Mr. MARSH. On May 31, 1916, Mr. H. B. Collins-I think you know him, one of you-wrote to L. E. Dunker, of Swift & Co.: "Think we should instruct our managers, where there is not a good reliable produce dealer, or produce dealer that favors us with their product, that we try to grow or make a produce dealer in each town in our territory." That is found on page 143, Part IV, Federal Trade Commission Report on the Meat Packing Industry.

Mr. WELD. That means, as I take it, that if there is not a produce dealer in some town that we try to get some fellow to handle butter, eggs, and cheese.

Mr. MARSH. All right. You admit that the president of the Wisconsin Cheese Producers' Federation, which takes in 3,500 patrons of 120 farmers' cheese factories, and which in 1919 sold 14,980,021 pounds of cheese for $4,318,596, knows something about the business?

Mr. WELD. Is that a question for me to answer?

Mr. MARSH. I say, you will admit it, will you not?

Mr. WELD. Not necessarily; I will not admit that all of your statements are true. I have known persons in larger businesses than that that were not always correct in their statements.

Mr. MARSH. So have I. I think that has been illustrated right here in this hearing.

Mr. WELD. That is a nice thing to say, is it not?

Mr. MARSH. I will say, "Not accurate." Yes, not accurate. [Reading:]

In the past the game of the combination has usually been to keep to the board prices very low during the summer, when the most and best cheese is produced, fill up the storages, and then in the winter, when the farmers produce little cheese, run the board price up and unload on the consumer. In the past, winter prices have usually been 60 to 80 per cent higher than summer prices, a condition which can not be justified, as it costs not over one-half cent a pound to store cheese for the season.

Mr. WELD. That is all foolishness.

Mr. MARSH. You say that is not correct?

Mr. WELD. Why, his statement as to how much higher the winter price may be over the summer price may be correct; I do not know. But, of course, the same things happen with butter and eggs during the season of short supply, and, of course, the packers and other handlers of cheese buy up the stuff during the summer, when its price is low, and put it in storage, and sell it during the winter. Swift & Co. buys almost nothing on the cheese boards of Wisconsin; they stay away from them, have practically nothing to do with them, and though I do not know what our profits from cheese have been, from storage, I do remember that on eggs it has been about a cent a dozen for the last six years, and on butter one-half a cent, and on poultry three-tenths of a cent a pound.

Mr. MARSH. You have not been making a profit on those products? Mr. CHAPLIN. Yes: we are making a storage profit.

Mr. MARSH. Are you not making a net profit?

Mr. WELD. That is what that is, a net profit on all storage operations on those commodities.

Mr. MARSH. You see, the packers seem to have such a wonderfully supersegregated budget that they can prove a loss on almost any item when they want to.

Mr. WELD. Each department of our business has to stand on its own feet, and each department is supposed to make a profit if it can. Mr. MARSH. Now, you are planning to extend your business a great deal. Are these figures

Mr. WELD (interposing). Where do you get that? I did not say we were going to extend it a great deal.

Mr. MARSH. Is it not the intention of the big packers to extend their business in poultry, butter, eggs, and cheese?

Mr. WELD. I think that undoubtedly we shall keep on in the future as we have in the past. I do not think we will say that we are going to lie down. That leads to business stagnation, as I said once before to-day.

Mr. CHAPLIN. We will try to get the supplies to fill the orders that we get from the retail dealers-sell the goods and go and get goods to fill the orders.

Mr. MARSH. All right. Then you will admit, I presume, in spite of your suggestion that the big packer, with his resources, has no advantage over the small man, that there is something in my statement that they have?

Mr. WELD. I do not get that. What is that that we have said?

Mr. MARSH. You have indicated that the little fellow has just as good a command of capital and credit, and could compete on the same terms with the big packer.

Mr. WELD. In the local business he is as well off as we are.

Mr. MARSH. I will read a letter from this same report of the Federal Trade Commission, from F. S. Hayward to Edward F. Swift, in reference to competition in the produce business at Cadillac, Mich., which shows with complete frankness the method and power of the big packer to bring local competitors to terms:

The first year we would probably have to operate at some loss, but while we were doing this, the probabilities are that the other people would be losing more than we would, and we think in the course of time this would bring them around to a reasonable view of the matter.

Mr. WELD. He undoubtedly means that business there would not be sufficient, and that there might be competition there, and that we would lose money for a while.

Mr. CHAPLIN. That is a case, I think, where one of our managers left our employ and practically destroyed our business there. We wanted to reestablish ourselves. He left our employ and we practically lost all the business there. We were trying to reestablish ourselves.

Mr. MARSH. Well, do not you try to get your own produce dealer, and to get people to sell to you, and do not you try to give higher prices for a while so as to put the other fellow out of business?

Mr. CHAPLIN. No; we do not try to put people out of business. There seems to be an idea that a business man is trying to see how much injury he can do to his patrons. We lose money when we try to put people out of business.

Mr. MARSH. Do you lose money when you try to put people out of business?

Mr. CHAPLIN. We do not try.

Mr. MARSH. You said just now that you would lose money when you try to put people who have been with you out of business.

Mr. CHAPLIN. No.

Mr. MARSH. You have never tried to do it at all?

Mr. CHAPLIN. We compete with them.

Mr. MARSH. With the amount of money that the big packers have they can go in and put any little fellow out of business by paying higher prices.

Mr. CHAPLIN. They would not try to do it. It is much cheaper to buy him out. It would not pay them to try to put him out of business; it is cheaper to buy him out.

Mr. MARSH. It is cheaper to buy him out?

Mr. CHAPLIN. Very much cheaper.

Mr. MARSH. I am very glad you made that statement, Mr. Chaplin. What would be your purpose in buying him out?

Mr. CHAPLIN. If we wanted to establish in a certain place, and a man wanted to sell his business place, we would buy his business. If we went in there and established a business it would mean, perhaps, a surplus capacity.

Mr. MARSH. Well, I simply can not get through to-night, Mr. Chairman. May I go on later? I have just started on these questions.

Mr. RAINEY. I think the committee has been extremely generous. The CHAIRMAN. How long will it take you, Mr. Marsh?

Mr. RAINEY. He said it would take him a half hour.

Mr. WELD. We have had 20 minutes of that half hour. Let us stick it out.

The CHAIRMAN. Anything that is reasonable.

Mr. MARSH. Now, you say that it is not proper for the Government to say what products any concern should handle?

Mr. WELD. I do not think that is a good principle of legislation. Mr. MARSH. Do you oppose the Hepburn commodity clause, which prohibited railroads from owning coal mines?

Mr. WELD. That is a public utility; that is a different thing; it is not analogous.

Mr. MARSH. You say that is all right because that is a public utility?

Mr. WELD. I say it is not analogous.

Mr. MARSH. You say it is all right?

Mr. WELD. I am not sure that it is. I have never been able to make up my mind that it is necessarily a good policy. But I say it is not analogous at all, because that is the case of a public carrier carrying its own products.

Mr. MARSH. You get special service on a public carrier, on refrigerator cars?

Mr. WELD. Well, we do not get special service; we get service that anybody else can get; there is equality of opportunity.

Mr. MARSH. No; there never is; under present conditions between an aggregation of 150,000,000, 200,000,000, or 300,000,000 in competition with a concern which has next to nothing.

Mr. WELD. There is an equality of opportunity, just the same. Until you can show that we have any privilege or any favoritism or any other advantage that results from some kind of artificial manipulation you can not say that there is favoritism. The Mr. they are speaking of down in Texas, had equality of opportunity in buying refrigerator cars if he wanted to.

that

Mr. MARSH. Mr. Taft is a man of great wealth; some of these little fellows are not.

Mr. WELD. Any slaughterer must have capital to do business.

Mr. MARSH. Well, is it not much more expensive to go into business to-day than it was when Mr. Swift went into business?

Mr. WELD. We are not responsible for that.

Mr. MARSH. I am asking you a question of fact, not of responsibility.

Mr. CHAPLIN. A man who buys a house to-day has to pay twice as much as he did 10 years ago.

Mr. MARSII. That is one reason for the economic unrest in this country. You said stockyard ownership did not give control, and under the decree the packers have to divorce themselves from ownership of the stockyards, as I understand it. Is there anything to prevent, under that decree, the packers from organizing a holding company and running the stockyards?

Mr. WELD. Yes; there are two things. First, we have entered into this decree in good faith and are going to divorce ourselves from the stockyards. We have given our word, and with a good many people that carries weight. In the second place, all the arrangements for getting rid of the stockyards are under the supervision of the Department of Justice, which is requiring us to get rid of our stockyards. Mr. MARSH. I want you to know that the American people have not given the Department of Justice a clean bill of health on this deal. Mr. WELD. Yes, sir.

Mr. MARSH. Now, will you tell me how anybody can find out whether or not the packers own stock in the stockyards?

Mr. WELD. Well, I think that the Department of Justice would be able to find out who the stock owners are.

Mr. MARSH. Can not you use the "bearer" warrant proposition? Do you remember the Prince deal, the Mr. H. F. Prince deal?

It

Mr. WELD. It might be used; but I think the Department of Justice could find out who the owners are there, if they wanted to. Mr. MARSH. Well, it could do a lot of things, if it wanted to. never caught a spy during the whole war. You do not know whether Mr. Prince is planning to organize a company to take over all the stockyards, holding the stockyards for the packers through dummies, do you?

Mr. WELD. No; I do not know.

Mr. MARSH. It could be done.

Mr. CHAPLIN. It can not be done, either, except with the consent of the court.

Mr. MARSH. I did not say the court would give its consent.
Mr. CHAPLIN. Well, we are not doing that kind of business.

Mr. MARSH. All right. Now, on the refrigerator cars. Let us see if there will be an equality of opportunity, as long as the big packers own their own refrigerator cars. Take it as a matter of practical application; you do not want any special advantage, of course, as I understand?

Mr. WELD. No, sir.

Mr. MARSH. The Big Five do not want any special advantage. Now, they have got a pretty well developed plan of operating their refrigerator cars, have they not?

Mr. WELD. Yes, sir.

Mr. MARSH. It would take some years for an independent company, if the Big Five continue the ownership of the cars-that they own to-day-to establish similar efficient service for its refrigerator cars, would it not?

Mr. WELD. Yes; the railroads will have difficulty in building the efficiency that we have. On the other hand, nothing will be gained by the destroying our efficiency and substituting that slow process of railroad efficiency. It would be disastrous to the country; and I guarantee you it will take a lot more cars for the railroads to operate with than for us to operate with.

Mr. MARSH. Why?

Mr. WELD. Because I do not believe that they can develop the efficiency in that special service, and I see what you are driving at, the railroads probably will not develop as high a degree of efficiency in the operating of refrigerator cars for the smaller packers as we have developed. There again, though, it is a question of developed efficiency, and not any question of unfair advantage or anything of the sort. The railroads can, if they are required to, operate a sufficient number of refrigerator cars, and efficiently enough, to give the small packers good service.

Mr. MARSH. How much empty hauling do you have in refrigerator cars, if at all?

Mr. WELD. Oh, we have a good deal. It has been found that we make more efficient use of cars by returning them empty from New York to Chicago, for example. There are so few things you can haul in a refrigerator car going westward, and it takes so much time to find what little there is. The Interstate Commerce Commission has found that it is the most efficient for us to bring our cars back empty very largely from the Atlantic seaboard.

Mr. CHAPLIN. It is largely like the stock car.

Mr. MARSH. Now, if there were intercarrier ownership of refrigerator cars, do not you think that the pooling of these cars would have the same effect as during the Government operation of the railroads, saving empties from travel?

Mr. WELD. It would not save any empty travel of refrigerator cars, as regards cars used in the refrigerated meat traffic.

Mr. CHAPLIN. There is no back haul of meat.

Mr. WELD. No back haul of perishable products practicable. Mr. MARSH. Now, are there not perishable products going in both directions?

Mr. WELD. Extremely small quantities; some grapes, oranges; etc., one carload to every 25 or 100.

Mr. CHAPLIN. You can not put fruit in our cars.

Mr. MARSH. On this question of eggs, do you remember the suggestion made during the war by a gentleman who had made a patent, the use of which he was going to give free to the Government during the war, to prevent the breakage of eggs in shipment, and that it was not adopted because the packers objected to it?

Mr. WELD. I do not know anything about that. I know we have developed methods of loading our cars so that we get smaller breakage than other shippers do.

Mr. MARSH. I do not know why it did not get by, except that the Food Administration objected to it.