The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1923-02-28
A QUESTION OF MERGERS

1t is a curious fact that a railroad presi-
to the federal plan for railroad consolida-
ton as the government is making to the
proposed packer merger. On the other
hand, the packers make almost the same
arguments in behalf of their measure as
the government makes in behalf OF rail con-
solidation. Apparently there is something in
the point of view. There is the difference
Of course that the government has final de-
cision with respect to rail charges, while there
is no such control of packers prices. Also,
on several occasions, and in congressional
debate, the consolidation plan was criti-
cized as being in contravention to the anti
trust laws.
In expressing his opinion adversely on
the railroad merger, Mr.. T. NJ. Schumacher,
president of the Ell Paso and Southwestern,
says that the whole theory is wrong In that
it would decrease competition, lower eff
ficency and bring into existence transpor-
tation units entirely too unwieldly and
cumbersome for management" Naturally
railway presidents are not particularly con-
cerned over the prospect of lowered COM
petition, because they are now by law re-
strained from the full and free exercise Of
the tactics Of earlier days when competitors
could be smothered and driven to the wall
by rate wars and the like. The government
doesn't allow the roads to prey upon one
another, but only on the waterways. The
students of economics and transportation,
moreover, claim for their plan of consolida-
L. 20 eFf IL -
it by Mr.. Schumacher. And in fact it does
appear that the union of two lines would
bring about a better distribution of equip
ment in times of stress than would be ex-
pected among lines under separate manage
ment and more or less competitive. At. any
rate, the plan is to be tried, and there is
little use in predicting disadvantages when
they will, if inherent in the plan, show up
soon enough.
AS for the packer merger, the chief dan
ger is that as a result the farmer will re-
ceive too little for his product and the con-
sumner pay too much. It is said that the
merger is not illegal provided the purchasing
company dispose of the rfoiert, = Ind pasi-
ness of the acquired. company. The legality
will be tested ir1 the courts and may find its
way to thu supreme court. Even without
isurr merger it would be possible for the pack
| ers by agreement to fix prices arbitrarily.
The remedy for that appears to lie with the
producer of livestock As long as the far
mer depends on others to defend him from
exploitation his case is precarious. When
he depends on himself and his cooperative
effort with his neighbors his position at once
becomes stronger. Indeed, it is not likely
that packer trust would be stronger than
a stockmen's trust, or that there could be
an arbitrary fixing of prices for meat on
the hoof at price lower than would yield
reasonable profit on the cost of produc-
ton, if the stockmen know the cost and in
sist upon profit.
1t appears that the stockmen are in better
position than ever before to protect them
selves from exploitation. They have their
cooperative marketing associations; they
have reduced their business more nearly to
science; they are employing the cost
system of accounting; they are taking into
the estimate of the cost of livestock pro-
duction all the elements formerly neglected,
such as interest on land values, interest and
depreciation on equipment, labor and the
other legitimate elements of cost, of which
formerly they took little account and for
which they were usually not reimbursed.
If the supreme court finds the merger IL
legal the situation remains as before. If
the court finds it regular, then the stockmen
are becoming prepared to protect their in
terests.