Pass Buck?

If anyone at Washington was overworked last week, it was the ex-Professor of Agronomy who recently came from Kansas to be Secretary of Agriculture. Mr. Jardine, in addition to routine work and a reorganization of his Department, was obliged to listen to a debate between the U. S. Government and two meat-packing houses.

"On Feb. 17, 1923, Armour & Co. were in financial difficulties." So were Morris & Co. They merged--Armour buying out Morris--lock, stock and pig.

It happens that the packing business is regulated by a Federal Statute, "The Packers and Stockyards Act," which specifically governs it. This statute, supplementing the broad provisions of the Sherman Anti-Trust Law, forbids, inter alia, restraint of trade.

Pressed by the Farmers' National Council and other lobbyists, the Department of Justice filed a complaint against the Armour-Morris merger. The packers insisted that the merger had been negotiated with the implied consent of the late Secretary, Henry C. Wallace, Mr. Jardine's predecessor. Government counsel denied this, insisted that Mr. Jardine should rule against the merger as a violation of the Packers and Stockyards Act.

Mr. Jardine called a hearing. Lawyer-spokesmen for the companies arrived. Chief of the Armour lawyers was Alfred S. Austrian. His points

1) Testimony of 322 witnesses in Denver, Omaha, Chicago, Kansas City had not included a single word indicating that the merger had restrained commerce.

2) "The fusion of two firms does not violate the law unless it places one in a position of dominant control," which this fusion did not do, since Swift & Co. does more business than Armour and Morris combined. (Of all animals killed last year, Swift killed 24.2%, Armour-Morris 23.5%.) Besides, the big packers find that their sternest competition is with the 1,300 smaller packers.

Chief of the Morris lawyers was Melville Washington Borders. His points

1) "Every person has a right to sell what he owns and there is not a single case in the U. S. where a seller has been held liable" (for unlawful combination). Morris & Co. should never have been made a party to the complaint.

2) If Mr. Jardine rules against the merger, the case will go to the Supreme Court. "If this is a buck-passing proposition, why were we called to Washington? . . . Pass the buck and you have the respect of no one."

Chief Government lawyer was Walter L. Fisher, Chicago pacifist and radical, onetime (1911-13) Secretary of the Interior, father of eight. His points :

1) The Courts have held that unlawful monopoly may exist without being 100% monopoly. "I defy anyone to name a market where the producer of raw material has to sell in such a slightly competitive market as this one." Meat prices are controlled by the big packers.

2) Recently, Armour & Co. refused to buy from "traders" because they gorged the hogs* with food and water to increase their weight. Although this embargo was repealed at the insistence of the Department of Agriculture, it illustrates the power of the big fellows.

3) If Mr. Jardine permits the merger, he will put an arrow in the quiver of the Radicals, who will accuse the Government of subserviency to big business.

The talk ceased. Mr. Jardine went home to think. His mind is said to work like Herbert Hoover's. His emotional sympathies are with the "average man" who earns his living outside a mahogany-glass office. Intellectually, he realizes the danger of interfering in the national development of business. He is not a quack. What business has joined together, let not a Secretary of Agriculture lightly put asunder.

And yet--if ever a Secretary of Agriculture might be pardoned for passing the buck, it would be Mr. Jardine on this occasion. If he rules against the merger, the gentlemen of the Supreme Court will have to judge it. Who better ?

*The phrase "watered stock" evolved from the practice of this trick by "Jim" Fisk before he began his notorious operations on Wall Street with the notorious Jay Gould.