Mr. Walsh concurred, I believe, in my interpretation of the law; at any rate, he registered no objection or dissent and suggested that I should go in and see Mr. Fort, who was then the only commissioner present in the building, and repeat to Mr. Fort the statement that I had just made to him (Walsh). I accordingly at once went with Mr. Walsh from the latter's office to the office of Mr. Fort. I repeated to Mr. Fort what I had told Mr. Walsh, and said to Mr. Fort that that was the reason why I had advised Armour & Co. that it was not required, under the Federal Trade Commission statute, to furnish the information that the commission had asked about this particular Argentine company.

Mr. Fort is in error when he says in his letter that I said "that the real reason that the returns (of the Argentine companies) should not be made was that it might involve very heavy additional payment of income tax to the United States Government on the part of Armour & Co. and likewise might lead to taxation in Argentine and other countries." The question of the income or other taxes of Armour & Co., payable in the United States, was not in any way referred to. There was and could have been no reason for referring to that question. The internal-revenue officials had unlimited access to the books and all the fiscal records of Armour & Co. and have periodically examined them.

I said to Mr. Fort that reports of the unfair agitation and propaganda that were being worked up in the United States against the packers were being published in the Argentine, and that if Armour & Co. were to make a detailed report of this Argentine company's business to the Federal Trade Commission that report would in all probability be published in the Argentine and might cause injury to this Argentine company by creating further agitation there.

Mr. Fort gave no indication of differing with me and did not in any way take issue with what I said. The intimation that he was outraged is wrong; he evidenced no feeling on his part. His statement that there was a suggestion that he could or would be a party to defrauding the Government, or would be a party to a deception on a friendly foreign Government, has no basis for its support. I can only attribute it to some unfounded suspicion or a failing memory on the part of Mr. Fort.

The statement in Mr. Fort's letter that "the desired information (about this Argentine company) was demanded and secured without any further delay also inaccurate, because the desired information was not furnished.

is

In conclusion, I want to add that at the conversation to which I am referring no commissioner other than Mr. Fort was present.

Will you please have this letter read and incorporated into the record?
Very respectfully, yours,

LEVY MAYER.

Mr. TINCHER. I think that Mr. Mayer or some other attorney or representative of Armour & Co. should favor the committee with their presence, so that we could ask them a few questions.

The CHAIRMAN. You may proceed, Mr. Weld.

STATEMENT OF MR. L. D. H. WELD, MANAGER COMMERCIAL RESEARCH DEPARTMENT, SWIFT & CO., CHICAGO, ILL.-Resumed.

Mr. WELD. I want to take up next, Mr. Chairman, the charge made by Mr. Anderson that we had been spending millions of dollars on misinformation.

Mr. TINCHER. Before you do that, the other day you were askedI do not remember what member of the committee brought it out-about the sporting goods and musical instruments that the different. packers were engaged in and also you were complaining about the report of the Federal Trade Commission as bringing out only one side of the controversy, and as I understood your testimony it was to the effect that while Armour & Co. own the stock of certain companies, the Armour Packing Co. did not engage in that line of busi

ness.

Mr. WELD. What is that?

Mr. TINCHER. That they were not themselves engaged in that line of work.

Mr. WELD. You mean Wilson & Co. in connection with the sporting goods?

Mr. TINCHER. Or Armour & Co. in connection with musical instruments.

Mr. WELD. I said nothing about that. There was a discussion with regard to Wilson & Co, being in the sporting-goods business, and I explained that the sporting-goods business was a separate business and not a part of the packing-house operations in any way, although it was owned either by Mr. Wilson or Wilson & Co., I do not know which.

Mr. TINCHER. To throw some light on that subject, I think I have something here that probably does not appear in the Federal Trade Commission's report. I have not the Wilson catalogue, but I have a musical strings and accessories catalogue, I have a catalogue of about 100 pages, the "Wholesale Catalogue, Armour's Musical Strings and Accessories," which shows not only the musical instruments but everything that goes with the instruments, and there is an order blank in the catalogue which reads, "Order blank for musical string department," addressed to "Messrs. Armour & Co., Chicago, Ill: Please send the following goods."

That is Armour & Co.

Mr. WELD. There is not anything in that that does not coincide with what I have said before. As you understand, strings for musical instruments, and so forth, are direct by-products of the packing house, they use the guts for making the musical strings and accessories, and I suppose they find that in order to merchandise those things successfully they have to carry other things that the same pur

chasers want.

Mr. TINCHER. I do not like to put the whole catalogue into the record. It seems that they carry the whole line. Here is another catalogue from Samuel C. Osborn Manufacturing Co., Chicago. Ill. They advertise musical strings, and instruments, the harp, the violin, every instrument of that kind and character, and on the back of the catalogue it says: "Send orders to Armour & Co., Chicago, distributors for all instruments listed in this catalogue: Manufacturer complete line of gut strings products accessories for all instruments.” That is a company, the Samuel C. Osborn Manufacturing Co.. that seems to have some connection with Armour & Co.

Mr. CHAPLIN. Where are they located?

Mr. TINCHER. The picture of the building on this catalogue; that is, Samuel C. Osborn Manufacturing Co., is apparently a building in Chicago.

Mr. WELD. What is the point, Mr. Tincher?

Mr. TINCHER. It is a catalogue of about 18 pages. You are accusing the Federal Trade Commission of leaving out some things, and if they left this out I thought we should put it in.

Mr. WELD. I would put it in if you want to.

Mr. DEADY. Mr. Chairman, I want to say, in order to straighten out this matter, that as far as I knew Armour & Co. do not make any instruments, it is just the strings and accessories. As Mr. Weld has very properly said, they handle the accessories because it is necessary

to carry other things that the customers want. They engaged in the manufacture of strings because they get them as raw material in the shape of the guts, and that is the reason for being in that business. Mr. TINCHER. Do you represent Armour & Co. ?

:

Mr. DEADY. Yes, sir.

Mr. TINCHER. And you are going to appear before the committee? Mr. DEADY. Not that I know of.

Mr. TINCHER. I think we should have somebody from Armour & Co. who knows about this leather company?

Mr. DEADY. I do not know of the details. I only know what most of you have read in the newspapers. I presume that you gather the principal parts of the whole transaction from the newspaper ad, the same as the public in general did. I might state that that is not a part of the decree, because a great many people seem to be under that impression.

Mr. TINCHER. I do not think that it is in the decree.

Mr. ANDERSON. The interesting question is whether or not that reorganization would have been such a reorganization as would be permitted under the decree.

Mr. DEADY. That I do not know.

Mr. TINCHER. I would like to go into that rather fully.

Mr. DEADY. I would not want to go into any of the technical questions, because I do not know, but I think I can get a statement from our people, and shall be glad to do so. There would be certain legal questions which, not being a lawyer, I could not answer.

Mr. TINCHER. I want to go back to these products of the packers. Here are "Gut' banjo strings," $2.50 to $4.50. They are made out. of part of the by-products of the packers' business?

Mr. WELD. I believe so.

Mr. TINCHER. Here are "Silk' banjo strings," I suppose that is the same thing?

Mr. WELD. If you are going to sell gut banjo strings successfully you have to carry silk banjo strings also.

Mr. CHAPLIN. In order to merchandise them economically you can not just handle one line.

Mr. TINCHER. And, of course, they have to handle the picks? Mr. WELD. The strings are not any good unless you have picks to go with them.

Mr. TINCHER. I understand. You do not handle the instruments? Mr. WELD. I do not know about that. Mr. Deady can explain it. Mr. TINCHER. You handle the whole thing, except the instrument itself?

Mr. DEADY. They handle the strings, because that is the raw material and we buy the accessories and carry a full stock, the picks and all that sort of thing, in order to merchandise the strings properly and economically and give the trade what they want. A party would not give us an order for strings alone unless we could fill the order complete with the other little things.

Mr. TINCHER. And resin?

Mr. DEADY. Yes, sir; we handle everything. I think the catalogue is very complete on accessories.

Mr. TINCHER. And bows?

Mr. DEADY. Yes, sir; everything but the instrument itself, I think that is my understanding.

Mr. WELD. I wish I could go on with my statement, Mr. Tincher. Mr. TINCHER. We have to pick out this information in order to get it. I understood while members of the firm were engaged in some of the side lines that they were not directly connected with the packers, but when you see the catalogue-

Mr. WELD. I have not made any such statement. There is nothing there which disagrees with my statement.

Mr. ANDERSON. I would like to call attention to the fact that Armour & Co. apparently do not directly sell instruments, but they seem to take orders for them to be filled by the Samuel C. Osborn Co. This catalogue says: "Complete line of gut string products, accessories for all instruments," sold through the distributing system of Armour & Co.

Mr. WELD. Suppose they do?

Mr. ANDERSON. We are just trying to show you some of the things that the Federal Trade Commission omitted.

Mr. WELD. I said that the Federal Trade Commission had omitted some things.

Mr. TINCHER. This is not the class of things.

Mr. WELD. You could probably get 30 items out of the different qualities and kinds of gut strings. If you want to swell the list, that is a perfectly simple matter.

(The following statement was subsequently submitted by Mr. Deady and ordered to be printed in the record:)

Armour & Co. has no financial interest in Osborn Manufacturing Co. We have 13 gut-string salesmen in the United States, and they have been selling from Osborn's catalogue during the past year. This enables our salesmen to broaden and hold market for gut strings. On last year's catalogue of Osborn Manufacturing Co, our name was printed as the distributors, but this does not appear on this year's issue. Customers desiring to purchase gut strings, as a rule, seldom will place an order for gut strings only, insisting they want to place their order for strings, accessories, and instruments with one concern. Our arrangement with Osborn was entered into in order to accommodate our many customers throughout the country, and the commission earned on selling Osborn's instruments reduces considerably our cost of market on gut strings. We do not keep or carry any musical instruments in stock. All orders for them are turned over to and filled by the Osborn Manufacturing Co., on which the latter pay us a commission.

Mr. MARSH. Mr. Chairman, a letter has gone into the record impugning my testimony-a letter addressed to the chairman of this committee and signed by Mr. Levy Mayer, although it is not on the letterhead of Armour & Co., but of Mayer, Meyer, Austrian & Platt, in which I am accused of having put in a statement which purports to be a copy of a letter from Commissioner Fort to Commissioner Murdock. My integrity is here impugned.

Mr. ANDERSON. I do not think that is the situation, Mr. Marsh. My understanding is that he questioned the accuracy of the statements made in Mr. Fort's letter, and not the accuracy of any statement you have made.

Mr. WELD. I request that I be permitted to proceed.

Mr. MARSH. Not only is my integrity impugned

Mr. ANDERSON. I suggest that you take it up later, when the chairman is present.

Mr. MARSH. If I may have that opportunity, very well.
Mr. WELD. May I go ahead now?

Mr. ANDERSON. As far as I am concerned.

Mr. WELD. As I said before, I want to take up the charge that we have been spending millions of dollars on misinformation. I think that is the expression that was used by Mr. Anderson. I have already referred to the amount spent on advertising by Swift & Co. Mr. Anderson made the statement that the large packers have spent about $8,000,000, I think, and that the program called for $12,000,000 the coming year. I do not know whether he referred to the money spent on just the advertising which he characterized as misinformation, but I have already given you the figures as to what Swift & Co. spent in educational advertising this past year.

Mr. ANDERSON. Was it greater the last year than the prior year? Mr. WELD. Yes, sir; in 1918 it was $1,000,000, or a little less. Mr. ANDERSON. The statement made before the Senate committee was $1,600,000?

Mr. WELD. $1,700,000 for both product and educational advertising.

Mr. ANDERSON. We should like to get some comparative figures. Mr. WELD. I gave you yesterday $2,500,000 last year for educational and product advertising, for 1919, and that is comparable with $1,700,000 for 1918. There is one point that I did not bring out when we were discussing the matter the other day, and that is that the $1,500,000 that we spent last year for educational advertising was about twelve one-hundredths of 1 per cent, or one-eighth of 1 per cent of the total sales. The average advertising expense of advertising manufacturers runs from 2.3 per cent up to 8 or 10 per cent, and a fair average is somewhere around 4 per cent of sales.

Mr. TINCHER. Is that comparable with what you call educational advertising?

Mr. WELD. I did speak of the educational advertising alone. The educational and product advertising would be probably about onefifth of 1 per cent of our sales, whereas the average advertising expense of advertising manufacturers is around 4 per cent. I base that statement on a very careful study that I made before I came with Swift& Co. I got reports from a good many advertising manufacturers, and the results of that study are published in Printer's Ink, an advertising magazine. I am merely pointing this out to show how extremely small our advertising appropriation is compared with our sales and as compared with advertising expenditures in other industries.

Of course, the reason we are spending what we do spend on this kind of advertising is to counteract the misstatements that are made about our industry. Why, it would take hundreds of thousands of dollars just to counteract the ill effects of such unfair diagrams as have been published by the Federal Trade Commission. We are trying to overcome the prejudice created by such misstatements made about our industry, and we are trying to insure the stability of our industry for the future and, if possible, to save ourselves from radical and destructive treatment through the passage of radical laws. Of course, also in all of this educational advertising as well as the product advertising we are trying to gain the good will of the people so that it will make it easier to sell our meat products to them.