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Co., Pete Bros., H. K. Fairbanks, James S. Kirk & Co., Fels & Co., Ltd and the Globe Soap Co. The Fourteenth Census of the United States Manufacturers, 1919, of the soap industry, shows the production during that year to have been 2,432,591,000 pounds. Armour & Co. produced during the same year 90,345,849 pounds, or 3.71 per cent of the total. Morris & Co. produced even a smaller percentage of the total.

Morris & Co. does not manufacture sandpaper. Therefore, no : consideration need be given to that item.

Both companies manufacture ammonia, as it is one of the principal articles used very extensively by them in producing refrigeration, and may properly be classed as a packing-house supply, although a considerable amount is sold to others, but we have not the exact figures showing the total production of ammonia in the United States and the proportions thereof produced by these two companies.

Armour & Co.'s production of cottonseed oil is relatively small. For the year commencing August 1, 1921, the total production of cottonseed oil in this country was 123,815,408 gallons. Of this amount Armour & Co. produced 1,877,998 gallons, or 1.52 per cent of the total, and Morris & Co.'s productions was considerably less. in

There are a number of large concerns in the United States other than the packers engaged in the glue business, such as the American Glue Works, Eastern Tanners Glue Co., United States Glue Co., Delaney & Co., etc. It appears from the Fourteenth Census of the ; United States Manufacturers, 1919, that the total value of glue production in the United States for that year amounted, in round figures, to $37,000,000, while Armour & Co.'s sales for that year were about $1,000,000, or 2.70 per cent of the total. Morris & Co.'s sales for the same year were less than Armour & Co.'s.

There are a large number of curled-hair manufacturers in the United States other than the packers, such as Delaney & Co., F. P. Wall, Chicago Curled Hair Co., Peter Wall & Sons, and numerous others. It is estimated that the actual production of curled hair in the United States for the year 1921 was 15,000,000 pounds. Of this amount, Armour & Co. produced from live stock slaughtered by it 1,347,000 pounds, or 8.98 per cent of the total, while Morris & Co.'s production was somewhat less.

It appears from the periodical bulletins issued by the Census Bureau and Department of Agriculture that the total production of poultry in the United States for the year 1921 was 550,000,000 fowl, which reduced to a pound basis, using the figures commonly used of 3 pounds per fowl, amounts to 1,650,000,000 pounds. The production of eggs for the same period was 1,843,000,000 dozen, which reduced to pounds, using 22 ounces to a dozen, which is the usual method, amounts to 2,534,125,000 pounds. The production of butter for the same period was 1,705,438,000 pounds, and of cheese 355,838,000.; pounds, or a total of all four products of 6,245,401,000 pounds. Armour & Co.'s sales of all these products for the same period ! amounted to 245,893,338 pounds, or 3.93 per cent of the total. Morris & Co.'s sales of the same products for the same period were con-, siderably less. These products are handled by a great many other : concerns in the United States, a number of which handle à much, larger proportion of the business than the two companies here under i consideration.

is & Co., ed States roduction Lour & Co 1 per cent Centage of

ear 1922, about 5,0034) a statemizer industr¥23, the

refore, ne

rican Agriculural Corporatioshe total for thertilize

the prin refrigers, althoug

the exact ted States nies. ely smal duction d - Of this 2 per cen: bly less ates othe - American

Glue Co asus of the ue of glue 1, in round

rear were Co.'s sales

There is shown in the appendix (p. 74) a statement showing the total production of fertilizer in the United States for the years 1914 to 1921, both inclusive, as taken from the American Fertilizer hand book for the year 1922, page 20, from which it appears that the production ranged from about 5,000,000 to 7,600,000 tons. There is also shown in the appendix (p. 34) a statement taken from the Federal Trade Commission's report on the fertilizer industry, dated August 19, 1916, from which appears, in Table 55, page 173, the fertilizer sold in bags and in bulk for the seven largest companies for season 1913. The companies shown are the Virginia-Carolina Chemical Co., the American Agricultural Chemical Co., Armour Fertilizer Works, International Agricultural Corporation, F. S. Royster Guano Co., Swift & Co., and Baugh & Sons Co. The total for the seven companies amounted to 3,934,534 tons, of which Armour Fertilizer Works handled 548,979 tons, or 13.95 per cent. That, of course, does not show the Armour Fertilizer Works' percentage of the total production in the country, as we have shown that the total production runs all the way from 5,000,000 to 7,000,000 tons. Morris & Co. is not shown on the statement, as it is a very small factor in the fertilizer business, handling less than 1 per cent of the total.

We have also placed in the appendix (p. 35) a statement containing an estimate made by the Armour Fertilizer Works of the tonnage handled by a number of the fertilizer companies, based upon a normal Fear's production of 6,500,000 tons. This, as well as the statement just referred to, shows that the Virginia-Carolina Chemical Co. and the American Agricultural Chemical Co. are by far the largest handlers of fertilizer in the country. The statement also shows that Armour Fertilizer Works during a normal year would handle about 9.23 per cent of the total, while Morris & Co. would handle 0.62 per cent of the total, showing that the latter company is a very small factor in the fertilizer business.

On February 6, 1920, Armour & Co. segregated its leather business nto separate company, a large portion of the stock of which is held by persons in no way interested in or connected with Armour & Co. The stock is listed on the Chicago Stock Exchange and is dealt in taly. We have, therefore, not made any detailed reference to the leather business.

PURPOSE.

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55,838,00

pounds me period the total

were cormany other le a much here under

During the war period the Government stimulated very greatly the production of live stock in this country, and also urged, in fact demanded, that the packers enlarge their plants and increase their facilities in order to handle the increased production which was to be used to supply the armies in Europe. As a result these companies built new plants, enlarged their existing plants, and increased their facilities generally, with the result that when the war ended the degand fell off, and these companies found themselves in the position I having investments in plants and facilities which were unnecessary

their normal business, and which resulted in an immense overhead Expense, as a great amount of additional capital was required in the Expansion period of the war. These facilities can not now be oper

"economically because they must of necessity be now operated to much less than their capacity. 28704–S. Doc. 283, 67

4 8

The acquisition herein referred to will permit economies to be effected in and through the administration of the business, the manufacture and distribution of its products, and the increased volume of business through its facilities as will place the company in a position to more efficiently and best serve the public and the pro- . ducer of live stock.

GENERAL.

No public franchise or patents are necessary for anyone to engage in the packing business. The field is open to all, and capital alone determines the size and scope of the business.

It is a well-know fact that the receipts of live stock at the various markets fluctutate greatly from day to day, week to week, and year to year. In order to illustrate this we have shown in the appendix i (pp. 76–77) a statement showing the receipts of live stock on the Chicago market, by classes, for each week during the year 1921, and also a statement (p. 77) over a period of years.

It is also well known that the prices of the various classes of lives stock fluctuate from day to day, week to week, and year to year, and in order to illustrate this we are placing in the appendix statements (pp. 77–80) showing the prices of the various classes of live stock on the Chicago market by weeks and by months for the year 1921, and also over a period of years.

The price of grain has a large bearing upon the price of live stock, because when the price of grain is high the tendency is toward higher prices for live stock, and conversely.

The price of the finished products are determined in the first instance by the supply, but the demand has a very important effect upon them, for the reason that if the prices get too high consumers turn to other products and refuse to buy these meat products. It thus appears that there are elements both in the production of the live stock and in the sale of the finished product that the packers are in no way able to control.

For the purpose of showing the small profit in the packing business on the investment per dollar of sales and per animal slaughtered, we have attached to the appendix (p. 48) a statement showing this data with respect to the five larger packers for the years 1913 to 1920, both inclusive, which was introduced in evidence by Thomas E. Wilson in the hearings before the Committee on Agriculture, Sixtysixth Congress, second session, on meat packing legislation, and will be found on page 399. The profit per dollar of investment for the year 1913 was 7.1 cents; for the year 1917, 19.8 cents, which was the highest of any of the years, and, it will be recalled, was a war vear when the value of the products was continually rising, resulting in an inventory paper profit which was subsequently wiped out by heavy declines in the inventory values, resulting in heavy losses in the year 1921 by all of the packers. This is illustrated further by the fact that in 1920 the profit per dollar of investment was 1.2 cents, which was followed, as stated above, by heavy loss in 1921. The profit per dollar of sales in 1913 was 1.7 cents; it was 3.03 cents in 1917, and 0.24 cents in 1920, with a heavy loss on 1921. The profit per animal slaughtered in 1915 was 0.59 cents; in 1917, 1.95 cents; in 1920, 0.19 cents, with a loss in 1921.

mies to be siness, the creased rolmpany in a

It will be noted that the profits vary from year to year and that they reached their highest point during the war years, due to constantly rising values of the products, and met with heavy decline, resulting in a loss in 1921.

ARGUMENT.

nd the pro

SHERMAN LAW.

to engage pital alone

the various E, and year e appendix ock on the - 1921, and

sses of live ar to year ndix state sses of live or the year

It has been definitely decided by the Supreme Court in the case of the Standard Oil Company v. United States (221 U. S. 1, 55 L. Ed. 619), that the Sherman Act does not condemn as unlawful every contract or combination in restraint of trade, but only such as, in the "light of reason" unduly or unreasonably restrain interstate or foreign commerce. We may assume, therefore, at the outset, that the fact that the proposed acquisition will eliminate the competition existing between the two companies here under consideration, does not necessarily lead to the conclusion that a violation of the Sherman Act will result.

It has also been definitely decided by the Supreme Court in the case of the United States v. United States Steel Corporation (251 1. S. 417, 64 L. Ed. 343), that size alone is not sufficient to show a violation of the Sherman Act in the absence of proof that the acquiring company is able to control production and prices, or in other Fords, monopolize and restrain interstate or foreign commerce.

Justice Taft has summarized the law upon this subject in a very concise statement appearing upon page 112 of his book entitled "The Antitrust Law and the Supreme Court,” as follows: The effect of the cases is that a mere union of capital in the same branch of industry I the purpose of promoting economy and efficiency, though it uses interstate comtkice, and though to the extent of the business of the two firms or companies it supproses the competition of each against the other, is not within the statute unless what stone necessarily has the effect to control all the business or can be shown by the Saracter of the acts to be intended to effect that purpose or to be a step in the plot to Lg it about. Mere bigness is not an evidence of violating the act. It is the purpe and necessary effect of controlling prices and putting the industry under the dagination of one management that is within the statute.

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The object of the antitrust law was to suppress the abuses of business of the kind
escribed. It was not to interfere with a great volume of capital which, concentrated
Wher one organization, reduced the cost of production and made its prof ts thereby
ei took no advantage of its size by methods akin to duress to stille competition with it.
i wish to make this distinction as emphatic as possible, because I conceive that
sting could happen more destructive of the prosperity of this country than the loss
that great economy in production which has been and will be effective in all manu-
cturing lines by the employment of large capital under one management.
...With these rules for the interpretation of the Sherman Act in
mind, we will discuss the size of the resulting combination and the

sure of the packing business, also the purpose sought to be accom-
pushed, in order to show that the Sherman law will not in any way

be violated.

the rest fact that hich was profit par

917, and

is not our purpose to restate in this argument all of the facts

gures set forth in detail in our statement of facts, but there are an outstanding facts relative to the size of the resulting combina

hich we think are very important and it is to those facts we to direct particular attention.

er animal 920.0.19

We have shown the total slaughter in the United States, including animals slaughtered on the farm, for the 10 years period from 1912 to 1921, and also the total slaughter in United States inspected houses, together with the percentage of each, slaughtered by Armour & Co. and Morris & Co., and it appears that of the total slaughter in the United States of all classes of live stock, including animals slaughtered on the farm, Armour & Co. and Morris & Co. combined slaughtered 13.43 per cent for the 10-year period covered. It also ap- ' pears that of the total slaughter of all classes in United States inspected houses for the same 10-year period, Armour & Co. and Morrison & Co. combined slaughtered a total of 24.57 per cent.

There are hundreds of packers engaged in the business of slaughter-ing live stock and handling live-stock products, and included among these are some very large concerns; for example, Swift & Co. slaughters 14.07 per cent, Wilson & Co., 3.82 per cent, and Cudahy & Co., 3.54 per cent of the total slaughter of all classes of live stock in the United States, including those slaughtered on the farm, for the same 10-year period. Of the total slaughter of all classes in United States inspected houses for the same 10-year period Swift & Co. slaughtered 22.39 per cent, Wilson & Co., 6.08 per cent, and Cudahy & Co., 5.64 per cent.

The total consumption of fresh meat and packing-house products in the United States for the year 1921 was 15,624.000.000 pounds. Of this amount Armour & Co. produced 1,587,000,000 pounds, or 10.15 per cent, while Morris & Co. produced 795,000,000 pounds, or. 5.08 per cent, the two companies together producing 15.23 per cent of the total.

These figures and percentages can not be disputed and clearly show that the acquisition will not only not result in placing in one company a dominating power over the packing industry, but demonstrate that the company will control a relatively small percentage of the business. These figures in and of themselves show that it will be impossible for a combination of the two companies to monopolize or control interstate commerce in the meat-packing business, because the proportionate part of the business which they control is too small to permit it, and the remaining business, which constitutes over 75 per cent of the total, will be in the hands of many different companies, totaling over 1,000, and varying greatly in size, some very large and some small companies, which are scattered all over the United States and all actively competing with Armour & Co.

In this connection, we wish to call attention to the fact, which will appear from our brief to be filed with this statement, that in no case has a voluntary consolidation of industrial corporations been held unlawful where it controlled less than 50 per cent of the business of: the country. For instance, in the case of the United States v. American Tobacco Company (221 U. S. 157) the percentage of control ranged from 70 to 95 per cent. In the Du Pont Powder case (186 Fed. 127) the control ranged from 64 to 100 per cent. In the Bathtub case (226 U. S. 20) there was a control of from 85 to 90 per cent. In the Cash Register case (222 Fed. 599) there was an 80 per cent control. In the case of the United States v. International Harvester Company (214 Fed. 987) the combined company controlled from 80 to 85 per cent.

On the other hand, in the Steel Co. case the control was about 45 per cent, and the Supreme Court held that this was not sufficient to constitute a violation of the Sherman law.

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