TO AMEND THE PACKERS AND STOCKYARDS ACT, 1921

FRIDAY, MARCH 16, 1934

UNITED STATES SENATE,
COMMITTEE ON AGRICULTURE,

Washington, D.C.

The committee met at 10 a.m., pursuant to adjournment, Senator George W. Norris presiding.

The CHAIRMAN. The committee will come to order. The first witness on the list this morning is Mr. Mollin, who I understand wants to leave, so we will hear him first.

STATEMENT OF F. E. MOLLIN, SECRETARY OF THE AMERICAN NATIONAL LIVESTOCK ASSOCIATION, DENVER, COLO.

Mr. MOLLIN. Mr. Chairman and gentlemen, my name is F. E. Mollin. I am secretary of the American National Livestock Association, headquarters at Denver, Colo. This is a producer organization that takes in the range cattle producers west of the Missouri River. We have the State regional and local associations out there affiliated with us, and many individual producers have individual memberships. To begin with, I would like to read our resolution, no. 27, which was adopted at the convention of the association at Albuquerque, January 10, 11, and 12 of this year. It is very short:

Whereas, we are advised that a bill has been introduced in Congress to prohibit the direct purchase of livestock by packers, and

Whereas, this association favors keeping open every avenue for the sale of our livestock, and particularly that of direct marketing, therefore be it

Resolved, that we are opposed to any legislation restricting or hindering the marketing of our livestock.

Now, the word "our" was used advisedly in that resolution in those two places because we discussed the situation here in the Corn Belt which we did not wish to get into, but we wanted to make plain our own position. We are not trying to resolve against what the hog producers may wish to do in the matter of their own livestock, but we are merely carrying on the policy that our association has had for a great many years in regard to its own marketing.

Senator CAPPER. Was that resolution reported by the committee unanimously?

Mr. MOLLIN. It was not unanimously adopted by the resolutions committee. There was an element in the committee that favored going into the situation which you have here in the Corn Belt, and resoluting against the direct marketing of livestock by the packers. That was voted down in the committee There was no fight made on the floor, and when it got to the convention floor it was adopted without protest.

Senator CAPPER. But there was pretty strong opposition in the committee, was there not?

Mr. MOLLIN. In the committee; yes, sir. I would say we were. more than liberal in picking our resolutions committee. We allowed Mr. Todd and Mr. Mercer to sit on that committee, although they have not been very active in our association, and we knew their attitude on this subject.

Senator CAPPER. Your association always has been very much opposed to legislation along this line, has it not?

Mr. MOLLIN. Yes, sir; as a matter of principle, because we believed in the right of the producer to seek his own market. But, as I say, we have not at least, it is not our intention or our desire to interfere regarding the marketing of hogs. Ours is largely a cattle organization, but we do not think that in working out your hog problem you should make the legislation so inclusive that it will interfere with what has developed in the West over a long period of years as the normal way of marketing our livestock.

Senator FRAZIER. You do not understand that this will prevent or prohibit direct marketing, do you?

Mr. MOLLIN. Well, of course, it depends on just what you mean by "direct marketing, Whether you mean as it exists in the Corn Belt on hogs or as we direct-market our cattle.

Senator FRAZIER. Cattle and hogs both. They come under the same arrangement.

Mr. MOLLIN. Of course, it gives broad power to the Secretary. If you will let me tell you a little bit about the way we market our livestock, perhaps some of the questions could be answered more fully.

Senator CAPPER. I understand perfectly that the plan is to have regulation and supervision of these private markets that are now running as they please-to have supervision in the interest of the producer, similar to that which is now given to those who market at the central markets.

Mr. MOLLIN. We would not have any objection to reasonable regulation of what you may call "private markets", but we have quite a different system of marketing in the West, which I will explain to you. I have been impressed with the fact that practically all of the testimony that has been given before your committee has dealt only with hogs. Every witness has talked about hogs, unless some Senator has asked him a question in regard to cattle, and then there has been brief mention that there are some cattle marketed direct. But it is a hog problem as it has been presented to your committee.

Senator NORRIS. That probably comes about through the fact, as I understand this practice, the practice of buying in, the field, that it has been in reference to hogs almost entirely.

Mr. MOLLIN. That is true.

Senator NORRIS. It would naturally follow that the hog men, if they are opposed to it, would be the first to feel the effects of that kind of buying. It has not happened in the cattle market nearly so much? Mr. MOLLIN. No, sir.

Senator NORRIS. Although I think it is increasing there somewhat. Mr. MOLLIN. It has increased somewhat in the Corn Belt, as I understand it.

The question has been asked as to the effect, the extent to which it might affect our people in the West. You take section 302 (b), which reads:

When used in this title the term "stockyards" also means any place, establishment or facility consisting of pens or other enclosure, and their appurtenances in which live cattle, sheep, swine, horses, mules, or goats are received.

Now, you take in the West, all through the West, particularly on the Pacific coast, and we have plants scattered elsewhere, cattle are bought in the country but they are received at the packing plant, and whether this bill would apply with the same effect on a little packing plant that operates in some town in California or Arizona or Utah or Montana, where even though they might actually buy the cattle in the country and receive them there at the plant, is a question which I presume it would take a lawyer to determine. I want to call the situation to the attention of your committee as to why we do not think it should apply to the operations as they are conducted in the West.

I would like to say that there was a cooperative organization in California that was called the "Western Cattle Marketing Association", that has recently changed its name to "The Pacific States", that serves four or five States in the Pacific coast territory, Arizona, California, Utah, Nevada, part of Oregon, and I think a smalĺ part of New Mexico, and that they did have over 200 different towns through which they sold livestock-mostly cattle. There were little operators out there that they could deal with, and they had a direct marketing system. It was a purely direct marketing system until a year ago, when they established a house on the San Francisco market. Later they established a concentration point. I do not know as it properly should be called a "concentration point", but it is a feeding point down near the Los Angeles yards, named Bassett, and they bring the cattle in there to feed and finish, and then feed them out as they get ready to go, and they found a desirable outlet for that stuff.

Senator NORRIS. I am interested in that story you have just related, where you say direct buying was practically universal there? Mr. MOLLIN. Yes, sir.

Senator NORRIS. How did they fix the price? Did they base the price on some stockyards market or was it just a dicker between seller and buyer?

Mr. MOLLIN. I think it was largely a dicker, because we do not have large markets in the West.

Senator NORRIS. So I understand; yes. I know about that, but I am interested to know now where you had a practical application of direct buying like that and cut the markets out, how you got along. Was everybody satisfied with the practice?

Mr. MOLLIN. No; I do not think everybody is satisfied. I do not know if they ever are.

Senator NORRIS. Where there was no leading market was there a very great difference in the prices in different localities?

Mr. MOLLIN. I think that the operation of the Association was considered a success, Senator. They had opposition from the markets, particularly at Los Angeles when they began to develop a central market, but those people in the West have always sold their cattle direct, to a great extent. They have sold them at home. They do today.

Senator NORRIS. What kind of a market exists in Los Angeles now? Is it a large market?

Mr. MOLLIN. No; it is not a large market.

Senator NORRIS. Where do they sell their output at Los Angeles? Mr. MOLLIN. Who, these people I speak of?

Senator NORRIS. The packers, I mean.

Mr. MOLLIN. They sell their output to all the cities of the Pacific coast, but it is a local market. That is one of the things I wanted to call to your attention, that when people get to the Los Angeles market it is the end of the road, and it is relatively a narrow market. That is one reason that they felt the necessity of this other system of marketing out there, because it was dangerous to start with a big shipment of cattle to the Los Angeles market, because if it happened to be oversupplied they were severely punished.

Senator NORRIS. How about hogs there?

Mr. MOLLIN. Well, I understand that the great percentage of the hogs that go out there are handled direct, but I am not in close touch with the hog situation. Our people are not concerned with hogs in the West, and I would not like to attempt to give the actual facts. But I do know that, of course, there are great quantities of hogs shipped from all through the Central West to the Pacific coast, and I think these largely direct and not through the central stockyards.

To show you the risk of that market out there I can cite an example of one of our members in Texas who sold his cattle at home to a California speculator, and they went to the California market, and that speculator lost something like $10,000 on that shipment of cattle. Of course, if he had happened to have been lucky he might have made $10,000. But the idea is that there is a risk involved. Now, there are a great many cattle that go to the Los Angeles market that are in the hands of speculators, and most of our people prefer to sell at home, if they can. So that you will find that shipments to that market are, quite a large proportion of them, already out of first hands before they go to market.

Senator FRAZIER. Did you refer to the organization out there as cooperative?

Mr. MOLLIN. It was a cooperative.

Senator FRAZIER. To what extent was it cooperative?

Mr. MOLLIN. It was a true cooperative.

Senator FRAZIER. Does that still exist now?

Mr. MOLLIN. It still exists. As I told you, they have changed the name to the Pacific States. They are still operating. They are members of the National Livestock Marketing Association.

Senator FRAZIER. You mean they have their local buying organizations and buy these cattle and ship them there to Los Angeles, and then rebate back?

Mr. MOLLIN. No; they did not have local buying organizations. The system was largely to sell before the cattle ever left the ranch. Then they had a field service so that the field man went and inspected these cattle and reported the cattle to their central agency. They had a salesman in an office in the city of Los Angeles, and they had a salesman in the office in San Francisco, and they made the deals with the packers up and down the coast. Then the cattle were moved as needed. It was a stabilization operation also. The cattle did not move until really there was a demand for them, instead of just putting them into the market and take what you could get for them.

In addition to the operation of that association there are a great many cattle that go to the Pacific coast from the intermountain territory from other States. The packers send buyers clear back into Colorado and New Mexico, and even into west Texas and buy cattle. I have here a letter from our president, Mr. Charles E. Collins of Kit Carson, Colo., dated March 12, and in that letter he says:

I think that you should state that the California buyers at times come as far east as central Kansas and Nebraska and into the panhandle country and west Texas, and buy fat cattle for the Pacific coast, and we would consider it unfair legislation which would prohibit us making those sales. Just recently a California buyer bought 150 fat cows from a neighbor of mine, paying 3 cents a pound for them, weighed up at Cheyenne Wells, and I am sure that this price netted this feeder 50 cents a hundred more than he could have got on any market on the Missouri River or Denver.

The big packers are not so strong on the Pacific coast as they are in the central part of the country. There is a great deal of competition out there. Armour does not have a plant on the Pacific coast except at Spokane. Swift and Cudahy and Wilson do have plants on the Pacific coast, but there is a host of other packers that are substantial packers that are not out there.

Senator NORRIS. What packers are there in Los Angeles?

Mr. MOLLIN. Wilson is at Los Angeles, and I think Cudahy, and Tobria, of Phoenix, who is independent, has just gone into Los Angeles. Then there are a lot of little packers. Swift is at San Francisco. Then they have plants also in the north. Swift has a plant up the north coast. I am not sure about Wilson. Armour is at Spokane.

But we have got real competition from a lot of different packers out on that west coast, and we are very anxious to preserve that competition. I spent a week in the west slope of Colorado in December, and I was told by representatives of the Kansas City Stockyards Co., who solicit trade in that territory, that the shipments of cattle from western Colorado to the Pacific coast this fall were 100 percent greater than last fall. Those are, a great many of them at least, sold before they move. They are sold to buyers that come in there. There are perhaps some cattle confined to the Los Angeles market, but there are a great many that come in.

Senator CAPPER. They do not carry on a system of concentration in the markets, in private markets?

Mr. MOLLIN. No, sir.

Senator CAPPER. Along the line that they are carried on in Iowa, and the Central States?

Mr. MOLLIN. No, sir.

Senator CAPPER. I do not know whether you have given thought to this provision of the bill (b) on page 3, which defines what a stockyard shall be under this legislation. It says:

The term "stockyard" also means any place, establishment, or facility consisting of pens or other enclosures and their appurtenances in which live cattle, sheep, swine, horses, mules, or goats are received, held, or kept for sale, slaughter, or shipment in commerce in sufficient volumes or in such manner or under such conditions as to enable the operator of such stockyard to manipulate or control prices of livestock in commerce, to create a monopoly in or apportion territory for the acquisition of, buying, selling, or dealing in livestock in commerce, or to establish or affect substantially the market value in commerce of livestock at stockyards as defined in subdivision (a).