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_ statement issued bythe Department of Labor concerniin_git_l_1_e_, business Qf`_fI`-he Vi/'illiam Davies Company...Limited has1bee_n`

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p r tlénts ound, llntnie: ,_ i Actual _Profits Two-Thirds of a Cent Per 'Poiuld ” ’

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' gwen widespread circulation throughout the country and provoked public unrest. 1 ‘ 4

_ ._ ' »VVhatever the technical wording of the report was, the effect has been that the newspapers have published that “the profitsion Bacon alone" of this Company “for 1916" were about “Eve millions ofdollars." This interpretation of the official ,report is not surprising in view of certain statements that the Commissioner ofthe Costof Living makes. The Commissioner is reported as saying that “There were two individual cases of profiteering in 1916 and that had these cases occurred since the passave ofthe cost of living Order-In-Council,

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he would consider it his duty to recommend thatwtheu facts be laid ,before the Attorney-Ceneral for' consideration as to their criminality.

The situation created by such erroneous and damaging statements is serious as emanating from a Government official, from Whom one

looks for not only accurate statements but correct conclusions.

The William Davies Company, being a private concern, has followed the practice of all private corporations, except when it made

a bond issue in 191 1, in that it has not published reports of its assets and liabilities or profit and loss. The present circumstance, how- ever, in which a_Governm_ent Official has led the public to false conclusions, makes it l advisable for this Company, for both the publiciin- tcrest and its own interest, to publish particulars ofits businesslas well as point (out the error of the statement of the Government Official.

_ . For the last fiscal year ending March 27th,, 1917, The William Davies Company bought and killed 1,043,000 head of Live Stock (Cattle, Hogs and Sheep). This, plus purchases of _ _ ' outside Meatshproduced 160,000,000 pounds of Mealg,-_i The Company handled 6,550,000 pounds of Butter and Cheese, 5,650,000 dozens of liggs, and manufactured 26,500 000 tins of Canned Goods

_ The net profits on these were .68 cents (pr twto-thirds ofa cent) pci' pound on meats, 1.04 cents on Butter and Checse,1.04 cents per dozen on Eggs, and .47 dents (or slightly less thali

_ one-half a cent.) per`_tin on Canned Goods. These profits include profits on all Bv-Products derived from these accounts ' i

__ - During the year the Conipariy se_i‘\'cd at its retail stores 7,500,000 custbmci's, thc' average purchase of each customer was 356, and the net profit upon each sale was 5-8 of 1 cent

_ The turnover of the Company from all its operations for the last fiscal year ending March 27th, 1917, was $40,000,000. The net percentage of profit upon this turnover, after deduct- ` “ _, ' ing war tax. was 1.69 per cent., or including war tax 3.45 per cent. .C i ‘

The William Davies Company has assets of $13,385,000, of which $3 865.000 is tied up in fixed investments.

*__ To pro le the necessar facilities for th i _ d ol f bi ` ,_ ‘ " ""

y e ncreasc v ume o isiness the Lompany expended $i.10 000 in buildings and equipment during the year.

‘ "1 Co1np“\`i~°" of other character present no more reasonable statement of profit and loss based upon tlieiinvcstiuents made in thc business

The \‘. Davies Company offered to thc Imperial authorities, as well as to the War Office Service (which represents thc lnrperilili authorities in Canada) to place the output of

-_ its 1”. t... -' with 1 _~ »_=-._. to Bacon supplies, Canned Beef and Pork and Beans at the service of the authorities, on the basis of cost plus an agreed percentage. These ot`f'ers»-were successively ~ f decL,n<.d as the authorities evidently desired to purchase” in the open market, and on this basis The William Davies Company has secured War Office business by open competition with the world.

_ _ Respecting the Report of the Commissioner on the Cost of Livingz- _ _

Vast 'Winter the Commissioner, under author-

iffy of Urder-in-Council, required packers to sub- mit statements under oath for some y`e"zirs"b'ack and--upto December lst, 1916, of incoming stocks of Meat: ' -iflthc ‘ f such, as well as state-_ ments of .itgoing ` et and the selling value. .This Company rep. _d in writing at the time that the information -, specifically required was not in accordance with Packing House Account- ing methods, and invited the Commissioner to send an 0Eicer to the Head Office of the Company to' examine the books for any information de- sired, and to secure a viewpoint as to the best way of collecting data which would be of use to fthe Government. This offer was declined, and there was nothing to do but fill in the information required as literally as we could determine it. For example, there was no recognition of the fact that a raw product may enter a factory under a specific ‘classification and leave the factory as a -finished product under some other classification.

We submit' rd a series of accurate figures

based upon our iternretation of the official re- quirements whic 'r no provision for charges of any descripti ' ~ than incoming freight and unloading cl. 1 ~- be included in the cost or to be deducteo _ - - selling price. There was nothing in the repo; .vhich could be read so as to determine a profit and loss statement. The very fact. that with only a statement based upon cost of raw products and _value of sales in Great Britain a Government Official has deduced “Large margins,” “Profiteering” and “Criminality” if it had occurred since the passage of a recent Act, shows too dangerous a trifling and incapacity to be permitted to deal with any important situ- ation. The statements of this Company have been treated by the author of this report as if the out- going product was identical with the incoming product, and from the series of reports he has singled- out two items-the Bacon and Egg reports -and from them deduced an erroneous “margin” which the newspapers have interpreted as "pro£t." The author of the inquiry shows a

A The Company does not challcn

strange lack of even a. fundamental knowledge of

g simtple bookkeeping-and a dangerous inability to

co rdinate figures. The following are specific and outstanding errors in the report:

The principal item that is causing excitement

deals with cold storage Bacon. The term “cold- storagc’_’ is not defined, and the public is allowed to make its own definitions.` As all Bacon in a. packing house is under refrigeration it' is really all cold-storage, and therefore this t,`ompany’s fig- ures of cold-storage Bacon represent the complete quantity of Bacon handled in its cntirc Plant, whether in freezers or in process of cure for im- mediate shipment. That some Companies inter- preted cold-storage product as “freezer” product only is evidenced by the ‘smallncss or entire lack of figures on the Bacon list for some Plants, in- dicating that many Firms did not submit state- ments of their complete stocks, as did this Com- pany. An Official of this Company pointed out this cold-storage distinction to Mr. O`Connor and Miss McKenna. in Ottawa a few weeks ago, and the failure to make the distinction after having had it pointed out evidences lack of desire for accuracy of the real information dcsircdf

It is trite The William Davies Company, in

1916, exported 97,791,000 pounds of Bacon, but we do not know how' the margin of 5.05 cents per pound is arrived at by Mr. O’Connor, as there were no figures to justify such a conclusion. The probabilities arc that the marginis arrived ,at by taking the average cost per pound of incoming product from the average selling price per pound of outgoing product., This may lie a rough way of estimating the gross margin when dealing with small figures, but when dealing with figures the size that Mr. O’Connor has to deal with, a very small fraction ofa cent per pound of error makes a very important ditTercnce~ in the total, and one must be careful to make sure that the outgoiiig product is the same finished merchandise of the incoming product reported on.

Allowing it to pass, however, as a rough esti-

mate, we wish _to point out-(first)-the inquiry of the Qoinniissioner allowed only. for incoming fi-eiglitiitiid unloading charges, and made 110 pro- vision whatsoevcr for operating charges of any kind, such as labor, curing materials, refrigera- tion, ct cctcra. Such actual charges on the 97,- 791,000 pounds exported were $1,162,000-or 1.2 cents per pound. ’l`his amount covered all charges up to the point of placing the Bacon on cars f.o,b. packing-house. ln addition to this was the actual cost to land and sell this 97,791,000 poundsin Eiigland after leaving the packing house, which involved charges of 2.9 cents per pound-or $2,836,000. This 2.9 cents per pound included inland and ocean frcight,f landing charges, war and marine insurance, ciiblgs, and selling commission to agents. Theocean freight and war risk alone would make up 2.4 cents of the charge of 2.9 cents pci' pound. This 12 cents, plus 2.9 cents-1_1 total of 4.1 cents-must, be de- ducted from Mr. O’Connor‘s margin of 5.05 cents per pound, leaving a margin of .95 cents, or slight- ly less than a cent per pound, which still has to be reduced because of the error of premises a‘n`d because of further factors which have tb be con- sidered to determine net profits. _ '

It is quite evident some of the other packers

did not show selling values in the country ln which the goods were sold-a proceeding quite proper, as thc forms submitted to bc filled in were indefinite andiambiguous, thus permitting with- out charge of evasion a variety of interpretation as to the information required. It is thus possible that of all the figures submitted by the different packers that no two sets of costs and sales prices are determined at thc same common points It is this difference of interpretation of what was re- quired that accounts for the difference of the al- lligcd "_rnargin" made by the different companies. Common conclusions, however, have been drawn by the author ofthe report from varying bases of premises. '

The"ti'gurcs of the Egg business were submit-

ted oil tho same basis as Bacon, and similar do- ductious must be made.

(Second)-The above margin is further re-

duced in that the authoi-'ofthis inquiry! singled out the Bacon figures as an item in w ich tho selling price, shows an alleged improper advance over cost, but he did not give us credit for the statements of other prmiucts, of which figures were submitted, the selling prices of which were under cost. The reason of this was that through failure to inquire the Department entirely over- looked the fact that product may come in as pork and, through the process of manufacture, go out as Bacon, or, in another instance, enter"ttie`fu'c’- tory as beef and go _out in the form of canned. meats; for example: much of the product which came in as pork, and which was entered on the pork sheet submitted to the Commissioner-about which he makes no mention--was cured and left the factory in the form of. Bacon, and was, there- fore, entered on the outgoing side of the Bacon sheet-the result is thatthe Bacon sales are-in~ creased by this amount over. the.incoming.stocks of Bacon, and, likewise, the"sheet`showiiig“slil9`s-' of pork is reduced by the amount that went out in the form of Bacon. If the Department takes one set of figures that show favorable to the Com- pany they should take another set of figures that show unfavorable, as the principle in eithercase is the same, and failure to do so looks_as if the_ author of the report was exercising more enthus- iasm than sound judgment in his investigations.

(Third)-It is queried in the report, that "if

the margin of 3.47 cents,” alleged to have been made in 1915, “was satisfactory, why was it ne- cessary to show increased margin in 19161” As- suming again for the moment the soundness of the premises in asking such a question based‘ on an erroneous “mai-gin," it will be found tha-tths increasedmargin is chiefly absorbed in increased ocean freight rates and war risk insurance in 1916, of which apparently the author of the re- port was in ignorance.

ge either the legal or moral right of the Government to invest' ate business cuter rises whcn` ublic intere irec

. V ig p . p ' V _st d' .ts such an investigation should be ‘

made. If an inv_estig_ation of _the packing and meat business is ordered, tho_ Company will place at the disposal ot`_the_Go\'ci-nment not only the data it would be required to supply under Order- in-Council directing that inquiry be made, but will place thc experience of' its officers at the rlisposal of thc liivestigating committee, if it is considered they can render any service which will

be of value. The Company has not now-nor at any time during the fifty years of' its operat.imi»-anything to conceal in method or practice of carrying on its business. It does, however, claim the right to couductits-icxport business without abusive riomnicntjriim (lovernnieiit civil servants-especially when the conclusions drawn from the _data asked for are improper and false.

One of*`Canada’§` chicf.€xport industries is the packing business. It is essential to the live stock iiirlustry, and, along with other cxportnndustries, it maintains the financial stability

i » -_- of this country and should, providing it is on a sound basis, pcccirc encouragement aud.not»slandcrous abuse. In view of tlic__publicit given to the report of thc Commissioner on the o ` t f

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living, the Company demands the same,.puhlicitv in having an official G vcininent mvesti ation ol ihie ie or-t to determine the truthfulnes or r t

__ _ _ _ q -- _ g ' _ -p - “ _ s, -'ont u lifulncss of its conclusions. We dofnnt

seek public consideration as a company, but we do say that untrulhl'ul ,official statements, oi' statements the effect of 'which is to create an 'tint_l_'ul|, adversely aflectthe live stock industry :of _ this country, wliioh is so valuable and cssffntiall ,f “».,?a|~¢p§nduciiig power and, in the long run, are harmful i0'_r.he, vcryfpcoplc _that the st.atc$e_n-t\;|eek_s _to benefit. i 1

If the hasslng out fb£.cxistcnce_' a sorpora riisttcltras The William Davies Company, or if nntionaltzation o - packing houses -_wo d mpteria yfand permanently reduce food ` "l

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-_ . t - -.-=A1ien.1n..view of the present world tragedy it ought to h'e consiimnistcd without delay. fThc.f`act of thc_matteir_-ls, however, that with peilcl in Etirnpe turning: from pro ' ' `

into consumers because of war, and the tremendous destruction of food products incident to war, there is no lc_medy» forthe. high prices ofjophtliwhil uch conditions last exce t th

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of thrift and increase of production. 5 1' ' ‘» 'T _'t _-_f.'.*,., ` _»~.___ _' ‘-_» _ _ , _ _' _ i ' ‘ ~ fl 1

_ _ Long before there was talk of n Food Controller in the Unitc_d States or Canada The William Davi§t4=Cornpilny _nrgcdthe Government at 0 stva, in writing, to appoint a Foo' -' `

be done,in- reducing food prices while currency is iniated and until the scale of prices ol’ all kinda of commoditiehideclincs also. What can be done canao y be done by a Food Controller-2 f "

troller with full power to do what he saw fit, as we realized at that time the upward tendency in the price of foodf“corrri.tihrliti§s unless checked by o_Eicial».'qort. At the most s,gg~¢'|f, den] t.

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wish to_ point out that nothing at all can be accomplished unles_s the data secured are accurately and clearly made Gnd f»l\0'd6d\1°fl0l1l ¢ll6l‘°fl'0ll1 l0l1Ild~ 011 y public harm arises from dsngfirous ineonipetency in the haphazard collection and careless use of important tigures. e _ ; " '

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' . As far as The William Davies Company is concemcd this terminates all piibtto statements of the Oompa , and it will no in attention to speculative and

haphazard itatemmtfmsdo either by newspapers or civil servants. The only further statement that will be mode willliie at an oRlo!s.’fhtv¢lt|;d§cn. . ,

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