Mr. WELD. From an economic standpoint I think it is a mistake. I think it would be a mistake to embody any such thing in legislation as the curtailment of activities in the handling of commodities. There is more justification in connection with the stockyards, because they are a public utility or in the nature of a public utility. I do not know that they have ever been legally declared a public utility, but I have pointed out that they are a different kind of business.

Mr. VOIGT. Considering the interests of the whole public, do you think it is proper to separate the packers from an ownership in the stockyards?

Mr. WELD. I do not think it will do the public any good.

Mr. VOIGT. I did not really ask you that. But, talking about the principle that is involved, you have said that the stockyards are in the nature of a public utility?

Mr. WELD. Yes; I would judge they are, as compared with the packing industry, which is a private manufacturing and distributing corporation.

Mr. VOIGT. What do you say, then, about the proposition of hooking up the operation of a public utility with a private manufacturing concern?

Mr. WELD. I say there is more reason for Government action with respect to that part which is the public utility; there would be more justification for regulating it. Whether there is justification, from an economic standpoint, of actually divorcing it, I have not had my mind made up. I do not know as I have a different opinion on that. But there would be more justification for divorcing it than there would be for divorcing a concern from handling certain products. Mr. VOIGT. Is there enough justification, in your mind, to warrant granting the divorce?

Mr. WELD. Well, I think there is probably in this case, because of the feeling of a misunderstanding with respect to the stockyards in the belief that the ownership of the stockyards means an ability to control prices, etc., and, as a matter of public policy, I think it is undoubtedly a good thing.

Mr. VOIGT. Leaving out of consideration this question of prejudice-I do not think this committee when it gets all through here is going to be governed by any prejudice-what do you say, as a matter of principle, now: Should the packer own the stockyards or not-not considering this agitation and prejudice at all; what is your personal opinion?

Mr. WELD. I have felt there is no good economic reason for divorcing the stockyards from the packers.

Mr. VOIGT. Then you are really opposed to the terms of the decree of the court?

Mr. WELD. On that particular point, I do not think there is anything to be gained from an economic standpoint. As I say, there may be other reasons that would make it worth while.

Mr. VOIGT. You can see a decided difference in principle between the operation of a stockyards and the operation of a packing plant, can you not?

Mr. WELD. Yes, sir.

Mr. VOIGT. That is, you claim, one is a private enterprise and the other is in the nature of a utility?

Mr. WELD. Yes, sir; a public utility.

Mr. VOIGT. Assuming that it is the proper thing, which should be enacted into law, the packers should be divorced from the stockyards, would you then also consider it proper to pass a law providing that the small packers can not be interested in the stockyards?

Mr. WELD. As a general economic principle, I said I did not believe there was anything to be gained by divorcing the stockyards from the large packers; and the same principle would apply to the small packers, too.

Mr. VOIGT. I asked you, assuming it is the proper principle.

Mr. WELD. Oh!

Mr. VOIGT. Then, you would also say it is proper to pass a law divorcing the small packers from the ownership of stockyards?

Mr. WELD. Yes; if we assume that it is a proper principle to divorce the large packers from the ownership of the stockyards for economic reasons, the same thing would apply to the smaller packers. Mr. VOIGT. Then, if the decree is correct as far as it goes on that point, it follows, logically, that it does not go far enough?

Mr. WELD. If there is an economic justification for separating the stockyards from the packers-but, as I have said, I do not believe there is any particular economic justification, and that there are other reasons that may make it desirable to divorce the stockyards from the large packers, and I do not believe that those other reasons apply in the case of stockyards owned by the smaller packers, because there is only the economic consideration there.

Mr. VOIGT. You say that the sale of the stockyards will be under the supervision of the Department of Justice?

Mr. WELD. So I understand-the arrangements for disposing of the stockyards.

Mr. VOIGT. There would be a man or set of men appointed by the Attorney General to see whether you packers live up to that agreement, and that the transfer is properly made, etc.?

Mr. WELD. I think men have already been appointed for that pur

pose.

Mr. VOIGT. Do you not think that a commission appointed by the President could perform that service at least equally as well as some appointees of the Attorney General?

Mr. WELD. Why, I suppose so; I do not know why they might not be able to.

Mr. VOIGT. You said a number of times that the packers operated the refrigerator cars at a loss.

Mr. WELD. Yes, sir; that has been the case for the last 8 or 10

years, anyway.

Mr. VOIGT. How did you find the fact that you do operate them at a loss?

Mr. WELD. That is an accounting proposition. Do you want to answer that, Mr. Chaplin?

Mr. CHAPLIN. The revenue that we get from the railroads is insufficient to cover the repair charges and maintenance charges. At one time, five or six years ago, it was sufficient, but the large increase in the cost of labor and materials has been such that the charges are much in excess of the revenue-the revenue has remained practically stationary.

Mr. WELD. You mean the cost of operating?

Mr. CHAPLIN. Operating and maintenance.

Mr. WELD. That is not counting in the interest on the investment at all?

Mr. CHAPLIN. No; we lose money without receiving any interest whatever.

The CHAIRMAN. How much do you receive a mile?

Mr. CHAPLIN. We receive a cent and a half a mile.
The CHAIRMAN. How many miles is a car good for?

Mr. CHAPLIN. It is good for about 15 years, I think. I do not know how many miles.

Mr. VOIGT. Let us get into that proposition a little bit further. You say that you operate the refrigerator cars at a loss because the railroad companies do not pay you back sufficient in mileage to cover your cost of operating the cars?

Mr. CHAPLIN. The maintenance of cars and operating them.

Mr. VOIGT. If the railroad companies were to furnish you cars of the same quality that you furnish for yourselves and keep them up to the same standards, they would charge you at least as much money as the cars cost to operate?

Mr. CHAPLIN. No; I think not. They would have to stand that loss instead of us.

Mr. VOIGT. Do you mean to say that the railroad companies can furnish a certain grade of refrigerator car cheaper than you can? Mr. CHAPLIN. No, sir; they could not furnish it any cheaper.

Mr. WELD. They could not furnish them as cheaply and perform the same service?

Mr. CHAPLIN. They would have to stand the loss.

Mr. WELD. Or else increase freight rates on perishables to cover the loss.

Mr. VOIGT. That is the point I am leading up to. If the railroads should be ordered to furnish you or any packer good refrigerator cars the same as you use now, in your opinion

Mr. CHAPLIN (interposing). And maintain them as well?

Mr. VOIGT. And maintain them as well, they would have to charge you an increased rate?

Mr. CHAPLIN. To break even, yes; to get equal revenue with other

cars.

Mr. VOIGT. So, that what you really mean, is that for the kind of refrigerator car which you operate it costs you more in operating expenses than for an inferior car which is furnished by a railroad company?

Mr. CHAPLIN. Yes, sir; that is about it.

Mr. VOIGT. Then you can not claim that because you get a better service, which is for your benefit, that you are doing that for yourselves at a loss, can you?

Mr. CHAPLIN. We are not complaining about the loss. We figure that we have to have this equipment; we have to keep it up, as we do keep it up; otherwise we could not do business.

Mr. WELD. That the benefits of having control of our own equipment, the routing of it, of always having cars, of always having the cars clean, and of always having the cars in repair, and knowing where our cars are, etc., and knowing how to distribute them to our

various plants and to our various branches, more than offsets the loss in the operation of the cars.

Mr. VOIGT. That is exactly the contention I would make. Now, then, that you derive an economic benefit from these cars which you maintain for yourselves, how in the world can you claim you are operating them at a loss? You are actually operating those cars at a benefit to yourselves, otherwise you would not maintain them. Mr. WELD. On ourt total operations, yes; on the actual cost of operating cars alone there is this loss, but on our total operations we would figure that it is of sufficient advantage to us, which means sufficient advantage to the country, so far as that is concerned, to have our own cars and stand this loss on the actual operation of them, which undoubtedly adds to the efficiency and profit of our total operations.

Mr. VOIGT. To sum it all up, you really do not incur a loss in the operation of these cars?

Mr. WELD. In the operation of the cars in conjunction with our other business, no.

Mr. VOIGT. That is the point I am getting at.

Mr. WELD. All right.

Mr. VOIGT. You can not separate any particular item in your business and call that a loss without figuring the loss and gain at the end of the year for your whole business, can you?

Mr. WELD. We can figure whether any particular department is operating at a profit or a loss.

Mr. VOIGT. That is where you treat a department as an entity. But I mean you can not single out these refrigerator cars and say that you are maintaining them at a loss.

Mr. CHAPLIN. They are a loss. We find a loss in our bank account by the operation of these cars. We pay out more money for the maintenance of them than we take in from the railroads as rental.

Mr. VOIGT. Yes; but if you were to credit that same account with the advantage in dollars and cents that you get out of these cars the account would more than balance.

Mr. WELD. Yes; that is true just the same as where you might be able to figure a loss on the farm, yet if you take the operations of the whole farm and the added fertility of the soil, etc., you might be able to figure a profit.

Mr. VOIGT. Well, I think this testimony here would satisfy us and would satisfy any fair man that you are not losing money on the refrigerator car service.

Mr. WELD. On the whole operation including the operation of the refrigerator cars, we are not losing money; we did lose money on the operation of the refrigerator cars last year.

Mr. VOIGT. You made a general statement that the packers had not been guilty of any illegitimate trade practices, I believe.

Mr. WELD. Well, I have said no specific abuses have been pointed out for which we need legislation. I do not mean to say, as I have often said before, we have been angels, that we have always been perfect, that we have always done everything just exactly as we ought to have done. If we have been guilty of any unfair practices, I believe there are laws to reach that.

Mr. VOIGT. When you make that general statement, you do not include the practices of the packers-I will use the word "control" here in controlling the price of cheese in Wisconsin?

Mr. WELD. If any packer has been guilty of using any artificial means of affecting prices of cheese in Wisconsin, my view is that he is not living up to the law in every respect. I have not taken the pains to go into that except as far as Swift & Co. is concerned; and I know that Swift & Co. has attempted in no way to artificially manipulate prices and has in no way connived with any other handler of cheese to affect prices in any artificial, illegitimate manner. And that is as far as I care to go on that.

Mr. VOIGT. I want to ask you, not as representing Swift & Co., but personally, have you read the letters that treat on this cheese manipulation, in Volume II of the Federal Trade Commission report? Mr. WELD. I did a long time ago.

Mr. VOIGT. Do you recall what your conclusion was after you read those letters?

Mr. WELD. No. I remember this, that on the face of that it looked as there were certain things that one at least ought to inquire into and find out just what they meant. Of course, the same thing is true of many things in the Federal Trade Commission's report about Swift & Co.'s operations, which, on examination and analysis in connection with other correspondence which was not brought out by the Federal Trade Commission's report, shows there was not any illegitimate practice there. I do remember that it looked as though there were things there in Wisconsin in buying cheese that would at least bear much closer examination, and I did not try to go into it because it did not affect my company.

Mr. VOIGT. You admit, then, that these letters that the Federal Trade Commission has produced on the question of cheese gave you a suspicion that there might be something wrong?

Mr. WELD. Yes; I will admit that. Also, of course, as I say, there are a lot of other cases in the Federal Trade Commission report, for instance, on the lard-compound agreement, that would give one a very strong suspicion there was something wrong. Whether there is any evidence in support of that I do not know.

Mr. VOIGT. You claim, of course, that the packers are not operating a public utility?

Mr. WELD. I claim that the operation of the packing company can not be considered a public utility, any more than any other manufacturing and distributing organization can be so considered.

Mr. VOIGT. Do you not think it is up to the legislative body of the country, or a State, to determine by law whether a certain business or line of business is affected with a public interest?

Mr. WELD. Of course it depends on what you mean by "affected with a public interest." In a general sense we are affected with a public interest, and in a general sense every retail store is affected with a public interest; every wholesale grocery, every steel manufacturer, is affected with a public interest.

Mr. VOIGT. I understand that, but do you not think that, after all, the question of whether the packing industry is affected with a public interest so that legislation should be applied to it which is not applied to the average private business, is a matter for the legislative body to decide?