Edward Aloysius Cudahy, Jr.
1885-1966
Birth: August 22, 1885 in Illinois, United States
Death: January 8, 1966
Occupation: Manufacturer (Specific) Meat Packing
Source: Dictionary of American Biography, Supplement 8: 1966-1970. American Council of Learned Societies, 1988.
BIOGRAPHICAL ESSAY
Cudahy, Edward Aloysius, Jr. (Aug. 22, 1885 - Jan. 8, 1966), meatpacker, was born in Chicago, Ill., the son of Edward Aloysius Cudahy, a meatpacking plant supervisor, and Elizabeth Murphy. In 1887 his father, his uncle Michael, and Philip D. Armour purchased from Sir Thomas J. Lipton a new, small packing plant (with a daily capacity of 1,000 hogs) in South Omaha, Nebr., which Cudahy's father then managed. In 1890 Michael bought out Armour and with Edward established the Cudahy Packing Company. Michael remained in Chicago as president while Edward stayed in Omaha as vice-president and general manager in charge of plant operations.
While Cudahy attended local schools, his uncle and father expanded Cudahy Packing so rapidly that by 1900 it was one of the four largest American meatpacking companies, along with Swift, Armour, and Morris. Edward Cudahy, Sr., reputedly became a millionaire. On Dec. 18, 1900, young Cudahy was kidnapped and held in chains for twenty-four hours by James Callahan and Pat Crowe, a garrulous swindler and train robber whom Cudahy's father had often aided financially. Threats to blind Cudahy with acid moved his distraught father to pay a $25,000 ransom in gold. After releasing Cudahy unharmed, Crowe escaped and spent the money, but Callahan was captured, tried for robbery (there was no law in Nebraska against kidnapping an adolescent), and acquitted. Apparently the $50,000 reward offered for a conviction undermined the credibility of prosecution witnesses, and the jury felt that Cudahy's father could well afford the ransom. Callahan was later tried and acquitted for perjury. After Crowe surrendered he was acquitted of felonious assault in 1905 and of robbery in 1906, went straight, lectured on the evils of lawbreaking while boasting he had kidnapped Cudahy, wrote an autobiography entitled Spreading Evil, and died destitute in New York City in 1938.
The episode seems to have caused Cudahy little harm. He attended Chicago Latin School and Creighton University, Omaha, from 1900 to 1904. In 1905 he entered the family's Omaha plant and learned the business from the ground up. He also became prominent in society. When Cudahy's uncle Michael died in 1910, Cudahy's father became president of Cudahy Packing and Cudahy moved to Chicago to join him at company headquarters. There he learned the business from the top down, becoming first vice-president in 1916. His tutelage was interrupted by service in the army during World War I as captain of a machine-gun company.
After the war Cudahy played a wider role in managing the company, gradually relieving his father of many duties. In 1919 the public accused meat packers of war profiteering, and the Federal Trade Commission charged them with price fixing and attempting to monopolize the food industry. Though the announcement of Cudahy's engagement in December 1919, followed by a congratulatory telegram from dead broke but irrepressible Pat Crowe, amused the nation, Cudahy aroused its ire a few days later when he blamed the high cost of meat not on price fixing but on the demand for expensive steaks and roasts and scolded people for not eating corned beef.
The big five meat packers (Wilson and Company was the addition) soon capitulated and consented to a federal court injunction issued in February 1920 restricting them to the wholesale meat business. On Dec. 27, 1920, Cudahy married Margaret Carry; they had two sons, who entered the family business, and a daughter, Sheila Cudahy Pellegrini, who became a publisher of books under imprints carrying both her maiden and married names.
Cudahy became president of Cudahy Packing (his father becoming chairman of the board) in January 1926. The company operated nine plants, had distribution facilities in nearly 100 cities, and owned a fleet of refrigerator and tank cars. It also manufactured Old Dutch Cleanser, soap, and cottonseed oil. Its sales in 1926 were $232 million, and its $4 million net profit was the highest in its history. It prided itself on its laboratories at each plant and boasted of its "conservative management" that insisted that meat packing was not dependent for success on general industrial activity.
Despite this claim the meatpacking industry was hurt by the Great Depression. In 1932 the company netted only $906,000 on sales of $133 million, though its 12,000 employees had taken two 10 percent wage cuts. Seeking unsuccessfully to modify the consent decree of 1920 that restricted meatpacking operations, Cudahy testified in November 1930 that collusion among meat packers to buy livestock or sell meat was both impractical and impossible. He stressed that in the late 1920's competition among the meat packers increased because pork exports to Europe had declined, chain stores (tending to purchase from smaller packers) had grown, and the highway system (enabling small packers to purchase livestock and sell meats over a wider area) had expanded.
At first Cudahy was pleased with President Franklin D. Roosevelt's New Deal. Its currency manipulation improved meat exports in 1933, and in 1934 National Recovery Administration regulations, while increasing operating costs, raised market prices; Cudahy's net profit rose to almost $2 million. Cudahy's enchantment with the New Deal evaporated in 1935 when a shortage of hogs led to declining meat prices. In 1936, after the Supreme Court declared the Agricultural Adjustment Administration unconstitutional, Cudahy Packing attempted unsuccessfully to recover the $11.9 million it had paid in processing taxes on slaughtered hogs. With the 1935 National Labor Relations Act, labor difficulties intensified. The Meat Cutters Union complained that Cudahy Packing had denied its newly guaranteed rights and by 1939 the National Labor Relations Board ordered Cudahy to disestablish its company union. Ominously, the Robert M. La Follette Civil Liberties Committee included Cudahy Packing among those companies with stores of munitions and tear gas, presumably for use against strikers. Cudahy Packing, which had failed to show a profit only once before, blamed a 25 percent rise on labor costs, a severe drought that cut corn and hog production, and the recession of 1937-1938, when it lost $1.8 million in 1937 and almost $3 million the next year. Contradicting his company's earlier testimony, Cudahy found that "factory payrolls bear a very close relationship to the price of meats and by-products."
Despite these losses, Cudahy was personally wealthy; his salary (almost $50,000 in 1941) did not indicate his worth. His father had distributed some of his wealth before he died in 1941. In 1937 the Joint Congressional Tax Evasion Committee used Cudahy to illustrate loopholes in the tax structure. His personal holding company, Lothair Development, held $5 million of his securities and from 1929 to 1935 they earned $3 million, which Cudahy neither touched nor paid taxes on.
Meat packing revived before World War II but so did federal antitrust activity. Along with other packers, Cudahy was indicted in 1941 for fixing hog prices in Iowa and Nebraska and Easter ham prices throughout the nation. Wartime demands and the need for cooperation led the government to ignore these indictments and to drop them in 1949. World War II brought prosperity to Cudahy Packing (in 1942 and 1943 its profits were $3.4 million), but during the war Cudahy's involvement in the daily operations of the company began to slacken. His wife died in 1942, a few months after they were divorced. Beginning in 1943 Cudahy wintered in Phoenix, Ariz. On Jan. 25, 1944, he married Eleanor Peabody Cochran, and later that year he gave up the presidency of Cudahy Packing to become its board chairman.
The postwar inflation increased Cudahy's net profits to a high of $7.1 million on sales of $573 million in 1947. These profits of one and a quarter cents on each sales dollar, or less than a quarter of a cent per pound of meat sold, were, as Cudahy argued, not exorbitant. Cudahy Packing, however, was inefficient. Its profits declined to $1 million in 1948 because of a disastrous, violent, two-month strike, and, while still fourth among packers, the company showed less growth in sales than did the next five largest packers. Rising operating costs lost Cudahy Packing $4.7 million in 1949, the same year many packers operated in the black.
During Cudahy's last years as board chairman, sales declined from $640 million in 1951 to $313 million in 1962. Occasional profitable years, like 1956 ($6 million), were overshadowed by losses ($7 million in 1954 and almost $1 million in 1962). Cudahy had fallen to seventh place in the packing industry. Struggling for efficiency, the company began in 1951 to close outmoded plants, unprofitable distributing branches, and egg and poultry plants. It also staved off deficits briefly by selling its profitable Old Dutch Cleanser and soap divisions. In the late 1950's, Cudahy began to modernize its facilities and in the early 1960's automated its Omaha plant. Anxious to improve its earnings through diversification, Cudahy Packing in 1956 again tried to obtain release from the restrictions of the 1920 consent decree, but in 1960 Judge Julius J. Hoffman rejected the petition.
After Cudahy, whose health was declining, resigned in 1962, analysts blamed his company's problems on its ingrown, narrow-minded, top-heavy management, which had preferred slaughterhouse to educational experience ("not a single graduate engineer in the company," as his son Edward put it). It had no personnel policy, no job descriptions, and much duplication of effort. Its obsolete marketing strategy snubbed chain supermarkets and relied on independent retailers, requiring an expensive distribution system. As president and then board chairman from 1926 to 1962, Cudahy failed to foster research, long-range planning, or diversification. By hanging Cudahy Packing's fortunes almost totally on the volatile livestock market, Cudahy presided over the disintegration of the company his uncle and father had created. He died in Phoenix, Ariz.
1885-1966
Birth: August 22, 1885 in Illinois, United States
Death: January 8, 1966
Occupation: Manufacturer (Specific) Meat Packing
Source: Dictionary of American Biography, Supplement 8: 1966-1970. American Council of Learned Societies, 1988.
BIOGRAPHICAL ESSAY
Cudahy, Edward Aloysius, Jr. (Aug. 22, 1885 - Jan. 8, 1966), meatpacker, was born in Chicago, Ill., the son of Edward Aloysius Cudahy, a meatpacking plant supervisor, and Elizabeth Murphy. In 1887 his father, his uncle Michael, and Philip D. Armour purchased from Sir Thomas J. Lipton a new, small packing plant (with a daily capacity of 1,000 hogs) in South Omaha, Nebr., which Cudahy's father then managed. In 1890 Michael bought out Armour and with Edward established the Cudahy Packing Company. Michael remained in Chicago as president while Edward stayed in Omaha as vice-president and general manager in charge of plant operations.
While Cudahy attended local schools, his uncle and father expanded Cudahy Packing so rapidly that by 1900 it was one of the four largest American meatpacking companies, along with Swift, Armour, and Morris. Edward Cudahy, Sr., reputedly became a millionaire. On Dec. 18, 1900, young Cudahy was kidnapped and held in chains for twenty-four hours by James Callahan and Pat Crowe, a garrulous swindler and train robber whom Cudahy's father had often aided financially. Threats to blind Cudahy with acid moved his distraught father to pay a $25,000 ransom in gold. After releasing Cudahy unharmed, Crowe escaped and spent the money, but Callahan was captured, tried for robbery (there was no law in Nebraska against kidnapping an adolescent), and acquitted. Apparently the $50,000 reward offered for a conviction undermined the credibility of prosecution witnesses, and the jury felt that Cudahy's father could well afford the ransom. Callahan was later tried and acquitted for perjury. After Crowe surrendered he was acquitted of felonious assault in 1905 and of robbery in 1906, went straight, lectured on the evils of lawbreaking while boasting he had kidnapped Cudahy, wrote an autobiography entitled Spreading Evil, and died destitute in New York City in 1938.
The episode seems to have caused Cudahy little harm. He attended Chicago Latin School and Creighton University, Omaha, from 1900 to 1904. In 1905 he entered the family's Omaha plant and learned the business from the ground up. He also became prominent in society. When Cudahy's uncle Michael died in 1910, Cudahy's father became president of Cudahy Packing and Cudahy moved to Chicago to join him at company headquarters. There he learned the business from the top down, becoming first vice-president in 1916. His tutelage was interrupted by service in the army during World War I as captain of a machine-gun company.
After the war Cudahy played a wider role in managing the company, gradually relieving his father of many duties. In 1919 the public accused meat packers of war profiteering, and the Federal Trade Commission charged them with price fixing and attempting to monopolize the food industry. Though the announcement of Cudahy's engagement in December 1919, followed by a congratulatory telegram from dead broke but irrepressible Pat Crowe, amused the nation, Cudahy aroused its ire a few days later when he blamed the high cost of meat not on price fixing but on the demand for expensive steaks and roasts and scolded people for not eating corned beef.
The big five meat packers (Wilson and Company was the addition) soon capitulated and consented to a federal court injunction issued in February 1920 restricting them to the wholesale meat business. On Dec. 27, 1920, Cudahy married Margaret Carry; they had two sons, who entered the family business, and a daughter, Sheila Cudahy Pellegrini, who became a publisher of books under imprints carrying both her maiden and married names.
Cudahy became president of Cudahy Packing (his father becoming chairman of the board) in January 1926. The company operated nine plants, had distribution facilities in nearly 100 cities, and owned a fleet of refrigerator and tank cars. It also manufactured Old Dutch Cleanser, soap, and cottonseed oil. Its sales in 1926 were $232 million, and its $4 million net profit was the highest in its history. It prided itself on its laboratories at each plant and boasted of its "conservative management" that insisted that meat packing was not dependent for success on general industrial activity.
Despite this claim the meatpacking industry was hurt by the Great Depression. In 1932 the company netted only $906,000 on sales of $133 million, though its 12,000 employees had taken two 10 percent wage cuts. Seeking unsuccessfully to modify the consent decree of 1920 that restricted meatpacking operations, Cudahy testified in November 1930 that collusion among meat packers to buy livestock or sell meat was both impractical and impossible. He stressed that in the late 1920's competition among the meat packers increased because pork exports to Europe had declined, chain stores (tending to purchase from smaller packers) had grown, and the highway system (enabling small packers to purchase livestock and sell meats over a wider area) had expanded.
At first Cudahy was pleased with President Franklin D. Roosevelt's New Deal. Its currency manipulation improved meat exports in 1933, and in 1934 National Recovery Administration regulations, while increasing operating costs, raised market prices; Cudahy's net profit rose to almost $2 million. Cudahy's enchantment with the New Deal evaporated in 1935 when a shortage of hogs led to declining meat prices. In 1936, after the Supreme Court declared the Agricultural Adjustment Administration unconstitutional, Cudahy Packing attempted unsuccessfully to recover the $11.9 million it had paid in processing taxes on slaughtered hogs. With the 1935 National Labor Relations Act, labor difficulties intensified. The Meat Cutters Union complained that Cudahy Packing had denied its newly guaranteed rights and by 1939 the National Labor Relations Board ordered Cudahy to disestablish its company union. Ominously, the Robert M. La Follette Civil Liberties Committee included Cudahy Packing among those companies with stores of munitions and tear gas, presumably for use against strikers. Cudahy Packing, which had failed to show a profit only once before, blamed a 25 percent rise on labor costs, a severe drought that cut corn and hog production, and the recession of 1937-1938, when it lost $1.8 million in 1937 and almost $3 million the next year. Contradicting his company's earlier testimony, Cudahy found that "factory payrolls bear a very close relationship to the price of meats and by-products."
Despite these losses, Cudahy was personally wealthy; his salary (almost $50,000 in 1941) did not indicate his worth. His father had distributed some of his wealth before he died in 1941. In 1937 the Joint Congressional Tax Evasion Committee used Cudahy to illustrate loopholes in the tax structure. His personal holding company, Lothair Development, held $5 million of his securities and from 1929 to 1935 they earned $3 million, which Cudahy neither touched nor paid taxes on.
Meat packing revived before World War II but so did federal antitrust activity. Along with other packers, Cudahy was indicted in 1941 for fixing hog prices in Iowa and Nebraska and Easter ham prices throughout the nation. Wartime demands and the need for cooperation led the government to ignore these indictments and to drop them in 1949. World War II brought prosperity to Cudahy Packing (in 1942 and 1943 its profits were $3.4 million), but during the war Cudahy's involvement in the daily operations of the company began to slacken. His wife died in 1942, a few months after they were divorced. Beginning in 1943 Cudahy wintered in Phoenix, Ariz. On Jan. 25, 1944, he married Eleanor Peabody Cochran, and later that year he gave up the presidency of Cudahy Packing to become its board chairman.
The postwar inflation increased Cudahy's net profits to a high of $7.1 million on sales of $573 million in 1947. These profits of one and a quarter cents on each sales dollar, or less than a quarter of a cent per pound of meat sold, were, as Cudahy argued, not exorbitant. Cudahy Packing, however, was inefficient. Its profits declined to $1 million in 1948 because of a disastrous, violent, two-month strike, and, while still fourth among packers, the company showed less growth in sales than did the next five largest packers. Rising operating costs lost Cudahy Packing $4.7 million in 1949, the same year many packers operated in the black.
During Cudahy's last years as board chairman, sales declined from $640 million in 1951 to $313 million in 1962. Occasional profitable years, like 1956 ($6 million), were overshadowed by losses ($7 million in 1954 and almost $1 million in 1962). Cudahy had fallen to seventh place in the packing industry. Struggling for efficiency, the company began in 1951 to close outmoded plants, unprofitable distributing branches, and egg and poultry plants. It also staved off deficits briefly by selling its profitable Old Dutch Cleanser and soap divisions. In the late 1950's, Cudahy began to modernize its facilities and in the early 1960's automated its Omaha plant. Anxious to improve its earnings through diversification, Cudahy Packing in 1956 again tried to obtain release from the restrictions of the 1920 consent decree, but in 1960 Judge Julius J. Hoffman rejected the petition.
After Cudahy, whose health was declining, resigned in 1962, analysts blamed his company's problems on its ingrown, narrow-minded, top-heavy management, which had preferred slaughterhouse to educational experience ("not a single graduate engineer in the company," as his son Edward put it). It had no personnel policy, no job descriptions, and much duplication of effort. Its obsolete marketing strategy snubbed chain supermarkets and relied on independent retailers, requiring an expensive distribution system. As president and then board chairman from 1926 to 1962, Cudahy failed to foster research, long-range planning, or diversification. By hanging Cudahy Packing's fortunes almost totally on the volatile livestock market, Cudahy presided over the disintegration of the company his uncle and father had created. He died in Phoenix, Ariz.
Edward Aloysius Cudahy, Jr.
1885-1966
Birth: August 22, 1885 in Illinois, United States
Death: January 8, 1966
Occupation: Manufacturer (Specific) Meat Packing
Source: Dictionary of American Biography, Supplement 8: 1966-1970. American Council of Learned Societies, 1988.
BIOGRAPHICAL ESSAY
Cudahy, Edward Aloysius, Jr. (Aug. 22, 1885 - Jan. 8, 1966), meatpacker, was born in Chicago, Ill., the son of Edward Aloysius Cudahy, a meatpacking plant supervisor, and Elizabeth Murphy. In 1887 his father, his uncle Michael, and Philip D. Armour purchased from Sir Thomas J. Lipton a new, small packing plant (with a daily capacity of 1,000 hogs) in South Omaha, Nebr., which Cudahy's father then managed. In 1890 Michael bought out Armour and with Edward established the Cudahy Packing Company. Michael remained in Chicago as president while Edward stayed in Omaha as vice-president and general manager in charge of plant operations.
While Cudahy attended local schools, his uncle and father expanded Cudahy Packing so rapidly that by 1900 it was one of the four largest American meatpacking companies, along with Swift, Armour, and Morris. Edward Cudahy, Sr., reputedly became a millionaire. On Dec. 18, 1900, young Cudahy was kidnapped and held in chains for twenty-four hours by James Callahan and Pat Crowe, a garrulous swindler and train robber whom Cudahy's father had often aided financially. Threats to blind Cudahy with acid moved his distraught father to pay a $25,000 ransom in gold. After releasing Cudahy unharmed, Crowe escaped and spent the money, but Callahan was captured, tried for robbery (there was no law in Nebraska against kidnapping an adolescent), and acquitted. Apparently the $50,000 reward offered for a conviction undermined the credibility of prosecution witnesses, and the jury felt that Cudahy's father could well afford the ransom. Callahan was later tried and acquitted for perjury. After Crowe surrendered he was acquitted of felonious assault in 1905 and of robbery in 1906, went straight, lectured on the evils of lawbreaking while boasting he had kidnapped Cudahy, wrote an autobiography entitled Spreading Evil, and died destitute in New York City in 1938.
The episode seems to have caused Cudahy little harm. He attended Chicago Latin School and Creighton University, Omaha, from 1900 to 1904. In 1905 he entered the family's Omaha plant and learned the business from the ground up. He also became prominent in society. When Cudahy's uncle Michael died in 1910, Cudahy's father became president of Cudahy Packing and Cudahy moved to Chicago to join him at company headquarters. There he learned the business from the top down, becoming first vice-president in 1916. His tutelage was interrupted by service in the army during World War I as captain of a machine-gun company.
After the war Cudahy played a wider role in managing the company, gradually relieving his father of many duties. In 1919 the public accused meat packers of war profiteering, and the Federal Trade Commission charged them with price fixing and attempting to monopolize the food industry. Though the announcement of Cudahy's engagement in December 1919, followed by a congratulatory telegram from dead broke but irrepressible Pat Crowe, amused the nation, Cudahy aroused its ire a few days later when he blamed the high cost of meat not on price fixing but on the demand for expensive steaks and roasts and scolded people for not eating corned beef.
The big five meat packers (Wilson and Company was the addition) soon capitulated and consented to a federal court injunction issued in February 1920 restricting them to the wholesale meat business. On Dec. 27, 1920, Cudahy married Margaret Carry; they had two sons, who entered the family business, and a daughter, Sheila Cudahy Pellegrini, who became a publisher of books under imprints carrying both her maiden and married names.
Cudahy became president of Cudahy Packing (his father becoming chairman of the board) in January 1926. The company operated nine plants, had distribution facilities in nearly 100 cities, and owned a fleet of refrigerator and tank cars. It also manufactured Old Dutch Cleanser, soap, and cottonseed oil. Its sales in 1926 were $232 million, and its $4 million net profit was the highest in its history. It prided itself on its laboratories at each plant and boasted of its "conservative management" that insisted that meat packing was not dependent for success on general industrial activity.
Despite this claim the meatpacking industry was hurt by the Great Depression. In 1932 the company netted only $906,000 on sales of $133 million, though its 12,000 employees had taken two 10 percent wage cuts. Seeking unsuccessfully to modify the consent decree of 1920 that restricted meatpacking operations, Cudahy testified in November 1930 that collusion among meat packers to buy livestock or sell meat was both impractical and impossible. He stressed that in the late 1920's competition among the meat packers increased because pork exports to Europe had declined, chain stores (tending to purchase from smaller packers) had grown, and the highway system (enabling small packers to purchase livestock and sell meats over a wider area) had expanded.
At first Cudahy was pleased with President Franklin D. Roosevelt's New Deal. Its currency manipulation improved meat exports in 1933, and in 1934 National Recovery Administration regulations, while increasing operating costs, raised market prices; Cudahy's net profit rose to almost $2 million. Cudahy's enchantment with the New Deal evaporated in 1935 when a shortage of hogs led to declining meat prices. In 1936, after the Supreme Court declared the Agricultural Adjustment Administration unconstitutional, Cudahy Packing attempted unsuccessfully to recover the $11.9 million it had paid in processing taxes on slaughtered hogs. With the 1935 National Labor Relations Act, labor difficulties intensified. The Meat Cutters Union complained that Cudahy Packing had denied its newly guaranteed rights and by 1939 the National Labor Relations Board ordered Cudahy to disestablish its company union. Ominously, the Robert M. La Follette Civil Liberties Committee included Cudahy Packing among those companies with stores of munitions and tear gas, presumably for use against strikers. Cudahy Packing, which had failed to show a profit only once before, blamed a 25 percent rise on labor costs, a severe drought that cut corn and hog production, and the recession of 1937-1938, when it lost $1.8 million in 1937 and almost $3 million the next year. Contradicting his company's earlier testimony, Cudahy found that "factory payrolls bear a very close relationship to the price of meats and by-products."
Despite these losses, Cudahy was personally wealthy; his salary (almost $50,000 in 1941) did not indicate his worth. His father had distributed some of his wealth before he died in 1941. In 1937 the Joint Congressional Tax Evasion Committee used Cudahy to illustrate loopholes in the tax structure. His personal holding company, Lothair Development, held $5 million of his securities and from 1929 to 1935 they earned $3 million, which Cudahy neither touched nor paid taxes on.
Meat packing revived before World War II but so did federal antitrust activity. Along with other packers, Cudahy was indicted in 1941 for fixing hog prices in Iowa and Nebraska and Easter ham prices throughout the nation. Wartime demands and the need for cooperation led the government to ignore these indictments and to drop them in 1949. World War II brought prosperity to Cudahy Packing (in 1942 and 1943 its profits were $3.4 million), but during the war Cudahy's involvement in the daily operations of the company began to slacken. His wife died in 1942, a few months after they were divorced. Beginning in 1943 Cudahy wintered in Phoenix, Ariz. On Jan. 25, 1944, he married Eleanor Peabody Cochran, and later that year he gave up the presidency of Cudahy Packing to become its board chairman.
The postwar inflation increased Cudahy's net profits to a high of $7.1 million on sales of $573 million in 1947. These profits of one and a quarter cents on each sales dollar, or less than a quarter of a cent per pound of meat sold, were, as Cudahy argued, not exorbitant. Cudahy Packing, however, was inefficient. Its profits declined to $1 million in 1948 because of a disastrous, violent, two-month strike, and, while still fourth among packers, the company showed less growth in sales than did the next five largest packers. Rising operating costs lost Cudahy Packing $4.7 million in 1949, the same year many packers operated in the black.
During Cudahy's last years as board chairman, sales declined from $640 million in 1951 to $313 million in 1962. Occasional profitable years, like 1956 ($6 million), were overshadowed by losses ($7 million in 1954 and almost $1 million in 1962). Cudahy had fallen to seventh place in the packing industry. Struggling for efficiency, the company began in 1951 to close outmoded plants, unprofitable distributing branches, and egg and poultry plants. It also staved off deficits briefly by selling its profitable Old Dutch Cleanser and soap divisions. In the late 1950's, Cudahy began to modernize its facilities and in the early 1960's automated its Omaha plant. Anxious to improve its earnings through diversification, Cudahy Packing in 1956 again tried to obtain release from the restrictions of the 1920 consent decree, but in 1960 Judge Julius J. Hoffman rejected the petition.
After Cudahy, whose health was declining, resigned in 1962, analysts blamed his company's problems on its ingrown, narrow-minded, top-heavy management, which had preferred slaughterhouse to educational experience ("not a single graduate engineer in the company," as his son Edward put it). It had no personnel policy, no job descriptions, and much duplication of effort. Its obsolete marketing strategy snubbed chain supermarkets and relied on independent retailers, requiring an expensive distribution system. As president and then board chairman from 1926 to 1962, Cudahy failed to foster research, long-range planning, or diversification. By hanging Cudahy Packing's fortunes almost totally on the volatile livestock market, Cudahy presided over the disintegration of the company his uncle and father had created. He died in Phoenix, Ariz.
1885-1966
Birth: August 22, 1885 in Illinois, United States
Death: January 8, 1966
Occupation: Manufacturer (Specific) Meat Packing
Source: Dictionary of American Biography, Supplement 8: 1966-1970. American Council of Learned Societies, 1988.
BIOGRAPHICAL ESSAY
Cudahy, Edward Aloysius, Jr. (Aug. 22, 1885 - Jan. 8, 1966), meatpacker, was born in Chicago, Ill., the son of Edward Aloysius Cudahy, a meatpacking plant supervisor, and Elizabeth Murphy. In 1887 his father, his uncle Michael, and Philip D. Armour purchased from Sir Thomas J. Lipton a new, small packing plant (with a daily capacity of 1,000 hogs) in South Omaha, Nebr., which Cudahy's father then managed. In 1890 Michael bought out Armour and with Edward established the Cudahy Packing Company. Michael remained in Chicago as president while Edward stayed in Omaha as vice-president and general manager in charge of plant operations.
While Cudahy attended local schools, his uncle and father expanded Cudahy Packing so rapidly that by 1900 it was one of the four largest American meatpacking companies, along with Swift, Armour, and Morris. Edward Cudahy, Sr., reputedly became a millionaire. On Dec. 18, 1900, young Cudahy was kidnapped and held in chains for twenty-four hours by James Callahan and Pat Crowe, a garrulous swindler and train robber whom Cudahy's father had often aided financially. Threats to blind Cudahy with acid moved his distraught father to pay a $25,000 ransom in gold. After releasing Cudahy unharmed, Crowe escaped and spent the money, but Callahan was captured, tried for robbery (there was no law in Nebraska against kidnapping an adolescent), and acquitted. Apparently the $50,000 reward offered for a conviction undermined the credibility of prosecution witnesses, and the jury felt that Cudahy's father could well afford the ransom. Callahan was later tried and acquitted for perjury. After Crowe surrendered he was acquitted of felonious assault in 1905 and of robbery in 1906, went straight, lectured on the evils of lawbreaking while boasting he had kidnapped Cudahy, wrote an autobiography entitled Spreading Evil, and died destitute in New York City in 1938.
The episode seems to have caused Cudahy little harm. He attended Chicago Latin School and Creighton University, Omaha, from 1900 to 1904. In 1905 he entered the family's Omaha plant and learned the business from the ground up. He also became prominent in society. When Cudahy's uncle Michael died in 1910, Cudahy's father became president of Cudahy Packing and Cudahy moved to Chicago to join him at company headquarters. There he learned the business from the top down, becoming first vice-president in 1916. His tutelage was interrupted by service in the army during World War I as captain of a machine-gun company.
After the war Cudahy played a wider role in managing the company, gradually relieving his father of many duties. In 1919 the public accused meat packers of war profiteering, and the Federal Trade Commission charged them with price fixing and attempting to monopolize the food industry. Though the announcement of Cudahy's engagement in December 1919, followed by a congratulatory telegram from dead broke but irrepressible Pat Crowe, amused the nation, Cudahy aroused its ire a few days later when he blamed the high cost of meat not on price fixing but on the demand for expensive steaks and roasts and scolded people for not eating corned beef.
The big five meat packers (Wilson and Company was the addition) soon capitulated and consented to a federal court injunction issued in February 1920 restricting them to the wholesale meat business. On Dec. 27, 1920, Cudahy married Margaret Carry; they had two sons, who entered the family business, and a daughter, Sheila Cudahy Pellegrini, who became a publisher of books under imprints carrying both her maiden and married names.
Cudahy became president of Cudahy Packing (his father becoming chairman of the board) in January 1926. The company operated nine plants, had distribution facilities in nearly 100 cities, and owned a fleet of refrigerator and tank cars. It also manufactured Old Dutch Cleanser, soap, and cottonseed oil. Its sales in 1926 were $232 million, and its $4 million net profit was the highest in its history. It prided itself on its laboratories at each plant and boasted of its "conservative management" that insisted that meat packing was not dependent for success on general industrial activity.
Despite this claim the meatpacking industry was hurt by the Great Depression. In 1932 the company netted only $906,000 on sales of $133 million, though its 12,000 employees had taken two 10 percent wage cuts. Seeking unsuccessfully to modify the consent decree of 1920 that restricted meatpacking operations, Cudahy testified in November 1930 that collusion among meat packers to buy livestock or sell meat was both impractical and impossible. He stressed that in the late 1920's competition among the meat packers increased because pork exports to Europe had declined, chain stores (tending to purchase from smaller packers) had grown, and the highway system (enabling small packers to purchase livestock and sell meats over a wider area) had expanded.
At first Cudahy was pleased with President Franklin D. Roosevelt's New Deal. Its currency manipulation improved meat exports in 1933, and in 1934 National Recovery Administration regulations, while increasing operating costs, raised market prices; Cudahy's net profit rose to almost $2 million. Cudahy's enchantment with the New Deal evaporated in 1935 when a shortage of hogs led to declining meat prices. In 1936, after the Supreme Court declared the Agricultural Adjustment Administration unconstitutional, Cudahy Packing attempted unsuccessfully to recover the $11.9 million it had paid in processing taxes on slaughtered hogs. With the 1935 National Labor Relations Act, labor difficulties intensified. The Meat Cutters Union complained that Cudahy Packing had denied its newly guaranteed rights and by 1939 the National Labor Relations Board ordered Cudahy to disestablish its company union. Ominously, the Robert M. La Follette Civil Liberties Committee included Cudahy Packing among those companies with stores of munitions and tear gas, presumably for use against strikers. Cudahy Packing, which had failed to show a profit only once before, blamed a 25 percent rise on labor costs, a severe drought that cut corn and hog production, and the recession of 1937-1938, when it lost $1.8 million in 1937 and almost $3 million the next year. Contradicting his company's earlier testimony, Cudahy found that "factory payrolls bear a very close relationship to the price of meats and by-products."
Despite these losses, Cudahy was personally wealthy; his salary (almost $50,000 in 1941) did not indicate his worth. His father had distributed some of his wealth before he died in 1941. In 1937 the Joint Congressional Tax Evasion Committee used Cudahy to illustrate loopholes in the tax structure. His personal holding company, Lothair Development, held $5 million of his securities and from 1929 to 1935 they earned $3 million, which Cudahy neither touched nor paid taxes on.
Meat packing revived before World War II but so did federal antitrust activity. Along with other packers, Cudahy was indicted in 1941 for fixing hog prices in Iowa and Nebraska and Easter ham prices throughout the nation. Wartime demands and the need for cooperation led the government to ignore these indictments and to drop them in 1949. World War II brought prosperity to Cudahy Packing (in 1942 and 1943 its profits were $3.4 million), but during the war Cudahy's involvement in the daily operations of the company began to slacken. His wife died in 1942, a few months after they were divorced. Beginning in 1943 Cudahy wintered in Phoenix, Ariz. On Jan. 25, 1944, he married Eleanor Peabody Cochran, and later that year he gave up the presidency of Cudahy Packing to become its board chairman.
The postwar inflation increased Cudahy's net profits to a high of $7.1 million on sales of $573 million in 1947. These profits of one and a quarter cents on each sales dollar, or less than a quarter of a cent per pound of meat sold, were, as Cudahy argued, not exorbitant. Cudahy Packing, however, was inefficient. Its profits declined to $1 million in 1948 because of a disastrous, violent, two-month strike, and, while still fourth among packers, the company showed less growth in sales than did the next five largest packers. Rising operating costs lost Cudahy Packing $4.7 million in 1949, the same year many packers operated in the black.
During Cudahy's last years as board chairman, sales declined from $640 million in 1951 to $313 million in 1962. Occasional profitable years, like 1956 ($6 million), were overshadowed by losses ($7 million in 1954 and almost $1 million in 1962). Cudahy had fallen to seventh place in the packing industry. Struggling for efficiency, the company began in 1951 to close outmoded plants, unprofitable distributing branches, and egg and poultry plants. It also staved off deficits briefly by selling its profitable Old Dutch Cleanser and soap divisions. In the late 1950's, Cudahy began to modernize its facilities and in the early 1960's automated its Omaha plant. Anxious to improve its earnings through diversification, Cudahy Packing in 1956 again tried to obtain release from the restrictions of the 1920 consent decree, but in 1960 Judge Julius J. Hoffman rejected the petition.
After Cudahy, whose health was declining, resigned in 1962, analysts blamed his company's problems on its ingrown, narrow-minded, top-heavy management, which had preferred slaughterhouse to educational experience ("not a single graduate engineer in the company," as his son Edward put it). It had no personnel policy, no job descriptions, and much duplication of effort. Its obsolete marketing strategy snubbed chain supermarkets and relied on independent retailers, requiring an expensive distribution system. As president and then board chairman from 1926 to 1962, Cudahy failed to foster research, long-range planning, or diversification. By hanging Cudahy Packing's fortunes almost totally on the volatile livestock market, Cudahy presided over the disintegration of the company his uncle and father had created. He died in Phoenix, Ariz.
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