department showed a profit of $983,000. IXVENTORIES (ITEMS 3 AND 4), The third and fourth items on the list of departmental accounts are inventories. These inventories are carefully segregated by departments so far as weights and quantities are concerned, but in the matter of pricing, tlae vitiating element which pervades the whole accounting system of the industry is again encountered, namely, the lack of accurate costs. For the purpose of profit determination inventories should always be priced at cost (though in MEAT-PACKING INDUSTBY. 57 financial statements a reserve may be set up for the difference between cost and market when the latter is less than cost at the date of taking mTentory ) . The following table furnishes a list of the packing plant departments of Armour & Co., together with the bases upon which in- ventories are priced in each department. It is to be noted that while many of the departments inventory their products on the basis of either actual or estimated cost, those departments which value their products on the basis of market are, generally speaking, the depart- ments which carry the heaviest inventories. It has been estimated that fully 75 per cent by value of the products of a packing house are priced on a market basis for inventory purposes, irrespective of the fact that costs if known might require a different valuation and thus profoundly modify not only departmental profits but total plant profits, and by the same token total company profits as well. Table 17. — Packing-plant departments and bases of pricing iwoentories therein. ARMOUR & CO. Name of department. Basis of valuation. Name of department. Basis of valuation. Dressed "beef Test cost. Market. Do. Do. Do. Do. Do. Do. Do. Test cost. Market. Do. Do. Do. Do. Do. Do. Do. Test cost. Market. Do. Do. Test cost. Cn,Tinflrf mflats Market Fresh beef cuts Fresh "beef products RiTttfirinp Cost Beef curing Tallow and grease Market Dried beef Do Pickled beef Oleo Do Beef casings Cost Hides Glue ■ Do. Onrjftd ha,ir Do. Dressed hogs Do Pepsin Do. Sweet pickled meats Dry sat meats Cost. Barrelled pork.. Market. Vin^ar pickled pork Smoked meats Lard substitutes' Cost. Do. Butter Do. Dressed sheep . . . Eees Do. Do. Do. Canned vegetables Do. Do. Do. Note. — ^The word "cost" means cost as determined by th.e company. Even on the unreliable basis of market prices for inventory pur- poses the Commission met serious difficulties when it attempted to review the accuracy of such prices taken by the packers. It was found that for many products no outside market quotations were available, and when available the companies followed the custom of making deductions, allowances, and differentials from that price to cover future processing, carrying charges, freight, etc. These deductions often exceeded a cent in the pound, and not being arrived at according to any uniform method seemed to depend largely upon the conservatism or optimism of the agent who fixed the price. On November 2, 1918, Swift & Co. priced its cured pork products for inventory purposes at about $100,000,000, this value probably 58 MEAT-PACKING INDTJSTEY. representing at least 300,000,000 pounds of products. A difference of only 1 cent per pound in fixing inventory prices would thus result in a $3,000,000 difference in reported profits. Thus under the present system of pricing the packers have available a technique whereby reported earnings may be inflated or deflated practically at will with- out serious possibility of detection. This observation is strengthened by the fact that the market quotations on many products are virtu- ally controlled by the great packers. Chart F (see p. 59) gives an idea of how profits may be reduced by inventorying at declining market prices at the end of an account- ing period. This chart shows a valley in the curve on and about November 1, 1918, which is nearly 1^ cents under the peak of October 1, a month earlier, and about 2 cents under the peak of December 1, a month later. It is difficult to see coincidence alone in this market curve, as November 1 had been fixed as the end of the profit-regula- tion year and consequently the date for taking inventories for the purpose of computing profits. Had the close of the first year of profit regulation fallen either on October 1 or December 1 instead of November 1, and the market curve had been permitted to be the same, the packers would have been expected to price their hams (and if this curve is typical, their other green and cured products as well) from 1^ to 2 cents higher per pound, with the result that their re- ported profits for the year would have been enormously increased. Not only are inventories based on market quotations, unreliable from the standpoint of determining accurate costs and profits, but in those plant departments (see Table 17 above) where inven- tories are said to be based on costs — such as the carcass meat handling departments — it has been found that such costs are not always to be depended upon. The large amounts of raw material transferred from the carcass meat departments to other further processing de- partments are valued not on a cost but on an assumed market basis, thus nullifying the accuracy of costs accumulated in the former. Conversely this procedure prevents the department receiving raw material transferred from the meat carcass departments from ac- cumulating accurate cost figures, raw material being charged at the outset on the basis of fictitious and arbitrary values. Again it was found that in the accumulation of so-called costs certain elementary principles of cost accounting have been disre- MEAT-PACKHsTG INDUSTRY. 59 garded by the great packers from time to time. For instance, it was found that Armour & Co. in using cost prices for glue department CD •*»■ -IM -l(M o o> 0) <0 to CVJ CM CVJ oo cvl I--' t- -loi vP CVJ ^\ (l!s . 1 1 > \ '^ 1 lu Q^, OfS y (D = 10 ^^ ^ ia in \ ».♦- ■q z^ 1 O /7> (D (ft N'i^^ vi/ le" I < /^ u^ I y ' -t: '^^^ 1- z Ul X ^ 0" Ul / H of / Ot- cJ) / / f H f q! u a I CD \ \ft/ 1^ \ ^ HI ■" H 1- \ < y 0. \/ ^ 10 lu *" c+- 1 ' ij \/ L@ 1 Q- 3' § I I Q I ■^r -lf CD CO f- r- .o K) & cvl (M OJ CNJ cvi W CvJ inventories, employed figures accumulated in 1912, thus reducing the glue department profit for the year 1918 by some $300,000 over what 60 MBAT-PACKISC INDUSTEY. would have been shown had current cost figui'es been used. It is also to be noted that 1918 was a year of phenomenal profit taking for manufacturers of glue. The great packers do not always make a clean-cut distinction between manufacturing and selling expense, in erecting their cost formuke, often including the latter as well as the former. Costs for inventory purposes must not include any part of selling expense. In short, the packers' inventories, whether on a market or on a cost basis, are not accurately priced in many instances, and accordingly costs and profits are in respect to these instances incorrectly re- ported. While much might be done to make present methods more amenable to verification, the fact remains that not until a sound cost system is developed for the industry will accurate periodical profits, either for specific products and departments, or for the business as a whole, come to light. The procedure now followed is particularly adaptable to the creation of " hidden reserves," in dealing with which modern accounting needs to be continually vigilant. Prevailing inventory methods offer the packers an opportunity to manipulate reported profits at will, with practically no possibility of verification. PURCHASES (ITEM 5). ■ Item 5 on the departmental account is " purchases of raw material." So far as this inquiry developed, this account, except for the minor matter of allocating the expense of the purchasing department, is accurately reported. There is little reason to criticize this item from the standpoint of soundness of principle. EXPE^^SES (ITEM 7). Item 7 and last is expenses, including manufacturing, selling, and overhead (or general administrative) . Additional difficulties are here encountered. A large share of the expenses charged against a given packing plant department has to be arbitrarily prorated. The basis of such proration varies widely between the several com- panies and in many cases can not be considered a sound method for distribution. Wages, certain supplies, certain services, can be charged direct to the packing plant departments and no serious questions need be raised in respect to items of this nature. Refrigeration, power, heat, storage, and all overhead expenses, such as adminis- trative salaries, advertising, the plant's share of the main office expenses, and similar items, must all be distributed to the de- partments on some arbitrary basis, and if this basis is not a sound one — certain departments being favored against other departments and not bearing their full quota of expense — profits as between de- partments are rendered unreliable and inaccurate. The following list shows the expenses of a typical department on the books of MEAT-PACKING INDIFSTEY. 61 AnnoTir & Co, classified aecording to tii« nature of the ifarans, whether "direct " or " distributive." Manufactwrins etep&nse: Direct — X^bor. Repairs. Tools and implements. Manufticturiiiig expense. Storage. Distributive — Water. St«am and air. Refrigeration. Light and power. Depreciatlan, insurance, taxes. Manufacturing interest. Manufacturing sundries. In respect to the so-called distributive expenses it may be stated emphatically that ihe several great packers have devoted consider- able attention to the que^ion of tlieir proper distribution. Each packer has worked out an elaborate series of formulse, but it is in- teresting to note that the formulae are often at variance with each other. The following table exhibits some of the divergencies in method noted: Sellm-g Expenses; Direct- Salaries. Selling expense. Commission. Advertising. Samples. Distributive — General administrative. Local administrative. Icing. Cartage. Selling interest. Car-route expense. Selling sundries. Table 18. — Basis cf clistribution of oertam indirect expenses of the five great packers {as of April, 1918). Item. Armour. Swift. Morris. Wilson. Cudahy. 'fienvTal adminis'firs- five distributed to plants on basis of— Two-flftbs of 1 per cent of sales. Sales, payroll, and invest- ment. Sales. Osn^ral wtetialstra- tive distributed to 'flepartanonts onbasis of— :6ales {produce department ■scaled down SO per cent). Sales (prodtice department -sealed down 50 per cent). Sales (produce department scaled down 60 per cent). Balary, pay roll, and mvest ment. Sales Cproducs and fish de- partments scaled down SO per cent.) J?aotory general ex- pense distributed to departments on basis of— Sales. PayroU.. Payroll.. Payroll.. Pay roll. Taxes distributed to 4lepetrtm«nts on basis of— Buildings and omachmery. Buildings and maohbiery. Sales. . Buildings, machinery, and stock. B uildings , macbia-eryp and stock. Interest distributed on basis of— 6 per cent on average in- vestment. 8i per cent on investment. 6 per cent on apartment Investmenf: and expense department investment. 6 per cent on Investment except in certain plants. Actual interest paid. Sf^iug expense dis- tributed to depart- ments on basis of— Sales.. Fifteen-one- bun dredths of 1 percent of sales ao- tuaJ -distri- bution. Direct chaige. Included in administra- t J V e e X - pense. Motive power (light, heat, refrigeration, power, etc.). In each of the five companies, the engineer's department prepares the distribu- tion, but the basis is different in each case. 62 . MEAT-PACKING INDUSTRY. It is obvious from the above table, that quite apart from the merits of the method of distribution used in the case of any par- ticular company, the wide variations in method shovs^n as between the several companies tend to raise a serious question over the ac- curacy of departmental profits as reported by any one company due to the lack of uniformity. It will be noted from the above table that both general administra- tive expense and selling expense are distributed to the depart- ments on the basis of sales in most cases. As a result, the well-estab- lished meat departments, such as beef, fresh and cured pork, and lamb, in that these departments sell the greater share of the total packing-house product, absorb the greater part of the administrative expense. It is well known that in recent years a very large part of the executive attention of the great packers has been devoted to the development of new lines of business, such as produce, cotton oil, soap, canned fruit, vegetables, etc., the old established lines re- ceiving proportionately less managerial attention. Thus it would seem that a distribution of expenses based solely on sales value would throw a larger burden on the old established meat departments and a lighter burden on the newer activities than the actual facts of the case warrant. In connection with the distribution of interest, it is the opinion of the Commission that interest is not a legitimate cost of operation and should not be distributed with manufacturing or selling expenses, but should go direct to the final profit and loss account. In the course of its study of distribution of indirect expenses, the Commission has found that the packing plants as such are bearing an unduly large share of the expenses of the main offices at Chicago as compared to both branch houses and affiliated enterprises man- aged from Chicago. It is not the packers' custom to distribute to affiliated companies any general administrative expenses, although specific charges for legal services, etc., may be made from time to time. In view of the fact that a great deal of executive attention has been given, particularly in recent years, to the operation of af- filiated enterprises, it would seem only reasonable to distribute to these enterprises a certain proportion of the main office general administrative expense, thus reducing the burden on the plant departments. The above brief survey of the situation in regard to the expense distribution of the great packers shows the necessity of not only bringing about greater uniformity as between the companies, but also in some cases materially changing the basis of distribution before accurate departmental costs and profits can be ascertained. MEAT-PACKING INDUSTRY, 63 To summarize, out of the seven principal items that must be reckoned with on every statement of departmental profit or loss, it is seen that six of these items, as at present treated under the pack- ers' accounting system, are subject to marked inaccuracies, and it is clear that underlying methods need to be completely revised before reliance can be placed upon departmental results. The following table shows certain departmental results for Armour & Co. and Swift & Co. for the fiscal year 1917 : Table 19. — Results of sclented departments, fiscal year 1017. Department. Armoiir & Co. Swift & Co. Profit. Loss. Proflt. Loss. Dressed beef ... 13,516,341 501,214 $92,745 733,259 Hides Olfio 51,304,186 362,372 $119,997 670,810 6,953 1,378,391 (v } 2,368,887 Dressed sheep 797,640 Wool and pelts.. 983,014 239,074 1,072,162 Sweet pi&rled pork i,327,i66 3,050,130 213,317 601,067 Dry salt pork. Refined lard 14, 142 Dressed calves 236,098 12,409 1 Fisures not available. An examination of the above table discloses some surprising varia- tions. While Armour & Co. is recorded as losing $3,500,000 in the dressed-beef department, Swift is shown to be losing only $92,000. While Armour appears to lose $797,000 on dressed sheep, Swift is shown to make a profit of nearly $7,000. The two companies handle not far from the same number of animals in a year, they sell in the same markets, their expenses are similar. No one would expect them to make equal profits or equal losses, but, on the other hand, the varia- tions quoted above are incredible and can only be explained by dif- ferences in departmental bookkeeping methods. - Surveying the Armour accounts alone it seems unlikely, to say the least, that while smoked pork is losing over a million dollars, sweet pickled pork is gaining $1,300,000 and dry salt pork is gaining over $3,000,000. Again, it is scarcely credible that besides losing $3,- 500,000 on dressed beef, Armour & Co. lost $500,000 on hides in the profitable year 1917, meanwhile gaining over $1,200,000 on oleo. In fact, it is impossible to review in series any of the departmental profits of the great companies without realizing that these profits can not be regarded as accurate reflections of the underlying facts but only as arbitrary bookkeeping results. (]More departmental figures are given in Exhibit E, where fluctuations may be studied in detail.) 128911°— 20 5 64 MEAT-PACKING INDUSTRY. What, it may be asked, is the use of the present departmental sys- tem of the packers in so far as live-stock products are concerned, if these departments do not and can not give accurate results? Why do the packers maintain them at all ? The answer is not difficult. It is probable that departments are maintained in order to stimulate internal efficiency and in order to give internal comparative figures. The Commission during its inquiry has repeatedly found instances of departmental managers being complimented or the reverse on the month's showing, and a competitive atmosphere is continually stimu- lated for managers to exceed their former records. Again, even though figures may be compiled according to an unsound method, if the application of that method is consistent a very good view is gained, not of absolute cost and profit, to be sure, but of relative cost and profitableness, period by period. Thus, in a department which normally shows a loss, like the dressed-beef department, the question that interests executives is not the loss itself, which they know to be fictitious, but rather whether or not that loss is decreasing or increas- ing from one month to the next and what are the reasons for the changes. The departmental method has its very obvious and ex- cellent uses in providing a barometer both of efficiency and varia- tion analogous to statistical index numbers. The departmental method as heretofore conducted has had its distinct uses to the packer in his relations to the public through the fact that he is enabled to report meat profits at low figures while with respect to by-products it is not profit but efficiency that is displayed for popular approval. PLAlv'T EESTJLTS. Having reviewed the departmental accounting system and estab- lished the fact that departmental results are incapable of being accurate under the prevailing methods, it is in order to inquire what effect these methods have on the final profit and loss of a given pack- ing plant. As has already been shown, the packing-plant profit and loss account is largely an aggregation of the final results of each individual department, and accordingly the observations made in analyzing the costs and profits of the departments apply also to the plant profit and loss account, with the exception of such accounts as cancel out when departmental results are thrown together. The apportionment of general plant expense, if inequitably distributed, may destroy the value of a departmental result, but when all depart- ments are aggregated, obviously this item cancels out, and the final profit and loss account of the plant is not affected. Similarly internal transfers of raw material from one department to another when inac- MEAT-PACKING INDUSTRY. 65 curately priced undermine the profits of a given department, but such items have no weight when the total plant profit is considered. In connection with transfers, however, there are many cases when transfer prices do not cancel out in considering the total profits of a given packing plant. Such transfers may be called " external " rather than " internal." Wlien material is transferred from a plant depart- ment to another plant or to another subsidiary company (such as a tannery), or when material is transferred to foreign branch houses for sale abroad, obviously the profits of the home plant in total, as well as the department in particular, are affected by the prices placed upon such material. The situation is further complicated by the fact that certain material may be transferred to another subsidiary com- pany and then retransferred to the home plant. Thus hides may be transferred to a tannery and the " fleshings " from those hides retransferred from the tannery to the glue department of the home plant. All such " external " transfers and retransfers so far as they are on a market or arbitrary basis, rather than a cost basis, tend to confuse accurate profit taking on the part of any given plant or subsidiary company. TOTAL COMPANY PROFITS. Taking the fiinal step to the contemplation of the profits on the entire business, it is found that the questions of employing a correct basis for pricing transfers, and of allocating general expenses be- tween plants and affiliated companies whose total profits are taken up with those of the main company, cease to be of concern, as those items now cancel out, and the only problems that remain unsolved in the total company results are the proper pricing of inventories, and the distribution of general expense to affiliated companies whose total profits are not taken up on the books of the main company. That the problem of inventory pricing is one of major importance in considering total company results, and that a change in the method of arriving at what is considered a " market " or a " cost " basis, may have a large effect on final company profits, is well illustrated by the fact that Swift & Co. oh November 1, 1917, raised its usual basis of inventory pricing in accordance with certain regulations of the United States Food Administration, and thereby threw a profit of some $11,000,000 into the single month of October, 1917, where on the old basis the profit would have been less than half that amoimt. In addition to inventories there are certain other items not treated in the departmental analysis which affect total company profits and which require comment at this point. Questions covering these items may be said to arise not from the untenable basis of the accounting system as such, but rather from the faulty manner employed in ag- 66 MEAT-PACKINa INDUSTRY. gregating certain final results and compiling annual reports thereon. The question of depreciation and its effect on total earnings also requires comment at this juncture. It is the correction of the latter items in line with the requirements of correct accounting principles that form the basis of the Commission's figures of " Adjusted Profits" in section 8, Chapter II of this report. These items are now considered in detail as follows : INCOME TAXES. The packers in common with most industrial companies in recent years have followed the custom of reporting to their stockholders a figure termed " net profit," which is really net earnings less pro- vision for income and excess-profits taxes. Such a procedure shows the individual stockholder what proportion of the year's earnings may come to him in the form of dividends, and, if the stockholder is not interested in what the company earns in total, no criticism can be applied to any statement so made. When, however, the packers turn from their stockholders and present these same figures through the medium of newspaper advertisements to the public in general a very different situation is faced. To report " net profits " as Swift & Co. has done for the year 1917 as $34,650,000 when this figure included an arbitrary deduction of $10,000,000 for "genei-al reserve " to cover estimated war income taxes, payable the following year, etc., is to create a serious misconception in the mind of the reader of Swift & Co.'s advertisements. The true profits for the year were at least $44,650,000, or 29 per cent more than the figure reported. The law provides that income taxes shall be paid out of profits as determined, and the larger figure is the only true index of the year's earnings. The following table indicates the difference between book profits and profits as publicly reported by the five great companies for the year 1917 : Table 20. — Net profits as reported, and before deduction of income tax reserves, 1917. Company. Reported profit. Income tax reserves. Corrected profit.' $21,294,000 34,650,000 6,301,000 6,504,000 4,431,000 $5,635,000 10,000,000 1,941,000 1,622,000 1,090,000 $26,929,000 44,650,000 7,242,000 8,126,000 5,521,000 Swift & Co ... J Morris & Co Wilson & Co Cudahv Packing Co Total .. 72,180,000 20,288,000 92,468,000 1 Corrected by income tax adjustment only. For Commission's final corrections, see tables, sec. 8, Cbap. II. Instead of showing their true earnings for the year, a part of which must be turned over to the Government, to be sure, the com- MEAT-PACKING INDUSTRY. 67 panies imply in their public statements that they have earned the lesser figure — a misstatement of the facts. RESERVES. In addition to reserves for income taxes, the packers are accus- tomed to charge inventory reserves, " general reserves," and " special Teserves " to the earnings of any particular year, decreasing reported profits to that extent. When such reserves are in the nature of surplus reserves, i. e., when they are special deductions not appli- cable to the income of the year in question, they should not operate to depress profits. Thus the Cudahy Packing Co. in 1916 reduced its earnings from $3,500,000 to $3,000,000 by an inventory reserve, and in the following year charged E. A. Cudahy's salary of $50,000 and a number of other items which had nothing to do with inven- tories against this reserve. SURPLUS ADJUSTMENTS CHARGED TO PROFIT AND LOSS. The great packers have repeatedly debited and sometimes credited the income account of a given year with items which more properly should be applied directly to surplus account, (the latter being defined as accumulated undivided profits and adjustments of former years). Thus Swift & Co. in 1916, the first year of great Avar profits, charged its profit and loss account with $3,349,000 for shrinkage in the value of stocks and bonds held by the company. Armour & Co. in 1916 charged $1,500,000 to its profit-and-loss account to offset the capitali- zation of the New York Dressed Beef Co., a subsidiary corporation. In the 1918 profit-and-loss statement of Armour & Co., there are no fewer than 22 items, debit and credit, which are clearly surplus adjustments, and accordingly have no place in a statement of earn- ings for the year. If the packers desire to show stockholders net additions to surplus instead of actual earnings for a given year, no objection to such a policy can be raised, but the former figure does not represent profits or earnings, and should not be publicly so reported. DEPRECIATION. The great packers have not handled the question of depreciation consistently in the past. As depreciation has only been recognized as a legitimate and determinable expense by authorities everywhere for perhaps the last 10 or 15 years, no criticism is attached to the packers' methods prior to that time. The methods of certain of the companies in the last six years are, however, open to criticism. Morris & Co., for instance, in each of the profitable years 1916 and 1917, increased its depreciation reserve by about $2,000,000 where 68 MEAT-PACKING INDUSTRY. heretofore the annual increase has been much less than $1,000,000. While it can not be positively said to what extent the company increased its rate of depreciation because of the unknown factor of debits to the depreciation reserve account, nevertheless it is clear that the company has in the good years set aside much greater sums for depreciation than had been the case in the more normal years prior to 1915. Table 21. — Increases in depreciation reserve account, 1913-1917. MOKEIS & CO. End of fiscal year. Fixed prop- erty (less land). Reserve for deprecia- tion. Reserve in- creased by- $15,263,000 17,192,000 17,470,000 18,296,000 19,052,000 21,134,000 $3,220,000 3,553,000 3,864,000 4,597,000 6,605,000 8,642,000 1913 $33.3,000 1914 311 000 1915 . . 733,000 1916 2,008,000 2,037,000 In the case of its car lines. Armour & Co. was found to be figuring a high rate of depreciation after arbitarily writing up the value of its cars some $2,000,000 in 1912. As depreciation should only apply to cost, this procedure operated improperly to depress the profits of the car lines. Swift & Co. has recently (1918) written up the value of its fixed assets by $30,746,000. An officer of the compar gave as one of the reasons therefore that too much depreciation ha been charged off in former years. So far as this statement is tri the profits of such former years have been understated. Uniformity in depreciation methods is imperative for the gre; packers before correct comparisons of profit can be made. SUBSIDIAKT COMPANIES. Another factor tending to discredit total company profits as r ported is found in the treatment of subsidiary company earning Many instances were discovered in which the packers (with the e: ception of the Cudahy Packing Co.) failed to take into the fin profit and loss statement of the controlling company earnings ( subsidiary companies over the current fiscal period. Swift & C in the year 1916 took up profits from foreign subsidiaries as follow Tabi^e 22. — Foreign results included in profits for 1917. SWIFT & CO. Partial results only taken up : Compafila Swift Ue la Plata $4,230,736.6 Compania Swift de la Montevideo 1, 173, 416. 7 New Pategonia Meat & Cold Storage Co 215, 029. £ H. L. Swift Stall (London) loss— SS,OU.S Curry & Co. (Ltd.) do 4S8..i MEAT-PACKING INDUSTRY. 69 Dividends taken up: Australian Meat Export Co. (Ltd.) $218,700.00 Swift Beef Co. (Ltd. ) 58, 320. 00 H. A. Lane & Co 43, 164. 58 Total of above partial results and dividends 5, 915, 885. 18 Complete results taken up: Swift Canadian Co. (Ltd.) 1,193,799.31 Other foreign companies loss__ 98, S21. 86 Total of complete results 1, 095, 477. 45 Grand total carried to summary 7, Oil, 362. 63 Armour & Co. in the case of its cotton-oil mills in Texas did not take up the profits of these companies on the books of the controlling corporation for a period of nearly three years. Thomas E. Wilson when president of Morris & Co. in 1915, at the time of the proposed merger of the Morris and Sulzberger interests, estimated that in the years 1912, 1913, and 1914, certain of the Mor- ris subsidiary companies, 100 per cent owned by the holding com- pany, had earned on the average $700,000 per year, which earnings had not been incorporated in the reported total earnings of the con- trolling company. This single factor of subsidiary company earnings is sufficient to raise a serious question over the accuracj' of total profits as hereto- fore reported by the great packers — ^with the exception of Cudahy Packing Co. — in any given year. It is also to be remembered that the investment in such companies continues on the parent company's books while the profit on that investment is not shown in some years and again overstated in other years with the consequent disastrous effect on the accuracy of any computations of rates of profit on investment. DIVORCING StrBSIDIAET COMPANIES. In connection with the packers' subsidiary companies and their ef- fect on total profits, it should be noted that three at least of the great packers. Armour & Co., Swift & Co., and Morris & Co., have, in the last two years, adopted a new policy in respect to their foreign subsidiaries. Heretofore the stock of these companies has been held by the controlling company, and although foreign profits have not been uniformly taken up, they have, in theory at least, formed a part of the controlling company's earnings. In 1917 Armour & Co. formed a separate corporation for its South American business, the capital stock of which, instead of being held by Armour & Co., is now held by individual stockholders of Armour & Co., thus appar- 70 MEAT-PACKING INDUSTRY. ently divorcing foreign interests from the domestic controlling com- pany. Swift & Co. and Morris & Co. followed suit in 1918 in respect to certain of their foreign companies, and Swift & Co. has adopted the same procedure in respect to Libby, McNeill & Libby, its great domestic canning subsidiary. The results of this policy are obvious. With the same management and the same control continuing to exist, the principal company no longer needs to report the earnings of any subsidiaries so divorced, foreign or otherwise, and accordingly profits of the principal com- pany will tend to be relatively less, although profits of the company system may be greatly increased. Strictly speaking, it is not pos- sible to measure the mutilated earnings of 1917 and 1918 against earnings of prior years when the profits of foreign subsidiaries were included (partially at least) in the final profit and loss account. A comparison of Swift & Co.'s profits for 1918 with those for 1917 force upon the uninitiated reader the conclusion that in 1918 the company had had a relatively poor year. No such conclusion can be drawn, however, until the profits of the recently severed companies are added to those of the principal company and the total compared with former years, for, the legal fiction aside, all of these earnings accrue to substantially the same stockholders. The Commission was not able to secure the profits of the foreign subsidiaries divorced, and accordingly both earnings as reported by the packers and as adjusted by the Commission do not include results from these very profitable South American plants. The best information obtainable places such profits in the case of Armour & Co. alone, for the year 1918, at no less than $10,000,000. The policy of legally divorcing subsidiary companies while retain- ing the same direction, raises a further important question as to prices assigned to material and products transferred or "sold" by the main company to companies so divorced. A technique is thus provided whereby profits or losses may be thrown from the main com- pany to divorced subsidiaries or vice versa, according to the prices assigned to these transfers. The final profit of the whole system is imaffected by intercompany transfer prices, as they cancel out from this viewpoint, but so far as reporting the individual profits of either the main company or the divorced companies is concerned, questions of policy may dictate the shifting of profit from the one place to the other. Section 4. Packers' methods of determining' profits per pound and per head. In section 3 the accounting system of the great packers has been reviewed in some detail. The manner in which the departmental accounts work into the profit. and loss account of the packing plant, and the latter into the final profit and loss account of the whole com- MEAT-PACKING INDUSTKY. 71 pany; the treatment of branch-house and car-route profits, and of items of miscellaneous income and outgo, and their final disposition in the company profit and loss account have all been subject to analysis, but as yet nothing has been said concerning the profits per head or per pound on beef to which Armour & Co. and Swift & Co. are continually giving publicity. The bookkeeping system, as such, does not automatically produce any figures showing the profit on beef or pork or lamb, per head or per pound. Such figures, either for the purposes of publicity or for private information, have to be compiled outside the books of account, and are in the nature of statistical computations. Armour & Co. and Swift & Co. have been in the habit for some years past of grouping certain packing-plant departments for the purpose of these statistical surveys into a "beef section," "pork section," "sheep section," etc. The idea lying behind the section grouping is to bring into relation with a given class of animals, such as beef, certain of the profits made on the so-called by-products, so that a computation of profits per head or per pound will include not only the dressed-carcass department results, but also the depart- mental results shown for hides, fats, casings, etc. By referring to Table 15 the departments which Armour & Co. includes in the various " sections " can be examined. Xot only is there a section grouping for each class of animal, but also a so-called " mixed section " as well as the specialty by-products, the former including canned-meat de- partment, sausage department, and so forth ; and the latter, soap, fer- tilizer, etc. The caption " mixed " signifies that the departments in- cluded therein handle raw material taken from more than one kind of animal. The canned-meat department, for instance, receives cuts and parts from cattle, hogs, and sheep. Any profits made in a " mixed " department obviously can not be added in toto to the profit of a given kind of animal, but must be divided between those classes of animab which have furnished raw material to the department in question. Thus the canned-meat department profit would have to be spread over all three animals. Like the departments included in the "mixed section," the raw material entering into the departments of the " specialty by-prod- ucts " is not obtained from one class of animals and the profits or losses of these departments can not accordingly be related to any given class of animals otherwise than on the basis of apportionment. In connection with the Borland resolution, introduced into Con- gress in 1916, Armour & Co. prepared certain statistical figures which purported to show the profit per head of cattle the company made in 1915. The figure presented was $1.19. ■\'\Tiile the individual figures making up the amount are at present unknown, the method followed 72 MEAT-PACKING INDUSTRY. in arriving at them can be shown in detail by employing the depart- mental figures for the fiscal year 1916, as follows: Table 23. — Beef profits based on boolc figures, 19 IG (Armour & Co.). (Interest eliminatecl as operating charge.) Beef department analysis : Cost of live animals purchased $116, 075, 373 Outside purchases, green meats, etc 454, 655 Inventory adjustments JfO, 050 Total raw material 116,489,978 Beef department expense 3, 801, 717 Gross cost $120, 291, 695 By-product transfers (at market prices) — Hides 18, 845, 460 Oleo 4, 060, 955 Beef cutting 4,723,628 All other 4, 825, 868 Total transfer credits 32, 455, 911 Gross cost less transfers 87. 835, 784 Beef department sales and shipments 86, 397, 024 Beef department loss 1, 438, 760 Beef section results brought back : Beef section departmental profits* 3,156,900 Total "beef section" profit 1,718,140 Number of head sold 1,392,010 Number of pounds sold (dressed beef) 795,932,339 Beef section profit per head $1. 23 Beef section profit per hundredweight of dressed beef 0. 22 Mixed section results brought back: Mixed section, estimated proportion of departmental profits allocatable to beef 1,317,708 Total profits on beef as allocated 3, 035, 848 Total profit per head $2. 18 Total profit per hundredweight of dressed beef_ 0. 38 It will be noted that the beef department is first analyzed, the cost of live cattle purchased being shown, together with outside purchases of green meats, inventory adjustments, and killing and dressing expenses. This total ($120,291,695) is then credited with the trans- fers of all material, except carcass beef, to the hide, oleo and other so-called by-product departments. The transfer value is based on 1 Includes profits or losses of foIlo\ring departments : Fresh beef cuts, fresh beet products, beef curing, dried beef, pickled beef, oleo, beet casings, and hides. ' This allocation is not the company's, but the Commission's estimate based on the company's procedure tor the Borland resolution. A portion of the profits or losses of the following " mised " departments are included : Canned meats, sausage, butterine, tailow. and grease. MEAT-PAGKING INDUSTKY. 73 prevailing market quotations or other estimates. The net cost of carcass beef (according to this method of finding cost) stands on the beef-department books at $87,835,784. The credits for " sales and shipments " for the year only aggregate $86,397,024, leaving a loss in the beef department of $1,438,760. This loss is of course purely fictitious, and the company could not well give publicity to it, as the final result on beef for the very profitable year of 1916. Accord- ingly the " beef section " is brought in. The profits on those depart- ments included in the section grouping are used to offset the beef- department loss. These profits aggregate $3,156,900, and thus trans- fer a beef-department loss of $1,438,760 into a " beef section " profit of $1,718,140, which, by applying the head sold and the pounds sold, gives a section profit per head of $1.23 and per pound of twenty-two one-hundredths cents. Now, if to the " section " profit is added some of the profits of the " mixed " departments, a further increment of $1,317,708 to beef can be estimated, thus raising the profit per head to $2.18 and per pound to thirty-eight one-hundredth cents. The procedure outlined above can be summarized by stating that in preparing statistical figures of profit per unit — be it per head of cattle or per pound of beef — Armour & Co. aggregates the total net results shown by the departments that are designated as coming under the " beef section " proper, and adds to them a portion of the profits or losses shown by the "mixed section" departments allo- catable to beef, but takes no account of the profits found in the " specialty " departments. The same method is also applied if profits per unit for animals other than beef are to be computed. In general, these observations hold true with equal strength for Swift & Co. (barring some divergencies in the selection of depart- ments as ex^nplified in the letter shown on p. 77.) Swift & Co. reported profits per head of cattle of $1.65 in 1916, $1.29 in 1917, and $1.02 in 1918. In its 1918 year book Swift & Co. reports its profit per head of cattle as follows: Average per head. Paid for live cattle $92.70 Received for meat $81. 45 Kecelved for by-products 22. 06 Total receipts 103. 51 Amount remaining for expense and profit 10. 81 Expenses : Freight 2. 57 Seiliag (branch house) 3.70 •Killing, dressing, etc 3. 52 9.79 Profit (interest not deducted) 1.03 74 MEAT-PACKIlirG INDUSTEY. In the light of the foregoing analysis, some of the inaccuracies of this statement are immediately apparent. While the amount paid for live cattle is probably correct, the $81.45 " received for meat " can only be a statistical estimate, for so far as the books are con- cerned, beef " receipts " are reported net after the deduction of freight and branch-house expenses. Swift & Co. has repeatedly in- formed the Commission's examiners that it was impossible to segre- gate these expenses, yet in this table the company has defied its own dictum and estimated such a segregation, increasing the book figure for beef " receipts " by that amount. The $22.06 per head " received for by-products " is unreliable. To begin with, no such amount has been " received." Though the profits of the "beef section" and certain "mixed-section" depart- ments are included in this figure, these profits do not represent ulti- mate " receipts." Vast quantities of by-products thrown off from beef in a given accounting period are not disposed of until succeed- ing periods, and accordingly the final credit to the original beef can not be shown in the same period, with the result that the final credit to the original beef is largely in the nature of an estimated profit. The profits of no specialty departments handling beef products are included in this figure, but have been arbitrarily cut off by the company in making the computation, and the same holds true of cer- tain large leather contracts. Obviously, profits per head can not be shown until the results of all such specialty beef products are brought back. The $22.06 per head is accordingly seriously understated. Furthermore, it is an open question whether branch-house profits have been included with departmental results in those instances when departmental profits have been brought back to beef. So far as the books are concerned Swift & Co. does not allocate branch-house profits to the departments, but transfers them in total to the com- pany profit and loss account. It may be that a rough allocation of such profits for statistical purposes has been attempted, but if it has not, it is clear that the $22.06 is again understated. The Commission can state positively that the company was not in the habit of allo- cating the branch-house profits on its regular accounting records prior to 1918. Finally and most important, the accounting methods obtaining in the departments in respect to inventories and transfer prices, render the profits of these departments :is returned for this computation unreliable. In respect to the $9.79' said to be the expense average per head, it is known that the averages for branch-house expenses ($3.70) and freight ($2.57) included therein, are arbitrary estimates having no relation to the books of account, and as for the balance ($3.52), said to cover killing and dressing expenses, etc., the legitimacy of this item is challenged by the whole question of the proper basis of dis- MEAT-PACKING INDUSTEY. 75 trjbution of indirect expense to departments (already dwelt upon), as shown by the lack of uniformity between the great packers in treating such expense, the obvious loading of plant expense as against affiliated enterprises, and the loading of the beef department as against other plant departments. Under these circumstances, the Commission is unable to place the slightest dependence upon the final profit per head ($1.02) as thus announced by Swift & Co. The Commission has never seen any computations of profits per pound or per head for the other three great packers, Wilson, Morris, or Cudahy, and it is probable that statistics of this nature are not prepared by those companies. PROFITS PEE HEAD. There are various objections to be raised against this method of computing unit profits per head of cattle as practiced by Armour and Swift. Obviously the first serious objection is found in the essential unreliability of the departmental profits which are taken as the basis of the computations. It has already been noted that no re- liability from the standpoint of accurate costs and profits can be placed on the departmental records, and accordingly statistical mat- ter derived from those records can not be depended upon to show accurate results. Another serious objection is found in the arbitrary selection of what department profits shall be included with beef department in making the computation. If the object is to show profits per head of any given class of animals, it would seem necessary that all profits derived from any part of that animal wherever located, should be included in the aggregate. The packers never attempt to do this, but set an arbitrary limit to the departments whose profits shall go back to beef, leaving the profits of a large number of departments which handle beef products, quite outside the computation. They eliminate for instance profits on soap, glue, leather, commercial fer- tilizer and many other specialty ^ products manufactured at least in part from cattle, and only include the profits of the so-called pri- mary by-products, comprising the "beef section" and the "mixed section." In other words, in their published figures of profits per head of beef they do not include all the profits made on the beef ani- mal. That such inclusion would entail a very delicate, if not alto- gether impossible, allocation of a part only of the profits in specialty departments, in no way vitiates the statement that their figures as presented are understated and erroneous. ' See " specialty section," Table 15, for list of Armour & Co. deimrtments where profits are not iseladed In " per bead " tabulations. 76 MEAT-PACKING INDUSTRY. A further difficulty in this connection is found in the fact that Armour and Swift do not agree as to what departmental profits shall be brought back to beef. This may be well illustrated by the following letter from Charles H. Swift: (Private.) Chicago, June 23, 1916. Messrs. Louis F. Swift, Edward F. Swift : Eeferring to Henry Veeder's letter June 13th to L. F. S. re- garding Borland resolution in which Mr. Meeker is quoted as saying that Armour made a profit of $1.19 per head on cattle for certain period (ours for same period $1.28 per head). Mr. Chaplin understands that Armour's includes their can- ners, which ours does not; part of their sausage results, and has 10 cents added per head for good measure for by-products transferred at market prices, which ours does not. If our and Libby's cattle were thrown together for the pe- riod, without including sausage or anything for good measure, it would bring ours ujj over $2 per head. Mr. Chaplin didn't think there could be as much diflFerence as this, but checked it pretty close and understands definitely that theirs includes all the above mentioned, which ours does not. (Signed) Chakles H. Swift. Thus it appears that for the 1915 computations. Armour included canning cattle profits, part of the sausage profits, and " 10 cents for good measure," none of which items were included in Swift's figures. Had they been so included, it appears that a profit of over $2 per head would have been shown for Swift & Co., instead of the $1.28 actually reported. Again it appears that even when similarly named departments are included by the two companies in their computations it does not always follow that these departments handle identical products or carry on identical processes. It has been found, in fact, that Ar- mour's " beef section " and Swift's " beef section " are not strictly comparable. Armour, for instance, has included, until very recently, the profits from calfskins in its beef section results, while Swift includes them, more accurately, in " veal section," thus keeping them out of beef computations altogether; PROFITS PER POUND OF BEEF. The same objections that have been developed in respect to profits per head apply also to profits per pound of beef sold, namely, the unreliabilty of the underlying departmental results involved in such a computation, the arbitrary cutting off of departmental results ap- portionable to beef, and the lack of uniformity in the maimer of MEAT-PACKING INDUSTEY. 77 aggregating the departments into sections as between Armour and Swift. Furthermore the procedure of computing profits per pound of beef sold presents additional difficulties that do not attach to the statistics of profits per head of cattle. It will be noted that the profit per hundredweight of beef sold exhibited in Table 23 was arrived at by dividing the profit figure of $3,035,848 by the weight of dressed beef. The unsoundness of this procedure is apparent, in that it in- volves the dividing of a profit figure which is a composite of a mul- titude of various products such as hides, oleo, sausage, canned meats, etc., by the quantity of beef. The latter is a product which at no stage of cost figuring as now practiced by the packers was handled as a component of any of the products thus brought back to beef or carcass meat. It is legitimate to relate the aggregate profits of these by-products to the total animal from which they have origi- nated, for the animal as a whole is a common denominator. Beef, however, which is only one part of the total animal, should not receive credit for other animal products, such as hides, casings, etc. To get at the profit on beef it is necessary to secure the cost of that portion (about 55 per cent of the live animal weight) of the steer which goes into carcass meat. Not until a cost system is evolved whereby there is an initial slaughtering department which kills the animal and transfers the various parts to other departnients ( such as dressed beef, hides, oleo, etc.) , in such a fashion that each department absorbs a proper share of the total live and killing cost, each bearing its proportion of waste and shrinkage, will the packers be enabled to announce with any authority their costs and profits per pound of beef produced. The departmental cost accounting theory currently followed by the packers is built on the assumption that the carcass meat of the steer is the sole main product and all material thrown off is so much by- product credited to beef on the basis of the prevailing market price, the beef department thus carrying the initial live and killing cost of the whole animal. It is obvious that the live steer is not killed for its meat alone, but also for its hide and fats ; as well, in a lesser de- gree, for its other products. The leather industry is one of the oldest and most important not only in the country but in the world, and the same can be said for cattle fats. Market conditions covering these so-called by-products are important considerations in the mind of the packers' live-stock buyer when he sets the price he is willing to pay per pound for the live animal. To a lesser degree the value of other products such as bones, casings, offal, etc., have their place in fixing this price. The cost of beef can not, accordingly, be aS' sumed to be the cost of the live animal, credited with the returns from all material except carcass meat. 78 MEAT-PACKING INDUSTRY. It is manifest that the figures exhibited by the packers covering their departmental costs and profits, as well as their unit profits are valueless in that they do not accurately reflect the underlyiag facts. Section 5. Profit on investment. The impossibility of securing costs and profits by segregating sec- tions of the meat business, on the part of the several great packers under their present accounting methods, has been established. The question next arises as to the use of such segregated figures — such as the profit on beef — could they be accurately determined. As already pointed out in Chapter II even were it possible to secure reliable profits per head or per pound, such figures, while interesting and valuable from certain viewpoints, would have no bearing on the question as to the reasonableness of earnings. Eeasonableness turns on the rate of profit on investment, not on profits per unit, and it is thus obvious that whatever the true costs and profits per pound of beef or of pork for the great packers may be — whether a fraction of a cent or several cents — the attempt to make such a profit the sole criterion of reasonableness is wrong and misleading. If a profit of only a cent or two per pound results in an excessively high; return on the beef or pork investment, profits on beef or pork are unreasonably large, and no amount of sophistry should be allowed to obscure this fundamental fact. The same reasoning holds true in the rate of profit per dollar of sales, such a return in the rapidly turning business like beef must necessarily appear small. But if it is the equivalent of an excessively high rate on the beef investment, no defense of profits on this ground can be allowed. The rate on investment must always be the deciding factor when the question of reasonableness is under consideration. Not only has it been found impossible to segregate costs and profits by animals as the books of the great packers are now kept, but also an accurate procedure for segregating investment has never been determined. To secure the beef investment, for instance, it is necessary to arbitrarily apportion to beef that share of the total floor space, machinery, and other fixed assets occupied by the beef departments in the packing plant, as well as to divide the branch house fixed investment over the several classes of animals, beef to receive its proper share. In addition to fixed investment, the prob- lem of allocating the current assets including cash, accounts re- ceivable, accruals, etc., to beef, is necessarily a very complicated one, in that most of these items apply not only to all three kinds of ani- mals, but to all nonlive-stock products as well. For the purposes of the Food Administration the packers attempted a segregation of their investment into three classes, but the Commission after an- MEAT-PACKING INDUSTRY. 79 alyzing the methods employed was forced to conclude that no reliance could be placed on an investment so determined. The question as to what the great packers actually make on beef or other classes of animals, and the further question as to the reason- ableness of such earnings can not accordingly be answered at the present time. In this connection it is interesting to note what some of the inde- pendent beef packers earned in 1918. Here a simplified case is pre- sented, the independent beef packer's total investment is devoted to the production of beef, and his total profit is the result of the utiliza- tion of that investment. Eighteen independent beef packers in the fiscal year 1918 showed the following aggregated result : Investment (capital and surplus) $3,221,782 Net profit (after charging interest) 592,971 Uate of profit on investment per cent— 18.4 Thus it is clear the independent beef packers as a class made a high return on their investment during this year. It would seem reasonable to assume therefore that the great packers, whatever their present bookkeeping results may show, did at least equally well. The contention of Armour & Co. and Swift & Co. that they make little or no money on beef, and only come out whole by virtue of the profits they make on the intensive processing of beef by-products, thus falls to the ground. The independent packers in the above list carry on very little intensive processing of by-products, and if they earn a high return, it stands to reason that the great packers must do likewise, or else the conclusion of operating inefficiency must follow. Section 6. Section profits under the Food Administration regpilation. The review of the accounting procedure of the packers already out- lined should be supplemented by observations of the Commission covering some of the divergencies that existed betw^n the packers in 1918, when they were subject to the reporting provisions of the United States Food Administration. The five great packers were instructed by the Food Administration to group their departments into " sections," and report such section results as aggregated returns, rather than to report individual departmental results. An analysis was made of these sections, and the following divergencies, among others, as between products handled in each by the several packers, were found : 028911°— 20 6 80 MEAT-PACKING INDUSTRY. Table 24. — Certain divergencies in definition of "Beef Seetion.' Five great packers. I As of July, 1918.) Product. Company. Included in — Swift Wilson ■- Swift O^fal Mixed section. Beef section. Driodbeef . . . Cudaliy, Wilson Mixed section. Morris Mixed section.. Swift Wilson Armour, Wilson Mixed seetion. Mixed section. Swift Not only did the packers differ in the names of the departments which they included within their sections, but sharp variations were found in the actual processes included in similarly titled de- partments. Thus, Wilson & Co., Inc., makes its glue jelly in the Lone department, while Armour & Co. makes its jelly in the glue department. Obviously the profits of the two glue departments are not comparable, and Wilson, in including its bone department in the beef section, renders that section a different unit from Armour's beef section. Instances of this kind can be multiplied. The following table shows variatioDis in section profits for the five packers, as reported under the Food Administration regulations: Table 25. — Section profits per head of animals slaugrhtered as reported by packers tinder United States Food Administration regulations, fiscal i/ear 191S. (Losses in italics.) Beef section; First period, November-December, 1917 Second period, Janaary-February,1918 Tliird period, Marcli- April, 1918 Fourtli period, May-June, 1918 Fiftb period, July-August, 1918 Sixth period, September-October, 1918. Hog seetion: First period, November-December, 1917 Second period, January-February, 1918 . Third period, March-April, 1918 Fourth period, May-June, 1918 Fifth period, July-August, 1918 Sixth period, September-October, 1918. Totals for year: Beef section Hog section Sheep section Calf section All sections, including mixed Armour. to.ss .31 .16 g.eo H.S7 .18 .SI 3.18 1.29 .33 2.66 .64 .71 1.27 .08 .07 .81 Swift. Morris. to.ss i.lO .52 1.65 1.12 3.47 .10 2.18 2.30 .95 1.08 .OS .54 1.17 .11 .17 1.07 Wilson. ts.te l.BS 1.29 2.53 g.SS 2.43 .47 3.09 2.63 .91 1.12 .53 .79 1.67 .OS Cudahy. SO. 33 2.31 .91 1.67 1.10 2.84 .36 2.46 2.36 1.92 2.51 .83 1.87 .11 .31 1.3o Total. 50.22 1.55 .01 .03 l.lt MEAT-PACKING INDUSTRY. 81 In the beef section for the first period, as the foregoing table ex- hibits, Cudahy makes a profit of 38 cents per head, while Wilson shows a loss of $2.46 per head. In the second period Cudahy makes $2.31, while Morris loses $4.10. In the last period, while Swift makes $3.06, Armour makes only 18 cents. The whole section is full of like incredible items. The hog section is less striking in this regard, but Cudahy's fourth-period profit of $1.92 against Swift's profit of only 14 cents is to be noted. In the totals for the year, Armour and Wilson appear to lose about as much on beef as the other three packers make. No better evidence of the inadequacy and inaccuracy of the pres- ent departmental and section results of the great packers could be presented than the above table fm^iiishes. To expect reliable profits per head or per pound of a given class of animals, based on an ac- counting foundation which produces such fantastic divergencies between the several companies, is manifestly to expect the impos- sible. Section 7. TTniform accounting. At the instance of the United States Food Administration, the Commission studied the accounting methods of the great packers with a view to developing more uniformity in order to facilitate the examination and comparison of the reports made to the Food Administration. The final success of any such uniform system turns upon the de- velopment of accurate cost finding for live-stock products, whereby the cost of the live animal may be allocated, transfers between de- partments valued, and inventories priced. Such allocation of costs may be to the departments on the basis of weight, or on any other sound and practicable basis. In any case total live costs should be absorbed, and the departments should start their accounting careers on such definite cost ba^es, unin- fluenced by current market fluctuations. After developing a cost system, the remaining problems of uni- form accounting, while difficult, would be by no means beyond solu- tion. Some steps have already been taken in this direction. A com- plete program would include: 1. A uniform system for distributing indirect expense, first to plants, branch houses and other enterprises, and then to departments within a plant. 2. A uniform method of billing plant products to branch houses, and a system of allocating branch-house and car-route profits back to packing plant departments. 3. A uniform definition of the processes and products to be in- cluded in a specified animal section (such as the pork section), and 82 MEAT-PACKING INDUSTRY. ultimately a uniform definition of the departments within the sec- tions. 4. Uniform principles to be laid down for carrying fixed assets at cost, and charging depreciation thereon. 5. Uniform fiscal years and intermediate accounting periods. 6. A uniform classification of asset, liability, income and outgo accounts, with specific rules as to what classes of subsidiary com- panies should be " spread " with the controlling company in making consolidated statements. All subsidiary company profits should be picked up before an annual statement of total company profits is presented. In due time a uniform system for the packing industry along the more important, at least, of the above lines may be developed. But until this is done, either by the Government or by the packers them- selves with the approval of the Government, the profits of the packers' business, both in total and in part, as reported by them, compiled according to their present accounting methods, can not be accepted as reliable or as consistently reflecting the underlying facts. CHAPTER IV. THE PROFITS OP THE "INDEPENDENT" PACKERS. Section 1. Introductory. The Commission has made a study of the profits of the "inde- pendent " packers for the fiscal year 1918, based on reports rendered by packers with sales over $500,000 and less than $100,000,000, under profit regulation by the United States Food Administration. One hundred and seventeen companies have been included in the follow- ing tabulations with annual businesses ranging from $620,000 to $63,811,000. While the total number of this class of packers under regulation by the Food Administration exceeded 200, it was found that many of the reports were incomplete, and that included in this total were a number of companies under the control of the five great packers. When the reports of controlled companies and those mak- ing inadequate reports were eliminated, 117 remained suitable for tabulation. These companies have been classified for the purposes of comparative study according to (1) the nature of their business, i. e., whether they are primarily pork packers, beef packers, or mixed packers; (2) size, based on sales; (3) status in respect to receiving Government allotments for products; (i) rate of earnings on net worth (capital stock and surplus). In addition a study has been made of the ratio of total expense to sales as between the various groups. Figures are also presented covering the net worth and profit of 65 independent packers for the years 1914, 1915, and 1916. These figures were compiled from schedules rendered by all independent companies to the Commission under the requirements of a question- naire in the fall of 1917. Over 200 companies submitted returns, but only 65 of these were sufficiently complete to be acceptable for tabulating purposes. Finally the reports of the five great packers under the provisions of the Food Administration profit regulation have been aggregated and a comparison made of the profitableness of the great packers with the independents for the year 1918. 83 g^ MEAT-PACKING INDTJSTKY. In accordance with most of the other figures dealing with packers profits these tabulations can not be regarded as conclusive, due to the lack of uniform methods in accounting heretofore pursued by the companies. The Federal Trade Commission's representatives ha^•e made no audit of the books of these companies, but have simply accepted the figures on the reports as returned, after eliminating such reports as appeared on their face to be inaccurate. Many companies did not prepare even simple balance sheets and profit-and-loss state- ments ; methods of charging off depreciation were found to vary widely . and to be calculated on erroneous bases; " net profit " did not have the same meaning for all companies : and in general it may be said that the reports indicated a decided indifference to the fundamental prin- ciples and methods of accounting on the part of many of the " inde- pendent " packers. Until accounting methods are improved figures collected by the Government or by any (rther agency can not always be taken as accurate, but only as a broad indication of the underlying financial facts. Furthermore, until substantially imif orm methods of accounting are used it will be impracticable to make satisfactory comparisons of the results of different companies. Finally it should be remembered that 1918 was an abnormal year, first becatise of the war, and second because packers' profits were subject to regulation, and accordingly any deduction drawn from the profits of the year can not be regarded as conclusive with respect to other years and other conditions except in so far as the 1914-1916 figures bear them out. It is also to be noted that in 1918 certain of the independent packers received Government allotments at fixed prices for their products, while others did not. Section 2. Effect of character of business on profits. The 117 "independent" packers, whose 1918 reports were used, were classified according to the character of their businesses. Almost every packer on the list is primarily concerned with live-stock products. Eighty-seven of the 117 companies reported no other business whatsoever, and of the 30 remaining, only 6 reported a more than 10 per cent (sales value) business in produce, oleo- margarine, ice manufacturing, or other outside activity. Two companies reported that about one-half of their business is in pro- duce and lard compound. Thus it may be stated that the business of the " independent " packer is primarily meat packing, and he has not branched out into other lines of food products, as have the five great companies. Furthermore, not over a dozen of the small packers report that they maintain selling or brancli houses, and onlv a few operate car hues. Strictly speaking, therefore, the businesses of MEAT-PACKING INDUSTRY. 85 the large and the small packers are not exactly comparable, because of this difference of functions. Of the 117 companies, 70 are here designated as pork packers, 18 as beef packers, and 29 as "mixed packers." The classification is based on the cost to the packer of live animals purchased ; if over 70 per cent of such cost is expended for the purchase of hogs, that packer is designated as a pork packer ; if over 70 per cent for cattle and calves, as a beef packer; if under 70 per cent for any kind of animal, as a mixed packer. Only three companies reported a 70 per cent or higher proportion for sheep, and accordingly it did not seem expedient to establish a "mutton packer" classification, and these three companies were included with the mixed packers. Table 26. — Profits of independent packers classified according to character of business, fiscal year 1918. Pork packers Beef packers Mixed packers Grand total Number of com- panies. Sales. $564,141,415 27,417,535 134,195,199 Net worth. » 573,410,390 3,221,782 12,584,776 117 725,754,149 89,222,948 16,127, Net profit. S13,299,778 ' 592,971 2,234,939 Rate of profit. On net wortli. Per cent. 18.1 18.4 17.8 18.1 On sales. Per cent. 2.4 2.2 1.7 2.2 1 End of first accounting period. " Net profit," as given above is after deduction of all interest charges, but not excess profits or income taxes, or donations to war charities. Net worth (or capital and surplus) , as already explained in Chapter II, represents the stockholders' or partners' equity in the business, and a rate of profit on net worth is a reasonable index of comparative profitableness. It is interesting to note that the 117 packers as a group, earning only 2.2 per cent on sales, made an average rate of return on net worth of 18.1 per cent. Pork packing is the main concern of the independent packers taken as a whole. Of the 725 millions of sales reported for the 117 com- panies, those classed as pork packers had 564 millions, or 78 per cent. There was not much difference in the rate of profit on net worth for these three groups of packers. While the rate was highest for the beef packers their business was comparatively small. Section 3. Effect of size on. profits. The following table reclassifies the 117 packers, according to the size of their businesses, reflected in terms of gross sales. No dis- tinction is made as between pork, beef, or mixed packers in this tabulation. 86 MEAT-PACKING INDUSTRY. Table 27. — Profits of independent packers classified according to size of business, fiscal year 1918. Number of com- panies. Sales. Net worth. Net profit. , Eate of profit. On net worth. On Sales. Group I. Over 25 millions Group II. 10 millions and less 6 11 11 34 65 8281,859,401 191, 307, 172 72,393,462 111,997,377 68,196,737 $37,204,313 16,968,666 10,095,750 14,385,574 10,668,745 $7,167,862 4, 008, 152 1,380,839 2,286,868 1,283,%7 Per cevt, 19.3 23.6 13.7 15.9 12.1 Per cent. 2.5 2.1 Group III. 5 millions and less 1.9 Group IV. 2 millions and less 2.0 Group V. Under 2 millions... 1.9 117 725,764,149 89,222,948 16,127,688 18.1 2.2 Groups I and II combined Groups III, IV, and V com- bined 17 100 473,166,573 252,587,576 64,172,879 35,050,069 11,176,014 4,951,674 20.6 14.1 2.4 1.7 Grand total . 117 725,754,149 89,222,948 16,127,688 18.1 2.2 It appears that the most profitable group of small packers, meas- ured in terms of rate on net worth, are those whose sales lie between 10 and 25 million dollars. The 11 companies in this group earned 23.6 per cent as against 19.3 per cent for the 6 largest companies in Group I. These medium-sized companies are probably the most advantageously situated of all the groups, as their plants are large enough to efficiently utilize by-products, where the smaller packer has to throw them into tankage, and yet not so large as to compete extensively with the five great packers in establishing a branch-house system, as do the Group I packers. Under 10 millions the rate of profitableness drops rapidly, the lowest rate (12.1 per cent) obtaining for Group V, or packers with sales of less than 2 millions per year. When Groups III, IV, and V are combined, as against the combination of Groups I and II, it is seen that the 17 packers with sales of more than 10 millions did al- most twice the business of the 100 packers with sales of less than 10 millions, and earned a much higher rate on net worth — 20.6 per cent as against 14.1 per cent. The effect of size on profitableness is clear enough, but the fact that Group I made less than Group II might indicate that there was. a very definite limit of size over which it may not be profitable for an " independent " packer to go. The following table gives the size groups for pork, beef, and mixed packers. It is to be noted that beef packers are only found in Groups IV and V. There is no large beef packer on the list. The three beef packers in Group IV made a very large average profit — 31.9 per cent on net worth, but this is not due probably to any general condition. The three mixed packers in Group II also made a high average rate of profit — 30.9 per cent on net worth, and the same comment may well apply to them. The number of companies is too small in both cases to admit of any general conclusions. Group III for both pork MEATrPACKING INDUSTRY. 87 and mixed packers shows a relatively low average rate of earnings, as does Group V for pork, beef, and mixed packers. Broadly speak- ing, this table bears out the conclusion already arrived at that the larger " independents " are more profitable than the smaller companies. Table 28.- -Profifs of independent packers classified according to character of, business and to siee, fiscal year 1918. Number of com- panies. Sales. Net worth. Net profit. Rate of profit. On net worth. On sales. FOBK PACKERS. Group I. Over 25 millions Group II. 10 millions and less than 25 millions 6 8 9 18 29 8281,869,401 127,482,681 59,080,678 68,427,454 37,291,201 $37,204,313 13,987,854 8,486,675 7,532,761 6,204,787 $7,167,862 3,085,852 1,157,183 1,172,789 716,092 Percent. 19.3 22.1 13.6 15.6 11.5 Percent. 2.5 2.4 Group III. 5 millions and less thar\ inTpillio"s 2.0 Group IV. 2 millions and less 2.0 Group V. Under 2miUions.... 1.9 Total pork packers 70 564,141,415 73,416,390 13,299,778 18.1 2.4 BEEF PACKEKS. Group rv. 2 millions and less 3 15 9,348,944 18,068,591 850,381 2,371,401 270,888 322,083 31.9 13.6 2.9 Group V. Under 2 millions — 1.8 Total heef packers 18 27,417,535 3,221,782 592,971 18.4 2.2 MIXED PACKEKS. Group II. 10 millions and less 3 2 13 11 63,824,491 13,312,784 44,220,979 12,836,945 2,980,712 1,609,075 6,002,432 1,992,557 922,300 223,656 843,191 245,792 30.9 13.9 14.0 12.3 1.4 Group III. 5 millions and less than lftTnilli""R- .. ... I 7 Group IV. 2 millions and less 1.9 Group V. Under 2 millions.... 1.9 Total mixed packers 29 134,195,199 12,584,776 2,234,939 17.8 1.7 Section 4. Effect of Government allotments on profits. The following table compares the profitableness of the 34 inde- pendent packers who received Government allotments for their products, with the 83 packers who did not. Almost without except tion, the " allotment packers " were the larger companies, but whether their greater profitableness was partly due to the allotment prices is an open question. Table 29. — Profits of independent packers classified according to Oovemment allotments, fiscal year 1918. Number otcom- '. anies. Sales. Net worth. Net profit. Rate of profit. On net worth. On sales. GoTemment allotinent packers NonaUotment packers . 34 83 $543,079,251 182,674,898 $63,822,873 25,400,075 $12,294,313 3,833,370 Per cent. 19.3 15.. 1 Percent. 2.3 2.1 Grand total 117 725,754,149 89,222,948 16,127,688 18.1 2 3 88 MEAT-PACKING INDUSTRY. Section 5. Bate of profit on net worth. The following table classifies the 117 independent packers on the basis of rate of profit on net worth (capital and surplus), no distinc- tion being drawn between character of business or si2;e of business. Table 30. — Profits of independent packers classified accordinij to rate of profit on net u-ortlt, fiscal year 1918. Rate on net worth. Number of com- panies. Total sales. Over BO per cent 25 and less than 50 per cent - 20 and less than 25 per cent . 15 and less than 20 per cent . 10 and less than 15 per cent . I>ess than 10 per cent Actual losses Total 836,033,426 211,669,962 39,984,092 141,965,440 237,655,135 41,912,657 16,5.33,437 725,754,149 Thus six packers earned over 50 per cent on net worth, 19 from 25 to 50 per cent, 14 from 20 to 25 per cent, 18 from 15 to 20 per cent, or 57 packers earned 15 per cent or better, while 60 packers earned less than 15 per cent. The 57 packers earning 15 per cent or better had aggregate sales of $429,652,000 or about 59 per cent of the total sales of aU packers in this tabulation. In the group earning better than 50 per cent on net worth were found three pork packers, one beef packer, and two mixed packers. The largest company in this group reported sales of nearly 19 millions, and the smallest sales of only $520,000. In the 19 packers in the group earning from 25 to 50 per cent, the pork packers predominated, but cattle and mixed packers were also found. The sales in this group ranged from $763,000 for the smallest company to $43,000,000 for the largest. No company with sales of over $7,000,000 was found in any of the groups earning 10 per cent or less. In the absolute loss group was found one company with sales of $6,280,000 and two companies with sales of over 3 millions. The greatest number of companies (29) was found in the group earning from 10 to 15 per cent. Broadly speaking, this tabulation shows that the big companies are largely in the higher-earning groups, but they by no means monopolize these groups, as the smallest company in the entire list, with sales of $520,000, is included in the highest group of all (over 50 per cent). It is significant, however, that no one of the 17 packers with sales of $10,000,000 or more earned less than 10 per cent on net worth. Section 6. Profits of independent packers in former years. Turning now to the profits of 65 independent packers as reported for the years 1913, 1914, and 1916, the following summary table has been prepared: MEAT-PAGKING INDUSTEIT. 8& Table 31. — Profits of independent packers, 191Jf-1916. Year. Net worth. Net profit. Rate of profit on net worth. 1914 , 139,323,000 44,934,000 60,655,000 85,018,000 5,875,000 11,215,000 Per cent. ' 12.6 191S 13.1 1916 22.1 45,137,000 7,369,000 16.3 One hundred and seventeen independent packers in 1918 averaged 18.1 per cent profit on net worth, while from the above table it appears that 65 independent packers averaged 12.6 per cent in 1914 (a prewar year), 13.1 per cent in 1915 (the first war year), and 22.1 per cent in 1916 (the second war year), the combined average for the three years being 16.3 per cent. As figures of annual sales were not returned (except in certain cases) for the 65 packers tabulated, no size groups comparable with the 1918 size groups can be compiled. The fact that 1916 was a more profitable year for 65 packers, than 1918 was for 117 packers may be explained in one of two ways; either the 65 packers reporting were larger and more profitable companies as a class than the 117 packers reporting in 1918, or possibly the United States Food Admin- istration regulation in 1918, actually retarded the profits of independ- ent packers as a class under what was being earned in 1916. Accord- ing to any interpretation and after allowing wide margins for inaccu- rate reports, extraordinary conditions, etc., it is clear that since 1915, the average profits of the independent packers measured in terms of rate on net worth have been high. Section 7. Expense of independent packers. It was found impracticable to aggregate the expense accounts of all the 117 independent packers in 1918, due to the lack of uni- formity in the returns. A selected list of 32 independent companies was prepared, however, for this purpose, these companies having ren- dered accounts that appeared to be reliable. The aggregate sales of the 32 companies selected amounted to $339,988,000, or nearly one-half the aggregate sales of the whole list of 117 companies, namely, $725,754,000. In the reports rendered, expenses were classi- fied into manufacturing (exclusive of raw material), selling, and administrative, and this division is indicated in the lower part of the following table, but it is doubtful if as niuch reliance can be placed upon the classified expense as upon the total expense. 90 MEAT-PACKING INDUSTRY. Table 32. — Independent packers' sales, expenses, and profits, fiscal year 1918, Item. Number of com- panies. Sales. Expense. Per cent ofexpense to sales. Net profit. Per cent of profit to sales. 18 14 $262,606,938 77,381,200 $30, 616, 266 7,452,029 11.7 9.6 $7,264,156 1,403,055 2.8 1.8 32 339, 988, 158 38,068,295 11.2 8,667,211 2.5 CLASSIFIED EXPENSES. Manufacturing, i Selling. Administrative. Total. Item. Amount. Per cent. Amount. Per cent. Amount. Per cent. Amount. Per cent. 18 pork packers 14 other packers $17, 121, 661 3,963,168 59.8 57.5 $9,307,599 2,247,272 32.2 32.7 $2,302,869 668,576 8.0 9.8 $28,733,129 6,869,016 100.0 100.0 Total, 32 packers 21,074,829 59.2 11,554,871 32.5 2,971,445 8.3 = 35,601,245 loao ^ Includes all manufacturing costs above materials. ^ Diflerence between this total and $38,068,295 listed above, due to exclusion of interest in lower table. Thus it appears that for the 32 companies tabulated, 11.2 per cent of gross sales was paid out in the form of expenses of every kind, including interest, 2.5 per cent of gross sales were returned as profit, leaving roughly 86 per cent of sales as the measure of the cost of live stock and other raw materials manufactured and sold during the year. This last percentage is only approximate, as it would have to be adjusted with "income other than sales" to make it exact. But as other income is largely a negligible quantity with the small packers, the percentage as given is substantially correct. The 18 pork packers show an expense percentage on sales of 11.7 while the 14 other packers (including 4 beef and 10 mixed packers) show a percentage of only 9.6. This difference is undoubtedly ex- plained by the fact that the pork packers, in that they sell less of their product fresh but rather cure it and process it, are put to consider- ably more expense per dollar of sales than are the other packers who sell beef and mutton fresh and operate on a more rapid turnover. Few figures are available whereby the expenses of the independent packers may be compared with those of the five great packers. As has already been pointed out, the great packers do a different sort of business than the independents, processing their by-products to a much greater extent and also dealing heavily in non-livestock products. The Cudahy Packing Co. is the only great packer that attempts to aggregate its total expenses for the year. The other companies aggregate expense by departments, sometimes by plants, but do not aggregate them for the whole company. The Cudahy figures, exclu- sive of raw material, for 1914 through 1917 are as follows : MEAT-PACKING INDUSTRY. 91 Table 33. — Expense of 32 independent packers compared Kith expense of the Cudahy Packing Co. Gross sales. Total Per cent. 32 independent packers, 1918.. Cndahy Packing Co., 1917> . Cudahy Packing Co., 1916. . Cudahy Packing Co., 1915 . . Cudahy Packing Co., 1914. . $339,988,158 184,811,423 133,960,986 116,162,156 109,121,441 $38,068,295 28,351,580 22,137,583 22,454,638 19,557,798 11.2 15.3 16.5 19.3 17.9 » See Exhibit D for detail of Cudahy expenses. It is to be expected that the ratio of expense to sales will be greater in the case of the big five packers than in the case of the independent packer, because the former processes his by-products more extensively and as a result secures a higher average selling price. The ratio of his raw material cost to selling price will there- fore be lower and his ratio of expense to selling price higher than in the case of the independent packer, supposing that both make about the same ratio of profit to selling price. Whether the considerably greater ratio of expense shown by the Cudahy Co. on the above table can all be accounted for on this basis of reasoning is an open question. Section 8. Comparison of the profits of the great packers and of the inde- pendents. Under the United States Food Administration profit regulation, the five great packers reported the following profits for the fiscal year 1918 : Table 34. — Five great packers' sales and profits, as reported to Food Adminis- tration, less interest on borroiced money, fiscal year 1918. Sales. Networth.1 Net profit. Per cent ol profit on- Net worth. Sales. $842,143,264 1,390,882,039 407,947,468 326,931,016 286,660,971 $165,391,448 204,799,823 47,832,048 35,473,370 29,364,883 $19,396,753 36,507,487 3,982,246 6,362,184 6,031,680 U.7 17.8 8.3 17.9 20.5 2.3 2.6 1.0 1.9 2.1 3,254,564,748 482,861,572 272,280,360 15.0 2.2 ArmonT& Co 6wlft&Co Morris & Co Wilson & Co., Inc.. Cudahy Packing Co . Total, Big Five., ' Beginning of fiscal year. " This figure will not agi-ee with 1918 profits shown in Chapter II because the latter isi taken from published reports of packers. These sales and profits represent not only the live-stock business, (which was subject to a 9 per cent limit on the total investment, in- cluding borrowed money in that business) , but all other activities of the companies as well. No extensive attempt has been made to 92 MEAT-PACKING INDUSTRY. audit these reports, and the Commission can not vouch for their cor- rectness. In compiling them the packers were asked to exclude from the expense account income and excess profit taxes, war dona- tions, and publicity expense. Net profit as 'shown in the above table is after interest has been deducted as an expense. The definition of "net profit" is accordingly the same for these cMnpanies and for the 117 independent packers whose accounts have been reviewed, A grave doubt is thrown aroTind the net profits here shown in the case of at least three companies — Armour, Morris, and Wilson. It seems incredible that Morris & Co. having alwa.ys kept step in the past with the average profitableness of the " Big Five," and shar- ing in 1918, its full quota of Government allotments, should only make a net profit of 8.3 per cent on its net worth and 1 per cent on its sales, while Wilson and Cudahy were obtaining better than twice these rates of profit. Only less noteworthj^ is the case of Armonr & Co., as compared to Swift & Co. A profit of 11.7 per cent on net worth for Armour, while Swift was earning 17.8 per cent and still keeping below the limit of profit regulation is hardly credible in view of the past performances of these two great companies. In short, an intensive analysis of the reports of the great pa«kers might bring to light a considerable increase in tl^ total reported profit — an increase that might raise considerably the laercentage on net worth. In comparing the great packers with the "inde- pendents" in the following tables, therefore the profits and rates of profits exhibited for the former should be regarded in the nature of minima. Tabi^e 35. — VBmpcmson of profits — fii'e great pacli-ers and 117 independent packers, fiscal year 1918. Number' of com- panies. Sales. Net worth. Net profit. Rate of profit. On net worth. On sales. Total Eig rive „ ^: 83,251,561,748 , 5482,861,672 1872,^0,350" Per cmt. 15. o! Per cem. 2.2 Independent packers ©tbt 25 11 100 281,859,401' 191,307,172 252,587,676 37,204,313 16,963,566 35,050,069 7,167,862 4,008,152 4,951,674 19.3 23.6 14.1 ^.■5 Independentjpackers,.10 millions ' and loss tlian 25 millions Independent paekei's under 10 ' TTiilliOTlS 2.1 S Total, independent packers 117 725,754,119 80,222,,948 • 16,127,688; 18.1 2.2 1 This figure will not aKree with 1918 profits shown in Chapter II because tne latter is taketn from pubUshcd reports of packers. Thus if the rate of profit on net worth for the great packers actu- ally was 15 per cent in 1918, it appears that it was considerably less MEAT-PACKING INDUSTRY. 93 than the average profit of the 17 independent packers with sales of over 10 million dollars, and only a little more than the average profit of the 100 independent packers with sales of less than 10 million dollars. It is interesting to note in passing that the total sales of the 117 independent companies listed only aggregated 725 millions, as against 842 millions for Armour & Co. alone, and 3,254 millions for the Big Five combined, or only 22 per cent of the latter figure. When it is remembered that the list contains practically all of the larger " independents," the relative importance of the " independent " packers as a class is readily seen. Turning now to a comparison on the basis of the actual number of independent companies earning 15 per cent or better, some of the figures shown in Section 5 are given, as follows : Table 36.- -Independent packer^ rates of profit on net ivorth iij groups, fiscal year 191S. Rate on net worth. Number of com- panies. Total sales. Per cent sales in eseli group. Over 20 per cent 15 and loas than 20 per cent. Under 15 per cent Total independents. . »287,687,480 141,965,440 296,101,229 39.6 19.6 40.8 117 725,754,149 Fifty-seven " independent " companies, with sales aggregating $429,652,000, earned 15 per cent or better on net worth — or about one- half of all the " independents " listed, doing riearly 60 per cent of the total business listed. Thirty-nine "independent" companies were earning better than 20 per cent and doing a business of $287,687,000, or about 40 per cent of the total business listed. Eegarding the companies earning from 15 to 20 per cent as being in the general zone of the earnings of the 5 great packers, it would appear that of the 117 " independent " companies listed, 39 were more profitable than the average of the "Big Five," 60 were less profitable, and 18 were in the same general class with slightly higher rates than the Big Five on the basis of the latter's unaudited returns. The 39 clearly more profitable companies did 40 per cent of the "independent" business listed, the 60 clearly less profitable com- panies did another 40 per cent of the business listed, while the 18 intermediate companies did the remaining 20 per cent of the business listed. Turning now to a comparison of rates of profits on net worth for the five great packers and the 65 independent packers already tabulated for the years 1914, 1915, and 1916, the following table has been prepared : 94 MEAT-PACKING INDUSTRY. Table 37. — Comparison of rates of profit on net worth, five great packers and 65 independent packers. Year. Rate of profit. 5 great packers. 65 inde- pendent packers. 1914 1915 1916 Average, 3 years Per cent. 8.3 12.8 18.5 13.5 Per cent. 12.6 13.1 22.1 16.3 Thus it appears that in 1914, 65 independent packers earned 12.6 per cent on net worth while the five great packers only earned 8.3 per cent. In 1915 the great packers earned less than the 66 inde- pendent packers by a narrow margin. In 1916 the great packers averaged 18.6 per cent against the independent packers 22.1 per cent. The average for the three years shows a rate of profitableness considerably to the advantage of the independents. Section 9. The significance of comparisons between the profits of the great packers and the independents. On their face the foregoing figures show that of the four years when comparisous were made (1914, 1915, 1916, and 1918) the aver- age rate of earnings on net worth for the great packers was invariably less than that of the independent packers as a group. The obvious conclusion to be drawn is that the independent packers are making relatively more money than the great packers. Before adopting this conclusion, however, it is important that certain qualifications be set forth. To begin with, from the standpoint of the character of the busi- ness, the activities of the great packers and of the independent pack- ers are not entirely comparable. The great packers operate branch houses, car routes, and a great number of nonlive-stock manufactur- ing and selling businesses. The independent packers, on the other hand, confine themselves almost exclusively to the production of meat and primary live-stock products. They dispose of their output through brokers or sell it locally, and have not, as a rule, any wide- spread system, of branch houses or refrigerator car routes. If it were possible to segregate the live-stock business of the big packers from other activities in which they alone (and not the independents) are engaged, a basis of comparison with the independent companies might be established, but when all activities are lumped together in one MEAT-PACKING INDUSTRY. 95 figure for the entire business of the great packer, the resulting rate of earnings is not conclusive when compared with that of the inde- pendent packer. The fact that the earnings of the great packers have averaged less than that of the independent packers in the years under review raises an interesting question as to the big packer's earnings in his meat business as compared with his earnings in the nonlive-stock business. As it has been found impossible under the present account- ing procedure of the great companies to bring about a dependable segregation, the question can not be answered conclusively. It may be argued that the great packers earn as much on their meat in- vestment as the larger independent pork packers or beef packers. If they do earn less, it is indicative of lack of efficiency on their part — if profitableness can be taken as a measure of efficiency. Granting for the moment that they do earn returns as high as those enjoyed by the larger independents, why is it that their rate on total business is less? Obviously because they earn a rate so low on the non-livestock section as to reduce the rate for the whole business to a point which is considerably less than that earned by the in- dependent meat packers. This assumption corresponds with the question already raised in Chapter I as to the losses and the low profits obtained by the great companies in entering new and unrelated fields. As they are continually investing their surplus earnings in these new fields and have to carry losses for a time pending the establishment of these new businesses on a profitable basis, it follows that in any given year, the rate of profit in these lines will be retarded, and also the rate on the whole business. This may be an indication of the sort of competition waged in the invasion of unrelated distributing and manufacturing lines. To summarize, the deduction to be made from the comparative figures already tabulated would seem to be that either the great packers are less efficient, from the standpoint of profits, in the pro- duction of meats than the larger independents; or else granting an equal, or greater profitableness in the meat businras, their continual invasion of new fields is a source of burden in the shape of losses on the current earnings. In other words high profits on meat may be used to finance new activities pending the establishment of the latter on a firm basis, meanwhile keeping down the average return on the total business, to a level less than that shown for the larger inde- pendent companies. So far as the independent packers considered individually are con- cerned, it is important to point out that only a few companies earn a rate higher than that shown for the five great packers, but the few which do earn a higher rate are mostly large companies 128911°— 19 1 96 MEAT-PACKING INDUSTEY. and effect thereby a preponderating influence on the average rate for the independents considered as a class. It is only these larger, profit- able, independent companies that are considered in the deductions outlined above. In connection with the comparative figures, two other interesting points are seen. Swift & Co. has repeatedly contended that it is necessary for the great packers to enter new fields, often unrelated to the meat business, in order to keep up the efficiency of the organiza- tion. It would appear from the above tabulations and the deductions drawn therefrom that, contrary to this contention, it has cost the great packers a lower rate of profitableness than that enjoyed by the larger independent companies, as the price of entering new fields. Had they remained strictly in the meat business, their effi- ciency, measured in terms of profitableness, would perhaps have been greater. Again, it has been extensively claimed by Swift & Co. that their rate of return on the basis of sales is low, only averaging from 2 to 3 cents for each dollar of products sold. Only the wide extent of the great packers' organization, they claim, can enable the company to sell at such a low rate and give the consumer the resulting bene- fit in reasonable prices. If this contention were true^ it would follow that the independent packer with his limited organisation could not exist on a return of only 2 or 3 cents per dollar of sales. Table 26 indicates that the rate of return for the independent beef packers averages 2.2 cents, for the pork packers 2.4 cents, for the mixed packers 1.7 cents, and for the 117 companies combined 2.2 cents, per dollar of sales. Thus it appears that the independent com- panies as a class, while making about the same profit on sales as do the great companies, reap a high rate on investment (18.1 per cent), and the contention of the great packers that only a large organiza- tion can exist on these rates is not sustained by the facts. EXHIBITS. Exhibit A. MEMOBANDTJM ON THE DISTEIBtJTION OF THE COMMON AND PKEFEBEED STOCK OP StTLZBEEGEB & SONS CO. (WILSON & CO.) At the time of the mcorporation of the Sulzberger & Sons Co. the outstanding common stock of Schwarzschild & Sulzberger amounted to 43,733 shares. Of this amount Ferdinand Sulzberger, president of Schwarzschild & Sulzberger Co. turned over 43,582 shares to Sulzberger & Sons Co. for the consideration of $25,227,800. In payment of $20,000,000 of said $25,227,800 he accepted all the common stock of Sulzberger & Sons Co. at par, and in payment of the balance, or $5,227,800, he accepted 52,278 shares of the 6 per cent preferred stock of Sulz- berger & Sons Co. also at par. The above deal left 151 shares of the old common stock of Schwarzschild & Sulzberger Co. still outstanding. Of this amount 40 shares were subse- quently bought by Sulzberger & Sons Co. for $24,000. The remaining 111 shares of the common stock were turned over to the Sulzberger & Sons Co. by Max J. Sulzberger, son of Ferdinand Sulzberger, the former president of Schwarz- schild & Sulzberger Co. in consideration of which transaction he received 222 shares of the preferred stock of Sulzberger & Sons Co. Thus of the $12,000,000 of authorized preferred stock of Sulzberger & Sons Co. there were immediately issued the following stock : $5,227,800 of preferred stock to Ferdinand Sulzberger. $22,200 of preferred stock to Max J. Sulzberger. $19,500 of preferred stock to the original subscribers: Nathan Sulzberger, Max J. Sulzberger, Germon F. Sulzberger, Nathan Grubenheimer, M. S. Loeb, each 39 shares. Total preferred stock issued, $5,269,500, leaving a balance of $6,730,500 un- issued at the time of incorporation. Very soon a syndicate was formed by HaUgarten & Co, to purchase $3,250,000 par value of the company's 6 per cent preferred stock. They were also given an option upon the remainder of the unissued preferred stock of $3,480,500. On December 8, 1910, the preferred stock of the company was placed on a 7 per cent basis. On December 19, 1910, the Mercantile Trust Co. and the Equitable Trust Co. both agents of Sulzberger & Sons Co., the former transfer agent, the latter reg- istrar, were authorized to issue 34,500 shares of preferred stock, in addition to the outstanding 52,695 shares of preferred stock, thus making a total of 87,195 shares outstanding on December 19, 1910. On January 3, 1911, HaUgarten & Co. and Salomon & Co. reported to Sulz- berger & Sons Co. that they had sold another 10,000 shares of preferred stock and the above trust companies were authorized to register and issue an addi- tional block of 10.000 shares of preferred stock, thus making a total of 97,195 shares outstanding on January 3, 1911. 97 98 MEAT-PACKING INDUSTRY. On January 17, 1911, Hallgarten & Co. and William Salomon & Co. sold another 2,805 shares of preferred stock. On April 10, 1911, at the meeting of the finance committee a resolution was adopted to sell the unissued authorized preferred stock of the company amount- ing to 13,500 shares. An option on it was given to the Guaranty Trust Co. and William Salomon & Co. and Hallgarten & Co. Recapitulation of preferred stock issued for cash up to and including Dec. 3.0, 1916. Shares. December 19, 1910 34, 500 Janaury 3, 1911 10,000 January 17, 1911 2, 805 47,305 These shares added to the preferred stock issued at the time of incorporation would make $10,000,000 of preferred stock outstanding. By the end of the fiscal year of 1918 an additional 4,760 shares of preferred stock were issued lor cash, thus adding another $476,000 to the preferred stock of $4,730,500 issued for cash up to 1916, and raising the amount of preferred stock issued for cash up to the end of the fiscal year 1918 to $5,206,500. Exhibit B. memoeandtjm on the eeorganization of cttdahy packing co. The Cudahy Packing Co. underwent a thorough reorganization on October 7, 1915, on which date the Cudahy Packing Co. took out a charter under the laws ol' Maine, and thus changed its status from an Illinois corporation to a Maine corporation. The authorized and outstanding capital stock of the old Cudahy Packing Co. at the time of the organization of the new Cudahy Packing Co. was $12,000,000, consisting of $10,000,000 of common stock and $2,000,000 of 6 per cent preferred stock. The new Cudahy Packing Co. was incorporated with an authorized capital stock of $20,000,000 which was to be divided into 114,495 shares of common stock having a par value of $100 each and 85,505 shares of preferred stock also with a par value of $100 each. These 85,505 shares were to be made up partly of the old 20,000 shares 6 per cent preferred stock issued in 1902 and 65,505 additional shares of 7 per cent preferred stock. It is to be noted that while all of the authorized preferred stock amounting to $8,550,500 was issued immediately upon the incorporation of the new company, of the authorized common stock only $3,449,500 was issued at that time. There was thus created a situation where the outstanding capital stock of the new company was identical to that of the old company, namely, $12,000,000, with the dif- ference that the common stock of the old company was reduced from $10,000,000 to $3,449,500 under the new company, and the preferred stock, which under the old company amounted to $2,000,000, was now raised by the same amount as the common stock was decreased, namely, by $6,550,500. This conversion j was undertaken for the purpose of shifting the control of the company, which could be exercised only through the ownership of the common stock, from one EXHIBIT B. 99 branch of the Cudahy family to another branch. Since the death of Michael Cudahy, senior member and founder of the Cudahy Packing Co. up to its re- organization in October, 1915, the majority of common stock of the company was vested in the hands of Joseph M. Cudahy, son of the deceased Michael Cudahy and his immediate relatives. The provision whereby the common stock of the old Cudahy Packing Co. was to be converted into preferred stock of the new Cudahy Packing Co. aimed at the elimination of this branch of the family as a controlling factor in the business, and the bestowal of these privileges upon E, A. Cudahy, brother of the late Michael Cudahy. This was accomplished by having amongst others the common stock of Joseph M. Cudahy and his relatives converted into 7 per cent preferred stock, and placing all of the common stock of the new company that was issued at the time of its organization into the hands of B. A. Cudahy. The bases of conversion and the salient changes resulting therefrom were as follows: The common stock of the old Cudahy Packing Co. which amounted to 100,000 shares at the time of the organization of the new company was divided into three blocks : (o) 56,350 shares were held by Joseph M. Cudahy, formerly president of the Cudahy Packing Co.; Illinois, and his relatives. ( 6 ) 40,450 shares were held by Edward A.- Cudahy and his relatives. (c) 3,200 shares were held by some of the employees of the Cudahy Pack- ing Co. According to the provisions of the reorganization plan the Joseph M. .Cudahy block of common stock was to be exchanged on the basis of $110 of 7 per cent preferred stock of the new Cudahy Packing Co. for each $100 of common stock, the Joseph M. Cudahy group thus absorbing 56,350 shares plus 5,635 shares, or a total of 61,985 of the 65,505 shares of 7 per cent preferred stock that the new company was to issue. The same basis of $110 was also adopted for the exchange of the common stock held by the group of employees of Cudahy Packing Co., thus absorbing the balance of 3,520 shares of the 65,505 new shares of 7 per cent preferred stock authorized by the new company. All of the common stock that was issued by the new company at the time of Its organization, 34,495 shares, went to Edward A. Cudahy in exchange for his holdings of common stock in the old Cudahy Packing Co. which, as previously brought out, amounted to 40,450 shares. The result was that at the time of the organization of the Cudahy Packing Co. of Maine, E. A. Cudahy, together with his immediate relatives, exercised sole control in the new com- pany. This condition, however, obtained only for a short while, since a policy has been adopted by the present management of the company to increase the number of its shareholders by frequent stock issues. It will be recalled that the old Cudahy Packing Co. had an issue of $2,000,000 worth of 6 per cent preferred stock since 1902. This stock remained unaffected by the reorganization, the preferred stock of the Cudahy Packing Co. now outstanding thus consisting of the $6,550,500 of 7 per cent preferred stock issued for the first time in 1915 and the $2,000,000 of 6 per cent preferred stock that was issued for the first time by the old Cudahy Packing Co. in 1902. 100 MEAT-PACKING INDUSTRY. Exhibit C. Becorwiliation of profits as reported by packers and ^^o^^^^l^'^'tf/itaT*^ °^ company net profits and profits available for dividends and surplus. 1912 1913 1914 1916 1916 1917 ABMOUB a; CO. Profltreported by company Add; Capitalization New York Dressed Beef Co 15,702,000 [6,028,000 [7,610,000 [11,000,000 [20,100,000 1,500,000 500,000 (21,294,000 Sundry reserves Estimated retainable profit. Add: 6,702,000 6,028,000 7,510,000 11,000,000 22,100,000 81,000 166,000 612,000 21,294,000 6,635,000 130,000 130,000 156,000 208,000 Bonus reserves Estimated net profit 5,702,000 6,158,000 7,640,000 11,166,000 22,849,000 27,137,000 SWIFT A CO. Profit reported by company Add: Car line depreciation adjust- 8,250,000 9,250,000 9,460,000 14,088,000 1,674,000 484,000 3,349,000 20,466,000 34,650,000 Abandoned property charged Fluctuation in securities , net . . 1,S»S,000 Estimated retainable profit. Add: 8,250,000 37,000 458,000 9,250,000 61,000 138,000 9,460,000 65,000 136,000 19,695,000 21,000 1,104,000 18,943,000 1,255,000 2,474,000 34,650,000 10,170,000 Pension-fund contributions ' . . 2,416,000 Estimated net profit 8,745,000 1,813,000 9,449,000 9,661,000 20,720,000 22,672,000 47,236,000 MOERra A CO. Profit reported by company Add: Estimated over depreciation . . 1,917,000 2,206,000 2,321,000 3,832,000 858,000 6,401,000 761,000 Estimated retainable profit. Add: 1,813,000 1,917,000 2,206,000 2,321,000 4,690,000 6,162,000 1,750,000 Pension-fund contributions » . - 200,000 100,000 Estimated net profit 1,813,000 1,917,000 2,206,000 2,321,000 4,890,000 8,012,000 ■WILSON A CO. mc. Profit reported by company Add; Simdry reserves (•) m P) 2,464,000 4,914,000 400,000 6,498,000 200,000 Estimated retainable profit . Add: 646,000 272,000 1,996,000 2,464,000 5,314,000 6,698,000 1,621,000 Estimated net profit t646,000 '272,000 »1,996,000 2,464,000 6,314,000 8,319,000 CUDAHY PACKDIQ CO. Profit reported by company 1,129,000 1,329,000 1,402,000 724,000 3,011,000 500,000 4,431,000 Estimated retainable profit. Income-tax reserves 1,129,000 1,329,000 1,402,000 724,000 3,611,000 3,985,000 950,000 Estimated net profit 1,129,000 1,329,000 1,402,000 724,000 3,611,000 4,936,000 < Contributions to employees' pension funds may well become within a few years a legitimate cost of indus- try, but until this principle is accepted by industry in general, and the cost assessed equitably to all com- panies (as depreciation is now accepted and assessed), it is doubtful if these fiuctuatlng donations on the part of only three of the companies can be allowed as an operating expense. They are treated therefore In the sense of a distribution of profits. » Company figures subsequently amended by accountants' reporl, and commission has talcen latter figures as more reliable, although it is known that these audited profits are before cliaiging depreciation. EXHIBIT E. Exhibit D. 101 PROFIT AND LOSS ACCOUNT SHOWING CLASSIFIED EXPENSES OF THE CUDAHY PACKING CO. The Cudahy Packing Co. is the only one of the great packers which attempta to compile a proflt-and-loss statement showing total sales, cost of sales, and classified expenses for the whole business. A copy of this statement for the years 1912 and 1917 is exhibited herewith. CUDAHY PACKING CO. Profit and loss account per company reports. 1912 Amount. Per cent. Amount. Per cent. Income: Income from sales Dividends from other corporations . Interest and rent received. Income from refrigerator cars Miscellaneous earnings Total. Outgo: Live-stock purchases Other products and materials Manufacturing supplies Manufacturing expense General and selliiig expense Freight on shipments Repairs Depreciation Interest Income and excess profits tax reserves . Total. 190,443,970 45,254 22,244 423, 09S 839, 191 100.0 $184,811,423 '69,272 216, 967 437, 977 1,109,176 91,773,767 186,633,815 66,184,905 6,348,624 2,635,997 4,994,173 4,900,517 4,347,928 303,549 236,436 692,163 73.2 7.0 2.9 5.5 5.4 4.8 .3 .3 128,579,301 24,182,404 4,107,764 7,609,002 8,330,460 6,617,573 471,498 766,070 1,549,224 1,090,000 90,644,292 182,203,286 69.6 13.1 2.2 4.1 4.5 3.0 .3 .4 The other four packers make no attempt to prepare a statement similar to the above, and accordingly it is impossible to compare the various items of Income and outgo between companies or to secure any comprehensive picture of the operating accounts at all. Exhibit E. DEPABTMENTAL RESULTS, PER BOOKS. SWIFT & CO., CO., INC. AEMOUE & CO., WILSON & The following tables purport to show the departmental profits of Swift & Co., Armour & Co., and Wilson & Co., Inc., for all plants combined, for the six years 1912 to 1917, inclusive, except that results for Wilson in 1917 were not available. These figures were taken directly from the records of the sev- eral companies, without adjustment of any kind. They are here presented, it can not be too carefully pointed out, not as the actual results of the depart- ments concerned but rather to illustrate the incongruities of the departmental system of profit-finding as now conducted by the great packers. The reader is invited to inspect carefully these results as tabulated, and to draw his own conclusions as to the reliability, measured in terms of probability and consis- tency, of the departmental profits as now aggregated on the books. 102 MEAT-PACKING INDUSTKY. Departmental results, per books, all plants combined. SWIFT & CO. (l/csses in Italics.) Fiscal year— 1912 1913 1914 1915 1916 1917 Beef section: t4,6S8,e34 40,729 983,570 178,613 4,026,814 1,343,700 228,981 4,681 108, 785 8,64^ 31,145 39,409 154,153 179,006 47,380 71,418 $686,658 18, 189 328,276 265, 161 72,485 149,551 32,397 4,668 159,061 21,293 4,244 100,981 113,564 314,484 17,417 41,459 137,687 168,052 $504,397 217,956 221,475 174,475 56,855 38,097 5,643 96,525 52,647 6,891 212,639 109,688 169,697 120,928 76,520 18,649 268, 759 $150,663 996 243,805 102,371 639,209 41,724 61,343 4,628 25,772 61,732 17,672 109,927 46,238 141,668 77,395 6S,8S6 4,776 241,288 $113,828 129,614 485,925 194,356 372,487 283,667 177,011 7,428 87,516 80,477 22,729 40,475 61,437 159,623 19,574 29,149 139,892 158,268 $92,745 Beef carcasses, frozen 157,587 670,810 933,042 Hides 733,259 119,997 398,356 4,053 237,860 146,475 Pickled beef 349,791 40,737 61,114 7,131 221,541 4i,7Jfl Offal 523,069 389,976 48,914 Selline adiustments 762,567 1,264,756 994,925 1,220,676 365,217 Total, beelsection 823,968 1,207,018 1,619,200 2,454,299 2,862,395 2,926,137 Total, hog section 1 2,547,988 8,800,597 3,002,968 812,708 8,397,213 15,800,247 Calf section: Veal carcasses . 102,932 8,024 4,871 89,844 20,988 5,469 32,651 44,868 45,219 21,119 226,242 12,297 1,069 32,602 14,377 3,042 10,790 260,176 13,319 491 19,638 22,167 1,354 14,112 254,616 25,181 7,602 60,036 37,462 33,604 6,119 378,130 12,409 Veal carcasses, frozen 19,873 102,680 32,817 Offal . . 46,438 28,699 ^9,0^ Total, calf section 205,671 222,608 274,921 325,697 635,696 589,745 Sheep section: Mutton carcasses 637,090 16,683 76 840,029 285,878 49,489 206,180 24,683 19,239 12,315 171,184 42,240 49,532 S7,785 81,663 804 761 22,024 1,740 244,013 7,798 55,586 55,749 192,673 27,572 14,814 8,716 27,224 645,915 18,900 1,054 29,781 153,727 18,861 5,488 7,241 6,841 694,875 2,848 7,310 4,274 2,261 6,953 Mutton carcasses, frozen. . . Mutton cuts 22,831 4,369 114,537 1,263,854 90,206 Pelts. 1 Wool . OflalT 36,410 SO OSS Expenses Selling adjustments 806 360 Total, sheep section 554,913 544,511 468,028 663,693 702,259 652,767 Mixed and specialty depart- ments: 2 Sausaee . 697,418 565,033 66,560 37,308 55,376 535, 104 170,771 198,684 76,889 261,978 702,605 652,018 741,628 38,' 707 16,855 $0,424 472,262 133,434 202,404 39,290 367,286 1,123,680 284,158 924,845 50,941 77,210 4,198 181,667 645,734 203,982 137,362 51,517 313,602 629,163 139,524 1,229,681 554, 143 73,310 39,431 306,118 150,263 314,043 226,565 39,964 190,651 303,266 16,732 1,269,045 1,240,460 114,774 185,952 933,783 220,453 687,072 206,706 9,660 168, 039 1,128,661 767,806 1,652,890 2,368,887 192,892 108,876 196,072 564,913 1,214,238 876,169 77,574 628,245 3,896,001 292,078 Lard r,Ji.nniTip City hides and fats Commercial fertilizer Olue Compound and cotton oil . Produce ' Details not available. 2 Not including results of many separate controlled companies. EXHIBIT E. Exhibit E — Continued. Departmental results, per hooks, all plants combined — Continued. AKMOUR & CO. (Losses in italics.) Beef section: i Dressed beef Fresh beef cuts.. Hides Oleo. Beet casings Dried beef. Beef curing Pickled beeL Fresh beef products . Eogsectlon: > Dressed hogs Fresh pork cuts Smoked meats Sweet pickled meats Vinegar pickled pork prod- ucts Dry salt meats Boiled hams Uefined lard Kettle rendered lard Neutral lard Barrelled pork Sheep section: i Fiscal year- t2,sei,m 361,641 1,122,790 659,543 151,717 heep... ■Wool and pelts.. CEdf section: Dressed calves . . . Iljxed section: i Fresh sausage Dry sausage Canned meats Tallow and grease Butterine Casings (sheep and hog). . Sterilized meats Sundry specialties: Glue Soap Beet extract Pepsin Mincemeat Gut strings Albumen Hair and bristles. Sandpaper Fertiuzer Lard substitutes. Ammonia Nonlive-stock departments: ' Butter Poultry Cheese Soda fountain Grape juice Canned and dried fruits Canned fish and vegetables llS,7i9 614,342 151,237 460, SSS gs.oei 3,687 1913 219,571 628,105 182 180 224,996 138,662 18,268 52,885 si,mo S74,S9B 275,988 1BS,66S 333,120 85,339 133,654 251,315 S0,t60 347,915 100,497 663,215 68,866 61,965 183,159 C4S,41S 151,546 40, ess 429,41s 88,122 19,453 123,030 303,624 215,982 145,828 111,349 485,857 t9S0,6SS 192,480 646,005 381,071 286,684 62,803 129,312 154,529 187,264 216,038 2S,70S 21, WS 6,086 5,007 S,068 73,949 63,370 418,590 3,423 B,sn S4,481 84,611 120,216 136,184 418,602 16,992 52,148 33,625 6,396 950 15,032 74,106 646,737 548,044 66,296 14,776 SO, 496 66, 7S2 2,180 16,182 432,668 sm.me 92,625 77,038 12,646 137,263 BS7,669 130,056 io,m 19,911 219,901 207,685 21,244 354,684 220,167 841,765 69,923 159,849 326,096 t61S,078 S2S,949 538,027 761,087 290,797 104,794 16, 164 96,224 150,643 344,648 42,62S 52,638 40,274 12,293 1,890 26,894 57,402 1,082,959 48,836 105,322 S0,798 164,468 189,906 47,559 36, 745 77,616 309,907 268,917 9,961 42,041 14,285 281,618 615,707 74,275 69, 607 253,023 344,868 148,440 60,872 479,669 282,587 631,553 3,611 166,244 111,826 $1,621, 24s 9,767 768,392 1,317,836 86,177 79, 126 267,283 100,082 371,785 135,033 271,730 972, 139 1,908,561 28,784 1,061,482 184,541 308,940 43,040 159,969 129,745 277,022 453,078 116,298 605,651 676,366 328,245 40,564 56,651 261,360 171,360 649,648 e,S61 61,314 17,263 26,652 9,184 167,867 64,268 2,913,494 218,075 84,648 117, SU 60,442 181,661 61,042 174,629 676,024 651,633 174,932 71,935 25,718 59,613 20,063 234,873 196,972 2,826,916 615,408 86,038 224,022 17,663 8,090 327,296 81,729 66,666 36,803 305,372 I Section totals not shown because definition of section has not remained constant over period. 'Does not include all income from these sources. 104 MEAT-PACKING INDUSTRY. Exhibit E — Continued. Departmental results, per hoolcs, all plants comMned — Continued. WILSON & CO., INC. (Losses in italics.) Fiscal year- 1913 Beef section: ' Dressed beef. Beef cuttings Hides Oloo Beef curing Beef casings Hog section: i Fresh pork Sweet pickled pork Barrel pork Dry salt pork Smoke house Prime steam lard Lard refinery Hog casings Boiled ham 8heep section: i Sheep slaughtering Dressed mutton Pelts Wool Sheep casings Calf section:! Calf slaughtering Dressed veal Calf skins Mixed and specialty departments: Sausage Tongues Tallow Pickled trimmings Oflal (all animals) Bone Canning Butterlne Head Foot Fertilizer Hair Produce 11,966,975 2U,70S 1, 209, 002 636,438 8,502 191, 611 i,6B7 233, 708 15,328 229,182 6,850 27,325 259,665 114,688 24,087 S6,Sr2 96,eie 135, 439 158,084 8,643 1,146 9,618 1,095 48,091 111, 126 141, 400 13, 747 257,706 15,304 105, 451 1,089 22, 432 13,447 87, 624 38,467 67, SIS t2,819,lSB StlB,989 1,401,161 656,057 24, 436 167, 698 183,280 284,892 9,5S7 66,978 17,90i 3,355 108,566 65,802 10,845 u,mo 19S,S6t 177,395 36,091 16, 582 13, 196 2,812 69, 145 96,391 155,872 3,843 252,337 19,060 29,262 Si, 126 40,791 16, 421 52, 421 47,610 27,659 tS, 412,650 19,81S 1,567,948 927, 791 32,896 225, 759 5,997 69,590 50,314 6,480 21,386 84,224 74,477 84,662 34,218 21,806 262,911 240, 790 145,999 63,805 n,689 21,775 1,457 88,122 72,884 109, 556 117,902 169, 545 67,324 293,036 18,924 54,204 25,423 91,248 92,002 13, 547 1091,898 136,443 678,480 612, 439 24,804 116, 436 53,465 86,991 26, 166 355,334 6,445 41,291 1,666 71, 178 20,447 0,608 110,862 31,205 58,240 77,813 13,625 6,781 60,350 62,946 75,902 163,055 120,734 68,569 30,011 16,999 33,401 13,040 73,453 63,466 27,236 12,072,451 211, 141 980,946 477, 418 608 30,933 378, 777 427,865 73,930 460,264 34,869 71,692 247,625 38,612 60, 702 1,910 112,749 3,999 298,260 70,949 4,380 9,970 12,312 106,895 104, 495 141,468 2,607 130,850 25,615 197,057 4,486 43,090 14,527 76, m 111,994 3,050 1 Division tuto sections made by Commission, and accordingly no totals are taken, are included. Not all departments EXHIBIT F. Exhibit P. FIVE 6BEAT FACKEIBS. Consolidated balance sheets, Nov. 2, 1918. (Per reports to United States Food Administration.) 105 A3SET3. Cash Eeoeivables, etc Inventories Securities — stocks and bonds . . Fixed assets (as depreciated) . . Deferred charges Brancli house investment .. Goodvrill Total assets LlABrUTIES AND NET 'WOBTH. Notes payable Accounts payable, accrued liabilities, etc Bonds and mortgages Total liabilities Preferred stock. Conmion stock Surplus and undivided profits' . Total net worth Total liabilities and net worth 123,046,361 69,807,930 136,421,912 32,048,017 79,054,737 9,571,570 98,225,023 612,093 Armour. Swift. Morris. Wilson. Cudahy. S26, 636,608 103,805,924 202,028,169 39,300,646 77,874,380 4,426,294 82,669,274 434,687,648 132,674,410 18,593,422 106,280,600 257,548,432 3,725,400 100,000,000 73,413,816 177,139,216 434,687,648 536,641,295 188,856,284 69,504,073 31,368,000 289,728,357 160,000,000 96,912,938 246,912,938 636,641,295 $8,342,965 16,198,800 46,909,035 1,486,696 17,328,971 667,649 18,604,133 108,428,239 44,769,959 •3,420,215 10,730,000 58,920,174 3,000,000 46,508,065 49,508,065 108,428,239 $7,476,940 16,280,743 41,839,616 10,922,317 26,934,293 919,080 20,986,912 10,215,656 134,575,557 64,719,601 17,932,251 16,646,186 88,297,038 10,476,400 20,000,000 15,802,119 46,278,519 134,675,557 13,968,973 14,097,974 31,911,212 1,879,719 14,735,716 1,554,338 19,667,092 87,816,024 31,465,608 2,306,886 18,685,245 62,347,739 8,560,500 11,449,500 16,467,285 35,467,285 87,815,024 Total. 869,371,837 205,191,371 458,109,944 86,637,395 215,928,097 17,128,931 240,052,434 10,727,754 1,302,147,763 452,476,862 111,756,847 182,609,031 746,841,740 22,762,300 284,449,500 248,104,223 566,306,023 1,302,147,763 1 Includes reserves for income taxes. Figures on these reports will not agree in many instances with figures per annual reports published by companies themselves. COMMENT ON CONSOLIDATED BALANCE SHEET. Under the Food Administration profit regulation, the several great packers were required to submit balance sheets at the end of each accounting period. A standard form was prescribed, but owing to the diversity of accounting methods it was found impossible for all companies to complete the form in every detail. The accompanying consolidated balance sheet is an abbreviated transcript of the required form, and the figures are as reported by the packers, unaudited, for November 2, 1918. The figures for the five companies constitute an Imposing total. Gross assets amount to over $1,300,000,000, of which only about 11 millions, or less than 1 per cent, is good will. The small sum for good will in Armour's statement comes from a subsidiary company whose accounts were " spread " in making the consolidated statement. The branch-house Investment includes both fixed property and working assets, and thus it Is Impossible to show the total fixed properties of the companies — ^plants, branch houses, and everything else — ^In one clean figure. Such property. Including the 215 millions shown for plants, and the unknown amount incorporated in the 240 millions of branch-house investment, probably does not exceed 350 millions, or only about 27 per cent of the total assets, and considerably less than the single Item of Inventories which amounts to 458 millions. Thus the current or working assets of the great companies far exceed the fixed assets. It Is interesting to note that the total of notes payable, representing bank paper and the like, equals 452 millions, or almost 1*J6 meat-packing industry. exactly the valuation placed upon Inventories. " Receivables " include trade accounts, personal accounts (from officers, etc.), and notes receivable. " Securities " represents tlie book valuation of all stocks and bonds in other companies, including many companies controlled but not 100 per cent owned. The assets and liabilities of all 100 per cent owned subsidiary companies are supposed to be " spread " on this statement. The total borrowed money is as follows : Notes payable $452, 475, 862 Bonds and mortgages 182,609,031 Total 635, 084, 893 while the combined net worth of the companies aggregates $555,306,023, or about 70 millions less. The par value of capital stock outstanding, both common and preferred, is $307,201,800, while the aggregate surplus amounts to $248,104,223. Thus on the basis of a $100 par value of stock, each share, in the aggregate for all companies. Is worth about $180; this in spite of large stock dividends issued against surplus in the past. In general it may be said that the consolidated balance sheet exhibits great financial security and strength, not only in total, but in detail, for the several companies. Against a total fixed property estimated not to exceed 350 millions, bonds and mortgages of 182 millions may be measured, or about 50 per cent of such property. Against total current assets, which may be estimated as follows : Cash $69, 371, 837 Receivables 205, 191, 371 Inventories 458, 109, 944 Branch house current assets 100, 000, 000 Securities (marketable) 25,,00O,O0O Total current assets '- 857, 673, 152 current liabilities including notes and accounts payable amounting to $564,232,- 709, may be measured, or only 66 per cent of the current assets, leaving a mar- gin of some 294 millions as the excess of current assets over current liabilities. Exhibit G. Sales as reported 6j/ the five great packers, 1912-1918. Armour. Swift. Morris. Wason. Cudahy. Total 5 companies. 1912 1263,307,000 349,897,000 354,80L000 380,157,000 479,969,000 « 577, 366, 000 2 842,143,000 $300,000,000 400,000,000 425,000,000 600,000,000 676,000,000 871,276,000 n,390,883,000 $134,430,000 165,909,000 158,983,000 177,040,000 219,781,000 268,792,000 « 407, 947, 000 (1) $186,998,000 225,000,000 326,931,000 $90,444,000 104,409,000 109,121,000 116,162,000 133,931,000 184,811,000 286,661,000 1913 1914 1915 1916 1917 1918 $1,595,709,000 2,127,245,000 3,254,665,000 • Figures not available. ■ Not including all South American business. EXHIBIT H. 107 Exhibit H. eabnings of leather companies. The earnings of certain Armour and Swift tanning companies as reported by them in recent years are as follows : Armour & Co. Swift & Co. 1912 $604,741 $1,490,462 1913 382,138 1,207,007 1914 798, 446 986, 027 1915 1,405,463 2,340,751 1916 3,954,651 4,317,362 1917___ 2, 431, 887 5, 214, 292 These figures include the leather and tanning profits shown on the final profit and loss statement of the parent company, but the Commission is not certain that they include earnings from all sources in this connection. (For a list of the specific companies see end of exhibit.) As an Indication of earnings of the big packers in the selling branch of their leather business the following is quoted from a letter of January 17, 1917, by the Eastern Leather Co., an Armour selling subsidiary, to Mr. F. W. CroU, of Armour & Co. The letter undoubtedly refers to the fiscal year ended November 1, 1916. We are enclosing our check on the National City Bank, New York City, payable to Mr. J. Ogden Armour, for $915,787, same being a dividend of 53 per cent on the 17,279 shares of common stock standing in his name. In addition to this, and in accordance with our conversation when in Chicago, we have set aside as a surplus $250,000, which represents 10 per cent on the common stock. We are also enclosing a check on the National City Bank for $202,145.62 payable to Mr. Armour, this being the balance due on 6,020 shares of com- mon stock held for employees. Here is a memorandum of May 15, 1917, from J. D. Murphy to Mr. H. W. Boyd, president of the Armour Leather Co. : Mat 15, 1917. Mr. H. W. Boyd: Herewith the comparative statement of results in the leather business for the three months ending Apr. 28, showing earnings of $1,964,945.18. This does not include Woodstock, as we have not finished enough of our own leather up there to make a loss and gain result of any value as indicating the possibilities of the plant. As per Mr. Armour's instructions, given through Mr. StuU, we are charging ofC in reduction of the above the following reserves : Earnings as above $1, 964, 945. 18 Reserve for income tax, 3 months ending Apr. 29, 1917 $36,915.61 Reserve for estimated excess profits tax, 6 months ending Apr. 28, 1917 423, 620. 84 460, 536. 4.'5 Net earnings 1, 504, 408. 73 J. D. MUEPHT. The manner in which Swift & Co. proceeded when a Government limitation of profits was expected, is shown by the the following letter, in which Louis F. Swift writes to his brother, Edward F. Swift : government control — leather companies. Chicago, Wov. 26, 1917. Mr. Edward F. Swift, Second Floor. We have had a virtual statement from Mr. Cotton that the Government expects to establish profit control 'in the leather Industry. With this notice, I think we should at least consider the advisability of reappraising the properties of the following companies : A. C. Lawrence Leather Co., National 108 MEAT-PACKING INDUSTRY. Calfskin Co., Winchester Tannery Co., St. Paul Tannery Co., Ashland Leather Co., St. Joseph Tanning Co. (in which we have only 50 per cent ownership). If it is agreeable to you, will arrange with Mr. Moon to go Into the matter and submit figures. Awaiting your reply, Louis F. Swift. I approve if done quietly and promptly. B. F. S. Detail of Earnings of Leather Companies. SWIFT & CO. (Losses in Italics.) 1912 1913 1914 1915 1916 1917 $13,633.19 622,251.11 $41,570.62 231,640.55 $18,115.49 232,691.05 $54,494.77 447,204.19 763.46 48,087.18 29,357.97 21,011.62 8,690.04 11,954.40 7,621.19 1,820,120.47 $82,449.52 575,787.71 788.18 608,111.05 60,287.76 12,640.34 22,740.68 21,728.51 77,079.63 2,926,410.57 A. C. Lawrence Leather Co. . A. C. Lawrence Leather Co., nis National Calf Sldn Co National Leather Co St. Paul Tanning Co National Leather Mfg. Co. . . Winchester Tanning Co 457,653.55 3,562.12 30,778.02 16,396.45 14,998.59 140, 568. 03 e, 1S7. 64 3, 768. 53 15,067.45 20,724.16 8,917.65 798,867.78 9,350.56 4,026.73 15,489.13 36,017.49 762, 196. 23 »,718,946.74 Misc. Tanning Accounts 551,804.60 3,495,344.76 Total 1,490,462.31 1,207,007.03 986,027.16 2,340,750.90 4,317,361.91 6,214,29L60 ARMOUB & CO. $330,965.64 273,775.00 $127,112.73 255,025.00 1635,228.05 163,217.50 $1,090,666.24 314,796.68 $586,728.17 1,206,350.00 358,362.82 447,616.39 99,062.02 1,040,918.44 215,613.61 $490,505.24 Eastern Leather Co 475,653.55 503,705.70 244,519.55 497,711.62 184,946.98 Badger State Tanning Co. . . Dominion Tanneries .". 34, 844. 02 Total 604,740.64 382,137.73 798,445 65 1,405,462.92 3,954,651.45 2,431,886.66 Exhibit I. NOTES ON THE LONG-TIME INDEBTEDNESS OF THE FIVE GREAT PACKEES. Armour & Co. The long-time Indebtedness of the company can be divided into two classes: (a) Real estate first gold 4i per cent bonds dated June 1, 1909, due June 1, 1939. The deed of trust called for an authorized bond indebtedness of $50,- 000,000, but during the first year of the existence of this trust only $30,000,000 was issued, the balance of $20,000,000 having been sold in 1916, thus placing on the recent balance sheets of the company a funded debt of $50,000,000. (6) Six per cent serial convertible gold debentures dated June 15, 1918, due $10,000,000 annually June 15, 1919 to 1924, inclusive. Authorized and issued $60,000,000, of which $12,000,000 had been exchanged for preferred stock up to April 1, 1919. The long-time indebtedness of Armour & Co. may be recapitulated as follows : Date of author- ization. Date of issue. Type of Indebtedness. Date Of maturity. Amount authorised. Amount issued. 1909 1909 1916 1918 1939 1939 1919-1924 $50,000,000 $30,000,000 20,000,000 60,000,000 1909 do 1918 6 per cent serial debentures 60,000,000 Total issued until the end of 1918. . 110,000,000 It is thus seen that it was only in 1909 that Armour & Co. increased its investments by floating a long-term loan. EXHIBIT I. 109 Swift & Co. For the time of its existence this company floated two long-term loans, as follows : (o) First sinUng fund gold 5's dated July 1, 1914, due July, 1944. Author- ized amount $50,000,000 of which only $33,370,000 has been Issued up to date. (6) Siw per cent two and one-half year gold notes dated February 15, 1919, due August 15, 1921. Authorized and issued $25,000,000. The long-time indebted- ness of Swift & Co. may be tabulated as follows : Date of authori- zation. Type of indebtedness. Date of maturity. Amount authorized. Amount issued. 1914 First sinking fund gold S's 1944 1921 $50,000,000 25,000,000 833,370,000 1919 6 per cent two and one-half year gold notes Total 25,000,000 58,370,000 Swift & Co. assumed its first long-term indebtedness in 1914, and, as com- pared with Armour & Co., its long-term indebtedness is considerably smaUer. Besides it resorted to this kind of Investment later than Armour & Co. which floated its first funded indebtedness in 1909. However, it has to be noted that Swift & Co. availed itself of the investor's market some time before it re- sorted to the above loans, in the form of capital stock subscriptions. This form of financing evidently met the requirements of Swift & Co. for a period and did away with the necessity of acquiring funds through floating long-t^m loans. Morris & Co. This company floated its first loan in 1909 under the designation first mort- gage sinking fund, 4i per cent gold bonds, maturing in 1939. Authorized $25,000,000, of which $12,500,000 was issued up to the end of the fiscal year 1918. Additional $6,250,000 was issued in 1919. The above data may be tabulated as follows : Date of author ization. Date Of issue. Type of indebtedness. Date of maturity. Amount authorized. Amount issued. 1909 1909 1919 First mortgage siniing fund 4J per cent gold bonds. do 1939 1939 $25,000,000 $12,500,000 1909 6,250,000 Total issued until July, 1919 18,760,000 Wilson & Co., Inc. Up to 1916 the company carried at a time on its loans debts other than short- time bills payable 6 per cent debenture notes a little in excess of $8,000,000, all of which matured in April, 1916. The first loan of this character was made in 1905 to the amount of $3,000,000. The recent long-term Indebtedness of the company shows the following classes : (o.) First sinking fund gold 6's series "A " dated April 1, 1916, due April, 1941. Authorized $25,000,000, of which $20,070,000 was issued up to 1919. (6) Convertible sinking fund gold 6's dated December 1, 1918, due December 1, 1928. Convertible into common stock. Authorized $20,000,000, all of which has been issued. Thus, the long-term indebtedness of Wilson & Co may be recapitulated as follows : 110 MEAT-PACKING INDUSTRY. Dtite of author- ization. Dateot issue. Type of indebtedness. Date of maturity. Amount autliorized. Amount issued. 1916 1916 1918 19« 1928 $25,000,000 20,000,000 $20,070,000 1918 Convertible smldng fund gold 6'sl '.'.'.'.'.'.'. Totalissued 20 non 000 40,^70,000 Wilson & Co., Inc., formerly known as Sulzberger & Sons Co., made extensive use of long-term loans In the form of floating debenture notes. The first bond Issue, however, did not take place before 1916. Cudahy Packing Co. Before issuing its first bonds in 1916 the company had floated some debenture notes, but to a rather limited extent. At present the company's long-term loans are represented in the following two classes : (a) First sinking fund gold 5's, dated December 1, 1916, due December 1, 1946. Authorized, .$12,000,000; issued, $9,000,000. (6) Five-year 7 per cent sinking fund gold notes, dated July 15, 1918, due July 15, 1923. Authorized, $10,000,000, all of which has been Issued. In order to summarize the above data the following recapitulation Is pre- sented : Date of author- ization. Date of issue. Type of indebtedness. Date of maturity. Amount authorized. Amount issued. 1916 1916 1918 Vir^t RiTiVTie fiinrt gnld ,V4 1.092 1.072 $12.63 9.93 26. 7S 16.1 15.6 13.5 $2.93 3.28 2.33 $0..37 .35 .00 $0.07 .02 00 $16.00 191.5 13.58 1914 29.11 3-year average 37 16.2 1.154 13.75 15.5 2.99 .30 .03 17.07 COST OF PRODUCING A YEARLING. In computing the cost of carrying the calves through the first winter, or from weaning time (October or November) until they are turned on pasture the following spring, about May 1, the baby-beef group has been omitted. The cost of finishing these calves for market is included with the report on the cost of finishing beef animals, otherwise the classification is unchanged. The calves on 25 of the farms were sold at weaning time or shortly thereafter. The records for these calves end at that time. This change in the number of farms necessitates the use of a new figure on the average cost of a calf at weaning time for the farms that are continued in the tabulations that follow. This new figure, of neces- MEAT-PACKING llvDUSTRY. 33 sity, varies slightly in each of the groups from the figures presented in Tables 15 to 20, inclusive. The various costs included in carrying a calf through the first winter until it is a yearling are shown in Tables 21 to 25, inclu- sive. The tables include the following charges: Cost of calf at wean- ing time (which here becomes the initial cost), feed, labor, equip- ment, interest, and miscellaneous charges. Under the heading "Miscellaneous charges" the following items of expense are included: Risk, insurance, taxes, and veterinary expenses. The item of risk amounts to 43 cents, which is 11 cents greater than the figure used in Report No. 111.' This figure is based on an average for 12,984 calves carried through the winter months. It is greater than for the preceding years because of the abnormally heavy loss from blackleg in the fall of 1915. The veterinary expense, which averaged 2 cents per head, was mostly for vaccination against blackleg. Interest has been figured on the basis of the average of the first and second inven- tory values of the animal. The cost at weaning time is used as the first inventory value. The Second inventory value is obtained by adding to the cost at weaning time the cost of feed and labor. The other items of expense have been secured in the same manner as for the cows and bulls. From the gross cost of production a manure credit has been de- ducted, this credit being assumed to be one-third of that allowed for the cows. Cost of producing a yearling in the ieef group. — The average net cost of carrying a calf until it is a yearling, for the 296 farms in the beef group (see Table 21), amounts to $51.29. This cost amounted to 155.08 in 1914 and 147.28 in 1916, the decrease being largely due to cheaper feeds. The initial cost, or cost at weaning time, which amounts to $36.85, is the greatest item of expense, constituting 70 per cent of the total gross cost ($52.89). The feed cost is $11.44, this charge being $2.81 less for the 1916 records than in 1914. This charge constitutes 21 per cent of the total, while labor, equipment, interest, and miscellaneous charges, taken together, amount to 9 per cent of the total. Table 21. — Cost oj producing a yearling, based on the averages of ^96 farms in the beef group for the three years, and by Stales, for 1916. State. Num- ber of farms. Num- ber of calves. Cost at wean- ing time. Feed. Labor, Equip- ment. Inter- est. other charges. Gross cost. Ma- nure cred- it. Net cost. 1916. 43 29 10 24 1,128 530 276 662 $37.19 33.91 32.27 30.99 $12.08 9.12 6.25 8.34 $1.91 2.17 2.23 2.00 $1.08 .81 .78 .46 $1.25 1.19 1,09 1.07 $0.45 .47 .62 .65 $53.96 47.67 43.24 43.51 $1.97 1.36 1.^5 1.14 $51,99 Missouri . 46.31 -Nebraska:.. -..; 41.59 Kansas 42.37 Average for 1916... Average for 1915... Average for 1914... 106 99 91 2,595 2,721 1,920 34.43 37.09 39.41 9.87 11.98 12.68 2.03 2.18 2.21 .83 .73 .62 1.18 1.33 1.40 .52 .42 .35 48.86 53.73 56.67 1.58 1.61 1.59 47.28 52.12 55.08 3-year average 298 7,236 36.85 11.44 2.13 .73 1.30 .44 52.89 1.60 51.29 152250*'— 20 > Report No. Ill, p. 51. 34 MBAT-PACKIl«rG INDUSTRY. The variation by States is shown for the year 191'6. It ranges from S51.99 for 43 Iowa farms to $41.59 for 10 farms in Nebraska. The feed charges varied from $6.25 in Nebraska to $12.08 in Iowa. Cost of froduting a yearling in the dvxil-purpose group. — The average net cost of producing a yearling for 141 farms in the dual-purpose group (as shown in Table 22) is $33.18, varying from $25.13 in 1016 to $42.40 in 1914. As feed costs were very nearly the same ($8.43 in 1916 as against $9.85 in 1914), and as the other charges vary but little, the difference is almost entirely attributable to the difference in the costs of the calves at weaning time. Table 22. — Cost of producing a yearling, based on tlie averag-es of 141 farms in the dual- purpose group. Year. Num- ber of farms.' Num- ber of calves .1 Cost at wean- ing time. Feed. Labor. Eqtlip- jnent- Inter- est. Other charges. Gcross cost. Ma- nure , it. Net cost. 1916 42 52 47 442 574 484 $13. .3S IS. 43 29.41 m. 13 10. 00 9.85 S2.74 2.47 2.55 $1.34 1.11 1.21 $0.58 .76 1.07 $0.50 .37 .34 $27.17 33. IS 44.43 $2.04 1.77 2.03 $25.13 31.36 42.40 1918 1914. 3-year auerage 141 1,500 20.64 9.48 2.58 1.21 .81 .40 35.12 1.94 33.18 I Totals. The feed cost are about $2 less than those for the beef group, the dual-purpose calves having been somewhat less heavily grained. As these calves are in smaller herds the labor and equipment charges are a little greater than for the calves in the beef group. Cost of producing a yearling in the mixed group. — For the 131 farms in the mixed group (see Table 23) the average cost of carrying a calf through the winter was $43.85, varying from $49.38 in 1914 to $38.34 in 1916. The difference ($11.04) is largely due to the difference in the cost of the calves at weaning time for the two years, as the feed and other costs do not vary greatly. Tabie 23.— Co«( of producing a y-earling, basedon the ax-erage of ISl farms in the mi'-id group. Year. Num- ber of f^ms.i Num- ber of calves .1 Cost at wean- ing time. reed. Labor. Equip- ment. Inter- est. other charges. Gross cost. nure cred- it. Net co^t. 1916 Bo 51 45 667 980 914 $26.66 27.88 33.71 88.75 11.80 12.24 $2.23 2.35 2. SO iO.80 .81 .83 JO.fle 1.03 1.23 SO. 50 .39 .32 $39.90 44.26 50.83 $1.56 1.51 1.45' $38.34 42.75 M.SS 1915 , 1914 ,..' 3-year average m 2,661 29.S6 11.14 2.37 .81 1.08 .39- 45.35 1,50 *3.» 'Totals. The feed costs are practically the same as for the calves in the beef group, being $11.14, as against $11.44 for the beef calves. The other charges do not vary appreciably from those for the beef group. MEAT-PAOKIjSr« IH-JDTJSTEY. 36 Cost of prodnudfyg a yearling in the jmiHally milked group. — ^The et- erage net cost of prodsiiciiag a yeaiiiag on 84 farms in the partially milked group (as shown in Table 24) is $38.94. This amounted to $43.71 in 1914 as against $33.04 in 1916, a difference of $10.67. As in the preceding group, this difference is mostly due to the difference in the cost of the calves at weaning time, although in this group there is a difference of $4.57 in the winter feed bill. As previously stated, most of the records in this group were from Missouri and Kansas, where, during the winter of 1913-14, feed was scarce and expensive, while it was abundant and comparatively cheap in 1916. Table 24. — CoH ofproduomg a ymrlin^, based on the averages of 84 farms in the partially milked group. Year. i Num-: bcr of: farms.ii Num- ber ot oaJves;! Cost at wean- lag time. Feed. Labor. Equip- ment. Inter- est. Other charges. Gross cost. Ma- nure Bred-; it. Net cost. 1916 27 it 429 204 472 J21.47 23.00 27.49 J8.30 9.88 12.87 J2.38 2.S2 2.71 10.89 .64 .75 $0.81 .87 1.06 SO. SO .36 .34 134.56 37.27 45. 22 $1.51 1.84 1.51 $33 04 19JS 35.63 1914 43 71 S-Tesr average 84 1,103 24.81 10.96 2. 58 .78 .95 .40 40.47 1.53 38.94 1 Total s. The various items of expense involved in carrying a calf from weaning time in the fall until it is turned on pasture in the spring are approximately the same in this group as in the beef and mixed groups. ■Oest of producing a yearling in the double-nursing group. — ^For 35 fajms in the double-nursing group (see Table 25) the average cost of producing a yearling was $29.36, It was practically the same in 1«15 and 1916 ($25.80 and $27.86, respectively). The charge is much higher for 1914, when the average cost was $42.13. The feed charges are about the same for each of the three years, and are a little less than those for the other groups, with the exception of the dual purpose. Table 25. — Cost of producing a yearling, based on the averages of S5 farms in the double- nursing group. Num- ber of farms. Num- ber of Oilves. Cost at wean- ing time. Feed. : labor. Equip- naent. Inter- «gt. other Charges. Gross cost. Ma- nure cred- it. Net cost. 1916 13 1 246 2S1 82 $16. .83 13.58 29,11 $9. 16 10.39 9.84 $2.24 1.71 2.25 $1.85 .89 1.14 $0.65 .57 1.06 $0.54 .36 .32 $29,49 27. M 43.71 $1.63 1.70 1.58 $27. 86 W16 25.80 WW 42.13 3-year average ' 35 679 17.09 8.84 2.00 1.00 .68 .41 3L02 1.66 29.36 36 MEAT-PACKING INDXJSTKY. A COMPARISON OF THE COST OF PRODUCTION AND THE VALUE OP CALVES AND YEARLINGS. In Table 26 a comparison is made between the cost and the sale or inventory value of the calves and yearlings for the five groups, excluding the baby-beef. Table 26.— The difference between the cost of production and inventory or sale value of calves and yearlings, by groups. Group. Sold or inventoried at weaning time. Number of head. Average value. Average cost. Gun. Beef: 1914 1916 191(5 Three years. . Dual purpose; 1914 1915 1916 Three years. . Mixed: 1914 1916 1916 Three years. . Partially milked: 1914 1915 1916 Three years.. Double nursing: 1914 1915 1916 Three years.. 996 655 896 2,447 64 84 79 247 199 59 68 326 104 92 91 287 6 3 8 16 $31.93 36.11 35.72 33.42 20.57 25.31 28.20 24.30 27.61 27.62 32.86 28.93 26.68 32.76 31.94 29.11 30.00 30.00 35.00 31.67 $35.69 33.56 34.64 34.80 44.50 1.85 10.71 17. «) 34.16 28.11 28.62 31.23 32.44 30.61 28.56 30.64 41.00 21.20 36.07 32.78 $3.76 $2.65 1.08 i.38 23.93 23.46 16.49 6.40 6.55 .49 4.24 2.30 5.76 2.15 3.39 1.53 11.00 8.74 1.07 Ml Group. Sold Jan. 1 to July 1. Num- ber of head. Average date. Aver- age value. Aver- age Loss. Gain. Inventoried May 1. Num- ber ol head. Aver- age value. Aver- age cost. Loss. Gain. Beef: 1914 1916 1916 Three years... Dual purpose; 1914 , 1916 1910 Three years... Mixed: 1914 1916 1916 Three years... Partially milked; 1914 1915 1910 Three years... Double nursing; 1914 1915 1916 Three years... 206 2fl 221 463 33 108 29 170 30 77 16 123 76 22 42 140 Apr. 6 Mar. 23 Mar. 6 Mar. 23 Mar. 7 Mar. 15 Mar. 1 Mar. 10 Mar. 20 Mar. 17 Mar. 21 Mar. 19 Apr. 13 May 1 Mar. 25 .\pr. 9 $44.35 49.76 44.08 45.05 33.90 33.18 34.62 33.65 37.00 41.48 65.00 44.06 40.29 42.00 39.08 40.19 $56.09 46.25 48.27 61.67 32.03 34:54 22.37 31.48 68.94 47.52 49.25 51.65 43.64 29.06 23.65 35.84 $11.74 4.19 6.52 $3.50 1.36 1.87 12.26 3.17 21.94 8.04 7.59 12.94 15.43 4.36 Mar. 1 May 28 May 6 51.00 32.33 37.00 31.08 14.07 18.32 19.92 1.26 18.68 1,692 2,725 2,366 6,783 440 465 389 1,294 903 872 620 2,395 463 182 372 1,007 284 190 566 $38.17 37.30 39.43 38.31 33.00 29.33 30.40 30.92 35.93 31.95 30.05 34.17 34.80 37.39 36.75 35.91 32. 50 34.19 32.71 33.37 $54. 69 61.87 47.87 51.29 42.35 31.37 26. 32 33.70 48.95 43.24 38.17 43.91 43.11 35.63 34.20 38.87 42.13 25. So 27.92 29.42 $16. 52 14.57 8.40 12.98 9.35 2.04 2.78 13.02 11.29 3.12 9.74 8.31 $4.08 1.76 2.55 8.39 4.79 3.95 . MEAT-PACKIITG INDUSTRY. 37 About one-fifth of all the calves in these five groups were sold at weaning time, or between September 1 and January 1. In 1914 the calves that were sold in the fall brought less than their cost of pro- duction. Many of these calves were produced on farms where the usual practice is to retain them on the farm and finish them as 2- year-olds, but because of an insufficient supply of winter feed it became necessary to sell them at a sacrifice. These losses ranged from $3.76 per head for 996 calves in the beef group to almost $24 for 64 calv€s in the dual-purpose group. In 1915 fewer calves were sold, as feed was more abundant. Of those sold, the calves in all except the mixed group showed a profit above expenses. In 1916 all of the calves sold at weaning time, except those in the double- nursing group, returned a profit. The latter showed a loss of $1.07. Taking a three-year average, the calves in all excepting the dual- purpose group cost more than their sale or inventory value. This difference between the cost of production and the sale, or inventory value, ranged from $2.30 for the calves in the mixed group to $1.11 for those in the double-nursing group. The calves in the dual-pur- pose group showed a profit of 16.40 for the three-year average. Only 949 of the calves were sold between January 1 and July 1, the farmers evidently recognizing the fact that this is an unprofitable time to sell. This is an insufficient number to justify the drawing of any definite conclusions. However, it may be noted that the, calves in the beef and mixed groups sold at a loss, while in the remaining groups they sold for more than their cost of production. The majority of the calves, 12,035 out of 16,307, were retained and turned on pasture about May 1, when their inventory value was taken. Those inventoried in the beef and mixed groups cost more to produce than their inventory value for each of the three years. The yearlings in the dual-purpose group showed a loss for the first two years, and those in the partially milked and double-nursing groups for the first year. The double-nursing group is the only one where the inventory value was greater than the cost of production for the three-year period. These calves show a deficit only for 1914. In the remaining groups the difference between the cost of production and the inventory value varied from $2.78 in the dual-purpose and $2.98 in the partially milked group, to $12.98 in the beef group. The fact that there were so few sales in the spring months would seem to show that the farmers realize that it is not profitable to carry calves through the first winter unless they are also kept through the following summer. This is because at this time the calves, having charged against them all the expenses of the breeding herd as well as their own winter feed bill, have reached a point of greatest expense as compared with their selling prices. Had the records been con- tinued on these calves until fall, so that advantage could have been 38 MEAT-PACKIS-G INDUSTRY. taken of the relatively cheap gains made on pasture, they would have made a much better financial showing. The figures presented indicate that the calves in the beef group, where no milk credits were obtained, were the least profitable, while those in the mixed group, where only a part of the cows were milked, show nearly as great a loss. In the partially milked and dual- purpose groups the calves showed the small losses of $2.98 and $2.78, respectively. In the double-nursing , group where one-half of the cows were milked, the remaining cows supporting two calves each, the calves showed a profit of $3.95. In this group the calves which had the advantage of the milk credits with a smaller cost for labor seemed to be the most profitable, although there are too few records to justify definite conclusions. The yearlings in the beef group showed the greatest loss, which averaged $12.98. However, some of these animals were fed on rations containing considerable grain in order to get a big growth before they were turned on pasture. The aim in doing this was to finish them for the late fall or early winter market. This expense would naturally be greater than for the normal wintering of the calves, and would raise the average cost of wintering. The calves in the dual-purpose group were relatively more profit- able than those in all other classes except the double-nursing group. They were, however, of a considerably poorer quality, and "many of them would need to be held for a longer period than those in the other groups before being fattened for beef. COST OF GROWING BEEF ANIMALS. CHAPTER II. COST OF PRODUCING BEEF ANIMALS ON TWELVE WESTERN RANCHES. By R. H. Wilcox, Assistant in Food Supply Investigations, Bureau of Markets. SOURCES OF DATA. Twelve representative ranches in Oklahoma, Texas, Colorado, Montana, and South Dakota were visited by agents of the United States Department of Agriculture, and all figures carried on their books appertaining to the cost of operating their cattle business, including a complete inventory of land and equipment, were taken in detail. Eight of the ranches were producing young stock, which were marketed at ages varying from calves to four-year-olds. On the other ranches the cattle w«re usually purchased from producers as calves, yearlings, and two-year-olds, grazed for one or two seasons, and then fattened and shipped to market. Since the figures do not in all cases extend over the same years and because of the small number of ranches included in the report, it was not considered advisable to average results for the 12 ranches. Each ranch is summarized separately, and the facts con- cerning the costs of production, the methods of arriving at costs, and the systems of production, are discussed separately. Special effort was made to get figures from stockmen's records and accounts on ranch operations over the five years 1913-1917. This was not always possible, and care is exercised in giving figures of cost to specify the years over which they apply. With but one exception. Ranch No. 5, the ranch books were closed in the month of December. On this ranch the fiscal year ended June 30. In compiling the data the fiscal year of each ranch company was used in determining the yearly costs of all items. All of the yearly costs for each ranch were averaged to obtain the average %ures used in all tables. The feeds appearing on the books as purchased between the dates of January 1 and January 1 were considered as the yearly feed cost. The lack of yearly inventories of feed and supplies, together with 39 40 MEAT-PACKIKG INDUSTRY. advance payments on supplies to be delivered after January 1 made it impracticable to compare one year with another, especially as regards feed, freight, and veterinary charges. Drought conditions in Texas during 1916 and 1917, together with an accompanying increase in the price of feedstuffs, have in many instances necessitated expenditures for feeds more than- treble the customary outlays. Labor, freight, and taxes are other items of expense which show the influence of general price advances and war conditions. The pasture charge is based on the current rate of interest on an average acre valuation of land owned and grazed, and on the rental price paid for leased lands. The value of the land is based on its selling price per acre as grazing land. In some instances it was found that small portions of the ranches were being sold for farming purposes and were bringing a price dependent upon the land's adapta- bility for raising farm crops rather than upon its value for grazing. Particular care was exercised in appraising such land at what it would sell for as grazing land, with a view to placing the interest on its valuation as a pasturage charge. Feed raised and fed on the ranch was charged at the cost of pro- duction. The feed purchased was charged at its purchase price plus the cost of transporting it to the ranch or feeding pens. In a few instances the freight and hauling of feed was included in the freight account, but generally this charge was thrown into the feed account. Wages of help (other than that used in the office and what is generally called management help), the groceries, supplies for camp outfits, and household supplies, together with a horse labor charge, constitute the items under labor. The only charge made for cow ponies and ranch teams was an amount equal to the current rate of interest on the yearly valuation of necessary mares, cow ponies, and teams, since the feed these horses received is already included in the general feed account and charged directly against cattle. A complete inventory was taken of ranch equipment, including such items as buildings, corrals, wells, tanks, fencing, and the like. In view of the marked increase in the price of building material, fencing, and well equipment, during recent years, an average valua- tion was placed on equipment according to 1915 price conditions. The equipment charge consists of three items: Interest on the aver- iige value of ranch equipment over the j^ears considered, depreciation of this equipment, dependent upon its normal length of lif«, and cash upkeep expenditures necessary to keep it in usable condition or in good working order. 'I'he freight charge is freight and express on incoming supplies, cattle, and, with some ranches, feed. This item of expense also MEAT-PACKING INDUSTRY. 41 includes moving charges on cattle when moved for feeding and graz- ing. It does not include freight incurred in marketing cattle. The administration charge includes the salaries of officers, superin- tendents, managers, the office force, the office material and supplies the audit of records and accounts, legal advice, and advertising. In the miscellaneous charges are placed such items as cattle asso- ciation dues, personal travel for the purchase of stock, damages, killing prairie dogs and the like, as well as the miscellaneous and petty cash accounts. OKLAHOMA. Four ranches were visited in Oklahoma. Two of these were pro- ducing calves; the other two used their range to carry steers, purchased as coming one and two year olds, one season on grass before putting them into the beef pens to be fattened on cottonseed cake and rough- age. The two ranches carrying breeding herds confined their opera- tions to the production of steers for the feeder market, practically no animals on these ranches being fattened. Interest rate on land and cattle money on the Oklahoma ranches was 7i per cent per annum. On short-time loans it was occasionally necessary to pay a higher rate than this, but in view of the fact that the bulk of the cattle and land money was obtained for 7i per cent, this interest rate is used for the Oklahoma ranchers. EANCH NO. 1. Ranch No., 1 is located in south central Oklahoma. It aims to carry approximately 2,000 cows for the production of feeder cattle. The manager endeavors to inventory these cows at their market A'^alue for beef production. The average value for the four years 1914-1917 for which figures were obtained was $67.50. Heavy rains in the spring of 1914 resulted in a flood through a ravine where some of the cows were being wintered. This, coupled with the fact that there was a heavy loss in a shipment of Texas cows brought north in the fall of 1913 and put in with the rest of the herd, resulted in a 13.7 per cent death loss during the first year. It was not thought advisable to include the first year's losses in arriving at the average death among cows on this ranch, but rather to use the average death loss during the remaining three years, which was 5.3 per cent. A 5.3 per cent death loss may be considered normal. Four and one-half bulls were run with each one hundred cows. They cost $110 a head, and after four year's service sold for $77.50 apiece. The death loss among these bulls was 9.2 per cent. The various costs of producing an 8-months-old calf, a short 2-year- old steer, and a 3-year-old steer on this ranch are shown in Tables 1 to 3. 42 MEAT-PACKIITG IITDUSTBY. Tabie 1.— Cos? of producing a mlf, Ranch No. 1 (1914-1917). Cow cost (100 cows valued at $67.50 a head): Interest, 7 J per cent $506. 25 Death loss, 5.3 per cent 357. 75 Pasture 326.62 Feed 375.66 Labor 105.93 Equipment 73. 94 Freight 7.24 Veterinary 11. 44 Miscellaneous 14. 87 Taxes and insurance 46. 54 Administration ; 18. 75 Bull service (45 bulls valued at $110 a head): Interest at 7J per cent $37. 13 Depreciation (kept 4 years, sold for $77.50) 36. 58 Death loss, 9.2 per cent 45. 54 Feed and pasture 31. 60 Labor and other expenses 12. 54 163.37 2,008.36 Cost of calf at weaning time (calf crop, 57.3 calves per 100 cows on foot at weaning time, 8 months of age) $35. 05 Table 2. — Cost of producing a S0-mont7i-old stfer, Ranch No. 1 (1914-1917). 100 calves at $35.05 a head $3,505.00 Cost of carrying 100 yearlings one year: Interest, 7i per cent $262. 88 Death loss, 5.1 per cent 178. 76 Pasture 326. 62 Feed 375.66 Labor 105. 93 Equipment 73. 94 Freight 7.24 Veterinary 11. 44 Miscellaneous 14. 87 Taxes and insurance , 46. 54 Administration 18.75 1,422.63 Cost of 100 steers at 20 months of age, at ranch ,, 4,927.63 Marketing expenses 290. 00 Cost of one hundred 20-month-old steers at market 5, 217. 63 Cost of a 20-month-oId Bteer at market ^...t. ......,„ 52.18 MEAT-PACKISTG INDUSTRY. 43 Table 3. — Cost of producing a S-year-old steer (SB months), Ranch No. 1. One hundred 20-moiiths-old steers (at $49.28 a head) ' $4, 927. 63 Cost of carrying one hundred 2-year-old steers one year: Interest, 7J per cent $369. 60 Deathless, 5.1 per cent 251.33 Peed and pasture 702. 28 Labor and other expenses 278. 71 1, 601. 92 Cost of 100 steers at 32 months of age , 6, 529. 55 Marketing expenses 290. 00 Cost of one hundred 3-year-old steers at market 6, 819. 55 Cost per steer at market 68. 20 RANCH NO. 2. Ranch No. 2, which is located is soutliwestern Oklahoma, carries about 1,000 cows and follows the system of selling its steers as short 2- and 3-year-olds. A few heifers and cows were purchased during the year for which records were taken. Their purchase price and the inventory value of the cows inventoried January 1 averaged $50. Four and four-tenths bulls were carried for each hundred cows. These bulls cost $100 each and when sold after an estimated service of four years brought $67 a head. The death loss was estimated to be 3 per cent among bulls, and 5 per cent among all other classes of animals. No attempt was made to count the calves at branding, but a yearly estimate of 56 per cent alive January 1 was made each season. The various costs in producing an 8-months-old calf, a short 2-year- old, and a short 3-year-old, are shown in Tables 4 to 6. Table 4. — Cost of -producing a calf, Ranch No. g. (1915-16). Cow cost (100 cows valued at $50 a head): Interest, 7^ per cent $375. 00 Estimated death loss, 5 per cent 250. 00 Pasture 498. 29 Feed 469. 29 Labor 118. 01 Equipment 53. 01 Freight 10. 18 Veterinary 3. 30 Miscellaneous 49. 00 Taxes and insurance 4. 39 Administration 19. 54 Bull service (4.4 bulls valued at $100 a head) — Interest, 7^ per cent $33. 00 Depreciation (kept 4 years and sold for $67) 36. 30 Death loss, 3 per cent 13. 20 Feed and pasture 42. 57 Labor and other expenses 11. 33 136, 40 Total cost of keeping 100 cows a year 1, 986. 41 Calf crop estimated 56 per cent on foot January 1. Cost of calf at weaning time (8 months old) 35. 47 1 See Table 2, cost of 100 steers at 20 months, at ranch. 44 ' MEAT-PACIiING INDUSTRY. Table 5.— Cost of producing a SO-months-old steer, Ranch No. 2. 100 calves at $35.47 a head , ^^' ^^^- '^^ Cast of carrying 100 yearlings one year: Interest, 7J per cent ^266. 02 Estimated death loss, 5 per cent l'^^- ^ Pasture 498.29 Feed 469.29 Labor 11801 Equipment 53. 01 Freight 10- 18 Veterinary o.Zv Miscellaneous 49. 00 Taxes and insurance 4. 39 Administration 19. 54 1,668.38 Cost of 100 steers at 20 months of age, at ranch 5, 215.38 Marketing expenses 285. 00 Cost of one hundred 20-months-old steers at market 5, 500. 38 Cost per steer at market 55. 00 Table 6. — Cost of producing a S-year-old steer {S^ months), Ranch No. 2. One hundred 2-year-old steers at $52.15 ' $5, 215. 38 Cost of carrying one hundred 2-year-old steers one year: Interest, 7J per cent $391.13 Estimated death loss, 5 per cent 260. 75 Feed and pasture 967. 58 Labor and other expenses 257. 43 ■ ■ — 1,876.89 Cost of 100 steers at 32 months of age 7, 092. 27 Marketing expense 285. 00 Cost of one hundred 32-months-old steers at market 7, 377. 27 Cost per steer at market 73. 77 RANCH NO. 3. Ranch No. 3 is located in west-central Oklahoma. It carries steel's, purchased as coming 1- and 2-year-olds, on grass for one season, and fattens them on cotton-seed cake and sorghum during the winter months. Approximately 1,500 steers are fattened annually. The various costs in handling such cattle are shown in Table 7. 1 See Table 5, cost of 100 steers at 20 months, at ranch. MEAT-PACKING INDUSTRY. 45 Table 7. — Cost of grazing and finishing steers, Ranch No. S (1914-1917). Cost of 100 steers coming 1- and 2-year-old8 $4, 217. 00 Cost of carrying one hundred 1- and 2-year-old8 one year: Interest, at 7i per cent. $316. 28 Loss at 5 per cent 210. 85 Pastuie 373. 62 Feed 1,218.26 Labor 264. 80 Equipment 114. 49 Freight 11. 18 Veterinaiy 5. 68 Miscellaneous 75. 30 Taxes and insurance 15. 05 Administration 27. 16 Cost of carrying 100 steers 12 months 2, 632. 67 Marketing expenses of 100 steere 392. 26 Total cost of 100 steers at marltet 7, 241. 93 Selling price of 100 steers 6, 978. 00 Loss on 100 steers 263. 93 Loss per head 2. 64 RANCH NO. 4. t Ranch No. 4 is located in south-central Oklahoma. It follows very closely the system of pasturing and feeding used on Ranch No. 3. Approximately 1,300 steers are handled annually, these being grazed for a season and then held on feed in the fattening pens of a period of four months. The various items of expense in handling these cattle are shown in Table 8. Table 8. — Cost of grazing and fattening steers on Ranch No. 4 (1915-16). Cost of 100 steers $4, 517. 00 Cost of carrying 100 steers one year: Interest at 74 per cent _ $338. 78 Death loss, 3 per cent 135. 51 Pasture. 797. 57 Feed 1, 321. 07 Labor. 166. 90 Equipment ^...>^.... 153. 71 Veterinary 1. 40 Miscellaneous 24. 88 Taxes and insurance 43. 63 Administration 58. 37 Cost of carrying 100 steers one year 3, 041. 82 Marketing expenses 248. 94 Totel cost of 100 steers at market 7, 807. 76 Sales price per 100 steers 7, 109. 48 Loss on 100 steers 698.28 Loss per steer 6. 98 46 MEAIC-FACKIIW IKOHSTiiy. TEXAS. .Sevan ranches which operated exclusiyely in Texas were studied. Three were located in southeastern Texas, two in aortk central, aad two in &e Panhandle. (See figs. 1 ajid 2.) The land valuations were carefully determined and were based on the present prices of grazing lands. The rate of 8 per cent per annum was used in figuring interest charges on land and cattle. This is the prevailing rate on long-time loans on cattle and land in this State. The size of the -ealf crop and the death losses on all but one ranch were ranch estimates. These estimates were based on the actual num- ber of cattle gathered, after allowing for animals lost through straying. RANCH NO. 5. This ranch, which is loca-ted in southeastern Texas, produces about 5,000 calves annually. The pasture land owned by the com- pany was valued at $4,84 an acre. The pasture charge on this land was based on this investment while the charge for the leased lands was their rental price. The ranch is stocked at the rate of 22^ acres to each yearling animal or older. It was not possible to obtain marketing expenses on all of the stock shipped, but the figures obtained show that this charge would average about 14 for a 2-year-old-steer. The cost of producing a calf at 12 months of age, a 2-year-old steer, and a 3-year-o'ld steer are sbown in the following tables, the figures presentad being an average for the five years 1913-1917. The various items of expense in producing yeexUnga, 2-je,ar-old, and 3-year-old steers are shown in Tables 9 to 11. Table '9. — Cost of producing a yearling, Ranch Mo. 6 (^lSlS~i917). Cost of keeping 100 cows (valued at $60 a Jiead) : Interest at 8 per cent , , |480.,..,,.^ ,.,,,,..,.,.. 281.47 Freight ,.- .,,., ,,. , , „.. 77.95 Taxes and in3ur8jice..,.„,,..,,,,.,^,,, ..,,.,,,..,,.,,,,, 62.23 Administration , ,,,,,,. ..,-,-,, ..., ,,., 36. 25 Bull service (■i.D bulls at $1.64 s head): Interest, 8 per cent. .,,,,..,,,,,, ,,.,,,,.,,,... $77.41 Estimated death loss, 3 per cent 29.03 Depreciation (kept 4 years, selling -for f 98) 97. 8S Feed and pasture 54.37 Labor and other expenses , ...^ 33.57 291. J3 2, 442. 26 Estimated calf crop, 52 living calves per 100 cowa, at 12 months of age. Cost of calf at 12 months of age 46.97 riG. 1.— Partial view of cattle on one of the Texas Panhandle ranches, showing some oJ the cattle and the supplj of winter feed on hand. Fig. 2. — Companion picture to figure 1, joining it on the right. 46 MEAT-PACKllSQ INDUSTRY. 47 Table 10. — Cost o/ producing a 2-year-old steer, Randi No. 5 (1913-1917). Cost of 100 yearlings at 12 months ($40.97 per head) $4, 697. 00 Cost of carrying 100 yeapliags one year: Interest at 8 per cent $375. 76 Death loss at 3 per cent 140. 91 PastuT« 715 99 Feed 205.53 Labor HI. h Ranch expenses 281. 47 i^ight 77.95 Taxes and insurance 62. 23 AdminiBtratian 36. 25 '■ — 2, 007. 20 Cost of one hundred 2-ye?r-old steers (24 months old) ^, 704. 20 Cost per steer 67. 04 Table 11.— Cost c^ producing S-year-old steers. Ranch No. 5 {1S13-1S17). One hundred 2-year-old steers ($67.04 a head) $6, 704. 2o Cost of carrying one hundred 2-year-old steers one year: Interest, 8 per cent ^536. 32 Death loss, 3 per cent 201. 12 Feed and pasture 921. 52 Labor Mid other expenses 569. 01 2,227.97 Costof one hundred 3-year-old steers (36 months) 8, 932. 17 Cost per steer ,., 89. 3? RANCH NO. 6. Ranch No. 6, which is als© located in southeastern Texas, pro- duces approximately 1,000 calves yearly. It maintains 18 acres of pasture for each animal other than calves. The value of grazing land as carried on the ranch books was the acquirement value. As tliis acquirement value was not believed to be comparable to the land's present worth, a valuation of $5 per acre was used in getting the pastura,ge cost. The various costs involved in producing calves, short 2-year-olds, and 3-year-old steers, are shown in Tables 12 to 14. Table 12.— Co«< of producing a calf, Ranch No. 6 {1913-1917). Cost of keeping 100 cows (valued at $55 a head) a year: Interest, 8 per cent $440. 00 Death loss, 3 per cent, estimated 165.00 Pasture 726.28 Feed 381.59 Labor , 122.74 Ranch expenses 278. 43 Administration 71. 49 48 MEAT-PACKING INDUSTRY. Cost of keeping 100 cows (valued at $55 a head) a year — Continued. Bull service (7.1 bulls valued at $90 a head): Interest *51. 12 Death loss, 3 per cent, estimated 19. 17 Feed and pasture 78. 66 Labor and other expenses 33. 56 $182. 51 2, 368. 04 Calf crop, 46.3 per cent on foot at eight months of age. Cost of calf at weaning time 51. 15 Table 13.— Cost of producing a W-monlh-old steer, Ranch No. 6 (1913-1917). Cost of 100 calves (8 months old) at $51.15 a head $5, 115. GO Cost of carrying 100 yearlings one year: Interest, 8 per cent $409. 20 Death loss, 4 per cent 204. 60 Pasture 726.28 Feed 381. 59 Labor 122.74 Ranch expenses - 278. 43 Administration 71. 49 ■ • 2,194.33 Cost of steers at 20 months of age, at ranch 7, 309. 33 Marketing expenses 400. 00 Cost of one hundred 20-months-old steers at market 7, 709. 33 Cost per steer 77. 09 Table 14. — Cost of producing a S-year-old steer, Ranch No. 6 (1913-1917). Cost of one hundred 20-months-oId steers at $73.09 a head ' $7, 309. 33 Cost of keeping one hundred 2-year-old steers one year: Interest, 8 per cent $584. 72 Death loss, 4 per cent, estimated 292. 36 Feed and pasture 1, 107. 87 Labor and other expenses 472. 66 2, 457. 61 Cost of 100 steers at 32 months of age 9, 766. 94 Marketing expenses 400. 00 Cost of one hundred 32-months-old steers at market 10, 166. 94 Cost per steer 101. 67 RANCH NO. 7. Ranch No. 7 is located in north-central Texas. It carries about 12,000 high-grade cows, which are valued at $80 a head. This ranch makes a specialty of producing calves which are sold direct to corn-belt feeders, a large percentage of which are fattened as baby beef. Some stock is also maintained for the production of breeding animals. The figures obtained were, however, confined to the cost of producing feeder animals. 1 See Table 13, total cost at ranch. MEAT-PACKUTQ HSTDUSTRY. 49 Some of the land on this ranch is suitable for farming purposes, and is consequently valued at $60 an acre, its sale price. As this land is included in the pastures along with the rough grazing lands, an arbitrary value of $5 an acre was assunaed as the value on which to base pasture charges. This figure is comparable with the value of other grazing lands in that general vicinity. The ranch is stocked at the rate of 27 acres to each animal one year old and older. The bulls used cost $200 each. They are kept for an average of 4 years each and sell for about $56 each, their block value, this being an exceptionally high depreciation. The cost of producing a fee'der calf on this ranch is shown in Table 15. Table 15. — Cost of growing calves on Ranch No. 7 (1913-1917). Cost of keeping 100 cows (valued at $80 a head): Interest, 8 per cent $640. 00 Death loss, 5 per cent, estimated 400. 00 Pasture 1, 052. 19 Feed 125.74 Labor 237. 42 Equipment 280. 81 Freight .., 7.74 Veterinary. , , 1. 82 Miscellaneous 60. 16 Taxes and insurance 91. 09 Administration 130. 69 Bull service (7.9 bulls, valued at $200 a head): Interest, 8 per cent: $126. 40 - Bepreciation (kept 4 years, sold for $56 a head) 284. 40 Death loss, 5 per cent, estimated 79. 00 Feed and pasture .- 93. 06 Labor and other charges 63. 97 646. 83 3, 674. 49 Calf crop 80.9 per cent branded, with estimated 5 per cent death loss on calves to Jan. 1, leaving 75.9 per cent on foot. Cost of calf to weaning time 48. 41 RANCH NO. 8. Ranch No. 8 is located in the Panhandle of Texas. It maintains about 2,500 cows for the production of calves. In addition approx- imately 10,000 steers are purchased annually and run for one year. All of the steers raised on this ranch, as well as those purchased, are sold to Kansas graziers, free on board cars at nearest shipping point to ranch, the cattle usually being contracted for in advance. This means that the ranch does not find it necessary to pay marketing charges except on "cut backs" and discarded breeding stock. 152250°— 20 4 50 MEAT-PACKIH-G nSDTJSTBY. Twenty-four and two-tenths acres of owned and leased pasture were used per head by animals as yearlings or over. The land owned by the ranch company was valued at its acquirement value, which averaged $6.20 per acre. The leased land was charged at th© rental price paid. The various costs involved in growing calves coming, 2-year-old and 3-year-old steers, are shown in Tables 16 to 18. Table 16.— Cost of growing calves, Ranch No. 8 (1914^1917}. Cost of keeping 100 cows one year (valued at |65 each): Interest, 8 per cent 1520, 00 Death loss, 2 per cent, estimated 130.00 Pasture 737. 12 Feed 216.30 Labor 162. 92 Equipment 107. 27 Freight 71.32 Veterinary 7.71 Miscellaneous 42. 32 Taxes and insurance 82. 64 Administration 14. 06 Bull service (6.7 bulls, valued at $90 a head): Interest, 8 per cent $48.24 Death loss, 2 per cent, estimated 12. 06 Feed and pasture 63.88 Labor and other expenses } • 32. 71 156. 89 2, 248. 55 Calf crop, 58.6 per cent on foot at 8 months of age. Cost of calf at weaning time 38. 37 Table 17. — Cost qfproduemg gO-months-old steers, Ranch No. 8 (1914-1917). Cost of 100 calves at 8 months of age (at $38.32 each) $3,837.00 Cost of keeping 100 yearlings one year: Interest, 8 per cent. . .^ $306.96 Death loss, 3 per cent, estimated 114. 93 Pasture 737. 12 Feed 216.30 Labor 162. 92 Equipment 107. 27 Freight 71.32 Veterinary 7. 71 Miscelianeoua / 42. 32 Tajtes and insurance 82. 64 Administration , 14. 06 '— 1,863.55 Cost of one hundred 20-months-old steers , 5,700.55 Coat per steer 57_ qi MEAT-PACKING INDUSTRY. 51 Table 18. — Cost of producing a S-ymr-old steer {SS months), ranch No. 8 (1914-19^17). Cost of one hundred 20-monthB-old steers $5, 700. 55 Cost of keeping one hundred 2-yeM'-old steers one year: Interest, 8 per cent $456. 04 Death loss, 2 per cent, estimated 113. 88 Pasture 737. 12 Feed.: '. 216.30 Labor 162. 92 Equipment 107. 27 Freight 71.32 Veterinary 7. 71 Miscellaneous 42. 32 Taxes and insurance. 82. 64 Adjninistration 14. 06 2,011.58 Cost of producing one hundred 32-months-old steCTS 7, 712. 13 Cost per steer 77. 12 RANCH NO. 9. Ranch No. 9 is also in the Texas Panhandle. It produces about 1,800 calves annually. In addition to the growing of stock cattle, this ranch also bought yearlings and 2-year-old cattle in 1916 and 1917, which were held for a while and then sold to Kansas graziers. Twenty-three and a half acres of pasture land were allowed for each yearling or older animal. In this report the ranch land was priced at its acquirement value, which was $4 an acre. This value may seem low when compared with the value used for ranch No. 8. However, the present condition of the pasture, together with the expenditures for feed, would indicate that the land is pastured a little heavily. The leased land was chained at its annual rental value. The various costs in producing calves and 2-year-olds on this ranch are shown in Tables 19 and 20. Table W.—Cost ofprodiueing a calf on Ranch NoV (1913-1917). Cost of keeping 100 cows (valued at $65 each) for one year: Interest, 8 per cent .' $520. 00 Estimated death loss, 5 per cent 325. 00 Pasture 669.65 Feed , 303.94 Lahor 154.64 Equipment 76. 83 Freight 17.70 Veterinary 1. 89 MiecellaneouB 1 7. 69 Taxes and insurance 50. 10 Adminiatration 54. 43 52 MEAT-PACKING INDUSTRY. Cost of keeping 100 cows (valued at $65 each) for one year— Continued. Bull service (5.6 balls valued at $218 a head): Interest, 8 per cent ?9^- °" Death loss, 3 per cent 36. 62 Depreciation 193. 20 Feed and pasture 54. 52 Labor and other charges ^^- ^ 2, 584. 21 Calf crop 55.9 per cent on foot at 8 months of age. Cost of calf at weaning time 46. 23 Table 20. — Cost of producing a W-months-old steer, Ranch No. 9 {1913-1917). Cost of 100 calves at 8 months of age ($46.23 a head) $4, 623. 00 Cost of carrying 100 yearlings one year: Interest $369.84 Death loss, 5 per cent 231. 15 Pasture 669.65 Feed 303.94 Labor 154 64 Equipment 76. 83 Freight 17.70 Veterinary 1. 89 Miscellaneous 7. 69 Taxes and insurance 50. 10 Administration 54. 43 1,937.86 Cost of one hundred 20-months-old steers 6, 560. 86 Cost per steer 65. 61 RANCH NO. 10. This rancli is located in southeastern Texas and near the Mexican border. It handles Mexican cattle, some of which are purchased very cheaply. These are usually bought as 2-year-olds and are held for a year or more on grass and then shipped to market. All of the grazing lands used by the company are leased or rented, so that the pasture charge in the figures presented is the amoimt actually paid out. The cost of carrying these cattle for one year is shown in Table 21. Table 21. — Cost of carrying yearling and ^-year-old steer on Ranch No. 10 (1913-1917). 100 steers, average purchase $30.22 a head $3, 022. 00 Coat of carrying 100 steers one year: Interest at 8 per cent $241. 76 Death loss, 3 per cent 90. 66 Feed 138. 73 Pasture 305. 50 Labor 78. 54 Equipment 51. 19 Veterinary 5. 07 Miscellaneoas 7. 55 MEAT-PACKING INDUSTBY. 53 Cost of carT3ring 100 steers one year — Continued. Taxes and insurance $29. 05 Administration 13. 82 $961. 87 Total cost of 100 steers on the ranch. .77 3, 983. 87 Marketing expenses 379. 00 Cost of 100 steers at market ._. 4, 362. 87 Sale price of 100 steers at market 5, 749. 78 Profit , 1, 386. 91 Profit per head 13. 87 RANCH NO. 11. Ranch No. 11 is located in north central Texas. It makes a business of purchasing yearling steers and carrying them for a year. The 2-year-olds are then shipped north to Oklahoma to be fed out. As but few of these cattle are shipped to market direct, the sales price shown in Table 22 is the net return at the ranch from all the animals sold. Table 22. — Cost of producing 2-year-old steers, Ranch No. 11 {1915-16). Cost of 100 yearling steers, at $40.06 a head $4,006.00 Cosf5f carrying 100 yearlings one year: Interest, 8 per cent .- $320. 48 Death loss, 2.4 per cent 1 96. 14 Pasture 585. 42 Feed 276.92 Labor 95. 51 Equipment 142. 66 Veterinary 18. 39 Taxes and insurance 23. 87 Miscellaneous '.'. 19. 96 Administration 21. 63 1,600.98 Cost of one hundred 2-year-old steers 5, 606. 98 Net sale price of 100 steers, at $48.10 per head 4, 810. 00 Loss 796. 98 Loss per steer 7. 97 R.4.NCH NO. 12. Ranch No. 12 is a group of ranches operating in Texas, Colorado, Montana, South Dakota, and Canada, all being operated from a cen- tral office. The ranches in Texas, Colorado, and Montana are mostly owned, while the lands in South Dakota and Canada are leased. The South Dakota ranch was only operated during the first two years for which figures were obtained. A valuation, based on 1915 figures, of $5 an acre was placed by the ranch company on all lands owned and grazed. The Canadian ranch is used exclusively for the summer grazing of 3- and 4-year-old steers. The other ranches, taken together, carry about 25,000 cows for the production of calves. 54 MEAT-PACKING INDUSTRY. The heavy "tax and insurance" charge paid on the cattle is due to the fact that the home office of the company is located in great Britain. This charge increased from 182.03 per hundred head in 1913 to $244.42 per hundred head in 1917. The ranches are treated as a unit in the figures presented in Tables 23 to 25. Table 23.— Cost of producing a calf on Ranch No. li (,1913-1917). Cost of keeping 100 cows (valued at $65 a head) for one year: Interest, 8 per cent $520.00 Death loss, estimated 650. 00 Pasture 506.87 Feed 85. 02 Labor 86. 00 Equipment 52. 98 Fi-eight 83.19 Veterinary 4. 37 Supplies 25.83 Miscellaneous 28. 99 Taxes and insurance 166. 98 Administration 27. 61 Bull service (5.1 bulla, valued at $200 a head) — Interest, 8 per cent $81. 60 Death loss, 7 per cent, estimated 71. 40 Depreciation (kept 4 years and sold for $66.50) 170. 21 Feed and pasture 30. 19 Labor and other expenses 24. 27 377. 67 Calf crop 59.4 per cent on foot at 8 months of age. ' Cost of calf at weaning time (8 months old) 44.03 Table 24.— Cost of producing BO-months-old ateerg, Ranch No. li {1913-1917). Cost of 100 calves at 8 months old at $44.03 a head ■. $4, 403. 00 Cost of carrying 100 yearlings a year: Interest, 8 per cent.., $352.24 Death loss, 10 per cent, estimated 440. 30 Feed and pasture 5g;i gg Labor and other expenses 475 gg "' '— 1,860.23 Cost of one hundred 20-month8-old steers c 263 28 Costpersteer ' an go Table 25.— C6at of producing S-y ear-old steers, Ranch No. 12 (1913-1917). Cost of one hundred 20-months-old steers at $62.63 $6 263 28 Cost of caiTying 100 two-year-old steers: ' Interest, 8 per cent ,-„, ^. Death loss,. 10 per cent, estimated 626 30 Feed and pasture rqi on Labor and other expenses ' 4750c 2, 195. 08 Cost of one hundred 32-month8-oId steers I Z Costpersteer 8,458.36 84.68 COST OF FATTENING CATTLE CHAPTER I. — Cost of Fattening Beef Animals on Corn- Belt Farms. CHAPTER II. CHAPTER III. -A Five-Year Study of the Cost of Finish- ing Cattle in Illinois. -Five-Year Results in Finishing Cattle on Twenty Corn-Belt Farms. Prepared by The United States Department of Agriculture Office of Farm Management, W. J. Spillman, Chief Bureau of Animal Industry, J. R. Mohler, Chief 65 CONTENTS. COST OF FATTENING CATTLE. Page. Preface 63 Chapter I. — Cost of Fattening Beep Animais on Corn-Belt Farms. Methods of obtaining information 67 Economic situation 68 Sources of data 69 Nebraska 69 Iowa : 70 Missouri 72 Fattening 2-year-old cattle 74 Nebraska 75 Iowa 75 Missouri 76 The cost of fattening 2-year-old cattle ^ 78 Method of obtaining coats 79 Items of expense , 79 Items of credit 82 Analysis of the profits realized 85 Fattening yearling cattle '. 88 Nebraska 88 Iowa 89 Missouri 89 The cost of fattening a yearling 89 Analysis of the profits realized 91 Finishing feeder calves as baby beef 92 Nebraska 93 Iowa 93 Missouri 94 Cost of fattening •• . 94 Analysis of the profits made 95 Finishing calves as baby beef on farms where they are raised 97 Cost of fattening 99 l-'othods of determining costs 100 Itemg-of expense. . . : »....'.. 100 Analysis of profits and losses 102 Summary 104 Two-year-old steers 104 Yearlings 105 Calves bought and fattened 105 Calves finished on farms where grown 105 Cost per pound of gain '. 106 57 58 CONTENTS. Chapteb II.— a Five-Year Study op the Cost of Finishing Cattle in Illinois. Page. Source of materiaL lO^ Years covered lOS Methods used in gathering coat data 108 Type of fanning in Hancock County 108 Methods of feeding 109 Summary of coats 110 Selling prices and margins necessary to cover coats 112 Hours of labor required 114 Summary 114 Chapter III. — Five-Year Results in Finishing Cattle on Twenty CoRN-B ELT Farms . Introduction 115 Source of data 115 Method of gathering data 116 Systems of feeding and management ^ 116 Missouri 116 Kansas 117 Nebraska ^ , 118 Corn yields ajid prices 118 Feed required to produce a hundred pounds gain 119 Methods of arriving at costs 119 Summary of costs 120 Missouri 121 Kansas 122 Nebraska 122 Method of arriving at credits 123 Selling prices ajid margins necessary to cover costs 124 Summary 126 Appendix 127 LIST OF TABLES. CHAPTER I. Table 1. The number of 2-year-old cattle, yearUngs, and baby beeves on which records were obtained for the six districts 69 2. Average size and value of the farms visited and the proportion of each ta pasture, corn, small grain, and hay, for tie six districts:. 70 3. Average purchase ^nd sales dates, and the gains made for the 2- year-old cattle ' 74 4. Kiud and quantity of feeds fed to a 2-year-old steer 75 5. Items of expense and of credit in finishing a 2-year-old beef animal for market 77 6. Average price of the different feeds given the 2-year-old cattle. ... 79 7. The pork produced per 2-yearrold steer, and per bushel of corn fed to a steer, and the value per pound of the pork sold 83 8. The profits made per head in fattening 2-year-old cattle 85 CONTENTS. 59 Page. Table 9. The necessary margin required and the margin ottained for the 2-year-old fattening cattle. . ; 86 10. Cost of a pound of gain in fattening 2-year-old steers with and with- out pork 86 11. The average purchase and sales dates and gains made for the year- ling steers 88 12. The kind and average quantity of feed fed to a yearling steer 88 13. Items of expense and of crexiitin fattening a yearling for market. . . 90 14. Average price of the different feeds given the yearling steers 90 15. The pofk produced per yearling and per buahel of corn' fed to a yearling, and the value of the pork sold 91 16. Profits and losses in fattening a yearling steer for market 91 17. The necessary margin and the margin obtained in fattening yearling cattle for market 92 18. Cost of a pound of gain in fattening yearling cattle with and without pork 92 19. Purchase and sales dates and gains made by baby beeves 93 20. Kind and average quantity of feed fed to a baby-beef animal 93 21. Items of expense and of credit in finishing a baby-beef animal for market ^ 94 22. The average farm value of the different feeds given the baby-beef animals 95 23. Pork produced per baby-beef animal and per bushel of corn fed to a baby beef, and the value per pound of the pork sold 95 24. Profits and losses in fattening a boby-beef animal 96 25. The necessary margin and the margin obtained in fattening baby- beef animals 96 26. Cost of a pound of gain in fattening baby-beef animals with and with- out pork 96 27. Size of farms visited, acreage in pasture, and number of calved fat- tened as baby beef 98 28. Date of sale, age and weight of the baby-beef animals 99 29. Items of expense and of credit in finishing a home-raided calf for baby beef 99 30. Kind and quantity of feed fed to a home-raised calf from weaning time until marketed as baby beef 100 31. Value of the feeds given home-raised baby-beef calves 101 32. The profit and loss per h^ad on the baby-beef animals for there years 102 33. The cost, sale price, and profit and loss per hundredweight for home- raised calves fattened as baby beef 103 34. The number of farmers making a profit and number making a loss raising baby beef, by years 103 CHAPTEK II, Table 1. Quantities of feeds consumed by a steer during the entire feeding period 109 " 2. Prices of feeds consuined by a steer during fattening period 110 3. Weights and gains of steers 110 4. Average animal cost and profits in finishing a 2-year-old steer in Illinois, 1912-1917 Ill 60 COBTTEWTS. Page. Table 5. Cost of fattening a steer in Illinois with and without considering the pork credit ^^ 6. The results during five years of feeding fifteen lots of 2-year-old steers without allowing pork credit 113 CHAPTER III. Table 1. Sources of data US 2. Total pounds of each class of feeds consumed by a steer and the amount of each required to produce 100 pounds gain 119 3. Average five-year cost and profits in furnishing a steer in four Corn- Belt States " - '- 121 4. The five-year average cost of producing' cattle gains on Corn-Belt farms, 1912-1913 through 1916-1917 125 5. The results during five years of feeding without allowing pork credit. 125 APPENDIX. Table 1. Weights and gains of Missouri steers 127 2. Weights and gains of Kansas steers 127 3. Weights and gains of Nebraska steers 127 4. Average amounts of feeds consumed annually per head by cattle in Missouri 127 5. Averagr amounts of feeds consumed annually per head by steers in Kansas 128 6. Average amounts of feeds consumed annually per head by steers in Nebraska 128 7. Average prices of feeds consumed by Missouri steers 128 8. Average prices of feeds consumed by Kansas steers 129 9. Average prices of feeds consumed by Nebraska steers 129 10. Corn yields per acre : 129 11. Average annual cost and profits in finishing a steer in Missouri 1912 through 1916 .^ 130 12. Average annual cost and profits in finishing a steer in Kansas, 1912- 1913 season through 1916-1917 130 13. Average annual costs and profits in finishing a steer in Nebraska 1912-1913 through 1916-1917 131 14. The results during five years of feeding in Missouri without allowing pork credit ; 131 15. The results during five years of feeding in Kansas without allowing pork credit 131 16. The results during five years of feeding in Nebraska without allowing pork credit 131 17. Cost of fattening a steer in Missouri with and without considering the pork credit (1912 thi-ough 1917) 132 18. Cost of fattening a steer in Kansas with and without^considering the pork credit (1912-1913 through 1916-1917) 132 19. Cost of fattening a steer in Nebraska with and without considering the pork credit 132 CONTENTS. LIST OF ILLUSTRATIONS. 61 CHAPTER I. Figure 1. Cattle-feeding plant typical of southwestern Iowa farms.. Facing page 72 2. A feeding plant in eastern Iowa Pacing page 72 3. Buildings typical of equipment used for winter feeding of cattle in western Iowa Facing page 73 4. A common type of Nebraska f eedyard Facing page 73 5. Average price for mixed hoga at GHcago for 1916-1917 and for previous decade 84 6. Margin between cost of feeder cattle and selling price of fat cattle at Chicago for 1917 and for previous decade 87 7. Baby-beef animals grown and raised on a southwestern Iowa farm Facing page 99 CHAPTER II. Figure 1. A f eedyard typical of many found in west-central Illinois. Facing page 109 CHAPTER III. Figure 1. Cattle on full feed on the Marshall County (Kan.s) farm. Facing page 118 2. Feedyard typical of many of those of the large cattle-feeding com- panies in Nebraska Facing page 118 PREFACE. The following report on the cost of fattening beef cattle was pre- pared by the Office of Farm Management, United States Department of Agriculture, in 1918, covering investigations relative to the cost of producing beef cattle ia the Com Belt for several periods prior to that year. The inquiry brought out the kinds and quantities of feeds used, the amount of labor performed on the cattle, the equip- ment required, and the various other items of expense that enier into the cost of finishing cattle for market. The report is divided into three parts : Chapter I, "Fattening Beef Animals on Corn-Belt Farms," includes a study made on 188 farms of the cost of fattening 2-year-old steers, yearlings, and baby-beef animals. It also includes a three-year study on the cost of finishing calves as baby-beef animals on the farms where they were produced. The figures presented were ob- tained by field agents who personally visited the farmers and entered on specially prepared blanks the data obtained from them. Chapter IE, "A Five-Year Study on the Cost of Finishing Cattle in Illinois," presents results of an investigation being made by the University of Illinois College of Agriculture on the cost of finishing cattle on a few selected farms in that State. The figures for these farms were obtained by accurate cost-accounting methods. Chapter III, " Five-Year Results in Finishing Cattle on Twenty Com- Belt Farms," presents figures on the cost of fatt ening cattle on 20 farms that feed on an extensive scale. The figures for these farms were taken directly from farm books, which were for the most part detailed and accm-ate. As there was not sufficient time to study aU of the different methods of fattening, these investigations have been confined to the types of fattening that are most commonly followed in the Com Belt, where the majority of the cattle are finished on a ration in which com plays the leading part.' * Cattle, of course, are fattened in many localities ia the United States other than the Corn Belt, but not ia such lao^e nunibera. In these other localities the number of cattle fattened and the znanneF of handling them depends largely on the qnantity and kinds of feed availahle> and on market eonditions. Principal among the methods of finishing cattle are the following: L The roughing of cattle throu^ the winter and grazing them on pasture the following summer. This practice is common in r^ions having luxuriant blue-grass pastures, as in the limestone sections of Virginia Mi Kentucky. Many cattle are simil^Iy finished in that part of eastern Kansas, where the pastures are cnderlain by lunestone. ^ 2. Tlio fiTirah i ng of cattle on cotton-seed meal, using cotton-seed hulls or some (dieap hay as a roughage. This method is extensively followed in tlie Cotton Belt, but owing to present high price of cotton-seed moal it has temporarily bees abandoned. 3.-Thcfinishingofcattleforwestemmarketsonalfalfahay in irrigated valleys of the Pacific Coast States. Many cattle are also fattened on native hay in Montana and Wyoming. 4. Fattening on beet pulp and ali^f a hay in srigated sections of the West. 6. Tile utilization of by-products such as distillery slop and cannery refuse in the finishing of cattle. 63 64 PREFACE. The practice of finishing cattle on corn dates back to' the beginning of the development of the Corn Belt. It was found that when cattle that were being driven from the Western ranges to the Eastern markets were held over and fed corn for a few months they made very profitable gains. At first this finishing was largely in the hands of drovers who were taking the cattle through to the Eastern markets, or in the hands of speculators who bought the cattle from the drovers or direct from the Western ranges. These men rented feed yards at convenient places, and purchased the corn and necessary roughages from the local farmers. As cattle feeding was not only lucrative, but also furnished an excellent market for corn and. jough feeds, as well as converting these products into manure with which to maiatain fertiUty on their land, the farmers soon began feeding. As the number of farmers who entered the business increased, the early profits decreased to a point where the speculators, who were unable to compete with the farmers, gradually dropped out. At present cattle feeding is largely in the hands of farmers who feed one or more carloads of cattle in order to consume large amounts of roughage such as stalks, straw, and hay, which can best be utilized by feeding them to cattle and, as above suggested, to convert these by-products into manure with which to maiataia fertility. In itseK cattle feeding is not considered very remunerative, but it fits in excellently with the production of pork and provides a gainful winter occupation. It is very frequently the case that although the steers considered alone may lose money, the hogs following are so remunera- tive that the combined enterprise when averaged "over a period of years proves profitable. For these reasons the average farmer is wiUing to feed cattle on a very low margin so long as it will furnish him with a satisfactory market for his farm products. In recent years the prices of cattle and of feeds have been very high. These high prices, together with the heavy market fluctua- tions that frequently occur, have made feeding a precarious business. The instabiUty of the market has caused many farmers to discon- tinue feeding or greatly to curtail their feeding operations. Not only does the market vary according to seasonal demands and the daily demand and supply, but there-are numerous sudden changes due to meat boycotts, strikes, droughts, and numerous other unfore- seen factors. While the large producers who carefully study the market can usually avoid the seasonal variations, and can to some extent avoid the daily fluctuations, none are able to tell when a sudden slump is coming. Moreover, the average farmer who feeds but one or two carloads of cattle to utilize the by-products of his farm can not become a close student of market conditions. Unless there is some degree of stability about the market he must change his type of farming and discontinue cattle feeding. PBEFACB. 65 The data presented in Chapters II and III of this report show that cattle feeding for the years 1912 to 1916 was not very remunerati-ve. The feeding year 1916-17 was, on the other hand, one of the most profitable known in recent times. This fact is borne out by the data presented in Chapter I of the report. The feeding year 1917-18, on the other hand, proved disastrous, owing to the fact that the feeders, in order to get their usual supply of cattle,- were obliged to bid against the packers and to pay unusually high prices. While many of them felt that the prices were too high to justify feeding, they needed the cattle in order to save the vast quantities of soft corn. They also felt it a patriotic duty to continue their cattle-feeding operations aa usual in spite of unfavorable economic conditions, and hoped for a much greater margin or spread than they received. It should be borne in mind that the cost figures presented in this report are applicable only under the feeding conditions and the feed and market price levels that existed during the period covered by each section of the report. Corn at the present time (1919) sells at over two and one-half times its average market value for the years 1912 to 1917; whUe other small grains and the forages are about double in value. Of the five feeding seasons of 1912-13 to 1916-17, inclusive, three were seasons of low feed and other production costs, starting in the fall of 1913 and lasting into the spring of 1916. In 1916-17 prices recovered rapidly, and market changes since that season have been steadily upward. The rapid increase in the market values of farm feeding stuffs since the season of 1916-17 renders the survey material in Chapter I, though covering a comparatively recent season, of little value other than to show costs for that one season. One is therefore not warranted in drawing conclusions from this report as to the present costs of fattening cattle, since the figures presented do not depict the conditions which obtain under the exist- ing price levels apd present feeding practice. Although county and State boimdaries are used as a means of territorial demarcation in the association and summarization of cost figures, it is not to be assumed that the figures obtained are repre- sentative of the costs throughout a State or even a county. They are the costs upon the specific, representative farms that furnished the data. Care is exercised to describe in some detail the systems of feeding followed in the several Beotions visited and by the indi- vidual feeders fxirnishing data. 152250°— 20 5 COST OF FATTENING CATTLE. CHAPTER I. COST OF FATTENING BEEF ANIMALS ON CORN-BELT FARMS. By J. S. Cotton, Agriculturist, Office of Farm Management; Edmund H. Thompson, Scientific Assistant in Beef Cattle Investigations, Bureau of Animal Industry, and Jay Whitson, Scientific Assistant, Office of Farm Management. This report includes a study of the methods and costs of fattening cattle on 188 farms in the Corn Belt. It shows the cost involved in the finishing of 158 droves of 2 and 3 year old cattle, 47 droves of yearlings, and 33 droves of calves that were fattened as baby beef. These droves include 9,541 2-year-olds, 1,530 yearlings, and 1,135 baby beeves. The report also includes a three-year study on the cost of finishing calves on farms that make a practice of growing and fattening th-eir own baby-beef animals. The record for the 125 droves so fattened begins with the cost of the calves at the time they were weaned.^ METHODS OF OBTAINING INFORMATION. The records used in the tabulations were obtained by experienced field men who personally visited the farmers and obtained directly from them the information concerning their feeding operations. Whenever possible, the figures were taken from books. Where books were not kept, the figures are based on the farmers' estimates. These estimates are, however, quite accurate, as the average feeder who has been in the business for a number of years knows approxi- mately how much com he feeds a steer daily, how long it takes to get that steer on full feed, and the number of days on feed. The farmer also is able to estimate very closely the total amount of rough- age fed, so that the estimates of the quantity of feeds used are usually very nearly as accurate as the book accounts. i An investigation concerning tlie cost of producing baby beef has been conducted during the past four years. The first part of that investigation, which deals with the cost of raising these calves to weaning time, is included with the report entitled " A Three- Year Study on the Cost of Producing Beef Animals in the Corn-Belt States. " The second part of that investigation, which deals with the cost of carrying these calves from weaning time until marketed, will be found under a separate heading at the end of the article. 67 68 MEAT-FACKING INDUSTRY. In cases in which the cattle were bought at one of the principal markets, a copy was made of the original purchase statement fur- nished the farmer by the commission firm who sold the cattle. If the cattle were sold on the market, a commission firm's statement showing the number of steers sold, their weight, value per hundred- weight, total value, cost of marketing, and the net returns was ob- tained. If the farmer did not have such a statement, these figures were taken directly from the books of commission firms who sold the cattle.' The records obtained are mostly for cattle sold during the early winter of 1916 and the calendar year 1917 — that is, cattle that were purchased in the summer and fall of 1916, and finished and sold that winter or the following spring and summer. It also includes a few droves bought in the summer and fall of 1917 and sold that winter after a short feed. A few of the cattle concerning which records were obtained were purchased in the fall of 1916 as yearlings and were held over and finished on com in the fall or winter of 1917. ECONOMIC SITUATION. The feeding year 1916-17 was an unusually profitable one. The farmers laid in their supply of feeders in the fall of 1916 at prices very little above the average. By the spring of 1917, when these cattle went to market, the entire economic situation had changed. The alhed nations were in need of vast supphes of meat, and the shortage of shipping facilities made it difficult to draw on Argentina or on other distant countries for their meat supplies. It thus became necessary for the United States to fill this demand. This situation naturally resulted in a rapid advance in prices for all meat commod- ities, so that the men who were feeding were doing so on a rapidly rising market. This movement was intensified by the fact that a sliort crop of corn kept many of the feeders out of business or curtailed their operations so that the demand for prime cattle was relatively great as compared with the supply. Not only was there a rapid advance in the price of beef, but there was an equivalent rise in the value of pork, so that the hogs following the cattle were unusually profitable. The farmers who sold their cattle in the early spring of 1917 realized unusually large profits. On the other hand, those who held their cattle over to be fed during the late spring or early summer of 1917 were compelled to feed unprecedentedly high-priced corn. To meet this condition, many feeders found it necessary radically to change their methods of feeding or to ship their cattle before they were fuUy fattened. Many of those who were obliged to purchase much of this hio'h- 1 Thanks are due to the many farmers who assisted In making this report possible. Thanks are also due the various commission firms who gave much valuable assistance in verifying the salei statements and also In giving Information aboat feeding areas to be visited. MEAT-PACKING INDUSTRY. 69 priced grain sold at a loss. Other farmers who had grown their own com made a large profit on the corn, although on paper the cattle showed a loss when the corn was charged at the market price. The cattle that were bought during the fall of 1917 were laid in at very high prices with the hope that the market would continue to rise sufficiently to allow the feeders their necessary margin. The hoped-for rise in price did not occur, however, before most of the cattle were marketed. Many of the cattle were also bought on the assumption that corn would be cheaper than proved to be the case. As a consequence, very heavy losses were incurred for the cattle that were finished for market in the winter of 1917-18. SOURCES OF DATA. The regions selected for study were as follows: 1. Burt County, Nebraska. 2. Pottawattamie County, Iowa. 3. Eastern Iowa (Cedar and Washington Counties). 4. Clinton County, Missouri. 5. Saline County, Missouri. 6. Carroll County, Missouri. It was originally planned to include one county from Kansas, but because of the failure of the corn crop in 1916 there was practically no feeding in that State during the winter of 1916-17. NEBRASKA. Records were obtained on a total of 72 droves from 49 farms in Burt County, Nebraska. The distribution of these records is shown in Table 1. Table 1. — The number of ^-year-old cattle, yearlings, and baby beeves on which records were obtained for the six districts.^ 2-year-old cattle. Yearlings. Calves. District. Num- ber of farms. Num- ber of droves. Total cattle. Aver- age num- ber of drove. Num- ber of bundles. Total cattle. Aver- age num- ber per bunch. Num- ber of droves. Total cattle. Aver- age num- ber per drove. Burt County, Nebi 49 44 1,264 29 18 360 28 It 454 30 Pottawattamie County, Iowa 37 28 32 20 1,138 1,177 36 69 13 9 472 209 36 23 Eastern Iowa Total Iowa 65 62 2,315 46 22 681 31 10 260 26 Clinton County, Mo 26 30 18 26 28 8 2,777 2,696 490 107 96 61 Saline County, ko Carroll County, Mo . . . Total Missouri 74 188 62 5,962 92 12 489 41 8 431 .54 Total of all diatriots 158 9,541 60 47 1,530 33 33 1,136 34 1 Exclusive of baby-l^eef animals fattened on 124 farms on which thoy were raised. 70 MBAT-PACKINQ INDTJSTBT. Burt County borders on the Missouri River, and is about halfway between Omaha and Sioux City, two of the leading stock markets. The facilities for shipping to either of these markets are excellent. According to the 1910 census the average size of farms in this county is 188 acres. The leading crops are corn, oats, and alfalfa. There is a considerable acreage in pasture and prairie hay, although during recent years much of the area previously devoted to these has been put under cultivation. The 49 farms visited averaged 275 acres in area. They were valued at a little over $56,000 per farm, the valuation ranging from $36,000 for the smallest farm to over $100,000 for each of three very large farms. Thirty-seven per cent of the land in these farms (see Table 2) was in corn, 17 in hay, and 24 in pasture. Table 2. — Averagesizeandvalueof thefarmsrisiled and the propoTtion of each in pasture, com, small grairi, and hay, fcrr the six districts. Number of farms. Size of farms. Proportion of farm In— Pasture. Com. Small grain. Hay. Average value of farms. Burt County, Nebr Pottawattanje County, Iowa. . . Eastern Iowa Clinton County, Mo Saline County, Mo Carroll Coimty, Mo Acres. 275 246 246 493 455 400 Per cent 24 29 35 42 35 50 Percent. 37 38 37 32 29 17 Per cent 18 11 13 9 IS 8 Percent. 17 12 12 10 4 21 156,000 47,000- 66,000 76,000 81,000 41,000 Cattle feeding is extensively followed in Burt County, it being estimated that in the vicinity of Oakland, where the majority of the records were taken, at least one-half of the farmers feed one or more carloads each year, primarily as a means of marketing their alfalfa and a part of their com. The cattle are fed in comparatively small lots. Most of the cattle are 2- or 3-year-old western steers^ which are purchased on the Omaha market in the fall months. They are put on feed as quickly as possible after new corn is ready, and are fed for a period of from two to six months, depending on their quality and the condition of the market. Some farmers buy middle-weight cattle and run them on pasture and stalk fields during the fall. These cattle are put on feed about Christmas time and are marketed in the early spring. Still others buy yearlings and calves, which are carried through the winter on a light grain ration. They are put on full feed in the spring and are marketed in early summer, generally without being turned on pasture. IOWA. A total of 37 farms were visited in Pottawattamie County and part of Shelby County, Iowa. The Missouri River forma the western MEAT-PACKING INDUSTRY. 71 boundary of Pottawattamie County, and Council Bluffs, the county seat, is just across the river from Omaha. Near the river the land is level; a short distance back from the river the land is sharply broken, gradually becoming smoother as one travels eastward. The soil belongs to the Missouri loess series. The average size of farm in this county as given in the 1910 census is 146 acres. The leadiQg crops are corn, small grain and hay, although alfalfa is extensively grown. The feeding of cattle is followed largely for the purpose of utilizing the rough feeds, for providing a home market for the corn, and for furnishing manure with which to maintain fertility. Very little corn is shipped out of the county, nearly all being fed to some kind of live stock. While a good many cattle are raised in the rougher portions of the county, most of the feeder cattle are purchased in Omaha, the farmers having easy access to that market. Most of the records were taken in the central part of the county where nearly all of the land is tillable, although quite rolling. The average size of the farms visited was 245 acres (see Table 2), 38 per cent of which was in com. Twenty-nine per cent of the land on these farms was in pasture, 12 per cent in hay, and 11 per cent in small grains. The average real estate investment was $47,000, the land being valued a little lower than for the farms in the Nebraska area visited. The farmstead of a farm typical of the large farms in this region is shown in figure 1. This farm has a real estate invest- ment of over $150,000. Twenty-eight records were taken in Cedar and Washington Coun- ties, which are in the southeastern part of Iowa, and near the eastern border. Although these two counties do not join, Washington County being southwest from Cedar, the general conditions are much the same in both, and are representative of the farming conditions, as well as the cattle-feeding business, in southeastern Iowa. The land is gently rolling and the soil is of the Iowa drift series. The average farm acreage, according to the 1910 census, is 148. Com is grown in rotation with wheat (or oats) and clover. At one time there were many blue-grass pastures, but within recent years a large number of these have been put under cultivation. Formerly many prime heavy steers were fattened in this region. The increas- ing prices of feeder cattle and of feeds have caused many farmers to discontinue their feeding while others have gradually curtailed their feeding operations or have radically changed their methods of feeding. The average size of the farms visited (246 acres) was practically the same as for Pottawattamie Covmty. The average real estate value of the farms was about $55,000. The relative acreage in crops was about the same as in the other districts, except that there was a greater acreage in pastm-e. 72 MEAT-PACKING INDUSTRY. A few of the farmers visited stUl continue to produce heavy prime beef, and to feed large quantities of com. The majority, however feed only a limited quantity of grain, and largely rely on silage and summer pasture in order to get as cheap grains as possible, their aim being to produce medium fat cattle. The production of cheap beef enables the farmers in this region more fully to utilize their com stalks and other rough feeds, and to save the greater part of their com to feed to hogs. It also provides them with an abundance of manure, which is an importajit factor in their farming operations. This method of feeding fits in well with their general farm operations, as most of the labor comes in the winter when field work is light, and the plan seems to be growing more and more popular. A feeding plant where several carloads are fed an- nually that is fairly typical of this region is shown in figure 2. MISSOURI. Records were taken on 25 farms in Clinton County, in the north- western part of Missouri, about 40 miles northeast of Kansas City and about equally distant from St. Joseph. The land is rolling to hilly. The soU is underlaid by limestone, which makes for excellent blue- grass pastures. As nearly one-half the land is in permanent pasture, the county is well adapted to live-stock farming. The majority of the farmers visited are men who own their farms, who have made money feeding cattle in previous years, and who take great pride in having prime cattle that command the top prices at the markets. In order to utilize the blue-grass pastures to the best advantage, farming is largely built aroimd the cattle-feeding industry. According to the 1910 census, Clinton Coimty was the fourth county in the State in number of cattle fed. The farms visited averaged 493 acres in size and had an average real estate investment of $76,000. Forty-two per cent of the total acreage was in permanent pasture and 32 per cent in com. Steers of good quality, weighing from 800 to 1,100 poimds, are usually purchased at Kansas City in the late summer and fall and turned on the blue-grass pastures, where they usually remain until disposed of. Corn fodder forms the basis of the feed, this being fed on pasture during the winter months. In the late winter or early spring the cattle that are to be fattened for early market are put on a heavy ration of corn, supplemented with cotton-seed meal, which is continued imtil they are shipped. The remainder are mainly carried on pasture until midsummer, when grain feeding is again resumed, to be continued until the cattle are marketed in the late summer. Whichever system is followed, corn is abundantly fed, it being commonly said that about 75 bushels are needed to finish a Fig. 1. — Cattle-feeding plant typical of southwestern Iowa farms fattening several carloads of steers annually. The rolling character of country is fairly typical of eastern Pottawattamie and adjoin- ing counties. Fig. 2.— a feeding plant in eastern Iowa, where several carloads of primesteers are fattened annually. This plant, although not elaborate, represents an Investment of several thousand dollars. 72 Fig. 3, — Buildings that are fairly typical of equipment used for winter feeding of cattle in western Iowa. Fig. 4.— a common type of Nebraskafeed yard, showing the large hay rack between two yards and the arrangement of feed bunks. The sloping hillside insures good drainage. 73 MEAT-PACKING INDUSTRY. 78 steer. During recent years these heavy rations of corn have not generally been profitable, and in most parts of the Com Belt they have largely been discontinued. It is probable that the quantity of com fed per steer in this county has been decreased somewhat, as many of the farmers realize that the use of excessive grain rations is not a profitable practice. Saline Coimty is situated in the west-central portion of Missouri, its northern boundary being formed by a big bend in the Missouri River. Marshall, the county seat, is about 75 miles east of Kansas City. The average size of the farms, according to the 1910 census, is 120 acres. The principal crops are corn, wheat, and hay. The low- lands along the river are almost wholly devoted to grain farming and hog feeding. The western portion of the county contains an area of bench land several miles wide. Cattle feeding predominates in this section, the feeders forming a distinct class, being generally owners operating farms much larger than the average for the county. The average size of t!he 28 farms on which records were taken was 455 acres, 35 per cent of which was in pasture, 29 in com, 15 in small grain, and only 4 in hay. The average value of these farms was 181,000. While most of the Corn-Belt farmers feed cattle as a means of utilizing their rough feeds, the feeding operation being a minor enter- prise, the men are primarily cattle feeders. They have built their farming operations around the cattle-feeding industry and have developed an excellent system. The common feeding unit is from 100 to 200 head. Cattle are generally bought in the fall, coming mostly from Kansas City, although some are brought from the counties to the east and south, and many from the Ozark Mountains. Most of the cattle (chiefly 2-year-olds) are of inferior quality, espe- cially those that are given but little corn. At one time Saline Coimty had the reputation of feeding prime heavy cattle, but there has been a gradual evolution untU at present few prime steers are fed. The object of the feeders in this region is to produce meat, with emphasis on amount rather than quality. While considerable com is raised, this is mostly utilized as silage or for supplementing the rations for the hogs that follow the cattle. Most of these men buy additional com for feeding. The principal feeds are silage, corn and cottonseed meal. These sometimes con- stitute the sole ration. CarroU County is in the north-central part of Missouri, on the north side of the Missouri B,iver. The average size of farms is 128 acres. In the southern part of the county the lands are mostly flat river bottoms. A few miles back from the river the rolling uplands begin. On the uplands there are large areas of blue-grass pasture. In this area the general farming operations are based on the utilization of 74 MEAT-PACKING INDUSTRY. this pasture, which is grazed the greater part of the year. Corn wheat, oats, and hay are the leading crops. The average size of farm, according to the 1910 census, is 128 acres. The farms which were visited averaged 400 acres and were slightly smaller than those visited in Clinton and Saline Counties. Fifty per cent of the land was in pasture and 21 per cent m hay. Unly 17 per cent was in corn, there being a comparatively small acreage in culti- vation. On the river-bottom land the practice of feedmg heavy cattle pre- vails. On the uplands this practice has been largely discontinued, most of the cattle fed at present being bought as yearlings and cakes. These are purchased in the fall, turned onpasture, and roughed through the following winter, being fattened on pasture the foUowiug summer for the late fall market. The pasture is usually supplemented by a small amount of corn and some linseed-oil meal or cottonseed meal. Most of the cattle are kept for a period of from 8 to 12 months. FATTENING 2- YEAR-OLD CATTLE. These cattle were for the most part purchased at the Missour River markets during the fall of 1916, although some were purchased earlier in the year. A few droves were purchased in the late winter or early spring of 1917. The average purchase date for all of the cattle was October 17. While there was a great variation in the length of time the cattle were kept, the average time for all districts (see Table 3) was 1 79 days. During this time the cattle gained on an average 293 pounds, the initial weight being 938 pounds and the final weight 1,231 pounds. Tablb 3. — Average purchase and sales dates and the gains made for the i-year-old oattU. District. Num- ber ol droves. Ave> age num- ber in drove. Purchase date. Sale date. Days kept. mtfai ■weight. Final weight. Total gain. "^ Burt County, Nebr. 44 32 20 26 28 g 29 36 59 107 96 61 Oct. 9 Oct. 10 Oct. 21 Oct. 16 Deo. 5 Sept. 30 Feb. 22 Feb. 24 May 12 July 10 July 3 Apr. 21 133 134 201 264 208 201 Pmnit. 943 972 998 923 901 900 1,218 1,273 1,223 1,282 1,172 1,226 IAh. 270 800 IM. 2.03 Pottawattamie Connty, f?l Saline County, Mo 1.80 l.«' Carroll County, Mo 158 60 Oct. 17 Apr. 21 184 938 1,231 293 1.S9 On several of the farms a few 3-year-old cattle were included. There were also a number of droves of 3-year-old cattle on which records were obtained, this being especially true in Clinton County, Mo, The 3-year-old cattle have been classed with the 2-year-olds in the tabu, lations, as they were handled in the same manner. MEAT-PACKING INDUSTRY. 76 NEBRASKA. The 2-year-old cattle on which records were obtained in Buil County, Nebr., were mostly purchased in the fall at an average weigiit (Omaha weight) of 943 pounds. Some of these' cattle were put di- rectly into the feed lots, while others were first turned into the stalk fields or on pasture for a few days and then put in the dry lots. The length of the time they were kept varied from 55 to 388 days, the average period being 4^ months. During this time the cattle made a net gain of 270 pounds per head and sold at market at an average weight of 1,213 pounds. The average ration for a 2-year-old steer on the farms visited in Burt County was : Corn 2, 127 pounds (38 bushels) , oil meal 54 pounds, hay 1,546 pounds, silage 75 pounds, stalks J acre, and pasture 18 days. Small quantities of other feeds, as shown in Table 4, were also given. Two-fifths of the com was fed as snapped corn, and one-fifth each as ear, crushed ear, and shelled corn. The hay was mostly alfalfa. Table 4.- -Kind and average qwmtity of feeds fed to a i-year-old steer. Dlstrlot. Com. Oats. Oil meal.i Mo- lasses feed. Gluten. Hay. • Silage. Straw. Stalks. Stover. Pas- ture. BortConnty, Nebr.... Pottawstta m 1 e County, Iowa. Lbs. 2,127 2,626 1,163 8,044 1,749 2,195 Lbs. 8 16 40 Lbs. 54 41 m 129 249 368 Lis. 1.4 Lbs. 36 Lbs. 1,646 1,167 627 425 257 1,241 Lbs. 78 197 2,842 389 Lbs. 329 216 426 181 846 56 Acres. 0.28 .18 .70 .07 .96 .10 Acres. 0.02 .02 .04 .72 .30 .14 Mos. 0.9 .9 2.S Clinton County, Mo.... Saline County, Mo Carroll County, Mo.... 334 3 140 4.7 3.2 3.2 > Including llnaeed-oll meal and cottonseed meaL IOWA. In Pottawattamie County, Iowa, the cattle were purchased on the Omaha market at practically the same time as were the Burt County cattle and were handled in the same general manner except that they were fed a little heavier. Their initial weight was 972 pounds, or 30 pounds more than the Nebraska cattle. They were also sold on the same average date, weighing 1,272 pounds, making about 30 pounds better gain than the Nebraska cattle. The average ration per steer was: Com 2,526 pounds (45 bushels), linseed-oil meal 41 pounds, gluten 35 pounds, hay (mostly alfalfa) 1,167 pounds, silage 197 pounds, straw 216 pounds, stalks 0.2 of an acre, pasture 28 days, and other small amounts of miscellaneous feeds, as shown in Table 4. A little over three-fifths of the com was fed as sheUed corn. The cattle on which records were obtained in Cedar and Washington Counties were mostly bought in the fall, either at Omaha' or Kansas City, at an average weight of 958 pounds (see Table 3), these being the heaviest feeders reported for any of the six districts. There were 76 MEAT-PACKING INDUSTRY. two distinct methods of feeding, which, because of an insuf&cient number of records for separate tabulations, have been included as one group. On some of the farms the cattle, after running in stalk fields for a short tiine, were immediately put in the feed lots and fat- tened as prime beef, being handled in the same manner as the cattle in Burt and Pottawattamie Counties. The cattle on which most of the records were obtained were roughed through the winter on a heavy maintenance ration, in which silage and clover hay were the principal feeds. These cattle were turned on pas- ture as soon as the grass was strong and were allowed to remain there until they were fit for market. They were fed a small amount of corn a few days before they were shipped. On two of the farms visited only 5 bushels of corn was fed per head. The average date of sale for all of the cattle was May 12. They gained 265 poimds per head and weighed 1,223 pounds when sold. The average ration for each steer was: Corn 1,163 pounds (20f bushels), oats 67 pounds, cottonseed meal 111 poimds, timothy and clover hay 627 pounds, silage 2,842 pounds, straw 425 pounds, stalks 0.7 of an acre, and pasture 3 months. MISSOURI. The cattle fattened in Chnton County, Mo., were mostly bought at Kansas City in the fall months, at an average weight of 923 pounds, being a little lighter than those in the previously-mentioned districts, "they were turned on pasture and given about two months fall grazing. Beginning in November or December, and continuing until spring, they were fed shock com(i. e., cut fodder which has not been husked). The farmers aim to feed about a peck of com a day to each steer. Toward spring the best cattle are usually sorted out, given a little additional corn, and shipped to market. The remainder are held over, the corn being discontinued six weeks to two months during the first part of the pasture season, although cottonseed meal ia usually continued. In midsummer they are put on full feed of com which is continued one to three months before the cattle are marketed. The cattle averaged 1,282 poimds at market, a gain of 359 pounds per head. This is equivalent to a daily gain of 1.36 poimds. These cattle in Chnton County were more heavily fed than those in any of the other districts visited, as the feeders aim to produce prime beef. They received 3,044 pounds (54.3 bushels) of com per steer, most of which was fed in the form of fodder. They also received 334 pounds of molasses feed, 129 pounds of cottonseed meal, 16 pounds of oats, 425 pounds of timothy and clover hay, three-fourths of an acre of stover (mostly fed as fodder but reduced to ear corn and stover in the tabulations), and 4.7 months pasture per head, besides small amounts of other feeds. No silage whatever was fed. MEAT-PACKING INDUSTRY. 77 The cattle fattened in Saline County, Mo., were bought in Kansas City, in the counties to the south and east, and in the Ozark Moun- tains. With the exception of those in Carroll County, these were the lightest feeders reported, averaging 901 pounds. They were bought the latest of any of the cattle, the average purchase date being Decem- ber 5. They were kept for an average period of 207 days, and sold in July, weighing 1,176 pounds per head, and were the lightest cattle sold. They made a total gain of 275 pounds per head, or 1.3 pounds daily. As the aim of the Saline County feeders was to produce beef at a minimum cost rather than to produce prime beef, corn was fed moderately. These men figured on making a large part of their gains with silage and pasture. The average ration was com 1,749 pounds (31 biishels), cottonseed meal 249 potmds, oats 40 pounds, hay 257 pounds, silage 2,373 pounds, straw 346 potmds, stalks 1 acre, stover one-third of an acre, and pasture 3.2 months. The two-year-old cattle on which records were obtained in Carroll County, Mo., were mostly purchased locally dxiring the latter part of September, averaging 900 pounds. They were kept for an average period of 200 days, and sold at an average weight of 1,225 pounds, a gain of 325 pounds per head. Table 5. — Items of expense and of credit in finishing a t-y ear-old heef animalfor market. District. Charges. Credits. Burt County, Nebr. rottawattanue Oounty, Iowa BastemlovB Clinton County, Mo Saline County, Mo Carroll Oounty, Mo Average of all 170.88 76.19 81.06 71.80 65.72 64.62 148.36 64.45 48.77 86.94 52.76 60.76 S3. 11 2.46 2.75 4. 8.80 2.43 S2.67 2. 2.79 1.76 1.97 1.90 12.48 2.78 8.32 5.94 SI. 31 1.01 1.07 .78 1.37 .70 S2.04 1.87 2, 2.28 2.66 2.62 S130. 25 141.44 142.75 172.60 131. OS 128. 82 S8.28 9.16 4.42 17.91 8.49 10.47 S2.34 1.64 2.94 .06 .85 .61 S10.62 10.69 7. 17.97 8.84 11.08 tii9.es 130. 75 135. 39 154.63 123.11 116.24 1168 71.94 66.73 8.27 2.35 8.48 1.10 2.30 141. 17 9.70 1.44 11. U 130.03 1 Total. The average gross cost of a steer for the six districts, including ship- ping expenses, was $141.17. The Clinton Coimty cattle were the most expensive, costing $172.60 per head. The CarroU County cattle were the least expensive, averaging $126.32. Deducting credits for pork and manure, the average final cost per head for the six groups at time of sale is $130.03. The average ration per steer was: Com 2,195 pounds (39 bushels), linseed-oil meal 241 pounds, cottonseed meal 127 pounds, molasses feed 140 pounds, timothy and clover hay 1,241 pounds, silage -389 pounds, stover 0.14 acre, stalks 0.1 acre, and pasture 3.2 months. 78 MEAT-PACKING INDUSTRY. THE COST OF FATTENING 2- YEAR-OLD CATTLE. The items of expense considered in the study of the cost of fattening 2-year-olds are initial cost (cost laid down), feed, labor, equipment, interest, miscellaneous charge (including risk, insurance, veterinary charges, and incidental expenses) and marketing. The credits con- sidered were pork and manure. There are a number of minor items of expense that have not been considered, as there was no accurate way of determining how much they amounted to, since they are charges that farmers seldom take into consideration. In the first place, no charge has been made for the farmer's own time as manager. Wherever he has performed direct work on the cattle this has been charged the same as for hired help. Again, no charge has been made for business risk which would cover the losses incurred during unprofitable years, or through inability to feed because of imsatis- factory market conditions. Nor does it take into consideration any losses from the hogs that follow the cattle because of possible epi- demics such as cholera. The various items of expense in this enterprise that were considered are shown in Table 5. The initial cost is the greatest item of expense, constituting 51 per cent of the total gross costs. This varied from $64.52 in Carroll County to $81.06 in eastern Iowa.' The feed biU was the largest expense, amounting to 40 per cent of the total. The average feed costs ($56.73) are very uniform for all districts except Clinton County. For Clinton County the feed bill amounts to $85.94, or 49 per cent of the total gross cost. In this one group the feed cost is greater than the initial cost. In the remaining districts this charge varies from $48.36 in Burt County to $54.45 in Pottawattamie County. Interest, labor, equipment, and the marketing charge each con- stitute approximately 2 per cent of the total cost, averaging $3.48 for interest, $3.27 for labor, $2.35 for equipment, and $2.30 for marketing. The miscellaneous charges amount to 1 per cent. The average pork credit for all six districts is $9.70. This varies from $4.42 in eastern Iowa, where very little corn is fed, to $17.91 in Clinton County, where each steer received 54 bushels of corn, most of which was fed on pasture in the form of fodder. The remain- ing pork credits vary from $828 In Burt Coimty to $10.47 in Carroll County. The credits for manure were $1.44, varying from $0.06 in Clinton County, where the cattle were on pasture the greater part, of the time and where manure was not much valued, to $2.94 ia eastern Iowa, where the manure is fully utilized. ' The eastern Iowa records include a tew droves of cattle that wore Qnished late in the year 1917, A nomo of these were iturobased during the spring of 1917, their Initial cost was greater than that tor the average. MBAT-PAOKINQ INDUSTBT. METHODS OF OBTAINING COSTS. ITEMS OF EXPENSE. 79 Initial cost. — The initial cost is the cost laid down at the feed yard. It includes the purchase price and any additional expenses Buch as freight, commission, etc., that are included in shipping the cattle to the farm. Feed costs. — The kind and quantities of feeds that were fed have already been shown in Table 4. The quantities are based on estimates made by the farmers, or on figures taken directly from books kept by them. The values of these feeds (shown in Table 6) are based on the cost laid down, or if raised on the farm, their value when fed. K outside labor was used in hauling the purchased feed to the feed yard this is included in the cost of the feed at the yard. Hauling done by the regular farm labor is included in the labor charge, as it is usually done during spare time. Feed that was' raised on the farm is priced at what it would have sold for on the farm, at the time of feeding, which is the market value of the product, less tha expense of getting it to the shipping point. Table 6. — Average price of the different feeds given the t-year-old cattle. Dlstiict. Com, per bush- el. Oats, per bush- el. ou meal, tan. Molas- 8ea feed, per ton. Miscel- lane- ous con- cen- trates, per ton. Hay, per ton. Si- lage, ran. Straw, Stalks, per acre. Stover, per acre. Pas- ture, per monfu. Bnrt County, Nebr Pottawattamie Coun^, (0.96 .93 1.83 LU 1.16 .80 (0.52 .12 .65 144.13 41.81 47.69 42.48 40.64 42.44 $26.00 134.67 no. 86 12.73 13.29 9.61 10.76 9.82 S6.2fi 6.08 6.49 '5.'62' 5.00 t2.26 3.94 6.55 3.93 3.26 5.00 tl.88 1.05 1.14 .75 .99 ,.75 te.l8 «.00 8.20 4.08 4.30 4.00 tl.6« L6t 2.PT 1.26 JUnton County, Mol ... . lallno County, Mo Csnoll County, Mm 37.82 89.15 39.27 Average ot all..... 1.04 .58 42.92 37.54 34.67 11.28 6.95 8.68 1.10 4.86 1.T8 The average price of corn was $1.04 per bushel, varying from $0.80 in CarroU County to $1.33 for the cattle in eastern Iowa which were finished in midsummer of 1917. In Carroll County, where only eight records were obtained, it so happened that on all of the farms corn was bought the previous fall at an average price of $0.80 a bushel. This com, if sold at the time of feeding, would have brought $1.06 a bushel. The average value of the hay fed was $11.28 per ton, ranging from $9.61 in Clinton Coimty to $12.73 in Pottawattamie County. Silage was valued at $5.95 per ton. The price was calculated by determining the value of unhusked com per acre and adding to this the cost of putting the com in the silo, and a small charge for the fodder. 80 MEAT-PACKING INDUSTRY. The value placed on pasture is based on the rent rate for the com- munity. When there was no established price this figure was deter- mined by charging 6 per cent on the value of the pasture land. The average monthly rent for pasture is $1.78 per head, this being higher than for the previous years. On a number of the farms the cattle were kept in the pasture fields and fed there during the winter months. When the pasture furnished but little, if any, of the feed during this time no charge has been made. Labor. — The item of labor is made up of the two charges, man labor and horse labor. The man labor has been figured at the rate of 20 cents an hour. This is an average of the estimates made by the farmers in the different districts for the feeding year of 1916-17. It is higher than the estimates of some farmers, but it is also lower than many actually paid. For the cattle sold after midsummer of 1917 this charge is too low, as much of the labor performed on them actually cost from 25 to 30 cents an hour. This charge is, however, higher than the estimates for the previous years, which averaged 15 cents an hour. Horse labor is figured at the rate of 10 cents an hour per horse used. This covers charges for feed, depreciation, interest on the investment, and other general maintenance charges on the horses and harness. This charge is based on estimates made by the farmers who were visited, and also on data secured from other sources by the Office of Farm Management. For the cattle fattened in the fall of 1917 it is too low, as more recent estimates show that this charge now runs from 13 to 15 cents an hour. The average number of hours of man labor per steer is 9.9. This varies from 7 hours in Carroll County to 14 hours in CHnton Coimty. The average number of hours of horse labor per steer was 12.5. This was lowest in Pottawattamie County, being 8 hours, and highest in Chnton Coimty (18 hours), where there was much winter horse labor in hauling fodder to the pasture. Equipment. — The equipment charges were obtained by first getting the inventory value of the equipment used by the cattle on each farm, and then by making a suitable charge against it. The rate charged varies with the type of equipment. In the case of barns, sheds, corncribs, and other buildings (as well as water systems) which are used solely in cattle feeding, a flat rate of 10 per cent is charged against their inventory value. This covers interest on invest- ment, depreciation, taxes, insurance, and general repairs. When only a part of these buildings is used by the cattle a charge is made to cover the proportionate space they utiUze. The charge for yardage is obtained by making a charge against the land used, and also against the fence inclosing it. A flat rate of 6 per cent to cover interest and taxes is made against the inventory MEAT-PACKING INDUSTRY. 81 value of the land. The fence charge for each farm is determined as follows: The annual value of fence is based on its original value divided by the years of its life. To this annual charge is added the farmer's estimate of the annual repairs, plus interest at 5 per cent on the average value of the fence. The average value of the fence is considered to be one-half of its original cost. In getting the annual charge for feed bunks and for hayracks, an estimate was obtained from the farmer as to their initial cost, the length of their life, and annual repairs. It was found that in the case of the bunks the rate for depreciation and repairs was 15 per cent of the 6riginal value. An interest charge of 2^ per cent' was added, mak- ing a total of 17^ per cent to charge against the original value. The charge against the hayracks was made in the same manner, except that the rate used is 15 per cent. Figure 3 is an excellent illustration of the type of building used by Iowa farmers, who feed the cattle under shelter, while figure 4 is a good illustration of an open yard in eastern Nebraska. Interest. — Interest has been charged on the initial cost of the animal in the feed yard and one-half the feed costs. On a few farms, where all of the feed was bought in advance, interest is charged on the entire feed bill. No interest has been charged against labor, unless the farmer actually borrowed money from the bank with which to pay such labor. The majority of the farmers do their own feeding, and under such circumstances an interest charge does not seem equitable. The rate of interest used was based on what the farmers were obliged to pay the banks, or the cattle loan companies. The rate of interest charged in each district is the prevailing one for that particular district, which was usually 7 per cent. Miscellaneous expenses. — The items of expense included under this charge are risk, veterinary expenses, insurance, taxes, and incidental expenses. Risk is figured separately for each farm. As it was impossible to get an accurate value of the animals at the time of death, the initial value is taken for each animal that died. The value of the hide, when saved, is then deducted. The remainder, divided by- the total number of steers sold, gives the risk figure for that drove. As the feed is always obtained on the basis of the total quantity consumed by the drove, the quantity consumed by the animals that die is pro- rated among those sold. The same is true of labor and the other items of expense. While this may not be a true risk figufe, never- theless, when it is considered that the steers marketed must stand the expense of those that died, it is a true cost. The average risk ' The rate of ^ per cent interest against the original cost is used in order to simplify the work, instead of a 6 per cent rate on the average cost (one-half the original cost). 152250°— 20 6 82 MEAT-PACKING INDUSTBT. charge is 33 cents per head, varying from 61 cents in Burt County, where there was a 1 per cent loss, to 5 cents in Clinton County, where there was a loss of one-tenth of 1 per cent. The average number of animals lost for the six districts was one-half of 1 per cent. The veterinary expense includes all charges for veterinary services, drugs, vaccination, and dehorning. An insxn-ance charge is included wherever the cattle were insured against death by fire, lightning, or tornado. This charge averaged for all districts 5 cents per head. Health insurance on cattle was not carried by any of the farmers visited. Whenever taxes were paid on cattle this item is also included. The incidental expenses included a number of items that are directly incurred in the cattle-feeding business. Among these are telephone and telegraph charges, when directly incurred against the cattle, oil and gas for pumping water and grinding feed, dues to asso- ciations when these deal directly with the feeding enterprise, traveling expenses in looking after items of business directly concerned with cattle feeding. All of these incidental charges taken together amount to 22 cents per head for the six districts. Marketing. — This item includes the cost of shipping the cattle to market, and is made up of charges for freight, feed in transit, shippii^ insurance, yardage, feed in yard, commission fees, etc. AJl of the costs under this head are taken directly from the commission firm startements. ITEMS OF CREDIT. From the gross cost of preparing a steer for market credits for pork and manure are deducted. Porlr credit. — The pork credit is based on the farmer's estimate of the amount of pork produced behind each drove of cattle and the farm value of this pork on the date the cattle were shipped. The farm value is the market value less the cost of shipping. If some of the hogs were sold during the feeding period and new ones substituted, the pork for those sold is credited at their farm-sale value. A number of farmers knew the definite number of pigs that were turned in behind the cattle as well as their initial weight. They also knew the number of hogs and their weight when the cattle were sold. On these farms accurate pork credits were obtained. On the majority of farms, however, the hogs are moved around in 'such a manner that no accurate figures as to the amount of porkcan be obtained. Under such circumstances it was necessary to take the farmer's estimate. However, most of the farmers visited had a fairly definite idea of the amount of pork that should be credited to the steers on which records were obtained. In the case of a few farms, where it was impossible to secure reliable estimates, it was assumed that two poimds of pork were produced for each bushel of corn fed to a steer. MEAT-PACKING INDUSTRY. 83 A number of farmers were feeding their cattle more corn than they could consume with the expectation that the hogs would get the corn that was left. As there was no way of prorating this corn between the hogs and the cattle, it has been charged directly against the cattle. While, under such circumstances, the charge against the individual steer may be too high, the credit for the pork will compensate for this when the feeding operation is considered in its entirety. The amoimt of pork produced behind a steer averaged 70 pounds per head (see Table 7), and was greatest in Clinton County (115 pounds) and least in eastern Iowa, where it amounts to only 32 pounds. Table 7. — The porh produced per g-y ear-old steer and per bushel of corn fed to a steer, and the value per pound of the porh sold. District. Pork per Steer. Pork per bushel of com fed. Price of pork per hundred- weight. Bnrt County, Neo... I Pottawattamie County, Iowa Eastern Iowa Clinton County, Mo Saline County, Mo Carroll Coudcy, Mo Average of all Pounds. 68 71 32 lis 65 77 Poimds. 1.8 1.6 1.0 2.2 1.8 1.8 til. 93 12.29 14.08 16.32 16.39 16.36 1.7 13.34 The amount of pork per bushel of corn fed to a steer is very uniform for all districts except Clinton County and eastern Iowa. In Clinton County most of the corn was fed in the form of fodder on pasture and in large quantities. On these farms the hogs naturally got a large quantity of waste corn, so that the amount of pork produced per bushel of com fed was 2.2 pounds. In eastern Iowa there were a number of droves of cattle that did not receive enough corn to justify having hogs behind the cattle. There were also a number of droves where the hogs got very little waste from behind the steers. In this district the amount of pork drops to one pound per bushel of corn fed to a steer. The value of the pork produced behind the cattle is lowest (111.93 per hvmdredweight) in Burt County, where most of the cattle were sold in the winter of 1916-17, before high hog prices began to prevail. In Clinton and Saline Counties, where the cattle were sold in mid- summer of 1917, the average value of pork was 15J cents per pound. The pork credit for Pottawattamie County is slightly higher than for Burt County, although the cattle were handled in the same manner, as two of the droves were marketed in the fall of 1917, when the price of pork was much higher. The average pork credit for the six districts is much higher than normal. The average price for mixed hogs at Chicago for 1917 was 84 MBAT-PACKHiTG INDUSTRY. $15.10 (see fig. 5), which is the highest average price on record, and for 1916, $9.60. These figures are much higher than for the decade of 1906-1915, 17.25 per hundredweight, and higher than for any of the YEAR NUMBER OF DOLLARS 1906 6.25 1907 6.15 1908 5.70 1909 7.25 1910 8.90 1911 6.70 1912 7.60 1913 8.50 PRICE PER HUNDREDWEIGHT 2 4 6 8 10 12 14 1914. 1915 1916 1917 8.30 7.20 9.60 15. 10 FiQ. 5.— Average price of mixed hogs at Chicago, 1906-1917 inclusive. previous 10 years. The price for 1917 is double the average for the 10-year period. Manure credit. — The manure credit is based on the farmer's estimate of the number of loads of manure hauled out and its value MEAT-PACKING INDUSTRY. 85 per load. The amount utilized varied from one-tenth of a load per steer in Clinton County, where the cattle were mostly fed on grass, to 2.6 loads in Burt County. The average value of a load of manure varied from $1.29 in eastern Iowa, where the manure was most highly prized, to 61 cents in Clinton County. The great majority of farmers valued manure at $1 per load in the yard, although estimates ranged from as high as $2 down to the mere cost of getting the manure on the land. ANALYSIS OF THE PROFITS REALIZED. As previously stated, these cattle proved unusually remunerative, making an average profit above expenses (see Table 8) of $12.32 per head. Table 8. — The profits made per head in fattening 2-year-old cattle. District. Final cost. Sale price. Profit with pork. Profit without port Loss without pork. Burt County, Nebr $119.63 130.75 135. 39 154.63 123.11 115.24 $128.18 143.08 144.05 168.84 139.04 139.00 $8.55 12.33 8.66 14.21 15.93 23.76 $0.27 3.18 4.24 Eastern Iowa r.lintnTl rniinty IVfn $3 70 Saline County, Mo 7.44 13.29 130.03 142.35 12.32 2.62 The profit per steer in Carroll County was $23.76. This abnor- mally large profit is due to the fact that the corn fed was bought the year before, and is charged to the cattle at but 80 cents a bushel. Had this com been charged at its actual sale value at the time it was fed ($1.06) the profit on these cattle would have been reduced to $13.26 per head, which is about the same as for the other groups. The next greater profit ($15.93) is for Saline County, where the bulk of cattle were fed in as economical a manner as possible. The lowest profit is in Burt Cotmty, averaging $8.55. The greater part of this profit is due to the pork credit, which, as pireviously explained, is imusually high. Deducting the credit for pork, the average profit per steer is $2.62. In Clinton County, where a very large quantity of com was fed, the average loss, when the credit for pork is deducted, is $3.70 per steer. In the remaining districts the cattle realized a profit which varied from 27 cents per steer in Burt County to $13.29 in Carroll County. Assuming the price of com to have been at its market value, the profit without pork on the Carroll County cattle would have been $2.79, or about the same as the average for the six districts. The margin of profit, or spread, between the initial cost and the selling price per hundredweight, for the six districts, is $3.89. This margin varied from $3.11 in Burt County (see Table 9), where the cattle were sold comparatively early, to $5.45 in Clinton County, where most of the cattle were held until July. 86 MEAT-PACKING IXPrSTRY. Table 9.— The necessary margin required and the margin obtained for the 2-year-oU fattening cattle. Burt County, Nebr Pottawattamie County, Iowa, Eastern Iowa Clinton County, Mo Saline County, Mo Carroll County, Mo Average of all Initial cost per hundred- weight. S7.46 7.84 8.46 7.72 7.29 7.17 7.67 Final cost per hundred- weight. $9.86 10.28 11.07 12.06 10.50 9.40 10.56 Sale g rice per undred- weight. $10.57 11.25 11.78 13.17 11.86 11.36 11.56 margin per hundred- weight. $2.40 2.44 2.61 4.34 3.21 2.23 2.89 Margin obtained per hundred- weight. $3.11 3.41 3.32 5.46 4.67 4.18 Because of unusual economic conditions this margin was mucli greater than normal in 1917. The difference between the arerage cost of feeder cattle and the sale price of beef animals at Chicago was $4.40 per hundredweight (see fig. 6). This margin between the price of feeder cattle and of fat cattle for the previous decade of 1906-1915 was $2, or a little less than one-half the margin for 1917. The greatest margin for any one year during this decade was in 1912, when there was a spread of S3 a hundredweight between feeder cattle and fat cattle. The necessary margin that must be sectired if the cattle were to pay their bare cost of fattening was $2.89. This necessary margin (which is the difference between the initial and the final cost per hundred- weight) is about 80 cents more than the spread obtained for the 10-year period. This means that the increased expenses in fattening these cattle made it necessary for the farmer to receive a considerably higher margin than usual, even when the pork obtained from behiad the cattle ^old for a much higher price than usual. The cost per pound of gain for the six districts is shown in Table 10. Table 10. — Cost of a pound of gain in fattening ^-year-old steers, xoith and withmU park. District. Pounds gained. Cost of fattening. Cost per pound of gain. With pork. Without pork. With pork. Without, pork. ' Burt County, Nebr 270 300 265 359 271 325 $49.25 54.56 54.33 83.33 57.39 50.72 $57.63 63.71 58.-7S 101.24 65.88 61.19 $0,182 .182 .205 .232 .212 .156 Pottawattamie County, Iowa Eastern Iowa. . -. Clinton Coimty, Mo Saline County, Mo .282 Carroll County, Mo .243 .188 Average of all 293 58.09 67.79 .198 .231 The average cost is 19.8 cents a pound. Deducting the credit for pork, this cost is increased to 23.1 cents a pound. The lowest cost MEAT-PACKING INDUSTRY. 87 per pound of gain, not considering pork, was in Carroll County, 18.8 cents. With com at $1.06, tMs cost would have been 21.9 cents, or Fig. 6.— Margin between cost of feeders and price of tat cattle at CUoago, 1906-1917, Inclusive. about the same as for Nebraska and Iowa. The greatest cost for a pound of pork, deducting pork credits, is 28.2 cents for Clinton County. 88 MEAT-PACKING liXDrSTRT. FATTENING YEARLING CATTLE. Records were obtained on 47 droves of yearlings. These were alT bought in the fall or early winter of 1916-17 at an average weight of 691 pounds (see Table 11) and were sold the following spring or summer at an average weight of 1,037 pounds. NEBHASKA. The yearling cattle that were fattened in Burt County, Nebr., were mostly purchased in the latter part of October, at an average weight of 709 pounds. They were run on pasture and stalk fields for a short time before being placed in the feed lot. They were kept for an average period of 158 days, during which time they gained 293 pounds, weighing 1,002 poxmds at market. Table 11. — The average purchase and sales dates and gains made for the yearling steers. Disl.rict. Num- ber of droves. Aver- age num- ber in drovB. Pur- chase date. Sale date. Days kept. Initial weight per hnd. Final weigtit per head. Gain per head. Daily gain per head. Burt County, Nebr Pottawattamie County, 13 13 9 12 28 36 23 41 Oct. 25 Nov. 13 Aug. 25 Oct. 20 Apr. 3 Msy 26 June 18 July 1 168 193 293 251 Zhs. 709 708 668 677 Lbs. 1,002 1,071 1,039 1,037 Lbs. 293 383 381 360 Lbs. 1.9 1.9 Eastern Iowa 1.3 Missouri 1.4 Average of all '47 33 Oct. 16 May 24 21S 691 1,037 346 1.0 The average ration per yearling in Burt Coranty (see Table 12) is: Corn 2,410 pounds (43 bushels), oats 28 pounds, linsee(J-oil meal 10 pounds, hay (mostly alfalfa) 1,414 pounds, straw 388 pounds, stalks 0.3 acre, and pasture 16, days. Tabie 12. — The kind and average quantity of feed fed to a yearling steer. Locality. Com. Oats. Oil meal.i Mo- lasses feed. Glu- ten. Hay. SItoge. Straw. Stalks. Stover. Pas- ture. Burt County, Nebr Pottawattamie County, Lbs. 2,410 2,664 1,124 1,814 Lbs. 28 3 86 34 Lbs. 10 W 151 160 Lbs. Lbs. Lbs. 1,414 1,487 1,070 1,040 JJa. 86S 2,193 368 Lbs. 388 309 S9B 63 Acres. 0.30 .04 1.25 r .80 Acra. 0.06 .11 .29 Mos. 6 94 8 4.2 196 2 4.8 Average of all 2,064 24 75 76 8 1,273 760 381 .64 .U 2.4 ' Including linseed-oil meal and cottonseed meal. These cattle were mostly purchased at Omaha during the latter part of October and November and were sold late in May, being kept an average period of 193 days. Most of them were run on pasture MEAT-PACKING I]S^DUSTRT. 89 and stalks until about Christmas, at which time they were put in the feed lots, where th'ey remained until sold. The imtial weight, 708 pounds, is practically the same as for Burt County. The final weight (1,071 pounds) is 69 pounds greater than for Burt County, chieflx- due to the feeding period being 25 days longer. The total gain is 363 pounds, or 1.9 pounds daily. The average ration per yearling is: Com 2,564 pounds (46 btisheJs), oil mieal 20 pounds, molasses feed 94 pounds, hay (mostly alfalfa) 1,487 pounds, silage 866 poimds, straw 309 pounds, pasture 22 days, and small amoimts of other feeds as shown in Table 12. lawA. The yearlings fattened in eastern Iowa were mostly bought during the latter part of August or early in September, and were kept for an average period of nearly 10 months. Their initial weight is 658 pounds per head, the lightest for the four groups. The final weight is 1,039 pounds per head, a total gain of 381 pounds per head, or 1..] pounds daily. The average ration fed to a yearling steer is: Com 1,124 pounds (20 bushels), oats 85 pounds, cottonseed-oil meal 151 pounds, timothy and clover hay 1^070. pounds, silage 2,193 pounds, straw 896 pounds, stalks 1.25 acres, stover 0.11 acre, pasture 4.2 months. MISSOURI. As records were obtained! from only 12; droves of yeairlings in Mis- souri, tih.e three districts in tihat State are combined in this group. The average puarchase date is October 20 and the average sale date July 1, the steers having been kept for a peaiod of 251 days. Their initial weight is 677 pounds per head, while the final weight is 1,037 pounds, a gain of 360 pounds, or 1.4 pounds daily. The average ration fed to each yearling is: Com 1,814 pounds (32^ bushels), oats 34 pounds, cottonseed-oil meal 150 pounds, molasses feed 1§5 pounds, hay 1,040 pounds, silage 368 pounds, straw 63 pounds, stalks Q.8 acre, stover 0.3 acre, pasture 4.8 months. The com was mostly fed as fodder, which in the tabulation has been reduced to ear corn and stover. THE COST OF FATTENING A TEARUNG. The total cost of finishing a yearling for market is 1119.49 for all districts visited. This cost is very uniform, rangrag from $112.15 (see Table 13-) in Missouri to 1130.20 in Pottawattamie County, Iowa. The feed cost is the greatest item of expense, amounting to $56.05, or 47 per csnt of the total cost. The initial cost is second, amounting to $51.13, or 43 per cent of the total. These two items make up approximately 90 per cent of the total coat of finishing a yearhng for market. Interest ($3.26) amoimts to 3 per cent of the total cost, 90 MEAT-PACKING INDUSTRY. while labor, equipment, and marketing each amount to 2 per cent. The miscellaneous charges CS1.38) make a httle over 1 per cent of the total. Table 13. — Items of expense and of credit in finishing a yearling for marhet. District. Charges. Credit. Burt County, Nebr Pottawattamie County, Iowa Eastern Iowa Missouri Average of all (52.36 53.65 49.60 162.04 64.31 54.67 52.46 S2.64 2.97 3.32 3.47 t2.32 2.74 4.94 1.83 S2.61 3.24 4.12 3.48 $2.06 1.46 1.02 ti.go 1, 1.64 2.03 J115. 72 130.20 119. 21 112. 16 111. 79 12.28 3.90 12.02 $2.61 S14.40 14.10 8.29 12.34 $101, 32 116. 10 110.92 99.81 66.05 3.05 2.76 1.38 10.48 12.63 106.86 1 Total. The pork credits average $10.48, and the credits for manure $2.15. The net cost of the steers at market is $106.86, this cost varying from 199.81 for the Missouri yearlings to $116.10 for those in Pottawat- tamie County. The various items of expense were figured in the same manner as for the 2-year-olds. The prices for the feeds, as given by the farmers, (shown in Table 14) are but little different from those for the 2-year- olds. The average price of corn was $1.07 per bushel, while hay was valued at $11.43 per ton. Silage was valued at $6.58 per ton and pastm-age at $1.45 per month. Table 14. — Average price of the different feeds given the yearling steers. Locality. Com per bushel. Oats per bushel. Oil meal per ton.i Mo- lasses feed per ton. Glu- ten Hay fon. Si- lage per ton. Straw per ton. Stalks per ton. Stover per acre. Pas- ture per month. Burt County Nebr $0.96 1.04 1.24 1.06 $0.48 1.70 .48 .68 $42.67 42.50 47.57 42.10 $10.66 13.96 11.65 8.42 $6.63 6.83 6.00 $1.90 3.86 3.56 3.00 $1.00 1.00 1.09 .96 $5.12 7. SO 3.18 $1.50 Pottawattamie County, Iowa $44.00 $45.76 1.63 1.51 Missouri 35.91 40.00 1.34 Average of all... 1.07 .64 44.29 37.94 42.88 11.43 6.58 3.23 1.02 4.76 1.45 ' Including linseed-oil meal and cottonseed meal. ! Fed December, 1917. The number of hours of man labor expended in caring for a yearling is a little over 10, this being very uniform in all districts. There was also an average of 10 hours of horse labor per steer. In Nebraska, where the steers were dry-lot fed, there was a cost of only 7 hours of horse labor per steer; while in Missouri, where corn fodder was the principal feed, there was an average of 13 horse hours per steer. MEAT-PACKING INDUSTRY. 91 Table 15.— The ■pork produced per yearling, and per bushel of com fed to a yearling, and the value of the park sold. Pork per yearliig. Pork per bushel of com. Value of pork per hundred- weight. Burt County, Nebr Pottawattamie County, Iowa, Kastemlowa MSasouii Average Powada. Pounds. 1.91 1.84 .72 2.72 1.8S $13. 10 14.31 14.70 14. S2 14.13 The amount of pork produced behind the yearlings, 77 pounds per steer (see Table 15), is very nearly as large as for the 2-year-old cattle. It varies from 93 pounds per steer in Burt County to 27 pounds in eastern Iowa. The pork per bushel of corn fed to a year- ling (1.88 pounds) runs higher than for the 2-year-old cattle. This is partly due to the fact that some of the yearlings receive more com than they could readily consume, getting nearly as much grain as the 2-year-olds, and partly to the fact that many of these cattle were fattened on pasture. The pork per bushel of corn fed to a yearling varies from 2.7 pounds in Missouri to seveij-tenths of a pounds in eastern Iowa. The average value of a pound of pork produced behind a yearling was 14 cents. It was lowest in Burt County (13 cents per pound) , as the cattle there were sold the earliest. The price of pork for the yearlings in eastern Iowa and Missouri is very nearly the same. The manure credit, $2.15, is about 70 cents more than for the 2-year-old8, because of the long period the cattle were kept in the feed yards. There was an average of two loads produced per steer. ANALYSIS OF THE PROFITS REALIZED. The average profit on all of the yearlings is $8.63 (see Table 16), varying from $7.98 in Burt County to $10.70 in Missouri. Table 16. — Profits and losses in fattening a yearling steer for rmrhet. District. Buit Comity, Nebr Fottawattainle Coonty, Iowa. Kastemlowa Missouri Average of all Final cost. tlOl. 32 116. 10 110. 92 99.81 106.36 Bale price. S109. 30 126. 59 116.46 110. 51 lie. 49 Profit with pork. 17.98 9.49 6.64 10.70 8.63 Profit without pork. SI. 64 Loss without pork. S3. 81 2.79 This is about $4 per head less than the profit obtained on the 2-year-olds. When the credit for pork is deducted, the eastern Iowa yearlings are the only ones to show a profit ($1.64 a head); 92 MEAT-PACKING INDUSTKY. for the other three districts the loss ranges from $3.81 for Xebraska to SI. 32 for Missouri. The average loss per steer for the four dis- tricts when the credit for pork is deducted is $1.85. The margin of profit, or spread, is $3.74 (see Table 17), or about 16 cents less than for the 2-year-old steers. The necessary margin of profit is $2.91, varying from $2.49 in Missouri to $3.26 in Potta- wattamie County, Iowa. Table 17.— The necessary margin and the margin obtained in fattening yearling cattle for market. District. Initial cost per hundied- welght. Final cost per liunmed' weight. Sale price per hundred- weight. Neces- sary nuir^. Uargin ohtained. Burt County, Nehr Pottawattamie County, Iowa, EafJtern Iowa l^souri Average of aU $7.38 7.58 7.62 7.13 tlO. 11 10.84 10.68 110. 91 11.73 11.21 10.66 $3.78 S.26 3.16 2.49 S3. S3 4. IS 3.53 7.40 10.81 11.14 3.91 3.74 The cost per pound of gain (see Table 18) is 16.1 cents where the pork credit is included. The cost is very uniform for the Nebraska and Iowa districts. In Missouri the cost is 14.3 cents. Deducting the pork credit, the average cost of a pound of gain for the four dis- tricts is $0.03 greater, or 19.1 cents. This cost ranges from 17.7 cents in Missouri to 20.8 cents in Burt County. Tablb 18. — Cost of a pound of gain in fattening yearling cattle viith and vnthout pork. Founds gained. Cost of ftittening. With pork. Without pork. Cost per pound of gam. With pork. Without pork. Burt County, Nebr Pottawattamie County, Iowa, Eastemlowa Missouri , Average of ail 363 381 360 $48.97 62.46 61.42 51.56 $60.76 74.73 65.82 63.87 $0,167 .ITS :1s $0,208 .206 .171 .177 55.73 66.21 .161 ,191 FINISHING FEEDER CALVES AS BABY BEEF. Records were obtained on 33 droves of calves that were purchased at market or from adjoining farms, and were finished as baby beeves. These calves were mostly purchased shortly after they were weaned, or in November and December, at which time they averaged in weight 452 pounds (see Table 19). They were kept for an average period of 212 days, during which time they made a gain of 346 pounds per head, or 1.6 pounds daily. MEAT-PACKING INDUSTRY. 93 Table 19. — Purchase and sale dates and gains made hy hahy heeves. LocaUtr. Droves. Num- herin drove. Purchase date. Sales date. Days kept. Initial weight per head. Filial weight per head. Gain per head. Daily gain jior head. NebraaliB 15 10 S 30 2S 54 Nov. 24 Dec. 18 Nov. 21 May 26 June 15 Sept. 28 181 187 807 Poundt. 472 461 404 Poundt. 774 801 841 Pounds. 302 340 437 Pounds 1.7 1.8 1.4 Missouri Average of all 133 34 Nov. 30 July 3 212 452 798 346 1.6 1 Total. NEBRASKA. The Burt County calves were purchased late in November at an average^ weight of 472 pounds. They were mostly fattened during the winter months and were sold late in May, weighing 774 poimds per head. They gained 302 pounds per head, or 1.7 pounds daily. The average ration for each baby-beef animal (see Table 20) is: Com 1,675 poimds (30 bushels), oats 353 pounds, linseed-oU meal 19 pounds, alfalfa hay 1,491 pounds, and straw 169 pounds. Table 20. — Kind and average quantity of feed fed to a baby-beef animal. LocaUty. Corn. Oats. Oil meal.i Mo- las- ses feed. Mis- cella- neous con- cen- trates. Hay. Si- lage. Straw. Stalks. Stover. Pas- ture. Lbs. 1,676 1,795 1,614 Lhs. 363 98 316 Lbs. 19 136 394 Lbs. Lbs. Lbs. 1,491 1,197 552 Lbs. "ai' 569 Lbs. 169 169 104 Acre. Acre. Monlli. 0.1 98 110 ■"49' 0.33 .10 6.63 .04 Average oi all 1,669 267 145 56 12 1,174 263 153 .13 .02 l.-l 1 Including linseed-oil meal and cottonseed meal. IOWA. As only 10 records were obtained in Iowa, 7 of which were from Pottawattamie County, they are all included in one group. The calves were mostly purchased in November (the average purchase date being Nov. 8) at an average weight of 461 pounds. They vv'ere kept a httle over six months, during which time they gained 340 pounds per head, or 1.8 pounds daily. The average ration per calf is: Corn 1,765 poimds (31.5 bushels), oats 98 pounds, hnseed-oil meal 62 pounds, cottonseed meal 71 pounds, hay 1,197 pounds, silage 414 pounds, straw 169 pound-, and small amounts of other feeds as shown in Table 20. 94 MBAT-PAOKING INDUSTRY. MISSOURI. The eight records obtained on baby-beef animals in Missouri were mostly from Carroll County. The calves were bought approximately at the same time as those in Nebraska and Iowa at an average weight of 404 pounds. They were kept for a little over 10 months, during which time they gained 437 pounds per head, weighing 841 pounds at market. The average ration for these calves is: Corn 1,614 pounds (29 bushels), oats 316 pounds, cottonseed meal 285 pounds, linseed-oil meal 109 pounds, molasses feed 109 pounds, hay 552 pounds, silage 569 pounds, bran 13 pounds, shorts 24 pounds, and hominy feed 12 pounds. They were also run on pasture for a period of five months in the summer, being sold from pasture in the latter part of Sep- tember. COST OF FATTENING. The various costs and credits in finishing baby-beef animals for market are shown in Table 21. The average gross cost of the calves when fat is $99.04. The feed cost (S50.45) is the heaviest item of expense, making 51 per cent of the gross cost. In this group the initial cost, which averaged 137.78, was only 38 per cent of the total. Labor and interest each amounts to 3 per cent, while equipment and marketing each amounts to 2 per cent of the total charge. Table 21. — Items of expense and of credit in finishing a baby-beef animal for marhet. Num- ber of droves. Charges. Oross oost. Credits. District. Ini- tial cost. Feed cost. La- bor. Equip- ment. In- ter- est. Ms- cella- neous. Mar- ket- ing. Pork. Ma- nure. To- tal. Net cost. Nebraska Iowa IS 10 8 J40.16 37.48 33.73 {46.10 52.24 56.40 J3.45 2.61 3.35 $2.44 2.10 1.75 (2.32 2.12 3.54 to. 84 .62 .88 $1.75 2.06 3.04 $97.06 99.13 102.69 S8.U 7.07 5.64 11.60 1.65 .44 J7.94 8.62 6.98 (89.19 90.51 Missouri 96.71 Average of all. •33 37.78 50.45 3.14 2.16 2.53 .83 2.16 99.04 6.41 1.26 7.67 91.37 1 Total. The average pork credit is $6.41, with but little variation for the three States, while the manure credit is $1.26. Deducting the total credits ($7.67) we have $91.37 as the cost of the calves at market. These costs have been worked up in the same manner as those for the two preceding groups. The feed costs, which are shown in Table 22, are very nearly the same as those for the yearling and 2-year-old cattle. / MEAT-PACKING INDUSTRY. 95 Table 22. — The average farm value of the different feeds given the baby-beef animals. I.n(ia1lty. Com, per bushel. Oats, per bushel. Oil meal, per ton.' Mo- las- ses feed, fen. Mis- cella- neous con- cen- trates, per ton. Hay, ton. Si- lage, Straw, ton. Stalks, per acre. Stover. per acre. Pas- ture, per month. Nebraska J1.12 1.14 1.12 $0.48 .52 .50 $44.29 44.83 42.24 $10.50 11.70 8.65 $6."i2' 5.00 $2.00 3.38 5.36 $2 22 Iowa - $38. 17 43.50 $46." 66' $0.92 .50 S7.25 4.00 99 jligsouri 85 Average of all... 1.13 .49 43.73 40.84 40.60 10.43 5.45 3.66 .82 6.60 1.00 1 Including linseed-oil meal and cottonseed meal. Corn is valued at $1.13, as against $1.04 for the 2-year-old cattle and $1.07 for the yearlings, this difference being largely due to the calves being held longer before marketing. Silage, valued at $5.45 per ton, is much cheaper than in the other gr9ups. This difference in price is due to the fact that silage in Carroll County was valued at only $5 a ton, this figure being lower than for the other districts. The silage fed the Iowa calves was given approximately the same price as for the other two classes of cattle. Hay is valued at $10.43, and for the same reason is cheaper than that fed in the other groups. Labor shows an average of 11 hours of man labor and 10 hours of horse labor. The amount of pork produced behind the calves, 45 pounds per baby- beef animal, is naturally much less than for the yearlings and 2-year- olds. The pounds of pork per bushel of corn fed to a calf ranged from 0.53 poimda in Iowa to 1.4 in Nebraska. The average value of pork per pound was 13,2 cents per pound in Missouri, and 14.5 cents in Iowa. Table 23. — Porh produced per baby-beef animal and per bushel of com fed to a baby beef, and the value per pound of the pork sold. District Founds of pork per steer. Poimds of pork bushel of com fed. Price of pork per hundred- weight. Burt County, N«br 45 48 43 1.39 1.30 .63 $14.35 Iowa... ...!.',.,,.,.„.. 14.53 Missouri 13.21 Av*IBgeofft]l ... , 46 1.14 14.14 ANALYSIS OF THE PROFITS MADE. The profit on the calves for all three States (See Table 24) averages $2.05. This varied from a profit of 8 cents in Burt Coimty to $5.77 in Iowa. When the credits for pork are deducted, all of the calves show a loss, the average loss being $1.40 in Iowa, $1.43 in Missouri, and $6.36 in Nebraska. 96 JIEAT-PACKING INDUSTRY. Table 2i.— Profits and losses in fattening a baly-beef animal. Final cost. Sale price. Profit with pork. Profit without pork. Loss without pork. SS9. 12 90.51 96.71 S89.20 96.28 97.81 SO. 08 5.77 1.10 S6.36 1.40 1.44 91.37 93.42 2.05 4.36 The lower profits obtained for the baby beeves, as compared with the yearlings and 2-year-old cattle, is partly due to the pork credits being much lower, and partly to the fact that, while they needed a slightly larger margin between the buying and selling price than the other cattle, the margin actually obtained was 41 cents per hundred- weight less than for the yearlings and 56 cents per hundredweight less than for the 2-year-olds. The necessary margin for all the calves is $3.08. Table 25. — The necessary margin and the margin obtained in fattening baby-beef animals. Initial cost per hundred- weight. Final ■ cost per hundred- weight. Sale price per hundred- weight. Neces- sary margin. Margin obtained. Burt County, Nebr. Iowa Missouri Average of all. $8.61 8.14 8.35 $11. 51 11.26 11.60 Sll. 52 11.98 11.63 $3.00 3.12 3.15 $3.01 3.84 3.28 S.36 The cost of a pound of gain (See Table 26) is 15.4 cents, being 4.4 cents less than for the 2 -year-old cattle, and 0.7 of a c^ent less than for the yearlings. If the credit for pork is deducted, the cost of a pound of gain becomes slightly greater, varying from 15.7 cents per pomid in Missouri to 18.4 cents in Nebraska. Table 26. — Cost of a pound of gain in fattening baby-beef animals, with and without porh. Pounds gained. Cost of fattening. Cost per pound 01 gain. States. With pork credit. Without pork credit. With pork credit. Withpiii- porlc ■" credit. 302 343 437 $48.96 53.03 62.98 $55.40 60.10 68.52 $0,162 .158 .144 lj..'a 175 Missouri... . 157 AverageofaU. 347 54.59 60.00 .164 '173 ' -^^ MEAT-PACKING INDTJSTEY, 97 FINISHING CALVES AS BABY BEEF ON FARMS WHERE THEY ARE RAISED. Records have been obtained for three successive years on the cost of finishing baby-beef animals by Corn Belt farmers who make a business of finishing calves of their own raising. One hmidred and twenty-four such records, embracing 4,004 calves, were obtained during the years 1914-1916 in Iowa, northern Missouri, eastern Kansas, eastern Ne- braska, and in Hancock County, 111. (near the southeastern corner of Iowa). A severe drought prevailed over a considerable portion of the southern half of the Corn Belt in the summer of 1913. This drought was especially severe in Missouri and Kansas, where it destroyed much of the corn and greatly shortened the supply of forage. Because of the shortage of feed there was very little finishing of cattle in these States in the winter of 1913-14, so that there were no baby-beef records from Kansas and only two from Missouri for that year. In these parts of Nebraska, Iowa, and Illinois, where the baby-beef records were taken, the drought of 1913 did not seriously affect feeding operations, though there was a slight shortage of rough feeds. The summer of 1914 was much more favorable; although it was unusually dry and hot and corn suffered severely in portions of . southwestern Iowa and southeastern Nebraska. From a feeding standpoint the season of 1914-15 can be considered as normal. The summer of 1915, on the other hand, was unusually wet, while an early frost damaged much of the corn, especially in northern Iowa and Nebraska. A number of farmers visited, who made a practice of fattening their calves as baby beef, foimd it necessary to hold these calves over for another year, as there was not enough hard corn to fatten them properly. A little over one-half of the records (see Table 27) were taken in Iowa. Many of the Iowa farmers who have experienced difficulty in purchasing steers of good quality at a price that they felt would leave them any margin of profit have taken up the practice of main- taining breeding herds for the raising of their own feeders. The farms visited were widely distributed over the State, although the larger number of records were taken in the southwestern part. They were typical of the better class of Iowa farms where stock raising or finishing is combined with grain farming, except that they were generally larger than the average, and had a proportionately larger acreage in pasture. They averaged 337 acres, of which 114 acres were in pasture. It is noticeable that only two of the records were from tenant farmers.' The average tenant does not have sufficient ' One of tbese men was operating a large farm as a tenant for the first two years of the study. By the beginning of the third year this man had moved on to his own farm. 152250°— 20 7 98 MEAT-PACKING INDTJSTBl. capital with which to follow this type of business. An average of 32 calves were fattened on each farm. TAB.B 27. -Size of farm, visited, acreage in pasture, and number Sea Cost of rattening Cattle, Fart II: A Five- Year Study of the Cost ot finishing Cuttle in lilinols. 120 MEAT-PACKING INDUSTRY. price was placed on the steers, approximating as nearly as could be estimated the market quotations for animals of similar quality and condition on that date. A year's business, as taken, included the costs expended on all cattle fed. These figures were compiled and reduced to the average cost of each steer sold. In this study the cost of the animal laid down at the farm was used as the initial value. No detailed study of the incost of the feeder was made, owing to the inadequate data and the widely varying methods of purchasing feeders. The cost of the feeder delivered at the farm is made up of the price paid for the feeder and all necessary expenses in getting this animal to the farm. The sales price, however, is the price received for the steer at market. The cost of marketing, since it is paid by the farmer, is considered a necessary cost of finishing. The margin is considered to be the, difference between the cost laid down and the gross sale price received at market for the finished animal. The necessary margin is the difference between the cost laid down and the net cost of the steer after being fattened and delivered to market, that is, the margin necessary to have simply met the costs while in the feeder's hands. As the books examined in this inquiry were confiaed entirely to classification of income and expenditure, with no attempt at cost accounting, the cash cost of all feed purchased for the purpose of feeding, if actually consumed within the fiscal year, was used as the feed charge, regardless of what its market price might have been the day or month it was consumed. As a matter of fact, the contracting for feed months before the feed lots were filled was considered by the majority of feeders visited to be one of the requlBites of the feeding business. Thus, if It was possible to save on feed cost by contracting ahead of production the steer was allowed the saving, and the feed charged to it at actual con- tract and purohase price. SUMMARY OF COSTS. The various costs in fattening a steer for market, as well as the credit that may be obtained, are shown for the three States and for Illinois in Table 3. MEAT-PACKING INDUSTRY. 121 Table 8. — Average five-y^r cott and'prcfMt infinidiing a steerinfoiicr Corn-Belt States,^ 19JS £hrottgM9J7. Itenu. lUlnota. Uluomi. Kansas. Nebraska. Average. Cost lalfl down feed Labor Eqalpment. Interest Bisk Genera! farm expense.. Veterinary tnsorance Taxes Inddentel AdmlnlstratlDD. . .. Marketing 40.60 3.04 .27 2.32 .63 oi.ae 2.e6 156. S» S».1S 1.91 .84 1.60 .16 .TO .04 .10 .13 .83 -U 172.04 4i.e6 1.60 i.h 2.88 .01 .20 «6B. 19 88.04 2.Q4 2.- 3.0: .21 8.94 .04 .10 1.11 .80 2.39 3.14 S67.08 87.34 8.16 166 t.ii .39 1.79 Gross cost. Credlti 122. 46 10.79 126.16 4.68 119. 8» 7.60 116.40 6.87 Net cost. Bales prloe 111.67 116.31 88.97 gl.23 7.81 1U.88 110.62 108. 68 109.88 Profit. Loss. . 8.64 Margin Neceffisiy margin . 2.16 1.87 4.91 L82 1.79 6.68 2.60 3.01 2.03 3.17 2.00 1.96 ! stated, the costs discussed and Incloded in tlie tables are for one steer dining tbe 1 Unless othenri entile fime on leed o The Illinois figures (see Cost ol Fattening Cattle, Part 11) which are included in this table tor compari- son 'Wifiiithe other Stains w«re not Itend^ea tn the-expensee inchided In "Oetoeral leawa expense." For the other three States veterinary charges, insurance, taxes, inoidental expenses, and administration charges are combined to maisB b general farm tx^sa^ camparabls to that of nimols. MISSOURI. It was impossible in siiinmariziiig tiie Missouri figures to carry all the farms throughi for the five years. This fact is reflected especially in the cost of the feeder steers laid down on the farm, figures for 1916 being obtainable from Carroll County only. (See Appendix, Table 11.) During the first four years the cost of the feeder animals increased from an average of $61.37 to $61.50. In 1916 the CarroU County feeders managed to lay in Uieir cattle for $49.82 a head. The average of the five years, oonaldering the year 1916, was $56.39. Although the cost of the steer varied widely from year to year, the cost of the feed fed to each steer throughout the feeding period increased quite steadily from $20.41 in 1912 to $37.63 in 1916, or an average cost over the five years of $28. 15. The average marketing cost was $3.39, labor $1.91, interest $1.60, and all other costs $1.70, making the gross cost of the steer $93.14. The cost of marketing the "Missouri steers included in this report is higher than the majority of feeders in this State would bear, due tp the practice of the feeders whose books were examined of shippiiig a large number of their finished steers to Chicago rather than to nearer markets. The feeding year 1914 was an exceptionally unprofitable one for the Missouri feeder, his steers costing $65.34, which was about $12 more than in the previous years, and his feeds about $10 a head more 122 MEAT-PACKING INDUSTKY. than he had been accustomed to paying, although he did not keep them on feed as long as usual. But for the fact that the steers fed in 1916 were purchased from farms in the immediate vicinity, and that it was possible to buy them for $10 less per head than animals of similar quality were selling for at the feeder markets, there would have been no profit this year in feeding. During the four years, 1912 through 1915, which were so unprofitable, the finished steer was unable to recover at market one-half of the margin necessary to pay for his feed and handling. The credits for pork produced by hogs following, and the manure recovered, averaged $4.26 per steer, making the net cost of the animal at market $88.88. The average gross selling price received for a steer during the five years was $83.97, resulting in a loss of $4.91 per head. (See Table 3.) KANSAS. The price of the steer in Kansas fluctuated considerably from year to year (see Appendix, Table 12), resulting in a five-year average cost of $72.04. With the exception of the 1915-16 season, when only $35.66 was expended, the feed cost increased from $32.97 in 1912-13 to $56.37 in 1916-17, with a five-year average of $42.56. Interest charge was $2.93, equipment $2.90, marketing $2.83, labor $1.60, and all other costs $1.30, makiug a total gross cost of $126.16. The hogs and manure brought a credit of $4.93 to the average steer, making the net cost at market $121.23. This average steer brought $127.81, thus making an average profit for the five years of $6.58. (See Table 3.) Three out of the five years on the Kansas farms studied proved to be sufficiently remunerative to wipe out the losses sustained in the 1913-14 and 1914-15 seasons. It is very doubtful if the average run of feeders in this State will show the same profit for the five years. Considering that the feeders included in the Kansas report are some- what advantageously situated, the losses sustained in 1918—14 and 1914-16 carry added weight. This loss can be attributed to the poor finished-cattle market and to the decided crop failures of 1918 and 1914. NEBRASKA. Feeder cattle were put into the lot in Nebraska during the five years at a very uniform cost, the average figxu-e being $68.19 per head. Feed costs show an advance from $29.71 in 1912-18 to $46.44 in 1916-17, an average of $38.04 throughout the five years. (Appendix, Table 13.) The high cost of feed in 1914-15 can be attributed to the general com failures in 1913 and 1914, and to the fact that cattle were held longer that year in an endeavor to find a remunerative mai'ket. The fact that cattle in 1914-15 were held on feed 173 days, while the MEAT-PACKING INDUSTRY. 123 average over the whole five jesrs was 142, is also reflected in other items of cost. Equqjment chaises over the five years amounted to $2.24, labor $2.04, interest $2.01, marketing $3.14, administration $2.39, taxes $1.11, and other changes 69 cents. Particular mention should be made of the 1916-17 tax, which reached $3.60 a head, owing to the war-time excess profit tax; in the other years the major portion of the tax, which ranged from 37 to 61 cents, was personal property tax, the amount of which wa.s governed largely by the value of cattle on hand at assessment time. The profit to the Nebraska feeders for 1912-13, as shown in Ap- pendix, Table 18, was so small that a slight variation in the estimated pork and manure credits would have wiped it out entirely. The 1913-14 and 1914-15 seasons were unprofitable for the Nebraska feeders. The loss in these two years, totaling over $19 on each animal fed, put many feeders out of business. The feeders who were able to obtain capital enough to continue feeding had not made good their loss at the end of the 1916-17 season, although the seasons of 1915-16 and 1916-17 were profitable. METHOD FOR ARRIVINO AT CREDITS. The unused portion of the feeds consumed by cattle, if recovered and placed upon the land or converted into pork, is a legitimate credit to the steer. Since much of the voided grain can still be used to produce a marketable product, the general practice of putting hc^ to work behind cattle has come to be considered one of the important adjuncts of cattle feeding. The amoimt of grain that passed through the steer imused depended upon the shape in which grains were fed, whether whole or ground, and upon the age of the animal. When cattle were fed groim:d grain by hand in a well-balanced ration, it was foiand that hogs following no more than held their weight. Where this practice of feeding was carried on no hog credit was allowed. Under the more prevalent system of using whole com, either shelled, chopped, or on the ear, the pork credit often amounted to enough to make the difference between a profit and a loss. In working with feeders well established in the business, who had made years of study in the requirements of cattle and hoga under their type of feeding, it was usually found that tests were made oS and on to learn just how much pork was being made by the number of hogs behind their steers. These hog gains were usually carried on their books aa a credit to cattle, ajid where they wenre not the hog gain was obtained by care- fully going over the hog accounts for the years covered, from which the number of hogs following cattle was worked out. Particular care 124 MEAT-PACKING INDUSTRY. was taken in all cases to study each farm and its method of carrying hogs, comparing the hog gains credited to cattle with carefully weighed gains made under similar feeding at experiment stations. This pork gain made from grain recovered in manure was credited to cattle at what it brought on the market. Margin on hogs was not considered a proper credit to cattle. The credits for manure varied widely, according to use made of it and to whether it accmnulated in such amounts as to be a liabiUty rather than an asset. Where, as in a few cases, farms were not owned in conjunction with the feeding business, extra labor was necessary to cart away the manure in order to have the lots in condition for the next season. Where use was made of the manure by spreading it out on the farm a careful estimate was obtained from the feeder as to number of loads and their value, and this estimate supplemented with careful observations as to size of yards and general facilities for making the best use of the manure before being put as a credit. SELLING PRICES AND MARGINS NECESSARY TO COVER COSTS. The five-year average margin obtained per hundredweight between the cost of the steer laid down in the feed lot and its value when fin- ished was $2.16 in Illinois^ (Hancock County), $1.32 in Missouri, $2.50 in Kansas, and $2.02 in Nebraska, or over the fom- States in the five years, $2. To have barely met the cost of fattening the average steer and placing it on the market during the five years, it would have been necessary for the feeder in Illinois to receive a margin of $1.87, in Missouri $1.79, in .Kansas $2.01, in Nebraska $2.17, and for the four States taken together, $1.96. When allowing the steers full credit for pork and manure in Illinois, the cost of 100 pounds gain increased from $13.81 in 1912-13 to $24.11 in 1916-17, or $16.73 for the five years, and for the Missouri steers from $11.66 in 1912 to $17.04 in 1917 or for the five years taken together $15.88 (Appendix, Table 17). One hundred pounds gain in Kansas, allowing all credits, increased from $10.98 in 1912-13 to $20.99 in 1916-17, a five-year average of $15.57 (Appendix, Table 18). Nebraska feeders put on a hundred pounds' gain imder like conditions for $16.03 in 1912-13, increasing to a cost of $19.44 in 1916-17, with a five-year average of $17.60 (Appendix, Table 19). Had the pork credit been left out entirely and the cattle been given credit for manure only, the cost of a hundredweight gain in Illinois would have advanced from $15.01 in 1912-13 to $27.71 in 1916-17, and averaged $18.79 over the five years; in Missouri from $13.20 in 1912 to $19.61 in 1917, a five-year average of $17.78; in Kansas from 1 See Cost of Fattening Cattle, Part II. A Five- Year Study of the Cost ol Finishing Cnttle in Illinois. MEAT-PACKING INDUSTBY. 125 $12.01 in 1912-13 to $22.79 in 1916-17, or an average of $17.08; in Nebraska, a liundred pounds put on in 1912-18, allowing no pork .credit, cost $17.06, increasing to $24.19 in 1916-17, an average over the five years of $20.59. As shown in Table 4 in the four States — Illinois, Missouri, Kansas, and Nebraska — ^from 1912 through 1917, it cost the feeder $16.47 to place a hundred pounds gain on a steer, allowing him all credit due this steer, and $18.60 when the steer was not allowed a pork credit. Table 4. — Thefive^ear average cost of producing cattUgaini on Com-Beltfarma, IBJg-lS through 19I6-J7.' Total gain. Cost of entire gain. Cost of 100 pounds gain. states. With pork. Without I)ock. With pork. Without pork. Pmndf. 239 206 321 260 139.88 32. 4» 49.20 44.16 144.90 86.44 64.01 61.67 816.73 16.88 15.67 17.60 $18.79 17.78 17.08 20. 8B knjwmr' Kansas ., Nebraska AvBraga 2S4 41.48 46.76 18.47 18.60 1 See Appendix, Tables 17, 18, and 19. •Cost of I^tening Cattle, Part tl: A Fiye-Year Study of the Cost of Finishing Cattle in Illlnola. Table 8. — The results during five years of feeding, without allowing pork credit. states. nUnols. Missouri. Eivuas. Nebraska, Average. Gross cost 1122.46 6.87 893.14 .30 8126.19 8119.86 .00 1115. 40 1.67 116.60 116.21 92.84 88.97 126.08 127.81 119.86 110.62 Sales price 109.88 Profit 1.78 1.89 8.87 9.88 4.46 By combining hogs and cattle as a feeding enterprise the Illinois feeders realized a profit of $3.54 per steer, and Kansas feeders $6.58, while the Missouri and Nebraska feeders lost $4.91 and $1.83,, respectively. Yet, combining the four States over the whole period, the feeders were able to realize a profit of 85 cents a head. By taking the hog gain away from the steer and allowing a credit for manure only, as has been done in Table 5, the Kansas steer was the only one able to pay for its feed and care, making a profit of $1.78. Under similar conditions Illinois showed a loss of $1.39 per steer, Missouri $8.87, and Nebraska $9.33. The average loss of $5.33 a steer without hogs following clearly shows than an attempt at feeding without hogs would have been decidedly unprofitable. 126 MEAT-PAOKING INDUSTBT. SUMMARY. To finish a steer in Missouri, on feed 137 days, 51 of which were spent on pasttire, required 33.6 bushels of com, 200 pounds of other concentrates, and 737 pounds of roughage; in Kansas (147-day feeding period), 46.3 bushels of com, 333 pounds of other concen- trates, 2,460 pounds of dry roughage, and 1,366 pounds of silage; • in Nebraska (142-day feeding period), 47 bushels of com, 293 pounds of other concentrates, 1,348 pounds of dry roughage, and 696 pounds of silage. In the four States — Illinois, Missouri, Kansas, and Nebraska— for 1912-1917, each 100 pounds of gain required 1,010 pounds of grain, principally com, 105 pounds of commercial concen- trates, 632 pounds of dry roughage, and 324 pounds of silage. The average price of the feeder in the four States, 1912-1917, was S67.08. Feed consumed cost $37.34, labor S2.15, equipment charge $1.56, interest $2.21, risk 29 cents; veterinary, insurance, taxes, incidental and administration costs totaled $1.79, to market the steer cost $2.98, making the gross cost at market $116.40, and the net cost $108.53, after giving a credit of $6.87 for pork and manure produced. The steer sold for $109.38, leaving the feeder an average profit of 85 cents. Had no pork credit been allowed the steers they would have involved a loss of $4.45 per head. The five-year average cost, 1912-1917, to put the entire gain on the steer in the four States, was $41.46 when allowing pork credit, and $46.76 when not allowing pork credit. A hvmdred pounds gain, allowing the pork credit, coat $16.47; without pork credit, 118.60. APPENDIX. Table l.—WeighU and gains of Missouri steers. Year. Pur- chase weight. Sale weight. Total gain. Days on feed. Gain per head per day. 1912 Pounds. 774 805 817 884 641 Pounds. 984 998 1,012 1,071 881 Pounds. 210 193 19» 1)12 126 132 1^ Pounds. 1 SB 1918 1 93 1914 1915 1916 785 989 iOS w Table 2. — Weights and gains of Kansas steers. Year. chaae weight. Sale weight. Total gain. Days on feed. Oainper heaa per day. 1912-13 1913-14 1914-16 1915-16 1916-17 Average Pounds. 1,076 1,048 912 1,077 944 Pounds, 1,483 1,833 1,269 1,884 1,241 Pounds, 867 285 867 807 287 187 164 133 Pounds. 8. IT 1.93 1.91 i.«7 123 1,011 1,332 821 14T tlS Table 3. — Weights and jains of Nebraslea Steers. Year. Pur- ohase weight. Sale weight. Totri gain. Daya on feed. Gain per head per day. 1912 18 Pounds. 1,054 1,023 1,002 967 911 Pounds, 1,297 1,246 1,263 1,2)3 1,174 Pounds, 261 . 262 \ 2CS 110 114 173 160 134 Pounds. 1.87 1913-14 L96 1914-15 1.61 1916-16 1.64 1916-17 , 1.96 989 1,239 260 142 1.76 Table 4. — Average amounts of feeds consumed annually per head by cattle in Missouri, 191i through 1917. Feeds. 1912-13 1913-14 1914-16 1915-14 1916-lT ?lv6-ye»r ayeragai Founds. 1,682 Pounds. 1,858 Pounds, 2,026 14 34 78 Pounds, 1,968 Pounds. 1,829 Pounds. 1,871 3 Linseed-olI meal 45 49 77 64 8 18 J" 92 8 61 40 164" i64' 19 Cotton-seed meaJ - 86 16 25 18 2 i' 4 6^! 496 h- 24 21 Gluten 12 Alfalfa 468 266 1,063 2 59 606 102 1.466 2 57 320 232 847 204 709 8 62 477 260 Silaee 816 B^ ::::::.: 3 63 51 12T 128 MEAT-PACKING INDUSTRY. TabIjB 6. — Average amounts of feeds consumed annwMy per head by steen in Kansas, 1911-lS through 1916-17. Feeds. 1912-13 1913-14 1914-16 1916-16 1916-17 nve- year average. Shelled oom P<»md». 2,669 Povmdt. 3,646 32 14 7 416 1,413 Pounds. 2,329 26 624 1,309 18 IS Pounds. 1,129 Pouiuh. 1 1 1,060 Pounds. 1,693 23 Oats . «• 2,0» 24 57' 337 1,640 33 Gottonfleed meaL '276 Alfalfa 1,665 21 Straw 4 Stover 1,170 1,415 33 237 Stalks •••-- 166 626 7 Silage 2,723 1,669 i,44« 1,366 Table 6. — Average amounts of feeds consumed annually per head by steers in Nebraska, 191S-1S through 1916-17. Feeds. 1912-13 1913-14 1914-16 1916-16 1916-17 Five- year average. Shelled com Pounds. 2,603 6 139 49 136 Pmndt, 2,^9 Pounds. 1 317 Pounds. 740 If "? 160 714 6 31 Pounds. 14 Hi- 666 POUTidS. 1,634 Oats 173 21 Bran Alfalfa feed 6i" 80 88 1 Miscellaneous concentrates Alfalfa 62S 411 ■■■■ iTs' 464 694 719 662 639 J 4 i Prairie hay Feterita Straw 68 3 262 700 3 3 34 ^ 3 Fodder Stalks Silage . 449 2 667 5 Salt Cane Table 7.— Average prices offudt consumed by Missouri steers, 191 1 through 1917. Feeds. 1912-18 1913-14 1914-16 1916-16 1916-17 nv8- year average. Shelled com bushel.. Oats bushel.. 60.38 80.48 80.63 .42 23.20 27.71 20.83 80.64 80.80 80.69 .42 80.87 81.41 W.80 36.10 Linseed-oU meal ton.. Cottonseed meal do.. Molasses feed do.. Bran do.. 32.13 27.34 28.90 30.00 26.88 38.14 36.38 27.31 36.84 Com hearts do.. 28.20 Hominy do.. 66.fi II .oii- 50.72 .036 Gluten ( 0.. f:S§ 3.00 .026 ■■•■«."d6" 7.00 4.00 .025 10.00 6.80 5.00 .026 8.00 6!60 .026 Clover hay do.. Bilage do.. Pasture (per day) MEAT-PACKING INDUSTRY. 129 Table 8. — Average prices of feeds ecnsumed by Kansas steers, 1912-13 through 1916-17 . Feeds. 1912-13 1913-14 1915-16 1916-17 Five- year average. Shelled com Oats Miscellaneous concentrates. . Linseed-oil meal Cottonseed meal Allalfa:. Prairie hay Straw Stover Staljcs MiaecUaneous roughage Eilage .bushel., .bushel.. ton.. do-. do.. do.. .....do.. do-. do.. do.- .....do.. do.. 50.40 30.00 24.00 10.14 2.00 1.00 6.00 (0.77 .44 40.00 32.00 27.62 12.60 $0.72 .50 20.00 33.00 24.64 9.00 10.00 6.21 SO. 68 39. 67 33.00 8.00 .67 's.'oo' 50.74 .60 36.47 40.98 39.08 10.46 16.60 5.52 5.00 .67 3.51 JO. 00 .51 32.16 35. 1.5 29. 66 10.02 12.73 5.68 3.60 .78 5.00 3.84 Table 9. — Average prices of feeds consumed by Nebraska steers, 1912-13 through 1916-17. Feeds. 1912-13 1913-14 1014-15 1915-16 1916-17 Five- year average. Shelled com Oats Linseed-oil meal Cottonseed meal Bran bushel.. bushel.. ton.. do.. do.. do.. SO. 46 .31 27.34 26.08 17.29 $0.62 .40 32.80 ■ 30.70 $0.58 .41 34.23 28.38 $0.56 .30 41.69 32.05 16.87 13.77 18.21 7.69 6.96 4.23 4.00 2.54 $0.83 .43 43.67 40.94 32.07 $0.61 .37 35.93 31.63 22 08 Misceltaxieous concentrates 13 77 Alfalfa feed Alfalfa Pr-airie hay Silage Feterita :.dO.. do.. do.. do.. do.. 17.33 7.00 6.04 3.14 16.08 7.74 6.60 3.67 18.42 6.85 5.05 3.75 22.41 8.51 7.38 4.61 18.49 7.56 6.18 3.86 Straw .........do.. do... 1.66 2.60 2.89 2 37 Stover Fodder do.. do.. do.. 5.00 .61 2.65 .58 4.67 3.82 Stalks 1.02 5.00 .74 Cane 4 84 Table 10. — Corn yield per acre.^ Locality. 1911 1912 1913 1914 1916 1916 Illinois Bushels. 33.0 26.0 21.0 14.6 31.0 36.0 38.6 Bushels . 40.0 32.0 24.0 23.0 43.0 40.3 42.8 Bushels. 27.0 17.6 16.0 3.2 34.0 36.0 37.5 Bushels.' 29.0 22.0 24.5 18. S 38.0 33.0 39.1 Busliels. 36.0 29.6 30.0 31.0 30.0 38.0 41.5 BusheU. 29.5 Missouri 19.6 Nebraska . . . . . : 26.0 10.0 Iowa 36.5 Indiana 34.0 Ohio 31.5 il917Yearbook, p. 609. 152250°— 20- 130 MEAT-PACKING INDXTSTRY; Table 11. — Average awmial cost and profits in finishing a steer in Missowri, i912 through 1916. Items. 1912 1913 1914 1915 1910 Five- year average. Cost laid down $51.37 20.41 1.53 .60 1.34 .26 .01 $53.93 21.72 1.65 .69 1.35 .33 .02 .01 .15 .37 .12 3.55 165.34 30.47 l.«2 .85 1.76 .05 .04 .09 .15 .31 .19 3.40 161.60 30.53 1.82 .89 1.70 .10 .01 .14 .13 .37 .18 3.43 S49.82 37.63 2.75 1.19 1.83 .08 .11 .24 .07 .20 $56.39 28.15 1.91 .84 1.60 Risk .16 .04 .10 Taxes .08 .39 .08 3.31 ll2 .33 .11 3.25 3.39 79.38 3.55 83.89 3.86 104.49 3.33 100.78 4.11 97.17 6.45 93.14 4.26 Net cost 75.83 72.64 80.03 75.86 101.16 85.61 96.67 91.72 90.72 94.02 88.88 83.97 3.30 3.19 4.17 15.55 4.95 4.91 .74 . 1.07 .90 1.32 .46 1.99 1.60 2.06 2.89 2.62 1.32 Necessary margin 1.79 Tabu! 12. — Average annual cost and profits in finishing a sleer in Kansas, 1912-13 season through 1916-17. Items. 1912-13 1913-14 1911-15 1915-16 1916-17 . Five- year average. $68.28 32.97 1.18 2.78 1.98 .23 .01 .76 .18 $75.30 42.37 1.52 3.27 3.06. .26 .01 .60 .41 .08 .28 2.39 f67.00 45.45 2.01 4.19 3.63 $79.57 35.66 1.80 2.04 3.11 .17 .01 .66 $70.04 56.37 1.49 2.24 2.85 $72.04 42 56 Labor 1 60 Equipment 2 90 Interest 2 93 Eisk 13 .02 .65 .24 .06 .21 2.78 .01 .57 .40 .10 .35 3.50 Taxes .25 TTipififiTit.a.l .05 .18 2.67 OS A<1miTiireparing the report tor pufelacaitlon and assis i.ed dn tJhe field warlc. Ortihers -wjio -assisted in i^ colieetaeB and compilation of the data were M. X. iGriffin, assistant iji marketing^ve stO(diiind meats; E, H. Schroer, assistant in marketing live «tock sud meats; <5. H. JSteey., asasiant in marlsetingiHrvcsligaltioiis; S. Bray a6sistanftfljQ{marketiiagjli*viest©ckfiaad Bleats; "WiJiiaan S«. 3fthBs,,assistaot.iaiioQd-Srtii|i|pllyiiwefiliiigatioiis and' A. G. Bovay, assistant in mailcctinglive stock and meals. MEAT-PACKING INDUSTfiY. 139 SCOPE AND METHODS OF CONDUCTING THE INVESTIGATION. Kecords of 911 specific sMpments of live stock totaling 1,343 cars, daubk-deck ears being c6ttnted as two, were obtained by following the stock frmn the shipping station to market or packing plant or by transcribing shipping accounts of farmers, Ipcal live stock shippers, and managers of hve-siock shipping associations. Field work was conducted from September, 1917, to June, 1918. A few of the records transcribed from the shipping accounts of farm- ers, local live stock shippers, and managers of live-stock shipping associations represent shipments made in 1915 and 1916. The ship- ments included in the records used originated in Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, and Wyoming. MARKETING EXPENSES CLASSIFIED. The items of cost considered include the bedding of cars, loading, feeding in transit, freight, and handling, feeding, and selling at the market. Fiactors affecting shrinkage in transit were given special consideration. In order to avoid repetition in the discussion of the cost of mar- keting the different classes of live stock, the following brief explana- tion of the items of expense considered in the inyestigation is sub- mitted. For comparative purposes net shrinkage and all items of expense have been computed on the basis of live weight. Net shrinkage was based on loading station weights, while all items of expense were computed on m:arket weights. Averages were computed from ths totals of each group and in no instance hj averaging averages. LOADING AND BEItDINC. The record of expense in this investigation begins with the arrival of the stock at the loading station. The first item of expense to be considered, therefore, is the cost of loading, which includes the labor involved and the price of bedding. Data furnished by the crop correspondents of the Bureau of Crop Estimates, and summarized in Report No. 113, Office of the Secretary, "Methods and Costs of Marketing Live Stock and Meats, "^ indicate that bedding material is furnished and placed in the ear by the railroad in 3& per cent of the instances recorded, and in 45 per cent of the cases reported a charge is made for this service, varying from 25 cents to |2 per car. The preference as to kind of bedding, based on the order of greatest use is, straw, sand, sawdust, hay, no bedding, cinders, and- shav- ings. Sand appeared to be used more extensively than any other material in bedding cattle in the^ western range States and in bed- ' By L. D. HaU, F. M. Simpsoa, and S. W. Doty. ' 140 MEAT-PACKING INDUSTRY. dine hogs during warm weather. Straw is more popular in the North cLtral States or Corn Belt, and is preferred for bedding hogs during cold weather. Tho cost of loading stock is given inKeport 113 as approximately $1 per car for cattle, $2 for hogs, and $1.50 for sheep. These figures represent the labor of loading and mclude feed only in the case of hogs. They do not include the expense of incidental repairs to cars or of insertmg partitions. Loading and bedding expense was found m the investigation herein reported to average 1.5 cents per hundredweight for hogs, 1 2 cents per hundredweight for cattle, and 1.9 cents per hundred- weight for sheep. Nothing is allowed for the labor performed by the shipper in calculating this expense, as the figures given include only the cost of bedding material and the additional labor used. FREIGHT. One of the most variable items of expense in marketing stock is that for transportation, or the freight cost. Freight rates, minimum carload rates, and other provisions of railroad contracts for the transportation of live stock vary so greatly throughout the United States that general statements relative to the cost of transportation are subject to much modification.' In the Southeast and in some sections of the West it is the general practice to publish live-stock rates on a per car basis, the rate varying with the length of the car; while in most other territory the rates are named on a weight basis. Minimum weights and car lengths also vary among raUroads in the same territory. A comparison of quoted tariffs effective in the dif- ferent sections of the country is impracticable, owing to the varia- tions named above, but certain general differences are shown in a compilation of rates in the three principal freight classification ter- ritories which has been made by Mr. Frank Andrews, of the Bureau of Ci-op Estimates. These averages, which were based on total tonnage carried and average length of haul, show average freight rates on live stock for the years 1911, 1912, and 1913, as follows: Eastern or official classification teritory, 10 cents per hundredweight for an average haul of 245.8 miles; southern classification territory, 11.9 cents per hundredweight -for an average haul of 150.65 miles; wes- tern classification territory 14.9 cents per hundredweight for an average haul of 213.72 miles. These averages are inserted for rela- tive comparisons only, inasmuch as all rates were increased 25 per cent in the spring of 1918 besides a previous increase in the rates in eastern classification territory in 1914. Beginning November 1 1917, a Federal tax of 3 per cent on all freight charges has been in The- two factors affecting freight costs which were given the most consideration in this report are length of h aul and weight of load. ' Eeport 113, Office of the Secretary, U. S. Dept. of Agriculture ' MEAT-PACKING INDUSTRY. 141 Inasmuch as the shipper can regulate the latter factor more easily than he can the former it was used where possible to do so as a basis in comparing freight costs. In computing these costs, terminal and switching charges, amounting to $1.50 to $2 a car, and the Fed- eral tax of 3 per cent were included wherever they were recorded. FKED IN TRANSIT. When the distance is such that the shipment to destination can not be made under 36 hours, according to the amended Federal 28- hour law, animals must be unloaded, fed, and watered. The rail- roads which have the heaviest long-distance shipments provide feed- in-transit stations for this purpose at intervals along their hnes. Data collected in 1914 indicated that the charges for care, feed, and water at these points at that time ran as high as $10 or $12 a car, with a general average of about $5 a car. Kailroads which do a small Hve- stock business often are without feed-in-transit stations; conse- quently the shipper patronizing these lines must make his own arrangements for feeding and watering. Finishing-in-transit points are found in the Middle West near the centralized live-stock markets. These stations are maintained in addition to the feed-in-transit stations. They usually are equip- ped with largo well-arranged stockyards, similar to those at the cen- traUzed markets, and are used both for finishing animals for advan- tageous marketing and as a place where animals may be kept in good condition while awaiting a favorable turn in the market. These stations are used principally for sheep and are an important factor in regulating the supply of this class of stock on the market. Stay of stock at these statiojis varies from 48 hours to 90 days, with an average of approximately 20 days. The charges for keeping sheep at these points average from 90 cents to $1.25 a head for a 20 day period and between 5 and 6 cents a head a day for a shorter period.' The data obtained in this investigation on the amount and cost of feed in transit were more complete for hogs than for either cattle or sheep. In a number of the records of cattle and sheep shipments the items for the feed used at market and that used en route were not separated, on the account sales; consequently these items had to be considered together. In calculating expense of feed en route for hogs the quantity of feed used as well as the cost was determined. The cost, where the feed is purchased, fluctuates with the market price of feed, while the quantity given to the animals is believed to be more constant. By determining the average quantity of feed used in cars and en route, comparisons oi market costs can be made applicable for any given period of time even though prices of feed fluctuate radically. » Report No. 113, Office ol the Secretary, 142 MEAT-PACKING INDUSTRY. LOSS AND DAMAGE IN TRANSIT. Consideration must be given to possible losses through death or injury to the animals while in transit or after arrival at the yards when shipping live stock to market. These losses in the aggregate reach large amounts and in many instances are due almost entirely to the negligence of the shipper in not taking proper precautions when load- ing- While losses in transit, like shrinkage, can not be charged as expense, they affect returns on a consignment, and therefore may be a factor in determining profit or loss. Nothing was allowed for possible loss and damage in transit, however, in calculating the total costs per hundredweight of marketing stock. The information presented here on this subject is submitted for the purpose of giving the reader a general idea as to the extent of this item. Table 1 shows by kiads and by months the ratio of dead stock to each 1,000 head of actual receipts at Kansas City during the four- year period 1914-1917, inclusive, as taken from data obtained by representatives of the Bureau of Markets. Only those animals which were miloaded dead at the yards or which died after unloading are included. Table 1. — Average number of dead stock received monthly at Kansas City during the four- year period, 1914-1917, inclusive.^ Mouth. Number of dead per 1,000 of receipts. Cattle. Hogs. Sheep. 1.26 1.24 .97 .91 .81 .85 .81 .80 .74 .63 1.63 2.24 3.13 2.93 2.86 3.27 2.67 2.41 2.48 2.68 3.04 2.01 2.93 3.25 0.93 .79 .71 .78 .64 .90 July 1.14 1.41 l.OG 1.36 2.61 1.98 1.05 2.82 1.17 1 other data on file in the Bureau of Markets show that the average weight of hogs marketed at Kansas City and East St. Louis during 1916 and 1917 was 189 pounds. The number of dead hogs received in every 1 ,000 liogs marketed at these two points averaged 2.6 during the winter months and 2.4during other seasons. This is equivalent to 2.6 pounds for every 1,000 pounds of live animal marketed, and represents a loss of one quarter cent a hundredweight for each cent a pound value. On this basis when hogs bring 20 cents in the market the loss due to death in transit and at the yards averages about 5 cents a hundredweight. It is estimated by shippers and others familiar with the business, that the number of hogs unloaded dead in transit at points outside of the yards is less than 1 per cent of the total dead unloaded at the yards. Where cattle shipments are more than one day in transit it is believed that the number of dead stock removed from the cars at outside points MEAT-PACKING INDUSTEY. 143 is considerable in the aggregate, especially among shipments of thin cattle from Western and Southwestern range States, as most of the deaths en route on long shipments occur during the first part of the trip. Data on file relative to losses at Kansas City show that cattle losses for the same months of different years are consistently uniform. The greatest losses in each of four years' records were in December, and the losses in winter exceeded those in summer. Among the causes of loss are shipping thin cattle, especially in cold weather, underload- ing and overloading cars, and extreme cold weather. Hog losses are more uniform throughout the year. The greatest average loss at Kansas City for the four-year period was sustained in April. A survey of the losses at a number of other markets indicates that extreme changes in weather, especially changes from cold to hot weather, tend to increase losses by death. The first hot periods which come in May usually cause heavy losses in shipping hogs, and extreme hot weather in July and cold weather in January likewise increase the death loss. It is the opinion of many members of the trade and of shippers that the use of unclean cars or of manure for bedding tends to increase the death loss, especially in hot weather, since the ferments ing manure generates heat. Diu-ing December and January losses are attributed, among other causes, to the fact that hogs become warm from driving and then cool off too quickly after loading. Over- loading also is given as a cause of loss in transit. Improper handling on the part of railroads is given by many shippers as a cause of con- siderable loss in shipping hogs. They assert that trains are often delayed several hours at terminals between box cars which shut off proper circulation of air and that train crews are careless about sprink- ling hogs while in transit in hot weather. Among the suggestions offered for decreasing losses are tar-papering the car on the exposed side during extremely cold weather, sprinkling often in hot weather, loading hogs at least one hour before train- moving time, allowing the hogs to rest at the loading station before loading, avoidance of overloading, using clean dry straw or shavings as bedding in winter, and using wet sand in the summer. Sheep losses are greatest when cars are overloaded. Occasionally during the fall heavy losses are experienced when sheep are allowed to drink exces- sively after a lo:^g trip. Claims for loss and damage in transit on the great volume of live- stock business reach large amounts in the aggregate. Twenty-seven railroads, comprising about 35 per cent of the total owned mileage of the country, reported to the Bureau of Markets ' that their claims paid on live stock during the fiscal year 1913-14 approximated > Beport^o. 113, Office of the Sectetarj, U. S. Department of Agriculiurs. 144 MEAT-PACKING INDUSTRY, almost 5 per cent of their lire-stock earnings. Inasmuch as the valua- tion in the live stock contracts did not cover the full value of the stock, it is doubtful if the return was equal to the loss, even if the shippers recovered full contract valuation. SHRINKAGE IN TRANSIT. wShrinkage as used in this report means the net loss in weight result- ing from the shipping of live stock from loading stations to the market, or the difference between weight at the loading stations and the hoof or sales weight at the market. Shrinkage is not considered in this report as a cost in marketing live stock, as it does not represent an actual money outlay, but it does affect profit or loss in the sale of stock, and all shippers desire to keep the amount of shrinkage reduced to the minimum. A normal shrinkage is to be expected, but an excessive fill resulting in waste of feed and possible discount in the price at the market ought to be avoided. The subject of shrinkage has been given special attention in this investigation because it is one of the factors in marketing live stock, on which information is in greatest demand. The lack of scale facilities at many of the shipping stations made it impossible to obtain the necessary loading weights needed to determine the net shrinkage or fill at market on shipments originating at such stations. In other instances, where loading weights were obtained by the inves- tigators while present at the tiihe of loading, the shippers failed to furnish the sales weights at market as promised. Inasmuch as it was impracticable for the investigators to follow many of the cattle shipments to market, they had to depend, to a large extent, on the information they could obtain from shippers and their records. FEED AT MARKET. Feed given to live stock after its arrival at market is provided by the stockyards company on an order from the commission firm to whom the shipment has been consigned. The charges for this feed are entered on the account sales and are deducted from the gross proceeds in making returns to the shipper. As a rule, charges for feed at stockyards are higher than the prices quoted in the grain and hay markets, but these charges cover, in addition to the feed itself, the service of delivery and distribution of the feed to the animals in the pens. Prices for feed at stockyards, while influenced by market quotations in the grain and hay market, do not change with the minor fluctuations in these quotations. Prices for feed at most of the centralized markets remained unchanged during 1914 and until the latter part of 1916. The usual prices were $20 a ton for prairie hay, $25 a ton for alfalfa, $1 a bushel MEAT-PACKINO INDUSTRY. 145 for corn, 75 cents a bushel for oats, and $2 a hundredweight for corn chops. Com was advanced to $1 .25 a bushel in October and Novem- ber, 1916. This was followed by further advances in 1917, until, by the middle of the year, corn cost shippers from $2.25 to $2.75 a bushel. The price of hay at most of the larger yards remained at $25 per ton until the spring of 1917, when it was advanced to $30 a ton. Later these prices were further increased until even $35 and $40 a ton was reached. Unless cattle and sheep have been on grain rations prior to ship- ping, the common practice is to feed only hay after arrival at market. Com, either shelled or in the ear, is the usual feed for hogs at market. COMMISSION. Commission firms at centralized markets to whom stock is con- signed for sale make a charge for their services. These charges usually are made on a car-lot basis, and the rates on cars of mixed stock in most instances are higher than those on straight cars. Com- mission costs have been computed in this report on the basis of a hundredweight of live animal in order to reduce all costs to a common basis for comparison. Commission charges have been increased at most of the markets since this investigation was made. Tables 2 and 3 are summaries showing the commission charges at 12 of the leading centralized markets as taken from the latest infor- mation on file in the Bureau of Markets. OTHER ITEMS OF EXPENSE. There are a number of miscellaneous items of expense incurred in marketiag live stock at centralized markets. These items consist of yardage, scale, inspection and insurance fees, and all other expenses at market centers except commission charges. Inasmuch as they have been computed in this report on the basis of the live weight of the stock, the weight of the carload is the principal factor affecting the amount per hundredweight of these items. The chief item included under "other charges" is yardage. This item varies at different markets, according to the kinds of live stock, as is shown in Table 4, which is a compilation of the yardage charges prevailing at 12 of the leading markets, according to the latest information on file in the Bureau of Markets. 152250°— 20 10 Market. 1^ I 1 For Per ,, . head, i . I„ , . tead. Mini- Maxi- ' Single. Double. 1 mum. mum. < Cinciunati — Denver:--- Fort ■"^orth Indianapolis Kansas City Omaha Pittsljuigh . St. Louis. . St. Paul Sioux City. $15.00 $20.00 11.08 1 18.00 22.00 18.00 15.00 21.00 IS. 00 19.75 25.00 18.00 .75 15.00 14.00 15.00 20.00 18.50 JO. 20 O.50 $12.00 I 10.00 to [ 12.00 12.00 12.00 10.00 12.00 10.00 to 12.00 10.00 to 12.50 16.00 10.00 to 12.50 UJM to 14.00 12.50 $20.00 15,00 to 20.00 "is. 66 20:00 20.00 [ 20.00 15.00 to 18.75 23.00 [20.00 15.00. to IS. 00 20.00 0.29 6.25 .IS .20 .20 .20 Single. DotiMis.. $12.00 10. oa to 12.0fl 12,00 12.50 10.00 12.00 10.00 to 12.00 12.-31 15.00 10.00 to 12.60 14.00 12.50 15.00 to 18.01 M.an 18. DO- 2«;08' 18.00 18.00 18:75 25:00 18:09 24.00 18.50 MIXED STOCK. $1.00 .70 LOO .70 .60 .75 .70 .75 1.25 .75 ■$i4."66' $20.00 18.00 22,00 22.00 $0.20 .20 .26 .25 .15 .25 .25 .25 .25 .25 ""'25 $12.00 12.00 "$26."66" $0.20 .20 .25 .25 .15 .20 .20 .20 .25 .25 """."26" $12.00 12.00 ""ii.'oo" ""i2."66" 12.50 15.00 12.50 14.08 12.50 Chicnpo ""iis'oo Cincinnati Deiivor 12.00 18.00 18.00 Fort Worth ■ 'i4.'66' 21.00 18.00 18.75 22.00 18.00 20.00 18.50 '12.' 66" 12.50 15.00 12.50 14.00 12.50 23.00 18.00 18.73 ""i8;66" 25.00 5.60 18.00 18.75 Kan'ias City Omaha , Pittsburgh Pt. Louis St. Paul .75 18:03 a Under eight head. ^ Gj:aduated.scale. Table 3. — Commission rates ov.stock driven or kaidedmfor 10 mnrlt^: Market. Buffalo Chicago...,. Cincinnati.. I*envcr f .1- Louis, '^loux City.".: Cattle; S1.2S pet head up to 5: each additional, $1. •IjP^hcad for loss than 15 $1 per head 35 cents per head up to car- load rates; 40 cents per head.for less than. 25 head. 50 cents each from 1-.S; 25 conts over; maximuffl) $3v 25 conts from 1-12; 20 cents up to 50; oper, car rates. SI.25 per head '^SlpP-fed. 25 conts from 1-.40; OY»r, at car-lot rates. 25 cents per head.... ! 35 cents, per head up to car load ra^. 25 c6nts.pfiaLhfiad.for less than 40fieadr 25 cents per head. 20, cents from l*-50: over, at oar-lof rates? 25 cents per head. 20 cents per head. 25eBirts perhoadL 25 cents per head for loss I lian 40 head. 30 cents per head. 20 cents per head. MEAT-PAeKIN& INDUSTRY. Table 4. — Yacdage charges at 1^ mar:heU. 147 Markets. Sheep Cattle. Calves. Hogs. and goats.. Cents. Cents. Cents. Cents. 30 15 ID 7 30 20 6 T 25-30 10-20 8-10 5-7 30 15 10 30 15 10 30 20 10 30 15 10 30 20 10 15 3 6 28 m 8 S 25 15. 8 6 30 15' 10 6 Horses and mules. Chioagp Kansas City... Om^a St. Paul....... Eaat.St. Iiouis^ Fott Worth.... Denver Sioux City Pittsburgh Buffalo Cincinnati Indianapolis... Cents. 25 25-30 30 30 30 25 25 25 CATTLE. METHODS OP MARKETING. rnformation oBtained in previous investigations conducted by the Bureau of Markets indicates that the number of cattle shipped to the large stockyards and packing centers varies from 40 per cent for some sections to 80 per cent for other sections of the country, while from 10 to 50 per cent, according to the section, is sold to local butchers and packers, and from 5 to 15 per cent is either farm slaugh- tered or marketed otherwise. The same information also indicates that the mmiber of cattle sent to the large packing centers is least in the extreme eastern, southern, and western sections and greatest in the north central section. It is estimated from reports of the Bureau of the Cisnsus and other data, available that one-half of the beef cattle pass through the large central markets, that one-third are sold for local slaughter, and that one-tenth are sold on farms and ranges. Data available also show that approxim;ately two-thirds of the cattle purchased as stockers and feeders are bought during the fall months, and that in the- Com. Belt, where 65 per cent of the. stockers and feeders are purchased in the fall, approximately 47 per cent of this class of stock, is hougjit at, the centralized markets. The period of hea^vy marketing begins in midsummer at the southern marketsi when, the m.ovement of grass cattle begins. This movement of grass cattle first afflects the volume of receipts, at markets lilce Eort Worth, Kansas City, and East St. Louis in July, but. tJhe , maximum is not reached until October, after which month the receipts decJine until the movement ceases in December. The move- ment of grass- CBtttb to the, more northern markets like Chicago, Omaha, and St. Paul,, does not affect the volume of receipts to any extent until September and does not reach its crest until October. The period of the range cattle movement to these northern markets is somewhat ahorteE maa. that, to the markets farther aoutk 148 MEAT-PAGKING INDUSTRY. From 32 to 39 per cent of the total receipts of cattle at the cen- tralized markets during the year are received during the three fall months, and from 40 to 60 per cent are received during the entire period of the raiige cattle movement, which extends over four to five months . The movement of cattle from the feeding sections is fairly uniform throughout the year, the greatest contribution coming during the spring, at which time the cattle fed throughout the winter are in finished condition for the block. The smallest volume of receipts at the southern markets is recorded during the period from February to May, when slightly more than one-fifth of the total receipts of the year are received. The period of decline of the receipts at Omaha as indicated by the average receipts for 1916 to 1918, inclusive, begins in May and extends through July, approximately only 18 per cent of the total receipts of the year being received during those three months. Keceipts are distributed more uniformly at Chicago than at any other market. The minimum receipts at this market are recorded during the three summer months, but they are only about 1 per cent less than the volume recorded during any three months of the first eight months of the year. Data available show that the Corn-Belt States lead all other groups in the percentage of marketed cattle shipped in carload lots by owners as approximately one- third of the cattle sold from this group of States is disposed of in this manner. About one-fourth of the cattle marketed from the States of the southwestern and north- western groups are shipped by owners. Approximately one-half the cattle of the Corn Belt and one-fourth of those in the southwestern and northwestern groups are marketed through dealer shippers. COSTS OF MARKETING. The investigation to obtain records on the cost of marketing cattle was first begun in the Flint Hills section ,of Kansas and the Osage Nation in Oklahoma, which are districts where cattle are finished on grass and marketed in the late summer and early fall. The lack of scale facilities at many of the loading stations, especially in Oklahoma, prevented, in a number of instances, obtaining loading weights needed to determine the shrinkage or fill resulting from shipping the stock to market. When the work was extended to the grazing sections of western Nebraska, Montana, Wyoming, the Dakotas, and Colorado, scale facilities were found to be limited there also. A factor which discourages the practice of weighing at loading stations in the western range States is the size of the shipments usually sent to market. In Montana and Wyoming, for instance, it often is necessary to drive cattle from 60 to 125 miles to a shipping station after they have been rounded up on the range, and the droves MEAT-PACKING INDUSTRY. 149 thus collected usually are of such size as to require a train of several cars to transport them to market. The task of weighing several cars of cattle when the scales will not accommodate a full carload, is not only laborious but requires considerable time which very few shippers like to spare in theip-desire to get their stock loaded as quickly as possible. Another factor which hampered' the investigation in Montana and Wyoming was the shortage of stock cars in the fall of 1917, which prevented shippers from moving their cattle and sheep to market as they had planned. In a number of instances the field men found shippers who had driven their stock long distances to loading stations only to find that the cars which had been ordered had not arrived and the railroad agent could give no definite information as to when they could be expected. The severe winter of 1917-18, together with the demands made on the railroads to move war supplies, affected the transportation service of this country to such an extent that shipping of live stock was made more difi&cult than usual, and conse- quently the records obtained applying to shipments made during that period covered abnormal conditions.. When the investigation was extended to those States where cattle are finished in feed lots, better weighing facilities were found and complete records were more easily obtained. Altogether complete records were obtained on 159 cars of cattle, of which 49 cars were composed of cattle of mixed classes and grades, and 35 cars of pulp-fed cattle from feed lots in the beet-sugar districts of eastern Colorado and western Nebraska, and 79 cars of steers from other sections. The data on these shipments were segregated for comparison into the three groups. The shipments of steers and mixed cattle originated in the follow- ing States : state of origiu. Ship- ments. Cars. Mixed cattle. Ship- ments. Cars. Ohio Missouri , Illinois Indiana Tennessee South Dakota. Kentucky Nebraska Kansas Michigan Mississippi Iowa Minnesota -Wisconsin Total.. 79 9 II 19 2 Practically all these shipments were feed-lot cattle or native cattle, as distinguished from range or western cattle. The data on 150 MMAT-EACKING INDUSTRY. the steers and raixed stock have been assembled in tabular foriH: on the basis of the size of load, based on weight. All cars weighing less than 20,000 pounds were segregated into the first group. Other groups were created for each additional 4,000 pounxis of weight added. Table 5 shows the different items of expense incurred computed on the basis of live weight at the market. The averages were com- puted by using the total weights and total costs for all animals in each group and not by averaging averages. In addition to the various items of expenses incurred in marketing, figures are included showing the net shrinkage per hundredweight of stock resulting from shipping the animals to market. The steers in the group of 79 cars on which marketing costs were assembled were of fairly uniform weight, ranging from an average of 1,040 pounds to 1,22.3 pounds at the market, the grand average being 1,113 pounds. The sizes of loads based on the number of animals to the car were quite imif orm, the average for the different groups vary- ing from 17 in the lightest loads to 24 in the heaviest, with an average of 21 for all cars studied. Only a few of the records showed the length of the cars used, but the observations of the field men engaged in the investigation indicated that the most common length used was 36 feet. The least shrinkage took place in the lightest loads, and with this exception the amount of shrinkage did not seem to be affected by size of load based on weight, the maximum variation being less than 0.2 per cent. The average shrinkage for all the shipments was 4.02 per cent, or 40 pounds for a 1,000-pound steer. Table 5. — Costs and shrinkage in Tnarheting cattle at centralized markets. Classes of cattle. Num- ber of cars. Aver- age num- ber of head to car. Aver- age length ofhaul. Aver- age car loading weLght. Aver- age car sales weight. Aver- sales weight per head. Aver- a,ge shrink- age per hun- dred- weight. Freight cost per hun- dred- weight. Feed cost per hun- dred- weight. Com- mission cost per hun- dred- weight. other charges per hun- dred- weight. Is 17 21 20 24 Miles. 238 182 265 218 Lbs. 18,019 21,661 25, 905 29,892 Lbs. 17,478 20,771 24,872 23,651 Lbs. 1,040 1, 144 1,223 1,176 Lbs. 3.00 4.11 3.99 4.15 Cents. 18.4 16.2 19.3 14.5 Cents. 3.7 4.8 2.1 2.6 Cents. 7.0 6.5 5.1 5.2 Cents. 2.7 2.6 2.1 2.0 Average 79 21 223 ! 24,447 23,465 1,113 4.02 17.2 3.4 5.7 2.S Mixed classes and grades. 22 24 29 25 117 179 190 186 17,223 21,876 26,135 29,988 16, 490 21,029 25,125 28,215 738 887 855 1,136 4.25 3.88 3.87 5.91 13.6 16.2 12.9 15.6 2.9 4.9 3.0 1.1 7.7 6.6 5.8 4.8 3.0 2.9 2.8 ; 2.2 Average 49 25 172 23,145 22,161 853 4.25 14.8 3.5 6.2 2.8 The average weight of the animals in the mixed loads, with one exception, was almost as imiiform as in the case of the steers, ranging from. 73& to 887 pounds. The one exception was a group of six cars which averaged 1,136 pounds per animal. The grand average for MEAI-EAiatmG njDUSIKZ» 151 all cars, of mixed cattle was 883 pounds. The kea-wieat shrinkage in this group took placeia the lightest and the, heaviest loads,, the latter shrinking most. Those loads ranging in weight horn 2Q).00§ to 28,000 pounds suffered an. average shrink of approximately 3.9 pounds p^r huiukedweight, or 39 pounds for a I,OOQTpound animal. The avffliage number of animals loaded per ear was quite uniform in this group also, ranging from 22 to 29 and averaging 25 for the entire group, Mininmm carload weights are obtained easily in shipping cattle, as shown, in the average weights of the loads studied. In fact,, the nainimum weight. fox cattle is ofteu excfied-ed without undue CEowding. Reference is made elsewhere to the difficulty of loading cars of hogs and sheep to the mimmum weight* for these animals^ As shown in the table, the average length of haul for the different groups was quite unifojmi, consequently there was little variation in the freight charges per hundredweight. The rate for the 79 ears, of steers, based on the actual weights and the average distance shipped, 223 miles, was 17.2 cents- per hundredweight, the range being from 14.5 to 19.3 cents per hundredweight. The average length of haul for the mixed cars was 1.72 miles and the average freight cost per hun- dredweight was L4 8 cents, with a range of 12.9 to 16.2 cents. Feed costs shown here are those for- feed given to the animals after arrival, and before sale at the markets, inasmuch as the length of haul was not great enough to require unloading and feeding under the amended 28-hour law. Based on weight of the cattle this cost is sm^ll, varying from 1.1 cents to 4.9- cents per himdredweight, and averaging approximately 3.5 cents a hundredweight for both steers and mixed cattle. In. very few instances did the account sales show the quantity of feed used.. Inasmuch as commission charges usually are made on a carload basis, and it is the tendency of shippers to load cars to- capacity in shipping cattle, it is to be expected that the comioiission cost per hundredweight would not vary to any great extent. This is borne out by the figrares- shown in the table, the average commission cost per hundredweight varying from 4.8 cents to 7.7 cents, the maximum cost applying to the lightest loads, and vice versa. Yardage and miscellaneous items listed under "Other items of expense " when computed ou the basis of live weight at the market amouated to only 2 to 3 cents per hundredweight on both classes of cattle. Summarizing the costs shown in Table 5, it will be noted that,, exclusive of the Ibss due- to shrinkage, the total cost of marketing the steers was 28.© eents per hundredweight, as compared with 27.3 ceats per hundredweight for the mixed cattle. The average total cost per head for marketing' the s.teers- amounted tO' $3.18^ and for 152 MEAT-PACKING INDUSTRY. the mixed cattle $2.41. The average shrinkage on the steers totaled 44f pounds and on the mixed cattle 37^ pounds per animal. This loss in weight measured by the market price of the stock amounts to a considerable sum, and shippers in consigning stock to centralized markets give this matter serious consideration, inasmuch as the amount of shrinkage often determines their choice of a market and the profit or loss. Table 6 is a summary of the data on the cost of marketing pulp- fed cattle from western Nebraska and eastern Colorado. The first three shipments originated in the latter State, two of them at the same loading station. The two Nebraska shipments also originated at the same station. The average weight of the cattle in three of the shipments was quite uniform, ranging from 1,025 to 1,043 pounds at the market. The other two shipments averaged 975 and 1,420 pounds per animal. The lighter cattle suffered the heaviest shrink, averaging 6.65 pounds per hundredweight. One shipment shrunk 2.15 per cent. The amount of shrinkage on the other three shipments was approxi- mately the same, being slightly over 3 per cent. The average car sales weight ranged from 22,550 to 24,972 poxmds; the shipment with the maximum weight was loaded with the lightest weight cattle. The average number of cattle loaded per car ranged from 17 of the heavier ones to 25 of the lighter ones, the average for all shipments being 22. All the pulp-fed cattle with the exception of one shipment had been purchased as feeders, with feed-in-transit privileges, which means that the freight charges had been paid to Missoiiri River markets at the time of purchase. Therefore, the charge of approxi- mately 7 cents per hundredweight for freight does not represent the true freight cost on these shipments. Tlie exception referred to took a freight rate of 30.8 cents, which represents the approximate rate from eastern Colorado points to Missouri Eiver markets. Table 6. — Costs and shritihage in marheting pulp-fed cattle from sugar-beet districts oj Colorado and Nebraska. Num- Aver- age num- ber of cattle per car. Length haul. Average car loading weight. Average car - sales weight. Aver- age sales weight per animal. Shrink- age per hun- dred weight. Freight cost per hun- dred weight. Feed cost per hundrfldweight. Com- mission cost per hun- dred weight. other costs ber of cars. En route. At marlcet. per hun- dred weight. 12 4 i 7 8 26 22 22 17 22 Miles. 660 617 679 863 S63 Pounds. 26,560 23,048 23,685 24,679 23,293 Pounds. 24,792 22,650 22,958 23,931 22,568 Pounds. 975 1,025 1,043 1,420 1,038 Pounds. 6.65 2.15 3.07 3.03 3.11 Cents. 30.8 7.1 7.1 9.0 7.7 Cents. 3.7. 3.8 2.4 Cents. 1.5 1.9 1.2 0.9 0.6 Cents. 6.1 5.9 .5.7 6.0 5.8 Cents. 2.6 2.5 2.4 1.8 2.5 85 122 1593 124,707 123,645 m,071 '4.30 116.1 13.3 11.2 15.7 12.4 o Average. MEAT-PACKING INDUSTEY. 153 All the shipments of pulp-fed cattle had to be unloaded for feed and water en route, in compliance with the amended 28-hour law. The cost of feed used en route was obtained on all but one shipment. This cost ranged from 2.4 cents to 3.8 cents per hundredweight of live animal, the cost on three of the shipments being approximately 3.7 cents per hundredweight. The feed cost at market ranged from 0.6 cents to 1.9 cents per hundredweight of cattle, the average being 1.2 cents. The commission costs on all the shipments were practically uni- form, ranging from 5 to 6 cents per hundredweight. The items of expense listed under "Other charges" averaged 2.4 cents per hundredweight; there was little variation in these charges. The expense of marketing these pulp-fed cattte approximated 42 to 45 cents per hundredweight. This does not include cost of labor in loading or materials used in bedding cars, nor is allowance made for shrinkage or possible loss or damage from death or injury in transit. RESULTS OF OTHER SHRINKAGE INVESTIGATIONS. As a supplement to the data obtained on shrinkage of cattle, attention is called to the results obtained in an investigation made by the Bureau of Animal Industry. That bureau made rather an ex- haustive study of shrinkage of range cattle shipped from the south- western and northwestern range states to centralized markets in 1910 and 1911. TabIjE 7.- — Shrinkage of range cattle and cottonseed-meal-fed steers in transit from South- western States to centralized markets, 1910-11. Description ol shipments. Number of ship- ments. Number of cattle. Average weight at origin. Net slu-inkage. i Hange. Average. Ratio of slirinlcage to live weight at origin. Range calves in transit less than 36 hours . . . Range calves In transit over 36 hours Range cows in transit less than 36 hours Mixed range cattle in transit less than 36 hours Mixed range cattle in transit 36 to 72 houi'S ' Mixed range cattle in transit 105 hours Ccttonseed-meal-fed steers In transit less than 36 hours Cottonseed-meal-fed steers in transit over 36 hours 475 509 791 1,810 688 616 Fownds, 166 209 749 676 541 1,266 862 Pounds. -1-14-13 -I- 9-0 -1-12-40 -H2-50 -1-27-3 7-42 41-67 47-73 Pounds. + 3 + 4 14 3 + 3 67 Per cent.* -1-1.8 -1-1.9 1.9 0.5 -(-0.6 7.0 4.5 > -l-lndioates gain in weight. • Cattle were in transit 54 to 72 hours, but the figures are for the second portion of the Journey, and i for the total time in transit. In addition, data were obtained on the shrinkage of feed-lot cattle shipped from Oldahoma, Iowa, and Illinois in 1911 and 1912. The results of this investigation were published in Department Bulletin 154 MEAT-EAiCiEIMG INDUSTRY. 25, The Shrinkage- in WeigLU of Beef Cattle in Traaisit, and Tables 7, 8, anicl 9 are summaries of the data appearing, in that bulletin. Table 7 is the summary of the data obtained during, the summer and fall; of 1910. and winter and early spring of 191 1 Data on nearly 6,000 head of cattle are included in, this, table. The year in which the work was done was a very dry one, with little grass,, and was con- d-ucive to a poor fill at origin and a small shrink im transit foe range cattle. With two exceptions the weather was good when all th3 shipments of range eattk were moving to^ market. Two shipments which were destined to Kansas City were cauglit. in snowsio^ms and their shrinkage was heavy when compared, with the other shipments. The variations, in the net shrinkages were quite wide for the different shipments. The greatest variations was found with the mixed range cattle in transit less than 3.6 hours, and the next greatest with range cows. The difference was not. so great with the calves nor with the fed eattle. The variation was greater with the fed cattle which were in transit over 36 hours than with those in transit for a shorter period. The average net shrinkage for all of the range cattle was small. It will be noted from a study of Table 7 that the weights of the range calves showed a fill instead of a slirink; also that the range cows and mixed range cattle had a very slight shrink. The heavy shrink- age' on the mixed range cattle in transit 105 hours was caused by a four-day snowstorm dtrring shipment, and at one of the stations where they were unloaded for feed and water the water pipes were frozen, so that they obtained very little water. The fact that these range cattle were shipped in a season of drought from pastures where there was little grass, and water undoubtedly tended to cause a very light net shrinkage at the market. On the other hand, the cottonseed-meal- fed steers were shipped under more normal conditions, with the result that the net shrinkage was greater. These fed cattle were shipped from feed fots iin- Oklahoma to Kansas Ci-ty and St. Louis, and wlLh the exception of one shipment, which arrived at market during a raging blizzard, weather eonxiitions; were very good. The datat oMained on these cottonseedr-mealrfed shipments indicated very cltearly that, tiie greater part of the shrinkage on the cattle occurred during the first 24 hours of the jouriiiey. Table 8 is a summary of the results obtained in sMppiug, range and feed-lot cattle from- the Northwestern States to the- centralized mar- kets during the season of 1911—12. The: range cattle originated im Wyoming, Montana, and western Nebraska, and were sent to market from Septfim.ber to December. The shipments, of fed cattle, originated in Iowa and IHinois, the work being finished in the latter State- in June,. 1912.. The net, shrinkage on aJil the ca.ttle was, quite uniform. MBAT-PACKIlsrG IKDUSTRY. 155 Table 8. — Shrinhage of range and feed-let cattle in transit from Northwestern States to centralized markets, 1911-12. - ^ Number of ship- ments. Number ol cattle. Average weight at origin. Net shrinkage.' Ratio or net Description o£ shipments. Range. Average. shrinkage to live weight at origin. Mixed range cattle in transit less than 36 Mixed range cattle in transit 36 to 72.liours . Milted rangff catttein transtt OYer-72-hours. Mixed corn-ted, cattle in transit less than 36 hours . :.. Mixed, corn-fed cattle in. transit 26 to 30 IG 11 g 6 38 19 7 11 ■ 866 794 695 278 1,209 527 397 438 Pounds. 909 978 1,030 1,218 1,214 1,086 1,232 1,121 Pounds. 35-114 -1- 1-54 12-97 20-78 9-123 18-88 + 7-67 7-7S Pounds. 58 36 53 51 51 45 23 32 6.38 3.68 5.00 4.19 4.20 Mixed corn-led cattle in transit 30 to 36 hours „ Silage-fed cattle in transit less than 20 hours Silagft-f ed cattle in transit over 20 hours 4.15 1.87 2.85 1 + indicates gain in weight. 0- TMs average is rarasuaBy low because of one shipment of 107 head, which actually gained 7 pounds per head after the fill at market. It this shipment is left out, the average net shrinkage of the remaming 290 is raised to 30 povplds. The data indicate that the greatest shrinkage occurs during the first portion of the journey. The work during 1911-12 was conducted under more normal weather conditions than that conducted in the previous season in the Southwestern States. The range cattle from the Northwest were marketed while the weather was good and con- ditions were favorable for keeping shrinkage to the minimum. The fed cattle which were shipped later went to market when weather conditions were more severe. Some of the shipments experienced extremely severe weather at the market. The data shown in Table 8 on fed cattle is more comparable with that obtained in the investiga- tion reported herein, and it wUl be noted that in both investigations there is littje variation in the average percentage of shrink, the aver- age being slightly more than 4 per cent. Table 9 represents a summary of work conducted in 1911 to supple- ment the other investigations made. Approximately 5,000 animals were weighed in securing the data shown in this table, and the results are a good indication of the shrinkage to be expected during a normal season. It will be noted that there was a considerable variation in the net shrinkage, especially in those shipments from the Northwest. The cattle shipments from that section originated in Montana and western South Dakota. Those from the Southwest originated in Texas. Frequent rains had fallen in Texas during the winter of 1910-11 and good grass wbs abundant the following summer. The grazing season of 1 9 1 1 was about a normal one and the results obtained from the shrinkage work that faH may be taken as an average. The cattle were either in good flesh or fat. Most of the range cattle are driven anywhere from one to upward of a hundred miles to the railroad for shipping, and as a rule they are driven from 15 to 20 156 MEAT-PACKING INDUSTRY. miles each day and then grazed along the trail for a few hours, and this procedure is kept up until shipping pens are reached. It is very seldom that range cattle are fed on arrival at the shipping pens before load- ing, and in many cases they are allowed little, if any, water. As a result of this treatment, range cattle have undergone considerable shrmk by the time they are loaded on cars at the shipping stations. Hay is seldom placed in the cars for the stock to eat while in transit. Among the conclusions reached in the investigation conducted by the Bureau of Animal Industry was that the shrinkage of range cattle in transit over 70 hours during a normal year is from 5 to 6 per cent of their live weight. If they are in transit 36 hours or less the shrinkage will range from 3 to 4 per cent of their live weight. Also, the shrinkage of fed cattle does not differ greatly from that of range cattle for equal periods of time. It varied from about 3 per cent with all of the silage-fed cattle and 4.2 per cent with the corn- fed cattle, when both classes of these animals were in transit for less than 36 hours, to 5.4 per cent for the pulp-fed cattle, which were in transit from 60 to 120 hours. Table 9. — Shrinkage of range cattle in transit to market from Northwestern and South- western States, 1911. Number of sliip- ments. Number of cattle. Average weight at origin. Net shrinliage. Ratio of shrink- age to live weight at origin. Description of shipments. Range. Average. Southwestern range calves en route less 3 5 8 17 3 13 6 4 211 730 1,307 1,383 126 849 150 180 Pounds. 246 1,193 860 007 1,020 783 751 1,066 Pounds. 11-13 65-83 26-60 4-64 50-72 ' +2-71 19-75 14-32 Pounds, 12 70 34 32 61 26 42 21 Per emu 4.9 Northwestern range steers en route over 36 hours -' 6.0 Southwestern range cows en route le^s than 4.0 Soutliwestem range cows en route 24 to 36 hours 3.6 Northwestern range cows en route over 36 6.0 Southwestern nuxed range cattle en route 3.3 Southwestern mixed range cattle en route 24 to 36 hours S.6 Northwestern mixed range cattle en route 2.0 ' + indicates gain in weight. SHEEP. METHODS OF MARKETING. Information previously collected by the Bureau of Markets and published in report 113, Office of the Secretary, shows that the num- ber of sheep shipped to the centralized markets of the United States, as compared with the number produced, varies from 35 per cent for some sections to 90 per cent for others, while from 10 to 50 per cent are sold to local butchers and packers and from 1 to 10 per cent, according to the section, are sold in the carcass or marketed otherwise. MEAT-PACKING INDUSTRY. 157 The- same information shows that the practice of shipping to cen- trfflized markets prevails most generally in the Central States, and that the greatest prevalence of local marketing is fomid in the ex- treme eastern, western, and southern sections. These comparisons represent relative proportions and not actual numbers of arrivals marketed from the various sections. By comparing one class of ani- mals with another, in specific groups of States, it was found in all sec- tions except the cotton States that sheep show the largest proportion shipped in carload lots by growers. In fact, the proportion of sheep marketed by owners leads to the conclusion that the majority of sheep producers are large scale growers or feeders who handle stock in such numbers as to permit marketing in carload lots. The data used in this report on cost of marketing sheep were col- lected on shipments originating in Colorado, Illinois, Kansas, Michi- gan, Missouri, Montana, Ohio, and Wyoming. With the exception of Kansas, from 68.9 to 74.5 per cent of the sheep marketed from the Central States in this group are sold to regular local dealers for ship- ment to market.^ Kansas sheepmen market 30.9 per cent of their marketable she»p through local dealers and ship 61.2 per cent in car- load lots. The proportion of direct shipments in carload lots in the other four Central States where data on sheep marketing were col- lected varies from 6.3 per cent in Ohio to 35.9 per cent in Illinois. In the former State 10 per cent of the sheep are sold to local butchers for the retail market trade. In Michigan 20.5 per cent are marketed in this way. The percentages shipped direct to market in carload lots in the three Western States, in which data were obtained on cost of market- ing sheep, ranged from 65.8 per cent in Colorado to 85.2 per cent in Wyoming. In the former State 23.8 per cent of the sheep marketed are sold for shipment to feeding points as compared with 8 per cent thus sold in Montana and 7 per cent in Wyoming. Montana sheep- men dispose of 8.4 per cent of their market sheep through local dealers and 10 per cent are bought by local butchers for retail trade. Information from various reliable sources indicates that four-fifths of the sheep and lambs marketed in the United States pass through the large central markets, while only one-eighth are sold for local slaughter and from 3 to 4 per cent are slaughtered on farms and ranges. The replies of the special live-stock and price reporters of the Bureau of Crop Estimates relative to the numbers of feeder sheep and lambs bought in the different seasons shows that f aU buying is most preva- lent.^ Figures for the Corn-Belt States, with those for the two sheep- feeding States of Michigan and Ohio added, show that 65 per cent ' Report 113, OfBce of the Secretary. 'Report 113, Office ol the Secretary, U. S. Dept. ot Agriculture. 158 MEAT-EACKIHG INDUSTRY. of the stocker and feeder sheep are bought in the fall- The re- lalies further show that the stockman of these areas buy 47 per cent of their feed-lot supphes at the centralized markets. The daily tele- graphic loading reports received from railroad division superin- tendents by the Bureau of Markets show that the large movement of sheep and lambs to feed lots takes place from the latter part of Sep- tember to the first part of December. Kentucky, Missouri, and Texas buy a large percentage of their stocker and feederlambs in the su mme r months. Large numbers of sheep are shipped from the surplus-producing mutton States in the fall, which makes this the heavy marketingsea- son for sheep. It is estimated that these States market 62 per cent of their sheep and lambs during the fall months. The sheep-feeding sections of the United States tend toward selling in the summer, with the exception of those few States which make a specialty- of shipping spring lambs. Lambs from the feed lot&of Colorado and Nebraska are sent to market from February to June. COSTS OP MARKETING. Records were obtained on shipments comprising 11 single and 43 double-deck cars. These records have been summarized according to States of origin in Table 10. Presented in this form it is possible to compare the costs of marketing sheep in the Corn Belt and in the sheep-feeding sections of the North Central States with the costs of marketing sheep from the western sheep-producing States. The lack of scale facihties at many sheep-loading stations prevented the secur- ing of loading weights needed in determining shrinkage in transit. This accounts for the small number of records used in the compari- sons. Table 10. — Costs and shrinkage in marketing sheep and lambs at centralized markets. state of origin. Wum- barof decks. Aver- age num- ber at animals per deck. Aver- age leQgtlx of haul. Aver- age load- ing weight. Aver- age sales weight. Aver- age shrink per huh- dreii- weight. Freight cost per hun- dred- weight. Com- mission cost per him- ■ dred- weight. Feed cost per hun- dred- weight; Other per hun- dred- weight. Ohio Missouri Illinois Michigan — Kansas Montana Colorado Wyoming. . . Ill U5 112 107 125 114 117 126 Miles. 300 157" 404 3S5 91 1,H3 G94 120' P(amis. 9,908 9,ias 9,381 8,655 10, 170 11,381 12,810i Pimnis. 9,068 8,37-4 9,026 7,950 9,565 Iff 150 10, 760 12,165 Pounds. 8.48 8.57 8.15 8.15 6.95 5.45 3.53 Cents. 19.3 625.9 C19.8 21.5 e7.7 222.9 CeiUs. 8.0 13.8 c9.5 10.0 7.3 8.0 6.5 5.8 Ccnte. a 11. 9 12.9 ■1116.8 /15.S 2a Crate. 6.0 7.9- c5.8 6.7 5.6 5.5 4.8 Including 3.2 cents, per himdredweight paid for feed, en route for 731 sheep totaling 60,370 pounds at 6 All single-deck cars. c Average on two siagie-deolE loads a.vBrBging:9,g85 pounds at market d Amojmt paid tor feed en route. These, lambs were marketed in four lots over a period of 23 fiavs were Bonght'as feeders with feed-in-lrmsi* / Including 10.9 cents per hundredweight for feed en route. J Includes freight charges paid to river markets on 5 double-deck cars. MEAT-BA.GKIKfG. ESTDUSTEY. l&U I Elevett shipaaeats comprising tliree single and ten double-dect cars on which records were obtadneA originated in Ohio. In. the case of two of the singlfi-deet car. siaigjaieats, the ship-pera decided to ship their stock in one car to save freight and had ordered one double-deck car, but after waiting two weeks for it two single-deck: cars were accepted, which, the shippers estimated iacreased their expense by $25. The three single-deck cars and. two double-decks were mar- keted at Pittsburgh, while seven double-decks were sent to Buffalo. The other double-deck car was billed to Cleveland. The length of haul for all the Ohio shipments ranged; from 170 to 36& miles. A record of the time in transit was obtained on only five shipments, and with the exception, of 2.7 hours for the shortest haul the time raaiged from 50 to 61: hours. The only explanation to be offered for the Lang period of time consumed in transporting, these cars to market ia that not enough cars of stock were being- shipped in that section to justify special live-stock trains, conseqaently they were forwarded in mixed freight triiins. Some of the shipments were sent to market during. the severe winter of 1917-18, when transportation service, especially between Mississippi River points and the Atlantic seaboard, was badly congested; but inasmuch as records of shipments originating , ill 1915 and 1916- also show that 50 to 60 hours, including time spent at rest and feeding stations under the 28-hour- law,, were required to haul stock 300 to 350 miles; this does not explain the delay entirely. With, the exception of one mixed single-deck car of lambs and sheep, alL of the shipments originating, in Ohio consisted of lambs,, and the number loaded per deck ranged from 100 to 116, with an average of 110. The sales weight per deck for these lambs ranged from 7,700. to 9,513 peund&, averaging 8,911 pounds. Minimimi carload weights for sheep range from 12,000 to 14,000 pounds for single-deck ears and 18,000 to 23^000 pounds for double-deck cars. The maiJEimum weight recorded: on a double-deck car in the reports obtained on Ohio shipments was 41,800 pounds on two cars at the" loading station, which is an average of 20)900 pounds per car. These cars weighed 38j050 pounds, or an average of 19,025 pounds each at the market.. The maximum weight on, a single-deck car was 10,850 pounds at loading station and 10,100 pounds at the market. While it is pessible. to attain the- minimum weight for double-deck cars in loadiaig sheepj especially for the lower weights,, it is practically impossible to do so in loading single-deck cars without undue crowd- ing, which, would increase the risk of injury and loss in shipping. The fa^t that it is difficult to load cars with, lambs to the minimum weight nece^arily ha-s a bearing on freight costs in shipping sheep or lambs to market. The shipper is compelled to pay the basic rate on the full minimum weight, and if he is unable to load to this, mini- mum,, the rate per hundredweight on the weight actually loaded ia 160 MEAT-PACKING INDUSTRY. increased in proportion to the difference between weight actually shipped and the minimum weight. For this reason shippers using single^deck cars and paying single-deck car rates usually pay- more per hundredweight in shipping sheep than those who use double-deck cars. In two of the three single-deck shipments from Ohio the length of haul was less than 200 miles and the freight charges paid amounted to 25 and 26 cents a hundredweight. Compared with this are two double-deck cars shipped approximately the same distance, the freight charges on which amounted to 15 to 17 cents per hundred- weight. One of these double-deck cars weighed 16,020 and the other 15,400 pounds at the market, the heavier car being almost 2,000 pounds under the lowest minimum weight for double-deck cars. Shrinkage is affected by so many factors that it necessarily varies widely. This is verified by the data on the Ohio shipments of sheep, wiiere it will be noted that the shrinkage from loading station to market ranged from 5.6 to 12.09 per cent. By averaging the data on shrinkage in a great number of shipments, a fair idea of the shrinkage to be expected under average conditions in a given section may be obtained, but it must be understood that for individual shipm.ents a wide fluctuation from the normal can be expected. The figures on shrinkage appearing in Table 10 must be taken for their respective values based on the number of shipments used in the averages. Commission charges on sheep at Pittsburgh at the time these ship- ments were made were $9 for a single-deck car and $16 for a double- deck car. At Buffalo the charge was $14 for a double-deck car. These charges when reduced to the basis of a 'hundredweight of live animal ranged from 7.4 to 10.4 cents, the average for all the Ohio shipments being 8.6 cents per hundredweight. Feed was given the lambs at stations en route to market in four of the eleven shipments. The cost of feed for these particular ship- ments amounted to slightly over 3 cents per hundredweight, or an average of 1.1 cents per himdredweight for all shipments. There was a wide variation in the cost of the feed used at market in feeding these lambs, the cost per hundredweight varying from 5.3 cents to 18.8 cents. The chief item included under "Other charges" is yardage, which in the case of sheep at the time of this investigation amounted to 5 cents a head at most markets. These "other charges" averaged 6 cents per hundredweight on the shipments originating in Ohio. The six cars of sheep originating in Missouri shown in Table 10, were all single-deck cars, and, with the exception of two cars of mixed sheep and lambs, all were lambs. The number of animals per car ranged from 88 to 135, the average being 115. All of the ship- ments were marketed at National Stock Yards, Illinois, and the MEAT-PAOKING INDUSTRY. 161 length of haul varied from 125 to 177 miles. The time en route ranged from 11 to 19 hours, with an average of 17 hours. There was a wide range in the weight of the loads, the mininniTn at the market being 5,880 pounds and the maximum 10,410 pounds, and in this instance both loads originated at the same loading station. The rate for the heavier load, based on the actual weight, was 21.1 cents per hundredweight on the actual weight, as compared with 40.8 cents per hundredweight for the lighter load. The net shrinkage on four cars was quite uniform, being approxi- mately 8.75 pounds per hundredweight. The other two cars had a shrinkage of 6.39 and 10.77 per cent, and -the greater shrinkage occurred in the lightest load, which consisted of 88 mixed lambs and old sheep. It is of interest to note that with the exception of the loads of sheep originating in Kansas the average net shrinkage on the sheep loaded in each of the Central States where data were obtained ranged from 8.15 to 8.57 per cent. The commission charges for selling sheep at National Stock Yards at the time these shipments were made ranged from $10 to $12 for a single-deck car. One of the cars on which records were obtained was used by two shippers who combined in shipping, and the division of this shipment at the market for the purposes of selling and proper accounting resulted in increasing the commission charges to $17.40. As stated elsewhere, the size of the load affects the commission cost per hundredweight when these charges are made on a car-lot basis. In the case of the shipments from Missouri the commission costs for the maximum weight load amounted to 9.6 cents per hundredweight, as compared with 17 cents for the minimum weight load. The expense of marketing sheep from Missouri listed under "Other charges" ranged from 5.5 to 11.1 cents per hundredweight, the aver- age being 7.9 cents. The maximum charge in this instance Was caused by the increase in yardage charges from 5 to 8 cents a head. The shipments of sheep originating in Illinois on which data were collected consisted of eight double-deck cars consigned from Chicago to Pittsburgh, and two local shipments, both single-deck cars, one of ^hich went to Chicago and the other to Indianapolis. The only information obtained on the shipments originating in Chicago was the weights at loading and destination, which made it possible to calculate the net shrinkage resulting. This shrinkage varied from 1 to 3.91 per cent and averaged 3.55 per cent. Probably the reason the shrinkage on these shipments was low was because the sheep received a good shrink while en route to Chicago from the original loading station. The shrinkage on the two local shipments was approximately the same, that on one car amounting to 5.29 per cent and the other 5.67 per cent. These two cars, one a mixed load and the other consisting entirely of lambs, averaged 9,785 pounds in 152250"— 20 ^11 162 ' MEAT-PACKING INDUSTBY. weight at the market, and as the marketing costs shown in the table on shipments from Illinois apply entirely to them no detailed expla- nation of the items is deemed necessary. The data on sheep from Michigan apply to one double-deck car shipped to Buffalo. The feed cost shown includes 3.1 cents per hun- dredweight for feed en route. The four decks shown as originating in Kansas and the 16 decks loaded in Montana comprised one ship- ment each. The outstanding features of the Montana shipment are the cost of freight and the feed charges. The freight cost is relatively large because of the long distance over which the shipment had to be transported. The feed cost was large because the sheep were held at a feeding station outside of Chicago and were marketed in four sepa- rate lots over a period of 23 days. As this is a common practice in marketing sheep from Montana and Wyoming, the costs shown are of particular interest as illustrating the allowances western shippers must make in consigning their lambs to the centralized markets. The two shipments originating in Colorado consisted of fat lambs loaded in the beet-pulp feeding district in the northern part of the State. , One shipment of two double-deck cars went to St. Joseph, and the other, consisting of three double decks, was sold in Kansas City. The latter shipment was the heavier, averaging slightly more than 11,000 pounds per deck at the market. The sales weight of the St. Joseph consignment averaged 10,383 pounds per deck, but there were three fewer lambs loaded to each deck. The net shrinkage on the lambs consigned to Kansas City was 1 per .cent lesa^ than on those to St. Joseph, but the cost of feed en route to market was $1 more per car, the average feed cost en route on both shipments being 10.9 cents per hundredweight. No feed cost was shown on -the account sales of the lambs sold at St. Joseph. The bill for feed on those sold at Kansas City amounted to 7.4 cents per hundredweight. The freight cost shown on the Colorado lambs is misleading because it does not include the amount paid when the lambs were sold as feeders w;ith the freight paid to the Missouri Eiver with feed-in- transit privileges. The 7.7 cents per himdredweight shown here represents the additional freight cost which the feeders paid when their lambs were ready for market. The records of the four shipments from Wyoming were obtained from one of the largest sheep growers in that State. The consign- ments, all double-deck cars, were marketed in Denver, but the freight was paid to the Missouri River on five of these cars. The rate to Denver, on those shipments on which freight was paid only to that point, amounted to about 10 cents per hundredweight, while those ahipments on which freight was paid to the Missouri River took a rate slightly more than 32 cents per hundredweight. It is a common practice in Wyoming and Colorado when consigning sheep to Denver MEAT-PACKING INDTISTRT. 163 to pay the freight to the Missouri River markets. The sheep or lambs can then be sold in Denver and reshipped to the river markets for resale or slaughter or they can be purchased by feeders who wish to finish the animals in the feed lots. It is a matter of particular interest that aU of the cars loaded in Wyoming were loaded much heavier than those loaded in the other States, the full minimum weight being attained in every ship- ment. The cars averaged 126 sheep to the deck, and with the exception of 130 wethers all of the sheep were old ewes. The net shrinkage resulting on the Wyoming shipments varied widely, ranging from 1.86 per cent to 6.29 per cent, and averaging 3.53 per cent. The feed costs at market on these Wyoming sheep represent an average cost for feed where hay only is fed. It is almost impossible to make a fair comparison of the average total costs of marketing sheep in the different States shown in Table 10, because of the wide variation in conditions applying to each State and the Incompleteness of the data obtained. Not including shrinkage, the total average cost of marketing, according to the records collected, varied from 23.9 cents per hundredweight for the two double- deck cars originating in Kansas and shipped 91 miles to Kansas City, to 11.97 per hundredweight on eight double-deck cars shipped from the neighborhood of Billings, Mont., to Chicago, a distance of more than 1,100 miles, and held from 3 to 23 days at a feeding station near that market. The cost of marketing sheep from Illinois and Wyo- ming on which records were obtained was slightly more than 35 cents per hundredweight in each case. The distance from the points of origm to .the markets to which the shipments were consigned also was about the same in each case, approximately 125 miles. The total expense of marketing sheep from Ohio, Missouri, and Michigan also was approximately the same, varying from 45.8 cents for the first-named State to 49.9 cents for the latter. Siunmarizing the data shown in Table 10, it is very conclusively shown that sheep and lambs shrink more in proportion than other classes of stock while en route to market. Also it is apparent that owing to the difficulty of loading to the minimum car weight now required in the tariffs on sheep, the freight expense for the load actu- ally carried is greater than for other kinds of animals. A study of the data on margins per hundredweight received by local dealer-shippers as pubHshed in Report No. 113, reveals that this class of shipper obtained an average margin on sheep ranging from 59 cents per hundredweight in Nebraska to $2.05 per hundredweight in Virginia. Compared with the estimated value of the animals sold, local dealers who consigned to 15 centralized markets in 1915 realized a gross margin of 12.9 per cent on their sheep as compared with 10.34 and 10.33 per cent on cattle and hogs. 164 MEAT-PACKING INDTJSTBY. HOGS. METHODS OP MARKETING. Approximately 60 per cent of the hogs marketed in tMs country are shipped to market from October to March, inclusive. The chief reason for this seasonal movement is the prevaiUng practice of having the bulk of the pigs farrowed in the spring in order to grow and fatten them most economically. Inasmuch as com is the chief fattening ration for finishing hogs and spring pigs reach the period ready for fattening coincident with the maturity of the corn crop, this also tends to influence the marketing of these animals during the cold weather months. Another factor which formerly influenced fall and winter marketing of hogs more than it does now was the development of winter pork packing prior to the invention and development of artificial refrigeration. With present facilities for freezing and curing pork, cold weather is no longer such a factor in regulating the movement of hogs to market. Inasmuch as the production of hogs supplements the production of corn, it is only natiual that the Corn Belt should be the center of the hog-raising industry of this country. The replies from the special live stock and price reporters of the Bureau of Crop Estimates, sum- marized in Report No. 113, indicate that the percentage of hogs shipped by owners runs highest in the Corn-Belt States, where about 23 per cent are sold in this manner. With the exception of Nebraska, from 60 to 69 per cent of the hogs in the Corn Belt are sold to regular local dealers, Nebraska reports indicating that local dealers handle 45 per cent, while 35 per cent are shipped in carloads by owners. Other North Central States not in the Corn Belt proper, which furnish a large percentage of market hogs, sell 48 to 63 per cent of their hogs through local dealers, while from 5 to 11 per cent are shipped by owners. These latter States market a number of hogs through cooperative shipping associations and to local butchers; also as farm- cured meats. An increase in the development of the hog industry in any section is usually foUowed by an increase in the percentage of hogs shipped by owners. Data presented in Eeport No. 113 also show that the number of hogs shipped to the centralized markets varies from 25 per cent for some sections to 80 per cent for others, while 10 to 40 per cent, according to the section, are sold to local retailers and packers and from 5 to 35 per cent are farm slaughtered and sold in the carcass or as farm-cured meats. It is estimated from the reports of the Bureau of the Census and other data that two-thirds of the hogs slaughtered in the United States pass through large central markets, one-twelfth are sold for local slaughter and about one-foiuth are slaughtered on farms and ranges. MEAT-PACKING INDUSTRY. 165 COSTS OF MARKETING. Records on 873 shipments of hogs, comprising 1,193 cars, douHe decks being counted as two cars, were used in this report in making the comparisons on cost of marketing hogs. These records represent two distinct methods of marketing, viz, consignment to commission firms at public stockyards and consignment direct to packing com- panies. Stock marketed by either method is consigned either by the farmer, local stock buyer, or live-stock shipping association. A commission firm receiving consignments at public stockyards has entire charge of the disposition of the stock, which is sold to packer buyers, city butchers, or shippers. The proceeds of the sale, less commission and other marketing charges, are the net proceeds received by the owner of the stock. Stock consigned direct to a packer is sold either at a price previously stipulated or at the market price on day of arrival. In making comparisons of the two methods of marketing hogs, the data on shipments to centralized markets were tabulated so as to show the differences in shrinkage of shipments made by farmers, local dealers, and cooperative shipping associations. Table 11 shows the niunber of the records according to class of shipper, destination, and in those cases where shipments were consigned direct to packing plants, the treatment in regard to fill after arrival. As has been stated, many of the records used in this investigation were obtained by transcribing records and account sales of local dealers. Inasmuch as this class of shippers market more hogs than do farmers or coopera- tive shipping organizations and are more inclined than farmers to keep accounts of their shipments, the majority of the records were obtained from them. The data collected have been assembled in several tables, so as to show the effect of variations in factors that influence shrinkage and marketing expenses. These factors are: Amoimt of feed placed in car or fed en route; season of the year; time in transit; distance traveled; and size of load on basis of both weight and number of animals per car. Table 11.- -Classijication of records of hog shipments according to season, source, and destination. Winter. Summer. Spring and fall. Class of Shipment. Ship- ments. Decks. Ship^ ments. Decks. Ship- ments. Decks. 21S 40 79 44 35 329 42 91 72 52 147 66 S 8 9 207 74 10 9 11 106 40 7 71 7 138 48 CooperaOve shipments to centralized maftets Direct Bhlpments to pacTHner plants with water fill at 9 90 Direct shipments to packing plants with no fill at destination 11 Total " 413 586 229 i 311 231 296 166 MEAT-PACKING INDUSTRY. The differences between the cost of marketing hogs at centralized markets and those incurred in shipping direct to packing plants are found mainly in the expenses incurred after arrival at destination. Prior to such arrival the expenses, with the exception of feed en route, are approximately the same for both classes of shipments, the expens • for loading and bedding cars is the same, and the freight costs do not differ materially for hauls of approximately equal length. When hogs are consigned direct to packing plants, however, they are not fed as a rule after arrival at destination, therefore there is a tendency on the part of shippers to place more feed in the car than when shipping to centralized markets. The shipments of hogs consigned to a centralized market will incur certain expense after arrival, such as yardage, com- mission, and feed, none of which is incurred by shipments consigned direct to packing plants. The total expense of marketing at centralized markets, therefore, will exceed the expense of shipping direct to pack- ing plants, to the extent of the amount of these costs. The margin between prices paid for hogs delivered direct to pack- ing plants and the prices paid at the centralized markets, with the differen6es in the costs and shrinkage resulting from shipping to either point, will determine which is" the most profitable method of market- ing. The prices paid at the open markets must be great enough to allow for the additional expense incurred at these markets and for any increased shrinkage over that resulting from shipping direct to pack- ing plants. The shrinkage and the items of expense incurred in ship- ping hogs to centralized markets have been computed in detail in this report. The data obtained on shipping hogs direct to packing plants were compiled so as to show the average shrinkage resulting from shipping to these plants. FEKIGHT COSTS. Most freight tariffs on hogs specify 17,000 pounds as the minimum weight for the standard single-deck car 36 feet in length, and this weight was used in this report as a basis in determining freight costs. When shipments are made approximately equal distances, the weight of load is the most important factor governing freight costs, inasmuch as there is a tendency among shippers to load less than the minimum weight, and the basic weight always is charged for the minimum weight whether that amount is loaded or not. In Table 12 is shown the actual average freight cost per hundred- weight and per car for loads of varying weights shipped 50 miles or less, 51 to 100 miles, 101 to 150 mil^s, 151 to 200 miles, and more than 250 miles. In the first two columns are shown the range of mUea over which shipments were made with the average for each group. The third colimin shows the nuxaber of cars in each group of weights on which freight costs were obtained, while the fourth and fifth columns MEAT-PACKING INDUSTRY. 167 show the average and the range of sales weights for each weight group. In the sixth coltunn is shown the difference in weight between the actual load and the minimum. The shipper was compelled to pay the basic freight rate on this difference, thereby increasing the freight cost per himdredweight when based on the weight actually shipped. In the seventh and eighth columns are shown the average freight costs paid per car and per htmdredweight for each weight group. The lower division of the table shows the average cost per car and per hundred- weight for all weights for the different groups of distances. It is im- possible to explain all the variations in freight costs because of the many variations in railroad rates in different sections of the country, and as the data were taken from shipments made in several States, it was to be expected that the results obtained would not be entirely con- stant. It is apparent, however, that a shipperwho loads less than the minimum weight is required to pay higher freight costs for the load actually carried. Out of a total of 253 cars on which records of freight costs were obtained 158 or 62.5 per cent weighed less than 17,000 pounds. Table 12. — Freight charges on hogs according to length of haul and weight per carload. Length olhanl. Number of cars. Car sales weights.' Average number of pounds below mini- mum weight per car. Average freight cost. Per car. For hundred, weight. Range. Average. Range. Average. Miks. 28-39 23-49 36-37 23-40 iSSO 35 39 37 . 34 38 4 4 2 6 10 Pounds. 10,050-13,760 14,060-14,970 15,520-15,880 16,220-16,710 14, 730-19, 700 Pounds. 12,073 14,501 16,700 16,625 18, 128 4,927 2,499 1,300 476 Dollars. 13.40 16.40 15.85 15.13 16.90 Cents. 11.1 11.3 10.1 9.2 9.3 Bt-9i 64-72 64 64-80 63-99 «6 64 64 61 67 16 11 1 4 16 10,290-13,710 14,020-14,830 12,882 14,380 15,770 16,320 19,442 4,118 3,620 1,230 680 22.88 10.91 16.84 31.49 22.88 17.4 13.8 10.7 13.1 11.8 16,000-16,910 17,080-21,150 118-131 108-139 101-160 101-150 101-144 123 123 123 120 120 12 11 13 23 35 9,640-13,560 14,210-14,990 16,050-15,980 16,000-16,950 17,200-23,390 12, 144 14,580 16,631 16,546 18,791 4,856 2,420 1,369 454 21.80 24.53 24.59 24.82 28.02 18.0 16.8 15.7 15.0 14.9 159-237 176^219 181-243 176-243 160-243 200 195 ig« 19S 200 7 7 12 17 30 10,280-13,720 14,010-14,910 15,180-15,970 16,120-16,940 17,060-20,200 12,249 14,473 15,497 16,541 18,137 4,751 2,524 1,603 459 21.62 28.37 32.19 30.65 .30.30 17.7 19.5 20.8 18.6 16.7 263-490 29fM21 413-427 353 337 421 6 4 4 15,240-15,990 16,300-16,910 17,220-18,345 15,506 16,688 17,853 1,494 312 32.87 40.71 32.76 21.2 24.4 18.3 23-60 64-95 101-160 159-243 263-490 87 61 121 198 369 25 48 94 73 13 10,050-19,700 10,290-21,150 9,640-23,390 10,280-20,200 16,240-18,345 16,066 15,758 16,474 16,416 16,692 934 1,242 526 685 408 15.82 21.81 25.56 29.68 35.25 9.8 13.8 15.5 18.1 21.2 ' Weights in tbla column are grouped i 16,000-17,000, (6) 17,000 and ovar. BfoUows: (1) below 14,000, (2) 14,000-15,000, (3) 16,000-16,000, (4) 168 MEAT-PACKING INDUSTBY. For comparative purposes and to show the possible extent to which freight charges may be increased on the actual weight of loads weighing less than the minimum, Table 13 is inserted. Table 13.— Percentage increase in freight charges on carload weights below 17 ,000 pounds minimum for single-deck S6-foot car of hogs. Weight Percentage (pounds). Increase. 16,600 3.0 16,000 6.29 15,500 9.7 16,000 13.3 14,600 17.2 14,000 21.4 13,600 25.9 13,000 30.8 12,600 36.0- 12,000 41.7 The calculations in this table are based on the proviso that the car rate will be charged on a minimum of 17,000 pounds. It will be noted that, theoretically, as the weight of load decreases the freight cost on the weight actually shipped increases on a sliding scale varying from 3 per cent for the first 500-poimds decrease in weight to 5.7 per cent on the tenth 500-pounds decrease. A comparison of the freight costs for hauls of different lengths shows that, in the cases cited, the rate on shipments of hogs trans- ported an average of 37 miles was approximately 3.5 cents per hun- dredweight less than for those hauled an average of 61 miles. In- creasing the length of haul from 61 to 121 miles increased the freight cost slightly more than 2 cents per hundredweight. An addition of 77 miles to the latter distance increased the cost almost 2.5 cents per hundredweight and an addition of 171 miles more increased the rate another 3 cents. In other words, the rate for all loads transported less than 50 miles was 9.3 cents per himdredweight on a 17,000-pound basis, and this was increased to an average of 20.75 cents for all loads hauled more than 250 and less than 500 miles. Feed in transit. — ^It is a common practice in shipping hogs to cen- tralized markets or direct to packing plants to provide them with feed either in the car, or at rest and feeding stations where they may be unloaded to comply with the 28-36-hour law. In order to indicate the extent of the practice among farmers and dealers of feeding hogs en route to centralized markets, Table 14 was constructed. This table shows the variation in the extent of feeding according to season and length of time in transit. The tendency as a rule, both among farmers and dealers, is to practice feeding eji route to a greater ex- tent during the winter months than in any other season. MEAT-PACKING ENDTJSTKY. 169 Tablb 14. — Bog sMpmentsfed in transit by dealers and farmers, according to season and length of time in transit to centralized markets.' Shipped by- Hours In transit. Length of haul (miles). Total cars. Carloads fed. Carloads not fed. Bange. Aver- age. Num- ber. Per cent. Num- ber. Per cent. ■ 4- 14 IS- 20 21- 30 31- 68 72-184 11 17 26 40 100 77 147 310 342 429 81 69 68 SO 10 66 62 62 44 10 69.1 76.4 91.2 88.0 100.0 25 17 6 6 30.9 •24.6 8.8 Average 12.0 winter 4-184 25 212 278 224 80.6 64 19.4 Farmeis..... ( 7-14 I 16-20 1 21-30 I 32-43 12 17 26 36 76 177 410 455 13 3 14 12 6 3 14 12 46.2 100.0 100.0 100.0 7 63.3 7-43 25 , 303 42 35 83.3 7 16.7 Dealers. ••••••••. . f 7-14 1 15-20 1 21-30 1 33-52 12 18 24 37 110 180 248 380 30 £8 80 20 19 42 22 18 63.3 72 4 73.3 90.0 11 16 8 2 36.7 27.8 10.0 7-52 20 208 138 101 73.2 37 26.8 Spring and lall. Farmers 6-14 15-20 1 21-24 30-46 12 17 22 37 125 157 139 615 11 20 6 12 1 13 6 10 9.1 65.0 100.0 83.3 10 7 90.9 36.0 2 16.7 , 6-46 21 242 48 29 60.4 19 39.6 Dealers 2-14 15-20 { 21-30 31-36 155-83 10 16 23 34 73 131 217 342 440 729 46 83 49 19 11 23 48 43 18 11 60.0 67.8 87.8 94.7 100.0 23 35 6 1 60.0 42.3 12.2 Average.. Farmers .•••.•••.. 5.3 2-83 22 275 208 143 68.8 65 31.2 4-14 15-20 \ 21-27 32-36 I 78 23 35 77 121 224 308 407 686 26 24 14 7 3 20 23 10 7 3 76.9 95.8 71.4 100.0 100.0 23.1 4.3 28.6 4-78 20 241 74 63 85.1 11 14.9 > This Includes shipments fed in car and at feeding stations. Table 15 is a summary of the data showing the amount of feed per hundredweight given to hogs in car and en route by farmers and dealers dtiring the different seasons and according to the length of time in transit. It is apparent from this table that for the shipments of which records were obtained farmers fed more heavily in car and en route than local dealers. This is further corroborated by averaging all the data for each class of shippers according to tinie in transit but without regard to seasons. Such an average shows that for any given length of time in transit more feed per hundredweight was used for the farmer shipments than for the dealer shipments. It also shows that as the length of time in transit increased, the difference between the amounts fed by the two classes of shippers increased. Stating the proposition somewhat differently, farmers and dealers both increased the amount of feed given to hogs en route as the time in transit increased, but farmers increased the amount in the greater proportion. 170 MEAT-PACKING INDUSTRY. Tablb Vi.— Effect ofgeaton and time in transit on quantity of feed given to Tioys t/t Iratuit ^len andfarTTiers in shipping to centralized markets. BoasoB. Shipped by- Hours In transit Length of haul. Num- ber cars or decks Av- erage nvmi- ber hogs per car. Average loading weight per car. Av- erage weight hogs. Average feed per hun- Bange. Av- erage dred- weight of animal. 4- 14 15-20 21-30 31-49 72-184 U 17 26 39 100 Mila. 84 180 324 368 429 66 62 62 44 10 74 77 77 76 88 Pmndi. 16,015 16,485 16,477 16,628 18,383 Pounds 213 211 316 318 200 Pounds. 1.34 1,89 2.08 Average 2.78 Winter 4-184 26 239 224 76 16,478 218 2.04 f 11-14 1 16-20 1 21-30 I 32-43 12 17 26 36 71 177 410 455 6 3 14 12 76 79 73 73 17,750 16,948 16,353 15,848 234 217 229 222 1.45 2.89 Average 2.63 3.95 11-43 27 347 35 74 16,470 221 2.85 f 7-14 1 16-20 1 21-30 1 33-52 12 18 24 37 123 194 226 400 19 42 22 18 76 75 75 72 16,133 15,857 17,823 16,837 213 211 237 231 1.54 L88 Average Farmera... L85 2.24 Spring (ma ralL 7-52 22 224 101 74 16,513 221 1.84 14-19 21-24 3S-46 17 22 37 147 189 553 10 65 68 68 15,272 16,242 18,917 243 280 201 1.63 2 12 Average .2.41 14-46 25 294 29 85 16,007 245 1.99 4-14 10-20 21-29 31-36 55-83 10 18 23 33 73 164 226 339 437 728 23 48 43 18 11 62 76 66 81 80 15,213 16,303 18, 487 16,677 17,093 242 218 251 271 212 1.77 1.78 Average Farmers 3.02 3.44 f^iTTinw , . 4-83 31 315 143 68 16,291 236 2.04 4-14 15-20 21-27 32-36 78 10 18 23 35 78 134 233 268 407 686 20 23 10 7 3 69 66 69 86 91 18,083 18,190 18,934 16,393 20,580 232 245 249 257 225 1.67 2.14 2.20 2.79 4.74 Average 4-78 32 228 63 68 16,499 240 2.18 Both classes of shippers used the least amount of feed in the spring and fall, the farmers feeding the maximum amount in the winter months. The data show that both farmers and dealers take the length of time in transit into consideration in deciding on the quantity of feed to place in cars for hogs shipped to market. For instance, in the shipments on which data were collected for Table 15, it will be seen that increasing the length of time in transit for dealer ship- ments in the winter months from an average of 11 to an average of 17 hours, increased the quantity of feed per hundredweight of live animal 0.55 pound, or 41 per cent. Increasing the time from 11 to 39 hours increased the feed used 1.44 pounds per hundredweight, or 107.6 per cent. However, when the time in transit was increased to an average of 100 hours the amount of feed used was only slightly greater than that for 39 hours. There was an increase of 0.34 pound per himdredweight "or 22 per cent in the quantity of feed MEAT-PAOKTNG INDrSTBY. 171 Tised by dealers in the spring and fall months when the time in transit was increased from an average of 12 to an average of 17 houra. When the time exceeded 30 hours the increase in feed amounted to 0.7 pound per hundredweight, or 45 per cent, and in the ciise of farmer shipments the increase was approximately 0.8 pound , per hundredweight, or 48 per cent. Dealer shipments made during the summer received approximately the same amount of feed per hundredweight for an average of 10, 18, and 23 hours; when the tune was increased to an average of 33 hours, the average quantity of feed given was increased by 1.45 pounds per hundredweight, or 71 per cent. Dealer shipments in transit an average of 73 hours received 94 per cent more feed than those in transit an average of 10 hours. Farmer shipments in transit an average of 12 hours during the winter months received 1.45 pounds of feed per hundredweight of live animal while en route to market. When this time was increased to an average of 17 hours, the amount of feed was increased 100 per cent, and when it was increased to an average of 36 hours, the feed was increased 172 per cent. During the summer season farmer shipments in transit an average of 10 hours received an average of 1.57 pounds of feed per himdredweight of live animal and an addition of 8 hours to this time increased the feed supply en route by 36 per cent. Those shipments in transit an average of 35 hours received approximately 78 per cent more feed than those in transit an average of 10 hours, and when the time was increased to an average of 78 hours the amount of feed was increased 202 per cent. Most of the feed used by farmers in feeding their hogs en route to market is of their own production and in most of the records obtained from this class of shippers no figures were given as to the value of the feed used. Local dealers usually find it necessary to purchase all the feed they use and at the time of this investigation they were paying from $1.25 to $2 a bushel or from 2.2 to 3.6 cents a pound for corn. At these prices the expense for feed used en route varied from an average of 4.5 to 7.3 cents per hundredweight of live animal in winter and summer and from 4 to 6.6 cents in spring and fall. Feed at destination. — The data relative to the amoxmt of feed fed to hogs after arrival at the centralized markets indicate that there is little imiformity as to the amount of feed given, and it is very evident that shippers differ in their opinions as to the amount of feed needed to put the stock in the best condition for sale. The extreme range in the amount of feed given to hogs according to the records collected was from 0.57 to 6 pounds per hundredweight of live animal. A summary of 152 consignments containing 13,898 aaiimals showed that an average of 1.95 pounds of corn per hundred- weight of hogs was used at destination. There was no Evidence to indicate that the amoimt of feed given varied with the seasons. Corn at the market cost the shippers from $1 to $2.50 a bushel. 172 MEAT-PACKING INDUSTRY. In the majority of instances the highest prices were paid, making the average cost approximate 8 to 9 cents a hundredweight of live animal. Commission charges. — Commission charges on hogs, like those on cattle and sheep, usually are made on a car basis ; consequently, the weight of the load is the only factor which would aflFect this item of cost. If the load is light in weight the commission cost per hun- dredweight would be greater than for a heavier load. However, the effect of weight of load is not sufBcient materially to influence commission costs as commission firms impose a higher charge if the load is extremely heavy. The commission cost per hundredweight on the shipments of hogs on which records were obtained ranged from 4 to 10 cents, the average being approximately 6 cents. Other costs. — The item "Other costs" which represents miscella- neous expenses incurred at the central markets, the chief of which is yardage, range from 2 to 10 cents per hundredweight for hogs, the average being about 4 to 5 cents. Yardage charges usually are assessed at so much per head, the present charge for hogs being 8 cents at most markets, consequently the weight of the animal is the only factor which would affect this item of cost when computed on the basis of weight of animal. SHRINKAGE IN TRANSIT TO CENTRAL MARKETS. The factors which are given consideration under this head are length of time in transit, number of animals per car, weight of load, size of hogs, seasonal conditions, shipping agency, i. e., farmer, dealer, or cooperative live-stock shipping association, and treatment in regard to feeding en route and feeding and watering at destination. Relation of length of time in transit to shrinlcage. — Tables 16 and 17 were compiled to show the effect of time in transit on shrinkage. In constructing these tables the data were grouped according to whether the animals had access to feed en route, whether the shipper was a farmer or a local dealer, the season of the year, and the length of time in transit. The hogs in the shipments' on which data were used La making Table 16 had access to feed either in car or en route. While those on which data were obtained for Table 17 received no feed from time of loading until after arrival at market. The quantity of feed given the hogs on which the data were obtained in Table 16 is shown in Table 15. The shipments were grouped according to time in transit as follows: 14 hours and less, 15 to 20 hours, 21 to 30 hours, 31 to 50 hours, and 51 hours and more. No distinction was made as to weight of cars or nmnber of animals loaded per car. A study of Table 16 reveals that shipments made by farmers sustained, a smaller net shrinkage than those made by dealers. In fact, some of the groups of farmer shipments show a fill instead of a shrink, while in every group of dealer shipments there was a loss in weight instead of a gain. The shrinkage on the dealer shipments was greatest during the summer months and least in the winter. The loss in MKAT-PACKING INDUSTRY. 173 weight on shipments made during the spring and fall coincided approximately with the average shrinkage for all seasons. Farmer shipments with access to feed en route sustained the least shrinkage during the spring and fall months, the maximum shrinkage being recorded in the summer on those shipments in transit more than 20 hours. Farmer shipments made 'during the winter months showed little fluctuation in the average shrinkage, the percentage being approximately the same for any given length of time in transit. In both farmer and dealer shipments there was little fluctuation in the shrinkage imtil after the shipments had been in transit more than 20 to 30 hoiirs, after which period the loss in weight increased more abruptly. The number of farmer shipments without access to feed en route, shown in Table 17, were not sufficient to make a fair com- parison with this class of shipments. In this group all shipments made during the spring and fall showed a slight gain instead of a loss in weight. Shipments made by dealers without access to feed showed a steady loss in weight as the time in transit increased. Table 16. — Effect of season and time in transit on shrinkage ofhoga having access to feed in transit when shipped by dealers and farmers to centralized markets. Season. Shipped by- Average hours in transit. Number of cars or decits. "Average car loading weight. Average car sales weight. Shrinkage or gain per hundredweight.' Average. Range. Dealers 11 17 26 39 100 66 62 62 44 10 PouTtdg. 16,015 16,485 16,477 16,628 18,383 Pounds. 15,772, 16,225 16,295 16,246 17,499 Pouv4s. 1.62 1.57 1.11 2.30 4.81 Pounds. + 1.55-4.70 + 2.73-5.10 + 1.82-4.71 + 1.47-6.90 2.79-7.50 Average 26 224 16,478 16,192 1.74 + 2.73-7.50 1 - 26 36 6 3 14 12 17,750 16,948 16,353 15,848 17,665 16,816 16,250 15,697 .48 .77 .63 .94 + 1.41-1.07 + .0»-1.25 Average. Dealers.... + 3.33-2.26 + 2.49-2. 6S 27 35 16.470 16,352 .72 + 3.33-2.65 12 18 24 37 19 42 22 18 16,133 15,857 17,828 16,837 15,491 15,608 17,559 16,386 2.18 1.57 1.61 2.68 + .38-4.41 + 1.14-4.71 Average Farmers + 2.37-3.98 .94-6.00 22 101 •3,513 16,204 1.87 + 2.37-5.00 Spring and fUL 1 " \ 22 I 37 14 6 10 15,272 16,242 16,917 15,252 16,360 16,733 .14 + .73 1.09 + 2.89-3.15 + 3.64-1.39 + .14^2.42 Average 25 29 16,007 15,953 .83 + 3.64-3.15 10 18 23 33 73 23 48 43 18 11 15,213 16,303 16,487 16,677 17,093 14,938 16,035 16,157 16, 157 16,559 1.81 1.64 2.01 3.12 3.12 ..18-2.75 + 2.59-4.90 + 1.48-9.88 + 1.69-9.06 + 1.66-5.84 Average 31 143 16,291 15,951 2.09 + 2.59-9.88 Bonmisr. •._...•..• f 10 18 23 35 78 20 23 10 7 3 16,063 16,190 ■ 16,934 16,393 20,580 16,052 16,253 16,831 16,083 19,680 .07 + .39 .61 1.90 4.37 + 1.88-2.07 + 4.59-3.43 + 4.53-3.66 Average + 1.28-4.92 -4.37 32 63 16,499 18,426 .45 + 4.59-4.92 > + Indicates gain in weight. 174 MEAT-PACKING INDUSTRY. Table 17. — Effedt t^stason and time in transit on shrinkage o/hoginot having access to feed in transit when shipped by dealers and fanners to centralized markets. Season. Shipped by— Average hours in transit. Number of oars or decks. Average car loading weight. Average car sales weight. Shrinkage or gain per honcfiedweight.' Average. Range. 1 17 1 26 I 49 25 17 6 6 Pounds. 16,492 16,069 16,263 15,683 PouTids. 16,251 15,746 15,890 15,135 Pou/nds. 1.4J 2.01 2.30 3.50 Pounds. + 1.04-4.55 + .17-4.68 1.35-1.27 1.98-5. DO Average Pannera 19 64 16,243 15,928 1.94 + 1.04-5.00 12 7 15,488 16,484 .02 + 1.24^1.88 fDealers 11 17 26 11 16 10 17.025 16,737 15,909 16,738 16,518 15,497 1.68 1.31 2.59. -5.28 + .91-3.33 Average Farmers , Average + .13-«.42 18 37 16,699 16,307 1.76 + .91-6.42 H 17 1 32 10 7 2 17,325 16,206 17, 562 17,290 16,254 17,655 .20 + .30 + .53 + 4.22-1.38 + 4.18-3.09 + 1.62- .49 16 19 16,938 16,946 + .05 + 4.22-3.09 10 17 I 24 23 35 7 14,068 16,657 16,803 13,770 16,290 16,386 2.12 2.34 2.49 .06-6.81 + 2.56-6.77 ATecage Fanaers .60-3.94 15 65 15,218 14,870 2.29 + 2.66-6.81 i 21 6 5 14,878 17,974 14,748 17,838 .87 .76 + .73-2.28 , Average 10 11 16,285 16, 152 .82 + .73-5.58 1 + indicates gain in weight. Smninarizing the facts brought out in Tables 16 and 17, the most striking features shown are that the use of feed en route did not appear to influence materially the shrinkage of the hogs in transit, especially for those shipments en route less than 30 hours; that the hogs shipped by farmers showed a lighter shrinkage than those shipped by dealers; that after the first 20 to 30 hours en route the Bhrinkage increased in direct ratio with the increase of time in transit; that during the first 20 to 30 hours the average shrinkage fluctuated very little, ranging between 1 and 2 per cent for dealer shipments and from a slight gain to less than 1 per cent with farmers' ship- ments, and that the average shrinkage for both farmer and dealer shipments did not exceed 3 per cent until shipments had been in transit approximately 50 hours or more. Relation of number of hogs per car to shrinkage. — Tables 18 and 19 were constructed to show the relation, if any, of size of load, based on the number of animals per car, to shrinkage, in shipping hogs to centralized markets. Table 18 contains data on hogs having access to feed, either in car or en route, while Table 19 contains data on those shipments which received no feed in car or en route. The MEAT-PACKING HfDX'STIiY. 175 shipments were grouped according to the number of hogs per car as follows (all cars considered aa single deck): 60 hogs and less, 61 to 70, 71 to SO, 81 to 90, and 91 and more. It will be noted that in practically every instance there was a decrease in the aver- age weight of the hogs, as the number loaded per car increased. For this reason the average car loading weights did not vai}' so widely as the fluctuation in the number of animals per car would seem to indicate. Where cars were loaded with fewer than 60 hogs, the average weight of the animals was much greater than where 90 or more hogs were loaded. A study of the figures in Tables 18 and 19, showing shrinkage or fill for the different groups, does not reveal facts which will justify definite conclusions. While there was considerable variation in the different groups in the amount of shrinkage, there is no positive evidence to indicate that the size of load based on number of hogs per car exerts any material influence on the amount of shrinkage. There is some indication that the mini- mum shrinkage takes place in those shipments where the average number of animals per car approaches 75, and that as- the number loaded decreases from or increases to 75, the loss due to shrinkage tends to increase. In five of the six seasonal groupings of dealer shipments this tendency holds true and this would appear to justify the assimiption that the optimum nimiber of animals to load to a car to reduce shrinkage to the minimum would be approximately 75. However, much would depend on the weight of the animals, inasmuch as extremely heavy hogs or very light hogs very often show extreme fluctuations in shrinkage, and until more data are available for study definite conclusions as to the effect of the size of load based on the number of animals loaded are not justified. The data in Tables 18 and 19 apply to the same shipments which were used in compiling Tables 16 and 17. Therefore it is apparent that these tables woxild show the same differences between the amount of shrinkage sustained by farmer shipments and the amount sustained by dealer shipments; that is, farmer shipments shrink less tiiau those made by dealers. 176 MEAT-PAOKING INDUSTRY. Tablb 18. — RdoHon of number of animals per car to shrinkage of hogs having access to feed in transit to centralized mxirkets. Number of Feed Aver- Seaaoo. Shipped by- hogs per oar. Num- ber of cars. Hours In tran- sit. Aver- age carload- weight. Aver^ age car sales welgiht. Aver- weftht hogs. en route, aver- age per hun- dred- sl^Sk- ageor gain per hun- dred- Aver- Bange. weight. weight.' PouTiia. Pounds. Pounds. POUTlds. Pounds. 54 44-60 19 19 14,363 14,266 265 1.96 0.67 «5 61-70 40 23 15,815 15,520 240 2.13 1.87 Dealers 76 71-80 94 23 16,633 16,347 220 1.91 1.72 85 81-90 60 22 16,673 16,357 196 2.01 1.89 Winter. 99 91-112 21 38 18,496 18,127 186 2.54 1.99 1.72 57 66- 60 4 28 63 61-67 7 32 16,161 16,031 256 4.09 .80 Farmers 76 71-79 13 25 17,085 16,989 227 2.55 .68 83 81- 87 8 25 16,250 16,103 195 2.62 .90 I 96 93-103 3 26 16,838 16,920 174 3.64 -^.48 56 51- 60 10 26 16,679 16,109 296 2.09 2.83 ti« 61- 70 33 19 15,584 15,338 235 1.78 1.67 Dealers 75 71-80 29 22 16,332 16,073 215 2.08 1.68 86 82-90 20 18 17,375 17,038 201 1.96 1.94 Spring and toll-. 97 91-110 9 26 18,676 18,065 190 1.17 2.80 64 51-60 6 24 15,756 15,727 289 1.84 .18 Farmers 64 61-70 16 24 16,694 15,690 245 1.60 .03 72 71-73 4 21 17,142 16,860 238 2.41 1.70 83 81-87 3 35 16,663 16-, 620 200 3.71 .26 f 65 48- 60 27 23 13,953 13,516 250 2.87 8.13 65 61- 70 67 22 16,414 16,102 263 1.95 1.90 Dealers 76 71-80 37 25 17,078 16,767 224 2.03 1.88 85 81-90 16 35 17,221 16,859 202 L66 2.10 Summer 92 48 91-94 32- 69 6 11 30 19 18,080 12,839 17,832 12,916 196 263 2.20 2.63 1.37 -t-.60 64 61- 70 25 16 16,058 16,076 260 2.29 -H.U Farmers.... 75 71- 80 18 19 17,641 17,466 234 1.61 .94 86 82-90 4 19 18,991 19,007 220 2.14 +.m 96 91-107 6 62 20,655 20,048 213 8.18 2.93 1 -I- Indicates gain in weight. Tablb 19. — Relation of number of animals per car to shrinkage of hogs not having access to feed in transit to centralized markets. Bblpped by- Number of hogs per car. Num- ber of cars. Aver- Aours in tran- sit. Average car loading weight. Average car sales weight. Aver- wf.t hogs. Aver- shmik- age or gain per hun- dred- weight.' Season. Aver- age. Range. Winter Dealers Farmers 68 63 76 86 102 87 74 90 66-89 61- 68 71-80 81- 90 93-130 55-60 72-74 • 18 7 i 1 23 19 17 18 1 Pounds. 13,780 14,623 19;634 14,407 Pounds. 13,447 4,257 16,164 7,369 18,892 14,410 15,740 17,940 Pounds. 193 197 Pounds, 2.43 1.88 1.03 J. 44 8.28 + .02 .58 -H.24 Spring and faw .. , Dealers Farmers 58 68 76 81 102 69 66 77 83 67-68 66-70 72-79 81-82 94-109 68-69 61-70 71-80 82-84 4 4 22 4 8 1 7 2 28 14 1? 14 14 13 17 14 23 13,680 18,985 16,724 17,616 16,633 18,930 16,601 17,449 17,908 13,130 18,648 16,818 17,077 16,860 16,768 16,700 17,863 17,695 318 280 331 216 163 373 349 234 216 8.68 2.81 1.28 2.50 1.66 1.04 -t-1.21 .66 1.19 Summer.*........... Dealers Farmers 53 66 -74 88 95 52 63 76 93 42-59 61-70 70-80 82-90 91-102 46-67 '74-' 78' 18 14 e 3 1 6 1 12 16 16 17 16 10 4 17 16 13,462 16,860 16,126 15,081 16,828 14,103 14,630 17, 115 19,610 13,209 16,368 15,633 14,843 16,605 14,007 14,440 17,117 18,1130 358 241 218 172 177 369 231 226 311 1.80 8.08 8.06 1.87 1.33 .69 .63 + .01 1 + Indicates gain in weight. MEAT-PACKING INDUSTRY. 177 Relation of weight of load to shrinTcage iw transit to centralized mar- Jiets.—T&hles 20, 21, 22, and 23 were constructed to show if the •weight of load had any effect on shrinkage of hogs in transit to mar- ket. Tables 20 and 21 contain data on dealer and farmer shipments having access to feed in car or en route, while Table 22 contains data on shipments receiving no feed until after arrival at market. Table 23 is a summary of the data on shipments consigned by cooperative shipping associations. With the exception of the data on winter shipments, this table did not include a sufficient number of consign- ments to warrant conclusions. Table 20. — Relation of weight qfloadto shrinkage of hogs in transit to centralized markets. (J)ealera' shipments having access to feed in transit.) Season. Number of cars. Average number hogs per car. A verage time in tr'innt. Average teed in transii per hundred- weight of hogs. Average ear loading weight. A verasc car sales weight. Average sales weight of hogs. Shrink- age per hundred- weight. Winter. 27 23 24 46 67 22 16 66 70 79 79 76 79 93 Bouis. 16 18 25 31 26 33 36 Pounds. 1.94 1.87 2.86 2.37 1.66 2.13 1.86 Pounds. 12,864 14,490 16,435 16,566 17,375 18,461 20,620 Pounds. 12,723 14,288 16,242 . 16,253 17,096 17,938 20,046 Pourids. 197 207 ^ 196 209 230 235 221 Pounds. 1.09 1.16 1.25 1.89 1.61 2.83 2.31 Average 224 76 26. 2.04 16,478 16,192 216 1.74 Spring and fell 16 1? 23 ,24 7 I 68 73 77 77 73 6S 76 92 17 15 21 24 23 22 18 26 1.99 2.15 1.89 2.14 1.78 1.62 1.86 1.20 12,567 14,695 16,425 16,506 17,479 18,266 19,401 21,652 12,394 14,319 15,116 16,287 17,182 17,777 18,943 , 20,992 185 202 200 213 239 267 266 233 1.37 2.58 2.01 1.33 1.70 2.67 2.36 2.41 Average 101 75 21 1.87 16,613 16,205 221 1.87 RiiTTijiier . . ■ f 15 9 24 39 33 11 11 59 69 65 69 73 73 79 16 19 23 22 36 28 16 2.71 1.76 2.63 2.03 2.06 1.82 1.32 11,819 14,677 15,483 16,651 17,612 18,160 19,841 11,680 14,211 16,243 16,215 17,134 17,720 19,266 201 213 238 239 240 248 249 2.03 3.18 1.65 2.03 2.16 2.42 1.96 Average 142 69 26 2.09 16,339 16,000 236 2.08 Although there is considerable fluctuation in the averages for the different groups, the figures in Tables 20 and 21, showing average shrinkage or fill indicate that as the weight of the load increased there was a general tendency for the hogs to lose weight proportion- ately. The least fluctuation in the average amoimt of shrinkage throughout the year took place in dealer shipments weighing be- tween 16,000 and 19,000 poimds. The Ughter loads of dealer ship- ments showed the least shrinkage during the winter months, while those loads weighing more than 18,000 pounds showed the greatest shrinkage during cold weather. 152250°^20 12 178 MEAT-PACKING INDUSTRY. Table 21. — Relation 6f weight of load to shrinkage of hogs in transit to centralized marh'ts. (Farmers' shipments having access to feed in transit.) Season. Number of cars. Averaiie namber hogs per car. timi-ln transit. Average feed in transit per hundred- weight of hogs. Average car loading weight. Average car sales weight. Average sales weight of hogs. Shrink- age or gain per bund ed- weight.i Winter 2 fi 6 10 5 7 67 75 80 71 86 71 Hours. 29 35 26 29 26 20 Pounds. 1.32 4.27 2.28 3.34 3.05 2.10 Pounds. 12,885 14,397 16,640 16,704 17,509 18,613 Pounds. 12,680 14,422 15,563 16,610 17,270 18,433 Pounds 222 192 197 236 204 261 Pounit^. 1.58 + .17 .49 L37 .97 Average. 35 74 26 2.87 16,470 16,352 221 .72 Spring and fall 6 e 8 9 6 63 64 66 68 64 20 22 25 25 34 1.20 2.92 2.21 2.19 1.36 13,073 14,612 15,903 17,651 18,485 13,212 14,702 16,073 17,368 18,130 208 228 240 260 289 -H.06 + .62 -t-1.07 1.04 1.92 Average. 29 65 25 2.00 18,007 16,954 246 .33 9 4 13 9 10 9 9 £1 59 66 63 73 76 88 13 13 21 19 18 19 38 2.32 1.98 2.36 2.91 1.91 1.34 2.43 11,521 14,560 15,555 16,628 17,395 18,268 20,814 11,787 14,565 15,608 16,761 17,399 17,956 20,338 225 248 235 266 240 243 237 -H2.30 + .03 .30 + .80 .32 L71 2.30 Average. 63 69 21 2.19 16,500 16,426 240 .46 < + indicates gain in weight. Dealer shipments receiving feed in car or en route showed a more uniform rate of shrinkage than those not receiving feed. Dealer shipments also showed less fluctuation in shrinkage than shipments made by farmers. The shrinkage on dealer shipments with feed en route ranged between 1 and 3 per cent for loads of all weights. The figures shoAving average shrinkage on farmer shipments receiv- ing feed en route ranged from a gain in weight of more than 2 per cent to a loss of a like amount, and a total range of more than 4 per cent. Dealer shipments without access to feed showed a range in average shrinkage of almost 4 per cent. Those loads which averaged slightly more than 15,000 pounds which were shipped ia the spring and fall weighed slightly more at the market than at loading stations. The data on farmer shipments without access to feed en route were not sufficiently complete to show any uniform tendency as to effect of weight of load on shrinkage. An average of all the data on dealer and farmer shipments without regard to season showed that feed in car or en route appeared to exert little or no influence on the shrink- age or gain. Hogs shipped without access to feed in car or en route showed greater fluctuation in shrinkage than those with access to feed, the latter showing a more uniform tendency to lose weight in propor- tion to the increase in the weight of load. Farmer shipments below 17,000 pounds in weight, with and without feed, showed a tendency to gain in weight en route to market, rather than to lose weight. Loads exceeding 17,000 pounds in weight showed a shrinkage MEAT-PACKING INDUSTBY. 179 which increased sharply as the weight of load increased beyond 18,000 pounds. Dealer shipments showed uniform tendency to shrink from H to 2^ per cent for loads of aU weights. An average of all the data by seasons, but without regard to shipping agency or feed in transit, shows that the least shrinjsage with hogs took place during the spring and fall months, and the greatest on extremely light and extremely heavy loads in the winter months. Loads weighing between 14,000 and 18,000 pounds sustained the greatest shrinkage during the summer months. The average shrinkage on aU the loads weighing less than 18,000 pounds did not exceed 2 per cent, and loads weighing more than 20,000 pounds did not exceed an average of more than 2.6 per cent. Tablb 22. — Relation of weight of load to shrinkage of hogs in transit to centralized markets. {Dealers' and farmers' shipments not having access to feed in transit.) Season. Shipped by- Number of cars. Average number hogs per car. Average time in transit. Average oar loading weight. Average car sales weight, Average sales weight of hogs. Average shrink- age or gain per hundred- weight.i ■ Dealers Average... Farmers Average... Dealers Average... Farmers Average... Dealers Average... Farmers Average... 16 5 4 10 8 7 S 62 89 69 77 78 83 98 Hours. 20 29 25 14 17 16 17 Poundt. 13,183 14,622 „ 15,464 16,733 17,534 18,896 22,620 Poundt. 12,863 14,111 16,270 16,546 17,329 18,616 21,791 Poundi. 211 165 225 219 224 226 230 Pounds. 2.42 . 3-60 1.19 1.12 1.17 2.01 3.67 Winter.... 55 76 19 16,342 16,002 210 2.08 3 1 2 1 62 76 81 60 16 7 12 13 12,776 16,300 17,686 18,420 12,687 16,380 17,765 18,440 206 217 218 807 .69 + .49 + .40 + .U 7 69 13 16,488 15,484 224 .02 [ ^ 1 7 6 13 1 68 76 94 80 60 64 66 22 28 13 16 16 17 16 11,919 14,616 15,890 16,609 17,665 18,708 20,860 11,636 14,635 15,420 16,273 17,407 18,396 20,740 176 192 169 206 220 262 316 2.33 + .13 2.93 L42 1.46 1.67 .57 Spring and foil... 37 76 18 16,699 16,335 216 1.59 S 2 1 6 i 64 76 15 18 16 19 14 12 13,208 15,333 16,400 17,378 18,476 19,245 13,740 16,600 16,370 17,347 18,210 19,035 206 204 208 236 256 296 +i.03 +1.74 .18 .18 1.43 1.09 19 71 16 16,938 16,947 238 + .06 * 13 19 6 a 11 6 £4 80 68 76 72 74 12 14 14 19 16 IS 11,647 14,330 15,493 16,766 17,662 18,773 11,432 14,168 16,030 16,262 17,131 18,274 217 179 228 222 246 266 1.85 1.13 2.99 3. OS 3.01 2.66 Summer 65 71 16 16,218 14,870 209 2.29 2 2 1 2 4 60 70 76 68 88 10 U 4 10 20 12,976 14,496 16,730 16,630 18,853 12,770 14,465 15,660 16,425 18,676 260 209 202 262 235 1.79 .21 .46 .64 .95 11 70 14 16,286 16,153 231 .82 1 + indicates gain in weight. 180 MEAT-PACKLNQ INDUSTBT. Tablb 25.— Rdatim of weight of load to shrinhage of cooperative shipments of hogs vn transit to centralized markets. Season. Number ol cars. Average number hogs per car. Average car loading weight. Average car sales weight. Average sales weight olhogs. Shrink- age or gain per hundred- weight.' Winter 3 8 15 29 22 9 8 73 73 78 75 77 79 79 Pomidt. 11,783 14,558 15,503 16,485 17,440 18,322 19,738 Pounds. 11,483 14,440 15,329 16,192 17,129 17,967 19,365 Potmdi. 161 199 198 221 228 233 249 Poundi. 2.55 .81 1.12 1.78 1.84 1.94 1.89 Average 91 76 16,590 16,314 214 1.66 1 1 4 1 2 64 79 77 63 84 14,646 15,130 16,330 17,210 18,600 14,480 15,120 16,118 17,130 18,650 271 192 213 273 221 1.12 .07 1.30 .46 + .27 9 74 16,612 16,500 222 .68 1 i 45 62 60 62 11,810 14,585 16,290 17,335 11,700 13,970 16,073 16,990 262 235 273 282 .93 4.21 1.34 1.99 Average 10 68 15,262 14,961 258 1.98 1 4-indicates gain in w^ght. The data covering cooperative shipments were copied from the records of the managers of the associations, and it was not possible to obtain information relative to the amount of feed the hogs received en route. With the exception of the group of extremely light loads the data on the winter shipments indicate that as the weight of the loads increased there was a tendency for the net shrinkage to increase. The average shrinkage of cooperative shipments was slightly less than that of dealer shipments but more than the average farmer shipments. Effect of size of hogs on shrinkage in transit to market. — ^In order to determine whether there is any relation between sizex)f the hogs and the amount of shrinkage, the shipments were segregated into three groups, according to the average weight of the hogs in each load. These groups, with the respective data on shrinkage, are shown in Table 24. It will be noted that the minimum shrinkage was recorded on those loads containing the lighter weight animals, the average for this group being 1.09 per cent, the heavy-weight hogs, averaging 277 pounds, sustaining a shrinkage of 1.77 per cent. The conditions in regard to the nimiber of hours en route, the distance traveled, and the feed supplied, were approximately the same. The conclusion drawn from the data shown in Table 24 is that the increase of net shrinkage is directly proportional to the weight of the animals. MEAT-PACKING INDUSTRY. 181 Summarizmg aU the data on shrinkage of hogs in transit to central markets, the most striking features brought out are that farmers ship hogs to centralized markets with a smaller shrinkage than that sustained by local dealers; that the shrinkage on local dealer shipments is more uniform for loads of all weights and for the different seasons than on farmer shipments; that feed does not seem to affect the amount of shrinkage materially; that as the weight of load increases there is a tendency for the amotmt of shrinkage to increase, and this continues until the loads exceed 20,000 pounds in weight, after which the amount does not appear to be affected by weight of load; that as the weight of the hogs increases the net shrinkage increases proportionately. Table 24. — Relation of size of hogs to shrinhage in transit to centralized markets. Weight of hogs. Average time in transit. Length of haul. Net Bhrink- Namber of cars. Range. Average. ageper hondred- weight. 123 F&imis. 135-195 195-255 265^00 Poundt. 181 22ft 277 Hours. 24 20 21 Miles. 252 225 230 POVMdS. 1.09 683 230 1.77 SHBINKAGE IN TKANSEIT DIRECT TO PACKING PLANTS. Data were collected on shipments of hogs consigned direct to packing plants for the purpose of comparing the shrinkage in such shipments with that in shipments to centralized markets where stock are allowed to rest" and are giren access to feed and water before weighing. When a shipper makes a contract with a packing company to consign a load of hogs direct an agreement is made as to whether the animals will be weighed as they are unloaded from the cars or whether they will first have access to all the water they can drink or, in some cases, to feed and water. In this report shipments sold under the first plan have been designated as "no fill at destination" shipments, while those which were weighed after being watered have been termed "water fill at destination," ship- ments and the grouping has been made accordingly. For purposes of comparison the data have been compiled on the basis of weight of load and on nimiber of hogs per car. Table 25 is the compilation on basis of weight of load, while Table 26 shows the data compiled with regard to the number of animals per car. In studying these tables it must be remembered that practically all con- signments made direct to packing plants are hauled relatively short distances by rail, therefore they are not subjected to the various factors causing increased shrinkage brought about by a long haul. 182 MEAT-PACKING INDUSTRY. For this reason it is not surprising to find tliat the shrinkage on this class of shipments is relatively low as compared with the shrinkage on shipments sent to the centralized markets. Likewise the ship- ments which were not watered before weighing at destination showed less shrinkage than those which were given water, but the average length of haul was only about one- third as great, consequently the figures are not comparable. It will be noted that the average amount of shrinkage is comparatively uniform for the different groups. There is little to indicate that the size of load from the standpoint of weight influences the amount of shrinkage; also the tabulation based on number of hogs per car shows little relationship between the number of animals loaded and the amount of shrinkage. The heavy loads in the "no fill" group shrunk the least while in the "water fill" group they showed the maximum shrinkage. The fea- tures in the two tables of greatest interest are the uniformity in the average weights of the hogs and the difference between the percen- tage of shrinkage of the two classes of shipments. Table 26. — Relation of number of animals per car and kind of fill to shrinkage of hogs shipped direct to packing plants. Kind of mi. Number ol hogs per car. Num- ber of cars. Aver- age length haul. Aver- age car loading weight. Aver- age car sales weight. Aver- weight of hogs. Aver- slumir- Season. Aver- age. Range. age or, gain per hun- dred, weight. Water fill only NofiU 53 68 74 86 56 66 77 83 100 66 67 75 85 103 66 75 82 31 67 91 ; 68 76 30-58 65-70 71-«0 81-91 60-60 64-69 71-80 81-87 100 50-59 61-70 4