The herald. [volume] (New Orleans, La.) 1905-1953, 1919-11-06
TELLS SENATORS
ABOUT BEEF COSTS
This May Throw Some Light on
the Price You Pay for
Beefsteak.

TeStify1ng recently De1Ore d pouy Va
senators In Washington, a vice-presl-
dent of one Of the large packing con-
Germs Of. Edison White of Armour ana
| Company made the astounding state
ment that so far in their fiscal year.
which would cover the past eight or
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 senators had access to the COM
pany's books.
Recovering from the first shock, this
same average man will say, Yes, but
the packers are shrewd; what they do
not make on the beef they more than
make up on the hides"
But even this Illusion was destined
| 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 for
sausage castings.
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-
ton, to the effect that packers profits
| on food commodities of all kind last
year were 1 6/1O cents on each dol
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 $40 cents
on each dollar sale.
All Of which would lead many to
say that the packing business Is not
we'll understood. 1t isn't. Yet as one
OF the leading industries Of the coun-
try, its workings and, above all, its
profits, should be familiar matters to
us. It is quite useless to crate against
the high cost of living without digging
into some of these fundamentals.
By.Produets at Market Values.
One of the most enllghtening bits of
Mr.. Whites testimony was his ex-
PLANTATION Of the way in which cost
price of beef is arrived at. If steer
is bought at S125.OO and hides are
bringing $1,000 in the open market,
then $1,000 is credited to the cost Of
the steer. If hides are selling at $500
that amount Is credited. The visceral
fat, offal and everything else that
comes from the steer are likewise
credited at their prevailing market
values. What remains is taken as the
cost price Of the meat. The beef car
cass is then shipped to one Of the To-
cal distributing branch houses, and
the manager there Is given the cost
price with instructions to sell the beef
at q profit If he can. But in any event,
whether the local market be lively or
dull, he must sell for what he can get.
for the commodity Is perishable one
and must be sold.
Manufacturers Profit on By.Produets.
However, there Is another hitch to
the packing business, quite as little
understood apparently, that goes to
show how q loss on. fresh meats may
be accompanied by a profit on the to-
tai amount Of business done. Take.
for example, the banjo strings afore-
mentioned. which are made from the
intestines Of sheep. The department
that makes banjo strings (and like
wise surgical ligatures, tennis strings,
etc., buys" the intestlnes from the
sheep-killing department. paying ex-
actly the same price that these bring
when sold to the outside market. On
this basis the string department manu-
features its strings and sells them,
bringing a profit into the business.
In like manner the fertilizer depart
ment buys blood and tankage; the soap
department buys fats; the glue depart
ment buys hoofs, horns, bones and
sinews; and so on through the list of
"by-products." The fertilizer, the
soap and the glue, just as the music
strings, bring in q manufacturers
profit.
| In all cases these by-pro6scts,
whether they be sold to outside man.
ufacturers or to one Of the manufac-
turing departments In the business Cat
the same prevailing market price,, are
credited to the cost Of the meat pOr-
ton Of the animals, just as In the in
stance Of the hides mentioned above.
Thus the utilization Of by-products'
system Of which we have heard much,
and the method by which 1t is con-
Quoted, show the packers manufacture
ing profit on a great variety Of COM
modities ranging all the way from
pharmaceuticals to glue, do. in reality