World War Wednesday: Why is the price of meat so high? (1919)

Earlier this month, I posted an article on my Substack about grocery prices, price gouging, and price fixing. I mentioned the investigation of meat packers during and after the war, but I hadn't yet done much digging on the subject. When browsing a February, 1919 issue of The Delineator, imagine my surprise when I came across this advertisement from Swift & Company!

One thing I've been researching for my book is the continuation of wartime measures after November 11, 1918. This whole issue of the New-York-based magazine is chock-full of references to food conservation, and the ads are no exception. But unlike the others, this advertisement isn't touting how their products can be used to meet food conservation goals. Instead, it is a company defending itself from criticism. 

It reads:

The head of a Philadelphia family writes to ask us why the price of meat is so high. He wants to know especially about the increase during the past four years.

There are, of course, many reasons.

The heavy demand for meat, caused by large orders from the Allies and by high wages at home, has helped to boost prices. The lower purchasing power of the dollar has also caused the prices of all commodities to increase.

But one important factor is the high cost of producing and marketing meat along the line from farm to retailer.

The retailer, for example, must pay higher wages to clerks and more for delivery service, in fact, everything entering into store operation has advanced tremendously.

And the retailer has to get a much higher price for meat, because he has to pay the packers more for it.

The packers, in turn, are in the same position as the retailers. It costs them more to do business. Labor, transportation, machinery, materials - all items in the packing business - have mounted rapdily. Wages of packing house laborers, for example, have increased over 100 per cent in the past three years. But here again the packers have to get higher prices for meat when they have to pay such high prices for live stock.

During the past four years, cattle prices to Swift & Company advanced 74 per cent, whereas the price received for beef by Swift & Company has advanced only 61 per cent during the same period.

The farmers have had to get more for cattle because it costs more to raise them. 

Cor, for example, has doubled during the past four years; farm labor is scarce and wages are high.

But even with these higher production costs, the price of meat has gone up no more than the price of other foodstuffs - and this is in face of the enormous quantities sent overseas to our Army and to the Allies. 

During the past five years, flour has increased 100 per cent, corn meal 133 per cent, sugar 65 per cent. During the past year alone, fruits have advanced 30 per cent.

If the packers were to eliminate their profits entirely, there would be practically no change in the price of meat. Swift & Company's profits average only a fraction of a cent per pound of meat.

Well! Quite the claim there, and I'm not sure how effective it was. But why was a major meat packing company spending their advertising budget on a full-page ad defending themselves? Well, as it turns out, since the U.S. entrance into World War I, Swift & Company had been under investigation by the Federal Trade Commission (FTC), alongside other meat packers, for price fixing and unlawful collusion. Although ordinary citizens had been encouraged to voluntarily reduce their consumption of meat in order to free up supply for the Allies and American armed forces, meat prices were quite high throughout the war. President Woodrow Wilson had ordered an investigation of the meatpackers by the FTC as soon as the U.S. entered the war.

Considering that the big four meat packers of 2024 (JBL, Tyson, Cargill, and National Beef) were all sued for price fixing last month just reinforces how much the history of World War I repeats itself approximately 100 years later (for other instances, see one of my earlier blog posts).   

Swift & Company had already been under fire since 1902, when President Theodore Roosevelt investigated the Beef Trust. The U.S. government took them to court in 1905 and the Swift & Co. v. United States Supreme Court case sided with the Roosevelt Administration. Thanks in large part to Upton Sinclair's book The Jungle in 1905, which detailed the horrific conditions of the meatpacking industry, Teddy got to go even further. Sinclair had been trying to get the public to support labor reform. Instead, he terrified them into sanitation and food safety reform. Theodore Roosevelt passed the Federal Meat Inspection Act of 1906. Meatpackers like Swift were no longer able to have as much free rein as they did before the Sherman Antitrust Act of 1890, but despite regulatory gains, there was still work to be done.

But this one little ad wasn't the end of Swift & Company's attempt to exonerate themselves in the public eye.

Swift & Co. advertisement in "The Egg Reporter," February 20, 1919.

The advertisement in The Delineator was one of many Swift & Co. released that February. This was another, touting its 1919 yearbook as providing "both sides" of the argument at hand. It reads:

Do you want to know both sides? 
Swift & Company's 1919 Year Book, just out, tells you

What Swift & Company profits were in 1918,
The truth about the Federal Trade Commission's investigation,
Why the prices of butter and eggs are so high,
And many other vital facts.

Whether or not you agree with us after reading this Year Book, you will at least know both sides.

You will find it interesting; Americans like to hear about big things done in a big way.

You will also discover that we are merely human beings like yourself, doing in the best possible way a necessary service.

Legislation is pending in Washington; as a good American citizen you want to know both sides of this question. It concerns you, as well as one of the most important industries in the country.

Do not hesitate to send for a copy of this booklet. Your name and address are all we need. 

I have yet to find a digitized copy of their 1919 yearbook, but I did manage to find this interesting gem from 1919, The Meatpacking Industry in America: An Illustrated Lecture, issued by Swift & Company. It explains not only how Swift & Company operate their meatpacking plants, but it also touts their sanitation and safety measures, including employee healthcare! And of course, how little profit they actually make.

Unfortunately for them and their meatpacking compatriots, the Federal Trade Commission (FTC) did not agree. In a six volume report published in the summer of 1919 (you can read volumes 1-2 here, and volumes 3-6 here), the FTC found that the five major meatpackers, including Swift & Company, had violated anti-trust laws by colluding to control production, prices, and competition through vertical integration. Their report read:

"The rapid rise of the packers to power and immense wealth and their present strangle hold on food supplies were not based necessarily on their ownership of packing houses but upon their control of the channels of distribution particularly the stockyards, private car lines, cold storage plants, and branch houses. Similarly great profits which they have secured and are now securing are not primarily due to exceptional efficiency in operating packing houses and manufacturing plants, but are secured through their monopolistic control of the distributive machinery This applies not only to the meat industry but to the other branches of the food industry which they control as is evidenced by the fact that, particularly in recent years, they have made far greater efforts to secure control of the distribution of the product than to secure manufacturing plants in the case of such products as cheese and canned goods."

"As long as the packers control these distributive utilities, producers will be at the mercy of the big packers competition will be restrained, and consumers generally will continue to pay the price of monopoly. Control and manipulation of the live stock markets have been the great factors in the discouragement of live stock production Control of the transportation and marketing facilities have been the instruments by which competitors have been crushed."

Their solution? Complete government takeover. No wonder Swift & Company were spending money right and left to convince the public of the justice of their business model!

Ultimately Swift & Company was not brought under government control. It was, however, restricted only to meatpacking operations. Alexander Mitchell Palmer, attorney general of the United States under President Wilson, forced major meat packers to a consent decree to get out of anything but meatpacking. For the public, it wasn't enough. In 1921, Congress passed the Packers and Stockyards Act of 1921, also known as the Packers Bill, and it was signed into law by President William G. Harding, President Woodrow Wilson's Republican successor. 

The Packers and Stockyards Act substantially curtailed the expansion of the major meatpackers into other foodstuffs and prevented them from vertically integrating - that is owning the stockyards and even railroads that transported livestock to their slaughterhouses. Of course, litigation began almost immediately, as did amendments to the Act.

In their first annual report, the Packers and Stockyards Administration, under the auspices of the United States Department of Agriculture (USDA), outlined not only brief biographies of some of their staff, but also the names and locations of the stockyards subject to the rules. The report also outlined complaints against packers and stockyards, including short-weight butter sales (selling 1 pound cartons of butter that contained only 15 ounces), as well as deceptive marketing of livestock, anti-competitive behavior, and general fraud. 

The Packers and Stockyards Administration is today the Grain Inspection, Packers, and Stockyards Administration (GIPSA), part of the USDA. It still operates and regulates meatpacking, stockyards, and now grain markets in the United States. Like the Food & Drug Administration oversees the safety, accuracy, and sales of manufactured foods and drugs, GIPSA oversees the safety, accuracy, and sales of grain and livestock. 

This advertising campaign from Swift & Co. is just one example of the many ways in which the First World War had a lasting impact on the American economy and government. Even though many of the regulatory agencies of the war were designed to be temporary - notably the United States Food Administration - other regulatory bodies like the Packers and Stockyards Administration had their roots in the Progressive Era and lasted long beyond the war. 

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