MEAT-PACKER INVESTIGATION. COMMITTEE ON AGRICULTURE, The committee this day met, Hon. Gilbert N. Haugen (chairman), presiding. The CHAIRMAN. Gentlemen of the committee, we have with us this morning Attorney General Palmer. We will be glad to hear from you, Gen. Palmer. STATEMENT OF HON. A. MITCHELL PALMER, ATTORNEY GENERAL. Attorney General PALMER. Mr. Chairman and gentlemen of the committee, I am pleased at being given the opportunity of appearing before the committee to discuss briefly some of the matters which I understand have been engaging the attention of this committee during recent months. I do not propose, Mr. Chairman, to discuss at length any of the bills which are pending before this committee upon which you have been holding hearings, but to confine myself, if I may, to a statement of the relations of the Department of Justice to the socalled packers' case, giving you a complete history of the development of the final adjustment in that case, what was sought to be done, and what was accomplished, for your attention and assistance in the consideration of such proposed legislation as you have pending before this committee. I would appreciate it, Mr. Chairman, and I think it would probably serve to save your time and mine, if I might be permitted to proceed without interruption until I conclude my statement, and after that, of course, I shall be pleased to answer any questions that the members of the committee may desire to ask. First of all, let me say that I have brought down and propose to place at the disposal of the committee a couple hundred copies of the petition and all the answers, stipulations, agreements, and decree in the so-called packers' case, all bound in, one volume for convenient reference. I do not know whether the members of the committee have seen this document, but there is nothing new in this book, except, as I say, there is a convenient arrangement of all the record in the case. Mr. Chairman, the so-called packers' case was one of the first pieces of business to engage my attention when I became the Attorney General, on the 5th of March, 1919. It occupied more of my time and required more of my attention during the following six or eight months than possibly any other piece of business that was before the Department of Justice. I willingly conceded this time and effort to the case, because I conceived it to be the most important piece of business which had come before the Department of Justice in a long time. The packers in their relations to each other and the public had been for several years the subject of constant investigation on the part of various agencies of the Government. The Federal Trade Commission had been engaged for something like two years in a thoroughgoing and exhaustive examination of all the facts in reference to the businesses of the so-called Big Five. As many as 8 or 10 separate investigations by congressional committees had been conducted both by Senate committees and House committees. The Bureau of Investigation of the Department of Justice had devoted a great deal of time and energy to delving intothe business of these packers and getting at the real facts of their relations to each other and to the public. None of these investigations had brought any final and definite results at the time that I entered the Department of Justice, in March, 1919; but they had occupied much attention, both at the hands of Government officials and in the public mind, and I conceived it to be about time that there should be a "show-down," if you will permit that inelegant expression, in this business. I conceived it to be about time, in the interest of justice to all parties, both the packers, the Government, and the public, that something definite and final should be done. Either the packers were entitled to vindication, were entitled to a clean bill of health, and were entitled to have the country know that they were law-abiding citizens, doing no improper thing, or the public was entitled to know that the Government should have some kind of a judgment against them which might be enforced in the public interest. So I immediately inquired as to the then status of these various investigations, and I found that the Federal Trade Commission's work of investigation had been concluded, that its report was in process of preparation, and that one volume of it, constituting, I think, the summary, had already been published and had been delivered to the Department of Justice for such action as the department might see fit to take. Other data that had been prepared by the Federal Trade Commission and had been compiled for the purpose of incorporation into the report had also been transmitted to the Department of Justice. On March 29, just about a year ago, I engaged a special Assistant Attorney General for the purpose of passing upon the results of all of these various investigations and of making a report to the Attorney General with respect to them. Before that the hearings before the various congressional committees and the report of the Federal Trade Commission had been turned over by my predecessor to Mr. Morrison, of Chicago, who had been engaged as special Assistant Attorney General in the former trial of the packers, and to Mr. Pagan, an assistant in the Department of Justice, with instructions that they should examine the record and report to the Attorney General as to whether or not there was a case and whether action should be brought under the Sherman antitrust law against the packers. I found that those two gentlemen had made an exhaustive examination of the record and were about prepared to make a report; but before their report was made, in view of the fact that they had been a long time engaged in the prosecution in the other case, I conceived that it would be wise and helpful to have another attorney consider the matter. Obviously, I could not myself give the time which was necessary to examine this voluminous record, and so I retained as an assistant to the Attorney General Mr. Isidore J. Kresel, of the city of New York, a member of the firm of Jerome, Rand & Kresel, with whom I had been associated while I was the Alien Property Custodian, where he had been employed for the purpose of making investigations of a somewhat similar character, and for whose ability and capacity to analyze a complicated voluminous record and make a clear report upon it I had the greatest respect. I turned over to Mr. Kresel all the record which the Federal Trade Commission had accumulated and instructed him to examine the record of the hearings before the congressional committees, placed at his disposal all of the facts which had been developed by the Bureau of Investigation of the Department of Justice, and instructed him to make an exhaustive examination and to report to me whether, in his judgment, it was a proper case for action under the Sherman antitrust law, and, if so, what that action should be. Mr. Morrison and Mr. Pagan in the meantime being instructed not to make their report until Mr. Kresel was ready to submit his, and that the three gentlemen, without cooperating with each other, should make separate reports to the Attorney General. Mr. Kresel devoted all of his time for several months to an examination of these data and on the 3d of August, I think it was, he presented to me his final report for my information and guidance, in which he analyzed the various facts which had been found by congressional committees and the Federal Trade Commission and his report and recommendations were concurred in by Mr. Morrison and Mr. Pagan in practically all respects, their report being based upon their separate examination of practically the same facts. After my own examination of the summaries which these gentlemen presented to me, I concurred with them that the time had come for some appropriate action, an action under the Sherman antitrust law, and, of course, I was immediately faced with the necessity of deciding whether I should take advantage of the criminal side of the Sherman antitrust law or of the civil side, for the act, of course, as all you gentlemen understand, provides both a criminal and civil remedy for its violation. Before deciding that rather difficult question I felt that there were some additional facts that ought to be developed, and so I instructed Mr. Kresel and other assistants who by that time had been employed by the department for the purpose of conducting this investigation, to go to Chicago and in cooperation with the United States District Attorney there to make an investigation before the grand jury. This was done in September and the investigation extended over possibly two months. It was not done pursuant to any definite program of indictment or criminal procedure, but for the purpose of developing some new facts and data which we felt it to be helpful to have before we proceeded in any way. Late in October we moved our stage of action to New York where we were about to take similar steps before a grand jury. Whether those steps in New York would have resulted in an indictment or not, I do not know; whether we would have decided to ask for an indictment, I do not know, because before it was necessary to decide the question of whether we would proceed on the criminal side of the court or upon the equity side, I received intimations from various sources, some of which I conceived to be of an authoritative char acter, that the representatives of the five great packers would like to meet with the Attorney General and to discuss with him this problem. Word was brought to me that the packers' complaint was that they had never been heard adequately by the Federal Trade Commission; that their side of the story had never been fully presented; and that before the Department of Justice took action they desired to present their side of it. In response to that intimation I sent word to them that if they desired to see the Attorney General for the purpose of presenting their side of the controversy in order to dissuade him from taking any action against them, that it was entirely unnecessary for them to consider the matter further; that if they desired to come to Washington to try to keep him from bringing action under the Sherman aititrust law, they could save their time and his, for the Attorney General had fully made up his mind that the time had come for some appropriate action and that it would be taken, but I added if their representatives desired to see me for the purpose of surrendering to the Government for the purpose of admitting, in a large degree, the Government's contention and meeting the Government's views, I should be perfectly willing to confer with them, provided that I could see a representative of the principals and not the lawyers in the case. I did not desire to engage in any lawyers' discussion, but I was willing to treat it as a business and economic proposition, because I had very definite ideas as to what the Government would propose and insist that they should accept. My plan was to make that proposition to them, and let them take it or leave it. I said to them in effect that I would not enter into conferences or negotiations except they were willing to enter into them with the understanding that out of it there must come a victory for the Government, a substantial victory all along the line. Their final reply to me was that they would be glad to meet me upon that basis. The first man who came to me representing these interests was Mr. Dunham, one of the vice presidents of Armour & Co., a gentleman, who I am advised, is close to Mr. Armour, the head of that company, and who came with such credentials as convinced me that he was entitled to speak in the matter for all the five of these packers who were holding conferences with the idea of arranging as to their position in any conference with the Attorney General. When Mr. Dunham came to me I stated what, in my mind, were the just complaints in the public's mind against the packers which I desired to meet in some way. As I understood them, in a general way, they were these: The charge was freely made, and we were satisfied from the evidence adduced that there was considerable fact to sustain it, that these five packers were conducting their business in a way that justified a finding that they were combining or conspiring in restraint of trade for the purpose of doing the things which the Sherman anti-trust law forbids; that the charge had been made that they were engaging in unlawful trade practices, of a kind which did considerable injury to both producers and the general public, but especially to the producers; that the charge had been made very vehemently, especially by the wholesale grocers of the Unired States, that broad, fair and open competition in the wholesale grocery business had been destroyed by these packers who, through their very large and unusually efficient distribution system, had engaged in the business of distributing and selling groceries under conditions which made competition with |