Obrázky stránek
PDF
ePub

would not take the raisins. So I had the man bring them home, and I made up my mind that I was going to find out whether a contract entered into as those contracts were was worth anything or

not.

I dumped those raisins from my own boxes, our sweat boxes, that had our names on them, into a lot of old boxes without any names, and I hired a neighbor boy with a little bit of a team of mules that nobody would suspect of being mine, and I told him to take those raisins to town and to sell them, and to go first to the man who had turned them down the day before. The market price of raisins now was 4 cents. So he hauled them up to Mr. Inderriedden's house, the people that had turned them down the day before, and told them that he had a load of raisins he would like to sell. They came out and looked them over, and said: "Yes; those raisins are all right," and that they would take them at 4 cents. We continued to deliver them, and we delivered the whole crop that they had rejected at 5 cents, and I brought suit for the damage, and won the suit. I think I got about $75, and it cost me $200 or $300 to do it. However, it did prove that under some conditions a contract was good; but, as I say, it is impracticable for a whole community to do that, and it simply goes to show that it was not a question of the quality of the raisins; it was a question of whether or not the firm would stand up and take a loss. There have been some good men in the packing business in Fresno, and there have been some very wealthy men, but I have never yet known a firm that would stand up and take delivery of 5,000 tons of raisins when they were losing a cent a pound on them without "welshing," and I do not think there ever was such a firm.

So that we were seesawing back and forth, selling one crop for less than the cost of production and some crops for almost the cost of production; and I will say just here that outside of the organized years, outside of the Kearney organization and our own organization, there has never been a year in the history of the raisin business since it assumed large proportions-the first years were profitable, when we had 5,000 or 6,000 tons of raisins-there has never been a year in the history of the raisin business, outside of the organized years, when we have sold the whole crop at the cost of production. There have been many years when we would sell part of a crop at the cost of production, but it would start high and go low, or start low and go high; so that there never was a year in all of those years when all the growers got the cost of production out of the crop. And it was not a question of good judgment, because there was no man that was in the raisin business that was smart enough to sell his crop for a good price every year. We all missed it.

About this time I think it was in the year 1911, probably-a number of those of us who were larger growers arranged for a conference with the packers in an attempt to do something to solve the raisin problem so that we could at least get a living price for our products. They were mostly living in San Francisco, and we arranged to meet them in the city hall in Fresno, I think about 20 of us, probably, and there were about that many packers, maybe 22 or 24, and we put this proposition up to them. I do not know whether this was a legal proposition or not; I do not know whether it would have stood the test of the Sherman law, but that matter was not

acute then; nobody was thinking of that. We suggested to them that if they would agree to buy-they had the money and the packing facilities and the knowledge of the business and special ability, as they told us, to do these things-we told them if they would agree to buy from us, for a term of five years, our crop at 34 cents a pound, which was just about the cost of production then-not the cost of production if you counted interest and depreciation and kept books like any business man keeps books, but it was the cost of existencewe would use our best efforts to get the growers together, to get 90 per cent of the growers to sign that contract for five years and sell them the raisins at that price; and they jeered at us. They scoffed us out of the room, and said that it was absolutely foolish; that there were too many raisins in the country; that there was an overproduction; and that it would break anybody to enter into such a contract as that.

We had heard this cry of "overproduction" from the time that there were 10,000 tons of raisins produced, and there was still the cry of "overproduction" when there were 20,000, when there were 30,000, when there were 40,000, and up to 70,000. There were probably about 70,000 tons produced annually at the time we made this proposition, and still there was the cry of "overproduction," and still the raisins were being eaten up every year not at a living price, but at some price-which showed that after all the people were eating the raisins. But that meeting, though it was a disappointment at the time, led probably to the organization of the Associated Raisin Co.

Mr. PRESTON. Let me interrupt there, without any intention to interfere. Was it not stated at this meeting that you called, to which you refer, that it was a violation of the Sherman Act to enter into this agreement?

Mr. GIFFEN. No; it was not. It was not mentioned at that time, Mr. Preston. There was a pooling arrangement later on, when the packers agreed to go on with it. We had entered into what was known as the Fairweather pool, which they refused to go on with because they said it would be a violation of the Sherman law. Mr. PRESTON. Pardon me.

Mr. GIFFEN. I am only touching the high spots here. There were, in between, all kinds of things tried. Every year or so there was some suggestion made for some pooling arrangement. There were the Fairweather pool and the Forsyth pool and all of these things, but they never got anywhere, and I have not mentioned them.

Anyhow, we had gotten to a place where we did not believe that 70,000 tons was an overproduction. We believed that it could be marketed at a living price to the growers, and we believed that it was a perfectly practical thing to pay 34 cents a pound, and in fact we believed that the men that bought those raisins for 3 cents a pound would make money, and that it was a thoroughly feasible thing. It took quite a while to do it, but it was there that the idea of a capitalized company originated, to do ourselves what we had tried to get the packers to do for us; and it was out of that that the California Associated Raisin Co. grew, with a million dollars of capital. It was first called The Million Dollar Co., because we believed that anybody that had a million dollars-it looked so big to us that we

54275-21-7

believed that anybody that had a million dollars-could do anything they wanted.

So we organized among ourselves the "Million Dollar Co." with the purpose of buying our own crops. Like lifting yourself by your own bootstraps, it seemed almost an impossible task, but we did it anyhow, and after a long campaign we got $750,000 of the $1,000,000 subscribed. We got hardly any of it in money, because we did not have any money. I think out of the $750,000 we got about $250,000 or possibly $300,000 paid in real money, and the balance was paid in growers' notes covering a term of three years, one-third each year, on the instalment plan.

At the same time, while it was independent, we formed a stock company and sold stock, most of it to the growers, probably 80 per cent of it to the growers; but it was a community affair. We did not confine the sale of stock to the growers. We sold some little to the bankers. I think the Fresno Clearinghouse Association, which was the organization representing the five banks of the city, took $15,000 worth of stock. The principal merchants took a thousand or two thousand dollars' worth of stock. The whole amount of stock that was sold outside of the growers was probably 20 per cent of the whole. I do not know the exact figure now, but I think it was about 20 per cent of the whole.

That has been very severely criticized, and I myself think now that it would have been slightly better, not because it has done us any harm-it has been a source of strength in the community there-but theoretically a cooperative organization should be composed of the growers. I should like to see it that way. We are not organized that way, though, and we do not know how to get that way. We do not know how to change it now; and, as I say, it is not doing us any harm. It is an imaginary harm, a harm that may come at some future time rather than anything else, because those men are as loyal to the organization as any of the growers, and would sacrifice their ownership of stock if it was necessary to do it; they would give it to the company if they needed to do it, because it has meant so much for them in their business there; not in the earnings. Suppose the Fresno Clearinghouse Association, with $15,000 worth of stock, gets 8 per cent. It is as nothing compared with the benefit that this organization has been there to them in their business, and everybody there feels that way about it.

Here in Washington, looking at it, that seems to be an evil. There it does not seem to be an evil at all. In fact, as I say, I rather feel that in many ways to have those men with us has been a source of strength, because an organization of this kind in the end depends on the good will of the community in which it operates; and when I say "the good will of the community," if you are going to have the good will of the producers it is necessary that you have the good will of the banks and the merchants and the lawyers and other men in that community.

After getting this $750,000 subscribed, or at the same time we were getting it subscribed, we prepared a contract agreeing to buy from the growers their crop for a term of five years-three years definitely, with an option on the part of the organization for two years more-and the prices were fixed on a sliding scale. This, too, may have been a mistake at the time; it might have been, probably; I do not

know what the law is, but nobody thought of it at that time. We agreed for 60 per cent of the crop to pay 3 cents a pound, for 75 per cent to pay 31, for 85 per cent to pay 33. I am not sure that those are the figures, but

Senator WALSH of Montana. That is to say, if you got growers enough in so that you handled 60 per cent, you paid 3 cents. If enough would sign up so that you controlled 75 per cent, you would pay so much more?

Mr. GIFFEN. Yes, sir. Our idea was that the source of our strength lay in the amount that we could get to join us there, and that it was dangerous with 60 per cent to pay three and a half, but we probably could pay three. That was the theory of it; and as a result of the campaign we had 76 per cent; so that the clause in the contract which went into effect was the 3 cents price, which was the same price that we had tried to get the packers to buy our crop for a year or two before.

We had the organization, and we had the contracts signed, and we thought our troubles were nearly over, but we found that they had just begun. The question was then what we were going to do with the million dollars, or not the million dollars, because we did not have it, we had only $300,000 of money, and the growers' notes, but what we were going to do with these contracts. We concluded that it was impossible for us to build packing houses with the limited money that we had, and market these crops, so that we sent for the packers to meet us. I think there were about 23 or 24 of them at this time. We sent for them to meet us to see whether an arrangement could be effected by which they would do the marketing of the crop.

While there were 24 of the packers, they were divided into groups of this kind: There were five of them that were exceedingly rich and exceedingly able firms, and many of them exceedingly high-grade men. They were known as "the high five," in the language of the raisin-growing district. There was another group of smaller men of five that were not so rich, probably not so able-although they would not want me to say that-known as the "low five;" and the high five and the low five together controlled absolutely the destiny of the raisin business for many years. As a matter of fact, the high five, in my judgment, controlled it. They lived in San Francisco; and while the low five were allowed to sit at the table, as far as the public were concerned, with the high five, I think there was without any question another secret table in San Francisco at which the policies of the raisin industry were determined by the high five, and at which the low five were not allowed to sit.

Then the other 12 packers one of them was my own brother, a young man who tried to break into the packing game-were men without much means, who lived in Fresno. The high five and the low five all lived in San Francisco and did business in Fresno. By the way, I might say that they not only did the raisin business of the State, but they did all of the dried fruit business of the State, prunes and dried peaches and everything else; not citrus friuts, but practically all of the dried fruit business of the State was handled by these men that we knew as the high five and the low five. The other 12 packers were men without much means, and had absolutely no influence on the destinies of the business, because they only had the

[ocr errors]

strength to follow along and do the thing the other fellow did. They were not allowed to sit in at the table at all, but rather, like Lazarus of old, they had to content themselves with the crumbs that fell from the table of the high five and the low five; and this was the situation when we were orgainzed. This was the grouping of the packers.

We sent for them all, and they believed then and were frank in saying that they had a vested interest in the raisin business, and that they believed, and said so in almost so many words, that they had a God-given right to pack and sell and market these raisins for the growers, and that the only thing we had the right to do was to produce them; that we were farmers; that we did not have the brains to compete in the business world, which was probably true; that they did have the brains, and they had the money, and they had the packing houses, and that they took it for granted that that was their right. We never conceded that then, and we do not concede it now.

They expressed a willingness, however, to work with us. They had in mind the old days of the Kearney organization, when they made money at both ends of the game, and they tried to trade with us on the basis that they would become the absolute selling agents of our crop-not that they were to sell part of it, but that they were to sell it all, or they were to have the right to sell it all. They did not agree to sell it; they did not agree to buy it from us, and they did not agree to sell it. There was no obligation there. In case they did not succeed the loss was ours; but they were not willing that we, as growers, should do any selling ourselves.

I mention this now because it has been said that we took advantage of those men in entering into a contract with them and afterwards taking the business away from them. There was no misunderstanding. I said to those men then-I was not the president at that time, but I was a member of the board of directors I said to those men, and I said it in view of the experience that we had had before, that so far as I was concerned I never would sign a contract which gave them the exclusive selling right to our raisins; that I was going to have the right, if we wanted to do so, to go into the markets of the world and compete with them in the selling of these raisins. I believed it was the only thing that would save us in the end, and I think yet that that was the only thing that saved us. I think if we had entered into a contract like they wanted us to enter into, we would not have been here to tell the story to-day. However, that is my own conclusion, and may be wrong.

Anyhow, we traded back and forth for some three or four weeks, and it was coming along to crop time, and we were having meetings every day, but we were not getting anywhere. They were trying to force us into a position by which we would have to give them the exclusive selling right, and we were refusing to do it, and the plan was that we would trade with them all and that they would divide this contract up among themselves as they wanted to.

Crop time was coming along, and we grew desperate, and we made up our minds that we had to do something; so we broke up the combination by entering into a contract individually with one or two of the little packers-not the high five or the low five but the little packers and we gave it out to the world that we had made arrangements with these packers and we were going to do business, and the

« PředchozíPokračovat »