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 HT> 
 
 I 
 
 SB 3T 273 
 
 S9I Swift & Company's 
 
 Analysis and Criticism 
 
 of 
 
 PART II 
 
 of the 
 
 Report of the 
 
 Federal Trade Commission 
 
 on the 
 
 Meat Packing Industry 
 
 of 
 
 November 25, 1918 
 
 Issued 
 April 5, 1919 
 

 FOREWORD 
 
 The investigation of the packing industry by the Fed- 
 eral Trade Commission was one-sided. The charge that 
 the packers have a monopoly is not founded upon fact. 
 In its report, the Federal Trade Commission has pre- 
 sented only such information as could be used, by means 
 of wrongful interpretation and insinuation, to make out 
 a case against the packers. 
 
 The Trade Commission had free access to Swift & Com- 
 pany's files, and in publishing letters and telegrams 
 taken therefrom, the Commission has actually failed to 
 reproduce in its report letters and telegrams and even 
 parts of. telegrams which controvert some of the very 
 contentions that it tries to establish. 
 
 In many cases, the Trade Commission has described 
 perfectly proper practices and transactions in such a way 
 as to make them appear illegitimate ; it has given undue 
 importance to trivial matters, and has failed to even men- 
 tion other matters of vital importance ; by a subtle method 
 of insinuation and suggestion, the Trade Commission has 
 in many instances given the effect of dogmatic assertion. 
 
 Proof of the foregoing statements may be found in the 
 following Analysis of Part II of the Federal Trade Com- 
 mission's Report on the Meat Packing Industry. Aside 
 from a Summary, this is the only part of the complete 
 report that had appeared at the time this Analysis was 
 prepared. 
 
 This Part II of the Report is supposed to present suf- 
 ficient evidence to warrant the conclusion of the Commis- 
 sion that the five large packers have a combination in 
 restraint of trade. Swift & Company denies that it has 
 any agreements or understandings with other packers to 
 affect prices of live stock or meats, and shows in this 
 Analysis that the Trade Commission has failed to prove 
 its case. 
 
CONTENTS 
 
 Page 
 
 FOREWORD 3 
 
 INTRODUCTION 5 
 
 One-sided Character of the Investigation 6 
 
 EARLY POOLS AND THE NATIONAL PACKING COMPANY.. 10 
 
 National Packing Company 12 
 
 THE ALLEGED COMBINATION OF TODAY 15 
 
 Summary of Trade Commission's Conclusions as to Monopoly 15 
 
 The Alleged "Live-stock Pool" 17 
 
 Centralized Buying System 23 
 
 Evidence from Packer Buyers 4 . 25 
 
 Packer Exchange of Information 25 
 
 Approximate Uniformity of Purchase Percentages The Real 
 
 Explanation 27 
 
 The Situation at St. Joseph 31 
 
 The St. Paul Situation 33 
 
 The Situation at Omaha and Sioux City 36 
 
 The Situations at Oklahoma City, Fort Worth, and Denver 37 
 
 Conclusion on Alleged Live-stock Pool 39 
 
 Alleged Collusion in Live-stock Buying 42 
 
 "Part Purchases" 42 
 
 "Split Shipments" 48 
 
 "Wiring on" 52 
 
 Alleged "Making" the Daily Market 57 
 
 International Meat Pool 62 
 
 Alleged Collusion in Selling Meat Products in the United 
 
 States 65 
 
 Alleged Collusive Action toward Small Competitors 69 
 
 The California Situation 71 
 
 ALLEGED AGREEMENTS IN OTHER LINES 81 
 
 The Real Facts about Alleged Lard Compound Agreement. ... 81 
 
 Alleged Collusion in Cheese Business 83 
 
 Alleged Agreements in Creamery and Butter Industry 84 
 
 Alleged Division of Territory in Poultry, Egg, and Butter Buy- 
 ing 92 
 
 Alleged Combinations in the Rendering Business. 94 
 
 Formation of Wilson & Company and the Sulzberger Mem- 
 oranda .. 97 
 
AN AL YS IS 
 
 . OF 
 PART II 
 
 OF THE 
 
 Report of the Federal Trade Commis 
 sion on the Meat- Packing Industry 
 
 INTRODUCTION. 
 
 Part II of the Federal Trade Commission's report on 
 the meat industry deals with "evidence of combination 
 among packers, " and is supposed to present sufficient 
 evidence to warrant the conclusion of the Trade Commis- 
 sion that the five large packing companies have a com- 
 bination in restraint of trade. 
 
 Aside from a "Summary" of the Federal Trade Com- 
 mission's report, which was issued under date of July 
 3rd, this Part II is the first instalment of the complete 
 report that has appeared ; but it is undoubtedly the most 
 important, because the most fundamental question in con- 
 nection with the whole packing industry is as to whether 
 there is a monopoly, or whether there are any illegal 
 agreements among the large packers. 
 
 It is on the theory that the Federal Trade Commis- 
 sion's conclusions are correct that legislation providing 
 for the regulation of the packing industry has been de- 
 
I 
 
 manded at Washington. It is therefore of extreme im- 
 portance to analyze the so-called "evidence of combina- 
 tion" in order to find out whether the Trade Commis- 
 sion's conclusion is sound. 
 
 This analysis will establish the fact that the evidence 
 contained in Part II of the Federal Trade Commission's 
 report is not sufficient to warrant the Trade Commission 
 in its conclusion that a monopoly exists. It will also be 
 shown that in trying to make out a case against the pack- 
 ers the Federal Trade Commission omitted correspond- 
 ence taken from Swift & Company's files, as well as easily 
 ascertainable facts, which completely controvert conten- 
 tions made by the Commission in its report. 
 
 It will also be showr that the Federal Trade Commis- 
 sion has described perf'^cMy sound business practices in 
 such a way as to make them appear illegitimate; that the 
 report is replete with insinuations and wrongful inter- 
 pretation of facts ; and that it contains actual inaccuracies 
 in its figures and statements. 
 
 One-sided Character of tke Investigation. 
 
 The Federal Trade Commission was supposed to make 
 an impartial investigation of the packing industry, and 
 at first it appeared that this was the intention of the Com- 
 mission. It soon developed, however, that the Trade 
 Commission was seeking only such information as it could 
 use, by adroit and ingenious interpretation, in making out 
 a case against the packing industry, and that it was not 
 seeking facts and explanations from the packers which 
 would place the information collected in its true light. 
 
 This one-sided character of the investigation was evi- 
 dent from the manner in which public hearings were held. 
 In the first place, the Commission employed the services 
 
of an attorney who had gained his reputation as a pros- 
 ecuting attorney, and who at once began to perform in 
 practically that capacity for the Commission. At the 
 hearings there were produced witnesses who had been 
 sought out by the Federal Trade Commission, who tes- 
 tified against the packers. The packers were not per- 
 mitted, however, through legal counsel to cross-examine 
 such prejudiced witnesses. They could not produce wit- 
 nesses who, through cross-examination, would controvert 
 evidence of prejudiced witnesses, and they could not 
 cross-examine witnesses of their own to substantiate the 
 facts which they might have produced. It is true that 
 representatives of the packers might have appeared at 
 these hearings, but since they would have been subject to 
 cross-examination by a hostile attorney, and since they 
 had no right of cross-examining witnesses themselves or 
 through counsel, they naturally did not care to submit 
 to any such unjust procedure. 
 
 That this is a true description of the character of the 
 hearings is substantiated bv the following statements by 
 Mr. Francis J. Heney, attorney for the Trade Commis- 
 sion, in public hearings at Boston, on December 28, 191 7 : 
 
 "Commissioner Murdock: This meeting will come to order. 
 This is a hearing held by the- Federal Trade Commission under the 
 direction of the President of the United States, and the authority 
 of Congress, in an inquiry into the food products of the country, 
 and the high cost of living. 
 
 'Proceed. Mr. Heney. 
 
 "Mr. Heney: Mr. Commissioner, I should like to ask for an 
 order at this time excluding all witnesses from the room with the 
 exception of the witness who is being examined, following the same 
 policy we followed in Washington at the commencement of the 
 hearings. 
 
 "Commissioner Murdock: That order will be made. 
 
 "Mr. Heney: I think it might be well for me to state for the 
 benefit of the members of the press, that this investigation is not 
 a trial in which any parties are defendants and thereby entitled 
 to appear by attorney. It is an investigation into the economic 
 conditions, as well as practices that may be prevailing, and it is 
 ex-parte, and while the Commission will be glad to hear any wit- 
 ness that presents himself here, no one comes here with the right 
 to be represented by attorneys, with the Tight to -put orTwitnesses, 
 because there is no investigation of that sort being conducted. " 
 
8 
 
 In further support of our contention that we were not 
 given a fair hearing, it is significant that Mr. Colver, 
 himself, Chairman of the Federal Trade Commission, 
 acknowledged to the House Committee on Interstate and 
 Foreign Commerce, on December 19, 1918, that the hear- 
 ings had been ex-parte in character. 
 
 Another evidence of the unfair and one-sided methods 
 of investigation used by the Federal Trade Commission 
 is the manner in which agents of ~ the Commission went 
 through the private files of Swift & Company and used 
 in the report only such communications as would appear 
 to make out a case against the packing industry. Public 
 hearings were being held while the files were being ran- 
 sacked, and scraps of correspondence were taken to the 
 hearings and read into the public record, not only without 
 adequate explanation, but with positively wrongful in- 
 terpretations and misleading insinuations. This practice 
 resulted in sensational items in the newspapers, and an 
 inflaming of the prejudice that exists in the minds of 
 many people against the packers. It hardly seems to 
 Swift & Company that this is a dignified and scientific 
 method for a department of the Government to use in 
 making what. was supposed to be a fair and impartial 
 investigation. 
 
 Whatever may be thought of the fairness and impar- 
 tiality of the methods of investigation, however, the im- 
 portant point is that the report itself is one-sided. Even 
 if the Commission felt justified in its conclusion that 
 monopoly existed, its report should have contained the 
 evidence on both sides of the question. But no! The 
 report is practically the brief of a prosecuting attorney. 
 It contains only such evidence as can, by wrongful inter- 
 pretation, appear to indicate illegal collusion among the 
 packers. It fails to produce scores of positive evidences 
 
of active competition. And, as mentioned above, the 
 Commission has actually refrained from publishing let- 
 ters that were taken from our files, and which controvert 
 statements and insinuations made in the report. In some 
 cases, it has actually used only such parts of telegrams, 
 taken from our files, as appear to bear out its case, omit- 
 ting items from the same telegrams which were not useful 
 to the Commission. 
 
 These are serious charges to make against a depart- 
 ment of the Government. Their proof will be found in 
 
 the analvsis that follows. 
 
10 
 
 EARLY POOLS AND THE NATIONAL PACKING 
 
 COMPANY. 
 
 Pages Chapter I presents a history of the so-called beef pools, 
 1 1 to 25 w hich were in existence before 1902, and of the National 
 Packing Co., which was in existence from 1902 to 1912. 
 The object of the Commission in going into this past 
 history is apparently to show that there was a disposition 
 on the part of the packers to work together in the past, 
 and to try to link these early events with the alleged 
 present-day agreement to divide live-stock receipts. Th^ 
 Commission says on page 11 of the Report : 
 
 "These admitted agreements of the past are a key to the evi- 
 dence of agreements and combinations of the present time." 
 
 This evidence is only of historic interest, however, unless 
 the Trade Commission can prove that the early day agree 
 ments have been continuous. It is on this point that the 
 Trade Commission has necessarily fallen down, in spite 
 of bold and unwarranted interpretation of scattered data 
 whi; h are supposed to indicate the existence of arrange- 
 ments continuing through the days of the National Pack- 
 ing Company and since the dissolution of that company. 
 
 It is perfectly true that for several years previous to 
 190? the large packers had arrangements which have be?n 
 referred to as "beef pools" or the "Veeder pools." 
 Under these arrangements a central bureau decided from 
 week to week how much fresh beef should be shipped to 
 the several eastern markets. The object was to prevent 
 recurrent gluts and scarcities therein. The economic 
 effects of such an arrangement on the public as a whole 
 were undoubtedly beneficial, as it probably had some 
 effect in stabilizing prices through the regulation of sup- 
 ply in accordance with demand. It might be added that 
 
11 
 
 the experiences under the pooling arrangements showed 
 the futility of attempting to fix the prices of such a per- 
 ishable commodity as fresh beef. 
 
 The beef pools were discontinued in 1902 but not 
 because they -were declared illegal! The Federal 
 Page is Government had filed a bill asking for an injunction to 
 prevent the packers from having agreements in illegal 
 restraint of trade. Swift & Company preferred to dis- 
 continue the arrangement, because of public criticism, 
 and did not contest the bill. The injunctional order was 
 issued, and was afterwards affirmed by the Supreme 
 Court of the United States, but the injunction itself con- 
 tained the following clause: 
 
 "Nothing herein shall be construed to prohibit the said defend- 
 ants from curtailing the quantity of meats 
 
 shipped to a given market where the purpose of such arrangement 
 in good faith is to prevent the over-accumulation of meats as 
 perishable articles in such markets." (1) 
 
 In other words, the injunctional order expressly per- 
 mitted the continuance of the very pools against which 
 the agitation at that time had been waged. In spite of 
 this fact, the packers preferred to discontinue the ar- 
 rangement, because of popular misunderstanding and dis- 
 approval. This explanation is of special significance be- 
 cause the Federal Trade Commission has tried to make 
 so much capital out of the fact that the packers had 
 pooling arrangements prior to 1902. At the time the 
 Veeder pool was abandoned, seventeen years ago, Swift 
 Company definitely and absolutely ceased to have rela- 
 tions with other packers leading to the allocation of beef 
 shipments or to any other form of agreement which might 
 be construed as in restraint of trade. As evidence of 
 Swift & Company's earnest efforts to carry out this policy, 
 there have been sent to the various department heads, at 
 intervals of about six months, ever since that time, a copy 
 
 (1) 196 U. S. 375. 
 
12 
 
 of the injunction, with the following letter of instructions, 
 and the receipt that must be signed : 
 
 Instructions issued periodically by Mr. L. F. Swift to 
 Department Managers of Swift & Company: 
 
 September 5, 1918 
 Letter No. 1979. 
 Dear Sir: 
 
 Enclosed please find copy of decree of May 26th, 1903, as modified 
 by the Supreme Court, in which the injunction issued in the suit 
 of the United States v. Swift & Company and others, is made 
 permanent. 
 
 We again bring this to your attention and advise you that you 
 are absolutely prohibited from entering into any agreement or 
 combination, either personally or for Swift and Company, which 
 will in any manner violate the injunction or the Sherman Anti- 
 trust Law. 
 
 This letter and copy of injunction bear serial numbers, and 
 are to be retained for your files. 
 
 Please acknowledge receipt of both documents on the blank 
 enclosed for that purpose. 
 Awaiting your reply. 
 
 Yours truly, 
 
 SWIFT & COMPANY, 
 
 L. F. Swift, 
 President. 
 
 Place 
 
 Date 
 
 Swift & Company, . . 
 
 Union Stock Yards, Chicago. 
 Dear Sirs: 
 
 I acknowledge receipt of your letter under date of Sept. 5, 1918, 
 together with copy of injunction issued in suit of the United States 
 v. Swift & Company and others, both bearing Serial Number 1979. 
 I shall be governed by the instructions contained therein. 
 Yours respectfully, 
 
 (Signature) 
 
 (Address) 
 
 Must be signed personally by 
 person to whom addressed. 
 
 National Packing Company. 
 
 Pages it is true that in 1902 the three largest packers planned 
 22 to 25 to merge their interests in a single large corporation, to- 
 gether with a number of small packing companies. The 
 proposed consolidation was similar to those taking place 
 
13 
 
 at that time in other industries, such as the U. S. Steel 
 Corporation; but the plan never went through, because 
 of difficulties that arose in connection with the financing. 
 The result was that no single predominating corporation 
 has ever been formed in the packing industry such as are 
 so common in other industries. 
 
 While the negotiations for the proposed merger were 
 under way several small packing companies were bought 
 up by Mr. Swift, Mr. Armour, and Mr. Morris, with the 
 intention of including them in the new company. On the 
 failure to carry through the proposed plan these small 
 companies were organized into the National Packing 
 Company, the stock of which was taken by the three large 
 packers interested, on the basis which had been agreed 
 upon for the merger, i. e., the basis of the tangible assets 
 of the three large packing companies. 
 
 It is undoubtedly true that the directors of the National 
 Packing Company discussed matters of general trade in- 
 terest at their regular meetings, but there is absolutely no 
 evidence or reason to suppose that such informal discus- 
 sion as they may have had constituted an agreement of 
 any form, or amounted to any illegal collusive action. 
 This very question was before the courts in the case of the 
 United States v. L. F. Swift et al., which was decided in 
 1912. and which acquitted the defendants of having any 
 illegal combination in restraint of trade. In fact, it was 
 even contended by the Government in trying that case 
 that the fairly constant percentages of purchases, taken 
 by the various packers, were evidence of agreements to 
 divide live-stock receipts. And the packers were declared 
 1 'not guilty"! It is on this same charge that the Federal 
 Trade Commission now bases its conclusion that the 
 packers have an agreement in restraint of trade. 
 
 The National Packing Company, although it was never 
 
14 
 
 declared illegal, was dissolved in 1912, and the properties 
 were sold to the Swift, Armour, and Morris companies. 
 The National Packing Company had not been particularly 
 successful financially, and strange as it may seem it had 
 actually been a thorn in the side of the other large pack- 
 ers from a competitive .standpoint. 
 
 Even if there had been an illegal arrangement during 
 the days of the National Packing Company, that would 
 have little if any bearing on the situation today; but 
 there were not agreements in restraint of trade at that 
 time, as decided by the courts, and this is a significant 
 fact inasmuch as the Federal Trade Commission at- 
 tempts to show that there has been a continuing arrange- 
 ment, though changing somewhat in form, from the earli- 
 est days to the present time. 
 
15 
 
 THE AIXEGED COMBINATION OF TODAY. 
 
 Summary of Trade Commission's Conclusions as 
 to Monopoly. 
 
 pages Qn pages 26 and 27 of the Report, the Federal Trade 
 26 to 27 Commission summarizes the principal charges which are 
 'supposed to prove that the five large packers have a con- 
 spiracy in restraint of trade. The Trade Commission in- 
 forms us that "this evidence is convincing, consisting 
 as it does largely of documents written by the packers/' 
 etc. We admit that on its face the evidence might well 
 appear convincing to the uninitiated and to the person 
 who does not know that the evid?nce has been hand-picked 
 for the purpose of bringing out only one side of the case. 
 AVe submit, however, that a careful analysis even of this 
 one-sided evidence reveals no proof of agreements in re- 
 straint of trade. It is only through constant repetition, 
 ingenious interpretation of the evidence, and bold as- 
 sertion and assumption, that this evidence appears con- 
 vincing even to the person who has not really studied the 
 matter. 
 
 The Federal Trade Commission bases its monopoly 
 charge on the following conclusions: 
 
 I. 
 
 That th n five large packers "are in an agreement for 
 the division of live stock purchases throughout the United 
 States according to certain fixed percentages." 
 
16 
 
 II. 
 
 That the five large companies "exchange confidential 
 inf ormation ' ' and "eniploy jointly paid agents to secure 
 information which is used to control and manipulate live- 
 stock markets." 
 
 III. 
 
 That the five companies "act collusively through their 
 buyers by means of such practices as 
 
 (a) 'Split-shipments' purchases; 
 
 (b) 4 part purchases'; 
 
 (c) l wiring on'; 
 
 (d) ' Making' the daily market." 
 
 (These practices will be described and discussed in 
 detail below.) 
 
 IV. 
 
 That Swift, Armour, Morris, and Wilson have com- 
 bined with certain other companies to restrict and control 
 shipments from South America to the United States and 
 other countries. 
 
 V. 
 
 That the large packers act collusively in the sale of 
 fresh meat. 
 
 VI. 
 
 That there is a joint contribution to funds by the five 
 large packers. 
 
 VII. 
 
 That there is joint ownership of various enterprises. 
 
 These conclusions will be discussed in the order that 
 they are taken up in the Commission's report. It will be 
 shown that there is no evidence to support the charge of 
 
17 
 
 collusion in an illegal or uncommercial way ; that many of 
 the practices described are perfectly legitimate ; and that 
 it is only by wrongful interpretation and insinuation that 
 they are made to appear as illegitimate. 
 
 The Alleged "Live-stock Pool." 
 
 pages The Federal Trade Commission practically bases its 
 27 and28 monopoly charge on the fact that the percentage of live 
 stock bought by each packer at the different markets, and 
 for all markets together, remains fairly constant from 
 year to year. It introduces the discussion of this subject 
 by referring to 1 1 control of shipments and prices of fresh 
 meats, " (page 28 of the Report), which the Commission 
 claims existed during the days of the National Packing 
 Co., and the Trade Commission refers to the National 
 Packing Co. as a " subterfuge ' ' for covering up the pur- 
 poses of the ' * pools " that existed before 1902. 
 
 We are then informed that a device had been contrived 
 for suppressing competition among the large companies 
 whereby the receipts of live stock at the various markets 
 were divided among the several packers. The Trade 
 Commission tries to link up the 1 1 effected control of ship- 
 .ments and prices of fresh meats ' ' with this new device in 
 order to make out that collusive action was continuous 
 through the days of the National Packing Company and 
 since its dissolution. The transition from the one method 
 to the other is indeed vague; it is only by unwarranted 
 assumption and by positive statement not based on fact 
 that the Trade Commission effects this link in its chain 
 of reasoning. 
 
 Pages Evidence is introduced to prove that there was an 
 
 29 and ao agreed division of live-stock receipts prior to 1912. This 
 
 evidence consists of statements that a former head hog 
 
18 
 
 buyer and a ' ' buyer employed at Kansas City ' ' had told 
 the Commission that there had been agreements to divide 
 receipts according to fixed percentages. This evidence 
 can hardly be considered authoritative since the names 
 of the informants are not given, since they may have had 
 some special reason for wanting to testify against the 
 large packers, and since, if they had been telling what 
 they then thought was the truth, they might even have 
 been mistaken in their conviction as to whether there 
 really was an agreed division. The last explanation is 
 probably the correct one, because a buyer, when he finds 
 that his concern is buying a. fairly definite proportion of 
 receipts, is likely to assume that this results from an 
 agreement with other packers. That this is not the case 
 will be pointed out below. 
 
 The Trade Commission apparently considers that all 
 references to percentages bought at different markets 
 found in letters or memoranda in the packers files are 
 proof of agreement. For this purpose a letter addressed 
 to Mr. M. R. Murphy is quoted at the bottom of page 29. 
 Among the numerous references to percentages in this 
 letter one will look in vain for even a suggestion that 
 there was an agreement among the packers. In fact, this 
 letter indicates absence of agreement, as, for example, 
 where the writer says "I wired you today that I thought 
 you ought to buy 17 per cent, of the hogs at Kansas City, 
 30 per cent, at Omaha, and 50 per cent., or just as many 
 hogs as Armour buys, at Sioux City." If there had been 
 any agreed percentage, the writer would have naturally 
 referred to the agreement, and spoken of the necessity 
 of living up to it, instead of merely wiring "I thought 
 you ought to buy ' '. 
 
 It should be pointed out in this connection, as will be 
 explained below, that each packer keeps a careful record 
 
of the percentage that he buys in each market, and that 
 he aims to at least maintain this percentage. Such a per- 
 centage becomes a usual or customary gauge of his suc- 
 cess in developing his business, and he therefore fre- 
 quently has occasion to refer to the percentage of animals 
 that he buys, and to give instructions to buyers in ac- 
 cordance with such customary percentages. The point is 
 that references to percentages do not in themselves imply 
 any agreement or collusion whatsoever with other pack- 
 ers. 
 
 Pages Another supposed evidence of agreement previous to 
 31,32, IQH was found in a letter to Mr. Veeder from Paul D. 
 33,34. Cravath (page 31 of Report). Attached to this was a 
 memorandum, reproduced on pages 31, 32, 33, and 34 of 
 the Report, showing the number and percentages of ani- 
 mals bought by different packers in different markets. 
 There is not a single word that indicates that these per- 
 centages were the result of agreement ; the memorandum 
 was made up by Mr. Cravath 's client, the Schwartzchild 
 and Sulzberger Company, as explained in the letter itself, 
 and covered past occurrences. The very fact that Mr. 
 Cravath asked Mr. Veeder to check up the figures is 
 pretty good evidence that they had not been the result of 
 collusion among the packers. 
 
 The truth of this matter is that Mr. Cravath was study- 
 ing the situation at that time with a view to trying to get 
 the other packers to agree to some legal arrangement that 
 would lead to more satisfactory conditions. Competitive 
 profits at that time were unreasonably low, and the Sulz- 
 berger company was already suffering from the aggres- 
 siveness of the other packers. Swift & Company, al- 
 though believing that some such arrangement might be 
 technically legal, especially as the "Veeder Pool" had 
 been specifically permitted by the injunction issued in 
 
20 
 
 1902, preferred not to run any risk of criticism, and 
 definitely declined to enter into any such arrangement as 
 was suggested. 
 
 And yet the Trade Commission introduces this letter as 
 evidence that there was an agreement in 1911 ! The Com- 
 mission could have easily ascertained the facts if it had 
 desired to go into both sides of this question. 
 Pages rpftg federal Trade Commission tries to show that the 
 34 and 35 alleged division of live-stock receipts during the days of 
 the National Packing Co. was continued after the dissolu- 
 tion by introducing a table of percentages of purchases 
 by the five large packers and the National Packing Co. 
 (page 35 of the Report) from 1910 to 1913, found in the 
 office of Swift & Company. There is absolutely no 
 evidence that the percentages were the result of 
 an agreement among the packers; such is merely 
 assumed by the Trade Commission. The feature of this 
 table to which the Trade Commission calls attention is 
 the last column headed "1910 arbitrary." This column 
 shows the percentage purchased by each of the five large 
 packers, after making readjustments caused by the dis- 
 solution of the National Packing Co. in 1912. The infer- 
 ence is that new percentages were arranged by agreement, 
 and that this table shows the continuance of an arrange- 
 ment from 1910 to 1913. 
 
 The fact is that Swift & Company has always been in 
 the habit of compiling these percentages for its own use, 
 so as to measure its success in holding its own and in 
 gaining on competitors. During the year 1913, it was 
 practically impossible to make comparisons with previous 
 years because the National Packing Co., whose business 
 was divided among Swift, Armour, and Morris, had been 
 in existence and taking part of the receipts, previous to 
 
21 
 
 and including part of 1912. It was therefore necessary to 
 recompile the figures for such a year as 1910 by eliminat- 
 ing the percentage bought by the National Packing Co., 
 and spreading this percentage over the percentages taken 
 by the other five companies. That is to say, the column 
 headed "1910 arbitrary" was merely a device employed 
 by Swift & Company to compare its percentage of 1913 
 with ifs percentage of 1910 ; such a percentage is of course 
 no evidence of any continuing agreement, or of any col- 
 lusive readjustment of percentages, even though the read- 
 justed figures for 1910 were apparently obtained and used 
 by other packers in making their comparisons. 
 Pages ^ further attempt is made to show that there was an 
 36 and 37 agreement to adjust percentages after the dissolution of 
 the National Packing Co. by introducing part of a memo- 
 randum by Mr. G. F. Sulzberger, found in what the Fed- 
 eral Trade Commission sensationally calls "The Black 
 Book. " There is nothing in this letter except an indica- 
 tion that Mr. Sulzberger and Mr. Armour had compared 
 notes as to the percentages of live stock that they and 
 other packers had been purchasing. The table of per- 
 centages which accompanied this letter (page. 37 of the 
 Report) is a memorandum of past purchases. There 
 is nothing at all about this letter or the percent- 
 ages to indicate that there was any agreement as 
 to what the percentages should be in the future. 
 It is difficult to see how such informal interchange of in- 
 formation can be interpreted as evidence of a definite 
 agreement among the large packers to divide receipts, 
 especially when it is known that at that time the Sulz- 
 berger Co. was beginning to have financial difficulties and 
 that Mr. Sulzberger had had frequent informal confer- 
 ences with Mr. Armour and representatives of other 
 packers, complaining of their severe competition. 
 
22 
 
 Pages Neither is there anything in the letters addressed to 
 
 38 and 39 M r . M. R. Murphy which indicates that there was any 
 
 agreement. In 'fact, the first letter to Mr. "Murphy gives 
 vary clear evidence of competition where it says "the 
 trouble is that there ought to be 105 per cent, to satisfy 
 everybody, " and again "I don't want to be too aggres- 
 sive on the market, but at the same time we cannot afford 
 to slide back." 
 
 In concluding our discussion of the attempt of the 
 Trade Commission to prove a continuing arrangement 
 from the time of the old beef pools during the nineties, 
 through the days of the National Packing Company, and 
 up to the present time, it requires but little analysis to 
 show that no continuing arrangement could have existed. 
 The beef pools were arrangements to allocate shipments 
 of dressed beef to the various eastern markets ; the Na- 
 tional Packing Company was a corporation in which tne 
 three largest packers owned stock in proportion to the 
 tangible assets of tjie three large packing companies ; the 
 alleged agreement of today is one of divided receipts of 
 live stock ! Any one arrangement could not have been a 
 continuation of the preceding one. 
 
 And in addition to this, the Veeder pool of the early 
 period was never declared illegal, and its principle was 
 specifically permitted by the injunction of 1902 ; and the 
 federal courts decided that the National Packing Com- 
 pany was not in illegal restraint of trade, and the ques- 
 tion of agreed division of receipts was involved in that 
 case! So much for the Trade Commission's use of early 
 history in its attempt to prove that there is an agreed 
 division of live-stock receipts today. 
 Pages j n bringing the discussion of the alleged agreement to 
 
 39 to 41 divide live-stock receipts up to the present time, the 
 
23 
 
 Federal Trade Commission begins by pointing out the 
 proportions of total receipts which the large packers are 
 said to buy in this manner, and then goes on to explain 
 the "centralized buying system," through which buying 
 policies are carried out. 
 
 Centralized Buying System. 
 
 Pages ^h e Trade Commission describes the buying system 
 42 to 44 US ed by the large packers, whereby their purchases in 
 various markets are governed by their respective head 
 buying offices in Chicago. It is explained that these head 
 buyers are in constant telegraphic communication with 
 the buyers in the different markets, and that they issue 
 specific instructions which have to be carried out by their 
 sub-buyers. 
 
 The description of this centralized buying system is a 
 good example of the Trade Commission's practice in de- 
 scribing a perfectly legitimate proceeding in such a way 
 as to insinuate that there is something irregular about it. 
 For example, the Trade Commission says: 
 
 Page 42 "All (the buyers who were questioned) said that they were cora- 
 
 ( Italics pelled to make their purchases in line with instructions from Chi- 
 
 Inserted cago. * * * Buying instructions must be obeyed, all agreed, 
 
 by S. & Co.) The head buyers at Chicago admitted this." 
 
 Why should the Trade Commission say that the head 
 buyers "admitted" this? There is no secret about it, 
 and it is nothing to be ashamed of. This is merely an 
 example of the insinuating methods used by the Com- 
 mission. 
 
 Page 44 rp^g Commission closes its discussion of this matter by 
 saying that: "This constitutes a situation in which a 
 control of the buying policies of all the large packers 
 may be effectuated, and only a few men in each company 
 need know that there is an agreement or understanding. ' ' 
 
24 
 
 Although, the Commission refers to "an agreement " as 
 though it had established its case, there is not even a 
 charge of collusion between the different packers in 
 connection with this description of. centralized buying. 
 The Commission apparently introduces this discussion 
 in order to show that it would be easier for the packers 
 to get together because they have these centralized buy- 
 ing systems than it would be if they did not have them. 
 
 The impression is also created that the packers are able 
 to exercise some control over prices in different markets 
 through this centralized buying system. This same mat- 
 ter is dealt with on pages 96 and 97 of the Report, where 
 telegrams are reproduced to indicate that the large pack- 
 ers "make" the market through their instructions to 
 buyers. Even if Swift & Company's head buyer in Chi- 
 cago wired to the buyer in Omaha to buy "ten lower than 
 yesterday, " this means to buy lower if he can. It im- 
 plies no control over prices whatsoever. A good exam- 
 ple of the kind of instructions issued is found on page 
 97 of the Report, where Mr. G. F. Swift, Jr., wires to 
 Kansas City, South Omaha, and St. Louis : 
 
 "Try buy hogs lower and improve spread. We are trying buy 
 15/25 lower K. C. buy around 2000 So Om buy around 2000 St. 
 Louis buy around 2000." 
 
 This is, of course, a perfectly legitimate way of instruct- 
 ing buyers, and is one that we shall undoubtedly continue. 
 It is only through unfair insinuation that telegrams like 
 the above can be construed as indicating questionable 
 practices. 
 
 There is, of course, absolutely no collusion with other 
 packers in this matter of sending out instructions to 
 buyers. 
 
 The important point is that this whole subject of the 
 centralized "buying system has been written up by the 
 
25 
 
 Federal Trade Commission in such a way as to throw 
 suspicion on a perfectly legitimate and praiseworthy 
 method that each packer employs in centralizing and 
 controlling his buying operations. 
 
 Evidence from Packer Buyers. 
 
 Page 44 j n connection with the alleged division of live-stock 
 receipts, it is of extreme significance that in all its 
 efforts to prove a case against the packers the Federal 
 Trade Commission has been unable to unearth one single 
 bit of positive proof that such an, agreement exists. No 
 such agreement could be carried out without a great 
 many people having to know about it. The Trade Com- 
 mission makes the point that "one of the buyers at a 
 western market" stated that he "couldn't prove it but 
 it did look awfully much as though the packers got to- 
 gether and divided up the total receipts for the day. 7 ' 
 This is pretty slim sort of evidence for the Federal 
 Trade Commission to even introduce into its report. 
 
 . 
 
 Packer Exchange of Information. 
 
 page 45 ^he Federal Trade Commission says that the packers 
 keep "a complete record of all one another's live-stock 
 purchases and shipments" and insinuates that this prac- 
 tice has ; ' a direct bearing on their combination in divid- 
 ing live-stock receipts." 
 
 As a matter of fact, each packer keeps a record of the 
 purchases of other packers for competitive reasons; 
 Swift & Company, for example, in order to measure its 
 success in holding its own in the different markets, 
 keeps these records for its own use ; it has done this for 
 years and expects to continue to do so. There is nothing 
 
26 
 
 in this fact to indicate that there is an agreement with 
 the other packers. 
 
 As for the collection of market information, the Fed- 
 eral Trade Commission has put this matter in an entirely 
 wrong light. The packers need the most detailed and 
 accurate information possible concerning receipts of an- 
 imals at the various markets^ the number shipped on to 
 other markets, e,tc., in order to govern their buying as 
 accurately as possible; and they need this information 
 each day as early in the moniing as possible. In many 
 markets the machinery for gathering such information 
 is inadequate, and the packers themselves have co-op- 
 erated in establishing methods to obtain -it. 
 
 Page 46 This accounts for the situation at Kansas City, de- 
 scribed at the top of page 46 of the Report, where it is 
 said that the large packers "jointly employ two men 
 to gather market information/' The information ob- 
 tained in this way is not used by Swift & Company in 
 any illegitimate way. It is not used as a basis for "wir- 
 ing on," as alleged by the Trade Commission, although 
 even this practice is not an illegitimate one, as will be 
 shown on pages 52 to 57 below. 
 
 It might be mentioned, in this connection, that the Fed- 
 eral Government, through its Bureau of Markets, has 
 been developing an organization for the collection and 
 dissemination of market information; Swift & Company 
 at least would be glad to see this work extended to such 
 a point that the packers may be relieved of all expense 
 and trouble in performing this function. 
 
27 
 
 Approximate Uniformity of Purchase Percentages. 
 The Real Explanation. 
 
 Pages Although the Federal Trade Commission uses every 
 46 to 78 possible means to make it appear that there is a uni- 
 formity of percentages in the purchase of live stock, 
 due to agreements among the packers, the truth of the 
 matter is that such uniformity as exists is an indication 
 of active competition and of the close watch that each 
 packer keeps on the others. As already explained, each 
 packer keeps a record from week to week of the per- 
 centages of total receipts at the various markets pur- 
 chased by himself and by each of the other packers. 
 Swift & Company is jealous of its position and does 
 not intend to let the other packers gain in their propor- 
 tion of the total by so much as a fraction of one per 
 cent. 
 
 It is true that the competition in purclrasing does not 
 take the form of "cut-throat" competition, except per- 
 haps to a slight extent at certain times. Any packer 
 might be able to increase his proportion inordinately by 
 going out and "bidding up" the market; or, in other 
 words, by paying more than the animals are worth in the 
 form of dressed meat. Any packer who tried this would 
 of course lose money, and the chances are that even if 
 this were tried the other packers would follow suit in 
 order to maintain their positions in the market. Each 
 packer not only has a fairly definite killing capacity in 
 his plants, but he has a certain established trade which 
 he must take care of, and if he falls off in his killing as 
 compared with one or more of the other packers, he will 
 lose customers for meat and perhaps suffer a permanent 
 falling off in his total business. This would also result 
 in running up his overhead expense, while his compet- 
 
28 
 
 itors' expenses would be kept down by their greater vol- 
 ume. It has been learned through experience by the 
 large packers that it does not pay for any one of them 
 to bid up the market by even a few cents a hundred 
 pounds over what the animals are actually worth in the 
 form of meat, and consequently price competition and 
 buying competition are carried on within fairly narrow 
 limits. The packers ' buyers are expert judges of weights, 
 dressing percentages, and the qualities of meat derived 
 from various animals, and their competitive bids in the 
 live-stock markets ordinarily vary only from 10 to 15 
 cents, or perhaps 25 cents per hundred pounds, and each 
 buyer naturally tries to buy at such a price as will yield 
 a profit to the company on each purchase. 
 
 If there is anything wrong in the lack of cut-throat or 
 destructive competition that would result from a reckless 
 attempt to increase purchase percentages by bidding up 
 the market inordinately, the packers are guilty. We do 
 not believe, however, that we can rightfully be criticised 
 for not entering into such competition, which would not 
 only be disastrous to ourselves or any other packer who 
 attempted it, but which would be of no benefit to any one. 
 It would only tend to make the market more erratic, and 
 it would unsettle conditions generally. It is usually 
 conceded that cut-throat competition is unhealthful and 
 there have been developed in many industries forms of 
 co-operative competition to regulate this very thing. 
 The form that this has commonly taken in recent years 
 is the open-price association, whereby a group of manu- 
 facturers in a certain industry, or a group of jobbers in 
 a certain trade, report individually to a central bureau 
 their costs, sales, prices, etc., of the previous week or 
 month. Statistics are then compiled and given to the 
 various members; these are records of past transac- 
 
29 
 
 tions and form the basis of future operations, without 
 any agreement as to what prices shall be. 
 
 There is not even this kind of an agreement in the 
 packing industry; in fact, there is no agreement what- 
 ever as to the division of receipts, and a careful reading 
 of the Trade Commission's report shows that there is 
 really no evidence of such an agreement. The fact is 
 that each packer watches the others so closely that no 
 one of them is able to gain appreciably on the others, 
 and consequently the proportion of animals bought by 
 each remains fairly constant from year to year. There 
 is no occasion for surprise that this is true. If statistics 
 were available to show the sales of the half dozen leading 
 wholesale grocers or department stores in Chicago, we do 
 not doubt but that the percentage of the total done by each 
 would remain fairly constant from year to year. The 
 more competitors come in direct contact with each other, 
 and the more they are able to watch each other closely, 
 the more nearly uniform will be the percentage of busi- 
 ness done by each. And the purchase of live stock is 
 carried on in open organized market places where each 
 packer can watch the other with the closest scrutiny, and 
 hence it is only natural that it would be even more diffi- 
 cult for one packer to gain on the others in this trado 
 than in almost any other trade. 
 
 With these thoughts in mind, it is much easier to un- 
 derstand and to appraise the allegations of the Commis- 
 sion. Even a slight change in purchase percentages is 
 really significant. The Trade Commission's own figures, 
 on page 57 of the Report, show that Swift & Company's 
 percentage of cattle purchases increased 1.17 per cent, 
 from 1913 to 1917. This means that Swift & Company 
 killed about 90,000 more cattle in 1917 than if it had not 
 increased its percentage over 1913. This also means that 
 
30 
 
 Swift & Company increased its proportion of total pur 
 chases of cattle by nearly 3^ per cent, in four years. 
 The figures for 1918 show a still further increase in their 
 percentage of purchases for Swift & Company, and this 
 is a highly satisfactory situation, because it shows that 
 at least in the buying of cattle and in the selling of 
 cattle products, we have made a gradual and substantial 
 gain on our competitors in the past five years. 
 
 Contrast this explanation with the statement of the 
 Federal Trade Commission at the top of page 48 of the 
 Report, where it is said that the weekly figures kept 
 by each of the large packers for comparison of purchases 
 made by other packers "does not supply useful business 
 information, but shows how nearly the agreement is 
 being adhered to." This is merely an attempt to give 
 the impression that the fairly constant percentages result 
 from a formal agreement, without giving any considera- 
 tion to the actual economic facts underlying this phe- 
 nomenon. 
 
 What has been said of the reason why percentages of 
 purchases remain fairly constant from year to year ap- 
 plies only to markets that are fairly well developed and 
 where conditions are fairly stable. The Trade Com- 
 mission introduces a number of tables and diagrams, 
 from pages 48 to 75 of the Report, which show how these 
 percentages work out. It will be shown below, however, 
 that for certain markets figures have been omitted which 
 show that in important cases they have not been so uni- 
 form after all. This point is especially important in 
 connection with the situations at Denver and St. Paul, 
 where the actual figures quite disprove statements made 
 by the Federal Trade Commission. (See pages 38 and 
 35, respectively, below.) 
 
31 
 
 Page 57 flie Sulzberger memoranda, quoted on pages 57, 58, and 
 59 of the Report, contain absolutely no evidence of agree- 
 ments to divide live-stock purchases. They merely show 
 an occasional interchange of information, concerning past 
 transactions, between Mr. Sulzberger and other individ- 
 ual packers. Some of these memoranda have to do with 
 foreign shipments and have no bearing on the point at 
 issue. The Trade Commission loses no opportunity to 
 try to drive home the impression that the percentages 
 quoted in these memoranda must have been the result of 
 agreement, and that they serve as bases for agreements 
 for future operations. 
 
 The Situation at St. Joseph. 
 
 Pages p rom pages gQ to 65 of the Report the Trade Corn- 
 so to 65 mission introduces telegrams with regard to the situa- 
 tion at St. Joseph, to indicate that representatives of 
 Swift & Company were worried over the fact that Ar- 
 mour and Morris were not buying their "share" of the 
 cattle in that market, and that Swift & Company had 
 tried to get these two competitors to buy more animals. 
 These telegrams are introduced as evidence that they 
 must have been in agreement as to the percentage that 
 each should buy, and the Federal Trade Commission tries 
 to give the impression that these agreed percentages 
 were an obligation that each packer must buy his full 
 share when the receipts are heavy. 
 
 The truth of the matter is that occasionally the St. 
 Joseph market tends to get "out of line" and slightly 
 under the Kansas City market, near which St. Joseph is 
 located. Competitive conditions, resulting from the 
 efforts of each packer to buy in the lowest market, always 
 cure such a situation and automatically distribute ship- 
 
32 
 
 merits among the various markets so as to keep them in 
 line with each other. But there have been occasions, 
 when receipts were temporarily heavy, that prices in St. 
 Joseph have been slightly below those in Kansas City. 
 Swift & Company has a large interest in the stock yards 
 in St. Joseph, and has a well equipped packing plant 
 there, and naturally is anxious that shipments should 
 continue to come to that market, and to that end that 
 shippers shall be satisfied with the prices they obtain 
 as compared with other markets ; otherwise they will stop 
 shipping to St. Joseph. Although other packers have 
 plants at St. Joseph, they sometimes rely too much on 
 the "other fellow " to support a bad market. 
 
 Swift & Company has always done its utmost, during 
 periods of excessive receipts, to support the St. Joseph 
 market, and has even urged its competitors to buy more 
 heavily and to assume a greater proportion of the respon- 
 sibility for keeping this market in line. Swift & Com- 
 pany acknowledges that it has even done this during the 
 past few months since the Trade Commission has alleged 
 that this practice constitutes an evidence of collusion. 
 Swift & Company can see no harm in making such efforts 
 to support a market. The fact that we have urged other 
 packers to buy more does not in any way indicate that 
 there is an agreement. When we have used the word 
 " share " (as in the letter at the bottom of page 60 of 
 the Report), this does not mean an agreed upon per- 
 centage, but merely the share or proportion that each 
 packer has been accustomed to purchase or that we think 
 such packer ought to purchase in order to do his part in 
 supporting the market. 
 
 Attention is called to the table on page 65 of the Re- 
 port, which shows that the percentages of cattle and hogs 
 bought by Swift, Armour, and Morris in St. Joseph have 
 
33 
 
 varied appreciably from year to year. The Federal 
 Trade Commission tries to make out that- this was a 
 failure to live up to " percentages agreed upon"; the 
 Commission's position is that uniformity in percentages 
 shows agreement, and that a lack of uniformity shows a 
 failure to live up to the agreement. In either case, the 
 Commission assumes that an agreement exists, and then 
 interprets the evidence to prove the assumption! 
 
 The St. Paul Situation. 
 
 Fage 65 ^ the bottom of page 65 of the Export the Trade Com- 
 mission introduces a statement attributed to J. T. Mc- 
 Millan, which appears on its face to contain pretty strong 
 evidence that there must be an agreement between Swift 
 and Armour in the division of live-stock receipts at South 
 St. Paul. It is reported that Mr. Bangs, the manager of 
 Swift's St. Paul plant, said to Mr. McMillan: "If you 
 move to the yards, you couldn't do that; you would have 
 to agree to buy not over a stipulated proportion of the 
 hogs offered each day, the same sort of working agree- 
 ment we have with Armour. ' ' 
 
 It will be noted that no indication is given as to when 
 or where this statement was made. One is inclined to 
 believe that if it were authentic, authoritative, and con- 
 clusive, the Federal Trade Commission would have made 
 much more conspicuous use of it in trying to establish its 
 thesis that percentages are fixed by agreement. 
 
 The only basis we can find for this statement is in the 
 evidence at the Trade Commission's hearings held in 
 St. Paul in January, 1918. It appears that Mr. McMillan, 
 who has a plant at St. Paul, was explaining negotiations 
 which he had with Mr. Bangs relative to -the bringing of 
 his (Mr. McMillan's) plant from St. Paul to the stock 
 
34 
 
 yards at South St. Paul. It also appeared that Mr. Mc- 
 Millan was concerned as to whether he would be able to 
 buy enough hogs to operate his proposed plant, and that 
 Mr. Bangs assured him that he would get an ample sup- 
 ply. There is evidence that during the negotiations there 
 was considered a stipulation that Mr. McMillan's pro- 
 posed plant should be of a certain minimum capacity. 
 There was to be absolutely no stipulation as to how much 
 larger than this minimum the plant might be. That is 
 to say, there is absolutely no evidence that Mr. McMil- 
 lan's operations were to be limited or curtailed in any 
 way, as would appear from the quotation at the bottom 
 of page 65 of the Report. Evidence in volume 7 of the 
 transcript of the hearings before the Federal Trade Com- 
 mission, pages 1356 and 1359, bears this out. This part 
 of the Trade Commission's presentation of the case must 
 have been a pure figment of the imagination. 
 
 It is true that in the public hearings Mr. McMillan said 
 that Mr. Bangs told him, in assuring him that he would 
 be able to buy enough hogs that ' ' that would be arranged 
 on a percentage basis, the same agreement as Armour 
 had" (page 1360 of the transcript). It is perfectly evi- 
 dent, however, from other testimony that was introduced, 
 and from the facts in the case, that Mr. McMillan could 
 not possibly have quoted Mr. Bangs correctly, and that 
 Mr. Bangs could have said nothing more than that Mr. 
 McMillan would get "his share," or what he needed to 
 satisfy his requirements, just the same as Armour had 
 been able to buy all that he wanted. That this interpre- 
 tation is not fanciful is corroborated by the testimony of 
 Mr. Bangs himself on pages 1308 to 1310 of the tran- 
 script, in which he denied having made such 'a statement 
 to Mr. McMillan, and by the testimony of Mr. T. F. 
 Wehner, a former hog buyer for Armour at South St. 
 
35 
 
 Paul (pages 1331-1333 of the transcript),, in which he 
 showed that there was no agreed division of receipts 
 between Swift and Armour. 
 
 Absolutely conclusive evidence that there has been no 
 agreement among the several packers to divide receipts 
 at South St. Paul is found in the following table of actual 
 percentages of cattle and hog purchases taken by the five 
 large packers at South St. Paul for each year from 1914 
 to 1918 : 
 
 Percentage of Cattle and Hogs Purchased by Each of the Five 
 Large Packers, South St. Paul, 1914 to 1918. 
 
 CATTLE. 
 
 Year Total Head Swift Armour Morris Cudahy Wilson 
 
 1914 168,487 97.4 1.0 0.2 0.2 1.2 
 
 1915 241,645 92.5 5.1 0.3 1.0 1.1 
 
 1916 286,017 85.6 9.1 1.0 0.4 3.9 
 
 1917 408,128 80.8 14.3 2.4 ... 2.5 
 
 1918 463,175 78.4 19.8 0.8 0.1 0.9 
 
 HOGS. 
 
 1914 
 
 1,380,679 
 
 75.7 
 
 23.6 
 
 0.6 
 
 1915 
 
 1,869.807 
 
 73.0 
 
 26.9 
 
 0.1 
 
 1916 
 
 2,327,000 
 
 65.0 
 
 34.6 
 
 0.4 
 
 1917 
 
 1,524,672 
 
 69.9 
 
 30.1 
 
 
 1918 
 
 1,766,218 
 
 67.1 
 
 32.9 
 
 
 This table shows that the percentages of cattle and hogs 
 bought by the different packers vary substantially from 
 year to year, and that as the live-stock receipts have been 
 increasing Swift & Company's percentage has been de- 
 creasing, while Armour's has been increasing. The per- 
 centages taken by the other three packers are insignifi- 
 cant but indicate that such purchases as they make vary 
 appreciably from year to year. 
 
 The reason why the percentages in this market have 
 not reached a greater degree of uniformity is that the 
 market is a new and growing one and that Swift & Com- 
 
36 
 
 pany is the only large packer that has a plant in South 
 St. Paul. The other packers have bought only in ac- 
 cordance with the requirements of their plants at other 
 points. When Armour's plant (now being built) gets to 
 operating, the proportions taken by Swift and Armour 
 will undoubtedly settle down to fairly constant per- 
 centages, just as they have in other markets. 
 
 At any rate the figures shown are positive evidence 
 that receipts at South St. Paul have not been divided 
 by agreement between Armour and Swift, although the 
 Federal Trade Commission tries to give the impression 
 that such a division of receipts obtains. This is a good 
 example of the Trade Commission's method of pre- 
 senting one little unsubstantiated statement in 
 order to prove its case and at the same time leav- 
 ing out a -wealth of evidence which clearly breaks 
 down its own contention. 
 
 The Situation at Omaha and Sioux City. 
 
 Pages The correspondence introduced by the Federal Trade 
 66 to 72 Commission with regard to the situation at Omaha and 
 Sioux City does not directly concern Swift & Company 
 and therefore will not be discussed in detail. It is suffi- 
 cient to point out one or two facts in connection with 
 this correspondence. 
 
 There are numerous phrases in these letters which 
 show competition; the references to "our 30 per cent.'' 
 and the instructions to buy certain percentages merely 
 indicate what the Cudahy company was accustomed to 
 purchase and was trying to maintain. There is abso- 
 lutely no evidence of collusion with other packers, or that 
 these percentages were the results of agreements. 
 
 Attention is called to the list of percentages at the 
 
37 
 
 end of the letter on page 68 of the Report, which were 
 introduced as though they were a part of the letter. A 
 footnote explains that these percentages were written 
 on the letter by an examiner of the Trade Commission. 
 When this letter was reproduced by the Trade Commis- 
 sion in its Summary of the Report on the Meat Packing 
 Industry, page 29, these percentages appeared to be a 
 part of the original letter, and no explanation was offered 
 that they had been added by an examiner of the Trade 
 Commission. The explanation in the footnote on page 
 68 of Part II of the Report does not admit the unfair use 
 made of them in the earlier report of the Commission. 
 
 The Situations at Oklahoma City, Fort Worth, 
 
 and Denver. 
 
 Pages Only two large packers are represented in each of these 
 72 to 76 three markets, and therefore the tendency is for each to 
 buy approximately the same number of animals as does 
 the other. For this reason the Trade Commission refers 
 to them as "50-50" markets. Swift & Company is not 
 interested at Oklahoma City, and the situation in that 
 market will not be discussed here. 
 
 At Fort Worth, Swift and Armour each buys about 
 50 per cent, of the receipts purchased by these two pack- 
 ers. Each plant is of about the same capacity, and so 
 far as Swift & Company is concerned we do not intend 
 to purchase less than 50 per cent, if we can possibly help 
 it. Armour & Company undoubtedly feels the same way. 
 For this reason, it works out that each gets approx- 
 imately 50 per cent. ; and yet the percentage often varies 
 substantially, as for example, the drop of Swift & Com- 
 pany's proportion of cattle purchases from 52.06 per 
 cent, in 1914 to 49.86 per cent, in 1915, according to the 
 
38 
 
 table on page 75 of the Federal Trade Commission's 
 report. 
 
 The situation at Denver is considered of extreme im- 
 portance by the Federal Trade Commission, and much is 
 made of the fact that P. D. Armour wrote a letter to 
 J. Ogden Armour, reproduced on page 76 of the Re- 
 port, in which he says : "Of course, as you know, every- 
 thing here is done on a 50-50 basis, and with the facilities 
 we have it is almost impossible to keep up this ratio." 
 The Trade Commission implies that the reference to a 
 "50-50" basis means an agreed division; whereas, it 
 merely means that each plant aims to buy at least 50 per 
 cent, of the receipts at that market, and that neither 
 wishes to see the other packer become the larger factor. 
 
 In this connection, the Trade Commission reproduces 
 on page 75 of the Report a table showing the percentages 
 of hog purchases taken by Swift and Armour, and these 
 figures indicate that each takes about 50 per cent., al- 
 though they show that in 1915 Swift bought 12,000 more 
 hogs than did Armour. It is very significant, however, 
 that the Trade Commission reproduces only the percent- 
 ages of hog purchases. It failed to reproduce figures of 
 cattle purchases, which show marked variations from 
 year to year. Swift's percentage of cattle purchases 
 was 47.6 per cent, in 1914; it increased to 48.5 per cent, 
 in 1915 ; to 50.7 per cent, in 1916 ; and to 54.7 per cent, in 
 1917. 
 
 By increasing from 47.6 per cent, to 54.7 per cent, (or 
 7.1 per cent, in all), Swift & Company increased its pro- 
 portion by 15 per cent, in three years! Armour's pro- 
 portion had b?en suffering a corresponding decline, and 
 this is undoubtedly what Mr. P. D. Armour referred to 
 when he said, "With the facilities we have it is almost 
 
39 
 
 impossible to keep up this ratio." Percentages of sheep 
 purchases show an even greater variation from rear to 
 year. 
 
 The introduction of the percentages on cattle 
 purchases would have destroyed the desired effect 
 of the "50-5O" letter on page 76. This is another 
 example of actual suppression of information on 
 the part of the Federal Trade Commission. 
 
 Conclusion on Alleged Live-Stock Pool. 
 
 pages j n conclusion the Trade Commission says that the 
 77 and 78 alleged division of live-stock receipts gives the packers 
 control over prices, and says that especially in " 50-50" 
 markets the price offered by the lower bidder becomes 
 the market price, and hence tends to reduce the market 
 price in the long run to the lowest point that will keep 
 producers raising live stock and sending them to market. 
 It is also said that this gives a power over the prices of 
 fresh meats, and that, hence, this alleged division of 
 receipts accomplishes the same purpose as the Veeder 
 pool prior to 1902. 
 
 The truth is that even if there were an agreed division 
 of receipts this would not give control over prices. If 
 the price in Denver, for example, were artificially re- 
 duced the least bit below prices based on country-wide, 
 or even the world-wide, conditions, there would be ship- 
 pers, speculators, and outside packers who are constantly 
 seeking the lowest markets, and who would immediately 
 jump in and make purchases of live stock, either to hold 
 them until the price recovered, or to ship them to other 
 markets or to their plants at other places. All stock 
 yards are open to every one who wishes to purchase, but 
 even if there were some way of keeping other buyers out, 
 
40 
 
 the price could not be depressed in such a market as 
 Denver, or any other market for that matter, because 
 within a few days no more live stock would be shipped 
 to that market. 
 
 Again, even if there were an agreed division of live- 
 stock receipts, this would give no control over meat prices 
 and would in no way accomplish the purposes of the old 
 Veeder pools. As explained above, the Veeder pools 
 were arrangements by which the total amount of fresh 
 beef to be shipped to the different Eastern markets was 
 determined from week to week, and which was to be 
 divided among the various packers. This was for the 
 purpose of avoiding gluts and scarcities in the marketing 
 of this highly perishable product. An agreed division of 
 live-stock purchases, even if such an agreement existed, 
 would in no way control the quantities of fresh beef 
 shipped to the several markets. Such an agreement, 
 even if faithfully lived up to, would not prevent gluts at 
 individual markets, and therefore would be ineffective to 
 control or regulate meat prices. There is absolutely no 
 form of agreement that affects such shipment of fresh 
 beef or of any other kind of meat. 
 
 Page 78 A t the top of page 78 of the Report, the Trade Com- 
 mission refers to "an exchange of information as to mar- 
 gins," and to "a periodical inspection of the supplies in 
 one another's coolers at the principal distributing 
 points." There is no formal interchange of information 
 as to margins. Occasionally the representative of one 
 packer might tell the representative of another that "we 
 made 'plus 30 ' last week in New York," as is shown in 
 the Sulzberger memoranda. This is merely an occa- 
 sional and informal interchange of information concern- 
 ing past occurrences, and it falls far short of formal and 
 organized methods of exchanging such information, as 
 
41 
 
 used by open-price associations (see page 28 above), 
 which apparently have the sanction of the law. 
 
 Neither is there a "periodical inspection" of the sup- 
 plies in one another's coolers. The branch house mar- 
 kets of the packers are really open markets, which any 
 person may visit, and it is true that the representative 
 of one packer often visits the branch houses of other 
 packers in order to get a line on the total stocks that are 
 available for distribution. So far as Swift & Company 
 is concerned, at least, this is not done " periodically " 
 nor according to any definite plan. If it can be impar- 
 tially and authoritatively determined that such occasional 
 inspection of competitors ' stocks is in any way unfair or 
 harmful, Swift & Company will be glad to discontinue the 
 practice. 
 
 Taken all in all, therefore^ it has been shown 1, that 
 the Federal Trade Commission fails to prove that the 
 fairly constant percentages of purchases are the result 
 of agreements among the packers; 2, that there are 
 enough instances of variation in purchase percentages, 
 as in the cases of St. Paul, South Omaha, and Denver, 
 to prove that there is no agreement to divide receipts; 
 3, that such approach to uniformity as exists is the result 
 of competitive watchfulness that each packer keeps on 
 the others ; 4, that even if there were an agreed division 
 of live-stock receipts this would carry with it no power 
 to control prices of live stock in the various markets and 
 no power to control the prices of dressed meats. 
 
42 
 
 Alleged Collusion in Live-Stock Buying. 
 
 Pages The Federal Trade Commission claims that the large 
 78 to 99 packers control the live-stock markets and fix live-stock 
 prices collusively by means of the practices known as : 
 
 "Part purchases." 
 
 ' ' Split-shipments. ' ' 
 
 "Wiring on." 
 
 " Making" the daily market. 
 
 It will be shown below in the discussion of these prac- 
 tices that : 
 
 1. The Trade Commission furnishes no evidence 
 of collusion among the packers. 
 
 2. Perfectly legitimate business practices have 
 been described in such a way as to give the impres- 
 sion that they are illegitimate and unfair. 
 
 3. In attempting to establish its case, the Federal 
 Trade Commission has used only such parts of in- 
 formation collected from Swift & Company's files as 
 appear to bear out its contentions, and it has ac- 
 tually suppressed other information which 
 controverts the contentions of the Commis- 
 sion. 
 
 Part Purchases. 
 
 Pages The "part purchase" plan is described as the method 
 78 to 84 whereby "two or more packers join in purchasing the 
 live stock of one shipper or producer, each taking a part 
 of the shipment at the same price." Letters and tele- 
 grams taken from Swift & Company's files are intro- 
 duced to show that when a shipment is purchased partly 
 by one packer and partly by another, the prices paid 
 by the two packers are commonly identical. On page 82 
 of the Report, there are assembled in table form a number 
 of such instances. The conclusion is (top of page 83 of 
 the Report) that these results could be obtained "only by 
 collusion." 
 
43 
 
 The facts of the matter are as follows : 
 
 A single shipper often sends a number of carloads of 
 cattle to market at one time, and the animals in such a 
 shipment are usually of practically the same type and 
 weight, so that naturally they ought to bring the same 
 price on any given day. Swift & Company's require- 
 ments range all the way from the very finest cattle to 
 the very poorest, and it is often impossible for us to use 
 a large number of animals of one type and weight. The 
 animals, when they are offered for sale, are placed in 
 different pens, and our buyer often bids on a certain part 
 of the total shipment, not feeling that he can use them 
 all. In making his bid and purchase he deals only 
 with the commission man and enters into no ar- 
 rangement whatever with the buyer of any other 
 packer to buy the animals in common, or to divide 
 the total shipment. 
 
 After the commission man has become satisfied that 
 he is getting the highest price obtainable, and has sold 
 a part of the shipment to one packer, he offers the re- 
 mainder, or part of the remainder, as the case may be, 
 to other packers. He naturally wishes to get at least 
 as high a price for the remainder of the shipment as he 
 obtained for the part already sold ; otherwise the shipper 
 whom he represents would be dissatisfied, knowing that 
 his cattle are of the same quality and weight and offered 
 for sale on the same day. In the majority of cases, he is 
 able to get the same price, and this accounts for the fact 
 that the prices paid by different packers on part pur- 
 chases are very often identical. 
 
 Since no packer can be expected to buy more than he 
 needs of any one type of cattle, and since the packer's 
 buyer deals only with the commission man and does not 
 connive with other packers' buyers, and since the whole 
 
44 
 
 transaction is perfectly legitimate and above-board, it is 
 perfectly obvious that the Trade Commission has wil- 
 fully described this innocent practice in such a .way as 
 to unfairly insinuate wrong-doing and collusion. 
 
 The letters and telegrams that are introduced begin- 
 ning with page 79 in the Report, are simply records of 
 completed transactions reported by one representative 
 of Swift & Company to another representative of the 
 same company, and offer no indications whatever of col- 
 lusion with other packers. They are all records of per- 
 fectly legitimate transactions transactions that con- 
 tinue today, and undoubtedly always will continue as long 
 as we make the painstaking study of market conditions 
 and prices that we find to be necessary in the efficient 
 conduct of our business. 
 
 As positive proof of the Trade Commission's desire to 
 misrepresent the facts, we submit the following letter, 
 a copy of which was taken from our files by the 
 Federal Trade Commission, but which the Trade 
 Commission failed to reproduce in its published 
 report. This letter was written when the very subject 
 of part purchases was under discussion in 1916, at a time 
 prior to the dates of most of the instances cited by the 
 Trade Commission from page 79 to page 82 of the Re- 
 port. 
 
 Chicago, April 20, 1916. 
 Mr. Louis P. Swift, 
 
 Fourth Floor. ?'&$ 
 
 Part Purchases 4/19/1916. 
 
 What they accuse us of, we understand we have never done, 
 namely, the buyer for one packer has never bought a lot of cat- 
 tle and then had the cattle divided and turned part of them over 
 to another packer. This is what they accuse us of doing, and 
 we should certainly see that it is never done. 
 
 Their proof, however, of our doing this is the account sales that 
 the shippers get from the commissionmen, showing for example 
 that of eighty cattle, forty were sold to Swift and 40 to Armour. 
 This merely means that the eighty cattle were put into two pens. 
 Swift's buyer bought one pen and Armour's the other, and we 
 should not give our buyers any instructions to discontinue this 
 
45 
 
 practice. If there were three or four pens belonging to one ship- 
 per and we wished to buy one, or two, or three, and leave the rest, 
 we should be perfectly free to do so. 
 
 Think we should, however, get this matter up squarely before 
 the official body of the commission men, tell them what we are 
 accused of doing, what we understand the facts to be, and ask them 
 if there is anything wrong with the way we handle these cases, and 
 what suggestions they have. Any agreement or instructions rela- 
 tive to our not bidding under these circumstances might be in the 
 nature of restraint of trade. 
 
 JMC-IOB J. M. CHAPLIN. 
 
 CC-ADW-RCM 
 
 This letter puts the- matter in its true light, and would 
 have completely offset the Trade Commission's conten- 
 tion of collusion if it had been included in the report. 
 It also appears that there are many other letters in our 
 files bearing on this subject, especially during 1916 when 
 the officials of Swift & Company were studying the mat- 
 ter closely because of criticisms that had been made at 
 some of the cattlemen 's conventions. The criticisms were 
 leveled principally at Fort Worth, where there are only 
 two large packers. The Trade Commisison had access 
 to this correspondence but did not take any of it. We 
 have found in our files, for example, the following letter 
 which was written by Mr. Harold H. Swift to our Fort 
 Worth manager in February of 1916, which also explains 
 the situation : 
 
 February 19, 1916. 
 Personal 
 
 Mr. J. B. Googins, 
 Swift & Company, 
 Ft. Worth, Texas. 
 Dear Sir: 
 
 There has been a good deal of talk around cattle conventions, 
 especially at El Paso, but also at other points, in reference to lack 
 of competition among buyers on the live stock markets. 
 
 This, I suppose, was somewhat aimed at Ft. Worth because of 
 there being only the two packing houses there, and along with 
 this was coupled the criticism of dividing, on which they made the 
 point that it is practically establishing one bid instead of healthy 
 competition. 
 
 I am pretty sure that the idea of buying only part of a string of 
 cattle has been confounded with the idea of dividing, although, of 
 course, I realize it is a different proposition, and, of course, our 
 buyers have positive instructions not to divide. While they do 
 sometimes buy only part of a string, on account of considerable agi- 
 tation, and the fact that the cattle men are confounding the two 
 subjects, would like you to review the general situation with our 
 
46 
 
 live stock buyers and request that they consider the policy of 
 buying all of a string when same is practical. 
 
 Of course, realize that in large numbers it is not practical for us 
 to take the whole string, but the other thing may be true, that is 
 that in smaller numbers we might just as well take the whole 
 string, and in such cases would like you to do so. 
 
 Would like you to review the general proposition with all of your 
 live stock buyers and advise me how you will handle the situation. 
 
 Awaiting .your reply, I am 
 
 Yours truly, 
 HHS-EAP HAROLD H. SWIFT. 
 
 It also appears that during the time we were paying 
 special attention to this matter in 1916, Mr. L. F. Swift 
 requested our Fort Worth manager to keep a complete 
 record from week to week of all part purchases in the 
 Fort Worth yards. We have this record from July, 1916, 
 to the present. In its tabulation on page 82 of the Report, 
 the Federal Trade Commission reports a large number 
 of instances of part purchases made at Fort Worth, and 
 the general impression is given that this is an extremely 
 common practice. Reference to our weekly record, which 
 was available to, but not used by, the Commission, shows 
 that the practice of purchasing only part of a shipment 
 is and was only occasionally resorted to. In fact during 
 the 14-month period covered by the Trade Commission's 
 instances on page 82 only about one per cent, of Swift 
 & Company's total purchases at Fort Worth were made 
 on the part-purchase plan. That is to say, the Federal 
 Trade Commission has described a perfectly proper 
 practice, (which, however, happens only occasionally), as 
 an illegitimate practice carried out in collusion with other 
 packers and as though it were a common occurrence ! 
 Page so Qne or two other points in connection with the trans- 
 actions reported by the Commission are worthy of note. 
 On page 80 of the Report the Commission reports the sale 
 of ten loads of steers shipped by A. Matthews, where it 
 is shown that six loads went to Swift at $7.75, and three 
 loads to Armour at $7.75. The original letter shows $9.75 
 
47 
 
 as the price paid by Swift & Company, and although this 
 figure in the original letter was undoubtedly incorrect, 
 the Federal Trade Commission should at least have ex- 
 plained that it changed the figure, inasmuch as the let- 
 ter is reproduced in full in its original form. 
 
 The figures shown in the tabulation on page 82 of the 
 Report are said to have been taken from "Swift & Com- 
 pany records," and there is a list of prices paid to Lan- 
 dergin Bros, for a period of about a year and a half dur- 
 ing 1916 and 1917. Swift & Company can find no trace 
 of such records in its own files. Since the weights of 
 these cattle are omitted, and since Swift & Company 
 would have kept 110 such record of an individual shipper, 
 we believe that the Trade Commission has carelessly 
 stated that the information was obtained from Swift & 
 Company, whereas it must have been obtained from some 
 other source. 
 
 Pages Tli;/ Trade Commission reproduces an exchange of let- 
 83&S4 ters an( j telegrams between L. F. Swift, President of the 
 Company, and A. B. Swift, Manager of the St. Joseph 
 plant, referring to part purchases in the St. Joseph mar- 
 ket, and trying to make out that there was collusion with 
 other packers in "dividing" receipts. 
 
 All that these letters and telegrams mean is that it 
 had been the custom for Swift & Company to purchase 
 only a part of comparatively small shipments, such as 
 those consisting of five or six cars. Mr. L. F. Swift de- 
 cided that we should buy larger quantities at a time, and 
 Page 83 issued instruct irrs that ''when cattle suit us in quality 
 and price and we need the cattle, and they are not over 
 five or six cars, he can buy them all any time but, of 
 course, v. hen the quantity is larger or the quality unde- 
 sirable, it is probably all right to only buy one-third or 
 one-half." 
 
48 
 / * 
 Perhaps the reason that the Trade Commission used 
 
 this correspondence in order to show collusion was that 
 in one of his letters Mr. L. F. Swift used the word "di- 
 viding" in referring to the purchasing of parts of single 
 shipments. This was merely careless phraseology on the 
 part of Mr. Swift. In one sense, the purchasing of part 
 of a shipment does mean the dividing of that shipment 
 with other packers, but not in the sense that our buyer 
 would connive or agree with the buyer of another packer 
 to purchase the cattle together or to divide them after 
 they were purchased. Because of his interest in the St. 
 Joseph yards, as explained above (page 32), Mr. Swift 
 has always been anxious to have shippers satisfied, and 
 he merely felt that in this case we could give the market 
 better support by buying larger "strings" of cattle than 
 had previously been our custom. 
 
 Split Shipments. 
 
 Pages The term "split shipments " refers to instances where 
 84 to 89 shippers divide their shipments between two markets. 
 The point made by the Trade Commission is that split 
 lots are sold at the same price on different markets, that 
 the packers keep a check on all such shipments and see 
 to it that the same prices are paid in the different mar- 
 kets. We are told (page 85 of the Report) that "such 
 sales represent collusion." 
 
 In our constant study of the various markets we are 
 naturally veiy much interested to know whether the 
 prices paid for cattle of the same type and weight are in 
 line with each other in different markets, and this matter 
 can best be studied in connection with shipments split 
 between Kansas City and St. Joseph, where freight rates 
 are practically the same, and where the prices, therefore, 
 
49 
 
 should be the same. All of the cases referred to in the 
 Trade Commission's report cover splits between Kansas 
 City and St. Joseph. 
 
 Prior to the spring of 1916 it is true that Swift & Com- 
 pany, when it learned of a split shipment between two 
 markets, frequently wired from one market to the other, 
 giving information of such split. This information was 
 given by one Swift buyer to another Swift buyer, and 
 there was no collusion with other packers. The letters 
 and telegrams reproduced by the Federal Trade Commis- 
 sion give absolutely no evidence of collusion. Although 
 we have been unable to see anything wrong in wiring from 
 one market to another in this way, we practically discon- 
 tinued the practice in 1916, owing to criticisms that were 
 being made. We prefer to lean backward in the matter 
 rather than to furnish grounds for dissatisfaction and 
 suspicion. During the period covered by the letters and 
 telegrams reproduced by the Federal Trade Commission, 
 therefore, Swift & Company has not been in the habit of 
 wiring from one market to another when there have been 
 split shipments. 
 
 The judgment of cattle buyers is so nearly perfect that 
 bids on cattle of the same weight and quality in St. Joseph 
 and Kansas City on the same day would naturally be very 
 nearly the same, if not exactly the same. But there is 
 another and more potent reason for the exact identity in 
 prices between these two markets, which occurs frequent- 
 ly, even when the animals are bought by two or more dif- 
 ferent packers. Many of the commission men have offices 
 in both Kansas City and St. Joseph, and when the Kansas 
 City office of a commission man learns of a split shipment 
 between Kansas City and St. Joseph markets, this Kan- 
 sas City office naturally gets in touch with the St. Joseph 
 
50 
 
 office, undoubtedly with the view of getting the same price 
 in both markets if possible. Otherwise, the shipper might 
 think that the commission man had done better for him 
 in one market than in the other, with resulting dissatis- 
 faction over the price received in the lower market. Swift 
 & Company understands that this is a common practice 
 and believes that it accounts for the frequent identity in 
 prices between these two markets. 
 
 In its tabulation on page 89 of the Report, the Trade 
 Commission presents data on a number of shipments 
 split between St. Joseph and Kansas City. Even in this 
 tabulation 23 per cent, of the cases show a slight differ- 
 ence in price between St. Joseph and Kansas City, and 
 to a man in the live-stock or packing business, it is not 
 surprising that p'rices paid in these two markets at the 
 same time should be identical in about three-quarters of 
 the cases. If the variation were any greater it would be a 
 matter of serious concern to the buying department of 
 Swift & Company. At any rate, the frequent identity in 
 prices is not evidence of collusion between the different 
 packers as explained above. 
 
 The most important feature of the Trade Commission's 
 discussion of split shipments, however, is the fact that 
 in compiling the figures for the table, which appears on 
 page 89 of the Report, the Federal Trade Commis- 
 sion used only such parts of telegrams taken from 
 our files as seemed to bear out its contention that 
 prices are identical on split shipments to St. 
 Joseph and Kansas City, and purposely omitted 
 other items in the same telegrams which showed 
 differences im prices. 
 
 To prove the truth of this statement, we submit the 
 following telegrams, copies of which were taken from 
 
51 
 
 Not used 
 by F. T. C. 
 
 our files by the Federal Trade Commission, but only parts 
 of which were used in the, tabulation on page 89 of the 
 Report. Portions which are shown in italics were not 
 used by Trade Commission. In one case it will be no- 
 ticed that the complete telegram is omitted. 
 
 St. Joseph, Mo. 2/28/1916. . 
 Leavitt 
 
 4 loads pulp fed steers account S. Karsh sold here today to Mor- 
 ' ris 133 '4# 8.20 
 ( ? loads same cattle sold K C to SdS 1324 # S.35 
 
 2 loads pulp fed steers account Prey Bros, sold here today to 
 Hammond 1276# 8.15 
 
 2 loads same cattle sold KG today S&S 1274 # 8.15 
 Copy to LFS EFS CHS 
 
 Vance 
 
 Not used 
 by F. T. C. 
 
 Not used 
 by F. T. C. 
 
 Not used 
 
 Ingwersen 
 
 St. Joseph 6/16/1915 
 
 We bought 2 loads Gebhardt & Son Colorado steers here today 
 average 1311 # at 8.65 3 loads same sold KG today 1302 # 8.15 
 to Morris with 3 cattle out at 1.50 Morris bought here today 7 
 loads Oklahoma natives account Vancellous average 1191 # at 8.45 
 9 loads same cattle sold KG today 1249 # 8.35 with 2 out at 7.50. 
 Copy to LFS EFS CHS 
 
 Vance 
 
 St. Joseph 2/21/1916 
 Leavitt 
 
 2 loads pulp cattle account Ludlow sold here today to Hammond 
 1398# 8.00 
 
 2 loads same cattle sold K C today to Armour 1404 # 8.00 
 We bought here today 3 loads pulp cattle account Prey Bros. 
 1294 # 8.00 3 loads same cattle sold K C today to Morris 130 /# 
 I 7.95 ' 
 
 Copy to LFS EFS CHS Vance 
 
 St. Joseph 8/25/1915 
 Leavitt 
 
 We bought 4 loads Russell & W cattle here Tuesday 875 # 6.90 
 4 loads same cattle sold Kansas City to Cudahy 885 # 6.90 
 f 1 load By water cattle here Tuesday sold Morris 1370 # 9.10 
 
 by F. T. C. \ 2 loads these cattle sold K C to S&S 1288# 8.90 
 Copy to LFS EFS CHS Tamblyn 
 
 Not used 
 by F. T. C. 
 
 St. Joseph 1/18/1916 
 Tamblyn 
 
 3 loads pulp cattle here Monday account James Bros, sold Ham- 
 mond 1087 # 7.75 
 
 3 loads same cattle sold K C to Cudahy as follows: 
 2 loads 1159# 7.50 
 
 1 load 1051 # 7.60 
 
 4 loads Miller Bros., Westerns sold here Monday as follows: 
 
 2 loads Swift 1030# 6.90 
 
 2 loads Morris 1046# 6.90 
 
 4 loads same cattle sold K C as follows: 
 
 3 loads Swift 1058# 6.90 
 
 1 load feeder buyers 945 # 7.00 
 Copy to LFS EFS CHS Ingwersen 
 
52 
 
 In conclusion, with regard to split shipments, it 
 has been shown that the Federal Trade Commission de- 
 scribed a perfectly legitimate practice as though it were 
 a means of collusion between the packers, and that in 
 .trying to show that the prices are the same on split ship- 
 ments, it actually omitted parts of telegrams, which show 
 differences in price. Finally, in explaining the fact that 
 prices are frequently identical, the Commission omitted 
 the true explanation, which it could have known, and 
 should have known, if it had really studied both sides of 
 the question. 
 
 Wiring On. 
 
 Another form of alleged collusion between the packers 
 i s fa e claim that when cattle are received in one market 
 and the seller or commission man is not satisfied with the 
 price, and consequently ships them to another market, the 
 buyer in the first market wires the buyer in the second 
 market, notifying him the price that he offered. The 
 Trade Commission claims that this is done for the pur- 
 pose of discouraging the forwarding of cattle from one 
 market to another, and the Commission specifically says 
 (bottom of page 89 of the Report) that "the packer buy- 
 ers at the second market bid at prices no greater and often 
 less than those offered the shipper at the first market, 
 thus causing him to lose the freight and shrinkage in the 
 weight of his stock. ' ' 
 
 The discussion of this matter furnishes one of the most 
 glaring instances of perversion of fact and actual sup- 
 pression of data taken from packers ' files to be found in 
 Part II of the Trade Commission's Report. 
 
 The practice of wiring on is in itself perfectly legiti- 
 mate. Suppose a buyer for Marshall Field & Company, 
 located in New York, were offered a bill of goods at a price 
 
53 
 
 which he was unwilling to pay. The seller of these goods 
 decides to go to Chicago and approach a Marshall Field 
 buyer there. The New York buyer naturally wires the 
 Chicago buyer, stating the price that he has offered. 
 
 Although Swift & Company has always realized that 
 there is nothing wrong in this practice, it practically dis- 
 continued it in the spring of 1916, due to criticisms and 
 suspicions on the part of shippers. The Federal Trade 
 Commission undoubtedly knew of this action, and at least 
 could have known of it, but did not mention it in its re- 
 port. 
 
 It should be noted that all of the telegrams reproduced 
 by the Trade Commission, from pages 90 to 93 of the 
 Report, with the exception of the first one on page 90, 
 are not examples of wiring on at all. They are merely 
 records of completed transactions, letters sent out after 
 the animals have been received and sold in the second 
 market, merely to give market information that all our 
 buyers are interested in. 
 
 The apparent object of introducing these telegrams is 
 to bear out the Trade Commission's statement that "the 
 packer buyers at the second market bid at prices no 
 greater and often less than those offered the shipper at 
 the first market." In the main, the telegrams that are 
 reproduced bear out this contention, but the important 
 point is that the Trade Commission purposely 
 omitted several letters which were taken from 
 Swift & Company's files, but which show higher 
 prices paid in the second market than were bid in 
 the first market. 
 
 The following are examples of such letters and 
 telegrams, which were taken from our files by the 
 Trade Commission but were not reproduced in the 
 
54 
 
 report. They absolutely controvert the statement 
 made by the Federal Trade Commission at the bot- 
 tom of page 89: 
 
 Chicago, Nov. 7, 1917. 
 Mr. Charles H. Swift, 
 General Office. 
 
 Dear Sir: 
 
 Barse forwarded from Ft. Worth Saturday, the 3rd, 15 loads grass 
 steers, sold St. Louis as follows: 
 
 Bid Ft. Worth Saturday, the 3rd. Sold St. Louis Nov. 7th. 
 
 15 loads grass steers 7.00 238 cattle 712# 7.65 Morris 
 
 held at 7.50 120 " 721# 7.65 Armour 
 
 91 " 727# 7.65 Swift 
 Yours respectfully 
 
 WL*PS (Sgd) W. Leavitt 
 Copy to LFS EFS 
 
 November 16th, 1917. 
 Mr. Charles H. Swift, 
 General Office. 
 
 Dear Sir: 
 
 Referring to my letter of Nov. 14th reporting on 2 loads natives 
 forwarded from St. Joseph Nov. 13th billed W. F. Clay, please cancel 
 this letter and substitute the following: 
 
 2 loads W. F. Clay cattle arrived Thursday from St. Joseph and 
 were sold at Chicago Nov. 16th as follows: 
 
 Bid on St. Joseph market 11/13 Sold Chicago 11/16 
 
 2 loads natives avg. ard. 1350# 11.75 2 loads natives 1300# 13c 
 
 With 2 out @ 12c 
 Yours respectfully, 
 
 ES (Sgd) W. Leavitt 
 
 LFS EFS 
 
 Chicago, Dec. 31, 1917 
 Mr. Charles H. Swift, 
 General Office. 
 
 Dear Sir: 
 
 S. Nelson, speculator, shipped from St. Paul Thursday, the 27th, 
 one car cattle; sold Chicago Monday, the 31st, as follows: 
 
 Bought St. Paul Thursday 12/27 Sold Chicago Monday 12/31 
 
 23 cattle 8.75 15 steers 918# 9.25 Daniels 
 
 4 cows 897# 7.50 Armour 
 
 3 cows 883 # 6.00 
 
 1 bull 600# 7.00 Libby 
 Yours respectfully, 
 
 WL*PS (Sgd) W. Leavitt 
 
 Copy to LFS EFS 
 

 Chicago, Oct. 25, 1917 
 Mr. Charles H. Swift, 
 General Office. 
 
 Dear Sir: 
 
 Place & Geritts forwarded from Milwaukee Wednesday, the 24th. 
 3 loads steers sold Chicago today as follows: 
 
 Bid Milwaukee 10/24 Sold Chicago 10/25: 
 
 f> i steers 
 10 steers 
 
 WL*PS 
 Copy to LFS EFS 
 
 9L25 
 7.50 
 
 1 load 
 1 " 
 
 1 " 
 
 9.85 Kellar 
 9.75 
 10.00 Swift 
 
 Yours respectfully, 
 
 (SgdJ W. Leavitt 
 
 Chicago, June 23, 1916 
 Mr. Charles H. Swift, 
 General Office. 
 
 Dear Sir: 
 
 Landers & Hess forwarded from St. Louis Wednesday, the 21st, 
 one car native steers sold Chicago as follows: 
 
 Bid St. Louis June 21st Sold Chicago June 23rd 
 
 one load native steers bid 9.40 1 load native steers 9.75 S&S 
 
 Afterwards could not get price. 
 
 Prey Bros, forwarded from St. Joseph Tuesday, the 20th, 3 loads 
 pulp cattle sold St. Louis as follows: 
 
 Bid St. Joseph Monday 6/19 Sold St. Louis Wednesday 6/21 
 
 3 loads pulp cattle 9.25 
 Held at 9.50 
 
 S*PS 
 
 Copy to LFS EFS 
 
 3 loads pulp cattle 1158# 9.00 
 Morris 
 Yours respectfully, 
 
 (Signed) W. Leavitt 
 
 Chicago, June 26, 1916 
 Mr. Charles H. Swift, 
 General Office. 
 
 Dear Sir: 
 
 Clay Robinson forwarded from Omaha Thursday, the 22nd, 4 
 loads cattle sold here today: 
 
 Bid Omaha Thursday, the 22nd 
 4 loads good heavy dehorned 
 
 Sold Chicago Monday, the 26th 
 
 white faced steers 10.50 
 
 S*PS 
 
 Copy to LFS EFS 
 
 4 loads good heavy dehorned 
 white faced steers 10.65 S&S 
 with one steer out at 9.50 
 
 Yours respectfully, 
 
 (Signed) W. Leavitt 
 
56 
 
 Chicago, Sept. 27th, 1916 
 Mr. Charles H. Swift, 
 
 General Office. 
 Dear Sir: 
 
 National forwarded from St. Louis Tuesday, Sept. 26th, 2 loads 
 native steers sold Chicago today as follows: 
 
 Bid St. Louis Sept. 26th Sold Chicago Sept. 27th 
 
 3 cars 50 native steers 9.25 50 1162 # 9.50 Armour 
 
 Afterwards could not get price 
 
 Yours respectfully, 
 
 (Signed) W. Leavitt 
 LFS EFS 
 
 Chicago, Nov. 24, 1916 
 Mr. Charles H. Swift, 
 
 General Office. 
 Dear Sir: 
 
 Moody Com. Co. forwarded from St. Louis Thursday, Nov. 23rd, 
 to Chicago the following cattle: 
 
 Bid St. Louis Nov. 23rd Sold Chicago Nov. 24th 
 
 34 native ylg. cattle 6.25 13 steers 1045# 7.10 Wilson 
 
 15 ylg. cattle 754# 6.35 Swift 
 
 6 " " 754# 6.00 " 
 Yours respectfully, 
 LFS EFS f Signed) W. Leavitt 
 
 Chicago, May 11, 1917 
 Mr. Charles H. Swift, 
 
 General Office. 
 Dear Sir: 
 
 Johnson Bruber forwarded from St. Paul May 9th 26 steers as 
 follows: 
 
 Bid St. Paul May 9th Sold Chicago May llth 
 
 26 steers speculators 10.50 with 5 out 26 steers 11.10 Morris 
 
 which did not bid Thursday's market 
 
 Gall Bros, forwarded from St. Paul May 10th 1 car 22 steers as 
 follows: 
 
 Bid St. Paul May 10th Sold Chicago May llth 
 22 steers 10.75 22 steers 11.50 Morris 
 
 Yours respectfully, 
 
 LFS EFS (Signed) W. Leavitt 
 
 Chicago, June 27, 1917 
 Mr. Charles H. Swift, 
 
 General Office. 
 Dear Sir: 
 
 Austin, Hamil. and Dickson forwarded from St. Joe Monday, 
 June 25th, 3 cars natives as follows: 
 
 Bid St. Joe 6/25 Sold Chicago 6/27 
 
 2 loads weigh 1600# 13.45 3 loads 1480 # 13.65 
 
 1 " 13.55 Armour 
 
 Yours respectfully, 
 LFS EFS (Signed) W. Leavitt 
 
57 
 
 Chicago, August 8, 1917 
 Mr. Charles H. Swift, 
 
 General Office. 
 Dear Sir: 
 
 Milton Marshall forwarded August 7th from St. Louis 2 cars 
 native steers as follows: 
 
 Bid St. Louis 8/7 Sold Chicago 8/8 
 
 2 cars native steers 12.60 2 cars native steers 13.00 Swift 
 
 Yours respectfully, 
 LFS EFS (Signed) W. Leavitt 
 
 By introducing these communications Swift & Company 
 does not mean to give the impression that prices paid in 
 the second market on forwarded shipments are ordinarily 
 higher than the prices paid in the first market. As a mat- 
 ter of fact, if the cattle are judged correctly, and if the 
 market does not change in the meantime, the forwarding 
 of shipments from one market to another would ordi- 
 narily result in loss to the shipper. The Chicago price, 
 for example, is higher than the Omaha price, but the 
 difference between the two is not equal to the full cost of 
 freight plus sufficient allowance for shrinkage of animals 
 in transit. Other items, such as the cost of hauling 
 dressed meat, are factors in the competitive determina- 
 tion of market differentials. 
 
 In conclusion, with regard to wiring on, it has again 
 been shown that the Trade Commission has resorted to 
 the suppression of data taken from our files, which con- 
 trovert its own contention; that it has described a per- 
 fectly legitimate practice as though it were illegitimate; 
 and that it has charged the packers with collusion, with- 
 out introducing a single bit of evidence that such col- 
 lusion exists. 
 
 Alleged "Making" the Daily Market. 
 
 The charge is that "the big packers act in concert to 
 make and control the market." The evidence given in 
 support of this charge is principally that the market on 
 
58 
 
 any given clay does not settle down to a definite, price 
 until the large packers send their buyers out into the 
 yards, and that these buyers of the large packers fre- 
 quently stay off the market until 10 or 11 o'clock, or until 
 even after the noon hour. It is also alleged that when 
 the packers enter the market late in the day the buyers 
 of all the different companies go out into the yards at the 
 same time. 
 
 As for staying off the market until late in the fore- 
 noon, we admit that this has occasionally been done, and 
 that naturally we have sometimes held off in this way 
 with the hope of buying live stock at a, lower price. There 
 are some days when we are loaded up with all the live 
 stock we want, or when the markets for dressed meats are 
 in bad condition, so that we know that we have got to 
 buy stuff cheaper if we possibly can, in order to make 
 our normal profit of a fraction of a cent a pound in dis- 
 posing of our product. Under such conditions, there' are 
 many times when we should prefer not to buy live stock 
 at all. and it is only the need of taking care of our es- 
 tablished trade, and our assuming of a moral responsi- 
 bility to do our share in clearing the market of live stock 
 from day to day that makes us willing to purchase at 
 all. We are really under no legal or moral obligation to 
 begin buying at 8 o'clock in the morning; there is no rea- 
 son why we should not enter the market until 2 o'clock 
 in the afternoon if the prevailing prices appear unwar- 
 ranted, or if we do not need material to keep our plants 
 operating. We naturally buy animals at as low a price as 
 possible; otherwise we should not make our fraction of a 
 cent per pound profit and we should have to go out of 
 the packing business. 
 
 There is one other important reason for late buying, 
 however, that the Federal Trade Comniission does not 
 
59 
 
 mention, and one that has been particularly important 
 within the past two years when live-stock receipts have 
 been extremely heavy, and transportation conditions have 
 been more or less chaotic. The reason is that frequently 
 a substantial portion of the receipts, especially at Chi- 
 cago, is not unloaded by the railroads until well into the 
 forenoon, and that therefore it is rather late in the day 
 before the commission men have the animals watered and 
 fed and ready for sale. Under such conditions, Swift & 
 Company generally prefers to wait until all or nearly all 
 of the live-stock is ready for sale, because in buying for 
 our day's requirements, we want to have a chance to in- 
 spect all of the offerings. A situation of this sort is illus- 
 trated by the telegram reproduced on the middle of page 
 98 of the Report, signed "Garry," where it says "50 cars 
 back will go slow on balance." This shows that there 
 were still 50 cars of hogs to be unloaded, and that the 
 buyer would therefore postpone his buying. 
 
 It is perfectly natural that the commission men should 
 sometimes be dissatisfied to have the large packers enter 
 the market late, and it was their feeling on this score that 
 prompted their protest back in 1916, reproduced on pages 
 94 and 95 of the Report. As a result of that protest, and 
 informal protests of a similar nature, Swift & Company 
 has tried to make it a point within the past few years 
 to have its buyers go out into the yards at an earlier 
 hour than formerly, even when there was little for them 
 to do, and when a large portion of the day's receipts 
 was not ready for inspection. Swift & Company is will- 
 ing, and has always stood ready, to do whatever is reason- 
 able in order to satisfy the demands of commission men 
 and shippers in a case of this sort. 
 
 As for the charge that the buyers of the different pack- 
 ers appear on the market at the same, or approximately 
 
60 
 
 the same time, whenever this happens it is not the re- 
 sult of collusion. Each packer keeps a close watch on the 
 day's receipts and knows when a sufficient number has 
 been unloaded from the cars and is ready to be bid on, 
 and each packer also keeps a close watch on the buying 
 activities of the other packers. Where packers have 
 been holding off the market until 10 or 11 o'clock in the 
 morning, the appearance of the buyers of one packer is 
 usually the signal for the buyers of the other packers 
 to go out through the pens in order to make their bids 
 on the offerings of the day. Otherwise, the buyers of 
 the first packer who enter the market are likely to pick 
 up some of the choicest offerings of the day. 
 Page 96 The telegrams, reproduced on pages 96 to 99 of the 
 Report, show nothing that is illegitimate and contain 
 absolutely no evidence of collusion between the different 
 packers. The first telegram, on page 96 of the Report, is 
 particularly worthy of mention as it indicates how care- 
 lessly the Trade Commission went into this matter, and 
 how carefully it avoided the obtaining of true explana- 
 tions of the material presented in the Report. 
 
 This telegram reads as follows: 
 
 Feb. 22nd 18 
 17 JC 
 
 Hogs opened 40/50 higher trying buy steady yesterday average. 
 
 Swift. 
 
 It is explained tha't "17 J C M is "apparently a code 
 address," and that "It amounts to an instruction to 17 
 J C to buy steady." The interesting features of this 
 telegram and explanation are that "J C" stands for 
 Jersey City; that the telegram was ordinary market in- 
 formation that we send to our Jersey City plant regu- 
 larly; that Jersey City buys no hogs, and that the hogs 
 killed there are bought in the West and shipped to that 
 point, (except occasionally a few that are bought direct 
 
61 
 
 in Buffalo) ; and that, therefore, the telegram 
 "instruction" at all. Furthermore, if it had been 
 struction to "try to buy steady," there would have been 
 nothing illegitimate even then ! 
 
 We might go on and analyze each of the telegrams ap- 
 pearing on pages 96-99 of the Report, and show that these 
 represent nothing but perfectly legitimate practices which 
 go on from day to day, and which will necessarily con- 
 tinue in the future. The Trade Commission apparently 
 bases its charge of collusion largely on the fact that one 
 telegram, signed "Olson," (middle of page 96 of the Re- 
 port), contains the phrase "packers trying for steady." 
 This does not mean that there is any collusion among 
 the packers. It merely means that the sender of this 
 telegram knew, from his observation of the activities on 
 the market on that particular day, that not only his com- 
 pany, but also the other companies, were trying to buy 
 at prices that had prevailed on the previous day, rather 
 than to buy at the higher price at which the market had 
 opened. 
 
 Although it is of course true that since the large pack- 
 ers are the principal buyers, their bids have the greatest 
 influence in establishing the price from day to day, it is 
 not mentioned by the Trade Commission that the price 
 goes up as frequently as it goes down. In fact, during 
 the past few years the general tendency has been decid- 
 edly and conspicuously upward. There is absolutely noth- 
 ing wrong in having our head buyins* office at Chicago 
 instruct our buying offices in other markets as to how 
 many animals they shall buy, or at what price they shall 
 "try" to buy them. The only possibility of harm is 
 through agreement or collusion among the different pack- 
 ers, and although the Trade Commission says that there 
 
62 
 
 
 is such collusion it offers absolutely no evidence that 
 
 such is the case, and it is unable to cite a single 
 instance where the price has been collusively 
 manipulated either up or down. 
 
 To a person in the packing business it seems absurd 
 to have to explain at all the Trade Commission's dis- 
 cussion of " making " the daily market. It has been 
 shown, however, that the Commission has described per- 
 fectly legitimate practices in such a way as to make it 
 appear that the packers have some arbitrary power to 
 fix the market price, and that they have acted in col- 
 lusion in making their purchases, without giving a sin- 
 gle bit of evidence to corroborate this contention. 
 
 International Meat Pool. 
 
 Pages ^his matter can be disposed of with a few words : first, 
 99 to 107 because it is not particularly germane to the question of 
 combination among the packers in the United States, 
 and second, because there are no arrangements concern- 
 ing shipments from South America which are not clearly 
 . legal, and open and above-board. 
 
 The charge is that the large packers have a "com- 
 bin^tion" with certain British and South American com- 
 panies to regulate and divide shipments of beef and mut- 
 ton to the United States, and certain foreign countries, 
 particularly England. 
 
 The charge that there is such an agreement to regulate 
 shipments to the United States is untrue. The charge 
 that there is such ah agreement to regulate shipments 
 from South America to England has a certain basis of 
 truth. 
 
 The truth of this matter is that for several years the 
 large American packers have had arrangements with each 
 
63 
 
 other and with certain foreign companies providing for 
 the proportion of total shipments that each should carry 
 between South America and England. Such a division 
 of business was not only justifiable because it helped to 
 make more regular the receipts of perishable meats in 
 England, but the arrangement itself, made necessary 
 largely by the lack of adequate boat space, was not secret, 
 and was countenanced by British law. Furthermore, this 
 arrangement is similar to the form of co-operation specifi- 
 cally permitted by the recent Webb Bill, which is intended 
 to encourage co-operation in exportation on the part of 
 competing firms in the United States. 
 
 As for the alleged control of shipments from South 
 America to the United States, the following are the facts : 
 
 Before the European war began and after the United 
 States import duty on fresh meat had been removed, 
 Swift & Company (through the Swift Beef Company of 
 London) made a contract with the Lamport & Holt Steam- 
 ship Company (a British company) providing for a cer- 
 tain amount of space to be used by Swift & Company in 
 shipments from South America to the United States. 
 Such a contract was made necessary by the fact that 
 there had been practically no refrigerated shipping space 
 in the South America-New York trade, and that iJfm- 
 port & Holt was the only line to equip itself with the 
 necessary refrigerated vessels to give regular service. 
 This contract was made independently by Swift & Com- 
 pany, and does not represent in any way an agreed di- 
 vision of shipments with the other packers. Shipments 
 to the United Stat- s have been limited only by amount 
 of steamship space offered, and Swift & Company has 
 continuously been in the market for all space obtainable. 
 
 Our London representatives have always been under 
 instructions not to enter into agreements with other pack- 
 
64 
 
 ers involving division of shipments to the United States. 
 During the war, because of insufficiency of refrigerated 
 vessels, there have been no shipments of refrigerated 
 meat from South America to the United States, and ship- 
 ments to England have been controlled by the British 
 Government. 
 
 With this explanation in mind, the extracts taken from 
 the Sulzberger memoranda, reproduced on pages 100 to 
 106 of the Report, appear more or less absurd when of- 
 fered by the Trade Commission as evidence of combina- 
 tion. In fact, there are parts of these extracts which 
 clearly show that the contracts made by the different 
 packers for shipping space to the United States were 
 made independently. For example: at the top of page 
 103 of the Report, Mr. Sulzberger notes that the Swift & 
 Company contract with the steamship line gave Swift 
 "one-third of total space/' and that he "thought this a 
 little excessive for Swift." In other words, Swift had 
 gone ahead and made a contract with the steamship com- 
 pany without reference to Mr. Sulzberger 's wishes in 
 the matter. Again, at the bottom of page 103 of the Re- 
 port, Mr. Sulzberger introduces a table showing the per- 
 centage of shipments to the United States made by each 
 packer, and he- introduces the table with the statement 
 "I stated that the United States shipments as arranged 
 figured about as follows, which figures ; ^ere made note 
 of." This shows that the other packers had not figured 
 out what the percentages were, and that therefore the 
 latter could not have been based on an agreement. 
 
 Another evidence of competition in foreign business is 
 found at the bottom of page 1 05 of the Report, where Mr. 
 Sulzberger infers, from remarks mada by a representa- 
 tive of Armour & Company, that that company had a 
 "Special contract" with the British Government, and 
 
65 
 
 that Armour asked him not to mention the special con- 
 tracts, as they were unknown to all ; and that Swift es- 
 pecially "does not know of them." This indicates that 
 each packer was making the best arrangements that he 
 could irrespective of the desires of the other packers. 
 
 Although the Trade Commission introduced this evi- 
 dence as though it were complete and final with regard 
 to the arrangements on foreign business, the Commission 
 itself is apparently a little skeptical about the conclu- 
 siveness of the data reproduced in the report. This is 
 evident from the manner in which it closes its discussion 
 on page 107 of the Report, where it says that ' * The Black 
 Book memoranda * * * are not a complete account 
 of negotiations." As a matter of fact, these extracts 
 from the Sulzberger memoranda refer to occasional and 
 informal exchanges of information between Mr. Sulz- 
 berger and other individual packers. It has been ex- 
 plained that there has been no agreement affecting ship- 
 ments to the United States, and that such other arrange- 
 ment as there has been, allocating boat space for ship- 
 ments from South America to England, was not only 
 justified from an economic point of view, but also per- 
 fectly right from a legal standpoint. 
 
 Alleged Collusion in Selling Meat Products in the 
 United States. 
 
 Page 107 j n trying to make out a caso that the large packers 
 act in collusion in selling dressed meat, the Trade Com- 
 mission falls back on its old explanation that the alleged 
 division of live-stock purchases covers the amount of 
 dressed meats that each packer will have for sale ; it says 
 that inspection of one another's branch-house stocks en- 
 ables the packers "to prevent an over-supply of fresh 
 meat in any market"; that prices are kept uniform by 
 
66 
 
 th3 exchange of information as to "margins" on the sale 
 of meats; and that retail butchers find "no perceptible 
 difference in the prices charged by the different big pack- 
 ers/' It also explains that there is "rotation in price 
 cutting/' in order to drive small packers out of business. 
 
 It has been explained that there is no agreed division 
 of live-stock purchases, and that even if there were this 
 would not involve the allocation of shipments of dressed 
 meat to the different markets, and would therefore have 
 no effect on meat prices. It has also been explained that 
 Swift & Company does not make periodical inspection 
 of stocks in competitors' branch houses, but that occa- 
 sionally visits are made in order to obtain a better idea 
 of meat stocks available for sale. 
 
 As for the interchange of margins, correspondence is 
 introduced on pages 110 to 114, which shows that occa- 
 sionally one packer has received, directly or indirectly, 
 results achieved by other packers on past transactions 
 in various markets. We can see no harm in such oc- 
 casional and informal interchange of information. There 
 is certainly no harm done if a representative of Swift & 
 Company tells a representative of Armour & Company 
 that we made a certain margin on our sales in Boston the 
 previous week. Such occasional exchange of information 
 is nothing as compared with the organized method of col- 
 lecting and exchanging such information's practiced in 
 many trades under the form of open-price associations. 
 (See page 28 above.) 
 
 The Trade Commission introduces the statement that 
 retail butchers found "no perceptible difference in the 
 prices charged by the different big packers," (bottom of 
 page 107 of the Report), as though this were proof that 
 the packers sold at agreed prices. This statement 
 
67 
 
 illustrates both a lack of grasp of economic phenomena, 
 and an omission of pertinent and salient facts which 
 really destroy the contention that the Trade Commission 
 tries to establish. 
 
 In the first place, the fact that prices become approx- 
 imately identical in any one market is the result of com- 
 petition. Every person who has studied economics knows 
 that in a well-organized market-place competitive buy- 
 ing and selling and competitive watchfulness bring about 
 practically a single price at any one time for products 
 of the same kind and quality. On the other hand, com- 
 petition does not work out perfectly in this way in the 
 meat markets, and although prices charged by the differ- 
 ent packers in the same market are approximately the 
 same, there are sufficient variations to cause retail butch- 
 ers to shop around from the branch house of one packer 
 to the branch houses of the others, so that they can buy 
 their meat to the best advantage. If they did not find 
 differences in price for the same qualities of meat, it 
 would not be worth their while to spend as much time as 
 they do in shopping around. This fact was not men- 
 tioned by the Federal Trade Commission. 
 
 Page 108 The Trade Commission tries to give the impression 
 that the large packers exert a control over prices through 
 the use of their " general men." It is true that the dis- 
 trict managers of large sales organizations have to keep 
 a close watch on prices, shipments, and profits, but they 
 in no way have agreements with other packers, and their 
 principal duty is to see that our own selling houses get 
 the best price they can for their products. The fact that 
 we take losses so frequently on fresh meats is in itself 
 sufficient evidence that our sales representatives do not 
 collusively control the price of meat. The diagram on 
 pages 30 and 31 of the 1919 Swift & Company Year 
 
68 
 
 Book, for example, shows that during the year ended 
 June 30, 1918, we either made no money, or actually lost 
 money on our sales of beef and beef by-products in 19 
 out of the 52 weeks. 
 
 A letter from R. C. McManus to H. B. Collins, repro- 
 duced at the bottom of page 108 of the Report, gives an 
 entirely wrong idea of the motives involved in writing the 
 letters. It will be explained below (pages 84 to 91), that 
 we have been doing our utmost to prevent agreements 
 among our local agents in buying cream. This letter is 
 merely an evidence of one attempt that we made back in 
 1915 to prevent such agreements. It was entirely unfair 
 for the Trade Commission to reproduce this letter by 
 itself detached from other correspondence on the same 
 subject, such as that appearing on pages 147 to 154 of 
 the Report. 
 
 On page 110 of the Report it is said that the " large 
 packers buy a great deal of fresh meat from each other, " 
 and that the object is "to even up the supply between 
 themselves or to keep prices at a high uniform level. ' ' It 
 is perfectly true that the packers often buy fresh meat 
 from each other, but the Trade Commission gives no 
 evidence that the object of this practice is to keep prices 
 at a "high uniform level"; and the Trade Commission 
 fails to present the true explanation of this perfectly 
 legitimate practice. As a matter of fact, each packer has 
 a certain established trade which he wants to take care 
 of, and if he is short of a certain quality or weight of 
 goods, he naturally buys them of another packer who has 
 nn ample supply. This is commonly done in all trades, 
 and in no way represents a form of collusion, or an at- 
 tempt to regulate supply so as to affect prices. 
 
69 
 
 Alleged Collusive Action Toward Small Com- 
 petitors. 
 
 Pages 114 ^he Trade Commission charges that the large packers 
 
 to118 act collusively with or against small packers, either by 
 
 having agreements with them as to prices, or by taking 
 
 turns in reducing prices in order to drive them out of 
 
 business. 
 
 The alleged price agreement at Los Angeles, described 
 at the bottom of page 114 of the Report, does not involve 
 Swift & Company, as we have no packing plant in that 
 city. As for the charge that there is an agreement at 
 Tacoma, Washington, where the Union Meat Company is 
 concerned, it will be noticed that the Trade Commission 
 offers no real evidence of the existence of any such agree- 
 ment, and Swift & Company can only deny that to the 
 best of its knowledge any agreement exists. The extent 
 to which the Trade Commission goes in trying to estab- 
 lish its case is illustrated by the statement that small 
 packers at Philadelphia regularly telephoned to the 
 branch houses of the large packers to secure their price 
 quotations, "which they closely followed." This is, of 
 course, a very common practice, and in no way shows 
 collusion. 
 
 The Trade Commission makes a positive statement 
 that the large packers take turns in cutting prices in or- 
 der to drive small competitors out of business, and on 
 page 116 of the Report, introduces testimony of one 
 Charles H. May,, Manager of the Farmers' Co-operative 
 Packing Co., of Madison, Wisconsin. A careful analysis 
 of this testimony shows that it is utterly inadequate as a 
 proof of rotation in price cutting. It will be seen that Mr. 
 May testified that during a single week the Plankinton 
 Co. (a Swift concern) was selling beef at a low price, and 
 
70 
 
 that Armour & Company was underselling the other 
 packers on pork. During the following week, Mr. May 
 said that "I haven't the exhibit of it, * * * but 
 'Cudahy did all the beef business in Madison." 
 
 We fail to see how this can be considered as -evidence 
 of rotation in price cutting. It is the commonest thing 
 in the world for one packer to undersell the others on 
 some particular product with which he may be loaded up 
 and which he has to move. To single out two weeks, 
 and to show that during the first, two packers had the 
 low prices on two different products, and that during the 
 second a third packer had the low price on beef, without 
 even introducing any evidence that this was true, does 
 not seem to us to constitute . sufficient evidence to make 
 such a serious charge, especially as Swift & Company 
 does not and would not resort to this practice, if for 
 no other reason than that we know the practice to be 
 illegal. 
 
 The charge that there is rotation in price cutting in 
 Salt Lake City (page 117 of the Report) is entirely un- 
 supported by evidence, and we are tempted to suggest 
 that if such evidence as the Trade Commission may have 
 in its possession were introduced, it would furnish no 
 better evidence of price cutting by agreement than is 
 introduced in connection with its charge that there is 
 " rotation in local price cutting * * * at San Antonio, 
 Texas." This evidence, beginning at the middle of page 
 117 of the Report, contains a statement by one local 
 packer that " These big fellows seem to be taking turn- 
 about at selling very cheap," and we are further in- 
 formed that the local managers of Armour & Company 
 and -Swift & Company have complained that the plants 
 often shipped them a great deal more meat than they 
 ordered, with the result that thev have had to reduce 
 
71 
 
 the prices in order to move their stocks. In the first 
 place, it will be seen that not even the small packer at 
 San Antonio has evidence that there is rotation in price 
 cutting, and in the second place it should be explained 
 that the shipment of larger supplies than are 
 ordered by local managers is a very common oc- 
 currence with Swift & Company all over the coun- 
 try, and in no way indicates or results in illegitimate 
 price cutting. The sum total of estimated requirements 
 as reported to our plants by our branch-house managers 
 may provide an outlet for only two-thirds of our total 
 supplies of meat, and we naturally have to give them 
 more than they want in order to move these supplies, 
 even if the local managers have to reduce prices in order 
 to induce greater consumption. 
 
 We repeat that this is pretty slim evidence for the 
 Trade Commission to use as a basis' for such a serious 
 charge that we take turns with other packers in re- 
 ducing meat prices so as to drive out small competitors. 
 On careful analysis, the Trade Commission's case falls 
 to the ground through lack of evidence. In addition to 
 this, Swift & Company absolutely denies that it ever 
 makes any arrangements with other packers to take turns 
 in cutting prices. 
 
 The California Situation. 
 
 + 
 
 Pages 118 The Federal Trade Commission claims that in Cali- 
 to 131 fornia there is collusion among the packers in the pur- 
 chase of live stock, and that there are "understandings 
 with reference to the prices to be paid" (page 119 of the 
 Report) ; and also that there is collusion in the sale of 
 meat products, particularly through the device of division 
 of territory. Although much correspondence is intro- 
 duced in support of these charges, it will be shown below 
 
that a careful analysis discloses no evidence of agree- 
 ments to control prices, and that there are portions of 
 this correspondence which clearly indicate the existence 
 of active competition. 
 
 It should be understood that in California the 
 method of purchasing live stock is different from that 
 used east of the Rockies. The packers purchase most of 
 their animals by sending buyers out to the ranches, and 
 by negotiating direct with the owners ; there are no public 
 stock yards to which animals are consigned in the care 
 of commission men. There is, therefore, no open market 
 place where live-stock values can be reported from day 
 to day, with the result that there is no such authentic and 
 wide-spread market information available as there is in 
 the organized live-stock markets of the Middle West. 
 This lack of authentic market information has to be 
 overcome to a certain extent by exchange of information 
 among the packers by means of private correspondence. 
 This system of keeping posted on the market has its dis- 
 advantages and is far inferior to the system of price 
 reporting in eastern markets, where outside market re- 
 porters can observe the prices that are being paid, as 
 well as the receipts of live stock ; and yet, in the absence 
 of any such open price-reporting system, the interchange 
 of information among the packers in the West yields 
 some benefit in steadying prices, in stabilizing the re- 
 ceipts at the different markets, and in making it possible 
 for the buyers of the different packers to estimate future 
 needs and future supplies. 
 
 On pages 119 and 120 of the Report the Trade Com- 
 mission introduces letters which show that the various 
 packers exchange information as to the receipts of live 
 stock, and that the Union Meat Company of Portland, 
 
73 
 
 and the Western Meat Company of San Francisco, ex- 
 change weekly data on live-stock purchases and prices. 
 
 An analysis of these letters shows that the informa- 
 tion given is merely a record of past occurrences and 
 transactions, and that there is nothing in them which 
 even suggests an agreement as to prices to be paid or 
 as to division of receipts in the future. Such interchange 
 of information is analogous to the methods employed by 
 open-price associations, as described on page 28 of this 
 document. We believe that it is beneficial to both the 
 packing and live-stock industries in California for the 
 packers to have such information, and we can see no 
 reason why this practice should be discontinued. 
 
 In the exchange of letters between the Western Meat 
 Co. and the Cudahy Packing Co. in June, 1915 (pages 120 
 and 121 of the Report), the phrase, "so we can work in 
 harmony with you with a view of getting prices down to 
 where they really belong"- (top of page 121 of the Re- 
 port) seems at first blush to contain a suggestion of col- 
 lusion in fixing prices. A careful reading of the other 
 parts of the letter, together with the reply from the 
 Western Meat Co., shows that the suggested harmony 
 was with regard to the question as to whether heavy hogs 
 should be purchased in Idaho at $1.00 or at 50 cents 
 under "the regular weights." That is to say, the ques- 
 tion concerned the differential between the price paid in 
 Idaho and the basic San Francisco price. The Western 
 Meat Co. replied that it "could not very well buy the 
 heavy weights less than |c lower," and said that it was 
 buying hogs in Idaho, not from the raisers themselves, 
 but from shippers who did not tell the Western Meat 
 Co. what the hogs were costing them. The Western 
 Meat Co. did not agree to work in harmony even with 
 respect to what the Idaho differential on heavy hogs 
 
74 
 
 should be, and there is absolutely no evidence in these 
 letters that there was any agreement with respect to the 
 prices themselves. 
 
 Again, at the top of page 122 of the Report, it appears 
 as though there may be collusion in the division of cattle 
 between the Western Meat Co. and the Cudahy Packing 
 Co. The Western Meat Co. refers to the cattle owned by 
 "Mr. Fuller," discusses the probable value of these cat- 
 tle, and suggests that if Cudahy does not need them, the 
 Western Meat Co. " could probably use some of them 
 very nicely. " 
 
 The explanation of this matter is that it has been gen- 
 erally understood for a number of years that Mr. Fuller 
 has been working closely with Mr. Cudahy, and that, in 
 fact, Cudahy has helped to finance the operations of Mr. 
 Fuller, and that Cudahy, therefore, had the preference on 
 all his cattle. The Western Meat Co. knew that there 
 would be no chance to purchase the Fuller cattle unless 
 the Cudahy Packing Co. did not want them. We can see 
 no harm in such a suggestion on the part of the Western 
 Meat Co., under these circumstances. 
 
 In the same letter, the Western Meat Co. asked if the 
 "Oxnard cattle " had been sold. The Western Meat Co. 
 merely asked for this information because it could not 
 have buyers everywhere, in order to keep posted on the 
 situation. 
 
 The references to prices in these letters are merely 
 exchanges of opinions, and in no way constitute an agree- 
 ment as to what prices shall be. It should be especially 
 noted that at the top of page 122 of the Report the West- 
 ern Meat 'Co. says that " whether they (prices) go lower 
 or not will depend entirely on how many are offered, as 
 the demand for beef is less than last year regardless of 
 
75 
 
 the Exposition." This clearly indicates that the price 
 is a competitive one, based on conditions of supply and 
 demand. 
 
 In the three letters on pages 123 and 124 of the Report 
 there is nothing but an interchange of information as to 
 transactions that had been carried out and of opinion 
 as to future prices. Attention is called to the statement 
 of the Western Meat Co. near the top of page 124 of 
 the Report, that u we are able for the first time in several 
 months to show a small favorable margin on beef." This 
 statement shows that there could have been no control of 
 prices, and that the packers had paid for cattle all that 
 they were worth, and even a little more than they were 
 w,orth in the form of dressed meat and by-products. If 
 the Trade Commission could offer one single instance 
 where the prices had been manipulated, either up or 
 down, or where prices were controlled so as to yield the 
 packers inordinate profits, there would be more founda- 
 tion for its accusations. 
 
 The letter on page 125 of the Report was written by 
 a representative of one of the small packing concerns, in 
 which none of the five large packers is interested. This 
 letter asks if it would not be possible to agree to buy hogs 
 "on a delivered basis." This is merely a suggestion that 
 the packers adopt a uniform method of quoting prices, 
 and does not suggest the fixing of the prices themselves. 
 Xear the end of this letter, however, there is a sugges- 
 tion that a definite price be arranged, but we call atten- 
 tion to the Western Meat Co.'s letter, signed F. L. W., 
 at the top of page 126 of the Report, in which it is de- 
 clared : 
 
 "As far as having any understanding on the price that is to be 
 paid for hogs, we would not care to be restricted in this manner, 
 as besides being contrary to the spirit of the time, there is always 
 the possibility that it might make bad friends." 
 
76 
 
 In other words, the only suggestion contained in all 
 this correspondence of anything like an agreement affect- 
 ing prices was promptly turned down by the Company in 
 which members of the Swift family own stock. Further- 
 more, there is no evidence that this suggestion was ever 
 carried out among the other packers involved. The let- 
 ter quoted above was written before the Federal Trade 
 Commission had begun its investigation of the affairs 
 of the Western Meat Co. 
 
 In commenting on the correspondence presented on 
 pages 127, 128, and 129 of the Eeport, the Trade Commis- 
 sion alleges that there is evidence of an understanding 
 that there shall be no price cutting, and that each packer 
 shall respect the sales territory of the other. The letter 
 at the top of page 127 of the Report contains a complaint 
 from the representative of the Western Meat Co. that 
 another packer is selling at extremely low prices, but he 
 specifically says : * 1 I, of course, have no suggestions to 
 make as to what prices your people should get." The 
 reply at the bottom of page 127 of the Report indicates a 
 willingness to refrain from cutting prices, and asks for 
 the Western Meat Co. 's price list. Nothing in this letter 
 can be construed to mean that there was agreement to 
 secure the same prices that were being charged by the' 
 Western Meat Co. Anybody is welcome to the Western 
 Meat Co.'s price list, and it is sent freely to competitors 
 as well as to dealers. 
 
 The Western Meat Co. has apparently felt that it is 
 overstepping neither the spirit nor the letter of the law 
 when it has complained that a competitor is unnecessarily 
 cutting prices, especially when such price cutting is sub- 
 versive of sound business conditions in a territory where 
 over-competition has been" more or less disastrous to all 
 concerned. At any rate, such complaints as are found in 
 
77 
 
 these letters are accompanied by no evidence that any 
 agreements resulted, and as a matter of fact the West- 
 ern Meat Co. has carefully refrained from having such 
 agreements, either as to prices or as to division of ter- 
 ritory. 
 
 In the letter at the bottom of page 127 of the Report, 
 the Pacific Coast Beef and Provision Co. complains of a 
 report that the Western Meat Co. of San Francisco is 
 going to ship beef to Los Angeles, and in the reply on 
 page 128 of the Report, the Western Meat Co. replies 
 that it is looking for no " extra places to lose money on 
 fresh meats," and explains that practically nothing has 
 been sold in Los Angeles. This letter also asks whether 
 Cudahy is go ing to "put in fresh meats at their new 
 branch house (at Fresno), as this might make considera- 
 ble difference in regard to our policy of keeping out of 
 Los Angeles." This might appear as though the West- 
 ern Meat Co. had some agreement to keep out of 
 Los Angeles. The fact is that the Western Meat Co. has 
 always shipped intermittently to Los Angeles when there 
 was any money in this business, and that it never agreed 
 not to do so. The quotation given above shows that the 
 Western Meat Co. did not know of Cudahy 's plans and 
 that information was merely being sought. This in 
 itself indicates lack of agreement to divide territory. The 
 reference to "keeping out of Los Angeles" implies no 
 agreement to do so, and in fact indicates the Western 
 Meat Go's, intention to sell goods in Los Angeles when- 
 ever it so desires. 
 
 The letter from the Cudahy Packing Co. to the Western 
 Meat Co., reproduced on page 130 of the Report, is sup- 
 posed to contain evidence that there must be a division 
 of territory, because Cudahy, located in Los Angeles, had 
 declined an order for ribs and loins in San Francisco. 
 
78 
 
 not caring to go "beyond the limits of our own terri- 
 tory." As a matter of fact, it rarely pays a Los Angeles 
 packer to ship fresh meat to San Francisco, because of 
 the freight rate that has to be paid, and Cudahy volun- 
 tarily gave information to the effect that he did not care 
 to ship goods to San Francisco, even though he had just 
 received "an inquiry "; the reference to "our own ter- 
 ritory " means merely the usual or customary territory, 
 as limited by freight rates, that is served from Los 
 Angeles, and does not refer to any agreed division of 
 territory. 
 
 In the letter at the top of page 131 of the Report the 
 representative of the Western Meat Co. at Fresno, Cal- 
 ifornia, complains to the San Francisco office of that 
 company that the Los Angeles branch of Swift & Com- 
 pany has been selling to the Terra Bella Mercantile Co., 
 of Terra Bella, and asks when Swift & Company was ac- 
 corded permission to do so. This can refer to nothing 
 but the division of territory that is made between the 
 branch houses of Swift & Company in San Francisco and 
 Los Angeles. These two selling houses representing the 
 same company must necessarily have an agreement as 
 to just which territory each shall cover. The Western 
 Meat Company's agent apparently had his hands full 
 because of competition from the San Francisco branch 
 house of Swift & Company, and naturally felt incensed 
 when he found he had the Swift & Company Los Angeles 
 house also to contend with in this particular locality. 
 It was perhaps his idea that the Western Meat Co. 
 might have influence with Swift & Company to prevent 
 competition from the Los Angeles branch. The West- 
 ern Meat Co. did not feel that it had such influence, as 
 is evidenced by the following reply to the letter under 
 
79 
 
 discussion, copy of which was taken by the Federal Trade 
 Commission, but which was not reproduced in its report : 
 
 Jan. 22, 1915. 
 Mr. G. A. Karr, 
 Fresno, Cal. 
 Dear Sir: 
 
 Replying to yours of the 20th inst., with reference to Swift & 
 Company, Los Angeles, selling Terra Bella Merc. Co., at Terra 
 Bella. 
 
 It would not be expedient for us to engage in a controversy with 
 them over selling in this town and consequently will not take up 
 with them about it. We are sure that our prices compare favorably 
 with those quoted by Swift & Company and you need have no fear 
 of their prices being lower than your own. 
 Yours respectfully, 
 
 WESTERN MEAT COMPANY. 
 
 Provision Dept. Per 
 
 WH-SS 
 
 In concluding our discussion of the California situa- 
 tion, we also wish to reproduce another letter written by 
 the President of the Western Meat Company to sub- 
 managers on September 4th, 1917, copy of which, in sub- 
 stantially the same language, was sent to all the branch- 
 house managers of that company. Although this let- 
 ter was written shortly after the Food Control law was 
 passed, and while the Federal Trade Commission inves- 
 tigation was in progress, it is worthy of note that sim- 
 ilar letters of instructions have always been sent out at 
 irregular intervals in order to show the policy of the 
 company, and in order to keep all managers from de- 
 parting from this policy. Copy of this was taken 
 from the files of the Western Meat Co. by the Fed- 
 eral Trade Commission, but it -was not reproduced 
 
 in the Report: 
 
 Sept. 4. 1917. 
 Mr. M. D. Gallagher, 
 Mr. E. R. Patterson. 
 Mr. W. Haaker, 
 Mr. E. G. Evens, 
 Gentlemen: 
 
 I write to caution you against having any understanding as 
 regards buying or selling with any of our competitors, either in the 
 fresh meat, produce, provision or inedible lines. It has always been 
 our policy to work on these lines, and I am merely calling your 
 
80 
 
 attention to this fact, so that the policy of the company will be' fully 
 confirmed in your minds. 
 
 A new food production bill provides for prison sentences of from 
 two to five years for offenses of this nature, which are particularly 
 aggravating in war times, and furthermore, heavy fines can be 
 levied in addition to the prison sentences. 
 Kindly acknowledge receipt. 
 
 Yours respectfully, 
 
 F. L. WASHBURN. 
 
 Swift & Company fails to find evidence in this Califor- 
 nia correspondence of any illegal or uncommercial collu- 
 sion among the packers in California with regard to 
 the fixing of prices or the division of territory. On the 
 other hand, we have shown that even in the correspond- 
 ence reproduced by the Trade Commission there are pos- 
 itive evidences of the real competition that exists; and 
 we have also shown that interchange of opinion as to 
 prices and receipts is necessary because of the absence 
 of open public market places and the current market in- 
 formation that is available when there are such market 
 places. 
 
81 
 
 ALLEGED AGREEMENTS IN OTHER LINES. 
 
 Pages 132 ^he Trade Commission claims that it has evidence 
 to 158 O f an agreement among the large packers to fix the price 
 of lard substitute, that there is division of territory and 
 joint manipulation of prices in the purchase of cheese, 
 that there are similar agreements in the purchase of but- 
 ter, cream, poultry, and eggs, and that there are also 
 "collusive and unfair practices" in the rendering busi- 
 ness. 
 
 There is perhaps no part of the Trade Commission's 
 report which is so replete with misconstruction of facts 
 or where there are such glaring instances of suppression 
 of correspondence taken from our files and of other data 
 which show the baselessness of the Commission's conten- 
 tions. 
 
 The Real Facts About Alleged Lard Compound 
 
 Agreement. 
 
 Pages 132 ^\ s evidence of an agreement to fix the price of lard 
 to 134 compound the Federal Trade Commission introduces 
 letters passed between representatives of Armour & Com- 
 pany relative to the situation at Pittsburgh, Pennsylva- 
 nia. These letters refer to the fact that the price charged 
 by all competitors on this product has been the same 
 "since Jan. 14th" (top of page 133 of the Report), and 
 that in another place it is said ' i Everybody 's price must 
 be the same as your's" (page 133). The last letter on 
 this subject (top of page 134), after referring to "com- 
 petitors ' prices being identical, ' ' ends with the remark : 
 "Also, you might destroy this letter on the subject." 
 On their face these letters look rather damaging, and 
 
82 
 
 without any further explanation, which the Trade Com- 
 mission does not give, they certainly seem to indicate 
 that there had been an agreement to fix prices. Whether 
 the Trade Commission had the facts or not we do not 
 know; at any rate, the Commission could have had the 
 proper explanation if it had not been so intent on mak- 
 ing out a case against the packers by presenting only 
 one side. 
 
 The truth about this matter is as follows : 
 
 These letters were written beginning with January 
 24th, 1918. The United States Food Administration had 
 begun to exercise its control over food matters during 
 the previous fall, and one of the first commodities over 
 which it exercised its authority was cotton-seed oil, out 
 of which lard compound is made. The manufacturers of 
 these commodities were brought together at the request 
 of the Food Administration in order to stabilize the 
 price of cotton-seed oil; a definite price was agreed on 
 as well as a differential over the price of oil which should 
 apply to lard compound. In other words, the fixed price 
 of lard compound, of -which the Trade Commission 
 complains, was determined at the request of, and 
 in co-operation with, the Government itself. This 
 fact is not mentioned by the Federal Trade Com- 
 mission in its report. 
 
 The Trade Commission places considerable importance 
 on the fact that one of these letters contains the phrase 
 "You might destroy this letter on the subject." Al- 
 though Swift & Company, of course, does not know just 
 why an Armour official should have issued such instruc- 
 tions, we should naturally guess that it was because the 
 Armour man was afraid that the letter might be seized 
 by the examiners of the Federal Trade Commission and 
 
83 
 
 used in an unfair and misleading way. If this was the 
 motive of the Armour official, subsequent events certainly 
 proved that his fear was not without foundation. 
 
 Further details about the negotiations between the 
 Food Administration and the manufacturers of lard com- 
 pound and cotton-seed oil, together with the resulting in- 
 structions as issued by the Food Administration, may be 
 found in the testimony of Mr. J. Ogden Armour before 
 the House Committee on Interstate and Foreign Com- 
 merce, Jan. 21, 1919.- 
 
 Alleged Collusion in Cheese Business. 
 
 Pages 134 Xone of the correspondence introduced by the Fed- 
 to 144 era } Trade Commission on this subject was taken from 
 the files of Swift & Company, 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 1918-1919), 
 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 & Company 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 " packer-controlled" firm, because 
 this firm sells 80 per cent, of its output to Swift & Com- 
 pany. It is true that we buy very heavily of this concern, 
 
84 
 
 with whom we have had very satisfactory relations ; but 
 it is not true in any sense that this firm is controlled by 
 Swift & Company. The alleged control of this firm is made 
 use of by the Federal Trade Commission in an attempt 
 to show collusion between Armour & Company and Swift 
 & Company, by introducing into the reproduction of a 
 letter from Armour & Company's files (bottom of 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 Com- 
 mission 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 cKeese business, Swift & Com- 
 pany also wishes to state that we buy over 90 per cent, 
 of our Wisconsin cheese purchases from wholesale deal- 
 ers, 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 con- 
 spiracies with other packers or dealers to affect cheese 
 quotations or to divide territory in any way whatsoever. 
 
 Alleged Agreements in Creamery and Butter In- 
 dustry. 
 
 Pages 144 The Federal Trade Commission claims that there is a 
 to 154 division of territory among the big packers in the buy- 
 ing of cream, which is used for making butter, and that 
 there are price agreements among the local buyers and 
 agents of the packers who gather cream at country points 
 for shipment to our butter factories. 
 
 In support of the first claim, the Trade Commission 
 
85 
 
 says that out of 1,561 creameries, condensaries, and cream 
 stations, reported to the Commission, 1,262 belong to 
 Page 145 Swift and 293 to Armour, and that "there are only 29 
 towns where cream buying stations of two or more packer 
 groups are located." This is supposed to imply a division 
 of territory. 
 
 In the first place it should be noted that the number 
 of Armour cream-buying stations is very small as com- 
 pared with the number of Swift stations. These cream- 
 buying stations are located principally at small country 
 points, and there are tens of thousands of such points 
 where the packers might have representatives to buy 
 cream. It is only natural that in developing a system 
 of cream-buying stations, one packer should prefer not to 
 establish a buying agency at the same shipping point 
 where another packer has already become established, 
 especially when there are so many thousands of places 
 that may be selected. That Swift and Armour are both 
 represented in only 29 towns, especially when Armour is 
 located at only 293 places in all, cannot possibly be con- 
 sidered evidence that there is an agreement to divide 
 territory. 
 
 Furthermore, Swift and Company's method of as- 
 ' sembling produce is substantially different from that em- 
 ployed by the other packers. We rely largely on our 
 own country plants, which collect, prepare, and ship these 
 products ; the other packers buy more heavily from other 
 dealers. This in itself indicates that it would be prac- 
 tically impossible to divide territory; and as a matter 
 of fact, Swift and Company has no agreement with other 
 packers for this purpose. 
 
 As for the question of agreement among local cream 
 buyers, this matter requires preliminary explanation 
 
86 
 
 before the correspondence introduced by the Trade Com 
 mission can be properly understood. In obtaining cream 
 at country points, Swift & Company employs agents who 
 assemble the cream brought in by surrounding farmers 
 and ship it to Swift & Company, receiving a commission 
 for their services. These agents are men who are gen- 
 erally in other lines of business. They are often pro 
 prietors of local stores, or they may be cash buyers of 
 poultry and eggs on their own account, who are acting 
 as agents for Swift & Company only in the purchase of 
 cream on a commission basis. 
 
 In many cases there are two or more such cream buyers 
 in a single town, and there are also cream buyers at ship- 
 ping points within a radius of ten or fifteen miles, to any 
 of which the farmers may haul their cream, depending on 
 the prices offered by these different cream buyers. 
 
 It is perfectly obvious that the prices paid by compet- 
 ing cream buyers in the same town or in the same general 
 locality must be substantially, if not exactly, the same; 
 otherwise, the buyer who offers, say 1 cent less per pound 
 for butter fat, will get no business, and he has to fall 
 in line with his competitors in order to hold his' trade. 
 On the other hand, if his price is too high, he gets the 
 business, but loses money on it. Because of this situa- 
 tion, it has always been very common for competing 
 cream buyers to keep themselves informed as to the prices 
 their competitors are paying. 
 
 This was the situation which confronted Swift & Com 
 pany when it entered the business, and is the situation it 
 has had to contend with in the development of local cream- 
 buying stations. We have employed agents who are rep- 
 resentatives of Swift & Company only in the sense that 
 they receive a commission for such cream as they gather 
 
87 
 
 and ship to us; they have always been in the habit of 
 keeping themselves posted. as to prices paid for cream 
 by other buyers in the same town or nearby towns; 
 and in the very nature of the case, the prices offer- 
 ed by these local cream buyers must be, and neces- 
 sarily will be, substantially identical, even though the 
 buyers are severe and jealous competitors of each other. 
 One other complicated feature of the situation is that 
 some states have "anti-discrimination laws/' which pro- 
 hibit one company from paying different prices for cream 
 or other products at different points within the state, 
 except as differences are justified or made necessary by 
 differences in transportation rates. The object of such 
 legislation is to prevent price cutting in single localities 
 for the purpose of driving competitors out of business. 
 
 We have therefore been up against the problem of 
 preventing price agreements in localities where prices 
 are bound to be practically the same, even if there is no 
 agreement, and at the same time of preventing differ- 
 ences in prices in different localities, as required by State 
 laws, except as such differences are justified by trans- 
 portation rates or are necessary to meet competition. 
 
 A careful analysis of the correspondence introduced 
 (pages 147 to 154 of the Report) show^s the difficulties we 
 have met in dealing with this situation, and shows at the 
 same time the positive efforts we have made to prevent 
 local price agreements among our country cream buyers. 
 The matter is written up in such a way by the Fed- 
 eral Trade Commission as to imply that we are con- 
 sciously having our agents enter into agreements with 
 competitors, and that we are trying to cover up the mat- 
 ter by admonishing and instructing our agents to be care- 
 ful in the phraseology of their correspondence. In this 
 connection, the Trade Commission has failed to 
 
88 
 
 reproduce certain letters that it took from our 
 files which more clearly define our real attitude 
 and policy than any of those which are actually 
 reproduced in the report. 
 
 As an example of the Trade Commission's unfairness 
 in this respect, it failed to reproduce the following pos- 
 itive instructions that were issued to our representatives 
 on Feb. 15, 1915, copy of which was available to the 
 Commission, and which shows our definite attempts to 
 prevent price agreements. Similar instructions were is- 
 sued from time to time. 
 
 No. 331 
 Legal Buying 
 February 15, 1915. 
 Produce Instructions. 
 
 1. Managers should keep in mind the fact that buying prices and 
 
 selling prices should be based on value, taking into consid- 
 eration quality, freight rates and competitive conditions. 
 Attention is directed to the so-called Anti-discrimination laws 
 under which uniform prices must be paid. While these are 
 construed to permit variations to meet legitimate competi- 
 tion, the conditions must be extreme to induce Managers to 
 make such variations. 
 
 2. Managers must not, under any circumstances, enter into any 
 
 agreements, verbal or written, restricting competition in any 
 manner, or dividing territory with competitors or in any man- 
 ner threatening or seeming to threaten shippers. Any acts 
 that might be so construed should be avoided. 
 
 3. Anything that might tend to affect the Company from a legal 
 
 standpoint, should be called to the attention of the Produce 
 and Legal Departments, with all the facts that can be gath- 
 ered concerning them. 
 
 Another evidence of the unfairness with which the Trade 
 Commission handled this matter is shown by the method 
 in which general instructions issued by Mr. L. F. Swift, 
 ordering compliance with the old Supreme Court injunc- 
 tion of 1903, are introduced at the bottom of page 149 of 
 the Report. This incident is explained as though it were 
 a special precaution taken by Mr. Swift at the time of 
 the introduction of resolutions in Congress calling for an 
 investigation of the packing industry. As a matter of 
 fact, these instructions, based on the 1903 injunction, 
 
89 
 
 have been issued periodically by Mr. Swift to all heads 
 of departments at intervals of about six months for many 
 years. This matter was explained, and the instructions 
 reproduced, on pages 11 and 12 above. 
 
 An attempt is also made, as on page 150 of the Report, 
 to intimate that auditors have been employed merely for 
 the purpose of going about among our agents in order to 
 destroy incriminating evidence. The truth is that one 
 of the duties of our traveling auditors has been to 
 check up the operations and correspondence of our repre- 
 sentatives in order to. prevent the actual occurrence of 
 collusive practices. This is clearly shown by the letters 
 reproduced at the bottoms of pages 148 and 151 of the 
 Report. 
 
 It is also significant that in reproducing the letter of 
 March 9th, 1916, on page 151 of the Report, the Federal 
 Trade Commission failed to reproduce the following let- 
 ter of April 3rd, which was written by the head of our 
 Produce Department to two sub-managers in the depart- 
 ment, which again explains our attitude and efforts, and 
 copy of which was actually taken from our files by the 
 Federal Trade Commission. 
 
 April 3, 1916. 
 Messrs. J. Y. Marshall 
 L. E. Dunker 
 
 Question of Making Agreements Other Produce Dealers. 
 
 Want you to take up especially with each Manager, assistant 
 manager, you visit, the question of making agreement of any 
 character. 
 
 You fully understand our requirements in this matter. The 
 Managers are all under instructions from Mr. L. F. Swift, covering 
 the matter. We desire you to further handle as follows: 
 
 Explain to them clearly that they have been thoroughly in- 
 structed in this matter and any deviation from these instructions 
 will revert against them in person. 
 
 You are to thoroughly and clearly explain to them that if for 
 any reason they have a conversation with other dealers, they are 
 not to make any statements of any character that could be construed 
 as an agreement and unless this is fully understood by them and 
 unless this is followed to the letter, we shall find it necessary to 
 instruct them that no conversations of any character are to be had 
 
90 
 
 r 
 
 with any other dealers that touch any feature of the produce busi- 
 ness. 
 
 You are to make a definite memorandum of this conversation with 
 each of these managers, showing the date thereon and hold same in 
 your files as permanent record and responsibility is placed with you 
 to see that interview of this character is had with every manager 
 of the produce plants under your direction, within reasonable time. 
 HBC*R 
 
 It will be seen that in this letter the manager of our 
 Produce Department said that it might be necessary to 
 instruct our agents not to hold "conversations of any 
 character * * * with any other dealers that touch 
 any feature of the produce business. " That is to say, we 
 were trying so definitely to prevent our agents from 
 entering into price agreements that we were thinking of 
 instructing them to not even talk with other dealers about 
 the produce business. Again, on page 147 of the Re- 
 port, the Trade Commission introduces a letter written to 
 Mr. H. B. Collins on September 10, 1915, but fails to 
 reproduce the reply written by Mr. Collins on September 
 20, copy of which was taken from our files by the Federal 
 Trade Commission and which clearly explains our atti- 
 tude: 
 
 Sept. 20, 1915. 
 Mr. R. C. McManus, 
 Legal Dept. 
 
 Answering your letter of Sept. 10th: 
 
 I may be mistaken, but I do not believe there is anything about 
 these letters that proves clearly illegal. 
 
 Considering the number of agents we have, unless we say to them 
 they are not under any circumstances to have conversation of any 
 character with their competitors, there will be more or less com- 
 munications reaching our creameries from these agents. 
 
 What do you think of instructing managers, as well as our trav- 
 eling representatives, that where they receive a communication, 
 either by telephone or by letter, from an agent, which shows any 
 . trace of getting together, or making agreement with, a competitor, 
 that they are to be written a clear letter, specifically mentioning 
 the communication, stating to them that under no circumstances 
 are they to make an agreement, and that they are making them- 
 selves criminally liable by so doing. 
 
 Believe this would have the effect 
 
 1st Of stopping possibility of their making agreement. 
 
 2nd It would make our records clear. 
 
 Awaiting your reply. 
 Produce Dept. 
 HBC EJH Desk A. 
 
91 
 
 Finally attention is called to the letter of September 1, 
 ]916, page 153 of the Report, which shows that because of 
 the difficulties we were having in preventing our cream 
 agents from entering into local agreements, in spite of 
 positive efforts we had been making in that direction, 
 we thought of actually doing away with cream agents in 
 Missouri, where we were having the most trouble, and 
 also of carrying out a similar policy in other states if it 
 worked out satisfactorily in Missouri. 
 
 In conclusion, it is obvious from the foregoing dis- 
 cussion that the Federal Trade Commission not only 
 misrepresented the facts w r ith regard to the cream- 
 buying situation at country points, but that it also 
 actually suppressed pertinent and relevant corre- 
 spondence which it took from our files. The insinuation, 
 which carries the weight of positive assertion in the 
 minds of those who do not understand the matter, is that 
 Swift & Company was sanctioning local price agreements, 
 whereas a true interpretation of the correspondence re- 
 produce'd in the Commission's report, and especially of 
 the correspondence which the Trade Commission failed 
 to reproduce, shows that Swift & Company was doing its 
 best to prevent illegal price agreements. Swift & Com- 
 pany doubts if any other concern has made such definite 
 effort* to cope with this difficult situation. 
 
92 
 
 Alleged Division of Territory in Poultry, Egg, and 
 Butter Buying. 
 
 Pages 154 j n introducing its discussion of this subject, the Fed- 
 
 to 156 era } Trade Commission says that in 1917 the five large 
 
 packers "had a control estimated in the trade to be over 
 
 65 per cent, of the dressed poultry and eggs shipped in 
 
 the United States and are also large shippers of butter." 
 
 If the Trade Commission wished to show what per- 
 centage of the trade in these products is handled by the 
 five large packers, it should have been more accurate in 
 the presentation of figures. In the first place, it should 
 not have gone to "the trade " for an estimate, because 
 substantially accurate data were available. Estimates in 
 the trade are particularly unreliable, especially as many 
 dealers are prejudiced against the large packers who 
 are their principal competitors, and who naturally have 
 an exaggerated notion of the part played by the large 
 packers. To give the impression that the packers con- 
 trol over 65 per cent, of the trade in poultry and eggs 
 is absolutely misleading. In the first place, they do not 
 together u control" any part of the trade, because they 
 are in keen competition with each other; and second, be- 
 cause even if they did work together, they would handle 
 nothing like 65 per cent, of the total. 
 
 The following table shows the total production of 
 poultry, eggs, and butter in the United States in 1918, 
 according to the latest reports of the United States De- 
 partment of Agriculture; the proportion entering trade 
 channels, as estimated by the Bureau of Markets of the 
 same government department ; the volume handled by 
 Swift & Company, the largest dealer in these products; 
 and tjie proportions of total production and of total 
 amount entering trade channels handled by Swift Com- 
 pany: 
 
93 
 
 PROPORTION OF POULTRY, EGGS, AND BUTTER HANDLED BY 
 SWIFT & COMPANY, 1918. 
 
 (000 omitted.) 
 
 Com- 
 modity 
 
 Total 
 Production 
 U. S. 
 
 Amount Entering 
 Trade Channels 
 
 Handled b> 
 
 Swift & Company 
 
 Quantity 
 
 Per Cent 
 Total Pro- 
 duction 
 
 Per Cent 
 Total 
 Entering 
 Trade 
 Channels 
 
 Per Cent 
 (a) 
 
 Quantity 
 
 Poultry 
 
 589,000 head (b) 
 1,767,000 Ibs. (c) 
 
 75.0% 
 
 1,325,250 Ibs. 
 
 79,000 Ibs. 
 
 4.5% 
 
 6.0% 
 
 Egg* 
 
 1,921,000 doz. (b) 
 2,881,500 Ibs. (d) 
 
 75.0% 
 
 1,440,750 doz. 
 2,161,125 Ibs. 
 
 91,620 doz. 
 137,000 Ibs. 
 
 4-8% 
 
 6.3% 
 
 Butter (el 
 
 1,475,000 Ibs. (f) 
 
 71.3% (ft) 
 
 1,051,250 Ibs. 
 
 61,600 Ibs. 
 
 4.2% 
 
 5.9% 
 
 (a) Percentages estimated by Bureau of Markets, U. S. Dept. of Agriculture letter 
 dated 1-21-19. 
 
 b Report of Secretary of Agriculture, 1918 page 8. 
 (c) Average weight estimated at 3 Ibs. each. 
 
 d 1 Yi Ibs. per doz. (30 doz. to case, 45 Ibs. to case). 
 
 (e) Creamery and Dairy. 
 
 (f) Figures furnished by Bureau of Markets, United States Dept. of Agriculture 
 
 letters dated 1-21-19, 2-18-19. 
 
 (g) Based on estimates of Bureau of Markets (Note a), 95 per cent for creamery and 
 
 45 per cent for dairy butter 
 
 It will be seen from this table that Swift & Company 
 handles only about 6 per cent, of the total poultry, eggs, 
 and creamery butter sold in the United States. The 
 Trade Commission could undoubtedly have obtained the 
 figures from other packers, and could have arrived at an 
 accurate estimate of the proportion handled by the five 
 large companies. Since Swift & Company is the largest 
 dealer in these commodities, and since two or three of 
 the large packers handle relatively small quantities, it 
 would be impossible to show more than 15 or 20 
 per cent, at the outside, as the proportion handled 
 by the five large packers. Contrast this with the 
 65 per cent, mentioned by the Federal Trade Com- 
 mission, which is given the semblance of authori- 
 tativeness by its issuance by a Government depart- 
 ment. Such disregard for accuracy is indeed sig- 
 nificant. 
 
94 
 
 
 
 As for the alleged division of territory in buying of 
 these products, the fact that the large packers do not 
 have buying stations to any extent at the same shipping 
 points is not in any way evidence of collusion. The ex- 
 planation for this situation is the same as that given for 
 the location of cream-buying stations, on pages 85 and 86, 
 above. The only evidence that the Trade Commission 
 offers that there must be a division of territory is a let- 
 ter reproduced on page 156 of the Report, in which an 
 official of Swift & Company refers to "each town in 
 our territory. " This phrase means absolutely nothing 
 so far as division of territory is concerned; it is merely 
 a common method of referring to the parts of the coun- 
 try where we habitually buy produce. 
 
 Although the existence of other firms in the poultry, 
 butter, and egg business is recognized on page 156 of the 
 Report, the Federal Trade Commission gives an entirely 
 wrong impression as to the importance of these other con- 
 cerns. As a matter of fact, there are hundreds of large 
 dealers in these products, located both in producing sec- 
 tions, and in large consuming centers, and in a great 
 many sections of the country the part played by the large 
 packers is insignificant as compared with the total busi- 
 ness. 
 
 Alleged Combinations in the Rendering Business. 
 
 Pages 156 ^ Q Federal Trade .Commission attaches considerable 
 
 to 158 significance to the fact that companies organized for the 
 
 ;. rendering of fats from dead animals, or from the waste 
 
 collected from retail stores, are owned by the packing 
 
 interests, that these concerns have exclusive rights in 
 
 the markets where they are located, and that they have 
 
 made extortionate profits. 
 
95 
 
 So far as rendering companies located at stock yards 
 are concerned, it is practically necessary for there to be 
 only one company at each yards in order to properly dis- 
 pose of the dead animals that arrive. This is due to 
 the fact that the business is really sufficient to support 
 only one company, and also to the fact that it is practically 
 impossible to get prompt and efficient service in the col- 
 lection and removal of dead animals if there are two or 
 more companies. For this reason a rendering company 
 located at stock yards is usually given the exclusive right 
 to buy all dead animals in the yards. 
 
 The rendering business is not a particularly attractive 
 enterprise, and one naturally wishes to obtain if pos- 
 sible a little larger return on his money than he 
 would expect from other investments. The larger 
 than normal profits that have accrued during the past 
 two or three years, however, have been due prin- 
 cipally to unforeseen rapid advances in the prices 
 received for rendered fats between the times that the 
 dead animals have been bought and the times that the 
 product has been put on the market. It was impossible 
 to predict at the time dead animals were being bought 
 that there would be any such increase in prices of result- 
 ing products. Nevertheless the prices paid by rendering 
 companies for dead animals have substantially increased 
 during the war period, and we do not believe that impar- 
 tial investigation would find any company in w T hich Swift 
 & Company is interested guilty of buying at unreasonably 
 low prices. 
 
 The Federal Trade Commission gives undue prom- 
 inence to this matter ; the rendering companies are on the 
 whole very small, and their business is insignificant. For 
 example, in the Congressional hearings at Washington 
 it was said that one company, which is connected with 
 
96 
 
 the Swift interests, made a profit of 60 per cent, on its 
 capital. As a matter of fact, the capital of this company 
 was $25,000, and the profit was $15,000; and this busi- 
 ness took care of all the dead animals that there were, 
 in connection with the marketing of over 2,000,000 head, 
 worth $100,000,000! It would appear in this instance 
 that the Commission has given undue prominence to a 
 trivial matter. 
 
 At any rate, Swift & Company recognizes the fact that 
 ownership of rendering companies, and the exclusive 
 manner in which they must necessarily be allowed to 
 operate, involves a certain measure of power to arbitra- 
 rily control prices of dead animals in individual markets, 
 and if it could be claimed that we have used this power 
 unfairly in the past, we wish to state that we have already 
 taken definite steps to see that no legitimate complaint 
 can be made against our activities in this direction in 
 the future. 
 
 We thoroughly believe that through our interest in 
 these companies we have improved the methods of taking 
 care of this disagreeable feature of the live-stock indus- 
 try, and that we have thereby improved conditions in the 
 stock yards ; it is our sincere desire to operate such facil- 
 ities to the best interest of all concerned, and we are only 
 too glad to make any changes necessary with this end in 
 view. All that we want in a matter of this sort is impar- 
 tial suggestion and co-operation, rather than misrepre- 
 sentation of our motives and of the facts. 
 
97 
 
 Formation of Wilson & Co. and the Sulzberger 
 Memoranda. 
 
 The remainder of the Trade Commission's report con- 
 sists almost entirely of an account of the negotiations 
 which led to the reorganization of Sulzberger & Sons Co. 
 under the name of Wilson & Co., Inc., and of the repro- 
 duction of the so-called " Black Book" of Mr. Germon F. 
 Sulzberger. 
 
 Swift & Company does not feel called upon to go into 
 an exhaustive explanation of these matters. We can find 
 no evidence of illegal or illegitimate practices in con- 
 nection with the reorganization of the Sulzberger com- 
 pany; and in the " Black Book" memoranda we can find 
 nothing but an occasional and informal exchange of views 
 and information between Mr. Sulzberger and other indi- 
 vidual packers at a time when the Sulzberger company 
 was having financial difficulties, and when Mr. Sulzberger 
 was complaining of the aggressive competition of the 
 other packers. 
 
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