United States. Congress. House. Appropriations.

Agricultural appropriation bill: 1923, hearing ... 67th Congress, 2d session online

. (page 88 of 114)
Online LibraryUnited States. Congress. House. AppropriationsAgricultural appropriation bill: 1923, hearing ... 67th Congress, 2d session → online text (page 88 of 114)
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We have to be cautious.

We have a situation at East St. Louis that is causing us some con-
cern. Most of the exchanges, if not all of them, have rules in their
rule books prohibiting their members from dealing with persons
who are not members of the exchange. While, in the inception of
that rule, it was probably aimed at persons who were not looked upon
as of the highest type, and who would not be acceptable for mem-
bership, it has grown to have application specifically to the cooper-
ative commission concerns in the markets, because of the fact that
in the interpretation that the exchanges place upon their rules, the
cooperative exchanges' rebate, and the exchanges look upon that as
a form of competition that they can not meet directly, and they are
inclined to enforce their rule that they have had, notwithstanding
the fact that now that the Packers and Stockyards Act is in force
such a rule can not stand; but that is one of the things that is be-
hind this litigation — one of the reasons for instituting the litiga-
tion, because they feel that that rule can not be maintained hereafter.

In East St. Louis there are two or three cooperatives now, and an
independent or two, that have started up, and they have all felt more
or less this apparent discrimination. It is a little difficult to lay
your fingers on it and to point out the actual facts, but still it would
seem that there is. So, the matter has gotten to the point where

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692 AGRICULTURAL APPROPRIATION BILL, 1923.

they have demanded a specific investigation and action bj' the ad-
ministration, and I have a man now in East St. Louis whose sole
duty is to get all the facts on that matter so that we can determine
whether to take any action or not,

I might say that even there there is a breaking away from the ex-
change, in that some of the traders and other members of the ex-
changes are beginning to cut loose on this proposition of dealing
with cooperatives. Tne packers themselves are not a party to it
at all.

Mr. Anderson. Well, they never have been, I think.

Mr. Morrill. Well, I do not know that they ever have been, but
recently they have adopted a very, very friendly attitude toward
the* cooperative associations, and while they do not discriminate in
favor of them, they certainly do not discriminate against them, and
I think that they have really helped the cooperatives to a consider-
able extent in a good many of the markets.

Mr. Anderson. I have noticed the same difference of opinion
among the members of the exchange as to the policy of the exchangje
with reference to cooperative organizations.

Mr. Morrill. In fact, members have told me that they did not
feel that they should fight cooperatives, except in the business. In
other words, that they are willing that the cooperatives shall come
into the market and do business on the same terms as anyone else.
and tliey will simply fight them on a purely competitive basis, and
I think that represents the attitude of the bulk of the broader
minded men; but there are so many of them who feel the danger
from that competition, and. who feel that they are likely to suffer
from it, that they are not willing to take that broad-minded attitude
toward it. Of coui'se, you could not seriously criticize a man who
feels that his bread and butter depends upon the success of these
cooperatives.

There has been a lot of propaganda circulated in coimection with
the matter for the purpose of showing that the cooperatives can not
be successful, or that if they are successful they ai'e doing it by
devious means, and, regardless of what one thinks about the prob-
able success of the cooperative movement, the shippers in the coun-
try generally are entitled to know the facts one way or the other.
I feel that if all that the old-line concerns say about the coopera-
tives were true, the sooner the diippers know it the better. If, on
the other hand, it is not true, the same answer applies — the sooner
they know it the better.

Mr. Anderson. It is a very difficult thing to get at, because it is
always difficult to tell what would have happened if a man had not
taken the pill. And it is difficult to tell what you would have gotten
for a carload of steers if somebody else had sold them instead of the
fellow that did.

Mr. Morrill. Certainly. When it comes to the question whether
the cooperatives are getting better prices for their live stock than
the old-line commission concerns, that is a most difficult question,
and I don't know whether there will be any satisfactory answer to it

This sort of a theory was advanced, which we are going to test
out for what it is worth— that we might take hogs, handled in the
same market through the cooperatives and through the old-line com-

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AGRICULTURAL APPROPRIATION BILL, 1923. 69$

mi&sion concerns over a considerable length of time, and average
the weight, average the prices, and see what the result is, on the
theory that the general average would be fair in both cases. Now,
whether that is true or not I do not undertake to say, but that is the
theory that has been advanced, and we are going to give it a test.

Mr. Anderson. There has always been some question in Minne-
apolis in respect to the cooperatives dealing in grain. The old-line
people have always claimed that the cooperatives did not get as
good prices as the old-line people did, and that what the tanner
got in dividends and rebates was more than offset by the smaller
price that they received. I don't know whether that can be demon-
strated or not. I suspect that if it were demonstrated there would
still be a good many people who would not believe the demonstra-
tion.

Mr. Morrill. I think that is true.

Mr. Anderson. And if that were not true, there would be a lot
of people who are in business now who would be out of business,
probably.

Mr. Morrill. We have a problem upon which we are working in
several markets, created by action recently taken by the stockyards
companies. In the past it has been the custom of a great many
stockyards companies to make no charge to speculators where re-
weighing is involved of the live stock. The live stock having once
been weighed and sold by a commission man and having gone to
a speculator, the speculator gets a free service.

I think the theory upon which the stockyards companies justified
that was that it built up a market and afforded a ready outlet for
the live stock that the packers would not take themselves, but I
think that the stockyards companies recently decided that, either on
the basis of the packers and stockyards act or on some other ground,
that that was ncJt exactly fair after all. A number of them have
introduced a charge equivalent to one-half of the yardage charge,
to be exacted from speculators when live stock is reweighed. But
they have introduced some refinements on it. For instance, in one
of the big yards that extra charge is not exacted where live stock
go. out of the market. That promptly brought a kick from one of
the local packers, who had bought live stock from a speculator and
therefore had the one-half yardage charge incorporated in the price.
I think that the stockyards company is ready to concede that there
is real discrimination there, and they are trying to work out the
problem with our supervisors of how to rectify their charges and
avoid discrimination.

Mr. Anderson. It is exceedingly complex.

Mr. Morrill. Yes. In other words, in a small way, reviewing some
of the things I have said, we have all the problems of an Interstate
Commerce Commission with respect to rates and charges of stock-
yards companies and commission men and other agencies, such as
serum companies, and the like, that render services in the yards; we
have all the problems of a Federal Trade Commission with respect
to commercial practices of all of those agencies, and the packer's, too,
not in the case of packers not confined to meat; we have all the
accounting problems that any accounting agency has, first, from the
standpoint of auditing the books of the various agencies, and, sec-

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694 AGRICULTURAL APPROPRIATION BILL, 1923.

end, from a constructive standpoint of determining better account-
ing practices, in order to get the facts; tlien we have, of course, all
of the legal questions that are involved in any of these matters.
So that we have a pretty big combination of practical and legal
questions in the administration of the packers and stockyards act:
I think about as comprehensive, in a relatively small organization,
as you can find in the Government.

Perhaps I have not covered the general activities as completely
as you would like, and I therefore will be glad if you will ask me
any questions that occur to you.

ORGANIZATION.

Mr. Anderson. I wish you would give us some idea of how the
proposition is organized, the classes of employees, and the salarit*.^
which you expect to pay.

Mr. Morrill. I will have to do that from the standpoint of an
organization in process of making, rather than one in actual exist-
ence; bearing in mind that it is a pretty slow job for me to get just
the kind of men tliat I want to keep in the organization with refer-
ence to the kind of work they have to do ; also thut the development
of the work indicates some changes that ought to be made m my
original plans. But in a tentative way I am working along these
lines, aside from the clerical organization, which of course would
inhere in any organization.

RATES, CHARGES, AND REGISTRATION SECTIONS.

We have to have a section that will deal with rates, charges, and
registrations. In that we have already employed a man who has
both economic and legal training, to handle those questions. He
will have to be assisted by a competent lawyer, whom 1 have not
yet appointed, for the purpose, but who shall have special training
in interstate commerce law and practice and procedure, public
utilities law, and so on. I am dealing with the Civil Service Corn-
mission in that matter, and I have in view a man who might met^t
the re(iuirements. T have not interviewed him yet.

In addition I figure on needing another man to do routine work
in this connection, with the tabulation of those schedules and the
carrying on of correspondence and the examination of regis tratiom^
and things of that sort.

Mr. Anderson. You are talking now about vour organization
here?

Mr. Morrill. The organization here in Washington. I will work
clear around the circle before I get through. So far I have figurea
upon three men in that rate section in Washington. Whether it will
need more than that I am not prepared to say, although it looks as
if it is going to be a pretty big thing to handle the questions that
are beginning to come m pretty fast from every direction, complaints
about the cost of feed, complaints about su h discriminations as that I
mentioned involving the extra charge to speculators; the gener.il
complaints about the alleged unreasonably high commission rates?
and specific complaints about relatively small matters like serum
(barges, not the charge for the serum itself, but for the vaccination

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AGRICULTURAL APPROPRIATION BILL, 1923. 695

service; also charges for hauling dead animals out of yards, and
things of .that kind.

Mr. Anderson. Now, I take it most of those things would be
handled in the first instance by the suj)ervisor at the yard.

Mr. Morrill. As far as possible we would hope that the super-
visor at the yard would be able to take it up and handle it and dis-
2)ose of it, but he must do it under general advice from the man
wliose duty it is to consider these specific questions.

Mr. Anderson. I take it^that it will take you some time to get
enough information to lay out any general administration rules by
which the local supervisor can be governed. You have to pursue a
general policy on some of these things, I imagine.

Mr. Morrill. That is one reason why, as far as possible, we are
trying to get the matter settled locally, until we can get these general
policies laid down, and as far as we can get local settlement satis-
factory to the parties, it relieves us in Washington, until we can get
an opportunity to lay down general policies that will govern all over.
That IS the reason 1 look upon the establishment of this rate section
in Washington as important from the standpoint of the personnel
and the w^ork that they iriust do.

Mr. Anderson. Now, that rate section in Washington, will that
have to do with everything that pertains to rates, charges, and prac-
tices in the stockyards?

Mr. Morrill. Kates, charges, and registrations, but not practices.
I intend to cover the matter of practices in a separate section^ be-
cause there is plenty to do handling rates, charges, and registrations,
and if those people specialize on it, I believe that they can do much
better work, if they specialize on those subjects, and do not have
the question of commercial practices to deal with independently, ex-
cept where those practices involve rates.

Mr. Anderson. Well, don't they most always involve rates? That
i>i, in the yards?

Mr. Morrill. No, they do not. For instance, this question of
weighing up to the commission men; the question of string sales;
the question of the abusive treatment of animals; the question of
shrinkage; the question of discrimination against cooperatives; all
of those things really are separate from rates. About the only ex-
ample that occurs to me of a practice and a rate being involved to-
gether is that question of gratuities. There, of course, you would
have a junction of two subjects.

COMMERCIAL PBACTICES SECTION.

Now, for handling the question of commercial practices, I think
that we should have a separate section for handling commercial
practices, and I have made a start, but only a start. I have only one
man in Washington who is working on these matters. Unfortunately
he happens to be sick at this time and I am shorthanded. There,
I think, is going to be a very heavy burden on the Washington
office, as well as upon the supervisors in the various yards, because
the supervisors realize quite frequently that the problem of a given
commercial practice is broader than tneir own yard, and that they
have to find out from Washington whether that same problem has

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696 AGKICULTURAL APPBOPRIATION BILL, 1823.

arisen in other yards, and what the packers and stockyards admin-
istration thinks about it.

In order to aid the supervisors, we are requiring the supervisors
to exchange their reports with each other; so that every supervisor
is informed, so far as we are concerned, of what is going on in all
the other yards and what questions ai'e coming up ana how they are
disposed of. We are trying to get an organization that is in com-
plete touch in all of its parts. However, in order to pass upon these
matters, it is going to talce a number of men in Washington working
on commercial practices, and they will htive to specialize to a certain
extent. For instance, I think that the time of one or two men will
have to be devoted to yard practices. 1 think the time of one or
two men will have to be devoted to packer practices, iust from the
standpoint of examining the facts and working out policies.

Mr. Anderson. You mean the packer practices in the stockyards i

Mr. MoKRiLL. No ; not in the stockyards. I mean outside of the
stockyards. The packer practices in the stockyards would relate tx>
the buying and handling of live stock, and would be a part of the
general problem of live-stock lundling in the yards.

Mr. Anderson. Will there be a separation — perhaps I am antici-
pating you — will there be a separation of administration with respect
to the stockyards, including tne rates, charges, and re^stration« and
practices, etc., and the violations of the act, or proceedings under the
act which relate to the practices of the nackers?

Mr. Morrill. As far as the rates, cnarges, and registrations are
concerned, they will not involve a question of separation, because the
packers, as such, do not have rates and charges and do not have tt)
register; but as to the commercial practices, I have not quite l>een
able to decide what is going to be the most practical way of handling
that. So far we are handling it all together, because there are certain
principles that run throu^n all of them; but at the same time it
might develop to a point where, as a matter of organization, it would
be wise to separate the commercial practices division into two parts.
either under one head, coordinating the two parts, or under two
separate divisions. I am a little inclined to doubt the advisability
of two divisions — one for handling yard practices, the other foV
handling packer practices — ^because I want to be sure that the prin-
ciples that they apply are coordinated*

I do think, nowever, that there will have to be, regardless of the
question you have .asked, specializing done. For example, the quei=-
tion of discrimination in buying prices for butter fat is sometnin*;
entirely outside of the realm of the live-stock man. That is just ai:
illustration of the i)roblem I am considering. Yet, underlying tl it-
whole thing, is the general principle of equal treatment for all per-
sons in like circumstances. The same principles of law will govern.
It is a question of application.

ACCOUlfTmO SECTION.

Now, as to the accounting division, that, of course, involves a
larger or smaller organization, according to the amount of work that
we expect to do. and the rapidity with which we expect to got re-
sults, plus our ability to get sufficiently competent men.

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AGRICULTURAL APPROPRIATION BILL, 1923. 697

The requirements for accountants would not be different particu-
larly, in nandling the live-stock questions, from those for handling
packer question*, so far as the principles of accounting are con-
cerned ; but the oetail would be decidedly different. I thiSf , though,
that there will be no attempt to divide the accounting division into
two parts, but rather to make it perfectly flexible, and to use the men
according to the work they have on hand, heading it by one man who
will generally direct tlie whole thing.

At present we have our entire accounting organization, which is
very small, in the South St. Paul yard, working there, and in addi-
tion the head of our accounting section, Mr. French, is and has been
for some time studying the packer accounts. He has gone through
all the information that the Federal Trade Commission had, includ-
ing the reports of the outside accountants who were employed for
that purpose, and has also interviewed the chief accountants of some
of the big packers for the purpose of getting at just what he will
have to race in the way of an examination of their accounts and
account statements, and whether uniformity or lack of uniformity
is such as to require particular attention.

As a matter of fact, even among the big five packers, there is not
uniformity of accounting. They admit it, and they have not been
able to reconcile it among themfiielves, even for the purposes of their
oi^n comparisons.

I think that you will remember periiaps in some comparisons that
they have attempted to make, they have pointed out in one or two
cases they could not compare figures exactly, because of their ac-
counting system.

Mr. Anderson. Their cost statements, however, are very much alike.

Mr. Morrill. Their cost statements are very much alike, and they
have been working toward uniformity in the last couple of years.
The Institute of American Meat Packers has been w^orking on a
uniform system of accounts, but it has not been adopted yet, as I
understand it. They are still working on it, and we feel that we
have got to get it on that, so as to be sure that when it comes out
and is used, if it is used, that it gets information in a way that we
would want to get it if we went into their books to audit them.

Mr. Anderson. Is there any danger that in the adoption of the
uniform costs and accounting system you would increase the pos-
sibility of concerted action and iiniform price policies?

Mr. Morrill. That is a difficult question to answer. I have beeii
thinking about it My impression is that it would rather decrease the
possibility of concerted action, because as a matter of fact, one of
the obstacles that I understand is in the way of uniform accounts now
is the fear that one of the competitors might learn too much about
the business of the other.

In other words, they will have too many facts. That is one of the
difficulties standing in the way right now. Now, whether that dif-
ficulty will be wiped out I can not say, but at least men like Wilson,
of the head of Wilson & Co., and others, are taking a very broad
minded attitude and trying to get things into a better condition of
affairs.

The accounting question, I think in order to get proper informa-
tion as to the livestock market and the costs in the yards, and proper

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698 AGRICULTURAL APPROPRIATION BILL, 1923.

information as to slaughtering, packing, and distributing costs, is
going to be a very expensive part of our organization. In the South
St. Paul yards now we are employing locally, in addition to four
auditors, quite a number of girls, employed locally on a piecework
basis at an average earning of around $26 a week for what they
are doing, and doing it on a piecework basis we are accomplishing
work very much faster than we would on the usual monthly salary
basis. We are doing it also without any expense for per diem or
traveling: by handling it in that way. The only expense for per
diem and traveling is that of our regular auditors.

SELECTION OF MEN FOB DIFFERENT SECTIONS.

In that connection there is another side of this that I have been
working on. In tlie selection of men for the different branches of
our work, I have tried to take into consideration whether a man who
was assigned to a particular work had qualifications which might lie
utilized in some other branch of the work.

For example, two of our supervisors recently appointed have had
very considerable experience in the office accounting work of com-
mission firms, and when I found out that I could do this auditing
work at South St. Paul, I took those two supervisors out of their
work and put them in South St. Paul temporarily, until we could
replace them. That makes our organization more flexible. They
will, however, go back to supei*vision work shortly, because we hope
to be able to carry on the auditing work without that necessity.

But you can see the idea that I have in my mind, to try to make the
organization sufficiently flexible so that we can direct our energies
along any particular line of work at any time with a larger force
than would ordinaril}' be assigned to a particular section.

I might say in this connection that the question of getting auditors
is a very difficult one, because the Treasury Department practically
is taking every auditor in sight. They are monopolizing the exam-
inations, and we are going to have a hard time getting our men. Our
f general auditor has been up to the Civil Service Commission and has
aid his problems before them. I think it is going to cost us some
pretty big salaries to get competent men ; $4,000 or $4,500 is probably
what we will have to pay for the type of auditors who will be ob-
tained to take charge of a particular job or to deal with the packer
accounts.

The packers themselves pay from $10,000 to $15,000 a year for
their chief accountants, and that is the type of man we have got to
deal with. I think it is of the utmost importance that we select our
auditors very carefully, having that in view.

I have mentioned three branches of the work — rates, charges and
registrations, commercial practices and the accounting division.

LEGAL SECTION.

Then, there is strictly the legal work, for which there will have
to be a division, in which we have already one lawyer, and, as I
see it, our legal questions are mounting up so fast that we will have
to have three. The time of the lawyer we have now is taken up con-
tinuously with the litigation that is now pending in the Supreme

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AGRICULTUEAL APPEOPRIATION BILL, 1923. 699

Court of the United States, the litigation which has now been insti-
tuted at South St. Paul, the packer consent decree matter, which is
pretty nearly closed, but which has taken up a great deal of our
time, because he was our representative on tnat special committee.



Online LibraryUnited States. Congress. House. AppropriationsAgricultural appropriation bill: 1923, hearing ... 67th Congress, 2d session → online text (page 88 of 114)