Combined run of hogs at seven markets-Receipts of hogs at Chicago, Kansas City, Omaha, St. Louis, St. Joseph, Sioux City, and St. Paul for 1919 and 1918.

Mr. WELD. I might say that this chart shows a further falling off in the exports of bacon, hams, and shoulders, and lard

Mr. ANDERSON (interposing). Not in lard?

Mr. WELD. From 114,000,000 in June to 68,000,000 pounds in July and 49,000,000 pounds in August.

Mr. ANDERSON. You are dealing with only October and November. Mr. WELD. I will read right through. September, 36,000,000 pounds; then it went up to 41,000,000 pounds; but reading right through, it declined very heavily, which is one of the important factors in the decline from August. We can not have any better explanation of the drop in hog prices in August and September than those figures.

Mr. MARSH. Mr. Chairman, you said that I could bring up this letter; may I do it now?

Mr. CHAIRMAN. You may before Mr. Weld starts in.

Mr. WELD. I would much prefer if you would permit me to go ahead, because I want to get through.

The CHAIRMAN. The letter was placed in the record this morning. Mr. WELD. It is not a part of my testimony.

The CHAIRMAN. Mr. Marsh, suppose you take that up when Mr. Weld finishes this evening.

Mr. MARSH. Certainly.

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 say a word on the question of the turnover, the number of times our stock is turned over in the course of a year. This is a point which has come up a number of times. It is a matter I will be glad to go into. I may say, to begin with, that the different parts of our business turn over at different rates of rapidity That is, for example, the fresh-beef business turns over much more rapidly than the pork business, where the goods have to be cured and are held for several weeks, and sometimes several months, before they are sold. In the cattle business, however, of course the fresh-beef turnover is more rapid than the hides or that part of the beef that is frozen, and probably it might be said that our running stock of cattle products would turn, perhaps, 6 or 7 times a year.

The stock of fresh beef might turn 10 or 12 times and the cured pork products, perhaps, only 4 or 5 times a year. If you consider the number of stock turns as based on the inventory, because that is the usual method in counting the number of stock turns in a regular manufacturing establishment, they divide the average inventory into the sales for the year. Last year our inventories ran a little less than $200,000,000-$190,000,000-and the sales about $1,200,000,000. That makes about six times during a year; a little over six times.

It becomes just about the same if you consider the turnover of our investment, that is, our net worth, which was about $200,000,000 with sales of $1,200,000 which means from that standpoint that it was about six times. If you take the total capital employed, including our investment and borrowed money, the total capital of the business has turned over about three and a half times during the year. Of course, this shows the relation between our profits on sales and profits on investment. It is because we can turn over our goods fairly rapidly, about six times a year, that we can do business on a profit of only 1.6 cents on each dollar of sales and still make a profit of 7 per cent on our investment.

The CHAIRMAN. Mr. Weld, will you please suspend a moment? Mr. WELD. Certainly.

The CHAIRMAN. I have just received word from the Attorney General's office that he can appear before the committee either on the 1st or 2d of April. What is the wish of the committee?

Mr. ANDERSON. I move that it be on the 2d of April.

The CHAIRMAN. At 10 o'clock?

Mr. ANDERSON. Yes, sir.

The CHAIRMAN. Without objection, the Attorney General will be invited to appear at 10 a. m., April 2.

There was no objection.

The CHAIRMAN. Mr. Weld, you may proceed.

Mr. WELD. I am about where we handle other products. I do not intend to go into this very exhaustively.

Mr. MARSH. May I ask a question on the turnover?

Mr. WELD. Please permit me to finish my statement and then you can ask the questions.

The CHAIRMAN. Have you finished your statement on the turnover?

Mr. WELD. Yes, sir.

The CHAIRMAN. Then the questions will be in order.

Mr. WELD. I had planned to finish my statement, which will not take more than an hour, and then answer any questions which may be asked.

The CHAIRMAN. If you desire, you may conclude your statement. Mr. ANDERSON. Yes; finish it.

Mr. WELD. If the gentlemen will please make notes I will be glad to answer any questions.

There has been, of course, a great deal said about our handling other products than meat. That is one thing covered in the recent decree. I want to point out why, from our point of view, it is not proper to use the word "unrelated" with respect to these products that we do handle. They are "unrelated" in one sense, usually they

are not products of live stock, but there is some very good reason for the handling of all of them. Swift & Co. at least handles lines aside from meats. There are three classes of commodities in which Swift & Co. is interested. The first class is raw materials which are needed in manufacturing our regular products, such as cottonseed oil. We are interested in the raw material used in the manufacturing operation.

Second, the class of goods which are by-products of the packing industry and which we advance to the further stage of manufacture, hides through the tanning process and oleo oil in the making of oleomargarine, etc. The third are the products for which we can use our sales organization to better advantage, such as butter, eggs, cheese, and poultry. As for this last class of goods, you must realize, I think-and this bears somewhat on the point that Mr. Voigt was trying to bring out with Mr. Sansom-we have this sales organization. We have the personnel of a sales organization, with the managers, including the salesmen, etc., and we also have the physical equipment in the form of refrigerator cars, storage houses, branch houses, delivery trucks, etc. If the sales organization that covers the country were used only for our beef line, why we could not afford to have it, except possibly in the larger cities. For packing pork and port products, lamb, etc., we are using the same equipment to handle a greater volume, and consequently can afford to have more branch houses and the operating cost is lower. The principle is that with the great volume we can be sure of the sales organization, such as the human beings and the physical equipment, and lower our unit selling cost. Therefore in the case of butter, eggs, and poultry we are using the physical equipment, the storage houses, the refrigerator cars, and the coolers in our branch houses, and the city trucks to get the eggs into the hands of the retailers, and we are using the same sales administration, largely the same accountants and the same salesmen, in selling very largely to the same class of retailers.

The handling of these goods fits very naturally into our general scheme of selling, and increases the volume of business without proportionately increasing the overhead expense. As I say, the result is a lower unit selling cost than would otherwise be possible, because both on the eggs, cheese, butter, and poultry, and on the meats that we handle it also makes possible a wider distribution, the operation of more branch houses, and the reaching of more towns from the branch houses than with car routes. There is good economic justification for handling these products that we do handle. That also has a very important bearing on the situation with regard to butter, eggs, cheese, and poultry to be taken away from us. I think that Mr. Colver told you that as to unrelated products there was no reason why we should handle them, that we ought to be kept from handling them, and that it would be a good thing for the country if we were kept from handling them. I have already pointed out in that connection that I think it would be an extremely dangerous precedent to establish in our laws; that is, to give any single commission or any Government official power to say what products a concern might or might not handle. I think that is a practically impossible principle to establish in the law. I also pointed out that that had been

accomplished through the consent decree so far as groceries are concerned, and, of course, our idea is that the consent decree has accomplished something for which there seems to be a very general demand and which I do not believe could be accomplished by law.

Now, about the stockyards, I am not going to dwell on them, especially, as from my point of view, that matter has been disposed of by the consent decree. You know under that consent decree we have to submit a plan for the disposal of the yards within 90 days after the decree is issued, and the yards have to be disposed of within two years, unless an extension of time is granted, as I remember it.

Mr. ANDERSON. I did not get the last statement?

Mr. WELD. I think the yards are to be disposed of within two years. I think there is a provision for an extension of time in case a satisfactory solution has not been found, but the whole matter of selling the stockyards is under the supervision of the representatives of the Department of Justice. I might say that we do not exactly relish the suggestion that we are not doing this in good faith and that we may possibly find some way to still indirectly control the stockyards after they have been sold, because I can say to you that we are entering into this agreement in good faith and expect to sell our stockyards, only it will all be under the supervision of the Department of Justice.

In passing that point, however, I should like to say that the ownership of the stockyards has not and does not give any control over prices or over the practices in the yard, and that we have two principal interests, I might say. The principal interest in the stockyards has been to have efficiently operated yards, and the second interest has been, of course, a financial one, and whoever buys them now, unless, perchance, stock raisers themselves buy them-if outside capital buys the yards, they will have only one interest, and that will be to have them make as much money as possible, and they will not have the close personal interest that we have had in having attractive and efficiently operated yards in connection with our packing plants. I may also say in that connection, for Swift & Co., that for two years it has announced that it was ready to sell its yards if an efficient means of operating them could be found. We have gone a little further than that in the consent decree and we have agreed to sell them whether we are satisfied or not with the operating efficiency, as in the past.

Mr. ANDERSON. I hardly think that that statement is justified by the language of the decree.

Mr. WELD. I do not think that we have made any condition as to efficiency, if that is what you mean.

Mr. ANDERSON. Paragraph 13 of the decree provides:

That the purchaser or purchasers of the defendants' interests in any stockyard shall, as a part of said purchase, agree with such of the defendants as now maintain packing plants in said stockyards that for a period of at least 10 years after the date when such purchase shall be consummated; said purchasers, their successors or assigns, will continue to maintain and efficiently operate such stockyards and each of them, and such of said defendants as now maintain packing plants at any of said stockyards shall agree with said purchasers that during the same period of 10 years said defendants, their successors or assigns, will continue to maintain and operate said packing plants at the points where the same are now located, unless strikes, shortage of sup

plies, or other causes beyond the control of either the purchasers, the stockyard companies, or said defendants shall prevent the carrying out of said agreement. Performance by either party shall be a condition concurrent to performance by the other.

It was required in this decree that they should be efficiently operated; but this clause affords no protection to whoever takes over the stockyards, because there is no requirement here that the packers shall continue to buy in the stockyards; and if they do not continue to buy in the stockyards, of course, the yards have no value.

Mr. CHAPLIN. Except the packers have their investment and necessarily must get live stock.

Mr. ANDERSON. Yes; but they can buy a considerable portion outside.

Mr. WELD. You are interrupting me.

I will take back what I said about there being any provision for their being operated efficiently. At the same time I should state that I did not remember that that clause was in. I may also say that even with that clause there, there is absolutely no agreement that they will be operated with the same efficiency that they have been in the past.

Mr. ANDERSON. I am perfectly willing that you shall proceed without interruption.

Mr. WELD. As to the refrigerator cars, those have been discussed a number of times to a certain extent, and I do not believe I need to go into that in very great detail. I do not know whether it has been sufficiently pointed out that the operation of refrigerator cars is a very special service; that in the operation of our cars, for example, we have a transportation department that knows where each car is all the time and that has agents keeping track of the cars and seeing that no time is lost in transit or in the return of the cars, to see that the cars are kept in proper repair and that they are kept sweet and clean. So it requires a very special service to take care of the refrigerator cars. You also know that we got to owning and operating refrigerator cars for the simple reason and that the railroads refused to do so. Now it is suggested to take them away from us. Of course, I think this clause has been stricken from the bill that has been reported in the Senate; I think it says nothing about the refrigerator cars; but, in the first place, there are not enough cars now, and the large packers themselves have not enough cars, and there is no unfairness or discrimination in the use of the cars by the large packers. The Interstate Commerce Commission. in its investigation of this subject showed definitely that we had been operating them at a loss for the past few years and said that it would be a mistake to change the present system.

Now, if the small packers do need more refrigerator cars, why, there is no reason in the world why the railroads should not be required to furnish them; but that does not mean necessarily that the railroads should take over our cars. Besides, it would do nobody any earthly good to take our equipment from under our own supervision. The same thing, so far as the smaller packers are concerned, can be accomplished by requiring the railroads to furnish such cars as are needed; and I believe that the new railroad law practically does this.