Federal Judge Peter S. Grosscup had issued a temporary injunction against the Big Six of the Beef Trust on May 20, enjoining them from colluding, and the Trust companies had dutifully distributed thousands of copies of the order throughout their national networks. Although they pledged to follow the injunction to the letter, they refused to admit wrongdoing. In the text of an internal memorandum distributed within Armour & Company, however, they practically did. In the letter, J. Ogden Armour himself directed subordinates to “disregard all verbal or written agreements” that may have been struck with other corporations, and to “do business entirely as an independent company.”1
It was nothing if not a tacit admission of guilt.
Judge Grosscup had spoken in the federal case, but New York State had yet to act. Since the New York City–based representatives of the Beef Trust companies had all stolen off to New Jersey, and as long as they remained there could not be served with subpoenas, Justice Chester’s hearing had to be postponed. Ex-Justice Landon, however, who had been asked to evaluate whether sufficient evidence existed for the state to revoke the corporations’ business licenses, was free to proceed.2
State Attorney General John C. Davies was certain the Trust operated in more or less the same way throughout the state, and that even without any New York City witnesses he could shine a spotlight on their anticompetitive activities with testimony from upstate. So on May 27, he put up witnesses from Troy and Albany. The subject, however, was not price-fixing, but blacklisting.3
The Troy-based arbitrator for the Trust packing houses, who had been given his walking papers immediately after Judge Grosscup’s ruling, asserted that while in the Trust’s employ he had received weekly reports from each constituent company tattling on retail dealers who had failed to settle their accounts promptly. His job was to compile a blacklist to ensure that if one Trust member experienced payment problems with a customer, the latter would be refused credit by all other members. He also testified that he had overseen an account funded by deposits from each company and had been empowered to deduct one hundred dollars for each violation of the Trust agreement, a copy of which was entered into evidence.4
The Schwarzschild & Sulzberger manager from Troy also took the stand. It had been his responsibility to submit his company’s weekly list of delinquents. He told Justice Landon that the agreement to do so had been abrogated the previous week on instructions from Ferdinand Sulzberger. Similar testimony was heard from local Nelson Morris & Company and Hammond & Company employees, and from two former Albany arbitrators.5
What did the extension or denial of credit have to do with price-fixing? U.S. Solicitor General John K. Richards explained the relationship this way: “Men who are selling dressed meat for consumption may compete not solely by price, but by the character of the credit extended. One man may be induced to purchase dressed meat at a slightly lower price per pound, another by an extension of credit. Therefore any combination to be effective must not only establish and maintain uniform prices, but must establish and maintain a uniform rule of credit, and so too with that arrangement which governs the transportation and delivery of the dressed meat.”6
In other words, it was not just price-fixing by the Trust that accounted for the rise in retail prices. It was also the credit policy of the wholesalers.
It appeared that the Trust companies had now abandoned their blacklist, at least in New York, though local butchers could be forgiven for being skeptical. “In the minds of men who do business with the Beef Trust . . . there is not an implicit faith in the unsupported promises of the packers,” the New York Herald reported. Any confidence that the list was really a thing of the past came not from their words, but from the fact that it would be impossible for them to continue the practice without being detected. Putting it a little less delicately, the paper wrote, “No consideration of business policy or symptoms of tenderheartedness inspires the greedy packers in burying the weapons with which they have beaten dealers into submission. It is the cold order of a federal judge . . . which was so overwhelming that they did not dare to oppose it.”7
As long as the injunction remained in force, the blacklist was history. And in another indication that the companies intended to comply, news came on May 28 that they had ordered the tickers removed from their branch offices in New York, Brooklyn, and Jersey City. This was an elaborate and costly electronic network that had been set up for the sole purpose of collusion. But the wire connections that powered the tickers were not ripped out, meaning that the system could easily be reinstalled and put back to work should the government lose its case.8
It took until June 4 for New York to act, and the key testimony that undergirded its decision was that of Daniel W. Meredith, the former employee of Swift and Armour whose deposition had also been introduced in the federal proceedings in Chicago. Reprinted verbatim in the New York Sun, it contained a detailed and damning description of the mechanisms employed by the Big Six to manipulate prices.
Meredith testified that when he had first gone to work for Armour in 1883, there had been normal competition among all the packing houses, but that after 1893 agreements were signed and regular meetings held “to arrange prices at which the products could be sold.” He explained that the six New York City–based general managers had control over the local affairs of their respective companies, “subject to the principal officers in Chicago.”
The managers had met once a week, and sometimes more frequently, at the St. James Building at Twenty-Sixth Street and Broadway to set prices for the coming week. Considering the amount of inventory on hand and the quantity of cattle already in transit, they would also sometimes agree to curtail shipments from the West to prop up prices. Decisions were reached by majority vote.
The six packing houses, Meredith asserted, had also agreed not to compete against one another in smaller towns. If one house had a branch office in a given town, the others would avoid setting up there. And sometime around 1901 a second accord was reached concerning the blacklist, whereby credit customers who defaulted on their obligations to one house would be denied credit at all of the others.
Meredith reported also that Arthur Colby, the Manhattan-based arbitrator, extracted fines from each company for violations of the agreement, and that any employee found cheating would be fired and unable to secure employment with any other wholesaler. In other words, there had been an employee blacklist as well.9
Once Attorney General Davies brought Meredith’s incriminating affidavit to the attention of Justice Chester, the latter issued an injunction along the same lines as Judge Grosscup’s order of two weeks earlier. It enjoined the “managers, agents, attorneys and servants and all persons acting or assuming to act” under the authority of the defendants from colluding on the price of meat, the supply of meat brought into the state, the price of labor, or competition in the labor force. Copies of the Judge’s order were served on all of the defendants.10
But, as the New York Press pointed out, the injunction didn’t really settle anything. It functioned as a stay as far as collusion was concerned. But the real test would be when the state got around to prosecuting the Big Six. To make the injunction permanent, it would be necessary to prove that they were acting in restraint of trade. But Samuel Weil, second vice president of Schwarzschild & Sulzberger, indicated that the companies intended to take the case to the U.S. Supreme Court. He insisted his firm had done no wrong and had never entered into any combination to set prices, and therefore there would be no change in its methods of doing business. What the newspapers had printed, he declared, had been “rot and lies.”
A representative of Swift & Company agreed. “How can the courts settle the price?” he asked rhetorically. “When there are 2,000,000 cattle less than in former years, and the population is ever on the increase, there should be no decrease in prices, and there cannot be any lower prices unless the price of cattle on the hoof is lower at the stockyards.”
Despite the mountain of evidence in both the federal and state proceedings that exposed them for blatant price-fixing, the Trust firms still had the temerity to cling to the fiction that high beef prices were solely a function of a diminished supply of cattle. Through its National Provisioner organ, the Trust continued to propagandize against the retail butchers.
“The ‘kosher’ butchers of Greater New York have been the first to reap the bad fruits of the present regrettable agitation about high beef prices,” the paper wrote. “The badly informed butchers have filled the daily papers and their customers’ ears with a lot of senseless rot about ‘Trust’ prices when they must have known that beef cannot be sold cheaper than it now is while all grades of cattle are dear.”
It went so far as to blame the kosher butchers for the boycott, not because they were gouging their customers, as the women had alleged, but because they had failed to manage their customers’ expectations. “The National Provisioner has been telling the butchers all along that cattle and beef would be high,” it wrote. “The paper has been advising the butchers to gradually get their prices up and explain to their customers that cattle were scarce and high and therefore beef was way up. If this advice had been heeded, the disgraceful meat riots and destruction of butcher shop stock and property witnessed in New York City during the last ten days would not have taken place.”
It was an entirely specious argument based on a lie; nor did it deal at all with the fact that kosher meat had become unaffordable to its customers, which was the basic reason for the unrest.11
Despite their unwillingness to admit fault, the Trust companies seemed intent on complying with the injunctions. It remained to be seen what effect, if any, their doing so would have on the price of kosher meat.