Needed: A Free Market

CONTROLS Needed: A Free Market When the U.S. Army tried to buy 13 million Ibs. of beef last week, all major U.S. packers refused the business. Only two small companies submitted bids--for a mere 190,000 Ibs. With soldiers' meat rations running low, the Army announced that it would try to find the beef overseas.

Many a Fair Dealer jumped to the conclusion that the meat industry was putting profits before patriotism. But in Chicago, the A.F.L. Meat Cutters' union put the blame squarely on price controls. The union made it clear that the packers could not sell the beef because they could not buy it on the hoof without losing money. "It is better to scrap all meat controls," warned the union, "than to precipitate a meat shortage, black markets and industry unemployment."

Many a U.S. retailer, also short of meat, is ready to dump controls. Black markets are thriving as "independent" packers roam the cattle country, buying above ceiling prices for hotels, nightclubs, etc. Many old-line packers have closed or are about to.

Wilson & Co. announced last fortnight that it will shut down its slaughtering plants one week every month (the union calls such partial closings "black weeks"). In Cleveland, the Koblenzer packing house has closed. Said its president: "Last month we killed 740 cattle and lost $6,700. They've taken my surplus, but they aren't going to get my capital. I'll sit till hell freezes over." Meat controls had created such a mess that even top Office of Price Stabilization officials were talking last week of abandoning them.

Steaks on the Hoof. The paradox is that the U.S. is short of meat when it has more beef on the hoof than ever before in its history. By year's end, there will be an estimated 90 million cattle on the ranges v. 1945's alltime peak of 85,573,000. Yet, because of OPS snarls, 10% fewer cattle are now being slaughtered than last year. And despite record meat prices, packers, who traditionally make only 1-c- on every $1 of sales, can hardly break even (Armour lost $1,600,000 in its latest quarter).

The main trouble is that OPS has put ceilings on every form of beef except the live animals. Since there is no way to set such a ceiling (it is impossible to grade beef before slaughter), livestock prices have gone right on climbing.

Ease & Squeeze. Last week OPS tried to ease the squeeze on meat handlers,, and, as usual, only succeeded in tightening it. OPS permitted a 1-c- a Ib. wholesale boost. At the news, livestock prices rose enough to cancel out the gain.

Few in the industry had ever thought controls would work without rationing. Now, since meat prices have been going up under OPS while many other prices have been stationary or dropping, everyone from cattleman to retailer thought it was time to dump controls--and get the vast supply of meat on the range to market.

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