Mr. WELD. I think it is for the legislative body to determine. Mr. VOIGT. Realizing the difference between what is ordinarily considered a public utility and what is ordinarily considered a private corportion?

Mr. WELD. Whether it should extend the kind of control that has been used over public utilities to such private corporations as the packing business, yes; it is a perfectly legitimate thing to determine whether there should be legislation to control an industry like the packing industry. That, I take it, is what the proceedings here are for.

If we are arguing that on the ground of public utility, considering what has generally been considered a public utility, that does no justify you in adopting regulations for a private corporation. Mr. VOIGT. You have stated that it has never been proven that a combination existed among the five big packers?

Mr. WELD. I do not think I stated it in just that way, because you might determine the arrangement before 1902 as an agreement between the packers. But I say there is no evidence that has been produced by the Federal Trade Commission or by anyone else that there is an agreement or monopoly between the large packers up to the present time.

Mr. VOIGT. When you talk about "evidence" there you mean tangible, direct evidence?

Mr. WELD. Yes, sir.

Mr. VOIGT. You do not refer to circumstantial evidence?

Mr. WELD. No, sir.

Mr. VOIGT. If you were sitting as a judge of a jury on this question of the combination of the packers, would you be influenced by the fact that the purchases of these five packers have run so uniformily as not to vary 1 per cent in so many years back?

Mr. WELD. To almost the same degree in other industries, where there was no thought of monopoly, and also if I had studied statistics and handled statistics a good deal, I think that I would be inclined to think that there was nothing particularly remarkable in the percentages working out so close.

Mr. VOIGT. I think you have already admitted here that there is no other line of business in the world in which the figures or purchases of any number of competitors run so evenly as they do in the case of the five packers.

Mr. WELD. I have not been able to find any, and I would not except to find any, because I do not know any other industry where the methods have not become so standardized and so stabilized, where the competitors are doing business in the open public market places face to face, where each can see what the other is doing from day to day; I do not know of any other industry where that occurs. Mr. VOIGT. There are small packers in business in this country who have been in existence a great many years, say 30 years?

Mr. WELD. Yes, sir.

Mr. VOIGT. Have you tried to find cases of other packers who have been in business a long time and who do a competing business in the same city or same territory; and in such a case have you tried to find out whether their purchases have run as parallel as those of the five big packers?

Mr. WELD. Yes, sir; I tried to ascertain that in Chicago, and I gave you the results which show that they run practically as close as those of the five big packers. One of those diagrams covered the the operations of 8 or 10 or 12 small packers, and showed percentages run just as close as the percentages of the large packers, and the Federal Trade Commission nor anybody else has ever said that those 12 packers were in agreement. They must be just as logically to conclude that they must be in agreement with the large packers in the division of purchases in Chicago.

Mr. VOIGT. Did you find that they did not vary 1 per cent for a period of many years?

Mr. WELD. I did not go back more than six or eight years. I do not remember; I have not the figures here. But the diagram that I presented for the last five or six years showed that they ran fully as closely as the percentages as the five largest. There was one, you possibly remember, that showed considerable decrease, more than 1 per cent. But, on the other hand, there were operations of one or two of the large packers in Chicago that were fully as great as that if not greater.

Mr. VOIGT. You admit as to that, do you not, that the purchases of live stock of all descriptions of the five packers for a great many years has not varied, as compared to the whole of the quantity purchased by all of the packers in any single case as much as 1 per cent a year?

Mr. WELD. I do not admit that, because in the cattle, especially, Swift & Co.'s increase

Mr. VOIGT (interposing). I am talking about the whole purchases.

Mr. WELD. I guess that is true, although I have never seen the figures compiled for the whole purchases, but I think that would be true. Of course, for the whole purchases that would mean 1 per

cent

Mr. CHAPLIN (interposing). That would be 60,000,000 pounds of live stock a year.

Mr. WELD. One per cent would be 60,000,000 pounds of live stock in a year for Swift.

Mr. VOIGT. That may be true, gentlemen, but that does not mean anything, because 1 per cent in your vast business does not mean any more to you than 1 per cent to a small packer where it might mean 6,000 pounds.

Mr. CHAPLIN. No; except that you take the entire live stock of the country-cattle, sheep, and hogs-and group them, you get such a large volume that the variations will continue to be smaller and smaller. The larger the volume that you compare the variations with, the smaller the percentage of variations become.

Mr. WELD. It is working on such a tremendous total that there can be a variation of a few hundred thousand head a year and still not affect more than 1 per cent. On hogs alone it would take 200,000 hogs to make a variation of 1 per cent; and if you add all the live stock together it would be nearer a half billion animals to a variation of 1 per cent.

Mr. VOIGT. That may all be true. But what I am trying to get at, or the point I am trying to make, is that I do not think that a

variation of 1 per cent in Swift's business is any more surprising than a variation of 1 per cent in the business of the smallest packer in this country.

Mr. CHAPLIN. Oh, yes; it is, as regards going out in the market and getting that 1 per cent. A small packer can go out in the market, and if he is killing a hundred hogs a day he can double his killing without affecting the market at all.

Mr. WELD. Without making a dent in the market.

Mr. CHAPLIN. If we tried to increase our one-half of 1 per cent immediately we would feel the effect of it.

Mr. VOIGT. I have been wondering just what the effect would be if you ever made that attempt.

Mr. CHAPLIN. The fact would be that the other buyers would get busy and prevent us, and we would find we would not make any headway; and if we insisted we would have cutthroat competition. Mr. VOIGT. If you did make that attempt to go beyond your percentage, there would be a rise in the price of cattle?

Mr. CHAPLIN. Yes; it would be unprofitable to do business.
Mr. WELD. There would be losses in cattle operations.
Mr. VOIGT. Losses for the packers?

Mr. WELD. Yes.

Mr. VOIGT. But it would be a good thing for the producers.
Mr. CHAPLIN. But in the long run it would not.

Mr. VOIGT. Do you not admit, as a general principle, that if you men engaged in this competition and tried to climb above your certain percentage, that it would raise the price of live stock if you engaged in that competition?

Mr. CHAPLIN. I do not think cutthroat competition is good for anybody.

Mr. WELD. In the long run.

Mr. CHAPIN. Or in the short run, either.

Mr. VOIGT. When you talk about "cutthroat competition," you mean real, active competition?

Mr. CHAPLIN. No; I mean competition where you are doing business at a loss.

Mr. VOIGT. You mean in your particular case competition which goes beyond your accepted percentage of the purchases of live stock? Mr. CHAPLIN. No; not at all. It is competition where you go beyond values in your insistence on getting volume. You disregard value. But the business man can not disregard values in buying or selling: he has got to buy and sell so that he can

Mr. VOIGT (interposing). Then you mean that if Swift & Co. would endeavor to buy more than your present percentage of live stock, they would, according to your version, engage in cutthroat competition?

Mr. CHAPLIN. Not that easy. We vary week after week. The purchases, according to that chart, varied very markedly every week. Mr. VOIGT. But your total purchases of live stock do not vary 1 per cent a year as compared with the other packers.

Mr. CHAPLIN. Yes; they vary more than 1 per cent a year in the case of cattle.

Mr. VOIGT. I am talking now about your total purchases.

Mr. CHAPLIN. I am talking about the total purchases for a year. Mr. VOIGT. I mean your total purchases of all animals.

Mr. CHAPLIN. I have never seen figures on that.

Mr. VOIGT. The figures are in evidence here.

Mr. CHAPLIN. I have never seen them.

Mr. WELD. That would not vary as much as 1 per cent a year. Mr. VOIGT. What I am trying to get at is that if you try to disturb that ratio which now exists among you, then you will engage in cutthroat competition, according to your version.

Mr. CHAPLIN. No; I do not think so.

Mr. WELD. If we tried to substantially increase our proportion by purchasing animals irrespective of how much money we were losing on them. Other packers undoubtedly do the same thing and meet us and not let us get away with it, and it would mean everybody would be losing money and it would not do anybody any good, it would do more harm than good. And you know you only have to bid a quarter above the market to get the stuff, and in less than no time you would find yourself right where you were before.

Mr. VOIGT. Then if any of the five packers should make an attempt to climb beyond the percentage of purchases which he now sustains toward the other four, there would ensue cutthroat competition?

Mr. WELD. I think there would; I do not think it would last long. Mr. ANDERSON. Then we will have to deal with this situation on the assumption that the present ration of business as between the Big Five will continue?

Mr. WELD. Yes, sir; undoubtedly; and the only way you can have it vary is to have us make an agreement to make it vary it has got to be done arbitrarily; you have got to have the kind of arbitrary agreement that some people now say results in uniformity.

Mr. VOIGT. So far then as you can see the ratio of purchases which the five packers sustain toward each other of all live stock will be the same 10 years from now that it is to-day?

Mr. WELD. It is bound to, unless one lacks in management or falls behind, or something of the sort. As long as we keep right up to snuff, that condition will undoubtedly prevail.

Mr. VOIGT. Then so long as that ratio has been maintained in the past you have all been "equally up to snuff"?

Mr. CHAPLIN. S. & S. was falling behind and they had to reorganize and they could not hold the trade.

Mr. WELD. If anything, S. & S. rather than fall behind in their percentage, which they knew would be suicidal, continued to buy their percentage and falling behind in the money they were making in the business?

Mr. VOIGT. They evidently found it to their advantage to maintain their percentage for the time being, even though they lost money.

Mr. WELD. If they had begun to slip at all on their volume, they would have slipped faster than they did undoubtedly?

Mr. VOIGT. Here, according to your statement, we have the case of a packer losing money and still maintaining his volume of pur

chases?

Mr. WELD. Trying to maintain their percentage, and, I think, approximately maintaining it.

Mr. CHAPLIN. They were losing money, but the other packers were not; and if they decreased their purchases they would increase their expenses, so that they would lose more money.

Mr. VOIGT. Then, according to the testimony of you two gentlemen, the percentage of purchases of these five packers is going to remain what it is to-day indefinitely?

Mr. WELD. We expect it shall, unless it is arbitrarily changed.
Mr. CHAPLIN. Unless some of the packers lose their efficiency.

Mr. VOIGT. Then it follows that you are all of equal efficiency in business?

Mr. CHAPLIN. Not at all; Swift makes more money than the others. Mr. VOIGT. Then that ratio would not vary unless one of the packers should fall behind in efficiency?

Mr. WELD. To a marked degree.

Mr. CHAPLIN. So he would have to drop out.

Mr. VOIGT. You do not think he could be lacking a trifle in efficiency and drop out 1 or 2 per cent in his purchases?

Mr. CHAPLIN. The minute he dropped behind in his purchases we would have an advantage over him, because if we gain on him our expenses are decreased; if he drops behind his expenses are increased. So that we do have double advantage over him. We have decreased expense and he has increased expense; he can not afford to do it.

Mr. VOIGT. The efficiency of the five packers has been on such a par for all these years past, without regard to volume of business handled, that you have each maintained this particular ratio of purchases?

Mr. CHAPLIN. No; they have not been of equal efficiency; each of the packers have made different percentages on their business.

Mr. VOIGT. But the increased efficiency in any individual case has not been sufficient to disturb this relation of purchases?

Mr. CHAPLIN. In the case of S. & S. it was on the part of eliminating them from the business.

Mr. VOIGT. But they were not eliminated.

Mr. CHAPLIN. They had to reorganize.

Mr. WELD. They had to reorganize and reestablish their business. Mr. VOIGT. It was true they had to reorganize, but their successors maintained the same ratio of purchases as their predecessors did? Mr. WELD. If they do not do that they will be at so much disadvantage on every head that they will not be able to compete with us. Mr. VOIGT. So it is a fact that one of these packers can be on the point of bankruptcy and reorganize and still maintain his precise position so far as the purchase of live meat animals is concerned? Mr. CHAPLIN. He can not afford to fall behind.

Mr. VOIGT. And during the time that he is having internal trouble and is reorganizing, the other packers can not get an advantage over him so as to increase their purchases even 1 per cent?

Mr. CHAPLIN. He has buyers on all the markets just the same as ever he had.

Mr. WELD. Do you not know in the old days of railroad history that there was a railroad losing money, the most reckless in maintaining its position and insisting on getting its volume of business just the same.

Mr. VOIGT. You do not claim that rule applies to the packers, do you?

Mr. WELD. No; but I claim there is a parallel in that thought there maintaining its volume.