Profits & Sin

With a whoop and a holler, the packing industry last week launched an all-out attack on the Office of Price Administration's price ceilings. Up before the Senate's Agriculture and Forestry Committee, which is probing the meat shortage, stepped dapper, sandy-haired Wilbur Laroe, spokesman for the 700 companies in the National Independent Meat Packers Association. Said Mr. Laroe: the OPA is largely to blame for the meat shortage because it has followed a "social philosophy which regards profits as a sin."

As a result, he said, packers are now squeezed so tightly between high ceilings for meat on the hoof and comparatively low ceilings for meat on the butcher's block that they are losing money on every pound of pork and beef. Thus, with the greatest cattle herds roaming the ranges in U.S. history, there is no incentive for packers to slaughter them. Sadly, Thomas E. Wilson, board chairman of Wilson & Co., one of the Big Four in meatpacking, agreed. Unless something is done at once, he predicted, the Federal Government will have to take over the packing industry.

Stuff & Nonsense? This scary talk, Deputy OPAdministrator for Prices James F. Brownlee promptly told the committee, was stuff & nonsense. Profits had little to do with the case. On every dollar of sales in the packing industry in 1944, he said, packers had made a net profit of 1.05-c-, which was well above their profits of .96-c- per dollar of sales in the years 1925-39. Thus, there was no reason to suppose that a boost in profits by a boost in price ceilings would mean more meat on U.S. dinner tables. The chief cause of the meat shortage, said he, was less the price squeeze than bad distribution. This is due chiefly to the Federal Government's system of buying meat for the armed forces, Lend-Lease, etc. It can buy only from the big, federally inspected packing houses which also supply most big cities. Thus, small packers who supply only markets within their own state have more than their share of the meat supply, while the cities far from major slaughtering centers have less. To even things up, the OPA plans to change its regulations so that big packers get more cattle and hogs.

Victory for Both. The Emergency Court of Appeals, set up to rule only on OPA regulations, decided that both OPA and the packers were partly right. Acting on protests from packers, the court held that packers who handle only fresh beef (about 15% of the industry) are losing money in the price squeeze, losses which are not made up by the Government's subsidy. Something should be done for them.* But the others, notably the Big Four (Swift, Armour, Wilson and Cudahy) are making up losses on meat through the sale of byproducts, tallow, glue, etc.

In the mass of conflicting evidence no one could decide whether ceilings should be raised, subsidies increased or what. As a way out, OPA agreed to sit down with the packers and see if a plan could be worked out to get more beef. But as long as the demands of civilians and the armed forces remain what they are, no one expected that much could be done to boost the available meat supply.

* Two days later OPA canceled the scheduled cut from 80-c- a 100 lb. to 30-c- in the subsidy to non-processor packers.

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