The Era-leader., 1919-11-06
TELLS Senators
ABOUT BEEF COSTS
This May Throw Some Light on
the Price You Pay for
Beefsteak.

dent of one of the large packing con-
Germs Of. Edison White Of Armour anu
Company made the astounding state
ment that so far in their fiscal year.
which would cover the past eight OF
nine months, his company had made
no money whatever on beef"
This statement is doubtless well
nigh incredible to the average man.
Yet 1t was made in full knowledge that
the SELF tors had access to the COM
pany's books.
Recovering from the first shock, this
same average man will say, Yes, out
the packers are shrewd; what they 90
not make on the beef they more thah
make up on the hides"
But even this illusion was destiheu
TO be shattered. Mr.. White explained
that his statement included everything
that was derived from the steer as
purchased-the hide, fat, even the IN
testines which are used largely 1or
sausage castings.
e Make Money, Nevertheless
Well the packers make money--hoW
do they do it? Mr.. White admitted
that they did, quoting figures secured
by auditors of the Food Administra-
+ion to the effect that packers profits
on food commodities of all kind last
year were l 6/1O cents on each dol
lar taken in. These would include
such things as sausage, shortening,
canned meats, ETC., in addition to fresh
meats hams and bacon. On all the
products Of his company, Mr.. White
explained, comprising both foods and
inedible commodities, the profits dur
ing the same period were l $40 cents
on each dollar sale.
All of which would lead many to
say that the packing business is moi
we'll understood. 1t isn't. Yet as one
of the leading industries Of the coun
try, it's workings and, above all, Its
profts, should be familiar matters tc
us. 1t Is quite useless to crate agalns'
the high cost of living without digging
into some of these fundamentals.
By-Produets at Market Values
One of the most enlightening bits O.
MIR. Whites testimony was his ex
planation of the way in which cos
price of beef Is arrived at. If stee
Is bought at $125.00 and hides ar
bringing $1,000 in the open market
then $1,000 is credited to the cost O
the steer. If hides are selling at $3.50
that amount is credited. The viscerf
fat, offal and everything else ths
comes from the steer are lfkewis
credited at their prevailing markt
values. What remains is taken as til
cost price of the meat. The beef ca
cass is then shipped to one OF the Il
cal distributing branch houses, an
the manager there Is given the CO..
price with instructions to sell the be-
at a profit if he can. But in any even
whether the local market be lively
dull, he must sell for what he can &c
for the commodity is a perishable OF
and must be sold.
However, there is another hitch
the packing business, quite as lit
understood apparently, that goes
show how loss on fresh meats MI
be accompanied by profit on the t
tai amount Of business done. TAX
for example, the banjo strings afor
mentioned, which are made from tt
intestines Of sheep. The departme1
that makes banjo strings (and lik
wise surgical ligatures, tennis string
etc., "buys" the intestines from tt
sheep-killing department, paying e
actly the same price that these bril-
when sold to the outside market. I
this basis the string department man
factures it's strings and sells thel
bringing profit into the business.
In like manner the fertilizer depal
ment buys blood and tankage; the so;
department buys fats; the glue depal
ment buys hoofs, horns, bones al
sinews; and so on through the list
'sby-products." The fertilizer. t
soap and the glue, just as the mus
strings, bring in a manufacture
profit.
In all cases these by-produc
whether they be sold to outside ina
ufacturers or to one Of the manuft
turing departments in the business
the same prevailing market price,, a
credited to the cost Of the meat p'
ton of the animals, just as In the
stance of the hides mentioned abo'
Thus the utilization Of by-product
system of which we have heard mu'
and the method by which it Is &C
ducted. show the packers manufact'
ing profit on a great variety OF co
modities ranging all the way, ire
pharmaceuticals to glue, do, in reali
bear the burden of fresh meat pric'
@-s"s-s"s"s"ss~s.s.s-s
gsenator Kellogg, Of Minnesota, II
J...,,..,~. Standardization al