by Maureen Ogle
But none of those projects succeeded in breaking the grip of the railroad-stockyard cabal. One reason was that the dressed-beef pioneers encountered the usual bugs and kinks that can derail any new project. They had a hard time finding an adequate supply of cold cars, and railroad employees sometimes failed to add ice along the way. Often trouble developed at the delivery point: refrigerated warehouses could not be secured and the meat spoiled before it reached consumers’ hands. According to some reports, those pioneer shippers too often skimped on the raw materials. In 1875, the Massachusetts Board of Health warned that dressed beef arriving in Boston should “be regarded with extreme suspicion” bordering on “aversion”: it came from emaciated Texas cattle that had arrived in Chicago reduced to “bone-frame and skin,” their meat worth about as much as “a squeezed lemon” and in such bad shape that no one was willing to ship them live.
One other obvious explanation for those early failures is that the railroad-stockyard complex, having invested millions in the business of moving live animals, had no incentive to transport dressed beef. But if that was so, why did Gus Swift succeed when others failed? Because Hammond and other dressed-beef pioneers did not understand the need to create an infrastructure to replace the one built by the railroads, or that beef carcasses were but one factor of a complex equation. Swift, in contrast, saw the beef for what it was: a small part of a vast system that included (among other things) railroad freight charges and rendering facilities; cold cars and warehouses; livestock producers, commission agents, herders, drovers, and stockyard managers; the line workers who “disassembled” the livestock; accountants and the engineers who designed the packing plants; wholesalers, retailers, and salesmen; and the bankers and brokers who controlled the money that financed all of it. In that respect, Swift resembled Thomas Edison and the era’s other “system” builders. Consider a decidedly non-meat example: Edison’s incandescent light bulb. By itself, it had no worth, other than as a curiosity. The bulb gained value only after Edison and his investors devised an integrated system that included the bulb, a source of electricity, and a means of transmitting that to individual bulbs in a shop, factory, or home. The system also included poles, wire, generators, transformers, and the like; financing packages and contracts; managerial and engineering skill; the willingness of urban residents to grant permission for the construction of the system’s physical components; and the political acumen necessary to persuade them to do so. Only then did Edison’s light bulb become valuable. The same was true of Swift’s plan to ship dressed beef. It succeeded because he envisioned all of the system’s parts: an integrated slaughterhouse and rendering plant where animals could be transformed into meat and byproducts; a transportation system to move the meat to a network of refrigerated warehouses and depots; and a network of wholesalers and retailers who were prepared to dispose of the product as soon as they received it.
Swift’s first step was to control the refrigeration. This was key to his endeavor because the railroads exerted an unholy control over shipments of perishable goods. Suppose Swift slaughtered livestock on Tuesday and promised delivery to a wholesaler in Massachusetts by Friday. He could not assume that express dispatch services would have refrigerated cars available on Tuesday, and when it came to perishable goods, timing was everything. The only way for him to guarantee the arrival of his shipments was by owning his own cold cars. But Swift did not invent the refrigerated railcar. By the time he needed that technology, Americans had accumulated several decades of experience using ice-filled railcars to haul fish, eggs, produce, and beer from one section of the United States to another. The technology was relatively simple and rested on a basic principle: as air chills, it becomes humid and heavy and drifts downward (warm air rises; cold air sinks). Unless that air circulated, the humidity saturated the car’s contents and caused them to deteriorate. So an efficient, functional cold car included not just ice and salt packed along its sides and top but a ventilation system, too. The rest was detail: the contraption had to be simple enough to allow inexperienced hands to add ice quickly during stops en route, and the cargo had to be arranged so that it did not lie directly on the ice.
There were dozens of patented refrigerator cars on the market, and Swift had to decide which one to use. In late 1875, he contracted with George Hammond to slaughter and ship beef on his behalf, not because he was ready to launch his business but because he wanted to test the viability of Hammond’s cars without investing his own then-meager funds. He was not impressed and kept looking. A year or so later, he acquired rights to several cold-car patents and arranged for a Michigan company to build cars for him. (Hammond promptly sued him for patent infringement, a common conflict at a time when patent law was relatively unstable. The court ruled in Swift’s favor.)
Swift’s next step was to contract with a railroad to haul his cars. Swift’s hagiographers later claimed that the major railroads refused to deal with him because they regarded dressed beef as a threat. Swift, being his heroic self, fought back and the rest, as they say, was history. But as with much of the Swift mythology, that version contains more fiction than fact. It’s true that the roads and their stockyard partners were committed to shipping livestock rather than beef. But it’s also true that in the late 1870s, they had no reason to see Swift as a threat. After all, others had tried to ship dressed beef and failed. Moreover, in 1877 and 1878, when Swift was ready to move, the railroad industry was suffering more than its usual chaos thanks to a series of violent strikes that stopped traffic for weeks. Then there were the ongoing demands of maintaining tracks, engines, and cars; the burden of managing the largest workforce in the world; and the thousand other problems that plagued the small group of people wrestling with the first grand corporate venture of the modern age. Swift’s failure to arrange shipping contracts with the railroads was probably less a nefarious plot (although the railroaders were capable of those) than it was his inability to capture the attention of people as distracted as any multitasker tweeting, texting, and blogging in the digital age. But the Swift mythology also ignores the most crucial fact: the railroad men who allegedly thwarted him were irrelevant to his plans. The nation’s three largest shippers, the New York Central, Erie, and Pennsylvania railroads and their affiliated stockyards and abattoirs, served the New York–Philadelphia metropolitan area. But Gus Swift planned to launch his empire on his home turf, New England, where he could take advantage of his wide network of business contacts.
That explains why he approached the managers of Canada’s Grand Trunk Railway. The Grand Trunk ran along the southern border of Canada and included spur lines that connected it to Chicago. At its eastern end, the route sliced through Vermont, providing easy access to New England towns and cities. As a bonus, the Grand’s tracks coursed through terrain whose temperatures ranged from cool to frigid for much of the year, which would increase the efficiency of his cars. Best of all, the GT’s managers delighted in functioning as a boil in the sides of American railroad magnates and enjoyed nothing so much as a splendid little rate war. They agreed to haul Swift’s refrigerated cars from Chicago to New England.
Railroad and refrigerator cars in hand, Swift turned to the most crucial component of his system: distribution. Because the meat was perishable, it was imperative that it be unloaded from cold cars into refrigerated warehouses or be transferred to retailers for immediate sale. Only then could Swift guarantee that his meat would be fresh and appealing to its final buyers, the men and women who would put it on their tables. Over the previous twenty years, Swift had cultivated a host of relationships with New England cattle dealers, butchers, packers, and wholesalers, and he parlayed those contacts into a network of outlets.
All of it required cash, of which there was never enough. That did not bother Swift. According to his son Louis Swift, who co-wrote a fawning biography of his father, the elder man’s “vision” typically “ran far ahead of the money” on hand. The son described his father as a “born expansionist” who operated by th
e principle of borrowing money whenever possible. Using his “persuasive enthusiasm,” he “hustled” for loans and “wheedled” funds from anyone who would listen. Louis Swift’s description of his father’s money-grubbing sounds a bit like a Ponzi scheme: Gus routinely borrowed from one source to pay off another. One fact is clear: in those early years, Swift raced from Chicago to Boston to Brighton, from Maine to Massachusetts to Rhode Island, wooing wholesalers, tinkering with refrigerator cars, and persuading people to part with their money. It was, said his son, in what is perhaps the only accurate assessment in a book otherwise devoted to hero worship, akin to juggling a “fish-bowl, a cannon ball, and a live rabbit.”
The juggling paid off. In January 1878, Swift and his brother launched Swift & Co. A year later, their “New England Fresh Meat Express” was delivering hundreds of tons of dressed beef to warehouses in Boston, Lowell, Fall River, and other Massachusetts towns. In addition, the Swifts sold meat straight off the railcars to wholesalers in dozens of other locations, buyers who then distributed it to another three hundred other towns and cities from Maine to Connecticut. By 1881, the meat magnate was shipping three thousand carcasses a week from Chicago (about a thousand of which, it’s worth noting, landed at the port in Liverpool, England). The company’s infrastructure included five hundred refrigerated railcars; forty-eight “coolers” scattered from New England to Washington, DC; and an assortment of warehouses, depots, and ice “farms” that stretched from Chicago to New England. He claimed that his Chicago facility was the largest cattle-slaughtering house in the world. That was likely a bit of promotional hyperbole, but the plant employed five hundred hands and two steam engines and boasted a “refrigerator” that could hold six thousand carcasses.
By 1882, Swift was ready to seek the holy grail: the nation’s biggest market, New York City, where he would confront the men who had siphoned off his profits with their overpriced sawdust and hay. He laid the groundwork for his assault by constructing the new warehouse at Washington Market. A newspaperman who visited the facility marveled at the efficient design, which included a “railway” track suspended from the ceiling, the track holding a collection of wheeled hooks from which hung dozens of beef carcasses. The warehouse manager explained that the company’s refrigerator cars were equipped with similar ceiling-mounted tracks. When a train arrived in New Jersey, a crew transferred the cars to a barge that floated them across the river to the warehouse. There, workers aligned the door of the train car with the door of the warehouse and slid the dangling carcasses off one track and onto the other. Thanks to such cost-cutting efficiencies, the reporter told readers, the “era of cheap beef” had begun. “Everything with us is systematized,” a company representative told another newspaperman. By using the telegraph, employees could respond almost instantly to local changes in demand and adjust prices accordingly, and do so faster than shippers who hauled live animals. “Everywhere we have located,” he said, “our success has exceeded our expectations.”
The project of shipping dressed beef long distances “has ceased to be an experiment, and . . . has become a demonstrated fact,” commented another observer, who predicted that Swift & Co., whose unofficial motto was “quick sales and small profits,” would “break down local monopolies and high prices.” According to some reports, the opening of Swift’s Washington Market refrigerator provoked a “panicky feeling” among local beef brokers and shippers as well as slaughterhouse owners in Manhattan, Brooklyn, and Jersey City, who feared that Swift would undercut them on price. That, opined a Chicago reporter, was the least of their worries. A disruption or reduction of New York’s live cattle trade would likely destroy local byproduct processors; without cattle, there would be no hides, bones, hooves, and fat. The locals’ anxiety was justified and surely increased when, just days after Swift opened his New York doors, Philip Armour joined the fray.
Today Philip Armour’s name is associated primarily with meatpacking, but he was not a meat man and certainly no butcher. As he once said, “[I]f you showed me a piece of meat I could not tell you what part of the bullock it came from.” Armour was only interested in meat for the same reason he was interested in wheat, corn, coal, or gold: it offered opportunities for manipulating supplies and therefore prices, and thus for earning huge profits.
Armour, who was born in 1832 and grew up in upstate New York, earned his first serious money during the California gold rush, not by panning for ore but by selling necessities to those who were. In the late 1850s, he landed in Milwaukee, a town boasting a robust and diverse economy, proximity to Chicago, and bountiful natural resources from the region’s farms and forests. There he and another man opened a commission house and worked as middlemen selling grain and other provisions. Sensing war on the horizon, the pair bought up a warehouse of whiskey, betting that if war came, Congress would raise taxes on liquor. War came; Congress did; the men profited.
But in the early 1860s, Armour entered into partnership with John Plankinton, a Milwaukee real estate powerhouse and owner of the city’s biggest pork-processing operation. Armour promptly impressed the older man with his acumen when the two earned a fortune by cornering the market in packed pork. Corners were Armour’s special delight, a fact he would demonstrate repeatedly during his life (to the dismay of his competitors). Plankinton and Armour signed “futures” contracts, agreeing to buy pork from other dealers on a specific date in the future. At the same time, the two men quietly purchased as much pork as they could lay their hands on. When the contracts came due, the saps who had contracted to deliver pork to Plankinton and Armour discovered that there was none to be had—except from Plankinton and Armour, who, having “cornered” the supply, could charge whatever price they wanted. The men holding the futures contracts had to buy from P & A—in order to sell to P & A. The partners reportedly earned somewhere between $1 and $2 million from the (legal) scheme, while many rivals collapsed under the weight of their costly mistake. The men used the windfall to expand their Milwaukee holdings and to fund a second pork-packing operation in Kansas City.
But Milwaukee could not satisfy Armour’s ambitions, and a few years later he parted ways with Plankinton (theirs was an amicable separation) and headed to Chicago. There he built a pork-processing plant, annoyed his new rivals by orchestrating corners, and waded into the beef industry by opening a beef-canning facility. Sometime around 1880, he began investigating the possibilities of shipping dressed beef, but he later admitted that his initial effort failed because he and his employees “did not understand the methods of refrigeration and did not get [the] beef to the seaboard in proper condition.” But Armour was a quick study, and in October 1882, he pronounced himself sufficiently “confident” to “go into the business on a large scale.” The timing was intentional: When Gus Swift marched into the New York market, George Hammond had tagged along. Armour had to make his move or run the risk that the other two would run away with the nation’s biggest meat market. A company representative explained that, unlike Swift, who targeted the wholesale market, Armour planned to deal directly with retailers and to sell “refrigerator” boxes of “small cuts”—tenderloins, sirloin, and so forth—rather than whole carcasses. The cost advantage played out at Armour’s Chicago packing plant, where employees transformed the rest of the carcass bits into sausage and canned and corned beef and used byproducts on the spot. The company had “no waste at all,” explained an Armour executive. “The blood, the bones, the offal, the hoofs, and the horns are all utilized and made profitable here.” The equation was clear: Sell direct to retailers. Ship only what they want. Earn top dollar for the rest of the carcass back in Chicago.
The arrival of Swift in Manhattan had been alarming enough. The entry of Armour, whose reputation as a cutthroat corner maker had long since outgrown Chicago, heightened the danger ahead. “There can be only one thing left for all the men who have capital invested here in this business,” said one New York meat wholesaler, and that was to “go away.” Or, as a less charitable obse
rver put it, “only stupid and sluggish minds” would fail to “heed the signs of the times.” Railroad magnates had become “fat and comfortable” on the “toll” exacted from the nation’s meat eaters, mused a newspaper editor. But thanks to Armour, Swift, and dressed beef, he told readers, “Mr. VANDERBILT sees in his dreams long lines of his stock cars rotting on disused sidings.” “There is really no reason on earth,” he added, “why the beef-eaters of New-York should be taxed for bringing hides and horns over Mr. VANDERBILT’s roads all the way from Chicago.” And should Vanderbilt and other tycoons complain, well, too bad. “[A]ll of this is nothing more than has happened in every trade revolution that has taken place in the country,” wrote another observer. “From our standpoint in all this matter, we are only looking at and dealing with the inevitable.” Statistics document the speed with which the dressed-beef revolution unfolded: In 1880, Chicago trains carried 416,000 head of live cattle and 31,000 tons of dressed beef to eastern markets. Five years later, the number of live cattle had dropped to 281,000 and dressed-beef tonnage had risen to 232,000. A journalist who covered commodities markets for the Boston Journal reported in 1883 that three-fourths of the dressed beef sold in that city came directly from Chicago, sixty train cars a week delivering nearly 1.8 million pounds of “bright and sweet” beef. Those shipments, he reported, had “materially curtailed” slaughtering operations at the Brighton market.
By any measure, the packers’ rapid conquest of the American beef market was extraordinary; in less than a decade they upended a long-standing system of distributing meat and beat the powerful railroads at their own game. Part of the reason, it’s clear, is that the dressed-beef men offered a superior alternative. But in the 1880s, the newcomers also benefited from rising demand for beef, not just in the United States but around the world, and from a cattle bonanza in the Far West that glutted stockyards and drove down the prices the packers paid for their raw material.
