Study of the Dairy Industry

to independent dealers. According to Business Week 2 for a week practically no milk got to Chicago excepting a small volume by special arrangement for hospitals, babies, and invalids. Trucks hauling independent milk were stopped and the milk dumped into the river.

Following January 1934 the struggle between organized and independent dairymen and organized and independent dealers continued culminating in the milk strike of October 1935. This strike was accompanied by threats, intimidation, dumping of milk, burning of bridges, and at least 2 or 3 deaths. Excerpts from publications show some of these events.

Chicago Daily Tribune (October 8, 1935): "Striking dairy farmers of northern Illinois last night blew up one section of track on the Chicago & Northwestern Railroad, burned out a 48-foot wooden railroad bridge, and set fire to another to prevent the passage of a milk train from Wisconsin ***"

"A coroner's jury in Kenosha, Wis., returned a finding last night that there was no negligence in the death of Herman K. Slater, a striker who was killed by a milk truck *** early Saturday.

"The testimony showed Slater deliberately stood in the path of the oncoming caravan of milk trucks, waving his arms and trying to flag them down."

Chicago Daily Tribune (October 9, 1935): "The strike violence of the day centered chiefly in Lake, McHenry, and Boone Counties. A tragi incident was the death of Chief of Police Herbert Lesch ***. He was fatally injured *** when his motorcycle collided with a State police car which was convoying milk shipments ***"

"Near Waukegan pickets clubbed 1 truckdriver, fired several shots at another, and dumped 3 truckloads of milk ***"

"On Skokie Road *** pickets seized John Lewandowski * * * and clubbed him so severely that he was taken to a hospital."

Chicago Daily Tribune (October 12, 1935): "At Hebron in McHenry County, nearly 6,000 gallons of milk stored in a warehouse was spoiled by the pouring of kerosene into its containers."

Reports similar to those of the Chicago Daily Tribune, were published in the October 19, 1935, issue of Business Week under the title "Dumped Milk and Broken Heads"; and in the October 19, 1935, issue of the Literary Digest under the title "Milk Strike Violence," as well as releases in many other papers.

The strikers finally accepted a 30-day truce by Gov. Henry Horner, during which a solution was to be sought by a committee set up for that purpose.

Mr. BARTLETT. Two. Preventing milk strikes and violence in such Federal order regulated markets has made it possible to maintain an increase per capita sales of milk above what they would have been without regulation; and

Three. In some markets under Federal regulation, class 1 prices have been fixed substantially higher than they would have been under competition, and have thereby worked against the public interest by lowering per capita sales of milk.

Now, taking the first point under exhibit 1, this is a résumé of what occurred in the Chicago market during the milk strikes in the early 1930's. The essence of this is that they blew up bridges; some farmers had busted heads; and they put kerosene in the milk, and there was general chaos in the industry without Federal regulation.

In the period since then, with Federal regulation, the prices of class 1 and class 2 milk in Chicago have gone up and down pretty much in line with manufactured prices. I credit the Federal order in the Chicago market specifically for having helped increase the per capita sales. Mr. ABERNETHY. As previously stated, you want these exhibits put in the record. They will go in the record as a part of your testimony. Mr. BARTLETT. There are 4 exhibits specifically to which I am referring.

2 January 13, 1934, p. 10.

The main point in regard to the first exhibit is that if we should eliminate Federal regulation of milk markets today there would be chaos all over the country and the per capita sales of milk would decline, in my humble opinion. So anyone who thinks that we would clear the market by throwing out regulations, it seems to me is off base. The second point deals with exhibit No. 2. (Exhibit No. 2 is as follows:)

EXHIBIT II

FACTS ABOUT OPERATION OF THE CHICAGO FEDERAL ORDER

1. Condensery prices tend to keep in line with United States farm prices. (Fig. 1.) This is true for all regions in the United States (table 1). During and after World War II, condensery prices were somewhat higher than the general level of farm prices but moved in the same direction.

2. Since the inception of the Chicago Federal milk order, class I and class II prices have gone up and down with condensery prices (fig. 2).

3. Between 1940 and 1954, blend prices paid to milk producers averaged 49 cents per 100 pounds higher than condensery prices (fig. 3). The net difference decreased from 74 cents in 1953 to 48 cents in 1954.

4. Condensery prices have been considerably higher than butter prices since 1935-39 (fig. 4). During World War II butter prices were fixed by Government while condensery prices were permitted to rise.

5. Since 1935-39, cheese prices and condensery prices have gone up and down together (fig. 5).

6. During World War II prices of skim milk powder were held at a high-level (fig. 6). Between 1948 and 1952 prices of skim milk powder changed with changes in condensery prices. Since 1952, skim milk prices have been relatively higher than condensery prices.

7. Between 1946 and 1950 there was a sharp increase in number of grade A producers on the chicago market (fig. 7). Since 1953 there has been a sharp reduction in the number of producers. In January 1955 there were 1,400 fewer producers on the Chicago market than a year previous. With the blend price dropping from 74 cents in 1953 to 48 cents above condensery prices in 1954 (fig. 3). some shippers and several milk plants have elected to sell their milk in markets other than Chicago.

8. In 1954, the average daily deliveries per producer in the Chicago area averaged 533 pounds of milk daily, or 200 pounds more than in 1940 (fig. 8). 9. Between 1940 and 1950, milk deliveries under the Chicago Federal order in September, October, and November, averaged 9 percent more than sales of class I and class II milk during these same months (table 2). While in 1946 and 1947 there was a real shortage of milk, for most of this period there was enough milk to meet market needs.

10. Between 1951 and 1954, milk deliveries under the Chicago Federal order averaged 20 percent above class I and class II sales. In 1953, this proportion increased to 35 percent, but fell off to 22 percent in 1954.

11. Since 1951, a supply-demand price adjustment was put into operation under the Chicago Federal order. This operates on the principle of increasing prices when more milk is needed to insure an adequate supply, and decreasing prices when milk deliveries in relation to sales are too high. Premiums above regular prices were paid from December 1951 to February 1953 (table 3). Since then, with an abundance of milk, price deductions have been made under the supply-demand formula. During all of 1954 and from January to March 1955, 24 cents per 100 pounds was deducted from regular premiums. With a decrease in manufactured milk, the deduction fell to 21 cents in April 1955, and to 18 cents in May 1955.