CHAPTER IV

"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]