The Washington times., 1919-01-21
R. ARm0UR'S TESTIMONY IN detail

not produce many pounds of pituitary
liquid, because by the time they have
killed any considerable number of ami
mails, the pituitary glands from the
first animals killed have ceased to be
usable.
From 1890 to 1900 the firm con-
tinued growing and expanding. We en-
tered into the manufacture of dry
sausage largely for export, in order
to better utilize coarser cuts of meat,
which while perfectly good and whole
some in every way, did not lend them
selves to sale to best advantage on
the market. We went into the fer
tilizer business primarily to utilize
the great quantity of packing-house
waste. similar reason caused US
to enter into soap-making industry.
Both of these latter businesses have
long since ceased to depend upon
packing house waste for raw ma
terial, but for all that we regard them
as important phases of our business.
During this decade the firms total
earnings were equal to lilo per
cent annually on the invested capital
and Il per cent of the aggregate was
reinvested in the business.
400 Per Cent Stock Dividend.
Let me take this occasion to COM
ment on the much talked Of 400 per
cent stock dividend which we de-
clared in 1916 and which has often
been cited as an example of the enor-
nous profits being made in the pack
hing industry. The Federal Trade
Commission in an official report to
Congress gave currency to this. They
said:
g. .Tbus Arp,our f.. ron,n,nv IN 1o16
raised it's capital stock from 100000
600 to $1OO.OO0,O 900 without receiving
a dollar of cash.
THAT statement is entirely mislead-
ing.
at implies that by some magic the
company put in the pockets Of the
stockholders $S0,0OO,0OO without re-
ceiving one cent in return thereof.
This is not a fact. BY this transac-
tion the stockholders did not receive
one penny. 1t merely gave each
stockholder five shares of stock where
formerly he held one, the value of
which was equal to the five which re-
placed it. 1t was merely bookkeep-
ing transaction, perfectly honest and
|, legitimate in every respect Our COM
pany was a family concern.
"The actual fixed working capital
on which the company was doing
business was actually contributed
dollar for dollar by the stockholders
by refraining from taking their
profits out of the business. The sole
and only purpose was to make the
actual share capital Of the company
more commensurate with the actual
capital investment therein. Let me
, say further regarding this stock divi-
dend: Whereas stock dividends ordi-
nariIy are intended to give the holder
of stock a greater equity in the busi-
ness on which to earn dividends and
| to 50 affect the market value of his
stock. in this particular case there
was no such motive. because Armour
& Co. were a close corporation with
the stock, as I have said. held almost
entirely in the Armour family and
| none 6f it was on the market.
"The sum total of our reinvest-
ments since 1868 represent Armour &
Co. today and I submit the above
facts to show how it was possible
for a 100000 firm to grow into
concern of our present proportions
with. / think credit to the owners
Of the business and with benefit to
the general public.
Taking on Outside Lines.
"One OF the most common reasons
cited when attempts are made To
heckle or cripple the packing indus
try, is that its entrance into fields
| other than that of meat packing. IS
! conducive to the building up Of a
food purveying organization too
| broad in its scope to be for the best
| interests OF the general public.
note that the chairman of the Federal
Trade Commission has said:
The cOmmi SSiOn has oh iePt ion
to mere size of an industry, but whea
big concern ramiffes into other fieiCsi
to the detriment of legitimate busi-
ness. it is time to call halt
"On that same basis the mail or:ie.'
houses, and department stores, shoud
be driven out, and the automobile in
dustry should have been suppressed
when trucks began invading the
realm OF the horse. and the United
States postoffice should have been
called up with a turn when il in
augurated the parcels post system ~
compete with express companies.
"While primarily our business was
built to handle only meat products.
we have found that there are certain
seasons when the equipment would
not be in use nor our sales force Oc-
cupied if we confined them strictly to
the meat food business. In particular.
during the years 1911, 1912, 1913, and
1914 the supply OF live cattle and hags
in this country was lower than
they had been for quite num-
ber of years while the popula-
Potash and Perfume.
1T seems a long jump from potash
to perfume and why Armour & Co.
should be handling two such products
which seem unrelated at first glance
is not apparent to the casual observer,
or maybe to those whose information
is entirely of an ex parte nature. But
there is definite relation between
potash and perfume.
Potash is bought and sold by the
Armour Fertilizer Works, an auxil-
iary of Armour & Co. Potash is not a
by-product of the packing business,
but it is a logical business associate
OF fertilizer materials which come
from the packing plants and il is
handled because we have the neces-
sary marketing machinery and be-
cause trade requirements compel us
to handle it if we expect success in
mark etlnS our own fertilizer ma