The Nonpartisan Leader Newspaper, October 14, 1918, Page 8

Final Chapter of Famous Government Report on Livestock Market — Gives Recommendations Made by President Wilson’s Investigating Body BY THE FEDERAL TRADE COMMISSION UR information shows that there are three principal causes for violent price fluctuations. First, collusive manipulation by the big packers to drive the prices either. up or down, de- pending upon whether they are overstocked with fresh and . cured meats and want to sell in a high market or are understocked and want to buy in a low market. Second, violent price fluctuations also occur as the result of disagreements among the Big Five, as, for example, when E. A. Cudahy, apparently excluded from the inner circle for a while, wrote the following to M. R. Murphy: Regarding hog buying—going to have pretty hot time unless allow other fellows to wipe us off map. Better see how our buyers stand in yards. May be at little dis- advantage account position we have taken on market for long time. Notice Chicago market about 15 higher today —s0 must be row on here too. Don’t know what is mat- ter with packers, but things seem to be getting worse instead of better. Third, unnatural price fluctuations are created when the packers controlling a particular livestock market decide to keep some competitor out by raising prices. This is illustrated by the following letter from Morris & Co.’s files, signed “E. M. Jr.,” presumably Edward Morris Jr.: Mr. E. G. Eldridge, Oklahoma City, Okla. A Dear Sir: Notice Armstrong (Armstrong Packing com- pany, which Armour had secretly bought in 1908) was in your market yesterday and bought 210 hogs. With re- ceipts getting now we can’'t afford to have Armstrong take any hogs out of our market. If he comes in for any hogs, let us put the market up a bit and make him pay enough so he will stay out. Our receipts are so light, it is hard to operate a place even if no outsiders buy on the market. ~ Yours truly, o5 “ Another indefensible practice, which particular- ly affects the producers of livestock and has done much to dishearten them, is technically known as “wiring on.” When a cattleman, dissatisfied with the prices offered at the stockyards to which he has shipped, decides to try another, a telegram is sent forward over the packer’s private wire noti- fying the buyers at the destination that the cattle are being shipped and giving the price offered at the first market. As a result the cattleman finds that at the second market he is offered the same or a lower price, and stands to lose at least the freight and the shrinkage as punishment for try- ing to beat the system. The packers have repeatedly denied that they wired on, although sometimes admitting that they used to; but something like 100 telegrams of re- cent date now in the possession of the commission completely refute the denial. < ~ It is our opinion that the failure of American meat production to keep pace with population is in large measure due to the conditions created and maintained in the markets by the Big Five. Their conspiracies and unfair practices have disheartened producers of livestock by -destroying their confi- dence in the fairness of the marketing system to such an extent that large numbers have abandoned or curtailed their operations. ; Moreover, the packers have deliberately dis- couraged production in certain regions where they do not wish to -establish packing plants and slaughterhouses. The story of the pack- ers’ activities in destroying the raising of sheep - and other animals in New England is a chap- ter by itself. It is unnecessary to do more than point out the large part which livestock raising plays in the successful production of other. foods. Livestock on farms are not only essential to fertilization but provide a means of utilizing waste and surplus crops which often marks the difference between success and failure. There is room on the farms and ranges of the United States for an immense additional number of animals, but so long as farm- ers and livestock men believe that they will have only a “gambler’s chance” instead of a “square - Chicago 7-23-15. B D What Commission Plans for Packers | WAITING FOR A WORKHOUSE SENTENCE - I The parties whom Cartoonist W. C. Morris shows here don’t feel so bad because the people are wise to them, for their attitude has always been, “the public bé damned,” but because they all face a sentence in the workhouse of government ownership. deal” at the markets there will be in securing this preduction. What has been said applies specifically to- the production and marketing of livestock, but the same methods are being applied by the big pack- ers in other branches of food production, and equally deplorable results are apparent. The producers of milk, butter, cheese and poultry are finding themselves disheartened by exactly the same conditions and practices against which the livestock men have been vainly contending for more than a generation. ANSWERING CLAIMS OF LOW PROFITS With the thought that the road to Teasonable great difficulty food prices lies in the direction of the elimination of monopoly, the curbing of unfair practices, and the assurance of a fair and reasonably stable mar- . ket, ‘the commission here gives relatively small space to the question of profits and ‘costs. * There is no doubt.that the packers’ profits, particularly since the beginning of the European war, have been enormous, both in the United States and in foreign countries. Measured by pre-war profits, the 1917 profits (exclusive of Armour’s foreign profits; -inclusive of only part of Swift’s South American profits) ~were 350 per cent greater than in the average of the three years before the Euro- Pean war; measured by the amount of sal%:they averaged, in 1917, 4.6 cents on. the dollar,? hich was sufficient to produce for the five companies . a total profit of $96,182,000; measured by the net “worth of the combined corporations (capital stock . plus’ surplus), they averaged, in 1917, 21.6 per cent; measured by. the capital stock outstanding, In the court of Judge Common People there has been so much unassailable testimony like that given on this page about verdict of guilty is a~bsolutely necessary. the packers that a- as an indication of the dividend possibilities, they averaged, in 1917, 39.5 per cent; and measured by the packers’ actual investment of new capital, they amount to several times even this last figure.. The unreliability of all meat cost-and-profit cal- ; culations is increased when they are placed upon a “per head” basis, for a new and difficult question immediately is presented as to what is included in the denominator of the fraction from which the result is obtained. However, since much publicity has been givén by Swift & Co. to certain figures purporting to show their net profit on “dressed - beef and all by-products” to be $1.29 per head in' 1917, some comment is called for. This is best put in the form of a quotation of a letter written by Charles H. Swift to Louis F. Swift and Edward F. Swift under date of June 23, 1916: £ Frmel & June 23, 1916. cago, June 23, Messrs. Louis F. Swift, Edward F. Swift: A Referring to_Henry Veeder’s letter June 18 to L. F. 8. regarding 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): = 3 Mr. Chaplin understands that Armour’s includes their canners, which ours does not; part of their sausage ‘Ye- sults, and has 10 cents added per head for good measure fior by—;::‘roducts transferred at market prices, which ours oes nof If our and Libby’s cattle were thrown together for the period, without™ including sausage or anythi for good measure, it would bring ours up over $2 per head. X Mr. Chaplin didn’t think.there could be as much dif- ference as this, but checked it pretty close and understands deginitely thad%e:heirs includes ‘all of the above-mentioned, which ours not. 7 % ; .. " CHARLES H. SWIFT. . - . The statement of the accountants who prepared the .Armour cost figure of $1.19 per hedd shows that it did not include actual profits. from fertiliz- ers and various other by-products. ' The signifi- /t_:ance_ot tlhisv lette:_' is that it shows thgt,'when' we N N ..