Page images
PDF
EPUB

time they had been crediting the carcass beef when they hung it up in the packing house with as much as 2 and 22 cents a pound. The byproducts paid the cost of slaughtering and distribution and enabled a credit to be given the carcass. As you will notice, this margin has been decreasing. This is the wholesale margin in the next to the right-hand column. You get down into 1931 and the minus margin is practically wiped out and in fact you had a plus margin in 2 months. That is due to the fact that the byproducts were decreasing in value, but the purpose of this is to show you that the beef is handled by the packers on a very small margin and actually during all but 2 months of 36 months, the beef from 100 pounds of live steer was sold by the packers for less than what it cost without allowing any credit for byproducts, so there is not a big margin there.

Senator NORRIS. Does that mean they were losing money?

Mr. Mollin. No, sir; it means they had to rely on the byproducts to make up that margin.

Senator NORRIS. I understood the value of the byproducts had gone down so rapidly.

Mr. MOLLIN. They have in the last 2 years. You will notice the minus margin went down also. You know the financial statements of the big packers during the last 2 or 3 years have indicated considerable losses along with other lines of business.

The same table shows in the right-hand column the retail margin, which is a plus margin running from $5 to $7 on the meats derived from 100 pounds of live steer weight.

The circular marked “No. 2" show the same information relative to lambs and with the situation on the whole quite comparable, although you will notice there are a good many more plus signsthey are not a minus margin all the time—and that is due to the fact that the byproducts of the lamb are not worth nearly so much as the byproducts of the beef.

In the food investigation referred to above it is not my understanding that the committee found evidence of excessive profits but only of excessive distribution cost. Isn't that true, Senator Capper?

Senator CAPPER. That is correct.

Mr. Mollin. I do not see how this would be remedied under the bill you are considering, inasmuch as the control is on the first processor, who is not making an undue profit under present conditions and plainly could not absorb any part of a processing tax.

On the first page of charts marked “No. 3” you will find for the years 1929 to 1931 a chart showing the relative trend of retail and wholesale beef prices at New York compared with steer prices at Chicago, bearing out the statement I made above. This chart was used at the Capper hearing, only I think it went back for a period of 10 years and it shows a big spread between the wholesale carcass price and the retail price and the narrow spread between the wholesale carcass price and the steer price.

I hand you a booklet entitled “Beef Cattle Outlook Charts”, marked “No. 4”, and while the pages are not numbered, I have turned down the corners of two, marking them “A” and “B”. Chart A shows that for 20 years we have not been on an export basis for beef, except during the war period, when we reduced our own consumption to send the meat to the Allies and, as stated above, our industry has not yet recovered from that condition. We are today receiving some slight imports of live cattle, of dressed beef, and of canned beef.

I call your attention especially to the chart marked “B”. This shows for the years 1921 to 1930, in the upper part of the chart, the wide fluctuations in cattle prices reaching a peak generally in May and a bottom generally in November of each year. The other line is that of retail meat prices, and you will note that these prices refuse to follow either the peaks or the depressions; that is, I mean to a marked extent. That line runs pretty constant where we have a jig-saw line of the live-animal prices. And that in every case, when the livestock receipts have been light and the market has advanced sharply, it is the retail price that has called a halt and pulled down the price of the live animals. This is clearly shown in the years 1928 and 1929. I don't believe there is a single major commodity which is so sensitive to the retail price of its product as is our commodity, cattle.

I wish to call your attention particularly to that. In 1928–29, you notice the cattle price started up and the retail price wouldn't go and pulled it right down and it repeated the next year. It shows the retail price governed the price of the cattle.

Senator CAPPER. That was probably due to lack of purchasing power to some extent?

Mr. Mollin. I suspect it was.
Senator CAPPER. To a great extent?

Mr. Mollin. Yes, sir. I hold no brief for the packers. They can speak for themselves. We work with them when we can, and fight them when we have to, but we are impressed with the fact today that they are selling our product as high as conditions will permit.

I call your attention to the fact that under conditions today the packers have not found it profitable to store meat, or possibly it has been impossible to finance normal storage operations. Whatever the reasons may be, the stock of every kind of meat in storage todaybeef, pork, lamb, lard also—is materially below what it was on March 1, 1932, and also materially below the 5-year March 1 average. That applies to every one of the 10 major classifications of meat which is stored and also to lard.

We are fearful that a processing tax would further discourage any storage operations, would force the packers to operate on a hand-tomouth basis, and would absolutely limit the sale of meat animals to the amount that could be forced into consumption on a fresh-meat basis. This might easily result in congested markets and would interfere seriously with the natural movement of livestock. Any reduction of consumption that would result from the operation of this law would be disastrous. How in the world are you going to prevent substitution with the host of commodities that are available; and where is the fairness in taxing competing commodities, produced by another set of domestic producers, putting the money into the United States Treasury while a few favored commodities are offered benefits under this bill? Oleomargarine is one thing specifically referred to in this bill as one of the competing commodities that should be taxed. Thousands of people can't even buy oleomargarine that is selling at 10 cents a pound. It has no effect on butter consumption. Those people are out of the butter market, they couldn't buy it if they wanted to.

What would happen when the poultry and egg people were informed that a compensating tax would be placed on their produets? I don't see how you could enforce such a tax. There are thousands of little ranches all over the country selling poultry at the door. My sister operates that way in California. She sells a couple of hundred fryers a year to people driving in the yard. You couldn't collect a tax on those people. I don't know why you want to boom the poultry business at the expense of other parts of the meat business.

How are you going to prevent substitution of fish when the bill, on page 7, refers to any competing agricultural commodity ? Mr. Loomis made some suggestions about the language of the bill last night but if you are going to include meat in this bill, it seems to me you ought to take out the word "agricultural” on page 7 and also the same language is used on pages 15 and 16 in 5 or 6 places. Fish isn't a competing agricultural commodity but it is a competing commodity. Unless you take out the word "agricultural,” I don't see how you could get any application to fish.

I have received several unsolicited wires from our affiliated organizations in the West, since reaching Washington, every one protesting against the inclusion of cattle in this bill. I am not going to offer them in my limited time. These have come from New Mexico, Montana, Utah, and Wyoming, and I have been in contact, before coming East, with stockmen from other States adjoining, and the feeling is very strong against the inclusion of cattle. We realize fully the seriousness of cattle. We realize fully the seriousness of the situation. We know that more cows in the country mean more calves, and that meat consumption must be increased and not decreased We can conceive of no industry where it would be more difficult to control production under the working of this law than the livestock industry. Land may lie fallow without protest, but the processes of increase or decrease in production of cattle in particular are slower and more difficult.

There are some things that can be done to help the situation, such as shutting off the huge imports of foreign oils—there is more than a billion pounds of oil imported into this country annually—which come in competition with our fats. Our association has pleaded for 25 years for an adequate tariff on bides and has been repeatedly denied. We do not see in this bill any method of controlling the imports of these raw materials which are serious indeed. There seems no application to the compounds made of cottonseed oil which come in competition with hog and beef fats. Give us such assistance as you can in the ways I have mentioned, and I believe it is the consensus of opinion of Western cattlemen today that they will continue to fight their own battles and to hope that artificial measures of this kind will not later have to be applied to our commodity.

Senator NORRIS. Referring to your reference to freight rates, I wish you would elucidate a little more. You spoke of freight being paid several times. Give us an illustration.

Mr. Mollin. The South is the long-time breeding ground. Cattle are moved from the South up possibly through the Denver market to ranges in Nebraska or Wyoming or Montana or South Dakota. A great many of the sand hill operators in your State, Senator, don't have cow herds. They buy young steers in Texas, then they may more from western Nebraska down to a feed lot in eastern Nebraska

or Iowa or Illinois, or they may even go on down there and go to somebody that is buying stock cattle and let them run a year or two. There might be still a third movement before they go into the feed lots. Then they go into Chicago as fat cattle. Then the finished product is distributed from Chicago throughout the East.

Senator NORRIS. Have you ever in a particular instance made a computation to show just how much transportation there was in a beefsteak in New York City?

Mr. Mollin. No, I haven't, Senator.

Senator NORRIS. There would be more than the ordinary person thinks of, wouldn't there?

Mr. MOLLIN. Yes, sir; it would be very startling. I do know that some of our stockmen who testified in this recent hearing in Denver on sale and transit complained that on shipments to Kansas City the marketing charges last fall were almost a third of the gross. That was on mixed cows.

Senator NORRIS. That beefsteak probably first started away down in southern Texas?

Mr. MOLLIN. Yes.
Senator NORRIS. And was shipped away up to Wyoming?
Mr. MOLLIN. Yes, sir.

Senator NORRIS. And from Wyoming it was shipped again to eastern Nebraska, probably?

Mr. MOLLIN. Yes, sir.
Senator NORRIS. Where it was fattened?
Mr. MOLLIN. Yes.

Senator NORRIS. And from there it was shipped to Chicago, where it was killed?

Mr. MOLLIN. Yes.
Senator NORRIS. And from there it was shipped to New York City?

Mr. MOLLIN. Yes. Then there might be another movement yet before it got to some town in New York.

Senator NORRIS. Exactly. So as a matter of fact while Congress hasn't given it any consideration and the great bulk of men interested in it like your organization and the farmers generally don't appreciate how much transportation there is in these farm products from the time they originate until they reach the consumer

Mr. Mollin. Yes, sir; that is true.

Senator NORRIS (continuing). It is one of the important things involved in it?

Mr. Mollin. One of the most important.

Senator NORRIS. But we don't find anybody or very many people at least saying anything about it?

Mr. MOLLIN. Well, we have petitioned for lower rates and reopened docket 17000 which was just decided recently and now we have just gone back to the Commission and petitioned for a general decrease. I don't think there is any single thing that could be done today that would do more to start the wheels of commerce going than to reduce those freight rates.

Senator NORRIS. I know it will help very materially. You and I may have an exaggerated idea of its importance but it is very important and very material and doesn't receive very much attention.

Senator KENDRICK. Is it not true, Mr. Mollin, that your association has made fruitless efforts to reduce the charges in the yards on the movement of livestock?

What would happen when the poultry and egg people were informed that a compensating tax would be placed on their products? I don't see how you could enforce such a tax. There are thousands of little ranches all over the country selling poultry at the door. My sister operates that way in California. She sells a couple of hundred

people driving in the yard. You couldn't collect a tax on those people. I don't know why you want to boom the poultry business at the expense of other parts of the meat business.

How are you going to prevent substitution of fish when the bill, on page 7, refers to any competing agricultural commodity? Mr. Loomis made some suggestions about the language of the bill last night but if you are going to include meat in this bill, it seems to me you ought to take out the word "agricultural” on page 7 and also the same language is used on pages 15 and 16 in 5 or 6 places. Fish isn't a competing agricultural commodity but it is a competing commodity. Unless you take out the word "agricultural," I don't see how you could get any application to fish.

I have received several unsolicited wires from our affiliated organizations in the West, since reaching Washington, every one protesting against the inclusion of cattle in this bill. I am not going to offer them in my limited time. These have come from New Mexico, Montana, Ŭtah, and Wyoming, and I have been in contact, before coming East, with stockmen from other States adjoining, and the feeling is very strong against the inclusion of cattle. We realize fully the seriousness of cattle. We realize fully the seriousness of the situation. We know that more cows in the country mean more calves, and that meat consumption must be increased and not decreased. We can conceive of no industry where it would be more difficult to control production under the working of this law than the livestock industry. Land may lie fallow without protest, but the processes of increase or decrease in production of cattle in particular are slower and more difficult.

There are some things that can be done to help the situation, such as shutting off the huge imports of foreign oils—there is more than a billion pounds of oil imported into this country annually—which come in competition with our fats. Our association has pleaded for 25 years for an adequate tariff on hides and has been repeatedly denied. We do not see in this bill any method of controlling the imports of these raw materials which are serious indeed. There seems no application to the compounds made of cottonseed oil which come in competition with hög and beef fats. Give us such assistance as you can in the ways I have mentioned, and I believe it is the consensus of opinion of Western cattlemen today that they will continue to fight their own battles and to hope that artificial measures of this kind will not later have to be applied to our commodity.

Senator NORRIS. Referring to your reference to freight rates, I wish you would elucidate a little more. You spoke of freight being paid several times. Give us an illustration.

Mr. Mollin. The South is the long-time breeding ground. Cattle are moved from the South up possibly through the Denver market to ranges in Nebraska or Wyoming or Montana or South Dakota. A great many of the sand hill operators in your State, Senator, don't have cow herds. They buy young steers in Texas, then they may move from western Nebraska down to a feed lot in eastern Nebraska

« PreviousContinue »