Herbert Hoover to Woodrow Wilson

Herbert Hoover to Woodrow Wilson

Hoover, Herbert, 1874-1964

WWP19470

1918 August 26

Hebert Hoover tells Woodrow Wilson that resolving the problems with the packing industry hinge largely on managing the transportation system and the existence of adequate refrigerated cars and warehouses.

Hoover-Wilson Correspondence, Hoover Institution, Hoover Institution Archives, Stanford, California

Woodrow Wilson Presidential Library & Museum

Wilson, Woodrow, 1856-1924--Correspondence

Hoover, Herbert, 1874-1964--Correspondence

English

Dear Mr. President

With regards to your inquiry as to the request for my observationsof the Food Administration upon the recommendations of the Federal Trade Commission as to the Packing Industry, I beg to say that while I approached the problem from by a somewhat different argument, I am in substantial agreement with most of the final recommendations of the Commission. In fact, these recommendations are in the main in accord with the opinion that I laid before you last Fall, that is, substantially that this growing and dangerous monopoly in the handling of the Nation’s foodstuff is substantially building built upon a monopoly control of transportation facilities., and in fact, It is the outgrowth of the railways’ failure to provide adequate rolling stock, terminal facilities for these industries, and thus they have thus in the main fallen into the hands of the big more enterprising and wealthy packers. On the one hand these concerns have had the energy and enterprise to provide and take advantage of these facilities, and on the other hand the railways can for many reasons be somewhat justified for their failure to provide could hardly could hardly forsee and provide in advance such specialized facilities, in any industry where the ultimate growth and demand could not have been foreseen by the railways.

The recommendations of the Trade Commission are four in order,

First: That the Railroad Administration acquire the transportation required for meat orders; and provide cars for annual transport.

Second: That they acquire the the Railways Administration stockyards as a portion of their terminal facilities;

Third: That they acquire the and provide ample refrigerator cars and their supplementary services; for the use of all packers

Fourth: That the Government itself acquire the branch houses, cold storage plants and warehouses of storage and of final final distribution.

I am in entire agreement with the first three recommendations, as an ultimate end to be attained. As to whether the Government, in its temporary relationship to the railways, should undertake this matter through the Railroad Administration, or whether it should be undertaken as an operation with the railway companies, and thus come under Government control during the Government operation of the railways, seems to me to require further consideration.

As to the fourth recommendation, that is that the Federal Government itself should acquire the branch houses and cold storage plants, I cannot see my way clear to approve it at present. I do believe that ultimately the cold storage and warehouse facilities of the country should be made a public utility, so as to give complete freedom of access to all products, but whether there is sufficient of these facilities today and they could be organized in such a manner as to give the necessary service under our present war purposes pressure is to me a great matter of doubt. As to taking over the branch houses of the packers, it seems to me that this is a positive step towards socialization, and requires a great deal of thought and investigation as to whether or not it does in the end stop all militate against competition. The packers’ branch houses, as distinguished from their storage facilities, are, in fact, commercial agencies for the sale of their products, as I see it, and the Government does not want to undertake the general work of a grocery agency and, in fact, wholesale dealing in foodstuffs.

Disregarding the acts of the packing establishments which may be of the order of conspiracy, and, therefore, a matter with which the Department of Justice is wholly concerned, I approach the subject purely from an economic point of view. I do not think it can be decided I believe it can be contended that these concerns have developed great economic efficiency, and are probably giving the public service at the present moment for a less remuneration per unit than could be obtained under a disintegrated and more competitive system. On the other hand and from a social point of view, the growth of such monopoly can but stifle initiative, and in the long run cannot fail to misuse the power which it acquires. Beyond this is the certain fact that while the industry may be economically efficient in its period of competitive upgrowth and in the hands of its more intergetic and able factors, once established in monopoly, founders as time goes on it cannot fail to diminish in efficiency, and ultimately the economic cost of preparation and distribution becomes higher than a competitive basis, with the constant improving of energy, initiative and ability which such competition involves. and in the end like all monopolies defend itself by repression rather than and efficiency. So that, while I believe that at the present moment, with the restrictions on packers’ profits now existing (and under course of revision) the public is receiving an economic service at low unit remuneration., This will, in my view, not maintain over a long term of years. I would, therefore, crystallize the problem into a question as to what should be done as in a War emergency, and what should be done as an ultimate solution of the problem, and I find doubts in my mind as to whether the Government should undertake the solution of this problem by the temporary authority conferred under War powers, which must terminate with Peace; or whether the matter should not be laid before Congress for the provision of an ultimate and positive solution.

I wish, however, to repeat that the views of the Trade Commission must necessarily be founded on the long outlook, whereas the views of the Food Administration are necessarily founded on securing the best largest service and the least disruption of commerce during this period of National strife; that strain,wWe are at one in our ultimate views, with the very moderate divergence as to the question of Government operation of the branch houses, which seems to me to require further investigation and consideration.

Yours faithfully,



His Excellency
The President of the United States,
The White House,
Washington, DC

Letter

Wilson, Woodrow, 1856-1924