Business: Happy Packers

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Pleased last week with the world, the flesh and the U. S. Supreme Court were Gustavus F. Swift, Robert H. Cabell, Edward Aloysius Cudahy, Edward Foss Wilson, all U. S. packers of meat. In November 1933, the U. S. Government begar collecting a pork-processing tax. Set at $2.25 per cwt. of pig slaughtered, the tax yielded $255,000,000 by June 1935. Then packers went to court, got injunctions against further tax collections until AAA's constitutionality could be determined. The special tax funds, in escrow, awaited the Supreme Court's decision. Last fortnight the AAA became the late AAA. Last week the Supreme Court ruled that impounded processing taxes must be returned to tax payers (see p. 17). So happy packers had no more processing taxes to pay, also had a large refund coming. To Messrs. Swift, Cabell, Cudahy and Wilson this refund would amount to some $20,000,000. No did the court entirely rule out the possibility that pre-injunction taxes might also be returned.

Most packers' fiscal years end abou Nov. 1. In fiscal 1935 the four big packers made some $32,000,000. In order to reap this profit, they had to sell no less than $1,850,000,000 worth of meat, butter, eggs, fertilizer, byproducts. The earnings amounted to only 1.7¢ per $1 of sale, but packers have long since grown accustomed to getting along on this modest ratio. The year was marked by a shortage of livestock. During 1935 only 29,266,000 little pigs went to market, compared to 44,398,000 in 1934. Total meat supply was off about 18%. The result was marked advance in meat prices. Between October 1934 and October 1935 beef went up (wholesale) 40%, lamb 30%, cured pork 40% and fresh pork 65%. Yet, except for Swift, packers had trouble in much improving 1934 profits, for the price of livestock increased even more than the price of meat. During the year ending October 1935, the price of cattle went up 55%, of lambs 40% and of hogs 95%.

In only two (1921 and 1932) of the last 50 years has Swift & Co. failed to make a profit. Last year it contribute $17,000,000 of the $32,000,000 earned by the Big Four. In spite of last year's tonnage decline—Swift slaughtered barely half as many hogs as in 1934—rising price produced sales of $767,000,000, nearly $150,000,000 higher than in 1934. Profit was up more than $6,000,000, but the thrifty Swifts appropriated a $6,000,000 reserve for possible inventory losses in the future. Since 1885, when Gustavus Franklin Swift founded the company over which Son Gustavus Franklin Swift now presides, Swift & Co. has reflected an extremely able family management.

Armour & Co. has had a hectic career since J. Ogden Armour cracked up in 1921 and left his company with a $253,000,000 debt. In 1933-34 a prolonged stockholders' battle brought peppery old Frederick Henry Prince of Boston into control of the company. Mr. Prince sunmoned from London Robert Hervey Cabell, Armour's London manager, made him president of Armour early in 1935.

Like most packers, Armour turned the corner in 1933, had a good year in 1934. In 1935. sales of $683,000,000 produced profit of only $9,349,000, leaving Armor with only 1.37¢ profit per dollar of sale. Mr. Cabell said he had observed "considerable consumer resistance" to high meat prices.