Part 2

NO amount of criticism, investigation, misrepresentations or “exposures” has ever shaken Armour and Company’s faith in the fairness and final endorsement of the great body of American livestock producers.

That the consumer found grievance in recent high food prices and attributed his troubles to the packer or producer, or both, was perhaps not to be wondered at, though his reasoning was not sound. That competing food distributors should object to the extension of packer efficiency to general food distribution is easily understood from these competitors’ viewpoint.

The retirement of Armour and Company from all lines of production and distribution not directly associated with meats and livestock by-products, was in response to these disturbed elements of public opinion. But these restrictions of packer activities in no way affect the relations of mutual confidence and dependence between Armour and Company and the livestock producers.

The fundamental things remain, and they are these: The livestock industry must continue to exist and expand; producers must be rewarded with fair profits; livestock markets must be maintained and made more convenient; and the markets for meat products must be enlarged and extended.

To these basic facts Armour and Company have pinned their business faith, and upon them shaped their policy. Ninety per cent of the profits of the Company have been re-invested in the business and are represented today by great packing plants at sixteen market centers, and many branch houses throughout the country, together with refrigerator car lines connecting the livestock markets with the consuming centers of the nation.

It requires no argument to show the livestock producer that his interests and profits are inseparably associated with these properties, and it is quite as plain that the necessities and conveniences of the consuming public are dependent upon and served by them.

America and the world will continue to demand more and more meat and other products from livestock. Agriculture will not successfully continue without the production of meat animals. So the future reveals no reason why Armour and Company should not continue the policy of re-investing their earnings in the business that gives the most direct and substantial support to the basic industry of animal husbandry.

Aspects of Big Business Explained

THE simple recital of an ordinary day’s doings of Armour and Company’s beef department will make plain a number of things that may appear mysterious to a casual observer. Each day, at the opening of the market, the manager of the beef department must carefully weigh the possibilities of his sales and shipments of beef carcasses against the receipts of cattle of the quality demanded by his trade. And he must buy accordingly.

The prevailing idea that, because of cold storage facilities at the packing centers, unlimited numbers of cattle of all grades and qualities can be absorbed and slaughtered, is wrong. For even though cold storage capacity were unlimited, beef cannot be held. Each day’s kill must find room in chill and storage rooms by the shipment of about an equal number of carcasses out of storage to Armour’s branch houses located in all parts of the country.

These branch houses must, in turn, dispose of each shipment promptly to make room for new arrivals. Each branch manager receives a memorandum of the cost of the beef, and of course is expected to sell it at a profit. But he must sell it within a very limited time, even if he cannot show a profit.

Local conditions determine this. He may meet with unforeseen competition in the kind of meats he has ordered, or the demand for meats may have fallen off for one or a dozen of reasons, or for no discoverable reason at all. These known and unknown influences on the demand govern his market and he has to accept the situation, depending on evening up the score under more favorable conditions.

Of course a decline or advance at one or a few branch house points, from merely local causes, does not materially affect the market at the packing centers, but any widespread fluctuation from general causes is immediately reflected in cattle prices at all of the great markets.

The best way for a producer to learn what determines the price he gets for his livestock is to visit the nearest Armour branch house and get first hand information on the facts that govern meat prices at the final market.

Any Armour branch manager will welcome visitors and willingly answer questions. He will explain not only the factors that influence the general level of prices, but will point out why cuts from certain types of beef carcasses are in constant demand at the highest prices, while similar cuts from other carcasses are neglected and sell materially lower.

There is a type of beef carcass that is best and commands the best price, and it costs no more to produce than an inferior type. The same is true of mutton and pork. Any Armour branch manager will show you what these types are and the Armour Farm Bureau will furnish, without charge, information on improved methods of producing the sort of animals that are most in demand for meat purposes.

One aspect of the big packing business, the importance of which is not generally appreciated, is refrigeration. It is not too much to say that without ample means of refrigeration, both in storage and in transit, no fit and adequate supply of fresh meats and dairy products could be supplied to the public.

Food refrigeration originated with the meat packing business early in its history. At first only storage refrigeration was practiced for the purpose of conserving and equalizing the supply of fresh meats for local or near-by consumption. Then came the conception of transit refrigeration, and the refrigerator car was invented, primarily for the purpose of shipping fresh meats from the producing centers of the West to the consuming centers of the East.

From the transportation of fresh meats, the extension of the service to the carrying of fresh fruits, vegetables and dairy products was a natural and easy step, resulting in the development and maintenance of the great orchard lands and fruit and market garden areas from coast to coast, and the tremendous expansion of the indispensable industry of dairy farming all over America.

To the livestock producer refrigeration in storage and in transit means everything. Without it the great packing interests could not exist and livestock husbandry would revert to the primitive and unprofitable conditions prevailing fifty years ago and described in the preceding chapter.

These facts explain why Armour and Company have persistently opposed every attempt to deprive them of the exclusive use of their privately-owned refrigerator cars and turn them over to the railroad companies for general use. To maintain the necessary constant movement of meat products Armour must have an adequate supply of these cars every day in the year. Extended experience has proven that they would not and could not be supplied by any form of railroad administration, either governmental or corporate, yet devised.

Declining Livestock Prices and the Causes

BRIEFLY outlined herewith is a resumé of what are accepted as the chief causes contributing to the sharp decline in livestock prices during 1919.

The discontinuance of Government orders for beef was the principal thing which affected cattle prices in the late spring. From being a purchaser the Government became a seller in the domestic market. Added to this, there has been unusual labor unrest, large supplies, agitation against the high cost of living, low foreign exchange rates, and the English boycott against high prices.

The falling off in hog prices was far more serious than in the case of beef, because normal demand for hogs is based on the consideration of large exports, while the market for beef is primarily and principally domestic.

The great demand for American pork products which was confidently expected from European countries did not materialize, because of the extraordinary and unforeseen development of exchange conditions which made purchases on the American market practically impossible.

The earlier part of 1919 was marked by an unprecedented export of pork products, reaching in the month of June the high point of over 400 million pounds. From this point the drop was sharp and continuous, month by month, the figures for October showing total exports of less than 120 million pounds—a falling off of 70% in four months. These later exports were on orders booked earlier in the year, and not on new business.

Added to these principal factors, and aggravating them, were attempted boycotts of meat and proposed radical legislation for the regulation and restriction of the packing industry, and the resulting condition of uncertainty up to the very closing weeks of 1919, when the understanding between the packers and the U. S. Department of Justice was made public.