"SQUARE EATERS"
"By Heaven, square eaters, more meat I say!"
--_Beaumont and Fletcher._
A delegate to one of the millers' national conventions said, "We want
cheaper wheat and dearer flour."
The Canadian Parliament reports that "the Biscuit Association,"
which had been in existence six years, had kept up the prices of its
products, "although the prices of the ingredients used have in that
time very materially decreased."
An Associated Press despatch from Chicago announced that at "a joint
meeting of all the cracker bakers between Pittsburg and the Rocky
Mountains, held this morning, it was unanimously agreed to advance the
price of crackers."
A "Bread Union" has been formed in London for the amalgamation of
concerns controlling hundreds of shops. Its chairman instructed the
stockholders that by concentrating a large number of shops under one
management in any district it could "quickly stifle the opposition of
any small unprincipled trader bent on reducing prices for competition
purposes." The Dominion Parliament, in condemning the Grocers' Guild as
"obnoxious to the public interest in limiting competition, in enhancing
prices," pointed out that "no reasonable excuse exists for many of its
arbitrary acts and agreements. The wholesale grocery trade had been for
many years in a flourishing condition; failures were almost unknown."
But though prosperous the grocers formed this guild, admitting some,
proscribing others, and established by private legislation the profits
they desired. The profits were "afterwards increased, and in no
instance lowered, though values generally had fallen."
At Minneapolis, the seat of the greatest flour-manufacturing industry
in the world, the elevators and railroads have united against the
wheat-growers in a way which does much to realize the dream of the
miller, of "cheaper wheat and dearer flour." A committee of the
Minnesota legislature investigated this combination in 1892. The
majority stopped short of reporting that it fixed the prices of wheat,
but admitted that some of the testimony tended that way, and that
the evidence "would seem to establish" that one of the most powerful
railroads had done so, and "had attempted to coerce compliance with
its requirements in the matter of prices by threats to embarrass the
business of local buyers."[30] A report from a minority of the same
committee was more outspoken. It summarizes the evidence, which shows
that the railroads and the elevator companies united to enforce a
uniform price for wheat. This price was six and a quarter cents below
what it should be. All the railroads adjusted their freight rates to
the artificial "list-price," and though rivals, they all charged the
same rates. The elevator companies, owning an aggregate of fifteen
hundred elevators, had a common agent who sent word daily, by telegram
and letter, to all wheat-buyers as to the price to be paid the farmers.
The report calculates the amount thereby taken from the wheat-growers
by the elevators at from four to five millions of dollars a year.
The findings of this report were ratified by the adoption of its
suggestions for a remedy. "There is," it said, "no agency but the State
itself adequate to protect, now, the producer of wheat in Minnesota
and the Northwest from the influence of this combine." It therefore
recommended the erection and operation of elevators by the State. This
was approved by the Legislature and by the Governor, appropriations
were made, and the officials of the State went forward with the plan
until the Supreme Court of the State stopped them on the ground of
"unconstitutionality."
That which we see the national associations of winter-wheat millers and
spring-wheat millers, and the fish, and the egg, and the fruit, and the
salt, and the preserves, and other combinations reaching out to do for
a "free breakfast table," to put the "square meal" out of the reach of
the "square eater," has been achieved to the last detail in sugar and
meat. Every half-cent up or down in the price of sugar makes a loss or
gain to the sugar combination at the rate of $20,000,000 a year. When
it was capitalized for $50,000,000 it paid dividends of $5,000,000 a
year. The value of the refineries in the combination was put by the New
York Legislative Investigation of 1891 at $7,000,000.
The Hon. Wm. Wilson, of the committee of Congress investigating trusts
in 1888, and the framer of the tariff bill of 1893, in a public
communication quoted figures showing that this Trust had a surplus of
$10,000,000 at the end of 1888, after paying its 10 per cent. dividend.
The profits for the next five and a half months were $13,000,000. This
surplus of one year and net profits of less than half a year together
amount to $23,000,000, nearly half the then nominal capital, and
several times more than the real value of all the concerns, as given
above. These profits so conservative a paper as the New York _Daily
Commercial Bulletin_ called "plunder," and it reaffirmed that epithet
when called to account. Stock was issued for this "fabulous valuation"
of $50,000,000, put on this $7,000,000 of original value, and was made
one of the specialties of the stock market.
"There has been an enormous and widespread speculation in the
certificates of the trust," says the report of the New York Senate. "It
was plainly one of the chief purposes of the trust to provide for the
issue of these certificates, affording thereby an opportunity for great
speculation in them, obviously to the advantage of the persons managing
the trust. The issue of $50,000,000 certificates was amply sufficient
for a speculation of many hundreds of millions of dollars."[31]
Since this investigation by the New York Legislature, the Sugar Trust
has been reorganized into a single corporation. The capital of this
is $75,000,000, all "water," since the value of the plants is fully
covered by the bonds to the amount of $10,000,000. The actual value of
the refineries in the Trust, excluding those which have been closed or
dismantled, was investigated by the New York _World_, January 8, 1894,
and put at $7,740,000. On this actual value of $7,740,000 in operation
the Trust paid in regular and extra dividends in 1893 no less than
$10,875,000, and acknowledged that there was in addition a surplus of
$5,000,000 in the treasury. This was in addition to the interest on the
$10,000,000 of bonds.
When a farmer sells a steer, a lamb, or a hog, and the house-keeper
buys a chop or roast, they enter a market which for the whole
continent, and for all kinds of cattle and meats, is controlled by the
combination of packers at Chicago known as "the Big Four."[32] This had
its origin in the "evening" arrangement, made in 1873 by the railroads
with preferred shippers, on the ostensible ground that these shippers
could equalize or even the cattle traffic of the roads. They received
$15 as "a commission" on every car-load of cattle shipped from the West
to New York, no matter by whom shipped, whether they shipped it or had
anything to do with it or not. The commission was later reduced to
$10. They soon became large shippers of cattle; and with these margins
in their favor "evening" was not difficult business.[33] By 1878 the
dressed-beef business had become important. As the Evener Combine had
concentrated the cattle trade at Chicago, the dressed-beef interest
necessarily had its home at the same place. It is a curious fact that
the Evener Combine ceased about the time the dressed-beef interest
began its phenomenal career.[34]
The committee appointed by the United States Senate to investigate
the condition of the meat and cattle markets fixed upon St. Louis,
Mo., and November 20, 1888, as the time and place of meeting, because
the International Cattle Range Association and the Butchers' National
Protective Association assembled at the same time and place. It was
supposed that prominent members of these associations would avail
themselves of the opportunity to appear before the committee. Some of
them did testify frankly, but the presence of antagonistic influences,
especially in the International Cattle Range Association, immediately
became apparent, and industrious efforts were made to prevent the
inquiries of the committee from affecting injuriously the dressed-beef
interest at Chicago. The committee found that under the influence
of the combination the price of cattle had gone down heavily. For
instance: In January, 1884, the best grade of beef cattle sold at
Chicago for $7.15 per hundred pounds, and in January, 1889, for $5.40;
Northwestern range and Texas cattle sold in January, 1884, at $5.60,
and in January, 1889, at $3.75; Texas and Indian cattle sold in 1884 at
$4.75, the price declining to $2.50 in December, 1889. These are the
highest Chicago prices for the months named.
"So far has the centralizing process continued that for all practical
purposes," the report says, "the market of that city dominates
absolutely the price of beef cattle in the whole country. Kansas
City, St. Louis, Omaha, Cincinnati, and Pittsburg are subsidiary to
the Chicago market, and their prices are regulated and fixed by the
great market on the lake."[35] This great business is practically in
the hands of four establishments at Chicago. The largest houses have
a capacity for slaughtering 3,500 cattle, 3,000 sheep, and 12,000
hogs every ten hours. When the Senate committee visited Chicago,
it was found impossible to obtain the frank and full testimony of
either the commission men doing business at the Union Stock Yards, or
of the employés of the packing and dressed-beef houses. The former
testified reluctantly, and were unquestionably under some sort of
constraint as to their public declarations. In private they stated
to the members of the committee that a combination certainly existed
between the "Big Four;" but when put on the stand as witnesses they
shuffled and prevaricated to such a degree as, in many cases, to excite
commiseration. The committee reported that the overwhelming weight of
testimony from witnesses of the highest character, and from all parts
of the West, is to the effect that cattle-owners going with their
cattle to the Chicago and Kansas City markets find no competition among
buyers, and if they refuse to take the first bid are generally forced
to accept a lower one.
As to the effect upon retailers, local butchers, and consumers, it was
admitted by the biggest of the Big Four "that they combined to fix
the price of beef to the purchaser and consumer, so as to keep up the
cost in their own interest."[36] They combined in opening shops and
underselling the butchers of cattle at places all over the country, in
order to force them to buy dressed meat. They combined in refusing to
sell any meat to butchers at Washington, D.C., because the butchers
had bid against them for contracts to supply with meats the Government
institutions in the District of Columbia.
The compulsion put upon local butchers is illustrated in the S----
case. The following telegram was sent from the office of one of the
combination at Chicago to an agent in Pennsylvania: "Cannot allow
S---- to continue killing live cattle. If he will not stop, make other
arrangements, and make prices so can get his trade."
S---- was a local butcher. He testified that he was approached by
the agent with a proposition that he should sell dressed-beef. He
refused, and was then informed that he would be broken up in business.
Notwithstanding this threat, he continued to butcher, and made his
purchases of cattle at Buffalo. From the time of his refusal to sell
dressed-beef as proposed, he could not buy any meat from Chicago,
and could not get any cars from the Erie Railroad to ship his cattle
from Buffalo. He was boycotted for his refusal to discontinue killing
cattle.[37] One of the combination, when testifying to this matter,
disclaimed responsibility for the despatch, but stated that he did not
think a butcher should be permitted to kill cattle and at the same time
sell dressed-beef. "He could not serve both interests." "We have no
hesitation in stating as our conclusion, from all the facts," says the
report, "that a combination exists at Chicago between the principal
dressed-beef and packing houses, which controls the market and fixes
the price of beef cattle in their own interest."
When pork is cheap, less beef is eaten. Beef monopoly must therefore
widen into pork monopoly. This has happened. There is a combination
between the pork-packers at Chicago and the large beef-packers. It
began in 1886. The existence of such an arrangement was admitted by its
most important member; and it is found to have seriously affected the
prices of beef cattle, both to the producer and consumer. It was shown
that one of the companies of the Big Four made in 1889 profits equal
to 29 per cent. on its capital stock--which may, or may not, have been
paid in--and this was not the largest of the companies. As to the idea
that other capitalists might enter into competition with those now in
possession, the report says: "The enormous capital of the great houses
now dominating the market, which each year becomes larger, enables them
to buy off all rivals."
The favoritism on the highways, in which this power had its origin in
1873, has continued throughout to be its main stay. The railroads give
rates to the dressed-beef men which they refuse to shippers of cattle,
even though they ship by the train-load--"an unjust and indefensible
discrimination by the railroads against the shipper of live cattle."
The report says: "This is the spirit and controlling idea of the great
monopolies which dominate the country.... No one factor has been more
potent and active in effecting an entire revolution in the methods
of marketing the meat supply of the United States than the railway
transportation."[38] There have been discriminations by the common
carriers of the ocean as well as by the railroads. The steamship
companies exclude all other shippers, by selling all their capacity to
the members of the beef combine, sometimes for months in advance. It is
useless for any other shipper to apply.
Property is monopoly, the Attorney-General of the United States says.
Those who own the bread, meat, sugar, salt, can fix the price at which
they will sell. They can refuse to sell. It is to these fellow-men we
must pray, "Give us this day our daily bread." And when we have broken
bread for the last time, we can get entrance to our "long home" only
by paying "exorbitant" toll for our shrouds and our coffins to the
"Undertakers'" and the "National Burial Case" associations.[39]