On January 9, 1933, Chicago and Kansas City combined had 44,000 direct hogs against only 50,000 farmers' hogs on sale. And, of course, the market was lower. This does not take into account the multiplied thousands of directs at other markets in the hands of miscellaneous packers, nor moving into or out of concentration points. On the Mondays suffering the greatest breaks in prices the supplies in packers' hands at Chicago and Kansas City were reported by the Bureau of Agricultural Economics as follows, together with supplies of farmers' hogs on those markets:

On 19 Mondays in 1933 the public market was more than 10 cents lower, and on all these Mondays direct hogs at Kansas City outnumbered farmers' hogs on sale.

Thus it is shown that the heavy receipts of hogs direct into the packing houses on Monday morning supply much if not all of the demand for hogs from those packers having them, resulting in lower prices. These lowered prices usually prevail for several days, and about Thursday or Friday another large supply moves into the packer's hands to keep prices down.

With heavy direct receipts on at least 2 days a week the packers were able through the year 1933 to keep prices under control. Thus, the American pig crop has sold below cost of production, and until this vicious circle of directs, bearing the market every day of the week through 2 days of paralyzing receipts, is stopped, there can be little hope that producers of hogs will profit by their industry.

Direct buying of hogs in the United States prior to 1920 was of comparatively small volume and perhaps without measurable effect. Since that time, however, it has developed to a point where it deeply reflects on the welfare of the livestock industry and in order to tell the story of its development during the subsequent years, the following graphs were submitted.

The first graph is a simple picture of the population of the United States and portrays the increase in our numbers during the last decade showing an average increase of one million seven hundred thousand per year. In contemplating this picturized statement it must be kept in mind that people must eat to live, and that meat is, or it should be, a major item in the American diet.

On the second graph we see in graphic style our yearly pork production. Since the story at this time is mainly concerned with hogs, this graph is submitted as evidence that the production of hogs during the period covered (1920-33, inclusive) has remained fairly constant, moving through about three cycles of moderate variation, reaching a low point in 1926.

1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931

Dept of Agr.

1932 1933

It will be perceived from this third graph that per capita consumtion of pork has more or less followed production, the number of pounds consumed per person having varied accordingly. While the figure for 1933 displays an increase of about 10 pounds per person • over 1921, the amount shown in any one of the years covered is short of actual consumption, being based on federally inspected slaughter only. Thus any result based on these figures will be conservatively low.

Here on graph no. 4, we develop the annual increase in consumption of pork which must necessarily accrue by reason of the increase in population as shown on graph no. 1. It reveals that even by using the conservative figures set out in graph no. 3, the accruing increase in consumption has offset the decrease in exports.

I hand you graph no. 5 which depicts the premium spread which hogs commanded as compared to beef cattle prior to about the middle of 1927. It will be noted that hogs again edged above been cattle in the latter part of 1929, and the early part of 1930. At which time the total number of hogs received direct throughout the country, for some reason, failed to increase in the latter part of 1929, and began only a slight upward trend again in the early part of 1930, as will be shown later on a graph no. 9. Moreover, as displayed in graph nos. 6 and 7, which I shall hand you in a moment, it will be noted that the number of hogs received direct at Chicago and Kansas City, failed to increase during this particular period.

Furthermore previous to 1923, which is the first year shown on this graph, direct buying of hogs was of little consequence, and the premium spread above beef cattle has existed to a greater or lesser degree

throughout the entire history of the public markets until about the middle of 1927 when direct buying of hogs reached such proportions as to influence prices.

Here are graphs nos. 6 and 7, just referred to, which show the percentage of total hog slaughter received direct at Chicago and Kansas City, 1922 to 1933. No figures being available back of the year first named. These charts explain very vividly how the larger packers operating at these two price-determining markets have developed the power to control base prices. It will be noted from the preceding graph that hog prices began to come under the influence of direct buying about the year 1927 at which time total direct receipts at Chicago exceeded 25 percent, while at Kansas City the number exceeded 50 percent of total slaughter at these two points. Certainly there is no question but what the packers with such an increasing supply of hogs in their hands as is here shown can go into the adjacent

Average Prices of Cattle and Hogs

public markets with considerable control over the price of their dairy purchases on the basis of which is determined the price of those which they received direct.

A most interesting picture is graph no. 8, which offers indisputable evidence of the power which direct marketing places in the hands of of the packers. The upper line expresses the weekly top prices established to the order-buyers who buy for packers away from the Kansas City market. The period covered being the year 1933. The lower line represents weekly top prices established to the large local packers at Kansas City. The latter is never higher than the former. Were this graph extended to a daily basis, it would reveal a spread on nearly every market day of the year ranging from 5 cents per hundred-weight to 25 cents per hundred-weight and in some instances more, giving the local packers just that much advantage, not only on their market purchases, but upon their direct purchases. This graph shows con