These figures show that, compared with their peak percentages, the declines in the proportion of total commercial slaughter handled for 1955 and other recent years by these 4 companies have been very substantial, as follows: Cattle from 52 to 32 percent, calves from 49 to 31 percent, hogs from 45 to 38 percent, sheep and lambs from 70 to 58 percent. From the foregoing figures and from those previously cited, which show a gain of 70 percent in 15 years in the number of wholesale meatpacking establishments, it is clear that the second allegation mentioned, namely that 10 large companies already have 70 percent of the meat business and are adding to their monopoly powers by absorbing small packers at a rapid rate, is wholly without basis in fact, and is untrue. Figures were put into the record on the Senate side by proponents of the transfer, purporting to show that some of the larger companies have acquired numerous plants over the last 3 or 4 decades. Yet at the same time the competitive position of these larger companies has not improved. Actually, acquisitions have been of little significance especially when viewed in the light of operations which have been discontinued. Figures showing the number of plants and branches closed by those companies were not included, which constitutes a glaring misuse of statistics, as is indicated by the fact that 2 of the larger companies have closed more than 500 branches since 1920 and that another which operated 122 plants and branches in 36 States in 1922 now has only 21 plants and branches in 16 States. Some of these companies have closed or disposed of some very large plants, some in leading packinghouse centers such as Chicago, Indianapolis, Sioux City, St. Paul, Kansas City, Los Angeles, and San Francisco. The 10 leading companies referred to by the proponents of this legislation have closed or disposed of more than a score of large plants in the last decade, which about equals the number they acquired. It is very doubtful whether their net capacity has increased. Allegation No. 3 is false: As to the third allegation, that the Department of Agriculture has not been preventing unfair trade practices and monopolistic acts, the exact reverse is true. The Department has full-time supervisors stationed at the leading livestock markets and meatpacking centers who give the industry full-time scrutiny, who are there every business day and fully aware of what is going on in the markets and in the industry generally and who do not have to rely only or principally, as does the Federal Trade Commission, on an occasion checking of occasional complaints. Handling a highly perishable product in uncontrolled supply, the meat industry is by nature a highly competitive industry and it is conceivable, of course, that some people would like to be protected from competition and would like to have a wall built around their trading area to keep competition out. Some of the people who want jurisdiction from the Federal Trade Commission, but what has the Federal Trade Commission done about them? What can any regulatory body do about those and other merchandising devices which, while in the opinion of some could be a bad economic practice, do not seem to be contracy to law? These prac tices, incidentally, are more prevalent in food industries subject to FTC supervision than anywhere else. And how can a highly perishable product like meat, with natural tremendous variations in quality, be marketed without having price variations which undoubtedly give rise to charges of price cutting, even though there probably isn't a packer in the country who isn't faced frequently with the choice of cutting prices below previous sales to move products or having the product spoil on his hands? No one, so far as we are aware, has brought forward any proof that nefarious practices exist in the meatpacking industry or any proof that the Department of Agriculture has been derelict in its duty. Statements are made to this effect but the people who make them have not yet, to my knowledge, come up with anything but allega tions. The claim the proponents of the legislation to transfer jurisdiction have made is that the Department has not brought many cases against packers and that therefore it is proved beyond doubt that the industry is rife with bad practices and that some companies are getting away with murder. Nothing is further from that. The meatpacking industry is a clean industry and the small number of cases proves it. Whether this is due to the prophylactic type of supervision the United States Department of Agriculture has given or to the innate nature of the business is beside the point. If there is any question as to the validity of this statement, one needs only to consider this fact: Since the Packers and Stockyards Act was passed in 1921, there has not been a single conviction we know about in the industry for antitrust law violation, despite numerous sweeping investigations by the Department of Justice, which, over the last 15 years actually brought 11 major criminal and civil cases involving packers of all sizes, all of which were droped, dismissed, or lost on trial. Several of these cases involved various trade practices, and in all of them the industry's activities were under the most detailed scrutiny and study. As recently as 1954, the Government, by dropping the dissolution case which it had brought against the industry's major companies, conceded that violations of the antitrust laws or undue concentration of economic power could not be shown. The point has been made by some of those who want to give authority to the Federal Trade Commission that the Commission has a much more numerically adequate staff (some 700 people) than has the Department of Agriculture (which some proponents of this legislation saw has only 3 persons to work on trade practice enforcement, although the Department itself says it has 78 full-time employees who may be utilized in investigations whenever necessary). It would appear, however, that even if their staff consisted of only 3 persons, the Department would have a distinct advantage personnelwise, with about 1 employee per 1,000 meatpackers and stockyard enterprises under its jurisdiction, as compared with probably 1 employee per 4,000 prospective supervisors as in the case of the Federal Trade Commission. There are many good and legitimate reasons why jurisdiction over the meatpacking industry was lodged with the Department of Agriculture. The overwhelming one is that the livestock and meat industry is a vital part of agriculture and is inseparable from it. In this connection, consider for a moment the laws administered by the United States Department of Agriculture, in addition to the Packers and Stockyards Act, which affect the meatpacking industry importantly. A partial list is as follows: Meat Inspection Act, 28-hour law and other laws controlling the transportation of livestock, Agricultural Marketing Act, Agricultural Marketing Agreements Act, Imported Meat Act, United States Warehouse Act, Agricultural Adjustment Act, Virus-Serum-Toxin Act, Commodity Exchange Act, Animal Quarantine Act, Cattle Contagious Diseases Act, and other laws controlling eradication of various diseases. Probably no one realizes more fully than the members of this committee the close and intimate relationship which the meat business bears to agriculture. Experience with OPA and OPS controls, with which this committee is intimately familiar through many hearings and careful consideration of the subject, proved clearly that the livestock and meat business were so closely interrelated that an attempt to apply a control in one area immediately reflected effects to all other areas of the industry, and that the meat and the livestock could not be separated. Likewise, as this committee understands and appreciates, in the case of meat inspection, this same interdependence, this same close relationship, has been demonstrated time and again. For example, what may be found by Government inspectors in the packing plant often points the way to disease eradication on the farm. In some cases, moreover, values of livestock are determined only after the animal has ben dressed and graded. Then, too, in the area of research, there is much in common between livestock and meat. Much research effort in the Department of Agriculture, as well as in some private research laboratories, is being directed toward the relationship of feeding, breeding, and so forth, to meat quality, including work in our own American Meat Institute Foundation Laboratories at the University of Chicago. As a matter of fact, a cooperative project of considerable scope, involving the Department of Agriculture and various other groups, is being carried on now at the foundation looking toward the development of commercially feasible methods of tenderizing beef. In marketing areas, likewise, a considerable amount of research is being done which encompasses the entire industry from farm to table, such as studies of spreads, for example. The relationship between meatpacking and agriculture is very real. Meat being perishable, it must be sold at prices that will keep it moving into consumption. Pricemaking in the meat business, therefore, takes place primarily and fundamentally at the retail counter. But the packer does not sell the public. The retailer does, and, in effect, represents the consumer. In selling the retailer, the packer actually represents the producer, for the amount the packer can pay for livestock obviously is determined by what he, the packer, can get for the products of that livestock. The whole system of marketing and processing the livestock and meat is integrated, and it is impossible to separate one portion of the process and label it agricultural and arbitrarily say that everything else is a matter of trade. Congress considered the question of regulation for the meatpacking industry for a long time before it decided to place jurisdiction in the Department of Agriculture. The Interstate Commerce Commission and other agencies were considered for this jurisdiction before the final decision was reached. That decision was based primarily on the fact that meatpacking is an inseparable part of the business of agriculture. Some of those who agitate for transfer of authority to the Federal Trade Commission maintain that there is no need for a separate agency to do a specialized job in the case of the meat business. As a matter of fact, there are many other governmental agencies of a specialized nature. The banks, the railroads, the security exchanges, the airlines, the radio and TV businesses, and the public utilities are all under the jurisdiction of agencies of this type. Obviously, if the arguments in support of transferring authority to the Federal Trade Commission are sound in the case of the packing industry, then logically the jurisdiction of the Federal Trade Commission should be extended to cover many types of businesses now under specialized supervision. In addition to the authority which it exercises under the Packers and Stockyards Act, the Department of Agriculture regulates the meatpacking industry in a number of important ways, as I suggested earlier. For example, there is no other food industry subject to the continuous regulation of processing operations which meatpackers have under the Meat Inspection Act. That is one important difference between meatpacking and other food processing, and, by itself, it constitutes a good reason for keeping meatpacking under Agriculture while some other food processors are under the Federal Trade Commission. It seems evident that the leading livestock and agricultural organizations share our view that supervision of the meatpacking industry should remain with the Department of Agriculture. We think this is highly significant, for it is the livestock producer who probably is most directly affected by the ways in which the laws governing packers are administered. They know and trust United States Department of Agriculture supervision of the meatpacking industry and want it continued. Following are the various livestock and farm groups which have passed resolutions or otherwise expressed their opposition to proposed legislation to transfer jurisdiction over the meatpacking industry to the Federal Trade Commission: American Farm Bureau Federation American National Cattlemen's Association American Stockyards Association Arizona Cattle Feeders Association California Cattle Feeders Association California Cattlemen's Association California Farm Bureau Corn Belt Live Stock Feeders Association Idaho Cattlemen's Association Kansas Livestock Association Minnesota Farm Bureau Missouri Livestock Association Montana Stock Growers Association The National Grange New Mexico Cattle Growers Association North Dakota Stock Growers Association Oregon Cattlemen's Association Texas and Southwestern Cattle Raisers Association I would like to point out in reference to this list that it is highly significant that in the area covered by the Western Meat Packers Association, which started this agitation, eight of the livestock associations are opposed to the proposition to transfer jurisdiction to the Federal Trade Commission. But to return to the allegations on which those who want to transfer jurisdiction from the United States Department of Agriculture to the Federal Trade Commission base their case: It is clear that the number of small meatpackers is increasing rapidly, not decreasing. It is clear that the larger companies do not have monopoly power and that, instead of enjoying an increasing share of the market, their share has decreased substantially. It is clear that trade practice enforcement is as vigorous and effective under the Department of Agriculture as under the Federal Trade Commission, if not more so. Since the whole case for a change in jurisdiction was based originally on allegations which have been shown to be false, it follows that there is no real case for making the transfer. Even the recent allegation that the preliminary finding of a Federal Trade Commission examiner in the Food Fair case makes a change of jurisdiction imperative is likewise without foundation in fact. In the first place, another Federal Trade Commission examiner made an exactly opposite ruling not long ago in a similar case, going extensively into the legislative history of the Packers and Stockyards Act to prove that the Commission did have jurisdiction. In this case, Docket No. 6172. In the matter of Carnation Company, et al., the Carnation Co. moved to dismiss a complaint brought against it by the FTC on the ground that it was engaged in the horsemeat business and the manufacture of dog food, which it contended made it a packer under the Packers and Stockyards Act. In a well-reasoned decision, the hearing examiner denied the motion to dismiss, principally on the ground that he felt that an intelligent reading of the legislative history of the Packers and Stockyards Act made it clear that the broad definition of the term "packer" was to prevent legitimate packers escaping jurisdiction on sidelines rather than to regulate someone primarily in the dairy industry merely because incidental thereto it operated a packing subsidiary. The General Counsel of the Federal Trade Commission referred to this case in his appearance before the Subcommittee on Antitrust and Monopoly of the Senate Judiciary Committee in such a way as to give the impression it was just another Food Fair type of case; that is, that the company had succeeded in finding a loophole, when as a matter of fact the examiner's ruling was directly contrary to the ruling in the Food Fair case and held that the Federal Trade Commission did have jurisdiction. Secondly, there is no basis for the allegation that getting out from under the Federal Trade Commission will make it possible for anyone to escape regulation. It is well known, and has been pointed out here this morning, that the Packers and Stockyards Act has more teeth in it than does the Federal Trade Commission Act. |