same conclusion primarily on the evidence which was submitted. Are you at liberty to state whether these gentlemen recommended a criminal prosecution against the packers?

Attorney General PALMER. They recommended that action be taken under the Sherman antitrust law against the packers, leaving it to the Attorney General to decide whether it should be on the criminal or on the equity side of the court. They may possibly have advised criminal proceedings.

Mr. VOIGT. Did they report to you, if you are at liberty to state, that the facts disclosed to them made out a case under the Sherman antitrust law?

Attorney General PALMER. They believed it justified a proceeding under the Sherman antitrust law.

Mr. VOIGT. Then, up to the time that the representative of the packers saw you, you had determined to prosecute the packers? Attorney General PALMER. Either criminally or civilly.

Mr. VOIGT. Had you determined at any time in your own mind which course to pursue?

Attorney General PALMER. I had not.

Mr. VOIGT. Was it your opinion that there was sufficient evidence on which to prosecute them criminally?

Attorney General PALMER. I think the department would have been justified in either course. Whether it would have been as successful in the one or the other was the problem which I had to decide as a practical matter; and, as I explained to you in my statement, I came to the conclusion that the chance of success on the criminal side was at least doubtful-possibly remote-final success— in view of the history of the law and all that; and that the result from proceedings on the equity side and getting a substantial judgment, accomplishing real things, would be so much greater in the public interest than the mere punishment of individuals that I think if I had entered into no conference I probably would have gone into court on the civil side. But I was easily persuaded it was my duty to take this kind of a decree rather than to go into the criminal side, when I found I could get more than I could possibly have gotten in the equity side of the court if I had gone into adverse litigation.

Mr. VOIGT. I understand your view is that you got more for the people in this proceeding than you could have gotten in a criminal prosecution?

Attorney General PALMER. That is my view, and I think it is a fact. Mr. VOIGT. There was a grand jury investigation in Chicago? Attorney General PALMER. Yes, sir.

Mr. VOIGT. In September and October, 1919?

Attorney General PALMER. Yes, sir.

Mr. VOIGT. At what date were you first approached by the packers? Attorney General PALMER. I can not tell you the date; it was somewhere about that time.

Mr. VOIGT. Was it while this grand jury investigation was on, or afterwards?

Attorney General PALMER. I think I received these intimations from various sources that they would like to confer with me before the matter was before the grand jury, but I do not think I actually met them until some time in September or October; I have forgotten the date.

Mr. VOIGT. You regard the entry of this decree as constituting a surrender to the Government by the packers?

Attorney General PALMER. I do.

Mr. VOIGT. I am asking that question, because I understood they complained before the committee that it was not in the nature of a surrender.

Attorney General PALMER. If you had seen the way they fought us on the thing, and how bitterly they denounced it, and the demands of the Attorney General, when it was first proposed to them, you would have been surprised that they would have ever come around and said they had not surrendered to the Government. What they might say now, I do not know.

Mr. VOIGT. The attorneys for the packers have stated before this committee that they consented to this decree in order to allay public feeling against them. Do you agree with that view?

Attorney General PALMER. I have no doubt that was in their minds, that it was a wise thing for them to do, to reestablish their prestige in the country so far as they could as law-abiding citizens. I think that was in their minds.

Mr. VOIGT. Do you think that was their motive in agreeing to this decree?

Attorney General PALMER. I think their motive in consenting to this decree was founded upon willingness to obey the law as they had come to be persuaded the law was, and that they went further than possibly we could have gone under adverse proceedings in the hope that that would accomplish what you have described-allay public feeling against them. I think there is something in that.

Mr. VOIGT. Do you not think they submitted to this decree also for the purpose of heading off the prosecution by your department? Attorney General PALMER. I do not know. I never mentioned prosecution to them, never discussed it with them. I expect that these defendants had in mind all the possibilities of the case. I would think so.

Mr. VOIGT. If there had not been this grand jury investigation and the possibility of prosecution by your department in their minds, you do not think they would have consented to this decree, do you?

Attorney General PALMER. If they had thought I was not going to do anything about it, they would not have bothered to come and see me. They got the notion I was going through, and they were right.

Mr. VOIGT. I agree with you on that. Let us take up another angle: The lines of cheese, butter, eggs, fish, and condensed milk are not touched by this decree.

Attorney General PALMER. Oh, yes; fish is taken out.

Mr. VOIGT. It touches fish, does it not?

Attorney General PALMER. Yes.

Mr. VOIGT. They meant to say cheese, butter, eggs, condensed milk and poultry, and also milk?

Attorney General PALMER. Creamery products; yes.

Mr. VOIGT. Are not touched by this decree?

Attorney General PALMER. Fresh milk is taken away from them. Mr. VOIGT. I do not think they deal in fresh milk to any extent, do they?

Attorney General PALMER. Not greatly, yet.

Mr. VOIGT. Do you consider that poultry, eggs, etc., are really related lines to the packing industry

Attorney General PALMER. Well, that was the occasion of most of these debates between the Department of Justice and these packers' representatives during all these conferences. The big pinch in this case was really whether we could or should take them out of the butter, eggs, poultry, and cheese business.

At first my mind inclined very strongly to the view that they were unrelated lines, and that we ought to insist upon their going out. But the more I studied it, the more familiar I became with it, the more doubt I had upon that subject, and especially did I have more doubt as to the economic value and wisdom of separating these particular businesses from this great distribution system of these defendants. They are articles which require refrigeration for their proper collection, distribution, and sale. They must have the benefit of the kind of a distribution system which these defendants had built up, and if they were taken away from them I am perfectly satisfied, in that case, that the situation Mr. Tincher referred to would have resulted, and would have resulted to so large an extent that there would have been a public clamor of protest which would have been very difficult to meet; and that would have resulted in increased prices for these products.

The refrigeration system of the defendants with reference to butter, eggs, cheese, and poultry has made it possible to spread the distribution of these products over the entire year. They are essentially seasonal products, and the period of greatest production in the summer is the period of the least consumption, and the period of least production in the winter is the period of greatest consumption.

Ordinarily, without the system which they have developed prices would have been so low in summer that the producer would not produce, and it would have restricted production. And the prices would have been so high in winter that the public would have been mulcted in the price, and this would have increased from time to time, because of the decreased production growing out of the fact that the producer could not carry his stuff over to winter and spread the price throughout the season.

That is a problem which is not in this case alone; this problem of spreading demand, spreading distribution throughout the entire year is in the production of every great commodity in the country. It is the basis of the trouble with the coal business, and it is the basis of the trouble with many other lines of business, and I was unwilling to take the position, as an economic proposition, that I would destroy at one blow the system which had spread this distribution throughout the year by refrigeration processes.

Mr. VOIGT. Is that the idea of cold storage in general that you are referring to there?

Attorney General PALMER. Yes, and the distribution system of these defendants.

But, frankly, not being entirely certain-we can not be certain in these days I specifically required that the door should be open for us at any time to go into this particular case for relief with reference to butter, eggs, cheese or poultry, for such relief as the facts might seem to justify, if there was any violation of law with respect to their conduct of those businesses.

Mr. VOIGT. General, let us see just how far this "holding the door open" is extended here. You could not divest these packers of these lines-butter, eggs, cheese, poultry, and milk products-unless you proved to the court that they had been guilty of a violation of the Sherman Anti-Trust Law, could you?

Attorney General PALMER. For any violation of any law.
Mr. VOIGT. Any law?

Attorney General PALMER. Any violation of any law; yes. Ι could not punish them if they did not violate the law.

Mr. VOIGT. I just want to get at this point as to how much prevention there is for the men engaged in these lines of business in this decree. There is nothing in the law at the present time to prevent any of these packers from engaging in the cheese, butter, eggs, or poultry business.

Attorney General PALMER. Lawfully?

Mr. VOIGT. I am saying now, provided they all go in independently and legally, of course.

Attorney General PALMER. There is nothing to prevent anybody from going into any business lawfully.

Mr. VOIGT. I understand that. I am talking now about the packers. I say there is nothing that you know of at the present time that is illegal about their operation in these lines?

Attorney General PALMER. No.

Mr. VOIGT. If they should continue to grow and finally come to do 75 or 80 per cent of the business in these lines and follow the same paths that they are following now, they would not violate any law. Attorney General PALMER. If they controlled 75 or 80 per cent of the cheese, butter, eggs, and poultry business of America?

Mr. VOIGT. I mean if their present business should grow along the present line so that they would control 75 or 80 per cent of these commodities, they would not violate any existing law?

Attorney General PALMER. Well, I am not sure about that, sir. Mr. VOIGT. Will you explain how they might violate any law if they increased their business along present lines?

Attorney General PALMER. It would depend upon all the facts and circumstances with relation to the increase. if by any joint arrangement, if by any facts and circumstances from which a court might deduce anything like an arrangement, these five defendants, or any of these defendants, ever acquired a control of 75 per cent of the butter, eggs, cheese, and poultry market in America, I would say that any Attorney General would be extremely derelict in his duty who did not hail them into court in this case and try at least to get a decree to prevent their continuance in that business.

Mr. VOIGT. That may be true.

Attorney General PALMER. I can not state it any more accurately than that, sir, because I do not know what the court would decide, and I do not know what the facts are going to be.

Mr. VOIGT. You are satisfied, or you were satisfied when this decree was entered, that their business in handling butter, cheese, eggs, and poultry was a lawful business, were you not?

Attorney General PALMER. Certainly.

Mr. VOIGT. Now, I say suppose they should continue in that business along present lines and in the future you should be unable to prove any conspiracy or combination among them, they would not violate any law?

Attorney General PALMER. If I can not prove that they have violated any law, then, of course, they will not have violated any law, so far as I know; but if they continue along their present lines, to the point that they control 75 per cent of the products that you describe, I would think we would find sufficient facts to warrant us going into court in the case. I do not believe that these five defendants could ever possibly control 75 per cent of the market in those products without some kind of an agreement.

Mr. VOIGT. You will admit if ever they do control that percentage that under the present law you would be powerless, unless you could prove a combination among them?

Attorney General PALMER. Unless we proved it to be unlawful.

Mr. VOIGT. You stated in answer to a question by Mr. Purnell that you would divorce these packers from the wholesale grocery lines whether there was an advantage or disadvantage to the public involved.

Attorney General PALMER. Whether it resulted-no, I did not quite say that. I said I would have taken the same action I did even if I had believed that it would not result in decreased prices.

Mr. VOIGT. I think that is stating the same thing my question implied.

Attorney General PALMER. Hardly.

Mr. VOIGT. That is, you did not take into consideration divorcing them from the wholesale grocery lines any slight advantage to the public in prices.

Attorney General PALMER. Yes, I did. I explained that I did not believe that taking them out of the wholesale grocery business would result in any increased prices. But even if it had not resulted in decreased prices I would still have taken this action, is what I said. Mr. VOIGT. But you preferred to divorce them from the wholesale grocery lines and let competition take its free course?

Attorney General PALMER. Yes, sir.

Mr. VOIGT. What I would like to find out is why you should not take that same view of the cheese, butter, eggs, and poultry business. Attorney General PALMER. Because they are, as I explained, refrigerated products of a kind that it seemed to me very likely, as an economic proposition, it was necessary to have this kind of a distribution system to stabilize the market, increase production, and keep prices down.

Mr. VOIGT. If I am not mistaken, General, the packers now control over 50 per cent of the cheese that is handled in interstate commerce in this country.

Attorney General PALMER. That is the proportion they control in one State, and I suppose it goes into interstate commerce.

Mr. VOIGT. I think you will find that is true of the entire cheese industry of the country.

Attorney General PALMER. I do not think that the figures are as large as that, but I have them and I will give them to you.

Mr. VOIGT. Did you ascertain what percentage of the total business of these packers was taken away from them by divorcing them from the wholesale grocery line?

Attorney General PALMER. If I have ever seen the figures I can not give them to you now.

Mr. VOIGT. It is rather a small percentage, is it not?