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THE CORPORATE INVASION OF AMERICAN AGRICULTURE

Giumarra vineyards where the United Farm Workers Organizing Committee has a strike in progress.

In Arvin, the houses sit close together. Many streets are either unpaved or the pavement stops abruptly 10 or 15 feet away from the yard fences. Old cars are parked along the street, wearing out the dry grass, and dust blossoms up as you walk along.

The sun is like a hammer, beating down, your eyes squint to protect you from it.

You go into a restaurant to get out of the sun. Two men sit at the counter talking in low tones, complaining about something somebody has done. They look up and see a stranger, and swivel on the lunch counter seats to direct their voices away. When they pay the check, there is no recognition by the waitress, and no friendliness. You notice that they did not leave a tip.

You drink your coffee black because the waitress has disappeared into the kitchen without serving cream. It is too much trouble to call her back. You can hear the conversation in the kitchen. She lived in Los Angeles until six months ago. She is going to leave next week. "I wish I could leave today," she says. Finally, she returns and puts your check on the counter. You leave a tip and she seems surprised, but puts it in her pocket.

Out on the street in the sun again, you notice the blind windows of the empty stores. You talk to people. They tell you that one out of every three people would leave tomorrow if they had anyplace to go. They tell you that all the big farmers care about is cheap labor. They want to pay everybody the same wages they pay migrants to cut weeds.

The high school has, on only two occasions, graduated as many as half of the number who entered it since it was built.

You are told that the police care nothing for the Mexican-Americans. "They'll stop a fight between two white men but, if they are Mexicans, they'll let them fight until one of them is beaten up before they stop it." A Mexican woman had her life's savings stolen from her home--$3,000-and they didn't even try to find it.

You drive out of Arvin, saddened by a city without pride. A city ought to be proud. People ought to be proud.

What kind of city is Dinuba?

A girl in an insurance office thought for a moment, and answered: "It's a good place to bring up children."

Dinuba is located in the northwestern corner of Tulare County. The Sierra Nevadas almost evade the eye just beyond a curtain of haze.

Here, too, you drive through miles of grapes and orchards. But there is a

THEY'RE DESTROYING OUR SMALL TOWNS

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difference. Neat, well-cared for homes are frequent, but it is difficult to ask directions because families are in the fields working, and children are in school. When you find somebody, the dogs are possessive and lie growling in the dust while you ask. There is a gentleness in the people. They have not yet felt the cyclone of dissatisfaction that is turning in the gut of their urban brothers. They look you in the eye, but there is the same friendly superiority expressed to the outsider who is lost that is characteristic of country people everywhere.

There is a look of prosperity about Dinuba. There are no empty stores on main streets. You go into Mom's Cafe at mid-morning. Mechanics from the Chevrolet dealer sit around a table talking about a story in the morning paper reporting that building trades union members have gotten a new contract in the San Francisco area that pays $7.50 an hour. “If I made $7.50 an hour, I'd work two hours a day," says one.

When he leaves, he tells a waitress he hopes she has a nice vacation. She's leaving tomorrow.

Bob Raison, the editor of the paper, says:, "We're a very law-abiding town. I can call the sheriff's department day after day, and they'll have rapes and robberies on their hot sheet, but none here. They're all in the south part of the county."

People don't drink much in public in Dinuba. When they drink, they usually drive to the Redwood Inn over at Sultana.

"We're trying to keep our kids here," says Clinton Cates, the high school principal. "We've got some jobs, in the phone company, in Pacific Gas and Electric, and in the yearbook company."

The town has five parks. They've just finished a new $144,000 recreation building in Roosevelt Park. Then there is El Monte Park, Recreation Park, Jefferson School Park, and Dinuba Elementary School Park. Expenditures per pupil in high school in 1966-67 were $640.03; in the elementary school, $442.25. Fifty-eight percent of the high school graduates go on to college, and 25 percent graduate. And the high school operates a continuation school for those who drop out.

Tom Bivens of the Chamber of Commerce will fill your briefcase with leaflets bragging about the town. Dinuba has gained population and is now around 8,000. It has grown since Dr. Goldschmidt made his study, from 7,400. Arvin has lost population from 6,200 down to 5,400. It is a classic example of what lies ahead for the communities in rural America as we change from family to corporate agriculture.

CHAPTER V

CORPORATE HORSEPOWER

The Federal Trade Commission building in Washington is an architectural monstrosity--rounded at one end, squared at the other to fit its triangle of land between Pennsylvania Avenue and Constitution Avenue, a few blocks from the Capitol of the United States. At the narrow, rounded end of the building are two immense statues--one on each side, of a shirtless giant of a man attempting to hold, without halter or rope, a plunging horse.

The statues were designed by a young WPA instructor, Michael Lantz of New Rochelle, New York, and it is easy to attribute significant meaning to them. One can imagine that the horses represent corporate America. The man, enormously muscular though he is, must represent the Federal Trade Commission. They are dramatic, exciting statues. But the corporate horses seem bound to win.

If family agriculture is to be saved, the corporate horses that threaten to trample it to death, must be tamed and broken to harness and bit.

The food industry is tugged as if by a giant magnet into the productive mechanism of the Nation. As the food distributing or processing corporation develops "needs" of its own, it must fulfill them. Thus, Ralston-Purina becomes the captor of broiler growers. National Tea Company operates its own egg farms. The orange juice companies grow their own oranges. The great competition markets for beef cattle are destroyed. Commodity after commodity falls before the corporate onslaught.

How do these corporations operate? Few more revealing episodes have occurred than the Federal Trade Commission case against the National Tea Company, both for what it revealed about the business logic of National Tea as well as what it showed about the attempts of government to protect the public.

Let us look at Docket Nol 7453: United States of America Before Federal Trade Commission in the Matter of NATIONAL TEA CO., a Corporation:

CORPORATE HORSEPOWER

"FINDINGS AS TO THE FACTS

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"1. The respondent, National Tea Company (hereinafter sometimes 'National Tea' or 'National'), is a corporation organized in 1902, under and by virtue of the laws of the State of Illinois, with its principal office and place of business located at 1000 North Crosby, Chicago 10, Illinois. It is controlled by Loblaw Grocerterias, Co., Limited, a Canadian corporation and subsidiary of George Weston, Ltd. of Canada. Loblaw Grocerterias of Canada purchased a substantial portion of National's common stock in 1955. As of June 1, 1957, it held 34.17%, the rest being divided among National's officers and directors (1.77%) and some 6,000 other stockholders (64.6%). In 1962, after the instant complaint was issued, Loblaw of Canada acquired more National stock, bringing the total to approximately 45%. Loblaw of Canada, at the time it acquired its controlling interest in National Tea, also controlled a New York corporation, Loblaw, Inc., which operated over 180 food stores in western New York, Pennsylvania, Ohio, and West Virginia, with annual sales of over $240 million in 1957. One hundred fifteen of those stores located in the Youngstown and Pittsburgh areas, with annual sales of $115 million, were transferred from Loblaw, Inc., of New York to National Tea in 1962. It was this transaction, paid for with National stock, that brought the Loblaw of Canada stock interest in National from approximately 35% to 45%. "2. National Tea operates a chain of retail, self-service, cash and carry food stores dealing in groceries, fresh fruits, vegetables, bakery and dairy products, frozen foods, meats, poultry, fish and other items. It also operates its own meat packing plants in Colorado, Minnesota and Michigan; a feed lot for finishing cattle in Colorado; a general food plant in Chicago that processes its private brands of coffee, tea, pepper, salad dressing, peanut butter, olives, preserves, vinegar, syrup, jellies, soft drinks and detergents; and bakeries located in Detroit, Chicago, Milwaukee, Minneapolis, and Denver. In 1959, respondent operated 910 retail stores located in 18 states, with sales of $829,518,276 and net income (after taxes) of $9,025,208 (1.09% of sales). The stores purchased from respondent's own manufacturing plants products having a wholesale value of $47,498,153, or 6.9% of the total food products purchased by the stores. It also buys in substantial volume from manufacturers who are owned or controlled by its parent and stockholder interests. In addition, respondent retails private label products produced by other food manufacturers and processors. In 1958, its purchases of such private label merchandise amounted to $62,608,857, or 9.8% of the $638,588,395 the company paid for the merchandise it sold in its retail stores. Altogether, private brand

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THE CORPORATE INVASION OF AMERICAN AGRICULTURE

merchandise accounts for up to 20% of National's total business." Paragraph No. 3 set out the scope of the FTC proceeding as follows:

"3. The relevant lines of commerce involved in this proceeding are the sale of groceries and related products, as a class, and individual grocery and related products (including fluid milk and cream, frozen desserts, and frozen fruits and vegetables) as a class, at the manufacturing, wholesaling, and retailing level."

The scope of the proceeding is important for what it included--and for what it did not include. Notably, the omission included the company's "meat packing plants in Colorado, Minnesota and Michigan; a feedlot for finishing cattle in Colorado...

What must be realized is that these operations have solid relevancy to the welfare of farmers, and affect the prices they receive for livestock (see Chapter II). National Tea evidently did not in 1958 operate its own egg farms, as it does now.

The FTC had every reason to include these operations in its case and could have worked with the Packers and Stockyards Division of the U. S. Department of Labor.

But, as will be shown, there is much more about the FTC to critize than this omission.

A Tale of Two Cities

The FTC brought its case as a result of National Tea's systematic expansion program. From 1951 to 1958 it made 26 acquisitions, becoming the fifth largest retail food chain in the Nation. In 1945, H. V. McNamara, a former Kroger executive, was hired as executive vice president and general manager. He said candidly that the company intended to expand into all 48 states. In a newspaper account of an interview with McNamara in 1954, he was quoted as saying: "This is my aim and the aim of Garfield Weston, our principal stockholder. We plan to cover the United States like a book."

This is the kind of aggressiveness Americans can appreciate. It fits our image of pioneering business enterprise. But wait. Let's see what National Tea really had in mind.

Dr. Willard F. Mueller, the FTC's chief accountant, said: "When a firm makes a market extension merger into a new geographical market, it buys a going concern, it buys in effect a part of that market."

What's wrong with that?

The FTC case found significant differences in the National Tea operation