New-York tribune., 1919-09-27

be reduced to practically the terms
Of a public utility. We feel that they
have overlooked certain great risks
something like $250,000,000 invest
ed in food stocks are being carried
at high prices and would depreciate
80 per cent if communications with
Europe were cut off thirty days. or
if the production programme in force
should outrun the meat demands and
there would be a fall in the animal
market. An increased shipping pro-
gramme that would open other food
markets to the Allies would have
the same effect.
"The food administration regula-
tions permit earnings upon borrowed
as we'll as packers own capital,
whereas the Trade Commission pro-
poses that no profits should be al
lowed on borrowed capital. This ap-
pears to us to strike at the base OF
most business enterprises. AS we
understand it, a large part of the
commerce and trade of the country
is founded on the earnings of an
excess sum on borrowed capital over
the bare interest cost, and we feel
that if this principle proposed by the
Trade Commission we're laid down as
a precedent it would produce an
absolute state Of panic in the United
States.
"This industry must borrow money
largely on short time paper to carry
the large reserve stocks now created
for the army and the Allies if they
are to be continuously provided for.
We are confident if this question
were submitted to any group of COM
petent advisers they would affirm
that business in general, and this
business in particular, must earn a
profit over and above interest
charges on actual capital borrowed.
War Forced Borrowing
"(8) The food strategy necessary
to the handling of war issues in
volved the increase in our exports to
the Allies and our army and navy
by more than $50 per cent. In order
that we should be prepared for any
emergency, it has been necessary to
call upon the packers to increase
their stocks in storage. Further
more, the programme of stimulation
of production, particularly the pork
so critically needed for war purposes
and maintenance Of stable mini
mum price on hogs. has involved the
packers in much larger stocks than
would normally be acquired. All of
this has neccssitated an increased
borrowing on the part of the packers
that would not have been called for
had they conducted their business in
the normal manner. Therefore the
compensation of the packers must
bear some relation to their borrowed
capital.
"(N We must recognize that this
1i,oA ;,,l, ho
cheap producer and that an adminis-
trative limitation Of maximum profits
in certain of their speciality bust
nesses that will reduce them to pop
ular ideas of earnings will throw
into the hands of these centralized
institutions all the business in these
specialties by crowding out high cost
producers. and thus will eventually
reduce production or aggrandize
monopoly We cannot agree to the
answer to this argument in the re-
port as follows:
"If it appears that the big pack
ers can operate these speciality busi-
nesses more effectively than the in
dependents, it is sound wartime eff
fciency to let them do it, The only
danger in the situation would be the
failure of the government to co1.-
tinuc its regulation Of the packers
and their affiliated companies after
the war
Fears for Small Dealer
at is our belief that one of the
greatest dangers to the whole of the
food trades of the United States is
the further expansion of these big
tion of smaller business and indi-
NyiHnol onfornricn H. SO