Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-06-02
PACKING. INDUSTRY
IN PRICE STRUGGLE
big Four" Faces Stiff Com
petition From Growing
Chain Stores.

Special Dispatch to The Star.
NEW YORK, June 1.-The big four
in the packing industry-Swift. Armour,
Cudahy and Wilson-are in quandry.
Probably never has big business"
voluntarily hobbled itself more effec-
lively than the big five did on Feb
ruary 81 1920, when Swift & Co., Ar
mour & Co.. Wilson & Co., Morris &
Co. and the Cudahy Packing Co. agreed
to the now famous consent decree.
By this the big five then tbig four
now. as Morris since has been taken
over by Swift hog-tied themselves In
| three particulars. First they were pro-
hibited from ever establishing retail
markets. Second, they were debarred
from handling so-called unrelated
lines. Third. they were prohibited from
owning stock yards.
At the time of the signing of the
| decree by the big five" and the
United States Government there was
much agitation against the packers.
Live stock shipping associations and
| farmers complained bitterly that
| through the ownership of stock yards
were able to control the price of live
stock and to depress these prices when
ever they so desired.
{ oAVSCAy AhtCICStS
Wholesale grocery associations like
wise entered complaints to show that
| their interests were threatened because
| the meat packers were able to give
| better service by their ownership of
| refrigerator cars.
Little did the big five packers realize
what was in store for them. At the
| time they signed the decree a new force
in the retail field had just begun-the
I
paratively few of thenl-about $1,000
and they were widely scattered, doing a
| gross annual business of S725 000, 900.
| Now there are three times that number,
doing nearly $7,000,000,000 worth of
business. The sales of the largest sin
gle chain exceed several hundred million
| dollars.
Another thing. Where 10 years ago
| the live stock shipping associations were
demanding that the meat packer be
| limited in his activity, the last IL
months have seen surprising changes
in this regard. One live stock shipping
association after another has passed
resolutions urging the large packers to
enter the retail business Twenty of
the largest in the country have already
passed such resolutions, on the ground
| that they might further reduce the
number of profits taken between the
producer of live stock and the con-
surner of meat.
In 1924, the American National Live
| Stock Association, one of the largest
in the United States, passed resolu-
ton in favor of the consent decree, to
limit the packers. In its melting
this year it passed a resolution ask
ing modification of the consent decree.
for the reasons above stated.
But resolutions will do no good. The
packers have signed the decree and
their hands are tied. The United States
Supreme Court has ruled that they
cannot undo what they have voluntarily
agreed to.
What is the situation today? The
largest chain of grocery stores now has
about $500 meat departments. It has
already announced it will double that
number within five years. Another
chain has 5000 meat markets.
Chain Business Is Large.
Chain groceries do about 35 to so
per cent total grocery business Of the
United States. That figure is mount
ing. every month. New retail meat
n selling chains are being developed in
all parts of the country. One chain
owns and operate two very large meat
packing plants. Another has just install
ed one of the largest and best sausage
factories in the world, and the business
has only started
But the meat packer must sit idly
by and watch this development in his
| field-he can take no active interest
in it.
Chain stores at present are doing
about Is per cent of the retail meat
business in the United States. The
chain stores, as they expand, inevitably
operate their own wholesale houses.
Many operate bakeries. AS a result many
of the wholesalers have been forced to
door to door, selling to dispose of
their goods.
With the big packers thus limited
the little packers have been moving
rapidly ahead There are so meat
packers in the United States who do
| gross annual business exceeding $25,-
| 100000 each; there are more than Is
| meat packers each doing business of
more than $50,000,000 annually. Yet
the big four have their hands tied.
The sales Of the big four are not in
creaSing. Swift leads the field with
a gross of S950,000.00o annually, fol-
| lowed by Armour with 5000 900 900.
| Wilson and Cudahy do about $3000o0.-
600 each.
Enters Packing Business.
What is likely to happen? The chain
| store with its fast-increasing buying
| power can enter and is entering the
meat packing business. 1t can refuse
| to buy from the present packers. Il
| knows the packers cannot enter the
| retail field, and the smaller packers,
under the consent decree, can entef
| the retail field If they find they cannot
do business with the chain or individA
| ual store.
In fact, this is just exactly what is
| happening One packer in Seattle has
! already opened a number of retail
! stores and has announced that he ex-
! poets to establish at least so retail
| stores on the coast.
The consent decree was entered be-
fore, the, passage OF the packers and
| stockyards' act This legislation was
put on the books to give the Govern.
ment power TO control the big packers
should they show tendency to go be-
yOnd the provisions of the existing law,
! but todey this act merely is added to
the consent decree to make the situa-
; ton for the big four" even more diff
hcult.
The big four have not asked modi-
/ f1cation of the consent decree, yet. They
fully realize the difficult conditions
under which they are operating at pres
ent. Should the decree be modified
and it can only be modified with the
consent of the Government-to enable
the packers to enter the retail meat
business in line with modern develop
ment. there are many who question
whether the big four could compete
With the existing chains unless they
were allowed to handle groceries in
addition to meats. But here again the
big four are barred. under the consent
decree, from entering any unrelated
line of activity. And the grocery busi-
ness happens to be one of these lines.
The big four have always been noted
e.. kI,Nf.. E..N