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The Refrigerator Car and the Growth of the American Dressed Beef Industry

Published online by Cambridge University Press:  11 June 2012

Mary Yeager Kujovich
Mary Yeager Kujovich
Affiliation:
Doctoral Candidate in History, Johns Hopkins University
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Abstract

Mrs. Kujovich examines the impact of technological innovation upon the beef industry and the railroads. Utilization of the refrigerator car disrupted the old order in the relationship between the industry and the railroads, exploiting the competition between railroads to make possible the nationwide expansion of the western dressed beef industry.

Type
Research Article
Information
Business History Review , Volume 44 , Issue 4 , Winter 1970 , pp. 460 - 482
Copyright
Copyright © The President and Fellows of Harvard College 1970

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References

1 In contrast to provisions which are salted and cured, dressed meat — the portion remaining after removal of hides, hooves, offal, etc., — refers to fresh, uncured meats.

2 An excellent overview of structural changes in the post-Civil War economy is presented in Chandler, Alfred D. Jr., “The Beginnings of ‘Big Business’ in American Industry,” Business History Review, XXXIII (Spring, 1959), 1–31.CrossRefGoogle Scholar

3 “Relative Cost of Transporting Livestock and Dressed Beef,” Abstract of Proceedings of Conference Between Trunk Line Executive Committee, Chicago Committee and Live Stock and Dressed Beef Shippers (New York, April 11 and 12, 1883), in Proceedings of the Joint Executive Committee (New York, 1883), 1–92. The report is essential for a thorough analysis of the struggle.

4 For further information regarding railroad economics see Ripley, William Z., Railroads, Finance and Organization (New York, 1912)Google Scholar, and Railroads, Rates and Regulation (New York, 1913).

5 In a traffic pool, each road carried a pre-arranged allottment of traffic decided upon by the Association's administrative office. A money pool, on the other hand, involved the forwarding of profits to the Association's office, where the money then would be divided up according to earlier arrangements. According to either method, rate cuts could increase neither traffic nor profits of a road, thus ideally removing the incentive for secret rate-cutting. See Chandler, Alfred D. Jr., (ed.), The Railroads: The Nation's First Big Business (New York, 1965), 161.Google Scholar

6 Differentials — an allowance from the original rate — posed many problems for railroads. In some instances, railroads requested differentials to offset their natural disadvantages and enable them to compete with more favorably situated roads. The Grand Trunk frequently asked for rate differentials between Boston and Chicago on the basis of its longer, more circuitous route. Differentials of this nature were designed to prevent excessive rate-cutting on these longer routes, where the need for traffic made them a threat to the more direct lines if they did not comply with such requests. Differentials were first allotted on April 5, 1877, according to the Seaboard Differential Agreement.

The best analysis of Grand Trunk-New York Central difficulties concerning differentials is Kirkland's, Edward ChaseMen, Cities and Transportation, (2 vols., Cambridge, Mass., 1948), I, 495–528.Google Scholar

7 The Trunkline Executive Committee, composed of the four east-west trunklines — the New York Central, Erie, Pennsylvania, and Baltimore & Ohio — was in a sense the top-ranking committee, since its representatives controlled nearly all east-west traffic either directly or indirectly via connections. Usually other meetings were called at the request of the Trunkline Executive Committee. The western executive committee, with headquarters at Chicago, was composed of the major western roads, while the joint executive committee was composed of representatives of the trunklines and their connections. See New York State, Proceedings of the Special Committee on Railroads to Investigate Alleged Abuses in the Management of Railroads, (New York, 1879), III, 3124–32Google Scholar for the articles of organization. A short but helpful article is Gilchrist's, D. T. “Albert Fink and the Pooling System,” Business History Review, XXXIV (Spring, 1960), 24–49.CrossRefGoogle Scholar

8 As might be expected, shippers criticized the Association and its pools, arguing that they should have the right to choose their own routes. The pools of course were designed to maintain rates at profitable levels, but the railroads insisted that shippers and the public would benefit: a suitable division of traffic, they argued, would eliminate the wild and undependable fluctuations in rates that always accompanied a war.

9 One of the few good studies of refrigeration is that of Anderson, Oscar E. Jr., Refrigeration in America (Princeton, N.J., 1953).CrossRefGoogle Scholar See also Hill, H. C., “The Development of Chicago as Center of the Meat Packing Industry,” Mississippi Valley Historical Review X (1923), 253–273.CrossRefGoogle ScholarClemen's, Rudolf A., The American Livestock and Meat Industry (New York, 1923)Google Scholar is the best and only comprehensive work on the meat industry. Valuable statistics and a general historical description of the beef industry, detailing structural and organizational changes, is found in U.S. Bureau of Corporations, Report on the Beef Industry (Washington, D.C., 1905).Google ScholarCommission, Federal Trade, Report on the Meat-Tack ing Industry (Washington, 1919)Google Scholar, is also helpful.

10 See Belcher, Wyatt, The Economic Rivalry Between St. Louis and Chicago, 1850–1880 (New York, 1947).Google Scholar

11 For information concerning Swift and his enterprise, see his biography, written by his son Louis B. Swift in collaboration with Van Vlissingen, Arthur Jr., The Yankee of the Yards (New York, 1927)Google Scholar; Neyhart, Louis A., Giant of the Yards (Boston, 1952)Google Scholar; Clemen, The American Livestock and Meat Industry, 159–164; Pierce, Louis B., A History of Chicago, (New York, 1940), III, 119–121.Google Scholar

12 Swift and Vlissingen, Yankee of the Yards, 5, 178; Neyhart, Giant of the Yards, 38.

13 Swift apparently began shipping his dressed beef in insulated cars on a yearly basis in the fall of 1878. The chronology is important when analyzing railroad difficulties with dressed beef shippers. (Pierce, A History of Chicago, III, 119, gives 1877 as the correct date; “Report of the Half-Yearly Meeting, April 30, 1886: President's Speech,” in Annual Report of the Grand Trunk Railway of Canada, 1886, includes a brief history of the dressed beef trade and mentions 1878 as the year for Swift's first shipments; FTC, Report of the Meat-Packing Industry, Part I, 238, lists 1878).

14 U.S. Federal Trade Commission, Report on Private Car Lines (Washington, 1919), 28.Google Scholar On the Canadian road, see Currie, A. W., The Grand Trunk Railway of Canada (Toronto, 1957).Google Scholar

15 Swift and Vlissingen, Yankee of the Yards, 181; Neyhart, Giant of the Yards, 93.

16 Swift began his business career as a New England wholesale butcher and cattle dealer.

17 Neyhart, Giant of the Yards, 95. See also, Swift's statement concerning his icing stations in “Relative Cost of Transporting lave Stock and Dressed Beef,” in Proceedings of the Joint Executive Committee (1883).

18 FTC, Report on the Meat-Packing Industry, Part III, 127, includes detailed charts and maps showing the geographical and numerical distribution of branch houses of all the packers.

19 The Railway World, December 6, 1884, gives comparative data of dressed beef and livestock shipments into New England from 1878–1884, showing that by 1884, New England was the recipient of more than 75 per cent of the dressed beef shipped eastward; New England's cattle shipments had decreased by nearly 100 per cent since 1880. The New York market, although reflecting similar changes, did not show as great a drop in cattle shipments nor as much of an increase in dressed beef. “Eastbound Cattle and Dressed Beef Shipments Forwarded from Western Termini of Trunk Lines Destined to New York and Boston,” Proceedings of the Trunk Line Executive Committee (1884), 81.

20 Armour's already extensive distribution network for preserved meats and his enormous profits from a pork-speculating venture in 1879 facilitated his move into the dressed beef trade in the early 1880's. After building his own line of refrigerator cars, he established branch plants at Utica, Schenectady, Amsterdam, Albany, Troy, and Poughkeepsie in order to counteract Swift's move into the New York market in 1882. Likewise determined to keep pace with his competitors, Hammond set up branch houses in cities where Armour was already located. Morris built his branch plants at New Haven, Bridgeport, and West Meriden, Connecticut, where Swift also had terminal facilities. Unfortunately, there are no records detailing the extent or rapidity with which Swift expanded his distribution network prior to 1898. The establishment of “a huge refrigerator plant” in New York City signaled Swift's move into that area in 1882. (New York Times October 10, 1882). By 1900, Swift had established 193 branch houses across the country. (FTC, Report on the Meat-Packing Industry, Part I, 153).

21 William Z. Ripley, Railroads, Rates and Regulation, 118.

22 The letters of railroad executives published in Cochran's, Thomas C.Railroad Leaders: 1845–1890 (Cambridge, Mass., 1953)Google Scholar, are valuable research aids. There are numerous refer ences to the packers.

23 New York Times, November 15, 1882, 4; October 10, 1882; U.S. Senate, Report of the Committee on Interstate Commerce, Testimony on the Transportation and Sale of Meat Products, 1889 49 Cong., 1 Sess. (Washington, 1889), III, Part 2, 131. Hereafter cited as Testimony.

24 W. Z. Ripley, Railroads, Rates and Regulation, 1–43, provides a concise historical survey of the development and spread of the transportation network. See also Chandler, Alfred D. Jr., (ed.), The Railroads: The Nation's First Big Business (New York, 1965), 3–18Google Scholar; and Taylor, George Rogers, The Transportation Revolution (New York, 1951).Google Scholar The New York Central and Pennsylvania had reached Chicago by 1869; the Baltimore & Ohio did not obtain a connection of its own until 1874.

25 FTC, Report on the Meat-Packing Industry, III, 194. The packers provided $50,000; the public put up $25,000. (Pierce, A History of Chicago, II, 53.) See also New York State, Proceedings of the Special Committee on Railroads to Investigate Alleged Abuses in the Management of Railroads, (7 vols., New York, 1879).Google Scholar

26 Railroad Gazette, September 26, 1879, quoting a trunkline resolution adopted September 23, 1879.

27 See Wyllie, Cleland B., “How the Grand Trunk Got to Chicago,” (Master's thesis, University of Michigan), 5Google Scholar, available in Grand Trunk Archives, Canadian National Railway Library, Montreal, Canada; Stevens, G. R., Canadian National Railways: Sixty Years of Trial and Error, (Toronto, 1960), II, 333Google Scholar; Commercial and Financial Chronicle and Hunt's Merchants Magazine (January-June, 1883), 663; Letter from John King, Baltimore, to John W. Garrett, July 12, 1878 (Baltimore & Ohio Archives, Maryland Historical Society, Baltimore, Md.).

28 See Railroad Gazette, October 19, 1883.

29 “Maintenance of Rates on Livestock and Dressed Beef to New England,” in Proceedings of the Trunk Line Executive Committee, October 8, 1880, 23–32.

30 Ibid.

31 Ibid.

32 Railroad Gazette, August 26, 1881, quoting Albert Fink, at a Joint Executive Meeting, August 10, 1881.

33 Problems plaguing the railroad business had intensified early in 1881, causing the Railroad Gazette (March 18, 1881) to conclude that “The combination of the Eastern and Western roads represented by the Joint Executive Committee probably never was so near destruction as during the past few weeks.”

34 Railroad Gazette, May 13, 1881; May 20, 1881; Proceedings of the Joint Executive Committee, May 6, 1881, 61.

35 The war was not as damaging to the Grand Trunk — the largest dressed beef carrier — as it was to American roads. (Railway World, January 14, 1882.)

36 Railroad Gazette, April 21, 1882; New York Times, April 13, 1882; April 15, 1882.

37 Proceedings of the Joint Executive Committee, March 30, 1883, 34, quoting the president of the Pennsylvania Railroad.

38 “Relative Cost of Transporting Live Stock and Dressed Beef,” in Proceedings of the Joint Executive Committee, 1883, 1–92. In terms of the prices in Eastern markets, if the buyer were to pay, say one dollar per pound for dressed beef whether the steer had been slaughtered in New York or Chicago, and the livestock shipper could claim that his costs were seventy-five cents while those of the dressed beef shipper were only twenty-five cents, then the railroads, under Fink's equalization plan, would have to make the dressed beef shipper absorb this differential by adding a corresponding amount to his transportation charges. For Fink's detailed and complex computations, see “Final Report of the Commissioner Upon the Relative Rates of Dressed Beef and Livestock,” in Proceedings of the Joint Executive Committee, May 31 and June 1, 1883, 32–39.

39 Testimony, III, Part 2, 649.

40 “Dressed Beef Industry's Reply to Fink,” New York Times, February 24, 1886, quoting Armour, who provided a summary of conditions from 1883 to 1886.

41 Proceedings of the Trunk Line Executive Committee, November 10, 1884, 10. The award was made October 2, 1884. For a detailed description of it see Railway World, December 6, 1884. Briefly stated, it was based on the principle of charging each interest a rate proportionate to the value of service, a value arrived at by comparison of market values in New York on lots of live cattle identical in value at Chicago. The one shipment, however, was delivered as livestock and the other as dressed beef in New York, allowing to each shipper the cost of transportation exclusive of railroad charges and in clusive of any loss from shrinkage. Clemen, American Livestock and Meat Industry, 241.

42 “Report of the President's Speech at the Half-Yearly Meeting,” in Annual Report of the Grand Trunk Railway of Canada, April 30, 1886, 32. “It is a matter of congratulation,” commented Tyler, “that we are not confined to the least profitable, but have a firm hold on one of the most expanding and lucrative classes of traffic.”

43 Testimony, III, Part 2, 360.

44 Chicago Board of Trade, Twenty-ninth Annual Report, 1886, xxvi.

45 Railway World, February 20, 1886.

46 Proceedings of the Trunk Line Executive Committee, March 3, 1886, 38.

47 New York Times, February 19, 1886.

48 Railroad Gazette, February 4, 1887 lists a 4.9 per cent decrease in cattle shipments and a 20.3 per cent increase in dressed beef shipments during 1886.

49 New York Times, December 7, 1886.

50 Railroad Gazette, February 4, 1887.

51 New York Times, February 24, 1886; February 19, 1886; December 7, 1886.

52 Railroad Gazette, February 4, 1887.

53 New York Times, December 7, 1886.

54 For more information on the origins of the Interstate Commerce Act see W. Z. Ripley, Railroads, Rates and Regulation, 441–486; Kirkland, Edward C., Industry Comes of Age (Chicago, 1961)Google Scholar; and Kolko, Gabriel, Railroads and Regulation: 1877–1916 (Princeton, N.J., 1965).CrossRefGoogle Scholar

55 Railroad Gazette, December 2, 1887.

56 Differentials were first granted April 5, 1877.

57 Apparentiy the Grand Trunk had been attempting to solicit Armour's business, as well as that of their regular customer, Swift. Tyler explained the rationale behind such a policy to Grand Trunk shareholders; “Now, there are two powerful parties — Mr. Swift and Messrs. Armour — in this business. Mr. Swift is the gentleman whose traffic we previously mainly carried — the bulk of Messrs. Armour's went by other routes; but as they were trying to set the companies by the ears in their favour, it was obviously not unjustifiable to deal with them separately.” “Report of the President's Speech,” in Annual Report of the Grand Trunk Railway of Canada, June 7, 1888, 37.

58 “Minutes of the Standing Committee,” in Proceedings of the Joint Executive Committee, November 18, 1887, 104.

59 MacAvoy, Paul, The Economic Effects of Regulation (Cambridge, Mass., 1965), 129.Google Scholar

60 The Nickel Plate (New York, Chicago and St. Louis Railroad) was one of several lines constructed in the early 1880's to compete with trunklines. The Railway Age (July 21, 1916) observed that “It was built parallel to the Lake Shore not because there was any economic need for an additional road between Buffalo and Chicago, but to force the Vanderbilts to buy it through the practice of cut-throat competition.”

61 It seems probable that the Swift-Armour feud may have been a clue to the difficulties. See Proceedings of the Trunk Line Executive Committee, January 14, 1888, 4, quoting Circular number 651, issued by the Trankline Freight Department.

62 New York Times, June 30, 1888; “Report of the President's Speech at the Half-Yearly Meeting,” in Annual Report of the Grand Trunk Railroad of Canada, October 30, 1888, 29; Paul MacAvoy, Economic Effects of Regulation, 129.

63 New York Times, July 4, 1888.

64 Railroad Gazette, July 20, 1888, quoting “a Chicago Paper.”

65 MacAvoy, Economic Effects of Regulation, 130.

66 Railroad Gazette, December 2, 1887, editorial opinion.

67 MacAvoy, Economic Effects of Regulation, 130.

68 Ripley, Railroads, Rates and Regulation, 434.

69 Wiebe, Robert, The Search for Order (New York, 1967)Google Scholar is particularly relevant to this study. He sees the railroads as one of a number of groups seeking “order” and “unity” during this period. Wiebe's description of the 1880's and 1890's also helps one understand more clearly the public attitudes and responses to innovation, for the shift in values certainly accounts for some of the public's confusion and reluctance to accept a new product.

70 Gerth, H. H. and Mills, C. Wright (eds.), From Max Weber: Essays in Sociology (New York, 1946), 228.Google Scholar