Evening star., 1933-12-18
DENIES NATIONAL
: DAIRY IS TRUST
Mclnnerney Tells Probers
Profits of Subsidiaries
e Average 8 Per Cent.
CONTINUED From First Page.)

handled approximately per cent Of
the country's total milk production and
that the net profits of its subsidiaries
have averaged about 6 per cent.
Shortly after McInnerney had been
sworn as the first witness at tie
morning session. Chairman King of
the Senate District Committee, who is
acting as head of the Milk Investigat-
ing Committee, placed in the record
of the hearing a statement made BY
Secretary of Agriculture Wallace in his
annual report decrying tactics of large
dairy corporations and blaming them
for shaking public confidence. Senator
King also scored John McGill, jr.,
secretary of the Maryland
Virginia Milk Producers Association,
for "intemperate statements which
merit correction"
King Tells of Complaints.
The committee chairman said he had
been advised McGill had edited man
uscript for publication in defense Of
the producers organization which orig
inally contained the words I'VE Che
association do not question the mo-
tive" of the Milk Investigating Com
mittee. McGill, according to Senator
King, changed the words to read we
do not understand the motives"
For the benefit of Mr.. McGin and
other members of his organization,
said Senator King, the chairman of
this committee received numerous COM
plants scores of them, about the milk
situation in Washington. 1t was as a
result of those communications that
the resolution was introduced which
authorized this investigation.
And Mr.. McGill's statements
through the newspapers or otherwise
will have no effect on this committee
McInnerney told the committee at
the outset of the hearing the formation
of the National Dairy Products Corpo-
ration was his idea, that it started with
his own HydroX Co., and was nnanced
by three New York bankers, including
Lehman Bros. a firm owned by the
brothers of the present Governor OF
New York The first acquisition OF the
new corporation was the Reick-Mc-
Junkin Co., for which 100000 was
paid by the New York banks. The
corporation, from its start in 1928 to
the present, has acquired SIS dairy and
ice cream companies through StocK
transfers.
In no instance did the National
Dairy Products Corporation sell stock
to the public and use the money SO
raised to make other acquisitions, NC
Innerney said. He added, National
Dairy started as a holding company
with 100000 shares, and from time to
time issued new stock for acquisition
purposes. McInnerney was questioned
closely by Seal as to what economic
had been effected by acquisitions. Nc
Innerney, who claimed that in every
instance, where National Dairy ac-
quired subsidiary, there had been ex-
ceptional benefits to the consumers, T
piled that economies had been effectou
in distribution, advertising, delivery and
the purchase of bottles.
With respect to the Chestnut Farms
Chevy Chase Diaries here Mc1nnerney
said the economies included universe
duction of selling expense and recu--
tion of advertising expense.
Paid Lowest Price.
Pointing to the fact National Dairy
had paid close to $4,000, 900 for Chest
nut Farms, whose actual net worth was
less than $4,000, coo. Seal asked McIn-
neraey how he reconciled the purchase
figures with his statements of economy
That was the lowest price we could
buy Chestnut Farms Dairy" Mc1nner-
ney replied.
DO YOU know of any case where an
acquisition by National Dairy Of a sub
sidiary has resulted in a reduction in
the price Of milk to the consumer
Seal asked.
In no acquisition. that is as re-
suit of such acquisition, has the price
to the consumer been raised Nc
Innerney said
He added under further questioning
that he did not know OF any reduc-
ton effected by the purchase of
subsidiary because our margin has
been so small"
Later, however, he admitted the unit
margins of National Dairy subsidiaries
might have increased due to operating
economy. He cited, under questioning
by Seal the case of Chestnut Farms
here, whose net profits have been
higher since it was purchased by Ma
tional Dairy.
Cites Losses in Western Cities.
Asked if there were any cities in
which National Dairy subsidiaries were
not making money, McInnerney said
corporations were losing in Detroit.
Omaha, Kansas City and Milwaukee
He added the losing subsidiaries were
bolStered by profits from the more
fortunate companies.
Among the exceptional services rem
dered by National Dairy, McInnerney
enumerated a delivery survey which
''unQuestionably improved service" in
nf doir a1I1ir
and extensive research work within
the dairy industry.
Among the exceptional services" rem
dered to the farmers the holding COM
pany president cited increase in the
consumption of fluid milk brought
about by extensive advertising and the
payment Of higher prices for class A
milk than other dairy companies. He
admitted, however, that in recent years
declining but attributed the drop to
overproduction. He said overproduc-
tion should result in lower prices to the
consumer.
Formed for Economy.
National Dairy Products Corpora
tion was formed in 1923 for the pur-
pose of achieving greater efficiency and
economy in the milk industry by de-
veloping Nationwide organization to
handle milk and milk products of all
kinds" McInnerney's statement said.
The company deals not only in fluid
milk but also in butter, cheese, ice
cream, condensed and evaporated milk
and other milk products by converting
the milk not used for fluid consumption
into by-products to insure its most
economic disposal.
The statement continued by saying
the company has nothing to conceal in
the purchase or operation of its afili-
ates. They were bought On the basis of
a fair price in competitive market.
They were not purchased for the pur-
pose Of. nor did they result in, the
raising of prices to the consumer or of
lowering them to the producer.
National Dairy Products Corporation
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