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+This eBook, including all associated images, markup, improvements,
+metadata, and any other content or labor, has been confirmed to be
+in the PUBLIC DOMAIN IN THE UNITED STATES.
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+Project Gutenberg (https://www.gutenberg.org) public repository for
+eBook #51244 (https://www.gutenberg.org/ebooks/51244)
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-Project Gutenberg's The Livestock Producer and Armour, by Armour and Company
-
-This eBook is for the use of anyone anywhere in the United States and most
-other parts of the world at no cost and with almost no restrictions
-whatsoever. You may copy it, give it away or re-use it under the terms of
-the Project Gutenberg License included with this eBook or online at
-www.gutenberg.org. If you are not located in the United States, you'll have
-to check the laws of the country where you are located before using this ebook.
-
-Title: The Livestock Producer and Armour
-
-Author: Armour and Company
-
-Release Date: February 18, 2016 [EBook #51244]
-
-Language: English
-
-Character set encoding: UTF-8
-
-*** START OF THIS PROJECT GUTENBERG EBOOK THE LIVESTOCK PRODUCER AND ARMOUR ***
-
-
-
-
-Produced by Emmy, MWS and the Online Distributed
-Proofreading Team at http://www.pgdp.net (This file was
-produced from images generously made available by The
-Internet Archive)
-
-
-
-
-
-
-
-
-
-
- THE LIVESTOCK
- PRODUCER AND
- ARMOUR
-
-[Illustration]
-
- _The success of capital lies in ministering to the
- people, not in taking advantage of them_
-
- Philip D. Armour
-
-
- 1920
- ARMOUR AND COMPANY
- CHICAGO
-
-[Illustration: _Directors of Armour and Company_
-
- George B. Robbins
- C. H. MacDowell
- Everett Wilson
- Arthur Meeker
- Frank W. Waddell
- Charles W. Armour
- Laurance H. Armour
- J. Ogden Armour
- A. Watson Armour
- Philip D. Armour
- F. Edson White
- E. A. Valentine
- Frederick W. Croll
- Robert J. Dunham]
-
-
-
-
-Foreword
-
-
-THE year 1919, included as it was in the period between the signing of
-the Armistice and the ratification of peace, was logically a season
-of uncertainty, unrest and unsettled conditions. And yet American
-business, discounting all this, entered upon and passed through this
-period with full faith in a favorable outcome.
-
-While prosperity was general, the processes of realignment of our
-economic relations hurt or temporarily hampered some lines of business.
-The livestock and packing industries did not escape entirely unharmed.
-
-Naturally, proposed radical legislation, with accompanying agitation,
-and a slump in American meat exports, caused such violent disturbance
-of the livestock markets during the latter half of the year that both
-producers and packers became deeply concerned as to the immediate
-future of the industry.
-
-No array of proved facts as to the low percentage of packer profits,
-no pointing out of the real factors controlling meat and livestock
-prices was sufficient to convince the disturbed element of the public
-and certain agents of the Government that packers’ operations on the
-existing large scale were justifiable.
-
-Therefore, by a recent understanding with the Government, Armour and
-Company will dispose of all their interests in food production, not
-directly associated with and dependent upon the meat packing business.
-In addition, Armour and other packers agree to relinquish interests
-in stock yards and railway terminal properties at the various market
-centers. The terms of the understanding permit the retention of dairy
-and poultry products in view of the dependence of these on such
-refrigerating and distributive facilities as the packers have provided.
-
-Both patriotism and enlightened self-interest command every citizen
-and business to make concessions and sacrifices in times of crises,
-whether of war or peace; and while Armour and Company felt that they
-were clearly within their rights in their operations previous to this
-understanding with the Government, it was plainly in the line of public
-service to make concessions that would clear the way towards public
-confidence in the development of the livestock industry.
-
- J. Ogden Armour
-
-[Illustration: Running against a “glutted market” in the “good old
-days.” Today the stockman’s market is nation-wide.]
-
-
-
-
-How and Why Livestock Market Grew
-
-
-THERE was a time, within the memory of men still active in the cattle
-business, when the capacity and demand of the local butcher shop
-measured the demand for fat stock and fixed the price as well.
-
-On driving his cattle to the village, or negotiating for their sale,
-it was not uncommon for the stockman to be met with the news that a
-neighbor had got ahead of him and glutted the market with two or three
-or more meat animals. No matter how good the offerings, there was no
-present market at any price.
-
-This was the condition of the livestock business in the “good old
-days” before the establishing of the great packing centers; before the
-development of economical systems of slaughtering, saving the waste,
-and distributing dressed beef quickly and continuously to the remotest
-parts of the country.
-
-No stockman now considers the demand of the local butcher as a serious
-factor in making or breaking the market for his cattle. If he is
-feeding a carload or more, he has an approximate date set for the
-finishing of his feed. By keeping in close touch with the supply of
-cattle in the country, their movement and the trend of prices, he
-chooses what appears to be the most favorable day and ships them to the
-market.
-
-Even if he is feeding only a few head, the disposal of them is not
-dependent upon local demand. He may double-up with his neighbors to
-make up a car. He may belong to a shipping association that makes a
-business of collecting small lots into carloads for direct shipment,
-and although he sells to the local stock buyer, his knowledge of what
-his cattle are worth at the central markets enables him to secure a
-fair price.
-
-So it has come about that world demand determines prices and governs
-buying activities in every town and village where livestock is
-purchased. For local butchers everywhere are governed by prices at the
-central markets. The truth is that the most successful butchers no
-longer do their own killing, but buy their beef from packers’ branch
-houses in the larger cities and towns or from “route cars” running from
-packing plants or branch houses into the smaller communities.
-
-In doing this they get better beef at lower cost than by local
-slaughtering, and they can serve their customers with a safer and more
-satisfactory article because the animal is killed and the meat prepared
-under the stringent government inspection and sanitary regulations
-that are practiced only in the larger establishments. This insures
-absolute freedom from diseased conditions and careless handling.
-
-Practical butchers, who are also feeders, have proved by test that they
-can ship their beef cattle hundreds of miles to the big packer, have
-them slaughtered, dressed and returned at less cost than they can do
-their own killing. This is possible because the utilization of every
-scrap of the animals in valuable by-products, and the saving in labor
-by wholesale slaughtering and handling, pay all expenses, including the
-freight both ways, and leave a margin for the butcher besides.
-
-The local butcher or livestock producer can little better afford to
-kill and prepare his own beef than he can afford to tan the hide and
-make his own shoes. There was a time, even in America, when the farmer
-himself actually did these things. He also sheared his own sheep by
-hand, while his wife and daughters spun the wool into yarn and wove
-cloth for the family clothing. Progress has made such methods absurd,
-unprofitable and impracticable.
-
-But the great machinery of economical production and distribution
-was not built in a day, or a year, or a decade. Armour and Company’s
-activities began more than fifty years ago. At first the packing
-house was only a butcher shop on an enlarged scale, preparing and
-handling pork products almost exclusively. Cattle were killed for
-local consumption only, as there was no such thing as cold storage,
-refrigerator car lines or branch houses for the distribution of fresh
-meats.
-
-In those days the offal from the packing houses was thrown away or
-buried, as is still done to considerable extent by the small butcher
-at the present time. The by-products industries, by which hundreds
-of valuable articles are now created from what was once waste,
-were developed through long years of scientific investigation and
-experimentation.
-
-The efficiency of the Armour organization of today is the result of the
-accumulated efforts of thousands of trained scientific and business
-minds, applied through half a century to the solution of the problem of
-factoring and furnishing food supplies for the nation and the world by
-the most direct and efficient means.
-
-Nothing less than a great and thoroughly organized concern could effect
-the economies that make such achievement possible. Armour and Company’s
-growth has been, and is, simply the natural expansion of a great
-industry keeping pace with the progress of the producer.
-
-
-
-
-Re-investment and Expansion Policy
-
-
-NO amount of criticism, investigation, misrepresentations or
-“exposures” has ever shaken Armour and Company’s faith in the fairness
-and final endorsement of the great body of American livestock producers.
-
-That the consumer found grievance in recent high food prices and
-attributed his troubles to the packer or producer, or both, was perhaps
-not to be wondered at, though his reasoning was not sound. That
-competing food distributors should object to the extension of packer
-efficiency to general food distribution is easily understood from these
-competitors’ viewpoint.
-
-The retirement of Armour and Company from all lines of production
-and distribution not directly associated with meats and livestock
-by-products, was in response to these disturbed elements of public
-opinion. But these restrictions of packer activities in no way affect
-the relations of mutual confidence and dependence between Armour and
-Company and the livestock producers.
-
-The fundamental things remain, and they are these: The livestock
-industry must continue to exist and expand; producers must be rewarded
-with fair profits; livestock markets must be maintained and made more
-convenient; and the markets for meat products must be enlarged and
-extended.
-
-To these basic facts Armour and Company have pinned their business
-faith, and upon them shaped their policy. Ninety per cent of the
-profits of the Company have been re-invested in the business and
-are represented today by great packing plants at sixteen market
-centers, and many branch houses throughout the country, together with
-refrigerator car lines connecting the livestock markets with the
-consuming centers of the nation.
-
-It requires no argument to show the livestock producer that his
-interests and profits are inseparably associated with these properties,
-and it is quite as plain that the necessities and conveniences of the
-consuming public are dependent upon and served by them.
-
-America and the world will continue to demand more and more meat and
-other products from livestock. Agriculture will not successfully
-continue without the production of meat animals. So the future reveals
-no reason why Armour and Company should not continue the policy of
-re-investing their earnings in the business that gives the most direct
-and substantial support to the basic industry of animal husbandry.
-
-[Illustration: The packer must, with utmost carefulness, balance his
-daily purchases against his daily sales.]
-
-
-
-
-Aspects of Big Business Explained
-
-
-THE simple recital of an ordinary day’s doings of Armour and Company’s
-beef department will make plain a number of things that may appear
-mysterious to a casual observer. Each day, at the opening of the
-market, the manager of the beef department must carefully weigh the
-possibilities of his sales and shipments of beef carcasses against the
-receipts of cattle of the quality demanded by his trade. And he must
-buy accordingly.
-
-The prevailing idea that, because of cold storage facilities at
-the packing centers, unlimited numbers of cattle of all grades and
-qualities can be absorbed and slaughtered, is wrong. For even though
-cold storage capacity were unlimited, beef cannot be held. Each day’s
-kill must find room in chill and storage rooms by the shipment of about
-an equal number of carcasses _out_ of storage to Armour’s branch houses
-located in all parts of the country.
-
-These branch houses must, in turn, dispose of each shipment promptly to
-make room for new arrivals. Each branch manager receives a memorandum
-of the cost of the beef, and of course is expected to sell it at a
-profit. But he _must_ sell it within a very limited time, even if he
-cannot show a profit.
-
-Local conditions determine this. He may meet with unforeseen
-competition in the kind of meats he has ordered, or the demand for
-meats may have fallen off for one or a dozen of reasons, or for no
-discoverable reason at all. These known and unknown influences on the
-demand govern his market and he has to accept the situation, depending
-on evening up the score under more favorable conditions.
-
-Of course a decline or advance at one or a few branch house points,
-from merely local causes, does not materially affect the market at the
-packing centers, but any widespread fluctuation from general causes is
-immediately reflected in cattle prices at all of the great markets.
-
-The best way for a producer to learn what determines the price he gets
-for his livestock is to visit the nearest Armour branch house and get
-first hand information on the facts that govern meat prices at the
-final market.
-
-Any Armour branch manager will welcome visitors and willingly answer
-questions. He will explain not only the factors that influence the
-general level of prices, but will point out why cuts from certain types
-of beef carcasses are in constant demand at the highest prices, while
-similar cuts from other carcasses are neglected and sell materially
-lower.
-
-There is a type of beef carcass that is best and commands the best
-price, and it costs no more to produce than an inferior type. The same
-is true of mutton and pork. Any Armour branch manager will show you
-what these types are and the Armour Farm Bureau will furnish, without
-charge, information on improved methods of producing the sort of
-animals that are most in demand for meat purposes.
-
-One aspect of the big packing business, the importance of which is not
-generally appreciated, is refrigeration. It is not too much to say that
-without ample means of refrigeration, both in storage and in transit,
-no fit and adequate supply of fresh meats and dairy products could be
-supplied to the public.
-
-Food refrigeration originated with the meat packing business early in
-its history. At first only storage refrigeration was practiced for
-the purpose of conserving and equalizing the supply of fresh meats
-for local or near-by consumption. Then came the conception of transit
-refrigeration, and the refrigerator car was invented, primarily for the
-purpose of shipping fresh meats from the producing centers of the West
-to the consuming centers of the East.
-
-From the transportation of fresh meats, the extension of the service
-to the carrying of fresh fruits, vegetables and dairy products was a
-natural and easy step, resulting in the development and maintenance of
-the great orchard lands and fruit and market garden areas from coast to
-coast, and the tremendous expansion of the indispensable industry of
-dairy farming all over America.
-
-To the livestock producer refrigeration in storage and in transit means
-everything. Without it the great packing interests could not exist and
-livestock husbandry would revert to the primitive and unprofitable
-conditions prevailing fifty years ago and described in the preceding
-chapter.
-
-These facts explain why Armour and Company have persistently
-opposed every attempt to deprive them of the exclusive use of their
-privately-owned refrigerator cars and turn them over to the railroad
-companies for general use. To maintain the necessary constant movement
-of meat products Armour must have an adequate supply of these cars
-every day in the year. Extended experience has proven that they would
-not and could not be supplied by any form of railroad administration,
-either governmental or corporate, yet devised.
-
-
-
-
-Declining Livestock Prices and the Causes
-
-
-BRIEFLY outlined herewith is a resumé of what are accepted as the chief
-causes contributing to the sharp decline in livestock prices during
-1919.
-
-The discontinuance of Government orders for beef was the principal
-thing which affected cattle prices in the late spring. From being a
-purchaser the Government became a seller in the domestic market. Added
-to this, there has been unusual labor unrest, large supplies, agitation
-against the high cost of living, low foreign exchange rates, and the
-English boycott against high prices.
-
-The falling off in hog prices was far more serious than in the case of
-beef, because normal demand for hogs is based on the consideration of
-large exports, while the market for beef is primarily and principally
-domestic.
-
-The great demand for American pork products which was confidently
-expected from European countries did not materialize, because of the
-extraordinary and unforeseen development of exchange conditions which
-made purchases on the American market practically impossible.
-
-The earlier part of 1919 was marked by an unprecedented export of pork
-products, reaching in the month of June the high point of over 400
-million pounds. From this point the drop was sharp and continuous,
-month by month, the figures for October showing total exports of less
-than 120 million pounds—a falling off of 70% in four months. These
-later exports were on orders booked earlier in the year, and not on new
-business.
-
-Added to these principal factors, and aggravating them, were attempted
-boycotts of meat and proposed radical legislation for the regulation
-and restriction of the packing industry, and the resulting condition
-of uncertainty up to the very closing weeks of 1919, when the
-understanding between the packers and the U. S. Department of Justice
-was made public.
-
-The big question is, What of the year 1920? While nothing positive can
-be predicted, better conditions is a practical certainty. The domestic
-consumption of beef is increasing to a gratifying degree; the arranging
-of international credits and the opening of foreign markets is a matter
-of comparatively short time. European need for pork products will be
-urgent and excessive for a considerable time, and this will not only
-take care of our surplus hogs, but will react favorably upon the market
-for cattle and sheep.
-
-
-
-
-Standard Breeds _of_ Beef Cattle
-
-
-ABERDEEN-ANGUS
-
-Early maturing; transmits polled character; high dressing percentage;
-high proportion valuable cuts.
-
-[Illustration: Aberdeen-Angus]
-
-
-SHORTHORN
-
-Greatest weight for age; dress out well at slaughter; quiet
-disposition; strong milking tendencies.
-
-[Illustration: Shorthorn]
-
-
-GALLOWAY
-
-Prepotent; adapted to rugged regions; high carcass value; valuable hide.
-
-[Illustration: Galloway]
-
-
-POLLED SHORTHORN
-
-Characteristics similar to Shorthorn except polled; some strains dual
-purpose.
-
-[Illustration: Polled Shorthorn]
-
-
-HEREFORD
-
-Best grazing breed; matures early; fattens rapidly; good weight for age.
-
-[Illustration: Hereford]
-
-
-RED POLLED
-
-Strictly dual purpose; fair grazers; early maturing.
-
-[Illustration: Red Polled]
-
-
-
-
-The Livestock Situation
-
-
-RIGHT now is a good time to stick to the middle of the highway of
-common sense. As shown in earlier chapters, the conditions adverse
-to the business can be only temporary, and even the losses incurred
-may be turned to profit in the end, if the livestock men shall learn
-the lesson of economy and efficiency of production and more complete
-co-operation among themselves and with the packing industry.
-
-Recent experiences will impel some producers to curtail or discontinue
-their operations temporarily, but others will take their places and
-quantity of production will be maintained while quality will be
-increased.
-
-High-priced land, grain and labor will compel stockmen to grade up
-their herds, to discriminate more closely in the purchase of feeding
-stock, to improve feeding methods and to keep exact records of costs.
-For at the higher level of costs and values all around, as compared
-with prewar times, both the risks and rewards of the business will be
-greater.
-
-As co-operative activities are extended among producers, it may be
-found advisable for livestock associations to employ expert buyers
-at the various markets whose duty shall be the filling of orders for
-association members, for the choice of feeders cannot be safely based
-on personal fancy. The only true guide is unbiased judgment as to what
-the market demands in the finished product and what type of feeding
-cattle will yield the result.
-
-An experienced buyer of keen judgment, constantly in touch with the
-market, should prove as valuable to producers as the expert buyer of
-fat cattle is to the packer.
-
-Such expert selection of feeders would take the guesswork out of the
-first and most important step in feeding.
-
-Generally speaking, the consumers’ demand is constantly for better
-meats from comparatively young animals. Taking the situation the
-country over with present prices of feed stuffs considered, it has been
-found that beef cattle make most money for the producer if not held
-past the age of two years. But there is no hard-and-fast rule for the
-guidance of every individual producer; the heavy, well-finished cattle
-always bring high prices. Only by keeping an accurate feeding record
-can the producer decide for himself what policy is most advantageous in
-his case, or determine when his steers stop making sufficient gains to
-compensate him for the feed required.
-
-
-
-
-Armour’s 1919 Livestock Purchases
-
-
-RISING prices of farm land and feed have changed entirely the
-character of livestock received on the market as compared to twenty
-years ago. The period following the war shows all conditions more or
-less accentuated, and one can trace very definitely the tendency to
-market animals younger and to feed to lesser ripeness than prevailed
-in the earlier years of the last decade. In 1919 Armour and Company
-purchased 12,235,451 head of livestock, while in 1918 they purchased
-11,398,131. Yet the animals bought last year weighed actually fewer
-pounds, in spite of their greater numbers, than those received the
-year preceding; the former weight being 3,740,347,223 pounds and the
-latter 3,939,278,534 pounds. Furthermore, the animals of 1919 cost over
-nineteen million dollars more. The following table presents these facts
-on a percentage basis:
-
- Increased number animals 1919 over 1918 7.3%
- Decrease in total weight animal purchases 5.0%
- Increase in cost of animals 3.7%
- Increased price per pound live weight 1.2¢
-
-Probably the fundamental factor in bringing about these conditions,
-which are distinctly unfavorable from a quality trade standpoint, is
-the feeder’s expectation of declining prices. This attitude has driven
-all the animals to market almost as soon as they were in merchantable
-form. The late winter months of 1919-20 saw an opposite tendency among
-hog feeders, but this was not sufficiently marked to check the general
-trend.
-
-Another factor in stimulating this hurried marketing has been the
-belief that more money could be made by selling the grain crop than by
-feeding it. This has given short rations to many animals that would
-have made suitable market records if handled properly, but it has
-enabled farmers to cash in their grain and meat crops while prices were
-relatively high.
-
-In terms of permanent agriculture it would have been better to leave
-a greater share of this cash invested in a further development of
-livestock, but the war order against feeding wheat placed the situation
-in some western states beyond the control of the average stockman. As a
-general practice in production this incomplete utilization of livestock
-must be deplored, although one cannot criticize the tendency under the
-special market conditions of 1919 and early 1920.
-
-
-
-
-Financial Aspects of Livestock Industry
-
-
-ONE of the most significant and gratifying gains in the livestock
-business during the decade just past is the recognition of its
-financial soundness. This is reflected in the changed attitude of
-financiers and investors towards cattle paper. While a decade ago
-bankers in the great financial centers looked with suspicion upon
-such securities, now bankers and business men throughout the country
-purchase approximately $500,000,000 of cattle paper annually and regard
-it as among the safest investments.
-
-Melvin A. Traylor, President of the First Trust and Savings Bank
-of Chicago, declares that “loans on livestock are the best of all
-investments,” and President Thos. P. Martin, of the Oklahoma Stock
-Yards Bank, Oklahoma City, agrees with him. This latter bank loaned
-$45,000,000 in seven years to cattle producers in Oklahoma, Texas and
-New Mexico, only fifty dollars of the amount loaned being lost. It is
-doubtful if any other industrial securities could make a better or even
-an equal showing.
-
-There is still some difficulty in arranging loans in some sections of
-the country, where bankers have not yet realized the changed conditions
-of the business and farmers have not given the proper emphasis to the
-improvement of livestock production. But generally speaking the cattle
-feeder with good judgment in the breeding and selection of feeders
-meets with no obstacles in financing his operations.
-
-Most country bankers freely accept cattle paper because it is readily
-rediscounted in the country’s financial centers. But many of them urge
-the borrowing feeders to keep accounts and determine accurately their
-profits and losses.
-
-This is to the interest of the feeder and the cattle industry as a
-whole. For if the business is ever to be placed on a cost-of-production
-basis for the reckoning of market prices, it must be done by an
-accumulation of thousands of actual tests in feeding practice. It
-is plain that each individual feeder could not set or ask a certain
-percentage of profit, since a poor judge of stock and a careless feeder
-would demand more for an inferior product than the more efficient
-feeder would ask for a better article.
-
-The feasibility of any such scheme of regulating prices does not now
-appear, but it is clear in any case that each lot of cattle would have
-to be appraised at what their production _ought_ to cost, considering
-quality, and not what it actually _did_ cost.
-
-[Illustration: Bankers now recognize cattle loans as good investments,
-and the skilled stockman has access to needed funds.]
-
-
-
-
-Losses on Declining Markets
-
-
-THAT the packing industry suffers with the livestock producers on a
-falling market was never more clearly emphasized than in the year
-1919. Armour and Company’s losses on dressed beef alone amounted, in
-the twelve months, to several million dollars; and on the sale of pork
-products the losses were even greater.
-
-These losses are figured on the basis of the primary sales, which
-include not only the meat but the hides and all other by-products
-derived from the animals.
-
-Such deficits do not mean that the Armour organization, as a whole,
-suffered a net loss for the year. But there is no mystery about the
-methods of countering these deficits. They are offset by the profit
-made in manufacturing by-products into merchantable commodities.
-Each by-product industry in the Armour organization is placed on its
-own responsibility. It must pay to the beef, hog, or sheep killing
-department the market value for its raw materials—the same price it
-would pay if it purchased on the outside market.
-
-For example, the beef department buys its cattle to the best possible
-advantage in competition with other buyers, and sells the beef at the
-best price obtainable. The hides go to the tannery at prices ruling on
-the open market. If the Armour tannery cannot pay this price the hides
-go to outside buyers. To sell at less would be favoring the tannery at
-the expense of the beef department, or robbing Peter to pay Paul.
-
-The same business methods are pursued with every scrap of the animal,
-whether used in making glue, soap, sand-paper, drugs, fertilizers, or
-any other commodity.
-
-While on this basis Armour and Company sustained heavy losses in their
-meat departments, the by-product industries showed profits, as they
-usually do, because their products are not so perishable and are not so
-much influenced by market fluctuations.
-
-These by-product industries are, in short, the insurance of the packers
-against crippling losses, and may be likened to the activities of the
-up-to-date livestock farmer, who diversifies his operations by feeding
-cattle and hogs and by keeping fowls, sheep and dairy cows, so that if
-he loses on cattle or hogs he may offset his losses by better prices
-for lambs, wool, butter, eggs, poultry, or a money crop.
-
-
-
-
-Why Prices Fluctuate
-
-
-PRICES for livestock are not controlled by packers, and only to a
-limited extent by the supply of cattle in the market. They go up or
-down in response to the price the consumer is willing to pay for meat.
-
-Note how closely the two lines in the chart, representing prices of
-cattle and dressed beef, follow each other through the two and a half
-years covered by the graph. America’s twenty million food shoppers
-determine the dressed beef price, by their willingness or refusal to
-accept beef at the price asked in competition with other food. And
-naturally dressed beef prices react directly and at once on cattle
-prices.
-
-It is often necessary for the packer to take a marginal loss on beef in
-order to stimulate demand, but he must at once hedge against this loss
-by buying cattle cheaper. He tries to fit the price he pays for cattle
-each day to the price he is obtaining for beef. Only by so doing can he
-maintain his business on present small margins. Large receipts of fish,
-poultry, game, eggs, vegetables or fruit at certain seasons also affect
-the price the public is willing to pay for beef, and this is reflected
-in the price the packer can afford to pay for the live animal.
-
-It is plain that the packer cannot determine retail meat prices, simply
-because he cannot say to the consumer at the butcher’s counter, “You
-must buy meat and you must pay such and such a price.” Because he
-cannot do this he cannot control the prices of livestock.
-
-[Illustration: WHAT MAKES THE PRICE OF CATTLE
-
-THIS CHART SHOWS THAT DEMAND BY CONSUMERS IS THE BIG FACTOR]
-
-
-
-
-What Efficient Distribution Means
-
-
-LIVESTOCK producers are, of course, engaged in an absolutely
-indispensable industry. Of scarcely less importance is the packing
-business. For upon food production and preparation depend all other
-industries and activities.
-
-But it is profitable and enlightening to ask, of what use would be
-production and preparation without means for delivering the food to the
-consumer? The mere asking brings realization of the prime importance
-of ample and uninterrupted transportation and distribution of packing
-house products to consumers through the retailers of the country.
-
-And this, in turn, brings us to the consideration of the packers’
-salesmen in the hundreds of cities and towns throughout America, which
-as a whole make up the final market for the producer’s livestock.
-
-With the sale of his meat animals by the commission man at the primary
-market, the owner seems to witness the end of the transaction as far as
-he is concerned. But does he?
-
-Could the commission man sell and the packer buy the livestock if it
-were not for another salesman and another buyer out at the farthest end
-of the market system transacting business with each other in the retail
-market?
-
-Again the question answers itself. For the packer’s salesman is
-literally the salesman of the livestock producer at the final market,
-upon which all other markets depend. The advertising and educational
-activities conducted by the packer continuously broaden and intensify
-the ultimate market for the products which the livestock man produces.
-It devolves upon these agencies to keep the meat products moving
-towards final consumption, just as the man at the measuring spout of
-the old-fashioned threshing machine had to keep the grain out of the
-way and prevent congestion.
-
-There are two distinct divisions of the process of turning livestock
-into available meat supplies. First, the production, shipment and sale
-of livestock. Second, the preparation, transportation and distribution
-of meat products to retailers. The two are interrelated and absolutely
-dependent one upon the other.
-
-The opportunity for organized producers to take complete possession
-of their end of the process by assuming control of the stockyards, is
-offered in the passing of that control from the packing industries by
-virtue of the recent understanding with the U. S. Government.
-
-[Illustration: The packer’s salesman is literally the farmer’s salesman
-in the thousands of “final markets” throughout the land.]
-
-
-
-
-Farming as a Business
-
-
-ALL business undertakings are ventures. Under the best of conditions
-there are fat and lean years, and the possibility of failure, due to
-poor management, lack of capital, or adversity, is always present.
-
-Farming is no exception. It is in essence a business proposition, and
-should be so regarded.
-
-A knowledge of crops, of soils and tillage, of livestock breeding
-and feeding and other purely agricultural subjects constitutes but
-one side of the farming industry. On top of this come the important
-matters of business management—the buying of seeds, fertilizers, feed
-stuffs, livestock and general equipment and supplies; the erecting
-and maintenance of buildings; the arrangements for necessary credit;
-keeping in touch with market conditions and prices; the hiring of
-help, and finally the establishing and operation of an accurate
-cost-accounting system.
-
-Yet when all is said and done, records indicate that farming offers
-more chances of success than almost any other line of business
-endeavor. A retail merchant, according to statistics, has from two
-to four chances in ten to conduct his business successfully for
-fifteen years; a manufacturer has from two to seven chances to do the
-same. Farming is conspicuous for its small percentage of out-and-out
-failures. Living is practically assured, which gives the farmer a
-distinct working advantage to begin with. He enjoys a cash market and
-is not called upon to suffer bad debt losses. He is in an industry that
-is absolutely essential, which cannot be destroyed by any shifting of
-circumstances.
-
-The greatest need is doubtless for cost-accounting systems which will
-serve as a guide, not only to prevent unwise purchases, but to indicate
-wise expenditures in improvements that will bring a good return on
-investment, and to show definitely the amount of profit obtained on
-each transaction. Next to this in importance is perhaps the need
-for a thorough understanding of crop rotation and the principle of
-diversified farming as a means of offsetting losses in one line with
-gains in another. The securing of credit to enable expansion, and the
-adoption of labor-saving devices are also essential.
-
-Profits and losses in farming must be reckoned, as in all other
-businesses, on averages over a term of years. But the future
-offers better assurance than ever before to the man who is a good
-agriculturist and at the same time a skillful business manager.
-
-
-
-
-We Stand or Fall Together
-
-
-WITH some elements of the American public there seems to persist the
-conviction that the great packing concerns are seeking the injury of
-livestock producers to their own enrichment. How such an idea can be
-seriously harbored by thinking men is hard to understand. For the
-packing industry to plan for the farmer anything but prosperity is to
-endanger or destroy the source of supply of the raw material by which
-it lives and grows.
-
-It should be perfectly plain that the packers are selfishly interested
-in encouraging the producer. Their selling efforts are directed towards
-disposing of the largest possible volume of meat products, at the best
-price obtainable in competition with other foods, in order that they
-may maintain large volume of livestock purchases at prices that will
-encourage both quantity and quality of production.
-
-Between the producer and the consumer, between the buying and the
-selling price, the packers operate upon a smaller margin of profit than
-any other large industry. On invested capital they have realized an
-average of about 9 per cent over a term of years, on volume of sales
-about 2 per cent, and on each pound of meat less than one-half of a
-cent.
-
-At the same time the risks of the business are greater than in other
-lines, both on account of the perishable nature of the product and the
-violent fluctuations of food prices, the causes for which cannot always
-be foreseen.
-
-The comparative low prices of hogs and pork products at the end of 1919
-is a case in point. The packing business entered upon the year in the
-belief that the world shortage of food would maintain pork prices at
-high levels for a number of years; that European demand would absorb
-even a larger surplus of American hogs than the pre-war period. The
-earlier months of 1919 confirmed this belief. The foreign demand was
-very brisk, exports reached unprecedented volume and prices were
-maintained.
-
-Then came the unlooked-for event. Foreign exchange rates fell to so low
-a point that Europeans could no longer afford to buy American meats.
-The packers extended credit for a time, but the limit of safety was
-soon reached, and when the year closed very little American pork was
-being exported and no new contracts were being made.
-
-The result was great loss to both producers and packers. Armour and
-Company alone packed millions of pounds of pork during the period of
-high prices, much of which was still in the course of curing when the
-slump in the market came.
-
-But the conditions that caused this decline and loss are exceptional
-and only temporary. The great foreign need for American meats still
-exists—the greatest need in the world’s history. The ability of Europe
-to buy will be restored with the full restoration of peace and the
-arrangement of international credits. The result will be a return of
-profits and prosperity to both producers and packers of pork.
-
-The facts to keep in mind are these:
-
-First, there must finally be a realignment of prices on all livestock
-and meats, to levels below the prevailing high war prices. A fair
-balance must be struck between the interests of the consumer and those
-of the producer. Prices for meat must be sufficiently attractive to
-consumers to insure an adequate volume of sales; on the other hand
-prices for livestock must be sufficiently high to encourage production.
-Only on this basis can the industry thrive.
-
-Second, the utmost care must be taken in breeding and buying of feeding
-stock and the most exacting economy practiced in feeding methods.
-
-Third, the producer must realize that the packer is his natural ally
-in maintaining the prosperity of the two inseparable branches of the
-livestock industry—production and packing.
-
-It is a reassuring sign that producers and packers are already getting
-together on a platform of better understanding of their mutual
-interests, both for protection against disturbing agitation and
-legislation and for the correction of whatever inequalities or abuses
-may exist in the shipping and marketing of livestock.
-
-Armour and Company’s Farm Bureau was established three years ago as a
-point of contact with livestock men, through which better methods of
-breeding, feeding, shipping and marketing could be promoted.
-
-Being in constant touch with the requirements of the markets, Armour
-and Company know the types of meat animals which are most demanded
-and which bring the largest profit to the stockman. The Farm Bureau
-has available many facts regarding the economical production of these
-types, and these facts can be had by addressing the Bureau, care of
-Armour and Company, Chicago.
-
-
-
-
-
-End of the Project Gutenberg EBook of The Livestock Producer and Armour, by
-Armour and Company
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-
-
-<h1 class="faux">THE LIVESTOCK
-PRODUCER AND
-ARMOUR</h1>
-
-<div class="figcenter" style="width: 499px;">
-<img src="images/cover.jpg" width="499" height="800" alt="cover" />
-</div>
-<p><span class="pagenum"><a name="Page_1" id="Page_1">[1]</a></span></p>
-
-
-
-
-<div class="figcenter" style="width: 368px;">
-<img src="images/title-quote.jpg" width="368" height="600" alt="title page" />
-</div>
-
-
-<div class="maintitle">THE LIVESTOCK<br />
-PRODUCER AND<br />
-ARMOUR<br /><br /><br /></div>
-
-<div class="blockquot2">
-<i>The success of
-capital lies in
-ministering
-to the people,
-not in taking
-advantage of them</i>
-
-<div class="sig">Philip D. Armour</div></div>
-
-<div class="center"><br /><br /><br />
-1920<br />
-<span class="smcap">ARMOUR and COMPANY</span><br />
-CHICAGO<br />
-</div>
-
-<hr class="chap" />
-<div class="chapter"></div><p><span class="pagenum"><a name="Page_2" id="Page_2">[2]</a></span></p>
-
-<div class="figcenter" style="width: 549px;">
-<a href="images/i-002-large.jpg"><img src="images/i-002.jpg" width="549" height="800" alt="Directors of Armour and Company" /></a>
-</div>
-
-
-<ul><li>George B. Robbins</li>
-<li>C. H. MacDowell</li>
-<li>Everett Wilson</li>
-<li>Arthur Meeker</li>
-<li>Frank W. Waddell</li>
-<li>Charles W. Armour</li>
-<li>Laurance H. Armour</li>
-<li>J. Ogden Armour</li>
-<li>A. Watson Armour</li>
-<li>Philip D. Armour</li>
-<li>F. Edson White</li>
-<li>E. A. Valentine</li>
-<li>Frederick W. Croll</li>
-<li>Robert J. Dunham</li></ul>
-
-
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_3" id="Page_3">[3]</a></span></p>
-
-
-
-
-<h2>Foreword</h2>
-
-
-<p class="drop-cap">THE year 1919, included as it was in the period between
-the signing of the Armistice and the ratification of peace,
-was logically a season of uncertainty, unrest and unsettled
-conditions. And yet American business, discounting all
-this, entered upon and passed through this period with full faith
-in a favorable outcome.</p>
-
-<p>While prosperity was general, the processes of realignment of
-our economic relations hurt or temporarily hampered some lines
-of business. The livestock and packing industries did not escape
-entirely unharmed.</p>
-
-<p>Naturally, proposed radical legislation, with accompanying
-agitation, and a slump in American meat exports, caused such
-violent disturbance of the livestock markets during the latter half
-of the year that both producers and packers became deeply concerned
-as to the immediate future of the industry.</p>
-
-<p>No array of proved facts as to the low percentage of packer
-profits, no pointing out of the real factors controlling meat and
-livestock prices was sufficient to convince the disturbed element
-of the public and certain agents of the Government that packers’
-operations on the existing large scale were justifiable.</p>
-
-<p>Therefore, by a recent understanding with the Government,
-Armour and Company will dispose of all their interests in food
-production, not directly associated with and dependent upon the
-meat packing business. In addition, Armour and other packers
-agree to relinquish interests in stock yards and railway terminal
-properties at the various market centers. The terms of the understanding
-permit the retention of dairy and poultry products
-in view of the dependence of these on such refrigerating and distributive
-facilities as the packers have provided.</p>
-
-<p>Both patriotism and enlightened self-interest command every
-citizen and business to make concessions and sacrifices in times
-of crises, whether of war or peace; and while Armour and
-Company felt that they were clearly within their rights in their
-operations previous to this understanding with the Government,
-it was plainly in the line of public service to make concessions
-that would clear the way towards public confidence in the development
-of the livestock industry.</p>
-
-<div class="sig">
-J. Ogden Armour<br />
-</div>
-
-<hr class="chap" />
-<div class="chapter"></div><p><span class="pagenum"><a name="Page_4" id="Page_4">[4]</a></span></p>
-
-<div class="figcenter" style="width: 376px;">
-<img src="images/i-004.jpg" width="376" height="600" alt="cowboy bringing cattle to meat marker" />
-<div class="caption">Running against a “glutted market” in the “good old days.” Today the
-stockman’s market is nation-wide.</div>
-</div>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_5" id="Page_5">[5]</a></span></p>
-
-
-
-
-<h2>How and Why Livestock Market Grew</h2>
-
-
-<p class="drop-cap">THERE was a time, within the memory of men still active
-in the cattle business, when the capacity and demand of
-the local butcher shop measured the demand for fat stock
-and fixed the price as well.</p>
-
-<p>On driving his cattle to the village, or negotiating for their
-sale, it was not uncommon for the stockman to be met with the
-news that a neighbor had got ahead of him and glutted the market
-with two or three or more meat animals. No matter how good
-the offerings, there was no present market at any price.</p>
-
-<p>This was the condition of the livestock business in the “good
-old days” before the establishing of the great packing centers;
-before the development of economical systems of slaughtering,
-saving the waste, and distributing dressed beef quickly and continuously
-to the remotest parts of the country.</p>
-
-<p>No stockman now considers the demand of the local butcher
-as a serious factor in making or breaking the market for his cattle.
-If he is feeding a carload or more, he has an approximate date set
-for the finishing of his feed. By keeping in close touch with the
-supply of cattle in the country, their movement and the trend of
-prices, he chooses what appears to be the most favorable day and
-ships them to the market.</p>
-
-<p>Even if he is feeding only a few head, the disposal of them is
-not dependent upon local demand. He may double-up with his
-neighbors to make up a car. He may belong to a shipping association
-that makes a business of collecting small lots into carloads
-for direct shipment, and although he sells to the local stock buyer,
-his knowledge of what his cattle are worth at the central markets
-enables him to secure a fair price.</p>
-
-<p>So it has come about that world demand determines prices and
-governs buying activities in every town and village where livestock
-is purchased. For local butchers everywhere are governed by prices
-at the central markets. The truth is that the most successful
-butchers no longer do their own killing, but buy their beef from
-packers’ branch houses in the larger cities and towns or from
-“route cars” running from packing plants or branch houses
-into the smaller communities.</p>
-
-<p>In doing this they get better beef at lower cost than by local
-slaughtering, and they can serve their customers with a safer and
-more satisfactory article because the animal is killed and the meat
-prepared under the stringent government inspection and sanitary<span class="pagenum"><a name="Page_6" id="Page_6">[6]</a></span>
-regulations that are practiced only in the larger establishments.
-This insures absolute freedom from diseased conditions and careless
-handling.</p>
-
-<p>Practical butchers, who are also feeders, have proved by test
-that they can ship their beef cattle hundreds of miles to the big
-packer, have them slaughtered, dressed and returned at less cost
-than they can do their own killing. This is possible because the
-utilization of every scrap of the animals in valuable by-products,
-and the saving in labor by wholesale slaughtering and handling, pay
-all expenses, including the freight both ways, and leave a margin
-for the butcher besides.</p>
-
-<p>The local butcher or livestock producer can little better afford
-to kill and prepare his own beef than he can afford to tan the
-hide and make his own shoes. There was a time, even in America,
-when the farmer himself actually did these things. He also sheared
-his own sheep by hand, while his wife and daughters spun the
-wool into yarn and wove cloth for the family clothing. Progress
-has made such methods absurd, unprofitable and impracticable.</p>
-
-<p>But the great machinery of economical production and distribution
-was not built in a day, or a year, or a decade. Armour
-and Company’s activities began more than fifty years ago. At first
-the packing house was only a butcher shop on an enlarged scale,
-preparing and handling pork products almost exclusively. Cattle
-were killed for local consumption only, as there was no such thing
-as cold storage, refrigerator car lines or branch houses for the
-distribution of fresh meats.</p>
-
-<p>In those days the offal from the packing houses was thrown
-away or buried, as is still done to considerable extent by the
-small butcher at the present time. The by-products industries,
-by which hundreds of valuable articles are now created from
-what was once waste, were developed through long years of
-scientific investigation and experimentation.</p>
-
-<p>The efficiency of the Armour organization of today is the
-result of the accumulated efforts of thousands of trained scientific
-and business minds, applied through half a century to the solution
-of the problem of factoring and furnishing food supplies for
-the nation and the world by the most direct and efficient means.</p>
-
-<p>Nothing less than a great and thoroughly organized concern
-could effect the economies that make such achievement possible.
-Armour and Company’s growth has been, and is, simply the
-natural expansion of a great industry keeping pace with the
-progress of the producer.</p>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_7" id="Page_7">[7]</a></span></p>
-
-
-
-
-<h2>Re-investment and Expansion Policy</h2>
-
-
-<p class="drop-cap">NO amount of criticism, investigation, misrepresentations
-or “exposures” has ever shaken Armour and Company’s
-faith in the fairness and final endorsement of the great
-body of American livestock producers.</p>
-
-<p>That the consumer found grievance in recent high food prices
-and attributed his troubles to the packer or producer, or both,
-was perhaps not to be wondered at, though his reasoning was
-not sound. That competing food distributors should object to
-the extension of packer efficiency to general food distribution is
-easily understood from these competitors’ viewpoint.</p>
-
-<p>The retirement of Armour and Company from all lines of production
-and distribution not directly associated with meats and
-livestock by-products, was in response to these disturbed elements
-of public opinion. But these restrictions of packer activities in
-no way affect the relations of mutual confidence and dependence
-between Armour and Company and the livestock producers.</p>
-
-<p>The fundamental things remain, and they are these: The livestock
-industry must continue to exist and expand; producers
-must be rewarded with fair profits; livestock markets must be
-maintained and made more convenient; and the markets for
-meat products must be enlarged and extended.</p>
-
-<p>To these basic facts Armour and Company have pinned their
-business faith, and upon them shaped their policy. Ninety per
-cent of the profits of the Company have been re-invested in
-the business and are represented today by great packing plants
-at sixteen market centers, and many branch houses throughout
-the country, together with refrigerator car lines connecting the
-livestock markets with the consuming centers of the nation.</p>
-
-<p>It requires no argument to show the livestock producer that
-his interests and profits are inseparably associated with these
-properties, and it is quite as plain that the necessities and
-conveniences of the consuming public are dependent upon and
-served by them.</p>
-
-<p>America and the world will continue to demand more and
-more meat and other products from livestock. Agriculture will not
-successfully continue without the production of meat animals.
-So the future reveals no reason why Armour and Company
-should not continue the policy of re-investing their earnings in
-the business that gives the most direct and substantial support
-to the basic industry of animal husbandry.<span class="pagenum"><a name="Page_8" id="Page_8">[8]</a></span></p>
-
-<div class="figcenter" style="width: 389px;">
-<img src="images/i-008.jpg" width="389" height="600" alt="man sitting at desk sorting papers" />
-<div class="caption">The packer must, with utmost carefulness, balance his daily purchases
-against his daily sales.</div>
-</div>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_9" id="Page_9">[9]</a></span></p>
-
-
-
-
-<h2>Aspects of Big Business Explained</h2>
-
-
-<p class="drop-cap">THE simple recital of an ordinary day’s doings of Armour and
-Company’s beef department will make plain a number of
-things that may appear mysterious to a casual observer.
-Each day, at the opening of the market, the manager
-of the beef department must carefully weigh the possibilities of
-his sales and shipments of beef carcasses against the receipts of
-cattle of the quality demanded by his trade. And he must buy
-accordingly.</p>
-
-<p>The prevailing idea that, because of cold storage facilities at
-the packing centers, unlimited numbers of cattle of all grades and
-qualities can be absorbed and slaughtered, is wrong. For even
-though cold storage capacity were unlimited, beef cannot be held.
-Each day’s kill must find room in chill and storage rooms by
-the shipment of about an equal number of carcasses <i>out</i> of storage
-to Armour’s branch houses located in all parts of the country.</p>
-
-<p>These branch houses must, in turn, dispose of each shipment
-promptly to make room for new arrivals. Each branch manager
-receives a memorandum of the cost of the beef, and of course
-is expected to sell it at a profit. But he <i>must</i> sell it within a very
-limited time, even if he cannot show a profit.</p>
-
-<p>Local conditions determine this. He may meet with unforeseen
-competition in the kind of meats he has ordered, or the
-demand for meats may have fallen off for one or a dozen of
-reasons, or for no discoverable reason at all. These known and
-unknown influences on the demand govern his market and he
-has to accept the situation, depending on evening up the score
-under more favorable conditions.</p>
-
-<p>Of course a decline or advance at one or a few branch house
-points, from merely local causes, does not materially affect the
-market at the packing centers, but any widespread fluctuation
-from general causes is immediately reflected in cattle prices at
-all of the great markets.</p>
-
-<p>The best way for a producer to learn what determines the
-price he gets for his livestock is to visit the nearest Armour
-branch house and get first hand information on the facts that
-govern meat prices at the final market.</p>
-
-<p>Any Armour branch manager will welcome visitors and willingly
-answer questions. He will explain not only the factors that
-influence the general level of prices, but will point out why cuts
-from certain types of beef carcasses are in constant demand at<span class="pagenum"><a name="Page_10" id="Page_10">[10]</a></span>
-the highest prices, while similar cuts from other carcasses are
-neglected and sell materially lower.</p>
-
-<p>There is a type of beef carcass that is best and commands the
-best price, and it costs no more to produce than an inferior type.
-The same is true of mutton and pork. Any Armour branch manager
-will show you what these types are and the Armour Farm
-Bureau will furnish, without charge, information on improved
-methods of producing the sort of animals that are most in demand
-for meat purposes.</p>
-
-<p>One aspect of the big packing business, the importance of
-which is not generally appreciated, is refrigeration. It is not too
-much to say that without ample means of refrigeration, both in
-storage and in transit, no fit and adequate supply of fresh meats
-and dairy products could be supplied to the public.</p>
-
-<p>Food refrigeration originated with the meat packing business
-early in its history. At first only storage refrigeration was practiced
-for the purpose of conserving and equalizing the supply of
-fresh meats for local or near-by consumption. Then came the
-conception of transit refrigeration, and the refrigerator car was
-invented, primarily for the purpose of shipping fresh meats from
-the producing centers of the West to the consuming centers of
-the East.</p>
-
-<p>From the transportation of fresh meats, the extension of the
-service to the carrying of fresh fruits, vegetables and dairy products
-was a natural and easy step, resulting in the development
-and maintenance of the great orchard lands and fruit and market
-garden areas from coast to coast, and the tremendous expansion
-of the indispensable industry of dairy farming all over America.</p>
-
-<p>To the livestock producer refrigeration in storage and in transit
-means everything. Without it the great packing interests could
-not exist and livestock husbandry would revert to the primitive
-and unprofitable conditions prevailing fifty years ago and described
-in the preceding chapter.</p>
-
-<p>These facts explain why Armour and Company have persistently
-opposed every attempt to deprive them of the exclusive use
-of their privately-owned refrigerator cars and turn them over to
-the railroad companies for general use. To maintain the necessary
-constant movement of meat products Armour must have an
-adequate supply of these cars every day in the year. Extended
-experience has proven that they would not and could not be
-supplied by any form of railroad administration, either governmental
-or corporate, yet devised.</p>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_11" id="Page_11">[11]</a></span></p>
-
-
-
-
-<h2>Declining Livestock Prices and the Causes</h2>
-
-
-<p class="drop-cap">BRIEFLY outlined herewith is a resumé of what are accepted
-as the chief causes contributing to the sharp decline in
-livestock prices during 1919.</p>
-
-<p>The discontinuance of Government orders for beef was
-the principal thing which affected cattle prices in the late spring.
-From being a purchaser the Government became a seller in
-the domestic market. Added to this, there has been unusual
-labor unrest, large supplies, agitation against the high cost of
-living, low foreign exchange rates, and the English boycott against
-high prices.</p>
-
-<p>The falling off in hog prices was far more serious than in the
-case of beef, because normal demand for hogs is based on the
-consideration of large exports, while the market for beef is primarily
-and principally domestic.</p>
-
-<p>The great demand for American pork products which was
-confidently expected from European countries did not materialize,
-because of the extraordinary and unforeseen development of exchange
-conditions which made purchases on the American market
-practically impossible.</p>
-
-<p>The earlier part of 1919 was marked by an unprecedented
-export of pork products, reaching in the month of June the high
-point of over 400 million pounds. From this point the drop was
-sharp and continuous, month by month, the figures for October
-showing total exports of less than 120 million pounds—a falling
-off of 70% in four months. These later exports were on orders
-booked earlier in the year, and not on new business.</p>
-
-<p>Added to these principal factors, and aggravating them, were
-attempted boycotts of meat and proposed radical legislation for
-the regulation and restriction of the packing industry, and the
-resulting condition of uncertainty up to the very closing weeks
-of 1919, when the understanding between the packers and the
-U. S. Department of Justice was made public.</p>
-
-<p>The big question is, What of the year 1920? While nothing
-positive can be predicted, better conditions is a practical certainty.
-The domestic consumption of beef is increasing to a gratifying
-degree; the arranging of international credits and the opening of
-foreign markets is a matter of comparatively short time. European
-need for pork products will be urgent and excessive for a considerable
-time, and this will not only take care of our surplus hogs,
-but will react favorably upon the market for cattle and sheep.</p>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_12" id="Page_12">[12]</a></span></p>
-
-
-
-
-<h2>Standard Breeds <i>of</i> Beef Cattle</h2>
-<div class="figcenter" style="width: 600px;">
-<a href="images/center-big.jpg"><img src="images/center.jpg" width="600" height="436" alt="cattle breeds" /></a>
-</div>
-<div class="tnote"><small><b>Transcriber's Note:</b> If supported by the reader's device, a larger version of this image may be seen by clicking
-on the image.</small></div>
-<h3>ABERDEEN-ANGUS</h3>
-
-<p>Early maturing;
-transmits polled
-character; high
-dressing percentage;
-high proportion
-valuable cuts.</p>
-
-
-<h3>SHORTHORN</h3>
-
-<p>Greatest weight for
-age; dress out well
-at slaughter; quiet
-disposition; strong
-milking tendencies.</p>
-
-
-
-
-<h3>GALLOWAY</h3>
-
-<p>Prepotent; adapted
-to rugged regions;
-high carcass value;
-valuable hide.<span class="pagenum"><a name="Page_13" id="Page_13">[13]</a></span></p>
-
-
-<h3>POLLED
-SHORTHORN</h3>
-
-<p>Characteristics similar
-to Shorthorn except
-polled; some
-strains dual purpose.</p>
-
-
-
-
-<h3>HEREFORD</h3>
-
-<p>Best grazing breed;
-matures early; fattens
-rapidly; good
-weight for age.</p>
-
-
-
-<h3>RED POLLED</h3>
-
-<p>Strictly dual purpose;
-fair grazers;
-early maturing.</p>
-
-
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_14" id="Page_14">[14]</a></span></p>
-
-
-
-
-<h2>The Livestock Situation</h2>
-
-
-<p class="drop-cap">RIGHT now is a good time to stick to the middle of the highway
-of common sense. As shown in earlier chapters, the
-conditions adverse to the business can be only temporary,
-and even the losses incurred may be turned to profit in the
-end, if the livestock men shall learn the lesson of economy and
-efficiency of production and more complete co-operation among
-themselves and with the packing industry.</p>
-
-<p>Recent experiences will impel some producers to curtail or
-discontinue their operations temporarily, but others will take
-their places and quantity of production will be maintained while
-quality will be increased.</p>
-
-<p>High-priced land, grain and labor will compel stockmen to
-grade up their herds, to discriminate more closely in the purchase
-of feeding stock, to improve feeding methods and to keep exact
-records of costs. For at the higher level of costs and values all
-around, as compared with prewar times, both the risks and rewards
-of the business will be greater.</p>
-
-<p>As co-operative activities are extended among producers, it
-may be found advisable for livestock associations to employ expert
-buyers at the various markets whose duty shall be the filling
-of orders for association members, for the choice of feeders cannot
-be safely based on personal fancy. The only true guide is unbiased
-judgment as to what the market demands in the finished
-product and what type of feeding cattle will yield the result.</p>
-
-<p>An experienced buyer of keen judgment, constantly in touch
-with the market, should prove as valuable to producers as the
-expert buyer of fat cattle is to the packer.</p>
-
-<p>Such expert selection of feeders would take the guesswork
-out of the first and most important step in feeding.</p>
-
-<p>Generally speaking, the consumers’ demand is constantly for
-better meats from comparatively young animals. Taking the situation
-the country over with present prices of feed stuffs considered,
-it has been found that beef cattle make most money for
-the producer if not held past the age of two years. But there is
-no hard-and-fast rule for the guidance of every individual producer;
-the heavy, well-finished cattle always bring high prices.
-Only by keeping an accurate feeding record can the producer decide
-for himself what policy is most advantageous in his case, or
-determine when his steers stop making sufficient gains to compensate
-him for the feed required.</p>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_15" id="Page_15">[15]</a></span></p>
-
-
-
-
-<h2>Armour’s 1919 Livestock Purchases</h2>
-
-
-<p class="drop-cap">RISING prices of farm land and feed have changed entirely
-the character of livestock received on the market as
-compared to twenty years ago. The period following the
-war shows all conditions more or less accentuated, and
-one can trace very definitely the tendency to market animals
-younger and to feed to lesser ripeness than prevailed in the earlier
-years of the last decade. In 1919 Armour and Company purchased
-12,235,451 head of livestock, while in 1918 they purchased
-11,398,131. Yet the animals bought last year weighed actually
-fewer pounds, in spite of their greater numbers, than those received
-the year preceding; the former weight being 3,740,347,223 pounds
-and the latter 3,939,278,534 pounds. Furthermore, the animals
-of 1919 cost over nineteen million dollars more. The following
-table presents these facts on a percentage basis:</p>
-
-
-
-<div class="center">
-<table border="0" cellpadding="0" cellspacing="0" summary="price of doing business">
-<tr><td align="left">Increased number animals 1919 over 1918</td><td align="left">7.3%</td></tr>
-<tr><td align="left">Decrease in total weight animal purchases&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td><td align="left">5.0%</td></tr>
-<tr><td align="left">Increase in cost of animals</td><td align="left">3.7%</td></tr>
-<tr><td align="left">Increased price per pound live weight</td><td align="left">1.2¢</td></tr>
-</table></div>
-
-
-<p>Probably the fundamental factor in bringing about these
-conditions, which are distinctly unfavorable from a quality trade
-standpoint, is the feeder’s expectation of declining prices. This
-attitude has driven all the animals to market almost as soon as
-they were in merchantable form. The late winter months of
-1919-20 saw an opposite tendency among hog feeders, but this
-was not sufficiently marked to check the general trend.</p>
-
-<p>Another factor in stimulating this hurried marketing has been
-the belief that more money could be made by selling the grain
-crop than by feeding it. This has given short rations to many
-animals that would have made suitable market records if handled
-properly, but it has enabled farmers to cash in their grain and
-meat crops while prices were relatively high.</p>
-
-<p>In terms of permanent agriculture it would have been better
-to leave a greater share of this cash invested in a further development
-of livestock, but the war order against feeding wheat placed
-the situation in some western states beyond the control of the
-average stockman. As a general practice in production this incomplete
-utilization of livestock must be deplored, although one
-cannot criticize the tendency under the special market conditions
-of 1919 and early 1920.</p>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_16" id="Page_16">[16]</a></span></p>
-
-
-
-
-<h2>Financial Aspects of Livestock Industry</h2>
-
-
-<p class="drop-cap">ONE of the most significant and gratifying gains in the
-livestock business during the decade just past is the recognition
-of its financial soundness. This is reflected in
-the changed attitude of financiers and investors towards
-cattle paper. While a decade ago bankers in the great financial
-centers looked with suspicion upon such securities, now bankers
-and business men throughout the country purchase approximately
-$500,000,000 of cattle paper annually and regard it as among the
-safest investments.</p>
-
-<p>Melvin A. Traylor, President of the First Trust and Savings
-Bank of Chicago, declares that “loans on livestock are the best of
-all investments,” and President Thos. P. Martin, of the Oklahoma
-Stock Yards Bank, Oklahoma City, agrees with him. This latter
-bank loaned $45,000,000 in seven years to cattle producers in Oklahoma,
-Texas and New Mexico, only fifty dollars of the amount
-loaned being lost. It is doubtful if any other industrial securities
-could make a better or even an equal showing.</p>
-
-<p>There is still some difficulty in arranging loans in some sections
-of the country, where bankers have not yet realized the
-changed conditions of the business and farmers have not given
-the proper emphasis to the improvement of livestock production.
-But generally speaking the cattle feeder with good judgment in
-the breeding and selection of feeders meets with no obstacles in
-financing his operations.</p>
-
-<p>Most country bankers freely accept cattle paper because it is
-readily rediscounted in the country’s financial centers. But many
-of them urge the borrowing feeders to keep accounts and determine
-accurately their profits and losses.</p>
-
-<p>This is to the interest of the feeder and the cattle industry as
-a whole. For if the business is ever to be placed on a cost-of-production
-basis for the reckoning of market prices, it must be
-done by an accumulation of thousands of actual tests in feeding
-practice. It is plain that each individual feeder could not set or
-ask a certain percentage of profit, since a poor judge of stock and
-a careless feeder would demand more for an inferior product than
-the more efficient feeder would ask for a better article.</p>
-
-<p>The feasibility of any such scheme of regulating prices does
-not now appear, but it is clear in any case that each lot of cattle
-would have to be appraised at what their production <i>ought</i> to
-cost, considering quality, and not what it actually <i>did</i> cost.<span class="pagenum"><a name="Page_17" id="Page_17">[17]</a></span></p>
-
-<div class="figcenter" style="width: 386px;">
-<img src="images/i-017.jpg" width="386" height="600" alt="banker explaining paper to man with hat in hand" />
-<div class="caption">Bankers now recognize cattle loans as good investments, and the skilled
-stockman has access to needed funds.</div>
-</div>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_18" id="Page_18">[18]</a></span></p>
-
-
-
-
-<h2>Losses on Declining Markets</h2>
-
-
-<p class="drop-cap">THAT the packing industry suffers with the livestock producers
-on a falling market was never more clearly emphasized
-than in the year 1919. Armour and Company’s losses
-on dressed beef alone amounted, in the twelve months, to
-several million dollars; and on the sale of pork products the
-losses were even greater.</p>
-
-<p>These losses are figured on the basis of the primary sales,
-which include not only the meat but the hides and all other by-products
-derived from the animals.</p>
-
-<p>Such deficits do not mean that the Armour organization, as
-a whole, suffered a net loss for the year. But there is no mystery
-about the methods of countering these deficits. They are offset by
-the profit made in manufacturing by-products into merchantable
-commodities. Each by-product industry in the Armour organization
-is placed on its own responsibility. It must pay to the beef,
-hog, or sheep killing department the market value for its raw
-materials—the same price it would pay if it purchased on the
-outside market.</p>
-
-<p>For example, the beef department buys its cattle to the best
-possible advantage in competition with other buyers, and sells the
-beef at the best price obtainable. The hides go to the tannery at
-prices ruling on the open market. If the Armour tannery cannot
-pay this price the hides go to outside buyers. To sell at less would
-be favoring the tannery at the expense of the beef department,
-or robbing Peter to pay Paul.</p>
-
-<p>The same business methods are pursued with every scrap of
-the animal, whether used in making glue, soap, sand-paper, drugs,
-fertilizers, or any other commodity.</p>
-
-<p>While on this basis Armour and Company sustained heavy
-losses in their meat departments, the by-product industries
-showed profits, as they usually do, because their products are
-not so perishable and are not so much influenced by market
-fluctuations.</p>
-
-<p>These by-product industries are, in short, the insurance of the
-packers against crippling losses, and may be likened to the
-activities of the up-to-date livestock farmer, who diversifies his
-operations by feeding cattle and hogs and by keeping fowls, sheep
-and dairy cows, so that if he loses on cattle or hogs he may offset
-his losses by better prices for lambs, wool, butter, eggs, poultry,
-or a money crop.</p>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_19" id="Page_19">[19]</a></span></p>
-
-
-
-
-<h2>Why Prices Fluctuate</h2>
-
-
-<p class="drop-cap">PRICES for livestock are not controlled by packers, and only
-to a limited extent by the supply of cattle in the market.
-They go up or down in response to the price the consumer
-is willing to pay for meat.</p>
-
-<p>Note how closely the two lines in the chart, representing prices
-of cattle and dressed beef, follow each other through the two
-and a half years covered by the graph. America’s twenty million
-food shoppers determine the dressed beef price, by their willingness
-or refusal to accept beef at the price asked in competition
-with other food. And naturally dressed beef prices react directly
-and at once on cattle prices.</p>
-
-<p>It is often necessary for the packer to take a marginal loss on
-beef in order to stimulate demand, but he must at once hedge
-against this loss by buying cattle cheaper. He tries to fit the price
-he pays for cattle each day to the price he is obtaining for beef.
-Only by so doing can he maintain his business on present small
-margins. Large receipts of fish, poultry, game, eggs, vegetables or
-fruit at certain seasons also affect the price the public is willing
-to pay for beef, and this is reflected in the price the packer can
-afford to pay for the live animal.</p>
-
-<p>It is plain that the packer cannot determine retail meat prices,
-simply because he cannot say to the consumer at the butcher’s
-counter, “You must buy meat and you must pay such and such
-a price.” Because he cannot do this he cannot control the prices
-of livestock.</p>
-
-
-<div class="center"><b><big>WHAT MAKES THE PRICE OF CATTLE</big><br />
-THIS CHART SHOWS THAT DEMAND BY CONSUMERS
-IS THE BIG FACTOR</b></div>
-<div class="figcenter" style="width: 600px;">
-<a href="images/i-023-big.jpg"><img src="images/i-023.jpg" width="600" height="297" alt="line chart" /></a>
-</div><div class="tnote"><small><b>Transcriber's Note:</b> If supported by the reader's device, a larger version of this image may be seen by clicking
-on the image.</small></div>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_20" id="Page_20">[20]</a></span></p>
-
-
-
-
-<h2>What Efficient Distribution Means</h2>
-
-
-<p class="drop-cap">LIVESTOCK producers are, of course, engaged in an absolutely
-indispensable industry. Of scarcely less importance is the
-packing business. For upon food production and preparation
-depend all other industries and activities.</p>
-
-<p>But it is profitable and enlightening to ask, of what use would
-be production and preparation without means for delivering the
-food to the consumer? The mere asking brings realization of the
-prime importance of ample and uninterrupted transportation and
-distribution of packing house products to consumers through the
-retailers of the country.</p>
-
-<p>And this, in turn, brings us to the consideration of the
-packers’ salesmen in the hundreds of cities and towns throughout
-America, which as a whole make up the final market for the
-producer’s livestock.</p>
-
-<p>With the sale of his meat animals by the commission man at
-the primary market, the owner seems to witness the end of the
-transaction as far as he is concerned. But does he?</p>
-
-<p>Could the commission man sell and the packer buy the livestock
-if it were not for another salesman and another buyer out at
-the farthest end of the market system transacting business with
-each other in the retail market?</p>
-
-<p>Again the question answers itself. For the packer’s salesman is
-literally the salesman of the livestock producer at the final market,
-upon which all other markets depend. The advertising and educational
-activities conducted by the packer continuously broaden and
-intensify the ultimate market for the products which the livestock
-man produces. It devolves upon these agencies to keep the meat
-products moving towards final consumption, just as the man at
-the measuring spout of the old-fashioned threshing machine had
-to keep the grain out of the way and prevent congestion.</p>
-
-<p>There are two distinct divisions of the process of turning livestock
-into available meat supplies. First, the production, shipment
-and sale of livestock. Second, the preparation, transportation
-and distribution of meat products to retailers. The two are
-interrelated and absolutely dependent one upon the other.</p>
-
-<p>The opportunity for organized producers to take complete
-possession of their end of the process by assuming control of the
-stockyards, is offered in the passing of that control from the
-packing industries by virtue of the recent understanding with
-the U. S. Government.<span class="pagenum"><a name="Page_21" id="Page_21">[21]</a></span></p>
-
-<div class="figcenter" style="width: 391px;">
-<img src="images/i-021.jpg" width="391" height="600" alt="looking through the shop window" />
-<div class="caption">The packer’s salesman is literally the farmer’s salesman in the thousands
-of “final markets” throughout the land.</div>
-</div>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_22" id="Page_22">[22]</a></span></p>
-
-
-
-
-<h2>Farming as a Business</h2>
-
-
-<p class="drop-cap">ALL business undertakings are ventures. Under the best of
-conditions there are fat and lean years, and the possibility
-of failure, due to poor management, lack of capital,
-or adversity, is always present.</p>
-
-<p>Farming is no exception. It is in essence a business proposition,
-and should be so regarded.</p>
-
-<p>A knowledge of crops, of soils and tillage, of livestock breeding
-and feeding and other purely agricultural subjects constitutes
-but one side of the farming industry. On top of this come
-the important matters of business management—the buying of
-seeds, fertilizers, feed stuffs, livestock and general equipment
-and supplies; the erecting and maintenance of buildings; the
-arrangements for necessary credit; keeping in touch with market
-conditions and prices; the hiring of help, and finally the establishing
-and operation of an accurate cost-accounting system.</p>
-
-<p>Yet when all is said and done, records indicate that farming
-offers more chances of success than almost any other line of
-business endeavor. A retail merchant, according to statistics, has
-from two to four chances in ten to conduct his business successfully
-for fifteen years; a manufacturer has from two to seven
-chances to do the same. Farming is conspicuous for its small
-percentage of out-and-out failures. Living is practically assured,
-which gives the farmer a distinct working advantage to begin
-with. He enjoys a cash market and is not called upon to suffer
-bad debt losses. He is in an industry that is absolutely essential,
-which cannot be destroyed by any shifting of circumstances.</p>
-
-<p>The greatest need is doubtless for cost-accounting systems
-which will serve as a guide, not only to prevent unwise purchases,
-but to indicate wise expenditures in improvements that will
-bring a good return on investment, and to show definitely the
-amount of profit obtained on each transaction. Next to this in
-importance is perhaps the need for a thorough understanding
-of crop rotation and the principle of diversified farming as a
-means of offsetting losses in one line with gains in another. The
-securing of credit to enable expansion, and the adoption of labor-saving
-devices are also essential.</p>
-
-<p>Profits and losses in farming must be reckoned, as in all other
-businesses, on averages over a term of years. But the future offers
-better assurance than ever before to the man who is a good
-agriculturist and at the same time a skillful business manager.</p>
-
-<hr class="chap" />
-<div class="chapter"></div>
-<p><span class="pagenum"><a name="Page_23" id="Page_23">[23]</a></span></p>
-
-
-
-
-<h2>We Stand or Fall Together</h2>
-
-
-<p class="drop-cap">WITH some elements of the American public there seems
-to persist the conviction that the great packing concerns
-are seeking the injury of livestock producers to their
-own enrichment. How such an idea can be seriously
-harbored by thinking men is hard to understand. For the packing
-industry to plan for the farmer anything but prosperity is to
-endanger or destroy the source of supply of the raw material by
-which it lives and grows.</p>
-
-<p>It should be perfectly plain that the packers are selfishly interested
-in encouraging the producer. Their selling efforts are
-directed towards disposing of the largest possible volume of meat
-products, at the best price obtainable in competition with other
-foods, in order that they may maintain large volume of livestock
-purchases at prices that will encourage both quantity and quality
-of production.</p>
-
-<p>Between the producer and the consumer, between the buying
-and the selling price, the packers operate upon a smaller margin
-of profit than any other large industry. On invested capital they
-have realized an average of about 9 per cent over a term of
-years, on volume of sales about 2 per cent, and on each pound
-of meat less than one-half of a cent.</p>
-
-<p>At the same time the risks of the business are greater than
-in other lines, both on account of the perishable nature of the
-product and the violent fluctuations of food prices, the causes
-for which cannot always be foreseen.</p>
-
-<p>The comparative low prices of hogs and pork products at
-the end of 1919 is a case in point. The packing business entered
-upon the year in the belief that the world shortage of food
-would maintain pork prices at high levels for a number of
-years; that European demand would absorb even a larger surplus
-of American hogs than the pre-war period. The earlier months
-of 1919 confirmed this belief. The foreign demand was very
-brisk, exports reached unprecedented volume and prices were
-maintained.</p>
-
-<p>Then came the unlooked-for event. Foreign exchange rates
-fell to so low a point that Europeans could no longer afford to
-buy American meats. The packers extended credit for a time,
-but the limit of safety was soon reached, and when the year
-closed very little American pork was being exported and no new
-contracts were being made.<span class="pagenum"><a name="Page_24" id="Page_24">[24]</a></span></p>
-
-<p>The result was great loss to both producers and packers.
-Armour and Company alone packed millions of pounds of pork
-during the period of high prices, much of which was still in the
-course of curing when the slump in the market came.</p>
-
-<p>But the conditions that caused this decline and loss are
-exceptional and only temporary. The great foreign need for
-American meats still exists—the greatest need in the world’s
-history. The ability of Europe to buy will be restored with the
-full restoration of peace and the arrangement of international
-credits. The result will be a return of profits and prosperity
-to both producers and packers of pork.</p>
-
-<p>The facts to keep in mind are these:</p>
-
-<p>First, there must finally be a realignment of prices on all livestock
-and meats, to levels below the prevailing high war prices.
-A fair balance must be struck between the interests of the consumer
-and those of the producer. Prices for meat must be
-sufficiently attractive to consumers to insure an adequate volume
-of sales; on the other hand prices for livestock must be sufficiently
-high to encourage production. Only on this basis can the industry
-thrive.</p>
-
-<p>Second, the utmost care must be taken in breeding and buying
-of feeding stock and the most exacting economy practiced in
-feeding methods.</p>
-
-<p>Third, the producer must realize that the packer is his natural
-ally in maintaining the prosperity of the two inseparable branches
-of the livestock industry—production and packing.</p>
-
-<p>It is a reassuring sign that producers and packers are
-already getting together on a platform of better understanding
-of their mutual interests, both for protection against disturbing
-agitation and legislation and for the correction of whatever
-inequalities or abuses may exist in the shipping and marketing
-of livestock.</p>
-
-<p>Armour and Company’s Farm Bureau was established three
-years ago as a point of contact with livestock men, through which
-better methods of breeding, feeding, shipping and marketing
-could be promoted.</p>
-
-<p>Being in constant touch with the requirements of the markets,
-Armour and Company know the types of meat animals which are
-most demanded and which bring the largest profit to the stockman.
-The Farm Bureau has available many facts regarding the economical
-production of these types, and these facts can be had by
-addressing the Bureau, care of Armour and Company, Chicago.</p>
-
-<div class="figcenter" style="width: 523px;">
-<img src="images/cover-back.jpg" width="523" height="800" alt="back cover" />
-</div>
-
-
-
-
-
-
-
-
-<pre>
-
-
-
-
-
-End of the Project Gutenberg EBook of The Livestock Producer and Armour, by
-Armour and Company
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