Burnt Grain

Directors of the Chicago Board of Trade last week forbade the Armour Grain Co. (corporation entirely separate from Armour & Co., meat packers) from further trading on their grain exchange. Thus the directors punished the company for the knavery of Armour Grain Co. employes--their thievery, their defrauding of the Farmers Cooperative Grain Marketing Corp. with burnt grain (TiME, Mar. 14), and their desecration of the Board's prestige.

The directors felt obliged to do this because their own conduct has been slovenly. Value of the Board of Trade depends upon public confidence in the honesty of its members, and all too often that honesty has been doubted. The Federal Government already pretends to supervise transactions on the Chicago Board of Trade, and the Illinois legislature last week sought laws to regulate the Board, similar to the laws by which New York legislators control the New York Stock Exchange. Board members hope that they can tighten up their own already existing rules and thus avoid the further fussings of lawmakers. The ejection of Armour Grain Co. aids their program.

For Armour Grain Co. the expulsion means dissolution. Without trading privileges on the Chicago Board of Trade it cannot conduct the cash business upon which its profits depend. Those profits have not been large in recent years. Sometimes they have been displaced by losses, which Jonathan Ogden Armour, present head of the Armour family, has paid from his own funds. This is so, although the company owns six great grain elevators, including the Northwestern in Chicago (largest in the world), and leases ten others. In these elevators it can store 28,800,000 bushels of grain. In effect it is to the U. S. what Joseph was to Egypt before the Israelite exodus.

Dissolution actually began last week by the sale of MaplFlakes Mills, Inc., important Armour Grain subsidiary at Chicago to Ralston-Purina Co. of St. Louis. Further liquidation will come, for the Armors are sick of grain.

Philip Danforth Armour I (1832-1901) established the business. His father was a farmer at Cazenovia, N. Y. His mother had been a schoolteacher. She taught him stern honesty; the father taught him industry. Shrewdness was inherent.

At 20, Philip D. Armour I learned that men were finding raw gold in California. He went there, walking a considerable part of the way, riding a mule the balance. Exertion did him no harm, for the Armours have always been brawny, after their first U. S, progenitor, James Armour, Scotch-Irishman. James Armour came to the American colonies in the 18th Century, used to boast: "I was born on a Sunday morning, and baptized before eight o'clock, and the devil a bit of any disease could ever light upon me." He had eight children; his son John, nine; John's son Danforth, six (including Philip D. I and Herman Ossian). Philip D. I's son was Jonathan Ogden, whose only child Lolita Ogden (Mrs. John J. Mitchell Jr.) was cured of a childhood hip deformity by famed Orthopedist Dr. Adolf Lorenz (TIME, March 22. 1926) ; and Philip D. II (died 1900), whose children are Philip D. Ill and Lester.

In California young Philip D. Armour I made money ditching water to placer mines. In a rough-&-tumble life, he was rougher than most and tumbled with the sturdiest. After four years he went home to Cazenovia, rich and restless; then to Milwaukee, where-- he went into pork packing with John Plankington, after whom the Plankington Hotel there was named, It's bartenders used to be adept at mixed drinks; its present chef prepares a capon just a little less appetizingly than does the chef of the Winthrop Hotel at Tacoma, Wash.

From Milwaukee this Armour went to Chicago where his younger brother, Herman Ossian, was in the grain commission business. Philip D. became head of Armour & Co., which they formed. (Both brothers died in 1901.)

Had these Armours lived three or four more years, President Roosevelt would have flayed them personally. As it was he pilloried their company as one of the vicious "trusts." It was that, for Philip D. Armour I, privately honest and eleemosynary, was in commerce ruthless. Like John D. Rockefeller Sr. in oil, he forced railroads to rebate him part of his payments for meat and grain transportation. Competitors suffered. Also like the elder Mr. Rockefeller, he made legitimate money by avoiding wastes and making savings in his business. Philip D. Armour I invented the scheme of utilizing every part of a slaughtered animal --flesh, hide, hair, horns, hoofs, bones, bristles, offal, everything "except the squeal." But more than this, he belonged to the band of giants of his time--Henry H. Rogers (Standard Oil); John W. Gates, speculator from California; August Belmont, Charles T. Yerkes and Thomas Fortune Ryan who managed street railways to their own profits. Those of these men who still live have become mel-lowed--by discretion and by the workings of old age and the Sherman Anti-Trust Law which Congress in fury at them passed in 1890.

Philip D. Armour I's wealth helped James G. Elaine lose the presidency to Grover Cleveland in 1884. With Jay Gould, Henry H. Rogers, Cyrus W. Field, Russell Sage and other men of "oppressive wealth" he gave a dinner to Mr. Elaine at Delmonico's in Manhattan, just before the 1884 elections.

His commercial methods he taught his sons Jonathan Ogden and Philip D. II, less by injunction than by example. Jonathan-- J. Ogden as he prefers to be called --left his studies at Sheffield Scientific School (part of Yale University) in 1883, to help his father run the family business. Next year he was partner; in 1901, at his father's and uncle's deaths, he became president. And when his orphaned nephews--Philip D. Ill and Lester--had gone as far at Yale as they pleased, he took them into business with him. Under him Armour & Co. segregated its grain and elevator business as the Armour Grain Co. (1890).

Under him, too, the family fortune has flooded away in three generations like the waters from his father's California flumes. With the late Edward Henry Harriman he organized a $67,000,000 company to build tunnels under Chicago to carry freight underground to the stores; they lost. He controlled the Kansas City Railway & Light Co.; it went bankrupt. In 1920 bankers saved Armour & Co. from bankruptcy by reorganizing it at J. Ogden Armour's chief cost. In 1923 he was the chief owner of Chicago bank stocks; he had to sell $5,000,000 in stocks to cover a $20,000,000 loan. The receivership of the Chicago, Milwaukee & St. Paul Railway has cost him a million. But his saddest loss was the forced sale in 1923 of his Melody Farm, $5,000,000 estate of forests, fountains, lakes, drives and gardens, near the Lake Michigan shore north of Chicago. Truculently honest, weary of commercial strife, he now spends most of his time rusticating in California. Last week however he was, like another Cincinnatus called from his farm, in Chicago alongside his nephews Philip D. Ill and Lester in their tribulations with Armour Grain Co.