than an expense, just the same as the manufacturer buying a laborsaving machine, there is an economy rather than an expense, and consequently the consumer gets the benefit by doing away with a very much more expensive method of doing the same thing without the machine. That is the economic justification. Mr. MARSH. Do you think is would be wise for the seven million farmers to go into advertising the relative merits of the products they raise? Mr. WELD. I think it would be a better thing if the farmers will do just what the California fruit people have done. I think they have done a fine thing in advertising the Sunkist oranges in developing a standard brand, advertising it and maintaining the quality definitely that is a perfectly good thing to do. Mr. MARCH. You could, of course, do advertising in the papers without spending quite so much money, taking less space? Mr. WELD. Yes; it would not be so effective. We could use a little bit of a machine instead of a big machine. Mr. MARSH. Effective on the editor? Mr. WELD. Yes; on the editor. I think they always read more than other people. I think it has had a very beneficial effect. Mr. MARSH. Do you include as a part of the expense of advertising the loans which you make to farm editors? Mr. WELD. I do not know that we make any loans. Mr. MARSH. When did you stop? Mr. WELD. I do not know. Mr. MARSH. I read into the record from the testimony before the Senate Committee on Agriculture a statement showing how Swift and Armour each made a $5,000 loan to an editor in Texas and the editor wrote, "I think you notice the difference in our policy before and after taking." Of course, no such principle enters into your vast expenditures in advertising? Mr. WELD. I do not know about that. As I remember it was a city paper, it was not a farm paper, that they made some loan to; I do not remember the circumstances of that at all. Mr. MARSH. You have no record of loans along that line? Mr. WELD. I do not think there has been any other that I know of. That is not the policy. There were some special reasons in that case. Mr. MARSH. You do not buy any space in farm journals or other papers when they urge the enactment of legislation such as the Anderson bill, do you? Mr. WELD. That is a very difficult question involved there. It is more or less difference of opinion as to what is the proper policy to pursue. It has been the policy of Swift & Co. to select its advertising mediums on the basis of their circulation and influence rather than on their editorial policy. I do not think that all the other packers have followed that. It is rather hard to continue paying for advertising space in a paper when the editorial columns call us "thieves." "monopolies," and things of that sort. That, of course, largely effects our advertising. On the other hand, the theory that I go on personally is that our advertising offsets the lies in the editorial column, and it is better to continue to advertise in such papers; that has been our general policy, although we have not selected all the papers that lie about us to put paying advertisements in their columns. Mr. MARSH. How many farm papers do you advertise in? Mr. MARSH. And about how many metropolitan and small-town papers? Mr. WELD. I think it is 8,000 or 10,000; I have not the correct figure. Mr. MARSH. And with an aggregate circulation of how many? Mr. WELD. I do not know; probably many millions. Mr. MARSH. About 25,000,000 to 30,000,000? Mr. WELD. I do not remember anything on that at all, and I would not want to hazard a guess. Mr. MARSH. Your theory is when you are opposed editorially in a paper that the readers of that paper need your information and you put out an advertisement? Mr. WELD. NO. We carry practically the same amount of space. In some papers we have every other week or month or something of that sort. We are guided almost entirely by the question of the circulation of the paper and the influence of the paper on its readers; those are the guiding principles that we have adopted. Mr. MARSH. Would you deem it necessary to continue this advertising if the Anderson bill or some similar one was passed? Mr. WELD. Yes, sir. We expect to continue it indefinitely, not exactly the same as we have been doing on account of the misrepresentations of the Federal Trade Commission, but we hopeMr. MARSH (interposing). You deduct the advertising as a part of your expense before you pay your income tax? Mr. WELD. I think so; that is a legitimate expense. Mr. CHAPLIN. We follow whatever the law is. Mr. MARSH. That is the law? Mr. CHAPLIN. Yes. Mr. MARSH. So the people pay it? Mr. CHAPLIN. No; the people do not pay it-the shareholders—it comes out of the earnings of the shareholders. Mr. MARSH. Let us correct that. A certain proportion that would otherwise go into the taxes comes out of the people? Mr. WELD. As I have explained to you, the people pay for it only in the same sense that they pay for the use of a machine in a factory. Advertising is very generally misunderstood. It is looked on by so many people as something taken away from the consumer. Mr. MARSH. You say that it is not true that the packers can charge up advertising to the consumers as they wish. If their profits were fixed by law, then the law of supply and demand might not apply, but I am asking if in your branch houses all over the country you do not charge more than the average price? Mr. WELD. Make our branch houses pay more? Mr. MARSH. Yes; make them charge more. Mr. WELD. We are continually after the branch-house managers to get the highest possible price they can, and when we are losing money, as frequently happens, we "jack" them up to get a higher price if they can. Mr. CHAPLIN. That is, for the meat. Mr. WELD. He can not generally. 166762-20-PT 27- -2 Mr. MARSH. Unless you can come to such an agreement with the Department of Justice Mr. WELD (interposing). That has absolutely nothing to do with it. We inform our manager to get as much as he can for his products. There is no collusion of any kind there. You are interpreting and misinterpreting the statement, and willfully, I believe. Mr. MARSH. I have written a letter to the Attorney General on that point. and I will submit my letter and his reply when received. Mr. WELD. We shall be very glad to see it. Mr. MARSH. I thank you very much. Mr. TINCHER. I am very sorry that you have refused to furnish a list of the papers and the amount of money you have spent with them in this educational advertising that you speak of. I think it is the first information that might be of any importance, and yet you refuse to furnish it. Especially in view of the fact that one of the editors has written that he received the advertisement and "I think you will notice the difference before and after." Mr. WELD. That has nothing to do with the advertising. It was long before we started the institutional advertising in many papers, and we advertise in the papers that we might be more competent to judge whether we have the good judgment of our patrons or the judgment inspired by the prozonents of this legislation. Mr. CHAPLIN. I think that all appears in the record already in connection with the hearings in the Senate-I am not sure whether the hearings in the Senate or in the House. Mr. WELD. As I have said, the principal reason I have in mind why I would not like to give it to you is the fact that we have trouble all the time in turning down newspapers and magazines, and just as soon as we give out a list of the farm papers there will be a lot of inquiries immediately as to why we have not bought space from them, and they will be sending their representatives to us in Washington or Chicago. We know what we would have to combat in that respect. Mr. MARSH. Do you spend the same amount of money each month, or is it smaller some months and larger other months? Mr. WELD. It is practically the same amount every month-that is, during the year. The expenditure for institutional advertising will not be as big this year as last year. Mr. ANDERSON. I want to ask one question, Mr. Weld, if I may. Swift & Co., I think, made a bond issue in 1918 or 1919 of something like $60,000,000. Am I correct about that? Mr. CHAPLIN. I think it goes further back than that. Mr. ANDERSON. When was it-1917? Mr. CHAPLIN. I thought it was back in 1915 or 1916. I think that you are referring to Armour & Co. Mr. WELD. You did issue some? Mr. CHAPLIN. That was a way back; that must be some years ago. Mr. ANDERSON. What I have in mind was in the last two or three years. Mr. CHAPLIN. No; that is not correct. Mr. ANDERSON. All right. Mr. YOUNG. I have been under the impression that yours is a much larger and more comprehensive scheme of advertising than Armour. Mr. WELD. I imagine Armour does fully as much merchandise advertising as we do; I do not know what his figures are. But on the educational advertising we spend a great deal more than Armour or any other packer. Mr. YOUNG. Is there any difference in your method of doing business than Armour's methods, for instance, of doing business that you can more freely approach the public in advertising than Armour can? Mr. WELD. Not that I know of. It is just a matter of individual policy with us. We have decided that it is necessary in order to safeguard our business and overcome this prejudice and offset these false statements made about us, and we are anxious to have the public understand us, and have the public good will, and we believe we are justified in the expenditure of an immense amount of money; it is insurance. Mr. YOUNG. The question which addresses itself to my mind, in your discussion of advertising, by dealing in it more largely to reach the general public than Armour, and you said your business was conducted on certain basis that was concealed from the public, and that it would be better for you and your business to have an open book before the public. Mr. WELD. Absolutely. Mr. YOUNG. Then the question struck me: Was there anything in the operation of these other packers that might be wise for them not to let the public know their methods of operation and therefore they did not indulge in this system of advertising? Mr. WELD. I do not believe that is so at all, Mr. Young. I think they probably have not appreciated the value of gaining the public's good will as much as we have; have not thought it worth while to spend the money. Mr. CHAPLIN. Another feature is that we got into the field at first and more than likely monopolized it. Mr. WELD. Possibly they are holding back because they feel we are covering the ground and that there is no necessity of their going strong in that direction; I do not know. Mr. YOUNG. Is the advertising done by you beneficial to the whole industry? Mr. WELD. We realize that. Mr. YOUNG. And they may be withholding the expenditure of any money in that way? Mr. WELD. That may be true. We believe we are doing the whole industry good; but we also feel we are doing Swift & Co. special good. Mr. YOUNG. The thing which impresses me is that the statements and most of the testimony we have had has been from representatives of Swift & Co.; that the other gentlemen have been very largely in the background. Mr. WELD. And most of the testimony has been pretty general testimony, dealing largely with economic questions of the whole industry. Mr. YOUNG. I was just wondering whether or not you are acting as spokesman here for the entire packing business. Mr. WELD. I stated that clearly on the first day that I officially only represented Swift & Co. Mr. YOUNG. The business is done generally on such a uniformity of operation between the different packers in the industry that your statement would be applicable to all the others, as I understand it. Mr. WELD. Practically; I should say that nine-tenths of what I say has to do with the economics of the business. The question of prices, the question of whether there is monopoly, the days I have spent on the Trade Commission's report, are all questions which apply to the packing industry as a whole. Mr. MARSH. Mr. Chairman, may I just have a moment to reply Mr. WELD (interposing). May I please proceed with my statement? I have not had a chance to cover one page of my notes this morning. Mr. ANDERSON. Before you get away from this subject of educational advertising, I want to submit to you a sample of it issued by the American Institute of Meat Packers. This is entitled "Friend Wife" by Roe Fulkerson. I will not read it all, but it may all go into the record. This is the little dialogue between Imogene and Andrew concerning the purpose and the place and life of the meatpacking industry. 66 'What and where is the Beef Trust?" asked Imogene, puzzled. "The Beef Trust is an imaginary punching bag for wind-jamming statesmen who want to get into the Congressional Record!" replied Andrew. I was just wondering if that was a sample of the advertising you have reference to. Mr. CHAPLIN. Not of Swift & Co. Mr. WELD. That is a little less dignified than what Swift & Co. put out. Mr. TINCHER. Swift & Co. contributed for the publication of that article, you do not know how much? Mr. CHAPLIN. They contributed a small proportion of it, I pre sume. Mr. WELD. We contributed to the general fund of American Institute of Meat Packers as an association, just as manufacturer members of every trade contribute to his trade association. Mr. TINCHER. I have got an idea that about 99 per cent of the contributions in support of the American Institute of Meat Packers are made by the Big Five. Mr. WELD. I do not know what the proportion is; it would be a very large proportion. (The article referred to and entitled "Friend Wife" is here printed in full in the record as follows:) FRIEND WIFE. (By Roe Fulkerson.) [Reprinted from the editorial page of the Chicago Herald and Examiner of Dec. 31, 1919.] "Well, I am certainly glad of that," said Imogene, looking up from her newspaper. "So am I," said Andrew, with a hearty determination to be agreeable. "What is it?" They have started an investigation of these people who are raising the prices of food." |