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diff --git a/.gitattributes b/.gitattributes new file mode 100644 index 0000000..d7b82bc --- /dev/null +++ b/.gitattributes @@ -0,0 +1,4 @@ +*.txt text eol=lf +*.htm text eol=lf +*.html text eol=lf +*.md text eol=lf diff --git a/LICENSE.txt b/LICENSE.txt new file mode 100644 index 0000000..6312041 --- /dev/null +++ b/LICENSE.txt @@ -0,0 +1,11 @@ +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. + +Procedures for determining public domain status are described in +the "Copyright How-To" at https://www.gutenberg.org. + +No investigation has been made concerning possible copyrights in +jurisdictions other than the United States. Anyone seeking to utilize +this eBook outside of the United States should confirm copyright +status under the laws that apply to them. diff --git a/README.md b/README.md new file mode 100644 index 0000000..770c91d --- /dev/null +++ b/README.md @@ -0,0 +1,2 @@ +Project Gutenberg (https://www.gutenberg.org) public repository for +eBook #51244 (https://www.gutenberg.org/ebooks/51244) diff --git a/old/51244-0.txt b/old/51244-0.txt deleted file mode 100644 index 821b714..0000000 --- a/old/51244-0.txt +++ /dev/null @@ -1,1271 +0,0 @@ -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 - -*** END OF THIS PROJECT GUTENBERG EBOOK THE LIVESTOCK PRODUCER AND ARMOUR *** - -***** This file should be named 51244-0.txt or 51244-0.zip ***** -This and all associated files of various formats will be found in: - http://www.gutenberg.org/5/1/2/4/51244/ - -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) - -Updated editions will replace the previous one--the old editions will -be renamed. - -Creating the works from print editions not protected by U.S. copyright -law means that no one owns a United States copyright in these works, -so the Foundation (and you!) can copy and distribute it in the United -States without permission and without paying copyright -royalties. 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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) - - - - - - -</pre> - - -<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 </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 - -*** END OF THIS PROJECT GUTENBERG EBOOK THE LIVESTOCK PRODUCER AND ARMOUR *** - -***** This file should be named 51244-h.htm or 51244-h.zip ***** -This and all associated files of various formats will be found in: - http://www.gutenberg.org/5/1/2/4/51244/ - -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) - -Updated editions will replace the previous one--the old editions will -be renamed. - -Creating the works from print editions not protected by U.S. copyright -law means that no one owns a United States copyright in these works, -so the Foundation (and you!) can copy and distribute it in the United -States without permission and without paying copyright -royalties. 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