Of somewhat similar character is the following letter written by Armour & Co.'s branch house superintendent at Philadelphia to the manager of the dressed beef sales department:

ARMOUR & Co., CHICAGO, ILLINOIS.

917-925 NOBLE ST., PHILADELPHIA, Pa.,

February 23, 1918.

Mr. V. H. MUNNECKE,

Armour & Co., Chicago, Ill.

DEAR SIR: This has been a very unsatisfactory week, because of the great quantity of bad condition beef we have had to sell. Even our Kisher cars coming into Noble Street were off condition. 90% of our beef unloaded this week was very stale.

Morris and Wilson had just as much trouble as we had. Swift got by with practically no trouble at all. Possibly this trouble may partly be accounted for by the beef being held a long time at the plant, while Swift had cars and was able to keep closer up to date on his shipments.

Wilson froze quite a little beef, some out of their own shipments, and some they bought. They bought beef from us at 132 N. Delaware Ave, that had been uriped up twice before we sold it to them. They bagged it up and shipped it to New York for freezing. They bought beef from Arch Street that was so bad that we bathed it in vinegar and soda before we showed it to them. I think this beef also was shipped to New York for freezing.

I certainly do not know what they are going to do with this beef. I certainly do not think beef in the condition they are buying ought to be exported or offered to our armies. [Italics by Commission.]

Yours truly,

TGL-MGC.

WHAT OUGHT TO BE DONE.

T. G. LEC.

In the President's letter of February 7, 1917, we were asked to state as a result of our investigations: "What measures are necessary to effect fundamental improvements?"

What the remedy is will appear from a brief analysis of the situation. The rapid rise of the packers to power and immense wealth and their present strangle hold on food supplies were not based necessarily on their ownership of packing houses, but upon their control of the channels of distribution, particularly the stockyards, private car lines, cold-storage plants, and branch houses. Similarly the great profits which they have secured and are now securing are not primarily due to exceptional efficiency in operating packing houses and manufacturing plants, but are secured through their monopolistic control of the distributive machinery. This applies not only to the meat industry, but to the other branches of the food industry which they control, as is evidenced by the fact that particularly in recent years they have made far greater efforts to secure control of the distribution of the product than to secure manufacturing plants in the case of such products as cheese and canned goods.

Several letters in our possession might be cited in support of this

statement.

As long as the packers control these distributive utilities, producers will be at the mercy of the big packers, competition will be restrained, and consumers generally will continue to pay the price of monopoly. Control and manipulation of the live-stock markets have been the great factors in the discouragement of live-stock production. Control of the transportation and marketing facilities have been the instruments by which competitors have been crushed.

We see no possibility of effecting the "fundamental improvements" which the President's letter sought, short of the acquisition by the Federal Government of the distributive utilities now controlled by the Big Five, and the establishment by the Federal Government upon equal terms for all the additional storage and distributive facilities necessary to open the channels of commerce in foods and related products and insure their free and unrestricted flow from the producer to the consumer.

We recommend, therefore:

1. That the Government acquire, through the Railroad Administration, all rolling stock used for the transportation of meat animals and that such ownership be declared a Government monopoly.

2. That the Government acquire, through the Railroad Administration, the principal and necessary stockyards of the country, to be treated as freight depots and to be operated under such conditions as will insure open, competitive markets, with uniform scale of charges for all services performed, and the acquisition or establishment of such additional yards from time to time as the future development of live-stock production in the United States may require. This to include customary adjuncts of stockyards.

3. That the Government acquire, through the Railroad Administration, all privately owned refrigerator cars and all necessary equipment for their proper operation and that such ownership be declared a Government monopoly.

4. That the Federal Government acquire such of the branch houses, cold-storage plants, and warehouses as are necessary to provide facili ties for the competitive marketing and storage of food products in the principal centers of distribution and consumption. The same to be operated by the Government as public markets and storage places under such conditions as will afford an outlet for all manufacturers and handlers of food products on equal terms. Supplementing the marketing and storage facilities thus acquired, the Federal Government establish through the Railroad Administration, at the terminals of all principal points of distribution and consumption, central wholesale markets and storage plants, with facilities open to all upon payment of just and fair charges.

The stockyards, and their essential adjuncts, such as exchange buildings and terminal railroads, must be acquired and operated by the Government under such conditions that the producer will be assured of a fair market, reasonable charges, open bidding, full and helpful market information, the limitation of violent fluctuations in price, and the elimination of unnatural market influences. Moreover, the measure authorizing the acquisition of the stockyards should provide for the acquirement by right of eminent domain of such sites adjacent to the yards as may be necessary for their proper expansion and for the location of such independent, municipal, or cooperative abattoirs or packing houses as may be established. This will open the way for the independent packers and butchers, big and little, to establish their plants and secure their live stock under such conditions as will enable them to compete actively with the big packers. Furthermore, we believe that the establishment of such open, competitive markets will be followed by a large increase in live-stock production.

The necessity for acquisition by the Government of refrigerator and other private car lines and icing stations is so obvious, particularly since the railroads have been brought under Federal operation, that argument seems unnecessary.

Acquisition of the stockyards and car lines alone will not secure the fundamental improvements which we are seeking. Figuratively speaking, we will have opened only two of the doors by which the big packers have obstructed the channels of food commerce, while the third remains closed. An independent packer may with Governmentowned yards and cars find it possible to secure and ship his products upon terms of equality with the big packers, but unless he has an opportunity to dispose of them under fair conditions, his competition will not be effective and the consumer will not be benefitted.

It is for this reason that we consider the provision of proper marketing and storage facilities by the Federal Government through branch houses and establishment of central wholesale markets and storage places to be an essential feature of a system which will provide for the American people adequate supplies of food at reasonable prices during both war and peace.

(The following is an extract from Part IV of the Report of the Federal Trade Commission on the Meat Packing Industry:)

Local price discrimination. The packers do not hesitate to raise prices in a locality in order to take the business away from independent buyers, and equally unhesitatingly lower the prices in those localities where they have eliminated local competition.

J. E. Hoban, a country buyer and shipper of produce at Carrollton, Mo., testified that on the same date, February 6, 1918, F. M. Stamper Co., of Moberly, Mo. (controlled by W. F. Priebe Co.), paid through its agent, J. P. Quick, 45 cents a dozen for eggs and 20 cents a pound for hens at Dalton, Mo., where there were no competitive buyers, while at Carrollton, Mo., and at Hardin, Mo. (through its agent, W. A. Templeton), where there are independent buyers, Stamper paid 54 cents a dozen for eggs and 24 cents a pound for hens. This testimony was confirmed by T. A. Buchanan, a produce dealer of Hardin, Mo.

The following letter from F. M. Stamper to W. F. Priebe indicates that local price discrimination in buying is a common practice with Stamper:

Mr. W. F. PRIEBE, Chicago, Ill.

AUGUST 15, 1917.

DEAR SIR: I have been up in the western part of the State the last few days. Had to go to Richmond to see the prosecuting attorney, as those fellows are just about to start action about us paying different prices at Hardin and Norborne. Don't amount to anything-just one of those aggravating cases gotten up by complaints of little competition. Am going back to Carrollton to-morrow or next day, as I am trying to straighten out this Carrollton proposition, and will probably stay up there the remainder of the week. Will run up to Macon this afternoon, as the board has a meeting Yours, very truly,

there.

F. M. STAMPER.

Local price discrimination is a general practice with the big packers throughout the producing territory as shown by the statements of independent poultry and egg dealers.

H. Morgan Co., of Cleveland, Ohio, states that:

"Swift, Armour, and other packers have monopolized buying of butter, eggs, etc., forcing up prices when we try to compete to prohibitive levels, and reducing price unreasonably as soon as we are driven out of the competition."

Arthur Franz, of St. Louis, Mo., who buys poultry in the producing areas, said to an agent of the commission:

"When the packers get ready to buy they get the poultry regardless of the price they have to pay.'

Chabrow Bros., of Philadelphia, independent egg dealers, state that Swift & Co. and other packers are bidding up the price or overbidding them, especially in the spring, when eggs are being placed in storage.

W. A. Tuttle, a produce dealer at Buffalo, N. Y., said to an agent of the commission: "The packers at present are going to shippers and are paying so much for poultry that the shipper can get more by selling locally to the meat packer, who ships the poultry to this plant and dresses same, than by shipping to Buffalo.

"

The following extract from a letter of June 26, 1916, by F. S. Hayward to Edward F. Swift in reference to competition in the produce business at Cadillac, Mich., shows with complete frankness the method and power of the big packers to bring local competitors to terms:

"The first year we would probably have to operate' at a 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."

Bogus independents.-Comparatively few of the buying stations controlled by the big packers are run under their own names, as is shown by Exhibit VII. Most of them are operated under the names of the local managers or of subsidiary or allied companies whose connections with the big packers are unknown to producers or to local competitors. This enables the packers to practice local price discrimination and other unfair methods of competition without the knowledge of their competitors. Through these bogus firms the big packers secure poultry and eggs from dealers who would not otherwise sell them. Through them they also secure knowledge of their competitors' business, particularly the prices at which they offer to sell.

In many cases if country dealers do not favor the packers by selling them, the latter will put a dealer in the territory who will favor them, as indicated by the following letter of H. B. Collins to L. E. Dunker, of Swift & Co.:

Messrs. L. E. DUNKER and J. Y. MARSHALL,

Produce dealers:

MAY 31, 1916.

"Think we should instruct our managers, where there is not a good reliable produce dealer that favors us with their product, that we try to grow or make a produce dealer in each town in our territory.

Misbranding and adulteration.—Misbranding of poultry products on the part of the big packers may go as far as actual adulteration, as shown by cases tried by the inspectors of the Bureau of Chemistry of the Department of Agriculture.

The Swift produce department detected misbranding of poultry by Armour & Co., as shown by the following letters:

Mr. CHARLES H. SWIFT,

Office:

APRIL 21, 1913.

The writer was in Philadelphia some few days ago, and one of our branch houses, Dock Street, had just purchased some frozen poultry of Armour & Co.

The stock consisted of some No. 1 fowl (old birds not fatted), but they were marked English Fatted Surrey," and each bird had a celluloid tag attached to the leg reading "Armour's Helmet Fatted Poultry.'

Other of the boxes were marked “Armour's Helmet Fatted Poultry,” and contained No. 2 quality fowls (old birds not fatted).

The placing of tags and these high-sounding names on poultry of this class do not indicate very good handling.

H. B. COLLINS.

Copy to Mr. Louis F. Swift, fourth floor; Mr. A. D. White, advertising department. Mr. WELD. Since you are going to insert stuff on the butter business, let us insert a few pages from our "Analysis and Criticism."

(The matter referred to and submitted by Mr. Weld from Swift & Co.'s Analysis and Criticism of Part II of the report of the Federal Trade Commission on the meat packing industry is here printed in full, as follows:)

ALLEGED COLLUSION IN CHEESE BUSINESS.

None of the correspondence introduced by the Federal Trade Commission on this subject was taken from the files of Swift & Co., and this company is not concerned to any great extent. It is true that the large packers together handle a considerable proportion of the cheese business of the United States, but the figures presented by the Federal Trade Commission on page 134 of the report exaggerate their "dominant position" in the cheese market of the Nation. The total production of cheese in 1918 appears to have been about 420,000,000 pounds (Standard Farm Paper Year Book, 1918-19), and according to estimates furnished us by the Bureau of Markets, United States Department of Agriculture, about 92 per cent of this entered trade channels. This means that about 385,000,000 pounds of cheese were traded in during 1918. Swift & Co. handled less than one-sixth of this total.

At the top of page 135 of the report, the firm of Pauly & Pauly is listed as a "packercontrolled" firm, because this firm sells 80 per cent of its output to Swift & Co. It is true that we buy very heavily of this concern, with whom we have had very satisfactory relations; but it is not true in any sense that this firm is controlled by Swift & Co. The alleged control of this firm is made use of by the Federal Trade Commission in an attempt to show collusion between Armour & Co. and Swift & Co., by introducing into the reproduction of a letter from Armour & Co.'s files (bottom page 135 of the report), a parenthetical remark which was not in the original letter. This point is mentioned merely as an illustration of the methods used by the Trade Commission to imply collusion. Such implications have the force and effect of absolute assertions in the minds of many readers of Government documents.

In connection with this cheese business, Swift & Co. also wishes to state that we buy over 90 per cent of our Wisconsin cheese purchases from wholesale dealers, in whom we have no financial interest, and that we buy the remainder direct from cheese factories, none of which we own. We buy no cheese on the cheese boards in that State. We have never tried to affect the quotations on the cheese boards, and we have no agreements or conspiracies with other packers or dealers to affect cheese quotations or to divide territory in any way whatsoever.

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