The sun., 1919-01-22
Tells Congressman Big Five
Are in Competition and Not
in Collision.
DENIES STOCK WATERING
Calls Profits Small and Puts
in Plea to Let Meat In
dustry Alone.
>pecioi Despatch TO The Sun.

dustry and said such enactments would
ne seriously and inJuriousfy felt
throughout the entire industrial fabric
Of the nation.
Mr. Armour denied emphatically that
any combination or collision as to price
GNjng or division of territory exists
anong the Big Five packers or that
the Big Five either could regulate or
actually do regulate or affect the prices
paid for meat to the producer or re-
ceiyed for the same from the consumer.
I'VE buy the live animal and II goes
tn one door and out the other he de-
Jared during the criss-examination on
ris formal statement, land we retain I s
cents on every dollar represented, which
Includes all returns from by products
everything. All we get Is the shading.
and I claim that when the shading is so
small somebody besides ourselves must
be benefited.
The witness declared that the investf-
cation by the Federal Trade Commits
s,on IN which the proposed legislation 10
based was admittedly entirely ex
pa-te" and had worked very serious in
Jury TO our industry"
Competition, Not Collision.
IF monkey wrench is thrown into
me gears OF this business" Mr.. Armour
declared in his prepared statement. "its
Effects will not be confined to the meat
packing industry. 1t is a fact entirely
ignored by the commission that 1t is the
keen competition which exists between
the big packers which causes the practices
,egardinty which the commissinn COM
nians and from which it concludes that
there must be 4 combination.
The kind of control that the Federal
Trade Commission fears is not possible.
II our competition to-day forced all
others out of business and II we used
the power thus obtained to increase
profit margins unfairly there would be a
new crop OF competitors tomorrow. I
DO not expect to see the day when
American business men will stand by
and keep their hands Off any field of
enterprise which is paving high profits.
1T has not been disputed that the
neat packers arc conducting a gigantic
AMI essential business on profit mar
Elm smaller than obtains in other In
;ustries. The theories upon which the
pending legislation are based are not
constructive. they are not progressive.
They are reactionary."
A, the opening OF his cross-examina-
ton b. Chairman Sims (Tenn.) Mr.. Ar
Tour was asked the reason for increas-
NE the capitalization of Armour & Co
Denies Watering of stock.
This operation simply reduced our
surplus and increased our capital pro-
1ortionately; II was not water and did
not change the value OF our stock per
share he replied. 1T was done largely
because outsiders IN estimating our
profits made their computations not on
he total amount of money invested but
upon our small capita llzation. Further.
more. Armour & Co. are large borrow.
IS and as such it was desirable to have
W. capitalization show the money &C
.call- invested.
Gross volumes OF sales by his com
usny in 1918. the witness said, totaled
ssG1 900, 900, compared with $4,000, 0of
IN 1917, but the net income was at the
rate of . per cent. on the average net
,apital invested.
The 400 per cent. stock dividend II
1875, whereby the capital stock wa.
raised from $4,000, 400 to 100000. 900
was said by Mr.. Armour to have beer
Made possible by reinvcstment during
c-Hrsding years OF II per cent. of tht
aggregate earnings, SO that the increase
presented not water but money &C
'l4.l.' spent in development. In this
'orncct.on he called attention TO the
1T that the firm Is almost entirely
owed within his family.
N- Armour said the reason VIII,
y 1oa now cost 20 cents a pount
AGAINST % and 80 cents four years sgt
VS. because prices OF live hogs hat
a. reased 245 per cent in that time
while cost OF labor and fuel had doubled
Chairman Sims outlined in detail thu
!ugtls 10 which the allied interests o.
h.g packing concerns might theoretical.
u carried IN invasion of other fields o.
Commercial operations. Packers. fron
tanning the hides of the stock they
sagGh,cged. he suggested, might worl
!.to the shoe manufacturing and jobbinf
business, or from their use of cottonseec
o' in the manufacture OF compound larc
might work into the ownership and op
cation Of cotton gins and the manu-
Set,ure OF cotton cloths.
Theory Right; Practice Wrong.
4 can see the business and profit II
t'"s' declared Mr.. Sims but what
want to know is the thing TO be fol
lived ont to its logical conclusion oil
how far? Where is It to end?"
Theoretically YOU are probably right
practically YOU are wrong" replied Mr.
Amour. The stop Is bound to CONF
" |ere added ramificatlons and diversi
'=- result in loss OF efficiency. 1t Il
rot matter OF size alone. but that b,
ADDING, for instance. to many differen
res % a salesInans territory You give
r.m TOO many different things to sci
e.l diminish his power to sell properly
Won might say we will 20 into raising
.a''it. Rut l contend that there Is
L'n - what any man can do well. anc
DON'T care how intelligent he Is, h,
cannot 80 beyond that capacity.
Armour & co. has not branched on
b'loHd our capacity. We will never &,
." tie shoe business with my consen
N" into the cattle raising business"
Questioned as TO Government owner
'''p and operation OF all refrigerato
ere. Mr. Armour said he believed tn
Il.hor' would suffer through decreased
efficiency
~ Hamilton (Mich.). Mr. Armour sale
tal While meat prices would not be 81
lfeh Except for tho European war h,
ca not believe they would have declined
from the pre-war basis despite the In
'caaed production OF cattle.
NJ. Hamilton was particularly inter
.H"d In Mr. Armour's connection witt
'2o rood Administration. The witnes
'''d that while many men had gone iron
.ac Armour firm TO various branches o
we Government II so happened tina
rome had gone TO the Food Adminstra
Tim
Dies suddenly In Hotel.
George II. futile Of ga Rockingham
rect Toledo. died suddenly last nigh