Despite the Federal Trade Commission's attempt to convey the impression that the packers' profits were exhorbitant, it may interest you to know that the United States Food Administration in its report for the year 1918 states that the profits of the packers on controlled products were 5.6 per cent of the total investment for the year, as shown by audited accounts. This was considerable less than the maximum profits allowed and on the gross sales this profit represented a percentage of only 1.6 per cent. Figures which have been subject to audit by the Federal Trade Commission prove that the average profit of the packer per dollar per sale has been about 2

cents.

In part 2 of the commission's report the statement is made that the packers had an agreed price for lard compound. The commission, by inference at least, attempted to show that this was an evidence of combination and collusion among the packers. As a matter of fact there was an agreed price for lard compound, but the agreement was made at the direction of the United States Food Administration. Although the Federal Trade Commission spread this lard compound agreement throughout the length and breadth of the country as an evidence of combination and collusion of the packers it has to this day never publicly corrected its false statements and inferences. Had the commission desired to be fair it should have given publicity to the fact that the agreement mentioned was made at the direction of another agency of the United States Government at a time when that agency was in a position to control not only prices but profits as well.

The above are only a few examples of the inaccuracies and exaggerations in the Federal Trade Commission's report. The whole report is filled with examples of the same kind but to detail each one of them would, I fear, be a burden upon the time of your committee.

Very truly, yours,

S. T. NASH,
Vice President.

Mr. LIGHTFOOT. Mr. Creigh wishes to be heard. The CHAIRMAN. Very well, we will hear from you, Mr. Creigh. STATEMENT OF THOMAS CREIGH, REPRESENTING THE CUDAHY PACKING CO.

Mr. CREIGH. Mr. Chairman and gentlemen of the committee, more or less in and out of the program here I, as representing the Cudahy Packing Co., have had quite a little bit to say. So I want to cut that time out of whatever time we properly should have now, and I will try to be brief.

I was so much pleased this morning with the general attention that was paid by the committee in its very full attendance when Mr. Wilson was speaking, and what impressed me so much was the eulogy that Mr. Wilson paid to the pioneers in the packing industry. I thought the committee really took him pretty much at face value with respect to those men and what they have done. And then in the second place I thought that even though Tom Wilson might not have been a pioneer, he was pretty near in the same class with them, and his statesmanlike manner of handling the thing would have done credit even to the pioneer stock.

Now there has been so much said in all these committees here about this Federal Trade Commission report. This morning the whole hearing, the whole situation, had a so much higher atmosphere than that sort of thing.

There are many morals that I would like to point out with respect to the construction of these bills here and their defects and unfairness to the industry as well as to individual firms. I shall need to point back to what happened these long years ago now with the Federal Trade Commission. But I do not desire to get this discussion down from the higher tone we had this morning. I should like

at any other time to talk at any length with you people on what I think-and I try to be dispassionate on what I know was a great injustice that was done to a very important industry. I do not think that should be material now. I am saying this at this time not to divert the attention of anyone who might want to ask me about any of those things but just to get into the record two thoughts: First, not only now, but even from the very first day, years ago, when the Cudahy Packing Co. people saw that report, we have challenged its accuracy as regards our interests in every respect, and we can demonstrate, I think, at any time that what is said is, first, not true, and, secondly, that the inferences drawn are entirely unjust.

Now, as I say, I put that in just to keep the record clean. I don't want to go into the discussion now because I want to help bring this thing out where I believe it will be more helpful to the committee.

Mr. CLARKE. Just a moment, right there. For how long have you been willing that proper official authorities should come in and have all of your records so that they could study them and investigate them, etc.?

Mr. CREIGH. Well now, Mr. Clark, I happen to have been one of the people, I think, in this country who perhaps put in more work than most anybody else, outside of Congress, in helping toward the passage of the Federal Trade Commission act. At that time I thought it was a great, constructive piece of legislation. I thought it was going to be helpful to business. I still think there are infinite possibilities for good in that act, but I will tell you that if ever an optimist on constructive legislation, dreaming of what might happen in the way of constructive and beneficial results, received a disillusionment from what actually did happen in regard to legislation of that kind I got it, because I have been in the very front of the firing line on this Federal Trade Commission situation ever since it came into being.

Now I don't know how many of you may be familiar with the Federal Trade Commission act. I will assume that a lot of you probably are, but you won't mind if I just call your attention to one or two things that are there. That is what puzzles me so much about all of this situation.

Now here is the Federal Trade Commission act that was passed September 26, 1914. And after the usual definitions common to such bills there are two general sections, one is section 5, "that unfair methods of competition in commerce are hereby declared unlawful.' Then there is a long procedure outlined.

Now here is the packing industry, and here is the Federal Trade Commission report against it, and here is charge after charge that unfair practices have in the past been indulged in. It is charged that there have grown up many unfair practices and that there have been violations of law, and yet this act is now nearly seven years of age, and the commission had for years all this stuff before it and with all that, I know of not a single complaint that has ever been filed against a packing company referring to any of the items that are now charged to be so wrong. Now just think of that situation. The Trade Commission with many, many volumes of complaints and charges, with ample machinery in its own act, and no commplaint ever filed that touched any of these things.

Now I must qualify that in one respect. There are a series of complaints filed involving certain subsidiary company holdings of the packers, and those are progressing in an orderly way, and ought to be finally decided in a correct manner. That is somewhat judicial. They are outside of the atmosphere of all this hurlyburly and sensational stuff. And there is also one other complaint that was filed against Wilson & Co. on the theory that the selling of some. product alleged to be inferior-but which later turned out to be not so was an unfair method of competition.

Now I think I am pretty fairly familiar with the commission's docket. I will have to qualify my general statement one time more. There was a complaint filed against the Cudahy Packing Co. We wanted to have a test case. What do you suppose it was? Any of these packing-house practices? No. That we made "Old Dutch Cleanser," which all you gentlemen possibly know of, and that our system of selling it was supposed to be not in accordance with the law. We worked out that proceeding in an orderly way-in the correct way under the act-to a conclusion that I think was just.

Now, as to all this packing-house business, all the machinery of the Federal Trade Commission, and all these rules, and so on, and nothing in the way of a single complaint as to the packers' general practices that I know of filed as to any of them.

Now, as regards what we may call "having access to books." Let us take section 6 of this same act:

"The Commission shall also have power," now listen, "to gather and compile information concerning and to investigate from time to time the organization, business conduct, practices, and managements of any corporation engaged in commerce," etc. Now, let us go ahead:

"To require, by general or special orders, corporations engaged in commerce to file with the commission in such form as the commission may prescribe, annual or special, or both annual and special reports, or answers in writing to specific questions," etc.

Ample authority under the law, plenty of it right now.

And not only in the Trade Commission itself. The Bureau of Markets now performs a service, and this, that, and other bureaus a similar one. Our chief trouble on the end of giving out of information is that we have so many of them that it is almost an intolerable burden at times.

Mr. ASWELL. Did you support this measure? Did you support the passage of this act, Mr. Creigh?

Mr. CREIGH. I certainly did. And as I say, I certainly was disillusioned as regards its being a constructive piece of legislation, as I hoped it would be. What I hoped would come out of that act was very different from what came to the packers.

Now, as regards the publicity, item F: "This commission is to make public from time to time," etc., as far as the legislation goes everything there would under existing legislation work out sensibly if properly handled by the Trade Commission.

Now, let us get down to one of the other features that perhaps Mr. McLaughlin will be interested in. Here is the Trade Commission act covering a procedure in regard to unfair methods of competition; very much like what is in his present bill. Now let us look at the Clayton Act. Section 11 of it vests the Federal Trade Commission

with the authority to enforce compliance with certain sections. Those sections of the Clayton Act are Nos. 2, 3, 7, and 8.

Now, I won't take the time to read them, but No. 2 applies to certain classes of discrimination. The very same thing, Mr. McLaughlin, that happens to be in your bill there, and with a thorough procedure. And yet, again there have as yet been no complaints, and no proceedings, with the possible exceptions I have named. None that go to the very things that are charged in this big voluminous report to be so wrong. None of them have been proceeded on at all. And the packer, in the face of these reports here, condemned to the public and having had no day in court at all. In my case I have tried and tried and tried to get a hearing before the commission, challenging them to produce the evidence.

Now, as I say, I want to pass all that. No complaints have ever been filed, no proper hearing ever had, and yet reports and charges heralded abroad. I think an injustice has been done. They may have their side to the story. But we have not yet, on the packer investigation, with all this expenditure of money and time and effort, gotten to the point where even now this committee is satisfied that it has the information. Yet here is already sufficient law. And I venture the assertion that a million dollars has been spent by the Federal Trade Commission in getting this far. Now I am not very enthisuastic as to what will happen in their jurisdiction. Now let us see what we can do.

This morning, as I say, I thought Mr. Wilson's treatment of the subject was very statesmanlike. Of course, it might be said that it would not be right for me to agree with him in all respects, so here is where we will disagree just a little.

While I have been down, here I have been very much interested in reading the bill recently reported by this committee, House bill 5676, on the subject of future sales and trading in grain. Now, of course, I don't want to get into the merits of future trading, but I want to compliment the committee on what seems to me one of the most sensible ideas in the world. Your provisions here of sections 5, 6, and so on, under which boards of trade, the existing machinery of business, with all their rules and standards and grievance committees, and what-not, are in effect incorporated reasonably into a national system, with some supervision by the Secretary, and then go ahead and adjust business to present forms. Now, that is sensible. There is such a distinction, gentlemen, as we work along here, between what we call "supervision"-the word is used very inexactly by most of us-and what we call "regulation."

We have had a lot of talk around the table here during the last few days on the act to regulate commerce, and on the proposition of the abolishing of rebates, and so on. Now, let us stop and try to philosophize about that just a minute. What did all that come to, really? In the old days of wide-open competition between carriers there were certain laws that were openly violated. How? Giving rebates is one form of it. What was the rebate after all? It was the form of competition that was left open to the carrier upon which he cut his price to certain customers. Now, that was your competition. This wide-open competition business. And the rebate was the thing practically that was almost the sole field left for the carrier to compete in. Now it has changed. The rebating, the cutting of prices, in other words, was prohibited; it became an offense.

Now, how many packer ills that we have been discussing around the table here are, possibly, caused more by too much competition than by too little? The carriers certainly, and the general public, have not been hurt by getting to some basis, by trying to regulate or supervise or even prevent their competition. Now, I don't want to get down to the point where there is no competition, but I certainly think that by exercising the normal machinery of business toward fair practices, reasonable regulations, standardized grades, ordinary conduct of business-all those things that stabilize and tend to make business more fair and make business more efficient-I certainly think that that is a wonderful field to work in. And I think that there can be no question as to the effectiveness of that, as against regulation, where the Government employee, or the changing Secretary, or the assistant, who must be paid a small salary, gets to where he can regulate-that is, tell Tom Wilson and the rest of them how they shall conduct their business. Isn't that a strange idea?

I want the Government to function from the standpoint of what I will call supervising. I think the function of the Government is to come in, and as between a packing company and a producer who may be aggrieved, or a consumer who may be aggrieved, afford a mechanism where the difference can be promptly adjusted between the contending parties. That is the Government's proper sphere. But the sphere of doing it itself, or of regulating and controlling day-to-day management of a private business, is not.

Now let us try to work that out back again to the carriers' situation, and the act to regulate commerce.

I have been before that commission many, many times. In the old days I suppose it was true that the shippers generally thought very well of the commission, perhaps because it was quite generous in the reduction of rates that were granted in many hearings. I do not blame the commission for the condition that the carriers are now in. I do think, though, as you study the later amendments to the act that you will find that one of the large features of difficulty in the present situation is that the early policy of making the commission the arbiter, the judge, if you please, in some proceeding, to decide matters between two contending parties, has been abandoned in the later years. More and more the commission has been put into the regulation field, the control field, telling the carriers what they shall do, and I think every inch of progression toward control and operation in an executive way has been to the detriment of the carriers and of the public, and even to the Government. The Government's sphere is not in operation. The Government's sphere is confined to supervision and judicial decisions between contending parties. Now there is the big principle as I see it and as applicable to the bills I am now discussing.

Let me take up these propositions further. First we have got to consider this whole governmental theory of competition in business. We talk about the commerce act being an improvement. Of course it was. But notice the philosophy underneath it. It is that the regulation, almost the elimination of competition, was to the benefit of everybody.

The second principle I would emphasize is another thing the distinction between supervision and control or regulation which directs.

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