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Full text of "Investigation of concentration of economic power; monograph no. 1[-43]"

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^^3d Sessfon^^} SENATE COMMITTEE PRINT 

INVESTIGATION OF CONCENTRATION 
OF ECONOMIC POWER 



TEMPOKARY NATIONAL ECONOMIC 
COMMITTEE 

A STUDY MADE UNDER THE AUSPICES OF THE FEDERAL 

TRADE COMMISSION FOR THE TEMPORARY NATIONAL 

ECONOMIC COMMITTEE, SEVENTY-SIXTH CONGRESS, 

THIRD SESSION, PURSUANT TO PUBLIC RESOLUTION 

NO. 113 (SEVENTY-FIFTH CONGRESS), AUTHORIZING 

AND DIRECTING A SELECT COMMITTEE TO MAKE A 

FULL AND COMPLETE STUDY AND INVESTIGATION 

WITH RESPECT TO THE CONCENTRATION OF ECONOMIC 

POWER IN, AND FINANCIAL CONTROL OVER, 

PRODUCTION AND DISTRIBUTION 

OF GOODS AND. SERVICES 



MONOGRAPH No. 13 

RELATIVE EFFICIENCY OF LARGE, MEDIUM 

SIZED, AND SMALL BUSINESS 



Printed for the use of the 
Temporary National Economic Committee 




UNITED STATES 

GOVERNMENT PRINTING OFFICE 

WASHINGTON : 1941 



TEMPORARY NATIONAL ECONOMIC COMMITTEE 

(Created pursuant to Public Res. 113, 75th Cong.) 

JOSEPH C. O'MAHONEY, Senator from Wyoming, Chairman 
HATTON W. SUMNERS, Representative from Texas, Vice Chairman 
WILLIAM H. KINO, Senator from Utah 
WALLACE H. WHITE, Jr., Senator from Maine 
CLYDE WILLIAMS, Representative from Missouri 
B. CARROLL REE CE, Representative from Tennessee 
THURMAN W. ARNOLD, Assistant Attorney General 
•WENDELL BERGE. Special Assistant to the Attorney General 
Representing the Department of Justice 

JEROME N. FRANK, Chairman 
•SUMNER T. PIKE, Commissioner 
Representing the Securities and Exchange Commission 
GARLAND S. FERGUSON, Commisfsioner 
•EWIN L. DAVIS, Chairman 
' Representing the Federal Trade Commission 
I8AD0R LUBIN, Commissioner of Labor Statistics 
•A. FORD HINRICHS, Chief Economist, Bureau of Labor Statistics 
Representing the Department of Labor 
JOSEPH J. O'CONNELL, Je. Special Assistant to the General Counsel 
•CHARLES L. KADES, Special Assistant to the General Counsel' 
Representing the Department of the Treasury 



Representing the Department of Commerce 

LEON HENDERSON, Economic Coordinator 

DEWEY ANDERSON, Executive Secretary 

THEODORE KREPS, Economic Adviser 

•Alternates. 



Monograph No. 13 

RELATIVE EFFICIENCY OF LARGE, MEDIUM-SIZED, AND SMALL 

• BUSINESS 

FEDERAL TRADE COMMISSION 



ACKNOWLEDGMENT 

The Temporary National Economic Committee is greatly indebted 
to the Federal Trade Commission for this contribution to the literatm-e 
of the subject under review. 

The status of the materials in this volume is precisely the same as that of 
other carefully prepared testimony when given by individual witnesses; it is 
information submitted for Com.mittee deliberation. No matter what the 
official capacity of the witness or author may be, the publication of his 
testimony, report, or monograph by the Committee in no way signifies nor 
implies assent to, or approval of, any of the facts, opinions or recommenda- 
tions, nor acceptance thereof in tvhole or in, part by the members of ,the 
Temporary National Economic Committee, individually or collectively. 
Sole and undivided responsibility for every statement in such testimony,, 
reports, or rnonographs rest3 entirely upon the respective authors 

(Signed) Joseph C. O'Mahoney, 
Chairman, Temporary National Economic Committee. 

Ill 



TABLE OF CONTENTS 



Page 

Letter of transmittal __. xv 

Method of inquiry , .. 1 

Results of the tests 12 

Individual company cost tests 12 

Tests for groups of companies 12 

Individual plant cost tests 12 

Tests for groups of plants 12 

Tests based on table of rates of return on invested capital earned by 

individual companies »^-_ IS 

Tests based on tables of rates of return earned^on invested capital by 

groups of companies 13 

Summary . , ^ 14 

Introductory statement to tables • ; 15 

Cement cost tables 21 

Iron and steel cost tables 26 

Farm machinery cost tables ^ '. - 30 

Petroleum cost tables _• 38 

Beet and cane sugar cost tables 44 

Milk and milk-products cost tables 55 

Wheat flour and bread cost tables. ; 60 

Tables containing returns on invested capital and related data 72 

High degrees of integration versus a less degree of integration 93 

Fundamental disabilfties in size from the standpoint of efficiency ■_ 95 

Testimony of Dr. Myron W. Watkins, professor of economics, New York 

University 98 

Case studies of three mergers ^ 101 

The merger creating the l9.i^est wholesale baking corporation in the 

United States---- . 101 

An import§,nt cement merger i 103 

An important steel merger : 106 

Testimony of Dr. Frank A. Fetter on efficiency in mass production 107 

Horizontal combination is not mass productioh . 108 

Critics of the first merger movement iti American business 111 

Size in American business today 116 

Growth in the size of business units within a single industry 116 

Conglomerates ' 117 

Example 1 117 

Example 2 119 

Multiple directorships .- 120* 

Where does responsibility for efficiency begin in giant corporations? 125. 

Directors who do not direct finance. _, 126'. 

Mariagerial responsibility in governments ,' 127 

Critics of the second merger movement in American business 128 

The problem of size in American business ." . 132 

APPENDIX A , 

Statement prepared by Myron W. Watkins 133; 

V 



VI Table of contents 

APPJJNDIX B 

Page 
Study of Pennsylvania-Dixie Cement Corporation and predecessor com- 
panies — the merger and its effect on operations 140 

Introduction ^ 140 

Sources of data for report 140 

History of predecessor companies 142 

The consolidation of predecessor companies to form Pennsylvania- 
Dixie Cement Corporation " 157 

Intangibles , 160 

Rates of return on investment ._ 162 

Income and expenses '. 171 

Unit costs 179 

Capacity and production of predecessor companies and of Pennsyl- 
vania-Dixie Cement Corporations 187 

Capital expenditures 188 

Ratio of net sales to invested capital for Pennsylvania-Dixie Cement 

Corporation and predecessor companies 189 

Reasons for the consolidation ■ 191 

APPENDIX c 

Historical development and merger motives of Bethlehem Steel Corpo- 
ration . 214 

Concentration in the steel industry •._ 214 

Mergers in the steel industry, 1922-23 _..'.. 217 

Proportions of Bethlehem Steel Corporation then and now 219 

Bethlehem versus Lackawanna 223 

Structural shapes 225 

Bethlehem versus Midvale-Cambria 227 

Structural shapes : 228 

Lackawanna versus Midvale-Cambria. 229 

Steel, bars 229 

Structural shapes 230 

•Steel plates 230 

Merger motives 232 

"Bad conditions" in the steel industry 233 

General conditions in 1919, 1920, 1921 , 235 

Price reductions by United States Steel Corporation effective April 13. • 238 

The steel prices become identical 239 

Territory west of Pittsburgh 24 1 

Territory east of Pittsburgh 242 

In defense . 248 

Steel mergers and the law 1 250 

APPENDIX D 

The fundamental principle of efficiency in mass productidn, by Dr. Frank 

Fetter 398 

Ambiguity of economic terms 398 

Ambiguity of the term "effieiency" ^ 398 

The varying content of the word "business" — single units 399 

Plural unit businesses --- 399 

Combination as process and as State 400 

Relative degrees of combination: Defined by ownership 400 

Various modes of attaining ownership combination 401 

Ownership combination versus production unification 402 

Horizontal combinations 402 

Vertical combination in ownership or in operation 403 

Size: Physical and financial growth 403 

Mass production . 404 

Technical advantages of large production in a single plant 404 

Economic limitations of mass production 405 

Horizontal combination is not mass production ^ 406 

Ex-President Taft's confusion of combination size with plant size 406 

Private advantages as motives for combinations 407 



TABLE OF CONTENTS VII 

The fundamental principle of eflScrency in mass production, by Dr. Frank 

Fetter — Continued; ' Page 

Geographical margin of monopoly power and competition 408 

The Bethlehem merger.. * 408 

Unequal application of the Sherman Actj stimulating the combination 

movement , 409 

Assumed economy of integrated ownership ^ 410 

Competition between integrated and unintegrated business 410 

Decisive effect of integration in the steel decision . ^ _,_ ' 411 

Integration in the technical sense — the Court's view-l^^^j^ « 412 

Shift to integration in the sense of mass production -_.,!_ _l : 413 

Some general conclusions -__i; 414 

APPENDIX B-_ - ■ .___i__..._- 416 

APPENDIX F _. , 423 

APPENDIX O 427 

APPENDIX H __ , •_., .. 431 



SCHEDULE OF TABLES, CHARTS 



Page 

1. Costs per barrel of 102 cement plants in 1929, arranged in order of 

ascending costs . 22 

2. Co^ts per barrel of 45 cement companies in 1929, arranged in order of 

ascending costs. 23 

3. Costs of cement plants in Lehigh Valley in 1929, arranged in order of 

ascending cost per barrel 24 

4. Costs of cement plants in the Lake States in 1929, arranged in order of 

ascending cost per barrel . ^__ 25 

5. Costs of cement plants in the southeastern section in 1929, arranged 

" in order of ascending cost per barrel ____• 25 

6. Book furnace costs of basic pig iron (northern furnaces) in 1910 for 

different sizes of plants of the United States Steel Corporation, 
arranged in order of ascending costs ^ s 26 

7. Book furnace costs of Bessemer pig iron in 1910 for different sizes of 

plants of the United States Steel Corporation, arranged in order of 
ascending costs . 27 

8. Book works costs of basic open-hearth -ingots (northern works) for 

each of the works of the United State's Steel Corporation in 1910, 

arranged in order of ascending costs L. __ 27 

Q Book work costs per gross ton of Bessemer billet ingots for different 
sizes of plants of the United States St^el Corporation in 1910, 
arranged in order of ascending costs : 28 

10. Cdsts of producing a ton of pig iron by merchant companies of different 

size in 1916, arranged in order of ascending costs '_ — 28 

11. Costs of producing, a ton of basic pig iron by integrated steel pro- 

ducers of different size, February through December 1918, arranged 

in order of ascending costs 29 

12. Costs of producing a ton of Bessemer pig iron by integrated steel pro- 

ducers of different size, February through December 1918, arranged 

in order of ascending costs. _i 29 

13. Costs of sfceel-wheel tractors for different companies in 1935 and 1936, 

arranged in order of ascending costs - 31 

14. Profits, costs, and price realizations on steel-wheel tractors for manu- 

facturers of different size in 1935 and 1936, arranged in order of 
decreasing profits ^ 31 

15. Costs per pound of combines as shown for different companies in 1935 

~ and 1936, arranged in order of ascending costs 32 

16. Profits, costs, and price realizations on combines for manufacturers of 

different size in 1935 and 1936, arranged in order of decreasing 
profits ^ 33 

17. Costs per pound of grain binders for different companies in 1935 and 

1 936, arranged in order of ascending costs 33 

18. Profits, co^ts, and price realizations on grain binders for manufacturers 

of different size in 1935 and 1936, arranged in order of decreasing 
profits - 34 

19. Costs per pound of 14-ihch, 2 base tractor-gang plows for different 

companies in 1935 and 1936, arranged in order of ascending costs. . 34 

20. Profits and price realizations on 14-inch, 2-base tractor-gang plows for 

manufacturers of different size in 1935 and 1936, arranged in order of 
decreasing profits 35 

21. Costs per pound of tractor-mounted two-row cultivators for different 

companies in 1935 and 1936, arranged in order of ascending costs.. 35 

22. Profits, costs, and price realizations on tractor-mounted two-row 

cultivators for manufacturers of diffei'ent size in 1935 and 1936, 
arranged in order of decreasing profits. 36 

vm 



SCHEDULE OF TABLES, CHARTS IX 

Page 

23. Costs per pound- of riding cultivators as shown for different companies 

in 1935 and 1936, arranged in order of ascending costs 36 

24. Profits, costs, and price realizations on riding cultivators for manu- 

facturers of different size in 1935 and 1936, arranged in order of 
decreasing profits . 37 

25. Average costs of producing a barrel of crude petroleum for groiips of 

■ companies in 1927 ^_ 38 

26. Average costs of producing a barrel of crude petroleum for groups of 

companies in 1928 ^ . 39 

27. Average costs of producing a barrel of crude petroleum for groups of 

companies in 1929 39 

28. Average costs of producing a barrel of crude petroleum for groups of 

companies in 1930 I 40 

29. Cost ranks and sizes of the five largest and three lowest-cost crude-oil 

producing companies in 1927, 1928, 1929, and 1930 40 

30. Cost ranks and sizes of three largest and two lowest-cost producers of 

crude petroleum in Long Beach, Seal Beach, and Signal Hill 
(Calif.) in 1927, 1928, 1929, and 1930 41 

31. Cost ranks and sizes of two largest producers and the lowest-cost 

producer "of crude petroleum in Santa Fe Springs (Calif.) in 1927, 
1928, 1929, and 1930 41 

32. Cost ranks and sizes of two largest producers and the lowest-cost 

producer of crude petroleum in Seminole field (Oklahoma) in 1927, 
1928, 1929, and 1930..--- ^ 41 

33. Cost ranks and sizes of three largest and two lowest-cost producers of 

crude petroleum in West Texas in 1927, 1928, 1929, and 1930 42 

34. Costs of producing beet sugar by plants averaged for the five crop 

years ending in 1913-14, arranged in order of ascending costs 45 

35. Costs of producing beet sugar by large, medium-sized, and small 

companies, averaged for the five crop years ending in 1913-14, 
arranged in order of ascending costs 46 

36. Costs of producing beet sugar per pound by plants of different size 

during the crop year 1929-30, arranged in order of ascending costs. 48 

37. Costs of producing beet sugar per pound by plants of different size 

during the crop year 193()-31, arranged in order of ascending costs. 47 

38. Costs of producing beet sugar per pound by plants of different size 

during the crop year 1931-32, arranged in order of ascending costs. 48 

39. Costs of producing beet sugar per pound by companies of different 

size during the crop year 1929-30, arranged in order of ascending 

costs 48 

40. Costs of producing beet sugar per pound by companies of different 

size during the crop year 1930-31, arranged in order' of ascending 

costs 49 

11. Costs of producing beet sugar per pound- by companies of different 
size during the crop, year 1931-32, arranged in Order of ascending 
costs . .- 49 

42. Cost ranks and size of four largest centrals and four lowest-cost 

centrals in Cuba over a 3-year period ^_.-..-. 49 

43. Cost ranks and size of two largest mills and four low.est-cost mills in 

Hawaii over a 3-year period 50 

44. Cost ranks and size of two largest raw sugar companies and three 

lowest-cost raw sugar companies in Louisiana 50 

45. Costs of refined cane sugar by refineries for the year 1929, arranged 

in order of ascending costs 51 

46. Costs of refined cane sugar by refineries for the year 1930, arranged in 

order of ascending costs ^-- 51 

47. Costs of refined cane sugar by refineries for the year 1931, arranged in 

order to ascending costs 51 

48. Costs of refined cane sugar by large, medium-sized, and small com- 

panies for the year 1929, arranged in order of ascending costs 52 

49. Costs of refined cane sugar by large, medium-sized, and small com- 

panies for the year 1930, arranged in order of ascending costs 52 

50. Costs of refined cane sugar by large, medium-sized, and small com- 

panies for the year 1931, arranged in order of ascending costs 53 

51. Costs of refining cane sugar (cost of raw sugar excluded) by large, 

medium-sized, and small companies for the year 1929, arranged in 
order of ascending costs 53 



SCHEDULiE OF TABLES, CHARTS 



Page 



62. Costs of refining cane sugar (cost of raw sugar excluded) by large, 
medium-sized, and small companies for the year 1930, arranged in 
order of ascending costs 54 

53. Costs of refining cane sugar (cost of raw sugar excluded) by large, 

medium-sized, and small companies for the year 1931, arranged in 
order of ascending costs 54 

54. Comparison of average costs of delivering a quart of milk at retail and 

wholesale for certain large dealers with the average costs of all 
dealers covered by the Boston report for the 12 months ending 
September 30, 1935 5 

55. Estimated costs per quart of fluid milk sold for two large, two medium- 

sized, and two small distributors in Milwaukee, 1933 56 

56. Costs of distributing 100 pounds of milk by 22 dealers in West Virginia 

for the year 1933, arranged in order of ascending costs ■ 56 

57. Cost' of distributing 100 poulids Of milk by nine retail dealers in West 

Virginia for the year 1933, arrayed in order of ascending costs 57 

58. Costs of retail and wholesale delivery per quart of fluid milk (grade B) 

for five Connecticut distributors during June, 1934 57 

59. Costs per pound of butter for centralizers of different size in 1918 58 

60. Ranks of six largest and three lowest-cost butter producers for 5 

years, 1914-18_--. 59 

61. Costs of evaporated milk per case in 1918 of large, medium-sized, and 

small companies , 59 

62. Costs per barrel of wheat flour ^exclusive of wheat costs) for flour mills 

of different capacities for the three 6-month periods ending June 

30, 1926, June 30, 1927, and June 30, 1928. '. 60 

63. Costs per barrel of wheat flour (exclusive of wheat costs) for flour 

mills of different size for the 3 crop years 1935-36, 1936-37, ^.nd 
1937-38 . 1 -.-- 61 

64. Selling, advertising, and miscellaneous expenses per barrel of flour for 

groups of flour mills of different size; 1935-36, 1936-37, and 1937-38 
averaged ^ '_. 61 

65. Costs, prices, and profits of 38 flour milling companies of different 

size for the 5-year period, 1913-14 to 1917-18 . 62 

66. TiJtal costs of producing a barrel of wheat flour (including cost of 

wheat and packages) in 1913 by companies of different size, arranged 

in order of ascending costs 62 

67. Costs of producing a barrel of w^heat- flour (including cost of wheat 

but excluding costs of packages) in 1913 by companies of different 

size arranged in order of ascending costs _-. 63 

68. Cost of producing a barrel of wheat flour (excluding cost of wheat 

but including costs of packages) in 1913 by companies of different 

size, arranged in order of ascending costs 63 

69 Costs of producing a barrel of wheat flour (excluding cost of wheat and 
packages) in 1913 by companies of different size, arranged in order 
of ascendipg costs 64 

70. Costs of a barrel of wheat flour (including cost of wheat and packages) 

in 1922 by companies of different size, arranged in order of ascend- 
ing costs 65 

71. Costs of producing a barrel of wheat flour (including cost of wheat but 

excluding costs of packages) in 1922 b}' companies of different size, 
arranged in order of ascending costs 66 

72. Costs of producing a barrel of wheat flour (excluding cost of wheat) in 

1922 by companies of different size, arranged in order of ascending 

cost^ 67 

73. Costs of producing a barrel of wheat flour (excluding cost of wheat 

and packages) in 1922 by companies of different size, arranged in 
order of ascending costs 68 

74. Total unit costs, unit costs exclusive of ingredients, and profit per 

pound for bread made in exclusively wholesale baking plants of 
different size, years 1922-25 combined 69 

75. Ranks of General Baking Corporation, United Bakeries Corporation, 

and Ward Baking Corporation according to three criteria: Total 
costs per pound, costs excluding ingredients per pound, and profit 
per pound, 1920, 1921, 1922, 1923, 1924 69 



SCHEDULE OF TABLES, CHARTS SJ 

Face 

76. Rank according to total cost per pound of bread, cost minus ingredi- 

ents, and profit per pound of four largest companies in an array of 

51 companies in 1925 70 

77. Ranks of 15 companies absorbed by Continental Baking Corporation — 

according to various criteria 71 

78. Rates of return on invested capital of 7 automobile companies for their 

motor-vehicle business, 1927-37 73 

79. Average price realizations and average costs for Chevrolet and Ply- 

mouth passenger cars, together with re .tions between these prices 
and costs, expressed as percentages: 1 29, 1932, 1934, 1935, 1936, 
and 1937 74 

80. Average price realizations and average costs for Chevrolet and Ford 

passenger and commercial vehicles, together with relations between 
these prices and costs, expressed as percentages: 1929, 1932, 1934, 
1935, 1936, and 1937 .-' 75 

81. Average price realizations and average costs for Studebaker passenger 

and commercial vehicles and for Oldsmobile passenger cars, to- 
gether with relations between these prices and costs, expressed as \ 
percentages: 1932, 1934, 1935, 1936, and 1937 75 

82. Average rates of return on stockholders' invested capital of 17 cement 

companies for the years 1917-36, arranged in order of descending 

rates of return 76 

83. Average rates of return on stockholders' invested capital of 16 cement 

companies for the year 1935, arranged in order of descending rates 

of return 77 

84. Average rates of return on stockholders' invested capital of 16 cement 

companies for the year 1936, arranged in order of descending rates 

of return : 77 

85. Average annual total invested capitals and returns thereon for 11 

steel companies 1917-38 78 

86. Rates of return on total invested capital of 1 1 steel companies 1930-38- 78 

87. Rates of return on invested capital of long-line farm-machinery manu- 

facturers 1913-37 79 

88. Eastern petroleum refiners, ranked according to simple average of 

rates of return on capital invested in petroleum business for years 
1922, 1923, 1924, and 1925 80 

89. California petroleum refiners, ranked according to simple average of 

rates of return on capital invested in petroleum business for years 
1922, 1923, 1924. and 1925 . 80 

90. Mid-continent petroleum refiners, ranked according to simple average 

of rates of return on capital invested in petroleum business for years 
1922, 1923, 1924, and' 1925 81 

91. Rates of return on total invested capital shown by all refiners with 

producing facilities, 1934-37 . ' 82 

92. Returns on invested capital of beet sugar companies of diiferent size, 

as shown by their assets, 1934-37 I 82 

93. Returns on invested capital of cane sugar refiners of different size, as 

shown by their assets, 1934-37... _■.. 83 

94. Rates of return earned on gross investment for the different sized 

canned-niilk companies, 1914-18 83 

95. Rates of return on invested capital in dairy business and butter pro- 

duction of four Ijutter centralizers, 1929-35 84 

96 Milling fnvostTncnt, m;t income, and rate of return by investment 

groups, 1019 22 84 

97. Production, jnilling investment, earnings, and rate of return by pro- 

duction group, 1919-22 85 

98. Return on milling investment and rank according to rates of return 

of 11 floiir-milling comianies in 1922 85 

99. Aver.ige rate of retnr;i on milling iuvestMi 3nt for 47 companies, grouped 

by qiiantitv- of fliuir prodiicti(jn, 1919 24 . '.- 86 

100. Average rate of return on milling ii vestment for 47 companies, 

grouped by size of investment, 19.9-24 (crop and calendar years 
combined) ,, , 86 

101. Rate of return on milling \n\c lmei t .'or 47 companies, grouped by 

size of investment, by years, 19 9 -24 (crop and calendar years 
combined) ,.... "... 87 



XII SCHEDULE OF TABLES, CHARTS 



Page 



102. Rate of return on milling investment for 47 companies grouped by 

quantity of production, by years, 1919-24 (crop and calendar 
years combined) : 87 

103. Returns on invested capital in 1924 of 70 wholesale baking companies 

as compared with returns of the 3 largest companies and those of 
certain smaller companies absorbed by Continental Baking Cor- 
poration at the end of the year 88 

104._ Rank according to return on baking investment of 51 baking com- 
panies in 1925 88 

105. Rates of return on business investment of four largest baking com- 

panies, 1927-37 - 90 

106. Returns on invested cap'tai tor the period from 1934 through 1937 

for nine general chemi(.xl >mpanies_. 90 

107. Returns on invested capital for the period from 1934 through 1937 

for five fertilizer companies 91 

108. Annual rate of return on total investment for principal ravon com- 

panies, 1 91 5-38 " 92 

APPENDIX B 

TABLES 

1. Summary of income and expenses of predecessor companies of 

Pennsylvania-Dixie Cement Corporation, 1921-July 31, 1926 -. 146 

2. Comparative balance sheets of predecessor companies of Pennsyl- 

vania-Dixie Cement Corporation, 1921-July 31, 1926-.^ 151 

3. Receipts, costs, and gross profit to the syndicate in the acquisition 

and dilstribution of securities of the Pennsylvania-Dixie Cement 
Corporation 160 

4. Intangible value included in the accounts of the Pennsylvania-Dixie 

Cement Corporation and the manner in which such value was 
written off _- 161 

5. Rates of return on investment for Pennsylvania-Dixie Cement Cor- 

poration, 1927-38, and for predecessor companies as a group, 
1921-July 31, 1926 163 

6. Comparative balance sheets of Penns3'lvania-Dixie Cement Corpora- 

tion, 1926-38, and of predecessor companies as a group, 1921-July 

31, 1926 167 

7. Investments, profits, and rates of return for predecessor companies 

of Pennsylvania-Dixie Cement Corporation, 1921-25 170 

8. Summary of income, expense's, and surplus of Pennsylvania-Dixie 

Cement Corporation, 1927-38 and of predecessor companies, 1921- 
July 31, 1926, inclusive 1 ■ 172 

9. Percent of costs, expenses, and income to net sales of Pennsylvania- 

Dixie Cement Corporation, 1927-38, and of predecessor companies, 
1921-25 178 

10. Per barrel costs, expenses, and income of Pennsylvania-Dixie Cement 
Corporation, 1927-38, and of predecessor companies, 1921-July, 
1926 , -. 18C 

1 1. Per barrel costs, expenses, and income of predecessor companies of 

Pennsylvania-Dixie Cement Corporation 1921-July 31, 1926-- 182 

12. Total annual cement production of the United States and production 
of the predecessor companies, 1921-25, and of the Pennsylvania- 
Dixie Cement Corporation, 1926-37, as related to capacities of 
each for the-period 1921-37 188 

13. Capital expenditures, and depreciatiop and depletion, including and 

excluding in tangibles, during the period 1927-38, inclusive, for the 
Pennsylvania-Dixie Cement Corporation 189 

14. Capital turn-over in terms of sales for the Pennsylvania-Dixie 

Cement Corporation, 1927-38, and for the predecessor companies 

for the period 1921-25, inclusive • ' 190 

15. Annual production of cement for the predecessor companies of 

Pennsylvania-Dixie Cement Corporation, 1921-25 191 



SCHEDULE OF TABLES, CHARTS Xlll 

APPENDIX C 

CHARTS 

Page- 
I. Historical development of steel ingot capacity of Bethlehem Steel Cor- 
poration 1916-32 (gross tons) Face p. 220 

II. Historical development of Bethlehem Steel Corporation in gross tons of 

ingot capacity, 1916-38---:.-- 287 

APPENDIX E 

TABLES 

1. ^ '.. 416 

2. --- 42Q 

APPENDIX F 

TABLES 

1. 423 

2. - 426 

APPENDIX G 

TABLES 

1 427 

2. .- -.--_-- > - --. 43Q 



LETTER OF TRANSMITTAL 

Federal Trade Commission, 

Washington, August 14, 1940. 
Dr. H. Dewey Anderson, 

Executive Secretary to the . 

Temporary National Economic Committee, 
' Federal Trade Commission Building, Washington, D. 6. 
Dear Dr. Anderson: The Commission has considered and ap- 
proved a report on the relative efficiency (of large, medium-sized, 
and small business in the United States. This subject was assigned 
by the Temporary National Economic Committee to the i^ederal 
Trade Commission for investigation. The instructions of the Com- 
mission are that the report be transmitted to you for consideration 
by the committee. 

Sincerely yours, 

. Willis J. Ballinger, 

Economic Admser to the Commission. 



. \ 



METHOD OF INQUIRY 

The Temporary National Economic Committee requested the Fed- 
eral Trade Commission to inquire into the relative efficiency of large, 
medium-sized, and small business in the United States. After a pre- 
liminary examination of the subject under discussion, it appeared that 
there were three possible methods of inquiry. The first problem of 
the Commission was to determine which of these three methods it 
would select. 

I. Should the Commission collect and appraise the opinions of 
responsible businessmen with respect to the relative efficiency of large, 
medium-sized, and small business in the United States? .Many state- 
ments, some supported and some unsupported by statistical data, 
concerning the relative advantages of different-sized business units, 
can be found in testimony before governmental bodies and in publica- 
tions of private agencies. The Commission, moreover, might have 
supplemented such published statements with fresh testimony from 
responsible heads of business units of different size. 

II. Should the Commission collect and appraise the opinions of 
economic theorists with respect to the relative efficiency of large^ 
medium-sized, and small business in the United States? The Com- 
mission found in existence an extensive literature dealing with the 
subject from the standpoint of economic theory. This literature was 
made up of economic textbooks, articles in scientific journals, and 
economic treatises. 

III. Is there any way that business efficiency can be statistically 
measured? If so, could the Commission obtain enough reliable data 
from a variety of industries with which to test business efficiency on 
a sufficiently comprehensive scale to avoid criticism that the tests, 
made were too limited in their scope to warrant any conclusions about 
industry in general? 

After considerable discussion of the advantage? and disadvantages 
of consulting with leaders in business for their viewpoints and opin- 
ions on^the problem of the relative efficiency of large, mediiim-sized^ 
and small business, the Commission rejected this method of inquiry 
for two principal reasons: (1) The testimony of business leaders 
would, it was agreed,, generally have to be confined to their own 
particular corporations in a field of industry. The subject under 
inquiry called for a study of "relative efficiency." Businessmen testi- 
fying about relative efficiency in particular industries might be ex- 
pected to favor the size business which they represented. This kind 
of testimony would, it was believed, consist largely of assertions and 
counter-assertions, which would generally not be capable of convinc- 
ing proof or disproof. (2) If business efficiency could be tested objec- 
tively and concretely, this method, the Commission felt, would be 
more satisfactory. 

An extensive exploration of the theoretical economic literature 
bearing upon the subject under investigation revealed a definite con- 
flict of two fundamental viewpoints. On one hand there were 

264005 — 11— No. 13 2 . 1 



2 CONCENTRATION OF ECONOMIC POWER 

specified certain economies which, it was claimed could only be 
■-achieved by business of large size. Thus it was frequently pointed 
out that large corporations could purchase their materials and sup- 
plies at lower prices than corporations of smaller size; that such cor- 
porations could get better terms from jobbers in the distribution of 
their products; that they could deal more effectively with labor; that 
they could get capital at lower rates of interest; that they could get 
more advantageous treatment from railroads in the shipment of their 
products; that they could secure continuous operaticr of their plants; 
that they could achieve a more advantageous specialization of plants 
and. machinery and a more advantageous specialization of managerial 
ability ; that they could employ in each plant the best devices, includ- 
ing those patented; that they could utilize byproducts more effectively; 
that they could secure savings in fire insurance because of wide dis- 
tribution of plants; that they could achieve smaller fixed charges per 
unit of product ; that they could achieve economies in advertising and 
on traveling salesmen; that they could avoid cross-freights, economize 
on bad debts and achieve a better quality of goods. 

On the other hand, that pnrt of the theoretical economic literature 
which criticized large size in business either denied that certain 
economies claimed for large size actually existed or argued that where 
they did exist they were obtained at the expense of free and fair 
compet'tion. Thus it was contended that the ability of large cor- 
porations to purchase their materials and supplies at lower prices 
represented in many cases not efficiency but the financial and eco- 
nomic power of such large corporations to extort from weaker and 
unorganized sellers; that it was one of the purposes of the Robinson- 
Patman Act to prevent this very kind of abuse of economic poweir. 

Similarly other critics contended that though large corporations 
were able to encroach upon their jobbers' margins, this kind of sav- 
ings merely reflected the financial and economic power of such large 
corporations to exploit their distributors; that large corporations had 
frequently sweated labor; that many large corporations had not 
been able to secure their capital more cheaply than smaller-sized 
business because such corporations had often been the victims of 
financial usury, represented by exorbitant underwriting commissions, 
when they raised their Jiioney ; that many large corporations had . 
secured discriminatory treatment from railroads in shipping their 
produces; that many large corporations had not achieved continuous 
operations of their plants ^ ; that the alleged specialization of plant 
machinery and ability in large corporations with numerous plants 
was not as effective a specialization as could be secured if corporate 
management concentrated its energies on one or a few plants of 
reasond,ble size; that large corporations had frequently suppressed the 
best devices, including patents; that byproducts could often be 
utilized more effectively by well-managed medium-sized or small cor- 
porations; that economies in insurance could not be significant so far 
as affecting the price of a product; that overhead charges which re- 
sulted from extravagant and even corrupt promotional activity would 
not give as low a cost per unit of product as overhead charges in 
smaller corporations which were more soundly financed; that over- 
head in large corporations which had overexpanded and which had 

• Data showine that all during the twenties many of our very large corporations had much Idle plant 
capaeiiy were referred to. 



CONCEdSITRATION OF ECONOMIC POWEH 3 

idle plant capacity would not result in as low a cost per unit of product 
as overhead charges in smaller corporations more prudently expanded 
where plant capacity was more fully utilized; that a lower cost of 
advertising in the case of certain larger corporations reflected only 
the ability of such corporations to control competition ; that in certain 
industries consolidations or mergers could not have produced any 
economies in advertising; that in others the cost of advertising went 
up rather than down with the creation of large corporations; that 
large corporations, because of their wider areas of distribution, may 
not be in such close contact with their customers nor so fully aware of 
their credit risks as smaller corporations with more localized fields of 
distribution; that quality of product requires close supervision of 
management and the receptivity of such management to new ideas; 
and that management in smaller corporations can, in the case of 
many products, better effect these ends than management in large 
corporations which has to rely upon methods of remote control and 
is handicapped by the red tape of such large organizations. 

This kind of theoretical economic material presented many funda- 
mental difficulties. An approach to the problem of relative* efficiency 
of large, medium-sized, and small business from the standpoint of 
assaying the relative merits of such opposing contentions was not 
adopted by the Commission for the following reasons : 

(1) The expense would be prohibitive for the Commission to deter- 
mine first, whether large-sized business in the United States obtained 
certain economies which smaller-sized business could not achieve; 
secondly, whether the economies achieved by large-sized business were 
or were not achieved at the sacrifice of a free and fair competitive 
system. This kind of inquiry would have taken the Commission into 
many complex and diverse fields of inquiry such as labor, capital, 
markets, purchasing policies of corporations, patents and inventions, 
and many others. Aside from the expense entailed, this kind of in- 
quiry would have consumed too much time. 

(2) If the- Commission had utilized this method of approach to the 
problem under inquiry and had found that large-sized business did 
achieve certain economies which were not justified from the stand- 
point of free and fair competition, the question would still remain 
whether large-sized business without these economies was less or more 
efiicient than medium-sized or small business. On the other hand, if 
the Commission had found that certain economies were achieved by 
large-sized business which were justifiable from the standpoint of free 
and fair competition, there would still remain the very important 
question of whether, in spite of such handicaps, medium-sized or small 
business might, nevertheless, be more efficient, since such economies 
might be more than offset by inefficiency resulting from the greater 
difficulties of managing large-sized business. 

After consultation with Government experts and private experts, 
the Commission became convinced that business efficiency could be 
subjected to two objective and scientific tests.' In the final analysis, 
efficiency in business means ability to produce and distribute goods at 
the lowest possible cost. The cost of producing a unit of product is 
perhaps the most important single test of business efficiency. Due to 
the inability to secure separate data on distribution costs, the rate of 
return on invested capital has been used as the second criterion. This 



4 CONCEINTRATION OF ECONOMIC POWEJR 

latter ratio supplements the former, since both production and dis- 
tribution costs are reflected in rate of return. Thus, the use of the 
ratio of return on invested capital has been especially of advantage in 
industries where cost data were inadequate or where products were not 
directly comparable. 

The Commission was influenced in selecting these two accoimting 
measurements of business efficiency because they represent standards 
which businessmen themselves most respect. Moreover, they are 
concrete and have the advantage of being susceptible of statistical 
measurement. Having decided that business efficiency could be 
measured objectively and scientifically by these two tests, the Com- 
mission explored the possibility of three methods for obtaining the 
accounting data necessary for applying such tests: (a) Obtaining new 
data from business by questionnaire and field work; (b) utilization of 
data, collected chiefly from Government sources but reworked by 
private agencies; (c) analysis of a great amount of data on costs and 
rates of return on invested capital found in the files of Government 
agencies. 

The possibility of securing from industry through questionnaire and 
field work new data relating to costs of production and rates of return 
was abandoned by the Commission for the following reasons; It was 
the opinion of every expert consulted that such a study would require 
a sum of money far in excess of the amount allocated to the Commis- 
sion by the Temporary National Economic Committee for conducting 
its inquiry. Some experts were of the opinion that this kind of a 
study would require in the neighborhood of a million dollars. The 
sum available to the Commission for conducting an inquiry into the 
relative efficiency of large, medium-sized and small business was 
approximately only $20,000. 

On the technical and scientific side there was a serious defect in 
this method of inquiry. The experts consulted agreed that the possi- 
bility of getting any but current costs in business would have been 
small. Such data could, therefore, have only applied to the present 
situation in business, which is, of course, a depression and recovery 
period. Conclusions for one phase of the business cycle might not 
apply to other phases. 

The most significant studies of private investigators or agencies 
making a statistical use of accounting data, were examined by the 
Commission. It was the opinion of the Commission, however, that 
though some of these studies were very useful they should be suuple- 
mented by other material for several reasons: 

(1) These studies show the varying rates of return on capital invest- 
ment for groups of different-sized i^ompanies, but they do not show 
the rates of return of individual companies.^ The Commission thought 
it important to compare the rate of return earned by the largest cor- 
poration in various industries with those earned by other large, 
medium-sized, and small companies in the same industries. 

(2) A rate of return on invested capital for a corporation is the 
ratio of net earnings to the total amount of capital invested. It is 
highly important in obtaining this ratio that both net earnings and 

» Epstein, Ralph Cecil, Industrial Profits in the United States. National Bureau of Economic Research. 
New York. 1934. 

Crum. William. Leonard, Corporate Size and Earning Power, Cambridpe, Mass., Harvard University 
Press 1939 

Twentieth Century Fund, How Profitable Is Big Business? New York, Twentieth Century Fund, 
Inc., 1937. 



CONCEJ^TRATION OF ECONOMIC POWER 5 

the total amount of capital invested be accurately determined. Pri- 
vate investigators approaching the problem of business efficiency from 
the standpoint of the rate of return on invested capital for corpora- 
tions of various sizes generally have used data fiirnished by the United 
States Bureau of Interna] Kevenue. The Bureau's figures with respect 
to net income are generally accurate, because Fedeia] taxes are based 
upon such net income. Excessive allowances for depreciation, deple- 
tion, or obsolescence, as reported by corporations to the Bureau, are 
frequently revised, so that the real net income of such corporations 
may not be understated. The Bureau, however, does not analyze the 
balance sheets of corporations to determine whether such balance 
sheets state the true amount o.f invested capital. Apparently the 
income-tax law does not even require corporations to furnish balance 
sheets. A considerable number of corporations do not submit balance 
sheets with their tax returns. The balance sheets that are submitted 
to the Bureau are generally accepted without verification. 

In the course of its extensive experience in computing rates of return 
on invested capital in many industries, the Commission has frequently 
found that invested capital, as shown by a company's books or 
computed by a company's accountants, may often be too high, for 
many reasons. There may be an overvaluation of fixed assets, 
because such assets have been arbitrarily written up by the company's 
:accountants. Inventories may be overappraised. The item of good- 
will alone may be grossly manipulated. There are some cases where 
■goodwill should not be carried as an asset at all. ^ There are other 
cases where goodwill may be- entered at an exaggerated value. Such 
overvaluations, if allowed, reduce the rate of return on invested 
capital. The Commission has found that sometinles corporations 
overstate their invested capital for the purpose of concealing high 
earnings. 

The assets of a large corporation, as shown by thfe books of the cor- 
poration, may ulso understate the rate of return on invested capital 
for another reason. The corporation may have evolved from a series 
of mergers or consolidations, and its assets may have been arbitrarily 
written up by promoters. Where this occurs, unless such watering of 
Assets is corrected, the rate of return on invested capital as shown by 
the company's . books will be less than what it should be. Testing 
business efficiency, therefore, from the standpoint of the rate of return 
■on invested capital, would work an injustice to many large corporations 
imless their balance sheets were properly revised to eliminate write- 
ups of assets. 

Consequently, in comparing the rates of return on invested capital 
of large, medium-sized, and small business in a variety of industries 
the Commission used its own accounting staff wherever possible to 
carefuUy check the balance sheets of corporations so that the amount 
•of invested capital plight be accurately determined. 

(3) The Commission was of the opinion that while the rate of re- 
turn on invested capital is an important test of business efficiency, it 
should be supplemented by another test, cost of production, which the 
Commission deemed to be perhaps an even more important criterion 
for measuring such efficiency. There have been a few private studies 
of business efficiency, in which average costs of groups of companies or 
plants of different size were used. But these studies covered only a 
few products or industries, and showed average costs of groups of 



5 CONCEiNTRATION OF ECONOMIC POWER 

companies rather than costs of individual companies. The Commis- 
sion felt that private studies of costs needed to be greatly supplemented. 

(4) Finally, the Commission has always followed, wherever possible^, 
the policy of reporting to the Congress on material which its own 
investigators have developed. 

The Commission discovered that in the files of Government agencies 
there have been steadily accumulating over the last 25 years an 
abundance of data on costs and rates of return on invested capital for 
many industries. A very considerable sum of money was found to 
have already been carefully spent by various governmental and 
State agencies for inquiries into costs, profits, and the general struc- 
ture of important industries over the past quarter-century. If it be 
urged that some of these studies which were considered by the Com- 
mission were not up to date, it should be realized that the principle 
involved can be more effectively tested the larger the time periods 
covered and the wider the time range. 

One further problem confronted the Commission with respect to 
the validity of using costs and rates of return as final tests of business 
eflBciency. Reference has been made to the fact that reputable stu- 
dents have often charged that large-sized business can show certain 
economies, but that these economies are achieved at the expense of 
free and fair competition. That such substantial economies do exist 
is admitted by both defenders and critics of large-sized business. 
The question of their existence, therefore, is not in doubt. The 
question whether such economies are justifiable from the standpoint 
of a sound competitive system, however, remains controversial between 
these private defenders and critics of large-sized business. 

If the abundance of cost and financial data in the files of Govern- 
ment a'gencies had shown that the largest companies had invariably 
had the lowest costs and the best rates of return on invested capital, 
the use of the tests of business efficiency which the Commission adopted 
might have been exposed to the criticism that such tests might not 
have eliminated certain savings obtained by large-sized business and 
certain sources of revenue obtained by such business which were 
realized through predatory business practices. 

The Commission realized that in testing business efficiency by 
costs of production and rates of return on invested capital, there 
was no way of preventing such tests from being biased in favor of 
large-sized business, because of the possible inclusion into costs and 
rates of return on invested capital of economies and income due to the 
ability of the financial and economic power of large corporations to 
exploit free and fair competition. 

If, however, the results of the Commission's tests were in favor of 
.medium-sized or snjiall business, this kind of criticism would no longer 
be tenable. In such an event, the results of the tests would, the 
Commission felt, very probably have the conservative advantage 
•of understating the real effectiveness of medium-sized or small 
lousiness. 

The cost and financial data obtained by the various Govemmeht 
departments in their studies of important industries are for the most 
part so extensive and detailed that it was possible for the Commission 
to avoid certain fundamental criticisms which can be made if cost is 
used undiscriminatingly as a measuring rod of efficiency in business. 
For example, it may be urged that because a certain group of plants 



CONCENTRATION OF ECONOMIC POWER 7 

or companies of medium size may happen to have the lowest costs 
during one time period is no proof that units of this size invariably 
or generally have the lowest costs. 

The availability of data for most industries during a series of years 
or other time periods makes it possible to determine whether the 
apparent relation between size and efficiency is persistent and not 
merely accidental or temporary. 

Again, it may be urged that when certain small or medium-sized 
plants or companies situated m one region invariably or generally 
have the lowest costs, their location rather than their size may furnish 
the explanation. The availability of a sufficient ninnber of unit costs 
for plants and companies in the various important producing regions 
made it }>ossible in some industries to analyze the relation between 
size and cost within a region, where every plant and company has 
practically the same regional advantages or disadvantages. Analysis 
of the relation between size and cost witliin a region affords a meas- 
urement of the effect of size, after the effect of location has been 
eliminated. 

The cost of producing a gallon of gasoline in a refinery located in 
the interior States, Illinois, Indiana, Ohio, etc., may be higher than 
the cost in almost every Gulf coast refinery because Gulf coast re- 
fineries may be nearer their crude oil supply. For instance, the fact 
that the larger Gulf coast refineries have lower costs than the smaller 
Illinois refineries would furnish no evidence as to the effect of size of 
refinery on the cost of its petroleum products. 

The obvious method of discounting the effect of this difference in 
costs of transporting crude oil when analyzing the relation betweeh 
size of refinery and cost of gasoline would be to separate the Gulf 
coast refining costs from the midcontinent refining costs for the pur- 
pose of two separate regional cost comp'arisons. In certam industries 
where peculiar geograpliic conditions affected costs of production 
regionally, the extensiveness of the data available enabled the Com- 
mission to analyze such costs regionally. In many industries, how- 
ever, a regional comparison of costs was not necessary. 

Another method of discounting the effect of the different crude-oil 
transportation costs referred to would be through a comparison of 
refinery costs after the excluMon of the cost of crude oil. For most of 
the governmental inquiries, the costs obtained were so itemized that 
it is possible to make almost any type of comparison desired. For 
the'^ reason given and for other obvious reasons comparisons of plaijt 
or company costs after the exclusion of the cost of raw material may 
be highly significant. For example, the cost of producing bread, 
after exclusion of the cost of the ingredients, mfiy be more useful for 
the purpose of this inquiry than the total cost including ingredients. 
Different bakeries producing different qualities of bread may use 
different ingredients and realize different prices per pound. 

The technique of the Commission in applying efficiency tests to 
business was to employ the well-recognized method of statistical 
sampling. Obviously, the reliability of such a statistical method will 
depend upon the size of the sample. If data for only one or two 
industries were available, conclusions for industry in general would 
be inadmissible from such a small sample. The Commission fcols 
that the sample used in this inquiry constitutes an unusually large 



g CONCENTRATION OF ECONOMIC POWER 

cross-section of American business. Costs or financial data were 
utilized in the following 18 industries:^ 

Cement. Milk distribution. 

Blastfurnaces. Butter. 

Steel mills. Canned milk. 

Farm machinery. Flour milling. 

Petroleum production. Baking. 

Petroleum refining. Motor vehicles. 

Beet-sugar production. Chemicals. 

Cane-sugar production. Fertilizers. 

Sugar refining. Rayon. 

These industries make hundreds of products. They had a total value 
of product equal to about one-fourth of the total value of product 
shown for all industries in the Census of Manufactures for 1937. 
Six basic tests of business efficiency were made : 

(1) Cost of production test for individual companies classified as 
large, medium-sized, or small. This kind of business efficiency test 
involves the following factors: 

•(a) The selection of a product; (6) the selection of a time period 
which the test is to cover ; (c) the obtaining of the costs, of all com- 
panies engaged in the production of this product for which costs 
are available; (d) the classification of -each company as large, 
medium -sized, or small; (e) the costs of the various companies 
engaged in the production of this product together with a size 
classification for each company are then arranged in order of 
ascending costs, from lowest to highest. The ascending cost 
series then shows the relationship between size' and cost. 

(2) Cost of production test for individual plants classified as large, 
medium-sized, or small. This kind of test involves the same factors 
as the cost of production test for individual companies. 

(3) Cost of production test for groups of companies classified as 
large, medium-sized, or small. This test is useful in showing whether 
large size is on the average more efficient than medium or small size 
in business. Thus, it might be contended that though individual 
companies of large size might not have the lowest costs in a test, taken 
as a whole, targe size was more efficient than medium or small size. 
Group tests of size throw light on the validity of such a contention. 

This kind of test includes the following elements: 

(a) The selection of a product ; (6) the selection of a time period 
during which the product is produced; (c) the obtaining of the 
costs of all companies engaged in the production of this product 
for. which costs are available; (d) the grouping of all companies 
into categories of size; (e) the averaging of the cost of production 
for each group. This information will then show whether the 
large, medium-sized, or small companies had as a group the 
lowest average cost. 

(4) The cost of production test for groups of plants classified as 
large, medium-sized, or small. This test involves the same technique 
as the cost of production test for groups of companies classified as 
large, medium-sized, or small. It is also useful in determining 
whether large-sized plants in an industry for a certain time period 
were on the average more efficient than medium-sized or small plants 
in the industry ._ 

3 Tables are presented beginning p. 21. 



CONCENTRATION OF EJCONOMIC POWER 9 

(5) The rate of return on ihvested capita,! test for individual com- 
panies classified as large, medium-sized, or small. This test consists 
of the following elements: 

(a) The selection of a time period for an industry; (b) com- 
puting the rates of return on invested capital for all the com- 
panies in this industry during this time period; (c) classification 
of the companies as large, medium-sized, or small; (d) making of 
a table showing each company with its size classification and its 
rate of return on invested capital for the time period. 

An inspection of this table will show. at once whether a large, a 
medium-sized, or a small company had the highest rate of return on 
invested capital. 

(6) A rate of return on invested capital test for groups of companies 
classified as large, medium-sized, or small. 

This test is- effected similarly to the way in which a test of 
the rate of return on invested capital for individual companies 
classified according to size is made. The only difference is that 
the companies are grouped and the average rate of return for 
each size group is determined. An inspection of a table setting 
forth these results will show which group of companies, large, 
medium-sized, or small, had the liighest average rate of return 
for the time period. This kind of test is also useful in testing 
the contention that where large-size companies do not have the 
highest rate of return, such companies may on the average have 
higher rates of return than medium-sized or small companies on 
the average. 

In 14 of the 18 industries covered in its inquiry, the Commission 
was able to make 59 tests of costs for- individual companies and 1 1 
tests of costs for groups of companies classified as large-sized, medium- 
sized, or small. Thus, the Commission was able to make 70 cost 
tests of large, medium-sized, or small companies in these 14 industries. 

The Commission was able to make 53 cost tests of individual large, 
medium-sized, or small plants; to make 5 cost tests of plants grouped 
as large, medium-sized, or small. Thus, the Commission was able 
to make a total of 58 cost tests of large, medium-sized, or small plants. 

Altogether, the Commission was able to make 128 coet tests of 
individual large, medium-sized, or small companies and plants or 
companies or plants grouped as large, medium-sized, or small. 

The Commission was able to make 105 tests of the efficiency of 
large, medium-sized, and small companies in 18 industries from the 
standpoint of their individual rates of return on invested cap>ital. 
There were 84 tests of rate of return on invested capital for individual 
companies classified as large, medium-sized, or small in these in- 
dustries. Twenty-one tests were made of companies grouped as 
large, medium-sized, or small. 

It should be pointed out that a number of tests included in the 233 
total tests of business efllciency made by the Commission really 
embrace more than one test. For example, some tests show data for 
a number of time periods, each one of which affords a separate test of 
efficiency. Again, some tests contain costs for a number of geographi- 
cal areas, each of which furnishes a separate test of efficiency. Finally, 
some tests have been made in two or more ways by excluding or 
including certain items of cost. 



10 CONCENTRATION OF ECONOMIC POWER 

For instance, in the flour-milling industry the claim was made that 
the large flour millers purchased a superiorand expensive grade of wheat, 
"which was not used by smaller concerns in the industry. Accord- 
mgly, the Commission not only showed the total cost of the various 
flour manufacturers, but a special series was constructed to show the 
■cost of producing flour with the cost of grain excluded. In this same 
industry it was also contended that the packaging of the big flour 
millers was far more expensive than the packaging of the small flour 
millers because the large flour millers sold in greater quantities. The 
■Commission, accordingly, constructed a cost table showing the cost 
■of production of the various flour millers with the cost of packaging 
and the cost of grain excluded. 

In the application of the two tests of business efficiency adopted by 
the Commission, it may be expected that if large-sized business in 
the United States is the most efficient kind of business, as many seep 
to believe, the largest companies should invariably, or at least usu- 
ally, show the lowest costs and the best rates of return on invested 
capital. If large-sized companies (plants) secured only an even break 
with rhedium-sized companies (plants) or- small-sized companies 
(plants) in the tests, it could reasonably be inferred that the superior 
efficiency of large size in American business is questionable. If 
however, certain medium-sized or small-sized companies (or plants) 
scored decisively in the tests, it might be reasonable to conclude that 
the long standing contention that large size insures efficiency in busi- 
ness is extremely doubtful. 

The results of the total tests reveal that the largest companies 
made, on the whole, a very poor showing! This should not be taken 
to mean that in every test all medium-sized or small companies had 
lower costs or better rates of return on invested capital than the largest 
■companies. Indeed, mos.t cases of highest costs Were those of very 
small companies. This, in turn, should not be taken to mean that the 
average costs of large-sized businesses were necessarily lower than the 
ayerage costs of medium-sized or small businesses. Cost tests for 
-groups of companies classified as larg«, medium sized, or small throw 
light on this possibility. Moreover, medium size in itself did not 
insure a low' cost or a high rate of return. But certain efficient 
medium-sized units — and in some industries certain efficient small 
units — generally made the best showing. 

Furthermore, ill the tests of group efficiency, the corporations 
grouped as medium sized or small sized had preponderately lower 
average costs of production or higher rates of return on invested 
capital than the groups of large-sized corporations with which they 
were compared. 

The Commission wishes to state very clearly to the Temporary 
National Economic Committee its position in regard to what con- 
clusions may be reached from the tests of business efficiency conducted 
by the Commission regarding the relative efficiency of large, medium 
sized, or small business in the United States. The Commission feels 
that the efficiency tests adopted in this inquiry are the best available 
scientific tests. They had the endorsement of experts who were con- 
sulted on this problem and are used by businessmen themselves. The 
basic data used also for making. the tests are, in the opinion of the 
'Commission, reliaHeT This material, taken from Government files, 



CONCEJStTRATION OF BCONOMIC POWER H 

was scrutinized and its applicability for the problem at hand was care- 
fully considered. The data were obtained by agencies of the United 
States Government, equipped with large and competent accounting 
staffs. Practically all the figures used have already been submitted 
to the Congress in the form of Government reports, but in these re- 
ports they are almost invariably shown as averages. The original 
material was consulted for the purpose of determining costs of produc- 
tion and rates of return on invested capital for inf'"vidual companies 
(or plants). The Commission was unable to fin i tnat these basic 
data were at any time seriously challenged. The confidential material 
obtained from the United States Tariff Commission was reviewed and 
its use approved by that Commission. All the data were rechecked 
by a special committee of accountants and experts of the Federal Trade 
Commission. The Chief Accountant of the Commission has certified 
to the Commission that the data have been accurately assembled and 
that the accounting techniques employed in determining costs and 
rates of return on investec capital are scientifically valid. 

The Commission in submitting the results of these tests to the 
Temporary National Economic Committee offers no definite opinion 
as to whether they conclusively disprove the claim freqiiently made 
that large size in American business is more efficient than medium 
size or small size. But the Commission does believe that in trans- 
mitting the results of these tests to the Committee it is contributing 
information concerning the efficiency ^f size, which is of large public. 
interest and of service to the Committee. 

The Commission is of the opinion that the data which it has here 
assembled are in many respects more comprehensive and detailed 
than those in any previous study of this problem. For this reason 
alone the Commission considers that the study is an important con- 
tribution to this field of economic inquiry. Whether the results of the 
tests conducted by the Commission cast serious doubt on the superior 
efficiency of large size in American business must be left to the judg- 
ment of the Committee. 



RESULTS OF THE TESTS 

INDIVIDUAL COMPANY-COST TESTS 

In but 1 of the '^9 individual company-cost tests did the largest 
company have th? ■ west cost. 

In 21 of these 59 tests, a company classified as medium-sized had 
the lowest cost. 

In 37 of these 59 tests, a company classified as small had the lowest 
cost. 

Of particular significance is the lact that in these 59 tests, on the 
average, over one-third of the companies in every array had costs 
lower than that -of the largest company.* 

TESTS FOR GROUPS OF COMPANIES 

In only 1 of the 11 tests derived from the tables showing average 
costs of companies, grouped according to size, did the group con-, 
taining the largest companies have the lowest average cost shown for 
any group. 

In 10 of the 11 tests the group containing companies generally 
classified as medium-sized had the lowest average cost shown for any 
group. 

INDIVIDUAL PLANT-COST TESTS 

In the 53 individual plant-cost tests, the largest plant had the 
lowest cost in only 2 tests. 

A large plant, although not the largest, had the lowest cost in 
4 tests. 

In 21 of the 53 tests, plants classified as medium-sized had the 
lowest cost. 

In 26 of the 53 tests, plants classified as small had the lowest costs. 
■In these 53 tests, over one-third of the plants in each cost array 
had on the average lower costs than that of the largest plant.^ 

TESTS FOR GROUPS OF PLANTS 

In every one of the five tests for groups of plants, the group con- 
taining the plants classified as medium-sized had the lowest average 
cost shown for any group. 

* The number of companies with lower costs than that of the largest company was determined for each 
test or cost array. Then/ this number was divided by the total number of companies in the array in order 
to find tlie percentage of the total number of companies with costs lower than that of the largest company. 
Thus, if in an array of 100 comnanies, 20 had costs lower than that of the largest compan-y, 20 pcrcen" of all 
the companies had a better cost position than the largest company. An average of those £9 percentages 
gave the average proportion of the total number of companies that had lower costs than the largest company. 

s The position of the largest plant in each plant-cost array was determined by dividing the total number 
of piants in the array into'the number of plants with better cost positions— that is, lower costs— than that 
shown by the largest plant. The fraction thus arrived at gives the percentage of plants with lower costs 
than that o( the largest plant. An average of these percentages for all tht; f3 arrays shows the average- 
position held by the largest plant with respect to the low-cost plants. 

12 



CONCENTRATION OF ECONOMIC POWER 13 

^ESTS BASED ON TABLE OF RATES OF RETURN ON INVESTED CAPITAL 
EARNED BY INDIVIDUAL COMPANIES 

In the 84 tests made for the rates of return on invested capital 
earned by individual companies in 18 industries, the largest company 
showed the highest rate of return only 12 times. 

In 2 of the 84 tests a large company, although not the largest, 
showed the highest rate of return. 

In 57 of the 84 tests a company classified as medium-sized showed 
the highest rate of return. 

In 13 of the tests a company classified as sifiall showed the highest 
rate of return. 

On the average about one-third of the total number of companies 
in each test showed higher rates of return than the largest company. 

TESTS BASED ON TABLES OF RATES OF RETURN EARNED ON INVESTED 
CAPITAL BY GROUPS OF COMPANIES 

In a total of 21 tests of rates of return on invested capital earned 
by companies grouped as large, medium-sized, or small, the group 
containing the largest companies had the lowest average costs in 
3 tests. 

In 14 of the 21 tests, the group containing the companies classified 
as medium-sized had the lowest average cost. 

In 4 of the 21 tests the group containing companies classified as 
small in size had the lowest average cost. 

The number of companies covered in the tables showing rates of 
return on invested capital was not so complete as the Commission 
would have wished. This applies especially to the small companies. 
The sources for these data — chiefly reports of the Federal Trade 
Commission and publications of the Securities and Exchange Com- 
mission — covered for the most part only large and medium-sized com- 
panies. Financial data on small companies, adequate for the purpose 
at hand, are hard to find even in the most comprehensive industrial 
manuals. ^ 

There is reason to believe that, had the rates of return for more 
smaller companies been available, the percentage of times in which 
the laige corporation showed the best rate of return would have been 
considerably reduced. 

Doctor William Leonard Crum has lately analyzed returns on in- 
vested capital earned by groups of companies of different size.^ Dr. 
Crum has used data published by the Bureau of Internal Revenue in 
"Statistics of Income." Dr. Crum's study shows that when all 
corporations, profitable as well as unprofitable, are considered, small 
corporations earn relatively poor rates of return on invested capital, 
but when only profitable corporations ^of all sizes are analyzed, the 
highest rates of return on invested capital are earned by the smallest 
corporations^ 

The larger rates of return earned by many small corporations may 

, possibly be explained by their more effective use of capital. Data in 

"Statistics of Income" clearly indicate that small corporations, 

whether profitable or unprofitable, turn' over their capital during the 

• Corporate Size and Earning Power, Harvard University Press, 1939. 



14 CONCENTRATION OF ECONOMIC POWEiR 

year more often than do medium-sized corporations, and that medium- 
sized corporations, turn over their capital more often than do large 
corporations. 

SUMMARY 

In the 233 combined tests, large size, whether represented by a 
corporation, a plant, a group of corporations, or a group of plants, 
showed the lowest cost or the highest rate of return on invested 
capital in only 25 tests. In these combined^ tests, medium size made 
the best showing in 128 tests and small size in 80 tests. Thus, large 
size was most efficient, as efficiency is here measured, in approximately 
11 percent of the total tests, medium size was most efficient in approx- 
imately 55 percent of the tests, and small size was most efficient in 
approximately 34 percent of the tests. 



INTRODUCTORY STATEMENT TO TABLES 

Before submitting the basic tables of this study, it is important tO' 
consider the purposes of those tables and what conclusions may be 
safely deduced therefrom. Comparison of unit costs of production of 
the various plants and companies in an industry has often been 
employed, both by industry and the Government, in measuring 
efficiency. One of the principal functions of a cost accountant in a 
large multiple-plant company is the demonstration of the relative 
efficiency of the various plants through such unit cost comparisons. 

In many industries today there exists a supercorporation which is 
appreciably larger than the next largest corporation in the industry. 
This was found to be true in most of the 18 industries which the 
Commission included in the present inquiry. If assets be taken as 
the measure of size, the difference between the largest corporation and 
the second or third largest corporation in the industries studied by 
the Commission was usually very considerable.^ For instance, in the 
automobile industry. General Motors Corporation is more than 
twice the size of the Ford Motor Co. and more than eight times as 
large as the Chrysler Corporation, which is the third largest motor 
corporation.^ In the iron and steel industry the United States 
Steel Corporation is nearly three times as large as the Bethlehem Steel 
Corporation, the second largest in the industry. In farm machinery, 
the International Harvester Corporation is nearly four times larger 
than the Allis-Chalmers Manufacturing Co., the second largest 
corporation, and nearly four times as large as Deere & Co., the third 
largest corporation.^ In the petroleum industry the Standard Oil 
Co. of New Jersey is more than twice as large as the Socony-Vacuum 
Oil Co., and nearly three times as large as the Standard Oil Co., of 
Indiana, the ithird largest corporation. In the sugar refining industry 
the American Sugar Refining Co. is more than four times as large as 
the National Sugar Refining Co., the second largest corporation in the 
industry. In beet sugar refining the Great Western Sugar Co. is 
nearly three times as large as the Holly Sugar Co., the second largest 
corporation. In milk and milk products the Borden Co., the second 
largest, is only 63 percent as large as the National Dairy Products 
Corporation. In flour milling, General Mills, Inc., is twice as large 
as the Pillsbury Flour Milling Co., the second largest Corporation. In 
chemicals, the E. I. duPont de Nemours Co. is nearly three times 
as large as the Union Carbide & Carbon Corporation, the second 
laigest in the industiy. In bread baking, Ward Baking Corpora- 
tion, the second largest, is only two-thirds as large as the Continental 
Baking Corporation, the largest in the industry. One of the fun- 
damental purposes of the Commission's present inquiry was to throw 

' Assets taken for the year 1937 from Poor's Manual for 1938. 

' When total invested capital in the automobile business is used as a measure of size, again General Motors 
and Ford show up as far larger than Chrysler. 

5 When total invested capital in the farm machinery business alono is used as a measure of size, the Inter- 
national Harvester Co. is still more than twice as large as Deere & Co., the second largest corporation in the 
industry, on this basis. 

15 



IQ CONCENTRATION OF ECONOMIC POWER 

some light on the extent to which largest corporations have been able 
to reduce their costs below those of medium sized and small corpo- 
rations.* 

The tables showing costs of plants and companies of different size 
and those showing rates of return on invested capital earned by 
companies of different size have for their first purpose, therefore, an 
examination of the records of supercorporations in a number of 
industries. If in the tests these largest corporations had almost 
invariably achieved the lowest costs and the best rates of return, the 
conclusion would be warranted that such corporations were efficient 
according to these fundamental tests which businessmen so respect. 
But if the largest corporations made a relatively poor showing in the 
tests there might still be the possibility that large corporations, but 
not supercorporations, would be considered the most effi'cient. In 
order to throw some light on the possibility that large size, but not 
supersize, insures efficiency in industry, the Commission divided 
plants and companies under consideration into size classifications of 
large, medium sized, and small. 

The classification of plants and companies into these three cate- 
gories of size necessarily involves judgment and might therefore be 
criticized as nonobjective. Where is the limit between a large and 
a medium-sized corporation or between a medium-sized and a small 
corporation? The largest-sized plants and companies in some indus- 
tries for example, may be smaller by most standards than the medium- 
sized plants and companies in other industries. And even among the 
largest corporations there will be differences of stature. It is evident 
that a different classification of size is needed for every industry, since 
size is relative to the industry. Consequently, it should be noted 
that the basis of such classification for each industry aftd for each 
cost table is carefully set forth for the scrutiny and consideration of 
any who may be interested in ascertaining the statistical basis for 
the Commission's study. The size of every plant and company, as 
measured by quantity of production or size of investment, was first 
set forth in a table. The lines used for the three classifications were 
put where a considerable break in the series was noted. For example, 
an attempt was made to draw the line between large and medium-sized 
corporations in such a way that the smallest large corporation was 
considerably larger than the largest medium-sized corporation. 

If it be urged that a company designated as medium sized in this 
inquiry is considered in its particular industry as a large company, 
it can be answered that the industry's designation is just as subjective 
as that used by the Commission. The important point, however, 
is that if such corporation, classified as medium sized by the Com- 
mission, is appreciably less in size than the largest corporation, or 
appreciably less in size than at least several corporations in its indus- 
try, and has in a series of tests involving different time periods shown 
lower costs and higher rates of return on invested capital, the con- 
tention that the largest company in that industry is the most efiicient 
company is less convincing, irrespective of how the medium-sized 
corporation is classified. The categories of size were so constructed 
that for 9. medium-sized or small corporation to score highest in a test 
meant that there was a very considerable difference in size between 

* The 18 industries in the present inquiry were selected solely on the basis of the existence of adequate data 
concerninp them. A number of other industries were rejected by the Commission because cost data and data 
enabling the computation of rates of return on invested capital were regarded as inadequate. 



GONCENTtlATION OF ECONOMIC POWEGEl 17 

such corporation and the largest corporation of its industry, or indeed 
the four or five largest corporations in its industry. Gaps between 
the large and the medium and between the medium and the small 
are so distinct that it seems difficult to object fundamentally to the 
categories that have been established. To a more limited degree 
this same principle was utilized in the division of plants into large, 
medium, and small. 

It is important to emphasize that the tables showing individual costs 
for companies and rates of return for individual companies in various 
industries were not intended to measure another important aspect of 
business eflSciencj^. More effective performance in the tests by 
corporations classified as medium-sized or small would have still 
left untouched the question of whether large size on the average was 
more or less efficient than medium size or small size on the average. 
In, considering business efficiency from this standpoint, the Commis- 
sion prepared other tables in which companies or plants were grouped 
according to size, and the average cost or rate of return for each group 
was determined and compared. The Commission was able to make 
1 1 cost tests for groups of companies classified as large, medium-sized 
or small; 5 tests for groups of plants classified as large, medium-sized 
or small; and 21 tests of the rate of return for companies grouped as 
large, medium-sized or small. Thiis the Conomission made 37 tests 
designed to throw light on the issue of whether large size on the average 
is more or less eflScient than medium size or small size. 

The Commission realizes the difficulties involved in obtaining 
accurate costs of production for plants and companies, and is not 
unaware of the controversies which such cost data usually involve. 
The cost data, however, as has been pointed out, were obtained largely 
from the files of United States Tariff Commission and those of the 
Federal Trade Commission. Both of these agencies over a number of 
years have had extensive experience in the making of cost studies. 
Both the United States Tariff Commission and the Federal Trade 
Commission in maldng cost studies invariably are careful to take 
account of unusual or vitiating factors which temporarily may 
produce a distorted picture of costs in an industry for individual plants 
or companies. Where such factors do exist, it has been the iong- 
established policy of both agencies to make the necessary adjustments 
to insure comparability. In some cases, the United States Tariff 
Commission has terminated an investigation of costs because of the 
fact that the situation was so unusual and the factors so abnormal 
that comparability could not be achieved. 

In considering what conclusions are admissible from the cost tests 
conducted by the Federal Trade Commission, it should be borne in 
mind that the Commission has taken the position that it does not 
attempt to explain the factors which may account for the more 
effective performance of medium-sized and even small companies in 
some industries. There is reason, however, to believe that size may 
have been the most significant factor in the results. 

In industry there are many factors which may account for the lower 
costs of one concern in comparison with another, or the higher rate of 
return of one industrial unit as compared with another. Such 
factors as location, degree of mechanization, degree of operating 
capacity, sex of labor, skill of labor, wages, and accidental conditions 

264905 — 41— No. 13 3 



l^ CONCENTRATION OF ECONOMIC POWER 

such as strikes, floods, storms, shifting centers of population, depletion 
of natural resources, climate and other influences may crucially affect 
at any one time costs of production and rates of return of particulr 
plants and companies. Whether size and size alone, rather than other 
factors, happens to explain the more effective performance of companies 
and plants classified as medium-sized or small in the tests conducted 
by the Commission caiuiot be definitely determined. But the Com- 
mission believes that Ihere may be considerable warrant for the con- 
clusion that the factor of size may well have been a very significant 
infiiience in the results of the tests. 

The factors which affect costs of production and rates of return on 
invested capital in industry can be divided into two classes. The 
first includes conditions over which corporate management has sub- 
stantial control. Some of such factors are degree of mechanization, 
initiative in using patented devices, promotion of the skill of workers, 
abdity to bargain with workers, location of plants, prudence and 
soundness of capital structures, and effectiveness in utilizing full 
operating capacity. The other group consists of factors which are 
beyond the control of corporate management. vSome examples of 
such factors would be a shift in the centers of population, exhaustion 
of natural resources, changes in consumers' tastes, government 
policies, storms and floods. 

It would be unreasonable to assume that the more effective per- 
formance of medium-sized and small business units in many industries 
could be solely the result of factors which lay beyond the control of 
management. Such factors are likely to affect all enterprises, regard- 
less of size, and are not likely to be statistically biased in favor of 
any one size classification as against another. 

Concerning factors affecting costs of production and rates of return 
on invested capital which are within the control of cor})orate manage- 
ment, it seems reasonable to believe that such factors are vitally 
affected by the degree of effectiveness of corporate management. 
The degree of effective management, in turn, may be vitally affected 
by th^ factor of size. In considering the factors over which manage- 
ment has substantial control and which affect costs of production and 
rates of return on invested capital, two deserve special attention. If 
it were trlie that the largest companies invariably paid better wages 
than those of medium or small size, the lower costs of companies of 
medium and small size might be said to be accounted for by the wage 
scale of the largest "companies. From data obtained by the Com- 
mission from other agencies, there is no evidence that the largest 
companies in general pay better wages than those of medium or 
small size. Indeed, the data available fail completely to corro- 
borate this proposition. It appears from the existing data that 
medium size or small size as often pay better wages than large size 
corporations.^ 

But even if it were demonstrated that large size in general paid 
better wages than medium-sized or. small-sized corporations, there 
are other elements to be considered. There is considerable warrant 

* Thn Commission ponij)utp<l th'> avraec annual worker incomo of the -i largest, the 4 noxt largest, and of 
the other rompanips in aU of the industries for which it presented cost tables. The foinnn'ssion selected 
some 14 olhr'r industries of preai importance for which it had presented no cost tables. These figures for 
average ann'ial worker incomes were derive<i from ati analysis of the Onsus of Manufactures for 1!W5 made 
by Dr. Gardner Moans. This compjirison showed tliat'in n>any of tlie important industries considered by 
the Commission, the 4 largest companies did not niford the workers thi' iiit.'hest average annual incomes. 
In some industries the 4 next-largest companies and in other industries (hose companies smaller than the 
first 8 companies paid as a group the highest average annual incomes. 



CONCENTRATION OF ECONOMIC POWEtR JQ 

for believing that very large size in American industry often enjoys 
certain advantages which affect cost of production and rate of return 
on invested capital, which are not enjoyed by medium-sized or small- 
sized corporations. As a partial enumeration of such advantages, 
very large corporations, having the greatest resources and the best 
access to capital markets, are in a better position to have the most 
up-to-date technological equipment, to own the best ])atents, to 
enjoy stronger financial and trade contacts which produce business, 
to possess a greater bargaining power with the producers of tlieir raw 
materials and with their distributors, to obtain preferential treatment 
in connection with transportation,® to have greater advertising power, 
to have better cost accounting systems, to more effectively contact 
prospective buyers for orders, to afford superior research facilities 
than corporations of far less size classified as medium sized or small. 
Consequently, if there were a differential in the wage rate against 
large size, this disadvantage to superbigness is at least somewhat 
offset by numerous other advantages which medium size or small size 
cannot command in industrial life. As has been pointed oat else- 
where, however, it should be noted that a number of the advantages 
accruing to very large size in business, m^-y be inconsistent with the 
effective maintenance of free and fair competition and other aspects 
of the public interest. 

In the cost tables submitted by the Commission, no consideration 
is given to the question of whether any adjustment was made for dif- 
ferences in operating ratios ^ of the concerns whose costs were being 
measured. This was not done for two reasons. In the first place, 
the technique of a cost investigation conducted by the United States 
Tariff Commission or the Fedei'al Trade Commission generally takes 
into consideration this factor and makes adjustments where operating 
capacity is unusually abnormal. 

In the second place, although it is well known that the operating 
ratio of a factory or a mill affects its cost of production, it is possible 
to overestimate the effect of these operating ratios. Also, it must be 
realized that low operating ratios are not always the peculiar misfor- 
tune of large size. Indeed, from certain data studied by the Commis- 
sion, low operating ratios were frequently found in efficient plants of 
medium and small size. A special analysis of cement plant costs for 

1928, 1929, and 1930 was undertaken because adequate information 
about operating ratios for such plants was in existence. Alongside 
of every unit cost, the operating ratio of the plant was placed. The 
figures showed no indication that the operating ratios were an im- 
portant factor in explaining the differences in cost between large, 
medium-sized, and small cement miUs. , Twelve of the lowest-cost 
mills, all medium-sized, operated at capacities of from 64 to 90 per- 
cent. In short, some of the lowest-cost mills, all medium-sized, were 
operating considerably below capacity. One of the lower-cost large 
mills (No. 15, table' 1), was operating below normal capacity in 1928, 

1929, and 1930. The other low-cost large mill (No. 14) was operating 
practically to capacity in 1929, and over 90 percent in 1928 and 1930. 
In short, it is possible to overrate the effect of operating ratio on the 
cost of various sized plants. 

9 Percent of total capacity utilized. 
' Percent of total capacity utilized. 



20 CONCE,NTRATION OF ECONOMIC POWEiPw 

Finally, the effectiveness of the factor of operating ratios as an 
explanation of cost behavior in the tables submitted by the Commis- 
sion is heavily discounted by the fact of the numerousness of the tests, 
involving many time periods. Considering the quantity of the tests 
and the variety of time periods which they cover, it would seem reason- 
able to conclude that if large size was so invariably handicapped by 
low operating ratios, such operating ratios were in turn a serious indi- 
cation of inefficient operation, involving the burdening of the large 
corporations with unused capacity. 



' CEMENT COST TABLES 

Tables 1, 2, 3, 4, and 5 show costs of producing a barrel of cement. 

All the costs are for the year 1929. 

All are costs of individual mills or individual companies, as dis- 
tinguished from average costs, for groups of companies. ^ 

Every mill or company is identified by some size classification. 

Size classification for mills (table 1) is based on production in 1929. 

Large mills. — Those with production- over 2,000,000 barrels. 

Medium-sized mills. — Those with production between 1,000,000 and 
2,000,000 barrels. 

Small mills. — Those with production of 1,000,000 barrels or under. 

Rank of plant (tables 3, 4, and 5) according to production: Plant 
with largest production in 1929 is given rank 1, plant with next 
largest production in 1929 is given rank 2, etc. 

Size classification for companies (tables 3, 4, and 5) as follows: Big 
Five companies — Universal Atlas Cement Co., Lehigh Portland 
Cement Co., Lone Star Cement Corporation, Penn-Dixie Cement 
Corporation, and Alpha Portland Cement Co. 

Size classification for conjpanies (table 2): 

Large companies.— Vniyersal Atlas Cement Co., Lehigh Portland 
Cement Co., Lone Star Cement Corporation. 

Medium-sized companies.— Fenn-Dixie Cement Corporation, Alpha 
Portland Cement Co., Ideal Cement Co., Medusa Portland Cement 
Co. 

Small companies. — Those with production in 1929 between 2,000,000 
and 4,000,000 barrels. ' . 

Very small companies. — Those with production in 1929 under 
2,000,000 barrels. 

21 



22 



CONCENTRATION OF ECONOMIC POWBK 



Table 1. — Costs per barrel of 102 cement plants in 1929, arranged in order of 

ascending costs i 



Classification of plants according to size 


Cost per 
barrel 


Classification of plants according to size 


Cost per 
barrel 


1. Mfifliiim . 


$0.88 
.90 
.91 
.92 
.95 
.96 
.96 
.96 
1.00 
1.02 
1.03 
1.04 
1.05 
1.07 
1.07 
1.07 
1.07 
1.08 
1.11 
1.13 
1.13 
1.13 
1.14 
1.14 
1.15 
1.15 
1.15 
1.15 
1.16 
1.16 
1.18 
1.18 
1.19 
1.19 
1.19 
1.19 
1.19 
1.20 
1.22 
1.23 
1.23 
1.23 
1.24 
1.25 
1.26 
1.26 
1.26 
1.27 
1.28 
1.28 
1.28 


52. Large 


$1.29 


2. Medium, 


53. Small 


1.30 


3. Medium ' 


64. Medium 


1.31 


4. Medium 




1.31 


5. Medium 


56. Small 


1.33 


6. Medium ,.. 


57. Large 


1.33 


7. Medium 


58. Small 


1.33 


8. Medium 


.59. Small 


1.33 


9. Medium 


60. Medium 


1.34 


10. Medium 


61. Small 


1.34 


11. Medium 




1.35 


12. Medium.. 


63. Medium 


1.35 


13. Medium . 


64. Small 


1.37 


14. Large 


65. Small-. 


1.37 


15. Large.— 


66. Small- : 


1.37 


Ifi. Mfifiinm 


67. Small 


1.37 


17. Small _ 

18. Small 


C8. Medium.. 

H9. Small - 

70. Medium 


1.38 
1.39 


19. Small 


1.39 


20. Large 


71. Small 


1.39 


21. I/arge 


72. Small . .-'.-. 


1.40 


22. Medium 


73. Small 


1.40 


23. Small . . 


74. Small 


1.41 


24. Small 


75. Small 


1.41 


25. Large 


76. Small.... ■_ 


1.41 


26. Large 


77. Small -... . 


1.41 


27. Medium ■ 


78. Small •.... 


1.42 


28. Medium 


79. Small 


1.46 


29. Medium. 


80. Small 


1.47 


30. Medium 


81. Small 


1.47 


31. Medium . . 


82. Medium 


1.49 


32. Small 


83. Medium 


1.50 


33. Small 


84. Small I 


1.50 


34. Large - 


85. Medium j 


1.50 


35. Large 


86. Small 

87. Small 


1.61 


36. Small...." 


1.53 


37. Medium 


88. Small 


1.60 


38. Mp(1iii|n 


89. Small 


1.61 


39. Medium 


90. Small - - 


1.63 


40. Medium 


91. Small 


1.65 


41. Small 


92. Small 


1.66 


42. Small 


93. Small 


1.68 


43. Small 


94. Small 


1.68 


44. Medium , 


95. Small -. 


1.75 


45. Small 


96. Small 


1.76 


46. Medium .. .. 


97. Small 


1.77 


47. Medium ...... 


98. Small . . . 


1 90 


48. Medium . ... 


99. Small . . 


1.92 


49. Medium ... 


100. Small ... 


2.00 


60. Small ... . 


101. Small .. . 


2.17 


fil Mpdinm 


102. Small 


2.18 









1 Costs include packing and shipping charges and imputed interest but no outward freight, nor selling 
expense. 

Source: Files of the United States Tariff Commission. 

COMMENTS ON TABLE 1 

(a) Thirteen medium-sized mills had lower costs than the lowest- 
cost large mill. 

(b) Not one of the 13 lowest-cost mills belonged to the largest 
company, but a few belonged to the other two companies classified 
as large. 

(c) Most of the highest-cost mills were small. 



CONCEJSTRATION OF ECONOMIC POWER 



23 



(d) Seven of the 25 highest-cost mills belonged to 3 companies 
classified as large. 

(e) One of the lower-cost large mills (No. 15) was operating below 
normal capacity in 1928, 1929, and 1930. The other low-cost large 
mill (No. 14) was operating practicallj'' to capacity in 1929, and over 
90 percent in 1928 and 1930. 

if) Twelve of the lowest-cost mills (all medium-sized) operated at 
capacities varying from 64 to 90 percent. 

(g) The highest-cost large mill (No. 57) operated at 79 percent in 
1928, 63 percent in 1929, and 60 percent in 1930. 

Table 2. — Costs per barrel of 45 cement companies in 1929, arranged in order of 

ascending costs ' 



Classification of companies according 
to size 



Very small 

Small 

Very small 
Very small 
Very small 
Medium... 
Very small 

Small 

Very small 
Medium... 

Large 

Very small 

Laree 

Small 

Very small 
Medium . 
Very sni.;Il 
Very small 
Very small 
Very small 
Very small 
Very small 
Very small 



Cost per 
barrel 



$0.91 
.99 
1.02 
1.05 
1.13 
1.14 
1.14 
1.15 
1.16 
1.18 
1.18 
1.19 
1.19 
1.19 
1.19 
1.19 
1.20 
1.22 
1.23 
1.23 
1.26 
1.27 
1.28 



Classification of companies according 
to size 



24. Very small 

25. Small 

26. Very small 

27. Very small 

28. Very small 

29. Lartje 

30. Small 

31. Very small 

32. Small 

33. Very small 

34. Very small 

35. Medium... 

36. Very small 

37. Very small 

38. Very small 

39. Very small 

40. Very small 

41. Very small 

42. Very small 

43. Very small 

44. Very small 

45. Very small 



Cost per 
barrel 



$1.28 
1.28 
1.29 
1.31 
1.31 
1.32 
1.33 
1.33 
1.34 
1.35 
1.38 
1.41 
1.50 
1.51 
1.53 
1.54 
1.59 
1.65 
1.76 
1.90 
2.00 
2.17 



I Costs include packing and shipping charges and imputed interest but no outward freight. 
Source: Files of the United States Tarifl Commission. 

COMMENTS ON TABLE 2 

(a) Ten medium-sized or small companies had lower costs than the 
lowest-cost large company. 

(b) Twenty-eight companies (including only two large companies) 
had lower costs than the highest-cost large company. 



Jl-i 



CONCEaSTTRATION OF ECONOMIC POWER 



Table 3. — Costs of cement plants in Lehigh Valley in 1929, arranged in order of 

ascending cost per barrel 



Big Five or independent 


Rank' 


Percent of 
capacity 
utilized 


Cost per 
barrel 


Net mill 

price 
received 
per barrel 


Margin per 
■ barrel » 




(5) 
(3) 

(5) 


7 
6 

8 
15 
12 
10 

18 

13 
14 
19 
16 
11 
17 
20 
9 


87 
86 
87 
97 
79 
81 
64 
61 
81 
73 
63 
94 
75 
83 
67 
98 
63 
86 
53 
60 


$0.88 
.90 
.91 
.92 
.95 
1.00 
1.02 
1.07 
1.11 
1.13 
1.13 
1.16 
1.19 
1.20 
1.24 
1.30 
1.31 
1.33 
1.37- 
1.50 


$1.32 
1.28 
1.46 
1.31 
1.31 
1.31 
1.43 
1.34 
1.32 
1.31 
1.49 
1.47 
1.39 
1.51 
1.31 
1.31 
1.32 
1.63 
1.31 
1.36 


$0.44 


Do 


.38 


Independent - .... 


.55 


Big Five 


.39 


Do 


.36 


Do :.-. 


.31 


Independent .- . 


.41 


Big Five 


.27 


Do - - 


.21 


Do .. t 


.18 


Independent -- 


.36 


Do .' ..^ 

Do 


.32 
.20 


Do - 


.31 


Do . .,.'. - - 


.07 


Big Five.- 


.01 


Independent-- - ..... 


.01 


Do 


.30 


Do 


-.06 


Do — - 


—.14 







' Rank in size indicated by number. For example, 1 was the plant with the largest production in 
barrels. 
' Not profit, since costs include imputed interest but no selling expense. 
» Disclosure of rank of this plant might disclose its identity. 

Source: Files of the United States Tarifl Commission. 



COMMENTS ON TABLE 3 

(a) In Lehigh Valley lowest-cost mill of the 20 covered was seventh 
largest mill ; next to lowest-cost mill was sixth largest miU. 

(b) None of the lowest-cost mills belonged to the largest company. 

(c) Large companies had some low-cost, some average-cost, and 
some high-cost mills. 

(d) Best net mill prices realized by mills of small companies, sug- 
gesting that the costs of distributing their cement were smaller than 
the costs of distributing the cement of the larger companies. 



.CONCENTRATION OF EX:;ONOMIC POWER 25 

Table 4.— Costs of cement plants in the Lake i^tates in 1929, arranged in order of 

ascending cost -per barrel 



Big Five or independent 



Big Five 

Independent - 

Do 

Do 

Do 

Big Five 

Independent- 
Do 

Big Five 

Independent- 
Do 

Big Five 

Independent - 

Do 

Do.. 

Do 

Do 

Big Five 

Independent. 

Big Five 



Rank' 



Percent of 
capacity 
utilized 



Cost per 
barrel 



$0.96 
.96 
1.05 
1.07 
1.07 
1.15 
1.23 
1.23 
1.25 
1.27 
1.28 
1.29 
1.33 
1.35 
1.37 
1.39 
1.47 
1.50 
1.51 
1.68 



Net mill 

price 
received 
per barrel 



$1.49 
1.60 
1.28 
1.63 
1.49 
1.48 
1.56 
1.51 
1.49 
1.47 
1.46 
1.42 
1.62 
1.63 
1.46 
1.61 
1.54 
1.50 



1.53 



Margin per 
barrel ' 



$0.53 

!23 

.56 

.42 

,33 

.35 

.28 

.24 

.20 

.18 

.13 

.19 

.28 

.09 

.22' 

.07 

.00 



1 Rank in size indicated by number. For example, 1 was the plant with the largest production m barrels. 

2 Not profit, since costs include imputed interest but no selling expense. 
8 Disclosure ,of rank of this plant might disclose its identity. 

Source: Files of the United States Tariff Commission. 



V, COMMENTS ON TABLE 4 

(a) In Lake States lowest costs were not those of the largest mills. 

(6) Lowest-cost mills were not those of the large companies. 

(c) Best net mill prices realized by mills of small companies, sug- 
gesting that the costs of distributing their cenlent were' smaller than 
the costs of distributing the cement of the larger companies. 

Table ^.— Costs of cement plants in the southeastern section in 1929, arranged in 
order of ascending cost per barrel 



Big Five or independent 



Independent 

Big Five 

Do. 

Independent 
Do 

Big Five 

Do 

Do 

Do.'...-- 

Independent 



Percent of 
capacity 
utilized 



100 
55 

,61 
68 
46 
53 
67 
48 
87 
49 



Cost per 
barrel 



$1.14 
1.15 
1.18 
1.19 
1.23 
1.34 
1.41 
1.42 
1.63 
1.65 



' Not profit, sinoB costs include imputed interest but no selling expense. 
Source: Files of the United States Tarifl Commission. 



Net mill 

price 
received 
per barrel 



$1.26 
1.16 
1.13 
1.12 



1.09 
1.22 
1.12 
1.56 



Margin per 
barrel' 



$0.12 

.01 

-►-,05 

-.07 



-.25 
-.19 
-.30 
-.07 



COMMENTS ON TABLE 5 



~ (a) In southeastern section, lowest-cost mill'Vas fairly small and 
belonged to a small company. 

(6) Certain big-five mills, belonging to one of the large companies, 
had quite high costs. 



IRON AND STEEL COST TABLES 

Tables 6 and 7 give the pig-iron costs of different plants of the 
United StateS Steel Corporation in 1910. 

Tables 8 and 9 give the steel-ingot costs of different plants of the 
United States Steel Corporation in 1910. 

Tables 10, 11, and 12 give the pig-iron costs of merchant iron com- 
panies and integrated steel companies dm-ing the war period (1916 
and 1918).^ 

Size classifications for plants of the United States Steel Corporation 
(tables 6, 7, 8, 9) are based on 1910 production: 

Large plants. — Over 450,000 tons. 

Medium-sized plants. — 300,000 to 450,000 tons. 

Small plants.— 150,000 to 300,000 tons. 

Very small plants. — Under 150,000 tons. 

Ranks of companies (table 10) based on 1916 production. Thus, 
merchant company with largest production of pig iron given rank 
1, etc. 

Size classifications for integrated steel companies in 1918 (table 11): 

Large companies. — United States Steel Corporation and companies 
later absorbed by the Bethlehem Steel Corporation.' 

Medium-sized companies. — Republic Iron & Steel Co., Youngs town 
Sheet & Tube Co., Jones & Laughlin Steel Co., Inland Steel Co., 
Colora'do Fuel & Iron Co., McKinney Steel Co. 

Small companies. — Other companies covered. 

Table 6. — Book furnace costs of basic pig iron {northern furnaces) in 1910 for 
different sizes of plants of the United States Steel Corporation, arranged in order of 
ascending costs 



Classification of plants according to 
size of production 



1. Medium.. 

2. Very small 

3. Large. 

4. Small 

6. SmaU 

6. Small 

7. Large 

8. Very small 

9. Medium.. 



Furnace 
cost per 
gross ton 



$11.94 
12.14 
12.41 
12.69 
13.06 
13.13 
13.21 
13.38 
13.78 



Classification of plants according to 
size of production 



10. Very small 

11. Small 

12. Large 

13. Very small... 

14. Very small 

15. Very small. -- 

Average 



Furnace 
cost per 
gross ton 



$13.94 
14.06 
14.22 
14.42 
14.63 
15.70 



13.20 



Source: Bureau of Corporations. 



COMMENTS ON T.A.BLE 6 



(a) Lowest-cost plant was medium in size. 

(6) Of three large plants one had a fairly low cost, one had an 
average cost, and one had a quite high cost. 



1 Financial data for later years to be presented in 'tables to follow. 
26 



OONCEiNTRATION OF ECONOMIC POWER 



27 



Table 7. — Book furnace costs of Bessemer pig iron in 1910 for different sizes of 
plants of the United States Steel Corporation, arranged in order of ascending 
costs 



Classification of plants according to 
size of production 



Large 

,Medium. _ 

Large 

Large 

Large 

Large 

Very small 

Small 

Very small 

Large 

Very small 
Medium.. 



Furnace 
cost per 
gross ton 



$12. 78 
12.79 
13.21 
13.33 
13.34 
13.74 
14.13 
14.19 
14.27 
14.39 
14.43 
14.46 



Classification of plants according to 
size of production 



13. Small 

14. Ver mpll... 

15. Lar 

16. Very small... 

17. Very small... 

18. Very small.. T 

19. Very small... 

20. Very small 

21. Very small... 

Average 



Furnace 
cost pet 
gross ton 



$14. 78 
14.87 
14.88 
15.19 
15.19 
16.69 
16.34 
16.52 
16.68 



13.89 



Source: Bureau of Corporations. 



COMMENTS ON TABLE 7 



(a) A large plant had lowest cost ($12.78). 

(b) A medium-sized plant had the next lowest cost ($12.79). 

(c) Most large plants had low costs, but some had average costs, 
and two had costs above the average. 

Table 8. — Book works costs of basic open-hearth ingots (northern works) for each of 
the works of the United States Steel Corporation in 1910, arranged in order of 
ascending costs 



Classification of plants according to 
size of production 



Medium... 

Large 

Large 

Medium... 

Small 

Medium... 

Large 

Large 

Large 

Medium... 

Large 

Very small 



Book 

works costs 

per gross 

ton' 



$15. 74 
15.86 
16.43 
16.50 
16. «1 
16.81 
16.82 

. 16. 83 
16.90 
17.32 
17.32 
17.50 



Cla.s.sificatioD of plants according to 
size of production 



13. Lnrge 

14. Very small 

15. Very small.... 

16. Small 

17. Medium. 

18. Large 

19. Very small 

20. Small 

21. Very small 

22. Very small. . . 

Average 



Book 

works costs 

per gross 

ton> 



$17.69 
17.82 
17.88 
17.91 
18.23 
18.24 
18.42 
19.93 
20.72 
22.40 



17.19 



> Does not include general expense, depreciation, or imputed interest. 
Source: Bureau of Corporations. 



COMMENTS ON TABLE 8 



(a) Medium-sized plant of the United States Steel Corporation had 
the lowest cost of basic open-hearth ingots shown by any of the 
northern works of the corporation. 

(6) Some large plants had low costs, some had average costs, and 
three large plants had costs above the fo^rerage. 



28 



CONCEiNTRATION OF E<X>NOMI<:! POWER 



Table 9. — Book works costs per gross tc". of Bessemer billet ingots for different sizes 
of plants of the United States Steel Corporation in 1910, arranged in order of 
ascending costs 



Classification of plantp according to 
size of production 



1. Large 

2. Medium... 

3. Medium... 

4. Very small 

5. Large 

6. Large '. 

7. Medium... 

8. Large 



Book 

works costs 

per gross 

ton> 



$15. 48 
15. 64 
16.76 
16.11 
16.20 
16.21 
16.99 
17.32 



Classification of plants according to 
size of production 



9. Medium 

10. Very small... 

11. Medium 

12. Small 

13. Very^mall... 

Averaee 



Book 

works costs 

per gross 

toni 



$17. 32 
17.68 
18.09 
18.50 
18.76 



16.63 



1 Does not include general expense, depreciation, or imputed interest. 
Source: Bureau of Corporations. 

COMMENTS ON TABLE 9 



(a) Large plant of the United States Steel Corporation had the 
lowest cost of Bessemer billet ingots shown by any of the corporation's 
plants covered in the table. 

(b) Only one large plant had a cost above the average. 



Table 10. 



-Costs of producing a ton of pig iron by merchant companies of different 
size in 1916, arranged in order of ascending costs ^ 



Location of producer 


Company's 
rank in pro- 
duction ' 


Costs per 
ton 


Location of producer 


Company's 
rank in pro- 
duction ' 


Costs per 
ton 


.\labama.. . . 


3 
11 

1 
10 

6 
14 

8 

2 


$11.40 
11.80 
12.03 
13.13 
13.30 
13.60 
13.71 
13.98 


Ohio J 

Tennessee 


'I 

7 
9 
13 


^14.84 


Do 


15:08 


New York 


Illinois .. 


15.17 


Tennessee 


New York '. 


16.03 




Vireinia 


16.60 


Virginia 


Pennsylvania 

Average . 


10. 97 








13.71 









' Costs include overhead expenses but no interest. 

' Thus, the company with the largest production has cost rank 1, etc. 

Source: Files of the Federal Trade Commission. 



COMMENTS ON TABLE 10 



(a) Lowest pig iron costs for merchant companies in 1916 were 
those of two companies in Alabama: one a fair-sized company, ajid 
one a small company. 



CONCENTRATION OF EX^ONOMIC POWER 



29 



Table 11. — Costs of producing a ton of basic pig iron by integrated steel producers 
of different size, February through December 1918, arranged in order of ascending 
costs 1 



Size classification of com- 
pany in steel industry 
as a whole 



Medium 

Do-. 

Large _.. 

Medium 

Largo 

Small.... 

Do-. 

Medium 



Rant of 
company 
in pig iron 

produc- 
tion ' 



Costs per 
ton 



$17.96 
IS. 93 
19.27 
20.59 
20.83 
20.84 
20.99 
21.91 



Size classification of com- 
pany in steel industry 
as a whole 



Medium. 

Do.. 

Large 

Small 

Do... 
Large 



.Average. 



Rank of 
company 
in pig iron 

produc- 
tion' 



Costs per 
ton 



$23.23 
23.88 
24.03 
24.24 
26.85 
27.64 



21.02 



1 Costs inclu-de neither general administrative expense, selling, nor interest. 
> Thus, the company with the largest production has rank 1, etc. 

Source: Files of the Federal Trade Commission. 



COMMENTS ON TABLE 11 



(a) Lowest costs of pig iron in 1918 were those of two medium- 
sized integrated steel companies. 

(b) The United States Steel Corporation had the third lowest cost. 

(c) The companies of the Bethlehem group had relatively high costs. 

Table 12. — Costs of producing a ton of Bessemer pig iron by integrated steel pro- 
ducers of different size, February through December 1918, arranged in order of 
ascending costs ' 



Size classification of com- 
pany in steel industry 
as a whole 



Rank of 
company 
in pig iron 

produc- 
tion 2 



Medium 
Large.... 
Do.. 
Medium 
Small.... 
Medium 



Costs per 
ton 



$21. 26 
21.76 
21.94 
22.17 
22.96 
23.71 



Size classification of com- 
pany in steel industry 
as a whole 



Large 

Medium. 
Large 



Average. 



Rank of 
company 
in pi^ iron 

produc- 
tion 2 



Costs per 
ton 



$24.30 
24.63 
30.26 



22.56 



1 Costs include neither general administrative expense, selling, nor interest. 
' Thus, thp company with the largest production has rank 1 , etc. 

Source: Files of the Federal Trade Commission. 



COMMENTS ON TABLE 12 



(a) A medium-sized integrated steel producer had the lowest cost 
of Bessemer pig iron in 1918. 

(6) The United States Steel Corporation had the second lowest cost, 
(c) The Bethlehem group had relatively high costs. 



FARM MACHINERY COST TABLES 

Tables 13, 15, 17, 19, 21, and 23 give costs of two-to three- and three- 
to four-plow tractors, costs of combines (per pound), costs of grain 
binders (per pound), costs of 14-inch, two-base tractor-gang plows 
(per pound), costs of tractor-mounted two-row cultivators (per 
pound), costs of riding cultivators (per pound) for certain manu- 
facturers in 1935 and 1936. The costs include no interest charges. 

Machines of different manufacturers often vary substantially in 
weight. For this reason, farm-machinery manufacturers often com- 
pare costs per pound rather than costs per machine. 

Tables 14, 16, 18^ 20, 22, and 24 give percentages based on the prices 
and profits (prices minus costs) for two- to three- and three- to 
four-plow tractors, combines, grain binders, 14-inch, two-base tractor- 
gang plows, tractor-mounted two-row cultivators, riding cultivators 
for certain manufacturers in 1935 and 1936. 

These tables are used for this industry because its products com- 
pared vary in , size, weight, and quality. Cost of a heavy farm 
machine with special attachments may bring a relatively high price 
and have a relatively high cost when compared with other machines 
of the. same type. Knowledge of the different prices charged by 
different manufacturers for the same type of machines affords a basis 
for determination of validity of the cost comparison. Where prices 
of different manufacturers vary too much, the cost comparisons are 
of less value. Profits, the difference between prices and costs — 
especially where prices do not vary substantially — give some clue as 
to the success of different manufacturers in the production and sale 
of the particular products compared. 

If actual prices were used, they might disclose the identities of 
particular manufacturers because of their published price lists. 
Therefore, both prices and profits (prices minus costs) are shown only 
as relatives, or percentages. The highest profit shown for any 
machme is considered 100 and the profits on other machines are shown 
as relatives, or percentages, of 100. The price of the machine on 
which the highest profit is shown is also considered 100, and the 
prices of other machines are shown as relatives, or percentages of 100. 

Costs are company costs as distinguished from plant costs, and 
include selling expense but no interest. 

Size classification of companies: 

Large. — The International Harvester Co. 

Medium-sized, — Deere & Co., Allis-Chalmers Manufacturing Co., 
and J. .1. Case. 

Small companies: — AU other long-line and short-line companies. 

30 



CONCENTRATION OF ECONOMIC POWER 



31 



Table 13. — Costs of steel-wheel tractors for different companies in 1935 and 1936, 
arranged in order of ascending costs 





TRACTORS (2 TO 3 PLOWS) 




size classification of company 


Cost per 
tractor 


Size classification of company 


Cost per 
tractor 


1935 


$523. 06 
542. 68 
558. 64 
644. 70 


1936 
Medium _ _ . 


$470. 52 


(I) . 


Do... 


473. 68 


(I) 


Small ...c 


510. 70 


Small - - 


(1).-- - - 


515.92 






(I).-- 


554.09 




Small 1 

Do . - 


612. 78 
731. 42 











TRACTORS (3 TO 4 PLOWS) 




1935 
Medium . . . . 


$564. 08 
605. 91 
639. 68 
667. 55 
685. 64 
704. 77 
722.27 
758. 80 
761.28 


1936 
Medium 


$510. 72 


Do 

Do 


Do ,. 

Do 


551. 15 
611.85 


(1) 


(1) 


653. 92 


(1) 


(1) 


656. 07 


(1) 


Small 


674. 08 


(1) 


(I).-- 


695. 98 


Small 


(1) 


702. 06 


Do .... 


Small. . 


711. 64 









1 Disclosure of classification here would reve-^l the cost of the large company. 
Source: Files of the Federal Trade Commission. 

COMMENTS ON TABLE 13 



(a) Certain medium-sized companies had the lowest cost of tractors 
in both years. 

(b) The lowest-cost medium-sized companies maintained their 
low-cost positions in both years. 



Table 14. — Profits, costs, and price realizations on steel-wheel tractors for manu- 
facturers of different size in 1936 and 1936, arranged in order of decreasing profits 

TRACTORS (2 TO 3 PLOWS) 

[Expressed in percentages] 



Size classifi- 
cation of 
company 



1935 

Medium.. 

(') 

(') 

Small 



Profit 

(price 

minus cost)2 



Percent 
100.0 
71.1 
55.6 
19.6 



Price 
realiza- 
tion 3 



Percent 
100.0 
94.6 
92.5 
94.3 



Cost 



$523. 06 
542. 68 
568. 64 
644. 70 



Size classifi- 
cation of 
company 



1936 

Medium.. 
Do... 

(') 

(') 

0) 

Small 

Do... 



Profit 

(price 

minus cost)3 



Percent 
100.0 
99.7 
84.6 
66.5 
62.5 
42.8 
13.0 



Price 
realiza- 
tion' 



Percent 
100.0 
100.3 
101.1 
04.3 
99.0 
100.5 
107.4 



Cost 



$470. 52 
473. 68 
515.92 
510. 70 
554.09 
612. 78 
731. 42 



See footnotes at end of table. 



32 



GONCEJMTRATION OF ECONOMIC POWER 



Table 14. — Profits, costs, and price realizations on steel-wheel tractors for manu- 
facturers of different size in 1935 and 1936, arranged in order of decreasing 
profits — Continiyed 

TRACTORS (3 TO 4 PLOWS) 



Size classifi- 
cation of 
company 


Profit 

(price 

minus cost) 


Price 
realiza- 
tion 


Cost 


Size classifi- 
cation of 
company 


Profit 

(price 

minus cost) 


Price 
realiza- 
tion 


Cost 


1935 

Medium 

Do 


ie«u) 
80.1 
6.S. 1 
32.3 
25.8 
12.6 
9.9 
-10.2 
-16.8 


100.0 
89.3 
94.7 
87.5 
92.0 
86.1 
92.0 
85.8 
75.4 


$605.91 
564.08 
639. 68 
667. 55 
722.27 
704. 77 
761.28 
758.80 
685.64 


1936 

Medium. 

Do 


100. . 
81.3 
60.7 
43.0 
39.6 
32.0 
22.7 
17.1 
3.3 


100.0 
88.7 
93.4 
92.1 
96.6 
95.1 
87.4 
88.0 
78.5 


$551. 15 
510. 72 


Do 


DO 


611 85 


(I) . .... 


(1) 


653. 92 


(1) 


(') 

(1) 


702. 06 


(1) 


711.64 


(1) 


Small 


674.08 


Small 


Do... 


695. 98 


Do 


Do 


656. 07 









' Disclosure of classification here would reveal the cost of the large company. 

' Profit on implement on which largest profit was realized is called 100 percent to avoid disclosure of 
manufacturer. Profits on implements of other manufacturers are shown as percentages, computed by 
dividing each profit by the largest profit. 

2 The net price realization on the implement on which largest profit is realized is called 100 percent and, 
the price realizations of other manufacturers on other implements are shown as percentages, computed by 
dividing each price by the price designated 100 percent. 

Source: Files of Federal Trade Commission. 

COMMENTS ON TABLE 14 

(a) Medium-sized companies that showed lowest costs in fore- 
going table (13) had the best profits in this table. 



Table 15.- 



-Costs per pound of combines as shown for different companies in 1935 
and 193S, arranged in order of ascending costs 



Size classification of company 



1935 

Medium .-. 

Small 

Do 

Medium 

(') — - — - 

(')- -— — . 

(0 



Cost per 
pound 



Cents 
12.80 
14.21 
14.23 
14.37 
14.70 
20.52 
21.00 



Size classification of company 



1936 
Small 

Do. 

Medium 

Do- 

Small 

Medium 

(1) 

(')- - -. 

(')-.-- :.. 



Cost per 
pound 



Cents 
10.37 
11.18 
13.12 
13.24 
13.93 
16.09 
16.20 
16.48 
18.82 



1 Disclosure of classification here would reveal the cost of the large company. 
Source: Files of the Federal Trade Commission. 

COMMENTS ON TABLE 15 

(a) Small and medium-sized companies showed the lowest costs of 
combines per pound. 



CONCENTRATION OF ECONOMIC POWER 



33 



Table 16. — Profits^ costs, and price realizations on combines for manufacturers oj 
different size in 1935 and 1936, arranged in order of decreasing profits 

[Expressed in percentages] 



Size classifi- 
cation of 
company 



1935 

Medium.. 

Do... 
Small 

Do... 
(') 

(■)...!.... 
(') 



Profit 

(price 

minus cost)' 



Percent 

100.0 

68.3 

9.4 

-4.7 

-46.8 

-73.9 

-88.3 



Price 
realiza- 
tion 3 



Percent 
100.0 

81.2 
138.1 

78.4 

41.3 
118.0 

91.2 



Cost 



$935. 99 

783. 24 

1, 521. 57 

881.83 

543. 82 

1, 446. 62 

1,206.57 



Size classifi- 
cation of 
company 



1936 

Medium.. 

Do... 

(') ... 

(') 

0) 

(■) 

Medium.. 
Small 

Do... 



Profit 

(price 

minus cost)' 



Percent 
100.0 
71.6 
60.9 
55.5 
53.7 
40.6 
-9.4 
-27.2 



Price 
realiza- 
tion s 



Percent 
100.0 
87.2 
115.0 
86.4, 
39.6 
79.0 
47.9 
76.8 
89.8 



Cost 



$959. 51 
867. 76 

1,213. 12 
891. 83 
350.96 
835. 81 
575. 99 
948.14 

1, 174. 49 



' Disclosure of classification here would reveal the cost cf the large company. 

' Profit on implement on which lareost profit was realized is called 100 percent to avoid disclosure of 
manufacturer. Profits on implements of other manufacturers are shown as percentages, computed by 
dividing each profit by the largest profit. 

3 The net pri'-e realization on the implement on which largest profit Is realized is called 100 percent, and the 
price realizaiions of other manufacturers on other implements are shown as percentages, computed by 
dividing each price by the price designated 100 percent. 

Source: Files of Federal Trade Commission. 

[COMMENTS ON TABLE 16 



(a) Same medium-sized companies that had low costs and large 
profits on tractors had best profits on combines. 



Table 17. 



-Costs per pound of grain binders for different companies in 1935 a'nd 
1936, arranged in crder of ascending costs 



Size classification of company 



1935 

Medium 

Small 

(') 

(') — 

Medium 

Do 

(0 - 



Cost per 
pound 



Cents 
7.64 
8.42 
8.48 
9.10 
9.42 
9.62 
11.23 



Size classification of company 



1936 

Medium 

(') - 

Small 

Medium 

Do 

Do 

(') - 

(') 



Cost per 
pound 



Cents 
7.62 
8.45 
8.5» 
8.91 
8.96 
8.97 
10.22 
11.04 



1 Disclosure of classification here would reveal the cost of the large company. 



264905 — 41 — No. 13 4 



34 



CONCEiNTRATION OF ECONOMIC POWER 
COMMENTS ON TABLE 17 



(a) The same medium-sized company produced its grain binder 
at the lowest cost per pound in both years,. 

Table 18. — Profits, costs, and price realizations on grain binders for manufacturers 
of different f<ize in 19S5 and 19S6, arranged in order of decreasing profits 

[Expressed in percentages] 



Size classifica- 
tion of company 



1935 

Medium.. 
.Do.„- 

(')-- - 

(') 

Small 

0) — 

Medium.. 



Pioiit (price 
minus 

cost) 2 



Percent 
100.0 
60.9 
50.6 
36.9 
-.5 
-7.0 
-13.9 



Price 
realization 3 


Cost 


Percent 




100.0 


$192.11 


73.1 


147. 78 


98.0 


217.02 


70.9 


156. 88 


57.8 


146. 51 


62.0 


161.06 


64.0 


170. 16 



Size classifica- 
tion of company 



1936 

Medium.. 

(') - 

Medium.. 

(■) 

Medium.. 

Small 

Medium.. 
(')--- 



Profit (price. p = 
cost) a '-pahzation^ 



Percent 
100.0 
66.4 
60.2 
44.4 
5.3 
-. 1 
-2.0 
-3.8 



Percent 
"100.0 
100.2 
■73.1 
72.5 
62.6 
78.8 
64.6 
59.7 



Cost 



$195. 31 
213. 16 
149. 38 
156. 21 
151. 77 
194. 55 
160.39 
149. 39 



1 Disclosure of classification here would reveal the cost of the large company. 

2 Profit on implement on which larsest profit was realized is called 100 percent to avoid disclosure of 
manufacturer. Profits on implements of other manufacturers are shown as percentages, computed by 
dividing each profit by the largest profit. 

' The net price realization on the implement on which largest profit is realized is called 100 percent and the 
price realizations of other manufacturers on other implements are shown as percentages, computed by 
dividing each price by the price designated 100 percent. 

Source: Files of the Federal Trade Commission. 

COMMENTS ON TABLE 18 

(a) The same medium-sized company reaUzed the largest profits on 
grain binders in both years. 

Table 19. — Costs per pound of 14-inch, 2-hase tractor-gang plows for different com 
panics in 19S6 and 1936, arranged in order of ascending costs 



Size classification of company 


Cost per 
pound 


Size classification of company 


Cost per 
pound 


1935 
Mfidinm 


Cents 
6.88 
7.14 
7.21 
7.66 
8.14 
8.24 
8.70 
8.95 
9.17 
9.62 
13.20 


1936 
Small 


Cents 
6.27 


Small * - 


(1) 


6.91 


(1).... 


Medium..- 


6.98 


Small 


Do -.- 

Small . ^. 


7.67 


ivrpfUuin. . 


7.71 


(1) 


Medium . . . . 


7.74 


Medium-.. 


Small - 


7.80 


Small 


(1) 


7.87 


(1) ' . . 


n) 


8.51 


Small 


Small -. 

Do ..- 


9.37 


Do._ 


10.76 







' Disclosure of classification here would reveal the cost of the large company. 
Source: Files of the Federal Trade Commission. 



COMMENTS ON TABLE 19 



(a) In one year a medium-sized company and in another year a 
small company showed the lowest cost per pound on 14-inch, 2-basc 
tractor-gang plows. 



CONCENTRATION OF DCONOMIC POWER 



35 



Table 20 —Profits and price realizations on 1 4-inch, 2-hase tractor-gang plows for 
manufacturers of different size in 1936 and 1936, arranged tn order of decreasing 

profits 

[Expressed in percentages] 



Size classification of 
company 



Profit (price 
minus 
cost) ' 



1935 



Large 

Medium.. 

Large 

Small 

Do... 
Medium. 
Small 

Do-.. 
Medium. 
Small 

Do.. 

Do.. 



lUO.O 

90.2 

64.6 

53.4 

42.3 

35.6 

8.7 

8.3 

-14.8 

-18.9 

-70.7 

-73.3 



Price real- 
ization ' 



100. 

98. 

76. 

95. 
102. 

98. 

71-, 

63, 



Size classification of 
company 



1936 



Large 

Medium.. 

Large 

Medium.. 
Small 

Do... 

Do... 

Do... 

Do... 

Do... 
Medium. 



Profit (price 


Price real- 


minu? 


ization ' 


cost) ' 




100.0 


100.0 


74.2 


96.4 


69.8 


77.2 


44.3 


95.9 


42.1 


93.0 


29.4 


99.3 


27.2 


72.7 


15.9 


61.3 


13.7 


56.7 


13.7 


106.6 


-2.7 


79.1 



I Profit on implement on which largest profit was realized is called 100 percent to avoid ^I'sclosure of manu- 
facturer. Profits on implements of other manufacturers are shown as percentages, computed by dividmg 

''?Wnet^pdce^reSk,n on the implement on which largest profit is realized is called 100 percent and 
the price Realizations of other manufacturers on other implements are shown as percentages, computed by 
dividing each price by the price designated 100 percent. 
Source: Files of the Federal Trade Commission. 



COMMENTS ON TABLE 20 

(a) The International Harvester Co. showed the best profits on 14- 
inch, 2-base tractor-gang plows in both 1935 and 1936. 

Table 21 —Costs per pound of tractor-mounted 2-row cultivators for. different 
companies in 1936 and 1936, arranged in order of ascending costs 



Size classification of company 



4935 

Medium 

Do 

« --— 

(0 - — 

0) - — - 

Small...: f 

Do 

Do 



Cost per 
. pound 



Cents 
7.54 
8.07 
8.13 
8.64 
i 9. 63 
9.79 
10.67 
13.75 



Size classification of company 



1936 

Medium 

(0 - --- 

Medium... 

Do... 

(>) : - 

(') - — 

Small 

Do 



Cost per 
pound 



Cents 
6.85 
7.78 
8.02 
8.07 
9.17 
9.93 
10.11 
10.86 



» Disclosure of rflassiflcation here would reveal the cost of the large company. 
Source: Files of the Federal Trade Commission. 



• COMMENTS ON TABLE 21 

(a) A medium-sized company showed the lowest cost per pound on 
tractor-mounted 2-row cultivators in both 1935 and 1936. 



36 



CONCEJS■TRATI0^' OF ECONOMIC POWER 



Table 22. — Profits, costs, and price realizations on tractor-mounted 2-row culti- 
vators for manufacturers of different size in 1936 and 1936, arranged in order of 
decreasing profits 

[Expressed in percentages] 



Size classification 
of company 


Profit 
(price 
minus 
cost) » 


Price 
realiza- 
tion 3 


Cost 


Size classification 
of company 


Profit 
(price 
minus 
cost) ' 


Price 
realiza- 
tion 3 


Cost 


1935 


Percent 
100.0 
72.8 
70.6 
66.5 
62.3 
27.4 
—12.2 
-29.9 


Percent 
100.0 
88.2 
90.3 
64.1 
87.1 
82.3 
77.3 
100.0 


$66. 88 
63.53 
66.15 
42.21 
68.46 
71.23 
77.99 

105. 04 


1936 
Medium .. 


Percent 
100.0 
82.6 
81.7 
63.9 
62.4 
42.5 
22.3 
—3.0 


Percent 
100.0 
88. 7 
89.6 
87.7 
64.6 
82.9 
100.7 
73.1 


$66. 47 


(1) 


(1) 


60.76 


Medium.. 

Small 


Medium 

Small u. 


61.84 
65.23 


(1) 


0) 

(1) 


43.57 


(1) 


66.91 


Medium .. .. 


Small.. 

Mfidinm 


89.74 


Small 


70.81 









1 Disclosures of classification here would reveal the cost of the large company. 

' Profit on implement on which largest profit was realized is called 100 percent to avoid disclosure of 
manufacturer. Profits on implements of other manufacturers are shown a^ percentages, computed by 
dividing each profit by the largest profit. 

3 The net-price realization on the implement on which largest profit is realized is called 100 percent, and 
the price realizations of other manufacturers on other implements are sbowdtas percentages, computed by 
dividing each price by the price designated 100 percent. 

Source: Files of the Federal Trade Commission. 

COMMENTS ON TABLE 22 

(a) The same mediimi-sized company showed the largest profits 
on tractor-mounted two-row cultivators in both years. This com- 
pany, however, was not the medium-sized company that showed the 
lowest costs per pound in the foregoing table. 

Table 23. — Costs per pound of riding cultivators as shown for different companies 
in 1935 and 1936, arranged in order of ascending costs 



Size classification of company 


Costs per 
poimd 
(cents) 


Size classification of company 


Costs per 
pound 
(cents) 


1935 
Small 


6.04 
6.68 
7.28 
7.56 
7.74 
7.85 
8.50 
9.24 
9.32 


1936 
Small : 


5.35 




Medium 


6.73 


Small 


Small 

(1)..- .— 


7.33 


(1) 


7.44 


(1) 


Medium 

(1) '. 


7.58 




7.89 


Prnf^ll 


(1) 


8.25 


Do 


Small 


8.34 


(1) . . 


Do 


8.71 









1 Disclosure of classification here would reveal the cost of the large company. 
Source: FDes of the Federal Trade Commission. 



COMMENTS ON TABLE 23 



(a) Small and medium-sized companies Had the lowest costs per 
pound on riding cultivators in both years. 



CONCEJVTRATION OF ECONOMIC POWER 



37 



Table 24. — Profits, costs, and price realizations on riding cultivators for manufac- 
turers of different size in 19S5 and 19S6, arranged in order of decreasing profits 

[Expressed in percentages] 



Size classifica- 
tion of company 



1935 

Medium.. 

(') .- 

Small 

Do.... 
Medium.. 
0)--:..— 

(1) 

(1) 

Small 



Profit 
(price 
minus 
cost)' 



Percent 

100.0 

68.1 

61.7 

54.6 

35.6 

22.8 

20.2 

8.9 

2.7 



Price reali- 
zatita » 


Cost 


Percent 




100.0 


$35.78 


96.7 


38.17 


78.6 


30.26 


92.9 


38.07 


90.3 


39.18 


111.7 


51.14 


73.3 


32.89 


89. 3 


42.04 


61.3 


29.31 



Size classifica- 
tion of company 



1936 

Medium. 

(')- 

Small..-. 

Do... 

Medium. 

0) 

(•) - 

0) 

Small.... 



Profit 
(price 
minus 
cost) a 



Percent 
100.0 
77.7 
71.5 
67.0 
54.1 
50.4 
40.5 
29.2 
27.5 



Price reali- 
zation 3 



Percent 
100.0 
97.2 
112.4 
77.6 
89.4 
92.6 
63.6 
72.4 
88.2 



Cost 



$36.06 
37.58 
45.78 
29.37 
36.78 
38.81 
25.93 
31.66 
39.62 



1 Disclosure of classification here would reveal the cost of the large company. 

' Profit on implement on which largest profit was realized is called 100 percent to avoid disclosure of 
manufacturer Profits on implements of other manufacturers are shown as percentages, computed by 
dividing each profit by the largest profit. 

3 The net price realization on the implement on which largest profit is realized is called 100 percent, and 
the price realizations of other manufacturers on other implements are shown as percentages, computed by 
dividing each price by the price designated 100 percent. 

Source: Files of the Tederal Trade Commission. 

COMMENTS ON TABLE 24 



(a) A medium-sized company showed the largest profit per pound. 
This was a company with lowest costs and largest profits in several 
of the foregoing tables. ■ 



PETROLEUM COST TABLES AND EXHIBIT ON PETROLEUM 

REFINING 

Tables 25, 26, 27, and 28 show the average costs of producing a barrel 
of crude oil by five groups of producing companies in the years 
1927,. 1928, 1929, and 1930. 

The five groups of producing companies, some of which are sub- 
. sidiaries of the major integrated oil companies, are as follows: ' 

Standard majors. — Standard Oil Co. (New Jersey), Socony-Vacuum 
Oil Co., Inc., Standard Oil Co. (Indiana), Standard Oil Co. of Cali- 
fornia, Ohio Oil Co., and Standard Oil Co. (Ohio). 

Non-Standard majors. — Texas Corporation, Gulf Oil Corporation, 
and 12 other major oil companies. 

Medium-sized independents. — Companies not classified as majors 
but with production of 3,000,000 barrels and over. 

Small independents.— Compeimes with production of from 1,000,000 
to 3,000,000 barrels. 

Very small independents. — Companies with production of l,U00,u00 
barrels or less. 

Table 29 shows (a) cost ranks (based on position in cost series) of 
five largest crude oil producing companies (all owaied by major inte- 
grated oil companies) for 1927, 1928, 1929, and 1930; (b) cost ranks of 
three lowest-cost producing companies over the same period. 

Tables 30, 31, 32, and 33 show similar data for important oil tields: 
two in California, one in Oklahoma, and one in Texas. 

Exhibit on petroleum refining gives conclusions concerning relation 
between refinery size and refinery costs based on unpublished allocated 
costs of producing a gallon of gasoline and total costs of refining a 
barrel of crude. 

Table 25. — Average costs of producing a barrel of crude 'petroleum for groups of 

companies in 1927 



standard majors... 

Non-standard majors ' 

Medium-sized independents 

Small independents 

Very small independents 



Number of, 

producing 

companies 



Number of 

barrels 
produced 



111,499,628 

242, 096, 659 

62, 407, 302 

45, 784, 961 

19, 719, 841 



Average cost 
per barrel 



$1.28 
1.14 
.84 
1.12 
1.48 



» Includes the Atlantic Refining Co. 
Source: Files of the U. S. TarifT Commission. 



1 In the tables the number of crude-oil producing companies is stated. Thus, the Humble Oil & Refining 
Co., the Carter Oil Co., and the Standard Oil Co. of Louisiana are counted as 3 companies, although 
all 3 are owned or controlled by the Standard Oil Co. (New Jersey). 

38 



CONCENTRATION OF ECONOMIC POWEIi 



39 



COMMENTS ON TABLE 25 

(a) Medium-sized independent oil companies — not any one of 
which was large enough to be classified as one of the 20 major oil 
companies — had the lowest average cost shown by any group in 1927. 

(b) The group containing the small independents had the next lowest 
costs. 

(c) The major oil companies not in the Standard group had a lower 
average cost of crude oil than the Standard companies. 

Table 26. — Average costs of producing a -barrel of crude petroleum for groups of 

companies in 1928 



Staniiard majors .•.. 

Non-standard majors i 

Medium-sized independents 

Small independents 

Very small independents 



Number of 
producing 
companies 



16 
25 
10 
24 
105 



Number of 

barrels 
produced 



115,325,814 
247, 233, 355 
56, 585, 951 
43, 063, 800 
29, 251, 214 



Average cost 
per barrel 



$1.14 
1.03 
.81 
1.03 
1.28 



' Includes the Atlantic Refining Co. 

Source: Files of the U. S. Tariff Commission. 

COMMENTS ON TABLE 26 

(a) Medium-sized independent oil companies — not any one of 
which was large enough to be classified as one of the 20 major oil 
companies — had the lowest average cost shown by any group- in 1928. 

(b) The groups containing the small independents and tlie non- 
standard majors had the next lowest costs. 

(c) The Standard majors had the next to highest costs. 

Table 27. — Average costs of producing a barrel of crude petroleum for groups of 

companies in 1929 



Standard majors. 

Non-standard majors '..!.- 
Medium sized independents 

Small independents 

Very small independehts 



Number of 
producing 
companies 



17 
28 
15 
40 
212' 



Number of 

barrels 
produced 



137, 365, 944 
271, 896, 698 
79, 426, 874 
61, 871, 484 
36, 029, 005 



Average cost 
per barrel 



$1. 11 
.198 
.78 
1.06 
1.36 



' Includes the Atlantic Refining Co. 

Source: Flics of the U. S. Tariff Commission. 



COMMENTS ON TABLE 27 



(a) Medium-sized independent oil companies — not any onv of 
which was large enough to be classified as one of the 20 major oil 
companies — had the lowest average cost shown by any group in 1929. 

(6) The non-Standard majors had the next to lowest costs. 

(c) The Standard majors had the next to highest costs. 



40 



CONCEiNTR-ATION OF ECONOMIC POWER 



Table 28. — Average costs of producing a barrel of crude petroleum for groups of 

companies in 19S0 ' 



Standard majors 

Non-Standard majors > 

Medium-sized independents 

Small independents 

Very small independents 



Number of 
producing 
companies 



20 
29 
12 
25 
105 



Number of 

barrels 
produced 



163, 738, 582 
263,170.570 
53, 613, 240 
42, 692, 912 
25, 565, 243 



Average cost 
per barrel 



1.04 
.80 
1.10 
1.27 



1 Includes the Atlantic Refining Co. 
Source: Files of the U. S. Tariff Commission. 



COMMENTS ON TABLE 28 



(a) Medium-sized independent oil companies — not any one of 
wliich was large enough to be classified as one of the 20 major oil 
companies — had the lowest average cost shown by any group in 1930. 

(6) The Standard oil companies had the next to lowest costs. 



Table 29.- 



-Cost ranks and sizes of the 5 largest and 3 lowest cost crude-oil-producing 
companies in 1927, 1928, 1929, and 1930 ' 



Company 


Affiliation 


Size of op- 
eration ' 


1927 cost 
rank s 


1928 cost 
ranks 


1929 cost 
rank' 


1930 cost 
ranks 


5 largest producing com- 
panies: 
A.- 


Non-Standard major. . 
Standard major 


Large 

do 


57 
51 
45 
6 
71 

2 
15 
6 


45 
52 
34 
16* 
61 

2 
5 
4 


59 
68 
28 
32 
64 

2 
3 
9 


42 


B.— 


64 


c 


Non-standard major 
do 


...do _ 

do 


29 


D 


24 


E , 




...do 


49 


3 lowest cost producing 
companies: 
F 


Independent- 


SmaU 

Medium.. 
Small 


5 


G 


.. do . .. 


2 


H 


do . 


15 









1 Companies -with annual production in excess of 1,000,000 barrels. \ 

* Large producers had production of from' 10,000,000 to over 40,000,000 barrels. 

Medium-sized producers had production of from 4,000,000 to 10,000,000 barrels. 

Small producers had production under 4,000,000 barrels. 

' Lowest cost producer has cost rank 1, etc. 

Source: Files of the U. S. Tariff Commission. 



COMMENTS ON TABLE 29 

(a) Total number of companies with annual production over 
1,000,000 barrels covered: 1927, 73; 1928, 70; 1929, 91; 1930, 78. 

(6) Cost ranks of 5 largest producing companies indicate that these 
largest producers did not have low costs during the 4 years con- 
sidered.^ 

(c) Lowest cost prod!ucers were a few relatively small or medium- 
sized independent producers. 

1 A producing company's cost rgnk is determined by its position in the cost series. Thus, the lowest cost 
company has rank 1, and the next lowest cost company has rank 2, etc. 



CONCEJMTRATION OF ECONOMIC POWER 



41 



Table 30.' — Cost ranks and sizes of 3 largest and 2 loivest cost producers of crude 
petroleum in Long Beach, Seal Beach, and Signal Hill (Calif.) in 1927, 1928, 
1929, and 1930 



Company 


Aflaiiation 


Size of op- 
eration 1 


1927 cost 
rank 


1928 cost 
rank 


1929 cost 
rank 


1930 cost 
rank 


3 largest producers: 
A 


Nonstandard major,... 
do . 


Large 

...do 


2 
6 

5 

1 
4 


5 
6 
4 

3 


3 
4 
11 

1 
2 


4 


B 


3 


C 


do 


do .. . 


9 


2 lowest cost producers: 
D 


Independent 

do 


Small 

do . .. 


2 


E 


1 











1 Large producers had annual production of from over 2,000,000 to over 10,000,000 barrels. Small producers 
bad production of about 1,000,000 barrels.' 

2 No data. 

Source; Files of the U. S. Tariff Commission. 

COMMENTS ON TABLE 30 

(a) Total number of operating companies covered for Long Beach, 
Seal Beach, and Signal Hill fields: 1927, 10; 1928, 13; 1929, 13; 
1930, 10. 

(6) Major companies did not have low costs. 

(c) Two independent producers with small production had the 
lowest costs. 

Table 31. — Cost ranks and sizes of 2 largest producers and the lowest-cost producer 
of crude petroleum in Santa Fe Springs (California) in 1927, 1928, 1929, and 
1930 



Company 


Aflillation 


1927 cost 
rank 


1928 cost 
rank 


1929 cost 
, rank 


1930 cost 
rank 


2 largest producers: 

\ 


Major 


6 
5 
1 


4 
8 
3 


2 
11 


2 


B 


do 


6 


Lowest-cost producer: C 


Small independent..-. 


3 



Source: Filp5 of the U. S. Tariff Commission. 



COMMENTS ON TABLE 31 

(a) Total number of operating companies covered for Santa Fe 

Springs field: 1927, 7; 1928, 8; 1929, 11; 1930, 9. 

(h) No company maintained a really low-cost position^ 

(c) One major oil company — not of the Standard group — and one 

small independent oil company showed the lowest costs over the 

4-year period. 

Table 32. — Cost ranks and sizes of 2 largest producers and the lowest-cost producer 
of crude petroleum in Seminole field (Oklahoma) in 1927, 1928, 1929, and 1930 



Company 


AfBliation 


Size of opera- 
ation 1 


1927 cost 
rank 


1928 cost 
rank 


1929 cost 
rank 


1930 cost 

rank 


/ 
2 largest produc<?rs: 


Major 


Large 


14 
4 
1 


'8 


10 


6 


B 


do 


do 


6 4 


4 


Lowest-cost producer: C 


do 


Medium 


1 


1 


3 



' Large producers had an average production over the 4-year period of over 8,000,000 barrels, 
sized producers had sn average production over the 4-year period of loss than 8,000,000 barrels. 

Source: Files of the U. S. Tariff Commiission. 



Medium- 



42 



CONCENTRATION OF ECONOMIC POWER 
COMMENTS ON TABLE 32 



(a) Total number of operating companies covered for Seminole 
field: 1927, 17; 1928, 19; 1929, 19; 1930, 21. 

(6) Lowest-cost operation was mediiim-s'ized one owned by a 
non-Standard major oil company. 

Table 33. — Cost ranks and sizes of S largest and 2 lowest-cost producers of crude 
petroleum in west Texas in 1927, 1928, 1929, and 19S0 



Company 


• 

Affiliation 


Size of opera- 
ation ' 


1P27 cost 
rank 


]92Scost 
rank 


1929 cost 
rank 


1930 cost 
rank 


3 largest producers: 


Major 

...do 




5 
1 
9 

1 


6 

1 

■!.4 

1 

2 


5 

1 

11 

1 


6 


B 


Medium 

do . 


1 


c :.. 


do 


13 


2 lower.t-cost producers: 
B 


do 


do 

Small 


1 


D. . 


Independent-. 


2 









• Large producers had average production over the 4-year period of over 10,000,000 barrels. Medium- 
sized producers had average production over the 4-year period of ovor-5,000,000 barrels and under 10,000,000 
barrels. Small producers had average production over the 4-year period under 2,000,000 barrels. 

» No data. 

Source: Files of the U. S. Tariff Commission. 

COMMENTS ON TABLE 33 

(a) Total number of operating companies covered for west Texas 
field: 1927, 14; 1928, 19; 1929, 20; 1930, 22. 

(6) Lowest-cost producing unit of those covered m the west Texas 
field had medium-sized production and belonged to a non-Standard 
major. , 

(c) The next lowest-cost producer was a small independent. 



EXHIBIT ON PETKOLEUM REFINING 

Analysis of refining cost data comphcated by the variety and 
varying proportions of petroleum products made by different re- 
fineries. 

A refinery's a^ciency is determined by: (1) Its allocated cost of 
producing a ga, a of gasoline; (2) its total cost of converting a 
barrel of crude oil into all the various petroleum products refined. 

Cost data for refineries producing lubricants not included with cost 
data for refineries not producing lubricants, because of special costs 
involved in production of lubricants. 

Exhibit 1 

Sizes of Lowest-(^ost Refineries of California, Gulf Coast, Atlantic 
Coast, and Interior States, 1929-30 ' 

california 

Nonlubricant refineries covered: 22 in 1929; 23 in 1930. 
Four lowest cost of the refineries covered were medium-sized or small.^ 
Lubricant refineries covered: Six in 1929; seven in 1930. 

Of two lowest-cost refineries of the group covered, one was small and other 
was medium-sized.2 



' A refinery's cost position was'determined by: (1) Its cost of processing a barrel of crude; (2) its allocatec 
•ost of producing a gallon of gasoline. Costs of charging stocks (including crude oil) excluded. A smal 
''^finery may belong to a large company. 

- Large: Capacity over 50,000 barrels per day. Small: Capacity 10,000 barrels per day or under. 

3 Large: Capacity over 60,000 barrels per day. Small: Capacity 10,000 barrels per day or under. 



CONCENTRATION OF ECONOMIC POWEiR 43 

GULF COAST 

Nonlubricant refineries covered: Seven in 1929; eight in 1930. 

Lowest-cost refinery (belonging to a large company) was one of smallest re- 
fineries of this group.* 

Lubricant refineries covered: Seven in 1929 and six in 1930. 

Lowest-cost refinery (belonging to a large company) was one of two largest 
refineries of this group. 

ATLANTIC COAST ■ 

Nonlubricant refineries covered: Nine in 1929; € ghi, in 1930. 

Lowest-cost refinery in group covered was medium-sized. 

Lubricant refineries covered: 12 in 1929 and 193b. ' 

Two lowest-cost refineries were among the small refineries of this group.* 

INTERIOR STATES 

Nonlubricant refineries: 66 in ":929; 71 in 1930. 

Two lowest-cost refineries were both small refineries of this group.' 

Lubripant refineries: 15 in 1929; 17 in 1930. 

Lowest-cost refinery was one of the small refineries of this group.*- 



' Small; Capacity 1,000 barrels per day and under. 

' Large: Capacity over 150,000 barrels per day. Small: Capacity 20,000 barrels per day and under. 

' Small: Capacity 15,000 barrels per day and under. 

Source: United States Tariff Commission's flies. 



BEET AND CANE SUGAR COST TABLES 

Tables 34, 35, 36, 37, 38, 39, 40, and 41 show costs of individual 
beet-sugar factories and companies for a 5-year pre-war period and 
for 3 years at beginnin'' e- present decide. 

Tables 42, 43, and ^A show the cost ranks of certain producers of 
raw cane sugar in Cuba, Hawaii, and Louisiana during the 3 years 
at beginning of present decade. 

Tables 45, 46, 47, 48, 49, 50, 51, 52, and 53 show the costs of refining 
raw cane sugar for refineries and refining companies for 1929, 1930, 
and 1931. 

Size classification of beet-sugar companies: 

Large company. — Great Western Sugar Co. 

Medium-sized companies. — Holly Sugar Corporation, Utah-Idaho 
Sugar Co., American Crystal Sugar Co. (formerly American Beet 
Sugar Co.), Spreckels Sugar Co», Amalgamated Sugar Co., and Michi- 
gan Sugar Co. . 

Small com!panies. — All other beet-sugar companies. 

Size classification for Cuban centrals: 

Large. — Centrals with average annual production over 150,000,000 
pounds. 

Medium-sized. — Centrals with average annual production between 
100,000,000 and 150,000,000 pounds. 

Small. — Centrals with average annual production below 100,000,000 
pounds. 

Size classification for Hawaiian sugar mills : 

Large. — Mills with average annual production over 150,000,000 
pounds. 

Medium-sized. — Mills with average annual production between 
100,000,000 and 150,000,000 pounds. 

Small. — Mills with average annual production less than 100,000,000 
. pounds. 

Size classification for Louisiana companies producing raw cane 
sugar: . 

Large. — Companies with average annual production over 20,000,000 
.pounds. 

Medium-sized. — Companies with average annual production be- 
tween 15,000,000 and 20,000,000 pounds. 

Small. — Comp9,nies with average annual production leSs than 
15,000,000 pounds. 

Size -classification for cane-sugar-refining companies: 

iar(7€. ^-American Sugar Refixiing Co. 

Medium-sized. — National Sugar Refining Co., and Cahfornia & 
Hawaiian Sugar Refining Corporation, Ltd. 

Small. — Other sugar-refining companies. - 
44 



I 
I 



CONCEiNTRATION OF ECONOMIC POWEB 



45 



Table 34. — Costs of producing beet sugar by plants averaged for the 5 crop years 
ending in 1913-14, arranged in order of ascending costs 



Rank of plant in production 


Location of plant 


Classification of 
company 


Cost per 
pound, 
cents. 


9 ---- 


California.. 

do 


Small.. 


2.9413 


2 . 


do 


2. 9894 


1 


*do 


Medium 


3.1294 


55 


Utah.. 


do.. 


3. 1310 


11 . 


California 


Small 


3.2038 


31 


Utah 


Medium 


3.2300 


34 -. 


do _... 


do 


3.2783 


19 .... 


do 


.-t..do.. . . 


3.3400 


4 . . 


Colorado 


Large _... 

Medium. 


3.3641 


25 


Michigan.. 


3.3735 


28 


Utah 


Small 


3.4005 


24 . 


California 


Medium. 


3. 4087 


5 . 


Colorado 


Large 


3.4160 


8 


Utah 


Medium... 


3.4388 


3 .. 


Montana 


Large 


3.4410 


20 


Idaho 


Medium 


3,4584 




Colorado 


Large 


3, 57»6 


17 


do 


do 


3,5843 




do 


do . . 


3.5843 


20 


Idaho 


Medium . . 


■ 3.6151 




California.. 


Small . . 


3. 6338 


12 - 


do.... 


Medium 


3.6538 




Colorado 


Large 


3. 6576 


21 


do 


do... 


3.6821 




do 


do ... . 


3. 7166 


10 - 


Nebraska 


do.. .. 


3.7550 




Colorado... . . . 


4o. :. . 


3. 7618 


7 . - - - 


do. 


Medium • \ 


■ 3.7760 




Michigan 


do.. ., 


3.7844 


33 


California 


Small.i..X., 

do ^ , . 


3. 8015 




Michican 


3.8089 


48 


California 

Idaho 


do /.. 

Medium 


3. 8710 




3. 8734 


37 _ 


Michigan.. 


Small. 


3.918b 




do 


Medium..... .... 


3. 9419 


36 


California 


Small 


3.9596 




Michigan _ 


Medium 


4.1495 


35 ... - --. 


do. 


do.. 


4. 1691 




Colorado. 


Small 


4. 1932 


46 - - 


Michigan 


do.. - 


4.1980 




Colorado 


Medium 

Small 


4. 1986 


54 - 


Michigan.. 


4.3212 




do.... . -. 


Medium 


4. 3345 


44 - 


do __.. 


Small 


4. 3339 




do . .. 


:....do 


4. 3486 


40 .... ...: 


Colorado 


do 


4.3489 




Kansas . ...•. 


do ... 


4. 4518 


45 


Ohio . . 


:.-.do 


4. 5133 




Wisconsin 


do 


4.5807 


43 . --- - 


■Michigan, 


do 


4.5855 




Minnesota 


. . do 


4. 6366 


36 - 


Michigan. 

Ohio. 


do 

..do . ■ 


4. 7937 




4. 8066 


61... -. 


Colorado _ . _ 


Medium 


4. 9636 




Wisconsin 


Small 


4. 9974 


53 - 


Ohio... 


do 


5. 0126 




Orpgon 


Medium 


5. 1749 


50 - 


Wisconsin 


Small . . 


5. 3652 


60 


Nebraska 


Medium . 


5. 4213 


57 


Iowa. 


Small 


5.4628 




Wisconsin 

Michigan 


.... do .. 


5 5405 


41 


do 


5.5690 




Colorado 


do 


6 4079 


62 - - 


Arizona 


do _ 


6. 4465 



Source: Federal Trade Commission files. 



COMMENTS ON TABLE 34. 

(a) Costs shown in foregoing table are averages for 5-year period 
ending with the crop-year 1913-14. 

(6) Lowest-cost plant had ninth largest production and belonged 
to a small beet-sugar company in California. 

(c) Next lowest costs shown by the two largest sugar plants, also 
located in California. One of these plants belonged to a small com- 
pany, another to a medium-sized company. 



46 



CONCEi]^4TRATION OF EOONOMIC POWEil 



(d) Great Western had some (airly low-cost plants, some average- 
cost plants, but no very high-cost plank. 

Table 35.- — Costs of producing beet sugar by large, medium-sized, and small com- 
panies, averaged for the 5 crop years ending in 1913-14, arranged in order of 
ascending costs 



- Glassification of company 


Cost per 
pound 


Classification of company 


Co.st per 
pound 


1. Small. . , 


Cents 
2.9413 

2. 9894 

3. 2038 
3. 2504 
3.4005 
3. 4472 
3, 4724 
3. 5440 
3. 6338 
3.8015 ; 
3.8710 
3.9JS.S 1 
3.931.! 
3. 9474 
3. 9596 
4.0403 


17. (') 


Cents 
4 193'' 


2. Medium 


18. (1) 


4 2491 


3. Small 


19. Small .. 


4 3339 


4. Medium. . . . . . 


20. Small 

21. dmall . 

22. Small 

23. Small . . ... 


4 348Q 


5. Small 


4 4518 


6. Medium 


4 5807 


7. Medium.. 


4 6144 


8. (0- - .-- 


24. Small 

25. Small 

26. Small.. 

27. Small 


4 6366 


9. (') 


4 H223 


10. (')- 

11. (1) - - ... 


4. y<J74 
5 3652 


12. (') 

13. Medium .. 


28. Small 

29. Small . . 

30. Small 

31. Small 

32. Small 


5. 4628 
6 5406 


14. Medium.. 1 

15. Small 


5. 5690 

6. 4079 


16. 0) 


6. 4465 









' Disclosure of classification here might reveal the costs of the large company. 
Source: Federal Trade Commission flies. 



COMMENTS ON TABLE 35 

(a) During pre-war period covered, at least seven small and 
medium-sized companies had lower costs than Great Western, whose 
position in the cost series is not disclosed. 

Table 36. — Costs of producing beet sugar per pound by plants'' of different size 
during the crop year 1929-30, arranged in order of ascending costs 



Production rank 
of plant 


Size classification 
of company 


Cost per 
pound 


Production rank 
of plant 


Size classification 
of company 


Cost per 
pound 


32 


Medium 

■(')-... -. 

(1) 


Cents 
3. 9218 
4. 1077 
4. 1872 
4.2428 
4.2654 
4.2972 
4. 3389 
4. 3575 
4. 3.588 
4. 3697 
4. 4570 
4. 4802 
4. 5202 
4. 5401 
4. 5649 
4. 5949 
4. 5975 
4. 6393 
4. 6581 
4. 6676 
4.6852 
4.7079 
4. 7182 
4. 7275 
4. 7362 
4. 7441 
4. 8077 
4.8213 
4. 8384 
4. 8697 
4. 8715 
4. 8720 
4.8814 


48 .. 


Me Hum 


Cents 

4 9093 


(1) 


12 


Large 


4.9823 


0) 


59 


Medium. 

.... do 


4. 9838 


19 




60 


4. 9937 


(I) 


(1) 


34 


do 


5. 0162 


43 .. 


Small 


16 


Large 


5. 0269 


26 . . 


Medium 


(1) 


(') 

Medium 


5. 0363 


(')■- 


(') 

(') - - 

Large 


50 ... 


5. 0744 


(1) : 


61 . 


do 


5.0763 


33 


10 


do 


5.1204 


(1)...., 


(')...-... 


46 


do.. 


5.1643 


39 


49 


Small 

Medium .", 

Small . 

Medium. .. 

do 


5. 1918 


56 

14 


...do 

Large . . 


58... .. ... 

44 


5.200P 
.5.2255 


23 .. 


do. 


17: 


5. 2797 


(1) 


(1). 


47 


5.3000 


41 ... 


Medium .... 


,37 


do 


5. 3330 


(') -- ^ - 


(1). 


20 


Large ... 


5. 3847 


11 ' ... 


Large... 

do 


28 


.- do .. . : 


5. 3987 


21....... 


52 ... 

31 


Medium. 

..do 


5. 4748 


36 


Medium 


5. 7078 


27 •., 


do... 


64...- 

64 ....' 


Small.. ... 


5. 7691 


22 


Large..: 


Medium 


5. 7937 


18 . . 


,do 


30. 

51 ...^ .^. 


- . do-.... 

Small 

Medium 


5. 7949 


40 . . 


Medium... . 

do ---. 


5. 9602 


15 


57 

S3 


6. 0456 


35 


Large.. 

do 


do 


6. 0708 


13 "" . 


63 


... do .... 


6. 1402 


38 




45 


.. do . ... 


6. 1089 


42 


.... do -. 


55 '. 


Small 

do _ 

Modium 

SnidU . 


6. 4514 


24 - 


do 


65 

62 - 


6.6283 


25 




6.7681 


29 


Medium.. 


66 


6.8114 



> Disclosure of plant production rank or size classification of company might reveal the identity of plant 
)r company it tielonus to. 

Source: U. S. Tariff CommissWn files. 



CONCENTRATION OF E€ONOMK" POWER 
COMMENTS ON TABLE 36 



47 



(a) Lowest-cost plant was a small plant, thirty-second in size, 
owned by a medium-sized company. 

(6) Most of the large plants had quite low costs. 

(c) Great Western's plants were fairly low-cost plants, although 
some had average costs and some fairly high costs. 

Table 37. — Costs of producing beet sugar per pound by plants of different size during 
the crop year 1930-31, arranged in order of ascending costs 



Production rank 
of plant 


Size classification 
of company 


Cost per 
pound 


Production rank 
of plant 


Size classiflcation 
of company 


Cost per 
pound 


22 


Large 


Cents 
3. 7660 

3. 9979 

4. 0499 
4. 0548 
4. OfiSl 
4. 1385 
4.1806 
4. 2094 
4. 2193 
4.2925 
4. 3501 
4. 3084 
4.3836 
4.4U5 
4. 4342 
4. 4401 
4. 4945 
i. 5520 
4. 5558 
4. 5921 
4.6216 
4. 6355 
4. 6550 
4. 7001 
4.7209 
4. 8080 
4.8197 
4. 8334 
4. 8375 
4. 8429 
4. 8462 
4. 85r.5 
4. 8608 


40 


Medium 

Small 


Cents 
4 8767 


11 


Medium 


54 


4 8861 


32 


do . 


53 


Medium... . 


4. 8920 


(1) 


(') 

Medium 


20-. 




4, 9510 
5 0524 


43 


23 


do 


(') 


(1) 


(').- 

64... 


0)... ..: 

Small 

Medium.. 

Large _ . 

Medium 

do 


5 0999 


(1) 


(!) 


5. 1450 


47 


Small- 


49. 


5 1516 


(') 


(') ... 

Medium .. 

Large... 

ATedium 

(') 


16 

.59 

50 


5 1675 


4.') 


5 1749 


29 


5. 1777 


39 .- 


61 

62 , 

56 


Small 

Medium 


5 1932 


(') -- 

(1) 


5 2077 


0) 

0) 

Medium. 

do 


5. 2078 


(1) 


58 


do 


5 2336 


31 . - 


51 


do 


5 2516 


.33.... 


14 . 

48 


do 

do 


5. 3409 


28 


Large 

Medium 

(') . 

Medium . 

Large 

Medium 

Large ... .. 

Small 

Large ,.. 

do. .. 

Medium . : 

.. do 

Large .. 

Medium .. 

...do.. 

... .do 


.'i 3635 


35 


25 


Large... 

Medium. . 


5 3913 


(1) ."... .... 


60 


5. 4550 


30 


. do . 


.5. 5284 


10 


12 

24 


Large 


5 5402 


57 


.. do 


5. 5504 


17 . ■ 


55 


Small 

Large 

Medium 

do 

- do- . 


5 5703 


44.. :.. 

21 -_. 

19. 

42 


27 

26. 

.52 

41 . 


r,. 7314 
5. 7657 
5. 8091 
6. 0992 


46 _. 


65 


Small 


6. 1448 


18 


36 

38 


Medium 


6. 2234 


15.. _ 


do.. 


6.2411 


34 


63 


Small. 


6. 4042 


13 















' Disclosure of plant proiluction rank or size classiflcation of company might reveal the identity of plant 
or company it belongs to. 

Source: U. S. Tarifl Commission flies. 



COMMENTS ON TABLE 37 



(a) Three lowest-cost beet-sugar plants in 1929-30 were small or 
medium size. One of these plants belonged to the Great Western 
Sugar Co. 

(6) The largest plants had fairly low costs. 



48 



CONCENTRATION OF EIOONOMIC POWER 



Table 38. — Costs of producing beet sugar per pound by plants of different size 
during the crop year 1931-32, arranged in order of ascending costs 



I 



Production 
rank of plant 



(')- 

(')- 

(')- 

(')- 

(')- 

17. 

25. 

22 

14. 

27- 

20. 

23. 

12. 

(>). 

21. 

43. 

15. 

47. 

36. 

19. 

11. 

30. 

41. 

35. 

26. 

18. 

38. 

24. 



Size classification 
of company 



(').- 

(1) 

0) - 

(') 

0) 

(') - 

Large 

Medium . 

Large 

do.... 

do-... 

do.... 

do.... 

do-... 

0) 

Medium. 

Small 

Medium. 

Small 

Medium. 

Large 

Medium. 

do.... 

do... 

do.... 

do.-. 

Large 

do.-.. 

Medium. 



Cost per 
pound 



Cents 
3.2884 
3. 2916 
3. 3774 
3. 3892 
3. 4008 
3. 4674 
3. 5579 
3. 5660 
3. 6087 
3.6426 
3. 6503 
3. 6687 
3.6847 
3. 6957 
3. 7108 
3.7245 
3.7285 
3. 7352 
3.7422 
3. 7564 
3. 7582 
3. 7613 
3. 7842 
3.8685 
3. 8703 
3. 8739 
3. 9004 
3. 9191 
3.9492 



Production 
rank of plant 



Size classification 
of company 



Medium, 
do.... 
do.... 



0). 

Large 

Medium. 

Large 

Medium. 
..--do.... 

Large 

Medium. 

do.... 

(') 

Large 

do.... 

Small 

do... 

Medium. 

Large 

Medium. 

do.... 

.....do.... 

do.... 

Small 

Medium. 

Small 

Medium. 

Small 

do.... 



Cost per 
pound 



Cents 
3:9939 
4.0047 
4.0223 
4. 0234 
4.0290 
4.0423 
4. 0615 
4. 1243 
4. 1487 
4. 1611 
4. 2013 
4. 2087 
4. 2095 
4.2148 
4. 2442 
4.4042 
4.4179 
4. 4584 
4. 5134 
4.5495 
4. 6366 
4.7288 
4.7894 

4. 8653 
4.9018 

5. 0201 
5. 0695 
5. 3003 
5. 8758 



1 Disclosure of plant production rank or size classification of company might reveal the identity of plant 
or company it belongs to. 
Source: U. S. Tariff Commission files. 

COMMENTS ON T.\BLE 38 

(a) Most of the large beet-sugar plants in 1931-32 had low costs, 
although largest plant was not one of the low-cost plants. 

(6) Great Western had a considerable number of low-cost plants, 
but this company also had some very high-cost planfs. 

Table 39. — Costs of producing beet sugar per pound by companies of different size 
during the crop year 1929-30, arranged in order of ascending costs 



Size classification of company 



1. Small...- 

2. 0) 

3. Medium 

4. (■)- 

5. Medium 

6. Medium 

7. Small-... 

8. Small.... 



Cost per 
pound 



Cents 
4.2972 
4. 5721 
4. 6393 
4.6880 
4.8121 

4. 9179 

5. 1918 
5. 2253 



Size classification of company 



9. (1) 

10. Medium 

11. Small.... 

12. Small-... 

13. Small.... 

14. Small.... 

15. Small.... 



Cost per 
pound 



Cents 
5. 3795 
5. 5239 

5. 7691 
5.9602 

6. 4514 
6.6288 
6.8114 



1 Disclosure of classification would reveal cost of large company. 
Source: U. S. Tariff Commission files. 



COMMENTS ON TABLE 39 

(a) Lowest-cost beet-sugar company in 1929-30 was a small 
company. 

(6) Great Western Sugar Co. was one of the lo^-cost companies in 
that year. "• 



CONCEiNTRATION OF ECONOMIC POWER 



49 



Table 40. — Costs of producing beet sugar per pound by companies of different size 
during the crop year 1930-31, arranged in order of ascending costs 



Size classification of company 



1. Medium. 

2. Small.... 

3. (1) 

4. 0), 

5. Small 

6. Medium. 

7. Medium. 

8. Small ... 



Cost per 
pound 



Cents 
4. 0548 
4. 2094 
4. 5536 
4. 6215 
4.7209 
4. 7603 
4. 8314 
4.8861 



Size classification of company 



9. Small... 

10. Small... 

11. Medium 

12. (1) 

13. Small... 

14. Small.... 

15. Small.... 



Cost per 
pound 



Cents 
5. 1430 
5. 1932 
5. 1974 
5.5272 

5. 5703 

6. 1448 
6. 4042 



' Disclosureof classification would reveal cost of large company. 
Source: U. S. Tariff Commission files. 

COMMENTS ON TABLE 40 

(a) The lowest-cost beet-susrar companies in 1930-31 were medium- 
sized and small. 

Table 41. — Costs of producing beet sugar per pound by companies of different size 
during the crop year 1931-32, arranged in order of ascending costs 



Size classiflcation of compaus 


Cost per 
pound 


Size classiflcation of company 


Co.st per 
pound' 

• V 


1. Medium 


Cevts 

3.5660 

3,6534 

3.7285 

. 3.7422 

3. 8275 

4. 0222 
4. 0234 
4. 0985 


9. (1) 


Cents 
4. 1662 
4.4042 
4. 4179 
4. 8653 
6.0201 
6.3003 
5.8758 


2. (1) - ---. 


10. Small.. 


3. Small ■ 


U. Small 


4. Small 


12. Small ""■ 


5. (1) ..; 


13. Small.. "'" 


6. Medium 


14. Small ■ ' " 

15. Small :.._ """ 


7. Medium 











' Disclosure of classiflcation would reveal cost of large company. 
Source: U. S. Tariff Commission files. 

COMMENTS ON TABLE 41 

(a) The lowest-cost beet-sugar company in 1931-32 was medium- 
sized. 

(6) Great Western Sugar Co. was one of the low-cost companies in 
that year. 

Table 42. — Cost ranks and size of 4 largest centrals and 4 lowest-cost centrals in 

Cuba over a 3-year period 



Central 


Size 


1929-30 
cost rank 


1930-31 
cost rank 


1931-32 
cost rank 


4 largest centrals: 

A 


Large i... 


35 

8 
42 
58 

2 
1 
5 
4 


39 
37 
56 
70 

2 
19 
4 
3 


46 
26 
31 
67 

16 


B 


do.. 


C, L 


do 


D.r : . . - : -..: 


do 


4 lowest-cost centrals: ' 

E ,. 

F ...] - 


Medium 

Small 

do.. 


Q 


2 


H .-J 


. .- do 






6 



Source: U. S. Tariff Commission flies. 
264905—4 1— No.. 1 3 5 



50 



CONCENTRATION OF ECONOMIC POWER 
COMMENTS ON TABLE 42 



(a) Total number of Cuban centrals covered: 1929-30, 78; 1930-31, 
71; 1931-32, 70. 

(6) Largest central (A) had cost ranks 35, 39, and 46, respectively, 
for the 3 years covered. By that is meant that there were 34 centrals, 
38 centrals, and 45 centrals, respectively, with lower costs during the 
years covered. 

(c) Lowest-cost centrals were small or medium-sized. 

Table 43. — Cost ranks and size of 2 largest lyiills and 4 lowesf-cost ntills in Ilaioaii 

over a S-year period 



Mill 


Size 


1929-30 
cost rank 


1930-31 
cost rank 


1931 -32 
cost rank 


2 largest mills; 

A .- 


Larftc 

do... 


13 
16 

2 
3 
1 
6 


7 
22 

8 
1. 
3 

r, 




B - 


2fi 


4 lowest-cost mills: 

C . 


Mediiini 

Small 

do 




D 


(i 


E - - - 


1 


F -■- - 


do.. ..: 


3 









Source; TJ-. S. TariiT Commission files. 

COMMENTS ON T.\BLE 43 

(a) Total number of Hawaiian sugar mills covered: 1929-30, 38; 
1930-31, 38; 1931-32, 36. 

(6) Neither of the two largest Hawaiian sugar mills had relatively 
low costs. 

(c) The lowest-cost sugar mills were relative!}^ small. 

Table 44.^ — Cost ranks and size of 2 largest raw-sugar companies and 3 lowest-cost 
raw-sugar companies in Louisiana 



Companies 


Size 


1920-30 1930-31 
cost rank cost rank 


1931-32 
cost rank 


2 largest companies: 

A' 


Larpe 


17 
13 

f.' 

3 

4 


10 

18 

1 
8 


12 


B - 


do. 


23 


3 lowest-cost companies: 

C 


Small 

lio 


3 


D 


2 


E --- 


do 


1 









' This is the only raw-sugar company covered that operated more than 1 mill. 
Source: U. S. Tariff Commission files. 

COMMENTS ON TABLE 44 

(a) Total number of Louisiana raw-sugar companies covered: 
1929-30,^22; 1930-31, 25; 1931-32", 23. 

(6) None of the Louisiana sugar companies were large, when com-' 
pared with Cuban centrals or Hawaiian mills. 

(c) The two largest Jjouisiana raw-sugar companies had quite 
high costs. 

{(l) The lowest-cost companies were relatively small. 



CONCENTRATION OP ECONOMIC POWER 



51 



Table 45. — Costs of refined cane sugar by refineries for the year 1929, arranged in 

order of ascending costs 



Rank of refin- 
ing plant in 
production 



Size classification of 
company 



Small. . 

(') 

0) 

Small.. 

do. 

do. 

do. 

0) 

(')-...., 
(■)....., 



Cost per 
pound 




Rank of refin- 
ing plant in 
production 



Size classification of 
company 



Small.... 
Medium. 

Small 

(') 

Small 

Large 

do.... 

do.... 

Small 

do.... 



Cost per 
pound 



Cents 
4. 6823 
4. 7217 
4.7311 



7321 
750a 
7744 
801S 
8442 
860G 



• Disclosure of production rank of refinery or size of company might reveal its identity. 
Source; U. S. Tariff Commission files. 

COMMENTS ON TABLE 45 

(a) Lowest-cost sugar refinery in 1929 was ninth largest in size. 

(b) The next lowest-cost refineines were large. 

Table 46. — Costs of refined cane sugar by refineries for the year 1930, arranged in 

order .of ascending costs 



Rank of refin- 
ing plant in 
production 



Size classification of 
compnny 



Small; ... 
do.... 

(')... ..\.. 

0)- 

(■) 

Small 

Medium. 

(■)-. 

(') -- 



Cost per 
pound 



4.0609 
4. 1188 
4. l.ViS 
4. 2042 
4. 2143 
4. 2220 
4. 2C92 
4. 2789 
4. 2805 
4. 2937 



Rank of refin- 
ing plant in 
proiiuction 



Size classification of 
company 



Small.. 

do. 

do. 

Large. . 

do. 

do. 

Small. . 

do. 

do. 

do. 



Cost per 
pound 



Cents 
4.3118 
4. 3324 
4. 4062 
4. 4098 
4, 4102 
4, 4771 
4, 4795 
4, 4874 
4, 4878 
4. 7617 



' Disclosure of production rank of refinery or .size of company might reveal its identity. 
Source: U. S. Tariff Commission files. 



COMMENTS ON TABLE 46 

(a) Again, the lowest-cost refinery was ninth in size. 
(6) The largest refineries had relatively low costs, but these largest 
refineries did not necessarily belong to the largest refining company. 

Table ,47.^ — Costs of refined cane sugar by refineries for the year 1931 , arranged in 

order of ascending costs • 



Rank of refin- 
ing plant in 
production 



9.. 

('). 
11. 

19. 

(')- 
15. 
16. 



Size classification of 
company 



Small.. 

0) 

Small.. 

0) 

(') 

Small.. 

(0 

Small., 
.do- 



(')- 



Cost per 
pound 



Cents 

3. 9689 
4. 0253 

4. 0475 
4. 1012 
4. 1433 
4. 1470 
4. 1581 
4.1614 

4. 1615 

4. 1616 



Rank o.'' refin- 
ing plant in 
production 



Size cla.ssification of 
company 



(') 

Small.. 

do. 

Large. . 
Small.. 
Large.. 

do. 

Small.. 
do. 



Cost per 
pound 



Cents 
4. 1800 
4. 2039 



2204 
2497 
2719 
2738 
3579 
44C.0 
5442 



' Disclosure of production rank of refinery or size of company might reveal its Identity. 
Source: U. S. Tariff Commission files. 



52 



CONCEiNTRATION OF ECONOMIC POWEiR 



COMMENTS ON TABLE 47 

(a) Again, thr lowest-cost refinery was ninth in size. 
(6) Some of the larger refineries had relatively low costs, but these 
refineries did not necessarily hclong to the largest refining companies. 

Table 48. — Co.sts of refined cane sugar by large, medium-sized, and small com- 
panies for the year 1929, arranged in order of ascending costs 



Size classification of company 


Cost per 
pound 


Siz(> classification of company 

■ 
1 


Cost ppr 
pound 


1. Small 


Cents 
, 4.4285 
4. 5684 
4. 5701 
4. 5798 
4.5909 
4.5920 
4. 5930 


8. Small 


Cents 
4. 6191 


2. Medium ... 


9. Small . 


4 6823 


. 3. Small 


10. Small 


4.7311 


4. Small 


11. (1).-- 


4. 746« 


5. Small 


12. Small .- 


4.7500 


6. (') - . 


13. Small ... 


4.8605 


7. (').... 


14. Small 


4.9698 









> Since only 1 company is designated as large and 2 as medium-sized^ tbe size classification of comDanies 
6, 7, and 11 are purposely not revealed. 

Source: U. S. Tariff Commission files. 

COMMENTS ON TABLE tS 

(a) The lowest-cost cane-sugar refining companies in 1929> were 
small or medium-sized. 

(b) The largest refining company did not have a low cost. 

Table 49>— Cos^s. of refined cane sugar by large, medium-sized, and suttaU com- 
panies for the year 1930, arranged in order of ascending costs ■ 



Size classification of company 



■ 

1. Small.... 

2. Small.... 

3. Medium 

4. (') 

5. Small ... 

6. SmalL... 

7. SmalL... 



Cost per 
pound 



Cents 
4.0609 
4.1188 
4.1990 
4.2042 
4.2692 
4.2806 
4.3118 



Size classification of company 



8. Small 

9. (•)---- 

10. Small 

11. (')---- 

12. Small 

13. Small 

14. Small 



Cost per 
pound 



Cents 
4. 3324 
4. 3451 
4.4062 
4.4795 
4. 4874 
4.4878 
4. 7617 



> Since only 1 company. is designated as large and 2 as medium-sized, the size classification of companies 
4, 9, and 11 are purposely not revealed. 

Source: U. S. Tariff Commission flies. 

COMMENTS ON TABLE 49 

(a) The lowest-cost cane-sugar refining companies in 1930 were 
small or medium-sized. 

(6) The largest refining company did not have a low cost. 



CONCENTRATION OF Et'ONOMIC POWER 



53 



Table 50. — Costs of refined cane sugar by large, medium- si zed, and small com- 
panies for the year 1931, arranged in order of ascending costs 



Size classifleation of company 


Cost per 
pound 


Size classification of company 


Cost per 
pound 


1. SmaH 


Cents 
3.9689 
4.0475 
4. 0675 
4. 1470 
4. 1581 
4-1614 
4. 1615 


8. Small.. 


Cents 
4 1616 


2. Small 


9. Small 


4-2039 


3. Medium 


10. (0 


4 2204 


4. Small. - - 


11. (1). - - 


4-2287 


5. (1) 


12. Small 


4 2719 


6. Small 


13. Small 


4.4460 


7. small 


14. Small 


4 5442 









I Since only 1 company is designated as large and 2 as medijom-sized, the size classification of companies 
6, 10, and 11 are purposely not revealed. 

Source: U. S. Tariff Commission flies. 

COMMENTS ON TABLE 50 

(a) The lowest-cost can-e-sugar refining companies in 1931 were 
small or medium-sized. 

(6) The largest refining company did not have a low cost. 

Table 51. — Costs of refining cane sugar {cost of raw sugar excluded) by large, 
medium-sized, and small companies for the year 1929, arranged in order of 
ascending costs 



Size classification of company 



1. Small... 

2. Small... 

3. Small... 

4. Small.. - 

5. Medium 

6. (') 

7. Small... 



Cost per 
pound 



Cents 
0. 5192 
.5566 
.5735 
.5849 
.6137 
.6341 
..6346 



Size classification of company 



8. (')-..- 

9. Small 

10. Small 

11. (>).--- 

12. Small 

13. Small 

14. Small 



Cost per 
pound 



Cents 
.6601 
.6655 
.7428 
.7450 
.7492 
.7557 
.9470 



1 Since only 1 .company is designated as large and 2 as meditim-sized, the size classification of companies 
6, 8, and 11 are purposely not revealed. 

Source: U. S. Tarifl Commission files. 



COMMENTS ON T.\BLE 51 

(a) The costs shown in this table are the same as those shown in 
table 48, except that the cost of raw sugar has been deducted. , 

(6) Small and medium-sized companies had the lowest refining 
costs in 1929. 

(c) The largest cane-sugar refining company had relatively high 
conversion costs in that year. 



54 



CONCEiNTRATION OF ECONOMIC POWER 



Table 52. — Costs of refining cane sugar (cost of raw sugar excluded) by large, 
medium-sized, and small companies for the year 1930, arranged in order of 
ascending costs 



Size classification or company 


Cost per 
pound 


Size classification of company 


Cost per 
poiind 


1 Small 


Cents 
0. 5497 
. 5783 
.6214 
. 6370 
.6383 
.6403 
.6600 


8. (1)--- - 


Cents 
.6683 


2. Small - --- 


9. Small 


.6801 




10. Small 


.6849 


4. Small - -- 


11. (1) 


.6921 


5 Small 


12. Small.. - 


.7293 


6 (') - -- 


13. Small 


.7757 


7. Small 


14. Small -- - 


1. 0575 









1 Since only 1 company is designated as l4rge and 2 as medium-sized, thf ; 
6, 8, and 11 are purposely not revealed. 

Source: U. S. Tariff Commission files. 



'6 classification of companies 



COMMENTS ON TABLE 52 

(a) The costs shown in this table are the same as those shown in 
table 49, except that the cost of raw sugar has been deducted. 

(6) Small and medium-sized companies had the lowest refining 
costs in 1930. 

(c) The largest cane-sugar refining company had relatively high 
conversion costs in that year. 

Table 53. — Costs of refining cane sugar {cost, of raw sugar excluded) by large, 
medium-sized, and small .companies for the year 1931, arranged in order of 
ascending costs 



Size classification of company 


Cost per 
pound 


Size classification pf company 


Cost per 
pound 


1. Small 


Cents 
0. 4865 
.5108 
.5182 
.5290 
.5857 
.6075 
.6238 


8. (') 


Cents 
.6328 


2. Small -- 


9. Small 


.6374 


3. Small -. . . 


10. Small 


.6438 


4. Medium 


11. (1) 


.6727 


5. Small 


12. Small 


.7186 


6. (')- - - - 


13. Small 


.7554 


7. Small... 


14. Small 


.9716 









• Since only 1 company is designated as large and 2 as medium-sized, the size classification of companies 0, 
8, and 11 are purposely not revealed. 

Source: U. S. Tariff Commission files. 



COMMENTS ON TABLE 53 

(a) The costs shown in this table are the same as those shown in 
table 50, except that the cost of raw sugar has been deducted. 

(b) Small and medium-sized companies had the lowest refining costs 
in 1931. 

(c) The largest cane-sugar refining company had relativelj' high 
conversion costs in that year. 



MILK AND MILK PRODUCTS COST TABLES 

Tables 54, 55, 56, 57, and 58 show the costs of distributing a quart of 
fluid milk in Boston, Milwaukee, Cincinnati, Philadelphia, Con- 
necticut, and West Virginia. The periods covered are not the same 
for each locality, but all the data are for some period between 1933 
and 1935. The first two of these tables are group-cost tables, whereas 
the other three are individual-cost tables. 

Table 54 gives the average costs of retail and wholesale distribution 
for "large" dealers, and all dealers in Boston. Table 55 gives the 
average costs of three groups of distributors in Milwaukee: Two 
''large," two "medium-sized," and two "small." 

Tables 56 and 57 give the individual costs of a number of distrib- 
utors in West Virginia. In the first table the costs of wholesale and 
retail distribution are combined. In the second table the costs are 
for retail distribution only. 

Table 58 gives the costs for 1 month for Connecticut, Cincin- 
nati, and Philadelphia. 

Table 59 is a group-cost table for butter centralizers for 1918. 
Table 60 contains a further analysis of the data in table 59 together 
with additional data for 1914, 1915, 1916, and 1917. 

Table 60 shows the relative positions in the cost series of the largest 
and the lowest-cost centralizers for each of the 5 years from 1914 
through 1918. Table 59 covers 34 companies for 1918, whereas 
table 60 shows the cost ranks for only 25 companies in that year. 
Although the cost data for 34 companies were available for, 1918, 
there were no figures for some ..f these companies for earlier years. 
In table 60, 25 companies were used because figures for these com- 
panies were available for 3 years. 

Table 61 shows 1918 costs of three groups of canned-milk manu- 
facturers: Large, medium-sized, and small. 



Table 54.- — Comparison of average costs of delivering a quart of jnilk at retail and 
wholesale for certain large dealers luith the average costs of all dealers covered by 
the Boston report for the 12 months ending Sept. 30, 1935 ' 





Large 
dealers- 
cost per 

quart 


All 
dealers- 
cost per 
quart 


j 


Large 
dealers- 
cost per 

quart 


All 
dealers- 
cost per 
quart 


Retail delivery: 
City plant 


$0. 0073 
.0017 
.0457 
.0009' 


$0. 0085 
.0017 
.0425 
.0009 


Wholesale delivery: 

City plant 


$0. 0073 
.0012 
.0199 
.0008 


$0. 0085 


Containers 


Containers 


.0012 


Delivery ... ... 


Delivery 

Interest 


.0204 


Interest 


.OOOS 




j Total.. 




Total 


.0556 


.0536 


.0292 


.0309 









' The large dealers represented were in a group comprising 7.2 percent of the total number covered, 
group distributed over 70 percent of the milk at retail and over 90 percent of the milk at wholesale. 

Source: Massachusetts Milk Control Board. 



56 



CONCE,NTRATI0N OF ECONOMIC POWEiR 



COMMENTS ON TABLE 54 

(a) Inquirj'^ was conducted by the Massachusetts Milk Control 
Board. 

(6) Basis for size classification of companies not indicated in the 
report of the board. 

(c) Dealers classified by the board as "large" had higher than 
average retail-delivery costs and lower than average wholesale-delivery 
costs. 

Table 55. — Estimated costs per quart of fluid milk sold for 2 large, 2 medium- 
■ sized, and 2 sm,all distributors in Milwaukee, 19SS 



2 large — 

cost per 

quart sold 



Cents 



Processing 

Delivery 

Selling... 

General and administrative 

Total. 

Source: U. S. Department of Agriculture, 



COMMENTS ON TABLE 55 



1.024 
1.875 
.174 
.215 



2 medi- 
um-sized— 

cost per 
quart sold 



Cents 



0.876 
1.318 
.086 
.322 



2 small- 
cost per 
quart sold 



Cents 



1.306 
1.910 
.027 
.334 



3.288 



2.602 



3.577 



(a) The Milwaukee survey was conducted by the United States 
Department of Agriculture. 

(6) According to an expert of the Department, the two large, two 
medium-sized, and two small distributors were typical of large, 
medium-sized, and small distributors in Milwaukee. 

(c) The two medium-sized distributors had a lower average cost of 
processing and distributing fluid milk than the two large or the two 
small distributors. 

{d) Retail delivery costs represent a very large proportion of the 
total cost of milk to the consumer. 

Table b%.— Costs of distributing 100 pounds of milk by 22 dealers in West Vir- 
ginia for the year 19S3, arranged in order of ascending costs 



Plant Xo.- 


Pounds 

of milk 

purchased 


Plant cost 
per 100 
pounds 


Delivery 

and sales 

cost per 

100 pounds 


Total dis- 
tributing 
cost per 
100 pounds 


1 ,.... 


2, 896, 600 

393, 330 

892, 152 

1,414,204 

5,341,072- 

1, 786, 966 

253,813 

1, 767, 190 

3, 63", 374 

3, 037, 872 

1, 510, 492 
1, 003. 157 

353, 835 

717.814 

2,726,911 

2, 294. 225 
3,080,152 

203,228 

244, 088 

1, 114, 500 

1, 499, 155 

416, 624 


$0. 5104 
.8237 
. M98 
.7G34 
.4446 
.5753 
.8292 
.6925 
.7364 
.6003 
. . 6857 
. 8364 
.2959 
.7766 
.6933 
.7819 

..6428 
. 9850 

1. 0559 
.7431 
.9384 
.9563 


$0. 4543 
.3958 
.7229 
.5669 
.8084 
.7275 
.6994 
.6859 
. 8607 
.8589 
6175 
.8497 
1.2071 
1.1560 
.8772 
.8218 
1. 0892 
.7708 
.9)40 
.8780 
1. 0438 
1. 0692 


•il. 410 


2 


1.514 


3.. 


1.717 


4 


1.778 


5 


1.781 




1.855 


7 


1.929 


8 :... 1 


1.961 


9 


1.994 


10 


2.021 


U 


2.052 


12 . ... 


2.239 


13 


2.239 


14 


2.276 


15. 


2.352 


16 - 

17 ; _ 


2.352 
2.362 


18 


2.447 


19 


2.484 


20 ..... 


2.489 


21.... 


2.775 


22 


2.911 


Average ...- l 1,663,034 


.658 1 .811 


2.050 



Source: College of .\griculture, West Virginia University. 



CONCENTRATION OF ECONOMIC POWER 
COMMENTS ON TABLE 56 



57 



(a) Survey of West Virginia was conducted by the State's agricul- 
tural college. 

(6) The value of this table for the purposes of this inquiry is 
limited by the fact that retail and wholesale distribution costs are not 
separated, 

(c) The largest company did not show the lowest combihed retail 
and wholesale costs. 

Table 57.— Cost of distributing 100 pounds of milk by 9 retail dealers in West 
Virginia for th^ year 19SS, arrayed ifi order of ascending costs 



Pounds of milk 
produced, 


Delivery 

and sales 

cost per 

100 pounds 


Total . .' 

tributing 

cost expense 

per 100 

pounds 


2, 896, 600 
393, 330 
892, 152 

1, 414. 204 

5,341,072 
253, 813 

1, 510, 492 
203, 228 
244, 088 


$0. 4543 
.3958 
.•7229 
.5669 
.8084 
.6994 
.6175 
.7708 
.9140 


$1. 410 - 
1.514 
1.717 
1.778 
1.781 
1.929 
2. 0.'i2 
2.447 
2.484 



Source: College of Agriculture, West Virginia University. 



COMMENTS ON TABLE 57 

(a) Table 57 shows the costs of nine retail milk distributors in West 
Virginia. 

(b) The largest retail distributor coveted by the survey had average 
costs as compared with other retail distributors. 

(c) Four retail distributors, considerably smaller in size, had lower 
costs than the largest distributor. 

Table 58 

COST OF RETAIL AND WHOLESALE DELIVERY PER QUART OF FLUID MILK (GRADE 
B) FOR 5 CONNECTICUT DISTRIBUTORS DURING JUNE 1934 



. Size of company 


Retail cost 
per qua.rt 


Wholesale 

cost per 

quart 


Smaller _■ 


Cents 
2.85 
2.07 
4.04 
4.04 
4.15 


Cents 

0.79 


.Do.. . ,. 


.65 


Larger .. . 


, 1.48 


Do 


' 2.06 


Do 









COSTS OF RETAIL DELIVERY PER QUART OF FLUID MILK ..(ORDINARY PASTEUR- 
IZED) FOR 5 CINCINNATI DISTRIBUTORS DURING OCTOBER 1935, ARRANGED IN 
ORDER OF ASCENDING COSTS 





Size of company 


Cost per 
quart 


Size of company 


Cost per 
quart 


Smaller... 


Cents 
3.70 
3.75 
4.42 




Cents 
4.71 


Do.... 


Smaller • 


4.78 


Larger 











58 



CONCEiNTRATION OF ECONOMIC i^OWER 
Table 58 — Continued 



COSTS OF COMBINED KETAIL AND WHOLESALE DELIVERY PER QUART OF 
FLUID MILK (GRADE B) FOR 7 PHILADELPHIA DISTRIBUTORS DURING OCTO- 
BER, 1934, ARRANGED IN ORDER OF ASCENDING COSTS. 



Size of company 


Business 


Cost per 
quart 


Smaller 


Retail and wholesale 


Cents 
2.37 


Do 


.....do 


2.70 


Larger -. . ... 


do 


2.75 


Smaller ... . 


do 


2.87 




do 


2 96 




do..- 


3.11 


Larger .. . 


Retail - 


3.18 









Source: Federal Trade Commission files. 

COMMENTS ON TABLE 58 

(a) The surveys showing monthly costs for Connecticut, Cincinnati; 
and Philadelphia were conducted by the Federal Trade Commission. 

{h) The Commission did not indicate the basis for its size classifica- 
tions: "Larger" and "smaller." 

(c) Some of the companies designated "slnaller" as well as some 
designated "larger" were subsidiaries of the National Dairy Products 
Corporation, the largest milk and milk-products company in the 
United States. 

{d) The Federal Trade Commission did not draw definite conclu- 
sions as to the relation between size and cost from these data. Table 
58, however, indicates that the larger distributors did not have the 
lowest costs. 

Table 59. — Costs per pound' of butter for centralizers of different size in 1918 



Range of company production per company 



Number 
of com- 




Butterfat 


Collection 


Number 


cost per 


cost per 


of plants 


pound of 


pound of 






butter 


butter 


2 


13 


$0. 3891 


$0. 0351 


5, 


37 


.4056 


.0241 


7 


26 


.4009 


.0324 


12 


14 


.3937 


.0333 


8 


10 


.4101 


. 0187 



Total cost 
per pound 
of butter 



Over 20,000,000 pounds _ 

10,000,000 to 20,000,000 pounds 
5,000,000 to 10,000,000 pounds. 
1,000,000 to 5,000,000 poimds. . 
Under 1,000,000 pounds:. 



8. 4737 
.4837 
.4832 
.4694 
.4956 



Source: Federal Trade Commission flies. 



COMMENTS ON TABLE 59 

(a) The lowest average cost shown for a group of centralizers was for 
the group containing 12 companies with production in 1918 of from 
1,000,000 to 5,000,000 pounds of butter. All the 12 companies in this 
group were small. 

(6) Low butterfat costs shown by the group of largest centralizers 
are explained by their practice of drawing cream fiom distant regions, 
where it was cheap. Further proof of this contention is the high 
cream-collection costs of these centralizers. 

(c) High average butterfat costs and low average collection costs of 
8 smallest butter producers in the table are explained by their use of 
fresh cream produced near the creameries. Such fresh-cream butter is 
generally of high grade and usually commands- a good price. 



CONCENTRATION OF DCONOMIC POWER 59 

Table 60. — Ranks of 6 largest and S lowest-cost butter producers fdr 5 years, 1914-18 • 



Company 


Total produc- 
tion, 5 years 


1914 


1915 


1016 


1917 


1918 


6 largest producers: 


Pounds 
94, 484, 644 
92, 588, 791 
80, 283, 130 
52,009,069 
40, 432, 665 
37,834,380 

2, 160, 763 

37, 834, 380 

2, 741, 327 


i 
12 

7 

9 
14 

3 

1 
3 
5 
15 


10 
18 

8 
11 
20 

3 

1 
3 
6 
20 


11 
21 
13 

8 
25 

2 

3 

2 

.10 

25 


6 
23 
12 

3 
22 

5 

7 

^ 
2 

25 


8 
20 


B.. 


C 


D 


4 
22 
7 


E 


F 


3 lowest-cost producers: 




3 


F ' 


' 7 


H 


g 


Total number of companies covered 


25 









1 Company with lowest cost had rank 1, etc. 
Source: Federal Trade Commission files. 



COMMENTS ON TABLE 60 

(0) Conclusions from data for 1914 are most reliable because the 
industry was less affected by abnormal conditions in 1914 than in the 
4 later years. 

(6) In 1914 the largest of the 15 companies represented had the 
fourth lowest cost. 

(c) The second largest producer, almost as large as the largest 
producer, had one of the highest costs. 

(d) Lowest-cost producer w^as a small producer. 

(e) For the period as a whole, the largest producers as a group did 
not have low costs. 

(f) Two veiy small producers and 1 medium-sized producer had 
the lowest costs for the period as a Avhole. 

Table 61. — Costs of evaporated milk per case, in 1918 of large, medium-sized, and 

small covipanies 



Company group 


Number 
of com- 
panies 


i Average pro- 
Number d"^J'°° 
of P'ants company 
("tails") 


Average 

cost 
per ease 
of "tails" 


Large 

Medium-sized 

Small 


6 

9 
28 


76 i 2,006,781 
21 434, 797 
34 C8, 716 


$5. 018 
4.751 
5. 137 



Source: Federal Trade Cc'jmission Report on Milk and Milk Pr 'ilucts, p. 49. 
COMMENTS ON TABLE 61 

(a) Size classifications of evaporated milk companies based on 1918 
production are as follows: 

Large. — Companies producing over 600,000 cases. 

Medium-sized. — Companies producing between 200.000 and 600,000 
cases. 

Small. — Companies producing less than 200,000 cases. 

(6) Group of medium-sized companies had the lowest average costs. 

(c) Plants of 9 medium-sized companies were on the average larger 
than the plants of the 6 largest companies. 

(d) Largest companies obviously attained size by absorbing other 
companies and plants. 



WHEAT FLOUR AND BREAD COST TABLES 

Tables 62, 63, and 64 show the milHng costs, exclusive of the cost 
of wheat, and the selling and advertising costs of flour mills of different 
size for the first 6 months of 1926, 1927, and 1928 and for crop years 
1935-36, 1936-37, and 1937-38. These figures were collected by 
the millers themselves. 

Table 65 gives the average costs (for the 5-year period 1913-14 
through 1917-18) of flour-milhng companies grouped into three classes 
according to size. 

Tables 66, 67, 68, and 69 give the costs of individual flour-milling 
companies in 1913. In the first table total costs include cost of 
wheat and packages; in the second table, costs include everything 
but cost of packages; in the third table, costs include everything but 
cost of wheat; in the fourth table costs include everything but costs of 
wheat and package. 

Tables 70, 71, 72, and 73 show the costs of wheat flour for 1922, 
according to the same arrangement described for 1913. 

Table 74 shows the costs of groups of bread plants of different size, 
averaged for the 4 years from 1922 through 1925. 

Table 75 shows the cost ranks (according to positions in cost series) 
of the largest baking companies in 1920, 1921, 1922, 1923, and 1924. 

Table 76 shows the cost ranks (according to positions in cost series) 
of largest baking companies in 1925. 

Table 77 shows for 1920, 1921, 1922, 1923, and 1924 the cost ranks 
(according to positions in cost series) of 15 companies absorbed b}" the 
Continental Baking Corporation at the end of 1924. 

Table 62.— Costs per barrel of loheat flour (exclusive of wheat costs) for flour mills 
of different capacities for the three six-months periods ending June SO, 19126, June 30, 
1927, and June SO, 'l928 ' 



Range of capacity of flour mills 


Costs 


per barrel of flour, 2 periods 
ending- 


June 30, 
1926 


June 30, 
1927 


June 30, 
1928 


Simple 
average 


800,000 barrels and over 


$1,111 
1.342 
1.037 
1.337 


$1. 172 
.971 
l.OSfi 
.993 


$0,992 
1.032 
1.020 
1.033 


$1,092 


•1(K),000 to 800,000 barrels 


1.11.5 


200,000 to 400,000 barrels. . 


1.031 


Below 200,000 barrels . 


1.121 







' Comparison of costs. Millers' National Federation, Nov. 10, 1928, table III. 

2 These milling costs do not include cost of wheat, but they do include all manufacturing, adrainistrativp, 
and Selling expense. Interest paid is also included, but apparently no allowance is made for interest on the 
stoclvholders' investment. 

Source: Millers' National Federation. 



COMMENTS ON TABLE 62 

(a) Number of companies covered: First 6 months 1926, 57; first 
6 months 1927. 85; first 6 months 1928, 90. 

(6) Group with lowest average milling cost in 1926 included mills 
with ajmual capacity of from 200,000 to 400,000 barrels, i. e., small 
mills. ^ - 
60 



COXCE^'TRATIOX OF ECOXOMIC POWER 



61 



{c) Group with lowest average milling cost in 1927 included mills 
with annual capacity of from 400,000 to 800,000 barrels, i. e., medium- 
sized mills. 

(d) Group with lowest average milling cost in 1928 included mills 
with annual capacity of 800,000 barrels or over, i. e., large mills. 

{e) Some of the mills in the group with annual capacity of 800,000 
barrels or over, however, were medium-sized rati :T han large. Dur- 
ing the period covered there were quite a few mills with annual ca- 
pacity of 800,000 barrels or over. Of these perhaps 5 were really 
large with annual capacity of 3,000,000 barrels or over. When com- 
pared with these really large mills the others included in the group 
may have been only medium-sized. 

Table 63. — Costs per barrel of wheat flour {exclusive of ivheat cost) for flour mills of 
di^erent size for the S-crop years 1985-36, 1936-37, and 1937-38 



Range of production of flour mills 



Under 30,000 barrels. 

50,000X0 100.000 barrels 

100,000 to 200,000 barrels. -- 
200.000 to 400.000 barrels... 
400.000 to 800,000 barrels.. . 
800.000 to 1,600,000 barrels - 
1,600,000 barrels and over.. 





Costs per barrel of flour 




1935-36 


1936-37 1937-38 


Simple 
average 


$1. 174 


$1,172 


$1,352 


$1,233 


1.078 


1.155 


1.127 


1.120 


.946 


.935 


.995 


.9.59 


1.008 


.973 


1.025 


1.002 


.997 


1.012 


1.085 


1.031 


1.078 


1.085 


1.050 


1.071 


1.011 


1.018 


1 noo 





' These milling costs do not include cost of wheat, but they do include all manufacturing, administrative, 
and .selling expense. Intprest paid is also included, but apparently no allowance is made for interest on the 
sfnckhdlders' investment. 



?ource: Millers' National Federation. 



COMMENTS ON TABLE 63 

(a) Number of mills covered: 1935-36, 146; 1936-37, 120; 1937-38 
125. 

(b) Group containing/largest mills did not show the lowest costs in 
any of the 3 years. 

T.\BLE 64. — Selling, advertising, and miscellaneous expenses per barrel of flour for 
groups of flour mills of different size: 1935-36, 1936-37, and 1937-38 averaged 



Range of production of flour mills 



49,999 barrels or less 

50,000 to 99,999 barrels.... 
100,0(X) to 199,999 barrels.. 
200,000 to 399,999 barrels.. 
400,000 to 799,999 barrels.. 
800,000 to 1 ,599,999 barrels 
1,600,000 barrels and over. 

Industry average. - 



Advertising 

expenses per 

barrel 



.022 
.032 
.025 
.046 
.077 
.083 
.107 



Outside and 
branch selling 
costs per barrel 



Service ex- 
pense-storage 
and cartage 

I)er barrel 



.$0,129 
.154 
.150 
. 185 
.204 
.255 
.227 



.216 



$0,033 
.026 
.015 
.024 
.011 
.044 
.028 



.028 



r?ource: Millers' National Federation. 



COMMENTS ON TABLE 



(a) The larger the flour mill, the heavier was its advertising and 
celling expense. 



62 



CONCEiNTRATION OF ECONOMIC POWEE 



Table 65. — Costs, prices, and profits of 38 flour-milling companies of different size 
for the 5-year period 1913-14 to 1917-18 



Company groups, classified by size of annual production 



I. Under 300,000 barrels.,, 
ri. 300,000 to 700,000 barrels 
:il. Over 1,000,000 barrels... 



^ofT^' Cost per Price per 
panTs barrel' ! barrel 



Profit 
per bar- 
rel 



$6.49 
6. U 
C.30 



$6.78 
6.45 
6.64 



$0.29 
.31 



' Including wheat cost. 

Source: Federal Trade rommission flies. 

COMMENTS ON T.\BLE 65 

(a) Group containing relatively small or medium-sized companies 
with average annual production of from 300,000 to 700,0.00 barrels 
during the period between 1913-14 and 1917-18 had- the lowest average 
costs shown for any of the 3 groups. 

(6) This medium-sized lowest-cost group realized the lowest average 
price. 

T.vBLE 66. — Total costs of producing a barrel of wheat flour {including cost of whea^ 
and packages) in 1913 by companies of diffe'-ent size, arranged in order of ascending 
costs • 



Classification of company accord- 
ing to size of production ■ 


Total flour costs : 
per barrel j 


Classification of company according 
to size of production 


Total flour costs 
per barrel 


1 Small 


$3.53 
3. .56 
3. .58 
3. 59 
3.71 
3.75 
3.76 
3.86 
3.88 
3.91 
.3.92 
3.95 
3.98 
4.00 
4.00 
4.06 
4.06 
4.07 
4.08 
4.08 


21. 

22. 

23. 

24. 

25. 

26. 

27. 

28. 

29. 

30. 

31. 

32. 

33. 

34. 

35. 
; 36. 
' 37. 
1 38. 
1 39. 
1 40. 


Small...:. , 


',4. 11 




Small 


4. U 


3. Medium . 


Small 

Small 

Medium 


4.12 


4 Small 


4.17 


5 Small 


4.18 




Small - ■. 


4.24 


7. Small - 


Medium 

Small 

Small 

Small 

Small 

Small 

SmiJll... 

Medium 

Small 

Small 

Medinm 


4.27 


8. Medium 


4.27 


9 Large . 


4.37 


10 Medium 


4.33 


11 Small - 


4.49 




4.49 


13. Small 

14. Medium 

l.i. Medium 

16. Small 

17. Large 

is: Small 

19. Small.... 

20. Medium 


4..M 
4.64 
4.78 
4.82 
4.91 


Small.. 

Small - 

Small... - 


5.10 
5.14 
5.25 



I Credit for feed excluded. 

Source: Federal Trade Commission files. 



COMMENTS ON TABLE 66 

(a) Size classification of companies in 1913: 

Large. — Washburn-Crosby Co., Pillsbury Flour Mills Co. 

Medium-sized.— Other companies with annua^ production over 
500,000 barrels. 

Small. — Companies with annual production under 500,000 barrels. 

(6) Table 66 shows that eight small and medium-sized flour-milling 
companies had unit costs lower than that of the lowest-cost large 
company (No. 9). 

(c) The other large company (No. 17) had a cost but little lower 
than the median cost. 



CONCENTRATION OF BCONO:MIC POWER 



63 



Table 67. — Costs of producing a barrel of wheat flour {including cost of wheat but 
excluding cosls of packages) in 1913 by companies of different size, arranged in 
order of ascending costs ' 



Classification of companies 
according to size 


Total flour 
costs per barrel 
but excluding 
costs of pack- 
ages 




Classification of companies 
according to size 


Total ilour 
costs per barrel 
but excluding 
costs of pack- 
ages 


1. Sniall -. 

2. Small - -- 

3. Small 


$.3.30 
3.32 
3. .■54 1 
■S.-il 
3.42 
3.52 
3. .53 
3.61 
3. 61 
3.64 
3.66 

■ 3.71 
3.72 
3.73 
3.75 
3.77 
3; 78 
3.82 

. 3.83 
i. 85 


21. 
22. 
23. 
1 21. 
25. 
26. 
27. 
28. 
29. 
30. 
31. 
32. 
33. 
34. 
35. 
36. 
37. 
38. 
39. 
40. 


Small : 

Small 

Medium 




$3.86 
3.87 
3.92 


4. Medium 


Small 


3.93 


5. Small .• 


Small . . 


4 00 


6. Small. 


Small 


4 01 


7. Medium 

8. Medium 

9. Medium 

10. Small - 

11. Large 

12. Medium 

13. Medium 


Medium _ 

Small 

Small 

Small 

Small.. 

Small 

Medium 


4.02 
4.04 
4.12 
4.12 
4.13 
4.23 
4 23 


14. Medinm 


Small 


4 30 


1.5. Small 


Small a 


4 54 


16. Medium 


Small 


4 54 


17. Large.. 


Medium 


4 56 


18. Small. 

19. Small.. 

20. Small 


Small 

Small _ 

Small _. 


4.83 
4.87 
4.96 



' Credit for feed also excluded. 
Source: Federal Trade Commission. 

COMMENTS ON T.\BLE 67 

(a) Size classification of companies: Same as in table 66. 

(b) Cost positions of two large companies not improved in cost 
series, when package costs are exc uded. 

Table 68. — Cost of producing a barrel of wheat flour (excluding cost of tvheat but 
including costs of packages) in 1313 by companies of different size, arranged in 
order of ascending costs ' 



I Milling and 

Classification of company accord- ,?3Jni'f ?^,^''Y 
mp t,n ST7P of r,rnVl..p>if.n ' costs per barrel, 



ing to size of production 



including costs 
of packages 



Classification of company accord- 
ing to size of production 



Milling and 
[ misnt'llancous 
! costs per barrel, 
[ including costs 
I of packages 



1. Small... .... 


1 
SO. 48 


2. Small.- 


..54 
..56 


3. Small... _. 


4. Small... 


.57 


5. Medium 


.57 


6. Small 


.60 
.63 


7. Small 


8. Medium.. 


.65 


9. Large 


.66 


10. Medium 


.66 


11. Small-. 


.66 


12. Small... 


.67 
.69 
.70 


13. Small. 


14. Small 


15. Small 


.71 


16. Small.. 


.71 


17. Small... 


.72 


18. Small... 


.72 


19. Medium 


. .73 


20. Small.. .... 


.74 



21. Medium. 

22. Small 

23. Small 

24. Large 

25. Medium. 
20. Small 

27. Medium. 

28. Small 

29. Medium. 

30. Medium. 

31. Small 

32. Small.... 

33. Small.... 

34. Small 

35. Small 

36. Medium. 

37. Small.... 

38. Medium. 

39. Medium. 

40. Small.... 



' Credit for feed also excluded. 

Source: Federal T'-adeCnromission files. 



.$0. 75 



. 10 

.76 



.80 
.81 
.81 
.82 
.82 
.82 
.85 
.86 
.89 
.90 
.99 
1.05 
1.08 
1.29 



64 



CONCEiNTRATION OF ECONOMIC POWER 
COMMENTS ON TABLE 68 



(a) Size classification of companies: Same as in table 66. 

(b) Position of large companies in cost series not improved by- 
excluding cost of wheat. 

Table 69. — Costs of producing a barrel of wheat flour {excluding cost of wheat and 
packages) in 1913 by companies of different size, arranged in order of ascending 
costs 1 



Cla.ssificntion of company accord- 
ing to size of production 


^f lUing and 
miscellaneous 
costs per barrel, 
after excluding 
costs of whest 
and packages 


Classification of compp.ny accord- 
ing to size of production 


Milling and 
miscellaneous 
costs per barrel, 
aftfr excluding 
costs of wheat 
and package.? 


1. Small : 

2. Small 

3. Small... 

4. Small . 


$0.32 
.34 
.34 
.37 
.37 
.38 
.40 
.40 
.41 
.43 
.44 
.44 
.44 
.45 
.45 
.46 
.47 
.47 
.48 
.48 


21. Small 

22. Small... 

23. Medium 

24. Small... - 

25. Medium... -.. 

26. Medium... 

27. Small... 

28. Medium..- 

29. Small.-. 

30. Medium . 

31. Small.-. 


$0.49 
.49 
.50 
.50 


5. Small 

6. Small.-. 

7. Medium 

8. Medium 

9. Small 

10. Small 


.51 
.52 
.52 
.54 
.54 
.55 


11. Small 


.55 


12. Medium ■ 


32. Small -.. 

33. Small -._ 

34. Small 

35. Medium... 

36. Small 

37. Small.- 

38. Medium 

39. Medium ..- 

40. Small 


.56 


13. Large--. 

14. Small 

15. Medium... __- 

16. Small -. 

17. Small 

18. Small 


.58 
.59 
.59 
.61 
.62 
.64 


19. Small 


.73 


20. Large . - 


1.02 







' Credit for feed deducted. 

Source: Federal Trade Commission files. 

COMMENTS ON TABLE 69 

(a) Size classification of companies: Same as in table 66. 

(6) There were 12 small and medium-sized companies that had 
lower milling and miscellaneous costs than the lowest-cost large com- 
pany. 

(c) The other large company had a median position in the array of 
milling and miscellaneous costs. 



CONCEJS'TRATION OF ECONOMIC POWER 



65 



Table 70. — Costs of a barrel of wheat flour {including cost of U'heat and packages) 
in 1922 by companies of different size, arranged in order of ascending costs ' 



Classification of company accord- 
ing to size of i)roduction 


Total costs per 

barreli neluding 

packages 


Classification of company accord- 
ing to size of production 


Total costs per 

barrel including 

packages 


1. Small - - 


$4.87 
4.94 
4.97 
■4.99 
5.00 
5.03 
5.06 
5.06 
5.08 
5.10 
5.11 
5.14 
5.15 
5.19 

• 5.22 
5.22 
5.23 
5.29 
5.32 
5.33 
5.36 
5.37 
5.41 
5.,42 
5.43 
5.43 
5.44 
5.46 
5.47 
.5.48 
5.52 
5.-55 
5.56 
5.61 
5,65 
5.66 
5.69 
5.72 
5.73 
5.74 
5.75 
.5.76 
5.76 
5.78 
5.84 
5.87 
5.88 


48. Large 


$5.89 
5 95 


2. Small 


49. Small 


3. Medium 


50. Small 


5 96 


4. Small 


51. Small 


5 97 


5. Medium 


52. Small. . 


5 97 


6. Small 


63. Medium 


6 03 


7. Small 


54. Small 


6 OS 


8. Small 


55. Small 


6 09 


9. Small 


56. Small . 


• 6 10 


10. Small 


57. Small _ 

58. Small 


6^10 


U. Small 


6 13 


12. Small 


59. Small 


6 15 


13. Small - 


60. Small 

61. Small.. 


6 15 


14. Medium. 


6 16 


15. Small. . 


62. Small 


6 17 


16. Small 


63. Small.. 

64. Small 


6 18 


17. Small 


6 19' 


18. Small 


65. Small " ^ 


6 21 


19. Small 


66. Small 


6 24 


20. Small 


67 . Large _ _ 

68. Small 


6 24 


21. Small. 


6 26' 


22. Small..,. 


69. Large. ^. 


6 31 


23. Medium 


70. Small 


6 34 


24. Small 


71. Small 


6 39 


25. Small. -_ 

26. Small.. 


72. Small..... 

73. Small 


6 43 


27. Small 


74. Small 


6 44 


28. Small 

29. Small 

30. Small 


75. Small 

76. Small . 

.77. Small . 


6.45 
6.49 
6 50 


31. Medium 


78. Medium..: 


6.56 


32. Sn'all 


79. Small 

80. Small ... 


6 57 


33. Small. 


6 59 


34. Small 


81. Small.. 

82. Small 


6 64 


35. Small 


6 65 


36. Medium .-. 

37. Medium 


83. Small 

84. Small.. 

85. Medium 

86. Small 


6.74 
6 76 


38. Small. 

39. Medium 


6.82 
6 83 


40. Small 

41. Small .. 


87. Small 

88. Small 


6.91 
6 96 


42. Small 

43. Small 

44. Small... 


89. Medium 

90. Small... 

91. Small 


6.98 
7.25 
7.48 


45. Small 

46. Small 


92. Small .: 

93. Small . 


7.60' 

7 71 


47. Small 


94. Small 


8 12 









' Credit for feed deducted. 

Source: Federal Trade Commission files. 

COMMENTS ON TABLE 70 

(a) Size classification of companies in 1922: 

Large. — Washburn-Crosby Co., Pillsbury Flour Mills Co., and 
Standard Milling Co. 

Medium-nzed. — Other companies with annual production of over 
500,000 barrels. 

Small. — Companies with annual production under 500,000 barrels. 

(6) Table 70 shows that three large companies had relatively high 
total costs of producing a barrel of flour. 



204i)(».5— 41— No. i:i- 



66 



CONCEiNTRATION OP ECONOMIC POWER 



Table 71. — Costs of producing a barrel of wheat flour (including cost of wheat but 
excluding costs of packages) in 1922 by companies of different size, arranged in 
order of ascending costs ' 



Classification of company ac- 
cording to size 



; Total flour costs i 

; per barrel | 

I excluding j 

packages { 



Classification of company ac- 
cording to size 



Small 

Small 

Medium. 

Small 

Siu.vll..... 
M("<lium. 
SmalL..-. 

Small 

Small 

Medium. 

Small 

Small 

Small 

Small 

Small 

Small 

Smaill 

Small 

Medium. 

Small 

Small 

Small 

Medium. 

Small 

Small 

Small 

Small 

Small..... 

Small 

Small .... 
Medium. 

Small 

Small 

Small 

Small 

Medium. 
Medium. 

Small 

Small..... 

Small 

Small 

-Small 

Small 

Small 

Small 

Small 

Small 



^4. 7o 


48. 


4.78 


, 49. 


4.78 


.50. 


4.79 


51. 


4.79 


1 52. 


4.80 


53. 


4.M 1 


,54. 


4.83 


.55. 


4.86 


.56. 


4.86 1 


' 57. 


4.90 ' 


.58. 


4.91 1 


,59. 


4.92 ' 


60. 


4.93 


61. 


4.97 


62. 


4.97 , 


63. 


4.99 1 


64. 


.5.04 I 


65. 


.5.06 1 


66. 


.5.08 1 


67. 


.5. 12 ' 


68. 


5.13 1 


69. 


.5. 15 i 


70. 


.5. 18 ' 


71. 


5.18 i 


72. 


5.18 1 


73. 


5.19 j 


74. 


5.22 1 


75. 


.5.22 


76. 


.5.26 


77. 


.5.30 


78. 


5.31 1 


79. 


.5.-32 1 


80. 


.5.33 1 


81. 


.5. .36 


^82. 


,5.37 


83. 


.5. 39. 


84. 


5.41 


85. 


.5.41 


86. 


5.42 ; 


87. 


,5.45 1 


88. 


5.48 ! 


89. 


,5.49 


90. 


.5, ,50 1 


91. 


5.51 1 


92. 


.5. .52 


93. 


5. .54 ! 


94. 



Small.... 
Largo... 
Small.... 
Small ... 
SmalL... 
Small.... 
Medium 

Small 

Small... 
Small.... 

Small 

Small 

Small 

Small.... 
Small.... 
Small ... 
Small..-. 
Small... 
Small...'. 

Large 

Small 

Small.... 

Large 

Small 

Small.... 
Small... 
Small.... 
Small.... 
Small.... 
Small.... 
Small. .. 
.Small.... 
Small ... 
.Medium 
Small ... 
Small.... 
Small.... 
Medium 
Small..-. 
Small. .-- 
Medium 
Small.... 
Small.. -- 

Small 

Small 

Small.... 
Small.-.. 



Total flour costs 
per barrel 
excluding 



1 Credit for feed produced was e.xcluded. 
Source: Federal Trade Commission files. 



COMMENTS ON T.\BLE 71 



■ (rt) Size classification of companies: Same as in table 70. 

(6) Cost positions of large companies not improved by excluding 
cost of packages. 



CONCENTRATION OF ECONOMIC POWER gy 

Table 72. — Costs of producing a barrel of wheat flour {excluding cost of wheat) in 
1922 by companies of different size, arranged in order of ascending costs ' 



Classification of compauy accord- 
ing to sizp of production 


Milling and 
miscellaneous 
costs per bar- 
rel, including 
package costs 


Classification of company accord- 
ing to size of production 


Milling and 
miscellaneous 
costs per bar- 
rel, including 
package costs 


1. Small 


$0.59 
.63 
.63 
.69 
.70 
.71 
.72 
.73 
■.73 
.74 
.75 
.75 
.76 
.77 
.78 
.78 
.78 
.79 
.80 
.81 
.81 
.82 
.82 
.84 
.85 
.85 
.85 
.86 
.86 
.86 
.87 
.87 
.89 
.89 
.91 
.91 
.93 
.93 
.94 
.94 
.96 
.97 
.98 
.99 
.99 
1.02 
1.02 


48. Small 


$1.03 
1 03 


2. Small 


49. Small .. 


3. Small 


50. Small 

51. Small 

52. Small ' . 

53. Small. 

64. Small i 

55. Small.... 

56. Small.... 

57. Small 

58. Small 

59. Medium 

60. Medium 

61. Small. 

62. Medium 

63. Small 

64. Small 

65. Small 

66. Medium ..: 

67. Small. 

68. Small 

69. Medium 

70. Small 


1 05 




1 08 


5. Small.. . 




6. jNledium - 


1 09 


7. Small 


1 10 


8. Small 


1 10 


9. Small . 


1 10 


10. Aledium 


l!ll 
1 11 


11. Small 


12. Small 


1 13 


13. Small . 


1 13 


14. Small 


1 14 


15. Small 


1.15 
1 15 


16. Small 




1 16 


18. Small 


1 17 


19. Medium . -.. 


1 18 


20. Small 


1.18 
1 19 


21. Small 


22. Small 


1 21 


23. Small 


1 22 


24. Small ■ ,.. 


71. Small 


1.23 


25. Small 


72. Medium 


1 24 


26. Small 


73. Small .. . 


1 26 


27. Medium 


74. Small • 


1 28 


28. Small 


75. Small 

76. Small 

77. Small 

78. Small. 

79. Small 

80. Small.,. 

81. Small 

82. Small. 

83. Small. 

84. Small 

85. Small _ 

86. Small... 

87. Small. 

88. Small ._ 

! 89. Small. 

90. Small 

91. Small.... 

92. Small 

93. Small 

94. Small. 


1 28 


29. Small . 


131 


30. Small.. 


1 31 


31. Medium 


1 33 


32. Small 


140 


33. Small 


1 41 


34. Small 


I 46 


35. Small 


1 46 


36. Small 


1 46 


37. Small 


1 47 


38. Small... 


1 53 


39. Small 


1 55 




1 56 


41. Small. : -.... 


1 57 


42. Small 


1 63 


43. Small ... •. : 


1 60 


44. Affidinm 


1.77 


45. Small. 


1 80 


46. Small 


1 81 


47. Small 


2 10 







' Credit for feed also excluded. 

Source: Federal Trade Commission files. 



COMMENTS ON TABLE 72 



(a) Size classificaticn : Same as in table 70. 

(6) One of the large companies showed a relatively low cost, when 
cost of wheat was excluded. 



68 



CONCENTRATION O^ ECONOMIC POWER 



Table 73. — Costs of producing a barrel of wheat flour {excluding cost of utheat and 
packages) in 1922 by companies of different size, arranged in order of ascending 
costs ^ 



Classification of company accord- 
ing to size of production 


Milling and 
miscellaneous 
costs per barrel 

exclusive of 
package costs 


Classification of company accord- 
ing to size of production 


Milling and 
miscellaneous 
costs per barrel 

exclusive of 
package costs 




$0.44 
.46 
.46 
.50 
.51 
.51 
.52 
.52 
.53 
. 53 
.54 
..W 
.55 
..50 
.56 
.57 
.57 
.57 
.58 
.59 
.60 
.61 
.62 
.62 
.62 
.63 
.64 
.65 
.65 
.65 
.66 
.67 
.67 
.67 
.1)7 
.69 
.69 
.69 
.69 
.70 
.71 
.72 
.72 
.72 
.73 
.'73 
.74 


48. Medium. 


$0. 75 


2. Small 


49. "mall 


.75 


?. Small 


50. SmaU... 


.76 


4 Small 


51. Small _ 


.78 


5. Small .- 


52. Medium 


.79 


6. Small . ... 


53. Small 

54. Small. 

55. Small... 

56. Small 


.79 




.80 




.80 




.82 


•10. Small 


57. Medium 

58. Small 


82 


11. Sipall 


83 


12. ^7;dium . .. 


59. Small 

60. Small. . . 


^4 


13. Large 

U. Small 


'84 


61. Small 

62. Small 

63. Small.-- - 

64. Small - - 

65. Small - 

66. Medium 

67. Small ;- - 

68. Medium-; -- 

69. Small.--.: .- 

70. Small........ 

71. Small....'- -,. 

72. Small 

73. Small 

74. Medium 

75. Small- - 

76. Small 

77. Small . . 

78. Small . 

79. Small 

80. Small 

81. Small.. 

82. Small 

S3. Small- 

84. Small 

85. Small 

86. Small ..i..: 

87. Small 

88. Small... 

89. Small 


84 


15. Small 


.84 


16. Small 


.85 


17. Small .. 


.85 


18. Small - . 


.86 


19. Small 

20. Small 


.87 
.88 


21. Medium 


.89 


22. Small 

23. P-nall ... .'.- 


.89 
.91 


21. Small . . . ;.... 


.91 


25. Medium ..." 


.93 


26. Small . . 


.93 


27. Small 


.95 


28. Small. 

29. Small .. 


.98 
1.00 


30. Small 


1.02 


31. Small .. 


1.04 


32. Small ' : 


1.04 


33. Medium 


1.07 


34. Small 

35. Large 

36. Small 


1.08 
1.09 
1.11 


37. ?mall 


1.12 


38. Small 


.. 1.12 


39. Small ...- 

40. Small - 


1.19 
■1.19 


41. Small 


1.30 


42. Small 


1.32 


43. Small.. )- 

44. Small 


90. Small.... 

91. Small 

92. Small- - 

93. Small 

94. Small 


1.41 
1.42 


45. Small 


1.54 


46. Small ..-- 

47. Small 


1.61 

1.85 







' Credit for feed also excluded. 

Source: Federal Trade Commission files. 



COMMENTS ON TABLE 73 



(a) Size classification of companies: Same as in table 70. 
(6) One of the larg^ companies had the lowest manufacturing 
cost, i. e., total cost exclusive of wheat and package costs. 



CONCENTRATION OF ECONOMIC POWEE 



69 



Table 74. — Total unit costs, unit costs exclusive of ingredients, and profit per pound 
for bread made in exclusively wholesale baking plants of different size, years 1922-25 
combined 



Production per plant in pounds per year 



Total cost 
per pound 



Cost exclu- 
sive of 
ingredients, 
per pound 



Profit, per 
pound 



Under 2,500,000 

2,500,000 to 5,000,000.., 
5,000,000 to 7.500,000... 
7,500,000 to 10,000,000_. 
Under 5,000.000 

5,oqp,oooto 10,000,000. 

10,000,000 to 15,000,000 
15,000,000 to 20,000,000 
•20,000,000 to 25.000,000 
25,000,000 to 30,000,000 
30,000,000 to 35,000,000 
■Over 35,000,000 

Average 



Cents 
7.419 
6.986 
6.913 
6.964 
7.076 
6.- 937 
6.592 
6.366 
6.492 
6.535 
6.565 
7.005 



Cents 
4.144 
3.748 
3.704 
3.770 
3.830 
3.735 
3.471 
3.256 
3.281 
3.253 
3.366 
3.670 



Cents 
0.194 
.312 
.495 
.514 
,287 
.504 
.559 
.933 
.967 
.979 
.691 
.701 



3.498 



.697 



Source: Federal Trade Commission. 

COMMENTS ON TABLE 74 

(a) Three standards used in- judging efficiency of bread plants neces- 
sary because different bakeries use different kinds of ingredients to 
make different kinds of bread. These different kinds of bread are of 
different quaUty and bring different prices. 

(6) When total cost is used as the criterion, the lowest-cost plants 
were those with production of from 15,000,000 to 20,000,000 pounds. 
When cost exclusive of ingredients is used as the criterion, lowest costs 
were those of plants with production of from 25,000,000 to 30,000,000 
pounds. When the three criteria are considered jointly, the most 
efficient plants were those with production of from 15,000,000 to 
30,000,000 pounds. 

{c) Largest plants were not most efficient by any of the three 
criteria. 

{(I) Some of the medium-sized, low-cost plants belonged to the 
largest baking companies. 



Table 75. — Ranks of General Baking Corporation, United Bakeries Corporation, 
and Ward Baking Corporation according to 3 criteria — total costs per pound, 'costs 
excluding ingredients per pound, and profit per pound, 1920, 1921, 1922, 1923, 
and 1924 



General Baking Corporation: 
Ranks according to: 

Total costs per pound, 

Costs excluding ingredients per pound 
Profit per. pound » 

United Bakeries Corporation: 
Ranks according to: 

Total costs per pound 

Costs excluding ingredients per pound 
Profit per pound. ._ 

Ward Baking Corporation; 
Ranks according to: 

Total costs per pound.. 

Costs excluding ingredients per pound 
Profit per pound 

Total number of baking companies in arrays.. 





(0 1 




(') 




(') 


31 


27 


29 


32 


23 


10 


36 


40 



1922 


1923 


1 


3 


3 


5 


3 


5 


0) 


20 


(') 


29 


(') 


43 


62 


61 


62 


56 


59 


62 


75 


74 



' Data not available. 

Soorce- Federal Trade Commission. 



70 



COXCE^'TRATION OF ECONOMIC POWER 



COMMENTS ON TABLE 75 

(a) General Baking Corporation was the largest company before 
1924. Continental Baking Co., formed at the end of 1924, became 
the largest baking company thereafter. 

(6) For the period 1920 through 1924 General Baking Corporation 
had the lowest costs shown by any of the three larger companies. 

(c) Only in 1922, however, did it have the best rank shoMn\ for any 
company, and then according to one criterion only. 

Table 76.— Rank according to total cost per pound of bread, cost minvs ingredientSf 
and profit per pound of 4 largest companies in an array of 51 companies in 1925.^ 



■Rank according to- 



Total (>n<;f J ^o''* ™'°*is 
DerDound '°^<^^'''"ts, 
per pouna p^^ ^oun^ 



Continental I 18 

General 5 

Ward : 20 

Purity I 27 



Profit, per 
pound 



1 Company with lowest cost has rank 1. and company with largest profit has rank 1. 
Source: Federal Trade Commission flies. 



COMMENTS ON TABLE 76 

(a) Size classification of companies: Continental Baking Corpora- 
tion has been by far the largest baking corporation since 1 925. Gen- 
eral Baking Corporation, Ward Baking Corporation, and Purity Bak- 
eries Corporation have been medium-sized as compared with the largest 
company. United Bakeries Corporation was the largest company 
absorbed by the Continental Baking Corporation. 

(6) There were 51 companies in the cost series used to derive the 
cost ranks of the four largest baking companies shown in table 76. 

{c) Of the 51 companies 17 had lower total costs per pound of bread 
than Continental, 20 had lower costs minus ingredients, and 10 had 
larger profits per pound. 

(f/) General Baking Corporation's record was much better than that 
of the Continental Bakmg Corporation in 1925. There were only three 
or four companies that had lower total costs, lower costs minus ingredi- 
ents, and larger profits per pound than the General Baking Corporation. 



CONCENTRATION OF ECONOMIC POWER 



71 



Table 77. — Ranks of 15 companies absorbed by Continental Baking Corporation^ 
according to various criteria 



Company No. 


Average pro- 
duction in 
pounds per 
year 


Ranks according to 

total costs per 

j)ound of bread 


Ranks according to 
costs minus ingre- 
dients per pound 
of bread 


Ranks according to- 
profits per pound 
of bread 




1920 


1921 


192i2 


1923 


1024 


1920 


1921 


1922 


1923 


1924 


1920 


1921 


1922 


1923 


1924- 


1 


325,814,000 
61,138.000 
43, 400, 000 
35,704,000 
31,230,000 
26, 710, 000 
24, 729, 000 
24,131,000 
23,708,000 
19,914,000 
16,048,000 
15, 900, 000 

• 15,367,000 
12, 450, 000 
8,979,000 








20 

27 
62 


11 

29 
58 








29 
37 
63- 


21 
24 
61 








43 
27 
24 


14 


2 




















17 


3 


30 
27 
18 
34 
20 
23 


31 
20 
11 
37 
18 
21 
28 


61 
10 
36 
64 
21 
44 
40 
19 
34 
14 
8 
4 
7 

75 


21 
.17 
.23 
25 
19 
16 


27 
16 
23 
31 
18 
21 
33 


53 
11 
54 
39 
30 
37 
64 
13 
24 
15 
8 
6 
19 

75 


11 
22 
17 
20 
13 
3 


7 
35 

6 
21 
22 

4 
24 


36 
29 
56 
31 
64 
16 
19 
23 
22 
34 
6 
8 
27 

76 


24 


4 




6 . 


26 
63 


28 
67 


45 
36 


42 
45. 


31 
35 


2,') 


6 


39 


7 




8 


36 
29 
16 
15 


50 
44 
18 
14 


22 
69 
9 
21 


31 
62 

8 
13 


20 

8 
22. 

9 


32 


9 


7 


10 


34 


11 














8 


12 ■ 


35 
6 
10 
26 

36 


16 
3 
4 

16 

40 


24 
5 
4 

28 

36 


U 
4 
3 

20 

40 


36 
19 
12 
21 

36 


23 
13 
14 
12 

40 




13 














14 


22 


36 


19 


19 


18 


13 


15 




Total number of com- 
panies In cost ar- 
rays 


74 


70 


74 


70 


74 


70 









Source: Federal Trade Commission files. 



COMMENTS ON TABLE 77 



(a) Costs of the 15 companies absorbed by the Continental Baking 
Corporation were in general high. The United Bakeries Corporation 
(company No. 1), the largest company absorbed by tlie corisoUdation, 
-did not show particularly low costs in 1923 and 1924. 



TABLES CONTAINING RETURNS ON INVESTED CAPITAL 
AND RELATED DATA 

The tables to follow show the returns on invested capital for cojn- 
panies in all the industries covered in the foregoing cost tables. 
Moreover, returns on invested capital for three other industries will 
also be given. These industries are the automobile, the chemical, and 
the rayon industries. 

Following the table showing returns on invested capital earned by 
the principal automobile companies are costs and margins between 
prices and costs for certain well-known automobiles. These so-called 
costs are not strictly' comparable with the costs shown in the , fore- 
going tables. They are rather statistical averages arrived at by 
dividing the total number of Chevrolets, Plymouths, Fords, Olds- 
mobiles, and Studebakers of all sizes and types into the expenses 
involved in the production of these various types and styles. Com- 
parison of the statistical averages for the various cars is made possible 
by the fact that the average prices reahzed on all these types and styles 
of cars are available for judgment as to the comparability of the cars 
represented in the statistical averages. For example, the average cost 
of producing all sizes and types of passenger Chevrolets can be 
•compared with the average cost of producing all sizes and types of 
Plymouths, provided the average price realized by General Motors 
from all types of Chevrolets was about the same as the average price 
realized by Chiysler on all types and sizes of Plymouths. . Where 
there is a small variation between the average price realized on the 
two cars, the margins between the average costs an-d the average 
prices give a basis for judgment as to the relative efficiencies involved 
in their production. 

Because of the inability to obtain sufficient cost data for comparing 
the efficiencies of different chemical companies, and because of the 
varying proportions of the many different chemicals produced by these 
companies, returns on invested capital furnish the only basis for 
judging the relative efficiencies of the chemical companies. 

The returns on invested capital earned by the rayon companies will . 
be presented to show: (a) the enormous profits possible for a monop- 
oly; (b) the relatively greater success of certain medium-sized and 
small companies, which appeared when the patent monopoly of the 
dominant company expired. 

The number of companies covered in the tables for returns on 
invested capital is- in general smaller than the number of companies 
covered in the c&.^.t tables. This^ is explained by the fact that the data 
on returns on invested capital are largely derived from sources which 
-cover only the larger companies in an industry. The Securities and 
Exchange Commission, for example, publishes figures only for com- 
panies registered on securities exchanges, and such companies are in 
general the larger companies in an industry. In some of the Federal 
72 



CONCEJ^TRATION OF ECONOMIC POWEK 73 

Trade Commission's reports, financial data for only the larger 
companies are presented. 

William Leonard Crum's study Corporate Size and Earning Power 
shows that small corporations, when successful, earn on the average 
higher rates of return than medium-sized and large companies.' For 
this reason, if the rates of return on invested capital for the numerous 
successful small corporations had been available, they would undoubt- 
edly have shown that many such corporations make a more effective 
use of their capital than the larger corporations. Figures published 
by the Bureau of Internal Revenue in Statistics of Income prove that 
the capital turnover of small corporations is in general much higher 
than the capital turnover of large corporations. 



Table 78.- 



-Rates of return on invested capital of 7 avtomobile companies for their 
motor-vehicle business, 1927-87 



Year 


Oeneral 
Motors 


Ford 


Chrysler 


Stude- 
baker 


Hudson 


Packard 


Nash 


1927 _ 


Percent 
61.43 
58.89 
48.41 
27.62 
25.35 
•2.07 
16.93 
16.61 
33.76 
37.93 
25.85 


Percent 

' 5.21 

1 12. 47 

15. 26 

5.81 

16.71 

1 13. 89 

12.16 

4.26 

2.20 

4.26 

.76 


Percent 
49.42 
38.73 
20.92 
.51 
4.94 
19.22 
20.28 

12:61 

44.55 
70.31 
55.75 


Percent 

14.04 

16.21 

11.23 

1.74 

2.62 

16.59 

1 1.10 

1 1.56 

1 5.68 

14.40 

5.57 


Percent 

41.39 

35.69 

29.35 

1.36 

16.66 

1 17. 33 

1 17. 27 

1 13. 40 

3.50 

14.39 

3.73 


Percent 

35.62 

65.61 

64.82 

26.53 

1 5.14 

I 17. 30 

1.09 

1 29. 14 

7.54 

29.65 

11.53 


Percent 
75.63 


1928 


66.57 


1929 


57.78 


1930 


26 85 


1931 


21 42 


1932. 


1.27 


1933 

1934 


1 19. 05 
1 33 00 


1935 

1936. 


1 15. 65 
3.12 


1937 


3.75 






11 -year average . 


32.32 


1.80 


27.27 


6.13 


9.40 


21.25 


36.90 







1 Loss. 

Source: Federal Trade Commission. 



COMMENTS .ON TABLE 78 

{a) Size classification of companies: 

General Motors is the largest company in the industry, although 
much of its size is explained by its business in lines other than motor 
vehicles. 

Ford actually had a larger investment in the motor-vehicle business 
than General Motors in 1937 as well as during the 11 years covered in 
the foregoing table. General Motors and Ford, for this reason, might 
be considered the large companies in the mo tor- vehicle industry. 

Chrysler, with an investment about one-fourth as large as General 
Motors or Ford, is designated medium-sized. 

Studebaker, Hudson, Packard, and Nash are small companies when 
compared with the three previously described. 

(6) During the late twenties Nash earned higher rates of return on 
invested capital than General Motors, but of late vears this company 
has not been so successful. 

(c) During the thirties Chrysler has made the greatest progress 
shown by any automobile company. Despite its relatively small 
capital its passenger car production has surpassed that of Ford. 
Chrysler is but little integrated, and has relatively little capital tied 
up in the manufacture of parts and raw materials. 

((/) Ford is the most integrated automobile company, apd General 
Motors is the next most integrated automobile company. 

1 Harvard University Press, 1939. 



74 



CONCEiNTRATION OF EOONOMIC POWER 



(e) In 10 of the 11 years covered Chrysler has earned higher rates 
of return on invested capital than Ford. Iji a number of late ye^rs 
Chrysler has earned higher rates of return on invested capital than- 
General Motors. 

Table 79. — Average price realizations and average costs for Chevrolet and Plymouth 
passenger cars, together with relations between these prices and costs, expressed as 
percentages, 1929, 19S2, 1934, 1935, 1936, and 1937 





Average price realizations 
on all types and models 


Average cost of all types 
and models 




Chevrolet 


Plymouth 


Chevrolet 


Plymouth 


1929 


$519.67 
452. 55 
523.88 
621. 07 
626.03 
556. 10 


$553. 77 
485. 80 
.■544.60 
533. 10 
543. 52 
573. 19 


$460.59 
449.22 
498. 37 
484. 97 
488.18 
527. 37 


$579 51 


1932 .- 


520.76 


1934 ,. 


521. 57 


1935-. . .- .... 


487.26 


1936 


478. 01 


1937 


523.92 







PERCENTAGES DERIVED FROM ABOVE FIGURES BY CONSIDERING THE AVERAGE 
PRICE REALIZATION AND AVERAGE COST OF A CHEVROLET AS 100 





Price 


Cost 




Chevrolet Plymouth 


Chevrolet 


Plymouth 


1929 


100. C 
100.0 
100.0 
100.0 
100.0 
100.0 


106.6 
107.3 
104.0 
102.3 
103.3 
103.1 


100.0 
100.0 
100.0 
100.0 
100.0 
100.0 


125.8 


1932. 


115.9 


1934.. . . 


104.7 


1935 


100.5 


1936 


97.9 


1937 


99.3 







Source: Federal Trade Commission. 

COMMENTS ON TABLE 79 

(o) The average costs shown are composite costs of all types and 
models of Chevrolets and Plymouths, and the average prices on all 
these types and models of Chevrolets and Plymouths indicate the 
comparability of the cars represented in' the average costs. 

(6) The price and cost relatives were derived by assuming that the 
average price and average cost of all types of passenger Chevrolets 
equal 100. The price and cost relatives for Plymouths were derived 
by dividing the average price realizations and the average costs of 
Chevrolets into the average price realizations and the average costs 
of Plymouths. 

(c) In 1929 General Motors realized an average price on all types 

and sizes of passenger Chevrolets of $519.07. In the same year 

Chrysler realized an average price on all types and sizes of Plymouths 

. of $553.77. These average prices indicate that the average Chevrolet 

and the average Plymouth in that year were reasonably comparable. 

{d) In 1929 Chrysler realized 6.6 percent more on the average 
Plymouth than General Motors realized on the average Chevrolet, 
but Chrysler spent 25.8 percent more to produce its Plymouths. This 
inlicates that Chevrolets were produced more effectively than 
plymouths in 1929. Of late years the relation has been reversed. In 
1^36, for example, Chrysler realized 3.3 percent more on the average 
Plymouth than General Motors realized on the average Chevrolet, 
but Chrysler produced the average Plymouth at 2.1 percent less than 
General Motors produced the average Chevrolet. 



CONCENTRATION OF ECONOMIC POWEB 



75 



Table 80. — Average price realizations and average costs for Chevrolet and Ford 
passenger and commercial vehicles, together with relations between these prices 
and costs, expressed as percentages— 1929, 1932, 1934, i935, 1936, and 1937 



1 . . 


Average price realizations 
on all types and models 


Average cost of all types 
.and models 


- 


Chevrolet 


Ford 


Chevrolet . 


Ford 


1929 


$530. 20 
465. 36 
528.30 
524. 54 
529.38 
562. 72 


$492. 10 
484. 42 
522. 51 
534.58 
524.14 
528. 35 


$457. 07 
446. 11 
484.08 
475.90 
478.68 
521.87 


$463. 06 


1932 : 7. 


624.01 


1934 


499. 59 


1935 


522. 69 


1936..^ 


513. 73 


1937 


533. 78 







PERCENTAGES DERIVED FROM ABOVE FIGURES BY CONSIDERING THE AVERAGE 
PRICE REALIZATION AND AVERAGE COST OF A CHEVROLET AS 100 





Price 


Cost 




Chevrolet 


Ford 


Chevrolet 


Ford 


1929 . 


100.0 
100.0 
100.0 
100.0 
100.0 
100.0 


92.8 
104.1 

98.9 
100.0 

99.0 

93.9 


100.0 
100.0 
100.0 
100.0 
100.0 
100.0 


101.3 


1932 - 


139.9 


1934 - 


103.2 


1935 


109.8 


1936 


107. 3 


1937 


102.3 







Source: Federal Trade Commission. 

COMMENTS ON TABLE 80 

(a) According to the standard described in the foregoing table, 
Chevrolets were produced more effectively than Fords in every one 
of the years shown. For example, in 1937 Ford got 6.1 percent less 
for the average Ford than General Motors realized on the average 
Chevrolet, but the average Ford cost 2.3 percent more to produce 
than the average Chevrolet. 

Table 81. — Average price realizations and average costs for Studebaker passenger 
and commercial vehicles and for Oldsmobile passenger cars, together with relations 
between these prices and costs, expressed as percentages — 1932, 1934, 1935, 1936, 
and 1937 





Average price realizations 
on all types and models 


Average tost of all typeS - 
and >»ici3els- 




Oldsmobile 


.Studebaker 


Oldsmdbile- 


Studebaker 


1932 


$692. 24 
684. 27 
683. 22 
673. 31 
704.24 


$746. 35 
720.03 
729.70 
735.99 
757. 62 


$871.59- 
68fr.22 
625. 27 
629.62 
685. 17 


$840.96 


1934 


,753. 69 


1935 - 


776. 55 


1936 . 


704. 82 


1937 


748.83 







PERCENTAGES DERIVED FROM ABOVE FIGURES BY CONSIDERING THE AVERAGE 
PRICE REALIZATION AND AVERAGE COST OF AN OLDSMOBILE AS 100 



^ 


Price ..„ , 


-Cost 




Oldsmobile 


Studebaker 


Oldsmobile 


Studebaker ■ 


1932 


100.0 
100.0 
100.0 
100. 
100.0 


107.8 
- 105.2 
106.8 
109.3 
107.6 


100.0 
100.0 
100.0 
100.0 
100.0 


96.6 


1934 J 

1935... 


109.5 
124.2 


1936 ^ 

1937 ^ 


111.9 
109.3 







Source: Federal Trade Commission. 



76 



CONCENTRATION OF ECONOMIC POWER 
COMMENTS ON TABLE 81 



(a) In 1934, 1935, 1936, and 1937 the average Oldsmobile was 
produced more effectively than the average Studebaker. 

(b) In 1932 the average Studebaker was produced more effectively 
than the average Oldsmobile. 

Ta&le- 8'' — Average rates of return on stockholders' invested capital of 17 cement 
companies for the 'years 1917-36, arranged in order of descending rates of return ' 



Company 


Size 


Location 


Average 
rate of 
return 


I 


Very small 


West - 


Percent 
22.67 


II .. 


Medium 

do .... 


Country-wide 


15. 63; 


Ill - 


West. 


15. 21' 


IV 


Small . 


do - 


15. 02' 


V. 


do 


Middle West. .. 


14. 98- 


VI 


Large..." 


Country-wide 


13.23 


VII-.. 


Very small 

Small . 


West 


12. 07" 


VIII- 


Middle West 


10. 82 


IX . 


Very small _ 

Large 


East . .... 


9.02- 


X 


Countty-wido. _ 


8.74 


XI.... ... . 


Small 


Middle West- - 


7.80' 


XII... 


Medium . .... .... 


Middle West and East 


7.79t 


XIII. 


Large. . 


Country-wide- 


7.28- 


XIV . 


Medium 


Middle West and East 


7.22' 


XV 


Very small 


Middle West: - 


6.8i: 


XVI 


_ _do 


East 


5.88- 


XVII 


Small .. . 


do 


4.56 











' stockholders' investment consists of the average of the outstanding common and preferred stocks and 
surplus at beginning and end of year. 

Source: Federal Trade Commission files. 

COMMENTS ON TABLE 82 

(a) Size classification of companies (same as that employed in- 
foregoing cement-cost tables) : 

Large companies. — Universal Atlas, Lehigh- Portland, and Lone 
Star. 

Medium-sized companies. — Penn-Dixie, Alpha-Portland, and Ideal. 

Small companies .—Those with annual production between 2,000,000' 
and 4,000,000 barrels. 

Very small companies. — Those with annual production under 
2,000,000 barrels. 

Over the 20-year period (1917-36) certain small and medium-sized 
companies in the West and one medium-sized company with plants 
in the South and East earned higher rates of return on invested capital 
than the most profitable of the three large companies. 

(6) One of the 3 large companies earned a relatively low rate of 
return on invested capital. Of the 17 companies covered in the table, 
12 earned a higher rate of return on invested capital than this large 
company. 



CONCENTRATION OF ECONOMIC POWER --ry 

T.\BLE SZ.— Average rates of return on stockholders' invested capital of 16 cement 
companies for the year 19S6, arranged in order of descending rates of 'return 



Company 


Size 


Location 


Rate of 
return 


I 


Medium - 

Very small ... 


West 


Percent 
15.68 
10. 07 
9.88 
4.43 

-'1^ 


II . 


do 


[II .. 


do ..- 

Large 

Small 

Large 

Small 


d. 


IV - 


Coun v-w ide 


V . . ,. . . 


Middle West .. 


VI 


Countrv-wide 


VII 


Middle West-..,.. . 


.42 

>.29 

' 2 23 


VIII 


do 


do 


IX. 


Medium 


Middle West and East. . 


X 




CountTy-wide. 


' 2 38 


XI 


do 


Middle West and East 


1 2 4u 


XII 


Small - 

...do... 

Large 


West... 


' 2 49 


XIII 


East _ 


• 3 30 


XIV 


Country-wide 


' 4 12 


XV 


Very small _ 


Middle West. . 


' 5 41 


XVI 


do 


East . 


> 6 14 











' Loss. 

Source: Federal Trade Commission files. 

COMMENTS ON TABLE 83 

(a) Size classification of companies: Same as in the foregoing table. 

(6) Three small and medium-sized companies in the West earned 
the highest rates of return on invested capital in 1935. 

(c) The largest company made a low rate of return on invested 
capital in that year. 

Table 84. — Average rates of return on stockholders' invested capital of 16 cemen 
companies for the year 1936, arranged in order of descending rates of teturn 



Company 


Size 


Location 


Rate of 
return 


I 


Medium 


West. 


Percent 
34 17 


II _. 


Very small.. '. 


do .. . 


24 30 


III.. 


Large 

Small _• 


Country-wide 


18 92 


IV 


Middle West... . 


15 05 


V 


Very small 

Medium 

Small 

Large ' 


West 


11 16 


VI -- 


Middle West and East. 


10 86 


VII 


West 


10.02 


VIII 


Country-wide. 


9 99 


IX 


Medium 


do 


9 16 


X 


do 


Middle We.st and East 


8 03 


XI ._ 


Small... 


Middle West 


7.67 


XII - 


Large 

Small. 

do 


Country-wide ... 


6 66 


XIII 


Middle West.- 


6.12 


XIV 


East. 


. 4.99 


XV 


Very small 


do--- 


1 54 


XVI ._ 


dp 


Middle West 


1 6.79 











' Loss. 

Source: Federal Trade Commission flies. 



COMMENTS ON TABLE 84 



(a) Size classification of companie ;: Same as in the foregoing table. 

(6) The highest rates of return on n vested capital were again earned 
by two western companies, neither o. which was large. 

(c) One of the three large com^ a lies earned a very high rate of 
return on invested capital in 1936. 



78 



CONCENTRATION OF ECONOMIC POWER 



Table 85. — Average annual total invested capitals and returns thereon for 11 steel 

companies 1917-S8 



Company 



Average an- 
nual total 
investment 



Average an- 
nual profit 
applicable 
to total in- 
vested capital 



Average 
annual 
rate of 
return on 
invested 
capital 



United States Steel Corporation 

Bethlehem Steel Corporation 

Republic Steel Corporation 

Jones & Laughltn Steel Corporation 

Youngstown Sheet & Tube Co 

National Steel Corporation i 

Inland Steel Co 

American Rolling Mill Co 

Wheeling Steel Corporation 

Otis Steel Co.» 

Pittsburgh Steel Co -. 



$1, 760, 820, 526 
528,805,568 
148, 335, 836 
182, 959, 802 
165, 650, 756 
144, 350, 340 
80, 407, 561 
61, 995, 249 
84, 723, 458 
29, 650, 862 
39, 298, 408 



$129, 020, 924 

23, 947, 750 

5, 700, 718 

11, 039, 140 

10, 688, 035 

11,789,262 

8, 187, 736 

4, 045, 371 

5, 161, 605 

1, 240, 364 

1, 933, 327 



Percent 
7.33 
4.53 
3.84 
6.03 
6.45 
8.17 
10.18 
6.53 
6.09 
4.18 
4.92 



• Annual average for period from 1930 to 1938, inclusive. 
» Annual average for period from 1919 to 1938, inclusive. 

Source: Federal Trade Commission files. 

COMMENTS ON TABLE 85 

(a) Over the 22-year period (1917-38) Inland Steel Co. earned a 
considerably higher rate of return on invested capital than the United 
States Steel Corporation, the Bethlehem Steel Corporation, or the 
Republic Steel Corporation, the three largest steel companies. 

(6) The National Steel Corporation, another medium-sized steel 
company, also shows a higher rate of return, on invested capital than 
the three krgest companies, but the figures for the National Steel 
Corporation extend back only to 1930. It should be noted, however, 
that about one-half of the years represented in the National Steel 
Corporation's average were depression years. 



Table 86. — Rates of return on total invested capital of 11 steel companies, 1930-38 

[Percent] 



Company 



United States Steel Corpo- 
ration _ _ -' 

Bethlehem Steel Corpcration. 

Republic Steel Corporation.. 

Jones & Laughlin Steel Cor- 
poration 

Youngstown Sheet & Tube 
Co ■. 

National Steel Corporation... 

Inland Steel Co 

American Rolling Mill Co... 

Wheeling Steel Corporatipn.. 

Otis Steel Co 

Pittsburgh Steel Co 



1930 



6.16 
4.71 
.24 

5.06 

5.19 
9.85 
8.95 
2.37 
4.05 
4.61 
4.90 



1931 



0.95 

1.10 

12.21 

<.84 

1 1.22 

5.78 

3.44 

'.81 

I 1.61 

12.44 

1 2.09 



1932 1933 1934 



13.52 
1 2.03 
•3.90 

1? 39 

14.07 
2.83 
1 1.39 
.24 
' 2.80 
16.77 
1 3.86 



11.75 
'.41 
1.53 

12.24 

1 1.93 

3.85 

2.40 

1.78 

.77 

12.79 

13.89 



10.81 
1.21 
'.08 

1 1.34 

.90 
6.66 
6.73 
4.04 
2.13 
4.92 
I 1.84 



1935 


1936 


1037 


1938 


0.63 


4.56 


8.64 


0.22 


1.97 


3.72 


6.92 


1.97 


3.75 


6.35 


5.65 


1.95 


.06 


2.95 


3.47 


1 1.79 


3.12 


7.50 


8.49 


1.33- 


10.33 


11.38 


15.44 


6.98 


12.82 


14.20 


13.15 


5.37 


7.93 


9.68 


9.37 


1.60 


5.46 


6.06 


5.84 


1.99 


11.24 


10.95 


10.44 


• 1.60 


12.86 


.60 


5.18 


.57 



Simple 
aver- 



1930-38 



1.68 
2.13 
.92 

.24 

2.15 
9.11 
7.30 
3.78 
2.43 
3.17 
1.38 



TLoss. 

Source; Federal Trade Commission files. 



CONCENTRATION OF ECONOMIC POWER 



79^ 



COMMENTS ON TABLE 86 

(a) National and Inland earned higher rates of return on invested, 
capital than the three largest steel companies jn almost every year 
between 1930 and 1938. 

(6) National and Inland are less integrated than the United States^ 
Steel Corporation in that they have less capital tied up in ore reserves, 
and have a relatively smaller pig-iron production. 

(c) National and Inland are compact companies located in the 
North Central States, near their raw materials and their markets. 



Table 87.- 



-Rates of return on invested capital of long-line farm-machinery manu- 
facturers, 1913-37 



Company 



Average 
1913-18 



Average 
1919-26 



Average 
1927-36 



1935 



1936 



1937" 



International Harvester Co 

Deere & Co I. 

Allis-Chalmers 

J. I. Case Co 

Emerson-Brantingham Corporation. 

Oliver Farm-Equipment Co 

Minneapolls-Moline 

Massey-Harris Co. 

B. F. Avery & Sons , 



Percent 
12.34 
10.89 



Percent 
8.74 
7.70 



3.73 
"6. hi' 
ii.'so" 



7.43 
'1.83 



Percent 
8.76 
11.51 
5.05 
5.40 



Percent 
12.40 
14.68 
6.06 
7.02 



Percent 

1 13. 34 

22.66 

11.01 

9.35 



Percent 

13. 18: 

24.91 

13.88. 

'14.68 



1.54 
S2.00 
'5.54 

1.11 



>2.50 

8.14 

'11.56 

8.17 



5.81 

6.12 

'2.75 

14.79 



14.62- 
« 16.98 ■ 



1 Based on net profits for 11 months. 

2 Based on net profits for 10 months. 
' Loss. 

Source: Federal Trade Commission files. 



COMMENTS ON TABLE 87 

(a) Size classification of companies: 
Large companies. — International Harvester. 

Medium-sized companies. — Deere, Allis-Chalmers, and J. I. Case. 
Small companies. — Other companies covered in table 87. 
(6) Before 1926 International Harvester Co. earned a higher rate of 
return on invested capital than the other farm-machinery companies. 

(c) Between 1927 and 1936 Deere forged ahead and showed th& 
highest rate of return on invested capital earned by any of the farm- 
machinery companies shown in the table. 

(d) In 1937 all three of the medium-sized companies earned 
higher rates of return on invested capital than International Har- 
vester. 

(e) In 1937 even the smaller long-line companies earned higher 
rates of return on invested capital than International Harvester. 

(J) International Harvester, which owns a steel company, is the 
most highly integrated farm-machinery company. Deere concentrates 
on the farm-machinery business, Allis-Chalmers, a newcomer in the 
industry, makes other types of machinery. Its success of late years, 
has been due to developments in power-driven farm machinery. 



80 



CONCEiNTRATION OF ECONOMIC POWER 



Table 88. — Eastern petroleum refiners, ranked according to simple average of rates 
of return on capital invested in petroleum business for years 1922, 1923, 1924, 
and 1925 i 



Company. 


Investment 
in 1922 ' ■ 


Ranks ac- 
cording to 
average 
return -on 
capital in- 
vestment 


Company 


Investment 
in 1922 


Ranks ac- 
cording to 
average 
return on 
capital in- 
vestment 




$8, 753. 254 

29, 236, 885 

61,920,006 

1,485,935 

4,9.50,344 

2, 229. 028 

233. 5.'>3, 064 

32, 107, 174 


1 
2 
3 
4 
5 
6 
7 
8 


9 


$67,811,150 

89, 467, 651 

316,240,235 

367, 651 

8, 4.50, 008 

690, 184 

1,391.059 

320, 834 


9 


2 - 


10. ._......: 

11 - 

12.. 

13 

14 


10 


3 - 


11 


4 - 

5 


2 12 

M3 




» 14 


7 


15... 

16 


215 


8 --- 


■"16 



1 Company with rank 1 had highest average rat? of return on invested capital for years 1922, 1923, 1924, 
and 1925. , , ^^ , »u ^ 

2 Indicates company operated at a loss over the average for the 4-year period. 

Source: Federal Trade Commission flies. 



COMMENTS ON TABLE 88 

(a) Rank, according to average rate of return on capital investment 
for each eastern petroleum refiner, was computed in the following 
manner: 

A simple average of the 1922, 1923, 1924, and 1925 rates of return 
on invested capital earned by each refiner was computed.' 

The refiner with the highest simple average rate of return for the 
4-year period was given rank 1 . The refiner with the next highest 
simple average rate of return was given rank 2. Companies with 
ranks above 12 showed a loss for the 4-year period as a whole. 

(6) Companies 7 and 1 1 were the two largest companies: Standard 
Oil Co. (New Jersey) and Standard Oil Co. of New York. 

(c) Six of the small and medium-sized eastern refiners earned a 
higher rate of return over the 4-year period than the more profitable 
of the two largest companies. The largest company was only the 
twelfth most profitable of the 16 companies covered in the tables. 

Table 89. -^California petroleum refiners, ranked according to simple average of 
rates of return on capital invested in petroleum business for years 1922, 1923, 19^4, 
and 1925^ 



Company 


Investment 
in 1922 


Ranks ac- 
cording to 
average 
return on 
capital in- 
vestment 


Company 


Investment 
in 1922 


Ranks ac- 
cording to 
average 
return on 
capital in- 
vestment 


1 


$612,837 

1,678,843 

3,3, 580, 513 

200, 866, 458 

52,211.737 


1 
2 
3 
4 
5 


6... 

7 


$172,454 
11,032,704 
104, 320. 624 
53, 345, 493 


6 


2 


7 


3 


8 


S 


4 


9 : . 


9 


5 . 









1 Company with rank 1 had highest average rate of return on invested capital for years 1922, 1923, 1924, 
and 1925. 
Source: Federal Trade Commission flies. 



CONCEJ^TRATION OF ECONOMIC POWEH 



81 



COMMENTS ON TABLE 89 

(a) Rank, according to average rate of return on capital investment 
for each California petroleum refiner, was. computed in the following 
manner: 

A simple average of the 1922, 1923, 1924, and 1925 rates of return 
on invested capital earned by each refiner was computed. 

The refiner with the highest simple average rate of return for the 
4-year period was given rank 1. The refiner with the next highest 
simple average rate of return was given rank 2. 

(b) The Standard Oil Co. of California, the largest oil company on 
the Pacific coast, had the fourth highest rate of return over the 4-year 
period covered. 

(c) The second largest company on the Pacific coast had next to the 
lowest rate of return on invested capital over the 4-year period. 

Table 90. — Midcontinent -petroleum refiners, ranked according to simple average of 
rates of return on capital invested in petroleum business for years 1^22, 192S, 1924, 
and 1925 ' 



Company 


Investment 
in 1922 


Ranks ac- 
cording to 
average, 
return on 
capital in- 
vestment 


Company 


Investment 
in 1922 


Ranks ac- 
cording to 
average 
return on 
capital in- 
vestment 


1 


$16, 930, 438 

175,033,355 

3, 158, 723 

210. 381 

184,423 

7.816,830 

167, 773, 095 

102, 340. 703 

271,454,011 

105, 855, 390 

24,894,826 

112, 616, 409 

25, 567, 276 

25, 422, 190 

57, 629, 723 


1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
11 
12 
13 
14 
15 


16 


$18,031,295 

184, 147, 222 

3, 870, 09*5 

244, 388, 154 

8, 185, 992 

991, 869 

449, 786 

3, 539, 135 

13,487,324 

92, 120, 816 

17, 163, 852 

35, 490, 447 

9,957,107 

45, 28a 801 

401, 568 


18 


2 


17 


17 


3 


18 


• 18 


4 


19 


19 


5 


20 


20 


6.^ 


21 


21 


7 


22 


22 


8 - . . 


23 


23 


9 


24 


24 


10 


25..., 

26 


25 


11. 


26 


12. 


27. 


J 27 


13 


28 


'28 


14 


29 


s 29 


15: 


30 


' 30 









' Company with rank 1 had highest average rate of return on invested capital for years 1922, 1923, 1924, 
and 1925.. 
' Indicates company operated at a loss over the average for the 4-vear period. 

Source: Federal Trade Commission flies. 



COMMENTS ON TABLE 90 

(a) Rank, according to average rate of return on capital investment 
for each midcontinent petroleum refiner, was computed in the follow- 
ing manner: 

A simple average of the 1922, 1923, 1924, and 1925 rates of return 
on invested capital earned by each refiner was computed. 

The refiner with the highest simple average rate of return for the 
4-year period was given rank 1. The refiner with the next highest 
simple average rate of return was given rank 2. 

(6) There were many more small and medium-sized oil refiners in 
the midcontinent field than in the coastal areas. 

(c) The largest company in the midcontinent field had ninth posi- 
tion in the series. That means that there were eight refiners with 
higher rates of return on invested capital than this largest company. 

(rf) The company with the next largest investment had the nine- 
teenth highest rate of return. 

26490B — 41— No, 13 7 



82 



CONCENTRATION OF ECONOMIC POWER 



Table 91. — Rates of return on total invested capilal shown hy all refiners with pro^ 

ducing facilities, 1934-37 



Assets (4-year 
average) 



Rate of return on total invested capital 



1934 



1936 



1936 



1937 



Simple 
average 



Standard Oil Co. (New Jersey) 

Socony-Vacuum OH Co., Inc 

Standard Oil Co. (Indiana) 

Standard Oil Co. of California..- 

The Texas Corporation 

Empire Gas & Fuel Co 

Shell Union Oil Corporation 

Consolidated Oil Co 

Tide Water Associated Oil Co 

Phillips Petroleum Co 

The'Atlantic Refining Co 

The Pure Oil Co - 

Union Oil Co. of California 

The Ohio Oil Co -. , 

Sun Oil Co 

Continental Oil Co 

Mid-Continent Petroleum Corporation 
Skelly Oil Co - 



$1, 



9347l8»7tK)0 
822, 552, 000 
699, 928, 000 
582, 771. 000 
525, 890. 000 
411,808,000 
364, 955, 000 
340, 073, 000 
197, 283, 000 
186, 059, 000 
169, 861, 000 
160, 761, 000 
155, 271, 000 
147, 809, 000 
114,221.000 
94, 630, 000 
61, 925, 000 
49, 265, 000 



Percent 
5.97 
4.86 
3.31 
3.73 
2.81 
(') 
1.00 
1.46 
(') 
5.04 
4.81 
2.30 
3.05 
3.48 
8.92 
7.12 
1.65 
1.14 



Percent 
7.34 
4.34 
5.25 
3.64 
6.50 
4.57 
3.26 
4.83 
(') 

10.43 
3.62 
8.00 
4.48 
4.42 
8.84 
11.20 
6.03 
8.91 



Percent 

10.32 
7.76 
8.22 
4.56 
9.82 
3.96 
7.89 
6:37 
5.22 

11.81 
6.31 
7.19 
4.91 
6.22 
9.66 

11.94 
8.95 

13.24 



Percent 
13.30 
9.02 
9.56 
8.24 
12.22 
4.37 
7.65 
■7.74 
. 9.95 
13.62 
7.43 
8.42 
9.01 
9.82 
10.76 
15.67 
10.16 
16.17 



Percent 
9.23 
6.50 
6.59 
6.04 
7.59 

« 4. 30" 
4.95 
5.10 

»7.69 

10.23 
6.54 
6.48 
5.37 
5.99 
9.55 

11.48 
6.45 

10.37 



1 No data. ' For 3-year period. 

Source: Securities and Exchange Commission. 



« For 2-year period. 



COMMENTS ON TABLE 91 

(a) Table 91 includes only the major oil companies. 

(6) Some of the small companies in the industry undoubtedly 
earned higher rates of return on invested capital than the major oil 
companies covered in the table. 

(c) The Standard Oil Co. (New Jersey) earned a fairly good rate 
of return on invested capital from 1934 through 1937, but four much 
smaller companies, though classified as major oil companies, earned 
a higher rate of return over the period. 

Table 92. — Returns on invested capital of beet sugar companies of different size, as 
shown by their assets, 1934-37 



Assets (4-year 
average) 



1934 



1935 



1936 



1937 



Simple 
average 



Great Western Sugar Co — 
American Crystal Sugar Co. 

Utah-Idaho Sugar Co 

Holly Sugar Corporation.... 

Michigan Sugar Co 

Union Sugar Co 



$61, 460, 000 
25, 159, 000 
1 23, 389, 000 
21, 744, 000 
9, 207, 000 
4,009,000 



Percent 
12.11 
7.13 



17.43 

6.71 

«2.09 



Percent 
11.66 
5.55 
8.58 
27.52 
1.80 
4.89 



Percent 
15.99 
10.61 

7.88 
24.22 

6.31 
10.26 



Percent 
14.40 
7.13 
4.16 
9.70 
>2.47 
4.71 



Percent 
13.64 
7.61 
»6.87 
19. 72 
3.09 
4.44 



1 3-year averages only, as 1934 figures not available. 

• Loss. 

Source: Securities and Exchange Commission. 



COMMENTS ON TABLE 92 



{a) Size classification of companies: 
Large. — Great Western Sugar Co. 
Medium-sized. — All other companies 
Union Sugar Co. 
Small. — Union Sugar Co. 



shown in table 92 except 



CONCEJ^TRATION OF ECONOMIC POWER 



83 



(6) Unfortunately, rates of return of other medium-sized and small 
companies not available in the Securities and Exchange Commission's 
publication. 

(c) The Holly Sugar Corporation, medium-sized as compared with 
"the Great Western Sugar Co., earned higher rates of return than the 

largest company in 1934, 1935, and 1936. 

(d) In 1937 Great Western Sugar Co. earned the highest rate of 
return shown in the table. 

(e) Conditions in the sugar industry during the period covered 
were affected by drought and Government control. 

Table 93. — Returns on invested capital of cane sugar refiners of different size, as 
shown by their assets; 19S4-S7 





Assets (4-year 
average) 


1934 


1935 


1936 


1937 


Simple 
average 




$118, 526, 000 
12, 952, 000 
1 6, 908, 000 


Percent 

5.33 

. 9.97 


Percent 
3.70 
8.73 


Percent 
4.78 
9.54 
12.00 


Percent 
4.56 
9.19 
8.49 


Percent 
4.59 




9.36 


The South Coast Sugar Corporation.. 


1 10 25 









> 2-year averages only, as 1934 and 1935 figures not available. 
Source: Securities and Exchange Commission. 

COMMENTS ON TABLE 93 

(a) Size classification of cornpanies: 
Large. — American Sugar Refining Co. 

Small. — Godchaux Sugar Co. and the South Coast Sugar Corpora- 
tion. 

(b) The low rates of return earned by the American Sugar Refining 
Co., successor to the Sugar Trust, are explained by the high costs of 
that compaiiy as indicated in cost table previously presented. 

(c) The high rates of return earned by the South Coast Sugar 
Corporation "are explained by the fact that when this company was 
lately reorganized its capital was written down conservatively. 

Table 94. — Rates of return earned on gross investment ^ for the different-sized 
canned-milk companies, 1914-18 



Groups 



^§ 



1914 



°.2 o 

— a« 

OJ o 

Q. "" 



So 

XJ CO 

=1 5 



1915 



^8 



II 



1917 



S2 

Oh 



1918 



eg- 



Group A— Companies with sales of $5,000,000 

or over 

Group B— Companies with sales of $1,000,000 

and less than $5,000,000. 

Group C — Companies with sales of $250,000 

and less than $1,000,000. 

Group D— Companies with sales of under 

$250,000 



(') 



11.5 
29.1 
11.3 
(=) 



U.4. 

23.8 

2.2 

»5.4 



18.1 
30.6 
16.8 
8.2 



19.4 
30.6 
17.3 
15.8 



Total and average. 



12.7 



11.9 



19.6 



26 



20.0 



8.9 
12.0 
4.5 
2.7 



8.8 



1 "Securities" included in investment; "gross investment" identical wth total investment. 

' Loss. 

' Figures for no companies of this size available in 1914. 

Source: Federal Trade Commission's Report on Milk and Milk Products, 1921, p. 44. 



84 



CONCENTRATION OF ECONOMIC POWER 



COMMENTS ON TABLE 94 

(a) Canned milk industry affected by abnormal conditions during 
war period 1914-18. Conditions in 1914 were probably least abnormal. 

(6) Three largest companies did not earn such high rates of return 
on invested capital as the three companies next in size in 1914. 

(c) During entire war period, moreover, the three next largest 
companies earned higher rates of return than the three largest com- 
panies. 



Table 95.- 



-Rates of return on invested capital in dairy business and butter 
production of 4 butter centralizers, 1929-35 





Beatrice 


Fairmont 


American 
Dairies 


North 
American 
Creameries 


Butter production (pounds, 1934) ... 


95, 108, 703 


84, 808, 315 


16, 819, 916 


14,116,040 






RATES OF RETURN ON TOTAL INVESTED CAPITAL IN DAIRY BUSINESS 



1929 
1930 
1931 
1932 
1933 
1934 
1935 



Percent 


Percent 


Percent 


13.30 


9.95 


10.40 


14.53 


1 1.80 


11.76 


14.32 


6.81 


5.43 


7.38 


6.90 


7.69 


1.62 


8.82 


5.90 


1.98 


9.95 


5.63 


6.17 




10.41 





Percent 

12.73 
6.67 

10.31 
1.44 
1.63 
223 



» Loss. 

Source: Federal Trade Commission files. 



COMMENTS ON TABLE 95 

(a) For the period 1929-35, as a whole, the Beatrice Creamery- 
Co., the largest butter company represented in the table, earned the 
highest rates of return on invested capital. 

(6) For the later years shown, however, two of the other companies 
showed higher rates of return on invested capital. 

Table 96. — Milling investment, net income, and rate of return, by investment groups, 

1919-22 



Investment 



Net income 



Rate of return 



Percent Rank 



Under $250,000. 

$250,000 to $500,000... 
$500,000 to $1,000,000.. 
$1,000,000 to $2,000,000 
$2,000,000 and over... 



$15,060,924 
39, 660, 996 
63, 748, 604 
76, 098, 923 

488, 024, 357 



$925, 263 
3, 333, 301 

6, 724, 092 

7, 596, 576 
53, 603, 674 



6.1 
8.4 
10.5 
10.0 
11.0 



Source: Federal Trade Commission. 

COMMENTS ON TABLE 96 

{a) The largest number of flour-milling companies covered for any 
year was 107. 

(6) Companies are grouped according to size of investment. 

(c) Over the 4-year period, the largest companies, those with 
milling investment of $2,000,000 and over, showed the highest average 
rate of return on invested capital. 



CONCEJVTRATION OF ECONOMIC POWER 



85 



(d) Some of the companies in the group with milling investment of 
$2,000,000 and over were probably only medium-sized. 

Table 97. — Production, milling investment, earnings, and rate of return by pro- 
duction groups, 1919-22 



Under 125,000 barrels 

125,000 to 250,000 barrels.. 
260,000 to 600,000 barrels.. 
500,000 to 1,000,000 barrels 
1,000,000 barrels and over. 



Production 



Barrels 
12, 089, 925 
15, 813, 678 
30, 126, 679 
24, 204, 461 
115, 295, 798 



Investment 



$i7, 903, 154 
56, 069, 154 
95, 493, 214 
89, 701, 734 

394, 032, 548 



Income 



$2, 438, 743 
4, 200, 079 

11 255,640 
9, 069, 414 

46, 218, 656 



Rate of 
return 



Percent 
5.1 
7.5 
11.8 
10.1 
11.6 



Source: Federal Trade Commission. 

COMMENTS ON TABLE 97 

(a) The largest number of flour-milluig companies covered for any 
year was 107. These companies are the same as those covered in 
table 96. 

(6) Companies are grouped according to size of production. 

(c) Over the 4-year period the medium-sized ilour millers, those 
with annual production between 250,000 and 500,000 barrels, earned 
the highest rate of return on invested capital. 

{d) The next highest average rate of return shown was earned by 
companies with annual production of 1,000,000 barrels and over. 
Some of these companies, however, were probably only medium-sized. 

Table ^'S.— Return on milling investment and rank according to rates of return of 
11 flour milling companies in 1922 



Company 


Spize classification 


Investment 


Rank ac- 
cording 

to rate of 
return 




Large 


$21,877,695 
21,330,764 
15, 199, 567 
12, 651, 668 
6,937,692 
6,808,228 
5, 699, 308 
4, 080, 416 
2, 997, 666 
2,785,783 
2,121,705 


9 




...:.. do 


2 


3. Pillsb-ury Flour Mills Co ... -- - 


do 


4 


4 . ... ■. ' , 


Medium 


11 


6. .. . 


.... do..-. 


5 


6. 


do.. 


7 


7 


do 


3 


8 


do 


10 


9. . . ... -.. 


do 


6 


10. .....>... .. 


do 


8 


11 


do 


1 









1 Represents a total of the accounts of the Northwestern Consolidated Milling Co., Southwestern Milling 
Co., Inc., Hecker-Jones-Jewell Milling Co., and Duluth Superior Milling Co. 

Source: Federal Trade Commission files. 



COMMENTS ON TABLE 98 

(a) Size classification of companies: 

Large. — Standard Milling Co., Washburn-Crosby Co., and Pills- 
bury Flour Mills Co, 

Medium-sized. — Other companies with production in 1922 in excess 
of 500,000 barrels. 

(6) The highest rate of return earned by any of the 11 companies 
was that shown by the smallest of the 11 companies. 



86 



CONGEiNTRATION OF ECONOMIC! POWER 



(e) The largest company had ninth highest rate of return, 
(d) Washbum-Crosby (now General Mills) earned the next highest 
rate of return. 

Table 99. — Average rate of return on, milling investment for 47 companies, grouped 
by quantity of flour production, 1919-24 



Production group ' 



Under 125,000 barrels 

125,000 to 250,000 barrels.. 
250,000 to 500,000 barrels.. 
500,000 to 1,000,000 barrels 
Over 1,000,000 barrels 

Average 



Average 

annual 

production 



BoTTels 
1, 260, 300 
1, 909, 966 
3, 199, 352 
3,093,002 
11, 255, 570 



20, 718, 190 



Average 

annuail 

investment 



$5, 040, 198 

6, 737, 816 

7, 674, 886 

10, 549, 729 

48, 035, 964 



78, 038, 593 



Average 

annual 

net profits 



$329, 498 
371, 846 

1,119,546 
712, 937 

5, 013, 298 



7, 647, 125 



Average 
rate of 
return 



Percent 
6.5 

5.5 
14.6 

6.8 
10.4 



' The group within which a company's production. Investment, and net profit for a given year are place:? 
is determined by its production for that year. For this reason the number of companies in a given group 
varies from year to year 



Source: Federal Trade Commission. 



COMMENTS ON TABLE 99 



(a) Table 99 covers 47 companies over the 6-year period 1919 
through 1924. 

(6) Companies are grouped according to size of production. 

(c) Highest average rate of return was earned by group containing 
medium-sized or fairly small companies. 

Table IQO. — Average rate of return on milling investment for 4^ companies, grouped 
by size of investment, 1919-24 {crop and calendar years combined) 



Investment group ' 



Average an- 
nual invest- 
ment of 
group 



Average an- 
nual net 
profit of 
group 



Rate of 
return 



Under $250,000 

$250,000 to $500,000.... 
$500,000 to $1,000,000.. 
$1,000,000 to $2,000,000 
Over $2,000,000 

AU companies.. 



$1, 684, 594 
5, 085, 286 
7, 209, 480 
7, 143, 803 

66, 915, 430 



$177,864 

430, 878 

756, 096 

718, 362 

6, 463, 925 



Percent 
10.6 
8.5 
10.5 
10.1 



78, 038, 593 



7, 547, 125 



9.7 



' The group within which a company's investment and net profit are placed for a given year is deter- 
mined by its Investment for that year. For this reason the ntimber of companies in a given group varies 
from year to year. 

Source: Federal Trade Commission. 

COMMENTS ON TABLE 100 

(a) Table 100 covers 47 companies over the 6-year period 1919 
through 1924. 

(6) Companies are grouped according to size of investment. 

(c) Highest average rate of return was earned by group containing 
medium-sized or fairly small companies. 



CONCEJ>JTRATI0X OF ECONOMIC POWER 



87 



Table 101. — Rate of return on milling investment for 4^ companies, grouped by 
size of investment, by years, 1919-24 {crop and calendar years combined) 





1919 


1920 


1921 


1922 


1923 


1924 


1919-24 


Investment group 


e 
1 




a 
9. 


OS 

K 






g 




B 
1 


a> 
a 


u 

a; 


0. 
03 
« 


1 

H 

3 


o 


Under $250,000 


11 

12 
9 
6 
9 


24.6 
13.5 
19.7 
11.9 
13.0 


5 
16 
8 
9 
9 


4.3 
11.1 
17.9 
17.6 
16.0 


7 
6 
9 


2.8 

' 1.2 

14.5 

'1.7 

4.3 


11 
13 
10 

8 


10.2 
15.2 
12.5 
7.0 
8.3 


8 
14 
13 
3 
9 


4.2 
9.8 
6.8 
6.0 
8.0 


9 
14 
12 

2 
10 


8.5 
5.3 
10.1 
3.4 
6.6 


5-11 
12-16 
7-13 
2-9 
8-10 


10.6 


$250,000 to $500,000 

$500,000 to $1,000,000 

$1,000,000 to $2,000,000... 
$2,000,000 and over 


8.5 
10.5 
10.1 

9.6 


Average 


47 


13.9 


47 


15.9 


47 


2.9 


47 


9.1 


47 


7.8 


47 


6.9 


47 


9.7 



' Loss. 

Source: Federal Trade Commission. 



COMMENTS ON TABLE 101 



In 



(a) Table 101 is based on the same 'data used for table 100. 
table 101 however, the figures for each year are shown separately. 

(6) In every year except 1921 the highest rates of return were earned 
by small or medium-sized companies. 

Table 102. — Rate of return on milling investtnent for 4^ companies grouped by 
quantity of production, by years, 1919-24 {crop and calendar years combined) 





1919 


1920 


1921 


1922 


1923 


1924 


1919-24 


Production group 


.a 

a 

3 


2 

a. 


1 

a 

3 


2 


y, 


5 


1 
3 


OS 


U 

a 

3 




X3 
i 


« 


a 

3 

"z, 




Under 125,000 barrels 

125,000 to 250,000 barrels. 
250,000 to 500,000 barrels - 
600,000 to 1,000,000 barrels. 
Over 1,000,000 barrels.... 


16 
12 
10 
4 
6 


15.4 
14.0 
18.0 
11.0 
13.7 


18 
9 
9 
4 

7 


7.8 
9.1 
21.1 
18.3 
16.2 


19 
12 
7 
3 
6 


13.2 
13.4 

5.4 
17.6 

7.8 


19 
8 

10 
4 
6 


9.3 
8.0 
12.9 
8.4 
8.6 


17 
9 

10 
4 
7 


4.3 
4.7 
12.8 
3.3 
8.5 


15 
11 
9 
5 

7 


7.0 
3.0 
11.6 

7.7 
6.7 


15-19 
8-12 
7-10 
3-5 
5-7 


6.5 
5.5 

14.6 
6.8 

10.4 


Average 


47 


13.9 


47 


15.9 


47 


2.9 


47 


9.1 


47 


7.8 


47 


6.9 


47 


9.7 



• Loss. 

Source: Federal Trade Commission. 



COMMENTS ON TABLE 102 



(a) Table 102 is based on the same data used for table 99. In 
talble 102, however, the figures for each year are shown separately. 

(6) In every year except 1921 the highest rates of return were 
earned by small or m.edium-sized companies. 



88 



CONCENTRATION OF ECONOMIC POWER 



Table 103. — Returns on invested capital in 1934 of 70 wholesale baking companies 
as compared with returns of the 3 largest companies and those of certain smaller 
companies absorbed by Continental Baking Corporation at the end of the year 



Total for 70 companies 

3 largest companies: 

General Baking Corporation ^ -.. 

Ward Baking Corporation... 

United Bakeries Corporation 

10 companies absorbed by Continental Corporation 

United Bakeries Corporation '. 

9 other companies .-■-. 

Total for 10 companies ' 



Num- 
ber of 
plants 



223 

31 
18 
39 



75 



Sales 



$162, 404, 244 

31,-833, 651 
22, 778, 787 
24, 118, 441 



24,118,441 
22, 065, 087 



46, 183, 528 



Baking in- 
vestment 



$152, 222, 222 

20, 580, 777 
33, 709, 806 
34, 050, 266 



34, 050, 266 
18, 406, 917 



52, 467, 183 



Return on bak- 
ing investment 



As- 
stated 



Percent 
15.32 

29.33 
15.01 
12.19 



12.19 
11.10 



As 
revised 



Percent 
26.42 

54.62 
24.78 
28.74 



28.74 
19. 14 



I Continental absorbed about 20 other plants for which no figures are available. 
Source: Federal Trade Commission files. 



COMMENTS ON TABLE 103 

(a) Table 103 gives an analysis of the rates of return on investment 
earned by baking companies during 1924, the year preceding the crea- 
tion of the Continental Baking-Corporation. 

(6) In 1924 the baking industry as a whole earned a very high 
rate of return on its invested capital. 

(c) Of the 3 largest baking companies only 1, General Baking 
Corporation, earned in 1924 a substantially higher rate of return 
on invested capital than the average shown for the 70 companies 
covered by the Federal Trade Commission's ijiquiry. 

{d) The largest company absorbed by the Continental Baking 
Corporation at the end of 1924 was the United Bakeries Corporation. 
This company earned a rate of return on invested capital equal to 
about the average earned by the 70 companies. 

(e) Nine smaller baking cofnpanies, also absorbed by Continental, 
earned a lower than average rate of return on invested capital in 1924. 

Table 104. — Rank according to return on baking investment of 51 baking companies 

in 1925 





Num- 
ber of 
plants 


Sales 


Company's rank 
based on rate of 
return 




Stated 
invest- 
ment 


Revised 
invest- 
ment 


1. Continental 


95 

33 

16 

25 

4 

11 

7 

3 


$60, 732, 756 

35, 197, 826 

23,761,171 

14, 797, 640 

7,809,328 

6, 945, 186 

6, 377, 710 

2, 836, 641 


3 19 

6 
18 
27 

5 
34 
24 
43 


8 17 


2. General ___ 


2 


3. Ward 


14 


4. Purity 


20 


5. (0...:.. 


5 


6. (')- . 


26 


7. (') _ 

8. (') : 


16 
40 



1 Name of company cannot be disclosed. 

2 This indicates that there are 18 companies with higher return on stated investment and 16 companies 
with higher return on investment, as revised by the Federal Trade Commission. 



CONCENTRATION OF ECONOMIC POWER 



89 



Table 104. — Rank according to return on baking investment of 51 baking companies 

in 1925 — Continued 



Num- 
ber of 
plants 



9. (1) 
10. (0 
n. (■) 
12. (') 
.13. (') 

14. (') 

15. (') 

16. (') 

17. (1) 

18. (1) 

19. 0) 

20. (') 

21. (■) 

22. (') 

23. (1) 

24. (1) 

25. CO 

26. (0 

27. (0. 

28. (0. 

29. C). 

30. (1). 

31. (I). 

32. (') 

33. 0). 

34. (1). 

35. (1). 

36. (1). 

37. (1). 

38. (1). 

39. CO. 

40. CO. 

41. CO. 

42. CO. 

43. CO. 

44. CO. 

45. CO- 

46. CO- 

47. CO. 

48. CO- 

49. CO- 

50. CO- 

51. CO- 



Sales 



, 125, 588 
, 596, 194 
, 593, 703 
, 427, 910 
, 151, 718 
, 032, 260 
993, 428 
990, 736 
870, 850 
856, 098 
843, 952 
808, 329 
806, 603 
806, 198 
768, 525 
750, 575 
729, 732 
637, 761 
602, 588 
571, 108 
515, 405 
465, 127 
436, 846 
432, 716 
393, 566 
369, 347 
365, 225 
336, 435 
334, 579 
309, 251 
282, 127 
240, 778 
236, 692 
234, 744 
225, 055 
215, 216 
210, 117 
141, 476 
82, 250 
77,909 
76, 861 
45, 629 
16,000 



Company's rank 
based on rate of 
return 



Stated 
invest- 
ment 



Revised 
invest- 
ment 



9 
37 

1 
39 
28 
27 
38 

8 
10 
18 
36 
25 
22 
34 
13 

7 
15 
47 
33 
31 
19 
44 
46 
21 
49 
41 
24 

3 
29 
30 
50 
43 
51 
11 
42 
32 

4 
35 
12 
6 
45 
48 
23 



Source: Federal Trade Commission files. 



COMMENTS ON TABLE 104 

(a) Table 104 gives an analysis of rates of return on invested 
capital in 1925, the year in which the Continental Baking Corporation 
became the largest company in the industry. 

(6) After the organization of the Continental Baking Corporation, 
General, Ward, and Purity were by comparison only medium-sized 
companies. 

(c) In 1925 there were about 18 of the 51 companies that earned a 
higher rate of return on invested capital than the largest company. 

{d) In that year General Baking Corporation showed the next to 
highest rate of return on invested capital, as revised by the Federal 
Trade Commission. 



90 



CONCENTRATION OF ECONOMIC POWER 



Table 105. — Rates of return on business investment of four largest baking companies, 

1927-37 1 





Continental 


Ward 


Purity 


General 


1927 


Percent 
IQ.n 
11.23 
13.49 
11.37 
8.89 
5.98 
6.18 
4.86 
4.55 
8.42 
10.14 


Percent 
12.06 
9.03 
8.78 
5.96 
5.99 
2.54 
1.80 
2.53 
3.89 
6.86 
4.50 


Percent 

22.02 

23.20 

20.11 

14.81 

7.49 

3.34 

4.85 

2.99 

1.60 

5.53 

4.14 


Percent 
30.27 


1928. 


26.53 


1929 


24 55 


1930 . . - .. ... 


17 13 


1931 


16.06 


1932 


15.55 


1933 , 


10 36 


1934 


10.34 


1935 


11.04 


1936 


14.71 


1937 ' 


8.95 






Average 1927-37. ...... 


8.86 


6.03 


9.48 


17 61 







> Business investment equals net worth plus long-term debt less outside investments, appreciation, and 
unamortized debt discount. Figures for any year obtained by averaging investment at beginning and 
end of year. 

Source: Federal Trade Commission files. 

COMMENTS ON TABLE 105 

(a) Table 105 shows the rates of return earned on invested capital 
by the four largest baking consolidations during late years. 

{h) In every year except 1937 General had a higher rate of return 
on invested capital than Continental. 

(c) Although strictly comparable figures for 1938 and 1939 were 
not available, it appears that General reassumed its position as the 
most profitable of the four larger baking companies after 1937. 



Table 106. 



-Returns on invested capital for the period from 1934 through 1937 for 
nine general chemical companies 



Company 



E. I. du Poiit de Nemours & Co.' 

Union Carbide & Ca»bon Corporation 

Allied Chemical & Dye Corporation. 

Air Reduction Co., Inc 

Monsanto Chemical Co 

The Dow Chemical Co 

Tiie Mathieson Alkali Works, Inc 

Pennsylvania Salt Manufacturing Co 

Westvaco Chlorine Products Corisoration 



1934 


1935 


1936 


1937 


Percent 


Percent 


Percent 


Percent 


10.64 


12.97 


15. .50 


14.36 


10.22 


12.78 


17.18 


19.75 


11.41 


13.61 


19.74 


18.04 


14.83 


17.82 


23.61 


25.06 


17.12 


18.75 


18.14 


16.48 


16.66 


19.60 


16.74 


13.79 


5.65 


6.60 


8.37 


8.44 


7.55 


10.86 


14.24 


8.07 


11.31 


9.75 


8.76 


8.52 



Simple 
average 



Percent 
13.37 
14.98 
15.70 
20.33 
17.62 
16»70 

7.27 
10.18 

9.59 



1 Investment in General Motors and return thereon excluded. 
Source: Securities and Exchange Commission. 



CONCENTRATION OF ECONOMIC POWER 



91 



COMMENTS ON TABLE 106 

(a) Some idea of the relative size of the chemical companies shown 
is given by their average yearly assets for the period from 1934 through 
1937. 

Du Pont . - $615, 000, 000 

Union Carbide 277,000,000 

Allied Chemical 239,000,000 

Air Reduction 40, 000, 000 

Monsanto. 32,000,000 

Dow-- _- 32,000,000 

Mathieson Alkali 26, 000, 000 

Pennsylvania Salt 16,000,000 

Westvaco - 10,000,000 

{h) Over the 4-year period covered the best rates of return on 
invested capital were shown by some of the smaller chemical com- 
panies covered in the foregoing table. 

(c) In every one of the four years between 1934 and 1937 Air 
Reduction shows a higher rate of return on invested capital than Union 
Carbide. 

Table 107. — Returns on invested capital for the period from 19S4 through 19S7 for 

5 fertilizer companies 



Company 



International Agricultural Corporation 

Virginia-Carolina Chemical Corporation 

The American Agricultural Co. (of Delaware) . 

Tennessee Corporation 

The Davison Chemical Corporation 



1934 



Percent 
2.17 
4.40 
8.43 
2.28 



1935 



Percent 

1.17 

.43 

6.30 

2.07 



1936 



Percent 
4.27 
6.21 
12.30 
2.80 
7.00 



1937 



Simple 
average 



Percent 
2.89 
3.34 
8.94 
3.35 
4.17 



Source: Securities and Exchange Commission. 



COMMENTS ON TABLE 107 



(a) Some idea of the relative size of the fertilizer companies shown 
is given by their average yearly assets for the period from 1934 through 
1937. 

International Agricultural $28, 000, 000 

Virginia-Carolina Chemical 27,000,000 

American Agricultural 21, 000, 000 

Tennessee Corporation 21, 000^ 000 

Davison Chemical 12, 000, 000 

(6) The highest rate of return earned by any of these com^panies 
over the 4-year period was that shown for the American Agricultural 
Co. (of Delaware), which was the company third in size. 



92 



CONCENTRATION OF ECONOMIC POWER 



Table 108. — Annual rate of return on total investment for principal rayon companies, 

1915-38 



Year 


Ameri- 
can Vis- 
cose Cor- 
poration 


Rayon 
depart- 
ment 
of E. I. 
du Pont 
de Ne- 
mours 
&Co. 


Celanese 
Corpo- 
ration of 
America 


Industrial 
Rayon 
Corpo- 
ration 


The 
Ameri- 
can Enka 
Corpo- 
ration 


North 
-American 
Rayon 
.Corpo- 
ration 


Tubize- 
ChatU- 
lon Cor- 
poration 


American 
Bemberg 
Corpo- 
ration 


Aver- 
age for 
group 


1915 


Percent 
26.32 
109. Ife 


Percent 


Percent 


Percent 


PerterU 


Percent 


Percent 


Percent 


Percent 
26 32 


1916 . . . 
















109.19 


1917 


95.96 
69.49 
















95.96 


1918 
















69.49 


1919 


97.02 

64.21 

44. 62 

51.16 

43.47 

26.63 

32.39 

21.75 

26.19 

28.79 

23.43 

8.07 

4.44 

2.35 

10.55 

6.97 

6.53 

9.67 

10.16 

' 1.66 
















97.02 


1920 
















64.21 


1921 


12.13 

34.11 

38.91 

27.88 

34.19 

15.23 

27.01 

26.63 

19.04 

1 .90 

4.45 

1.21 

12.65 

8.58 

5.27 

11.00 

13.10 

4.15 














41.99 


1922 














50. 12 


1923 














43. 15 


1924 














26.73 


1925 


1.15 
12.60 
20.76 
9.09 
9.88 
5.98 
3.03 












30.60 


1926 


12.80 
25.48 
22.03 
12.42 
13.38 
fi. 43 










20.14 


1927 


• 








25.76 


1928 








8.34 
1.04 
17.25 
19.72 

1 10. 43 
14,64 
19.90 

1 11.10 
17.27 
29.45 
18.44 


24.49 


1929 




10.96 
1.30 
1 .32 
1 3.50 
12.58 
5.88 
. 10.06 
21.75 
24.75 
4.48 




18.05 


1930 . 


14.28 
1.55 
1.29 
8.86 
/ 1.84 
' 5. 03 
17.12 
21.19 
S. 4fi 




4.96 


1931 




3.35 


1932 


3. 47 2. 10 
20. 37 14. 35 
10.91 9.33 
12. 13 4. 25 
11.98 9.66 
10. 96 1. 68 

6. 00 1. 67 




1.47 


1933 


4.73 
1.27 
5.86 
12.27 
16.60 
S.55 


12.16 


1934 .... 


6.88 


1935. 


6.74 


1936- 


11.47 


1937 


12.14 


1938 


2.52 








Average.. 


21.27 


11.52 


9.75 


8.37 


6.31 


7.33 


6.82 


3.15 


13.99 



> Denotes loss. 

Source: Federal Trade Commission files. 



COMMENTS ON TABLE 108 

(a) Until the early twenties the American Viscose Corporation had 
a monopoly in the rayon business. During the war period and immed- 
iately thereafter its returns on invested capital were enormous. 

(b) In 1938 the American Viscose Corporation had 30 percent of 
the total business of the country; the rayon department of Du Pont 
had 22 percent of the total rayon business; and the Celanese Corpora- 
tion of America had 15 percent of the total rayon business. 

(c) After competition developed in the industry, the profits of the 
-American Viscose Corporation were much reduced. 

(d) Of late years Du Pont, the Celanese Corporation, and even some 
of the smaller rayon companies have earned higher rates of return on 
invested capital than the American Viscose Corporation. 



HIGH DEGREES OF INTEGRATION VERSUS A LESS DEGREE 

OF INTEGRATION 

The results of the Commission's tests of business efficiency also serve 
to throw light on the problem of greater integration versus less inte- 
gration in industry. It was discovered that a number of industries 
characterized by relatively lesser degrees of integration made a better 
efficiency showing than their more highly integrated competitors. 
Less integrated companies had a better record of efficiency in the farm 
machinery industry, the automobile industry, and the steel industry 
than larger and more highly integrated companies. 

Data for some of the other industries covered, although not so com- 
plete, could have been used as corroborative evidence on this point." 

Testing business efficiency in the three industries mentioned, how- 
ever, offered special problems either because the products of different 
manufacturers were not completely standardized, or because different 
manufacturers produced varying proportions of the different products. 
In appraising the efficiency of farm macliinery and automobile manu- 
facturers, recourse was had to margin comparisons ' as well as to the 
rates of return on invested capital earned by the companies on all their 
varied products. Where the steel industry was concerned, entire 
reliance had to be placed on the rates of return earned from all the 
various iron and steel products by each company. 

In the farm-machinery industry, International Harvester is by far 
the largest company. Deere, although second in size, is considerably 
smaller. International Harvester ov/ns its own steel plant and is a 
much more integrated corporation than Deere. Yet in the manufac- 
ture of certain basic farm machinery selling at approximately the same 
price as farm machinery produced by the International Harvester 
Co., the Deere Co. had considerably lower costs. Further proof of 
Deere's greater efficiency lies in its higher rates of return on invested 
capital since 1927. 

' A "margin comparison" is used here to mean a comparison of the unit margins, or unit profits, of two or 
more manufacturers. It is a method for testing business efficiency when the product? of different manufac- 
turers are substantially, but not exactly, identical in form or quality. For such homogeneous products as 
crude oil, cement, pig iron, or refined sugar, efficiency can be tested through comparisons of unit costs. But 
in the automobile or farm-machinery industries, the product of one manufacturer is never e.\actly identical 
with the product of another manufacturer. Nevertheless, the product of one manufacturer can be compared 
with the product of another manufacturer in these industries, provided the products compared are substan- 
tially similar and sell at approximately the same prices in the same markets. If the price of an International 
Harvester tractor varies but little from that of a Deere tractor, or if General Motors' Chevrolet sells at about 
the same price as Chrysler's Plymouth, the relative efficiency of the manufacturers of these products should 
be measured by making a comparison of unit profits, rather than of unit costs. However, unit costs may be 
compared even where two products are not completely identical, either with respect to quality or to price, 
if the product selling at the higher price is produced at a lower unit cost than the product selling at the lower 
price. But where a produce sells at a higher price than the other comparable products and has a higher 
unit cost than the other products, a comparison of unit costs is open to the criticism that the higher-cost 
product is superior in quality, and that its high cc t is entirely explained by that superiority. 

Under these circumstances, a comparison of unit profits affords the only basis for measuring the relative 
efficiencies of the mamafacturers of the products compared. If the manufacturer of the product selling at 
the lowest pric« realizes the largest unit profit, he is considered the most efficient manufacturer not because, 
he has the lowest unit cost hut because he shows the highest unit profit. Conversely, if the manufacturer 
of the product selling at the highest price has the greatest unit profit, he is considered the most efficient 
manufacturer because of that high unit profit; irrespective of what his cost may be. 

93 



94 CONCENTRATION OF ECONOMIC POWER 

In the automobile industry, General Motors is the largest company, 
chiefly because of its business in lines other than motor vehicles. 
Ford's direct investment in the automobile industry is probabl|^ even 
greater than that of General Motors. Ford is the most integrated of 
all the automobile manufacturers, and General Motors is the next 
most integrated company in the industry. Chrysler, which is con- 
siderably smaller and far less integrated than either of the two larger 
companies, has made better profit margins on its Plymouths than 
Ford or General Motors have made on their comparable automobiles 
(Fords and Chevrolets) during most of the years since the depression. 
Chrysler, furthermore, had a higher rate of return on its invested 
capital than Ford or General Motors. 

Practically all the important steel companies are integrated. The 
United States Steel Corporation is more integrated than the "inter- 
mediate" steel companies, because it has iron ore reserves for a more 
distant future and because it produces a large part of the pig iron 
which it uses in its manufacture of steel. Yet, such medium-sized 
steel companies- as National and Inland have consistently earned 
higher rates of return on their invested capital than the largest and 
most integrated company in the steel industry during the last decade 
and a half. 



CASE STUDIES OF THREE MERGERS 

THE MERGER CREATING THE LARGEST WHOLESALE BAKING CORPORATION 
IN THE UNITED STATES 

This corporation was organized under the laws of Maryland Novem- 
ber 6, 1924, as a holding and operating company. It acquired all or 
the controlling interest in the stock of a number of wholesale baking 
companies. Twenty companies were absorbed by the consolidation 
at the end of 1924 or during 1925. The consolidation by 1925 had 
brought together 95 plants and had an annual production of bread 
amounting to 34 percent of the total production reported by all whole- 
sale baking companies covered by the Federal Trade Commission's 
report, entitled "Competition and Profits in Bread and Flour." 

The Federal Trade Commission procured data on costs of production 
for 15 of the companies acquired by the consolidation in 1924 and 1925. 
The period for which these costs were obtained covered the 5-year 
period from 1920 through 1924, but costs for all 15 companies were not 
available for all of the 5 years. Only 5 companies reported for all 5 
years. 

The predecessor companies absorbed by the consolidation for which 
costs were procured operated 75 plants in 1924 and accounted for ap- 
proximately 29 percent of the total bread production reported for all 
companies in that year. Only 10 of the companies absorbed by this 
consolidation reported in 1924, since 5 of the companies previously 
reporting had been abeorbed by 2 other baking corporations, both 
of which were taken into the consolidation. 

The efficiency of the predecessor bakery companies absorbed by the 
consolidation can be judged by three standards: 

(1) Total cost per pound of bread, 

(2) Total cost, excluding ingredients, per pound of bread; 

(3) Profits per pound of bread. 

The 5 companies for which costs were obtained maintained a fairly 
constant production throughout the 5 years. 

Total cost per pound of bread comes to mind as the first method of 
measuring the relative efficiencies of different bread-baking companies. 
But since the use of different ingredients may result in different kinds 
of bread, all of which might not be strictly comparable in quality, cost 
per pound minus ingredients suggests itself as a second criterion of 
efficiency. 

Profit per pound was used as a third standard for measuring effi- 
ciency. Some companies may make a high-grade bread, or special 
kind of bread, at increased cost but with a better price realization and 
a larger profit margin. Where breads of different quality are com- 
pared, profits per pound may represent the best basis fi^r efficiency ap- 
praisal. If the profit per pound is greatei for a company making a 
liigher quality of bread at a higher cost than for a cbmpany making a 

101 



102 CONCENTRATION OF ECONOMIC POWER 

lower quality of bread at lower cost, profit per pound rather than cost 
per pound becomes the best criterion of efficiency. 

A comparison of unit costs and unit profits of the 15 companies which 
were absorbed by the consolidation with the unit costs and unit profits 
of other companies in the baking industry furnished the basis for ap- 
praising the relative efficiencies of these companies. Judged by the 
first fu^o standards — cost including ingredients and cost excluding 
ingredients — the 15 predecessor companies absorbed by the consolida- 
tion were but in few instances relatively efficient, when compared with 
all other baking companies. Of the 5 companies for which figures are 
available for all years, 2 generally showed relatively high unit costs, 
1 showed a higher than average cost, and 2 showed average costs. 
In each of the 5 years, the weighted average cost of these 5 companies 
was higher than the weighted average cost of all reporting companies. 

The 15 companies, as a whole, made a better showing in the series 
constructed from unit profits per pound. Only a few companies, 
however, showed relatively high, or higher than average, unit profits, 
in any one year. While several companies did show average unit 
profits in some years, particularly in 1923 and 1924, the weighted aver- 
age unit profit for the entire group of 15 companies in 1924 was lower 
than the weighted average unit profit of all reporting companies. 

The rates of return on invested capital earned in 1924 by 12 of the 
companies acquired by the consolidation were also available. In 
1924 the rates of return earned on invested capital by almost all 
baking companies were abnormally high. Although the 12 predecessor 
companies earned good rates of return, they were not so high as the 
weighted average rate or return earned by all reporting companies. 
Thus, these 12 predecessor companies were below the .average in 
efficiency, when this criterion is used. 

It may be concluded therefore that the consolidation was a com- 
bination of companies which had relatively large production and 
capitalization but higher than average cost and less than average 
rate of return on invested capital when compared with other com- 
panies in the industry. In short, the companies absorbed by the 
consolidation were not chosen because of their efficiency. Size, for 
size sake,, appears to have been the primary motive behind the 
consolidation. 

The record of the consolidation in 1925 and thereafter suggests 
that those responsible for the merger were not primarily interested in 
creating increased efficiency. In 1925 the consolidation became the 
largest wholesale baking company in the United States. Its unit 
cost was very slightly lower than 'the average unit cost of all com- 
panies reporting in 1925. Its unit profit was not quite so high as 
the average unit profit shown for all reporting companies. Thus, both 
its unit cost was ac ually above, and its unit profit actually below, the 
average for the industry. Out of the 51 companies reporting in 1925, 
there were 18 with higher rates of return on baking investment, as 
such investment was stated by the companies. Sixteen companies 
had higlier rates of return on baking investment, as such investment 
was revised by the Federal Trade Commission. 

A comparison of the rates of return eai'ned on invested capital during 
the thirties by the consolidation with those earned by another baking 
corporation large in size but considerably smaller than the consolida- 
tion, shows that this huge company had in most years a lower earning 
power than the smaller company. 



CONCENTRATION OF ECONOMIC POWER 103 

AN IMPORTANT CEMENT MERGER 

This corporation was organized on September 16, 1926, to acquire 
the assets and liabihties of four independent cement companies. One 
of the four predecessor companies was a single-plant company; the 
other three operated two plants each. 

Officials of the corporation frankly stated to agents of the Federal 
Trade Commission that the 1926 consolidation was conceived and 
promoted by a banking syndicate. The syndicate approached the 
controlling stockholders of the four predecessor companies and made 
them attractive offers for their properties. 

The bankers received about $5,400,000 minus the costs of distribut- 
ing the securities. Wlien this remuneration is compared with the 
predecessor companies' net worth of about $16,000,000, the burden of 
the underwriting of the new .company and its stockholders becomes 
apparent. The public appears to have invested approximately 
$32,000,000 in the four companies making up the consolidation, the 
books of which companies showed a net worth of about $16,000,000. 
At the time of the consolidation, the common stock of the new cor- 
poration sold for $43. It dropped in value to 50 cents a share in 1932. 
On May 23, 1940, it had a market value of about $2 a share. From 
the point of view of the banking syndicate and the stockholders of the 
predecessor companies who sold out, the consolidation was obviousl}'' 
a great success. From the point of view of those who invested in the 
stock of the consolidation, the same cannot be said. 

Although the promoters stated in a prospectus that economies 
resulting from the consolidation would benefit the earnings of the 
new company, it is apparent that they were primarily interested in 
the profits they themselves realized from the promotion. Some indi- 
cation of the -lack of interest shown by officials of the new company 
in increasing its efficiency is their reported failure to acquire the 
detailed operating records of the predecessor companies. Officials of 
a company intent on increasing the efficiency of its plants are careful 
to make year-by-year comparisons of the items of plant cost. Through 
such comparisons, cost reduction and increased efficiency may be most 
readily effected. 

The progress of the four predecessor companies that were combined 
to form the consolidation had been exceptional. During the early 
twenties, the capacity and production of the cement industry in the 
United States were enormously expanded. Between 1921 and 1925, 
total United States production increased by about 67 percent. The 
four predecessor companies showed an even greater increase in pro- 
duction of 80 percent. With this increase in production, costs per 
barrel were substantially reduced. In 1921, the four predecessor 
companies had an average cost per barrel (exclusive of interest on 
capital) of $1,717; in 1925, these same companies had an average cost 
per barrel of $1.24. Expansion in the cement industry as a whole 
continued through the period of the consolidation and reached its 
peak in 1928. During the period of great expansion in the industry, 
between 1921 and 1928, the price of cement, as well as cost of cement, 
declined substantially. 

Although the four predecessor companies had expanded their pro- 
duction and sales more rapidly than the cement industry as a whole, 
the progress of the consolidation did not keep pace with that shown 
by the industry after 1926. Indeed, in ]927, the year following the 



104 CONCENTRATION OF ECONOMIC POWER 

consolidation, the production and sales of the consolidation fell off, 
whereas those for the cement industry as a whole continued to advance. 
And in 1928, the consolidation made an even poorer showing as 
compared with all other cement companies. Proof of the failure of 
the consolidation to maintain the position in the industry held by the 
four predecessor companies is given by the following figures. In 1926, 
the year of the consolidation, the four plants produced 5.9 percent of 
the total United States production. In 1927, the year after the 
merger, this percentage dropped to 5.2. In 1928, it fell to 4.8 per- 
cent. During the depression year 1932 it fell as low as 3.5 percent. 
In 1-937, the company's proportion of the total production was 3.4 
percent. 

Officials of the company admit that the combination lost some of 
the business that the four aggressive competing predecessors had had. 
As a result, the consolidation increased its sales efforts and spent 
njore money for the marketing of its product. Thus, if the accounts of 
the consolidated company for 1928 are compared with those of the 
four predecessor companies for 1925, it appears that the consolidation 
spent 9 percent more for selling and administrative expenses to market 
only 2 percent more cement. 

After 1929, and all during the depression, wages in cement plants 
were drastically reduced. The consolidation reduced its plant pay 
roll between 1929 and 1930 from $1,900,000 to less than $1,000,000, 
and the average worker found his wage cut almost in half. Between 
1927 and 1933, this company had reduced its number of plant workers 
from about 1,700 to about 700, and the average worker in 1933 
received less than one-fourth of the wage he had earned in 1927. 

It may be supposed that although the consolidation cut wages 
drastically and lost moneys during the depression, it did no worse than 
other cement companies. The only available method for measuring 
the record of this company against those of other cement companies 
is through a comparison of the rates of return on invested capital. 
The rates of return on invested capital earned by the consolidation can 
be compared with the average rate of return earned by 17 of the most 
important cement companies, including the consolidation.^^ 

The figures of the 17 companies were obtained by the Federal Trade 
Commission from the files of Government agencies. As it was 
impossible to obtain the rates of return earned on the total capital of 
the cement companies from these Government files, a comparison of 
rates of return on stockholders' invested capital was resorted to. 

Since temporary or unusual conditions may affect the earnings of a 
company in one year, it was considered advisable to make a comparison 
for a series of years. Average rates of return for a series of years are 
significant if all of the years occur in the same phase of the business 
cycle. For this reason, a comparison of the rates of return of the 
consolidation and the 17 companies for four separate periods will be 
presented. 

The first period covers the 6 years before the consolidation — 1921, 
1922, 1923, 1924, 1925 — when the cement industry was expanding 
rapidly. 

The second period covered the three years following the consolida- 
tion of 192 6. The years 1927, 1928, and 1929 were fairly good years 

" For most years, there were 17 companies, including the Pennsylvania-Dixie Cement Corporation. The 
rates of return of all the large and medium-sized companies and some small companies are included in the 
average. 



CONCEiNTRATION OF ECONOMIC POWER 



105 



in the cement industry, although the overcapacity created during the 
early years of the decade began to be felt even before the crash of 1929. 

The third period covers the 4 years of depression: 1930, 1931, 1932, 
and 1933. During this period the accounts of the cement industry 
were written in red. 

The fourth period covers the 3 years of revival after 1933. Industry 
revived slowly, and only the most efficient companies were able to 
show a normal profit. 

Simple averages of the yearly rates of return on stockholders' invested capital in 

cement companies 





Years 


Rate of return on stock' 
holders' investment for— 




17 cement 
companies 


The consoli- 
dation 


1921-25 - -- 


Percent 
19.82 
11. 77 

- 18 1.17 

14.55 


Percent 

21.02 


1927-29 --- 


19.68 


1930-33 




» 14. 39 


1934-36 ..,...'.. :.. 


0.54 







• Returns for only 16 companies available for years 1932-36. 
2 Loss. 

These figures show that with the rapid expansion of the industry 
during the first half of the twenties, stockholders of the four predecessor 
companies earned a higher than average rate of return on their in- 
vested capital. 

In 1927, 1928, and 1929, the 3 years following the consolidation, 
the consolidation continued to show a higher than average rate of 
return, for its stockholders. 

In the depression years, however, the stockholders of the con- 
solidation fared far worse' than the stockholders of the average 
cement company. During the revival after the depression, moreover, 
this company just about broke even, whereas the other companies 
earned on the average a small profit. 

There were apparently two principal reasons why the stockholders 
of the consolidation earned such low rates of return on their invested 
capital, after 1929, even though the costs of this company were held 
down by drastic wage reductions. The first reason was the large 
increase in funded debt resulting from the consolidation. The 
predecessor companies had had $2,200,000 bond issue, whereas the 
new company had a funded debt of $12,500,000. During good times 
such increase in funded debt may not appear to be a great burden, 
but during the depression years the interest requirements were 
extremely onerous. 

It should be remembered that in the process whereby the consoli- 
dation was created,' the assets acquired of the four predecessor com- 
panies were recorded on the books of the consolidation at values 
approximately 100 percent in excess of the amounts at which they 
had been recorded on the books of such predecessor companies. The 
public, through its purchase of the securities of the consolidation at 
inflated values, has suffered heavy los^. 

The promoters not only overcapitalized the consolidation, but they 
burdened it with a topheavy capital structure. This topheavy capital 
structure caused large losses t^ investors in equity securities. No 



106 CONCE.NTRATION OF ECONOMIC POWER 

dividends have been paid on the common stock of the consohdated 
company since July 1, 1928, and no dividends have been paid on the 
preferred stock of t' e company since September 16, 1929. The unpaid 
dividends on the preferred stock amounted to $64.75 per share, or 
$7,847,700, on December 15, 1938. 

The market value of the preferred and common stock has declined 
drastically since the consolidation. At the formation of the consolida- 
tion in September, 1926, the preferred and common stocks were 
publicly offered at $99 and $43 per share, respectively. In 1938, 
these values had declined to a range of $10}^ to $30 per share for the 
preferred, and $2K to $5% for the common. 

The second reason for the poor record of the consolidation over the 
present decade was the sharp decline in the average price realized by 
this company on its cement sales. During the depression years, 
1931, 1932, and 1933, all cement companies found their profits greatly 
reduced or wiped out by the rapid decline in the realized price of 
cement, but the consolidation's price realization dropped even more 
rapidly than those of other cement companies.^ 

AN IMPORTANT STEEL MERGER 

In the files of the Federal Trade Commission was found information 
bearing upon th*e motives underlying the consolidation of two impor- 
tant steel companies with the second largest steel company in the 
twenties. One company was acquired in October, 1922, while the 
second was absorbed in March of 1923. Accompanying this summary 
of the Commission's inquiry into the relative efficiency of large, 
medium-sized, and small business is a detailed statement prepared 
by the Commission's staff acquainted with the steel industry, setting 
forth the facts in the possession of the Commission with respect to the 
circumstances surrounding this merger.^ 

The records show that the two companies acquired had been very 
active competitors of the larger company for many years and that 
during the agricultural depression wliich immediately preceded the 
acquisition of these companies they had been very active price cutters 
and had taken large tonnages solicited by the larger company; that 
in the course of their solicitation, they had quoted and sold steel on an 
f. o. b. mill basis rather than the "Pittsburgh plus" destination prices 
which the larger company sought to preserve. ,The facts strongly 
indicate that otie of the prime incentives for this merger was to end 
the price competition of the two smaller companies with the acquiring 
company and to restore the Pittsburgh plus or single basing-point 
system, which thereafter became effective in the territory east of 
Pittsburgh-Buffalo, an area dominated by the acquiring company. 

' The detailed report of the Commission on th'"^ consolidation is submitted herewith, "Appendix B." 
' Appendix C. 



Chart 16 
RELATION BETWEEN RATE OF RETURN AND RATE OF NET PROPERTY EXPANSION, BY YEARS, 1927-1938 

SELECTED OIL-PRODUCING AND REFINING CORPORATIONS 



Corporations omitted for all yeor$ 







i^ 


i,. 


1 








.> 










■ ^ 

IS 


^ 










." 


.»» 


N 








." 




^ 










• 




1933 


















til 














~ 






£ 






y 


/ 






V 










\X 




... 









1928 









^ 


K. 












.' 




















•m 


»•". 
...>j 


i>- 










B' 

















1934 



X Unweighted overages for corporotions included 

1929 1930 







'■'. 


^1 








•s 






^ 






^^ 


•* 








" V 


w" 


f i 








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1935 



-10 -5 



• 10 tl5 ♦20 -10 
Rote of return on invested Capitol 




Corporotions omitted for porl 

1931 




1936 



1937 





1 




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1932 









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n. 

















1938 








: i 






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'1 








y 




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i 





- 

s 

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10 'IS '20 -10 -5 I 

Role of return on mvested copitol 



+5 'lO +16 '20 -10 -5 +5 tlO 



-10 -5 *5 -i-IO +15 ♦20 

invested copitol 



Sources ond M?ttiods- See Ctiopters IX and XL ond Appendix II, Section 6 
26071)1 — 41— No. 12 (Pocep. 107) 



TESTIMONY OF DR. FRANK A. FETTER ON EFFICIENCY IN 
MASS PRODUCTION 

The Commission consulted Dr. Frank A. Fetter with respect to an 
analysis of the concept of "mass production." Dr. Fetter has for 
many years questioned whether very large corporations have promoted 
efficiency in mass production. Following is a brief summary of the 
testimony which Dr. Fetter submitted to the Federal Trade Com- 
mission for the purpose of this inquiry: ^ 

* * * the term business is vague and variable, as are the words frequently 
employed as its synonyms — such as industry, enterprise, concern, company, 
corporation, etc. These terms are all used to designated both a sihgle plant 
and various kinds of groupings or collections of plants. Confusion Js therefore 
inevitable when these terms are used in relation to the word size. 

The single-unit business, in its primary and typical form, presents few complica- 
tions as compared with the plural unit kind or kinds. It is a single physical unit, 
afid is at a single definite location. It is a unit technologically, that is, it is oper- 
ated as a physical unit, and it is under a single ownership — individual, partnership, 
or corporation. It is-tlie old fashioned kind of business which could and did act 
independently and compete in services and prices in the absence of clearly illegal 
conspiracy or contracts in restraint of commerce * * *. It is the kind of 
business organization 'which unquestionably most facilitates true market competi- 
tion and the maintenance of the competitive system * * *. The decrease and 
disappearance of the single-unit business has created the problem which faces the 
public and this committee today. 

It will be observed that combination * * * gives unity to the ownership, 
but not.to the productive processes of the subsidiary plants. The physical plants 
and equipment remain largely under decentralized management; they still produce 
singly, while the officers of the controlling corporation are concerned almost wholly 
with financial and general organization and commercial matters. It is well to 
remember this.when considering the claims of increased productive efficiency that 
are made for size attained by combination. * * * 

* * * Horizontal combination is that in which plural plants of the same 
kind, normally separate physically and geographically and located more or less 
economically in relation to their market areas and consumers' destinations, are 
combined in respect to ownership by the various legal devices * * *. This 
gives unity in respect to commercial and price policies, but does not unify the 
productive plants physicallv, and usually it neither changes their number nor 
increases their unit size * * * financial size attained by horizontal conibina- 
tion is constantly confused by the apologists of bigness with increased size of 
single plants * * *. 

Mass production primarily and generally means a relatively large degree of 
specialization in a single plant which turns out a large number of a particular 
kind of product, or of a particular pattern, model, or size of a product. It is a 
relative term, as it may apply to a greater or less degree of specialization and to a 
larger or smaller mass of products of the same kind from the same factory * * *_ 

It is apparent that "the economy of large production" * * * jg essentially 
a phenomenon of the single-unit plant rather than of plural-unit plants. It is a 
matter of internal arrangements and economies within a single plant. It is tech- 
nical or technological, not financial or commercial; that Is, it is the sum of various 
economies of time, materials, and wear and tear of machinery combined with 
labor used in a continuous process on one product, as compared with a more or 

■ From: Who's Who in America, vol. 20, 1938-39. Frank Albert Fetter, professor political economy and 
finance, 1901-10, economics and distribution, 1910-11, Cornell University; professor political economy, 
Princeton, 1911-31, professor emeritus since 1931. Author: Principles of Economics, 1904; Economic Prin- 
ciples, 1915; Modern Economic Problems, 1916, 1922; Masquerade of Monopoly, 1931. 

' Dr. Fetter's complete testimony is herewith submitted as Appendi.x D. 

107 



108 CONCENTRATION OF ECONOMIC POWER 

less discontinuous process with change of products and patterns. Certain of 
these advantages are well recognized and elementary, and call for no exhaustive 
enumeration. They include (1) the more use of highly speciahzed machinery for 
a single product, thus reducing the machine cost attributable to each unit of 
product; (2) less uisuse of machines during changes and adjustments for sizes, 
patterns, etc.; (3) reduction of labor cost for changes of machines for gauges, 
processes, etc.; (4) reduction of labor cost through increased skill resulting from 
specialized practice; (6) various miscellaneous advantages, such as economy in 
factory space, storage space, use and waste of materials, etc. Such economies of 
production in single plants should not be confused with certain other actual or 
alleged economies of large size in the case of plural-unit combinations, such as 
mass buying, monopolistic buying and selling power, economy of salesmanship 
due to absence of competition, etc. Obviously, the economy of mass production in 
its proper sense does not even imply the necessity of very large size in a single-unit 
factory. It is more a matter of the degree of specialization attainable within a 
single factory than a matter of tlje size of the plant as a whole. A small factory 
employed on a few patterns of a single kind of product may get a fuller measure of 
economy of mass production than a much larger factory which produces a variety 
of products * * *. 

We have to do here with an optimum point in the economy of mass production. 
It is beneficial up to the point of economic maximum of the single plant, but 
beyond that point it turns into a disadvantage * * *. It is often implied and 
sometimes explicitly declared with an appearance of seriousness that any limitation 
of the size of corporations means a return to the hand tools and the small neighbor- 
hood shops of the middle ages. The exaggerations and error of such a statement 
surpasses absurdity. It implies first of all a confusion of combinations with 
specialized factories of optimum size * * *_ j know of no serious suggestion 
from any critic of big business that any single producing plant shall be smaller 
than the optimum size for the most efficient operation in the area served, or that 
it shall use any but the best tools and methods which modern science and the 
technical arts make possible. 

HORIZONTAL COMBINATION IS NOT MASS PilODUCTION 

In the light- of these distinctions, what is to be thought of the claim that the 
economy, of mass production results from horizontal merger of duplicate plants 
under a single ownership? What technical economy of mass production could 
result from the mere common ownership of two or more duplicate plants? * * * 

Even though no technical economies result from the larger size of combinations, 
there may be, and doubtless are, certain advantages to some persons and of some 
kind, or else there would be no such corporations formed. But personal advan- 
tage and private profit are no sure proof of technical economy * * *. If the 
foregoing analysis is sound, it follows that industrial combination cannot make for 
economy of mass production in the technical sense, beneficial to the whole com- 
munity, though it may create some other kind of advantages to those who form 
or control the combinations. 

Simple as is the distinction, when formally set forth, between a large single 
plant with its economy of mass production and a big business in the sense of the 
combined ownership of .plural plants, it is constantly ignored, either innocently or 
intentionally, with resulting great confusion of thought. 

Professor Fetter als6 pointed out to the Commission that so-called 
interplant economies as distinguished from the fundamental economies 
of mass production, i. e., intraplant economies, where they existed, 
were often attributable to the ability of aggregated financial power to 
exploit a fair and free competitive system. Dr. Fetter referred to 
certain fallacies as to" integration, as distinguished from horizontal 
combination in business. Under the title "Assumed Economy of 
Integrated Ownership": 

Attention has before been called to the error of identifying ownership integration 
of geographically separate plants and resources at different stages of production 
with the economic integration of successive physical processes in a single plant. 
The real economy of physical integration in some cases cannot properly be at- 
tributed in all cases to mere unity of ownership * * * 

Very commonly a different explanation is advanced for the assumed economy of 
mere ownership combination. Integrated ownership, it is said, saves in the later 



CONCEJVTRATION OF ECONOMIC POWER JQQ 

stages the profits of manufacture- which otherwise would have to be paid to 
independent producers at the earlier stages. This naive theory is rejected by 
every competent student of the subject. Profits are the return on investment, 
and investment at each stage is no less after than before the integration — usually 
more. Each plant continues to have a capitalization on which it must earn 
profits pro rata, if possible. The rate of profit on the whole investment of an 
integration cannot as a rule be greater unless some new economies result, and that 
has to be shown. 

* * * A much more important question is that of the efficiency in the 
technical management of integrated plants as compared with that of independent 
plants specializing on fewer products and selling to numerous buyers. Again it is 
a question of the economy of mass production. 

Dr. Fetter believes that integration is often a form of unfair com- 
petition in that it permits the large company with resources sufficient 
to integrate to discriminate in prices of particular products and thus 
to undersell smaller corporations not financially able to do so.^ 

Dr. Fetter contended that integration in American industry has 
afforded particular protection to the unfair competitive practice of 
price discrimination, in that integration can effectively conceal the 
operation of such a practice. While contending that the combination 
of various plants engaged in different stages of production under a 
unified management does not increase the real efficiency of mass 
production Dr. Fetter frankly stated to the Commission: 

There appears to be small chance of the ultimate survival of independent unin- 
tegrated fabricating plants in various industries under these conditions. 

Dr. Fetter also reinforced the testimony of Dr. Myron W. Watkins 
with respect to the claim that combinations have more effectively 
promoted scientific research in industry. 

The claim that more and better research to improve products can and does 
result from great combinations was one of the earliest and has been one of the 
most persistent. But grave doubts hang over such a claim. The subject is in 
need of much completer study. The United States Steel Corporation, for which 
this claim was strongly made at its inception was long a notorious laggard and all 
the significant advances in metallurgy, mostly the development of alloys, for a 
quarter of a century were made by the comparatively small companies. Some 
of the most epoch making inventions of our times have come from independent 
laboratories, such as that of Thomas Edison, or have been merely the last steps 
taken in the application of pure science discovered at the universities or by 
scientific workers of the Governmeiit. Most hopeful, too, are cooperative plans 
of research by small industry. By and large, large combinations seem to have 
exerted themselves far more in buying up patents for use or suppression than they 
have in leadership of research and invention. This subject is closely connected 
with that of the revision of the patent policy. 

Professor Fetter also pointed out to the Commission that critics 
of large size in business do not propose to "atomize" American 
industry back into a handicraft stage. 

No critic of "big business" in America, so far as I am aware, has ever proposed 
that any single plant shall be reduced below the optimum size, that is, the size that 
makes possible the maximum technical efficiency of mass production. In view 
of the existing state of the arts, in manufacturing and transportation. The 
position and motives of those who criticize big business is therefore misrepresented 
when it is said that they would like to reduce industry to mere atoms, and return 
to the hand tools and methods of the Middle Ages. That is a caricature of the 
truth and a distortion of the issue. 



3 This advantage becomes particularly unfair if the large company attempts to monopolize the sources of 
raw materials or the means of transportation. The United States Steel Corporation's early attempts to buy 
up all important iron ore reserves and the Standard Oil Co.'s desire to control all important pipe lines offer 
excellent examples of the unfair possibilities in the striving for integration. 



no CONCEINTRATION OF ECONOMIC POWER 

Professor Fetter's testimony may be summarized under the follow- 
ing points: 

(1) Efficiency in mass production means obtaining as low a cost 

as possible within a plant by the effective coordination of 
men, machines, and materials. 

(2) Mere combination of plants does not increase the efficiency 

of mass production in the single plants. Additions of 
plants increase the difficulties of corporate management in 
effectively supervising the internal efficiency of each plant. 
When plants are combined, certain other general economies 
may be achieved, but these in the main represent the 
ability of aggregated financial resources to exploit a free 
and fair competitive system. 

(3) Such economies, however, even though achieved at the 

expense of free and fair competition, may be more than 
offset by increasing plan costs due to losses in managerial 
efficiency, which results when too many plants have to be- 
managed. 

(4) Whether the mergers or combinations are horizontal or 

vertical, the foregoing principles apply. Horizontal com- 
binations do not ihcrease the efficiency of mass production; 
neither do vertical combinations except in a relatively few 
cases where vertical integration is related to the elimination 
of technical waste in production. Both in horizontal 
combination and vertical combination the general effect 
is to decrease managerial efficiency. 

(5) Large corporations did not create mass production. Mass 

production existed before the creation of great corporations 
in American business 50 years ago. Mass production is, 
of course, conducted today by large corporations. But it 
could be achieved more effectively by smaller corporations. 
More efficient mass production would be achieved if cor- 
porate management confined itself to managing a smaller 
number of plants of optimum size, rather than attempting 
to-manage numerous plants of diverse size, often producing 
niultiple products, and widely dispersed geographically. 
Real efficiency in mass production is impaired when cor- 
porate management either fails to concentrate its energies 
on the achievement of intraplant economies, or when the 
number of plants under the direction of a management are 
so numerous and complex in their activities that an 
effective supervision of such plants internally becomes a 
physical impossibility. The greatest efficiency in mass 
production is attained when men, machines and materials 
are coordinated to a maximum degree of effectiveness 
within a plant. Corporate management in large cor- 
porations today is generally too remote from plants and 
factories to effectively organize them internally. Such 
management generally concentrates its energies on financial 
policies which may be of benefit to some persons, but not 
necessarily to the public, or even to the stocldiolders of the 
corporation. 



CRITICS OF THE FIRST MERGER MOVEMENT IN AMERICAN 

BUSINESS 

Students of American business generally agree that there were two 
important merger movements in the United States. The first period 
was from 1890 to 1904. The second was from 1919 to 1928. Through 
the merger process many thousands of originally independent estab- 
lishments disappeared, narrowing in all directions the field of competi- 
tion and enlarging the domain of monopoly. 

In 1921 Prof. A. S. Dewing, ' then at Harvard University, made a 
study of the notable mergers that had occurred in the first merger 
period. 

Thirty-five industrial combinations were chosen, which inajt the 
following six conditions: The combination must (1) have beer, in 
existence at least 10 years before 1914 ; (2) have been formed as a com 
bination of at least five separate and competing plants; (3) have been 
of national, rather than mere sectional or local significance; (4) have 
published financial reports in which at least some degree of confidence 
could be placed; (5) have available published or acceptable financial 
reports covering the separate plants prior to the time the combination 
was effected; and (6) the group as a whole represented a wide diversity 
of industries. 

Roughly, the promoters of these consolidations believed or pro- 
fessed to believe that the mere act of consolidation would increase the 
earnings about one-half. In actual results the earnings of the separate 
companies before the consolidations were nearly a fifth greater (18 
percent) than the earnings of the consolidated companies for the first 
year after consolidation. The promoters expected the earnings to be a 
half greater than the aggregate of the competing plants; instead they 
were, about one-fifth less. 

Nor were the sustained earnings an improvement, for the earnings 
before the consolidations were between one-fifth and one-sixth greater 
than the average for the 10 years following the consolidations.- In 23 
of the 35 consolidations, the earnings in the next 10 years were less 
than the earnings of the constituent companies before the merger, 
and in half of these, less by from one-third to nine-tenths. In the 
aggregate, the earnings of all 35 consolidations were nearly one-fifth 
less than those of the separate competing establishments prior to con- 
solidation, and this in spite of the inclusion in the latter period of 
earnings of large additions to capital and plants of new financing, the 
amoimts of which could not accurately be estimated. Even the 
United States Steel Corporation earned only about 85 percent as much 
in its first 10 years (1901-11)^ as the previous earnings of its constitu- 
ent companies. 

' From Who's Who in America, vol. 20, 1938-39: Arthur Stone Dewing, author: Assistant in philosophy, 
Harvard, 1902-13; instructor in economics, 1911-12, and 1919-20; assistant professor of economics. 1920-22; 
associate professor of finance, 1922-27, professor, 1927-33. Author (among others): Promotion and Iteorgani- 
zation of Industrial Corporations, 1914; Financial Policy of Corporations, 1920, 3d rev. ed., 1934; Corporation 
Finance, 1921, rev. ed., 1930; The Corporation- A Study of Its Financial Structure, 1934. 

' The period from 1901-11 is regarded by Professor Fetter as a more prosperous period in business than 
the preceding decade. 

Ill 



JJ2 CONCENTRATION OF ECONOMIC POWER 

At the time this first great merger movement was in progress, many 
noted persons spoke out critically against the size of the corporations 
being created. Some bluntly called attention to the fact that they 
doubted if human, brains existed to competently manage the vast 
aggregations which were appearing. As noted an economic scholar 
as Prof. A. T. Hadley, president of Yale University/ said frankly in 
Scribner's Magazine in 1899: * 

Just as in an army, there are many who can fill the position of captain, few 
who can fill that of colonel, and almost none who are competent to be generals 
in command— so in an industrial enterprise there are many men who can manage 
a thousand dollars, few who can manage a million, and next to none who can 
manage 50 million. 

Other economic commentators pointed out that the success or failure 
of an enterprise is in fact usually determined by one man, and there 
is a Very definite limit to what one man can do. Even in those far-off 
times a noted Wall Street figure foresaw the connection between size 
in business and the diminution of incentive to run that business effi- 
ciently. A salaried employee, a manager or superintendent, is hardly 
likely to give such close personal attention to a plant in which he has 
no large financial interest as an individual who owns the plant. Thus, 
Charles R. Flmt, who recorded himself in the American Who's Who 
as. ''the father of trusts," testified frankly before the Industrial Com- 
mission : * 

One of the fundamental difficulties of the management of these corporations 
lies in the fact that the managers have a smaller percentage of interest in the 
operations "that they are conducting under the plan of an industrial combination 
than they had wiien it was an individual property, or when they had a large 
interest in a small corporation. That is fundamental. There is no way in which 
that condition can be changed. 

In another part of his testimony before the Commission, Mr. Flint 
thought that in pertain businesses centralization could be extremely 
dangerous : 

In my judgment one of the dangers to the success of great industrials is that 
parties, "without being intellectual giants, are liable to attempt to centralize too 
much. Taking men as they are, I think that in businesses where high-class 
ability is required at many places, and where the business is not of such a char- 
acter that its conduct can be reduced to rules, and where its success depends on 
local ability and local judgment, and where, the efficiency of the selling depart- 
ment is involved with long-time personal relations, such a business it may be 
very dangerous to suddenly centralize. It is far wiser, I tliink,.in a case of that 
kind, to sustain the independence and individuality of the separate concerns. 

There is the statement of Mr. William Griffiths, manufacturer of 
tin plate, replying to a question of the Industrial Commission as to 
the ability of the American Tin Plate Co. to freeze out competitors 
by underselling them: 

Well, I intended to ftnswer that question in the remarks that I made, that I 
thought the independent concern could possibly economize to a greater extent, 
that concern being directly under the owner's eye, than the American Tin Plate 
Co. I have not the least hesitancy in saying that it is costing them more today 
to manufacture tin plate under their present operations and administration than 
it was under individual ownership, because the man that owned the plant — he 

f 3 From Who's Who in America: "Arthur Twining Hadlcy: Lecturer on railroad administration, 1883-86; 
professor political science, 1886-91; professor political economy, 1891-99: president, 1S99-1921 (emeritus), 
Yale Universitv. Author (among others): Economics— An Account of the Relations Between Private 
Property and Public Welfare, 1896; Economic Problems of Democracy, 1923; Conflict Between Liberty 
and Equality, 1925." 

< Scribner's, vol. 26, pp. 604-610, at p. G07. 

' Industrial Commission, vol. 13, p. 85. 



CONCENTRATION OF ECONOMIC POWER 123 

was directly on the ground, and if he had practical knowledge of the business he 
was cudgeling his brain all the time in the direction of his own interest.^ 

Mr. Griffiths was a partner in a tin-plate company which was taken 
over by the American Tin Plate Co. Mr. Griffiths' company was 
taken over against his wishes. He held a minority interest in the 
company, and his partners overruled him. Further on in his testi- 
mony Mr. Griffiths said: 

The district manager is supposed to supervise, superintend, and direct the 
manufacturing. Now his district, as 1 said before, possibly will number possibly 
5 or 6 different mills or works, representing possibly 20 or 30 mills. It is simply 
impossible, in a business involving so many details, for"a man making his appear- 
ance once a week, even though he is a very practical fellow and possesses a world 
of information on that subject, to get good results. 

There is the statement of Mr. Hugh Campbell, pi-esident of the 
United States Tobacco Co., challenging the belief that large industrial 
combinations really effect economies: 

They may be able to buy a few things cheaper, but as regards tl.e raw mate- 
rial — leaf tobacco, which is, of course, the principal ingredient entering into the 
m.anufacture of tobacco — they must n\ake their purchases at auction on the ware- 
ho\ise floor just the sam.e as any sm.all manufacturer; in t) at tlicy liave no advan- 
tage. On the other hand, thej- have very expensive offices and officers, and I 
think that any little advantage they m.ay have in the price of some materials, 
such as foil, printing, and so on, ^^ ill be far m.ore than offset by reason of the 
expensive way in which they do business and advertise.' 

There is the statement of Gen. John McNulla, receiver of the Dis- 
tilling & Cattle Feeding Co., replying to a question ns to the advisa- 
bility of bringing under one ownership plants that ate scattered all 
over the United States (the old distilleries and cattle I'eeders organiza- 
tion was composed of 65 companies engaged primarily in distilling 
alcoholic spirits): 

There is absolutely no use of combining where they are scat lered all over the 
country. If comliinations are formed it is to get a corner on tlie market and 
better somebody's fortune. There is no practical advantage in it; not a bit. Fo 
instance, the distilling people had distilleries in * * * ^nd in a dozen dif 
ferent places. There was absolutely no necessity for com.bining. It was only 
to control the m.arket, liu'.it the output, and com.m.it extortion. They attempted 
to do it and failed, sin>ply because, as I have explained to you, it did not require 
a large capital to get up coni.petiticn — to build new distilleries. Wh}', they threw 
away property that cost them, hundreds of thou.sands of dollars merely to elimi- 
nate it; they paid men for staying out of the trade; they paid rent on this aban- 
doned land riglit along from, j-ear to year, nearly $100,000 a year. I liave got on 
the roll here, I think, $100,000 approxiir>.ately, if I remem.ber it, a year for rent 
for nothing. Tliey rented the places where the distilleries were in order to put 
them out of the way.^ 

There is tlie statement of Mr. George V. Cresson, president of a 
machinery manufacturing cojnpany, who put his finger squarely on 
one of the. existing causes of the high heart mortality rate among 
American businessmen today, and who also commented that size in. 
business can frequently become so great as to fall to pieces from the 
inability of managers to properly manage it: 

No; I think that consolidation of business is productive cf sometliing worse 
than that, and it acts in this way, according Ir ;r.y idea: If I am. running a business 
I know all aljout it. It has been said by people who are prei.ty good manufac-. 
turers and n\erchants that when a business gets too big for one head to manage 

» Industrial rommis.sion, vol. I, p. 890. ot scq. 

" Industrial Commi.ssion, vol. 13, p. If09. 

* Industrial Commission, vol. 1, pp. 238-239. 

264905— 41— No. 13 9 



JJ4: CONCENTRATION OF ECONOMIC POWER 

it is not managed, and I think that is so. There have been a great many different 
kinds of business consoHdated, and sometimes for a while they are successful, but 
if you will carefully watch them you will find they are not successful unless the 
man at the head of it is a good deal better than the average run of men. In any 
event, tne man at the head of that consolidated concern has a terrible bad life 
of it. He has to work a great deal harder, just as much harder than each of those 
concerns did before. He has to be the head of the whole thing. I have seen 
these men in many cases gradually failing until they dropped out; then somebody 
else tried to do the business, and they could not do it, and the consolidation fell 
through. I think business should be done as it has been done to a certain extent, 
certainly with modern improvements and things of that kind, but the old story 
will hold good, as it always did. You want to get a business done by men of 
average intelligence, strength, and health, so as to stand the racket; then you 
can run the business right. But consolidations to eliminate expenses are, I think, 
. a mistake. ' 

"Whereas competition," wrote Prof. Eliot Jones, author of The 
Trust Problem in the United States (1929), "provides a stimulus to 
the introduction of improved methods, the tendency of monopoly is 
toward stagnation." And the author quotes John Stuart Mill: 

To be protected against competition is to be protected in mental dullness. 

And, Jones concludes, "there is much evidence to support this view." ** 
Critic%of size in business have commented on the fact that for many 
years, and even as late as 1920, leading raUroad executives in the 
United States opposed the proposition to establish regional raUroad 
monopolies, their contention being that it was essential that competi- 
tion in service be maintained. The chairman of the Westinghouse 
Airferake Co., in a statement prepared for the Senate Committee on 
Interstate Commerce, opposed the proposition on the ground that 
it would retard invention : 

As a rule, railway managers were not overenthusiastic about testing untried 
devices, and it became necessary to find the right man and auspicious conditions, 
in order that the desired development and demonstration might be made. This 
process was greatly facilitated by the number of railways to which appeals could 
be made." 

Another practical businessman, a manufacturer, summed up what 
he regarded as an inherent weakness in size when he made a remark 
quoted by Professor Dewing in his book. Corporate Promotions and 
Reorganizations. 

There comes a point when the man in the twentieth story fef an office building 
cannot make up, no matter how brilliant he may be, for the waste and shiftlessness 
of a variety of superintendents in many mills, hundreds of miles away in all 
directions. '2 

A conservative critic of business. Prof. J. J. Bullock, of Harvard 
University, wrote: 

There may easily arise an irrepressible conflict between that central respon- 
sibility necessary for intelligent unified management and that individual freedom 
and energy requisite' for the healthy life of the separate members." 

Prof. Eliot Jones, commenting on this, said : 

What is thus gained at the center in t5ie way of control and guidance might 
thus be lost through reduced energy and efficiency at the circumference." 

• Industrial Commission, vol. 14, p. 272. 

>» The Trust Problem in the United States, p. 535 (1929). 

1' The Trust Problem in the United States, Eliot Jones, pp. 535-6 (1929). 

" Corporate Promotions and P.eorganizations, Dewing, p. 559. 

IS The Trust Problem in the United States, Eliot Jones, p. 538. 



CONCENTRATION OF ECONOMIC POWER 115 

In siimiiung up this first merger movement in American business, 
Prof. Eliot Jones wrote, in 1929: 

It must be admitted that the showing of the trusts has not realized the high 
hopes that were entertained for them upon their formation a generation ago.i* 

In the last 10 years, however, there has been a vigorous movement 
on the part of many important American businessmen to obtain 
legislative sanction of monopoly in business. The argument is again 
being made that bigger business will promote efficiency and achieve 
economy and benefit consumers. 

i< The Trust Problem in the United States, Eliot Jones, p. 641. 



SIZE IN AMERICAN BUSINESS TODAY 

GROWTH IN THE SIZE OF BUSINESS UNITS WITHIN A SINGLE INDUSTRY 

If the doubts of many b'lsi 'cssmen and noted economists abput 
the eflBciency of great corpon ti. is formed 40 to 50 years ago had any 
validity then, they apply with far greater force to the American 
business world of today. Now there are units in American business 
which dwarf into insignificance the largest corporations created toward 
the end of the last century in American business. For instance, 
the famous Standard Oil Trust was in its day considered a very large 
business in American industry. In 1882 this company was capitalized 
at $70,000,000, 'and the value of its properties was appraised at 
$55,000,000, according to testimony taken before the Bureau of 
Corporations.^ In 1 892 this large concern had increased its capitaliza- 
tion to $K)2, 2.33, 000, and the appraised value of its property was 
estimated by testimony to be approximately $121,631,312. In less 
than 9 years, however, the United States Steel Corporation was 
organized with a capitalization of approximately .$1,300,000,000. 
The Bureau of Corporations estimated that this capitalization included 
approximately $600,000,000 of watered stock. Making allowance 
for the watered stock, it can safely be estimated that the United 
State9*Sted Corporation was between six and seven times as large as 
the famous Standard Oil Trust of the last century. 

The great steel corporation of 1901, however, was destined for 
phenomenal growth. At the time of its formation, United States 
Steel Corporation controlled approximately 66 percent of the output 
of steel ingots, in the steel industry. Today, however, it controls 
approximately only 40 percent of the output. ' This is not because 
the United vStates Steel Corporation has grown smaller. As a matter 
of fact, it has grown very substantially. When organized, it con- 
trolled 7,000,000 tons of ingot capacity in the steel industry. In 1929 
it controlled 25,000,000 tons. The unwatered assets of this corpora- 
tion today have increased from approximately $700,000,000 to over 
$2,000,000,000. The United States Steel Corporation, therefore, has 
grown between three and four times as large as it was at the time of 
its fo.rmation. Its tremendous growth provoked the following com- 
ment in. Fortune Magazine for March 1936: 

When the elder Morgan gathered 65 percent of the steel industry into one 
incredibly powerful company, endowed with the finest transportation facilities 
every owned by a nonrailed road coinpany and bulwarked with a quasi-monopolis- 
tic control of the iron-ore reserve of the nation, when he had finished his titantic 
labors, he would have been angry indeed if some bespectacled pip-squeak of an 
economist had told him that he had created a corporation too big and too power- 
ful for its own good. Yet such would have been no more than the truth. The 
trouble with the United States Steel Corporation can l^e briefly stated: it has 
been too big too long. 

' Report of the Commissioner of Corpprations on the Pctroltum ludustry, pt. I. May 20, 1907. 

116 



CONCENTRATION OF ECONOMIC POWER 



117 



If the Standard Oil Trust of 1892 at that time was considered a 
very hxrge concern, what can be said of one offshoot of this trust, the 
Standard Oil Co. of New Jersey today? This corporation today has 
assets of more than $2,000,000,000. Expressed mathematically this 
represents an increase in the difficulties of managing size efficiency 
over that of the old Standard Oil Trust of approximately 2,000 percent. 
In many fields of American industry today we can find corporations 
which are many times the size of the old Standard Oil Trust and even 
many times the size of the United States Steel Corporation of 1901. 
For instance, the American Telephone & Telegraph Co. has been 
estimated to have assets of more than $5,000,000,000. The Metro- 
politan Life Insurance Co. of New York is also reported to have 
assets of more than $5,000,000,000. 



CONGLOMERATES 

There is another characteristic of size in American business today 
which increases the difficulties of managing size efficiently. The 
difficulties of effectively managing size in business can become too 
great even if size confines itself to the operation of a single business 
and to a certain class of products. But these difficulties may become 
greater where size operates to bring under a common management 
many diverse businesses and a great number of products. Efficiency, 
as Adam Smith envisioned it, is the case of a shoemaker sticldng to 
his last; and the "last" in many American businesses has already 
become extremely complex. Today, however, in American business 
we have many very large corporations which are engaged in the 
operation of numerous diverse businesses and the production of a 
great variety of diverse products. This is not mass production, which 
means specialization; rather it is diversification of production under 
one managenient. Students of the problem of business efficiency often 
wonder how a board of directors of even 15 or 20 extraordinary busi- 
nessmen could be soundly acquainted with the labyrinthic production 
program of these conglomerates. , Following are examples of the 
multiplicity of products and diverse businesses which have been 
brought under a common management in the American business 
structure: 



Ixat 


<nple 1. 


Example 1 — Continued. 


1. 


Dyestuffs. 


17. 


Neoprene. 


2. 


Dyestuff. intermediates. 


18. 


"SD02" corrosion-resistant coat- 


3. 


Organic chemicals. 




ing. 


4. 


Chemicals and dyes for the petro- 


19. 


Neoprene latex. 




leum industry. 


20. 


Rubber peptizing agents. 


5. 


Sulfur dixoide. 


21. 


Accelerator retarders and activa- 


6. 


Nitrated filter cloths. 




tors. . 


7. 


Ditergents. 


22. 


Special chemicals for rubber. 


8. 


Wetting-out agents. 


23. 


All completely and specially de- 


9. 


Textile assistants and finishing 




natured alcohol formulas sjich 




agents. 




as antifreeze alcohol and indus- 


10. 


Solvents. 




trial solvent. 


11. 


Aromatics. 


24. 


Motion-picture film. 


12. 


Perfume. 


25. 


Portrait film. 


13. 


Photographic and pharmaceutical 


26. 


X-ray safety film. 




chemicals. 


27. 


Lithopone. 


14. 


Antioxidants. 


28. 


Titanium dioxide. 


15. 


Vulcanization accelerators. 


29. 


Extended titanium pigments. 


16. 


Rubber colors. 


30. 


Leaded zinc oxide. 



118 



CONCE,NTRATION OF ECONOMIC POWER 



Example 1 — Continued. 

31. Aluminum hydrate, and 

32. Dry colors. 

33. Acetate rayon yarn and staple 

fiber. 

34. Commercial cellulose acetate flake. 

35. Viscose ravon varn and staple fiber. 

36. Cellulose film.' 

37. Cellulose caps and bands for 

sealing containers. 

38. Transparent seamless tubing. 

39. Cellulose sponges. 

40. Ammonia and allied products. 

41. Methanol. 

42. Higher alcohols. 

43. Urea. 

44. Fertilizer compound. 

45. Hydrogenated products. 

46. Methacrylate resins. 

47. Aliphatic acids and esters. 

48. Anhydrous ammonia in cylinders. 

49. Aqua ammonia in drums and tank 

cars. 
.50. Ammonium carbonates. 

51. Pyroxylin-coated and impregnated 

fabrics. 

52. Sponge-rubber non-skid underlay. 

53. Sponge rubber rug cushioning. 

54. Pyroxylin-impregnated washable 

window-shade cloth. 

55. Rubberized flexible ventilating 

duct. 

56. Rubberized fabric for heavy duty 

chair and automotive uphol- 
steries. 

Rubberized fabric for outerwear 
garments. 

Latex-saturated fiber for midsole 
and innersole materials. 

Hospital sheeting. 

Neoprene-treated textiles. 

Nitrocellulose. 

Solvents. 

Leather cements. 

Pyroxylin solutions. 

Paints. 

Varnishes. 

Synthetic-resin enamels. 

Bronze powder. 

Special finishes for automobile 
refinishing and all industrial 
purposes. 

Polish. 

Automobile wax. 

Top dressings. 

Protective cream and other auto- 
mobile specialties. 

Cellulose nitrate plastic. 

Cellulose acetate plastic. 

Methyl methacrylate resin, all in 
the form of slieets, rods, and 
tubes. 

Molding powders. 

Resin denature material. 

Monofilaments and bristling fila- 
ments. 

Toiletware, including brushes, 
combs, hair ornaments, and 
novelties. 



57, 

58, 

59. 
60, 
61, 
62 
63 
64 
65, 
66 
67 
68 
69 



70 
71 
72 
73 

74 
75 
76 



Example. 1 — Continued. 

81. Sodium. 

82. Cj'anides. 

83. Peroxides. 

84. Chlorine. 

85. Heat-treating salts. 

86. Formaldehyde. 
Hexamethylenetetramine. 
Gold, silver, and platinum prepa- 
rations. 

Ceramic materials of all types. 

Methyl chloride and other re- 
frigerants. 

Noninflammable solvents and other 
chemicals for all industries. 

Preparations to prevent and con- 
trol many seed-borne plant 
diseases. 

Preparations to improve crop 
yields. 

Shotguns. 

Rifles. 

Cartridges and shot shells. 

Traps. 

98. Targets. 

99. Gun grease and oil. 
Rust remover. 
Powder solvent. 

Complete line of pocket knives. 
Professional and household cutlery. 
Dynamite. 

"Nitramon" blasting agent. 
Black powder in granular and 

pellet form. 

Blasting accessories. , 

Complete line of products for all 
industrial and agricultural uses. 

Torpedoing oil and gas wells with 
liquid and solidified nitroglycerin 
to increase productivity. 

Chemicals for leather, manufac- 
turers. 

Chemicals for textiles, manufac- 
turers. 

Chemicals 
turers. 

Chemicals 
turers. 

Chemicals 
turers. 

Chemicals for battery manufac- 
turers. 

Chemicals for ceramics manufac- 
turers. 
117. Chemicals for sheet, tin plate and 
steel manufacturers. 

Chemicals for petroleum manu- 
facturers. 

Chemically pure acids. 

Electrolyte. 

121. Filter alum. 

122. Insecticides and 
Fungicides for fruits, vegetables, 

lawns, and flowers. 
Silicate of soda. 
Soldering fluxes. 
Zinc. 
Wood preservatives. 



87. 



90. 
91. 



92. 



93. 

94. 
95. 
96. 
97. 



100. 
101. 
102. 
103. 
104. 
105. 
106. 

107. 
108. 

109. 



110. 



111. 



112. 
113. 



114. 



115. 
116. 



118. 

119. 
120. 



123. 

124. 
125. 
126. 
127. 



for paper manufac- 
for paint manufac- 
for rubber manufac- 



CONCENTRATION OF ECONOMIC POWER 219 

Example 2. 

This corporation rims at the same time businesses producing 
numerous breakfast cereals, animal feeds, gelatine, ice cream mix- 
tures, a medley of desserts, a coffee and tea business, a cake and 
bread business, a chocolate and cocoa business, a coconut-meat busi- 
ness, a sirup business, a nut business, a salt business, a baking-powder 
business, a business of manufacturing laundry aids, an oyster business, 
a business of producing frosted foods, a business of processing corn 
products, a business of canning fruits and vegetables, a business of 
manufacturing cottons and shipping cases and bags, a business of 
manufacturing tin cans and a business of meat packing. This corpo- 
ration was formed by promoters in the 1920's. 

Critics of excessive size in business who view this kind of industrial 
phenomena often ask, "Can one man, acting as president of either of 
these corporations, possess the capacity to know enough about such 
numerous and diverse businesses to effectively administer them from 
the standpoint of eliminating waste, promoting efficiency and technical 
progress in all of them at the same time?" 



MULTIPLE DIRECTORSHIPS 

The difficulties of efficiently managing large American businesses 
have been complicated by another important factor — that of interlock- 
ing directorates. The American Telephone & Telegraph Co. is a huge 
corporation bringing to its board of directors and officers tremendous 
problems in efficient management. This corporation has approxi- 
mately $5,0P0,000,000 of assets, 700,000 stockholders, offices in nearly 
ev.ery city and hamlet in the United States; it supplies the entire radio 
industry with a program transmission service, controls the largest cor- 
poration in the world producing telephone equipment, owns one of the 
greatest research and scientific laboratories in American industry, the 
Bell Laboratories, furnishes equipment and technical service in con- 
nection with talking pictures for the whole motion-picture industry in 
the United States, furnishes sound equipment to the phonograph in- 
dustry, manufactures turntables for mortuary parlors, public address, 
phonograph, and radio distribution systems, terminal apparatus for 
submarine cables, acoustic engineering apparatus, race-timing appa- 
ratus, electro-surgical knives and other medical equipment, aids to 
hearing, and photo-electric cell applications; controls an extensive in- 
teroceanic telephone system with France, England, and South America; 
has a large financial interest in the Bell Telephone Co. of Canada; 
has an extensive interest in the Cuban-American Telephone Co.; owns 
the Trans-Pacffic Communications Co., Ltd., which maintains radio- 
telephone communication between the United States and the Hawaiian 
Islands; controls more than 200 corporations, owns 80,000,000 miles 
of wires, employed in 1929 nearly 400,000 people, and bad a pay roll 
of nearly $550,000,000; owns more than 21,000,000 independent tele- 
phone stations in the United States; received in 1930 a gross income 
of more than $1,000,000,000. 

The 19 directors of the American Telephone & Telegraph Co., how- 
ever, do not devote their full time to this huge corporation. These 19 
directors also have 172 other business affiliations.^ On the average, 
each director of this corporation is concerned with 9 other businesses 
at the same time. The record shows Mr. Charles Francis Adams, a 
director of the American Telephone & Telegraph Co., helping to direct 
25 other businesses, ranging from the gas business, the carpet business, 
the trust business, the railroad business, the sugar business, the real 
estate busmess, the life insurance business, the savings bank business, 
the electrical business, the smelting business, and the drug business, 
to the mvestment trust business. The record shows Mr. Phillip 
Stockton, another director, directing the affairs of the American Tele- 
phone & Telegraph Co. and 29 other businesses. Mr. Stockton is in 
the banking business, the insurance business, the sugar business, the 
fine-spinning business, the gas business, the securities business, the 
safety razor business, the educational business, the submarine signal 
business, and many others. The record shows the president of the 

' Appendix E. 
120 



CONCENTRATION OF ECONOMIC POWER 121 

corporation, Mr. Walter Gifford, who is of course the chief executive 
officer of the American Telephone & Telegraph Co., also helping to 
direct one of the large commercial banks of the country, a savings 
bank in New York City, a university, a philanthropic organization, 
and directing the policies of two of the greatest scientific and educa- 
tional organizations in America — the Rockefeller Foundation and the 
General Education Beard. There is submitted with this report a list 
3f the directors of the American Telephone & Telegraph Co. with a 
list of their outside directorships, and, where the data were available, 
an effort has been made to show the amount of assets each director is 
really trying to direct, including those of American Telephone & Tele- 
graph Co.^ This table shows that the 19 directoi*s of the American 
Telephone & Telegraph Co., instead of concentrating all of their time 
on the direction of a mere $5,000,000,000 of assets, are actually trying 
to direct more than $38,000,000,000 of assets. The Pujo committee, 
appointed in 1912, alarmed the country by its findings that the House 
of Morgan was indirectly interlocked with $22,000,000,000 of invested 
capital. That was approximately 28 years ago. Today we have one 
corporation in the United States directly interlocked with more than 
$38,000,000,000 of assets. This is after "eliminating duplications of 
assets in cases where more than one director of the American Tele- 
phone & Telegraph Co. was affiliated with another single company. 

The United States Steel Corporation is approximately a three- 
billion-dollar affair.^ Internally it represents hundreds of corpora- 
tions that were engaged in making at one time many diverse and 
complex steel products, which have been consolidated into a giant 
edifice — the United vStates Steel Corporation. It owns and controls 
the greatest iron ore reserves in the Nation; owns and controls an 
extensive railway system; owns and controls an extensive water 
carrier- system ; owns and' controls the largest cement corporation in 
the world; owns and controls tremendous coal interests; owns and 
controls large dolomite and limestone quarries; owns and controls 
timber interests; makes 50,000 different steel products; owns and 
controls between 500 and 600 mills; and employs more than 220,000 
workers. A discerning observer might come to the conclusion that 
the directors of this corporation ought to have their working day 
completely taken up by its affairs alone if they are really directing it. 
Yet the directors of this giant corporation are concerned, with direct- 
ing a good many other huge and diverse enterprises at the same time. 

The 18 directors have 92 other business connections representing 
an average of 5 outside businesses per director.* 

The record shows Mr. Edward E.. Stettinius, chairman, of the 
board of United States Steel Corporation,, helping to direct the larg- 
est life insurance company in the world, a five-billion-dollar organi- 
zation, the Metropolitan Life Insurance Co., and helping to direct a 
museum of science and industry. 

The record shows J. P. Morgan running on the outside the largest 
investment banking house in the world and directing the business 
fortunes of the Pullman Co., while at the same time helping to ad- 
minister the policies of the United States Steel Corporation. 

The record shows the president of the United States Steel Corpora- 
tion, Mr. Benjamin F. Fairless, holding down the job of four other 

2 See Appendix E. 

3 Total assets are before deducting depreciation reserves. 
* See Appendix F. 



122 CONCENTRATION OF ECONOMIC POWEti 

presidencies in four other corporations, and a total of nine director- 
ships. It is true that these other presidencies of Mr. Fairless are in 
subsidiaries of the United States Steel Corporation. But one wonders 
how it is humanly possible for a man to be president of the United 
States Steel Corporation and president of four other companies at 
the same time, whether subsidiaries of the United States Steel Cor- 
poration or not, and really be effective in the elimination of ineffi- 
ciency in these businesses. 

The record shows Mr. Philip R. Clarke helping to direct the Pure 
Oil Co., and also serving as president and director of one of the 
largest banks in Chicago, the City National Bank & Trust Co. Mr. 
Nathan L. Miller is not only a director of the United States Steel 
Corporation, but is an active partner in one of the largest law firms 
' in New York City and also a trustee of an important life insurance 
company. The record shows Mr. Thomas W. Lamont in the securi- 
ties business, the trust business, the agricultural business, the con- 
struction business, the railway business, and the educational business,, 
in addition to his part-time job of directing the United States Steel 
Corporation; David F. Houston helping to manage the American 
Telephone & Telegraph Co., the Guaranty Trust Co. of New York, 
the Mutual Life Insurance Co. of New York, and the North British 
& Mercantile Insurance Co.; Sewell L. Avery directing a, gypsum 
company, the Chicago Daily News, the packing organization. Armour 
& Co., serving as chairman of the board and director of Montgomery 
Ward & Co., directing the People's Gas Light & Coke Co., the Pull- 
man Co., and the Pure Oil Co. The record shows Mr. Myron C. 
Taylor, directing the First National Bank of New York, the New 
York Central Railroad, the Atchison, Topeka & Santa Fe Railway, 
the Mutual Life Insurance Co., and the American Telephone & 
Telegraph Co. Recently Mr. Taylor, in addition to his varied 
directorship responsibilities, became the representative of the United 
States Government at the Vatican, 

The record shows Mr. Robert C. Stanley directing the International 
Nickel Co., Inc., in the United States, and the International Nickel 
Co. of Canada, Ltd., the Ontario Refining Co., Ltd., the International 
Sales, Ltd., the Mond Nickel Co., Ltd., of England, the Huronian Co.,. 
Ltd., the Canadian Nickel Products, Ltd., the Centre d'Information 
du Nickel of France, the great Canadian Pacific Railway, the largest 
bank in the United, States (Chase National Bank of New York), the 
American Metal Co., Ltd., the Amalgamated Metal Corporation, Ltd., 
of England, the International General Electric Co., the Mutual Life 
Insurance Co., and the General Electric Co. of the U^nited States. 

There is submitted at the end of this report a list of the directors 
of the United States Steel Corporation with a list of their outside 
directorships,^ and where the data were available an effort has been 
made to show the amount of assets for which each director is respon- 
sible, including those of the United States Steel Corporation. This 
table shows .that the 18 directors of the United States Steel Corpora- 
tion, in addition to directing the affairs of this approximately three- 
billion-dollar corporation, are actually trying to direct the business 
fortunes of corporations with aggregated assets of more than 
$30,000,000,000 

' See Appendix F. 



CONCENTRATION OF ECONOMIC POWER 223 

For a number of years the Chase National Bank of New York City 
has been the largest bank in the United States, and probably the larg- 
est private bank in the world. When Mr. Albert Wiggin was the chief 
executive head of the Chase National Bank, he held at the same time 
59 directorships in various public utility, industrial, insurance, bank- 
ing, and holding corporations. When Mr. Wiggin was discredited by 
a Government investigation and forced to resign, his place was taken 
over by Mr. Win'throp W. Aldrich. In 1939 Mr. Aldrich, in addition 
to his position as chairman of the greatest bank in the United States, 
was president and director of the Chase Safe Deposit Co., was helping 
to direct the American Telephone & Telegraph Co., Rockefeller Center, 
Inc., the Westinghouse Electric, & Manufacturing Co., the Westing- 
house Electric International Co., the Discount Corporation of New 
York, the Rockefeller Foundation, the General Education Board, the 
Metropolitan Life Insurance Co., and the New York World's Fair. 

In many corporations in America today, a board of directors rang- 
ing from 10 to 20 men is supposed to manage an enterprise, the size 
of which in itself seems to challenge competent administration, even 
if these gentlemen devoted every hour of their working day to its prob- 
lems. In many cases, however, these directors are also directors of 
many other businesses at the same time. 

Multiple directorships among directors of large corporations are 
undoubtedly very extensive in American business. The Commission 
has cited to the Temporary National Economic Committee only a few 
examples, because the Commission had neither the funds nor the time 
to submit to the committee more comprehensive material on this sub- 
ject. Experts on the Commission's staff familiar with this problem 
expressed the opinion that many more examples could have been cited. 

The Commission's limited investigation of this subject, however, 
disclosed the fact that multiple directorships are not confined exclu- 
sively to large corporations. Some of the medium-sized corporations 
in the 18 industries covered by the Commission's inquiry had directors 
and officers who were also directors and officers in numerous other 
businesses. Typical of these medium-sized corporations is the Na- 
tional Steel Corporation. This corporation was found to have 11 
directors who also held 117 directorships or business connections in 
other enterprises. The directors of the National Steel Corporation, 
therefore, average more than 10 outside businesses per director. How- 
ever, the total assets of all the businesses directed by the 1 1 directors 
of the National Steel Corporation, including those of the National 
Steel Corporation, amounted to only one and a half billion dollars.® 

The theory that multiple directorships impair business efficiency 
appears to be most cogent in the case of corporations of extreme size. 
Such corporations, because of their hugeness, the complexity of their 
business activities, would seem to require the undivided attention of 
their officers and dii;ectors. The burden of outside business interests 
on the directors of medium-sized corporations generally appears to be 
less than in the case of directors of very large' corporations for two 
reasons: First, the medium-sized corporations were invariably con- 
siderably smaller than the larger corporations, and consequently 
presented a much reduced problem of management. Secondly, the 
total business interests of the directors and officers of medium-sized 

« See Appandix Q. 



224 CONCENTRATION OF ECONOMIC POWER 

corporations were generally found to involve businesses whose aggre- 
gated assets were substantially smaller than the aggregated assets of 
the total business interests of officers and directors of large-sized 
corporations. 

It should be remembered that the Commission, in citing multiple 
directorships as a possible cause of inefficiency in very large corpo- 
rations, is only developing in a limited way a thesis advanced by many 
critics of very large size in American business. On the validity of 
such a theory the Commission expresses no opinion. 

In 1913 the Congress ordered an inquiry to find out, if possible, 
whether directors in American business really direct. The Commis- 
sion on Industrial Relations reported, in 1916: 

, Boards of directors are respon^ble in theory- for, and would naturally be ex- 
pected to maintain supervision over, every phase of the corporation's manage- 
ment. But as a matter of fact we know that such supervision is maintained only 
over the financial phase of the business, controlling the acquisition -of money 
to operate the business and distributing the profits. 

Upon the testimony of financiers representing as directors, hundreds of corpo- 
rations, the typical director of large corporations is not only totally ignorant of 
the actual operations of such corporations, whose property he seldom, if ever, 
visits, but feels and exercises no responsibility for anything beyond the financial 
■condition and the selection of the executive officials. Upon 'their own statements 
these directors know nothing and care nothing about the quality of the product, 
the condition and treatment of the workers from whose labor they derive their 
income, or the general efficient inanagement of the business.'' 

' Final report of the Commission on Industrial Relations, S. Doc. 415, 64th Coug., 1st sess. 1915-16, vol. 
1, p. 27. 



WHERE DOES RESPONSIBILITY FOR EFFICIENCY BEGIN IN 
GIANT CORPORATIONS? 

If, according to this report, directors of large corporations know 
little or nothing about the technical side of the business, how can such 
directors select competent officers to ruji the organization? And if 
the officers are incompetent, how will they ever be discovered, if the 
directors know nothing about the business? Incompetency is not 
always to be measured by earnings. Many times in the business 
world a corporation may seemingly thrive, not because it is competitively 
efficient, but because it has financial contracts and economic power 
that command business. Consequently, though earnings might be 
satisfactory, a really competent manager might have made them far 
better by the elimination of inefficiency and waste. If boards of 
directors cannot be interested in efficient management because of too 
many outside imerests, where does responsibility for efficient manage- 
ment begin in very large corporations? Does it begin with the pres- 
ident? If so, the problem, of management becomes that much more 
difficult. Instead of 15 or 20 men directing the business in all its 
phases, there is placed upon the shoulders of 1 individual a task that 
is from 15 to 20 times greater. Yet, in spite of this, we find the 
presidents of very large corporations- engaged in managing or directing 
many other outside businesses. 

Reference has already been made to the multiple business interests 
of the presidents of United States Steel Corporation and the American 
Telephone & Telegraph Co. Two additional examples of presidents 
of extremely large corporations who are at the same time engaged in 
directing multiple other businesses are submitted. 

Mr. H. Donald Campbell is president of the Chase National Bank 
of the city of New York today. The record shows Mr. Campbell 
also directing a smelting and refining company, three insurance com- 
panies, a motion-picture corporation, an indemnity company, and a 
coal company. Mr. Gordon S. Rentschler is president of the National 
City Bank of New York, the second largest bank in the United States, 
with assets running over $2,000,000,000. The record shows Mr. 
Rentschler also directing a banking corporation, a machinery manu- 
facturing corporation, another bank, the Discount Corporation of 
New York, two insurance companies, the National Cash Register Co. 
and the International Telephone & Telegraph Corporation.' 

1 Submitted herewith as Appendix H is a list of the business enterprises with which Mr. Campbell and 
Mr.Rentschler are connected. 

125 



DIRECTORS WHO DO NOT DIRECT FINANCE 

Not infrequently the public becomes acquainted with corporate 
directors who are unable to properly direct the financial policies of 
large corporations because of numerous outside interests. The sub- 
stitution of worthless collateral by Mr. Kreuger in the portfolios of the 
International Match Co. will be long remembered. The committee 
may recall that Mr. Kreuger wanted $50,000,000 worth of good bonds 
from the portfolios of the International Match Co. The substitute 
.collateral offered by Mr. Kreuger consisted of an alleged Polish match 
concession and concessions from three other countries, unknown, but 
designated as X, Y, and Z. The valuation of the concessions was given 
as $66,310,196. It turned out that the concessions were forgeries; 
but apparently useless forgeries, because the Mr. Durant, president 
of the corporation, didn't even ask to see them. When the public 
got the facts, there was a universal query as to what the directors of 
the International Match Co. were doing. It would seem that a sub- 
stitution of collateral for $5^,000,000 of bonds in the portfoHos of the 
International Match Co. should have been a matter of importance to 
the board of directors. Directors of the International Match Co. 
did not pass upon the matter at all. Mr. John T. Flynn, writing in 
the New Republic for May 25, 1932, commented: 

Well, as for the directors, they are, save for one or two Swedish gentlemen, 
American businessmen of almost overpowering intelligence, the kind that "have 
made America what she is today" and I hope they're satisfied. But one wonders 
during what odd moments they are directing the International Match Co. Most 
of them are directors in so maijy corporations that it is difficult to understand how 
even such mighty fellows could really spare the time for even a few of them. 
Here they are, with the number of corporations of which each is a director: 

Percy A. Rockefeller 51 

S. F. Pryor ■ 41 

E. W. Allen -. 21 

H. O. Havemeyer 17 

John McHugh 17 

F. L. Higginson 1 ^ 13 

Donald Durant ' 8 

A. H. Larkin 8 

B. Tomhnson 5 

Mr. Rockefeller, for instance, when not directing these various 51 corporations, 
devotes a good deal of time to operating in Wall Street, playing bear, and we know 
how that uses up one's mental energies. What are these fellows doing on this 
International Match board, and on all those others, for that matter? Thej' are in 
reality making a thoroughgoing comedy out of American business. How will 
they explain — and how will thfe president of the International Match Co., Mr. 
Durant, explain— how Kreuger could remove $50,000,000 worth of securities from 
their vaults on a simple request and substitute a handful of junk without their 
'knowing it? Mr. Durant has testified that he accepted these alleged concessions 
from 3 countries without knowing what countries they were and without any 
sc^'ap of evidence that they really existed. 

■ *< * * * * * * 

To sum the matter up: We have in this unsavory mess one more beautiful 
example of our crowning American financial vices — holding-company abuses, 
directors who do not direct, worthless «ecurities bought by trusting investors on 
the faith of so-called "bis"' bankers, "friendly" receiverships which result when the 
crash comes and the secrecy which cloaks big txisiness and behind'which all these 
(Mostly practices are carried on. 

126 



MANAGERIAL RESPONSIBILITY IN GOVERNMENT 

Businessmen often make Government their favorite example of 
inefficiency and waste. Yet Government has always adhered strictly 
to the idea that administrators should stick to one job and give that 
job their full attention. In a very few cases Government officials 
will be found to be serving on committees an*d boards in addition to 
the principal job which they have. But in such cases the boards and 
committees are for the purpose of coordinating governmental agencies 
which have a regulatory problem in common. 

Critics of the multiple-directorship system in business often make 
the point that government in the United States has with only slight 
exception recognized and practiced a somider theory of managerial 
responsibility. These critics say that if governmental Washington 
had been patterned along the lines of managerial practices prevailing 
in industry today, businessmen would have been the first to criticize 
the inefficiency of such a system. 

If Congress had permitted to flourish a S3^stem of interlocking 
officials, so that one individual would be at the same time a member 
of several unrelated departments or commissions, common-sense 
public opinion would have unmediately asked why such diverse 
regulatory businesses should have their managernent intermingled. 
Also, such critics say, common-sense public opinoin would refuse to 
believe that any man would be sufficiently versatile to discharge his 
managerial responsibilities adequately if he were permitted to hold 
a number of Government offices, diverse in their regulatory functions, 
at the same time. 

Could an official holding down four c*r five positions with Govern- . 
ment agencies, entirely unrelated in their activities, justify himself 
by saying that in each of these numerous and diverse businesses he 
specialized in only a small part of his managerial responsibility; that 
his principal business was to appoint subordinates to really manage 
businesses about which on the technical side he knew practically 
nothing? 

Critics of th§ system of multiple directorships in business frequently 
emphasize the query, ''Why is it that in industry and commerce one 
job, even though it may be confronted with the task of efficiently 
managing many hundreds of millions of dollars, is not enough to 
take a man's full time, when in much smaller political entities, where 
political management with only a few million dollars to administer, 
is presumed by common-sense public opinion to have on its hands a 
job the efficient discharge of which will require its full and undivided 
attention?" 

127 



CRITICS OF THE SECOND MERGER MOVEMENT IN 
AMERICAN BUSINESS 

From 1919 to 1926 occurred the second great period of mergers in 
American business. ..." 

\ ■ The extent and pointedness of the criticisms of large size in business 
which came from business itself in this period are surprising. This 
criticism came from eminent lawyers who had had extensive experience 
with big business, economists who were close to the operations of big 
business, and big businessmen themselves. About 8 years before this 
second merger movement got under way, the Honorable Louis D. 
Brandeis, at that time a noted corporation lawyer, had recorded in 
print his belief that bigness in American husiness had become a 
"curse" — not only from the standpoint of the effect of this big busi- 
ness in repressing competition in our industrial life and- in exercising 
a control over the direction and use of savings in the Nation, but 
particularly from the standpoint that such bigness was actually 
inefficient. In "Other Pe6ple's Money," Mr. Brandeis wrote: 

Bigness has been an important factor in the rise of the Money Trust: Big 
railroad systems, big industrial trusts, big public-service companies; and as 
instruments of these, big banks and big trust companies. J. P. Morgan & Co. 
(in their letter of defense to the Pujo committee) urge the needs of big business 
as the justification' for financial concentration. They declare that- what the}' 
euphemistically call "cooperation" is "simply a further result of the necessity 
for handling great transactions," that "the country obviously requires not only 
the larger individual banks, but demands also that those banks shall cooperate 
to perform efficiently the country's business," and that "a step backward along 
this line would mean a halt in industrial progress that would afi"ect every wage- 
earner from the Atlantic to the Pacific." The phrase "great transactions" is 
used by the bankers apparently as meaning large corporate security issues. 

Leading bankers have undoubtedly cooperated during the last 15 years in 
floating some very large security issues, as well as many small ones. But rela- 
tively few large issues were made necessary by great improvements undertaken or 
by industrial development. Improvements and development ordinarily proceed 
slowly. For them, even where the enterprise mvolves large expenditures, a 
series of smaller issues is usually more appropriate than single large ones. This is 
particularly true in the East where the building of new railroads has practically 
ceased. The "great" security issues in which bankers have cooperated were, with 
relatively few exceptions, made either for the purpose of effecting combinations 
or as a consequence of such combinations. Furthermore, the combinations which 
made necessary these large security issues or underwritings were, in most cases, 
either contrary to existing statute law, or contrary to laws recommended by the 
Irtterstate Commerce Commission, or contrary to the laws of business efficiency. 
So both the financial concentration and the combinations which they have served 
were, in the main, against the public interest. Size, we are told, is not a crime. 
But size may, at least, become noxious by reason of the means through which 
it was attained or the uses to which it is put. And it is size attained by com- 
bination, instead of natural growth, which has contributed so largely to our 
financial concentration.' 

At another point in his book, Mr. Brandeis says: 

The American people have as little need of oligarchy in business as in politics. 
There are thousands of men in America who could have performed for the New 
Haven stockholders the task of one "who guides, superintends, governs, and 

' "Other People's Money," Louis D. Brandeis, National Home Library edition, pp. 110, 111. 

128 



CONCENTRATION OF ECONOMIC POWEiB 22g 

manages," better than did Mr. Morgan, Mr. Baker, and Mr. Rockefeller. For 
though possessing less native ability, even the average businessnoan would hav^ 
done better than they, because , working under proper conditions. There is great 
strength in serving with singleness of purpose one master only. There is great 
strength in havitig time to give to a business the attention which i-ts^ difficult 
problems demand. And tens of thousands more Americans could be rendered 
competent to guide our important businesses. Liberty is the greatest developer. 
Herodotus tells us that while the tyrants ruled, the Athenians were no better 
fighters than their neighbors; but when freed, they immediately surpassed all 
others.^ 

All during the twenties, when thousands of corporations were 
disappearing through the processes of merger apd combination, 
sharp criticism found its way into print from men who were intimately 
acquainted with business and its problems. Close on the heels of 
Mr. Brandeis, a distinguished metallurgist and public accountant 
who had intimately known many inditstries, sounded a warning about 
merger and combination in American business. Mr. Ernest Salis- 
bury Suffem, writing in the New York Times Analyst for November 3, 
1913, said in an article entitled "The Apparent Failure of ijndustrial 
Eugenics": 

Knowledge and technical ability have given place to financial influence * * * 
We have learned that the limit of growth is soon reached at which a central con- 
trol is effective * * *. The idea that centralization and combination always 
produce increased efficiency and profit is a bubble that has been sadly pricked. 

A few years later, Mr. Archer Wall Douglass, who for many years 
served as chairman of the committee on statistics of the Chamber 
of Commerce of the United States, wrote in "The Handicaps of Big 
Business," in the Times Analyst for February 14, 1916: 

Great consolidations are not the surest way to efficiency in production * * * 
Mere size, especially if it be much extended, means vulnerability as well as 
strength * * *. The essential weakness of the large, extended organization 
is the failure to achieve, save in part, the very thing for which it is principally 
created; namely, the economies supposed to be brought about by concentration. 

Mr.-Siiffem was passing judgment on the first great merger move- 
ment in American business. Mr. Douglass was speaking at a time 
when there were already signs on the horizon that another merger 
movement was on the way. 

In 1926, in the middle of the second merger movement, a careful 
student of business. Prof. A. L. Bishop, of Yale University, writing in 
the Analyst for January 29, 1926, said: 

The acceptance of this idea (that the larger the business unit the more profitable 
the enterprise) as a basic principle in business expansion, at least in the field of 
industry, is unsafe. 

In 1929, at the very height of the second merger movement in Ameri- 
can industry, Dr. Willard Thorp, "a conservative student of business, 
later to be chief economist for Dun & Bradstreet and trustee of Asso- 
ciated Gas & Electric Co., wrote in "Recent Economic Changes in the 
United States," a report prepared for President Herbert Hoover by 
the National Bureau of Economic Research: 

The present mergers are unlike those of the ;^r »at combination period at the end 
of the nineteenth century. In the earlier in t mces the incentives were usually 
either the formation of a monopoly or prof is of some promoter. Tie present 
mergers often appear to be quickly followed 'i>\ new financing, thus implying that 
the desire for additional capital is an impor a t motive. A further incentive, in 

' "Other People's Money," Louis D. Brandeis, Nations' E ime Library edition, pp. 141, 142. 

2tU00.o — 41— No. i;^ 10 



230 CONCEiNTRATION OF ECONOMIC POWER 

certain industries, has come from modern marketing methods, in which the con- 
cern which is large enough to undertake national advertising has a definite ad- 
vantage over its smaller rivals. 

It has long been claimed that large-scale operation offered many potential 
■economies. It is evident that the most efficient size at which an industrial plant 
may operate has increased greatly during recent years. However, as regards 
combinations among such plants, the facts are entirely inadequate. The few 
available do indicate that as often as not, these potential economies are more than 
offset by real losses in efficiency. Over against this fact is the probability that the 
large concerns are taking an increased share of the Nation's business * * * 
Again, we conclude that this larger share in the Nation's business is not owing 
to ability to produce at a low* r c 't, but to grec^ter success in the field of marketing. 
An interesting side light on t is development is ihe present status of the Sherman 
and Clayton Acts, which tend to encourage combinations, since the merged com- 
panies can adopt a uniform marketing policy which would be illegal if under- 
taken by independents. 

Dr. Erwin H. Schell, professor of business management, wrote in 
the Annals of the American Academy for May 1930: 

The horizontal merger has been held to offer marked advantages to production. 

* * * Results, however, have been somewhat disappointing. 

Even the conservative New York Times commented editorially 
upon the consequences of the widespread mergers effected during the 
twenties, in the midsummer of 1930: 

These mergers and expansion programs were expected to result in economies in 
operation and management, but in many instances the falling off in business 
showed a number of glaring inefficiencies. 

Mi". Arthur .A.nderson, head of one of the largest accounting firms 
in the United States and a man intimately acquainted with the cost 
operations of business, wrote in the New York Times for August 24, 
1930: 

A large organization has much the same susceptibility to defective operation 
as has the small business, and in addition has substantial weaknesses peculiarly 
its own. * * * Properties may be added one after another too quickly 

* * * resulting in industrial indigestion. 

In February of 1933 as eminent and conservative a financier as 
Owen D. Young stated definitely to a congressional committee that 
the basic reason for the collapse of the Insull utilit}^ empire was size 
too big for any man to manage competently. Said Mr. Young: 

Great numbers of operating utilities with holding companies superimposed on 
the utilities, and holding companies superimposed on those holding companies, 
investment companies and affiliates, which made it, as I thought then and think 
now, impossible for any man, however able, really to grasp the situation. * * * 
But I saj^ it is impossible for any man to grasp the situation of that vast structure. 

Even in such a competitive ii:dustry as the automobile industry, 
Mr. Alfred P. Sloan of the Geiicral Motors Corporation spoke as 
follows :to a meeting of the comoany's sales committee, held July 
29, 1925: 

General ■ Motors should be more progressive in this and other directions. In 
practically all our activities we seem to suffer from the inertia resulting from our 
great size. It seems to be hard for us to get action when it comes to a matter 
of putting our ideas across. There are so many people involved and it requires 
such a tremendous effort to put something new into effect that a new idea is likely 
to be considered insignificant in comparison with the effort that it takes to put 
it across. 

I can't help but feel that General Motors has missed a lot by reason of this 
inertia. You have no idea how man\' things come up for consideration in the 
technical committee and elsewhere that are discussed and agreed upon as to prin- 
ciple well in advance, but too frequently we fail to put the ideas into, effect until 



CONCEiNTRATION OF ECONOMIC! POWER 131 

■competition forces us td do so. Sometimes I am almost forced to the conclusion 
that General Motors is so large and its inertia so great that it is impossible for us 
to really be leaders. 

Perhaps it would be safest for us to let the other fellow take the initiative and 
then be satisfied to follow him as best we can. It seems a pity, however, that 
with our resources and ability we can't be a little more aggressive. 

In 1931 Mr. Melvin A. Traylor, president of the First National 
Bank of Chicago, and also of the First Union Trust & Savings Bank, 
wrote: 

Every kind and character of combination and consolidation was made, regardless 
of economic advisability or the possibility of economies in management or in- 
creased profits therefrom. Little or no consideration was given to the nature of 
the businesses involved; in one instance, for example, soaps and candles were 
united. Such combinations and mergers were promoted and securities were sold 
on the theory that temporary earnings derived from a false demand would not 
only continue, but would forever increase. Furthermore, these securities were not 
sold to those in a position to buy, or who could buy for investment purposes, but 
rather to those less able to . buy — to men and women fascinated by high-power 
salesmanship and an inborn desire to gamble for high profits. Was such financial 
leadership calculated to inspire confidence or make for an economic stability which 
insures social welfare? I am afraid not. But financial leadership did not stop 
there. It actively promoted the purchase of equity stocks and split its own unit 
of stock par, in order, it is said, to bring its market values within the reach of the 
small investor. Financial leaders organized and promdted so-called investment 
trusts to give the small investor a chance to profit from wise financial leadership, 
made foreign loans of speculative value, and, altogether, followed the procession 
obviously intent upon getting theirs while the getting was good. 

* ' * * * * * * 

Ambition, cupidity, and greed have dictated policies, and trouble has been the 
result.' 

As noted an industrialist as James Farrell, president of the United 
States Steel Corporation, toward the end of the merger movement of 
the twenties, became alarmed at the march of size in American 
business, and declared openly to other steel masters that such size 
had become a danger. 

In 1932 the president of a great university commented on the 
merger movement of the twenties. Dr. Ernest M. Hopkins, president 
of Dartmouth University, who had been connected with the Western 
Electric Co., the Curtis Publishing Co., the Filene Store, and the 
New England Telephone Co., and -who was still a director in the 
Boston & Maine Railroad and a member of the Rockefeller Founda- 
tion, said, in a published statement to the press: 

I used to look upon a bank as an institution that was interested in the well-being, 
the welfare, of its clients. One went to a banker for counsel. When one's factory, 
or shop, or mercantile, or industrial establishment was ill, one looked to the banker 
as tp a physician. * * * But today, and for a number of years past, in this 
period of m.ergers and reorganizations, a great many of our banks have stood like- 
harpies, watching until a client shows signs of illness, and then rushing in to forec 
him into liquidation, into bankruptcy. The bank then takes a hand in reorganiz- 
ing the concern, makes a profit out of the reorganization and puts some of its men 
on the new directorate.* 



3 Quoted by Mr. Norman Hapgood in his foreword to the National Home Library Foundation's edition- 
of "Other People's Money" by the Honorable Louis D. Brandeis, at p. 34. 

* Quoted by Mr. Nornian Hapgood in his foreword to the National Home Library Foundation's edition 
■ of "Other People's Money" by the Honorable Louis D. Brandeis, at p. 30. 



THE PROBLEM OF SIZE IN AMERICAN BUSINESS 

Darge-sized corporations in American industry present two funda- 
mental economic problems. The first is the problem of whether such 
corporations are actually more efficient than small or medium-sized 
units in their industries. Even if such corporations are more efficient; 
there is still another problem to be considered. Is the greater effi- 
ciency of such corporations passed on to the consuming public in the 
form of lower prices as the result of free and fair competition? Or 
does such corporate size operate to suppress competition so that the 
efficiency achieved merely increases profits by widening the difference 
between costs and noncompetitive selling prices? 

The Commission knows that in many fields of industry, even if 
large corporations are efficient, the benefits of their efficiency are not 
enjoyed by the consuming public, since the effect of such corporate 
size has been to enhance prices, without advantage to the consumer. 
Consequently, no matter how efficient large corporations in industry 
may be, if they operate to repress competition their size cannot be 
defended on the ground that it is in the public interest. 

When free and fair competition prevails, business is under a constant 
spur to reduce costs through efficiency, and to share such savings with 
the public in the form of lower prices. The constant lov.-ering of 
costs in industry and the sharing of such savings with consumers is 
the vital process in a capitalistic system whereby standards of living 
are improved through the production and distribution of more wealth 
and a maximum employment of labor is achieved. 

On the other hand if very large corporations are actually less 
efficient than medium-sized or small corporations in American business, 
and if, in addition, the large size of such corporations enables them to 
suppress competition and thereby to frustrate the greater efficiency 
of medium-sized or small business, this size is indefensible from the 
standpoint of a sound and progressive capitalistic sj^stem. Under 
siich conditions the effect of large size in business is to protect, con- 
serve, and perpetuate inefficiency in business and to destroy capitalism. 

132 



APPENDIX A 
STATEMENT PREPARED BY MYRON W. WATKINS ' 

The object of this statement is to examine the relation of industrial 
'Consolidation to the general economy. This is the problem I have 
been asked to discuss. It implies certain limits upon the scope of the 
inquiry, and as it may be helpful in clarifying the nature of that 
problem, I propose at the outset to make those limitations explicit. 
First, we are not here concerned with either the structure or mode of 
functioning of banks aivd insurance companies, on the one hand, or of 
transportation and public utility systems, on the other. Agriculture 
is likewise outside our purview. What we are concerned with is the 
structural characteristics and mode of functioning of what is often 
called "trade and industry." This term applies to three fairly well 
demarked sectors of the current economy: Manufacture, distribution, 
and nonprofessional service (hotels and motion pictures, for example) 
■outside of the group already excluded as public utilities. 

Secondly, "industrial consolidation" is not synonymous with 
"business combination" or "economic concentration." Consolidation 
in industry connotes the possession by a single, unified group of a 
power to determine the vital managerial policies respecting output 
apd prices in a particular sphere, such power j^esting upon a propri- 
etary basis, directly or indirectly. It should be added at once, 
however, that the connection between ownership and control is more 
often indirect than direct. Those who exercise the control of big 
business units seldom own more than a small fraction of the property 
they administer. They are, above all, the beneficiaries of "absentee 
ownership." But whether through the device of proxy solicitation, 
of security disfranchisement, or pyramiding, of voting trust agree- 
ments, or otherwise, a given group gains control of the operations of 
one or a series of corporate enterprises, the power wielded has its basis 
in proprietary interests. On the other hand, the phrases "business 
combination" or "economic concentration" embrace a much wider 
range of developments in the organization of trade and industry. 
Specifically they include, in addition to industrial consolidation, the 
whole matter of trade agreements and all those ties and pressures 
which are traceable to the dependence of industry upon credit and 
the capital market. There is a popular belief that many influences 
of the latter sort are not only sinister but of a singularly compelling 
character and that they originate in Wall Street. There is no occasion 
here to discuss the validity of that impression. For the present 
statement is limited to a consideration of the relation of industrial 
•consolidation to the general economy. 

Finally, it may be noted by way of introduction that this last phrase 
denotes not a static thing, such as a given area, or a given institu- 
tional framework, of economic activity, but a dynamic process. What 

' Prepare'l-fei- the Temporary National Economic Committee, March 1940, this statement should be 
ri'earded as consisting solely of the opinions of the author. 

133 



134 CONCENTRATION OF ECONOMIC POWER 

we are primarily interested in, I take it, is not the relation of industrial 
consolidation to the competitive system, but its relation to the 
achievement of a tolerable solution of the economic problem. By that 
I understand such an allocation of resources among alternative lines 
of production, such a method of organizing and conducting productive 
operations, and such a distribution of the joint product as will yield 
in the long run the maximum returns in proportion to the efforts 
expended. There is no universal and perennial optimum "solution" 
for these three basic phases of the economic problem, of course. But 
the fundamental test of a tolerably satisfactory performance of each 
of these unescapable functions of an economic system is capacity for 
continuous adaptation. And the degree to which adaptation to 
constantly changing conditions (sources of "supply," technical 
methods, directions of demand) is facilitated is precisely the degree 
to which that much-abused term "economic equilibrium" is realized. 

So much by way of introduction. Like Cleveland, we are con- 
fronted with a condition, not a theory. Industrial consolidation is a 
fact. It once was not a fact. Sixty years ago it was only a prospect. 
A century ago, aside possibly from a few patent monopolies, there 
was no single enterprise controlling the output, much less the distri- 
bution, and still less the price, of as much as 10 percent of any produc 
manufactured in this country, I venture. Then came the railroads, 
steam and electric power, semiautomatic and automatic processing 
machinery, and, in their train, large-scale production. The number 
of productive enterprises in proportion to the aggregate output tended 
to decline. This tendency was not uniform, of course. In worsted 
manufacture, for example, it was more pronounced than in the carpet 
or stove industries. Nevertheless, though, by 1890 large-scale produc- 
tion had become characteristic of most established lines of manu- 
facture, there were few industries, outside of a handful of early 
"trusts" (oil, sugar, whisky) in which any single enterprise was 
responsible for as much as 25 percent of the national production. 
The exceptions, besides those noted above, were in every case new 
industries, such as photographic equipment and cash registers 

Undoubtedly industrial consolidation had its initial impetus and first 
manifestation in the growth of large-scale production. But it is im- 
portant to realize that this transformation of the structure of industry 
from local shops producing for a regional market to mechanized fac- 
tories producing for a national market had been substantially accom- 
plished before the birth of big business, in any proper sense of the 
term, around the turn of the century. Indeed, the constituent enter- 
prises which went into the so-called trusts were, in the majority of 
cases, essentially familj^ concerns, though they were already of a size 
sufficient to realize whatever technical advantages from large-scale 
output the existing state of technology atTorded. The best evidence 
of this is that the managers of the trusts themselves were content to 
continue the scale of manufacture previously developed until such time 
as the progress of technology made available, in some instances, addi- 
tional net advantages from increasing the size of individual plants. 
This was in practically every case a decade or more later, and in many 
cases to this day the scale of production, i. e., the size and rate of out- 
put of individual plants, has not mounted above the level attained 
when the consolidation occurred. 



CONCENTRATION OF ECONOMIC POWER 135 

The main factors in the pre-war trust movement, which represents 
the second stage in the development of industrial consolidation, were 
not technical economies but financial and strategic advantages. The 
financial factor had many facets. It included along with promoter's 
profits and prospective underwriting fees some genuine economic ad- 
vantages in the way of access to the capital market and a certain flexi- 
bility resulting from the diversification of corporate securities. But 
it is hard to escape the conclusion that the major 'Tmancial" advan- 
tage sought and secured by corporate consolidation was the opportunity 
afforded, through the dispersion of ownership interests and through the 
erection of intricate, pyramided, labyrinthine, corporate structures, 
for the manipulation of corporate funds, corporate policies and cor- 
porate accounts by "insiders," or irresponsible "outsiders," to their 
own enrichment and without regard to the interests of the enterprise, 
the workers, the stockholders, or, least of all, the consumers. It is 
difficult to escape that conclusion because the record of what has trans- 
pired in the actual course of events is so replete with^ evidence of 
utilization of the power thus conferred for the purposes indicated. 

The strategic advantages afforded by consolidation were primarily 
related to the control of the markets either for raw materials or for 
products, or for both. In reference to raw-material markets, in some 
cases, as in those of sugar and tobacco, for example, the concentration 
of purchasing power and the scope of operations might yield a highly 
advantageous bargaining position. In others, as in the aluminum, 
nickel, asbestos, and iron and steel industries, the strategy of buying 
up essential raw-material sources might be pursued to greater advan- 
tage and with less restraint. But in all cases the leverage afforded 
upon product prices from the presence in the market of a formidable 
enterprise of overtowering size appears to have been a major desider- 
atum in amalgamation. 

The financial policies of many of the pre-war consolidations were 
so reckless and the utilization of their strategic position so ruthless, at 
the outset, that as is well-known there ensued a violent reaction both 
among investors and among the public generally. This found politi- 
cal expression in virile "trust busting" campaigns and represented a 
large element in the Progressive movement. Big Business was put on 
the defensive and eventually was constrained to temper its tactics. 
The viability of "the shorn lambs" could not safely be disregarded, it 
was found. Nevertheless, in the post-war decade the industrial con- 
solidation movement was resumed with an accelerating tempo. 

The methods, the sphere, and the objectives of the merger move- 
ment of the twenties all differed appreciably, however, from those of 
the two preceding stages in the development of industrial consolida- 
tion. It was a less spectacular, less cataclj^smic, process. Piece-meal 
absorption of one competitor after another, but one at a time, was the 
rule, though there were exceptions. The sphere of consolidation was 
broader, embracing not only distribution proper, for example the 
chain-store development, but many "manufacturing" fields which 
might better.be termed "processing and packaging" industries, such as 
dairy products, bread, groceries, and drugs. Conspicvious, too, were 
the consolidations in service trades: hotels, restaurants, movie theaters. 
All this is aside from the noteworthy development in the same direc- 
tion in banking and public utilities, with which we are not here con- 
cerned. 



136 CONCENTRATION OF ECONOMIC POWE.R 

An analysis of the factors proximately, responsible for this third 
stage in the growth of industrial consolidation reveals the major in- 
fluence of commercial, or distributive, considerations, in contrast to' 
the technical factors in the first stage and the financial factors in the 
second stage. Take, for example, the Colgate-Palmolive-Peet merger 
in the soap industry. If this represented any change in the methods, 
scale,* or location of production, it has not been disclosed and is "not 
apparent. Nor were the flotation of securities and the manipulation 
of corporate finances evidently decisive factors leading to consolida- 
tion. This is not to say that exigencies and opportunities of the fore- 
going character may not have played some part in effecting the con- 
solidation, much less to say that they were wholly absent in other 
instances, for example, the McKesson & Robbins case. But the main 
factor in the soap merger as in a large majority of post-war consolida- 
tions, appears to have been prospective advantages in distribution. 
Trade-marks and trade names could be more fully utilized. Adver- 
tising expenditures coiild be made to "go farther," or perhaps a better 
expression would be that their potential effect on sales could be more 
nearly realized. Wasteful duplication in selling forces and distribu- 
tive facilities (warehouses and delivery equipment) could be reduced. 
Cross-freights could be minimized. I am not suggesting that stra- 
tegic factors associated with a dominant position in the market have 
been ignored in the development of industrial consolidation latterly. 
I am contending that in some instances supplementary to these fac- 
tors and in other instances largely independently of them, notably 
in the growth of chain-store systems, the opportunity to gain gen- 
uine distributive economies has given stimulus to expansion through 
absorption of competing enterprises. 

In the perspectiva afforded by this brief survey of the development 
of industrial consolidation, it should be clear that big business, mergers, 
giant corporations, are not all black; nor are they all white. Not aU 
are predatory; not all are prudential. Some represent a response to 
distressing exigencies; others fo promising opportunities. . We cannot 
ignore their differences. No more can we neglect the joint, collec- 
tive, aggregate significance of the transformation wrought in the 
structure . and mode of operation of the American economy by the 
development of enterprise units of such size and power. 

What, then, has been the actual relation of industrial consolidation 
to the general economy? What has been the practical effect of big 
business? One cannot answer such questions without first inquiring 
from what standpoint they are asked. From the purely investment 
standpoint mergers may or may not, in general, have been "success- 
ful." But whether, by and large; they have been highly profitable, 
moderately successful, or consistently unprofitable, the answer can 
furnish little illumination upon the question of whether the net results 
from the public standpoint have been salutary. 

I assume that the committee is primarily interested in an answer 
from the social standpoint. From thp,t standpoint, an adverse judg- 
ment upon industrial consolidation, taking the movement as a vrhole, 
seems to me inescapable. If one considers the last two stages of this 
development apart from the first, that conclusion is reinforced. There 
are three features of the outcome of industrial consolidation upon 
which this adverse judgment preeminently rests. Briefly they are: 
The human or psychological, the mechanical o. technological, and the 
cyclical or strictly "economic" results. There is time for only the 



CONCEiNTRATION OF ECONOMIC POWER 139 

my judgment a closer scrutiny of the facts disproves such an inter- 
pretation. If adequate account is taken (a) of variations in profit- 
abihty among industries, (b) of the varying effect of cyclical phe- 
nomena in different spheres, and (c), above all, of the incidence of 
inescapable risks attending the establishment of "going concerns," by 
the test of profits the consequences of merger are neutral. 

After all, why should it be otherwise? Consolidation has developed 
as a spontaneous business phenomenon. Business is run for profits. 
The merger movement would not only have ebbed, it would have 
stayed at the ebb, a generation ago if "normal" profits had. not been 
forthcoming. On the other hand, if it has been singularly "profitable" 
from the mvestment standpoint, there is little reason for supposing 
that it would not have proceeded much farther than it actually has. 
Certainly there was nothing in the anti-trust law "curb"^ as judicially 
interpreted since 1911, and especially since 1920, to have deterred 
such a development. 

The above should not be' taken as an assertion that there have 
been no lucrative gains, no "unearned increment," in the develop- 
ment .of industrial consolidation. A reminder may not be out of 
place that the discussion related to the profitability of mergers "from 
the private investment standpoint." There are other ways, as 
numerous as they ar6 subtle, to gain through or from mergers than 
by investing in them. Indeed, a study of the record of industrial 
consolidations will convince even the most skeptical, I am confident, 
that those who have made the real investments upon which they 
operate have been fortunate to fare no worse than they have. To cite 
only a single example, though it could be multiplied many times, 
when one member alone of the board of directors of one of the best 
known industrial consolidations can with the connivance of his asso- 
ciates divert corporate revenue in the amount of $2,160,000 to his 
personal account as remuneration, not for capital invested but solely 
for "services rendered," in a single year in the depth of the worst 
depression in history, there is no occasion for surprise that the rate 
•of profit on the "other people's money" actually invested in such 
enterprises should be no more than adequate to keep the "goos.e" on 
the nest. If this sort of thing may be done with impunity, as the 
Supreme Court itself has assured us it may — under corporation 
charters as now drafted and with corporate privileges as now granted — 
we have only ourselves to blame for such a perversion of the enterprise 
system. 

The restoration of business enterprise to responsible control is the 
solution of the problem of industrial consolidation. Size, we have 
been told, is no offense. If irresponsible management were once 
ended, we should soon find it no less true that size is no defense — in 
competition with efliciency. There will be no occasion, then, to 
limit size arbitrarily. Size will limit itself-^to a varying and ever- 
changing economic optimum. But the restoration of responsible 
control will not come by admonishing big business not to restrain 
trade. It will come only from a reconstruction of the corporate units 
of business enterprise themselves, a redefinition of the powers and 
privileges which a corporate franchise confers, and of the obligations 
it imposes. That means Federal incorporation. 

Myron W. Watkins, 

New York University. 



APPENDIX B 

STUDY OF PENNSYLVANIA-DIXIE CEMENT CORPORATION 
AND PREDECESSOR COMPANIES— THE MERGER AND 
ITS EFFECT ON OPERATIONS 

INTRODUCTION 

An investigation and study has been made of the records of the 
Pennsvylania-Dixie Cement Corporation from 1927 to 1938, inclusive, 
and of the records of four predecessor operating cement companies, 
for 5 years and 7 months prior to their consohdation, in 1926, to 
form the Pennsylvania-Dixie Cement Corporation, together with 
other data described below. 

This investigation and study was authorized and directed by the 
Federal Trade Commission, acting as an agency for the Temporary 
National Economic Committee, in order to determine the purpose 
of the merger and what economies were hoped for arfd realized. 

This report shows that the idea for the consolidation originated 
with a banking syndicate, headed b}^ the National City Co. and 
Hemphill, Noyes & Co., which is reported to have approached the 
controlling stockholders of the Dixie Portland Cement Co., Clinch- 
field Portland Cement, Co., Pennsylvania Cement Co., and the 
Dexter Portland Cement Co. and made them attractive offers for 
their properties. The acceptance of the offers enabled the syndicate 
to form the Pennsylvania-Dixie Cement Corporation and market its 
securities to the general public at a handsome profit to itself. In 
the process, the assets acquired by the new company were recorded 
at values approximately 100 percent in excess of the amounts at which 
they had been recorded on the books of the predecessor companies, 
and the public through its purchase of the securities of the Penn- 
sylvania-Dixie Cement Corporation at inflated values have suffered 
heavy loss. 

The study also demonstrates that no operatijig economies were 
achieved as the result of the consolidation. Furthermore it appears 
that the controlling stockholders of the various predecessor com- 
panies gave little consideration to the desire to achieve operating 
economies when the consolidation was being con^d'ored. 

SOURCES OF DATA FOR REPOI^ 

Several conferences were held with officials of the Pennsylvania- 
Dixie Cement Corporation at its New York offices iD order to ascer- 
tain the location of records showing the results of the operations of 
the four cement companies which were combined, dming 1926, to 
form Pennsylvania-Dixie Cement Corporation; and likewise the 
location of data showing the details of the operations of the latter 
company. 
140 



CONCENTRATION OF ECONOMIC POWER 14J 

Officials of the Penngylvania-Dixie Cement Corporation stated that 
their company was interested only in acquiring the assets of the pre- 
decessor companies, subject to the liabilities of said companies; 
and that the detailed operating records of the predecessor companies 
were not acquired by the corporation. Also that if such records are 
still in existence they are most likely scattered over a wide territory 
within the eastern portion of the United States, being located at or 
near the operating plants of the predecessor companies. 

Records of the Pennsylvania-Dixie Cement Corporation showing 
summaries of the operations of the various plants acquired as above 
are kept at the general offices of the company in New York City. 
However, officials of the company stated that they were extremely 
busy preparing their defense in' the matter of the complaint of the 
Federal Trade Commission against the cement companies, with year- 
end closings, and with various reports to Government agencies, such 
as the Securities and Exchange Commission. The}^ stated fm-ther 
that much of the information was available, in the form desired by 
the committee, at the New York Stock Exchange and at the New 
York office of the Securities and Exchange Commission; and then 
requested that as much of the information as possible be obtained 
from such sources. 

A search of the records of the New York Stock Exchange and those 
located at the New York office of the Securities and Exchange Com- 
mission necessitated obtaining further data directly from the com- 
pany's records. After intimating, at an early conference, that it 
would not be necessary to subpena any data which the company 
could furnish from its own files, counsel for the company subsequently 
requested a subpena to cover material which had been assembled at 
the request of representatives of the committee. Accordingly, a 
subpena was obtained and served upon the secretary of Pennsylvania- 
Dixie Cement Corporation to cover such material. 

Data was obtained froni the New York offices of Pennsylvania- 
Dixie Cement Corporation principally as follows: Balance sheets for 
each of the predecessor companies for the years 1921 to 1925, inclu- 
sive; income statements for each of the predecessor companies for the 
years 1921 to 1925, inclusive; statement of production and shipments 
■of the predecessor companies for the years 1921 to 1925, inclusive; and 
for Pennsylvania-Dixie Cement Corporation for the years 192Q to 
1938, inclusive; capacity figures for the latter company for the period 
1926 to 1938, inclusive; statement of average number of office and 
sales department employees of the Pennsylvania-Dixie Cement Cor- 
poration for the years 1926 to 1938, inclusive; and copies of agree- 
ments between stockholders or their representatives, in negotiations 
for the predecessor companies with the National City Co. and Hemp- 
hill, Noyes & Co., relative to the sale of the assets of the predecessor 
companies to the Pennsylvania-Dixie Cement Corporation. 

Brieflj'^, data for fhis report were obtained from sources principally 
as follows: 

(a) Company's records. — The data described in detail above, sup- 
plemented by explanatory information, was furnished by representa- 
tives of the Pennsylvania-Dixie Cement Corporation. ' 

(6) New York office, S. E. C. — Financial statements of the pre- 
decessor companies for the years 1924, 1925, and tlje fiscal period 
January 1 to July 31, 1926, and flnancial data and other ^nforhiation 



142 CONCENTRATION OF ECONOMIC POWER 

as contained in the annual reports of the Pennsylvania-Dixie Cement 
Corporation to its stockholders. 

(c) New York Stock Exchange. — Statements filed with committee ort 
stock list, required by the exchange for securities listed with it for sale. 
These statements showed authority for and purpose of issue for bonds, 
preferred and common stock issued by Pennsjdvania-Dixie Cement 
Corporation, and also copies of the offering statements for each class 
of security. , ' 

(d) Synd'^cate agreements providing full details of the exchanges 
of Pennsylvania-Dixie Cement Corporation's securities for the assets, 
and liabilities of the predecessor companies were not available at the 
New York offices of Pennsylvania-Dixie Cement Corporation. The 
syndicates which handled the above-mentioned securities were headed 

' by the National City Co., which has since gone out of business, and 
HemphUl, Noyes & Co. A conference was held with Leo M. Blancke, 
a partner of Hemphill, Noyes & Co. Mr. Blancke furnished a copy 
of the syndicate's offer to cause the assets and businesses of the prede- 
cessor companies, subject to the liabilities, to be conveyed, transferred, 
and delivered to Peni»ylvania-Dixie Cement Corporation. The 
details of such transfers are further described elsewhere herein. 

(e) Financial Journals; The Statistical Abstract; Minerals Yearbook; 
Commercial and Financial Chronicle; and the New York Times. — 
Various supplemental data such as prices of products for th'e industry,, 
total production; business trends, prices of securities, and market con- 
ditions were obtained from these sources. 

HISTORY OF PREDECESSOR COMPANIES 

The .Pennsylvania-Dixie Cement Corporation was organized in 
Delaware, September 16, 1926, to acquire the assets, liabilities, and 
businesses of four cement companies. These four companies were 
the Dexter Portland Cement Co., the Dixie Portland Cement Co., 
the Pennsylvania Cement Co., and the Clinchfield Portland Cement 
Corporation. In addition to the assets and liabilities of the above 
companies, the Pennsylvania-Dixie received at the time of the con- 
solidation* through the sale of its securities approximately $5,200,000 
in cash, $2,200,000 of which was used to retire bonds of the Dexter 
Portland Cement Co. and the remaining $3,000,000 to be used for 
working capital. 

The four predecessor cement companies were independent companies 
of similar size. The total assets of these companies, exclusive of good- 
will, on July 31, 1926, less than 2 months before the completion of the- 
consolidation, ranged from $4,577,716 for the Dixie Portland Cement 
Co. to $5,474, 925"for the Dexter Portland Pement Co. These com- 
panies were also similar in respect to their lack of long-term debt. 
None of the companies during the 5 years prior to the consolidation 
possessed any appreciable amounts of borroA^ed funds. The principal 
exception to this lack of funded debt was a bond issue of $2,200,000 
floated by the Dexter Portland Cement Co. just a few months prior 
to the consolidation in connection with its acquisition of the Penn 
Allen Cement Co. 

Although the consolidation in 1926 welded together four cement 
companies, five companies were really involved. In the latter part of 
1925 the Dexter Portland Cement Co., one of the four companies, 
purchased the Penn Allen Cement Co. In' terms of total assets, the- 



CONCENTRATION OF ECONOMIC POWER 



143 



Dexter was somewhat larger than one and one-half times the size of 
the Penn Allen. However, the combined assets of both companies 
approximated the size of the other companies entering into the con- 
solidation In acquiring the assets, liabilities, and business of the 
Penn Allen, the Dexter paid, roughly, $2,200,000, which was financed 
through the issuance of $2,200,000 par value of bonds. This amounted 
to slightly less than $800,000 in excess of the net book value of the 
Penn Allen. As the result of this consolidation, long-term debt of 
significant amount appeared for the first time in the capital structure 
of any of the five companies, subsequent to January 1, 1921, the 
beginning of the period covered by this study. The Pennsylvania 
Cement Co. had in 1923 rather heavy short term borrowing of ovel* 
$1,390,000 but this amount was reduced to less than $370,000 the 
following year. 

The four companies, consolidated to form the Penn-Dixie, operated 
seven plaiits, each a completely integrated producing unit, with large 
nearby reserves of high-grade raw materials. The following tabula- 
tion sets forth the location of these plants and their annual capacity. 
The plant formerly owned by the Penn Allen is shown as belonging 
to the Dexter Cement Co. 



Company 


Location 


Annual ca- 
pacity 


(1) Dexter: 

Plant No. 1 


Nazareth, Pa . 


1, 300, 000 
1,200,000 

1, 940, 000 
1,060,000 
2,000,000 

1,500,000 
1, 100, OOO 

10, 000, OOO 


Plant No. 2 .- 


do 


(2) Pennsylvania: 

Plant No. 1 : 


Bath, Pa 


Plant No. 2 


Portland Point, N. Y. 


(3) Dixie 


Richard City, Tenn 


(4) Clinchfleld: 

Plant No. 1 


Kingsport, Tenn 


Plant No. 2 


Clinchfleld, Ga 







As the result of the absence of funded debt, the predecessor com- 
panies financed their expansion and development largely by the rein- 
vestment of earnings, which were from time to time made part of 
permanent capital through the issuance of stock dividends. The data 
concerning these stock dividends are included in the further -details 
of the predecessor companies which follow. 

Dexter Portland Cement Co. was incorporated under the laws of 
Pennsylvania in 1899, with an authorized capital of 200 shares with 
a par value of $50 per share. From this modest beginning, capital 
stock was increased from time to time, until as of July 31, 1926, the 
issued capital of this company consisted of the following: 40 shares 
of preferred stock and 49,640 shares of common stock, each with a 
par value of $40 per share. In addition, the Dexter had $2,200,000 
par value 6 percent gold bonds outstanding arising from its acquisition 
of the Penn Allen Cement Co. in January 1926. 

Originally the par value of the stock was $50, but was reduced to 
$40 per share in 1917 by a liquidating dividend of $10 per share. 
During the period from 1899 to the end of 1905, in addition to common 
stock, the company issued 2,500 shares of preferred stock and $300,000 
principal amount of debenture bonds, both issues being convertible 
into common stock. These conversion privileges were later exer- 
cised to the extent of the entire amount of the preferred stock and 



144 CONCENTRATION OF ECONOMIC POWER 

$280,000 debentures, the balance of the bonds amounting to $20,000 
lieing retired for cash. The capitaUzation of the company was fur- 
ther increased by stock dividends paid on common-stock equivalent 
to 150 r .cent of the outstanding common stock in 1920, 50 percent 
in 1923, 33}^ percent in 1925. • 

On July 29, 1926, through its representative John A. Miller, the 
Dexter Co., entered into an agreement with a syndicate headed by 
the National City Co. and Hemphill, Noyes & Co. providing for its 
consolidation with three other cement companies to form Pennsyl- 
Tania-Dixie Cement Corporation. 

Pennsylvania Cement Co., was incorporated under the laws of 
Pennsylvania in 1899, with an authorized capital of 2,000 shares of 
common stock, each share of which had a par value of $100. Capital 
stock was increased from time to time until 1922, when a 150-percent 
stock dividend further increased its outstanding stock to $1,250,000. 
The outstanding stock of this company remained the same until 
July 26, 1926, when tlu-ough certain of its stockholders it entered into 
an agreement with a syndicate headed by the National City Co., and" 
Hemphill, Noyes & Co. looking to its consolidation with the three 
other cement companies, mentioned above, to form Pennsylvania- 
Dixie Cement Corporation. , 

During 1918 the Pennsylvania Cement Co', leased a cement plant, 
located at Portland Point, N. Y., belonging to the Cayuga Operating 
Co., Inc., a New York corporation. This ^ease expired June 30, 
1919, and at the expiration of the lease the plant was purchased by 
Pennsylvania Cement Co. In 1920 the power plaiit of the Cayuga 
Co., also located at Portland Point, was likewise piu-chased by the 
Pennsylvania Cement Co. 

Dixi» Portland Cement Co., was organized under the laws of West 
Virginia, in 1906. Originally its authorized capital stock was 11,000 
shares of 7 percent cumulative preferred and 16,000 shares of common 
stock, each of $100 per value. 

During 1923 Dixie Portland Cement Co. issued a common-stock 
■dividend amounting to 31 percent of its outstanding stock. The 
following year 1924 outstanding capital stock was further increased 
by the deck/ation of a common-stock dividend of 25 percent. 

As of July 23, 1926, when this company entered into an agreement 
with the National City Co., and Hemphill, Noyes & Co., looking to 
its consolidation with the three other cement companies, named above, 
to form Pennsylvania-Dixie Cement Corporation, it had outstanding 
capital stock of 9,933 shares of 7 percent cumulative preferred and 
24,950 shares of common stock, each with a par value of $100 per share. 
At this time the Dixie Portland Cement Co., owned all of the common 
stock of the Dixie Sand & Gravel Co. 

. Clinchfield Portland Cement Corporation was organized under the 
laws of Virginia, in 1910, with an authorized capital of $900,000. 
Common and preferred stock was issued at various times so that at 
July 24, 1926, when it entered into an agreement with the National 
City Co., and Hemphill, Noyes & Co., for the purpose of its consoli- 
dation with three other cement companies to form Pennsylvania- 
Dixie Cement Corporation, total capital stock amounted to $2,657,000 
consisting of 9,564 shares of 7 percent oumulative preferred and 17,006 
shares of common stock, each class of stock having a par value of 
$100 a share. 



CONCENTRATION OF EX50N0MIC POWER J45 

At the time it entered into the above ; indicated agreement the 
Chnchfield Portland Cement Corporation owned all of the stock of 
the Marcem Quarries Corporation, a concern with a capital of $300,000. 
The entire output of the Marcem Quarries Corporation was shipped 
to the Kingsport Plant of the Clinchfield Portland Cement Corpora- 
tion. 

There are presented on the following pages income statements and 
balance sheets of the predecessor companies for 1921 to July 31, 1926, 
inclusive. 



264905— 41— No. 13 11 



146 



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157 



THE CONSOLIDATION OF PREDECESSOR COMPANIES TO FORM PENNSYL- 
VANIA-DIXIE CEMENT CORPORATION 

During July 1926, a syndicate headed by the National City Co. and 
Hemphill, Noyes & Co., investment bankers, entered into separate 
agreements with four independent operating cement companies for 
the purpose of combining these companies into one large consoli- 
dated company. The seven plants of these four cement companies 
were well integrated units, scattered along the eastern and southern 
regions from New York to Georgia. The consolidation was primarily 
directed to the consolidation of the capital structures of the four 
cement companies. In this type of horizontal grouping of companies 
economies resulting from integration of personnel and productive 
facilities are limited. 

The agreements between the syndicate and the representatives of 
the common stockholders of the constituent cement companies pro- 
vided that the syndicate would use its best efforts to cause a consoli- 
dated corporation to be oi^anized for the purpose of acquiring the 
assets, liabilities, and businesses of the constituent companies. The 
names of the constituent companies andlhfe dates on which agreements 
with the syndicate were entered into are as follows : 

Date of agreement and names of constituent companies: 
July 23, 1926: Dixie Portland Cement- Co. 
July 24, 1926: Clinchfield Portland Cement Corporation. 
July 26, 1926: Pennsylvania Cement Co. 
July 29, 1926: Dexter Portland Cement" Co. 

The agreements further provided that, if consummated, securities 
of the proposed consolidated company would be given as consideration 
for the net assets of the predecessor companies. The new company 
was to have a capitalization of $13,000,000 par value of bonds, 
$13,000,000 of preferred stock: with a par value of $100 a share, and 
400,000 shares of common Stock having no par value. The greater 
part of these securities of the new company were offered as considera- 
tion for the " acquisition of the predecessor companies and were as 
follows : 





Securities of proposed consolidated 
company to be issued as considera- 
tion 


Namo or predecessor companies 


Stock 


Bonds— prin 
cipal amount 




Common, 
shares 


Preferred, 

shares 


Dixie Portland Cement Co... 


59,533.33 
51,111.11 
98, 888. 88 
38, 272. 00 


26,790.00 
25,875.00 
34,904.01 
17, 224. 40 


$2, 679, 000. 00 
2,875,000.00 
3, 703, 703. 70 
1,722,240.00 


Clinchfleld Portland Cement Corporation ^ 


Pennsylvania Cement Co 


Dexter Portland Cement Co. - .... . 






237, 805. 32 


104,791.41 


10, 979, 943. 70 
, — 



According to these agreements, the syndicate offered to purchase 
back from the common stockholders of the predecessor companies all 
of the above securities of the Pennsylvania-Dixie Cement Corpora- 
tion. Terms offered the Dixie, Clinchfield, and Dexter stockholders 
were identical, in that the syndicate agreed to pay these stockholders 
cash equal to the par value of the bonds and preferred stock, and $4/v 



158 CONCEJsTRATIOX OF ECONOMIC POWER 

a share for the common stock of the Pennsylvania-Dixie Cement 
Corporation. Less favorable terms were granted the stockholders of 
the Pennsylvania Cement Co. Such stockholders were to receive for 
their Penn-Dixie securities, $90 for each $100 par value of bonds, 
$95.50 for each par value of preferred stock, and $37.50 for each 
share of common stock. Under this provision of the agreements the 
stockholders .of the predecessor companies were to receive the fol- 
lowing amounts of cash for their Pennsylvania-Dixie Cement Cor- 
poration securities : 

Predecessor companies: Cath 

Dixie $8,036, 985 

Clinchfield 7,762,495 

Pennsylvania . 10, 000, 000 

Dexter -" 5, 166, 720 

Total 30,966,200 

The securities to be acquired by the syndicate for cash were to be 
distributed to the general public. To reduce the amount of securities 
to be distributed, the syndicate offered to the stockholders of the 
predecessor companies a bonus as an inducement to retain the 
securities which were received by them under the agreements. Terms 
of the bonus varied slightly between the various predecessor com- 
panies, though in general the syndicate agreed to give to Ihe stock- 
holders one-ninth share of preferred stock for each share of preferred 
stock, and one-fifth share of common stock for each share of common 
stock retained by them. 

However, stockholders retaining the securities of the new company 
and accepting the bonus were required as consideration on their part 
to agree, among other conditions, not to dispose of any of such 
securities for a period of 6 months from date of acceptance of the 
offer. This clause was simply to protect the syndicate in its distribu- 
tion of the securities tq»^he general public. 

Having concluded agreements with the companies entering into the 
consolidation, the syndicate completed arrangements contemplated 
in the above agreements with the newly formed Pennsylvania-Dixie 
Cement Corporation. The syndicate made an offer, dated September 
18, 1926, to the Pennsylvania-Dixie Cement Corporation which 
carried out and supplemented the terms of the previously mentioned 
agreements with the predecessor companies. Penn-Dixie accepted 
the offer on the saiije day, September 18, 1926. The agreement 
provided that the syndicate in addition to causing the assets of the 
predecessor companies, subject to their liabilities, to be conveyed to 
the Pennsylvania-Dixie Cement Corporation was to pay cash in the 
amount of $5,256,728.65 to the Penn-Dixie for use as working capital 
and to retire $2,200,000 principal amount of bonds of the Dexter 
Portland Cement Co. This cash payment was composed of two 
separate sums. The principal sum resulted from the purchase by 
the syndicate of 112,000 shares of common stock at $35 a share, which 
amounted to $3,920,000. The remaining cash payment of 
$1,336,728.65 represented a consideration by the syndicate in addi- 
tion to its services, for the securities which the syndicate received 
from the Pennsylvania-Dixie Cement Corporation. 

Before estimating the profits to the syndicate, let us see what the 
stockholders of the predecessor companies received for their net 
assets. The amount of bonds received by the stockholders of two 



CONCENTRATION OF ECONOMIC POWER ^59 

of the companies, the Dixie and the Clinchfield, was $2,336,151.77 
less than originally agreed as the result of the operation of a condi- 
tional provision in the agreements with the predecessor company's 
stockholders. This provided that should any of the companies retire 
any of their preferred stock prior to the transfer of their assets and 
liabilities to the new comp&,ny, the amount of bonds to be issued as 
consideration to the common stockholders of such companies would 
be reduced by an amount equal to the par value of the securities 
retired. The Dixie Portland Cement Co. retired 10,242 shares of its 
preferred stock with a par value of $100 a share, which accounted for 
the net decrease of $1,024,200 of bonds which it received. The 
decrease of $1,311,951.77 in amount of bonds received by the Clinch- 
field Portland Cement Corporation was accounted for by the retire- 
ment of 12,840 shares of its preferred stock. The remaining $27,951.77 
represents minor adjustments concerning current asset position pro- 
vided for in the original agreement with the syndicate. Although not 
confirmed, it appears that the moneys to effect the retirement of 
preferred stock were advanced by the syndicate, since the bonds 
intended for the Dixie and the Clinchfield stockholders were turned 
over to the bankers. In all other respects, the securities to be given 
the stockholders of the predecessor companies under the agreement 
of September 18, 1926, remained identical with the amounts to be 
received by the stockholders under their original agreements with 
the syndicate. 

While accurate determination of the profits of the syndicate is 
lacking, it appears from records available to the committee that gross 
profits to the syndicate amounted very close to $5,400,000. Firms 
arid persons assisting in the distribution of the securities of the Perm- 
Dixie to the general public shared in the division of this sum. How- 
ever, all expenses incident to the consolidation such as fees of the 
accountants, lawyers, and engineers were not met from these gross 
profits. Contracts between the syndicate and the stockholders of 
the predecessor companies and with the Penn-Dixie provided that all . 
such expenses should be borne by Penn-Dixie. An officer of Penn- 
Dixie stated that these expenses were in the neighborhood of $300,000. 

The records indicate that the syndicate marketed all of the bonds 
and preferred stock of the Penn-Dixie. They also distributed 300,000 
shares of the common stock. It appears that the remaining 100,000 
shares of common stock went to the stockholders of the predecessor 
companies. Acting under one of the clauses in their contracts with 
the syndicate, these stockholders retained 80,000 shares of common 
stock received as part of the consideration for the transfer of the 
assets and liabilities of their companies to the Penn-Dixie. As the 
result of the retention of thes^ securities by the stockholders, the 
syndicate was required to give them as a bonus for their action 20,000 
shares of common stock of the Penn-Dixie. 

The following table 3 presents in summary form, the receipts, costs, 
and gross profits to the syndicate iri the acquisition and distribution 
of the securities of the Pennsylvania-Dixie Cement Corporation. 



160 



CONCEINTRATION OF ECONOMIC POWER 



Table 3. — Receipts, costs, and gross profit to the syndicate in the acquisition and 
distribution of securities of the Pennsylvania-Dixie Cement Corporation • 

RECEIPTS FROM SALE OF PENN-DIXIE SECURITIES 



Security 



Par value or 

number of 

shares 



Price 



Cash 
receipts 



Common stock (shares) 

Preferred stock 

Bonds --- 



300,000 
$13,000,000 
$13,000,000 



$43.00 
99.00 
99.50 



$12, 900. 000 
12, 870, 000 
12,935,000 



38, 705, 000 



COST TO SYNDICATE TO ACQUIRE PENN-DIXIE SECURITIES 

Cash pajrments to Penn-Dixie: ' 

Purchase from company of 112,000 shares of common stock at $35 a share. $3, 920, 000. 00 
Cash payment under terms of agreement with company 1,336,728.65 

Advances for retirement of preferred stock: 

To Dixie Portland Cement Co.. 1,024,200.00 

ToClinchfleld Portland Cement Co 1,311,951.77 



$5, 256, 728. 65 



2, 336, 151. 77 



Cash payments to stockholders of predecessor companies for: ' ■ 

Common stock at $45 a share -; 7,101,239.40 

Preferred stock -.-- - 10,322,073.00 

Bonds - -- - - 8,273,421.23 

■— 25, 696, 733. 63 

33, 289, 614. 00 

Gross profit to syndicate (subject to distributing expenses) 5,425,386.00 

1 For use as working capital, and to retire $2,200,000 principal amount of Dexter Portland Cement Co. 
bonds. 

' Represents highest possible cost to syndicate to acquire 157,805.32 shares. It is quite possible that a 
number of these sliares were purchased by the syndicate at $37.50 a share. 

The banking or promoting syndicate of the National City Co., and 
Hemphill, Noyes & Co., called in other bankers to assist in the dis- 
tribution of the securities of the Pennsylvania-Dixie Cement Corpora- 
tion. Three separate underwriting syndicates were formed to dis- 
tribute the three classes of Penn-Dix:ie securities. The composition 
of these syndicates was practically the same. The National City Co. 
and Hemphill, Noyes & Co. headed both the preferred stock and bond 
syndicates. Other bankers participating were Homblower & Weeks, 
Cassatt & Co., Rogers, Caldwell & Co., Mitchell, Hutchins & Co., 
and Bond, Goodwin & Tucker, Inc. All of the above banking fiiTQS 
participated in the common stock syndicate with the exception of the 
National City Co. This syndicate was headed by Lehman Bros. 

Copies of the agreements between the syndicate and the stock- 
holders of the predecessor companies and between the syndicate and 
the Pennsylvania-Dixie Cement Corporation are contained in the 
appendixes No. 1 to No. 5, inclusive. 



INTANGIBLES 

In the process of consolidation of the Pennsylvania-Dixie Cement 
Corporation in September 1926, almost $13,000,000 of intangible 
value was brought on the books of the new company. This repre- 
sented an increase of approximately 100 percent in the value of the 
fixed assets of the new company over the value of the same assets as 
recorded on the books of the predecessor companies. Ford, Bacon & 
Davis, Inc., appraisal engineers, engaged by the banking syndicate of 
the National City Co. and Hemphill, Noyes & Co. to^ examine and 
appraise the properties involved in the proposed consolidation, re- 



CONCENTRATION OF ECONOMIC POWER 



161 



ported that the reproduction value of these properties exceeded 
their book value by almost $13,000,000. The net book value of these 
fixed assets prior to the consolidation was close to $13,000,000; after 
the consolidation their net book value was approximately $26,000,000, 
In connection with this revaluation, it should be added that the Penn- 
sylvania-Dixie Cement Corporation stated in information submitted 
to the stock list committee of the New York Stock Exchange in 
December 1926, that the commercial value of these same properties 
had been appraised at $34,762,000. 

The entire amount of the intangible value created at the formation 
of the Pennsylvania-Dixie Cement Corporation has been since written 
off. Table 4, which follows, sets forth the manner in which this has 
been accomplished. 

Table 4. — Intangible value included in the accounts of the Pennsylvania- Dixie 
Cement Corporation and the manner in which such value was written off 





Intangible 
value at be- 
ginning of year 

(2) 


Write-offs of intangibles accomplished 
by charges 


Total— sum of 
columns 3, 4, 5 

(6) 




Year 
(1) 


Against In- 
come ' 

(3) 


Against 
special re- 
serve of sur- 
plus " 

(4) 


Against capital 
surplus prmci- 
pally created 
by reduction in 
value of pre- 
ferred stock 

(5) 


Intangible 

value at end of 

year 

(7) 


19261 


$12,917,799.61 
12, 879, 607. 61 
12, 658.901. 62 
12, 270. 178. 76 
12, 083, 804. 65 
11,942,860.07 
11,761,452.81 
11,496,772.61 
11,116.648.61 
10, 647. .366. 61 
10, 085, 867. 61 
9, 399, 307. 61 


$38,292 
131,469 
106, 016 
84, 534 
132, 379 
168. 499 
259, 838 
380. 124 
469, 282 
561, 499 
686,560 






$38, 292. 00 
220, 605. 99 
388, 722. 86 
186.374.11 
140, 944. 58 
181, 407. 26 
264, 680. 20 
380, 124. 00 
469, 282. 00 
561, 499 00 
686, 560. 00 
9,399,307.61 


$12, 879, 507. 61 


1927 


$89. 136. 99 
282, 706. 86 
101,840.11 

8, 565. 58 
12,908.26 

4, 842. 20 




■ 12, 658, 901. 62 


1928 




12, 270, 178. 76 


1929. 




12,083,804.65 


1930 




11,942,860.07 


1931 




11,761,452.81 


1932. .. . 




11,496.772.61 


1933 


' 


11,116,648.61 


1934 






10, 647, 366. 61 


1935 






• 10,085,867.61 


1936 






9, 399, 307. 61 


1937. . 




$9, 399. 307. 61 














Total-. - 




3, 018, 492 


500,000.00 


9, 399, 307. 61 


12, 917, 799. 61 











1 Sept. 23, 1926, to Dec. 31, 1926. 

' These charges against income included in charges for depreciation. 

It will be noted that of the. $12,917,799.61 of intangible value orig- 
inally present in the accounts, $3,018,492 was written off by charges 
against income in the fonn of depreciation and depletion allowances. 
That is, the amounts shown in column 3 represent the difference be- 
tween the annual depreciation charges computed on a book basis and 
such charges computed on a cost basis. 

The remaining $9,899,307.61 was written off against - capital ac- 
counts. At the end of 1927 a special surplus reserve of $500,000 for 
property betterments and improvements was created. Against this 
reserve were charged certain units of the company's manufacturing 
equipment and property which were abandoned or had become ob- 
solete, the value of which had not been completely amortized by annual 
depreciation charges. 

In 1937 the company concluded that the intangible value, the bulk 
of which yet remained, should be eliminated from their records. To 
accomplish this, the value of its 7 percent cumulative preferred stock 
was reduced from a par value of $100 a share to a stated value of $25 

264905 — 41— No. 13 12 



162 CONCEINTRATION OP ECONOMIC POWER 

a share. This resulted in the creation of a capital surplus of $9,090,000. 
This amount, together with $309,307.61 of sui*plus was applied against 
the intangible values contained in the fixed assets. 

In addition to the $13,000,000 of intangible value arising at the 
time of the formation of the Pennsylvania-Dixie Cement Corporation 
in 1926, one of the predecessor companies, the Dexter Portland Ce- 
ment Co., listed as one of its assets, goodwill, amounting to $797,379.11, 
This occurred as the result of the acquisition of the Penn Allen Cement 
Co. in January 1926, by the Dexter Portland Cement Co., the cost of 
the Penn Allen being in excess of its book value by this amount. 

RATES OF RETURN ON INVESTMENT 

Having considered the history and consolidation of the predecessor 
companies to form the Pennsylvania-Dixie Cement Corporation, 
attention is now given to the succ.ess of that consolidation as measured 
by earnings on investment. In determining the success of any 
business the amount of profit must be related to the capital employed 
in the production of the profit. Many factors influence the rate of 
profit, but all must operate or be expressed through the rate of profit. 
Over the years, the rate of ii-eturn on investment provides the most 
critical test for judging the efficiency of a business enterprise. Table 
5, which follows, presents the rates of return for the Pennsylvania- 
Dixie Cement Corporation for the years 1927-38 and for the pred- 
ecessor companies as a group for the years 1921-25. 

Rates of return were computed on the total investment and on 
stockholders' investment before deducting provisions for the pay- 
ment of Federal income and profits taxes from earnings and after 
deducting appreciation from investment. The total investment con- 
sists of common and preferred stock, surplus, surplus reserves, re- 
serves for Federal income and profit taxes, and long-term debt. 
The stockholders' investment consists of the foregoing with th€ 
exception of long-term debt. • In computing the rates of return th( 
investments were averaged as of the beginning and end of the year. 



CONCENTRATION OF ECONOMIC POWER 



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CONCENTRATION OF ECONOMIC POWER 1^5 

The table shows that the rates of return on total investment for the 
predecessor companies steadily increased from slightly less than 10 
percent for 1921 to more than 27 percent by the end of July, 1926, 
just 2 months before the consummation of the consolidation. Later 
figures for the consolidated companies are not available. Rates of 
return on total investment of the Pennsylvania-Dixie Cernent Cor- 
poration, based on calculations eliminating the effect of intangible 
value from both income and investment, were considerably below 
rates earned by the combined companies prior to the consolidation. 
In 1927, the first full year's operation of the new company, rate of 
return on total investment was over 10 percent less than it was for 
the last full year's operation of the predecessor companies. Rates for 
the new company continued to decline with almost no interruption in 
the downward trend from 1927 to the close of 1932. The trend was 
then reversed and by 1934 the Penn-Dixie made a profit of 2.52 per- 
cent on total investment. . The following years showed some improve- 
ment. The rate in 1936 reached 8.31 percent; but for the last 2 
years the rate has been in the neighborhood of 4% percent. 

Operating economies as the result of the consolidation are not much 
in evidence from a comparison of the rates of return on total invest- 
ment. The rate of return for 5 years preceding the consolidation was 
less than half of that for the 5 years subsequent to the consolidation. 
Rate of return for Ix^o predecessor companies as a group for 1921-25, 
inclusive, was approximately 21 percent, while the rate of return for 
the Penn-Dixie for 1927-31, inclusive, was just 8 percent. 

Comparison of rates of return on stocldiolders' investment is not so 
significant. The predecessor companies possessed little or no funded 
debt, while the Penn-Dixie had a large amount of funded debt. As 
long as the rate of return on total investment was greater than the 
rate of interest on borrowed money, the stockholders of Penn-Dixie 
benefited as the result of their leverage. This effect was particularly 
noticeable in 1927, when the return of stockholders' investment was 
over 32 percent, or more than twice the rate of return on total invest- 
ment. This greater opp/)rtunity for profit, if we may judge from the 
subsequent history of the company, was more than offset by the in- 
creased risk attaching to their junior position. Rate of return on 
stockholders' investment for the period 1927-38, inclusive, was a 
fraction over 2 percent, which was less than one-half the Tate earned 
on total investment for the same period. 

The consolidation of the Penn-Dixie resulted in the inclusion of 
approximately $13,000,000 of intangible talue in the fixed assets of the 
new company. This intangible value served as a base on which to 
issue an equivalent amount of Penn-Dixie securities. From the 
company's point of view it was necessary that a rate of return be 
earned on this value. For this reason, table 5 includes the rate of 
return on total investment on a book basis. This rate was approxi- 
mately half the rate of return on total investment excluding intangi- 
bles. HoweV-er, this comparison does not properly reflect the effect 
of intangible values on the rate of return. From. 1927 to the close of 
1936, the Pennsylvania-Dixie CemeYit Corporation wrote off some 
$3,000,000 of intangible value. In 1937 decision by the company was 
reached to eliminate the remaining $9,300,000 of intangible value by 
the direct reduction of the capital account. This write-off of approxi- 
mately three-quarters of the intangible value arising at the time of the 



IQQ CONCENTRATION OF ECONOMIC POWER 

consolidation had no effect on the rate prior to 1936 computed on a 
book basis. In view of the action of the company it seems probable 
that a good part of the reduction of intangible value in 1937 was 
applicable to prior years. 

Table 6, which follows, presents comparative balance sheets for the 
Pennsylvania-Dixie Cement Corporation for 1926-38, and for the 
predecessor companies as a group for 1921 to July 31, 1926. The 
balafice sheets give the details of investment used in computing the 
rates of return, and contain other pertinent information regarding the 
financial position of the companies involved in the consolidation. 



1 



CONCEiNTRATION OF ECONOMIC POWER 



167 



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OONCBNTBATION OP EOONOMIC POWER Igg. 

While we are principally concerned with the predecessor companies 
as a group, it is of some interest to know which were the more profit- 
able companies entering into the consolidation. The rates of return 
for the predecessor companies for the years 1921, to 1925, inclusive^ 
are shown in table 7, which follows: 



170 



CONCENTRATION OF ECONOMIC POWER 



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(JONCEJVTRATION OF ECONOMIC POWEE 17J 

INCOME AND EXPENSES 

Table 8, wliich follows, presents the comparative income state- 
ments for the Pennsylvania-Dixie Cement Corporation for 1927-38, 
and for the predecessor companies as a group for 1921 to July 31, 1926. 
These statements give in detail the determination of net income 
applicable to both total investment and stockholders' investment, and 
supply the basis for the determination of unit costs and other operat- 
ing ratios; 



172 



CONCENTRATION OF ECONOMIC POWER 



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CONCENTRATION OF ECONOMIC POWER 



175 



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176 CONCENTRATION OF ECONOMIC POWER 

In connection with the foregoing table, it will be noted that certain 
extensive readjustments in the capital structure of the Penn-Dixie 
"were effected through surplus. 

In 1933, surplus was increased $3,600,000 as the result of the 
reduction in the stated value of the common stock from $10 a share to 
$1 a share, there being no change in the number of shares outstanding. 
As the result, the stated value of the 400,000 shares of common stock 
was reduced from $4,000,000 to $400,000. The primarj- purpose of 
this adjustment was to eliminate the deficit carried in surplus. The 
net loss for 1933 of $1,674,739 was sufficiently large to wipe out the 
rather smaU surplus balance existing at the beginning of the year, 
and thus to produce a deficit of $1,158,892. To correct this con- 
dition, the company felt compelled to reduce the stated value of the 
common stock. 

In 1937 it was decided to eliminate the rest of the intangible value 
arising at the time of the consolidation in 1926, the bulk of which 
remained. Since the surplus was inadequate to permit of such a 
large write-off, it was necessary to reduce the value of the preferred 
stock from a par value of $100 a share to a, stated value of $25 a share. 
Since the number of shares remained the same, this resulted in a 
reduction in the value of the preferred stock from a par value of 
$12,120,000 to a stated value of $3,030,000. The difference of 
$9,090,000 was transferred to surplus and was used together with 
:$309,307.61 of surplus to write off the remaining intangible value of 
$9,399,307.61. . 

Voting rights and preferences of the 7 percent cumulative preferred 
stock were not substantially altered by this change. The preferred 
stock continued to possess the right to elect a majority of the directors 
on default of four quarterly dividends or sinking fund installments for 
one year. The preferred stdiok has the same preferences as to assets 
and dividends. In liquidation it is entitled to receive $110 a share 
and dividends, if voluntary, and $100 a share and dividends if in- 
voluntary. The stock is callable, on 30 days' notice, on any dividend 
date. 

The Penn-Dixie has passed most of the dividend dates since its 
consohdation-, although approximately $4,000,000 in dividends have 
been paid since 1926, Dividends on preferred stock were paid at the 
rate of $1.75 per share on December 15, 1926, and quarterly thereafter 
at that rate to September 16, 1929. Dividends were paid on the 
common stock at the rate of 80 cents a share on January 3, 1927, and 
quarterly thereafter at that rate to July 1, 1927; and at the rate of 
50 cents per share on October 1, 1927, and quarterly thereafter at 
that rate to July 1, 1928. No dividends have been paid on the 
•conunon since that date, and no dividends on the preferred have been 
paid since September 16, 1929. The unpaid dividends on the pre- 
ferred stock amounted to $64.75 per share, or $7,847,700, on December 
15, 1938. 

The market value of the preferred and common stocks has declined 
drastically since the consolidation. At the formation of the Penn- 
Dixie Co. in September 1926, the preferred and common stocks were 
pubhcly offered at $99 and $43 per share, respectively. During that. 



CONCENTRATION OF EJCONOMIC POWER J 77 

year the market value of the preferred stock ranged from 99 to lOOK 
and the common stock ranged from 36% to 43%. In 1938 these values 
had declined to a range of 10}^ to $30 per share for the preferred and to 
2y2 to 5?8 for the common. 

Funded debt of the Penn-Dixie was reduced from $13^000,000 at 
the time of the consolidatioti in 1926 to $7,167,000 by the tod of 1938. 
In the process of debt retirement, the company made a profit of 
$1,218,536 through the purchase of its own bonds below par. The 
reduction in debt likewise resulted in a reduction in fixed interest 
charges. In 1927 these charges amounted to $747,681, while in 1938 
they were only $438,466. 

Although the preceding table presents a record of the operations 
of the Pemi-Dixie and its predecessor companies, the relationship of 
the various items appearing in the statements are perhaps more 
easily grasped from table 9, presented on p. 178, which shows costs 
and income in terms of percent of net sales. 

In the case of the predecessor companies, it is readily apparent that 
an increasing proportion of net sales was retained as net income. The 
increasing margin of profit betweeh sales and total costs was due to 
decreasing manufacturing costs. Depreciation and depletion and 
administration and distribution expenses remained almost constant 
throughout the 5-year period, 1921-25. 

The experience of the Pennsylvania-Dixie Cement Corporation 
since the consolidation has not been so fortunate. The most suc- 
cessful year in terms of these percentages occurred in 1927, when the 
percent of net income applicable to total investment was slightly less 
than it was in 1925. Increased depreciation and depletion charges 
largely accounted for the difference. From 1927 to 1931 the percent 
of net income applicable to total investment continued to decline. 
In 1932 total operating costs exceeded- net sales by 32 percent. In 
other words total operating costs increased from 74 percent of net 
sales in 1927 to 132 percent in 1932. Approximately two-thirds of 
this increase represents percentage increases in depreciation and 
depletion and administration and distribution . expenses. The 
remaining one-third of the in,crease is due to the increased percentage 
absorbed by manufacturing costs. In spite 0/ the fact that labor 
costs decreased approximately 9 percent in terms of net sales other 
items of manufacturing costs failed to decline as rapidly as did net 
sales. This was partieularly true in the case of supplies and materials 
and "other" manufacturing expenses. 

From 1932, the trend in total operating expenses in relation to net 
sales was downward, particularly between 1933 and 1934 when the 
decline was most pronounced. Manufacturing expenses fell quickly 
to a low for the period of 48 percent in 1934. The following year 
showed an increase to 54 percent, aild from this time on manufactur- 
ing expenses changed little. The decrease in depreciation and deple- 
tion charges and in administration and distribution costs was responsi- 
ble for most of the decline in- total operating expenses. It is of signifi- 
cance that while depreciation and depletion charges in 1938 were 
practically the same percent of sales as they were in 1927, adminis- 
tration and distributioii costs were almost twice as much in 1938 as 
they were in 192/. 



264905 — 41— No. 1^ 



178 



CONCENTRATION OF ECONOMIC POWER 



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CONCEiNTRATION OF ECONOMIC POWER 279 

The effect of the injection of $13,000,000 of funded debt into the 
capital structure of the Pennsylvania-DLxie Cement Corporation is 
particularly noticeable during the depression years, 1931-35, when the 
burden of fixed costs was onerous. In 1933 approximately 21 percent 
of net sales were required to meet interest on the funded debt. In 
this same year the depreciation and depletion charges applicable to 
the intangible values, capitalized at the time 3f the consolidation, 
amounted to 14 percent of net sales. Such lactors as these seem 
easily borne in good times, but their inflexibility makes retrenchment 
during poor business conditions most difficult. 

UNIT COSTS 

The reduction of the income statement to a "per barreP' basis 
provides an excellent measure of comparison for determining the 
relative efficiency of companies within the cement industry. This 
method of comparison is particularly desirable in view of the fact 
that the companies produce but one commodity. The variation in 
quality of the great bulk of cement produced is not a significant factor 
in accomiting for variations in the costs of production. Since the 
operating statements of the various companies are based upon the 
number of barrels sold rather than upon the number of barrels actually 
produced, the costs and other items appearing in table 10, which 
follows, are computed on the basis of the barrels of cement sold 
annually: 



180 



CONCENTRATION OF ECONOMIC POWER 



\a cc CO GO t* »Q 00 
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'^ S'H a 



CONCEiNTRATION OP ECONOMIC POWER Igl 

The foregoing table presents the combined results of operations of 
the predecessor companies for the period from January 1, 1921, to 
July 31, 1926, inclusive, and the results of operations for the Pennsyl- 
vania-Dixie Cement Corporation from 1927 to 1938, inclusive. These 
results have all been reduced to a "per barrel" basis. Details of manu- 
facturing costs are not shown for the predecessor companies. . Account- 
ing classifications followed by the four predecessor companies differed 
so widely and information necessary for their reconstruction was so 
inadequate that it was impossible to recast the statements to provide 
any degree of comparability with those of the Pennsylvania-Dixie 
Cement Corporation. It, therefore, is necessary in comparing the 
predecessor companies with the Pennsylvania-Dixie Cement Corpora- 
tion to confine our attention to such summary figures as manufacturing 
costs, administration and distribution expenses, where classification* '" 
valid for all companies concerned. Before proceeding with our 
analysis, it should be pointed out that financial data for the Penn 
Allen Cement Co. are lacking for 1921. Since all totals are computed on 
a "per barrel" basis, little distortion follows as the result of the 
omission of the Penn Allen for this year. 

An inspection of the figures for the predecessor companies as a 
group reveals two outstanding facts. First, the average sales price 
per barrel shows a fluctuating downward trend over the 5K-year 
period of approximately 22 cents a barrel. At the same time, 
total operating expenses declined 58 cents a barrel without a break 
in the dowjiward trend. Thus the spread between selling price and 
costs increased from 22 cents in 1921 to 59 cents for the first .7 
months of 1926. This constantly increasing margin of profit per 
bari'el of cement becomes of greater significance when coupled with the 
fact that production and sale of cement was on the increase during thia 
period 

Secondly, practically all of the decrease in total operating expenses 
occurred in manufacturing expenses. Depreciation and depletion 
charges, and administration and distribution expenses remained sur- 
prisingly constant throughout the whole period. The chief effect of 
any variation in the productive capacity utilized is principally confined 
to just these expenses which fluctuated little during this period. As 
has been pointed out elsewhere, accurate information concerning the 
percent of productive capacity utilized by the predecessor companies 
is lacking. We do know, however, that the combined productive 
capacity of the predecessor companies entering into the consolidation 
in September 1926, was approximately 10,000,000 barrels annuaUy, 
and that this represented an increase over 3,000,000 barrels during the 
preceding 3 years. In view of the fact that sales of cement increased 
approximately the same amount, it is probable that the percent of 
plant capacity utilized by the predecessor companies during this period 
did not fluctuate greatly. 

According to Mr. George Kilian, secretary and treasurer of the 
Pennsylvania-Dixie Cement Corporation, the slashing of manufac- 
turing expenses by the predecessor companies reflects the continuous 
improvements in the art of making cement during this period, and the 
constant adaptation of the plants of the predecessor companies to 
these improvements. As the result of this policy on the part of the 
predecessor companies their plants were maintained in excellent 
condition. 



182 



CONCEiNTRATION OF ECONOMIC POWER 



Although we are primarily concerned with the co«ibined results of 
the predecessor companies, we are also concerned to some extent with 
the operating trends of the individual companies. Table 11, which 
follows, sets forth the "per barrel" costs of these companies. All of the 
companies made substantial reductions in total operating costs, though 
the Pennsylvania Cement Co., the largest of these companies, showed 
the most spectacular reductions. In 1921 the total operating costs of 
the "Pennsylvania Cement Co. were SI. 95 a barrel. For the first 
7 months of 1926 these costs had been reduced to $1.1-3 a barrel. 
On the other hand the Clinchfield Portland Cement Co., while it 
effected considerable reductions in total operating costs, accomplished 
these savings in a much more erratic manner. In 1921 total operating 
costs amounted to SI. 74. The next year, 1922, saw these costs reduced 
to SI. 33 a barrel. The following 2 years saw little change in these 
costs, but in the first 7 months of 1926 a further reduction to SI. 17 
a barrel was made. 



Table 11. — Per barrel costs, expenses and income of predecessor companies of 
Pennsylvania- Dixie Cement Corporation, 1921 to July 31, 1926 





1921 


1922 


1923 


1924 


1925 


Jan. 1, to 

July 31, 

1926 


Sales: 

Clinchfield Portland Cement Corporation 


$1. 982 
1.7T9 
1.962 
1.931 


SI. 729 
1.547 
1.636 
1.741 
1.781 


$1,880 
1.553 
1.983 
1.835 
1.993 


$1.-776 
1.711 
1.836 
1.649 

• 1.723 


$1. 766 
1.708 
1.819 
1.589 


$1,711 
1.718 


Pennsvlvania Cement Co ... . . 


1.716 


Disie Portland Cement Co .. 


1.630 


Penn S\\pr\ rpment r'o , ... 












Total I 


1.918 


1.673 


1.856 


1.752 


1.733 


1.699 






Manufacturing costs: 

Clinchfield Portland Cement Corporation 


1.348 
1.063 
1.578 
1.397 


1.059 
1.058 
1.286 
.913 
1.331 


.989 
.850 

1.312 
.992 

1.213 


1.045 
.835 

1.079 
.811 

1.031 


1.089 
1.954 
.922 
.768 


.903 
.848 


Pennsvlvania Cement Co .. . 


.784 


Dixie Portland Cement Co 


.761 














Total 


1.363 


1.127 


1.096 


.973 


.933 


.828 






Depreciation and depletion: 

Clinchfield Portland Cement Corporation 

Dexter Portland Cement Co 

Pennsvlvania rement Co 


.249 
.094 
.131 
.115 


.110 
.099 
.096 
.091 
.097 


.095 
.095 
.110 
.109 
.106 


.089 
.103 
.119 
.078 
.110 


.096 
.046 
.129 
.126 


.119 
.107 
.095 


Dixie Portland Cement Co 


.122 














Total. 


.146 


.098 


.117 


.102 


.098 


.121 






Selling and administration expense: 

Clinchfield Portland Cement Corporation 

Dexter Portland Cement Co 


.145 
.289 
.243 
.156 


.163 
.243 
.185 
.138 
.242 


.164 

.272 
.179 
.171 
.239 


-.178 
.309 
.174 
.243 
.220 


.176 
.280 
.186 
.177 


.145 
.188 




.209 


T)iTip Portland Cempnt Co 


.194 














Tota: 


.208 


.185 


.197 


.217 


.209 


.185 






Total operating expenses: 

Clinchfield Portland Cement Corporation 

Dexter Portland Cement Co 


1.742 
1.447 
1.951 
1.669 


1.331 
1.400 
l.-')67 
1.216 
1.671 


1.249 
1.217 
1.511 
1.272 
1.590 


1.311 
1.247 
1.372 
1.131 
1.361 


1.360 
1.279 
1.237 
1.071 


1.169 
1.143 


Pennsvlvania Cement Co 


1.129 


Dixie Portland Cement Co . 


1.080 














Total. 


1.717 


1.426 


1.396 


1.291 


1.240 


1.133 






Net income applicable to total investment: 

Clinchfield Portland Cement Corporation 

Dexter Portland Cement Co 


.260 
.347 
.046 
.262 


.429 
.169 
.114 
.525 
.111 


.662 
.348 
.427 
.563 
.403 


.500 
.471 
.500 
.536 
.363 


.434 
.442 
.620 
.544 


.556 
.589 


Pennsylvania Cement Co , 


.609 


Dixie Portland Cement Co 


.624 


Penn Allen Cement Co 












Total 


.219 


.270 


.482 


.484 


.519 


.594 







1 Includes an indeterminate amount of depreciation and depletion on certain properties. 



CONCENTRATION OF BOONOMIC POWER J §3 

The table also shows that while the profits per barrel of the com- 
bined companies were constantly increasing, trends for the individual 
companies varied considerably. For most of the period, The Dixie 
Portland ^Cement Co. maintained a large and relatively stable margin 
of profit. The Clinchfield Portland Cement Co. likewise maintained 
a large margin of profit, though this margin fluctuated somewhat more 
than did that of the Dixie Co. The Pennsylvania Cement Co. 
increased its profits per barrel most rapidly. In 1921 this company 
earned 4.6 cents a barrel, while by 1925 tliis spread between total 
operating costs and sales had increased to 62 cents a barrel. 

Returning to table 10 for a consideration of the results of operations 
in terms of "per barrels" of the Pemisylvania-Dixie Cement Corpora- 
tion, it will be noted that quite a different picture is presented. In 
1927 the consolidated company/ received $1.48 a barrel for its cement. 
This amounted on the average to 22 cents less on each barrel sold 
than was received by the predecessor companies in the first 7 months 
of 1926. Net sales price continued to decline. In 1931 the sharpest 
drop occurred when sales price fell over 31 cents a barrel. In 1932 
the sales price dropped to a low for the entire period of 96 cents a 
barrel. From this point sales price recovered rapidly. In 1934, an 
average selling price of $1.57 per barrel was obtained. Since then 
sales price has declined 17 cents, most of this decline occurring in 
1937 and 1938. 

The following discussion will deal, first with the results of operations 
for the 5-year period 1927-31, following the consolidation, and secondly 
with the period since 1931. This division permits of a more direct 
comparison of the results of the consolidation in terms of operations. 
That is, a period of 5 years prior to the consolidation may be compared 
with a period of 5 years following the consolidation. 

Although the sales price dropped sharply in 1927, the first full 
year's operations after the consolidation, total operating expenses 
were cut but 4 cents a barrel. Furthermore, this reduction was soon 
lost, for in the following year, 1928, total operating expenses averaged 
slightly above similar expenses of the combined companies just prior 
to the consolidation. For the next few years, these costs were held 
at a very even level. For the 4-year period from 1928 to 1931, total 
operating costs varied less than 1 cent per barrel. The great stability 
in operating expenses for the 5-year period following the consolidation 
was the result of mutually offsetting decreases in naanufacturing 
expenses and increases in depreciation and depletion, and administra- 
tion and distribution expenses. An inspection of table 10 reveals 
that the reduction of manufacturing expenses was achieved almost 
wholly by the reduction in the payments to labor in the form of wages 
and salaries. The per-barrel cost of labor (including superintendence) 
fell from almost 29 cents a barrel in 1927 to a fraction more than 12 
cents a barrel in 1931. The explanation of this saving of almost 17 
cents a barrel in the price of labor is not a matter of increased efficiency 
in the utilization of labor, but primarily the result of the great depres- 
sion which paralyzed industry in the end of 1929. We find that the 
price of labor per barrel of cement dropped from 25.4 cents in 1929 to 
15.3 cents in 1930. The average number of men employed at com- 
pany plants in 1927 totaled 1,709; by 1931 the average number of 
men employed at the plants had been cut to 1 ,066. The actual decline 
was somewhat greater since the figures for 1927 do not include the 



184 



CONCENTRATION OF ECONOMIC POWER 



men employed in the plants of the Pyramid Portland Cement Co., 
which did not become part of the Pennsylvania-Dixie Cement Cor- 
poration until 1928. 

The decline in the dollar amounts paid to labor during this period 
was even sharper. This is indicated in the following tabulation 
showing not only the amounts paid to employees of the plants of the 
I'ennsylvania-Dixie Cement Corporation for the 5 years following 
the consolidation but also for all subsequent years as well. 



Amounts paid to plant employees of Penn-Dixie 



< 



1927--. $2, 351, 259. 87 

1928 2,349, 760. 86 

1929 1, 891, 063. 22 

1930 974,487. 11 

1931 714,476.71 

1932 360, 764. 43 



$241,762.16 

703,302.38 

854,759.22 

-979,797.11 

1937 - 1, 180, 938. 31 

1938 1,232, 116. 72 



1933_ 
1934. 
1935. 
1936. 



It will be observed that the amount paid to plant employees of 
the Penn-Uixie in 1933 was but little more than one-tenth the amount 
paid to plant employees in 1927. Plant employees constitute most 
of the employees of the Penn-Dixie. The terrific decline in the 
amount of wages and salaries which such employees received from 
1927 to 1933, is simple evidence of the effect which the decline in the 
business of the Penn-Dixie had upon them. The decrease in the 
average number of men employed by the Penn-Dixie was not nearly 
so great. The following tabulation shows the average number of 
men employed by the Penn-Dixie at plants and in offices and sales 
department for the years 1926 to 1938, inclusive. The curtailment in 
employment by the Penn-Dixie is not fully expressed in this tabula- 
tion, since an increasing number of the employees during-the depres- 
sion were employed but part of the time. 

Number of employees, 1926-38 



Total 



1926 
1927 
1928 
1929 
1930 
1931 
1932 



-M plants 


In ofiBces 
and .sales 
depart- 
ment 


Total 


1,770 
1,709 
1,620 
1,302 
1,251 
1,086 
814 


160 
156 
211 
213 
226 
223 
203 


1,930 
1,865 
1,831 
1.515 
1,477 
1,289 
1,017 



1933 
1934 
1935 
1936 
1937 
1938 





In oflBces 


A t plants 


and sales 
depart- 




ment 


757 


172 


1,002 


197 


1,049 


213 


1,046 


218 


1,132 


222 


1,084 


221 



920 
1,199 
1,262 
1,264 
1,354 
1,30J 



Returning to a consideration of other unit costs, some saving was 
also effected through the decrease in the' price of coal. During the 
period 1927-31, a fraction over 5 cents a barrel was saved in this 
manner. However, other manufacturing expenses proved less flexible 
to a declining schedule of production, and absorbed a good part of 
the -saving obtained through the decline in the price of labor and coal. 

It may be fairly said that an inspection of manufacturing costs for 
the 5 years following the consolidation do not reveal any material 
increase in the efficiency of the plants of the Pennsylvania-Dixie 
Cement Corporation. With production declining rapidl}'^ as the 
result of the lessening in the demand for cement, the company was 
in no position to make any substantial alteration in its methods of 



CONCENTRATION OF ECONOMIC POWER 185 

production. Serious decline in production did not set in until after 
1928. Capital expenditures for 1927 and 1928 were far above subse- 
quent years. These expenditures increased the capacity of the 
Pennsylvania-Dixie Cement Corporation from 10.000,000 barrels 
annually to 12,200,000. Capital expenditures for ' 1927 and 1928 
amounted to $3,396,018, Of this amount, however, $1,294,265 was 
used to purchase an existing plant located in Iowa, far removed from 
the company's other plants. In the following 3 years, 1929, 1930, 
and 1931, the company expended for replacement and additions 
$1,114,683. This amount was considerably below the total deprecia- 
tion of tangible assets for these 3 years, which totalled $3,782,922. 

It has already been pointed out that the decrease in manufacturing 
expenses was offset by increases in distribution and administration 
expenses, and depreciation and depletion charges. In 1928 distribu- 
tion and administration expenses jumped 5% cents over what they 
were in 1927. According to Mr. George Kilian, the Pennsylvania- 
Dixie Cement Corporation encountered considerable difficulty in the 
marketing of its product. The goodwill of the predecessor companies 
was not transferred in full to the new consolidated company, and for 
that reason additional effort was required on the part of the sales 
force of the Pennsylvania-Dixie Cement Corporation to maintain 
sales. It was largely for this reason that the initial reduction in the 
administration and distribution costs per barrel achieved shortly after 
the consolidation was not retained. 

The increase in depreciation and depletion per barrel was almost 
solely due to the decrease in production. Since charges for depletion 
are relatively small compared to those for depreciation, reference 
hereafter to, depreciation is understood to include both charges. De- 
preciation charges remained fairly constant during the 5-year period, 
1927-31. With production declining, depreciation costs per barrel 
mounted in inverse ratio. The increase of about 7 cents a barrel was 
spread quite evenly over the period. 

It will be recalled that as the result of the consolidation, the valua- 
tion of the fixed assets was increased almost 100 percent. Depreciation 
rates of the new company were, of course, based upon the increased 
valuation of the fixed assets. However, in our computations we have 
included in depreciation only that portion applicable to tangible 
assets. For income tax purposes the new company was required to 
compute its depreciation on the bases followed by the predecessor 
companies. It is these annual depreciation allowances which have 
been used in ascertaining total operating expenses. By following this 
procedure, comparability between the predecessor companies and 
the Pennsylvania-Dixie Cement Corporation is preserved. Depre- 
ciation of intangible values averaged less than 2 cents a barrel for the 
first 5 years following the consolidation, and therefore was not a 
significant factor in increasing total operating expenses as computed 
by the Pennsylvania-Dixie Cement Corporation. 

The period since 1931 likewise does not reveal that any important 
operating economies were achieved as the result of the consolidation. 
Manufacturing expenses for a short time decreased slightly, as the 
result of the decrease in per barrel payments to labor. Labor costs 
per barrel leaped sharply in 1934 to a poi|it only slightly below what 
they were in 1927. By 1938 labor costs per barrel were above the 
1 927 level. Manufacturing costs followed roughly the course of labor 



135 CONCENTRATION OF ECONOMIC POWER 

costs. By 1935 total manufacturing costs were above similar costs 
in 1927, and such costs have continued to fluctuate within very narrow 
limits since that time. Total operating expenses increased rapidly 
after 1931, due primarily to inelasticity, in depreciation and adminis- 
tration and distribution expenses at a time when production declined 
and continued at low levels. By 1933 depreciation amounted to 44 
cents a barrel, or almost two-thirds of manufacturing costs for the 
same year. The increase in administration and distribution was only 
slightly less severe. In 1933, such expenses amounted to 43 cents a 
barrel. The effect on total operating expenses was great. In 1927, 
depreciation and administration and distribution expenses totaled 
approximately 30 cents a barrel; in 1933 these same classes of expenses 
totaled 87 cents a barrel. This increase of 57 cents a barrel forced 
total operating expenses to $1.57 a barrel. Depreciation charges 
have declined steadily from the peak of 44 cents a barrel in 1933, and 
in 1938 at 12 cents a barrel are below such charges for 1927. This 
decrease is accounted for by an increase in production and by a 
decrease in the depreciation rates allowed by the Treasury Depart- 
ment. Prior to 1934, composite rates of depreciation of approximately 
5 percent were allowed by the Treasury Department for cement 
companies. Since this time, as the result of Treasury decisions, 
maximum composite depreciation rates have been limited to approxi- 
mately 3 percent. 

The effect of the inflation of the value of the fixed assets becomes 
more evident as the demand for cement slackened. In 1933 deprecia- 
tion for the intangible value included in the fixed assets of the com- 
pany amounted to 17 cents a barrel. For the next 3 j^ears there was 
loaded in costs depreciation charge for intangibles of approximately 
this amount. In 1936 the Pennsylvania-Dixie Cement Corporation 
eliminated from its accounts the remaining intangible values. This 
decision resulted in the writing off of over $9,300,000 against capital 
accounts. Prior to this action on the part of the company, some 
$3,000,000 had been written off the books through depreciation 
charges. Had the company attempted to recover all of this iiitangible 
value through inclusion in their costs, it is clear that total operating 
costs would have been much higher. From the point of view of the. 
investor, the only way in which his capital investment may be con- 
served is the recovery of such values through their inclusion in cost. 
And to the extent of the 100 percent increase in the value of fixed 
assets, the consolidation increased the operating costs of the new 
company. 

In addition to the relatively inelastic charges for depreciation and 
administration and distribution, the costs of the Pennsylvania-Dixie 
Cement Corporation were further burdened with the interest on long- 
term debt. The predecessor companies with little or no funded debt 
were not faced with this problem. The effect of the $13,000,000 
created at the time of the consolidation of funded debt on the per 
barrel cost of cement is shown in table 10. Funded debt has regularly 
decreased in accordance with the retirement program of the Pennsyl- 
vania-Dixie. This decrease for the first 5 years following the consoli- 
dation was rather closely paralleled by the decline iti sales of barrels of 
cement. As the result of this correlation between these two factors 



CONCEiNTRATION OF ECONOMIC POWER 187 

interest cost per barrel only increased from 9.1 cents in 1927 to 10.7 
cents in 1931. For the next few years interest costs per barrel became 
more burdensome. In 1933 such costs amounted to 25.7 cents a 
barrel. This was equal to more than one-third manufacturing 
expenses for this year. 

CAPACITY AND PRODUCTION OF PREDECESSOR COMPANIES AND OP 
PENNSYLVANIA-DIXIE CEMENT CORPORATION 

By reference to table 12, which follows, it may be noted that plant 
capacities of the predecessor companies are not available for the years 
1921 to 1925, inclusive. However, production- increased steadily 
during this period; and elsewhere herein it is shown that durmg this 
period the predecessor companies spent large amounts in modernizing 
their plants. In connection with the organization of the Pennsylvania- 
Dixie Cement Corporation, Chairman Richard Hardy wrote a letter, 
dated September 18, 1926, in which he stated that during the years 
1923, 1924, 1925, and to July 31, 1926, the annual capacity of the 
plants was increased by more than 3,000,000 barrels. The capacities 
of these plants were increased until the combined annual capacity of 
the several plants was 10,000,000 barrels per annum in 1926. Shortly 
thereafter additional plants were acquired which largely accounted for 
an increase of over 2,000,000 barrels in the total annual capacity of 
these plants. 

The table also shows that the capacity of all of the plants in the 
United States steadily increased from 144,354,000 barrels per antium 
in 1921 to 271,850,000 barrels in 1931. There was no further change 
reported in total capacity until 1934 when total plant capacity 
declined to 262,709,000 barrels per annum and continued to decline 
for the remainder of the period covered by this report. 

The table also shows that the Pennsylvania-Dixie Cem.(ent Corpo- 
ration utilised over 98 percent of its plant capacities during 1926, the 
year in which it was organized. During 1926 the total utilization of 
plant capacities for the whole cem.ent industry was 77.4 percent. 
During the years 1928 to 1937, inclusive, the percent of plant utiliza- 
tion of the Pennsylvania-Dixie Cem.ent . Corporation was much less 
than for the industry as a whole. The Pennsylvania-Dixie Cem.ent 
Corporation utilized but 70.8 percent of the total capacity of its plants 
during 1928^ which declined to 33.3 percent before the end of 1937 
while the percent of utilization for the total United States declined 
from. 73.2 percent in 1928 to 46 percent in 1937. 

The relative im.portance of the predecessor com.panies and the 
Pennsylvania-Dixie Cement Corporation is also set forth in the last 
colum.n of the above-mentioned table, where it is shown that in 1921 
the com.bined production of Pennsylvania-Dixie Cem.ent Corpora- 
tion's predecessors was 5.4 percent of the total United States produc- 
tion. The ratio of 'production of these com.panies is shown to have 
continued in approximately the sam.e relation to total production and 
that shortly after Pennsylvania-E^ixie Cem.ent Corporation was organ- 
ized in 1926, it produced a sm.aller percentage of the total cem.ent 
production in the United States. 



188 



CONCENTRATION OF ECONOMIC POWER 



Table 12. — Total annual cement production of the United States and production of 
the predecessor companies, 1921-25, and of the Pennsylvania-Dixie Cement Corpo- 
ration, 1926-87, as related to capacities of each for the period 1921-37 





Total United States 


Predecessor companies, 1921-25— 
Penn-Dixie, 1926-37 


Ratio of 
production 
of Penn- 
Dixie to 
total pro- 
duction 


Year 


. Produc- 
tion 1 


Capacity • a 


Percent 

of capacity 

utilized 


Produc- 
tion 


Capacity 


Percent 

of capacity 

utilized 


1921 


99,381 
115,679 
138, 732 
150, 777 
163, 388 
166, 635 
175, 330 
178, 509 
172, 856 
162, 989 
126, 671 
77, 198 
63, 984 
78, 419 
77, 748 
114,469 
118,075 


144, 354 
146, 203 
161, 858 
175, 100 
195, 000 , 
215, 300 
227,080 
243, 702 
258, 917 
270, 044 
271, 850 
271, 850 
271, 850 
262, 709 
261,915 
255, 504 
255. 223 


68.8 
79.1 
85.7 
86.1 
83.8 
77.4 
77.2 
73.2 
66.8 
60.4 
46.6 
28.4 
23.5 
29.9 
29.7 
44.8 
46.3 


5,401 
5,589 
6,586 
7,420 
8,419 
9,813 
9,040 
8,643 
7,165 
6,437 
5,538 
3,502 
2,226 
3,075 
3,308 
4.069 
4, 067 


(5) 

8 

(') 
(5) 

10, 000 
10, 000 
12, 200 
■ 12. 200 
12.200 
12,200 
12.200 
12, 200 
12,200 
12,200 
12, 200 
12,200 




Percent 
S 4 


1922 




4 8 


1923....: 




4.7 


1924 




4.9 


1925. 




5.2 


1926. 


98.1 
90.4 
70.8 
58.7 
52.8 
45.4 
28.7 
18.2 
25.2 
27.1 
33.4 
33.3 


5 9 


1927 


6 2 


1928 


4 8 


1929 


4 1 


1930 


3 9 


1931 


4 4 


1932 


3 5 


1933 


3 9 


1934 


3 9 


1935 


4 3 


1936 . . 


3 6 


1937 


3.4 







' Thousands of barrels (from Statistical Abstract of the United States), 
s Estimated (from Mineral Yearbook. Bureau of Mines). 
■3 Not available. 

CAPITAL EXPENDITURES 

Table 13, which follows, presents in comparative form the annual 
capital expenditures and depreciation and depletion charges of the 
Pennsylvania-Dixie Cement Corporation from 1927 to 1938, inclusive. 
Capital' expenditures for. most of the years of the period fell consider- 
ably behind the loss in the value of the property and equipment as 
m.easured by the depreciation and depletion charges. In only 2 years 
of operations, 1927 and 1928, did the capital expenditures exceed the 
depreciation and depletion charges, regardless of whether such charges 
were computed with or without intangible value. The bulk of the 
capital expenditure in 1928 was for the acquisition of the Pyramid 
Portland Cem.ent Co., whose plant and business were located in Iowa, 
far rem.oved from, the other plants and markets of the Penn-Dixie. 
This purchase obviously in no way altered or im.proved the existing 
plants of the Penn-Dixie. It is apparent from, the table that from 
the close of 1928 very little m.oney was reinvested im property and 
equipm.ent. It is evident that these expenditures were insufficient 
to perm.it the com.pany to introduce substantial economies through 
replacement of plant and equipm.ent. In fact, these expenditures 
were insufficient to replace the plant and equipm.ent existing at the 
time of the consolidation. Depreciation and depletion of tangible 
values exceeded capital expenditures by $6,198,305 for the period 
1927 to 1938, inclusive. 

The fact that the m.anagem.ent of the Penn-Dixie did not sub- 
stantially alter its facilities or did not fully replace depreciated plant 
and equipment is no reflection in itself upon its m.anagerial skill or 
ability. It sim.ply m.eans that no extensive changes were possible 
within the lim.its im.posed by the capital expenditures as set forth in 
the following table. 



CONCENTRATION OF ECONOMIC POWER I39 

Table 13.- — Capital expenditures, and depreciation and depletion, including and 
excluding intangibles, during the period 1927 to 19S8, inclusive,- for the Pennsyl- 
vania-Dixie Cement Corporation 





Capital ex- 
penditures 


Depreciation 


Year 


Excluding 
intangibles 


Including in- 
tangibles 


1927 


$1,465,441.18 
1 1, 930, 577. 07 
386, 245. 00 
fi23, 436. 00 
105, 002. 69 
67, 995. 91 
205, 249. 17 
171,641.83 
16^, 441. 27 
175, 004. 38 
153, 852. 58 
143, 123. 93 


$1, 129, 153 

1, 278, 769 

1,311,382 

1 246,910 

1,224,630 

1, 122, 564 

996, 755 

886, 296 

814, 236 

681, 101 

685, 472 

513,048 


$1, 260, 622 
1 384 785 


1928 . - 


1929 - 


1 395' 916 


1930 

1931 


1! 379', 289 


1932 . ... 


\, 382^ 402 
1,376,879 
1 355 578 


1933 


1934 


1935 


1, 375, 735 
1 367 661 


1936 . . 


1937 _ 


585, 472 
513,048 


1938 -. 




Total 


5,592,011.01 


11, 790, 316 


14, 770. 516 





' Includes $1,294,265.81 representing purchase price of the Pyramid Portland Cement Co. 

While available records of the predecessor companies are not 
sufficiently detailed to show accurately either capital expenditures or 
the increase in productive capacity, the balance sheet increases in 
fixed assets from year to year indicate that earnings were reinvested. 
Balance sheets for the Penn Allen Cement Co. and the Cayuga 
Operating Co., a subsidiary of the Pennsylvania Cement Co., are 
lacking for 1921 and 1922. Total net assets for the other predecessor 
companies, which constitute the bulk of the investment in fixed 
assets by the predecessor companies, show little change for these 2 
years. The remaining 3 years showed steady increases. The invest- 
ment in fixed assets in 1923 for all companies with the exception of 
Penn Allen, after deduction of depreciation and depletion, amounted, 
to $7,874,625. Assuming that the net investment of Penn Allen in 
fixed assets was the same in 1923 as it was in 1924, net investment for 
all predecessor companies amounted to approximately $9,100,000. In 
1924, net investment in fixed assets increased to $11,500,000, In 
1925 there was a further increase of approximately $1,260,000. "This 
raised the total of net fixed agSets to $12,760,000. The increase in 
fixed assets was reflected in increase in productive capacity. Chair- 
man Richard Hardy of the Penn-Dixie stated in September 1926 
that the annual capacity of the predecessor companies was increased 
by more than 3,000,000 barrels during the period 1923 to July 31, 
1926, inclusive. 

In a discussion concerning the operating efficiency of the predecessor 
companies, one of the officers of the Pennsylvania-Dixie Cement 
Corporation said that these companies had brought their plants and 
equipment to an excellent state of efficiency at the time of the con- 
solidation. 



RATIO OF NET SALES TO INVESTED CAPITAL FOR PENNSYLVANIA-DIXIB 
CEMENT CORPORATION AND PREDECESSOR COMPANIES 

Table 14, presented below, shows the capital turn-over in terms of 
sales for the predecessor companies, for the period 1921 to 1925, 
inclusive, and for the Pennsylvania-Dixie Cement Corporation for 



190 



CONCENTRATION OF ECONOMIC POWER 



the. years 1927 to 1938, inclusive. Capital turn-overs based on 
invested capital, both including and excluding intangibles, are shown 
for the Penn-Dixie Cement Corporation. This ratio expresses the 
number of times which the money value of the invested capital is 
converted into cash or its equivalent in a year. Other factors being 
equal, the more rapidly the invested capital revolves the greater will 
be the profits. 

The table shows the wide variation in the rate of capital turn-over 
of the predecessor companies. Except for 1921, rates for the CJinch- 
field and the Dixie were similar. Both companies turned over their 
invested capital on the average a little more than 6 percent, "^he 
rates of both of these companies fluctuated little from year to year. 
Rates of the Pennsylvania* Cement Co., while more erratic, were 
•substantially greater than for the two companies mentioned above. 
This company was able generally to turn its invested capital more than 
once each year. The rates of the Dexter Portland were rather similar 
to those of the Pennsylvania Co., though their range of fluctuation 
was less. 



Table 14. — Capital turn-over in terms of sales for the Pennsylvania- Dixie Cement 
Corporation, 1927-38, arid for the predecessor companies for the period 1921 to 
1925, inclusive 





Penn-Dixie Cement 
Corporation 


Predecessor companies 


Year 


Exclud- 
ing in- 
tangibles 


Includ- 
ing intan- 
gibles 


Total 


Clinch- 
field 
Portland 
Cement 
Corpora- 
tion 


Dexter 

Portland 

Cement 

Co. 


Pennsyl- 
vania Ce- 
ment Co. 


Dixie 

Portland 

Cement 

Co. 


Penn Al- 
len Ce- 
ment Co. 


1921 - -. 






85.17 
88.83 
89.62 
86.43 
83.34 


72-76 
^4.53 
p- 38 
61.90 
61.03 


115.39 
196.89 
98.04 
103. 39 
103 95 
--•>c — •-- 


128.04. 
98.53 
98.13 
113. 73 
106.57 


59.74 
62.56 
61.88 
64.12 
62.41 




1922 








1923 








1924 






112. 13 


1925 








1926 


""""eofss' 

59.29 
60.24 
44.96 
35.91 
22.91 
19.83 
34.91 
40.09 
50.45 
50.95 
51.35 


'""'37.' 20" 
36.72 
30.79 
27.71 
21.24 
13.04 
10.98 
19.39 
22.22 
28.96 




1927 


— -- - 






1928 










1929 














1930 














1931 














1932 














1933 














1934 














1935 














1936 














1937 






-J -.-.-- 








1938 





















' Invested capital of Cayuga Operating Co., principal subsidiary of the Pennsylvania Cement Co., esti- 
mated for this year. 

The experience of Penn-Dixie in respect to the rate of capital tum*- 
over has not been as satisfactory as those of the predecessor companies. 
The rate of turn-over of invested capital for the Penn-Dixie, excluding 
intangible values, was highest in 1927 when a rate of approximately 
61 percent was realized. Capital turn-over slowed up for each of the 
succeeding 6 years, so that in 1933 the rate of turn-over was but 20 
percent. From this low, rates were quickfened, and for the 3 years, 
1936-38, rates held close to 50 percent. Rates based on invested capi- 
tal including intangibles are slightly in excess of 50 percent of rates 
computed on the basis of invested capital not including intangibles 



CONCENTRATION OF ECONOMIC POWER 



191 



arising at the time of the consolidation in 1926. Rates on botii bases 
are the same for 1937 and 1938, as the Pelnnsylvania-Dixie Cement 
Corporation in the beginning of 1937 wrote off all remaining intangible 
values. It will be observed that at no time did the rates based on 
intangibles rise above 37 percent. In 1933, the low point m the life 
cycle of the Penn-Dixie, th« rate of turn-over dropped to. 11 percent. 
In other words at this rate it would require 9 years for the company to 
turn over its invested capital. 

Table 15 presents the annual production of the predecessor com- 
panies by individual compaijies for the years 1921 to 1925, inclusive. 
The production of cement provides a good measure of the relative 
importance which each individual company bore to the group. The 
Pennsylvania Cement Co. was until 1925 much the largest company. 
However in that year the Dexter Portland Cement Co. acquired the 
Penn Allen Cement Co., and the combined production of these com- 
panies approached the Pennsylvania Cement Co. in size. 

Table 15. — Annual production of cement for the predecessor companies of Penn- 
sylvania-Dixie Cement, Corporation, 1921-25 





BARRELS OF CEMENT 








Production 


1921-25 


1921 


1922 


1923 


1924 


1926 


Clinchfleld Portland Cement 
Corporation . 


6, 303, 418 
6,284,779 
10, 244, 164 
6,910,915 
2, 510, 276 


982,691 

922,124 

1, 807, 600 

1, 148, 263 

640,776 


1, 076, 737 

813, 560 

1, 705, 200 

1, 286, 425 

707, 160 


1, 259, 667 

948, 375 

2,169,000 

1, 407, 639 

801, 025 


1,340,981 

1. 227, 230 

2, 422, 000 
1.427,410 
1, 002, 160 


1, 643, 342 
2, 373, 500 
2, 761, 000 
1,641,178 


Dexter Portland Cement Co.. 

Pennsylvania Cement Co 

Dixie Portland Cement Co... 
Penn Allen Cement Co 


Total i 


32, 263, 661 


5, 401, 354 


6,689,062 


6,-585, 706 








' ' 



REASONS FOR THE CCNSOLIDATION 

The fact that the consolidation did not develop important economies 
is not at all strange. The reason leading to the grouping together of 
the predecessor companies was not primarily one of increasing the 
efficiency of the combined properties. Mr. John A. Miller, and Mr. 
George Kilian, president, and secretary and treasurer, respectively, 
of the Pennsylvania-Dixie Cement Corporation, both of whom were 
active in the negotiations resulting in the consolidation, stated that 
to the best of their knowledge, the idea for the consolidation originated 
with the banking syndicate, who, they believe, approached the various 
companies with attractive offers for their assets. The opportunity 
for profit in the flotation of securities supplied ample reason for the 
■consolidation. The bankers were the promoters, and occupied the 
center of the stage. It was they who bargained with the various 
parties and reconciled their conflicting interests. We have already 
seen that the bankers cleared, subject to the costs of distribution, 
approximately $5,400,000; 

The opportunity to capitalize intangible value was undoubtedly a 
very potent force in the consolidation, both from the point of view of 
the bankers and of the stockholders of the predecessor companies. 

The predecessor companies were all earning handsome rates of 
return on invested capital. The businesses, on a going concern basis, 
were worth more than the book value of the properties. However, 
the stockholders' opportunity of disposing of this value through the 



'192 CONOEiNTRATlON OF ECONOMIC POWER 

sale of their securities on the open market was limited. The proposi- 
tion of the bankers presented them with the possibility of converting 
their holdings into cash on a very attractive basis. 

The above reasons, of course, were of little appeal to the investor 
who purchased the securities of the new company through the dis- 
tributing channels of the bankers. The principal reason advanced in 
the prospectuses offering Penn-Dixie securities for sale was the need 
of working capital for the new company. However, the Pennsylvania- 
Dixie Cement Corporation received'from? the sale of its securities only 
$5,000,000 more cash than was possessed by the combined predecessor 
companies. Not all of this was available for use as working capital, 
for $2,200,000 was earmarked for the retirement of a like amount of 
6 percent bonds of the Dexter Portland Cement Co. Further than 
this, the remaining $3,000,000 was not long enjoyed by the Penn- 
Dixie as working capital. In 1928 the Penn-Dixie spent approxi- 
mately $1,300,000 in cash to acquire the Pyramid Portland Cement 
Co. TliP need for working capital apparently was not a very power- 
ful motive for the consolidation. 

Exhibit No. 1 

Agreement, made this 24th day of July 1926, by and between The Securities 
• Company and John B. Dennis, individually, and as a Committee of the holders of 
the Common Stock of Clinchfield Portland Cement Corporation (hereinafter called 
"Committee"), parties of the first part, and The National City CaMPANY, a 
corporation organized under the laws of the State of New York, and Hemphill, 
NoYEs & Company, a copartnership doing business in the City and State of New 
York (hereinafter called "Syndicate"), parties of the second part, and The 
National City Bank of New York, a national banking corporation (hereinafter 
called the "Depositary"), party of the third part, Witnesseth: 

That in consideration of the premises and of the mutual agreements and under- 
takings Rerein contained and of the payment by the Syndicate to the Committee 
of the sum of Ten Dollars ($1Q) in cash, receipt of which is hereby acknowledged, 
the parties hereto hereby agree as follows: 

I. The Committee represents — 

(o) That Clinchfield Portland Cement Corporation (hereinafter called 
"Clinchfield Company") owns and- operates plants for the manufacture of 
Portland Cement in or near the, Cities of Kingsport, Tennessee, and Clinch- 
field, Georgia, and also owns free and clear of any lien or charge all the issued 
and outstanding shares of the capital stock of Marcem Quarries Corporation, 
a corporation of the State of 

(fc) That attached hereto and marked Exhibit "A", is a true copy of the 
consoUdated balance sheet of Clinchfield Company and its said subsidiary, 
and that said balance sheet correctly sets forth the financial condition of said 
companies as of the close of business on May 31st, 1926. 

II. The Syndicate agrees to use its best efforts to cause to be organized a cor- 
poration (hereinafter called "Consolidated Company") for the purpose of acquir- 
ing, directly or indirectly, the assets of Clinchfield Company and of its said sub- 
sidiary, and the assets of certain other cement companies, including all or some 
of the following companies: Dexter Portland Cement Company, a Pennsylvania 
corporation, and its subsidiaries, Dixie Portland Cement Company, a West Virginia 
corporation, and its subsidiaries, and Pennsylvania Cement Company, a Pennsyl- 
vania corporation, and its subsidiaries. The Consolidated Company may be 
organized as a new corporation with such name and under the laws of such state 
as the Syndicate may deem desirable, or it may be created through the consolida- 
tion of one or more of the above mentioned companies, or through the amendment 
of the charter of p,ny one of them to provide for the capital structure below outlined. 

The capital of the Consolidated Company shall consist of an authorized issue of 
$20,000,000 par value of Preferred Stock bearing cumulative dividends at the rate 
of 7% per annum and redeemable at' not exceeding $115 per share, of which 
(except as below provided) not more than $13,000,000 par value shall be outstand- 
ing at the completion of the consolidation; and an authorized issue of 1,000,000 
shares of Common Stock having no par value, of which not more than 400,000 



CONCENTKATION OF ECONOMIC POWER IQg 

shares shall be outstanding at the completion of the consolidation. The Consoli- 
dated Company will also authorize an issue of not exceeding $20,000,000 of bonds 
bearing interest at not exceeding 6% per annum, and maturing not more than 
twenty years from their date, of which not more than $13,000,000 will be out- 
standing at the completion of the consolidation. Should the face amount of 
bonds outstanding at the completion of the consohdation be reduced below 
$13,000,000, the amount of Preferred Stock then outstanding may be increased by 
an amount equivalent to such reduction. 

III. The Committee agrees to use its best efforts to cause all holclers of the- 
Common Stock of Clinchfield Company to deposit their shares with The National 
City Bank of New York as Depositary, under this Agreement, with proxies or 
powers of attorney running to the Committee, in form sufficient to authorize the 
Committee to vote for a transfer of the assets of Clinchfield Company to the 
Consolidated Company, or a dissolution of the- Clinchfield Company and to take 
any other action, corporate or otherwise, which may be necessary or desirable to 
carry out the terms of this Agreement. 

The shares of the Clinchfield Company so deposited shall be held by the Deposi- 
tary subject to the terms and provisions of this Agreement. Unless, within one 
hundred and twenty (120) days from the date of this Agreement, there shall have 
been deposited with the Depositary the securities and/or cash specified in Article 
IV of this Agreement as the purchase price to be paid by the Consolidated Com- 
pany for the assets and properties of Clinchfield Company, the Depositary, upon 
the expiration of said one hundred and twenty (120) days, shall return the shares 
of stock of Clinchfield Company deposited with it hereunder to the persons or 
companies depositing the same respectively. In the event that said securities 
and/or cash specified in Article IV of this Agreement are deposited with the 
Depositary within said period of one hundred" and twenty (120 )days from the 
date hereof, the Depositary shall deliver the shares of stock of the Clinchfield 
Company deposited with it to or upon the order of the Committee. 

IV. The Committee agrees subject to its being able to obtain the deposit of not 
less than 75% of the shares of the Common Stock of Clinchfield Company in the 
manner aforesaid, forthwith upon request of the Syndicate to cause Clinchfield 
Company to sell, assign, transfer and deliver to the Consolidated Company, all 
its assets and properties of every character and description, including ajl stock or 
assets of its subsidiaries and all trade-marks, trade-names and-" goodwill, and to 
receive in full payment therefor securities of the Consolidated Company of the 
character above described as follows: $2,875,000 in bonds, at their face value, 
25,875 shares of Preferred Stock, 51,111.11 shares of Common Stock; provided 
that if the net current assets of Clinchfield Company as of July 31, 1926, as deter- 
mined by the auditors selected by the Syndicate, and after redemption of its 
preferred stock, shall be less than $1,150,000, then, and in that event, the face 
value of the bonds which Clinchfield Company shall be entitled to receive in' 
part payment of its assets shall be reduced by the amount, if any, that said net 
current assets of Clinchfield Company determined as above provided shall be 
less than $1,150,000; provided, however, that if said net current assets of Clinch- 
field Company determined as above provided and after redemption of its pre- 
ferred stock shall be in exc6ss of $1,150,000, an an^ount equivalent to such excess 
shall be paid to Clinchfield Company in addition to the securities above mentioned. 

V. The Syndicate agrees, subject to the conditions hereinafter set forth, to 
cause said Consolidated Company to purchase and acquire all of the assets of 
Clinchfield Company, and to make payment therefor to Clinchfield Company In 
the securities of the Consolidated Company as hereinabove set forth, and to cause 
said Consolidated Company to enter into a contract with Clinchfield Company 
fo"r the assumption by the Consolidated Company of all liabilities of Clinchfield 
Company shown on the annexed balance sheet as well as any obligation incurred 
for moneys borrowed as provided in paragraph (4) of this Article V; provided: 

(1) That the Consolidated Company will be able, in the opinion of the 
Syndicate, to acquire the assets and properties of other companies mentioned 
in the foregoing Article II of this Agreement, in a manner and on a basis 
satisfactory to the Syndicate. 

(2) That the earnings and financial condition of all of said companies, in- 
cluding Clinchfield Company, when checked by independent auditors 
approved by the Syndicate, will be in substantial accord with the represen- 
tations with respect thereto which have been made to the Sj-ndicate; and 
that a report by Messrs. Ford, Bacon & Davis, Engineers, appointed by The 
Syndicate for the purpose of making a survey of the properties of said com- 
panies, will in all respects be satisfactory to the Syndicate. 

264905 — 41— No. 13 14 



1^ CONCENTRATION OF ECONOMIC POWER 

(3) That no substantial defects will appear in the titles to any of the 
properties of any of said companies; : . 

(4) That from May 31, 1926, the date of the balance sheet hereto annexed, 
to the date of the transfel* of the assets of Clinchfield Company to the Con- 
solidated Company, no dividend or distribution of assets shall have been 
declared or , paid to the Stockholders of Clinchfield Company, except the 
regular dividends on Its Preferred and Common Stock, payable prior to 
August 1, 1926, at the current rate, and that after July 31, 1926, no dividend 
or distribution of assets shall have been declared or paid to Stockholders, 
unless the aggregate amount of such dividend or distribution shaU have been 
set forth as a current liability on the balance of the Clinchfield Company as. 
of July 31, 1926; and that no substantial expenditure of funds or dissipation 
of assets has taken place, except as may have been required in the regular and 
usual course of business; except that the Company may redeem all of its 
Preferred Stock outstanding on May 31, 1926, and borrow all or any part 
of the amount required for this purpose. 

(5) That the legality and validity of the merger or acquisition of said 
companies and of all matters relating to their combination or merger shall be 
approved by counsel selected by the Syndicate; 

(6) That there shall be no substantial decline in the general market for 
industrial securities of the character to be issued by the Consolidated Com- 
pany. 

VI. In the event of the consolidation becoming^ effective, the Committee agrees 
forthwith to take all necessary action to effect the distribution to the stockholders 
of Clinchfield Company of the securities of the Consolidated Company received 
by it; provided that the securities of the Consolidated Company to which stock- 
holders represented by the Committee are entitled shall be forthwith deposited 
with the Depositary, subject to the order of the Committee, pursuant to the terms 
and provisions hereof. 

The Committer hereby agrees to sell to the 'Syndicate 

(a) All bonds of the Consolidated Company so deposited; and 
lb) All shares of the Common and Preferred Stocks of the Consolidated 
Company so deposited, less such number of shares of said Common' and/or 
Preferred Stocks as the Committee shall notify the Syndicate of its election 
to r«tain as hereinbelow provided. 

Notice of its felection to retain any portion of the said Common or Preferred 
Stocks of the Consblidated Company shall be given by the Committee to the 
Syndicate not later than fifteen (15) "days from the date of this Agreement, shall 
be in writing signed by the Committee and shall specify the number of said 
shares of Common and/or Preferred Stocks sold to the Syndicate, and the number 
of shares of said stocks which the Comrnittee has elected^to retain. 

The Syndicate hereby agrees to purchase ivoxn the Committee the securities 
described in (af&nd (b) above and to make payment therefor by depositing with 
The National City Bank of New York to the order of the Committee, the following 
amounts in cash, viz: 

For each bond of the Consolidated Company so purchased an amount 
equal to the face value thereof without interst; 

For each share of Preferred Stock of the Consolidated Company so pur- 
chased an amount equal to the par value thereof; 

For each share of the Common Stock of the Consolidated Company so 
purchased. Forty-five Dollars ($45). 

The Syndicate also agrees to deposit with the Depositary to the order of the 
Committee % share of Preferred Stock for each share of Preferred Stock which' the 
Committee has elected to retain, and Yi share of Common Stock for each share 
of Common Stock which the Committee has elected to retain. 

VII. In consideration of said deposit by the Syndicate the Committee agrees 
to deposit aU certificates representing such Common and Preferred Stocks with 
the Depositary, and that it will not sell or dispose of any of said stocks or permit 
any of said stocks to be sold or disposed of for a period of six (6) months from the 
day of their delivery to the Depositary without the consent in writing of the 
Syndicate first had and obtained, and will not for a further period of six (6) 
months sell or dispose of any of said sto,cks or permit any of said stocks to be sold 
or disposed of without being first offered to the Syndicate at the prices at which 
it may be desired to offer the same for sale. Said stocks shall be held by the 
Depositary under such deposit agreement or deposit agreements or receipts as 
mav be necessary, appropriate, or desiralile to carrv out the provisions of this 
Article VII ^ ' 



CONCEiNTRATION OP E<X)NOMIC POWER 1^5^ 

VIII. The fees and expenses of the Depositary and all expenses in -connection 
with the transfer of assets of Clinchfield Company shall be borne by the Con- 
solidated Company, and all proceedings relating thereto shall be supervised by 
•counsel for the Syndicate whose charges and disbursements shall likewise be paid 
by the Consolidated Company. 

IX. All notices or requests provided to be given to the Committee shall be 
suflBciently given if sent by registered inail, postage prepaid, to The Securities 
Company, at 24 Broad Street, New York City, and any notice so mailed^shall 
be conclusively deemed to be received by the Committ 3. AU notices required 
to be given or filed with the Syndicate shall be sufBcientlj given or filed if delivered 
to The National City Company at its oflBce No. 55 Wall Street, New York City. 

In Witness Whereof, the parties hereto have executed this Agreement as of 
the day and year first above written. 

[Seal] The Securities CoaIpany, 

By H. R. Dennis, Vice President. 
Attest : 

Warren P. Eaton, 

Secretary. 

John B. Dennis. (L. S.] 
[Seal] The National City Company, 

By Stanley A. Russell, Vice President,. 
Attest : 

F. J. Maguire, 

Asst. Secretary. 

Hemphill," NoYES & Co. [l. s.] 
[Seal] The National City Bank of New York, 

3y Sherman Allen, Trust Officer. 



Attest: 

H. D. Hall, 

Assistant Cashier. 



Exhibit "A" 



Clinchfield Portland Cement Corporation and Marcem Qu^.. ries Corporation, 
Consolidated balance sheet — May SI, 1926 

assets 
Current assets: 

Cash in banks and on hand_ $673, 776. 83 

Notes receivable 8, 322. 23 

Customers' accounts receivable 

less reserve of $4,690.79 $240, 277. 29 

Advances to officers and em- 
ployees 19,206.35 

Due on stock subscriptions. _•- 17, .650. 02 

Other accounts receivable 8,247.81 

285, 381. 47 

Inventories, at cost or market 
whichever is lower, as certi- 
fied bv responsible officials: 

Cement 98; 194. 69 

Raw materials, supplies 

■and work in process 507, 753. 62 

605, 948. 31 

, $i^ 573^ 428. 84 

Deferred charges to future operatiOiis; 

Prepaid insurance, royalties and other ex- 
penses •- 31, 422. 20 

Stripping and development expenses, less 

amountvwritten off 9,541.55 

40, 963. 75 

Miscellaneous investments .. 14, 500. 00 

Property account: ■^Al'iy'<y 

Land, buildings, machinery and equipment- $^, '79, 870. 11 
Less — Reserves for amortization, deprecia- 
tion and depletion ,, rj65, 517. 09 

3^ ■j]^^ 353_ 02 

4, 843,245 61 



196 CONCENTRATION OF ECONOMIC POWE-R 

Clinchfield Portland Cement Corporation and Marcem Quarries Corporation,. 
Consolidated balance sheet — May SI, 1926 — Continued 

LIABILITIES 

Current liabilities: 

Notes payable $210, 501. 78 

Accounts payable 89, 261. 36 

Accrued wages, taxes, and. other expenses. - 97, 551. 89 

Provision for Federal income taxes 176, 331. 13 

$573, 646. 16 

Reserve for maintenance of railroad hopper cars 7, 802. 91 

Capital stock: 

7 percent cumulative pre- 
ferred: Aut-ic- ed and is- 
sued, 10,000 sli. res of $100 
each $1,000,000.00 

Less — Held in treasury, 436 
shares of $100 each 43, 600. 00 

J956, 400. 00 

Common: Authorized 50,000 

shares withou-t par value: 

Outstanding, shares 
24,344 

Reserved to ex- 
change for old 
shares not sur- 
rendered, 
shares. _ 80 

Total, 

shares. 24,424 1,643,033.46 
Subscriptions to 576 shares of 

common stock, partly paid 57, 600. 00 

1, 700, 633. 46 

2, 657, 033. 46 



Surplus: 

Appropriated for retirement of preferred 
stock, less premiums on stock purchased, 
etc 44,456. 79 

Unappropriated surplus 1, 560, 306. 29 



1, 604, 763. 08 



4, 843, 245. 61 
Exhibit No. 2 

Agreement made this day of , 1926, by and between certain 

stockholders of Pennsylvania Cement Company, a Pennsylvania corporation, 
who have become parties hereto by signing this Agreement (hereinafter called 
"Stockholders"), parties of the first part. The National City Company, a cor- 
poration organized under the laws of the State of New York, and Hemphill, 
NoYES & Company, a copartnership doing business in the City and State of New 
York (hereinafter called "The Syndicate"), parties of the second part, and The 
National City Bank of New York, a national banking corporation (hereinafter 
called the "Depositary"), party of the third part, Witnesseth: 

I. Stockholders represent — 

(a) That Pennsylvania Cement Company owns and operates a plant for 
the manufacture of Portland cement in or near Bath, Pennsylvania, and also 
owns free of any lien or charge all the issued and outstanding shares of the 
capital stock of Cayuga Operating Company, Inc., a corporation of the State 
of New York. 

(6) That attached hereto marked "Exhibits 'A' and 'B'," respectively, are 
true copies of the balance sheets of said Pennsylvania Cement Company and 
said Cayuga Operating Company, Inc., and that said balance sheets correctly 
set forth the respective financial conditions of said companies at the close of 
business on May 31, 1926. 



CONCENTRATION OF EXX)NOMIC POWER ,|97 

Stockholders make the foregoing representations beUeving them tO/Jje.- i^all 
respects in accordance with the existing facts but it is understood that tiiey are 
to incur no personal liabiUty, either individually or collectively, on account of such 
representations. 

II. The Syndicate agrees to cause to be organized a corporation 'hereinafter 
called "Consolidated Company" which shall acquire, directly or indirectly, the 
assets of the said Pennsylvania Cem.ent Company and of its said subsidiary, and 
the assets of certain other cement companies, including all or some of the following 
companies: Dexter Portland Cement Company, a Pennsylvania corpora tteji, and 
its subsidiaries, Clinchfield Portland Cem.ent Corporation, a Virginia corporation 
and its subsidiaries, and Dixie Portland Cement Company, a West Virginia cor- 
poration, and its subsidiaries. The Consolidated Company may be organized as a 
new corporation with such name and under the laws of such state as The Syndicate 
may deem desirable, or it may be created through the consoUdation of- one or more 
of the above-m,entioned companies, or through the amendment of the Charter of 
a,ny one of them to provide for the capital structure below outlined. 

The capital of the Consolidated Company shall consist of an authorized issue 
of $20,000,000 par value of Preferred Stock bearing cumulative dividends at the 
rate of 7% per annum and redeemable at not exceeding $115 per share, of which 
(except as herein otherwise provided) not m.ore than $13,000,000 par value shall 
be outstanding at the com.pletion of the consolidation; and an authorized issue of 
1,000,000 shares of Common Stock having no par value, of which not m.ore than 
400,000 shares shall be outstanding at the com.pletion of the consolidation. The 
Consolidated Company will also authorize an issue of not exceeding $20,000,000 of 
bonds bearing interest at not exceeding 6% per annum, and maturing not m.ore than 
twenty years from their date, of which not more than $13,000,000 will be outstand- 
ing at the completion of the consolidation. Should the face amount of bonds 
outstanding at the com.pletion of the consolidation be reduced below $13,000,000, 
the amount of Preferred Stock then outstanding ro.ay be increased by an amount 
equivalent to such reduction. 

III. The Stockholders agree forthwith upon theargreem.ent of purchase on behalf 
of The Syndicate (herein set forth) becon).ing effective, either by declaration of 
The Syndicate or by lapse of tim.e as hereinafter provided, to cause Pennsylvania 
Cement Company to sell, assign, transfer, and deliver all of 'ts assets and properties, 
of every character and description, including trade-m.arI(S', trade nam.es, and good- 
will, and all the capital stock or assets of itssubsidiar- companies to the Consoli- 
dated Coro.pany, upon deposit with the Depositary as hereinafter provided for the 
account of Stockholders of securities of the Consoli datefl Company of the char- 
acter above described as follows: $3,703,703.70 in bonds, 34,904.01 shares of 
Preferred Stock, 88,888.89 shares of Com.mon Stock. 

IV. The Syndicate agrees to cause the Consolidated Company to purchase all 
the above assets and properties of the Pennsylvania Cem.ent Company and its 
subsidiary, and to issue and deliver to the Depositar}' fdr the account of Stockhold- 
ers in paym.ent therefor the securities of the Consolidated Com.pany in the amounts 
above set forth, and to cause said Consolidated Conifjany to enter into a contract 
with the Pennsylvania Cement Company for the assumption by the Consolidated 
Company of all obligations and/or liabilities of the Pennsylvania Cement Com- 
T)any and its subsidiaries. 

V. This Agreement shall be subject to the foUowiiig conditio'ns: 

The earnings and financial condition of the Peryisylvania Cement Company 
and of the Cayuga Operating Company, Inc., when checked by independent 
auditors approved by The Syndicate will be in substantial accord with the 
balance sheets of said Pennsylvania Cement Company and said Cayuga 
Operating Company, Inc., hereto attached marked "Exhibit 'A' and Exhibit 
*B'," respectively, and a report by Messrs. Ford, Bacon & Davis, Engineers, 
appointed by The Syndicate for the purpose of making a survey of the proper- 
ties of the said two companies, will be in all respects satisfactory to The Syn- 
dicate; and the Consolidated Com.pany will be able, in the opinion of The-. 
Syndicate, to acquire, in a manner and on a basis satisfactory to The Syndicate 
ine assets and properties of other companies mentioned in the foregoing 
Article II of this Agreement. 

No defects will appear in the titles to any of the properties of any of said 
companies of a character sufficiently serious in the opinion of The Syndicate 
to render any of said companies unavailable for the consolidation. 

There shall be no substantial decline in the general market for industrial 
securities of the character to be issued by the Consolidated Company. 



198 CONCEiNTRATION OF ECONOMIC POWE.R 

VI. Unless within sixty (60) days from the date of this Agreement, The Syndicate 
shall give -written notice to the Stockholders that one or more of the above condi- 
tions have not been complied with to its satisfaction, all of said conditions shall be 
deemed to have been fulfilled in a manner satisfactory to The Syndicate and The 
Syndicate thereupon, and within one hundred and twenty (120) days from the 
date hereof, agrees to carry out and complete said proposed consolidation and to 
purchase from the Stockholders the securities of the Consolidated Company 
received by them as herein set fojth; provided that from May 31, 1926, the date of 
the balance sheets hereto annexed, to the date of the transfer of the assets of the 
Pennsylvania Cement Company to the Consolidated Company or until the pur- 
chase of and payment for the stock in the Pennsylvania Cement Company owned 
by the Stockholders as hereinafter provided, no dividends or distribution of assets 
has been declared or paid to the Stockholders by said Company except dividends 
at the rate of five pei'cent (5%) per month and that no substantial expendi- 
tures of funds or dissipation of assets of said Company or of its subsidiaries has 
taken place except such expenditures as may be required in the regular and usual 
course of business and for new constructions deemed desirable to provide for the 
expansion of its business. The Syndica.te may, however, at any time subsequent 
to the agreement of purchase on behalf of The Syndicate (herein set forth) becom- 
ing effective, either by declaration of The Syndicate or by lapse of time as herein- 
before provided in this paragraph, and within one hundred and fifteen (115) days 
from the date hereof, notify Stockholders in writing that all of said conditions have 
been fulfilled to their satisfaction and demand the deposit by Stockholders' of all 
stock of Pennsylvania Cement Company issued and outstanding duly endorsed in 
blank with signatures guaranteed or otherwise satisfactorily authenticated, with 
The National City Bank of New York, party of the third part, as Depositary, 
together with irrevocable proxies or powers of attorney running to The Syndicate' 
orits nominee, or nominees in such form as may be requested by The Syndicate to 
enable said shares to be transferred and/or voted in favor of any corporate action 
required or deemed advisable by counsel to The Syndicate to effect the consolida- 
tion herein outlined, and any other corporate action incident thereto or consequent 
thereon, and Stockholders shall thereupon be obligated to make such deposit of all 
such shares within five (5) days of the date of such de^nand. The shares of the 
Pennsylvania Cement Company so deposited shall be held by the Depositary 
subject to the terms and provisions of this agreement and the Depositary shall 
issue, subject to the sam.e term.s and conditions, negotiable receipts for such shares 
to each of such Stockholders in the form, hereto annexed marked "Exhibit 'C'." 

The transfer by The Syndicate of any of the shares deposited by th6 Stock- 
holders under the provisions of this paragraph shall not deprive such Stockholders 
of their right to dividends at the rate of five percent (5%) per month from May 
31, 1926, to the date when the securities of the Consolidated Company are received 
by the Depositary or the purchase price for their stock in the Pennsylvania 
Cement Company is otherwise paid as hereinafter provided. 

VII. All securities of the Consolidated Company to be issued in payment for 
the assets of the Pennsylvania Cement Company shall be deposited as soon as 

, practicable, and in any event on or before one hundred and twenty (120) days from 
th'e date of this Agreement, with the Depositary for the account of Stockholders 
in the proportions to which they are entitled to the same according to the number 
of and in exchange for the shares of the stock of the Pennsylvania Cement Com- 
pany deposited by them respectively. 

The Stockholders by signing this Agreement hereby severally agree to sell te 
The Syndicate and The Syndicate hereby agrees to purchase from the Stock- 
holders all of said securities immediately upon the <ieposit thereof and to pay to 
each Stockholder for the securities to which he is entitled the following amounts 
in cash: for bonds of the Consolidated Conipany 90% of the face value thereof 
without interest; for Preferred Stock of the Consolidated Company at the rate of 
$95.50 per-share on a par value of $100; for Common Stock of the Consolidated 
Company at the rate of $37.50 per share; provided, however, that Stockholders shall 
have the privilege of retaining any portion of the securities of the Consolidated 
Company to which they are entitled respectively and which they rnay not desire 
to sell, by giving notice to The Syndicate, as herein provided, setting forth the 
principal amotmt of .bonds and the number of shares and class or classes of stock 
which they elect to retain. Such notice shall be in writing signed by the Stock- 
holders who desire to retain any of said securities, and shall set forth the number 
and character of the securities desired to be retained and shall be deemed duly 
given if filed with The Syndicate not more than ten (10) days after the copy of the 
reports of the indepepdent auditor employed by The Syndicate and of Messrs. 
Ford, Bacon & Davis provided for in Paragraph V of this Agreement covering the 



CONCENTRATION OF ECONOMIC POWER 199 

companies to be included in the consolidation other than Pennsylvania Cement 
Company and its subsidiaries have been delivered at the oflSce of the J'ennsyl- 
vania Cement Company, 131 East 46th Street, New York City, N. Y. 'Any of 
the Stockholders failing to file any such notice within the time specified shall be 
conclusively deemed to have elected to sell all of the securities of the Consolidated 
Company received by them for cash and at the prices above stated. 

In the event that the purchase by The Syndicate becomes effective and that 
for any reason the securities of the Consolidated Company to be received by 
Stockholders in payment for the assets of the Pennsylvania Cement Cbmpany 
and. its subsidiaries shall not have been deposited with the Depositary for the 
account of Stockholders, as herein provided (which deposit shall not be deemed 
to be complete unless and until the execution and delivery by the Syndicate to 
the Depositary of the certificate provided for in subdivision (b) of Article VIII of 
this Agreement), on or before one hundred and twenty (120) days from the date 
hereof, then, and in such event. The Syndicate shall forthwith upon the expiration 
of said one hundred and twenty (120) days purchase from the Stockholders and 
the Stockholders shall sell to The Syndicate all the said stock of the Pennsylvania 
Cement Company, and The Syndicate shall pay to the Stockholders in payment 
for their respective shares in the ' Pennsylvania Cement Company the sum of 
$10,000,000. Such payment shall be payable proportionately to each Stock- 
holder at the office of the Depositary on the surrender by each such Stockholder 
of his or her stock properly endorsed for delivery or upon the surrender of his or 
her receipt foi* such stock issued by the Depositary properly endorsed for delivery. 

Every Stockholder signing this Agreement agrees for himself that, in case he 
elects to retain any securities in accordance with the provisions of this paragraph, 
he will not for a period of six (6) months from the date of their delivery to him, 
sell or dispose of any of said securities so retained by him without the written 
consent of The Syndicate and, for a further period of six (6) months, will not sell 
or dispose of any of said securities without first offering them to The Syndicate 
at the price at which he then proposes to offer such securities for sale. Nothing 
herein contained, however, shall prevent Any transfer by the executor pf any 
estate, a party hereto, to the beneficiaries 6i such estate. 

VIII. Whenever there shall be delivered to the Depositary 

(o) Securities (in definitive or temporary form) of the Consolidated 
Company, viz: $3,703,703.70 face value of bonds of said Company, 34,904.01 
shares of its Preferred Stock, and 88,888.89 shares of its Common Stock. 

(6) A certificate, signed by the President, a Vice President or Secretary 
of Pennsylvania Cement Company, and by The Syndicate, setting forth: 
(1) that the securities so delivered to the Depositary are the securities of the 
Consolidated Company contemplated by this Agreement, (2) the amount 
and classes of such securities to which each of the Stockholders is entitled, 
(3) the amount and classes of such securities which each of the Stockholders 
has agreed to sell to The Syndicate, and (4) the amount and classes of such 
securities which each of the Stockholders desires to retain, the Depositary 
shall deliver to or upon the order of The Syndicate all shares of stock of 
Pennsylvania Cement Company deposited with it, and shall also deliver to 
or upon the order of The Syndicate, upon receipt of payment therefor at 
the prices hereinabove provided, all the securities of the Consolidated Com- 
pany agreed to be sold by the Stockholders to The Syndicate, and shall 
distribute to the Stockholders the cash payable to them and/or the securities 
retained by them. 

The Depositary shall be entitled to rely absolutely upon the above-men- 
tioned certificate for any action taken hereunder, and shall be protected and 
held harmless for all things done or omitted by it in good faith, and shall be 
liable only for its own wilful default or misfeasance. 

IX. All notices provided to be given to Stockholders shall be sufficiently given 
if fcicnt by registered mail, postage prepaid, to Pennsylvania Cement Company at 
131 East 46th Street, New York City, New York, and any notice so mailed shall 
be conclusively deemed to be received by each of the Stockholders. All notices 
or statements required to be given to o/ filed with The Syndicate shall be suffi- 
ciently given or filed if delivered to The National City Company, at its office 
No. 55 Wall Street, New York City. 

X. The Syndicate agrees that all expenses in connection with the transfer of 
assets ana dissolution of the Pennsylvania Cement Company, including the fees 
of the Depositary and all expenses in connection with the transfer of shares and 
negotiable receipts, including all Federal and State revenue stamps, will be borne 
by the Consolidated Company and all proceedings will be supervised by counsel 



200 CONCENTRATION OF ECONOMIC POWER 

for The Syndicate whose charges and disbursements shall likewise be paid by 
the Consolidated Company. 

XI. This Agreement shall not be assignable by The Syndicate until the agree- 
ment of purchase by The Syndicate shall become efifective either by declaration 
of The Syndicate or by lapse of time as herein provided. ■, 

XII. This Agreement may be executed in one or more counterparts, all of which 
shall constitute but one and the same instrument and shall bind and benefit the 
several parties hereto and their survivors, heirs, executors, administrators, suc- 
cessors, and assigns. 

In Witness Whereof, the parties hereto have executed this Agreement as of 
the day and year first above written. 

The National City Company, 

By , Vice President. 

Attest: 

, Secretary. 

The National City Bank of New York, 

By , Vice President. 

Attest: 

, Assistant Cashier. 

Exhibit "A" 

Pennsylvania Cement Co., balance sheet, May SI, 1926 

assets 
Capital assets: 

Plant $2,526,087. 99 

Construction ' 53, 808. 51 

Real estate 112, 286. 15 

Barges 60, 904. 68 

Automobiles 27, 291. 37 

Furniture and fixtures 7,021.02 

N. Y. office building 48,827.59 

Total 1--' - $2,836,227.31 

■Stores and material: 

Coal $53, 107. 20 

Gypsum 2,672.80 

Cotton bags, Pa 27, 732. 13 

Cotton bags, Cayuga 11, 432. 26 

Supplies 141,471. 59 

Paper bags. Pa 6, 686. 63 

Paper bags, Cayuga .3,465.48 

Total 246,568.09 

Current assets : 

Bulk cement stock $164, 654. 61 

White cement stock , 464. 00 

Lumnite cement stock 60.00 

Accounts receivable cement 423, 380. 74 

Sundry accounts 3, 571. 58 

Notes receivable 843, 320. 40 

Cash . 374,205. 81 

Cash advances - ' . 3, 834. 81 

Cash advances account com 1, 900. 06 

Total 1,815,392.01 

Investment account , 161, 508. 30 

Unexpired insurance 12, 384. 44 

Accrued taxes 12,990.25 

Cayuga Power Co. bonds-. 50,396.00 

Cayuga Cement Co. bonds 18,500.00 

Cayuga Operating Co., Inc 119, 5'i!5. 11 

5,273,511.51 



CONCEJ^TRATION OF ECONOMIC POWER 201 

Pennsylvania Cement Co., balance sheet, May 31, 1926 — Continued 

LIABILITIES 

Capital stock issued... $1, 250. 000. 00- 

Reserves: ' , 

Depreciation— Plant .-$1,556,265.05 

Depreciation — miscellaneous . 32, 985. 27 

Depletion 16, 635. 22 

Income tax 202, 106. 17 

JBad accounts... • 8,424.74 

Total .- 1,816,416.45 

Current liabilities: 

Account paya*ble purchases $34,912.32 

Accounts payable sundries : 808. 91 

Pay rolls and salaries 21, 693. 70 

Coal adjustment 3,381.27 

Total . 60, 796. 2a 

Foreign bags . . 13, 545. 30 

Brass checks . 74. 75 

Bag redemption ^ . 230, 820. 16 

Unclaimed wages . 299. 65 

Total 3,371,952.51 

Surplus.. -. $1, 628, 764. 74 

Profit and Loss, 1926 272, 794. 26 

1, 901, 559. 00 

5, 273, 511. 51 
Exhibit "B"' 

Cayuga Operating Co., Inc., balance sheet. May 81, 1926 

ASSETS 

Capital assets: 

Plant— Cement Co J $1,909,789.26 

Plant— Power Co 314,036. 04 

Construction 10, 681. 25 

Total $2,234,506.55 

Stores and material: 

Coal $13,520. 52 

Gypsum . 1, 568. 79 

Supplies...- 126, 272. 85 

Explosive stock 4, 469. 39 

Total .... 145,831.55 

Current assets: 

Bulk cement stock . $172, 712. 93 

White cement stock 901. 58 

Clinker stock.. 82, 152. 93 

Accounts receivable cement 78, 923. 00 

Sundry accounts 2,962.10 

Sundry claims 102.70 

Cash 15,835. 60 

Cash advances 1,995.25 

Cash freight account 10, 000. 00 

Total 365,586.09 

Investment account . $42, 844. 51 

Unexpired insurance. Guaranty Trust Co. (Ce- 
ment Co.) 2, 663. 34 

Guaranty Trust Co. (Power Co.) 1, 156. 17 

.\ccrued taxes... 2,806.29 

49, 470. 31 

2, 795, 394. 50 



202 CONCENTRATION OP ECONOMIC POWER "" 

Cayuga Operating Co., Inc., balance sheet, May SI, 1926 — Cont. 

LIABILITIES 

Capital liabilities: 

Cayuga Operating Co., Inc., capital stock 

issued $50, 000. 00 

First mortgage bonds ,._____-,^_„>.:: 119,000.00 

Total (Operating Co.) - ...-_..- 1 1. 1 $169, 000. 00 

Cayuga Power Co., first mortgage, bonds 76, 000. 00 

Depreciation (Operating Co.) $432, 295. 45 

Depletion 7,902.59 

Federal income taxes 8, 039. 34 

Sinking fund (Operating Co.) ._ 

Total (Operating Co.) , 448, 237. 38 

Depreciation (Power Co.) J • $111, 113. 34 

Sinking fund (Power Co.) 18,000.00 

Total (Power Co.):..,..-.... -.---,-.,-.--, -,,,., 129, 113. 34 

Current liabilities: 

Accounts payable — purchases $12, 305. 56 

Accts. payable — miscellaneous 729. 96 

Notes payable (Pa. C. Co.) . - 797, 343. 20 

Payrolls and salaries ,_ 15, 711. 25 

Penna Cement Co . ....-._ 119, 545. 11 

Total - - 945,635.08 

First mortgage bond and note interest :.- $22, 875. 67 

Brass checks . 133. 25 

Unclaimed wages 133. 28 

Unexpired insurance- ._ .. 5, 480. 79 

Suspense 120, 907. 09 

^ 149, 530. 08 

Total - 1.917,515.88 

Surplus - $828, 940. 56 

Profit and loss. - . - . 48, 938. 06 



877, 878. 62 



Exhibit "C 



2, 795, 394. 50 



(Form of Certificate of Deposit) 
No -• Shares 

Certificate of Deposit of Shares of Capital Stock of Pennsylvania 

Cement Company 

This Certifies that -.- has deposited with the undersigned, 

The National City Bank of New York, certificates purporting to be for 

shares of the capital stock of the Pennsylvania Cement Company, subject to 
the terms and conditions of, and deliverable as provided in, an Agreement, dated 
July . ., 1926, between certain stockholders of the Pennsylvania Cement Company, 
parties of the first part, The National City Company and Hemphill, Noyes & 
Company, parties of the second part, and the undersigned as Depositary, party 
of the third part. The holder hereof by accepting this Certificate, assents to and 
is bound by all the provisions of the said Agreement, and is entitled to receive 
all the securities or cash, or both, to which the depositor of the said shares is or 
may become entitled pursuant to the provisions of the said Agreement. This 
Certificate and the rights represented hereby may be transferred upon books 
kept by the undersigned for that purpose by the holder hereof in person or by 
duly authorized attorney upon surrender of this Certificate to the undersigned, 
properly indorsed. 

Dated, New York, . 

The National City Bank of New York, 

as Depositary. 
By , Authorized Officer. 



CONCENTRATION OF ECONOMIC POWER 203 

(Form of Indorsement) 

For Value Received, the undersigned hereby sells, assigns and transfers 

unto the within Certificate and all rights represented thereby, 

and irrevocably constitutes and appoints , attorney, to transfer 

the same on the books of The National City Bank of New York, with full power 
■of substitution in the premises. 

Dated . 

[L.S.]. 

In the presence of 



Notice: The signature to this assignment must correspond with the name as 
written upon the face of the Certificate in every particular, without alteration or 
•enlargement, or any change whatever. 

Exhibit No. 3. 

Agreement, made this 23rd day of July 1926, by and between Richard Hardy 
and Thomas R. Preston, individually and as a Committee of the holders of the 
Common Capital Stock of Dixie Portland Cement Company (hereinafter called 
"Committee"),, parties of the lirst part, and The National City Company, a 
corporation organized under the laws of the State of New York, and Hemphill, 
NoYEs & Company, a copartnership doing business in the City an4 State of New 
York (hereinafter called "Syndicate"), parties of the second part, Witnesseth: 

That in consideration of the premises and of,the mutual agreements and under- 
takings herein contained and of the payment by the Syndicate to the Committee 
of the sum of Ten Dollars ($10) in cash, receipt of which is hereby acknowledged, 
the parties hereto hereby agree as follows: 

I. The Committee represents — 

(a) That Dixie Portland Cement Company (hereinafter called "Dixie 
Company") owns, and operates a plant for the manufacture of Portland Ce- 
ment in or near the City of Chattanooga, Tennessee, and also owns, free of any 
lien or charge, all the issued and outstanding shares of stock of Dixie Sand & 
Gravel Company, a corporation of the State of Tennessee. 

(b) That attached hereto and marked Exhibit "A", and Exhibit "B", 
respectively, are true copies of the balance sheets of Dixie Company and- of 
said Dixie Sand & Gravel Company, and that said balance sheets correctly 
set forth the respective financial conditions of said companies as of the close 
of business on April 30th, 1926. 

II. The Syndicate represents that it will uae its best efforts to cause to be 
organized a corporation (hereinafter called "Consolidated Company") for the 
plirpose of acquiring, directly or indirectly, the assets of Dixie Portland Cement 
Company and of its said subsidiary and the assets of certain other cement com- 
panies, including all or some of the following companies: Dexter Portland Cement 
Company, a Pennsylvania corporation, and its subsidiaries, Clinchfield Portland 
'Cement Corporation, a Virginia corporation, and its subsidiaries, and Pennsylvania 
Cement Company, a Pennsylvania corporation, and its subsidiary. • The Consoli- 
dated Company may be organized as a new corporation with such name and under 
the laws of such state as the Syndicate may deem desirable, or it may be created 
through the consolidation of one or more of the above-mentioned companies, or 
through the amendment of the charter of any one of them to provide for the 
capital structure below outlined. 

The capital of the Consolidated Company shall consist of an authorized issue 
of $20,000,000 par value of Preferred Stock bearing cumulative dividends at the 
rate of 7% per annum and redeemable at not exceeding $115 per share, of which 
(except as below provided) not more than $13,000,000 par value shall be outstand- 
ing at the completion of the consolidation; and an aiithorizpd issue of 1,000,000 
shares of Common Stock having no par value, of which not more than 400,000 
shares shall be outstanding at the completion of the cortsolidation. The Consol- 
idated Company will also authorize an issue of not exceeding $20,000,000 of bonds 
bearing interest at not exceeding 6% per annum, and maturing not more than 
twenty years from their date, of which not more than $13,000,000 will be out- 
standing at the completion of the consolidation. Should the face amount of 
bonds outstanding at the completion of the consolidation be reduced below 
$13,000,000, the amount of Preferred Stock then outstanding may be increased 
by an amount equivalent to such reduction. 



204 CONCENTRATION OF ECONOMIC POWER 

III. The Committee agrees to use its best efforts to cause all holders of the 
Common Stock of Dixie Company to deposit their shares with the Hamilton 
National Bank, of Chattanooga, Tennessee, under a deposit agreement with the 
Committee, and with proxies or powers of attorney running to the Committee, in 
form sufficient to authorize the Committee to vote for a transfer of the assets of 
Dixie Company to the Consolidated Company, and to take any other action, 
corporate of otherwise, which may be necessary or desirable to carry out theterms 
of this Jigreement. 

IV. The Committee agrees subject to its being able to obtain the deposit of not 
less than 75% in amount of the shares of the Common Stock of Dixie Company 
in the manner aforesaid, forthwith upon request of the Syndicate to cause Dixie 
Company to sell, assign, transfer, and deliver to' the Consolidated Company, all 
the assets and properties of every character and description of Dixie Company,, 
including aU issued and outstanding shares of stock of its subsidiary company and 
trade-marks, trade-names and goodwill, and to accept in full payment therefor 
securities of the Consolidated Companv of the character above described as 
follows: $2,679,000 in bonds, at their face' value, 26,790 shares of Preferred Stock, 
'59,533^ shares of Common Stock; Provided, that the amount of bonds, as above 
provided, which Dixie Company shall be entitled to receive in part payment for 
its assets, shall be reduced by an amount equal to $100 per share for each share of 
its Preferred Stock acquired by Dixie Company prior to April 30, 1926, and held 
in its treasury on that date, and Shall be further reduced by an amount equivalent 
to the cash which shall have been paid by Dixie Company since that date to 
holders of its Preferred Stock in purchase or redemption of their shares (but not 
including cash paid for accrued dividends thereon) or deposited by the said Com- 
pany with a bank or trust company for the purpose of effecting such purchase or 
redemption; 

If the assets of Dixie Company are not transferred to the consolidated com- 
pany and tlie consideration paid in accordance with the terms hereof on or before 
October 1, 1926, then and in that event all the net earnings of the Dixie Com- 
pany accruing subsequent to October 1, 1926, shall not be included in the assets 
to be transferred to the consolidated company but shall remain as assets of the 
Dixie Company for distribution among its stockholders. 

V. The -Syndicate agrees, subject to the conditions hereinafter set forth, to 
cause said Consolidated Company to purchase and acquire all of the assets of 
Dixie Coonpany, and to make payment therefor to Dixie Company in the securi- 
ties^ of the Consolidated Company as hereinabove set forth, and to cause said 
Consolidated Company to enter into a contract with Dixie Conapany for the 
assumption by the Consolidated Company of all liabilities of Dixie Company and 
of its subsidiary shown on the annexed balance sheets, as well as any obligation 
incurred for moneys borrowed as permitted by paragraph (4) of this Article V; 
provided : 

(1) That the Consolidated Company in a manner and to an extent satis- 
factory to the Syndicate shaU be able to acquire the assets and properties 
of other companies mentioned in the foregoing Article II of this Agreement. 

(2) That the earnings and financial condition of aU of said companies, 
including Dixie Company, when checked by independent auditors approved 
by the Syndicate, will be in substantial accord with the representations 
with respect thereto which have been made to the' Syndicate; and that a 
report by Messrs. Ford, Bacon & Davis, Engineers, appointed by The 
Syndicate for the purpose of making a survey of the properties of said com- 
panies, will in all respects be satisfactory to the Syndicate. 

(3) That no substantial defects will appear in the titles to any of the 
properties of any of said companies ; 

(4) That from April 30, 1926, the date of the balance sneets hereto annexed, 
to the date of the transfer of the assets of Dixie Company to the Consoli- 
dated Company, no dividend or distribution of assets has been declared or 
paid to the Stockholders of Dixie Company, except a dividend of 3}i percent, 
on its Preferred Stock, payable July 1, 1926, and that no substantial expendi- 
ture of funds or dissipation of assets has taken place, except as may have 
been required in the regular and usual course of business; except that the 
Company may redeem all of its Preferred Stock outstanding on April 30, 
1926, and borrow all or any part of the amount required for this purpose. 

(5) That the legality and validity of the merger or acquisition of said 
companies and of all matters relating to their combination or merger shall 
be approved by counsel satisfactory to the Syndicate; 



CONCENTRATION OF ECJONOMIC POWER 205 

(6) That there shall be no substantial decline in the general market 
for industrial securities of the character to be issued by the Consolidated 
Company. 

VI. In the event of the consolidation becoming effective, the Committee agrees 
forthwith to take all necessary action [o effect the speedy dissolution of Dixie 
Cpropany and the prompt distribution to its stockholders of the securities of 
the Consolidated Company received by it; provided, that the securities of the 
Consolidated Company to which stockholders represented by the Committee are 
entitled shall be deposited with The National City Bank of New York subject to 
the order of the Committee. 

The Committee hereby agrees to sell to. the Syndicate — 

(a) All bonds of the Consolidated Company so deposited; and 

(b) AU shares of the Common and Preferred Stocks of the Consolidated 
Company so deposited, less such number of shares of said Common and/or 
Preferred Stocks as the Committee shall notify the Syndicate of its election 
to retain as hereinbelow provided. 

Notice of its election to retain any portion of the said Common or Preferred 
Stocks of the Consolidated Company shall be given by the Committee to the 
Syndicate not later than twenty (20) days from the date of this Agreement, shall 
be in writing signeid by the Committee and shall specify the number of said shares 
of Common and/or Preferred Stocks sold to the Syndicate, and the number of 
shares of said stocks which the Committee has elected to retain. 

The Syndicate hereby agrees to purchase from the Committee the securities 
described in (a) and (6) above and to make payment therefor by depositing with 
The National City Bank of New York to the order of the Committee for the ac- 
count of stockholders of Dixie Company represented by it, the following amounts 
in cash, viz.: 

For each bond of the Consolidated Company so purchased an amount 
equal to the facq valu^ thereof without interest; 

For each share of Preferred Stock of the Consolidated Company so pur- 
chased an amount equal to the par value thereof; 

For each share of the Common Stock of the Consolidated Company so 
purchased. Forty-five Dollars ($45). 

The Syndicate also agrees to deposit with said The National City Bank of New 
York to the order of the Committee Four and 50/100 Dollars ($4.50) for each 
share of Preferred Stock which the Committee has elected to retain, and one-fifth 
(Yi) of a share of .Common Stock for each share of Common Stock which the Com- 
mittee has elected to retain. 

VII. In Consideration of the said deposit by the Syndicate, the Committee 
agrees to deposit all certificates representing such Common and Preferred Stocks 
of tlie Consolidated Company retained by the Committee with the Hamilton 
National Bank, of Chattanooga, Tennessee, and that it will not sell or dispose of 
any of said stocks or permit any of said stocks to be sold or disposed of for a period 
of "six (6) months from the day of their delivery, to said Bank without the consent 
in writing of the Syndicate first had and obtained, and wiU not for a further j)eriod 
of six (6) months sell or dispose of any of said stocks or permit any of said stocks 
to be sold or disposed of without being first offered to the Syndicate at the prices 
at which it may be desired to offer the same for sale. Said stocks shall be held 
by said Hamilton National Bank under such deposit agreement or deposit agree- 
ments or receipts as may be necessary, appropriate or desirable to carry out 
the provisions of this Article VII. 

VIII. All expenses in connection with the transfer of assets and dissolution of 
Dixie Company including fees and expenses of Hamilton National Bank, as de- 
positary, shall be borne by the Consolidated Company, and all proceedings relating 
thereto shall be supervised by counsel for the Syndicate whose charges and dis- 
bursements shall likewise be paid by the Consolidated Company. ' 

IX. All notices or requests provided to be given to the Committee shall be 
sufficiently given if sent by mail, postage prepaid, to Richard Hardy, at Chatta- 
nooga, Tennessee, and any notice so mailed shall be conclusively deemed to be 
received by the Committee. All notices required to be given or filed with the 
Syndicate shall be sufficiently given or filed if delivered to The National City 
Company at its office No. 56 Wall Street, New York City. 



206 CONCENTRATION OF BOONOMIO POWER 

In Witness Whereof, the parties hereto have executed this Agreement as of 
the day and year first above written. 

Richard Hardy. [L. S.] 
Thomas R. Preston. [L. S.] 
Not individually but as a Committee of the holders of the Common Stock- 
of Dixie Portland Cement Company. 

The National City Company 
By Stanley A. Russell, Vice President. 
Attest: 

F. J. Maguire, Asst. Secreta,ry. 
Hemphill Noyes Co. [L. S.] 

Exhibit "A" 

Dixie Portland Cement Co. 

Statement as at April 30, 1926 

assets 
Liquid assets: 

Cash . $572,034. 49 

Receivables : 

Open accounts $289, 919. 05 

Notes - 51,874.89 

341, 793. 94 

Stocks and bonds 96,900.00 

Cement and raw materials 114,998.10 

$1, 125, 726. 53- 

Working assets: 

MiU supplies, fuel and gypsum 148, 686. 89 

Bags, patterns and tools 54, 956. 02 

Furniture, fixtures and laboratory equipment. 27, 347. 49 

Teaming and auto equipment ■ . 27, 898. 72 

Dixie ibn and hospital supplies and equipment. 7, 842. 79 

266,731.91 

Dixie Sarfd & Gravel Co 387, 044. 51 

Dixie Concrete Products Co ...- 110, 075. 07 

Fixed assets: Real estate, buildings and equipment (less depre- 
ciation) . ... 2,447,965. 13 

Total ,. - 4, 337, 543. 15 

liabilities 
Current payables: , 

Open accounts. . .... $110, 271. 07 

Customers' sack accoimt.. . 61, 167. 68 

Unidentified bags 11, 025. 71 

$182, 464. 46 

Reserves: 

Taxes . 59,308.11 

' Miscellaneous 304,150.89 

: 363, 459. 00 

Surplus: Undivided net income 272, 419. 69 

Capital stock: 

Preferred . 1, 024, 200. 00 

Common .- 2, 495, 000. 00- 

Total...' .-- - 4, 337, 543. IS 



CONCENTRATION OF ECONOMIC POWER 207 

Exhibit "B" 
Ditie Sand & Gravel Co. 
Statement as at April SO, 1926 

ASSETS 

Liquid: 

Cash . $1,529.95 

Accounts receivable $14, 401. 33 

Bills receivable 511. 50 

14, 912. 83 

Sand and gravel 14,880.84 

$31, 323. 62 

Working: 

Operation supplies 6, 450. 48 

Patterns 140. 10 

Tools : 921. 93 

Automobile . 1, 225. 00 

OfRce equipment 948. 97 

-'- 9, 686. 48 

Fixed : Real estate, plant and equipment 625, 449. 37 

Deferred charges: 

Extraordinary repairs J $150. 00 

Accident to employees 74. 40 

Insurance 1, 747. 35 

■ 1, 971. 75' 

Total . 668,431. 22 

LIABILITIES 

Current: 

Accounts payable $8, 793. 93 

Dixie Portland Cement Co 368,120.81 

376, 914. 74' 

Reserve: 

Adjusting previous years' accounts . 3. 99 

Junk -' 200. 00 

Depreciation 177, 987. 71 

Reserve for taxes 1, 778. 27 

Bad accounts 1, 036. 55 

Coaling- _ .... 39. 38 

: 181, 045. 90 

Surplus and undivided profits 91, 970. 58 ^ 

Capital less treasury stock. 18, 500. 00 ^ 

Total ...:. 668,431. 22 

Exhibit No. 4 

Agreement, made this 29th day of July 1926, by and between John A. Miller, 
individually and as representing the holders of the Common Capital Stock of 
Dexter Portland Cement Company (hereinafter called "Miller"), party of the 
first part, and The National City Company, a corporation organized under the 
laws of the State of New York, and Hemphill, Noyes & Company, a copartnership 
doing business in the City and State of New York (hereinafter called "Syndi- 
cate"), parties of the second part, and The National City Bank of New York, 
a national banking corporation (hereinafter called "Depositary"), party of the 
third part, Witnesseth: 

That in consideration of the premises and of the mutual agreements and under- 
takings herein contained and of the payment by the Syndicate to Miller of the 
sum of Ten Dollars ($10) in cash, receipt of which is hereby acknowledged, the 
parties hereto hereby agree as follows: 

I. Miller represents — 

(a) That Dexter Portland Cement Company (hereinafter called "Dexter 
Company") owns and operates two plants known as the "Dexter" and "Penn 
Allen" plants, for the manufacture of Portland Cement in or near the City 
of Nazareth, Pennsylvania. 



208 CONCEiNTRATION OF ECONOMIC POWER 

(6) That attached hereto an4 marked Exhibit "A," is a true copy of the 
balance sheet of Dexter Company, and that said balance sheet correctly 
sets forth the financial condition of said company as of the close of business 
on May 31st, 1926. 

II. The Syndicate agrees to use its best efforts to cause to be organized a 
corporation (hereinafter called "Consolidated Company") for the purpose of 
acquiring, directly or indirectly, the business, property, and assets of Dexter 
Company and the business, property, and assets of certain other cement com- 
panies, including all or some of the following companies: Dixie Portland Cement 
Company, a West Virginia corporation, and its subsidiaries; Clinchfield Portland 
Cement Corporation, a Virginia corporation, and its subsidiaries; and Pennsyl- 
vania Cement Company, a Pennsylvania corporation, and its subsidiaries. The 
Consolidated Company may be organized as a new corporation with such name 
and under the laws of such state as the Syndicate may deem desirable, or it may 
be created through the consolidation of one or more of the above-mentioned 
companies, or through the amendment of the charter of any one of them to provide 
for the capital structure below outlined. 

The capital of the Consolidated Company shall consist of an authorized issue 
of $20,000,000 par value of Preferred Stock bearing cumulative dividends at the 
rate of '7% per annum and redeemable at not exceeding $115 per share, of which 
(except as below provided) not more than $13-000,000 par value shall be out-, 
standing at the completion of the consolidation; and an authorized issue of 1,000,- 
000 shares of Common Stock having no par value, of which not more than 400,000 
shares shall be outstanding at the completion of the consolidation. . The Con- 
solidated Company will also authorize an issue of not exceeding. $20,000,000 of 
Bonds bearing interest at not exceeding 6% per anaum, and maturing not more 
than twenty years from their date, of which not more than $13,000,000 will be 
outstanding at the completion of the consolidation. Should the face amount of 
Bonds outstanding at the completion of the consolidation be reduced below 
$13,000,000, the amount of Preferred Stock then outstanding may be increased 
by an amount equivalent to such reduction. 

III. MiUer agrees to use his best efforts to cause all holders of the Common 
Stock of Dexter Company to deposit their shares with the Depositary, under this 
Agreement, with proxies or powers of attorney running to Miller, in form sufficient 
in the opinion of the Syndicate to authorize Miller to vote for a transfer of the 
assets of Dexter Company to the Consolidated Company, and to take any other 
action, corporate or otherwise, which may be necessary or desirable to carry out 
the terms of this Agreement. 

The shares of the Dexter Company so deposited shall be held by the Depositary 
subject to the terms and provisions of this Agreement. Unless, prior to October 
1, 1926, there shall have been deposited with the Depositary the securities and/or 
cash specified in Article IV of this Agreement as the purchase price to be paid by 
the ConsoUdated Company for the assets and properties of Dexter Company, the 
Depositary shaH promptly return the shares of stock of Dexter Company deposited 
with it hereunder to the persons or companies depositing the same, respectively. 
In the event that said securities and/or cash" specified in Article IV of this Agree- 
ment are deposited with the Depositary prior to October 1, 1926, the Depositary 
shall deliver the shares of stock of the Dexter Company deposited with it to or 
upon the order of Miller. 

IV. Miller agrees subject to his being able to obtain the deposit of not less than 
75% of the shares of the Common Stock of Dexter Company in the manner 
aforesaid, forthwith upon request of the Syndicate to cause Dexter Company to 
sell, assign, transfer, and deliver to the Consolidated Company, all its business, 
assets, and properties of every character and description, including all trade-marks, 
trade names, and goodwill and to receive in full payment therefor securities of the 
Consolidated Company of the character above described as follows: $1,722,240 in 
Bonds, at their face value, 17,222.4 shares of Preferred Stock, 38,272 shares of 
Common Stock; Provided, that if the net current assets of Dexter Company as of 
July 31, 1926, as determined by the auditors selected by the Syndicate, shall be less 
than $1,100,000, then, and in that event, the face value of the Bonds which Dexter 
Company shallbe entitled to receive in part payment of its assets shall be reduced 
by the amount"; if any, that said net current assets of Dexter Company determined 
as above provided shall be less than $1,100,000; Provided, further, that if said net 
current assets of Dexter Company determined as above set forth shall be in excess 
of $1,300,000, an amount equivalent to such excess shall be paid to Dexter Com- 
pany in cash in addition to the securities above mentioned. 

V The Syndicate agrees, subject to the conditions hereinafter set forth, to 
cause said Consolidated Company to purchase and acquire all of the assets of 
Dexter Company, and to make payment therefor to Dexter Company in the 



CONCEJSTTRATION OF BOONOMIC POWER 209 

securities of the Consolidated Company as hereinabove set forth, and to cause said 
Consolidated Company to enter into a contract \^>^ith Dexter Company for the 
assumption by the Consolidated Company of all liabilities of Dexter Company 
shown on the annexed balance sheet: Provided. 

(1) That the Consolidated Company will be able, in the opinion of the 
Syndicate, to acquire the assets and properties of other companies mentioned 
in the foregoing Article II of this Agreement, in a manner arid on a basis 
satisfactory to the Syndicate. 

(2) That the earnings and financial condition of all of saiu companies, 
including Dexter Company, when checked by independent auditors approved 
by the Syndicate, will be in substantial accord with the representations with 
respect thereto which have been made to the Syndicate; and that a report by 
Messrs. Ford, Bacon & Davis, Engiijeers,. appointed by the Syndicate for 
the purpose of making a survey of the properties of said companies, will in all 
respects be satisfactory to the Syndicate. 

(3) That no substantial defects will appear in the titles to any of the 
properties of any of said companies. 

(4) That from May 31, 1,926, the date of the balance sheets hereto an- 
nexed, to the date of the transfer of the assets of Dexter Company to the 
Consolidated Company, no dividend or distribution of assets shall have been 
declared or paid to the stockholders of Dexter Company, except the regular 
divid^ds on its Preferred and Common Stock, payable prior to August 1, 
1926, at the current rate, and that after July 31, 1926, no dividend or distri- 
bution of assets shalt have been declared or paid to such stockholders) unless 
the aggregate amount of such dividienH oi: distribution, .shall have been set 
fortn on the balance sheet of the Dexter Company as of July 31, 1926; and 
that no substantial expenditure offunds or dissipation of assets has taken 
place, except as may have been required in the regular and usual course of 
business, and except that the company may pay certain bonuses at the rates 
now authorized to bejiaid to its officers aad employees, but not exceeding 

$100,(JUU in aggregate amount. ;--- 

(5) That the legality and validitv of the merger or acquisitioni of said' 
companies and of all matters relating to their combination or merger si all be 
approved by counsel selected by the Syndicate. 

(6) That there shall be no substantial decline in the general market for 
■• industrial, securities of the character to be issued by the Consolidated 

Company. 

VI. In the event of the consolidation becoming effective. Miller agrees forthwith 
to take all necessary action to effect the distribution to the stockholders of Dexter 
Company of the securities of the Consolidated Company received for the assets of 
Dexter Company: Provided, that the securities of the Consolidated Company to 
which stockholders represented by Miller are entitled shall be forthwith deposited 
with the Depositary, subject to the order of Miller, pursuant to the terms and 
provisions hereof. ' 

Miller he^r>3by agrees to sell to the Syndicjite 

(a) All Bonds of the Consolidated Company so deposited; and 
(6) All shaies of the Common and Preferred Stocks of the Consolidated 
Company so deposited, less such number of shares of said Common and/or 
Preferred Stocks as Miller shall notify the Syndicate of his election to retain 
as hereinbelow provided. 

Notice" of his election to retain any portion of the said Common or Preferred 
Stocks of the Cpnsolidated Company shall be given by Miller to the Syndicate 
not later than twenty (20) days from the date of this Agreement, shall be in writing 
•signed by Miller and shall specify the number of saicf shares of Common and/or 
'Preferred Stocks sold to the Syndicate, and the number of shares of said stocks 
which Miller has elected to retain. 

The Syndicate hereby agrees to purchase from Miller the securities described 
in (a) and {h) above and to make payment therefor by depositing with the Deposi- 
tary to the order of Miller for the account of stockhblders of Dexter Company 
represented by him, the following amounts in cash, viz: 

For each bond of the Consolidated Company so purchased an amount equal 
to the face value thereof without interest; 

For each share of Preferred Stock of the Consolidated Company so pur- 
chased an amount equal to the par value thereof; 

For each share of the Common Stock of the Consolidated Company so 
purchased. Forty-five Dollars ($45). 
264905 — 41 — No. 13 15 



210 CONCENTRATION OF ECONOMIC POWEH 

The Syndicate also agrees to deposit with the said Depositary to the order 
of Miller Yg of one share of Preferred Stock for each share of Preferred Stock 
which Miller has elected to retain, and }i of one share of Common Stock for each 
share of Common Stock which Miller has elected i^o retain. 

VII. In consideration of said deposit by the Syndicate, Miller agrees that he 
will deposit all certificates representing Common and Preferred Stocks of the Con- 
solidated Company retained by him or deposited for his account with the Deposi- 
tary, and that he will not sell or dispose of any of said Stocks or permit any of 
said Stocks to be sold or disposed of for a period of six (6) months from the day 
of their delivery to the Depositary without the consent in writing of the Syndi- 
cate first had and obtained, and will not for a further period of six (6) months sell or 
dispose of any of said Stocks or permit any of said Stocks to be sold or disposed of 
without being first offered to the Syndicate at the prices at which it may be desired 
to offer the same for sale. Said Stocks shall be held by the Depositary under such 
deposit agreement or deposit agreements or receipts as may be necessary, appropri- 
ate, or desirable to carry out the provisions of this Article VII. 

VIII. The fees and expenses of the Depositary, and all expenses in connection 
with the transfer of assets of Dexter Company shall be borne by the Consolidated 
t!ompany, and all proceedings relating thereto shall be supervised by counsel 
fof the Syndicate whose charges and disbursements shall likewise be paid by the 

vConsolidated Company. 

IX. All notices or requests provided to be given to Miller shall be sufficiently" 
given if sent by registered mail, postage prepaid, tp John A. Miller, at 350 
Madison Avenue, New York, N. Y., and any notice so mailed shall be conclusively 
deemed to be received by Miller. All notices required to be given or filed with 
the Syndicate shall be sufficiently, given or filed if delivered to The National City 
Company at its office, No. 55 Wall Street, New York City. 

In Witness Whereof, the parties hereto have executed this Agreement as of 
the day and year first above written. 

Individually, and as repTesentiiig the holders of the Common 

Capital Stock of Dexter Portland Cement Company. 

The National City Company, 

By — , Vice President. 

Attestj 

— -, Secretary. 

—. ' — iL. S.J 

The National City Bank of New York, 

By — , Assistant Trvsi Officer. 

Attest: 

, Assistant Cashier. ■ 

Exhibit "A" 
Dexter Portland Cement Co. balance sheet, May 31, 1926 

assets 
Current assets: 

Cash in banks and on hand $256, 594. 01 

Notes receivable, less reserve of $10,361.42, . 42, 441. 03 

Customers' accounts receivable, less reserve 

of $34,675. 42 384,332.07 

Advances to officers and employees 8, 380. 79 

Other accounts receivable 7, 229. 62 

Inventories, at cost or market 
whichever is lower, as certi- 
fied by responsible officials: 

Cement . j^ $255, 957. 76 

Raw material, supplies, 

and work in process 544,416.31 

— — 800, 374. 07 

$1,499,351.59 

Deferred charges to future operations: Prepaid 

insurance and taxes ,_!. 11, 486. 31 

Investments: Miscellaneous stocks $9,150.00 

Less reserve ■-- 4, 300. 00 

4, 850. 00 



CONCEiNTRATION OF ECONOMIC POWER 211 

Dexter Portland Cement Co. balance sheet, May SI, 1926 — Continued 
ASSETS — continued 

Property account: Land, buildings, machinery, 

and equipment $4, 738, 777. 31 

Less reserve for depreciation and depletion 1, 607, 581. 14 

— $3, 131, 19G. 17 

Goodwill, being cost of capital stock of Penn-AUen Cement Co. 

in excess of the book value thereof 797, 379. 1 1 

Total 5, 444, 26^. 1 8 

LIABIMTIES 

Current liabilities: 

Notes payable, banks $240, 000. 00 

Accounts payable 76,666.85 

Accrued wages, salaries, bonuses, taxes, and 

other expenses - 209, 819. 36 

Provision for Federal income taxes 149, 202. 20 

— '675, 688. 4 1 

First-mortgage, 6-percent serial gold bonds: Due $165,000 on Dec. 

15 each year to 1934 and $715,000 on Dec. 15, 1935 2, 200, 000. 00 

Capital stock: 

Authorized— 125,000 shares of $40 each $5, 000, 000. 00 

Issued : 

Preferred, 40 shares of $40 each 1, 600. 00 

Common, 49,640 shares of $40 each 1,985,600.00 

— — — — 1 , 987, 200. 00 
Surplus 581, 374. 77 

Total _ _ . 5, 444, 263. 1 8 

I'JXHIBIT No. 5 

[Copy] 

September 18th, 1926. 
To Pennsylvania-Dixie Cement Corporation: 

I. We offer to cause to be conveyed, trf.nsferred, and delivered to your Com- 
pany, the following properties and cash: 

(a) All the plants, re^l estate, assets, properties, and business of Pennsyl- 
vania Cement Company, a Pennsylvania corporation, and of its subsidiary, 
Cayuga Operating Co., lac, q New York corporation, including cash in bank, 
accounts receivable, tracte-marks, trade names, and goodwill. 

(6) All the plants, real estate, assets, properties, and business of Dexter 
Portland Cement Company, a Pennsylvania corporation, including cash in 
bank, accounts receivable, trade-marks, trade names, and goodwill. " .. 

(c) All the plants, real estate, assets, properties, and business of Dixfe" 
Portland Cement Company, a West Virginia corporation, including cash in 
bank (other than cash necessary to retire Preferred Stock), accounts receiv- 
able, trade-marks, trade- names, and goodwill, and the capital stock (or at 
your election, the assets) of its subsidiary, Dixie Sand & Gravel Company, 
a corporation of the State of Tennessee. 

id) All the plants, real estate, assets, properties, and business of Clinch- 
field Portland Cement Corporation, a Virginia corporation, including cash 
in bank, accounts receivable, trade-marks, trade names and goodwill, and 
the capital stock (or at your election the assets) of its subsidiary, Marcem 
Quarries Corporation, a corporation of the State of Virginia. 

It is the intention to transfer to your Ccnpany as going concerns all the prop- 
erties, assets, and businesses of the comp m ies named in Items (a), (h), (c), and- 
(d) as the same shall be at the date, or X the respective dates of tiansfer, and 
subject to all the debts, liabilities, alnd ob -.{' itions of said companies, respectively, 
ail of which your Company must assumf a id pay, 

(e) $1,336,728.65 in cash, such csT to be in addition to all cash included 
among the assets of the companiet r iraed in Items (c), (6), (c), and {d). 



212 CONCENTRATION OF ECONOMIC POWER 

It is understood that your Company will assume and pay all expenses incident 
to the transaction, including all expenses of transferring the above properties, 
the charges and expenses of all depositaries of stocks of the above-mentioned 
companies, or of your Company, the charges and expenses of all engineers, ap- 
praisers, and accountants retained to examine or to report on the condition ot the 
above properties, and the fees and disbursements of our attorneys, and all ex- 
penses paid or incurred by us incident to the consolidation. „r x t. 

II We submit for vour information a statement by Messrs. Price, Waterhouse 
& Companv of the combined financial condition of the above-mentioned com- 
. panfes as of Julv 31, 1926, based on the commercial value of the fixed assets as 
' appraised bv Fwd, Bacon & Davis, Inc., Engineers, which statement shows a 
combined net worth of over $35,000,000, excluding the cash mentioned m Item 
(e) We however, make no rer '•e. itations as tu the net worth, or the commer- 
cial or other value of the said V .-Ot ^rties, assevs, and businesses, and we assume 
no responsibility for the correctness of the valuations placed thereon by said 

^"frmust be understood that our undertaking to cause to be conveyed, transferred, 
and delivered to your Company the assets mentioned in Items (o), {b), [c), 
and id) above, will be fully complied with if we cause the respective companies 
to execute and deliver, directly to your Company, such deeds, conveyances, 
bills of sale, assignments or other instruments of, transfer as in the opinion ot your 
counsel shall be sufficient to vest in your Company such title to the items of 
. property thereby sold, assigned, and conveyed, or intended so to be, as the com- 
pany or companies respectivelv executing the same shall have at the time of 
the execution and delivery of the same; and we make no representation? or war- 
ranties as to the sufficiency of the said deeds, conveyances, bills of sale, assign- 
ments, or other instruments of transfer or as to the validity of the rights, titles, 
and interests thereby given, granted, or conveyed. . ^, , . +v„^k„i„„»^ 
It is further understood that anv changes which may take place in the balance 
sheets or current earnings of the said respective companies, orjn their assets and 
liabilities, or in the conditions affecting their respective businesses before the 
transfer of their assets and businesses to your Company is completed, shaU be . 

^Sn"'"ln^wnsideration of the transfer to your Company of the foregoing assets 
and going businesses, your Company shall issue the following securities: $13,- 
000,000, aggregate principal amount, of its First Mortgage Sinking Fund Gold 
Bonds Sems A, bearing interest at the rate of 6% and due September 15th, 
1941 13o!oOO shares of its Series A, Convertible 7% Cumulative Preferred Stock 
of the par value of $100 a share; and 288,000 shares of its Common Stock without 
nominal or par value. , . ,, ^ n • 

Such securities shall be issued m the manner following. 

d") $3 703 703 70 aggregate principal amount, of the said Bonds; 34,904.01 
shares of' the'said Preferred Stock; and 88,888.89 shares of the said Common 
stock to be deposited for the account of the Stockholders of the Pennsylvama 
Cement Company with The National City Bank of New York, as Deposi- 
tary under the Agreement hereinafter referred to, dated ^uly 2b, ly^b, a. 
copy of which is hereto annexed, marked "Schedule A ; 179904 

(2) $1722.240, aggregate principal amount, of the said bonds-, i/,iiii^.* 
shires of the said Preferred Stock; and 38,272 shares of the said Common 
Stock to be deposited subject to the order of John A^MiUer with Tb^^ National 
Citv Bank of New York, as Depositary, under the Agreement hereinafter 
referred to, dated July 29, 1926, a copy of which is hereto annexed, marked 

(V\ m 654 800! aggregate principal amount, of the said Bonds; 26,790 
shirL of the said Preferred Stoci; and 59,533/3 shares of said Common 
.Stock, to be deposited subject to the order ^f Rrchard Hardy and Thomas 
R Pi-eston with The National City Bank of New York, as Depositary, under 
the agreement hereinafter referred to, dated July 23, 1926, a copy of which 
is hereto annexed, marked "Schedule C"; ti^^Hc. 0^ 875 

(4) $1,563,048.23, aggregate principal amount, of the said Bonds, ^o,»/o 
shares of the said P^eff^ed Stock; and 51,111.11 shares of the said Common 
Stock, to be deposited subject to the order of The Securities Company 
and John B. Dennis, as a Committee, with The National City" Bank of New 
York, as Depositary, under the Agreement hereinafter referred to, dated July 
24, 1926, a copy of which is hereto annexed, marked Schedule D , ana 

(^) $4 356.208.07, aggregate principal amount, of the said i>onds, .io, 
208^9shares of the said Pfeferred Stock; and 50,194.67 shares 01 the said 
Common Stock, to ihe undersigned jointly. 



COXCEiNTRATION OF ECONOMIC POWER 213 

It is understood that, upon the request of the undersigned, your Company will 
make application to list on The New York Stock Exchange all issued amounts of 
the above-mentioned stocks and bonds. 

IV. In order that you may be informed as to the profit resulting to us from this 
transaction, we refer to the following Agreements annexed hereto as Schedules 
"A," "B," "C," and "D," respectively: 

Schedule A: Agreement, dated July 26, 1926, between certain Stockholders 
of Pennsylvania Cement Company, The National City Company, and 
Hemphill, Noyes & Company, and The National City Bank of New York, 
as Depositary; 

Schedule B: Agreement, dated July 29, 1926, between John A. MiUer, 
individually and as representing holders of the Common Stock of Dexter 
Portland Cement Company, The National City Company and Hemphill, 
Noyes & Company, and The National City Bank of New York, as Depos- 
itary; 

Schedule C: Agreement, dated July 23, 1926, between Richard Hardy and 
Thomas R. Preston, individually and as a Committee of the holders of the 
Common Stock of Dixie Portland Cement Company, The National City 
Company and Hemphill, Noyes & Company, and The National City Bank 
of New York, as Depositary; 

Schedule D: Agreement, dated July 24, 1926, between The Securities Com- 
pany and John B. Dennis, individually and as a Committee of the holders of 
the Common Stock of Clinchfield Portland Cement Corporation, The Na- 
tional City Company and Hemphill, Noyes & Company, and The National 
City Bank of Nev/ York, as Depositary. 

V. If the foregoing offer is accepted by you, we wiU, at your option, to be 
exercised by notice to us in writing, within two days after the acceptance of this 
offer, subscribe to, and within ten days after the transfer to your Company of 
the properties above referred to, pay for 112,000 additional shares of your Com- 
pany's Common Stock without par value at $35 a share, such stock to be issued and 
delivered to us, or upon our order, upon payment to your Company of the full 
subscription price of $3,920,000, and such stock to include the ten shares subscribed 
for by the incorporators and by them assigned to James G. Scarff, and by him to 
the undersigned as appears from the annexed assignment, marked "Schedule E." 

VI. The foregoing offer is subject to the condition that it must be accepted 
within five days from the date thereof. 

Very truly yours. 

The National City Company, 
By Stanley A. Russell. 
Vice-President, Hemphill, Noyes & Co. 

Exhibit No. 6 

[CopyJ 

September 18, 1926. - 
The National City Company and Hemphill, Noyes & Company. 

Dear Sirs: This will advise you that your offer to this Company, dated 
September 18, 1926, for the transfer to this Company of the properties of Pennsyl- 
vania Cement Company, Dexter Portland Cement Company, Dixie Portland 
Cement Company, and Clinchfield Portland Cement Corporation has been 
accepted by this Company. 

Please be advised also that this Company elects to accept j'our proposal con- 
tained in said offer to subscribe to 112,000 shares of the Common Stock upon the 
terms and conditions therein set forth. 
Ver}^ truly yours, 

Pennsylvania-Dixie Cement ConpoRATiON, 
B}' ■ , President. 

Receipt of a.copv of the foregoing letter is herebv acknowledged. 
New York, September 20, 1926. 

The National City Company, 
Bv - — , Vice President. 



APPENDIX C 

HISTORICAL DEVELOPMENT AND MERGER MOTIVES OF 
BETHLB^EM STEEL CORPORATION 

This case study is offered in compliance with that part of section 2 
of the joint resolution creating a Temporary National Economic 
Committee (S. J. Res. 300, Public Resolution No. 113, 7oth Cong.) 
in which reference is made to certain aspects of the monopolj^ problem 
which were referred to in the President's message of April 29, 1938. 
/ It will be recalled that in section VI of the President's message it 
was observed, "We have learned that the so-caUed competitive system 
works differently in an industry where there are many independent 
units from the way it works in an industry where a few large producers 
dominate the market," and that "there should be a thorough study of 
the effect of that concentration upon the decline of competition." 

Other phases of the problem are raised by the additional observa- 
tion that "industrial efficiency does not have to mean empire build- 
ing"; nevertheless, the "heavy hand of integrated financial and 
management control lies upOn large and strategic areas of American 
industry." 

Elsewhere in the President's message it is suggested that the price 
practices h\ specific basic industries have exhibited certain seemingly 
uneconomic and unsocial characteristics and that some connection 
may exist between such practices and the ackno\^ledged fact of inte- 
grated financial and management control or concentration of economic 
power. 

These and other assertions of like import should be accepted as a 
challenge to inquire whether a partial answer, at least, may not be 
found within the industries mentioned by the President and in the 
existing files of the Federal Trade Commission, and without the 
further expenditure of public funds. 

Since the practices of one of the industries mentioned by the 
President are now involved in formal proceedings before the Com- 
mission (Docket 3167) and since some of the facts involving the other 
and coming within the issues presented in formal proceedings before 
the Commission have not been correlated heretofore,' the choice seems 
logically to fall upon the larger and perhaps more basic steel industry. 

CONCENTRATION IN THE STEEL INDUSTRY 

While this is primarily a study of the merger motives arid historical 
development of Bethlehem Steel Corporation, it necessarily involves 
Some study of the first and larger concentration accomplished by 
United States Steel Corporation, to which some refereuce must be made 
in order that there may be a more complete understanding of the 
facts which follow. 



Formal action In the Matter of Bethlehem Steel Corporation, Docket 962, was suspended by reason of the 
decision of the U. S. Supreme Court in the Eastman Kodak case, 274 U. S. 619. (See pp. 218-19 of this report.) 

214 



CONCENTRATION OF ECONOMIC POWER 215 

Moreover it has been urged in lesser merger cases before the courts 
and in other proceedings before the Department of Justice and the 
Federal Trade Commission that size is not an offense against the law, 
that in the steel dissolution suit the court refused to condemn a com- 
bination of approximately 45 percent of the total ingot capacity, and 
"of course the decision (just referred to) is controlling." ^ In defense 
of the right to pursue the particular merchandising plan of the steel 
industry in which the UiJted States Steel Corporation was (and still 
is) the acknowledged leader, it was contended that "the existence of 
the Steel Corporation, the scope of its operations, the power which 
it exerts, its actual or potential influence, has received legal sanction. 
The necessary consequence of its being and the natural results of its 
operation must be accepted also." ^ 

In view of the apparent misinterpretation of what the Supreme 
Court said in the dissolution suit, it may not be out of place to recite 
the quotation which the Court made from the opinion of Judges 
Wooley and Hunt in the court below as seeming to rejflect its own 
view in the matter: 

The view was expressed that neither the Steel Corporation nor the preceding 
combinations, which were in a sense its antetypes, had the justification of indus- 
trial conditions, nor were they or it impelled by the necessity for integration, or 
compelled to unite in comprehensive enterprise because such had become a con- 
dition of success under the new order of things. On the contrary, that the or- 
ganizers of the corp ration and the preceding companies had illegal purpose from 
the very beginning, and the corporation became "a combination of combinations, 
by which, directly or indirectly, approximately 180 independent concerns were 
brought under one business control," which, measured by the amount of pro- 
duction, extended to 80 percent or 90 percent of the entire output of the country, 
and that its purpose was to secure great profits which were thought possible in 
the light of the history of its constituent combinations, and to accomplish per- 
manently what those combinations had demonstrated could be accomplished 
temporarily, and thereby monopolize and restrain trade.'* 

On the question of size and productive capacity the majority opinion 
of the Court definitely stated that the Steel Corporation was "equal 
or nearly equal to them all, but its power over prices was not and is 
not commensurate with its power to produce." ^ The magnitude of 
that consolidation is difficult of appreciation without reference to the 
summary which accompanied the Corporation's first annual report of 
manufacturing plants and other properties acquired (exhibit 2). 

The Court considered at great length the effect of the Corporation 
upon competitors and the testimony of customers, and rejected the 
Government's contention that there had been any oppression of either 
class. In the majority view the Government was "reduced to the 
assertion that the size of the corporation, the power it may have, not 
the assertion of the power, is an abhorrence to the law * * *" — 
that is to say, that the combination embodied in the Corporation 
"unduly restrains comj*etition by its necessary effects and therefore is 
unlawful regardless of purpose." The opinion continues to the effect 
that the oppressive size of the corporation requires an effort of resolu- 
tion not to exaggerate its mfluence, and continues, "but we must 
adhere to the law and the law does not make mere size an offense or 
the existence of unasserted power an offense." * 

' Opinion of the Attorney General to the President of the Senate issued in response to S. R. 286, May 12, 
1922 (exhibit 1). 
' Dissenting opinion of Commissioner Gaslcill in F. T. C. Docliet 760. 
<251U. S.407. 
•Ibid, at 445. 
« Ibid, at 451. 



216 UONCEiNTEATION OF ECON0:\IIC POWER 

Nowhere is it suggested in that opinion .that mere size was a factor 
in the decision and that in other circumstances would it be impossible 
to find that a combination of substantially less than 45 percent of the 
country's total ingot capacity might not inhibit the law. Moreover, 
at some pains it pointed out that confederated action was not asserted; 
"if it were this suit would take on another cast. The competitors would 
cease to be the victims of the corporation and would become its 
accomplices." ^ 

The offenses against the public were assumed to have ceased with 
the discontinuance of the Gary dinners something more than 3 years 
before the commencement of the suit. Yet there was in effect and in 
full flower at that time a practice in the steel industry, around which 
the Gary dinner activities revolved,^ which another Attorney General 
represented to the court in a later case as "one of the most effective of 
all devices to fix prices and plunder the consuming public ^ * * *." 
If the Government was aware of the existence of this contrivance it 
was not mentioned hj counsel at any time and the Corporation never 
permitted the court to see it. 

It is, in our present understanding of this problem, indeed an incredible thing that 
such an important influence as the basing point system should have been entirely 
ignored iln the greatest law suit the world has ever seen." 

The possible connection between this practice, later known as 
"Pittsburgh plus," and subsequent events in the steel industry will 
appear later in this report. 

Among the principal competitors of the United States Steel Cor- 
poration for its different forms in 1922 were the follov/ing, in the order 
of their rated ingot capacities in gross tons : 

Ingot capacity 
(gross tons) " 

Midvale Steel & Ordnance Co.: Cambria Steel Co 2, 710, 000 

Lackawanna Steel Co '.. 1, 840, 000 

Youngstown Sheet & Tube Co 1, 520, 000 

Bethlehem Steel Co . 1, 412, 000 

Republic Iron & Steel Co '. 1,400, 000 

Inland Steel Co _ 1,000,000 

Steel & Tube Co. of America .. 690, 000 

Brier Hill Steel Co _• 648,000 

In 1938' the respective ingot capacities of the nine largest producers 
were : 

Ingot capacity 
(gross tons) '* 

United States Steel Corporation 25,790,000 

Bethlehem Steel Corporation 10, 042, 000 

Republic Steel Corporation 6, 500, 000 

Jones & Laughlin Steel Corporation 3, 660, 000 

Youngstown Sheet & Tube Co _._ _. . 3,120,000 

National Steel Corporation . . 3, 400, 000 

American Rolling Mill Co __ _ 2,669,520 

Inland Steel Co , . . 2, 340, 000 

Wheeling Steel Corporation 1, 750, 000 

' Ibid, at 449. 

' The price for steel referred to by Judge Gary in the dissolution suit as the "advertised price, so to speak, 
what are considered trade paper prices," were then as now merely one factor of the "destination price" which, 
is the sole manner in which all rolled steel forms (except rails) were then and are now sol'' . For testimony 
by Judge Gary see exhibit 3. 

' Brief for the Government in the District Court of the United States for the Southern District of New 
York. In Equity No. 59-10.3, Sugar Institute, Inc., et al. Defendants, p. 240. 

10 Frank A. Fetter, Masquerade of Monopoly, Harcourt Brace & Co., New York, 1931. p. 144. 

» U. S. Steel Corporation exhibit No. 444 in Docket No. 760, F. T. C. v. United States Steel Corporatto 

" Hearings before the T. N. E. C. pt. 27, exhibit No. 2236. See exhibit 4 attached. 



CONCENTRATION OF ECONOMIC POWER 217 

What became of Mid vale-Cambria and Lackawanna Steel Co., 
the second and third largest producers both of which were situated 
in the highly industrialized section of the United States east of 
Pittsburgh, and what were the causes of their disappearance? 

MERGERS IN THE STEEL INDUSTRY, 1922-23 

During the early months of 1922 and immediately prior thereto 
certain events were occurring in tlie steel industry which will be 
correlated later. The situation at that time is briefly summarized 
in Senate Resolution 286, Sixty-seventh Congress, second session. 
May 12^, 1922 (exhibit 5), which recited definite reports that there 
was about to be consummated a merger of seven of the largest steel 
companies having a total annual capacity of more than 10 million 
tons of steel, the consummation of which it was said would result in 
the creation of a billion dollar corporation controlling substantially 
all of the steel-producing capacity of the country which was not then 
controlled by the United States Steel Corporation. 

The resolution directed the Attorney General and the Federal 
Trade Commission to inform the Senate as soon as possible what, 
steps they had taken or proposed to take to ascertain the purposes 
and probable effects of the proposed merger, and what actions they 
had instituted to protect the public interest. 

The North American Steel Co. as originally conceived contemplated 
as stated in the Senate resolution the inclusion of Lackawanna Steel 
Co. and, among others, the Brier Hill Steel Co. and Steel & Tube 
Co. of America. 

A short time prior to June 1, 1922, Lackawanna dropped out of 
the proposed North American steel merger and was promptly absorbed 
by or merged with Bethlehem Steel Co. The Federal Trade Com- 
mission thereupon on June 3, 1922, issued its complaint against these 
companies in Docket No. 891, and on June 5 advised the Senate 
of its action. In the same communication the Commission advised 
the Senate that the formation of the proposed North American Steel 
Co. had not so far progressed as to enable it to reach a reason to 
believe that tli« merger would or would not carry the same tendency 
as in the case of the Bethlehem-Lackawanna merger, but that further 
investigation was in progress and a later report would be rendered. 
A copy of this communication is supplied for the convenient reference 
of the committee as exhibit 6. 

On July 21, 1922, however, the Attorney General in responding to 
the Senate, in a very elaborate opinion advised it that as to the 
Bethlehem-Lackawanna merger he was persuaded that the motive 
which prompted Bethlehem to acquire Lackawanna was the sole 
desire to secure greater efficiency and economy in the production, 
handling and distribution of steel products, and that the thought 
of acquiring a monopoly or enhancing prices was never present; that 
the whole transaction from beginning to end impressed him as being 
thoroughly c^san, honest, and straightforward (exhibit 1). He then 
pointed out that in United States v. TJ. S. Steel Corporation the Supreme 
Court refused to declare illegal a combination of much greater mag- 
nitude, and while the avowed purpose of that combination was to 
acquire a monopoly, that such monopoly as inhibited the law was 
found to be impossible of attainment. He added that the proposed 



218 CONCEiNTRATION OF EOONOMIC POWER 

merger would, not result in an actual monopoly nor was it even an 
attempt to monopolize and that of course the decision in the dissolu- 
tion suit would be controlling upon him. The net residt of that 
merger was to give to the Bethlehem Steel Corporation a practical 
monopoly of the ingot capacity and of the production of certain forms 
of rolled steel products in the territory east of the Buffalo-Pittsburgh 
line, a territory somewhat larger than the German Reich before 
Munich. A graphic illustration of the geographical advantages of 
location of the plants acquired by Bethlehem Steel Corporation from 
1916 to 1923 over the potentially competitive Pittsburgh and Birming- 
ham-districts appears herein as exhibit 7. 

In the meantime Youngstown Sheet & Tube Co. had deserted the 
proposed North American Steel Co. (exhibit 8) and active negotia- 
tions were carried on between Midvale, Republic, and Inland only; 
although it was said by the promoters that neither Brier Hill Steel 
Co. nor the Steel & Tube Co. of America were then wholly out of the 
picture. 

In this case the Attorney General again advised the Senate that he 
saw nothing in the proposed merger that would offend against the 
Sherman Act (exhibit 1). He stressed the rather minor percentage 
which each company produced of the country's total capacity, and 
reached the conclusion that because of such minor proportion there 
would be no possibility of substantially lessening competition in any 
part of the country. Some of the reasons which led him to this con- 
clusion, which are given in considerable detail, are extremely interest- 
ing when examined in the light of the Commission's later development 
of the facts. 

On August 3 1 , 1922, the Commission issued complaint in t-he Midvale- 
Republic-Inland case, Docket No. 905, and on September 28 the 
executives of Midvale-Republic-Inland issued a public statement 
saying that at a meeting held that day "the entire situation arising 
from the action of the Federal Trade Commission was reviewed and 
the conclusion was reached that under existing circumstances it was 
not possible to proceed with the proposed merger * * *." The 
Commission thereupon dismissed the complaint (October 21, 1922). 
A copy of that statement was supplied the Commission by the pro- 
moters (Cliadbourne, Babbitt & Wallace) on October 4 and appears 
herein as exhibit 9. 

Almost immediately rumors began to appear, of Bethlehem's inten- 
tion to acquire Midvale, and on or about November 24, 1922, it was 
announced that Bethlehem had entered into an agreement to con- 
solidate with Midvale Steel & Ordnance Co. and Cambria Steel Co., 
which was to be accomplished by the acquisition by Bethlehem of the 
physical properties of the other companies. The Commission accord- 
ingly dismissed the complaint in Docket No. 891 (which involved only 
Bethlehem and Lackawanna) and issued its complaint in Docket No. ; 
962 (January 26, 1923) directed against the merger involving also 
Midvale and Cambria. ... 

During the prosecution of complaint in Docket N'6. 962 the Com- 
mission was also prosecuting a complaint against the Eastman Kodak 
Co. and others (Docket No. 977, issued April 19, 1923), in which it 
charged the illegal acciuisition of competitors. In an action to review 
the judgment of the United States circuit court of appeals, the 
Supreme Court on May 31, 1927, handed down an opinion which 



C0NOE(NTKATI0N OF ECONOMIC POWER 219 

declared the Commission was without authority to order the divest- 
iture of physical assets (274 U. S. 619). The Commission thereupon 
discontinued taking testimony, and later closed the proceeding;. 

It may be of interest to note that two other companies originally 
mentioned in connectioil with the formation of the North American 
Steel Co., i. e., the Brier Hill Steel Co. and the Steel & Tube 
Co. of America, later (1923) passed into the hands of a third, the 
Youngstown Sheet & Tube Co. 

Perhaps equally as interesting and significant was the attempt in 
1928 of Youngstown to acquire luland (exhibit 10) and the attempt 
in 1930 of Bethlehem to acquire Youngstown, the latter njove being 
defeated by a minority group of Youngstown stockholders (exhibit 11). 

PROPOETIONS OF BETHLEHEM STEEL CORPORA.TION, THEN AND NOW 

The latest available Iron and Steel Works Directory of the United 
States and Canada published by the American Iron and Steel Insti- 
tute shows the aggregate ingot capacity of Bethlehem plants as of 
September 15, 1938, as 9,662,000 gross tons. There is submitted 
herewith as exhibit 12 a genealogy of 3ethlehem Steel Corporation 
as shown in Poor's Industrials, 1934, which includes mention of the 
acquisition by Bethlehem of certain properties in the Pacific Coast 
States which were acquired in 1930. This study is not concerned 
with these later acquisitions, although it may be noted in passing 
that the remaimng properties on the Pacific coast were acquired by 
the United States Steel Corporation. It is concerned principally 
with the facts and motives which impelled the acquisitions in 1922 
and 1923. Some of these motives are very near the surface and 
something ma}'" be said concerning them with certainty.' 

In the case of the Lackawanna properties acquired in 1922 it is 
well known that aro.ong other things Bethlehem acquired a very 
favorable lo.cation. In the eighteenth annual report to the stock- 
holders of Bethlehem Steel Corporation for the year 1922 it is said 
with respect to Lackawanna that — 

There has been thus added to the Bethlehem properties important raw material 
|)roperties and a large steel plant at Lackawanna near Buffalo having a' steel 
ingot capacity of 1,840,000 gross tons, well located for assembhng raw materials, 
manufacturing and distributing its products to the important markets in the 
Middle West and Canada. The steel ingot capacity of your corporation is 
now 4,890,000 gross tons per annum (exhibit 13). 

In the sam.e report it is also said that agreements were entered into 
on November 24, 1922, for the purchase of Midvale Steel & Ordnance 
Co. (except the Nicetown, Pa., plant) and all the properties and 
assets of Cam.bria Steel Co.; that the consum.mation of this purchase 
would increase the steel capacity of Bethlehem to 7,600,000 gross 
tons per annum which would equal about 15 percent of the steel 
capacity of the coimtry, and would add many im.portant lines to 
those then produced by Bethlehem.. It added that with these acquisi- 
tions Bethlehem would becom.e a producer of all the important com- 
mercial steels except pipe and seamless tube. Moreover that these 
acquisitions would add very valuable ore^and coal properties and 
that their operation in conjunction with properties then owned by 
Bethlehem would perm.it of more economical assembling of raw 
materials. The report pointed out another incentive, the importance 
of which will appear later, that "the unifying of the operations of the 



220 CONCENTRATION OF E?OONOMIC POWER 

manufacturing properties will permit of a more advantageous alloca- 
tion of orders." Finally it promised that, through these im.portant 
advantages as well as by. a reduction of overhead expense and the 
elimination of duplications in the distributing costs, the position of 
Bethlehem in competition with other commercial producers would 
be materially improved. 

The nineteenth annual report of Bethlehem Steel Corporation for 
the year 1923 includes an account of the acquisitions of the Mid vale- 
Cambria properties and their transfer to Bethlehem as of March 30, 
and also discloses what was then considered by those well inform.ed 
in trade as one incentive to these acquisitions no less important than 
the control of the Cambria Iron Co. properties. That incentive is 
glimpsed in the aggregate sales of Bethlehem for that year (including 
both Lackawanna and Midvale-Cambria) as $260,968,326 "including 
$5,261,000 of orders on the books of Midvale Steel & Ordnance Co. 
and Cambria Steel Co. on the date of the acquisitions of their proper- 
ties" (exhibit 14). This backlog of orders accumulated during an 
unusually lean period doubtless reflected the aggressive sales poHcy 
of Midvale and to some extent, as will be shown, the reduction from 
the so-called Redfield scale of prices, which was initiated by Midvale 
in a determination to attract tonnage to its mills. That effort, hoA^- 
ever, is another part of the story. 

Although what has been said may comprehend the larger and more 
important acquisitions by Bethlehem of its competitors it does not 
by any means embrace all of them. 

The history of Bethlehem Steel is a continuous tale of acquisitions 
of com.petitors and of competitive locations ; of a horizontal and not 
a vertical integration such as might be expected when the objective 
is mass production and a consequent optimum of efficiency. Al- 
though the evidentiary matter is not quite complete, there is suf- 
ficient to show that some of the incentives to these acquisitions were 
exactly those known to underlie the formation of the United States 
Steel Corporation and that their consummation was the realization 
of the dreams of some of the sam.e men. 

With the aid of some recollection of what has occurred in the steel 
industry since 1912 and the evidentiary facts contained in the records 
of the Federal Trade Commission, it is not difficult to reconstruct in 
greater detail a general picture of Bethlehem's development which 
is recorded in Poor's Industrials and elsewhere. , 

The historical development of Bethlehem Steel Corporation as por- 
trayed in chart I is based on steel-making capacity expressed in gross 
tons of ingots. It shows the original units of Bethlehem plants located 
at Bethlehem, Pa., on March 1, 1916, as 1,129,000 tons; that it ac- 
quired in that year the plants of the Pennsylvania Steel Co. at Steelton, 
Pa., having a capacity of 1,515,000 tons, and another plant with a 
capacity of 702,000 tons from the Maryland Steel Co. at Sparrows 
Point, Md. Exhibits 15 and 16 hereto, which are but fragmentary 
parts of the evidence available, are conclusive on the question as to 
whether these plants made common products and sold to common 
customers. These sales contracts show not only that Pennsylvania 
Steel Co., Maryland Steel Co., and Bethlehem Steel Co. were selling 
large tonnages 'of rails to both the Pennsylvania Railroad and Balti- 
more & Ohio Railroad, but also that the Cambria Steel Co. and 
Lackawanna Steel Co. were likewise sellmg to the same roads. Exlubit 
16 is a somewhat broader showing of the same general facts. 



CHART I 



HISTORICAL DEVELOPMENT OF STEEL INGOT CAPACITY 

OF 

BETHLEHEM STEEL CORPORATION 

1916—1923 (GROSS tons) 




Ingot C«p«olty of original unit of Bethlehem Plant of 

Bethlehem Steel Co. ae of December Jl, 1922 . 
.Inpjt Capaoity of original unit of Bethlehem Plant of 

Bethlehem Steel Co., Uarob 1916 , . 

Inoreaae In oapaclty of original unit at Bethlehem, Pa." 

for period 1916 to 192J 



Plante Ao qulred in Competltire looatione During Period 1916-1925 



"•roh 1. 1916 PennaylTanla Steel Co. 

" karyland Steel Co. 

Oat. 10, 1922 Uolcaminna Steel Co. 
Uarob 2, 192} Midvale Steel & 
Ordnanoe Co. 



Steelton, Pa. 

Sparrows Point, Ud. 

Lack-awanna, N.T. 
(CoatesTille, . Pa. 
(Wilmington, Del. 
(Johaatoim, Pa. 



1,515,000 Too» 

702,000 
l,al|0,000 

550,000 

114,000 



l.iaa.OOO Tone 
1.129.000 
283,000 




(JohBatom, Pa. 2.016.000 

Total 



261905— 41— No 13 (Face p. 220) 



; CONCEiNTRATION OF ECONOMIC POWER 221 

Chart I also contrasts the combined ingot capacity of the Betlilehem, 
Steelton, and Sparrows Point units as of December 31, 1922, with the 
combined capacities of Lackawanna and Midvale-Cambria, both of 
which were acquired in something less than 5 months in 1922-23, a 
period m which Bethlehem's acquisition of competitors in strongly 
competitive locations ir creased its ingot capacity almost 150 percent. 
As stated earlier the chart is. in terms of steel-making capacity as ex- 
pressed in steel ingots which is the crudest form in which steel is 
produced as distinguished from commercial steel in the form of capital 
and consumer goods and therefore represents potential rather than ac- 
tual cofepetition in the strictest sense. It will later be shown that 
when the Pittsburgh-plus systern broke down temporarily during the 
depression of 1921-22, actual and very active competition developed 
involving several forms and very large tonnages of finished-steel 
products, especially between the Midvale and Lackawanna com- 
panies on one side and Bethlehem and United States Steel on the 
other, the latter group striving to maintain the merchandising plan 
which had been standardized and developed under the leadership of 
the Steel Corporation during the Gary dinners. 

At the moment it is desired to make plain only what happened in 
the steel industry in that part of the United States in which Bethlehem 
was especially interested (the territory east of Pittsburgh) as expressed 
in ingot-capacity figures. They show that during the period 1916 to 
1922, inclusive, the capacity of the original unit of Bethlehem at 
Bethlehem, Pa., was increased but 283,000 tons. During this same 
period Betlilehem had acquired from Pennsylvania Steel Co. at 
Steelton and from Maryland Steel Co. at Sparrows Point addi- 
tional ingot capacity aggregating 2,217,000 tons. Chart I details the 
acquisitions of Bethlehem during the period 1916-23, the aggregate of 
which" was 6,767,000 tons. In other words during the period in 
which Bethlehem was expanding the capacity of the original unit at 
Bethlehem by 283,000 tons it had acquired 6,767,000 tons in com- 
petitive locations. In other words for" every ton of ingots which 
Bethlehem expanded the capacities of the original Bethlehem plants 
they acquired almost 25 tons in competitive locations. It shows that 
of a total of 7,600,000 tons possessed by Bethlehem in March 1923 it 
had acquired 4,550,000 tons from two competitors within a period of 
5 months. The situation is shown in greater detail in chart II which 
outlines the manner in which the aggregate ingot capacities of the 
Bethlehem plant as of December 31, 1922, became 3,050,000 tons. 



222 



CONCENTRATION OP^ ECONOMIC POWER 



Chakt II. — Historical development of Bethlehem Steel Corporation in gross tons of 

ingot capacity, 1916-38 
Showing — 

(o) Ingot capacity (in gross tons) of original unit of Bethlehem Steel Co. 
at Bethlehem, Pa., March 1, 1916. 

(6) The locations and capacities pf the competitive plants acquired in 
that year. 

(c) Capacities as of December 31, 1922,' of original unit of Bethlehem Steel 
Co., and the plants acquired in 1916. 

(d) Location and ingot capacities as of December 31, 1922, i of competitive 
plants acquired in 1922 and 1923. 

(e) Capacities of the several plants of Bethlehem Steel Co. as of Septem- 
ber 15, 1938. 

(/) Change in ingot capacities of the various plants during periods 1916-22, 
1923-38, and 1916-38. 





Capacities as 




Capacities as of 


Capacities as 




shown in Iron 




Dec. 31, 19221 of 


shown in Iron 




and Steel 




respective plants 


and Steel 




Works Direc- 




ofBetheIemSt«el 


Works Direc- 




tory of United 




Corporation and 


tory of United 




States and 




the competitive 


States and 




Canada, 




plants acquired 


Canada, 




Mar. 1, 1916 




in 1922-23 


Sept. 15, 1938 




Tons 




Tons 


Tons 


Bethlehem Steel Co.: 


1.129,000 


Bethlehem Steel Co.: 






Lehigh and Saucon 




Bethlehem plant 


1,412,000 


1,840,000 


plants, South Beth- 










lehem, Pa. 










Pennsylvania Steel Co.: 


, 1, 515, 000 


Steelton plant 


788,000 


660,000 


Steelton, Pa., plant (ac- 










quired by Bethlehem 










Mar. 1, 1916). 










Maryland Steel Co.: 


702, 000 


Sparrows Point, Md., 


850,000 


2,965,000 


Sparrows Point, Md., 
plant (acquired by 
Bethlehem Mar. 1, 
1916). 




plant. 
























Lackawanna Steel Co.: 


1.840,000 


2,592,000 






Lackawanna, N. Y., 










plant (acquired by 
Bethlehem Oct. 10, 


















1922). 










Midvale Steel & Ord- 
nance Co.: Coates- 




(J) 












ville. Pa., plant,3 550,- 










000 tons; Wilmington, 










Del., plant,' 144,000 










tons. 










Cambria Steel Co.: 


2,710,000 


1,605,000 






Johnstown,. Pa., 










plant,! 2,016,000 tons 
(Midvale acquired by 


















Bethlehem Mar. 2, 










1923). 






Total 


• 3,346,000 


7,600,000 


9,662,000 











CHANGE IN INGOT CAPACITIES 








1916-Dec. 31, 1922 


1923-38 


1916-38 




Increase 


Decrease 


Increase 


Decrease 


Increase 


Decrease 




283,000 




428,000 




711,000 






727,000 


128,000 


855,000 


Sparrows Point, Md., plant... 


148,000 
9 240, 000 
'125,000 

144,000 
8 236,000 


2,115,000 
752, 000 


2, 263, 000 
992,000 










Coatesville, Pa., plant 

Wilmington, Del., plant 

Johnstown, Pa., plant. 




556,660 
144, 000 
411,000 


550,000 








144,000 


" 






175,000 











Shown in respondent's exhibit 444 in docket No. 760, F. T.C.v. U.S. «eeZ Corpn., submitted by William 
Q. Gray, a,<!sistant secretary, American Iron & Steel Institute. No Iron and Steel Works Directory pub- 
lished in 1922. 

2 Produces finished products only. 

' Midvale acquired Coatesville plant from Worth Bros., Inc., Oct. 13, 1915. 

* Midvale acquired Wilmington plant from Wilmington Steel Co. Nov. 1, 1917. 
« Midvale acquired controlling interest in Cambria Steel Co. Feb. 10, 1916. 

8 1916 capacity, 1,600,000 tons. Iron and Steel Works Directory of United States and Canada, Mar. 1, 1916. 
' 1916 capacity, 425,000 tons. Iron and Steel Works Directory of United States and Canada, Mar. 1, 1916. 

* 1916capa( ity, 1,780,000 tons. Iron and Steel Works Directory of United States and Canada, Mar. 1, 1916. 



CONCEiNTEATION OP^ BOONOMIC POWER 223 

Chart II also details the ingot capacities of the respective plants of 
Bethlehem as shown by the most recent Iron and Steel Works Direc- 
tory of the United States and Canada, published September 15, 1938, 
at which time the aggregate is shown as 9,662,000 tons. Attention is 
particularly suggested to changes in the capacities of these plants 
which occurred in the periods 1916-22 and 1923-38, respectively, espe- 
cially to the fact that the total increase in the Bethlehem plant was 
but 711,000 tons during which time the Sparrows Point plant was 
being increased 2,263,000 tons and the Lackawanna plant 992,000, 
and to note the respective positions of tliese plants on the map (ex- 
hibit 7). During the same period ' the -authorities cited in chart II 
show that the ingot capacity of the Steelton plant, which was acquired 
from Pennsylvania Steel Co., was reduced by 727,000, that during the 
period 1923-38 Steelton was reduced an additional 128,000 tons, and 
that the plants acquired from other competi-' s were reduced as 
follows: ^^^^ 

Coatesville 550, 000 

Wilmington 144^ 000 

Johnstown i 4 1 1, 000 

It is a matter of some interest to note that the expansion of the 
Lackawanna Plant at Buffalo during the 16 years' ownership by Beth- 
lehem was 752,000 tons compared to the increase at Bethlehem during 
the same period of 428,000 tons, and that Scranton, Pa., is but about 
70 miles north of Bethlehem as the crow flies, from which location 
Lackawanna had moved to Buffalo 20 years previously. 

BETHLEHEM VERSUS LACKAW.A.NNA 

It has been suggested that this study will present evidence that 
actual price competition developed in 1-921-22 between Lackawanna- 
Midvale-Cambria and Bethlehem on certain forms of rolled steel. 
That showing would involve, in the first instance at least, some evi- 
dence that those companies produced identical forms of steel. It 
would involve also some showing that they had solicited sales and had 
sold those forms in the same general territoiy, and what would be 
more convincmg, to the same customers. 

In the reply of Attorney General Daugherty to Senate Resolution 
No. 286 some rough quantitative measurements v^ere undertaken of 
the capacities for the production and distribution of several forms of 
rolled-steel prpducts. In order that there may be no question as to 
what was said therein or the source of the data upon which the state- 
ments purport to have been based and in view of the importance of 
the conclusions reached, the reply of the Attorney General is repro- 
duced in full as exhibit 1. Many of the statements made are recog- 
nized as extravagances and others as without any apparent foundation 
in fact. Doubtless much of the so-called information upon which 
the Attorney General relied was furnished by the producers as he re- 
ported that "in order to furnisli information which I called for it was 
necessary for tln^st; companies to set at work for many days a large 
clerical force to go through hundreds of thousands of invoices covering 
each individual sale for the years 1919, 1920, and 1921 * * * and 
the figures for all these years are before me * * *." Immediately 
thereafter is set forth a long list of raw materials, fabricated articles, 
and rolled-steel products said to have been produced by Bethlehem 



224 CONCEiNTRATION OF ECONOMIC POWER 

but which were not produced by Lackawanna. It is then said: "On 
the other hand the Lackawanna produces for sale a number of articles 
which Bethlehem docs not. These include base plates, piling, plate 
piling, merchant steel bars, including rounds, squares, and flats, agri- 
cultural shapes, and auto sections." Later the Attorney General 
states, "I have set forth with considerable detail the extent of the 
competition between the two companies." 

As an illustration of some of these inaccuracies from, which erro- 
neous conclusions were reached, reference is m.ade to the statement 
concerning Bethlehem.'s capacity for the production of bars. Con- 
trary facts were then currently being shown in considerable detail in 
evidence before the Federal Trade Commission in Docket No. 760, 
and later in respondents' exhibit 444 prepared by the assistant secre- 
tary of the American Iron and Steel Institute, i. e., that the capaci- 
ties of the various mills here concerned for the production of "mer- 
chant bars, bands, hooks, and shapes under 3 inches," all com.monly 
known to be bar mill products, were as of December 31, 1922, as 
follows: 

Bethlehem Steel Corporation: T'ons 

Bethlehem. Pa .. 270, 000 

Steelton, Pa 1 ^ - : 125,000 

Lebanon, Pa -' H2, 000 

Reading, Pa - 37, 000 

' 544, 000 

Lackawanna Steel Co., Lackawanna (Buffalo), X. Y . 381,000 

Cambria Steel Co., Johnstown, Pa .- 440, 640 

Moreover the stock lists and rolling schedules issued by Bethlehem. 
Steel Corporation from, tim.e to time during that period, which are 
in evidence in F. T. C. Docket 9(32, show practically a full range of 
bar sizes. An abstract of the stock list of bar si^es of "com.m.ercial 
quality steel, under .25 carbon" carried "in stock at Pittsburgh, 
Steelton Cleveland, Lebanon, and Pittsburgh warehouses, of bars 
in m.ill lengtlis Decem.ber 1, 1921," which is dated something less 
than 7 montlis prior to the Attorney Gt^neral's advice to the Senate, 
is. subm.itted as exhibit 17. This list shows 57 different sizes of 
rounds, 61 different sizes of flats, 2 difierent styles and 13 different 
sizes of concrete reinforcing bars, all' of which the Attorney General 
advised the Senate were not m.ade by Bethlehenv. 

There is also subm.ittpd as exhibit 18 her-eto a list of invoices cov- 
ering substantial shipments of certain specific sizes of flat bars shipped 
by Bethlehem and Lackawanna prior to its acquisition by Bethlehem, 
and from, tue Lackawanna plant subse({uent to that acquisition. 
There is included as exhibit 19 an abstract from contracts, invoices, 
and acknowledgm.ents of orders contained in the record in docket .962 
covering bdlt and rivet rods and other fonn.s, known as rounds, to 
custom.ers of Bethlehem in Peimsylvania, New York, and Connecticut. 
The abstract also shows substantinl shipmeiUs of tbe same character 
by Lackawanna Steel Co. and Cambria Steel Co. im.m.ed lately prior 
to their acquisition by Bethlehem. In 6ve instances sjiles were made 
by tAvo producers to the sam.e consumer. Other fncls concerning 
prices charged, to which reference is made in the not(^ ii|)|)caiiiig on 
the exhibit, will be referred to later. 

The fact that Bethlehem, produced and sold to a cuslonier at Phi-di- 
cott, N. Y., very large tonnages of sniall bar m.ill sizes of forging 



( !(JiNC'Ei\TI{ATION OF ECONOMIC POWER 225 

billets in the years immediately preceding the acquisition of Lacka- 
wanna-Midvale-Cam.bria is shown by partial abstract of inv^oices which 
appears in the record in F. T. C. Docket 962 (exhibit 20). Abundant 
evidence exists in the same record that Lackawanna and Cambria 
were producers of the same fonn of material. 

Structural Shapes. 

"In point of tonnage and revenue this constitutes a very important 
.item." in the opinion of Attorney General Daugherty (exhibit 1), but 
as the com.bined production of both Lackawanna and Bethlehem "in 
the dom.estic trade was 14.49 percent of the total production in the 
United States" and the distribution of that total vaiied considerably 
in various subdivisions of the United States, the conclusion is reached 
that the Clayton Act "denounces the acquisition only where the effect 
may be substantially to lessen com.petition between the com.panies"; 
that the effect of tliis m.erger was not "substantially to lessen com.pe- 
tition between them, or to restrain commerce in any section or com- 
m.unity * * *" (exhibit 1). Mention was not m.ade, however, of 
the productive capacities of either com.pany. It is noted that the 
Iron and Steel Works Directory of the United States and Canada for 
the year 1920, to which the Attorney General occasionally referred, 
shows the capacity of Bethlehem.'s Saucon plant at Bethlehem, as 
710,000 tons and Lackawanna Steel Co. as 225,000 tons. The same 
authority also gives the capacity of the Cambria plant as 980,000 
tons of structural shapes, plates, and bars, there being no subdivision 
of the three item.s. The capacity of the latter is given since it will 
be referred to presently. It is noted, however, that the structural 
capacity of the Cambria plant is given in respondents' exhibit 444 in 
F. T. C. Docket 760 as 184,800 tons. 

As evidence that Betlilehem and Lackawanna both made and 
shipped substantial quantities of the same size of angles (a form 
of structural shapes) there is submitted as exhibit 21 ari abstract 
of invoices contained in F. T. C. Docket 962 covering sales by both 
companies to a customer at Bridgeport, Conn.; by Lackawanna during 
the period prior to the acquisition of Lackawanna by Bethh^hem, and 
by Bethlehem both prior and subsequent to such acquisition. It will 
be noted also that these shipments include three bar mill sizes. The 
fact that the same sizes of heavy structural shapes were being pro- 
duced by both Bethlehem and Lackawanna and sold in substantial 
quantities to common customers at Rochester, N. Y., in the 2 years 
immediately prior to the acquisition by Bethlehem of Lackawanna 
is shown by exhibit 22 hereto. These shipments include angles 
varying from 2 to 6 inches and structural beams varying all the way 
from 8 to 15 inches. This tabulation merely purports to illustrate 
the general facts stated. It does not purport to show anything 
approaching a quaiititive measure of the total shipments by either 
producer. The potential competition between the two companies 
is illustrated by the fact that orders placed with Bethlehem Steel 
Co. prior to October 21, 1922, and partially filled by shipments from 
Betlilehem, Pa., were, subsequent to the acquisition by Bethlehem of 
Lackawanna, filled in part by shipments from Jjuckawanna, N. Y. 
It shows instances in which shipnu-nts applying upon specific orders 
placed with the Bethlehem Steel Co., which included standard struc- 
tural shapes and sp(>ciul sections, the latter made. only by Bethlehem, 

261905 — 41~No. 18 ^10 



226 CONCEiNTRATION OF ECONOMIC POWER 

were partially filled by shipments of standard shapes from Lacka- 
wanna, N. Y., immediately subsequent to the acquisition of Lacka- 
wanna by Bethlehem. 

Additional evidence of the same general character is shown with 
respect to a specific contract covering standard structural shapes 
placed with Bethlehem on August 28, 1922, by a Syracuse, N. Y., 
customer. 

Exhibit 23 is copy of an acknowledgment of executory contract 
by Bethlehem Steel Co. with a customer at Syracuse, N. Y., dated 
August 19, 1922, covering 1,850 tons of "plain standard sections, 
sheared and universal mill plates" for use in connection with the 
Utica-Lowville tower lines for the Northern New York Utilities Co., 
the first shipments against which were made by Bethlehem in Sep- 
tember, prior to the acquisition of Lackawanna at a destination price 
of 2.04 cents per pound for structural shapes, of which 33 carloads 
were shipped from Bethlehem, Pa. in the succeeding 3 months. 
Immediately succeeding the acquisition of Lackawanna by Bethlehem 
substantial tonnages applying on the contract were allocated to" 
Lackawanna, which included 7 sizes of heavy channels varying in 
weight from 9.8 pounds to 20.7 pounds per lineal foot, which were 
likewise produced and shipped from Bethlehem, Pa. 

Exhibit 24 is a partial abstract of invoices covering the same 
contract showing the same general facts and in addition thereto the 
order nimibers to which they relate and the delivered price received 
therefor. It will be observed that in addition to the substantial 
shipments of structural shapes which were allocated to the Lackawanna 
almost immediately upon its acquisition by Bethlehem, 13 carloads of 
bars, which the Attorney General reported that Bethlehem did not 
produce, are shown as having been made by that company and as 
having been produced at Bethlehem, Pa. 

Among the many evidences of the production and shipment by 
Bethlehem and Lackawanna of comm6n forms of structural shapes to 
common customers in different sections of the country were the 
invoices rendered by each to Russell Wheel & Foundry Co., a struc- 
tural fabricator at Detroit, Mich., which covered periods both prior 
and subsequent to the acquisition by Bethlehem of Lackawanna- 
Midvale-Cambria (exhibit 25). This exhibit lists approximately 
450 carloads of heavy structural shapes which were shipped by 
Bethlehem and Lackawanna during the years 1922-25 and a 
portion of 1926 a,nd include shipments by both companies prior to the 
acquisition by Bethlehem of Lackawanna. The shipments are 
indicated in greater detail in order that there may be no misconception 
as to the substantial nature of the tonnage and of the potential com- 
petition which existed between these companies. Incidentally, they 
also show 6 carloads of structural shapes by Cambria Steel Co. prior 
•'to its acquisition by Bethlehem and approximately 200 cars starting 
immediately thereafter and continuing for nearly 3 years succeeding 
it, to which reference will be made later. 

As further evidence of the same general facts which have just been 
recited, there is submitted as exhibit 26 a partial abstract of invoices 
rendered by Bethlehem Steel Co. against Whitehead & Kales Co., 
Detroit, Mich., during the first .6 months of the year 1926 showing 
that Bethlehem continued to ship standard structural shapes from 
both Lackawanna, N. Y., and Bethlehem, Pa., upon which the 



CON€EiNTRATION OF BOONOMIC POWER 227 

uniform valuation of 2.14 cents per pound applied. It also shows 
that substantial shipments of plates were made during that year from 
both the Lackawanna, N. Y., and the Johnstown, Pa., works, which 
had been acquired from Lackawanna Steel apd Midvale-Cambria, 
respectively. 

Reference has been made heretofore to the Attorney General's 
large list of raw materials, fabricated articles, and rolled-steel products 
produced by Betlilehem which were not produced or sold by Lacka- 
wanna (exhibit 1 ). His analysis of the lack c substantial competition 
between Bethlehem and Lackawanna and thj assumed facts on wliich 
he based his conclusion that the merger was not one in which th^ effect 
"may be substantially to lessen competition between them or to restrain 
commerce in any section or community" involve a novel method of 
determining the presence or absence of factors wliich may tend to lessen 
competition in any section or community. He said: 

Taking the figures for 1920 as a basis it appears that of the income received by 
the Bethlehem from its steel products division, 67.60 percent was derived from 
products which the Lackawanna does not produce^ Id the case of the Lacka- 
wanna 31.98 percent was derived from products which the- Bethlehem does not 
produce. 

As the Attorney General pointed out the so-called steel-products 
division of Bethlehem Steel Co. represents a large category of fabri- 
cating activities including the manufacture of steel and wood sleep- 
ing, private, passenger, baggage, and mail cars, etc., which seem in 
no case to be connected with the production of rolled-steel products. 

BETHLEHEM VERSUS MIDVALE-CAMBRJA 

In that part of the Attorney General's opinion relating to the pro- 
posed Midvale-Republic-Inland merger, which failed because of the 
action taken by the Federal Trade Commission in Docket 905, it 
is said in the discussion respecting structural shapes which were sold 
"in the entire New England and eastern districts," that "Mid vale 
reached every State in this territory" (exhibit 1). This fact is con- 
firmed by studies made by the Federal Trade Commission of the 
production-and-distribution data supplied by Gl producers of rolled- 
steel products comprising something more than 90 percent of the total 
output of rolled-steel forms as shown by statistical reports of the 
American Iron and Steel Institute. These data covered the dis- 
tribution of 14 principal forms of rolled-steel products to the severaF 
States and for export to foreign countries. 

The ambitious nature of the Betlilehem program may be a'ppreciated 
from a study of these data wliich show, among other things, that the 
median point of distribution of both structural shapes and plates 
(two of the very heavy tonnage items) for the 3 5^ears'"1919, 1920, and 
1921 for which the data were accumulated was found to be cast of but 
near JohnstowTi., Pa. In other words, more than one-lialf of the total 
consumption of rolled steel in the forms mentioned and including 
three forms of semifinished steel which wrre made in com.m.on. and 
sold by Bethlehem, Midvale, and Lackavxnna werr distributed in 
the form of capital goads in that highly i a ustrialized section of the 
United States east of a north-and-south a le drawn through Jtylins^ 
town, Pa., and north of an east-and-west ■ r 3 drawn through the same 
point. By reference to exhibit 7 it wili .e seen that this is the terri- 
tory in whicli Bethlehem by these mer;':e s acquired a .con.sider3;ble 



228 CONCEiNTKATION OF ECONOMIC POWER 

freiglit-rate advantage over its principal competitors in tli"" dis- 
position of its finished steel. 

Structural Shapes. 

It is a matter of some regret that these data are too voluminous for 
reproduction here. It will be sufficient to repeat the Attorney Gen- 
eral's findings that "in the. entire New England and eastern districts 
[which are undefined and may or may not include the Philadelpliia 
district] the Midvale -ol.^ 79,032 tons" in 1920. In his statement of 
the distribution of sti ic .iral shapes oy Bethlehem which had been 
made up for him by the producers from thousands of invoices covering 
each individual sale and which he had before him, the Attorney 
General omits to give the distribution to these districts but states: 

In passing it may be observed that Bethlehem specialized in the production of 
structural shapes (exhibitl). 

If we accept the authority cited by the Attorney General and the 
figures given in respondents' exliibit 444 in F. T. C. Docket 760, we 
must assume the structural capacities of the various plants for 1920, 
as shown on page 225 hereof, to be approximately as follows: 

Tons 

Bethlehem Steel Co., Bethlehem, Pa 710, 000 

Lackawanna Steel Co., Lackawanna, N. Y 225,000 

Midvale-Caml^ria, Johnstown, Pa 184, 800 

It is suggested that these capacities and the location of these works 
upon the map to a larger degree would be determinative of the poten- 
tial competition which may have existed between these producers 
rather than the volume of distribution of any of their products to 
particular sections in which each was soliciting and sellings 

In view of the Attorney General's observation with respect to 
articles which were not made in common by two companies that "as 
to such articles there can obviously be no competition between the 
two," and to the emphasis placed upon the importance of the special 
sections made alone by Bethlehem under letters patent, there should 
be no misapprehension as to the character and range in sizes of struc- 
tural shapes which were actually produced and sold by Bethlehem 
and Alidvale-Cambria. , Accordingly there is appended as exhibit 27 
an abstract from the rolling schedules and stock lists issued by 
Bfethl Ahem and Cambria showing certain sizes and forms of standard 
structural shapes (including bar sizes) manufactured or carried in 
stock and offered for sale by both companies prior to the acquisition 
by Bethlehem of the properties of Cambria, which schedules and lists 
appear in the records of the Federal Trade Commission in Docket 962. 
It shows that those companies produced 43 different sizes of steel 
beams ranging from 3 to 24 inches in width and weighing 5.7 
to 100 pounds per lineal foot. The exhibit also shows 37 different 
sizes of steel channels varying from 3 to 15 inches and weighing 4.1 to 
55.0 pounds per lineal foot. It shows 10 different sizes of ship channels 
varying from 7 to 12 inches and weighing from 18.9 to 40.8 pounds 
per lineal foot. In equal leg angles it shows 45 sizes ranging from 
2 by 2 inches to. 8 by 8 inches, and in unequal leg angles 64 sizes 
varying from ;2K by 2 inches to 8 by 6 inches. Among the foregoing 
aicfi 12 bar mill sizes which the Attorney General assumed were not 
made by Bethlehem. 

Comprising a part of the evidence of the production of heavy 
structural shapes and shipment thereof to the same territory and 



CONCENTRATION OF EtOONOMIC POWER 229 

frequent sale to common customers, although perhaps at different 
times, are the invoice data appearing in F. T. C. Docket 962 covering 
shipments to Whitehead & Kales Co., J)etroit, Mich., shown herewith 
as exhibit 28. While the abstract shows 28 cars as having been shipped 
by Cambria in the year 1917 and approximately 100 cars by Bethle- 
hem in 1919 it is only a fractional part of such evidence and is offered 
only by way of illustration of the character and substantial quantity 
which was being produced and sold by each in the period prior to the 
acquisition by Bethlehem of Midvale-CJambria. It will be noted that 
this exhibit 28 also shows the shipment of a considerable nund)er of 
cars of plates by each company. 

A most illuminating bit of evidence as to the state of competition 
which developed between Bethlehem and Mi'.' vale-Cambria in the 
depression years of 1921-22 appears in connection with a contract 
which was made by Cambria with Russell W^heel & Foundry Co., 
Detroit, Mich., dated January 30, 1923, which was but 1 month prior 
to its acquisition by Bethlehem, for 7,000 to 8,000 tons of standard 
structural shapes, plates, and bars at a destination price "of 2.29 cents 
per pound. The importance of the price at which the order was 
taken will appear later. A copy of the contract is subnutted as 
exhibit 29. 

As exhibit 30 there is submitted a tabulation of shipments applying 
upon this contract. It also shows that prior to January 30, 1923, 
the date of the contract, purchases were being made by Russell Wheel 
& Foundry Co. from Bethlehem in the early part of January ; also that 
shipments were being made fiom Bethlehem and from Ijackawanna, 
which had Vjeen acquired in the previous October. The oiiiy shipments 
matle against this contract which were invoiced by C^mibria were the 
two cars invoiced on March 28. Subsequent to that date all shipments 
were invoiced by Bethlehem and all or a considerable part of each 
(with *he exceptions specifically noted) whether shipped from Bethle- 
hem, Pa., or Lackawanna, N. Y., were shown as applying upon the 
contract made with Cambria. The delivered value of the steel 
covered Vjy this contract, assinning it was completed, was $30(5,400 
and obviously constituted a part of the "$5,2()1,000 of orders on the 
books of Midvale Steel & Ordnance Go. and Cambria Steel Co. on the 
date of the acquisition of their properties" (exhibit 14). 

LACKAWANNA VERSUS MIDVALE-CAMBRIA 

Steel Bars. 

In exhibits to wnich previous references have been made there is 
evidence,, "which appears in a somewhat incidental way, of the pro- 
duction and shipment to common customers by Lackawaima and 
Midvale-Cambria of structural shapes and bars both prior and sub- 
sequent to the date of acquisition by Bethlehem of those companies. 
As shown heretofore the bar capacity of Lackawanna Steel Co. is given 
as 381,000 tons and that of Cambria Steel Co. as 440,000 tons. The 
opinion of the Attorney General with respect to the Bethlehem- 
Lackawanna merger contributes nothing on the production or ship- 
ment of bars by Lackawanna upon the erroneous assumption that 
they were not produced by Bethlehem. However, in his opinion 
upon the attempted Republic-Midvale-Inland merger, the Attorney 
General said in respect to merchant bars, "in point of tonnage this is 
the most important item in the steel industry" and that "in the New 



230 CONCENTRATION OF ECONOMIC! POWER 

England and eastern district Midvale sold 132,089 tons." The fact 
that Lackawanna and Cambria, as indicated by their bar capacities, 
were large producers of bars is shown by exhibit 31 hereto, which is 
an incomplete abstract of the shipping notices of the respective pro- 
ducers covering alloy steel bars to a fabricator at Mechanicsburg, 
Pa., "for account of the Ford Motor Co." In this instance the bars 
consisted of alloy rounds in six sizes varying from % inch diameter to 
l/{6' riiches, of which 20 cars are shown to have been shipped from 
Johnstown within a few months preceding the acquisition by Beth- 
lehem of the properties of Lackawanna and Mid vale-Cambria, and 
44 cars in the 21 months succeeding those acquisitions. Although 
Bethlehem was a large producer of round bar shapes (as shown by 
exhibit 19 hereto) and a large seller of alloy steel in bar shapes, the 
record fails to show any shipments by Bethlehem for the account of 
the Ford Motor Co. until its acquisition of Lackawanna, after which 
time 83 cars were supplied by Bethlehem from the works acquired 
from Lackawanna. The abstract shows that prior to that acquisition 
Lackawanna shipped 3 cars of 3 different sizes of identically the same 
analyses. Having regard for the high quality of the material it can 
scarcely be said with propriety that these quantities were not sub- 
stantial. 

Structural Shapes. 

In the absence of rolling mill schedules or stock lists issued by Lack- 
awanna of the character shown in exhibit 27 as having been issued by 
Bethlehem and Midvale-Cambria, and in view of the Attorney 
General's method of measurement of potential competition and espe- 
cially his statement that certain sizes of products do not compete with 
other sizes," there is submitted as exhibit 32 a partial abstract of certain 
invoices covering shipments of structural steel from the Johnstown 
works rendered by Cambria prior to the merger of that company with 
Bethlehem, and by Bethlehem subsequent thereto. This abstract 
covers purchases by Bellefontaine Bridge & Steel Co., Belief on taine, 
Ohio, of shapes from the Lackawanna*works of Bethlehem. The 
different items have been segregated so as to show the different sizes 
of structural angles, channels, and beams. The range in angle sizes 
is from 2}^ by 2 by K inch to 6 by 4 by % inch; in channels, from 
6 inches by 8.2 pounds to 12 inches by 20.7 pounds; and in beams' 
from 8 inches by 18.4 pounds to 15 inches by 42.9 pounds. Against 
these sizes and forms have been set forth certain tonnages shipped by 
each mill as evidence of the potential competition which then existed 
between two independent and cornpeting properties which later came 
under the ownership and control of Bethlehem. Other evidence of 
shipment by each of these producers of heavy tonnages of structural 
shapes and the wide territorial distribution of those forms will appear 
later. 

Steel Plates. 

In his analysis of the potential competition for steel plates which 
existed between Bethlehem and Lackawanna and between Midvale- 
Cambria and other companies with which it was then proposed to 
merge them, the Attorney General does not contribute anything on 
the respective plate capacities of the producers. However, by 
referring to the Iron and Steel Works Directory of the United States 
and Canada fcr the year 1920, which he occasionally cites, it appears 
that the capacity of 'Bethlehom's Sparrows Point plant was 250,000 



CONCENTRATION OF ECONOMIC POWER 231 

tons and Midvale Steel & Ordnance Co.'s Coatesville plant, 310,000 
tons. That authority does not segregate the plate capacity. of the 
Johnstown plant of Midvale-Cambria, which shows a total for plates, 
shapes, and bars of 980,000 tons. The break-down of this capacity 
as given by respondents in F. T. C Docket 760 (respondents' exhibit 
444) indicates the plate capacity of the Johnstown mill as 331,920 tons. 

In his test of the extent of potential competition then existing be- 
tween the different companies involved in the proposed Midvale- 
Republic-Inland merger (F. T. C. Docket 905) the Attorney General 
pointed out that ''in the entire New England and eastern districts the 
Midvale sold 79,032 tons" of plates and "reached every State in this 
territory" (exhibit 1). In that pari of his consideration of the pro- 
posed Bethlehem-Lackawanna merger (Docket 891) which related to 
steel plates not exceeding 78/2 inches in width, he gave the total 
distribution of Bethlehem to those districts as 39,191 tons, saying 
that "81.72 percent of the total tonnage sold by the Bethlehem in 1920 
found its way into the eastern district as against 70.20 p^rcent on the 
part of Lackawanna" (exhibit 1). The January 30, 1923, contract 
between Cambria and Russell Wheel & Foundry Co., shown as 
exhibit 29, covered 500 tons of plates. There is offered as exhibit 
33 an abstract of the invoices rendered by Bethlehem as applying on 
that contract covering 63 cars of steel plates, 39 of which are shown as 
having been shipped from Johnstown prior to August 1, 1923, and 24 
of which were allocated by the Bethlehem Steel Co. to and shipped 
from, the Lackawanna mill in August and succeeding months. Again 
this is but a partial abstract showing shipments of plates in widths less 
than 78)^ inches, the maximum width which the Attorney General said 
one of the mills was capable of producing. 

The Attorney General had no occasion to express an opinion as to 
whether the consolidation of Bethlehem and Midvale would inhibit 
the law since the merger of those companies was not immediately 
involved. It would seem, however, that potential competition be- 
tween them was implicit in the location of Bethlehem's Sparrows 
Point, Md., mill and the Coatesville, Pa., mill of Midvale, and the 
relative position of those works upon the map as shown in exhibit 7. 
The power which these mergers gave to Bethlehem to mass its produc- 
tion at any of these points under the merchandising system employed 
in the steel industry is obvious , The fact that it did so in subsequent 
years is shown by a partial abstract of invoices which were rendered 
by Bethlehem to the Belmont Iron Works of Philadelphia in 1925 and 
1926, as shown by exhibit 34 hereto which covers large quantities of 
plates shipped in both years from the Johnstown works acquired from 
Midvale-Cambria in 1923 and the Sparrows Point, Md., works ac- 
quired from Maryland Steel Co. in 1916. 

In order that there may be a proper appreciation of the relative 
size of Midvale-Cambria which is expressed in ingot capacity only in 
charts I and II, and the public interest in the preservation of that 
property as an independent unit, which should be apparent from its 
possession of enormous raw material resources, from its diversity of 
products, and from its situation midway between the large steel- 
producing centers in eastern and western Pennsylvania and within a 
few miles of the center of distribution of important rolled products, 
there is offered as exhibit 35 a copy of Bethlehem's exhibit No. 86 
in a proceeding before the Interstate Commerce Commission in 1923 



232 



GONCEiNTRATION OF EOONOMIG POWER 



in I. & S. Docket No. 1929 (89 I. C. C. 609). This is a statement of 
carload shipments of manufactured iron and steel articles forwarded 
from Jolmstown, Pa., in the period January 1 to September 30, 1923. 
While the break-down of these shipments is not provided, they doul)t- 
less consist largely of the finished forms for which Johnstown had the 
greatest capacity, i. e., structural shapes, plates, bars, and wire pro- 
ducts. The proceedings did not involve freight rates in general but to 
a limited territory, to w^hich the distribution is shown. As will be 
shown later, some of these enormous tonnages were distributed to 
points served also by Bethlehem Steel Co. and Lackawanna Steel Co. 
prior- to the m,erger of those producers. It will be noted also that the 
statement purports to cover distribution of Midvale-Cambria's 
Johnstown plant for the period of 3 months prior to the acquisition 
of .that company by Bethlehem. In brief it shows : 



Alliance, Ohio 

Beaver Falls, Pa 

Buffalo, N. Y 

Cleveland, Ohio 

Greenville, Pa 

Martins Ferry, Ohio 

McKees Rocks, Pa. (sub 

urb of Pittsburgh) 

Morado, Pa . 

Neville Island, Pa. (sub 

urb of Pittsburgh) , 



Cars 



322 
205 
129 
385 
77 
60 

no 

73 
135 



Pounds 



9, 195, 065 



Nilcs, Ohio 

North Warren, Ohio 

Pitcairn, Pa. 

Pittsbmah, Pa 

Rochester, Pa. 

Sharpsville, Pa 

Sharon, Pa 

Veriina, Pa _ 

Warren, Ohio 

Wheeling, W. Va 

Voungstown, Ohio.. 



Cars 



85 
IfiS 

79 
398 
103 

50 
232 
101 

65 

81 
112 



Pounds 



K24, 617 
971,133 
665, 525 
333, 877 
230, 963 
194, 480 
476. 725 
997, 9i,3 
515,416 
509, 086 
655, 935 



As a fragmentary part of the evidence of the wide distribution of 
the principal heavy products of the three competitors here under 
consideration, there is offered as exhibit 36 an abstract of sales con- 
tracts covering plates, structural shapes and bars, entered into by 
Bethlehem Steel Co., Lackawanna Steel Co. and Midvale-Cambria 
with various consumers in 21 States and tlie District of Columbia 
during the year 1919, which contracts or abstracts thereof are con- 
tained in the records in F. T. C. dockets 760 and 962. The primary 
purpose of tliis abstract was to show that the producers involved in 
these mergers normally sold their rolled steel at so-called Pittsburgh- 
plus prices in various parts of the country. The conditions in 1919, 
1920, and 1921 and the behavior of prices in those years will be referred 
to later. The exhibits are used in the present connection in a more 
incidental way as illustrating the general fact of territorial distribu- 
tion and to avoid the unnecessary reproduction of similar and more 
comprehensive statistical data. 



MERGER MOTIVES 

We come now to a consideration of the probable motives underlying 
the attempted formation of North American Steel Corporation and 
the "mushroom growth of Bethlehem" wliich became the second 
largest consolidation of steel properties under one ownersliip. 

Was not the United States Steel Corporation, whose objectives the 
Supreme Court had found it had failed to accomplish, the antetype 
of this second attempt and what was the reasonableness of its prospects 
of success? 

Had it the justification of industrial conditions impelled by the 
necessity of integration or the economies of mass production, "or 



CONCENTRATION OF ECONOMIC POWER 233 

compelled to unite in comprehensive enterprise because such liad be- 
come a condition of success under the new order of things'" .which 
many assume was approved by the Supreme Court in the steel dissolu- 
tion suit? 

Was it, as the promoters alleged, an attempt in good faith to meet 
competition of the United States Steel Corporation wliich was said to 
be "almost in control of the markets'"^ in 1922, or was it simply an- 
other attempt to maximize profits of a group of steel producers by 
establishing "a chain of factories * * * in all these markets and 
parallel the United States Steel Corporation" insured by the perpetu- 
ation of the same methods of pr:c.3 control which the Steel Corporation 
had found necessarv to adopt in order to secure the full benefits of that 
consolidation? 

In fairness and perhaps in the interests of accuracy, attention should 
be called to a seemingly frank. statement as to the origin of the seven- 
company merger notion, referred to in the Senate resolution, which 
was made by Mr. John A. Toppuig, then chairman of ^he Republic 
Steel Corporation," on July 19, 1922, at a conference with the Federal 
Trade Commission during an attempt to formulate the nucleus of the 
North American Steel Corporation. Mr. Topping said: 

I will be brief. As showing the intent of this organization from a business 
standpoint, Mr. Chadbourne '^ came to me, and at first I didn't think it could 
be done. Later on, I. thought the time was very opportune because of the bad 
conditions, and I thought it would be necessary, to save our position, to strengthen 
our organization. I wrote the first letter and called a meeting over my own sig- 
nature at his suggestion, and in that letter I cited ina general way the reasons 
and the benefits that would accrue. In that letter 1 made no mention of the 
seven companies. I realized that there would be no lessoning of competition 
even though it involved seven companies, because the production was so incon- 
sequential as compared to the outside totr^l production in this great pool that 
I passed that up as a matter of no significance whatever, and stressed the advan- 
tages of combination of our ability and capital with the Midvale resources and 
manufacturing facilities and the better service that we would be able to render, 
probably, through a chain of operations, and later on I called attention to the 
great wealth of our raw material in the Southern States. * * * 

A concise statement of the "advantages of the plan" and "some of 
the essential reasons for the proposed unification of the properties of 
the companies" as it was furnished to the stockholders of those com- 
panies, is included herein as exhibit 37. No elucidation is made of 
the objective described in that statement as "the economJc advantage 
of better distribution for the use of such products." 

It has not been proved that we cannot have size enough for the greatest possible 
efficiency, and still stop short of monopoly. Would the Carnegie Co. have suf- 
fered seriously in its industrial efficiency if it had never joined the "Ste(!l Trust"? '" 

"bad conditions" in the steel industry 

What were the existing "bad conditions" to which Mr. Topphig 
referred? What, if anything, had happened in the steel industry 
which furnished any justification for the statement that the United 
States Steel Corporation was "almost in control of the markets" at 
that time? 

'5 Transcript of record of conference at Department of Justice, May 24, Vi22, p. 51. 
» File F. T. C. (leneral ~~; , p. 57-58. 

30-1 

" Thomas L. Chadbourne, counsel for promoters of North American Steel Corporation and Midvale 
Steel & Ordnance Co. 
" J. B. and J. M. Clark, The Control of Trusts, the Macmillan Co., New York, 1914, p. 196. 



234 CON<:?EiNTRATION OF ECONOMIC POWER 

It is thought that the answer to these questions will disclose one of 
the prime incentives to the mergers. The "bad conditions" referred 
to by Mr. Topping doubtless had reference to price conditions. 
Though much has been said and written concerning steel prices as 
they were quoted then and now, perhaps some brief explanation of 
the practices should be made here, since much of what follows, if we 
are to have an authentic record, must be largely in steel terminology. 

For many years all rolled-steel products (except heavy steel rails) 
have been sold and invoiced only at destination or what have become 
known as "delivered prices," which included the transportation from 
point of origin to destination. Prior to 1921, however (and during 
the early months of that year), practically all price negotiations were 
carried on with custom.ers in terms of "Pittsburgh basis," the mechan- 
ics of which were well understood by all buyers of steel. As the full 
significance of what follows may only be realized with a com.plete 
understanding of that method or system, the "established meaning" 
of the term as it appeared on large numbers of price quotations now a 
part of the files of the Federal Trade Com.mission is repeated herein: 

The established meaning of "Pittsburgh basis" is that the price is f. o. b. 
Pittsburgh plus the official aU-rail freight rate in effect from Pittsburgh to destina- 
tion on date of shipment, less the official aU-rail freight rate in effect from seller's 
works to destination on date of shipment (exhibit 38) . 

The net result of that method was that irrespective of point of 
production or shipment or destination, the total cost of steel to the 
consumer or fabricator of steel into other products, at destination 
was the equivalent of the price at Pittsburgh, plus the freight from 
Pittsburgh to destination." The latter element was easily ascertained 
and was known to eveiy buyer of consequence. Before, the invoice 
was received he knew exactly what the "destination price" would be.'^ 

The Pittsburgh "base price" was, of course, an important and at 
times uncertain element in this combination. It was the only variable 
element in a very definite method of calculating the "destination 
price." It was as Judge Gary testified, "The advertised price so to 
speak," which was published in the trade journals. ^^ 

After an examination of exhibit 51 and with- this explanation of the 
then current steel formula, the price conditions as reported in the indus- 
trial press, the somewhat technical testimony of witnesses and the 
tabulations herein will be readily understood.^" 

To correctly understand what were probably the "bad conditions" 
to which Mr. Topping referred as existing in July 1922, it will be 
necessary to review briefly the general conditions for something more 

" "Under the Pittsburgh Plus method delivered prices all over the country were higher than the Pittsburgh 
price by the amount of the freight from Pittsburgh. • * • For example, a mill at Chicago, or other 
producing points, received a delivered price on sales at such point higher than the Pittsburgh base price by 
the amount of the freight from Pittsburgh to such point." The Basing Point Method of Quoting Delivered 
Prices in Steel Industry, by U. S. Steel Corp., hearings before the T. N. E. C, pt. 27, ex. 1418. 

" In most instances shipments were made "freight collect" at destination and the freight bill returned to 
the producer as a voucher for the amount of the deduction or allowance for freight from the face of the invoice- 
"No allowance to be made for spotting, switching, war tax, etc." Nor was a cash discount permitted on the 
amount of freight paid within the discount period for the obvious reason that the amount of freight varied 
from different shipping points, and no other means was devised to equalize this difference in discounts. 

" "Our instructions to our people were positive, to let us know if they wanted to make any change'' in 
prices, and then if we made any changes we would put them in the trade journals, and let it be known to „ ur 
customers generally; we would treat our customers all alike, or try to" (exhibit 3). 

2" For further explanation of and comments upon the basing point formula, see publications by the F. T. C . 
which appear as follows in hearings before the T. N. E. C, pt. 5, Practices of the Steel Industry Under the 
Code, Senate Doc. No. 159, 73d Cong., exhibit 338; Report of the Federal Trade Commission to the President 
in Respect to the Basing Point System in the Steel Industry 1934, exhibit 339; Report to the President on 
Steel Sheet Piling, 1936, Made in Response to Executive Direction, exhibit 340; Findings of Fact and Con- 
clusions of the Federal Trade Commission in so-called "Pittsburgh Plus" case, F. T. C. Docket 760, 1924, 
exhibit 343. See also pt. 27. exhibit 2242 by Walter B. Wooden and Hugh E. White of the staff of the F. T. 
C, An Analysis of the Basing Point System cif Delivered Prices in the Steel Industry as presented by the 
United States Steel Corporation in exhibits 1410 and 1418. - 



CONCEiNTRATION OF EOONOMIC POWER 235 

than 3 years prior there "^o, as they are recorded in the industrial 
press and elsewhere, and especially the prices for various forms of steel 
in terms of the Pittsburgh base. 

GENERAL CONDITIONS IN 1919, 1920, 1921 

The abrupt termination of hostilities in November 1918 was, for 
well-known reasons, followed by a few months' hesitancy approaching 
industrial stagnation, during which negotiations were carried on 
between the Industrial Board of the Department of Commerce and 
the steel industry in an effort to agree on prices which would encourage 
buying and would be fair to the Government, especially for the use of 
the railroads which then remained under Federal control and were in 
urgent need of large quantities of steel for repairs and replacements. 

In the annual report of the United States Steel Corporation for the 
year 1919 it is said: 

During the first 5 months a comparatively small amount of new business was 
offered. This was followed by an increasing demand and broadening market for 
steel products (exhibit 39). 

It confirms what has just been said- respecting the understanding 
with the Industrial Board of the Department of Commerce. 

On March 21, 1919, the Industrial Board of the Department of Commerce 
announced a schedule of prices for the principal standard steel products which, 
after extended investigation, it has concluded was fair and reasonable under pre- 
vailing conditions. These prices were a substantial reduction from those which 
had previously been quoted by steel manufacturers generally. The subsidiaries 
of this Corporation promptly accepted this schedule and have since followed it, 
notwithstanding there has been a steadily increasing cost of operation and pro- 
duction, and that the demands of customers for materials would have permitted 
higher prices. The decision of the Corporation in this particular has been influ- 
enced by the heretofore announced reasons which from time to time in the past 
have decided its policy in respect of prices under conditions where the necessities 
of consumers induce them to bid up the market. At the close of 1919 the tonnage 
of unfilled orders of the subsidiary companies for rolled steel products was 8,265,366 
tons, * * * 

It has been suggested, in connection with exhibit 36, that 1919 was 
considered a more normal year than any immediately prior or subse- 
quent thereto. The year 1920 was one of intense industrial activity, 
during which premium pri<;es were asked by most, if not all, of the 
independents which were frequently much in excess of and frequently 
almost double the corporation's price. As prices for that year con- 
tinued to climb these independents deferred shipments of their earlier 
orders and a&ked as much for immediate shipment as the traffic would 
bear, and by those tactics excited intense antagonism on the part of 
consumers whose projects were delayed, .and some of whom were 
thereby subjected to suit for damages. The corporation, on the other 
hand, continued in effect the scale of prices which had been agreed 
upon with the Industrial Board of the Department of Commerce and 
endeavored to pror&,te its production between its old customers in 
about the ratio of their purchases in previous years, with the result 
that it went into the year 1921 with a backlog of more than 8,000,000 
tons (exhibit 39). There is recited below an excerpt from the annual 
report of the United States Steel Corporation, which appeared in its 
statement of general conditions for the year 1920 (exhibit 39): 

The demand for iron and steel products during the first 7 months of the year 
was large', the new business booked from month to month materially exceeding 



236 CONCEiNTRATION OF ECONOMIC POWER 

capacity. Beginning with August there was a slackening in the volume of orders 
offering. The new business accepted during the year with the considerable toa- 
nage of unfilled orders carried over from 1919 enabled the properties of the sub- 
sidiary companies to operate to very nearly full capacity except as operations 
were interfered with, especially from April to July inclusive, because of inadequate 
railroad service, arising principally from strikes and from shortage in fuel sup- 
plies. * * * No change was made during the year in the domestic prices for 
the principal steel products which were in accordance with the schedule announced 
by the Industrial Board of the Department of Commerce on March 21, 1919, to 
which reference was made in last annual report. This price schedule was adhered 
to by the subsidiary companies notwithstanding the demand for steel was such 
during the first half of the year that higher prices could have been obtained. 

The corporation again exhibited some uncanny foresight in its 
endeavor to stop the price inflation to which others apparentl}'^ saw 
^no limit, for, as it correctIy«says, it made no increases in its prices 
base Pittsburgh, which was the sole basing point at that time, although 
its assembly costs must have«increased enormously by the advance 
in freight rates which occurred in August of 40 percent in Central and 
Eastern States territory, and 33}^ percent interterritorially. Its own 
statement of the situation is as follows (exhibit 39): 

The price policy adhered to by the corporation, however, enabled it, notwith- 
standing substantial increased costs arising from advances in labor rates, in freight 
rates and higher cost for raw materials required to be purchased, especially fuel, 
to net considerable profits and to maintain operations at the degree above men- 
tioned (80 percent of capacity), also to^carrv forward to 1921 a large tonnaije of 
unfilled orders. These latter at December' 31, 1920, totaled 8,145,122 tons of 
various classes of steel products. 

Prominent among those so-called independents who were defer- 
ring shipment of orders taken at the so-called Redfield scale, and 
meanwhile accumulating as much premium spot tonnage at as high 
a price as the traffic would bear, were Bethlehem and Midvale- 
Cambria. To a lesser extent the same policy was pursued by Lacka- 
wafma (exhibit. 38). Not until some time later did the independents 
begin to take seriously what some of their customers, who were also 
buyers from the United States Steel Corporation, had told them in 
resentment of their solicitation of premium orders from others, and 
delaying shipment to them of previous obligations at the Redfield scale, 
which was in effect, that they would thereafter trade with the steel 
corporation up to its ability to fill their requirements, and that others 
would have to buy back any patronage they might hope to get. 

By February 1, 1921, the Steel Corporation was rapidly reducing its 
backlog tonnage, but at the end of the first quarter was able to report 
that it was operating at a ratio of 70 percent of capacity and obtaining 
the Redfield scale prices, while many of the independents were either 
shut down completely or operating at as low as 20 percent. In the 
meantime a series of events occurred which are matters of authentic 
record, which, together with what has just been said, may furnish 
some basis for the plea in support of the mergers that the United States 
Steel was "almost in control of the markets" at that time. The first 
of these events was recorded some months later in the annual report 
of Mid vale-Cambria for the year 1920, which was being written late 
in February 1921. It recites that — ■ 

The halting trade which was in evidence at the close of the year 1920 continued 
through January 1921 so that the situation became extremely serious, not only 
to stockholders, but especially to the 30,000 employees who under normal con- 
ditions depend upon tl"> operation of our m.ills for the daily living of themselves 
and their families. 



CONCEiNTBATION OF ECONOMIC POWER 237 

The reason for the action which Midvak^ had taken earlier in the 
month was frankly stated: 

While we appreciate that the causes of the halting trade are verj- complex, 
nevertheless we believe that one of the important factors in the hesitation of 
buyers, was that they believed, and rightly, that the market for steel products 
was falling. The psychology of the situation was that no buying of any import- 
ance would be done until the consuming interests were convinced that the market 
had fallen. 

Rmnors had occurred of market weal^nesses at that time, but the 
following statement by Midvale in its annual report made more than 
a year later removed any doubt as to the identity of the interests whicli 
took the initiative. The Midvale report says: 

We therefore, on February 4, 1921, announced radical reductions in the selling 
prices of our standard rolled products. This action was taken, not with the ex- 
pectation that it would imm.ediately start a buying movement, but with the l^elief 
that such a step must be the first one taken in order to restore norm.al conditions 
(exhibit 40) . 

The course which prices took thereafter is recorded in the various 
issues of "The Iron Age" and is confirmed in general by documentary 
evidence in the files of the Federal Trade Commission. Before ex- 
amining the price chronology it may be well to recall what was said 
something more than a year later as to the price compulsion under 
which the merger companies weiT acting. The reasons publicly 
advanced in support of the mergers were naturally different than those 
suspected by the well-informed as to what was taking place. One 
producer urged that "the Steel Corporation's legality has been estab- 
lished by the Supreme Court and it has a control which no witness 
will dispute, expressly or by innuendo, and by whicli it can sell its 
products $3, $4, or $5 a ton less than its competitors." 

Another, speaking on May 24, 1922, said, "Practically speaking, the 
situation has been that the United States Steel ' Corporation was 
almost in Qontrol of the markets, and to stay in our company lost 
about $6,000,000 last year." 

Another said, "And Midvale Steel and Ordnance lost about $3,- 
300,000"; "and Briar Hill Steel Co. lost about $5,308,000." Col- 
lectively they represented that the mergers "will strengtheii • these 
weak sisters in the business and enable them to more effectively com- 
pete for the benefit of every consumer in the markets of the United 
States." 

Others urged that they were under serious disabilities in competing 
with the United States Steel Corporation, that they were "very anxious 
to overcome that disability not only to save our own investment, but 
by so doing to render a public service," and that they might "be able 
to maintain active competition whereas today, as we are now situated, 
we cannot maintain active competition except locall3^" They further 
urged that "the merger of these companies would in no sense eliminate 
competition as that term is legally understood, but would tend to 
maintain it" and "to definitely establish it ia active form." They 
were very emphatic hi their staternents that no substantial competition 
existed between any two of them and that the sole purpose of the 
merger was to provide "for active competition for or against United 
States Steel Corporation." ^' 

21 Confercnco at lloiiartmont of Justice May 24, 1022, and hearing before Federal Trade Comini.ssion 
July 19, 1922 (file 905-3-0-1). " 



238 CONCEiNTRATION OF KOONOMIC POWER 

This was less than 3 years after the Supreme Court had held that 
the corporation had no such power in or control over the markets, 
and it was advanced at a time when, as "Iron Age" correctly said, 
their prices varied "from $7 to $13 per ton below those of the corpora- 
tion." ("Iron Age," March 31, 1921, p. 866, exhibit 41.) 

The price history of the respective groups, as recorded in the files 
of the Federal Trade Commission, and as reported by "Iron Age," 
is a quite different story. In the Pittsburgh market letter of "The 
Iron Age" next succeeding the announcement by Mid vale Steel & 
Ordnance Co. that it would quote prices low enough to bring business 
to its mills and that cuts of $5 per ton below the Steel Corporation 
schedules were reported, it further says, "other independent interests 
have done nothing in the m-atter of price cuts" and that "the Steel 
Corporation subsidiaries meanwhile are holding to the level of prices 
which it has observed now for almost 2 years." It cited the corpora- 
tion's operations as "still at an 80 percent or 90 percent rate," that 
"leading independent mills have run at 20 percent to 35 percent in 
the last week" (exhibit 41). 

On February 17 it reported that Mahoning Valley independents, 
"on a lower cost basis are underbidding the Steel Corporation for 
business and are quoting prices on plates, sheets, and bars below the 
Industrial Board level" (exhibit 41). It commented on some quota- 
tions as "representing a drop of $8 a ton in 2 weeks" and that "as far 
as its effect upon the prices and wage policies of the Steel Corporation 
is concerned the course pursued by the independents in the matter of 
price and wages has been nil" (exhibit 41). 

The M&Tch 3 issue of "Iron Age" contains comments on a bid by 
Cambria Steel Co. on 350 tons of base plates for the Navy Depart- 
ment foT delivery at the Philadelphia Navy Yard at what was the 
equivalent of $6 per ton less than the then current price of the Steel 
Corporation. The Cambria Co. was also low bidder on 240 tons of 
bars at a price "equivalent to 2.25 cents base Pittsburgh, after allowing 
for Navy specifications," whereas the Steel Corporation was still ad- 
hering to the Redfield scale, which was on a basis of 2.35 cents base 
Pittsburgh (exhibit 41). On March 10 it reported that "Midvale 
Steel & Ordnance Co. is operating its Johnstown plant at about 40 
percent of capacity. Other independents do not appear to have fared 
nearly so well in the drive for business, and taking those companies 
located in the Valley district, Pittsburgh and Wiieeling, it may be 
said that 20 percent of capacity operation is a liberal estimate of what 
they are doing today" (exhibit 41). 

These price concessions apparently continued to increase until on 
March 31 "Iron Age" reported some independent companies as 
quoting $7 to $13 per ton below those of the corporation. In the 
Pittsburgh market letter of April 12 it said, "AH of the independents- 
are now quoting steel bars at 2.10 O'^.nts base Pittsburgh, and 2.20 cents 
base Pittsburgh represents the minimum price idea of all manufacturers 
except the Steel Corporation on shapes and plates" (exliibit 41). 

PRICE REDUCTIONS BY UNITED STATES STEEL OORPORATION KFFECT[VE 

APRIL 13 

In its analysis of the iron and steel market conditions appearing in 
the April 14 issue it is said : 



CONCENTRATION OF KOONOMIC POWER 239 

On Tuesday afleruoon, April 12, the Steel Corporation made public a list of 
reductions in its prices effective on the following day which brought bars down 
from 2.35 cents to 2.10 cents Pittsburgh, and plates and shapes from 2.65 cents 
and 2.45 cents, respectively, to 2.20 cents. The Steel Corporation also reduced 
billets from $38.50 to $37; sheet bars from $42 to $39; wire rods from $52 to $48 
and tin plates from $7 to $6.25 per box, or but $15 per net ton * * * Some 
consumers had intimations last- week of expected action of certain independent 
companies * * *. Buyers were allowed to cover at the lower prices just before 
the advance, and as a result bookings last week were larger than the average for 
March * * *. It is estimated that if its sheet and pipe prices which do not 
appear in the published list are reduced to those lately quoted by independent 
producers, its entire output will have come down an average of $7"to $8 a ton. 

THE STEEL PRICES BECOME IDENTICAL 

Ihe effect of this action is described by "Iron Age" Jas follows:' 

The week has been featured by a revision of prices by independent steel man- 
ufacturers which, for unanimity, has few parallels in the recent history of the 
industry or since ruinous com.petition gave way to stabilized prices (exhibit 41). 

Steel Corporation prices and those of a number of independent- steel companies 
have become identical on some products and in close relation to others, as tlie 
result of several interesting developments in the past few days. The new turn 
has caused more stir than the steel market has known in months, and its effect 
on the volume of business is being widely canvassed (exhibit 41). 

Obviously this action was no surprise as "Iron Age" had ascer- 
tained that certain consumers had intimations of the contemplated 
action and "were allowed to cover at the prices just before the ad- 
vance." The course wliich prices took during the balance of the 
year is extremely interesting. A short period ensued in which they 
appear to have been "stabilized" to a considerable degree. " On April 
21 "Iron Age" said : 

The chief effect of the coming together of independent and Steel Corporation 
prices by the raising of the fonmer and the lowering of the latter was the closing 
of business by the independent companies on which they had made quotations 
below the new level. Thus the bulk of the new orders of the past week has gone 
to the independents, but at the sam.e tim.e the Steel Corporation has been helped 
by the reinstatement of business which had g6ne off its books while it was main-, 
taining Industrial Board prices (exhibit 41). 

On May 10 "Iron Age" published a report by its Pittsburgh 
observer that "steel prices again are beginning to take on a some- 
what ragged appearance"; that "some of the ipdependent producers , 
had been led to. 'substantial concessions from the stabilized devels,' 
but some makers are not prepared to yield." He reported ^hat: 

The Ford Motor Co., which recently put out an inquiry for 4,000 tons of hot ^ 
rolled strips and for 5,000 tons of cold rolled strips,' has placed the former at 
2.40 cents base Pittsburgh, a concession of $7 per ton from the regular market 
quotation, while the Texas Co., which is seeking 4,200 kegs of wire nails, was 
quoted $3 base per keg, base Pittsburgh, or $5 per ton below the recently es- 
tablished quotation * * * ' (exhibit 41). 

In the analysis of iron and steel markets contained in the June 23 
issue of "Iron Age" it is said: 

There is no longer any strict adherence to the prices announced by the Steel 
Corporation as effective April 13. Reports have' gone through the trade that a 
form.al announcement, of lower prices would be made July 1 * * *. The 
market on bars and structural shapes is now about 2 cents, while 1.90 cents for 
plates, or $6 per ton below the April 13 price, is not uncommon (exhibit 41). 

Of particular significance is the report from Chicago, the home of 
Inland Steel, which was one of the companies, concerned in these 
mergers, that "the weakness in bars is more pronounced"; that 



240 CONCEiNTEATION OP BOONOMIC POWElt 

"sheets are now auout $5 peri ton below the April schedule * * *." 
The reports of departures from the "stabilized basis of April 1-2" 
apparently had reference also to conditions in the East as indicated 
by Bethlehem's announcement on July 4, to become effective on July 
5, which are described by the Iron Age on July 7 as having been 
received in Pittsburgh with mixed emotions. 

The reductions have b^en generally adopted by other independent companies, 
and while official announcement is yet to be made it is believed that the new 
prices will be adopted by the steel corporation. _ ' 

The ainounts of the deductions were said by Iron Age to amount 
to $4 per ton for bars, plates, shapes, billets, skelp, sheet bars, and, 
blue annealed sheets; $5 for black and galvanized sheets; and $10 for 
tin plate. It observed that "As to some products the announcement 
merely recorded what the market already had done" (exhibit 41). 

"A chronology of the base prices of subsidiary pompanies of United 
States Steel sho\^s that the corporation put these lower prices into 
effect on July 6." On July 21 Iron Age reported that "cutting of 
the steel prices announced early in July has been more general in" 
the past week, particularly in plates, structural shapes, reinforcing 
bars a'nd sheets"; that "aggressive competition between Steel Cor- 
poration and independent steel has been seen in the Chicago market" 
and concluded from its analysis of quotations made on diflterent forms 
of rolled steel in the Chicago district that "Pittsburgh basing has gone 
by the boafd in that district" (exhibit 4,1). 

Of conditions in the East it reported: : 

At Philadelphia a 5,000-ton order for plates and shapes for a fabricating com- 
pany went at 1.75 cents Pittsburgh for the plates and 1.80 cents for the shapes, 
whereas both are presumably 2 cents Pittsburgh. Several lots of about 100 tons 
reported, in the New York market brought out "prices of 1.80 cent's and 1.85 
cents, and in one case 1.70 cents. 

A chronology ' of the "Steel Corporation's base prices shows the 
establishment of the following, base Pittsburgh: (Per 100 lbs.) 

July 26, plates 1 -- .- $1.85. 

July ^6, structural shapes.- --:.-■_ 1. 85 

Jnly 26, bars _.--..._-_ . . 1. 85 

August 1, plate*- ,1 — , 1. 75. 

August 1, structural shapes. ^^> 1. 75 

September 26, bars.. - ^ 1. 65 

November 1, plates. . -_ ^__ 1. 65 

November 1, structural shapes _-_ _ __ 1. 65 

November 15, plates. . , 1. 60 

November 15, structural shapes - , 1. 50 

IJovember 15, bars ...■. !-_ 1..50 

(Commission's Exhibit 6855, Docket 760.) 

The prices quoted above by United States Steel Corporation sub- 
sidiaries appear to have been about the going prices succeeding the 
announcement by Judge Gary that the Steel- Corporation thereafter 
would meet competitive market prices as it found them. The 
Iron Age of September 1- quotes Judge Gary as saying: 

_When the subsidiaries of the Steel Corporation ascertain to a certainty that 
large and important independents, so-called, are selling at prices materially lower 
than those, which have been heretofore announced, our subsidiaries meet the new 
prices. They do not pfecipitate or lead in establishing lower prices (exhibit 41). 

" Commission's Exhibit 6855, F. T. C. Docket 760. 



CONCEiNTEATION OF BOONOMIO POWER 241 

It stated further that — 

The prevailing opinion is that the pronouncement has clarified the situatiot 
and that the fact that the Steel Corporation now will sell as low as anyone else 
is likely to exert, a restraining influence on promiscuous cutting of prices. This 
will probably mean less selling to regular recognized customers by independents, 
because such buyers now will be able to match the lowest prices named by inde- 
pendents with those of the Steel Corporation subsidiaries (exhibit 4i). 

No material change in price conditions appears to have oc(;urred for 
the balance of the year, either from the price chronologies available 
or. the industrial press. An incident of some significance, however, 
occurred which is referred to in the December 15 issue of "Iron Age." 
Although not positively identified, it appears to have reference to and 
illustrate the aggressive policy of Midvale. "Iron Age" says: 

A number of interests which have been regular buyers of plates from valley 
producers have been obliged, under the circumstances, to purchase tonnage else- 
where. One of the most striking instances recently involved 20,P00 tons of plates 
sought by a Shenango VaUey fabricator which had been a consistent buyer from 
a Valley maker for many years. An eastern interest, however, offered to produce 
the plates at a price whic'" the Valley maker could not touch, and for that reason 
the business went elsewhere * * * (exhibit 41). 

TERRITORY WEST OF PITTSBURGH 

Some confirmation of events recorded by "Iron Age" is found in 
the brief chronology of prices in the West during 1921, which was 
furnished in the Pittsburgh basing case in 1922 (F. T. C. Docket 760) 
by the purchasing agent of a large agricultural implement manufac- 
turer at Racine, Wis. Testifying from records which he had before 
him the witness said: 

In February 1921 Midvale cut prices $5 a ton. The oiher independents followed. 
The corporation maintained its $2.35 price, but on April 1 the price of bars, beams, 
and structurals was apparently 2 cents f. o. b. 'Pittsburgh; and on April 12, 1921, 
the corporation f educed its price on bars to $2.10 and on plates and shapes to 
$2.20, I think, Pittsburgh; the independents advanced to these prices. By May 
prices were shaded to $1.90, Pittsburgh, for bars and 2 cents for plates; and frcim 
July on, why, we heard that Chicago base was gradually creeping into the market; 
we heard that some people, were able to buy bars from the Chicago miU at a 
Chicago base. Later on we found from our transactions that the corporation 
also was on a f . o. b. Chiciago basis rather than f. o. b. Pittsburgh. * * * 2^ 

In its comment upon the effect of the coming together of independ- 
ent and steel-corporation prices, by the raising of the former and the 
lowering of the latter on April 13, which "for unanimity has few 
parallels in the recent history of the industry," the "Iron Age," in 
referring to the reinstatement of steel-corporation business, "which 
had gone off its books while it was maintaining Industrial Board 
prices" (exhibit 41), touches upon an iniportant development which 
needs further elaboration. They were important factors in the cir- 
cumstances referred to by Mr. Barr, in which, as "Iron Age" correctly 
said, Pittsburgh basing had gone by the board in that district. 

Under the then current practice of tying all prices to Pittsburgh by 
the Pittsburgh-plus method, any cut in the Pittsburgh equivalent or 
Pittsburgh base, as it was known, wherever the cut may have occurred 
was considered as a'cut in the market as a whole. As tih© prices made 
in Chicago territory and elsewhere were related by the prevailing 
freight rates to the Pittsburgh price, it was inevitable that any cut 

'' Harrv G. Barr, purchasing agent, J. I. Case Threshing Machine Co. F, T. C. Docket 760, transcript 
pp. 1613-1514. 

-264905 — 41— No. IS 17 



242 CONCENTRATION OF ECONOMIC POWER 

by Midvale-Cambria would, under the then-existing conditions, be 
reflected in the Chicago territory and west thereof. Some of the im- 
portant fabricators in that section who were in competition with east- 
ern fabricators, who were being supphed by Midvale-Cambria, Lacka- 
wanna, and other eastern producers, were .securing part of their require- 
ments from United States Steel Corporation subsidiaries and the In- 
land Steel Co., at Indiana Harbor, Ind., the latter being the only 
independent of consequence in that territory. The lower prices made 
by eastern independents were very promptly reflected in the 
Chicago territory and were adopted by Inland, thus giving to those 
fabricators trading with Inland a very considerable price advantage 
over those who had theretofore been dependent upon the United 
States Steel Corporation. These fabricators, finding their margins 
very much reduced under the then-existing conditions, advised the 
Steel Corporation that they could no longer continue to patronize it 
at prices materially higher than those asked by the independents, 
and that as a matter of self-preservation they must either have as 
low prices as their competitors or change their sources of supply. 
The Steel Corporation thereupon reduced its' prices to some of those 
fabricators of structural shapes and plates, a fact which appears not 
to have become known to "Iron Age" for some time thereafter. The 
"aggressive competition" between the Steel Corporation and inde- 
pendent steel later seen by "Iron Age" as occurring in the Chicago 
market doubtless had reference to this situation as that competition 
progressed to a point where the corporation's Chicago and Pittsburgh 
prices were equal. ^'^ 

TERRITORY EAST OF PITTSBURGH 

Without repeating any testimony of witnesses, a -sequence of events 
occurring in the territory east of Pittsburgh, with which tliis study is 
mainly concerned, may be reconstructed from the mass of documen- 
tary evidence accumulated in the so-called Bethlehem-Lackawanna 
merger case (F. T. C. Docket 962). These data show that while 
prices were still upon a relatively high level, Midvale-Cambria de- 
parted from the established method and began selling certain of its 
customers on an f. o. b. mill basis (exhibit 42). 

Lackawanna likewise commenced selling certain customers in the 
territory tributary to its mill on an f. o. b. mill basis. ^^ To equalize 
the delivery cost of steel to those customers of Midvale-Cambria and 
Lackawanna who thus secured it at less than the then current "Pitts- 
burgh-plus prices," Bethlehem and United States Steel were com- 
pelled either to quote a variable "base Pittsburgh" or to quote a 
"delivered price" which was equivalent to the cost at destination of 
purchasers from those companies. The , evidence shows that the 
f. o. b. mill price of Lackawanna, while ordinarily 10 cents per hundred 
pounds higher than the then current Pittsburgh base price at Pitts- 
burgh, v.as lower during certain periods than the then current 
Pittsburgh base. As exhibit 43 hereto there is offered an abstract of 
the invoices rendered by Lackawanna to four customers at Buffalo, 
N. Y., during a portion of the years 1921 and 1922, which shows these 
facts. It also shows the then current freight rate from Pittsburgh 
to Buffalo and under caption "Pittsburgh equivalent" gives the figures 

a* Commission's exhibit No. 6855, F. T. C. Docket' No. 760. 

» Commission's exhibits Nos. 1775, 1786 in F. T. C. Docket 962. 



COx\CENTRATION OF ECONOMIC POWER 243 

which it would be necessary for the Steel Corporation and Betlilehem 
to use as a "Pittsburgh base" in order to sell at an equal destination 
cost. It will be noted that these equivalents were for a long period 
19K cents per pound, or $3.90 per ton less than the then current 
Pittsburgh price as quoted in the "Iron Age," 

There is not only abundant evidence that both Lackawanna and 
Bethlehem did sell upon the basis of these reduced Pittsburgh equiva- 
lents, but conclusive evidence of the resulting net prices to the corpo- 
ration is shown in its chronology of var'able base prices in use in its 
eastern territory during that period Commission's exhibit 6855, 
F. T. C. Docket 760). 

The inference contained in the statements made by the promoters 
of these mergers has been shown to be without foundation. Their 
own Shylock policy of demanding every cent the traffic would bear 
in 1921 was entirely responsible for the extent to which "the United 
States Steel Corporation was almost in control of the markets." It 
has been shown in what manner the action of Midvale-Cambria, fol- 
lowed by Lackawanna, by other eastern independents and by Inland 
in the Chicago district had forced United States Steel Corporation to 
relinquish the unearned freight increment equivalent to the freight 
rate from Pittsburgh to Chicago and Pittsburgh to Duluth on the 
products of the newest of the corporation's mills. Likewise, in 
meeting the situation created by Lackawanna and Cambria in the 
territory more strictly tributary to those mills, the corporation was 
forced to discount to a very considerable extent its Pittsburgh-base 
price which it theretofore obtained everywhere. These facts gave 
color to the belief quite prevalent at that time that the Steel Corpo- 
ration was smiling upon the Bethlehem program. 

Although Mid vale's action was taken when prices were on a rela- 
tively much higher level than obtained shortly thereafter, it was a 
terrific blow to Bethlehem, which was a staunch advocate of the 
Pittsburgh-plus system, which system gave both its Bethlehem, Pa,, 
and Sparrows Point, Md. (Baltimore), works an unearned freight 
increment of more than ^6 per ton, the freight rates being more than 
$6 from Pittsburgh to those points. Likewise, the system gave 
Bethlehem a considerable bonus above' its Pittsburgh base price on 
practically all shipments to the large industrial eastern section of 
Pennsylvania, New York, and New England, to which, its freight 
rates from Betlilehem and Sparrows Point were considerably less than 
from Pittsburgh. 

The action taken by Midvale-Cambria also put a temporary halt 
to the common practice in the industry of carrying coals to New- 
castle. It was against this disability that complaints were voiced by 
the promoters of the Republic-Midvale-Inland merger, who urged 
that under the then existing conditions (which were attributed to 
action of the United States Steel Corporation), the Youngstown Works 
of Republic could no longer reach the Chicago market because of a 
"disability of $7.60 per ton freight charges." ^® 

Instances of the fact that this was common practice before the 
acquisitions are shown by exhibit 44 hf reto, and subsequent thereto 
by Bethlehem Steel Co.'s exhibit No. S > in I, & S, Docket No. 1929 
(exhibit No. 35), which shows hundrrdi of cars of the same kind- of 
steel moving from one producing ,j( mt ,to another,^ and in some 

* Transcript of record of conferences at Department . f .' istice May 24, 1922. 



244 CONCEOSTTRATION OF E<X)NOMIC POWER 

in&tances for hundreds, of miles. Exhibit 44 is a partial abstract 
only of invoices rendered in 1919 by Bethlehem Steel Co. as represent- 
ing shipments from Bethlehem and shipments by Cambria Steel Co. 
from Johnstown to a common customer at Buffalo, N. Y. (of which 
Ijackawanna is a suburb), and by Lackawanna Steel Co. to the same 
customer. With minor exceptions, in which premium prices are 
indicated for prompt shipment, it shows consistent use of the Pitts- 
bui^h-plus system by the three producers. When Lackawanna 
opened the potential steel market of Buffalo by selling these and other 
consumers in the immedia e ,'icinity of its mill on an f. o. b. mill 
basis comparable to the base price then current at Pittsburgh, it 
became very costly for either the Bethlehem, Steelton, or Sparrows 
Point works of the Bethlehem Steel Co. to continue shipments into 
the Buffalo territory, as will be apparent from the resulting " Pittsburgh 
equivalents' ' shown in exhibit 43. It is largely an arithmetical con- 
clusion, therefore, that Midvale's action, on February 24, 1921, 
followed by Lackawanna and other important independents in the 
Pittsburgh and Shenango and Mahoning Valleys, was responsible 
for the fact that the Pittsburgh-plus system (then a single basing- 
point system) went by the board in the Chicago district, and 
likewise in a tremendously more important territory east of Pitts- 
burgh, a territory in which more than one-half of the country's total 
of heavy steel products was distributed, arid where Bethlehem re-, 
ceived its highest prices under the Pittsburgh-plus system. 

Small wonder that merger discussions were begiin as a remedy 
for this condition, that Bethlehem should have so prominent a part 
in them, while the corporation was smiling on the Bethlehem program. 

It will be recalled that Bethlehem acquired Lackawanna on October 
10, 1922, and on November 24 of that year entered into agreements 
covering the purchase of aU the properties and assets of Midvale 
Steel & Ordnance Co., with certain exceptions, and all the properties - 
and assets of Cambria Steel Co. (exhibit 13). With those facts in 
mind attention is directed to exhibit 45 hereto, which is statistical 
evidence of several interesting facts. It is a partial abstract of the 
price quotations by Bethlehem on steel bars (which Attorney General 
Daugherty said Bethlehem did not prodoice) to the Philadelphia & 
Reading Coal & Iron Co., Philadelphia, a specimen of which is sub- 
niitted as exhibit 46. Among, other things shown by exhibit 45 is 
the rapid increase in the Pittsburgh base (Pittsburgh equivalent) 
prices -used by Bethleheni, in the quotations in question, and the 
price, base Pittsburgh, pubhshed by "Iron Age" in the issue next 
succeeding the quotations. The Carnegie Steel Co. (United States 
Steel subsidiary) bar priee "base Pittsburgh" subsequent to October 
1, 1922^ is not a matter \of record in the files of the Federal Trade 
Commission. Of equal interest, however, are three other facts: 
•First, that a $4 p^r ton advance in prices occurred while mergers were 
under discussion with the Department of Justice and the Federal 
Trade Coftimission in the spring of 1922.; that an $8 increase occurred 
between that tmie and the acquisition by Bethlehem of Lackawanna 
in October; and that another increase of $8 per ton occurred shortly 
alter the acquisition by Bethlehem of Midvale-Cambria in the spring 
of 1923. An equally' interesting and significant fact is that the 
f. o. b. ntill quotations disappeared' with the acquisition of Lacka- 
wanna and the options obtained on the Midvale-Canabria properties, 



CONCENTRATION OF BOONOMIC POWER 245 

and that the merchandising of steel was again put on a Pittsburgh 
basis in that enormous consuming territory east of the Indiana-Ohio 
State Une and north of the Potomac River, which was not controlled 
by the dual base which had been established in Chicago. The exact 
language in which that was done is repeated in exhibit 46 and illus- 
trated by exhibit 47. An additional fact worthy of note is that the 
acknowledgment of orders of a Baltimore customer 'covering com- 
mercial quality steel bars states that shipment may be made from 
either the Jolinstown, Pa., or Lackawanna, N. Y., works, both of 
which properties had been acquired by Bethlehem in the previous 
9 months. . 

Although the Attorney General could find no- evidence of actual 
or potential competition between any of these companies, there is 
submitted as exhibit 48 a tabulation of invoices covering sliipments 
by Midvale-Cambria into the city of Betlilehem in the 2 years pre- 
ceding the merger, which aggregate more than 600 tons of plates and 
almost a thousand tons of structural shapes. 

' Among other interesting facts which may be glimpsed in exhibit 
46,^^ reference has already been made to the terms in wliich steel 
prices were quoted as distinguished from the terms in which they 
were actually sold or invoiced in the period prior to or immediately 
succeeding the actioh'* taken by Mid vale in February 1921. In addi- 
tion to quoting a certain figure as "base Pittsburgh, Pittsburgh 
basis," which was commonly understood, it was frequently the prac- 
tice to repeat "the established meaning of Pittsburgh basis" as shown 
in exhibit 38. With the introduction of a dual base at Chicago in 
192? prices could no longer be quoted in that manner in the territory 
west of Pittsburgh in which the destination cost to the consumer 
might be made up of the lower alternate of the Chicago base, plus 
freight. Accordingly, in that territory it immediately became the 
practice to quote a -"destination" or "delivered" price. In the 
territory east thereof no such compulsion appeared, and subsequent 
to the acquisition by Bethlehem of Lackawanna and Midvale-Cambria, 
Betlilehem Steel Co. continued, for about 3 years, to quote at a specific 
price per pound "base Pittsburgh, Pittsburgh basis" ^* (exhibit 46) 
until on or about March 19, 1924, when quotations were revised in 

terms of a price " per pound, base, mill, freight equalized with 

Pittsburgh." This method contuiued to about July 30, 1924 29 

(exliibit45. No. 21395). 

In the meantime, on July 21, 1922, the Federal Trade Commission 
issued its order against the subsidiary companies of United States 
Steel Corporation to cease and desist from the Pittsburgh-plus prac- 
tice, which, of course, ran against United States Steel Corporation 
subsidiaries situated in the territory east of Pittsburgh, of which there 
were several. On or about August 27, 1924, Bethlehem changed the 
language of its quotations to show a specific price per pound "base, 
f. o. b. mill, with carload freight (or less than carload) allowed to 

,"^the particular destination^" (exhibit 45', No. 21414). '■ 

" While specific reference has not heretofore heen made to the factual showing contained in exhibit 48, 
It will be recognized as containing matters to which reference has been made, especially to the language' 
employed in price quotations, to the price levels obtaining at different times, to the premiura prices asked 
by certain independents during the periods of high and low demand, to the then current Pittsburgh base 
prices as published in Iron Age and to the then current prices of Carnegie Steel Co., a United States Steel 
Corporation subsidiary. 

" Commission's exhibits 21393-21395-21396-21398-21399-21400-21401-21406, inclusive, in F. T. C. Docket 
»62. ' 

'« Commission's exhibits 21407 to.24113, inclusive, in F. T. CJuDocket 962. 

'« Coinmissipn's exhibits 21414-21415-21416, F. T. C. Docket 962. 



246 CONOBNTRATION OF ECONOMIC POWER 

In the Iron Age of September 25, 1924, the issue next succeeding 
the date of issue of notice by United States Steel Corporation sub- 
sidiaries of their intention to comply with the order of the Federal 
Trade Commission "insofar as it is practicable to do so," there 
appeared a Philadelphia dispatch saying : 

President Eugene Grace of the Bethlehem Steel Corporation announced last 
week that his company would follow the lead of the Steel Corporation in abandon- 
ing the Pittsburgh price base. 

A week later Iron Age discovered that abandoning the "Pitts- 
burgh price base" simply meant a change in the method of quoting 
steel and none whatever in the cost to the consumer in the territory 
east of Pittsburgh, as has been shown heretofore. Comment upon 
this change is contained in the Philadelphia market letter appearing 
in the October 2 issue, in which it is said: 

There is nothing to indicate that the abandonment of Pittsburgh basing for 
steel products by the United States Steel Corporation and some of the inde- 
pendents will have atiy marked effect upon prices or conditions of doing business 
in the Philadelphiar district. So far the only change is that most of the mills are 
quoting delivered prices rather than f. o. b. prices,^! but the actual cost of material 
to the consumer figures out exactly the same. In fact, the eastern mills, in 
making quotations, simply include the freight from Pittsburgh in their delivered 
prices (exhibits 45-50). 

A suggestJLon that a change m the method of quoting only was 
contemplated in Mr. Grace's announcement is contained in the press 
statement of a Baltimore steel man 2 days earlier, in which he said: 

Of course, the Sparrows Point plant of the Bethlehem Steel Co. would stick 
to the Pittsburgh base because otherwise it would be entering into competition 
with its own Pittsburgh plants (Johnstown); the Bethlehem Steel Co.'s Pitts- 
burgh prices "will control its Sparrows Point prices, and the prices at all its other 
plants. 

This method continued in effect on steel sheets, one of the chief 
products of Bethlehem, until June 1938. This fact was made plain 
by the testimony of President Grace of Bethlehem before the Tem- 
porary National Economic Committee in respect to prices charged for 
sheets when sold to customers in Baltimore (exhibit 52),^^ 

As illustration of the fact that United States Steel and Bethlehem 
recognized a common interest in the maintenance of Pittsburgh plus 
in, the territory in which Bethlehem had acquired such predominating 

81 A stock defense of the basing point system has been, and still is, the contention that the destination price, 
or the terms in which the invoice is rendered under a basing point system was adopted at the insistence of 
buyers who wanted to, and otherwise would be unable to, compare "laid down costs." Invoices for steel 
have been rendered in that manner, which is in accordance with the mechanics of a basing point system 
and was in accord with the established meaning of Pittsburgh basis. Steel was not, however, quoted in thaf 
manner until after Pittsburgh-plus had gone by the board in the Chicago district in 1921. 

32 Mr. Grace attempted to justify this practice on the ground that theretofore the Sparrows Point mill, 
12 miles distant from Baltimftre, "wasn't important in the total picture of sheet production" (hearings before 
the Temporary National Economic Committee, pt. 19, p. 10611, et seq.). In this connection, it may be 
interesting to note that the Iron and Steel Works Directory of the United States and Canada for the year 
1935 shows Bethlehem's S'parrows Point capacity for steel sheets as 180,000 tons and that of the Eastern 
Rolling Mill Co. of Baltimore as 90,000 tons. Both producers based their Baltimore prices on Pittsburgh 
plus. Under conditions approaching free competition and subject to those competitive forces known as the 
law of supply and demand, the movement of a homogeneous commodity is from surplus to deficit areas. The 
Pittsburgh-plus prices at Baltimore could be justified as competitive only when some portion necessary to 
supply that point would have to come from Pittsburgh. Under such circumstances, both Bethlehem and 
Eastern Rolling Mill would be expected to ask the Baltimore consumer the equivalent of the Pittsburgh 
price plus the cost of freight to Baltimore, or as near that aggregate as would enable him to sell his product. 
However, no such conditions of supply and demand exist in Baltimore. The distribution of Bethlehem 
sheets is not definitely known, but there is evidence before the Senate Committee on Interstate Commerce to 
the effect that in 1 year, 40 percent of Eastern Rolling Mill's production was shipped to points west of Pitts- 
burgh. In other words, both of the Baltimore producers systematically held their Baltimore customers up 
to a Pittsburgh-plus formula price, while permitting Pittsburgh producers to sell in Baltimore at equal 
"destination prices," and dumped their thus created surpluses west of Pittsburgh or elsewhere at materially 
lower prices. Without such reciprocal action, the Pittsburgh-plus or multiple basing system would be 
unworkable. 



CONCENTRATION OF ECONOMIC POWER 247 

control, there is offered as exhibit 53 a partial abstract of invoices 
covering steel products in the form of consumer goods, i. e., plain 
wire and wire nails which were sold by Bethlehem and American Steel 
& Wire Co. (a steel corporation subsidiary) to a common customer in 
the New York metropolitan area during the years 1924 to 1926, 
inclusive. The units of sale are such that the destination prices may 
be readily resolved into a Pittsburgh equivalent. It will be noted 
that the prices of both producers, both prior and subsequent to 
September 16, 1924 (the date of the steel corporation's notice of its 
intention to comply with the order of the Federal Trade Commission), 
differ on both products from the Pittsburgh base price by exactly the 
same amount, showing that the same freight element was contained 
in the delivered price during both periods. 

A noticeable feature of the mechanics of Pittsburgh plus was the 
addition by Bethlehem to the. face of the invoices covering shipments 
from Johnstown of an amount equal to the freight differential of 
1)2 cents per hundredweight in favor of Johnstown, "to equalize with 
Pittsburgh" (notes c and d, exhibit 53). 

It is understood that this is stiU current practice as to these par- 
ticular steel products. 

Another fact which, although not strictly a part of the matter 
under discussion, is intimately related thereto and whether it be 
effect or coincidence should not go unmentioned. It concerns the 
indirect means of increasing prices by the use of so-called extras, which 
method was used several times before these acquisitions, and at least 
once since. One of the two methods of doing this, which has been the 
subject of considerable complaint by users of steel as capital goods, 
has been to increase the quantity extras applicable to the smaller 
quantities, which had the alleged effect of unduly burdening the small 
fabricator. It will be recalled that there were many and drastic 
increases made under the so-called Code of Fair Competition for the 
Steel Industry .^^ 

On March 30, 1923, the Midvale properties were transferred to 
Bethlehem Steel Co. and the Cambria properties to Bethlehem Steel 
Products Co, (exhibit 14), 

On or before July 1 there was published and made effective on that • 
date by steel producers generally, a new Ust of extras for various sizes 
and shapes of steel bars and small structural shapes, of which each of 
the merging companies were large producers. This list materially 
increased the then existing extras for machine cutting and the smaller 
quantity differentials to a lesser extent. In several instances it 
imposed extras for which none had theretofore existed. The princi- 
pal price increases at this time were, however, applicable to the price 
extras for sizes and shapes, which in ihany instances were more than 
100 percent. The range was from a minimum of 20 percent to a 
maximum of 140 percent and appears to have averaged about 60 
percent. The range of increase in cents per 100 pounds was from 5 
cents to $1, A comparative table of these extras with those in effect 
prior to the acquisition of Lackawanna and Midvale-Cambria is 
included herein as exhibit 49. No intelligent estimate of the 
weighted average seems possible, but enough is known concerning the 
importance which the industry attaches to their promulgation and the 

" Practices of the Steel Industry Under the Code, March 1934, hearings before the Temporary National 
Economic Committee, pt. 5 (exhibit 338). Report of the Federal Trade Commission to the President with 
. Respect to the^ Basing-Point System in the Iron and Steel Industry, November 1934 (exhibit 339, p. 7). 



248 GONCEiNTRATION OF E'OONOMIC POWER 

maintenance activities which have taken place in the technical 
committee of the American Iron and Steel Institute to furnish basis 
for the accusation that this source of additional revenue 'has been 
much overworked. Some of these collective activities, at least, have 
been carried on in a rather high-handed manner, as they were under 
the guise of a code of fair competition for the industry during the 
existence of N. I. R. A. These activities are not new, They are as old 
as the well-organized industry, and are indicated by the testimony of a 
former vice president in charge of sales of Carnegie Steel Co., who 
testified in the Pittsburgh basing case from personal knowledge. He 
said: 

I sat in what was known as the bar association from 1897 on. That was what 
was called a gentlemen's agreement. It was not a pool. It was nothing more or 
less than an association to help stabilize prices, but more particularly to stabilize 
extras, which had been very unscientific in their manner, and went to a cost basis 
in order to establish scientific extras, which were almost more important than the 
base price, and many of the associations dealt with matters of that kind quite 
as much or more than they dealt with prices; * * * ^^ (exhibit 51). 

In the hearings before the T, N. E. C. it was frankly admitted by Mr. 
Fairless, president of the United States Steel Corporation, and Mr. 
A. C. Adams, a vice president, that the matter of extras was talked 
over with competitors respecting the changes made in May 1938, 
that because of overlapping of certain products classifications and 
varying extras within each classification, -there had been "a state 
of confusion from a price standpoint" (verbatim record 219-222). 
Testimony to the same general effect was given by Mr. Eugene G;' 
Grace, president of Bethlehem (verbatim record p. 289). 

When the members of an industry will collectively agree upon base 
prices to the extent shown by exhibit No. 2214 before the. Temporary 
National Economic Committee,^^ there appears no reason to suppose 
that they wUl not agree also upon a subject which, in the opinion of a 
vice president in charge of sales, was "almost more important than 
the base price." 

IN DEFENSE 

Brief reference has heretofore been made to the contentions ad- 
vanced in support of these mergers. Among those urged upon the 
Government were the economies which might be eflFeoted in the wages 
of management. In view of the enormous bonuses commonly known 
to have been paid by Bethlehem Steel Corporation, this contention 
may be passed without further comment. 

The necessities for effecting economies in order to meet the com- 
petition of United States Steel Corporation, represented as then 
almost in control of the markets, have been shown to be without 
foundation. 

Another alleged objective, i. e., "increased economy resulting from 
the mining «of a larger tonnage of ore, coal, and limestone, under 
one control" may conceivably have been possible of accomplishment 
to some extent. This latter objective is coupled with "the economic 
advantage of better distribution for the use of such products" what- 
ever that may mean (exhibit 37). The remaining objectives ad- . 
vanced as justification were the possible economies of mass pi;oduction 

** Col. Henry P. Bope, vice president, Carnegie Steel Co., transcript of record in F. T. C. Docket 760, 
pp. 10857-10870. 

3« Hearings before the Temporary National Economic Committee, pt. 27, exhibit No. 2214. See exhibit 
62 hereto. 



CONCEiNTRATION OF ECONOMIC POWER 249 

and sale of finished steel. It may be conceded that m the manu- 
facture of steel as in all other manufactured products, one may 
conceivably reach a point of optimum efficiency. The progress 
toward such a theoretical goal, however, does- not involve the ac- 
quisitions and control under one management of thoroughly inte- 
grated plants located several hundred miles apart. Economies 
inherent in that situation are confined quite largely to those which 
may be effected in the wages^of management and in many cases these 
seem to be exaggerated. 

The evidence available in this case points very definitely in other 
directions. The comparatively higher earnings of the smaller steel 
producers, shown in exhibit 4 hereto, and in more positive form in 
other evidence before the Temporary National Economic Committee, 
suggests very definitely that the economic effects of going too far in the 
accumulation of scattered properties are not less drastic than the legal 
penalties and frequently become effective much more promptly. 

Midvale-Cambria had become an aggressive competitqr of Bethle-^ 
hem in many lines and was engaged in extensive alterations, repairs, 
and renewals of the Cambria properties at Johnstown (exhibit 40). 
Through its control of Cambria Iron Co. it had enormous reserves of 
domestic ores which Bethlehem lacked; it had an aggressive sales 
force and had accumulated an enormous cash reserve. Following the 
lead of^ Midvale-Cambria, Lackawanna had also resorted to price 
competition by selling on an f. o. b. mill basis in 1921-22, which 
deprived Bethlehem of much of the unearned freight increment from 
Pittsburgh which Bethlehem had beien enjoying on all its products 
(other than rails), which amounted to something more than $6 per 
net ton in eastern Pennsylvania and substantial amounts elsewhere. 
This unearned freight increment on the sheet capacity of the Spar- 
rows Point mill alone, if sold where Bethlehem received its highest net 
price, would amount to more than $1,000,000 annually. Further- 
more, Lackawanna enjoyed a low-assembiy-cost location on the 
Great Lakes to which it had moved from eastern Pennsylvania 20 
years previously. It likewise enjoyed equal or lower distributive 
freight rates on its finished products to many consuming points in the 
East, and a pronounced advantage over Bethlehem in its distributive 
costs both by rail and by water to the growing West. These advan- 
tages are reflected in the comparative increases in steel-producing 
capacity at Lackawanna and at Bethlehem. Although Lackawanna 
was larger than Bethlehem when acquired, in the 15 years of owner- 
ship by Bethlehen^, 1923-38, the ingot capacity of the Lackawanna 
plant was increased by 752,000 tons. In the same period the Bethle- 
hem plant was increased but 428,000 tons. A more striking contrast 
is presented in the ratio of increase in the Sparrows Point plant 
acquired from the Maryland Steel Co., which,^in the 15 years under 
Bethlehem ownership, was increased 2,1 15,000 Irbns. It is also notice- 
able that in the' same period of Bethlehem ownership, the ingot ca- 
pacity of several of the plants acquired in other locations was materially 
reduced. The outstanding instances were the Cambria plant at Johns- 
town which was reduced by 411,000 tons, the Wilming*ton plant by 
144,000 tons, and the Midvale' plant at Coatesville by 550,000 tons. 
Not without significance also is the comparatively recent transfer of 
the wide plate mills from Coatesville to Sparrows Point. 



250 CONCEiNTRATION OF ECONOMIC POWER 

This history of Bethlehem's development shows only a moderate 
increase in the original steel-making unit at Bethlehem and a tre- 
mendous expansion of some of the acquired plants and a drastic reduc- 
tion in or complete abandonment of others. It has not been that 
gradual expansion of a plant, by a somewhat trial-and-error method, to 
that theoretical maximum in which size produces an optimum of 
efficiency. Rather, it has on three occasions acquired competitive 
plants each of which were at the time considerably larger than the 
then-existing Bethlehem plant (chart II). 

There is usually a limit beyond which the economy of management by the 
enlargement of plant ceases; and where this appears and combinations continue 
beyond this point, the very fact shows intent to monopolize and not to econo- 
mize.*^ 

In the field of manufacturing and marketing it is doubtful if a monopolistic 
combination is in many cases the most efficient form of organization. We have 
already learned that the efficiency of large-scale production And combination has 
very real limits. There are few important lines of industry in which this limit 
would not be reached long before the would-be monopohst has become great 
enough to absorb the wbole.^' 

* * * Another characteristic of merger periods is the tendency to misin- 
terpret the significance of mere size for efficiency and economy of operation and to 
ignore the principle of diminishing returns. The idea then takes unusually 
strong hold upon the public mind and the business community that if anything is 
good, a hundred times as much is more than a hundred times as good; and espe- 
cially thq.t if you can make and sell a thousand units of something at a profit you 
shouldy b^ able to sell a milhon units at more than a hundred times the profit. 
Belief ir^ the exceptional economies of mere mass production has been more charac- 
teristic df the period since the war than it was of earlier merger periods, but it is 
remarkaible that it should be accepted with so little question by the business world 
in a period when the problems of excess capacity and the difficulties of distribution 
have been so acute and so widely discussed. The fact that merge r8 in recent 
years have been so largely in the distributive fields, however, is some indication 
that these" difficulties are being recognized. * * * ^^ 

STEEL MERGERS AND THE LAW 

P^'ior to the consummation of the mergers referred to herein certain 
conclusions of law concerning them were reported to the United States 
Senate by the then Attorney General. These conclusions were reached 
a^ter a study of data requested by and prepared for him by the steel 
producers- after an examination and analysis of hundreds of thousands 
of invoices covering each individual sale. The opinion, however, was 
based mainly on figures f^r the year 1920 which were considered fairly 
representative. The basic facts found as to each contemplated merger 
and the opinions rendered respecting them were substantially alike 
and were to the effect that neither would violate either the Sherman 
Antitrust Act nor the Clayton Act. 

While this study is concerned primarily with the facts surrounding 
these mergers rather than what may have been the law concerning 
them, it cannot entirely avoid reference to the legal decisions and to 
the logical and practical consequences of those decisions, which are 
offered in full as exhibit 1 . 

In respect to the status of the proposed Bethlehem-Lackawanna 
merger as related to the Antitrust Act (F. T. C. Docket No. 891), the 
Attorney General agreed that: 

'» William Howard Taft, the Antitrust Act and the Supreme Court, p. 128. . . 

" Elementary Economics (Industrial Monopoly and Its Control), vol. 2, p. 71. Fred Rogers Fairchild, 
Knox professor of political economy; Edgar Stevenson Furniss, professor of political economy; Norman 
Sidney Buck professor of political economy; Yale University, 1931. 

'• The Merger Myth, by Virgil Jordan, chief economist, National Industrial Conference Boar<^. 



CONCENTRATION OF ECONOMIC POWER 251 

Every combination formed for the avawed purpose of restricting interstate 
trade or of acquiring a naonopoly therein falls, of course, within its condemnation, 

and 

Manifestly, tlie evils that may be inflicted upon the public, such as enhancement 
of prices, are of paramount concern. 

The promoters, however, alleged other motives and the Attorney 
General, after what he described as an exhaustive investigation, 
declared: 

■ I am persuaded that the motive which prompts the Bethlehem to acquire the 
Lackawanna plant is the sole desire to secure greater efficiency and economy in 
the production, handling, and distribution of steel products and that the thought 
of. acquiring a monopoly or of enhancing prices was never present. The whole 
transaction from begining to end impresses me as being thoroughly clean, honest 
and straightforward. 

He rendered this opinion without any mention of the fact that 10 
days prior thereto, he was advised by the Western Association of 
Rolled Steel Consumers that in behalf of its membership of 800 major 
western manufacturers, it was challenging before the Federal Trade 
Commission the practice in the steel industry known as Pittsburgh 
plus. The association suggested that the practice "must of necessity 
be intimately connected therewith" and urged that he inform himself 
concerning it through the Federal Trade Commission and include 
the subject in his investigation. Although supplied with considerable 
data concerning it and advised of the possibility that the mergers 
might render the Commission's orders ineffectual, the suggestion was 
apparently ignored (exhibit 53). 

On the matter of size, he added: 

I need not stop to point out that in United States v. United States Steel Corpora- 
tion (251 U. S. 417), the Supreme Court refused to declare illegal a combination 
of much greater magnitude * * * 

After an observation that- restraint of trade was charged in that case 
and found iinpossible of attainment and. that price control was aban- 
doned in good faith before suit was brought, the Attorney General 
concluded that — 

The merger now under consideration will be neither an actual monopoly nor even 
an attempt to monopolize, and, of course, the decision just referred to is controlling. 

In the steel dissolution suit, the Supreme Court was careful to say 
that — 

It is this flexibility of discretion— indeed an essential function — that makes its 
value in our jurisprudence — value in this as in others — 

that — 

The appropriate relief in each instance is remitted to a court of equity to deter- 
mine * * *. 

Exactly what was meant by the statement that "the decision just 
referred to is controlling"? Is it to be inferred that the Supreme 
Court, having failed to condemn an aggregation of 45 percent of the 
country's steel capacity because mere size is not an offense, must 
approve a 15 percent merger, irrespective of other considerations than 
those of mere size, for the same reason? If so, by what reasoning 
could approval be withheld from another aggregation of 40 percent? 
Would it then be contended that this combination of 100 percent of 
the country's steel capacity in three concerns did not violate the Anti- 
trust Act? 



252 CONCENTRATION OF BOONOMIC POWER 

It is obvious from the Attorney General's repeated references to 
the relatively minor percentages wjiich each of the merging companies 
produced of the entire country's production of several forms of steel, 
that he gave great weight to the contention of the promoters that 
the aggregate production of those companies would be a compara- 
'tively minor part in what was urged as "this big pond of produc- 
tion.""^^ It is also obvious, from the method of acquisition adopted 
by the merging companies, that they recognized and avoided the 
difficulties which might confront them under the Clayton Act via 
the stock acquisition route, in the inhibition against such course — 

where the effect of sucii acquisition may be substantially to lessen competition 
between t jem or to restrain commerce in any section or community * * *_ 

The capital structures of the acquired companies and other inter- 
esting facts concerning them, as shown bj'' the consolidated balance 
sheet and profit and loss statements filed with the Committee on 
Stock Lists of the New York Stock Exchange by Bethlehem Steel 
Corporation, are appended as exhibits 54 and 55 for Lackawanna and 
Mid vale-Cambria, respectively, for the year next preceding their 
acquisition. 

Whatever may have been the status of these mergers under the 
law, the obvious fact is that the net result was — 

(a) to restore and perpetuate the then-existing basing point 
system of merchandising steel which had temporaril}^ broken 
down over a wide area through the action of Midvale-Cambria 
and Lackawanna; . 

(6) to give Bethlehem almost complete domination over a ter- 
ritory which at that time consumed more than one-half of the 
country's total production of certain important forms of rolled 
steel, by taking over competitors, a method which insures the 
most certain and complete power over supply and over prices 
which it has been possible to devise. 

Will it again be seriously contended that this aggregation "having 
been given legal sanction, the necessary consequence of its being and 
the natural result of its operation must be accepted also"; that irre- 
spective of the public or private importance of the price of a basic 
material such as steel (to which is added more of human labor in the 
further conversion into consumer goods than any other), the producer 
of that raw material may abolish all semblance, of an open market, 
create his own conditions of supply and "read his price from the 
flight of crows or the Ouij a board." 

The record of Bethlehem's price policy in this region for several 
years succeeding the mergers is perfectly clear. The production 
facilities of United States Steel in that area were so relatively insignifi- 
cant that it apparently felt it wise to follow Bethlehem's leadership in 
the matter of prices in that region, protected as it was by Bethlehem's 
powerful acquisitions at Johnstown and Buffalo which faced the 
corporation's Pittsburgh mills on the north and east; Having such a 
preponderance of the completely integrated steel capacity in this 

s' "Inasmuch as all steel products are made from this article it will be well to give figures showing the ingot 
capacity of the entire country and the percentage represented by Bethlehem and Lackawanna, with figures 
designed to contrast their capacity with that of the United States Steel Corporation and other producers. 
The country's total rated annual ingot capacity is 50,440.000 tons. Of this amount Bethlehem and Lacka- 
wanna's combined' capacity is 9.7 percent; that of the United States Steel Corporation is 45 percent; that of 
all others is 45.3 percent. In other words, the rated ingot capacity of the United States Steel Corporation 
is about five times that of the Bethlehem and Lackawanna combined." Letter from the Attorney General 
of the United States, S. Doc. No. 256, 67th Cong., 2d sess. (exhibit 1). 



CONCEiNTBATION OF BCONOMIC POWER 253 

territory, Bethlehem doubtless felt that it could afford to risk con- 
sumer opposition to the Pittsburgh-plus practice in that territory untU 
it chose voluntarily to abandon it. This it did for several years despite 
the implication contained in Mr. Grace's announcement in Septem- 
ber 1924 that it would "follow the lead of the United States Steel Cor- 
poration in abandoning the Pittsburgh-price base" (exhibit 50). 

As a matter of fact the levet of prices which are the starting point 
of calculation from^which current "delivered," or "destination" prices 
are reached, would be no less arbitrary if read from the ouija board. ^* 
It is in no sense the price in a market. During the forty-odd years 
since the inauguration of the various delivered-price systems, the 
market has become, in the language of their defenders, synonymous 
with the point of delivery in a general area of consumption. The 
term "market" "has been deliberately perverted by the organized 
defense of these systems so that the result, i.e., identical destination 
prices, may be pled as the result of perfect competition," and textbooks 
produced by the bale in support of that contention, something hardly 
to be expected in an imperfect world, but which exists to the exact 
cent or minute fraction of a cent per hundred pounds. On this point 
the testimony of Dr. Ripley, among several other noted economists, 
may be cited : 

The market, .as I see it, is not at the place where some steel and some freight 
and some wind have all three been hitched up together to form a kind of a com- 
bination — in other words, "where an artificial freight rate, which never was paid 
on that product, is figured in on it, making up the delivered price. That does not 
seem to me like a market. I think entirely in terms of that market at Chicago, 
■where we are dealing only with steel." 

So much has authoritatively been said as to the purposes of these 
so-called "base pripes," their origin, development, and current use 
that there is no\i^ httle excuse for disagreement on these essential 
points in any fair-minded dispussion of the matter.^^ The chief point 
of disagreement is the industry's insistence that the system, of which 
these base prices arfe an Lfltegral part, is a Mghly competitive system,^^ 
whereas sonie critics of it have endeavored to point out that it does 
not conform in most vital respects to the economic concept of com- 
petition but is rather plainly marked as a deliberate plan to evade it.'*^ 

Within the past 4 years, there seems, however, to have developed a 
growing realization on the part of the industry as to some of the eco- 
nomic implications contained in a system the avowed purpose of wtich 
was, as Mr. Tower has said, to enable all members of the industry 
"no matter where located" to "sell his products in anj part of the 
coimtry in Competition with all other producers" and -^'without disad- 

*» They are prices only in a very limited sense. The "deliverpd price," the only term in which steel is 
sold, includes another factor. The potential steel markets of the country, Pittsburgh, Chicago, Birming- 
ham, Buffalo, Cleveland, Baltimore, etc., have been closed for many years by the basing-point practice 
and any inquiry in those potential markets elicits another, i. e.. Where do you live or where is the steel to be 
delivered? In the language of one of the foremost economists, it is "a figure out of the delivered thing which 
is a hybrid in every sense of the term. It is not a price for steel. It is not a price for steel plus freight, but 
it is a price for steel plus a calcalation'" (Prof. William Z. Ripley, Harvard University, traoscript of record in 
F. T. C. Docket 760, p. 18315.) 

« Prof. William Z. Ripley, Harvard University, transcript of record in»F. T. C. Docket 760, p. 18240. 

" See statement of Judge Elbert H. Gary, formerly r-hairman, United States Steel Corporation, exhibitSl. 

<3 See statements of Walter S. Tower, executive secretary, American Iron and Steel Institute, before 
various Government bodies, exhibit 51. 

44 <<• • • the tonnage steel industry represents a problem in monopoly and monopolistic competition — 
not merely a so-called 'trust' to be scattered by the courts or the Federal Trade Commisjion hut an economic 
structure inherently monopolistic." (A r&um6 of "The Economics of the Iron and Steel Inaustry," by 
Dr. Ralph J. Watkins, Director of the Bureau of Business Research, University of Pittsburgh, February 
1937). 

See also An Analysis of the Basing Point System of Delivered Prices by Walter B. Wooden and Hugh 
E. White of the staff of the Federal Trade Commission, hearings before the Temporary National Economic 
Committee, Part 27, exhibit No. 2242. 



254 CONCEiNTRATION OF EXX)NOMIC POWER 

vantage to him" (exhibit 51). That is the negation of price compe- 
tition.*^ Such a result necessarily involves the substitution for the 
impersonal processes of competition an arbitrary decision by one per- 
son or a limited few having the power to make them, as to what prices 
shall be charged and what portion of the total burden shall be imposed 
upon different localities and the many different industries using steel 
as capital goods, which in its simplest terms means industrial dicta- 
torship.*^" The extent and importance of these decisions is well illus- 
trated in the recent testimony of President Grace, of the Bethlehem 
company, before the T. N. E. C, in which he makes reference to the 
overnight reduction of $6 per net ton in the price of sheets at Balti- 
raore (exhibit 52). It is illustrated further in the high prices which 
were maintained for many years in the Central West, despite the much 
lower production costs of certain forms of steel in that territory, which, 
if permitted to operate, would have forced much lower prices at Pitts- 
burgh and all the territory east thereof.*^ It is illustrated by the 
overnight effects of the partial compliance with the Federal Trade 
Commission's order in the Pittsburgh Plus case upon the destination 
prices of wire and wire nails in the territory west of Pittsburgh (ex- 
hibits 56 and 57). It is illustrated by the fact that (with one minor 
exception) no change in price occurred as a result of the Commission's 
order in the territory east of Pittsburgh; that as to those steel prod- 
ucts in the form of consmner goods including tin-plate and tubular 
products, the Pittsburgh plus practice still prevails in that region. 
It was the injudicious exercise of that arbitrary power, together with 
the enormous increases in freight rates which occurred during 1918 
and 1920, which precipitated the so-called Pittsburgh Plus case, F. T. C. 
Docket 760! That controversy was originally a friendly argmnent 
betweeii the buyers and sellers of steel. It was in no sense an altru- 
istic movement inaugurated by philanthropists in behalf of the for- 
gotten consumer. It was an effort on the part of 800 midwestem 
fabricators of steel to secure relatively cheaper steel, relative to Pitts- 
burgh; an effort to put an end to the price discrimination which was 
then being practiced to their detriment through a system with which 
they were in sympathy to a limited extent, but which never contem- 
plated an increase in the freight rates, which in effect expanded the 
continental United States to twice its former size, imder which Pitts^ 
burgh plus developed into an intolerable burden. Their selfish inter- 
ests required an abandonment of the very; system vhich the Bethlehem 
mergers were designed, among other things, to accompUsh, the per- 
petuation of Pittsburgh plus in the East. The modification of that 
system by the partial substitution of the multiple basing point system, 
a system which the industry a^ees is identical in principle, has the 
sole merit of effecting a wider distribution of the total burden of non- 
competitive prices. 

For the reasons indicated herein the legal status of the mergers 
accomplished by Bethlehem Steel Corporation remains in doubt. 
Likewise, the legality of the system of merchandising which they were 
designed to perpetuate, a system which both Bethlehem and United 

*' The absurdity of that proposition as a competitive set-up appears when one contemplates the world 
as a common "marlcet" instead of the continental United States, and the level of price which it would 
necessarily involve. 

<»• See Exhibits Nos. 1385, 1386, Hearings Part 19. 

" Hearings before the Temporary National Economic Colnmittee, pt. 27, exhibits Nos. 2238, 2239; see 
also pt. 27, exhibit No. 2242, by Walter B. Wooden and Hugh E. White, of the staS of the Federal Trade 
Commission. 



CONCENTRATION OF ECONOMIC POWER 255 

States Steel Corporation vigorously defend as a system of fair com- 
petition in that it enables every producer to "compete" with every 
producer, everywhere, remains for final judicial determination. 

Must it be assumed that the extent of the power shown to have 
been secured and exercised through these mergers has been obtained 
by legal means? 

Congress was moved to pass the Anti-Trust Act by two main considerations: 

(1) The desire to preserve the competitive system of industry; (2) the conviction 
that that system was threatened by the undue concentration of commercial power 
resulting chiefly from the unrestricted exercise of the right of combination.^^ 

In the absence of a purpose to monopolize or the compulsion that results from 
control or agreement, the individual certainly may exercise great freedom, but 
concerted action through combination presents a wholly different problem and is 
forbidden when the necessary tendency is to destroy the kind of competition to 
which the' public has long looked for protection.''^ 

The only alternative than evasion is epitomized by two of the most 
emment economists of our time: 

Without competition the Government must control prices of products and 
possibly wages and prices of raw materials. This is an alarming program; and 
yet the state cannot leave its citizens in the power of the "octopus" of popular 
rhetoric. Nothing but competitive power of some kind can relieve the state of 
the duty of entering the market roughshod and forcibly dictating values of many 
kinds. Competition can save us from that difficult and perilous necessity." 

In the consideration of these matters, two questions present them- 
selves: (1) Is there reasonable expectation that the law may be so 
interpreted or amended as to reach the situation described herein, or 

(2) must we admit that our economic system does not work because 
we live in a world of pretense and that we caimot solve our problems 
because we refuse to diagnose them realistically? 

Exhibit 1 

July 21, 1922. 

The Opinicn of the Attorney General 

To the President of the Senate: 

This communication is in response to a resolution passed by the Senate on May 
8, 1922, a copy of which was duly transmitted to me. Without stopping to quote 
it in full, the resolution starts out with recitals that the public press has an- 
nounced a proposed merger of seven steel companies, to be followed later by the 
inclusion therein of the Bethlehem Steel Corporation; that if such a merger takes 
place the corporation thereby formed will control the steel production of the coun- 
try outside of that part in the hands of the United Steel Corporation, thereby 
placing monopolistic control of the country's entire steel production in the hands of 
two gigantic corporations. These recitals are then followed by requests to the 
Attorney General "and the Federal Trade Commission to inform the Senate what 
steps they have taken to ascertain the purpose and effects of such a merger; the 
results of any investigation they may have made; what action they have instituted 
to protect the public interests; and that the Attorney General inform the Senate 
whether he thinks it advisable to proceed under the Sherman Act and the Clayton 
Act to prevent the impending combination. 

" United States v. U. S. Steel Corporation, 251 U. S. 417. 

*' Unanimous opinion of U. S. Supreme Court, U. S. v. American Linseed Oil Company, et al., 202 U. S. 
371,390. 

<« J. B. and J. M. Clark, The Control of Trusts, the Macmillan Co., New York, ini4, p. 122. 

"Prof. John Bates Clark is perhaps the most distinguished of the American economists who may be 
regarded as the legitimate offspring of the classical line. lie is certainly the American theorist who, during 
the past generation, has made the most original and impressive contribution to abstract economic theory. 
Of international reputation, he has been classed by the late Prof. Alfred Marshall as among the 3 or 4 great 
theoretical writers of the past generation. And many economists have concurred in Prof. E. R. A. Selig- 
DJan's judgment, that his writings have 'earned for him the reputation of being one of the 5 or r> great .\rrglo- 
Saxon theorists of the nineteenth century, putting him on a level with RIcardo, Sr., John Stuart IMill, Jevons, 
■and Marshall' " ("John Bates Clark: Earlier and Later Pha.ses of His Work" by Paul T. Homan, Cornell 
'University. Quarterly Journal of Economies, November 1927, p. 39). 



256 CONCENTRATION OF ECONOMIC POWER 

At the outset I think it proper to call attention to the fact that my predecessors 
have consistently adhered to the doctrine that the duties of the Attorney General 
are prescribed by statute; that he is a member of the executive branch and as such 
is under the guidance and supervision of the President; that for the legislative 
branch to direct his conduct is a measurable interference with the executive 
branch; and that he is under no duty to obey the mandates of one branch of the 
Government when not sanctioned by positive law. The opiaiions embodying these 
declarations are copied in the margin. A compliance with this resolution in all 
of its details demands a departure on my part from what has heretofore been 
regarded as settled law. I do not intend, however, to allow these rulings to stand 
in the way of making a full and comprehensive report; but it must not be inferred 
that by so doing I manifest any intention to challenge the correctness of these 
rulings or to assail in the slightest degree the reasoning on which they are founded. 

Two separate and independent mergers, unrelated to each other in any way, are 
in process of formation. One is between the Bethlehem Steel Corporation, own- 
ing plants in Pennsylvania and Maryland; and the Lackawanna Steel Co., whose 
plant is at Buffalo. The other is between the Midvale Steel & Ordnance Co., 
owning plants in Pennsylvania and in Delaware; the Republic Iron & Steel Co., 
owning plants in Ohio, furnaces in Pennsylvania and in Alabama, and certain plants 
at East Chicago and Muncie, Ind., and at Moline, 111.; and the Inland Steel Co., 
owning plants close to Chicago. 

It will be conducive to a clearer understanding of the situation if I take these 
mergers "up separately. In order to furnish the information which I called for it 
was necessary for these companies to set at work for many days a large clerical 
force to go through hundreds of thousands of in,voices covering each individual 
sale for the years 1919, 1920, and 1921, and to tabu]ate the results. The figures 
for all these years are before me, but to set them all forth would require an in- 
ordinately long report. I shall th^efore confine myself to the figures for 1920, 
whiph I think can be considered a fairly normal year. As every one knows, there 
was a heavy slump in the steel business in 1921, and the figures for that year can 
hardly be regarded as typical. 

BETHLEHEM AND LACKAWANNA MERGER 

To get an accurate idea of the scope of the activities of the Bethlehem and the 
Lackawanna, it will be well to priesent at the outset a list of the articles made by 
one company which are not made by the other. As to such articles there obviously 
can be no competition betweto the two. This process of elimination will even- 
tually lead us to the products which are comrpon to both. 

The activities of the Bethlehem may properly be divided into main divisions, 
one representing the production of steel products, the other the building of ships. 
Of the selling value of its products in 1920, 61.39 percent was derived from the 
former; .38.61 percent from the latter. Inasmuch as the Lackawanna does not 
engage in shipbuilding activities, it is apparent that no competition between the 
two in thisJine of business can possibly exist. 

Coming now to the' division representing the production of steel products, the 
Bethlehem produces for sale a large number of articles which the Lackawanna 
does not. These ihclude low-phosphorous pig iron, spiegeleisen, ferromanganese, 
Mayari iron, girder rails for street-car service, guard rails, high-tee rails, rail braces, 
frogs, switches, crossings, special track work, switsh stands, turntables, Bethlehem 
structural shapes, ship structural shapes, eye bars, cem.ent-to.ill balls, hollow forg- 
ings, press and ham.mer forgings, fluid-compressed ingots, hardened-steel rolls, 
drop forgings, st^aftilng, die blocks, irdn, alloy, steel and other highly finished bars, 
cold' drawn bar's, spring steel, file steel, rough-turned bars, window-sash sections, 
ourb bar, barrel-hoop sections, blue annealed sheets, black and galvanized sheets, 
tin and ijlack plate, steel castings, ro.anganese-steel castings, cast iron and steel 
rolls, iron castings, tunnel segnaents, iron m.oulds, brass castings, puddle iron, 
staybolt iron, chain iron, electric tool steel, crucible tool steel, toe calk steel, 
armor plate, .guns, gun forgings, gun mounts, carriage caissons and limbers, fange 
finders, gun sights, air-flask forgings, shell forgings, com.pleted am.m.unition, car- 
tridge cases, fuses, turret mechanism^s, arm.or-plate vaultjs, safe-deposit boxes, 
largfe gas engines, large oil engines, heavy m.achinery, large pum.ps, machine tools, 
hydraulic presses, steel automobile wheels, cutting and punching tools, special 
bolts, and nuts of all kinds, rivets, washers, tie rods, liner wedges,-, car and bridge 
knu^ckle and cotter pins, devices, pole-line m.aterial turnbuckles, m.arine engines, 
Curtiiss turbines, Diesel entwines, Scotch and YarroV boilers, condeijsers, marine 
au.XiUaries, Weir pumps, Dahl fuel-oil burners, -valves and fittings, paraflfine-wax 



CONC'EiNTRATION OF ECONOMIC POWER 



257 



machinery, mining machinery, steel and wood, sleeping, private, passenger, bag- 
gage, and mail cars. ■ 

On the other hand, the Lackawanna produces for sale a number of articles 
which the Bethlehem, does not. These include base plates; piling; plate piling; 
merchant steel bars, including rounds, squares, and fiats; agricultural shapes, auto 
sections. 

The products produced by both companies for sale may with substantial accu- 
racy be designated as follows: Coke byproducts, pig iron, blooms, billets, slabs 
and sheet bars, standard tee and light rails, rail joints, splice bars and tie plates, 
structural shapes, plates, universal and sheared, concrete bars, steel bridges, via- 
ducts, buildings and pier caissons, railroad spikes, track bolts and niits. 

Taking the figures for 1920 as a basis, it appears that of the income received 
by the Bethlehem from its steel-products division, 67.60 percent was derived from 
products which the Lackawanna does not pro"duce. In the case of the Lacka- 
wanna, 3L98 percent was derived from products which the Bethlehem does not 
produce. Or to state the m.atter in a different way, the Bethlehem.'s income 
received from products common to both companies (including both the domestic 
and foreign trade) was 32.40 percent; the Lackawanna's, 68.02 percent. 

In this connection it should be borne in mind that both companies engage in 
export as well as dom.estic trade. Inasmuch as, the antitrust laws differentiate 
between the two, it will be well to produce the figures showing the percentages 
of each. Of the total income, both dom.estic and export, received by .the Bethle- 
hem, from its steel-products division in 1920 on all articles, common to both com- 
panies, substantially 83 percent was received from the dom.estic trade, and 17 
percent from the export. In the case of the Lackawanna, substantially 84 percent 
was received from the dom.estic and 16 percent from, the export. 

The following table shows the products in the domestic trade common to both 
com.panies in 1920, and the percentage of incom.e represented by each such prod- 
uct to the total incom.e on both common and noncomm.on prodlicts, the Bethle- 
hem.'s incom.e from its shipbuilding activities being wholly disregarded in arriving 
at the percentages: 



Articles 


Bethlehem 


Lacka- 
wanna 


Articles 


Bethlehem 


Lacka- 
wanna 


Coke and byproducts . 

Pig iron, basic 

Blooms, billets, and slabs. 
Sheet bars 


Percent 
3.48 
2.12 
2.06 
2.15 

5.02 
.06 

8.82 

2.23 
.07 


Percent 
2.12 
2.24 
1.08 
7.31 

30.01 
1.53 

10.21 

7.82 
.01 


Rail accessories: 

Standard splice bars 
and continuous and 
100-percent joints. . . 

Bonzano joints 

Tie plates, standard.. 

Railroad spikes. 

Track bolts 


Percent, 
- 1.96 
.19 
.19 
.57 
.56 


Percent 
2.49 
.06 


Rails: 

Standard 

Light tee.- 


.12 
.95 
.32 


Structural shapes, stand- 
ard 

Plates, 78V2 inches and 
under 


Total, common 

products'. 

Total, all others.: 




29.48 
70.62 


66. 27 
33.73 


Concrete bars, twisted 


Total of both -• 




100.00 


100.00 



Coming now to the products common to both companies, I shall take up each 
separately and pVesent figures from which a fair idea of the extent of competition 
between the two can be obtained. 

Coke and byproducts. — The products derived in the making of coke and tar, 
ammonia sulphate, naptha, benzol, toluol, motor fuel, and gas. As' might be 
inferred, the sale of coke and gas is not a normal incident of the steel business. 
The Lackawanna sold neither in 1920. All that was produced was needed for 
its own business. The tar is sold outright at the plants to purchasers in that 
locality. Of the various products, ammonia sulphate, motor fuel, and benzol 
are, in the order named, the most important from the standpoint of revenue. 
The companies themselves do not engage in the sale of these products. They 
are delivered to an independent company, which disposes of them on a com- 
mission basis wherever a market can be found. Inasmuch as all concerns engaged 
in the manufacture of gas produce similar products, to say nothing of like products 
placed on the market bj^ the United States Steel Corporation through an inde- 
pendent selling agency, it will be seen how really unimportant are these items 
with respect to the matter in hand. 

Pig iron — basic. — The pig iron produced by both of these companies is pri- 
marily intended for their own use. The production of pig iron is, of course, the 



264905— 41— No. 13- 



-18 



258 CONCEiNTRATION OF ECONOMIC POWER 

initial step in the manufacture of steel products. As both companies need pig 
iron in their operations, it is obvious that the sale of this article is but a mere 
incident. It not infrequently happens, however, that if a surplus is on hand at 
any particular time the companies are \\illing to dispose of the same; but this is 
usually done as a matter of accommodation to a steel manufacturer who happens 
to be in need of the particular product. In the year in question the entire pro- 
duction of all kinds of pig iron was 36,925,987 tons. Of this amount the Bethle- 
hem produced 4.69 percent; the Lackawanna, 2.87 percent. The Bethlehem 
sold in the domestic trade 107,145 tons; the Lackawaima, 33,997 tons. At the 
present time the latter company is selling none. The only States in the New 
England district (Connecticut, Maine, Massachusetts, New Hampshire, Rhode 
Island, and Verrnont) where both comi)anies happened to ship in 1920 were 
Connecticut and Massachusetts; the Bethlehem shipi)iiig'that year to Connecticut 
•6,865 tons and to Massachusetts 374; the Lackawanna, 8,315 tons to Massa- 
chusetts and 2,337 to Connecticut. In the Eastern district (New York, Dela- 
ware, District of Columbia, Maryland, New Jersey, Ohio, Pennsylvania, and 
West Virginia), the Bethlehem sold in that year 99,540 tons; the Lackawanna, 
22,327. Of the amount thus shipped by the Bethlehem, about 57 percent went 
to Pennsylvania; and of the amount thus shii)ped by the Lackawanna, about 65 
percent went to New York. The tonnage shipj)ed by the Bethlehem to New 
York was slightly under 1,200; while the Lackawanna's tonnage was slightly over 
14,400. The Bethlehem shipped a large tonnage to Delaware; the Lackawanna 
shipped none. The Bethlehem shipped close to 10,000 tons to New Jersey; the 
Lackawanna shipped slightly over 4,000 tons. The Lackawanna shipped a com- 
paratively small tonnage to Ohio; the Bethlehem none at all. The Bethlehem 
shipped none at all to the Western district (Colorado, Idaho, Illinois, Indiana, 
Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, 
North Dakota, South Dakota, Utah, Wisconsin, and Wyoming) ; the Lackawanna, 
only 440 tons. The Bethlehem shipped none at all to the Southern district 
(Alabama, Arizona, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, 
New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and 
Virginia) ; the Lackawanna but 69 tons. The Bethlehem shipped to the Pacific 
Coast district (Alaska, California, Oregon, and Washington) only 366 tons; the 
Lackawanna, 179. 

' While statistics are available showing the entire production of pig iron in the 
whole of'the United States, there afe none showing the total sales in each particular 
State. But when we stop to consider that of the total pig iron produced in the 
United States in 1920, the Bethlehem and the Lackawanna together produced 
but 7.56 percent; it becomes at once apparent that any question of competition 
with respect to pig iron is a matter of small concern. 

Blooms, billets, and slabs. — These are semifinished rolled-steel products, being 
forms through which the steel ingot passes before its conversion into other steel 
products. Blooms, billets, and slabs are similar ])roducts, differing from each 
other merely ia point of size. As might be implied, they are consumed for the 
most part by the company which produces them, although a small tonnage finds 
its way into the hands of some particular hianufacturer of steel products. The 
total production of steel ingots in the United States in 1920 was 40,881,392 tons. 
Assuming a loss in the conversion of these ingots into blooms, billets, and slabs of 
15 percent, which is ordinarily the case, the production of the latter was therefore 
«lose to 35,000,000 tons. The total tonnage sold by the Bethlehem in the United 
States in 1920 was 51,631; by the Lackawanna, 9,408. In other words, their 
combined tonnage sold in the United States in that year was 61,039, the Bethle- 
hem contributing 84.59 percent and the Lackawanna 15.41 percent. 

Sheet bars. — Statistics are not available showing the entire production in the 
United States. Like the items last discussed, sheet bars are a semifinished 
Tolled-steel product and constitute the material out of which sheets are made. 
Obviously, therefore, the purchaser of this product is usually some particular 
manufacturer of steel products. In 1920 the Bethlehem sold in the domestic 
grade 49,870 tons; the Lackawanna, 70,473 tons. In other words, out of a 
•combined tonnage that year of 120,343 the Bethlehem contributed 41. ^44 percent; 
the Lackawanna, 58.56 percent. There were only six States to which .sheet bars 
were shipped by either company in that year — New York, Delaware, Maryland, 
Ohio, Pennsylvania, and West Virginia. Of the 70,473 tons sold by the Lacka- 
wanna that year 60,248 tons, or 94 percent of its entire tonnage, were sold in 
New York, w'hile the Bethlehem shippo'd none at all to that State. Of the 49,870 
tons sold by the Bethlehem that year, 26,803 tons were sold in Maryland and 
17,168 in Pennsylvania, representing 88.17 percent of its entire toiuiage. On 



CONCENTRATION OF ECONOMIC POWER 259 

the other hand, the Lackawanna sold none at all in Maryland and only 1,850 
tons in Pennsylvania. Of the entire business transacted by these companies, 
blooms, billets, and slabs constitute a very small part. 

Sheet plates — 78Y2 inches. — No mention will be made of plates exceeding the 
size just mentioned, inasmuch as one of these companies does not produce them. 
In 1920 the sales made by these companies were distributed as follows: in. the. 
New England district, the Bethlehem 1,564 tons, the Lackawanna 2,720; in the 
Eastern district, the Bethelehem 37,626 tons; the Lackawanna 43,375; in the 
Western district, the Betlilehem 2,408 tons, the Lackawanna 9,612; in the South- 
ern district, the Bethlehem 2,500; the Lackawanna 368; in the Pacific Coast 
district, the Bethlehem 1,946; the Lackawanna 5,694. In short, out of a com- 
bined tonnage of 107,813, the Bethlehem contributed 42.71 percent, the Lacka- 
wanna 57.29 percent. It will be observed that 81.72 percent of the total tonnage 
sold by the Bethlehem in 1920 found its way into the Eastern distri<5t as against 
70.20 percent on the part of tlie Lackawanna. Of the portion produced by both 
companies which found its way into the area described as Greater New York, 
the Bethlehem shipped 72 percent, the Lackawanna 28 percent. Of the tonnage 
produced by both which found its way into the rest of New York State, the 
Bethlehem shipped 8.62 percent; the Lackawanna 91.38 percent. 

Concrete bars — twisted. — In the entire United States the Bethlehem sold but 
1,192 tons; the Lackawanna, only 129 tons. 

Structural shapes. — In point of tonnage and revenue this constitutes a very 
important item. There are two kinds known to the trade, the standard and the 
Bethlehem. The latter derives its name from the fact that it is made alone by 
the Bethlehem company under letters patent. The manufacture of standard 
shapes is open to anyone. The total tonnage of structural shapes produced in 
the United States in 1920, both standard and Bethlehem, aggregated 3,306,748 
tons. The Bethlehem shipped for the domestic trade 204,837 tons of standard; 
the Lackawanna, 88,877. In addition the Bethlehem shipped for the domestic 
trade 186,347 tons of the Bethlehem shapes. In other words, the percentage of 
the portion shipped by both companies in the domestic trade was 14.49 percent 
of tlie total production in the United States. Of the total tonnage of both 
shapes shipped by the Bethlehem close to one-third was n\arketed in Pennsyl- 
vania alone, while slightly less than one-tenth was marketed in New York. The 
Lackawanna, on the other hand, shipped about one-ninth of its product to Penn- 
sylvania and about one-quarter to New York. Tlie Bethlehem shipped about 
one-thirteenth of its product to Ohio; the Lackawanna, about one-tenth. The 
Bethlehem shipped about one-sixth of its product to New Jersey; the Lacka- 
wanna scarcely any. In passing it may be observed that the Bethlehem special- 
izes in the production of structural .shapes. 

Rails — standard. — The Lackawanna's great specialty is the production of steel 
rails. Of the entire tonnage produced in the United States in 1920 (2,604,116), 
it contributed 15.18 percent; the Bethlehem, 6.78 percent. If these companies 
combine they will, if the ratio just mentioned continues, control substantially 22 
percent of the country's entire production. About seven-eighths of this pro- 
duction is sold in the United States, the remaining one-eighth being sold in the 
foreign trade. Of the entire amount sold by these two companies in the New 
England district, the Bethlehem contributed 16.37 percent; the Lackawanna 
83.63 percent. In the Eastern district, the Bethlehem contributed 38.69 per- 
cent; the Lackawanna 61.31 percent. In the Western district, the Bethlehem 
contributed 4.73 percent; the Lackawanna, 95.27 percent. In the Southern dis- 
trict the Bethlehem contributed 67.08 percent; the Lackawanria, 32.92 percent. 
Neither company shipped any into the Pacific Coast district. 

My investigation of this matter, conducted by repres< .■ Natives in the field. 
Convinces me that in the New England district these two companies enjoy a very 
substantial amount of the trade in rails. As already indicated, no figures are 
available showing what other manufacturers ship there. But representatives of 
practically every railroad in this district were interviewed, all of whom corrobo- 
rate the statement just made. This in a great measure, ii" not entirely, is at- 
tributable to the fact that the Lackawanna's plant at Buffalo and the Bethlehem's 
plant in eastern Pennsylvania lie closest to that field. 

With respect to rails a marked uniformity, of long duration, exists in quoting 
prices. All manufacturers of steel rails throughout the country, no matter where 
the plants may be located, quote substantially the same prices; and the prices 
thus quoted are uniformly f. o. b. at the mills. Naturally, therefore, it is the 
railroad's advantage to place its orders with those mills readied by its own rails; 
or if no mills are located on its line then with those mill.s oIT its line that afford 



260 CONCENTRATION OF ECONOMIC POWER 

the shortest haul. In the former case it incurs no transportation charge; in the 
latter, such charges are reduced to a minimum. None of the railroad repre- 
sentatives in the New England district (where alone the Bethlehem and Lacka- 
wanna enjoy almost an exclusive field in the rail line), voiced any apprehension 
that a merger of these companies would result in an enhancement of prices or a 
monopolistic control. 

Rails — ligJd tees. — These constitute a comparatively unimportant item. In 
1920 the Bethlehem produced in the domestic trade 2,191 tons; the Lackawanna, 
14,416. tons. Only 14 tons were sold by both companies in the New England 
distri. '■■. Of the 2,191 tons shipped by the Bethlehem 1,550 were sold in Pennsyl- 
vania and 484 in West Virginia, leaving .only 157 tons for distribution elsewhere. 
The Lackawanna, on the other hand, disposed in Pennsylvania, New York; and 
Ohio of nearly all it produced. 

Rail accessories. — (o) Standard splice bars: In the New England district the 
Bethlehem sold 2,701 tons; the Lackawanna, 711 tons. In the Eastern district 
the Bethlehem sold 8,389 tons, the Lackawanna 10,975 tons. Of the latter 
tonnage the Lackawanna marketed over two-thirds in the State of New York. In 
the Western district the Bethlehem marketed 1,554 tons, the Lackawanna 3,066 
tons. In the Southern district the Bethlehem marketed 2,405 tons, the Lacka- 
wanna 95 tons. In the Pacific Coast district the Bethlehpm marketed 29 tons, 
the Lackawanna less than a ton. 

(6) Bonzano joints: This is a patented product. The Bethlehem produced 
3,825 tons, the Lackawanna 510 tons; both companies selling to a single purchaser. 

(c) Continuous and 100 percent joints: This also is a patented product sold 
by both companies to a single purchaser, the Bethlehem selling 21,643 tons, the 
Lackawanna, 4,320. 

(d) Tie plates — standard: The Bethlehem sold direct to customers 3,633 tons-, 
the Lackawanna, 1,370 tons, all of which went to a single concern. 

These rail accessories constituted but 2.34 percent of the Bethlehem's domestic 
business in its steel-works division; and but 2.67 percent of „the Lackawanna's 
domestic business. 

Railroad spikes and track bolts. — In the New England district the Bethlehem 
sold 833 tons, the Lackawanna 544 tons. In the Eastern district the Bethlehem 
sold 5,602 tons, the Lackawanna 4,626 tons. In the Western district the ratio 
between the" two was abqut the same, although the volume of sales was consider- 
ably less. In the Southei'n district the Bethlehem sold 4,570 tons, the Lacka- 
wanna only 591. The sales in the Pacific Coast district were so small as to 
deserve no mention. 

Bridges, viaducts, caissQ7is, and buildings. — No figures are available showing the 
entire amount of business done throughout the country in this line of activity, 
and it was not until the beginning of this year that the Lackawanna entered upon 
the construction of viaducts and bridges. It has had nothing to do with caisson 
construction for upward of three yeai's, although just now it is engaged in carrying 
oyt a contract for the tunneling of the Hudson River. With respect to viaducts 
and bridges the Lackawarina is not equipped to carry on work of the larger kind, 
its main work being confined to railroad bridges and the like. On the other hand, 
the Bethlehem's equipment is such as to enable it to construct viaducts and bridges 
of whatever size. It makes no active effort, however, to acquire the smaller 
business, such as the Lackawanna engages in, for on the whole it finds it ad- 
vantageous to keep away as much as possible from work of the smaller kind. 

The principal concerns engaged in the fabrication of structural material on a 
large scale are the following, although there is a large number of smaller fabri- 
cators not included in this list whose combined capacity is very substantial: 

American Bridge Co., a subsidiary of IJ. S. Steel Corporation; Belmont Iron 
Works-; Berlin Construction Co.; Bethlehem Fabricators, Inc.; Boston Bridge 
Works; Buffalo Structural Steel Co.; Eastern Bridge & Structural Co.; Erie Steel 
Con.striiction Co.; Fort Pitt Bridge Co.; Hay Foundry & Iron Works; Hedden 
Iron Construction Co.; .Tones & Laughlin Steel Co.; George A. .last Co.; Kansas 
City Structural Co.; Kellogg Structural Steel Co.; King Bridge Co.; Lehigh 
Structural Steel Co.; Levgar Structural Co.; McClintic-Marshall Co.; Minne- 
apolis Stool & Machinery Co.; Mt. Vernon Bridge Co.; National Bridge Works; 
New England Structural Co.; Paterson Bridge Co.; Penn Bridge Co.; Phoenix 
Iron Co.; Pittsburgh Des Moines Co.; Shoemaker Satterthwaite Co.; Virginia 
Bridge & Iron Co.; Witherow Steel Co. 



CONCENTRATION OF BOONOMIC POWER 261 

rhe percentage of the principal products produced by other manufacturers and the 
competition that will exist if this merger goes through 

Pig iron. — The total production in the United States in 1920 was 36,925,987 
tons, of which the Bethlehem and the Lackawanna together contributed 7.56 
percent. The amount produced by others was 34,137,290 tons, or 92.44 percent. 

Structural shapes. — The entire production in the United States for 1920 was 
3,306,748 tons. Of this tonnage, Bethlehem and Lackawanna together contrib- 
uted 21.43 percent. Or, to state the matte^ in a different way, 2,757,929 tons, 
or 78.57 percent of the whole, were produce b; other concerns s The Iron and 
Steel Works Directory of the United States and Canada for 1920 gives, on page 
470, a list of 52 different concerns engaged in the manufacture of structural 
shapes in the United States. 

Plates. — 4,755,133 tons were produced in the United States in 1920; the Beth- 
lehem and the Lackawanna together contributed 4.73 percent. This means that 
4,529,986 tons, representing 95.27 percent of the total, were produced bji^other 
concerns. See pp. 472-3 of the Directory just mentioned for a list of 58 concerns 
in the United States manufacturing plates in 1920. 

Rails. — The total production in the United States in 1920 amounted to 2,604,116 
tons, of which Bethlehem and Lackawanna together contributed 21.96 percent. 
Or, to state the matter in a different way, 2,032,231 tons, representing 78.04 per- 
cent of the total, were produced by others. See p. 469 of the Directory for a list 
of the various concerns in the United States engaged, in the manufacture of rails. 

Steel ingots. — Inasmuch as all ^tee\ products are made from this article, it will 
be well to give figures showing the ingot capacity of the entire country and the 
percentage represented by Bethlehem and Lackawanna, with figures designed to 
contrast their capacity with that of the United States Steel Corporation and other 
producers. The country's total rated annual ingot capacity is 50,440,000 tons. 
Of this amount Bethlehem and Lackawanna's combined capacity is 9.7 percent; 
that of the United States Steel Corporation is 45 percent; that of all others is 
45.3 percent. In other words, the rated ingot capacity of the United States 
Steel Corporation is about five times that of the Bethlehem and Lackawanna 
combined. 

Will a merger of these companies violate the act of July 2, 1890, commonly known as 

the antitrust act? 

In my opinion it will not. I am unable to find any ground for asserting that 
the acquisition of the Lackawanna by the Bethlehem will offend the Act of July 
2, 1890, commonly known as the Sherman or antitrust act. The numerous 
decisions of the Supreme Court, ranging over a period of 30 years, leave little room 
for doubt as to the true scope and meaning of this important statute. Every- 
combination fprmed for the avowed purpose of restraining interstate trade or of 
acquiring a monopolj' therein falls, of course, within its condemnation. As 
pointed out in an early decision of the Supreme Court,' it is not every contract or 
combination in restraint of trade that is prohibited by this act; for if that were 
the case, scarcely any contract would fall beyond its reach. It obviously applies, 
however, to every contract or combination in unreasonable restraint of trade; 
and manifestly the evils that may be inflicted upon the public, such as the en- 
hancement of prices, are of paramount confcern. 

I am unable, however, to find in the exhaust! v'e investigation I have made any 
reasonable warrant for asserting that the public will suffer if this consolidation is 
consummated. I am persuaded that the motive which prompts the Bethlehem 
to acquire the Lackawanna plant is the -sole desire to secure greater efficiency and 
economy in the production, handling, and distribution of steel products, and that 
the thought of acquiring a monopoly or of enhancing prices was never present. 
The whole transaction from beginning to end impresses me as being thoroughly 
clean, honest, and straightforward. I need not .'itop to point out that in United 
States v. U. S. Steel Corporation, 251 U. S.'417, the Supreme Court refused to 
declare illegal a^ combination of much gre.'it ^r magnitude. In that case the court 
apparently adopted the findings of two o 'he four judges of the lower court that 
the combination there assailed was form' d for the avowed purpose of acquiring a 
monopoly; but because monopoly was f i id to be impossible of attainment and 

' Hopkins V. United States. 171 XJ. S. ?i73. f>00. '". h act * * * must have a reasonable construction 
or else there would scarcoly be an agreement or cont' ic' amonp businessmim that cnul'l not be said to have 
indirectly or remotely some bearing upon interstati cc nmcrce, and possibly to restrain it." 



262 -CONCEiNTRATION OF ECONOMIC POWER 

all attempts with other manufacturers to control prices had been abandoned in 
good faith before suit was brought, the court refused to order the combination 
dissolved. Tlie merger now under consideration will be neither an actual monop- 
oly nor even an attempt to monopolize; and of course the decision just referred 
to is controlling. 

Will a merger of these companies violate the Act of October 15, 1914, commonly known 

as the Clayton Act? 

Here, also, I am constrained to the conclusion that it will not. But different 
considerations in part apply. That act (Sec. 7) makes it illegal for one corporation 
engaged in interstate commerce to acquire the stock or other share capital of 
another corporation engaged also in such commerce where the effect of such 
acquisition may be substantiaU\ , > Ii sen competition between them or to restrain 
commerce in any section or comi; ii. .y, or tend to create a monopoly of any line 
of commerce. It is obvious thac the acquisition of the stock of one company 
by another is -.not prohibited where all that takes place is a mere lessening of 
competition. The act denoutices the ac(}uisition only where the effect may be 
substantially to lessen competition between the companies. I have set forth 
with considerable detail the extent of the competition existing betvreen the two 
companies mentioned. In my opinion the facts are not sucTi as to bring the pro- 
posed merger within the prohibition of the Clayton Act. 

This conclusion renders it unnecessary for me to consider another question, the 
solution of which is attended with no little difficulty, and that is whether the 
proposed merger would fall within this act if its effect were to sub('tantially lessen 
competition. As we have just seen, that act does not in express terms prohibit 
the acquisition of physical assets. What it prohibits is the acquisition of "the 
stock or other share capital." What the Bethlehem company in this instance 
proposes to do is to acriuire, not the capital stock of the Lackawanna, but an 
outright conveyance of its physical assets. Tl e Federal Trade Commission, by 
a ruling made in 1916, announced that in its opinion the act did not prohibit the 
acquisition of the physical assets of one corporation by another. As that body, 
no less than myself, is charged with the duty of enforcing certain provisions of this 
act, its administrative construction of the section in question is entitled, under a 
long and well-recognized line of authorities, to great weight. In this instance 
however, the plan of purchase contemplates that the Lackawanna shall convey 
its property to the Bethlehem in return for shares of stock, of the latter company, 
to he followed by an early winding up and dissolution of the Lackawanna and the- 
distribution of these shares among the Lackawanna stockholders. I need not, 
however, stop to consider whether, under other circumstances, this would be a 
violation of the act, for the conclusion I have just announced makes it unnecessary 
to do so. 

Will a merger of these companies violate the Act of April 10, 1918, commonly known 

as the Webb Act? 

These companies are members of an association formed pursuant to the authority 
granted by this act to handle export trade. It is obvious from what I have 
already said that this act will in no wise be violated if this merger goes through. 

Will a merger of these companies violate the act of Sept. 26, 1914, commonly known as 
the Federal Trade Commission act? 

The Senate's resolution is broad enough to call for an expression of my views 
upon this point; but for obvious reasons I must decline to express any. The 
Federal Trade Commission is alone vested with the power of enforcing that act, 
and as appears from the Congressional Record, 67th Congress, 2d session, p. 8872' 
et seq., that body has preferred a formal complaint against these companies, 
charging that the proposed merger is an unfair method of competition within the 
rqeaning of sec. 5. The Senate will no doubt be quick to perceive the impropriety 
of mj- exprcs.sing any opinion upon this matter. 

' MIDVALK-REPUBLIC-INLAND MERGER 

I shall begin by taking up the products common to all three of these companies 
and i^re'scnt sales figure's showing the geographical distribution of the products 
and the p^^rcentage whioi the production of these comjfianies bears to the entire 
oroduction in +he United States. As in the case of the other merger, I shall deal 
aloniit'witii the year 1920.. 



CONCENTRATION OF BOONOMIC POWERi 263 

Coke and byproducts. — The remarks under this heading in dealing with the 
other merger are likewise applicable here, and accordingly this item does not 
require separate treatment. 

Pig iron. — What has be .n said under this heading with respect to the other 
merger likewise applies here, and repetition is accordingly unnecessary. The 
three companies combined produced only a small percent of the entire production 
in the United States, and are really not in competition with respect to this item, 
the Republic alone engaging in its sale and then only with respect to that made 
in Alabama. 

Blooms, billets, and slabs. — In the New England district (Connecticut, Maine, 
Massachusetts, New Hampshire, Rhode Island, and Vermont) none of the three 
companies in 1920 sold any blooms. Midvale sold 33 tons of billets and 3 tons 
of slabs. The Republic sold 1,055 tons of billets, and no slabs. Inland sold 
neither blooms, slabs, nor billets. In the Eastern district (New York, Delaware, 
District of Columbia, Maryland, New Jersey, Ohio, Pennsylvania, and West 
Virginia) the Republic sold no blooms. The Midvale sold 10,582 tons, over 
one-half of which went to New York. The Inland sold 36,451 tons, all but 90 
tons going to Ohio and Pennsylvania. As a rule the"- Inland's shipments into 
this territory are exceedingly small,' the heavier tonnage for 1920 being accounted 
for by the fact that an unusual shortage occurred in this district in that year, and 
the abnormal conditions which existed at the time were such as to induce Inland 
to ship a portion of its product to that territory. 

With respect to billets the Midvale sold 953 tons; the Republic 6,977 tons; the 
Inland 12,747, all but 154 tons going to Ohio. With respect to slabs Midvale 
sold 3,015 tons; Republic 1,845 tons; Inland 15,021 tons, all of which went to a 
single concern in northern Ohio. 

In the Western district (Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, 
Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Dakota, 
South Dakota, Utah, Wisconsin, and Wyoming) the Midvale sold only 4 tons of 
blooms, 56 tons of slabs and 2,733 tons of billets; the RepubHc none at all; the 
Inland 217 tons of blooms and 33,819 tons of billets, of which over 30,000 were 
sold in Illinois. In the Southern and Pacific Coast districts the sales made by 
each are so insignificant as to deserve no mention. When we stop to consider 
that approximately 35,000,000 tons were produced in the United States, we 
realize how inconsequential this item rally is. As stated elsewhere, blooms, 
billets, and slabs are usually used by the steel manufacturer that produces them, 
the surplus only finding its way to the market and then usually to accommodate 
some particular manufacturer who happens to be running short. 

Sheet bars. — None of the companies sold this product in the New England 
district. In the Eastern district, Midvale sold 15,792 tons, over one-half of which 
was sold in Pennsvlvania; Republic, 173,533 tons, of which all but 18,759 tons 
were sold in Ohio; Inland sold 35,300 tons, 22,302 tons going to Ohio and the 
balance to Pennsylvania. In the Western district, Midvale sold none at all; 
Republic, 165 tons; Inland, 2,928 tons; all but 39 tons being sold in Indiana, 
where the Republic sold none at all. None of the companies sold in the Southern 
or Pacific Coast States. It is to be borne in mind that sheet bars are a semi- 
finished product, the purchaser being the steel manufacturer and not the ultimate 
consumer. As shown at page 469 of the Iron and Steel Works Directory of the 
United States and Canada for 1920, there are 37 concerns scattered throughout 
the United States engaged in the production of this product. 

Plates. — The entire production in the United States for 1920 was 4,755,133 
tons. Midvale contributed 8.22 percent; Republic 0.75 percent; Inland 2.31 
per cent. In the entire New England and Eastern districts Inland sold only 576 
tons; Republic 27,956 tons, 16,215 tons of which were sold in Pennsylvania, 
6,763 tons in Ohio, and 3,153 tons in Maryland. The rest of its sales were scat- 
tered through Delaware, New Jersey, New York, Rhode Island, and West Virginia. 
On the other hand, Midvale, whose sales aggregated 269,057 tons, reached every 
one of the States in these two districts, Pennsylvania, Ohio, New York, Maryland, 
New Jersey, Massachusetts, and Delaware being the heaviest purchasers in the 
order stated. In the Western States Midvale sold 26.054 tons; Inlar.J 94,850 
tons; while Republic sold but 67 tons. In Illinois and Indiana Inland's sales 
aggregated over 68,000 tons; Midvale's sales in these two States amounting to 
about 10,000 tons. In the Southern States, Midvale's sales amounted to 18,260; 
Republic's 1,137; Inland's, 844 tons.. In the Pacific Coast States, Midvale's 
sales amounted to 6,004 tons; Inland's 'to 3,544 and Republic's to 26 tons. 

After eliminating the plates made by these three companies in 1920, the re- 
maining production in the United States amounted to 4,218,803 tons, or 88.72 
per cent of the total. By referring to the Iron and Steel Works Directory of the 



264 CONCE.NTRATION OF ECONOMIC POWER 

United States and Canada for 1920 it will be seen (pp. 472-473) 'chat 62 companies 

are listed as manufacturers of plates, 58 of which are in the United States. 

Sheets. — Midvale is not a manufacturer of this article and therefore can be 
disregarded. In the entire New England and Eastern districts Republic sold 
32,204 tons; Inland only 1,279 tons, all but 214 tons of which went to Ohio, the 
remaining 214 finding its way either to New York or Pennsylvania. When we 
come to the Western district, we find the Republic sold 9,077 tons, whereas the 
Inland sold 84,600 tons. Of the 9,077 tons sold by the Republic in this territory, 
over one-half found its way to Illinois, in which State the Inland sold 44,980 tons. 
In the Southern district the Republic sold 3,709 tons; the Inland 5,030 tons. 
In the Pacific Coast district the Republic sold 1,704 tons; the Inland 5,751 tons. 

The total production of sheets in the United States in 1920 was 4,582,547 tons, 
Inland contributing 2.3 percent and Republic 1.09 percent. Or, to state the mat- 
ter in' a different way, 4,427,158 tons, representing 96.61 percent of the total 
production, were produced by other coro.panies. On p. 474 of the directory 
mentioned under the preceding heading will be found a list of 66 com.panies, all 
engaged in the manufacture of plates. The American Sheet & Tin Plate Co. 
alotie has 13 mills, located at various points in Ohio, Indiana, and Pennsylvania. 
(See pp. 21-24 of directory just mentioned.) There were 644 sheet mills in the 
United States on Jan. 1, 1922, the Republic and the Inland together owning 36 
of this number. 

Structural shapes. — The Republic does not manufacture this important item 
and therefore m.ay be disregarded. In the entire New England and Eastern 
districts the Midvale sold 79,032 tons; the Inland 4,174 tons. The Midvale 
reached everj^ State in this territory; the Inland only Connecticut, New York, 
Ohio, and Pennsylvania, nearh^ all of its product going to the two latter States. 
In the Western district, the Midvale sold 13,985 tons, the Inland 106,747 tons. 
In the Southern district, the Midvale sold 5,145 tons; the Inland 1,560 tons. In 
the Pacific Coast district, the Midvale sold 3,109 tons; the Inland 7,746 tons. 

The entire production in ] 920 in the United States was 3,306,748 tons, of which 
Midvale contributed 3.61 percent and the Inland 3.72 percent. It will be seen 
from the figures just given that the great bulk of Midvale's tonnage is naarketed 
in the New England and Eastern territory, where Inland finds a market for about 
one-nineteenth of the tonnage marketed by Midvale. On the other hand, the 
great bulk of Inland's tonnage is marketed in the Western district, where Midvale 
markets about one-eighth of the tonnage marketed by the Inland. 

After deducting the tonnage manufactured by these two com.panies in 1920 
from the total tonnage throughout the United States, we have left 3,064,323 
tons, or 92.67 percent of the total. By turning to the Iron and Steel Works 
Directory for 1920, p. 470, we find a list of 52 concerns engaged in the manufacture 
of structural shapes at different places in the United States. 

Rails, — Until recently Midvale was the only one of these three com,panies to 
manufacture rails. In March 1922, Inland, .however, began their m.anufacture 
and sale. It is apparent from the discussion of this itefn in dealing with the other 
merger that no competition between the two companies will exist with respect 
to rails, the plants of each company being close to 800 miles apart. 

Merchant bars.^In point of tonnage this is the most im.portant itern in the 
steel industry. To obtain an accurate idea of the sales made by these three 
eompanieS'it will be well to divide m.erchant bars into three classes: (1) steel 
bars; (2) old rail bars; (3) iron bars. Iron bars may be disregarded, the Republic 
being the only one that makes them. Midvale may be disregarded so far as old 
rail bars are concerned, for it does not m.ake them. And so far as the New Eng- 
land and Eastern districts are concerned Inland m.ay be entirely disregarded 
with respect to steel and old rail bars, for it sold none of the latter and only 877 
tons of the form.er. 

Coming now to steel bars, in the New England and Eastern districts Midvale 
sold 132,087 tons; Repubhc 191,712 tons. In the Westren district, sales of steel 
bars were: Midvale 30,597 tons; Republic, 44,842 tons; Inland, 73,922 tons. 
In the Southern district, Midvale, 7,945 tons; Republic, 4,922 tons; Inland, 
1,009 tons. In the Pacific Coast district, Midvale, 1,526 tons; Republic 152 
tons; Inland, 630 tons. 

With respect to old rail bars (which Midvale does not product) the Republic 
sold 1,219 tons in the New England and Eastern districts; the Inland none at all. 
In the Western district, the sales were: Republic, 34,366 tons; Inland, 35,868 
tons; in the Southern district. Republic, 1,464 tons; Inland, 671 tons; in the 
Pacific Coast district, none at all. 



CONCENTRATION OF ECONOMIC POWER 265 

In this connection the fact must not be overlooked that "merchant bars" is a 
generic term of wide apphcation, embracing different kinds of bars which are 
used for an endless number of purposes. The bars produced by the Midvale are 
practically all made on slow-running hand mills. On the other hand, about 75 
percent of the bars turned out by the Republic are made' on continuous or semi- 
continuous mills. The larger part of those produced by. the Midvale are of a high 
grade and of special grades and special sections; while those produced by the 
Republic and Inland are of a commoner sort — styled common merchant bars to 
distinguish them from the higher grade article. Because of the wide variety of 
uses, to which these bars are put, the demands of the trade must be satisfied by 
the production of'these various types and grades. Unlike those produced by the 
Midvale, Inland, for example, makes no special sections. Its product, all of which 
is made from continuous mills, consists for the most part of rounds, squares and 
fiats, and of what is termed concrete bars. 

Still using 1920 figures as a basis,, of the entire steel tonnage marketed by Midvale 
14.45 per cent was represented by merchant bars; in the case of the Republic 
34.37 per cent; and in the case of the Inland 16.83 per cent. 

The total production of merchant bars (iron, steel, and old rail bars) in the United 
States in 1920 amounted to 7,268,313 tons. Midvale's contribution was 2.72 
per cent; Republic's 4.77 per cent; Inland's 1.75 per cent; or 9.24 per cent for all' 
three. There are 148 different concerns engaged in the productiorj of these bars,, 
109 of which make steel bars. A complete list of these various manufacturers 
and the location of their plants will be found at pp. 478-82 of the 1920 directorj^ 
above mentioned. 

Other products made by these companies. — It hiust not, of course, be inferred 
that the products above enumerated are the only ones made by these companies. 
On the contrary, numerous other articles are manufactured, many of them on a 
large scale. For example, Republic is a large manufacturer of oil and gas pipe,, 
which neither Midvale nor Inland produces. Again, Midvale is a large manu- 
facturer of boiler tubes, rods, drawn wire, wire nails, steel cars, axles, and wheels, 
none of which is produced by the other two. But the above enumeration em- 
braces substantially all of the products of any importance produced in common 
by these companies. 

Will a merger of these companies violate the act of July 2, 1890, commonly known as 

the anti-trust act? 

I see nothing in the proposed merger that offends this act. In my opinion 
there is not the slightest ground for supposing that it will result in any restraint 
of trade or monopolistic control. The plants of these companies are widely- 
scattered; and my investigation leads to but one conclusion, and that is that the 
underlying purpose of this combination is not to acquire a monopoly or to restrain 
trade, but to enable the new company more effectually to compete with the 
United States Steel Corporation, which, because of the wide distribution of its 
various plants and their easy accessibility to the source of raw materials, is enabled 
to produce and sell its products much cheaper than other jnanufacturers. In- 
stead, therefore, of being in restraint of trade, the new combination will be in fur- 
therance of trade. Its formation has, I believe, been in a great measure prompted 
by the heavy losses which all of these companies sustained following the marked 
depression in the steel industrj' which began over a year ago. These losses, aggre- 
gating many millions of dollars, have naturally induced these companies to devise 
methods of cheapening the production, sale, and distribution of their products. 
By owning plants that are widely scattered, where production can take place 
in accordance with the needs of the community lying closest to the plants; by 
manufacturing products at plants advantageoush' located to ore supplies; by 
reducing overhead expenses; aiid by eliminating unnecessary sales agencies, sub- 
stantial economies can be effected. . The combination being formed for this sole 
purpose, I am unable to see wherein it is tainted with illegality. 

Will a merger of these companies violate the Act of Oct. 15, 1914, commonly known as 

the Clayton act? 

What these companies^plan to do is to merge the Inland with the Midvale and 
to acquiref outright the physical assets of the Republic. To accomplish this 
shares of the stock of the new company will be issued to the stockholders of the old 



266 CONCEiNTRATION OF ECONOMIC POWER 

companies in exchange for their present holdings,- accompanied in the case of the 
Inland by a payment of something like $24,000,000 to retire its preferred stock. 
In the light of the facts which I have set forth, I fail to discover any ground for 
asserting that the Clayton Act will be violated 

Will a merger of these companies violate the act of April 10, 1918, commonly known as 

the Webb act? 

As in the case of the other merger, these companies, too, belong to an association 
formed to handle export trade alone and functioning under the permission which 
this act gives. In my opinion it is impossible to conceive how a merger of these 
companies will in any way offend this act. 

Will a merger of these companies violate the act of Sept. 26, 1914, commonly known as 
the Federal Trade Commission act? 

Under a like heading in dealing with the other merger I have pointed out the * 
impropriety of my expressing any opinion upon this question. For exactly the 
same reasons I must pursue a similar course here. 
Very respectfully, 

H. M. Daugherty, 

Attorney General. 
Hon. Calvin Coolidge, 
President of the Senate. 

July 21, 1922. 

Source: The Iron Age, July 27, 1922, p. 208. 



CONCE^'TRATION OF ECOXOMIC POWER 



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E'a 


s^jo.tt ni 
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S51J0M JO jaqtnnjsj 
























siifiu \\vj JO jaqranM 
























Bloom- 
ing, 
slab- 
bing, 
billet, 
and 
sheet 
bar 
mills 


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siiim JO joqmnN 




















Cl 


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-^ 


Open 

hearth 
steel 
works 


saaBTi 
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•^ 


S2iJOMj(TJ0qran,M 




















-^ 


Bes- 
semer 

steel 
works 


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a 


sjjJOAV JO joqmnM 




















- 


saoBajnj iSBiq jo joqainN 
















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s 

s 


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II 

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CONCENTRATION OF ECONOMIC POWER 



271 



252-2 




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■272 



CONCEiNTRATION OF ECONOMIC POWER 



c 

i ■ 




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a 
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II ; 




II 






;■ 






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1 - II 






; 






Sheet mills, 
black plate 

mills, and tin 
"'ate mills 

■ 


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- 1 , 


- 


- 






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1 - II 


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tural 
shape 
mills 


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II .; 




II 














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II 














" Mer- 
chant 

bar, 
hoop, 

and 
cotton 

tie 
millSj 


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mills 


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il • 














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Bloom- 
ing, 
slab- 
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billet, 
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sheet 
bar 
mills 


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N 


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steel 
works 


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Bes- 
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steel 
works 


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s^jOM JO jaquinKi 


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Location of 
works 


d a 
O o 

lis 


s ° 


c 

c 
1 


1 

- C 

1 

c 


Dresden, 
Ohio. 

Cambridge, 
Ohio. 

DennisoD, 
Ohio. 

New Philadel- 
phia, Ohio. 


^ c 
•Sc 

11 


■2 

o 


6^ 
O c 

a c 


c 
c 


i 

M — 


fain Steel 
Co. 

Union Steel Co.: 
- Sharon Works 


1 


Steel Co. 

American 

Sheet Steel 

Co.: 

M i d I ii n d 


. c 

1^ 


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c 


a 
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CONCEWTBATION OF ECONOMIC POWER 



273 









; i - i i i ;. i ; - 11 ; i ; i - ;« i i 












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- 






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1 






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; 


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^ ^OcOr^qCCOCDCO COt>.CQ - 


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s ■ 


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i i 










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- 




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i ; 










s 




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1 1 1 : •( 








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i i i i 1 i i i i 1 i i i 














1 i, : i I i i 1 1 1 1 ■ i i 








.- 

•3-2 


ill 


.2— 


Ohio. 
Bridgeport, 

Ohio. 
McKeesport, 

Pa. 
Scottdale, Pa.. 

.....do......... 

Saltsburg, Pa. 

Apollo, Pa.._ 
Vandergrift, 

Pa 
Hyde Park, 

Pa. 
Leechburg, Pa 




Joliet, 111 

Muskegon, 

Mich. 
Elwood, Ind.. 


Anderson, 

Ind. 
Gas City, Ind. 

Middletown, 

Ind. 
Cambridge, 

Ohio. 
C 1 e V ela n d, 

Ohio. 
Niles, Ohio 


d 

c 

a 

o 

13 


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264905 — 41— No: 13- 



-19 



274 



CONCENTRATION OF ECONOMIC POWER 



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sincid patnoniis ptns eSppq Jo laquniN 



sintn eqm jo jeqintiM 



Sag a 



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s^JOAi m sinni 
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ss 



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CONOEiNTRATION OF ECONOMIC POWBB 

■a ' '^ 
£ « ft 

.Srtft 
— ■a ^^ 

"■Sal 



275 



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276 



CONCEiNTRATION OF ECONOMIC POWER 



i • 
. II 

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-. ^ 


sjUBid iBjn}onj}s puB adppjq jo jaqranM 




















- - 


sinra 9qni jo jaqmnM 


- -H-HW ^ ^ _ 


II 






Sheet mills, 
black plate 

mills, and tin 
plate mills 


3umaBA(B3 
joj si'naraiJtJdao: 


























Smumj 
JOJ sina'mjJBdaci 




















1 






SJlJOAi UI S[[IUI 

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. 












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OS 


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CO-" «( " 


SJtJOAi ni 
sinni JO jaqtani>j 


























sjiJOAi JO jaqmn>^ 


























Mer- 
chant 
bar, 
hoop, 
and 
cotton 

tie 
mills 


s:ilJOAi UI 
siiiui JO joqmn^i 


























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0.m 


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11 






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1 






sjjjoAijo jaqcoTiM 




















II 






sijim n^J JO wqninN 




















11 






Bloom- 
ing, 
slab- 
bing, 
billet, 
and 
sheet 
bar 
mills 


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1 






SjlJOAi JO jaqmn^ 




















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Open 
hearth 

steel 
works 


sao'BQ 
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« 






Bes- 
semer 

steel 
works 


sjajjaA 
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II 






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CONCEiNTRATION OF H'JONOMIC POWER. 



277 



£ 2 

3 t£ So 

^£> as, 



o o 



o-o 



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53 Ck 
P-. 



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278 



CONCENTRATION OF ECONOMIC POWER 



Iron Ore Mines — List of Active Iron Ore Mines Owned By Subsidiary 
Companies in the Lake Superior Ore District 

Located on Marquette range: 

Bessie mine. Moore mine. 

Hartford mine. Negaunee mine. 

Queen mine (three-fourths interest), Stegmiller mine. 

Section 16 mine (three-fourths interest). Winthrop mine. 

Section 21 mine (three-fourths interest). Volunteer mine. 

Hard ore mine (three-fourths interest). 

Hematite ore mine (three fo ths in- 
terest) . 

Located on Menominee range: 

Columbia mine. Hilltop mine 

Forest mine. Chapin mine. 

Hope mine. Aragon mine. 

Mansfield mine. Cundy mine. 

Michigan mine. Iron Ridge mine. 

Riverton mine. Pewabic mine (one-half interest) . 
Cuff mine. 

Located on Gogebic range: 
Norrie mine. Tilden mine. 

Aurora mine. Atlantic mine, 

Chicago mine. 

Located on .Vermillion range: 

Pioneer mine. Zenith mine. 

Savoy mine. Chandler mine (one-lialf interest). 

Sibley mine. Soudan mine. 

Located on Mesaba range : 

Mountain iron mine. Hull mine; 

Stephens mine. Pillsbury mine. 

Virginia mine. Rust mine. 

Fayal mine. St. Clair mine. 

Auburn mine. Sellers mine. 

Genoa mine. Spruce mine. 

Chisholm mine. Donora mine. 

Sauntry mine. Sharon mine. 

Clark mine. Penobscot mine. 

Adams mine. Sweeny mine. 

Burt mine. Union mine (one-half interest) . 

Day mine. Biwabik mine (one-fourth interest). 

Duluth mine. Mahoning mine (one-fifth interest) . 
Glen mine. 

In addition to the foregoing active mines, the subsidiary companies own on the 
ranges named extensive acreages of land, much of which contain large quantities 
of ore yet unopened, and on which there are also great quantities of standing 
timber designed for future use in mining operations. 

Coking Coal Properties Owned by Subsidiary Companies 

In the Connellsville And lower ConneUsville districts in Westmoreland 
and Fayette Counties, Pa.: . 

Acreage of coal -_ acres. . 59, 740 

Acreage of surface do 18,273 

Number of coking coal plants (beehive ovens) 60 

Number of beehive ovens 16, 661 

In the Pocahontas district, McDowell County, W. Va.: Lease of 50,000 acres 
of coking coal. On this property there are to he constructed coking coal plants 
which will have in all 3,000 beehive ovens. Work is now in progress on the first 
1,000 ovens 

Byproduipt cote ovens, located at Ben wood, W. Va., at Sharon, Pa., and 
South Sharon, Pa., in all ovens. -357 



CONCEOSTTRATION OF BOONOMIC POWER 279 

Steam Coal Properties Owned by Subsidiary Companies 

In Washington, Allegheny, Somerset, Green, and Fayette Counties, Pa., 

an acreage of steam and gas coal is owned to the amount of acres. _ 24, 375 

Sundry tracts of steam coal located at or near f utnaces - and mill plants 
of the subsidiary companies in- Pennsylvania, West Virginia, Ohio, 
and Indiana, and in Williamson County, 111., of an acreage of 
about acres. . 6, 500 

Total steam coal . do 30, 875 

Miscellaneous Properties Owned by Subsidiary Companies 

Water-supply plants. — In the Connellsville coke regions various water-supply 
plants having eight large reservoirs and seven pumping stations and extensive 
pipe lines. Water is supplied from these plants for use in manufacturing coke, 
and is al§o furnished for general purposes. 

Natural-gas property. — Carnegie Natural Gas Co. owns in Pennsylvania, Ohio, 
and West Virginia extensive natural-gas territory, either owning or having under 
lease about 120,000 acres; also owns 1,134 miles of pipe lines and two pumping 
stations. 

Extensive natural-gas territory and pipe lines are also owned by the American 
Sheet Steel Co. in Pennsylvania, the gas therefrom being used at its Vandergrift 
plants; also by American Tin Plate Co. adjacent to its plants in the Gas Belt dis- 
trict in Indiana. 

Ore docks. — Large forwarding ore docks situated on Lake Superior are owned as 
follows: At Two Harbors, Minn., owned by Duluth & Iron Range Railroad Co., 
five docks; at Duluth, Minn., owned by Duluth, Missabe & Northern Railway 
Co., three docks. 

Receiving ore docks are owned at the furnace plants at Chicago, 111. ; Milwaukee, 
Wis.; Lorain, Ohio, and Cleveland, Ohio. 

Receiving and forwarding docks are owned at Lake Erie ports as follows: 
At Conneaut, Ohio, by Pittsburg and Conneaut Dock Co.; at Ashtabula, Ohio, 
by Minnesota Dock, Co. and National Steel Co.; at Fairport, Ohio, by Penn- 
sylvania & Lake Erie Dock Co.; at Buffalo, N. Y., by Minnesota Dock Co. 

Summary of standard-gage railroad mileage owned by subsidiary companies, Dec. 

Si, 1902 



Owned or operated by— 


Line 
owned 


Branches 
and spurs 


Operated 
under 

trackage 
rights 


Second 
tracks 


Sidings 


Duluth & Iron Range R. R.: 

Duluth to Ely, Minn 


117.22 

1.40 

25.31 

8.63 

8.50 




0.80 






Tower Junction to Tower, Minn 








Allen Junction to Virginia, Minn 








117. 33 


McKinley to Eveletb, Minn 










Waldo to Drummond 










Two Harbors to Wyman 






49. 85 
14.43 

1.30 




Summit Switch to Eveleth Switch 










Between south end of A lien Junction and West 
Switch at Wyman 










Branches and spurs to mines, etc 




48.80 








161. 06 








Total, D. & I. R. R. R 


48.80 


.80 


65.58 


117 33 






Duluth, Missabe & Northern Ry.: 

Stony Broolc to Mount Iron 


48.62 
29.34 
15.54 
17.07 
18.57 










Missabe Junction to Columbia Junction... 










Iron Junction to Biwabilc 










Wolf to HibbinK 








54.36 


Main line branches.. -. 










Proctor to Ore Doclc 






7.20 
6.00 
10.89 




Shaw to Wolf Switch 










Second tracl< branches 










Branches and spurs to mines, etc . . 




31.28 




4.18 












Total, D., M. & N. Ry 


129.14 


31.28 




24.09 


5S 54 










280 



OONOEiNTRATION OF ECONOMIC POWER 



Summary of standard-gage railroad mileage owned by subsidiary companies, Dec-. 

SI, / 50^— Continued 



Owned or operated by- 


Line 
owned 


Branches 
and spurs 


Operated 
under 

trackage 
rights 


Second 
tracks 


Siding.s 


Elgin, Joliet & Eastern By.: 

Waukegan, 111., to Porter, Ind_ _ 


129.94 

33. .30 

9.65 

1.79 

7.08 

10.67 










Walker to Wilmington, UK. .' , 










Normantown to Aurora, 111 








107. 53 


East Joliet to Jolift, ni . . - .-. . 










State Line to Whiting, Ind... ...' 










Griffith to Clarke Junction, Ind 










Ea.<!t Joliet to Frankfort, 111 






13.50 




Spurs to coal im ines, quarries, etc . 




22.11 






State Line to 112th St. fC. (J: W. I. Ry.)....:..._ 




4.80 
2.05 






112th St. to 98th St. (Belt By.) 






^... 












■ Total, E., J. & E. By. 


192. 43 


22.11 


6.85 


13. .50 


107. 53 






Chicago, Lake Shore & Eastern By.: 

South Chicago, Ul., to Clarke Junction, Ind 


9.31 






9.31 




At Brimson and at South Chicago 


69.65 
9.93 
5.08 
23.10 
18.15 






At Bridgeport (S. & S. By.). 










At North Chicago fC. & K. By.) _ . 










At Joliet (J.& B. I. By.) 










At Milwaukee (M.,B. V. & C. By.) 










Chicago Heights to WestviUe, Dl. (C. & E. I. 
B. B.) 




111.20 
44.27 






East Joliet, 111., to Clarke Junction, Ind. (E., J. 
& E. By.) - ._ 




















Total, C, L. S. & E. By 


9.31 


125.91 


155.47 


9.31 








Bessemer & Lake Erie B. B.: 
ICremis t.n O.sgond 


8.87 
146.09 

6.97 
10.30 
8.71 
6.42 
20.54 

1.20 
1.05 








.87 


North Bessemer to Conneaut Harbor 










North Bessemer to Bessemer (leased to Union 
B. B.) .. 










Branchtou to Hilliard 


20.74 




18.54 


119. 36 


Conneaut Junction to Wallace Junction 






Main line branches 






J 














Lynces Junction to Exposition Park (M., C. L. 
& L. B. B.) ^ 










MeadviUe to Valonia 










Cascade to Wallace Junction (N. Y. C. & St. L. 
B. B.) ... 




12.40 
.50 






Pittsburgh Junction to Butler '(B. & 0. B. R.) 
















Total, B. & L. E. B. B 


210. 15 


20.74 


12.90 


18.54 


120.23 


Union B. E.: East Pittsburgh to Streets Bun, Pa., 
and Duquesne Junction to Duquesne, Pa^ 


8.64 

.58 

7.82 

4.41 

4,53 

12,58 
,67 

2.44 

11.66 

1.92 


10.43 




8.43 


46. 36 


McKeesport Connecting By.: McKeesport, Pa., to 
Port Perry..: 






Benwood & Wheeling Connecting By- Biverside 
yards . . 










Waukegan & Mississippi Valley By.: Between E. J. 
& E. and 0. N. W Bys at Waukegan 










Newburg & South Shore By.: At Newburg and 
Cleveland... ... 








18. 4r 


Pittsburgh & Ohio Valley By.: At Allegheny, Brad- 
dock, Neville Island, and Bankin, Pa 










Northern Liberties Bv.: At Pittsburgh 










Johnstown & Stony Creek B. B.: Bedford Station 
to Stony Creek Bridge 










The Lake Termmal H. B.: Lorain Steel Co.'s plant 
■ toC. L. & W. B. B 










Youghiogheny Northern By.: Broad Ford to Sum- 
mit, Pa 










Etna & Montrose R B • Etna to Pine Creek Pa 




2.00 






South West Connecting By.: Marguerite Coke 


2,20 
1.06 

1.20 

6.04 






.50 


Mount Pleasant & Latrobe B. B.: Standard Coke 










Elwood, Anderson & Lapelle By.: Elwood, Ind., to 
connections with L. E. and W. and P. C. C. & St. 
L. Bys 








2.60 


Masontown & New Salem B. B.: Buffington to 
Moser Bun Junction (leased to Pennsylvania 
B. B.) ■ 










Total mileage... 


767,84 1 259.27 


178. 02 


139. 45 


471.66 






■ 


— 



CONCENTRATION OF ECONOMIC POWER 281 

Standard gage railroad equipment owned by subsidiary companies, Dec. 31, 1902 





a 

O 

•a pi 

Si 

■3 
Q 


<D 


•3 


'So 

s 


CO 

o . 

o 


h4 


•3 
« 

«=» 
o 

'3 


03 

f 

< 


5 ' 


1 

Eh 




70 


40 


54 


62 


86 


75 


52 


32 


471 






Cars: 


9 

3 

2 

2 

85 

321 


8 

3 

1 

2 

62 

274 


3 




31 

7 

7 

3 

193 

202 




2 




53 


Combination (passenger 


13 


Combination (baggage, 
mail, and express) 












10 


Officers' 












7 


Box, freight .. 


433 

87 


1,636 

402 

25 

496 


4 

16 


81 
106 


4 
^5 


2,498 


Flat _-. 

Pig iron 


1,443 
25 




2,581 

350 

15 


3,475 
5 












6,552 


Iron ore-, steel 


3,585 


100 


24 


300 


4,364 


Coal 


2,018 


212 
976 
4 
150 
125 


2,245 


Coke -- - 








2,746 


3,722 


Stock . . , 


2 


2 




19 
2,102 






27 


Gondola, steel . - -- 






50 
10 . 
133 


2,302 


Gondola, steel hopper 










80 
140 


215 










1,749 




2,022 


Wire 








21 


21 


Fence 














8 


8 


Log 


175 
12 
39 

8 














176 




9 

29 
4 














21 




29 


11 


51 


1 






160 


Boarding 






12 




66 


70 
1 






32 




168 




, 4 
2 
4 
24 


1' 






6 


Pile driver and tool 


1 
11^ 
6 








3 




1 
1 




1 

41 


1 






18 


Sundry road- - .^. 


1 


1 


74 






Total 


3,638 


3, 877 


2,636 


4,171 


7,967 


122 


466 


3,287 


26,164 



MARINE EQUIPMENT 
Pittsburgh Steamship Co.: 

Steamers. -... ...1 .-... 71 

Barges __ 43 

Total _ 114 

During the season of 1902, extending from Apr. 3, to Dec. 15, 1902, this fleet carried 10,777,636 tons of iron 
ore and 179,217 tons of miscellaneous freight: total 10,956,853 tons. The gross earnings of the fleet were 
$9,059,999.94. 

Source: First annual report of United States Steel Corporation for fiscal year ended Dec. 31, 1902. 



Exhibit 3 

Excerpt from testimony of Judge Elbert H. Gary, chairman, 
United States Steel Corporation, in United States v. U. S. Steel Cor- 
poration, volume 12, transcript of record in the District Court of the 
United States for the District of New Jersey (pp. 4901-4904). 

Between the date of the first Gary dinner, so-called, and the date of this meet- 
ing, February 18, 1909, there had always been fluctuating prices. I knew that 
business that naturally would come to us; that is, business from regular cus- 
tomers would go elsewhere, and we would follow it up and find from the customer 
the reason for the business going elsewhere; and that increased to some extent. 
We had prevented the demoralization of business, as I call it; we had by our 
business friendship and our coming close together and keeping one another 
posted, prevented. the wide and sudden fluctuation which I particularly was at- 
tempting to prevent; but there had been changes from tim.e to time and sales 
made below the advertised price, so to speak, what are considered the trade- 
paper prices, but nevertheless I believed it was still good business and good 
morals to continue to furnish the information which we had been furnishing from 



282 CONCTEiNTRATION OF ECONOMIC POWER 

time to time until we reached this period whea it was perfectly evident that 
there was a disposition on the part of everyone outside of ourselves to do just 
exactly as they pleased; that is, to publish one price and sell at another, to sell 
far below the prices that were supposed to exist without notifying us. That was 
the point, as it seettied to me, that when the competitors in business were mak- 
ing radical changes in prices below their published prices, they ought in fairness 
to notify the rest and especially to notify us, because we were notifying them 
always. We were not obligated to do it, except as two men who profess to be 
friends, or professing to give information one to» another as to what they were 
doing, naturally ought to tell the truth about it, to speak in plain words. You 
say. Were they obligated by any agreement, express or impUed? I say no. It 
was absolutely understood that they could do as they pleased, but there is a 
fair way of doing business that we all know nowadays in this country,' and an 
unfaii* way, which 1 hope we all know. Our instructions to our people were 
positive, to let us know if they wanted to make any changes in prices, and then 
if we made any changes we would put them in the trade journals, and let it be 
known to our customers generally; we would treat our custo aers all alike, or try 
to. ■ Those were our instructions, and not only that, if any of our customers 
asked' us about our prices we told them and told them frankly what we were 
doing. 



OONCEiNTBATION OF ECONOMIC POWEP 



28? 



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284 



CONCENTRATION OF BOONOMIC POWER 



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all I 



CONCENTEATION OP ECONOMIC POWER 285 

Exhibit 5 

S. Res. 286. 

In the Senate of the United States, April 20 (Calendar Day May 12), 1922. 

. Whereas definite reports in the daily press and in financial journals state that 
there is about to be consummated a merger of seven of tht3 largest iron and steel 
corporations, namely, Midvale Steel and Ordnance Company, Republic Iron and 
Steel Company, Lackawanna Steel Company, Inland Steel Company, Youngs- 
town Sheet and Tube Company, Steel and Tube Company of America, and Brier 
Hill Steel Company, having a total annual capacity of more than ten millions 
tons of steel; and 

Whereas it is also reported that the Bethlehem Steel Corporation, while not a 
part of the present merger, will join the combination when it has been success- 
fully accomplished; and 

Whereas the complete consummation of this plan will result in the creation of a 
billion-dollar corporation, controlling substantially all of the steel-producing 
capacity of the country which is not now controlled by the United States Steel 
Corporation; and 

Whereas this will create a complete monopoly of the steel industry in the hands 
of two gigantic corporations, resulting inevitably in the suppression of such com- 
petition as now exists in the manufacture and sale of this essential product and 
in the restraint of trade and commerce among the several States and the District 
of Columbia and with foreign nations; and 

Whereas experience has shown the impossibility of dealing effectively with such 
combinations and mergers after they have been consummated, regardless of the 
damage which they may inflict upon competitors and of the injury to the public 
welfare; and • - • 

Whereas section 4 of the Sherman Antitrust Lav/ (Act of July 2, 1890) specifi- 
cally provides: 

"The several circuit courts of the United States are hereby invested with juris- 
diction to prevent and restrain violations of this Act, and it shall be the' duty of 
the several district attorneys of the United States, in their respective districts, 
.under the direction of the Attorney General, to institute proceedings in equity to 
prevent and restrain such violations": . ' 

Resolved, That the Attorney General of the United States and the Federal 
Trade Commission be requested to inform the Senate as soon as possible what 
steps they have taken or propose to take to ascertain the purposes and probable 
effects of the proposed merger; what have been the results of any investigations 
which they may have conducted; and what actions they have instituted to pro- 
tect the public interest: 

Resolved Further, That the Attorney General be further requested to inform 
the Senate whether or not it is advisable, in his opinion, to proceed under the 
appropriate provisions of the Sherman law and the Clayton law to prevent and 
restrain this impending combination. 

Attest: 

George A. Sanderson, Secretary. 



Exhibit 6 

June 5, 1922. 
To the President op the United States Senate. 

Sir: By Resolution No. 286, agreed to on May 12, 1922, the Attorney General 
of the United States and the Federal Trade Commission were requested to inform 
the Senate what steps had been taken or they proposed to take, to ascertain the 
purpose and probable effects of the proposed merger of certain steel companies 
therein named; to inform the Senate as to results of any investigations which 
they may have conducted and what actions they have instituted to protect the 
public interest. 

Insofar as this Resolution is directed to the Federal Trade Commission, that 
Commission presents the followir -• report. 

In the early part of December 1921 the attention of the Federal Trade Com- 
mission was attracted by reports and rumors of proposed and impending mergers 
of considerable importance in many lines of industry. The Commission there- 
upon by resolution directed its proper officials to seek all possible information 
with reference to these proposed mergers and to keep the Commission advised as 
to their f)rogress. Prior to the adoption of Senate Resolution 286, the proposed 



286 OONCJENTRATION OF EX^ONOMIC POWER 

merger among the steel companies was under observation by the Commission 
and it was collecting information with reference thereto. 

Up to the time of this resolution, however, none of these proposed mergers had 
reached a sufficiently definite or concrete stage to warrant the Commission in 
reaching a conclusion with reference to the legality of such proposed mergers. 

Subsequent to the adoption of the Resolution in question.it became apparent 
that the movement toward a merger in the steel industry had taken on the form 
of a combination of the Bethlehem Steel Corporation and its subsidiaries with 
the Lackawanna Steel Co. and its subsidiaries on the one hand,' and a like com- 
bination of the properties of the Midvale Steel & Ordnance Co., the Republic 
Iron & Steel Co. and the Inland Steel Co., these three latter companies proposing 
to form a new corporation to be known as North American Steel Co. 

The Bethlehem-Lackawanna merger has advanced to a stage where it is prac- 
tically- complete except for the necessary ratification by the stockholders of the 
two companies, and we are informed that this remaining detail will be completed 
as soon as possible. 

The Federal Trade Commission had considerable information already at hand 
with reference to the position of the Bethlehem Steel Corporation and its subsidi- 
aries and the Lackawanna Steel Co. and its subsidiaries in the steel industry and 
the relation of each to each other and to competitive conditions in the steel 
market generally. This information has been supplemented by inquiry and 
research with the result that the Federal Trade Commission upon the information 
before it, has reason to believe, in the language of its constituent act, that the 
proposed BethJehem-Lackawanna merger then consummated will constitute an 
unfair method of competition in that it contains a dangerous tendency unduly to 
hinder competition and to restrain trade and commerce, and that a proceeding 
by the Commission in this respect is in the public interest. 

In this aspect under' its constituent act it becomes the duty of the Federal 
Trade Commission to issue its complaint and to state its charges in that behalf.. 
The Federal Trade Commission therefore issued its complaint directed to the 
Bethlehem and Lackawanna companies on Saturday, June 3, and for .the further 
information of the Senate attaches a copy of this complaint hereto. 

Of course the issue of the complaint is merely the institution of formal pro- 
ceedings to test the legality of the proposed merger. In the ordinary course 
answer will be filed to this complaint ard testimony will be takon both on behalf 
of the Government and of the two steel companies. At the conclusion of this 
test-imony and after argument the Commission will determine the facts and apply 
the law thereto. And only if such a conclusion is justified by the facts will an 
order to cease and desist from the proposed merger be issued. Otherwise, the 
complaint will be dismissed. In other words, in the issue of the complaint the 
Federal Trade Commission expresses no final judgment as to the legality of the 
proposed merger. 

If an order to cease and desist from the proposed merger is issued, it is, of course 
subject to review by the United States Circuit Court of Appeals. 

"'HE MIDVALE-BEPUBLIC-INLAND MERGER 

With reference to the proposed Midvaie-Kepublic-Inland merger and the 
format'' n of the North American Steel Co., we are advised that tentative arrange- 
■ ments entered into between the executive officers of these three companies have 
been settled upon and agreed to on behalf of the Board of Directors of the Com- 
panies and tentative arrangement nas been made with Kuhn, Loeb & Co., for the 
financing of the proposed merger. The actions of these three Companies have 
not so far advanced toward completion as to reveal the essential facts with the 
samli precision and comprehensiveness as in the Bethlehem-Lackawanna case, and 
the Federal Trade Commission therefore has not yet been able to reach a reason 
to believe either that the proposed three-company merger will or will not.carry 
the same tendency and capacity as in the case oLthe Bethlehem-Lackawanna 
merger above referred to. The details of this plan^ai:e, however, being carefully 
followed and so soon as the Commission is in possession of suflScient information 
it will make further report to the Senate as to the second of these proposed mergers. 

By the Commission: 

Respectfully submitted, • 

Nelson B. Gaskill, Chairman. 



CONCE,NTRATION OF BCONOMIC POWER 
Exhibit 7* 



287 




'£zplanatory materia] appears on folio wirg page 



288 CONOEiNTRATION OF ECONOMIC POWER 

historical development of bethlehem steel corporation 

Illustration of the geographical advantages of loca- 
tion OF certain competitive plants acquired by BETH- 

' LEHEM steel corporation, 1916-23. 

Sectional map of the United States showing, the extent of the territory, generally 
east and south of Pittsburgh, to which the all-rail freight rates applicable on 
rolled steel, carloads, from one or more of the rolling mills acquired by Bethlehem 
Steel Corporation are less than from either Pittsburgh or Birmingham. This 
graph ignores the very considerable rate advantage of Lackawanna (Buffalo), 
Sparrows Point, and Wilmington, over Pittsburgh and Birmingham (also Bethle- 
hem) to interior points tributary to the Great Lakes or South Atlantic ports, 
on shipments via water or water and rail routes. 



AREA OF TERRITORY EAST OF ASHTABULA- 
QHARLESTON LINE 



State 


Area {sq. mile 


Maine 


33, 040 


New Hampshire 


9,341 


Vermont 


9,564 


Massachusetts 


8,266 


Rhode Island 


l; 248 


Connecticut 


4,965 


New York 


49, 204 


New Jersey 


8, 224 


Delaware 


.2,370 


Maryland 


12, 327 


District of Columbia 


70 


*Pennsylvania 


30, 392 


*West Virginia 


4,745 


♦Virginia 


38, 014 


*North Carolina 


34, 909 


*South Carolina 


2,677 



Total 249, 356 

. *Does not include areas of counties split by 
the line. 



CONCEtNTEATION OF ECONOMIC POWER. 289 

• Exhibit 8 
J. A. Campbell, 
President 

The Youngstown Sheet & Tube Co., 

Youngstown, Ohio, May 23, 1922. 
Nelson B. Gaskill, Esq., 

Chairman, The Federal Trade Commission, Washington, D. C. 
Dear Sir: Your telegram of May 13 was received in due time and it was our 
intention to com.ply with your request before any plans were consummated or 
actual transfers made. 

We held conferences with the other steel companies and inspected. their plants; 
we also estim.ated valuations of the different properties with a view of merging our 
interests with theirs. Before any agreem.ent, however, was arrived at, this coro.- 
pany, for reasons of its own, decided to withdraw from any further negotiations 
along that line. We are not advised as to whether or not the other com.panies are 
still carrying on negotiations. 

If there is any further specific information you desire, we will be glad to comply 
with any request you may make for it. 
Yours very truly, 

(Signed) J. A. Campbell, President. 

d: 



Exhibit 9 



Statement of Promoters of Proposed Merger of Midvalb Steel & Ordnance 
Co., Republic Iron & Steel Co. and Inland Steel Co. 

September 28, 1922. 

Mr. W. E. Corey, chairman of tlie board of Midvale Steel & Ordnance Co., Mr. 
John A. Topping, chairman of the board of Republic Iron & Steel Co., and Mr. 
L. E. Block, chairman of the board of Inland Steel Co., have authorized the 
following statement: 

At a meeting held today the entire situation arising from, the action of the Fed- 
eral Trade Commission was reviewed and the conclusion was reached that under 
existing circum.stances it is not possible to proceed with the proposed merger of the 
Midvale Steel & Ordnance Co., the Inland Steel Co., and the Republic Iron & 
Steel Co. While all of the eminent counsel who have been consulted agree that 
the proposed merger would be legal in every respect and while its consum/mation 
would not have restrained but have intensified com.petition, the final determina- 
tion of the questions involved would delay the carrying out of the plan to such an 
extent, that the parties in interest do not deem, it advisable to proceed. Pending 
such final determination of the questions involved, the financing of the proposed, 
merger would not be possible, and it is not feasible to proceed with the merger 
without such financing. 

Federal Trade Commission v. Midvale Steel & Ordnance Co., Republic 
Iron & Steel Co., and Inland Steel Co. Docket No. 905 

ORDER of dismissal 

A form.al statem.ent having been filed with the Commission Ijy Chadbourne, 
Babbitt, and Wallace, attorneys for the respondents, stating tliat the proposed 
merger, consolidation, and the combination charged in the complaint in this 
proceeding had been entirely abandoned and that all acts for the consummation 
of such m.erger, consolidation, and combination had been discontinued. 

It is ordered that the complaint herein be, and the sam.e is hereby dismissed. 

By the Com.mission. 

[seal] Otis B. Johnson, Secretary. 

(October 21, 1922.) 

Exhibit 10 

Youngstown, Inland Merging as Third Largest Producer • 

Provided their directors and stockholders assent, the Youngi^town Sheet & 
Tube Co., Youngstown, Ohio, and the Inland Steel Co. Cliicago, will be merged 
into the third largest steel producing unit in tlie country'. Preliminary details 

' Iron Trade Review, February 2, 1928. 
264905 — 41— No. 13 20 



290 



CONCEiNTRATION OF ECONOMIC POWER 



were concluded January 25 and the consolidation is expected to be declared op- 
erative early in April. 

James A. Cam.pbell, now president of the Youngstown Co., will be president of 
the new organization, with headquarters at Youngstown. L. E. and P. D. Block, 
at present chairman and president, respectively, of the Inland Co., will becom.e 
vice presidents in charge of production and sales of the western plants in tne 
Chicago district. 

Details of finapiging include the issuance of 3,200,000 shares of com.m,on stock 
in the new com.pany, of which 2,000,000 shares will be di.stributed am.ong Youngs- 
town stockholders and 1,200,000 am.ong Inland stockholders, the latter on a share- 
for-share basis. To adjust assets, in lieu of the regular March com.mon dividends, 
Youngstown will distribute $1,250,000 and Inland $6,000,000. 

It has not yet been announced what changes are in contem.plation for the other 
securities of the two com.panies. The funded debt of Yoxmgstown totals $75,000,- 
000 and of Inland $12,525,000. Preferred .shares of Youngstown m.ount up to 
12,241,000 and of Inland 10,000,000. Com.m.on shares of Youngstown total 
987,606 and of Inland 1,182,799. It is expected that m.anj^ economies of operation 
will be effected, but at present few changes in personnel are said to be probable. 

A revised statement of the capacities of the two companies, given in the accom- 
panying table, shows the combined steel ingot total to be 4,840,000 tons. This 
compares with 23,035,000 tons for the United States Steel Corporation and 
7,900,000 tons for the Bethlehem Steel Corporation. Ranking after the Youngs-' 
town-Inland combination come Jones & Laughlin Steel Corporation with 3,000,000 
tons and Repubhc-Trumbull with 1,800,000 tons. 

The momicntum of the merger movement which has gripped the iron and steel 
industry of northern Ohio in recpnt weeks is not yet spent. Filial approval of 
the Youngstown-Inland and Republic-Trumbull deals is taken for granted, while 
the amalgamation of six independent sheet mills into the. Empire Steel Corporation 
is now fact. Because the Mather and Eaton interests of Cleveland have large 
holding*^ in Central Alloy Steel Corporation, Massillon, Ohio, as well as iii Youngs- 
town and Inland, rumor persists that this producer will eventually become the 
alloy steel division of Youngstown-Inland. 

The Corrigan, McKinney Steel Co., Cleveland, has figured in the picture since 
the death of James W. Corrigan, its president, January 23, although on the election 
of John'H. Watson, Jr., as his successor, January 31, it was stated that the com- 
pany would continue as in independent producer and follow the policies of the 
late Mr. Corrigan. It has been thought that the company's properties would fit 
well into the United States St'eel Corporation, giving that interest steel bar pro- 
duction in proximity to the large Cleveland and Detroit markets. The corpora- 
tion's policy against buying up competition might not be applicable, inasmuch 
as the corporation has no competing plant in the Cleveland district. A rurnor 
of lesser credence Is that the Otis Steel Co. and Midland Steel Products Co., both 
*of Cleveland, would make a three-cornered merger with Corrigan, McKinneyt 

Capacity joined in Youngstown and Chicago districts 
YOUNGSTOWN SHEET & TUBE CO. AND SUBSIDIARIES 





Campbell 
works 


Brier 

Hill 

works 


Mayville 
works 


Indiana 
Harbor 
works 


South 
Chicago 
works 


Hubbard 
works 


Total 


Blastfurnaces.... 


4 

1900,000 

2 306 

' 1, 500, 000 

12 

2 

1 780, 000 

840,000 

1, 620, 000 

160,400 

600,000 

370,000 


3 
1 550, 000 

84 
1 370, 000 

12 


2 

275,000 

108 

300,000 


2 

1468,000 

3 120 

1 648, 000 

4 

2 

600,000 

240,000 

840,000 

"70,600 

240,000 


4 
1 810, 000 


2 
1325,000 


17 


Pig iron capacity, 

By-product ovens 

Year)} '?oke capacity 

Open hearths 


1 3, 328, 000 
*618 






1 2, 818, 000 






28 










4 


Steel ingot bes 










1,380,000 


Steel ingot 0. H 


780,000 

780,000 

60,000 

8 72,000 








1, 860, 000 


Steel Ingot total 








3, 240, 000 










291,000 






M26,660 




932,000 








370,000 






1 









1 Tons. 

2 Koppers. 

' Scmet-Solvay. 
* Ovens, 
i^est Res. 
8 Evanston. 
' Zanesville. 



CONCENTRATION OF ECONOMIC POWER 

Capacity joined in y'oungslown and Chicago districts — Continued 
INLAND STEEL CO. 



291 





Indiana 
Harbor 


Chicago 
Heights 


Milwaukee 


Yearly 
capacity 


Blast furnaces . . 


4 
2204 
26 
f 8 200,000 

» 332, ooe 

\ '" 200, 000 

" 185, OW 

I 12 140,000 






870 000 








900, 000 


Open hearths _..... 






1, 600, 000 
















Hot rolled products including 






■ 1,320,000 




, 45, 000 






50,000 











COMBINED CAPACITY BOTH COMPANIES 



Blast furnaces 


Pig iron 


Coke 
capacity 


Ingot 
capacity 


Pipe 
capacity 


Sheets 


Tin Plates 
plate and skelp 


Bars 


Wire 


2i 


4, 198, 000 


3, 718, 000 


4, 840, 000 


932, 000 


481, 000 


115,000 1,570,000 


435,000 


370, 000 





* Kopper. 

' Ton rails. 
' Structural. 

10 Plates. 

11 Tons bars. 

'2 Tons sheets. 



STEEL MERGERS AND STEEL OUTPUT ^ 



Now that the merger of the Young.stown Sheet & Tube Co. and the Inland 
Steel Co. is virtually assured and, the purchase of the Trumbull Steel Co. by the 
Republic Iron & Steel Co. has been ratified by stockholders, the grouping of large 
units of steel production has been carried to a point where 10 companies will 
control about 82 percent or 47,497,000 tons, out of the 58,000,000 tons per annum 
of theoretical steel-making capacity in the United States. Five of these com- 
pc lies have total capacity of almost 41,000,000 tons, the smallest of the group 
being rated at nearly 2,000,000 tons, while in a secondary group ar' ' other 
producers whose totals arc between 1,000,000 and 1,750,000 tons each. Tne ingot 
capacities of the 10 companies are: 

'funs 

United States Steel Corporation . . 23, If, '00 

Bethlehem Steel Corporation ■ 7, 900, 000 

Youngstown-IulaiKl Corporation- . ^ 5, 040. 000 

Jones & Laughlin Steel Corjjoration , 3. 000, 000 

Republic-Trumbull Cos • .. ... !. ;),')!;, 000 

American I? oiling Mill Co 1 , 76Q, 000 

Central Alloy Steel Corporation 1 , 400, 000 

Wheeling Steel Corporation .. . . _ 1 . ?7:i> 000 

Colorado Fuel & Iron Co ". i. 138, 000 

•Corrigan, McKinney Steel Co 1 ... , 1, 000, 000 

Total 47, 497, 000 

If the Youngstown-Inland and Republic-Trumbull properties should bo brought 
together later under OU' ownership, a possible development toward which there 
is as yet no definite move, the total ingot capacity of the combination, amounting 
to 6,990,000 tons, would still be exceeded bv the Bethlehem Steel Corporation's 
rating of 7,900,000 tons. 

' The Iron Age, February 2. 1928. 



292 



CONCEl^'TRATION OF ECONOMIC POWER 



Of a little less than 11,000,000 tons of ingot capacity that is left to all of the 
steel companies not included in the 10 above listed, there are 13 whose totals 
range between 300,000 and 1,000,000 tons a year. These are: 

Crucible Steel Co. of America (including Pittsburgh Crucible Steel ^o'" 

Co.) 950, 000 

International Harvester Co 700, 000 

Lukens Steel Co 686, 500 

Pittsburgh Steel Co 600, 000 

Weirton Steel Co 570,000 

Donner Steel Co 540, 000 

Alan Wood Iron & Steel Co 529, 000 

Otis Steel Co 42 1 , 000 

Sharon Steel Hoop Co 400, 000 

Interstate Iron & Steel Co , 375, 000 

Granite City Steel Co 360,000 

Bourne-Fjuller Co 300, 000 

Andrews Steel Co 300, 000 

Total - _ . 6, 73 1 , 500 

While most of these 13 companies make only 1 or 2 products each, instead of the 
diversified lines in which the larger groups are engaged, they are well distributed 
geographically and help to preserve a competitive situation which allays any 
fear of mo'nopolistic tendencies in steel production. Recent industrial history 
confirms the opinion, before expressed in these columns, that large consolidations 
of capital and facilities have brought with them a greater degree of responsibility 
toward the public, including that share which purchases the products of the steel 
mills. 

The smaller manufacturing units in the steel industry, although numerically 
of importance own only 6}^ percent of the total steel-making capacity. It is in 
this group, however, that mergers may now be looked for, such as the one recently 
consummated by ?ix Ohio sheet companies under the name of the Empire Steel 
Corporation. This company, while having only 185,000 tons of steel-making 
capacity, has upward of 400,000 tons of finished steel capacity when relying upon 
other companies for some of its raw product. 

In the major steel products — rails, plates, shapes, bars, tubular goods, sheets, . 
and wire rods — -the five leading producers under the new line-up wilf predominate 
to a degree which is well illustrated .by the following table, giving in the first 
column the collective capacities of the five companies and in the second column 
the estimated capacities of all plants compined: 



Rails 

Plates 

Shapes ._. 

Bars, hoops, bands, etc 

Tubular goods 

Sheets and tin mill black plate 
Wire rods _ 



Combined 


Estimated 


capacity of 


capacity of 


5 leadinp 


all pro- 


producers 


ducers 


(tons) 


(tons) 


3, 672, 000 


4, 529, 500 


5,119,000 


6, 877, 000 


3. 784, 000 


4, 434, 000 


9,148,000 


18, 048, 100 


3, 646, 000 


1 5, 501, 500 


3, 645, 000 


8, 710, 700 


2, 886, 000 


4, 494, 800 



' Welded and seamless. 

In the Chicago district the Youngstown-Inland combine will have 240,000 tons 
of rail-making capacitv out of a total of 1,373,000 tons; 330,000 tons in plates of 
a total of 1,566,000 tons; 285,000 tons in shapes of 914,000 tons; 360,000 tons in 
bars, hoops, bands, etc., of 3,732,000 tons; 265,000 tons in sheets and light plates 
of 530,500 tons; 312,000 tons in pipe of 738,000 tons. Tubular products lead in 
the jcapacity at Youngstown, with 600,000 tons. 

The acquisition of the Trumbull Co. will give the Republic Iron & Steel Co. 
a total of about 650,000 tons fh bars, strips, hoops, and bands and 260,000 tons 
in abcpts. 



CONCEiNTRATION OF ECONOMIC POWER 293 

Exhibit 11 • 

Bethlehem Steel Corporation, 

Newark, N. J., March 30, 1931. 
To *he Stockholders: 

The board of directors submits herewith the following report of the business and 
operations of your corporation and its subsidiary companies for the fiscal year 
ended December 31, 1930, and of the condition of its properties and finances at 
the close of that year. 

The net income of your corporation and its subsidiary companies for the year 
was $23,843,406, as compared with $42,242,98' Tor the preceding year, equivalent 
to $5.26 per share of common stock for 1930 as compared with $15.50 per share 
on 2,273,333 shares, the average n.'.mber of shares outstanding during the pre- 
ceding ypar, and $11.01 per share on the 3,200,000 shares outstanding at the end . 
of that year. 

The value of shipments and deliveries by subsidiary companies of your cor- 
poration during the year, as represented bv gross sales and earnings, Avas 
$258,979, 253 as compared with $342,516,207 for the preceding year. 

The value of orders booked during the year, including $1,382,741 of orderg-on 
the books of Pacific Coast Steel Co. and Southern California Iron & Steel Co. on 
the date of the acquisition of their properties, aggregated $241,344^^5 as com- 
pared with $369,536,888 for the year 1929. The unfilled ordjgrs-on December 31, 
1930, amounted to $68,426,595 as compared with $86;t360,883 on December 
31, 1929. 

Full dividends were paid on the preferred sjjoek during the year, and dividends 
on the common stock of $1.50 per share were' paid on Februarv 15, Mav 15, August 
15, and November 15, 1930. 

The Sparrows Point drydock serial 6 percent gold bonds of your corporation 
were paid on February 11, 1930, and its secured serial 5 percent gold notes were 
called for redemption on June 15, 1930. The funded debt of your corporation 
on December 31, 1930, was $117,528,600 as compared with .$237,142,264 on 
December 31, 1924. 

Under date of March 12, 1930, an agreement was entered into covering the 
acquisition by your corporation, directly or through subsidiaries, of all the 
properties and assets of the Youngstowh Sheet & Tube Co. in consideration of 
the assumption of all liabilities and obligations of Youngstown, including 
$72,000,000, principal amount, of its first mortgage sinking fund 5 percent gold 
bonds, series A, together with $15,000,000 in cash to be paid to the holders of 
the preferred shares of Youngstown and one and one-third (1,^) shares of the 
common stOck of your corporation for each common share of Youngstown, of 
which there were approximately 1,200,000 outstanding. The validity of this agree- 
ment was attacked by a group of minority stockholders of Youngstown and its 
consummation was enjoined by the court of common plea^ of Mahoning County, 
Ohio. This decision has been appealed. 

The holders of about 292,000 shares of the common stock of Youngstown which 
had not been voted for the sale have demanded the fair cash value of their shares 
under the provisions of the Ohio statutes, in lieu of the shares of common stock 
of your corporation to which they would otherwise be entitled under the terms 
of the agreement. To the extent that they shall become entitled to receive such 
fair cash value the number of shares of common stock of your corporation to be 
delivered will be proportionately reduced. 

In October 1930 negotiations were concluded for the acquisition by your 
corporation of all of the fabricating properties and business of McClintic-Marshall 
Corporation in consideration of 240,000 shares of common stock and $8,200,000, 
principal amount, of 4)4 percent serial notes of j'our corporation with an adjust- 
ment of dividends and interest thereon as of October 1, 1930, and the assumption 
of liabilities of McClintic-Marshall, including $12,000,000, principal amount, of 
bonds now outstanding. Title to the properties was transferred on February 
10, 1931; 214,159 shares of common stock of your corporation were purchased 
during the year for this purpose and were delivered as part of such consideration, 
in addition to 25,841 shares which were availa)>le in the treasury. The 4% percent 
serial notes are part of an authorized issue )f $25,000,000, principal amount, ma- 
turing in 10 equal series annually, commen ji ig January 1, 1932. The properties 
acquired include fabricating plants located m or near Rankin, Leetsdale, Carnegie, 
and Pottstown, Pa.; Buffalo, N. Y.; ( h cago, III.; San Francisco and Los 

' From Twpnty-Sixth Annual Report of Belhlehen-. St el Corporation, December 31, 1930. 



294 CONCENTRATION OP ECONOMIC POWER 

Angeles, Calif. The acquisition of these properties, fully equipped for the 
fabrication and construction of steel buildings, bridges, tanks, river barges) pipe 
lines, etc., represents an important extension of the activities of your corporation. 

The cash expenditures for additions and improvements to properties during 
the year amounted to $47,158,004. The estimated cost of completing the con- 
struction authorized and in progress as of December 31, 1930, is $14,820,000. 

The most important units of the, construction work now in progress are: The 
additional open-hearth department and 40" Universal Slabbing Mill at the 
Maryland plant and the additional open-hearth depa^tm.ent at the Lackawanna 
plan't, all of which were referred to in our previous report; the removal of the. 152- 
inch plate mill from the Coatesville plant to the Maryland plant v^'here it will be 
increased in size to 160", r.nc installed in lieu of constructing the proposed 
new 166" sheared plate mill ef /red to in our previous report; improvements to 
the by-product equipm^ent ox the Lackawanna coke-oven plant and the complete 
rebuilding of two blast furnaces, one at the Maryland plant and the other at the 
Lackawanna plant, together with installations of primary gas washers and equip- 
ment for cleaning and distributing blast furnace gas. 

PROPERTIES OWNED OR LEASED BY SUBSIDIARY COMPANIES 

Steel and manufacturing plants 

Otoss tont 

Pig iron capacity as of January^l^ 1931 _. 7, 236, 000 

Steel capacity as of January 1, 1931 8, 610, OOO 

Plant Location 

Bethlehem plant Bethlehem, Pa. 

Cambria plant . Johnstown, Pa. 

Coatesville plant -. Coatesville, Pa. 

Harlan plant , Wilm.ington, Del. 

Lackawanna plant Lackawanna; N. Y. 

Lebanon plant Lebanon, Pa. 

Los Angeles plant -Vernon, Los- Angeles, Calif. 

Maryland plant Sparrows Point, Md. 

Seattle plant ^^ . Seattle, Wash. 

South San Francisco plant South San Francisco, Calif. 

Steelton plant > Steelton, Pa. 

Fabricating works (including McClintic-Mnrsthall Corporation) 
Plant Location 

Bethleriem works Betnlehem, Pa. 

Buffalo works Buffalo and Lackawanna, N. Y. 

Carnegie Works Carnegie, Pa. 

Central works. _^ - . San Francit oo, Calif. 

Los Angeles works . i L Los Angeles, Calif. 

Morava and Kenwood works - Chicago, 111. 

Pbttstown works - Pot tstown, Pa. 

Rankin works Rankin, Pa. 

Ritcr-Conley and Leetsdale works. - Leetsdale, Pa. 

Steelton works Steelton, Pa. 

Shipbuilding and ship repair plants 
Plant Location 

Baltim.ore plant Sparrows Point and Baltimore, Md. 

Fore River plant. J _• _- Quincy, Mass. 

Boston plant : .' Boston, Mass. 

Union plant ■ ' . _San Francisco and San Pedro, Calif. 

Equipment at above properties. — One thousand four hundred and seventy-eight 
byproduct coke ovens with apparatus for the recovery and rectification of benzol 
products; 2 sintering departments; 1 calcining departm.ent; 32 blast furnaces; 11 
bessemer converters," 144 open-hearth furnaces (including 12 under construction); 
7 electric furnaces;. 11 puddling furnaces; 26 charcoal iron-knobbling furnaces; 
13 blooming mill«; 3 slabbing mills; 15 billet sheet bar and skelp mills; 3 "Bethle- 
hem' special stntetural shape mills; 6 standard structural shape mills; 3 universal 
plate mills; 6 sheared plate mills; 1 universal and sheared plate mill; 3 rail mills; 
5 bar and structural shape mills; 30 bar mills; 2 wire rod mills; 2 butt weld pipe 



CONCEiNTRATION OF ECONOMIC POWLk 295 

mills; 2 lap weld pipe mills; 1 tube mill; 1 puddle mill; 1 muck bar mill; 2 rolled- 
steel wheel mills; 48 tin-plate mills with 35 tinning stacks; 12 sheet mills with 4 
galvanizing pots; 2 sheet jobbing and light-plate mills; 2 wire drawing, wire finish- 
ing and nail departments; 1 cold drawing department; 2 press and hammer forge 
shops; 1 drop forge department; 1 axle forging departm.ent; 2 steel foundries; 
6 iron foundries; 8 brass foundries; 1 steel, iron,dnd brass foundry; 1 ingot mold 
foundry; 1 roll foundry; 1 roll finishing shop; 1 special treatment plate depart^ 
ment; 1 forge specialty and projectile department; 1 steel treatm.ent department; 
3 commercial machine shops; 6 ship m.achine shops; 1 steel and wood freight car 
department; 1 passenger train car plant; 1 small tool departm.ent; 14 structural 
fabricating shops; 1 tank and plate shop; 1 tower department] 6 ship fabricating 
shops; 3 ship boiler shops; 2 splicp bar and tie plate shops; 2 frog and switch 
departments; 3 bolt, nut and spike factories; 1 agricultural implement and rail 
anchor shop; 1 plate'flanging and pressing department; 1 brickyard; 27 building 
ways with cranes; 1 barge building departm.ent; 7 graving docks; 10 floating dry 
docks; 4 marine railways; 6,568 acres of manufacturing site; 7,684 acres of other 
real estate; 2,829 dwellings, stores, welfare and miscellaneous buildings for 
employees. 

IRON ORB PROPERTIES 

Two-thirds interest in Corsica Iron Co., two-thirds interest in xlobart Iron Co., 
51 percent interest in Mahoning Ore & Steel Co. (50 percent held ilnder Cambria 
Iron Co. lease), 45 percent interest in Hoyt Mining Co., and two-ninths interest 
in Bennett Mining Co., which operate under lease properties in the Mesaba 
Range. 

Full ownership of Sunday Lake Iron Co., two-fifths interest in Plymouth Min- 
ing Co., and one-half interest in Odanah Iron Co., which operate under lease 
properties in the Gogebic Range. 

One-half interest in the Negaunee Mine Co., and 51 percent interest in Palmer 
Mining Co., which operate under lease properties in the Marquette Range. 

Full ownership of Penn Iron Mining Co. (held imder Cambria Iron Co. lease) 
and one-half interest in the Verona Mining. Co., which operate under lease proper- 
ties in the Menominee Range. 

One-fourth interest in Vermillion Mining Co., which operates underlease proper- 
ties in the Vermillion Range. 

Three-fifths interest in Cuyuna Ore Co., which operates properties under lease 
and three-fifths interest in Lehigh Ore Co. which has an interest in a mining com- 
pany operating properties under lease in the Cuyuna Range. 

The share interest in the above-riientioned properties makes available approxi- 
mately 7,375,000 tons of iron ore per annum,. 

Ore' mines located in Cornwall Borough, Pa., and concentrating and sintering 
plant in Lebanon, Pa., equipped to produce 750,000 tons sintered ore per annum. 

Tofo iron ore mines located near Cruz Grande in province of Coquimbo, Chile, 
operated under long-term, lease and equipped to produce 1,500,000 tons of iron ore 
per annum. 

Undeveloped property located in the state of Michochan, Republic of Mexico. 

Property located near Santiago on South coast of Cuba eq/iipped to produce 
300,000 tons of iron ore per annum. 

Property and mineral rights located near Nipe Bay, on north coast of Cuba, 
equipped to produce 500,000 tons of nodules per annum. 

The iron ore properties referred to (excluding those o.n the north coast of Cuba 
and in Mexico and excluding interest of others in properties not owned outright) 
are estimated to contain 172,013,000 tons of iron ore. 

COAL PROPERTIES 

Developed coal properties in the vicinity of Ellsworth, Heilwood, Johnsu.. , 
Marianna and Slickville, Pa.; Fairmont and Morganlown, W. Va. 

These properties are estimated to contain 701,788,000 tons of coal and are 
equipped to produce 12,030,000 tons per annum. 

Limestone properties 

Quarries located at Bethlehem, Bridgeport, Hanover, Lebanon, Naginey, 
Steelton, and York, Pa.; McAfee, N. J.; and undeveloped properties in Blair and 
Center Counties, Pa.; Pekin, N. Y.; and Felton, Cuba. The develbped properties 
are estimated to contain 133,192,000 tons of calcite and dolomite- limestone and 
are equipped to produce 2,045,000 tons per anfium for consumption at the steel 
plants and 425,000 tons for building and road purposes. 



296 CONCEiXTRATION OF E'OONOMIC POWER 

Railroads 

Seven railroad companies operating in the vicinity of plants located at Beth- 
lehem, Johnstown, Lebanon, and Steelton, Pa.; Lackawanna, N. Y.; Sparrows 
Point, Md.; and Quincy, Mass. 

These railroads own and operate 139 standard gage steam locomotives, 1 
electric locomotive, 194 70-ton standard gage cars and approximately 382 miles 
of main line, yard tracks and sidings, connecting with other common carrier 
railroads. 

In addition to the above, 14 standard gage locomotives and 176 miles of main 
line, yard track and sidings are owned and operated in conjunction with the steel 
plants. 

Ocean transportation 

Five ore and coal carrying vessels of 20,000 d. w. t. capacity each; 2 ore carrying 
vessels of 11,600 d. w. t. capacity each, 1 ore and coal vessel of 6,000 d. w. t. 
capacity, and 13 general cargo carrying vessels of 111,695 total d. w. -t. capacity; 
and under charter 2 ore and coal carrying vessels of 20,000 d. w. t. capacity each. 

JLake transportation 

Eight vessels with a total carrying capacity per trip of 82,000 gross tons, and 
50 percent interest in three and 62 percent interest in two additional vessels with 
a total carrying capacity per trip of 48,200 gross tons, and under charter 3 
vessels with a carrying capacity per trip of 38,000 gross tons. These vessels have 
a total carrying capacity per season of approximately 3,900,000 gross tons of 
iron ore, and are also suitable for carrying coal, limestone and grain; also under 
charter 2 vessels with a total carrying capacity per season of 135,000 gross 
tons of steel and iron pro'ducts which are also suitable for carrying return cargoes 
of scrap. 

Prodtjcts 

Agricultural steel and specialties: Standard and special shapes and sections for 
all purposes; semifinished agricultural implement parts. 

Armor plate. 

Automobile steel: For forgings and machined parts, wheel rim sections, springs, 
axles and brake drums. 

Automobile tire moulds and rings, rolled steel. 

Auxiliary locomotives: Four and six-wheel designs. 

Axles: Passenger and freight train car, engine and tender truck, driving, motor, 
and electric and mine locomotive and car. 

Bars, iron: Chain, staybolt, special staybolt, enginebolt, and muck bar. 

Bars and Jaands, steel: Bessemer, open hearth and electric; alloy, special, and 
carbon steels; black as rolled, annealed, heat treated, cold drawn; Society of 
Automotive Engineers specifications and special analysis, suitable for all purposes. 
Special sections, hot rolled or cold drawn. 

Bars, concrete reinforcing steel: Plain, twisted, deformed, bent, and placed. 

Bars, rail steel: Plain, deformed, and angles. 

Billets, blooms, and slabs, steel: Bessemer open hearth and electric; alloy, 
special, and carbon steels; reroUing and forging quality. 

Blanks, rolled: For gears, pistons, fly wheels, double flanged track wheels, 
sheaves, turbines, shaft couplings, pipe flanges, brake drums, and other circular 
forgings. 

Boilers: "Bethlehem" Marine, Scotch and Yarrow types. 

Boiler heads: Flanged and dished. 

Boiler tubes, lap welded: Genuine knobt'id charcoal iron, and steel. 

Bolts: All kinds: plain a. ^ galvanized; machine and special; plain and heat 
treated; carbon, alloy, and "Mayari"; steel frog, track, and fitting-up bolts; 
hollow and solid stay bolts. Rivets, steel and iron — boiler, structural, and ship. 
Rods — tie, silo, radiator, structural, and pulley. Pipe bands. 

Bridges, buildings and dther structures: Designs for and fabrication and erection 
of all types of fabricated steel bridges and buildings, tanks, pipe lines, subways, 
towers, oil refinery plants, blast furnace stacks and stoves, steel frame houses, pier 
caissons, buckle js^atcs, display signs and miscellaneous structures. 

Byproducts: Coke oven gas, tar, ammonium sulfate, crude naphthalene, 
benzol and its homologues, cyanogen sludge; copper and sulfur concentrates. 

Car building shapes: Beams, channels, angles, bulb angles, center sills, and 
Z-bars. 



CONCEiNTRATION OF BOONOMIC POWER 297 

Cars, mine: All types. 

Cars, passenger train: Passenger, baggage, express, mail, combination passenger 
and baggage, baggage and mail and other combinations, gas-electric, private, and 
special cars. 

Cars, freight: Ballast, gondola, hopper, fiat, tank and box; upderframes and 
trucks; forged, pressed, and fabricated car parts. 

Car wheels, wrought steel: For freight and passenger cars; engine and tender 
trucks; street, interurban, elevated, and subway cars; ratne locomotives and cars; 
cinder, ore, and other industrial cars. 

Castings: Carbon and alloy steel (open hearth and electric), manganese steel, 
stainless-clad steel, iron, brass, and bronze; rough as cast or machined, tunnel 
segments, iron and steel. Centrifugal cast bronze sleeves and liners. 

Coke: Furnace, foundry, and domestic. 

Drop forgings and upsetter forgings: Special designs, large and small sizes, in 
carbon and alloy open hearth and electric high speed and stainless steels; copper, 
brass, bronze, and Monel metal. Annealed or heat treated if desired. 

Engines: Steam, marine type, gas,, and "Bethlehem" large unit oil. 

Fencing: "Cambria" woven wire fence for field, poultry, and all other purposes; 
fence posts. 

Ferromanganese. 

Forgings: Hydraulically pressed and hammered, all sizes; carbon and alloy 
steels; solid and hollow; rough and finish machined; for marine ^nd stationary 
engines, turbines, generators, machine tools; ship shafting; hardened steel rolls; 
weldless chambers for oil refineries; tool joints for drills, seamless penstocks; 
high pressure seamless boiler driims and chemical vessels; cylinders for aircraft 
engines, and other types of punched and drawn forgings. 

Frogs and switches: Frogs, switches, guard rails, crossings, switch stands, steam 
and street railway special work. Manganese steel track work of every description. 
Light rail track work for mines and industrial plants. 

Fuel oil burning systems: "Bethlehem-Dahl" mechanical type, for marine and 
land service. 

Gears and pinions: Cut and cast bevel; spur, with straight or herringbone cut 
teeth, any size; mill reduction gearing and pinions; for bridge operating machinery. 

Ingot molds, stools, and bottom plates: All sizes. 

Joists: "Bethlehem" joists and "MacMar" welded joists. 

Machinery: Hydraulic presses, pumps, accumulators, intensifiers, plate bending 
rolls, rolling mill machinery, heavy duty roll, lathes, vulcanizing plates and presses, 
mechanical doublers, retorts, special machinery of all types and designs. 

Mine ties: Steel. 

Nails, wire: All kinds; standard and special sizes; galvanized, cement coated, 
annealed, blued, and bright; spikes; wirq staples for fence and netting. 

Nuts: Hot and cold pressed; all .sizes, shapes, and standards; blank or tapped, 
cold punched, chamfered, trimmed, and reamed; semifinished; castle; "Bethle- 
hem" treated. 

Oil refinery plants. 

Oil separators: Marine type; for separating oil from bilge and ballast water. 

Oil well derricks and equipment. 

Ore, chrome. 

Ordnance: Projectiles; gun and shell forgings. 
• Paraffin wax plant equipment. 

Pig iron : Basic, Bessemer, semi-Bessemer, foundry, low phosphorus, malleable, 
malleable Bessemer, "Mayari" and "Silvery Mayari." 

Piling: "Lackawanna" steel sheet piling; straight, arched, deep-arched, and 
bent webs; fabricated corner, and taper piles. 

• Pipe, steel: Standard, butt and lap-welded, and line pipe; black, galvanized, 
and special rust resisting; copper bearing. Riveted, electric welded, and lockbar 
pipe. 

Pipe couplings: Forged. 

Plates: Universal and sheared, in all grades for all p'.irposes; flanged and dished 
heads; miscellaneous pressed plate work. 

Plate work: Steel plate construction of all kinds; gas holders, oil and water 
tanks, barges, blast furnace stacks and stoves, metal mixers, hot metal ladles, 
stacks, pipe, etc. 

Pole line material: Black and galvanized. 

Propellers: Propellers and contra propellers for all type vessels. 

Rails and accessories: Standard tee, girder, guard, high tec, and light rails;" 
splice bars, rail joints, tie plates, bolts, nuts, rail clips, spikes, and rail anchors. 



298 



CONCENTRATION OF EJOONOMIC POWER 



Reinforcing bars: Plain rounds and squares, twisted, deformed; bent and placed. 

Rivets, steel, and iron: Boiler, structural, and ship. 

Rods, wire: Basic, acid open hearth, and Bessemer. Patented spring rods. 

Rolls: Carbon and alloy steel; chilled and sand cast iron. Hardened sleel rolls. 

Shafts, forged: All kinds. 

Sheet bars: Open hearth and Bessemer. 

Sheets — black, blue annealed and galvanized: Formed roofing and siding prod- 
ucts; rust-resisting copper steel sheets. 

Shipbuilding shapes: Ship channels and bulb angles. 

Skelp: Universal and sheared. 

Spiegeleisen. 

Spikes: Standard railroad, screw track, universal screw, tie plate screw, boat, 
dock and wharf. 

Stone: Limestone and limestone sand for concrete and road work. 

Structural shapes: "Bethlehem" beams, girder beams, and columns, "Bethle- 
hem" joists and stanchions; standard and bar-size beams, channels, and angles; 
car and shipbuilding shapes; standard and special T and Z bars; rolled steel slabs 
for column bases and column covers. 

Sucker rods: Box and pin type; double pin type with coupling; pull rods with 
turtle backs; sub polished and pony rods. 

Ties, steel cross:. Railroad, industrial, and mine. 

Tin plate: Coke tin plate; black plate; speqial lithographing, galvanizing, and 
enameling stock. 

Tool steel: "Bethlehem" special high speed; "Comokut" super high speed; 
carbon; finishing; nonshrinkable; stainless; rock and mine drill, solid and hollow; 
35 percent nickel; "Cobaflex" magnet; "Bethalon" free, machining, non-rusting 
screw stock; and other special grades. 

Tools: Punches and dies, chisel blanks and chisels, hot and cold friction saws, 
rivet sets, steel stamps (letters and figures for hot and cold work), shtting shears, 
shear blades, tool bit holders, and special tools. 

Towers: Fabricated structural steel for power t^ransmission lines and bus 
structures, etc. 

Track work, mine and industrial: Light rails, steel mine ties, frogs and switches, 
switch stands, rail braces, splice bars, track bolts, and spikes. 

Tubinp;, rail stee^ : Structural, fence, and guard rail. 

Turbines: "Bethlehem" geared marine, Curtis and Parsons types. 

Turntables, railroad: "Bethlehem" twin-span and balanced. 

Vessels: Passenger combination passenger and cargo ships, oil tankers, freight- 
ers, refrigerating ships, car floats, ferryboats, yachts, tugSf barges, dredges; 
battleships, battle cruisers, scout cruisers, destroyers, and submarines. 

Vessel repairs: Repairing, reconditioning, converting, and dry docking, all 
types and sizes. 

•Wheels, wrought steel: For cars, locomotives, and industrial equipment. 

Wire: Plain, bolt, screw, extra soft rivet, chain, hard bright nail galvanized, 
an. telephone; "Cambria" barbless twisted and all styles of barbed wire; spring 
wire; wire bale ties, wire nails, and wire fencing. Wire rods. 

Subsidiary companies 



Name 



Incorporated 



State 



Date 



Bethletem Chile Iron Mines Co. 

Bethlehem-Cuba Iron Mines Co 

Bethlehem Iron & Steel Corporation 

Bethlehem Land & Improvement Corporation. 

Bethlehem Mines Corporation....*...^ 

Bethlehem Securities Co 

Bethlehem Shipbuildinc Corporation, Ltd 

Bethlehem Steel Co '. 

Do 

Bethlehem Steel Co. of Brazil. 

Bethlehem Steel Export Corporation 

Bethlehem Steel Products Co....^. .i 

Bethlehem Steel Realty Corporation 

Bethlehem Transportation Corporation 

Beth-Mary Steel Corporation 

Buena Vista Iron Co 

Buffington Water Co 



Delaware 

West Virginia. 

New York 

do 



Delaware 

Pennsylvania. 

Delaware 

Pennsylvania. 
Delaware. -..- 
do 



do 

Pennsylvania. 

...do- 

Delaware 

Maryland 

New Jersey... 
Pennsylvania. 



Jan. 
June 
Apr. 
Apr. 
Nov. 
June 
Oct. 
Apr. 
Feb. 
Apr. 
Sept. 
Oct. 
Jan. 
Feb. 
Dec. 
Feb. 
Dec. 



18, 1913 
29. 1889 
22, 1908 
20.1923 
23, 1917 

28. 1916 

15. 1917 
17, 1899 

6, 1923 

8,1920 
22, 1922 

8,1908 
31,1907 
19, 1925 
22. 1921 

?, 1910 
28,1900 



CONCENTRATION OF EKX)NOMIC POWER. 
Subsidiary companies — Continued 



299 



Name 



Caln.ar Steamship Corporation 

Cambria Inclined Plane Co ■ 

Cambria Iron Co.' 

Compania de Minas de Fierro "Las Truchas" S. A 

Conemaugh & Black Lick Railroad Co 

Cornwall Railroad Co 

Dundalk Co., The 

Dundalk Sewerage Co., The 

Dundalk Water Co., The 

East Wheatfleld Water Co 

Ellsworth Collieries Co " 

Fore River Railroad Corporation 

Fore River Shipbuilding Corporation 

Franklin Iron Co., The 

Juraeua Iron Co ■. 

Kenilworth Land Co.. 

Lebanon Consolidated Water Co 

Lebanon County Light, Heat & Fuel Co., The 

Manufacturers Water Co., The ■. 

McClintic-Marshall Corporation > ^ 

Northampton County Water Co 

Ore Steamship Corporation 

Pacific Coast Steel Corporation 

Patapseo & Back Rivers Railroad Co 

Penn Iron Mining Co 

Penn Iron Mining Co. of Wisconsin 

Penn Store Co... ' '. 

Philadelphia, Bethlehem & New England Railroad Co. 

Pine Township Water Co..' 

Possum Glory Water Co 

Service Stores Corporation 

South Buffalo Railway Co .1 ^. 

Steel Frame House Co « 

Do - 

Steel Frame House Finance Co 

Steelton & Highspire Railroad Co 

Sunday Lake Iron Co., The 

Union Iron Works Co.. 

Union Irgn Works Dry Dock Co -.. 



Incorporated 



State 



Delaware 

Pennsylvania. . 

do_ 

Mexico 

Pennsylvania.. 

do 

Maryland 

do 

,-..<io 

Pennsylvania. . 

do 

Massachusetts. 

do 

New Jersey 

Pennsylvania.. 

do 

.-.- do 

do 

do 

do 

.... do 

Delaware 

do 

Maryland 

Michigan 

Wisconsin 

Michigan 

Pennsylvania. . 

do •.... 

do. 

do...- 

New York 

Delaware 

Pennsylvania.. 

Delaware 

Pennsylvania.. 

Michigan 

New Jersey 

California 



Date 



July 29,1927 
Sept. 6,1889 
Aug. 27, 1852 
Jan. 20,1919' 
Dec. 31, 1923 
May 25, 1850 
May 5, 1917 
Apr. 22,1918 

Do. 
Dec. 28, 1900 
Oct. 13,1925 
Jan. 6, 1919 
May 15,1913 
Mar. 14, 1871 
Nov. 18, 1903 
Nov. 14, 1917 
Feb. 6, 1925 
Dec. 27,1904 
Feb. 19,1900 
Dec. 14,1880 
Jan. 6, 1916 
Aug. 2,1916 
July 1, 1919 
Dec. 26,1916 
June 26,1882 
Feb. 9, 1915 
Mar. 31, 1902 
Apr. 12,1910 
Feb. 10,1903 

Do. 
Nov. 15.1904 
Apr. 25,1899 
May 16,1930 
Sept. 15, 1927 
Sept. 13, 1929 
Nov. 16,1916 
Feb. 28,1900 
Jan. 7, 1905 
Feb. 1, 1909 



> The $8, 465, 625 capital stock is outstanding in hands of the public. Bethlehem Steel Products Co. has 
agreed to pay an amount equal to 4 percent per annum thereon as rental for property held under 999-year 
lease. 

> Name changed-from the Midvile Steel Co. 



Exhibit 12 
Bethlehem Steel Corporation * 

History and properties. — Incorporated Dec. 10, 1904, in New Jersey, under 
perpetual charter; successor to the United States Shipbuilding Co., under the 
modified reorganization plan described in the manual for 1904, page 1612. The 
corporation acquired the entire capital stock (except directors' qualifying shares) 
of the following companies: Bethlehem Steel Co., Harlan & Hollingsworth 
Corporation, Union Iron Works Co. of San Francisco, Samuel L. Moore & Sons 
Corporation, Carteret Improvement Co., Eastern Shipbuilding Corporation, 
Crescent Shipyard Corporation, Bath Iron Works Co., and Hyde Windlass Co. 

The plants of the Bath Iron Works Co. and the Hyde Windlass Co. were 
disposed of early in 1905. During 1905 small portions of the property of the 
Harlan & Hollingsworth Corporation, and the Samuel L. Moore •& Sons Corpora- 
tion, not essential to the operation of the plants, wcr^ sold. The plant of the 
Crescent Shipyard Corporation at Ehzabethport, N. J., and the plant of the 
Carteret Improvement Co. at Carteret, N. .T., were consolidated with Samuel L. 
Moore & Sons Corporation on Nov. 21, 1907. The plant of the Eastern Ship- 
building Corporation was sold to Charles R. Hanscom, representing a syndicate, 
in September 1907. 

The entire property of the San Francisco Dry Dock Co. was purchased in 
November 1908, by the Union Iron Works Dry Dock Co., then a subsidiary 

' Poor Industrials, 1934. 



300 CONCEiNTRATION OF ECONOMIC POWER 

conxpany of the Union Iron Works Co., now a subsidiary ot the Bethlehem Steel 
Corporation. 

During 1913 the plants and properties of Fore River Shipbuilding Co., Quincy, 
Mass., and of the Titusville Forge Co., Titusville, Pa., were purchased, respec- 
tively, by Fore River Shipbuilding Corporation, and Titusville Forge Co., the 
latter companies being then subsidiary campanies of the Bethlehem Steel Co. 
organized for the purpose of taking over those properties. The Titusville Forge 
Co. (see manual for 1916, p. 3968, or apply to our information department) was 
dissolved in 1916 and its plant taken over for direct operation by Bethlehem Steel 
Co.; in January 1920, it was sold and acquired by a new company known as 
Titusville Forge Co. — see General Index. 

• On Aug. 17, 1915, the Bethlehem Steel Co. acquired the plant' of the Detrick 
& Harvey Machine Co. of Baltimore City, through purchase of its entire capital 
stock.. This company was subsequently dissolved and its assets transferred to 
and liabilities assumed by Bethlehem Steel Co. In 1925 the properties were 
sold to a new company known aathe Detrick & Harvey Machine Co. 

In February 1916, the plant and properties of the United Engineering Works 
at Alameda, were acquired through purchase by the Union Iron Works Co. 

In February 1916, the Bethlehem Steel Co., directly or through the Penn-Mary 
Steel Co., acquired all the assets and assumed the liabilities of Pennsylvania 
Steel Co. (of Pennsylvania) (see manual for 1916, pp. 3965-3968, or apply to our 
information department), and Maryland Steel Co., and all the assets of Pennsyl- 
vania Steel Co. (of New Jersey), except the stock of the said Pennsylvania Steel 
Co. (of Pennsylvania), and Maryland Steel Co., for $31,941,630 (which was at 
the rate of par for the preferred and about $31 per share for the common, subject 
fo existing liens except the $8,500,000 bonds of Pennsylvania Steel Co.. (of New 
Jersey) which wer.e retired out of the proceeds of this sale. The lieng, subject to 
which the properties were purchased, aggregated approximately $17,300,000, all 
of which has since been paid. The purchase price was paid in 5 percent 20-year 
purchase money bonds secured by mortgage upon the plants acquired. 

In May 1916, the Bethlehem Steel Co. acquired the Baltimore Sheet & Tin 
Plate Co. (see manual for 1916, p. 3967, or apply to our information department), 
by the purchase of all its assets at price sufficient to pay at the rate of par for ths 
preferred stock on the dissolution of the latter company. 

Near the close of the year 1916. Penn-Mary Steel Co. acquired the property 
and plants of the American Iron & Steel Manufacturing Co. (see Manual for 
1916, p. 3967, or apply to our information department) at Lebanon, Pa., and 
Reading, Pa. The purchase price of these properties was $6,660,000 in bonds of 
the Penn-Mary Steel 'Co., secured by a mortgage upon the real estate and plant? 
acquired, and guaranteed by the Bethlehem Steel Co. For description of these 
bonds see a subsequent page. 

At about the same tiro.e Bethlehem Steel Co. acquired from, the Lackawanna 
Steel Co. the properties and plants of the Lackawanna Iron & Steel Co. at Lebanon, 
Pa., consisting of two blast furnaces and a byproducts coke plant at Lebanon, an 
interest in the Cornwall Ore Banks Co., and a lease of three additional blast 
furnaces at Lebanon and Cornwall, Pa., and of the Cornwall Railroad. 

In February 1917 Bethlehem. Steel Co. purchased all of the capital stock of the 
Lehigh Coke Co. (see manual for 1916, p. 2934, or apply to our information 
department). The purchase price of this property and plant was payable in pur- 
chase m.oney bonds secured by the properties and plant acquired. All the prop- 
erty and business of the Lehigh Coke Co. were acquired on April 20, 1917, by 
the Eastern Coke Co., a subsidiary of the Bethlehem Steel Co. In July 1918, 
the Eastern Coke Co. and Penn-Mary Steel Co. were dissolved and their assets 
transferred to and liabilities assum.ed by the Bethlehem Steel Co. 

On October 23, 1919, announcement was made of the purchase by the Penn- 
Mary Coal Co. of the Elkins Coal & Coke Co. (see 19i9 Industrial Manual, p. 
2438, or apply to our information department) ; this property consisted of 46,224 
acres of coal lands in West Virginia with coal reserves estimated at more than 
150,000,000 tons. The Penn-Mary Coal Co. has since been dissolved and its West 
Virginia properties transferred to Bethlehem. Mines Corporation. On April 17, 
1920, part of the bitum.inous coal properties of the Jamison Coal & Coke Co. 
(see General Index) was acquired by the Finch Run Coal Co. (which has since 
been m.erged into Bethlehem Mines Corporation), a subsidiary of the Bethlehem 
Steel Co., subject to an issue of $176,000 (as of Dec. 31, 1932) Dakota Sinking 
Fund 5's described below; the latter properties consisted of about 7,000 acres of 
coal lands containing 65,000,000 tons of coal located in Marion County, W. Va. 

In 1921 Bethlehem Shipbuilding Corporation, Ltd., purchased the shipbuilding 
and ship repair plants and properties of Baltimore Dry Docks and Shipbuilding 



CONCENTRATION OF ECONOMIC POWER. 3Q]^ 

Co. located at Baltimore and in part paym.ent therefor issued its 5% percent pur- 
chase tp.oney mortgage bonds guaranteed by Bethlehem. Steel Co. and secured by 
the properties acquired. 

In 1922 Bethlehem Iron & Steel Corporation purchased all of the properties 
and assets of Lackawanna Steel Co. in consideration of the assum.ption of the 
liabilities and obligations of Lackawanna and the delivery of $12,500,000, par 
am.ount, of 7 percent noncum.ulative preferred stock and $22,608,500 par am.ount, 
of the class "B" com.m.on stock of the Bethlehem. Steel Corporation and $473,- 
509.45 in cash. This purchase and the increase of capital stock of the corpora- 
tion required therefor, were approved by the stockholders on Septem.ber 18, 1922, 
and the properties were transferred on October 10, 1922. There were thus added 
to the Bethlehem, properties im.portant raw-m.aterial properties and a large steel 
plant at Lackawanna, near Buffalo, having a steel-ingot capacity of 1,840,000 
gross tons per annum., well located for assem.bling raw materials and m'anufac- 
turing and distributing its products to the im.portant markets in the Middle West 
and Canada. 

Under date of Novem.ber 24, 1922, agreements were entered into covering the 
purchase by the Bethlehem. Steel Corporation directly or through subsidiaries, of 
all properties of the Midvale Steel & Ordnance Co. (except the ordnance plant 
and other business located at Nicetown, Pa., and certain assets appurtenant 
thereto and the stock owned hy it in the Cam.bria Steel Co.) and all the prop- 
erties and assets of the Cam.bria Steel Co. The properties were transferred March 
30, 1923. Under the term.s of purchase, all liabilities and obligations of the Mid- 
vale and Cambria com.panies (except certain thereof related to the operation of 
the Nicetown plant), including the 20- year convertible sinking-fund gold 5's of 
the Midvale Co., were assumed by one or m.ore of the subsidiaries of the corpo- 
ration and said bonds were guaranteed by the corporation. In addition thereto, 
the corporation issued in payment for the properties purchased $97,681,400, par 
value, of its com.m.on stock. Of such com.m.on stock, $95,000,000 was received 
by the Midvale Co. on the consum.m.ation of the transaction for distribution to 
its stockholders and the balance thereof, namely, $2,681,400 was distributed by 
the Cam.bria Co. among the holders of its stock not then held by the Midvale 
Co. The corporation also agreed to issue its com.m.on stock against the surrender 
and cancelation of said bonds on the basis of $500 par value of said stock for each 
$1,000 bond. 

In December 1924, Bethlehem Shipbuilding Corporation, Ltd., purchased the 
ship repair plant at Los Angeles, Calif, which it had been operating under lease since 
1921, and in part paym.ent therefor issued $900,000, par am.ount of its purchase 
money m.ortgage 6-percent 15-year sinking fund gold bonds dated January 1, 1925. 

On July 6; 1928, Bethlehem. Shipbuilding Corporation, Ltd., purchased the 
plant of the Atlantic Works (see 1928 Manual, p. 686), Boston, Mass., and in 
part paym.ent therefor asfeum.ed $422,500 first m.ortgage 6-percent sinking fund gold 
bonds, which were redeem.ed January 2, 1930. 

In January 1930, all of the properties and business of Pacific Coast Steel Co. 
and Southern California Iron & Steel Co. (for last published statements see 
Manual for 1929, p. 706) were acquired by Pacific Coast Steel Corpuration, a 
Bethlehem, subsidiary, which now operates the plants, and in addition to selling 
the products thereof, sells the full line of products m.anufactured at Bethleh'em.'s 
eastern plants. 

In February .1931, .acquired all fabricating properties and business of Mc- 
Clintic-Marshall Corporation and assumed all liabihties of McCIintic-Mgrohall 
Corporation, including $12,000,000 ($7,999,000 outstanding December 31, 1933) 
of outstanding bonds. Properties acquired are equipped for the fabrication and 
ccmstruction of steel buildings, bridges, tanks, river barges, pipe lines, etc. Con- 
sideration was 240,000 shares common stock and $8,200,000 4)^-percent seriat 
bonds of Bethlehem Steel Corporation. 

During 1931 purchased the properties and assets qf Levering & Garrigues Co., 
Hay Foundry & Iron Works, and Hedden Iron Construction Co., which owned 
structural steel fabricating plants in or near Newark, N. J., and of Kalm^n Steel 
Co. (see 1931 Manual, p. 2943) fabricators and distributors of concrete bars and 
building specialties. These purchases involved the issue of an additional $5,500,- 
000 of Bethlehem Steel Corporation 4)^-percent serial gold bonds and the assump- 
tion by Bethlehem Iron & Steel Corporation, subsidiary company, of $240,000 
(outstanding December 31, 1933, $114,600) of Kalman Steel Co. first mortgage 
6-percent gold bonds. 

During 1932 purchased the property and assets of Seneca Iron & Steel Co., 
which owned a plant for the manufacture of steel sjieets, located at Blasdell, 
N. Y., near the Lackawanna plant. In consideration therefor Bethlehem assumed 



302 OONUENTRA,TION OF ECONOMIC POWElt 

all the liabilities of Seneca, and also delivered 5,000 shares of its preferred stock 
and 10,000 shares of its common stock. 

Bethlehem Steel Corporation has approximately a 22-percent interest in the 
common stock of Witherbee, Sherman & Co. (see General Index). 

PROPERTIES OWNED OR LEASED BY SUBSIDIARY COMPANIES 

Steel and manufacturing plants 

Oross tons 

Pig iron capacity as of Jan. 1, 1934. 6, 375, 000 

Steel capacity as of Jan. 1, 1934 9, 360, 000 

Plant Location 

Bethlehem plant Bethlehem, Pa. 

Cambria plant Johnstown, Pa. 

Coatesville plant Coatesville, Pa. 

•larlan plant Wilmington, Del. 

Kalman plant Blasdell, N. Y. 

Lackawanna plant Lackawanna, N. Y. 

Lebanon plant Lebanon, Pa. 

Los Angeles plant ... Vernon, Los Angeles, Calif. 

Maryland plant Sparrows Point, Md. 

Seattle plant — . Seattle, Wash. 

South San Francisco plant South San Francisco, Calif. 

Stf^elton plant r Steelton, Pa. 

Fabricating, works 

Bethlehem works Bethlehem, Pa 

Buffalo works. ._ Buffalo and Lackawanna, N. Y. 

Carnegie works Carnegie, Pa. 

San Francisco works San Francisco, Calif. 

Los Angeles works ^ Los Angeles, Calif. 

Morava and Kenwood works Chicago, 111. 

Pottstown- works Pottstown, Pa. 

Rankin works Rankin, Pa. 

Leetsdale works Leetsdale, Pa. 

Steelton wbrks - Steelton, Pa. 

Garrigues works - Dunellen, N. J. 

Hedden works HiUside, N. J. 

,Hay works Newark, N, J. 

Shipbuilding and ship repair plants 

Baltimore plant Sparrows Point and Baltimore, iv^u. 

Fore River plant.. Quincy, Mass. 

Boston plant . - . Boston, Mass. 

Union plant San Francisco and San Pedro, Calif. 

Equipment at above properties. — :One thousand four hundred and seventy-eight 
by-p_ jduct coke ovens with apparatus for the recovery and rectification of benzol 
products; 1 sintering department; 28 blast furnaces; 11 bessemer converters; 127 
open hearth furnaces; 7 electric furnaces; 11 puddling furnaces; 26 charcoal iron 
knobbling furnaces; 13 blooming mills; 3 slabbing miUs; 15 billet, sheet bar, and 
skelp mills; 3 Bethlehem special structural shape mills; 5 standard structural 
shape mills; 3 universal plate mills; 4 sheared plate mills; 1 universal and sheared 
plate mill; 3 rail mills; 5 bar and structural shape mills; 29 bar mills; 2 wire rod 
mills; 2 butt weld pipe mills; 2 lap weld pipe mills; i tube mill; 1 puddle mill;' 
1 muck bar mill, 2 rolled steel wheel mills; 48 tin plate miUs with 36 tinning 
stacks; 28 sheet mills with 4 galvanizing pots; 2 sheet jobbing and light plate 
mills; 2 wire drawing, wire finishing and nail departments; 1 cold drawing depart- 
1 lent; 2 press and hammer forge shops; 1 drop forge department; 1 axle forging 
department; 2 steel foundries; 7 iron foundries; 8 brass foundries; 1 steel, iron, 
and brass foundry; 1 ingot mold foundry; 1 roll foundry; 1 roUfinishing shop; 1 
special treatment plate department; 1 forge specialty and projectile department; 
1 steel treatment department; 3 commercial machine shops; 6 ship machine shops; 
1 steel and wood freight car department; 1 passenger train car plant; 1 small 
tool department; 18 structural fabricating shops; 1 tank and plate shop; 1 tower 



CONCEJ^TRATION OF ECONOMIC POWER 3Q3 

department; 6 ship fabricating shops; 2 ship boiler shops; 3 sphce bar and tie 
plate shops; 2 frog and switph departments; 3 bolt, nut, and spike factories; 1 
agricultural implement and rail anchor shop; 1 plate flanging and pressing depart- 
ment; 1 wire forming shop; 14 warehouses for steel products, 11 with facilities for 
fabricating reinforcing bars; 1 welded joist shop; 1 expanded joist and metal door 
frame shop; 27 building ways with cranes; 1 barge building department; 7 graving 
docks; 10 floating drydocks; 3 marine railways; 6,387 acres of n;ianufacturing 
site; 7,852 acres of other real estate; 2,610 dwellings, stores, welfare, and miscel- 
laneous buildings for employees. 

Principal products. — Agricultural steel and specialties; armor plate; automo 
bile steel; automobile tire molds and rings, rolled steel; auxiliary locomotives; 
axles; bars, iron; bars and bands, steel; bars, concrete reinforcing steel; bars, raiJ 
steel; billets, blooms, and slabs, steel; blanks, rolled; boilers; boiler tubes, lap 
welded; bolts; designs for and fabrication and- erection of bridges, buildings, and 
other structures; buUding specialties; byproducts; cars, mine; cars, passenger 
train; cars, freight; car wheels, wrought steel; castings; coke; drop forgings and 
upsetter forgings; engines — steam, marine type; gas engines and "Bethlehem" 
large unit oil; fencing; ferromanganese; forgings; frogs and switches; fuel-oil 
burning systems; gears and pinions; ingot molds, stools, and bottom plates; joists; 
machinery; nails, wire; nuts; oil separators; oil well derricks and equipment; ore, 
chrome; ordnance; pig iron; piling; pipe, steel; pipe couplings; plates, plate work; 
pole line material; propellers; rails and accessories; road reinforcement: rivets, 
steel and iron; rods, wire; rolls; sheet bars; sheets — hot rolled, blue annealed, 
galvanized, etc.; skelp, universal and sheared spikes; stone; structural shapes; 
sucker rods; ties, steel, cross; tin plate; tool steel; tools; tube rounds; tubing, rail 
steel; turbines; turntables, railroad; vessels; vessel repairs; wire vid wire shapes.- 

Iron ore properties 

Two-thirds interest in Corsica Iron Co., two-thirds interest in Hobart Iron 
Co., 51-percent interest in Mahoning Ore & Steel Co. (50 percent held under 
Cambria Iron Co. lease), 45-percent interest in Hoyt Mining Co., and two-ninths 
interest in Bennett Mining Co. and one-third interest in Campbell Mining Co., 
which operate under lease properties in the Mesaba Range. 

Full ownership of Sunday Lake Iron Co., two-fifths interest in Plymouth Mining 
Co., and one-half interest in Odanah Iron Co., which operate under lease proper- 
ties in the Gogebic Range. 

One-half interest in the Negaunee Mine Co., and a 51-percent interest in 
Palmer Mining Co. which operate under lease properties in the Marquette Range. 

Full ownership of Penn Iron Mining Co> (held under Cambria Iron Co. lease) 
and one-half interest in the Verona Mining Co., which operate under lease prop- 
erties in the Menominee Range. 

One-fourth interest in Vermillion Mining Co. which operates under lease prop- 
erties in the VermiUion Range. 

Three-fifths interest in Cuyuna Ore Co. which operates properties under lease in 
the Cuyuna Range. 

The share interest in the above-mentioned properties makes available approxi- 
mately 7,230,000 tons of iron ore per annum. 

Ore mines located in Cornwall Borough, Pa., and concentrating and sintering 
plant in Lebanon, Pa., equipped to produce 750,000 tons sintered ore per annum. 

Tofo iron ore mines located near Cruz Grande in Province of Coquimbo, Chile, 
operated under long-term lease and equipped to produce 1,500,000 tons of iron ore 
per annum. 

•Undeveloped property located in the State of Michochan, Mexico. 

Undeveloped property located in the State of Bolivia, Republic of Venezuela. 

Propertj' located near Santiago on south coast of Cuba equipped to produce 
280,000 tons of iron ore per annum. 

Property and mineral rights located near Nipe Bay, on north coast of Cuba, 
equipped to produce 500,000 tons of nodules per annum. 

The iron-ore properties referred to (excluding those on the north coast of Cuba 
and in Mexico and Venezuela and interest of others in properties not owned 
outright) are estimated to contain 173,062,000 tons of iron ore. 

Coal properties 

Developed coal properties in the vicinity of Ellsworth, Heilwood, Johnstown, 
Slickville, and Marianna, Pa.; Morgantown and Fairmont, W. Va. 

These properties are estimated to contain 635,554,000 tohs of coal and equipped 
to produce 10,500,000 tons per annum. 



304 



CONCENTRATION OF BCONOMIC POWER 



Limestone properties 

Quarries located at Bethlehem, Bridgeport, Steelton, H'anover, York, and 
Naginey, Pa., and McAfee, N. J., and undeveloped properties in Center County, 
Pa.; Felton, Cuba, and Pekin, N. Y. The developed properties are estimated 
to contain 121,832,000 tons of calcite and dolomite limestone and are equipped to 
produce 1,940,000 tons per annum for consumption at the steel plants and 720,000 
tons for building and road purposes. 

Railroads 

Seven railroad companies operating in the vicinity of plants located at Bethle- 
hem, Steelton, Johnstown, and Lebanon, Pa.; Sparrows Point, Md.;. Lackawanna, 
N. Y., and Quincy, Mass. 

These railroads own and operate 135 standard gage steam locomotives, 2 electric 
locomotives, 192 70-ton standard gage cars and approximately 342 miles of main 
line, yard tracks, and sidings, connecting with other common-carrier railroads. 

In addition to the above, 10 standard gage locomotives and 203 miles of main 
line, yard track, and sidings are owned and operated in conjunction with the 
steel plants. 

Ocean transportation 

Five ore and coal-carrying vessels of 20,000 d. w. t. capacity each; 2 ore-carrying 
vessels of 11,600 d. w. t. capacity each, 1 ore and -coal vessel of 6,000 d. w. t. 
capacity, and 13 general-cargo-carrying vessels of 111,695 total d. w. t. capacity 
and under charter, 2 ore- and coal-carrying vessels of 20,000 d. w. t. each. 

Lake transportation 

Eight vessels with a total carrying capacity of 82,000 gross tons, and over 51- 
■)ercent interest in 3, and 62-percent interest in 2 additional vessels with a total 
carrying capacity of 48,200 gross tons, and under charter 3 vessels with a 
carrying capacity per trip of 38,000 gross tons. These vessels have a total 
carrying capacity per season of approximately 3,900,000 gross tons of iron ore, 
and are also suitable for carrying coal, limestone, and grain. 

Subsidiary companies 



Name 



Bethlehem Chile Iron Mines Co : 

Bethk hem-Cuba Icon Mines Co _. 

Bethlehem Iron & Steel Corporation 

Bethlehem Land & Improvement Corporation 

Bethlehem Mines Corporation 

Bethlehem Securities Co 

Bethlehem Shipbuilding Corporatfon, Ltd 

Bethlehem Steel Co 

Do 

Bethlehem Steel Co. of Brazil 

Bethlehem Steel Export Corporation 

Bethlehem Steel Products Co 

Bethlehem Steel Realty Corporation 

Bethlehem Transportation Corporation 

Beth-Mary Steel Corporation... 

Buena Vista Iron Co 

BufRngton Water Co 

Calmar Steamship Corporation 

Cambria Inclined Plane Co 

Cambria Iron Co.' 

Compania de Minas de Fierro "Las Truchas" 

Conemaugh & Black Lick R. R. Co...' 

Conemaugh & Franklin Water Co.s . .. 
Cornwall R. R. Co... 

bundalk Co., The 

Dundalk Sewerage Co., The 

Dundalk Water Co.-, The 

East Wheatfleld Water Co " 

Ellsworth Collieries Co 



1913 
1889 
1908 
1923 
1917 
1916 
1917 
1899 
1923 
1920 
1922 
1908 
1907 
1925 
1921 
1910 
1900 
1927 
1889 
1852 
1919 
1923 
1893 
1850 
1917 
1918 

1900 
1925 

1 The $8,465,625 capital stock is outstanding in hands of the public. Bethlehem Steel Products Co. has 
agreed to pay an amount equal to 4 percent per annum thereon as rental for property held under 999-year 
lease. »• 

' Subsidiary of Johnstown Water Corporation; 



S. A. 



Incorporated 



State 



Delaware 

West Virginia. 

New York 

do... 

Delaware 

Pennsylvania. 

Delaware- 

Pennsylvania. 

Delaware 

:...do 

do 

Pennsylvania. 

do.. 

Delaware 

Maryland 

New Jersey 

Pennsylvania - 

Delaware 

Pennsylvania. 

do......... 

Me.xico 

Pennsylvania. 

do. 

do. 



Marvland 

do 

do 

Pennsylvania. 
do 



Date 


Jan. 


18, 


June 


29, 


Apr. 


22, 


Apr. 


20, 


Nov. 


23, 


June 


28, 


Oct. 


15. 


Apr. 


17, 


Feb. 


6, 


Apr. 


8. 


Sept 


22, 


Oct. 


«, 


Jan. 


31, 


Feb. 


19, 


Dec. 


22, 


Feb. 


2, 


Dec. 


28, 


July 


29, 


Sept 


6, 


Aug. 


27, 


Jan. 


25. 


Dec. 


31, 


May 


16, 


May 


25, 


May 


5, 


Apr. 


22, 


DO. 


Dec. 


28, 


Oct. 


13, 



CONCENTEATION OF ECONOMIC POWERi 
Subsidiary companies — Continued 



365 



Name 



Fore River R. R. Corporation 

Fore River Shipbuilding Corporation 

Franklin Iron Co., The 1. 

Iron Mines Co. of Venezuela 

Johnstown Water Co.' 1 _ 

Johnstown Water Corporation * 

Juragua Iron Co 

Kalman Steel Corporation 

Lebanon Consolidated Water Co 

Lebanon County Light, Heat & Fuel Co., The 

Manufacturers Water Co., The 

McClintic-Marshall Corporation 

Northampton County Water Co 

Ore Steamship Corporation ; 

Pacific Coast Steel Corporation. 

Patapsco & Black Rivers R. R. Co 

Penn Iron Mining Co ,. 

Penn Iron Mining Co. of "Wisconsin 

Philadelphia, Bethlehem & New England B. R. Co. 

Pine Township Water Co 

Possum Glory Water Co ., 

Service Stores Corporation 

Do 

South Buffalo Ry. Co ..'.. 

Steel Frame House Co. 

Steel Frame House Finance Co 

Steelton & Highspire R. R. Co, 

Sunday Lake Iron Co., The 

Union Iron Works Co 

Union Iron Works Dry Dock Co., 



Incorporated 



State 



Massachusetts. 

do 

New Jersey 

Delaware 

Pennsylvania.. 

Delaware 

Pennsylvania.. 

Delaware 

Pennsylvania.. 
do 



do......... 

do 

do 

Delaware 

do 

Maryland 

Michigan 

Wisconsin 

Pennsylvania. 

do 

do 

do 

Michigan 

New York 

Delaware 

do.. 

Pennsylvania. 

Michigan 

New Jersey 

California 



I 98.29 percent interest owned by Johnstown Water Corporation. 

' $1,804,000 6 percent cumulative preferred stock is outstanding in hands of the public. 



Date 



Jan. 6, 1919 
May 15, 1913 
Mar. 14, 1871 
Aug. 10,1933 
Apr. 11,1806 
Apr. 19,1928 
Nov. 18, 1903 
July 20,1931 
Feb. 6, 1925 
Dec. 27,1904 
Feb. 19,1900 
Dec. 14,1880 
Jan. 6, 1916 
Aug. 2, 1915 
July 1, 1919 
Dec. 26, 1916 
June 26,1882 
Feb. 9, 1915 
Apr. 12,1910 
FeW. 10,1903 

Do. 
Nov. 15, 1904 
Mar. 31. 1902 
Apr. 2.5.1899 
May 16, 1930 
Sept. 13, 1929 
Nov. 16. 1916 
Feb. 28,1900 
Jan. 7, 1905 
Feb. 1, 1909 



Exhibit 13^ 
General 

The value of shipments and deliveries by your Corporation during the year, as 
represented by gross sales and earnings was $131,866,111.39 as compared with 
$147,794,352.77 for the preceding year. The net income of $4,605,330.54 for the 
year compares with $10,332,804.34 for the preceding year. 

Full dividends were paid during the year upon the 8 percent cumulative con- 
vertible preferred stock and the 7 percent preferred stocks, and regular quarterly 
dividends of 1}4 percent were paid upon the common stock and class B common 
stock. ■ , . 

The value of orders booked during the year, including $7,525,255 orders on the 
books of Lackawanna Steel Co. at the date of the acquisition of its properties, 
aggregated $149;21 1,500 as compared with $52,672,334 f(ir the year 1921. The 
unfilled orders on December 31, 1922, amounted to $67,510,007 as compared 
with $50,164,619 on December 31, 1921. 

"During the year $9,691,000, face amount, of the secured serial 7 percent gold 
notes were exchanged for consolidated mortgage 30-year sinking-fund 6 percent 
gold bonds, series A, leaving $11,767,000, face amount, of notes outstanding on 
December 31, 1922. Through the recent sale of $25,000,000, face amount, of 
consolidated mortgage 30-year sinking-fund 5H-pel'cent gold bonds, series B, 
provision has been made to pay at maturity, July 15, 1923, any notes not so 
exchanged, and also to pay $10,862,000, face amount, of first mortgage bonds 
of Lackawanna Steel Co. maturing April 1, 1923, which were assumed in con- 
nection with the Lackawanna purchase. 

Your corporation, through one of its subsidiaries, Bethlehem Iron & Steel 
Corporation, purchased during the year all of the properties and assets of Lacka- 
wanna Steel Co., in consideration of the assumption of the liabilities and obliga- 
tions of Lackawanna and the delivery of $12,500,000, par amount, of 7 percent 
noncumulative preferred stock and $22,608,500, par amount, of the class B com- 
mon stock of your corporation and $473,509.45 in cash. This purchase, and the 



264905 — 41— No. iB- 



-21 



306 CONCE-NTRATION OF ECONOMIC POWER 

increase of capital stock of your corporation required therefor, were ap'proved at 
the speciil meeting of the stockholders of your corporation held September 18, 
1922, and the properties were transferred on October 10, 1922. There has thus 
been added to the Bethlehem properties important raw material properties and a 
large steel plant at Lackawanna, near Buffalo, having a steel ingot capacity of 
1,840,000 gross tons per annum, well located for assembling raw materials, manu- 
facturing mnd distributing its products to the important markets in the Middle 
West and Canada. The steel ingot capacity of your corporation is now 4,890,000 
gross tons per annum. 

At the special meeting above referred to, the stockholders also approved a 
plan submitted by the board of directors for the simplification of the capital stock 
structure of your corporation, involving certain amendments to its certificate of 
incorporation. The plan provided for the creation of a new class of stock known 
as 7 percent cumulative preferred stock with full voting powers, which, it is' 
expected, eventually will be the only class of preferred stock outstanding. To this 
end the holders of the 7 percent noncumulative preferred stock were given the 
privilege of exchanging their stock for the new preferred stock share for share for 
a limited period, and the holders of the 8 percent cumulative convertible preferred 
stock were also given the privilege, effective Tanuary 1, 1923, of exchanging their 
stock for the new preferred stock until April 1, 1923, on the basis of $115, par 
amount, of the new preferred stock for each share of the 8 percent preferred stock 
and thereafter, subject to termination of the privilege, on such basis, not ex- 
ceeding that specified, as shall be fixed by your board of directors. 

Provision was also made to confer full voting powers upon the class B common 
stock (thus eliminating the distinction between it and the common stock) when 
80 percent of the largest par amount of the 7 percent noncumulative preferred 
stock theretofore issued shall have been exchanged ill the exercise of the privilege 
above referred to or otherwise retired. The consummation of this plan will, 
therefore, result in your corporation having only one class of common stock and 
one class of preferred stock, each with full voting powers. This simplification in 
its capital-stock ■ structure will, in the opinion of your hoard of directors, be 
advantageous both to your corporation and to its stockholders. 

In the exercise of the privilege of exchange thus granted to the holders of the 
7 percent noncumulative preferred stock, Lackawanna Steel Co. elected to take 
$12,500,000, par amount, of the 7 percent cumulative preferred stock instead of 
a like aijiount of the 7 percent noncumulative preferred stock by the contract of 
purchase agreed to be issued to it, and $7,959,400, par amount, of the previously 
issued 7 percent noncumulative preferred stock was also exchanged prior to De- 
cember 31, 1922, leaving only $7,040,600, par amount, of the 7 percent noncumu- 
lative preferred stock outstanding on that date. Since that date additional ex- 
changes of the 7 percent noncumulative preferred stock have been made, and 
the holders of a substantial amount of the 8 percent cumulative convertible pre- 
ferred stock have also exchanged their stock for the new preferred stock. 

Under date of November 24, 1922, agreements were entered into covering the 
purchase by your corporation, directly or through subsidiaries, of all the properties 
and assets of Midvale Steel & Ordnance Co. (except the plant at Nicetown, Pa. 
and certain assets appurtenant thereto and the stock owned by it in Cambria 
Steel Co.) and all the properties and assets of Cambria Steel Co., in consideration 
of the assumption of all liabilities and obligations of the Midvale and Cambria 
companies (except certain thereof pertaining to the Nicetown plant), including 
outstanding 20-year 5-percent convertible sinking-fund gold bonds of the Midvale 
Co., and the delivery of $97,681,400, par amount, of the common stock of your 
corporation. Your corporation has also agreed to issue its common stock against 
the e-rrender and cancelation of said bonds on the basis of $500, par amount, of 
stock for each $1-000, face amount of bonds. 

The consummation of the proposed Midvale and Cambria purchases which is 
subject to the approval of the stockholders of the companies interested will, in 
the opinion of your board, prove exceptionally advantageous to your corporation. 
Not only will it increase the steel capacity of your corporation to 7,600,000 gross 
tons of steel ingots oer annum, equal to about 15 percent of the steel ingot capac- 
ity of this country J' vut it will add many important lines of products which your 
corporation does not now manufacture. With the addition of these products 
your corporation will be a producer of all the important commercial steel products 
except pipe and seamless tubes. Moreover, the acquisition of very valuable 
developed iron ore and coal properties included in the purchase, and their opera- 
tion in conjunction with properties now owned by your corporation will permit 
of more economical assembling and better mixtures of raw materials, \\hile the 
unifying of the operations of the manlifa^turing properties will permit of a more 



COXCEXTRATION OF E€ONO:\IIC TOWER 307 

advantageous allocation of orders. Through these important advantages as well 
as by a reduction of overhead expense and the elimination of dui^lications in dis- 
tributing costs, the position of your corporation in competition with other com- 
mercial steel producers will be materially improved. 

In order to extend its facilities for ship repair work in the harbor of Boston and 
to supplement the operations of j'our P^ore River shipbuilding plant, your cor- 
poration during the year purchased the plant and property of Simpson's Patent 
Dry Dock Co., at Boston, the consideration being the assumption of $318, 652. 8§ 
of indebtedness and delivery of $182,000, face amount, of the consolidated mort- 
gage 30-3'ear sinking-fund 6-percent gold bonds, series A, of your corporation. 
Title to the properties was taken on January 3, 192"" 

The first of the five 20,000-ton cargo vessels of y ar subsidiary, Ore Steamship 
Corporation, which was completed in February 19'^2, delivered the first cargo of 
iron ore from your Chilean mines at New York on Jvme 6, 1922. Two more of 
these vessels were delivered and put in operation later in the j-ear and the re- 
maining two, it is expected, will be completed and put in operation before June 
of this year. Contracts were made during the year with Swedish operators under 
which they have agreed to construct two 20,600-ton cargo 'vessels to be operated 
in transporting Chilean ore for your corporation for a term of 20 years at a fixed 
freight rate.' These seven vessels will be able to transport approximately 1,000,000 
tons of Chilean ore per annum. 

During the year the Consolidated Steel Corporation, through which your cor- 
poration conducted its export business, in conjunction with other steel manufac- 
turers, discontinued business and is in process of dissolution, and Bethlehem Steel 
Export Corporation, a new subsidiary company, was formed to handle the export 
business of your corporation. 

All contracts made with the Emergency Fleet Corporation during the war 
have been completed, and progress is being made in th« adjustment of balances 
due thereon. 

At the beginning of the year the steel plants of your corporation were operated 
at about 30 percent of capacity, the lowest operating rate for many years past, 
and selling prices were correspondingly depressed. Commencing in March th^e 
rate of production gradually increased until at the end of the year the volume of 
new business warranted full operations. Selling prices also improved gradually, 
but at the end of the year were still too low to afford a fair profit. The improve- 
ment in prices has continued, and present indications are that your steel plants 
will operate throughout the current year t(jkthe capacity permitted by labor and 
transportation conditions. 

In the shipbuilding industry conditions continued poor throughout the year. 
There was, however, a fair amount of ship-repair business which increased sub- 
stantially toward the end of the year. The steel-passenger-coach department of 
your Harlan plant operated practically at full capacity throughout the year and 
has a sufficient volume of orders on hand to assure continued full operation for at 
least another 6 months. * 

While the subsidiary companies of your "corporation have for manj, years paid 
pensions to old employees, no definite uniform pension plan was in force. After 
a careful study of the plans of other corporations, the subsidiary companies of 
your corporation have formulated and put into operation, effective January 1, 
1923, a pension plan making a definite provision for old-age pension based upon 
the length of service 9,nd average compensation of the employee. 

On October 26, 1922, Messrs. H. G. Dalton, O. G. Jennings, Moses Taylor, 
and Alvin Untermyer were elected directors of your corporation to fill vacancies. 

Your board of directors takes pleasure in acknowledging the loyal and efficient 
services of the officers and employees of your corporation and its subsidiary 
companies. ' , 

By order of the board of directors. 

C. M. Schwab, 
Chairman of the Board of Directors. 
E. G. Grace, 

President. 



Exhibit 14 

Full dividends were paid during the year up',«ii the 8-percent cumulative con- 
vcitlblc prcf°r»-*^d stock and the 7-percent preff r d stocks, and regular quarterly 
dividends of IJ^ percent were paid upon the conn ion stocks. 

The value 6i orders booked during the year, ir jluding $25,261,000 of orders on 
the books of Midvale Steel & Ordnance Co. e/ic Cambria Steel Co. on the date 



308 CONOEiNTRATION OF ECONOMIC POWER 

of the acquisition of their properties, aggregated $260,968,326 as compared with 
$149,211,499 for the year 1922. The unfilled orders on December 31, 1923, 
amounted to $53,264,911 as compared with $67,510,007 on December 31, 1922. 

Ten million eight hundred and sixty-two thousand dollars, par amount, of 
first-mortgage bonds of Lackawanna Steel Co. matured on April 1, 1923, and 
were paid. During the year $8,857,000, par amount of the secured serial 7-percent 
gold notes were exchanged for consolidated mortgage 30-year sinking-fund 
6-percent gold bonds, series A, leaving an unconverted balance of $2,910,000, par 
amount, of notes which matured on July 15, 1923, and were paid. 

The agreements, wl.'ch were referred to in our previous report, covering the 
purchase of all the prop -n i and assets uf Midvale Steel & Ordnance Co. (except 
the plant at Nicetown, ^'a., and certaii: assets appurtenant thereto and the stock 
owned by it in Cambria Steel Co.) and all the properties and assets of Cambria 
Steel Co., were approved at the special meeting of the stockholders of your cor- 
poration held March 12, 1923, and on March 30, 1923, the Midvale properties 
were transferred to Bethlehem Steel Co. and the Cambria properties to Bethlehem 
Steel Products Co., subsidiary companies of your corporation. Payment for 
these properties was made by the delivery of 976,814 shares, of the common stock 
of your corporation and the assumption of all liabilities and obligations of the 
Midvale and Cambria companies (except certain thereof pertaining to the Nice- 
town plant), including $40,906,500, par amount, of Midvale Steel & Ordnance 
Co. 20-year convertible sinking-fund 5-pe -cent gold bonds, and also the obligation 
of Cambria Steel Co., under the 999-year lease covering the properties of Cambria 
Iron Co., to pay an amount equal to dividends of 4 percent per annum on the 
$8,465,625 capital stock outstanding of Cambria Iron Co. 

The cash expenditures for additions and improvements to properties during the 
year amounted to $19,914,660.36. Tlie estimated cost of completing the con- 
struction, autli^orized and in progress as of December 31, 1923, is $13,550,000. 

Substantial progress has been made in the simplification of the capital stock 
structure of your corporation in accordance with the plan approved by the stock- 
holders at the special meeting held September 18, 1922. Practicallj!' all of the 7 
percent noncumulative preferred stock outstanding at the beginning of the year 
was exchanged for the 7 percent cumulative preferred stock, and a fund provided 
for the retirement of the small unexchanged-balance, so that there now exists only 
one class of 7 percent preferred stock. One of the results of this exchange was to 
confer full voting powers upon the class B common stock in accordance with the 
provisions of the certificate of incorporation of your corporation as amended on 
September 18, 1922, so that the class B common stock was merged in the common 
stock and has ceased to exist as a separate class. During the year the holders of 
$11,337,700, par amount, of the 8 percent cumulative convertible preferred stock 
exchanged their stock for the 7 percent cumulative preferred stock leaving 
$18,662,300, par amount of the 8 percent cumulative convertible preferred stock 
outstanding on December 31, 1923. Since that date and to March 1, the date of 
closing of the books for the transfer of stock, an additional 26,055 shares have been 
exchanged. The exchange of the balance will complete the simplification planned 
and your corporation will then have outstanding only two classes of stock; namely, 
the 7 percent cumulative preferred stock and the coi mion stock. 

The nunfiber of stockholdei;s to whom the dividends due January 2, 1924, were 
paid was 49,497 as compared with 27,080 the previous year. 

For some years past the employees of your Corporation, through -their repre- 
sentation committees, have expressed a desire for a plan which will helj) them to 
save systematically a part of their earnings and also to purchase stock of your 
corporation upon easy terms of payment. To these ends your board of direc- 
tors, believing it to be of advantage to your corporation to encourage thrift in its 
employees and also .to encourage them to become stockholders, in January of this 
year approved a plan known as the "Employees saving and stock ownership plan" 
which contemplates an annual offering through Trustees of a limited amount of 
stock of your corporation which may be paid for through small deductions made 
from their earnings. In the initial offering by the trustees under this plan, 
made on January 31, 1924, shares of the 7 percent cumulative preferred stock of 
your corporation were offered at the price of $94 per share and as an incentive to 
the employees to retain their stock your corporation has agreed to pay to them in 
January of each year for '5 years a special bonus of $1 per share for the first year, 
$2 for the second year, and so on up to $5 for the fifth year, conditioned in each 
case on the emplo.vee remaining continuously in the employ of the corporation 
during the preceding year and retaining the purchased stock. Applications 
for approximately 40,000 shares have been received from more than 14,000 
employees. 



CONGEiNTRATION OF EOONOMIO POWER 309 

The insurance fund plan inaugurated by your corporation in 1918 has continued 
In successful operation, its scope having been graduallj^ extended. 

PROPERTIE!?^ OWNED AND LEASED BY StTBSIDIARY COMPANIES 

Steel plants 

Tons 

Pig iron capacity 6, 610, 000 

Ingot capacity - - - 7, 600, 000 

Plant Lacation 

Bethlehem plant - --- Bethlehem, Pa. 

Steelton plant. ^ . ._- Steelton, Pa. 

Lebanon plant - Lebanon and Reading, Pa. 

Maryland plant . 1 Sparrows' Point, Md. 

Lackawanna plant Lackawanna,- N. Y, 

Cambria plant Johnstown, Pa. 

Coatesville plant _^ Coatesville, Pa, 

Detrick and Harvey plant. . Baltimore, Md. 

Equipment. — Forty-four blast furnaces; 2,150 byproduct coke ovens (174 under 
construction) with apparatus for the recovery and rectification of benzol products; 
4 sintering departments; 2 nodulizing departments; 1 calcining departrnent; 1 
concentrating plant; 17 bessemer converters; 116 stationary open-hearth fuiv 
naces; twelve 200-ton and two 50-ton tilting open-hearth furnaces; 3 electric steel 
furnaces; 21 puddle furnaces; 13 blooming niills; 2 slabbing mills; 8 billet mills (1 
under construction); 2 Bethlehem special structural mills; 6 standard structural 
mills; 3 rail mills; 2 rail and structural mills; 2 bar and structural mills; 34 bar 
mills; 1 muck-bar mill; 2 skelp mills; 1 tube mill; 2 universal-plate mills; 7 sheared- 
plate mills; 1 universal- and sheared-plate mill; 24 tin-plate mills; 8 double-sheet 
mills; 2 sheet jobbing mills; 2 puddle mills; 1 wire-rod mill; 1 wire-drawing depart- 
ment; 1 nail department; 1 barbed-wire and woven-fence department; 1 wire- 
galvanizing department; 2 cold-drawn departments; 3 press and hammer-forge 
shops; 1 drop-forge department; 1 axle-forging department; 2 steel foundries; 
3 iron foundries; 2 brass foundries 1 steel, iron, and brass foundry; 1 ingot- 
mold foundry; 1 armor-plate department; 1 gun department; 1 shell and projec- 
tile department; 1 general steel treatment department; 4 commercial machine 
shops; 1 automobile and truck steel-wheel shop; 2 rolled-steel-wheel mills; 2 steel- 
freight-car departments; 1 tool department; 5 structural fabricating shops; 1 
tie-plate shop; 3 splice-bar shops; 1 frog-and-switch department; 4 bolt, nut, 
rivet, and spike departments; 1 rail-anchor shop; 1 agricultural-implement 
department; 1 plate-flanging department; 1 brickyard; power, service and auxiliary 
departments; warehouses; water supply for Cambria plant from Conemaugh 
River and from dams havirtg storage capacity of approximately 12,125 million 
gallons from watersheds totaling about 392 square miles, conveyed to plant by 
approximately 33.5 miles of distributing mains at rate of 153 million gallons per 
24 hours; 5,872 acres of manufacturing site; 3 harbors; 3 unloading plants each 
having a capacity of handling from vessels over 1,000 tons of ore p^r hour* 6,408 
acres of other real estate; 4,234 dwellings (300 under construction), stores, welfare, 
and miscellaneous buildings for employees. 

Principal products. — Pig iron; ferromanganese; spiegeleisen; blooms; billets;, 
slabs; sheet bars; Bethlehem structural shapes; standard structural shapes; uni- 
versal and sheared plates; sheet piling; plate piling; flanged and pressed plate 
products; commercial steel bars; iron bars; muck bars; concrete bars; special and 
alloy steel bars; cold-rolled steel; cold-drawn steel; spring steel; electric and 
crucible tool steel; staybolt iron; standard, light, high, and special tee, girder, and 
guard rails; rail joints; rail braces; rail anchors; splice bars; tie plates; frogs, 
switches; crossings; special track work; switch stands; turntables; blue annealed 
sheets; black and galvanized sheets; tin and black plate; forging ingots; fluid- 
compressed ingots; pressed and hammered -forgings; hollow forgings; drop forgings; 
shafting; steel, iron, and brass castings; tunnel segments; ingot moulds; rolls; 
armor plate; guns; gun forgings; gun carriages and mounts; caissons and limbers; 
range finders; sights; shell forgings; completed ammunition; turret mechanism; 
large gas engines; Bethlehem oij engines; heavy machinery; machine tools; 
pumps; hydraulic presses; steel bridges; viaducts and buildings; pier caissons; 
cutting and punching tools; bolts; nuts; rivets; spikes; track bolls; washers; tie 
rods; toe calks; wire rods; wire nails; barbed wire; woven wire fence; fence posts; 
steel freight^ tank, mine, and special dump cars; forged and pressed car parts; 
car underframes and trucks; car axles; rolled car wheels; rolled flywheels; roHcl 



310 



CONCEiNTKATION OF ECONOMrC POWER 



gear blankg; agricultural-implement parts; agricultural shapes; liner wedges; car 
and bridge knuckle and cotter pins; clevises; annular rolled sections; skelp; 
lap-welded iron and steel boiler tubes; coke; gas; tar; ammonia liquor; ammonium 
sulfate; light oil; benzol; motor fuel; toluol; solvent haphtha; naphthalene; etc. 

Exhibit 15 

In the Matter of Bethlehem Steel Corporation et al. Docket No. 962 

'Phe'followng is an abstract of sales contracts which are contained in the record 
herein, between the Pennsylvania Railroad Co., the Baltimore & Ohio Railroad 
Co. and various producers of steel rails, showing tonnages fin gross tons) placed 
by the carriers at various times with the respective producers. 

To: Pennsylvania R. R. Co. 



Exhibit 
.. No. 


Contract date 


Pennsyl- 
vania 
Steel Co. 


Mary- 
land 
Steel Co. 


Cambria 
Steel Co. 


Bethle- 
hem Steel 
Co. 


Lacka- 
wanna 
Steel Co. 


25869 


Jan. 24, 1912 








fi.OOO 




25760 


.....do 






29,000 




25722 


do. '. , 


31,000 








2573-14 


do 








12,000 


25771 
25735 


Nov. 23, 1912 






37, 808 






... do 


39, 136 








25868 


. do .. ■ 






3,352 




25738 


Jan. 14. 1914 • 


7,432 








25786 


Mar. 25, 1914 




10,000. 






• 25708 


do - 




. 5,000 






25787 


May 25, 1914 




350 






25870 


July 10. 1914 , 






6,000 




25788 


do 






22,000 




25741 


do . . - 


22,000 








• 25715 


.....do 








* 6,000 


25791 


Sept. 23, 1914 '. 






5,000 






25745 


Jan. 20, 1915..^ 

do 


2,000 








25871 






2,000 




25799 


. . Jlo 

Jan. 28, 1915 





"""2,' 336" 


2,000 




25746 






25872 


June 14, 1915 






8,050 




25801 


.. do .. 






34,800 




25750 


do . - 


33,350 








25709 


Oct. 26, 1915 


2,250 




' 




25873 


Oct. 28, 1915 . ' 






10,500 




25710 


do ,. 




36,250 






25808 


do - 




38,500 






25746 


do... 








10,000 


25711 


Feb. 3, 1916 . . 




i,6o6 

. 1,000 








25712 


Apr. 17, 1916 


,*" 








25816 


May 1, 1916 ■ 




1,770 
45,100 






25817 


June 1, W16 










2.5717 


do .' -. - . 








12,300 




July 14, 19)6 . .. 








1,300 
3,057 




Oct. 17, 1916 










26822 


Nov. 3, 19U; 






1,000 
15,033 




25826 


Mar. 15, 1917 










25719 


do..-. '. . 








4,100 


25890. 










1,000 
26,633 




25901 


July 12, 1919 . ..-.. 


" 








25846 


Dec. 21, 1920 .... 






45,000 




25909 


do 






45,000 




25720 


do 








iol'ooo 


25910 


Aug. 24, 1921.... :..... 








500 




25847 


Jan. 12, 1922 






18,000 




.25721 


do ..„. 








4,000 


25911 


do 








18,000 
23,000 




25912 


Sept. 30, 1922 










25853 


..v.. do 






23,000 




25919 


July ,5. 1923..- 






1,000 
1,171 
10,000 
88.000 
45,000 
90,000 




25918 


July 18. 1923.... 










25920 


Sept. 11, 1923 










25921 












2«922 


Feb. 6, 1926 '. 










25923 


Nov. 11, 1926 ..1 


















1 





CONCENTRATION OF ECONOMIC POWER 
To: Baltimore & Ohio R. R.' Co. 



311 



Exhibit 
No. 



Contract date 



Mary- 
land 
Steel Co. 



Cambria 
Steel Co. 



Bethle- 
hem 
Steel Co. 



22656 
22559 
22557 
22560 
23567 
22561 
22558 
22562 
22568 
22569 
22570 
22563 
22565 
22571 
22572 
22573 
22574 



Feb. 2, 1915.. 
Mar. 3, 1915- 
Oct. 1, 1915... 
Nov.- 1, 1915- . 
Nov. 19, 1915. 
Mar. 20, 1916- 
Mar. 28, 1916. 
Jan. 19, 1917-. 
Jan. 22, 1917.. 
Oct. 4, 1920... 
Dec. 18, 1920.. 
Feb. 4, 1921.. 
Sept. 30, 1922. 

....do 

Oct. 5, 1923... 
Nov. 11, 1924. 
Oct. 19, 1925.. 



4,000 



11,000 

'io.ooo" 



9,000 



26,000 
"15,066' 

""5," 666' 



3,500 



6,000 
12,000 
12,000 



2,500 
12,000 



10,000 
18, 000 
20,000 
30,250 



Exhibit 16 
In the Matter of Bethlehem Steel Corporation, et al. Docket No. 962 

The following is an abstract of sales contracts for steel rails (in gross tons) by 
various producers with various rajlroad companies which contracts, or photostatic 
copies thereof, appear in the record herein. 





Ex- 
hibit 
No. 


Contract , 
date 


Penn- 
syl- 
vania 
Steel 
Co. 


Mary- 
land 
Steel 
Co. 


Cam- 
bria 
Steel 
Co. 


Lacka- 
wanna 

Steel 

Co. 


Bethle- 
hem 
Steel 
Co. 


Norfolk & Western Ry. Co 


22602 
22597 
22617 
22601 
22616 
22606 
22588 
22607 
22618 
22608 
22589 
22619 
22609 
22620 
22593 
22610 
22590 
22621 
22614 
22591 
22592 
22622 
22623 
22624 
22594 
22611 
22615 
' 22625 
22595 
22596 
22626 
22627 
22612 
22629 
22631 


Nov. 2,1911 
Nov. 3,1911 
Feb. 1, 1912 
Feb. 26,1912 
do 






3,500 








6,500 
















3,000 




2,000 


















900 




Feb. 28,1912 
Nov. 6,1912 
Nov. 7,1912 
do. 






1,100 








— 


9,750 








6,900 














6,000 




Dec. 1, 1913 
Dec. 3, 1913 
Dec. 4, 1913 
Jan. 11,1915 
Jan. 12,1915 
Jan. 13,1915 
May 6,1915 
May 7,1915 
do 






5,000 










6,813 












4,107 








1,493 














1,500 






1,998 










,1,000 










2,000 












1,000 




May 15,1915 
May 28, 1915 
July 2, 1915 
July 6, 1915 
Aug. 10,1915 
Oct.' 15,1915 
Oct. 16,1915- 
Oct. 19,1915 
Oct. 25,1915. 
Apr. 1, 1916 
Apr. 3, 1916 
Apr. 27,1916 
Aug. 27,1917 
Dee. 8, 1921 
Jan. 6, 1922 
Aug. 27, 1923 
July 30,1924 








1,000 






553 
1,600 




















1,000 












1,300 












3,500 




— 1. 


4,000 










3,600 












1,000 












4,000 






4,000 
1,000 






















9,000 












24,780 








2,700 














21,400 












13,1600 



312 



CONCEiNTBATION OF BCONOMrC POWERi 





Ex- 
hibit 

No. 


Contract 
date 


Penn- 
syl- 
vania 
Steel 
Co. 


Mary- 
land 
Steel 
Co. 


Cam- 
bria 

Steel 
Co. 


Lacka- 
wanna 
Steel 
Co. 


Bethle- 
hem 
Steel 
Co. 


Seaboard Air Line Ry 


22590 

22584 

22581 

22575 

22576 

22577 

22582 

22583 

22578 

22579 

22585 

22586 . 

22587 

4973 
4974 
18753 
187.56 
18756 
22371 
22372 
22373 
22374 
22375 
22376 
22658 
22661 
22662 
22663 
22665 
22667 

20304 
20345 
20401 
20526 
23517 
23516 
23515 
23520 
23518 
23519 
23526 
23524 
23522 
23525 
23527 
25528 
23521 
23523 
23531 
23533 
23530 
23532 
23529 
21674 
21677 
21676 
21672 
21673 
21678 


May 13,1912 
May 20, 1912 
Apr. 19,1-913 
Apr. 24,1913 
do 








5,600 












5,200 










4,000 








500 
4,513 
4,985 
















June 4, 1914 
June 23,1914 
do 














600 
3,339 
















Dec. 27,1915 
Apr. 25,1916 
Oct. 3, 1922 
Feb. 5, 1924 
Oct. 9, 1924 

Dec. 22,1919 
Sept. 26, 1922 
May 9,1922 
Oct. 4, 1922 
Feb. 17,1923 
Apr. 18,1926 
Jan. 15,1917 
Apr. 15,1920 
Oct. 29,1920 
Dec. 18,1920 
Oct. 11,1922 
Sept. 30, 1922 
Feb. 10,1923 
. .. do.. 




4,500 
10,000 




















15, 000 












11, 530 












3,600 


Buffalo, Rochester & Pittsburgh Ry. 
Co -.,.- .-- 








8,500 












6,000 


Long Island R R. Co. 










2,500 












8,000 












2,000 






3,000 














2,000 












2,000 












2,000 












2,000 












2,000 


Chesapeake & Ohio Ry. Co 










5,000 












2,000 












1,000 




Sept. 27, 1923 
do . 










1,350 












11, 754 




Nov. 6,1924 

Feb. 13,1920 
Jan. 14,1922 
Sept. 16, 1922 
Nov. 24, 1923 
Oct. 29,1913 
Oct. 31,1913 
Nov. 5,1913 
Oct. 30,1914 
Dec. 28,1914 

do 

Jan. 19,1915 
Jan. 27,1915 
July 20,1915 

do.. 

July 23.1915 
Sept. 23, 1915 
Sept. 27, 1915 
Nov. 11,1915 
Mar. 28, 1916 
Apr. 5, 1916 
Apr. 6,1916 
Apr. 20,1916 
Apr. 29,1916 
Apr. 14.1920 
Aug. 12,1921 
Feb. 16,1922 
Mar. 10,1922 
Sept. 25, 1922 
Sept. 26, 1922 










5,908 


New York, New Haven & Hartford 
R. R Co 








21,000 












24,500 












25,000 












20,000 


Philadelphia & Reading Ry. Co 


10,000 
1,000 






















'■ 




5,000 




900 
2,500 
1,000 






































2,500 










1,500 






2,750 
1,000 


























1,250 




5,665 


















3,000 












3,000 




5,000 
10,000 




























4,000 










3,000 








2,000 












15,000 












15,000 












13,000 








1 

1 
























13,000 

















Exhibit 17 
In the Matter of Bethlehem Steel Corpokation et al. Docket No. 962 

The following is an abstract of bar sizes shown by Bethlehem Steel Co. as "in 
stock at Bethlehem, Steelton, Cleveland, Lebanon, and Pittsburgh warehouses, 
all bars in mill lengths, December 1, 1921," as shown by Commission's exhibit 
herein, No. 1925 i. 



'^ 



CONCENTRATION OF ECONOMIC POWER 

[Commercial quality steel, under 0.25 carbon] 



313 













Reinforcing 




Hot rolled rounds 


Hot rolled flats 


Hot rolled 
hexagons. 


steel— hot 
rolled 


Fire steel— hot 
rolled flats 












' rounds 




Inches 


Inches 


Inches 


Inches 


Inches 


Inches 


Inches 


H 


2H 


H by }6 


31.2 by 3i 


■ li 


5-16 


1 by^ 


H 


2»'i6 


li by H 


3Hby H 


1 


?6 


H6byi4 


m 


2% 


Ji by ii 


31/2 by 56 


1^6 


56 


mbySz-ie 


H 


27/^ 


H by 5,i 


31,4 by 13.16 


113/16 


?4 


IJ^byMe 


Ha 


215/f6 


1 by 51 6 


3Hby H 


2 


13/16 


156 by 1.^ 


'A 


3 


1 by Vi 


3Hbyl 




2%2 


I%by9l6 


ms 


SH 


1 by 5i« 


4 by 56 




«564 


2 by 56 


H 


3K 


11344 by Vi 


4 by 114 




li 


2H by 7/6 


■Me 


3J6 


li?64by i?64 


4 by 2!-4 




63/64 


2?4 by ^6 


H 


3!^, 


1^J2 by ''A2 


4i.4by ?6 




1 


4 by 56 


1 




m by 5i - 
11^ by 3/1 6 


4Hby U 
4 1/2 by ?6 








IMs 


m 


m by Me 


4Hbyl!-i 




154 




1^^ 


4 


m by 56 


5 bylH 




1 li 




1M« 


4H 


1?4 by li 


6 1/2 by ?6 




. 111.6 




IH 


4H 


2 bym 


51.4 by 56 




ilH 




nu 


454 


2 by m 


534 by 1 








m 


5 


2H by 516 


6 by H 








VAi 


51.^ 


2H by ?6 


6 by 5-16 








\Vi 


5^4 


2^4 by H 


6 by H 








IMe 


6 


2M bylH 


6 by 11/6 








156 


6H 


2^^ by 5-1 e 


6 by 13/6 








I'Ms 


6^^ 


2li by ?6 


6!-^ by 56 








IM 




2H by m 


7 by li 








I'Mo 




2H by ?6 


1 bylW 








1'/^ 




2U by 14 


8 by H 








lifie 




3 by ],i 


8 by Vz 








2 




3 by 5'i8 • 


91/2 by 56 








2H6 




3 by 1^42 










2!4 




3 by H 










2^6 




3 byl 










21/4 




3 bym 










234 




3H bylH 










27i6 















1 Square twisted. 



Abstract of bar sizes of carbon steel "in stock at Steelton and Bethlehen) 
plants, June 14, 1919," as shown by Commission's exhibit herein. No. 20823. 



Steelton plant 


Bethlehem plant 


Fiats 


Squares • 


Roimds 


Flats 


Inches 


Inches 


Inches 


Inches 


Inches 


Inches 


1 by H 


3^iby Me 


5H by 54 


54 


2M2 


5 by 546 


IbyH 


3!^by H 


6 by 546 


li 


2562 


SHbyMe 


13/6 by H 


31.6 by 94 6 


6 by 3/^ 


U6 


3H6 




l!^by?6 


3H by 56 


6 by Me 


l^i 


35/4 6 




Wz by i/i 


3^2 by 7/i 


6 by 1^ 


254 e 


,356 




13/4 by i/i 


3H by 1 


6 by 946 


2K2 


4 




2by W 


3?4 by Me 


6 by 56 


21 He 


4H6 




2 by 546 


33/4 by ^4 


6 by 1948 


3 






2 by 56 


4 by 54 6 


6 by 1546 


3^^. 






2 by M 


4by ?6 


6by 1 








2 by 56 


4 by Me 


61.^ by 56 








2 by Yi 


4 by H 


6K' by Me 








2hyli 


4 by ?46 


6^12 by H 








21.4 by H 


4 by 56 


Wz by 56 








2K4by546 


4 by ?4 


7by 54e 








2!.i by H 


4by.n6 


7 by 56 




1 


2H by Me 


4 by 13/le 


7 by vie 








2 ^^2 by ?6 


4by 1V4 


7 by 56 








23/i by ?i 


4by li.'2 


7 by 1 «4 








3by H 


4H by 5i6 


7 by 54 








3 by 548 


4 1/2 by % 


7}4 by 56 








3 by ^6 


m by }^ 


7H by H 








3 by M 


5 by 1/4 


7H by % 








3 by 9/fe 


5 by ^6 


7^ by li 








3 by 56 


5by ^ 


8 by Mo 








3by 1 


5 by 56 


8 by H 








3H by 3/6 


5 by 11.16 


Sby 56 








3H by Me 


5by?4 










3^4 by 1/4 


5 by 2 










3}2by51e 


5^4 by Me 










3H by 56 


5y< by 56 











314 



CONCEiNTRATION OF EiCONOMIC POWER. 
Exhibit 18 



In the Matter of Bethlehem Steel Corporation et al. Docket No. 962 

The following is a partial abstract of invoices rendered by Bethlehem Steel 
Co. and Lackawanna Steel Co. to Gifford Wood & Co., Hudson, N. Y., which 
appear in the record herein during the years 1920 and 1923, showing, section 1, 
that shipments of substantial quantities of steel bars were made by both com- 
panies; and section 2, that substantial quantities of exactly the same form and 
size were shipped from Bethlehem, Pa., and Lackawanna, N. Y. 

SEC. 1 



From Bethlehem Steel Co. 


From Lackawanna Steel Co. 


Exhibit No. 


Invoice date 


Weight 


Exhibit No. 


Invoice date 


Weight 


16458 


July 31,1919 
Jan. 17,1920 
Mar. 15,1920 
Mar. 25, 1"20 
July 14,1920 
Aug. 5, 1920 
Sept. 20, 1920 
Sept. 28, 1920 
Dec. 9, 1920 
Dec. 29,1920 


105, 000 
37, 175 
8,330 
45,612 
16,900 

289,800 
34, 300 
28,800 
7,810 
33, 805 


16549 


July 10,1920 
do 


108, 70a 


16460 


16550 


108, 380 


16462 


16551 


Aug. 7,1920 
Aug. 9,1920 
Jan. 13,1923 
Jan. 11,1923 
Feb. 6, 1923 
Feb. 7, 1923 


101, 285 


16463 


16552 


38, 165 


16464 


164721 1... 


148, 845 


16465 


16471 I 


149, 380 


16466 


16473 ' .. . . 


58, 800 


16467 


16474 ' 


41,520 


16468 -. 






16469 









SEC. 2 



Size 



From Bethlehem Steel Co. 



Exhibit No. Pounds 



From Lackawanna Steel Co. 



Exhibit No. Pounds 



1^ by J-ie inch. 
IH by 54 inch.. 
l\i by M« inch. 
H by ^inch... 
^ by ^ inch... 
Hbyliinch... 
Hhy H inch... 



16468 


40,120 


16458 


29,820 


16460 


37, 175 


16458 


35,060 


16465 


65,500 


16465 


42,600 



16549 


71,15© 


16649 


21, 865 


16551 


32,720 


16551 


56,430 


16552 


29,715 


16472 


1148,845 


16471 


1 149, 380 



» Shipped from Lackawanna subsequent to-acquisition by Bethlehem Steel Co. 



CONCE;NTRATION OF EX:ON'0MIC POWER 



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CONCEiNTRATION OF E€OISOMrC POWER 





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CONCE^'TRATION OF ECONOMIC POWER 



317 



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OONCEiNTRATION OF ECONOMIC POWER 



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CONCEA'TRATION OF BOONOMIC POWER 
Exhibit 21 



319 



In the Matter of Bethlehem Steel Corporation et al. Docket I^o. 962 

The follbwing is a partial Abstract of invoices contained in the record herein, 
rendered by Bethlehem Steel Co. and Lackawanna Steel Co. against Porcupine 
Co., Bridgeport, Conn., showing shipments of substantial quantities of identical 
forms and sizes of structural shapes, including bar sizes, from both Lackawanna, 
N. Y., and Bethlehem, Pa., prior to the acquisition by Bethlehem Steel Co. of 
the properties of Lackawanna Steel Co. 





From Lackawanna, N. Y. 


From Bethlehem, Pa. 


Product 


Exhibit 
No. 


Invoice date 


Weight 


Exhibit 
No. 


Invoice date 


Weight 


Angles: 

2H by 2H by ^ inch 

2Vi by 21.12 by i-i inch 

2y> by 2^ by yi inch 

3 by 3 by H inch ". 


15602 
15611 
15656 
15615 
15615 
15603 
15615 
15605 
15618 
15646 
15604 
15608 
15608 


July 21,1919 
Sept. 15, 1919 
Aug. 25, 1920 
Feb. 18,1920 

do 

Aug. 2, 1919 
Feb. 18,1920 
Aug. 2, 1919 
Mar. 1, 1920 


12,205 
15, 655 
24,910 
35,280 
43,920 
18,007 
43,920 
19, 483 
22. !7fi 


15428 
15440 
15461 
15469 
15469 


Aug. 6, 1919 
Oct. 25,1919 
Sept. 15, 1920 
Oct. 21,1920 
do 


24, 570 
11,090 
19,280 
34, 398 
21,740 


3 by 3 by ^ia inch 


3 by 3 by Me inch 




3 bv 3 by Me inch 








3H by 3 by Me inch 


15458 


June 36,1920 


32,983 


zyi by 3 by Me inch 


4 by 3 by Me 


July 30, 1920 .^'i- i.'^fi 


15434 
15433 
15562 
15433 
15578 
15429 
15550 


Sept. 2,1919 
Aug. 26, 1919 
May 25, 1923 
Aug. 26, 1919 
Jan. 20,1923 
Aug. 9,1919 
Apr. 24,1923 


19,296 
19,600 


4 by 4 by ^ inch 


Aug. 2, 1919 
Aug. 26,1919 
do 


12, 544 
39, 200 
32,800 


4 by 4 by % inch 


27, 048 


4 by 4 by Me inch 


14, 432 


4 by 4 by Me inch 


16,400 


6 by 3H by Si inch 


15632 
15633 
15648 


June 8, 1920 

do 

Aug. 9, 1920 


14, 040 
27,910 


23,400 


6 by 3J^ by H inch 


21,000 


6 by 3H by H inch ■ 


43,875 













320 



CONCEiNTRATION OF EKX)NOMIC POWER. 



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COMUii.iViKAXiOi\ OF ECONOjMIC POWER 



321 



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264905— 41— No. 13- 



-22 



322 



CONCEiNTKATION OF ECO>rOMrC POWER 



The following shows that substantial quantities of exactly the same form and 
size, or their practical equivalents, were furnished by bock Lackawanna and 
Bethlehem. 



From Bethlehem, Pa. 



Exhibit 

No. 



Pounds 



Product 



From Lackawanna, 
N. Y. 



Exhibit 

No. 



Pounds 



461. 
461. 
458. 
462. 
468. 
458. 
472. 
457. 
483. 
479. 
480. 



465. 



475. 

481. 
458. 



475. 
480. 
485. 



10, 190. 
15,660 
16,340 
10,004 
10, 004 
20,064 
13,200 
24,928 
32, 800 
24, 600 
14,760 



22, 080 



27, 250 



15, 761 
22,860 
24, 117 



19, 080 
57, 240 
28,620 



31, 396 



Angles: 

2 by 2 by -He 

2 by 2 by M 

2 by 2 by H 

2H by 2l.i by Vt. 
2H by 2W by U. 
4by 4by Ki-- -. 

4 by 4 by H 

4 by 4 by Me 

4 by 4 by Mb 

6 by 4 by ^^ 

6by 4by 16 

Beams: 

8 by 18- 

8 by 18 

8by 18.... 

8 by 18-... 

8 by 18.4 

8 by 18.4 

9 by 21. 

9 by 21- '-... 

9 by 21.8... 

10 by 25 

10 by 25..." 

10 by 25 

10 by 25.4. 

10 by 25.4 

12 by 31.5 

12 by 31.5. 

12 by 31.5. 

12 by 31.8 

12 by 31.8 

12 by 31.8 

12 by 31.8 

15 by 42 

15 by 42.- 

15 by 42... 

15 by 42.9. 



427. 
431. 



431. 
448" 



441. 
445. 
447. 
426- 

411. 
413. 
423. 
434. 
437. 
451. 
4151 
416. 



416. 
428. 
434. 
451. 



411. 
417. 
430. 
451. 



411. 
427. 
428. 



3,865 
8,585 



6,595 



13,200 



16,400 
17, 515 
30,996 
23, 376 

10,800 
10,800 
21,600 
21,600 
22,190 
11,040 
12,201 
12,600 



15,000 
15,000 
30,000 
12, 192 



18,900 
18,900 
37,800 
28,620 



25,200 
27,300 
45,360 



The following illustrates the fact that orders placed with Bethlehem Steel Co., 
prior to October 21, 1922, and partially filled by shipments from Bethlehem, Pa., 
were, subsequent to the acquisition by Bethlehem Steel Co. of the properties of 
Lackawanna, filled in part, by shipments from Lackawanna, N. Y. 

The following is a partial abstract of invoices, showing (a) materials made 
only by Bethlehepi Steel Co. and ordered under the numbers shown herein; 
(b) a partial list of the standard forms covered by the same order numbers, some 
of which were shipped from Lackawanna, N. Y., immediately subsequent to the 
acquisition of Lackawanna by Bethlehem. 



CONCENTT^ATION OF DCON'OillC POWER. 



323 



Ordered from Bethlehem, Pa. 


Supplied from Lackawanna 


Example 
No. 


Invoice 
Date 


(a) 
Order 

No. 


Bethlehem 
Specials 


Example 
No. 


Invoice 
Date 


Order 
No. 


(b) 

Standard 

.shapes 


Weight 


479 

479 


10-21-22 
...do 


H 

AT 24. 
AT 24. 

AT24- 

AT 24. 


H 
12 by 655 

G-28by 165..... 

G-lOby 50 

BC-6by 23 


480 

480 _ 


11-1-22 
...do 


AT 24. 

AT 24. 

AT 24. 

AT 24. 

AT 24. 

AT 24. 
AT 24. 


Beams 12 by 31.8. 
Angles 2}4 by 

2H by H. 
Beams, 10 by 

25.4. 
Beams, 6 by 

12.5. 
Channels .10 by 

15.3. 
Channels 8 by 

11.5. 
Channels 7 by9.8. 
Angles 6 by 4 by 

n. 


38,160 
8,000 

30,480 

22,600 

18,360 

13,800 

17,640 
19,680 


479 

480 


...do 

11-1-22 


481 

481 

486 

486 

486 


11-13-22 
....do.-.. 

12-11-22 

...do 

. .do .. . 




486 . . 


do 








478 

482 

482 


10-20-22 
11-22-22 
_..do 


AT 74. 

AT 74. 

AT 74. 
AT 74. 
AT 74. 
AT 74. 
AT 74. 


H-12by64.5.... 

O-24-by 141 

H-12by 113 


486 

486 


...do 

...do 


AT 74. 

AT 74. 


Channels 10 by 

15.3. 
Beams, 15 by 

42.9. 


31, 722 
27,885 


482 


...do 


H-lOby 83.5 












482 


...do 


H-lOby 77.5 












482 


do 


n-10 by 60.5 












482 


...do 


H-lOby 49.5 





























Exhibit 23 
In the Matter of Bethlehem Steel Corporation et al. 



Docket No. 9 



The following is a copy of Commission's Exhibit, herein, No. ISGb.. which ante- 
dates the acquisition by Bethlehem Steel Co. of the properties of Lackawanna 
Steel Co.: 



UTICA LOWVILLE TOWER LINES FOR THE NORTHERN NEW YORK UTILITIES CO. 

Bethlehem, Pa., August 28, 1922. 
Archbold-Brady Co., 
Mr. M. A. Dunne, 

Secretary and Treasurer, Syracuse, N. Y. 
Dear Sir: We' have this day executed contract with you for eighteen hundred 
fifty (1850) net tons of plain standard section.s, sheared and universal mill plates, 
for the above operation, our price No. AH— 8061-C, dated August 19, 1922, and 
enclose herewith your copy of agreement. 

Thanking you for this business, which will have our best attentioji, we remain 
Yours very truly, 

.(Signed) G. H. Blakeley, 
Manager, Structural and Plate Sales. 

The following tabulation is made from invoices rendered by Bethlehem Steel Co. 
to Archbold-Brady Co. bearing exhibit numbers herein as noted, which invoices 
show that the shipments covered therebv, applied upon the contract above referred 
to. 

These invoices also show that subsequent to the af nuisition by Be. : lehem 
Steel Co. of the properties of I;ackawauna Steel Co., . abstantial quan. ties of 
structural shapes applying upon the same contract were shipped fiom Lackawanna, 
N. Y., and that .'iul:>stantial quantities were identically the same form and size as 
furnished from Bethlehem, Pa., as illustrated herein. 



324 



CQNCEiNTRATTON OF BOONOMIC POWER, 





Date of 
invoice 


Shipped from Bethlehem, Pa. 


Shipped from Lackawanna, 
N. Y.i 


E.\hibit No. 


Tonnage 


Delivered price 


Tonnage 


Delivered price 




1 


B OS 

• cts: 


i 




s. 

x; 


1 


1 

a! 


Standard 
shapes 




« 

E 






1487 


Sept. 26, '922 




49,643 
73, 664 
40, 140 
52,247 
49, 590 
79, 896 
63, 892 
3,542 
38, 678 






$2.04 
2.04 
2.04 
2.04 
2.04 
2.04 
2.04 
2.04 
2.04 
















1489 


Sept. 27,1'. 22 ' 

Sept. 28, li^ "2 




















1490 
















1491 


Sept. 27, l'/2 
Sept. 21, 1922 
Sept. 20, 1922 
Sept. 19, 1922 
Sept. 11, 1922 
Sept. 15, 1922 
Oct. 3, 1922 
Oct. 8, 1922 
Oct. 13,1922 
do- 


25,570' 




















1492 




















1493 




















1494 ^ 




















1495 




















1496 




















1441 




$2.09 
















1440 


53, 226 
54,040 
•56,?56 
81, 070 
72, 186 
104. 550 
120, 776 
62, 883 
53, 518 
1C9, 227 
113,977 
223, 749 




2.04 
















1437 






2.04 
















1438 






2.04 
2.04 
2.04 
2.04 
2.04 
2.04 
2.04 
2.04 
2.04 
2.04 
















1439 


dct. 18,-1922 
Oct. 21,1922 
Oct. 30,1922 
- do . - 






















1444 



















1443 . 






.... 


.... 




.... 




— — 




1442 








1449 


Oct. 13,1922 
Oct. 23,1922 
Oct. 27,1922 
Oct. .30,1922 
Oct. 31,1922 
Nov. 1,1922 
^Tov. 3,1922 
Nov. 7,1922 
Nov. 18, 1922 
do 


"15,"" 095" 




















1448 




















1452 




















1447 
















1446 




















453 




2.09 
















1454 


29, 812 
71, 750 




2.04 
2.04 
















1455 




















1456 










62,362 
87, 276 






$2.04 
2.04 




1458 






















1459 


Nov. 10, 1922 
Nov. 17,1922 
Nov. 21, 1922 
Nov. 1.5, 1922 
Nov. 9,1922 
Nov. 27, 1922 
Nov. 3,1922 
Nov. 17,1922 
Nov. 6,1922 
Dec. 9, 1922 
Nov. .3,1922 
Dec. 12,1922 
Dec. 8, 1922 
do 




91, 723 






2.04 












1460 










132, 446 
,58, 032 
52, 202 






2.04 
2.04 
2.04 




1401 






















14R3 






















1464 ' 




102, 580 
83, 136 
103, 536 






2.04 
2.04 
2.04 












1465 




















1466 




















1467 










39, 325 






2.04 




1468 




99,732 






2.04 












1472 










8,192 






2.04 




1474 




86,502 






2.04 












1'75 








1 




91, 828 






2.04 

• 




1477 




80, 664 
75, 924 
42. 525 
77, 981 








2.04 

■2.04 
2.04 
2.04 












1478 




















1480 


Dec. 22,1922 
Dec. 15,1922 
Dee. 9, 1922 























1482 






1 












1483 










113,401 






2.04 
















1 











I Plates shipped from Sparrows Point, Md. 

Lackawanna Steel Co. acquired by Bethlehem Steel Co. November 1922. 



Illustrations of. the fact that identical forms and sizes were shipped from both plants 



From Beth- 
lehem, Pa. 


Product 


From Lacka- 
wanna, N. Y. 


From Beth- 
lehem, Pa. 


Product 


From Lacka- 
wanna, N. Y. 


Exhibit 
No. 


Pbunds 


Exhibit 
No. 


Pounds 


Exhibit 
No. 


Pounds 


Exhibit p^^^j3 


1442 

1477 

1478 

1482..... 


45, 564 
57, 869 
75, 924 
51, 387 


Angles 6 by 6 

by ?6. 
Channels: 7 by 

9.8. ■ 
Channels: 7 by 

9.8. 
Channels: 7 by 
• 9.8. • 


1483... 
1467... 
1460... 

1454... 


78, 809 
39, 325 
116,734 
29,812 


1487... 
1489... 
1491... 
1446... 


49, 643 
73, 664 
35, 232 
201, 339 


Channels: 10 by 

15.3. 
Channels: 10 by 

15.3. 
Channels: 10 by 

15.3. 
Channels: 12 by 

20.7. 


1458... 
1450. . 
1461... 
1452... 


•87, 276 
62, 3C2 
10, 496 
109,227 



CONCENTRATION OF ECONOMIC POWER 



325 



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326 



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CONCENTRATION OF ECONOMIC POWER 



327 



Exhibit 25 
In the Matter of Bethlehem Steel Corporation et al. Docket # 962 

This is a partial statement of shipments of standard structural shapes and plates, 
also Bethlehem special sections, bv Bethlehem Steel Co. (see exception) to Russell 
Wheel & Foundry Co., Detroit, Mich., during the years 1922, 1923, 1924, 1925, 
and a portion of the year 1926 as shown by exhibits, herein, to which reference is 
made. These shipments include substantial quantities of exactly the same form- 
and size from Bethlehem, Pa., and from the competitive plants acquired at 
Lackawanna, N. Y., and Johnstown, Pa. 

Exception. — Shipments indicated thus "(*)" were made by Cambria Steel 
Co. prior to the acquisition of that company by Bethlehem Steel Co. 

FROM BETHLEHEM, PA. 



Page 

No. 



I Bethle- 
Invoice date ! hem 
specials 



Sept. 4, 1922 
Sept. 6, 1922 
Sept. 12,1922 
Aug. 23,1922 
Aug. 28,1922 
do 



Aug. 30, 1922 

do 

Oct. 3, 1922 
Oct. 6, 1922 
do 



Oct. 20, 1922 

do 

Oct. 24,1922 
Oct. 31,1922 
Nov. 6, 1922 
Nov. 9, 1922 
.do. 



Nov. 20, 1922 
Nov. 23, 1922 
Dec. 1, 1922 
Dec. 7, 1922 
Dec. 8, 1922 
Dec. 15,1922 



26,799 



7,825 



14,815 
28,274 



49, 350 
31,329 
33, 564 
10, 154 
51, 520 
32, 266 
15, 330 
33, 950 
53.900 

3, 8.50 
993 

9,256 



22, 392 
10, 952 



Stand- 
ard 
shapes 



27, 192 
76, 725 
61,975 
66, 767 
26,388 
12,263 
45, 768 
15, 300 
13, 588 
5,266 
31,3.37 
12, 750 
588 
43,200 
28, 350 
32, 3,36 
66,282 
36, 125 
47, 835 
63, 819 
26, 652 
34.996 
42, 793 
4.5, 461 



Plates 



Page 
No. 



10 

11 

12 

14 

15 

16 

17 

18 

19 

20 

23 

64 

79 

127.... 
161.... 
184.... 

189 

230.... 
236.... 
237.... 
249.... 

254 

256.... 
262.... 



Invoice date 



Jan. 11,1923 

do 

Jan. 16, 1923 
Jan. 26,1923 
Feb. 2, 1923 
Feb. 8, 1923 
Feb. 26,1923 
do 



Mar. 5, 1923 
Mar. 7,1923 
Apr. 2, 1923 
May 19, 1923 
June 2, 1923 
July 26, 1923 
Aug. 10, 1923 
Aug. 20,1923 

do _. 

Sept. 6,1923 
Sept. 7, 1923 
Sept. 11, 1923 
Sept. 17, 1923 
Sept. 25, 1923 
Sept. 27, 1923 
Oct. 25,1923 



Bethle- 
hem 
specials 



■ 4,517 
35, 178 



61,048 
24, 180 
19, 225 
19, 186 
15, 022 



47,001 



45,223 
88,400 
47, 600 
19, 102 
963 
3,632 



4,637 
1,737 



22, 967 
51, 787 



Stand- 
ard 
shapes 



96, 400 
19, 136 
33, 859 
70,700 
10, 439 
18, 339 
24, 809 
86, 740 

36, 266 
57,600 

615 
62, 378 
20,240 
12,6.36 
9,026 
24,744 
53,890 
62, 512 
34,507 
52, 469 

37, 419 
94,828 
2.5, 471 
12,630 



Plates 







^ 


FROM LACKAWANNA 


,N.Y. 








25 


Dec. 11,1922 
Dec. 15,1922 
Dec. 16,1922 

......do... 

Dec. 19; 1922 
Dec. 23,1922 
Dec. 29,1922 
Jan. 23,1923 
Mar. 27, 1923 
Apr. 30,1923 

do 

May 17,1923 
May 24, 1923 
May 29, 1923 
Aug. 4, 1923 
Aug. 6, 1923 
Aug. 7,1923 
Aug. 8, 1923 

... do 






36,125 

"'79,"6i5 
28,460 

lis," lis 

106,640 
108, 235 
144. 180 
113,695 
148, 295 


159 

162 

168 


Aug. 9,1923 
Aug. 10,1923 
- - do . .. 






112,310 


27 




102, 413 
74,068 
61,644 
63, 614 
85, 515 
68,004 
62, 830 






89, 425 


28 








100, 575 


29 




170 

175 

179 

183 

196 

198 

200 

202 

206 

208 

213 

215 . . 


Aug. 11,1923 
Aug. 13,1923 
Aug. 17,1923 
Aug. 18,1923 
Aug. 23,1923 
Aug. 22, 1923 
Aug. 23, 1923 
Aug. 24, 1923 
Aug. 25,1923 
Aug. 27,1923 
Aug. 29,1923 
.-do 






105, 985 


30 






113,420 


31 






59, 452 




32 






120,100 


13 







106, 145 




22 




109, 151 


47 










106,920 


48.. ^... 




69, 212 
62, 445 
63,380 
57,058 






111,410 


61..J... 






74, 155 


68 








119,875 


76 








149, 565 


139 








21, 175 


143 






216 

234 

245 

252 


Aug. 31, 1923 
Sept. 7,1923 
Sept. 12, 1923 
Sept. 22,1923 






119,270 


145 






. . 




60,095 


147 










86,520 


149 










66,600 


166 


Aug. 9,1923 





















328 



CONCENTRATION OF ECONOMIC POWER 
FROM JOHNSTOWN, PA. 



Page 

No. 


Invoice date 


Bethle- 
hem 
specials 


Stand- 
ard 
shapes 


Plates 


Page 
No. 


Invoice date 


Bethle- 
hem 
specials 


Stand- 
ard 
shapes 


Plates 


1* 


Jan. 6, 1923 
Jan. 8, 1923 
Jan. 9, 1923 
Jan. 18,1923 
Mar. 28, 1923 
do... 






59, 180 

"59," 440 
'ii4,"676 


80 

81 

82....... 

83 

84 

85 


June 4, 1923 
June 5, 1923 

do 

June 6, 1923 
June 7,1923 
. do 




103,800 
61, 382 
71,218 




2*. 




120, 233 
147, 193 
147, 526 
51, 873 
46, 812 
86,906 
85,754 
114,387 
89, 708 
67, 271 
43,548 
81,332 
146, 712 
51,114 
60, 023 
53, 016 
82, 685 
85, 582 
106, 724 
108, 779 
235, 614 
259, 009 
89, 598 
201, 976 
142, 692 
41,292 
34, 917 
122,940 
184, 399 
114, 357 
54,700 
130, 530 
179,433 
134, 560 
15,942 






4* 








6*.:.... 




138, 440 


8* 








47, 230 


9* 






108, 407 
137,357 




24 


Apr. 3, 1923 
Apr. 4, 1923 
Apr. 6, 1923 
Apr. 9, 1923 
Apr. 10,1923 
Apr. 17,1923 

do 

Apr. 20,1923 
Apr. 23,1923 

- ...do 




86 

87 

88 

89 

90 

91 

92 

93 


do 

June 8, 1923 

do 

June 9, 1923 
June 11,1923 

do- 

June 14, 1923 

.... do 






25 




142,760 


26 








180, 320 
221,460 


28 •- 




29 








164, 630 


30 






121,893 


31...... 




80,280 


33 






105, 320 


35. 




95 

96 


June 16,1923 
- do 






107, 180 


36- 






30, 975 




37 


Apr. 24,1923 
do 




97 

98- 

99 

101 — . 

102 .... 

103 .... 

104 .... 
105-.... 

106 .... 

107 .... 

108 .... 

110 .... 

111 .... 

112 .... 

113 .... 

114 .... 

115 

116 

117 


June 19,1923 
June 20,1923 
June 23,1923 
do 




107, 830 


38 








79,200 


39 


do 

Apr. 26,1925 
Apr. 27,1923 
Apr. 28, 1923 
Apr. 30,1923 

do_. 






132, 774 
46, 794 


41 






42. 




June 26,1923 
June 27,1923 
June 29,1923 
June 30,1923 
July 2, 1923 
do 




103, 830 


43 








148, 630 


44 








66, 320 


45 








122, 450 


46 


do 






36, 687 




50 


May 2, 1923 
May 4,1923 
do 






72,580 


51 




.-__do- -. 






82,520 


62 


July 3, 1923 
July 5, 1923 
July 6, 1923 
July 9, 1923 
... do 






149, 870 


53 


do....... 








50,24rf 
61, 210 


54 


do.. . .. 








55 


May 8,1923 
May 10,1923 
May 12,1923 
May 17,1923 
May 18,1923 
May 21,1923 
do ... 








62, 450 


57 






156,800 




58 




July 13,1923 

do. 

do -. 




78, 420 


59 








120, 620 
122, 650 


63- 




65- 




118 

120 

121 

122 


July 16,1923 
July 20,1923 
July 21,1923 
.-. do 






240,900 


66 








68,750 


67- 


do . . 




100,346 
76, 095 
97, 272 

130,774 




39,494 




69 


May 25, 1923 
do 






65, 120 


70 




123 

124 - 


July 25,1923 
do 




100,600 
91,686 
79, 873 
85, 745 
2,897 




71 


May 26, 1923 
May 28, 1923 

.....do 

do.. 

do 

May 30, 1923 
May 31, 1923 








72 




125 


-.-do 






73 




150, 963 


126 

128...- 
129 


July 26,1923 
July 27,1923 
do 






74 


9,576 i - - 






75 


140, 594 


"159," 880 
128,260 




81, 770 


77 


130 


July 30,1923 






13a 970 


78 





















FROM: BETHLEHEM, PA. 



1. 


Feb. 27,1924 
do- 




37,837 
47,827 
11, 107 
40, 710 
50,049 
13,247 
4,200 
4,675 


1" '1047220 


32 

33 ... 


Apr. 30,1924 
do 


25, 394 
25, 560 
35, 364 
34,896 


21, 956 
21, 155 
19, 773 
2,544 




2 






3 

4 

5.. 


Mar. 8,1924 
Mar. 11,1924 
Mar. 10, 1924 
Mar. 13, 1924 
. . do 


37, 188 
12, 393 


34 

35 

36 

37 

38. 

39. 

40. 

46 

47...... 

48 

50 

51 

52 

53. 

54 

55 

56 

57 

59. 

60 

62 

64. 

74 


May 1, 1924 
May 3, 1924 
May 6, 1924 
May 7, 1924 
May 8,1924 
May 9, 1924 
May 12,1924 
May 16,1924 
May 29,1924 
June 5, 1924 
June 10,1924 
June 12,1924 
June 13,1924 

do-. 

June 14,1924 

do 

June 17,1924 

do... 

July 1, 1924 

do 

July 16,1924 
July 25,1924 
Sept. 2,1924 


V3.5,"224 


6 

7 


24, 917 
50, 497 
33, 467 


15, 35i 
11,684 
■ 20, 708 
41,018 


21, 2i9 
26, 955 
18, 971 
13,674 
69, 476 
13, 032 
54,810 
51, 756 
42, 097 
5,476 
42, 320 
15, 010 
41, 484 
23,303 
58, 534 




7-A 

8 


Mar. 14, 1924 
Mar. 24, 1924 
Mar. 25, 1924 
Apr. 1, 1924 
Apr. 3, 1924 
Apr. 7, 1924 
Apr. 10,1924 
Apr. 11,1924 
Apr. 14,1924 
Apr. 17,1924 
do 




9 


41,030 
31, 725 


4,416 

5,664 

192, 630 

40, 590 

12, 232 

44, 772 

192 

273 

654 

25, 301 

19, 093 

2,467 

17, 569 

3,714 

20,608 

40, 717 




11 

12 


65, 143 
8,550 




14 


29,490 




15 






16 

21 

22 

23 - - 


17, 190 
36, 206 
55, 040 
42,511 
15, 104 
23,658 
62, 188 
18, 623 
42, 799 
20,363 


36, 450 

"23^787' 
1,165 




24 


Apr. 18,1924 
Apr. 19,1924 
Apr. 22, 1924 

.- ..do 

Apr. 26,1924 
Apr. 29,1934 
•. do 




25. 

26 


1,656 
61,802 

"34,159" 




27 

29 

30-.... 


2i, 425 

6,433 

81,300 

23. 985 




31...... 


34,861 





' Shipments from Sparrows Point, Md., plates not'produced at Bethlehem. 



CONCEiNTRATION OF ECONOMIC POWERi 
FROM: LACKAWANNA, N. Y. 



329 



Invoice date 



July 28, 1924 



Bethle- 
hem 
specials 



Stand- 
ard 
shapes 



65, 417 



Plates 



Page 
No. 



Invoice date 



Dec. 23,1924 



Bethle- 
hem 
specials 



Stand- 
ard 
shapes 



89, 394 



FROM JOHNSTOWN, PA. 



133 


July 31,1923 
Aug. 1,1923 
Aug. 2, 1923 
Aug. 3,1923 

do 

Aug. 9,1923 

do 

Aug. 10,1923 

do 






46,870 

"i23,'46o 
"92," 860 

""65,"8i6 


""ii,'226 
"so^'sio 


261 

263 

10 

13 

17 

18 

19 

20 

42 

43.-.-.-- 
44 


do — 




107, 924 




134 




68,550 
132,011 
88,872 
72, 430 
131, 865 
101,471 


Oct. 26,1923 
Mar. 31, 1924 
Apr. 4, 1924 
Apr. 14, 1924 
Apr. 10,1924 
Apr. 11,1924 
Apr. 15,1924 
May 15,1924 

do 

. do .- . 




50,920 


135 






68, 551 
40, 382 
32, 640 
19, 980 
29, 808 
98, 672 
32,683 

"'51,' 596' 




137 








138-..-- 








151 






154 








165 






167 ---- 




30,068 






173 


Aug. 13,1923 
do 

Aug. 17,1923 
do 






11, 550 


177 




92,090 
83, 437 
77, 149 
87, 393 
161,306 




180 


49 

58 

61 ■- 

63 

65 

66 

67 

691 

70 

71 


June 9, 1924 
June 26, 1924 
Ju'y 15,1924 
July 24,1924 
July 26,1924 

do 

July 28,1924 

do .-- 

July 31,1924 
do 




51, 680 


182 






61,088 
55, 159 
81, 634 




185 


Aug. 20,1923 

do - 

Aug. 21,1923 

do 

Aug. 22,1923 
Aug. 25,1923 
Aug. 27,1923 

do 

Aug. 28,1923 

do.-- 

Aug. 29,1923 
Sept. 3,1923 

do ... 

.--.do 




c 




187 






190 




21, 430 


192 

194 




166, 616 
138, 903 
114,095 
104, 028 
96,245 
140, 358 
111,464 
100, 292 
13,243 
12,484 




8,149 
16, 372 

132, 045 
32, 858 
68, 797 

112, 124 




204..- 






207 






209 






210.-.:. 


72 

73 

76 

77 

78. 

79 

80. 

'81 

82 

84 

85 


Aug. 11,1924 
Aug. 18, 1924 
Sept. 17, 1924 
Sept. 19, 1924 
Sept. 20, 1924 
Sept: 23, 1924 

---.-do 

Sept. 27, 1924 

Sept. 20, 1924 

Oct. 1, 1924 

do - - . 






211 






70,700 


212 .. 




69, 137 
144, «00 
90,060 
97, 060 
145, 492 
46, 726 
55, 177 




219 






220 








221 






225 


Sept. 5,1923 

do 

..-■-do --- 

do 

do--- 




112,488 
98,235 
73, 461 

175, 502 






226 






227 






228 




23, 470 


229 




33, 900 
64, 626 
55, 048 




232.- 


Sept. 7, 1923 
Sept. 11, 1923 
do 




115,314 
78,485 
55,077 

135, 626 
53, 148 , 
75, 426 
38, 243 
72, 968 
92, 664 
77, 846 
59, 960 
68, 586 
54,550 
6,768 
6,445 


98 

104 

116 

133 

134 

140 

142 

150 

152 

154 

159 

161 

lo3 

165 

166 


Oct. 15,1924 
Oct. 19,1924 
Oct. 23,1924 
Oct. 31,1924 
- do- -- 






238 






239 




121, 040 


240 


.-.'..do 

do 






23, 543 




242 




72. 360 


243 


do 






Nov. 7,1924 
do.— 






90, 460 


244 


Sept. 12, 1923 
Sept. 17, 1923 
Sept. 18,1923 
Sept. 21, 1923 
Sept. 26, 1923 
Sept. 28, 1923 
Sept. 29, 1923 
Oct. 3, 1923 
do 






20, 119 
75, 000 




247 




Nov. 14, 1924 
Nov. 15, 1924 
Nov. 20, 1924 
Dec. 25,1924 
Dec. 30,1924 

do— 

Dec. 31,1924 
. do - . 






250 






63, 240 


251 








38, 080 


255 




94,854 
105, 5i)0 
21,697 
61, 560 
156. 078 




257 








258 




"* 


259- - . 






260 





















FROM BETHLEHEM, PA. 



Sept. 1.3, 1924 
Sept. 30, 1924 
Oct. 3, 1924 
Oct. 6,1924 
do 



Oct. 7, 1924 
Oct. 10,1924 
do 



Oct. 11,1924 
Oct. 13,1924 

do 

do -. 

Oct. 15, 1924 
Oct. 16,1924 

.....do 

Oct. 17,1924 
Oct. 21,1924 

do 

do.---..-. 

Oct. 22,1924 

do 

do. 

do 



57,300 
37, 650 
31,090 
13, 920 
52, 784 
60,415 



26, 755 
2,065 
30, 635 
40, 432 
2,820 
37, 62» 
2.1, 871 
40, 0^0 



5,640 

638 

24, 425 



9,370 
32, 607 



6,564 
26, 166 
6,671 
6,196 
3,054 
3, 222 



40. 960 
22. 951 
49,081 

6,567 

470 

67, 820 

237 

14, 108 

4, 284 
42, 570 
67, 144 
47,119 
15,376 
68, 340 
26, 715 

4,757 



118.... 
119.... 
121---. 
122.... 
124--.- 
126---. 
128-..- 
130---- 
131---- 
136...- 
138--. 
139.... 
143.--. 
144.... 
146.--. 
147--.- 
148.--- 

149 

151.--- 
1.53-.-- 
155..-- 
157.--. 
160-.-- 



Oct. 23,1924 

do.- 

Oct. 25,1924 

do 

Oct. 27,1924 
Oct. 28,1924 
Oct. 30,1924 

do 

Oct. 31, 1924 
Nov. 3,1924 
Nov. 4.1924 
Nov. 5,1924 
Nov. 8,1924 
.do. 



Nov. 10, 1924 
Nov. 11, 1924 
do. 



Nov. 12,1924 
Nov. 14, 1924 
Nov. 15, 1924 
Nov. 26, 1924 
Nov. 27, 1924 
Dec. 26,1924 



35, 840 
7,341 



3,860 
9,566 
35, 837 
39, 565 
29, 610 
37, 335 
35, 448 



40, 950 
29, 661 
21,259 
29,850 



19, 431 



35, 723 
26, 781 
34, 650 
9,226 



9,779 
31, 283 
71, 560 
38, 466 
36, 545 
19, 055 
24, 775 
41, 712 
30, 498 

3,841 
67, 525 
27,880 
659 
31,. 355 
36, 748 
65, 351 
.41,099 
17, 146 
i34, 170 

3,018 
34, 048 
57, 435 
28, 620 



330 



CONCENTRATION OF ECONO-MIC POWER 



FROM BETHLEnEM, PA.— Continued 



Page 
No. 


Invoice date 


Bethlc- 

liem 
specials 


Stand- 
, ard 
shapes 


Plates 

1 


Page 

No. 


Invoice date 


Bethle- 
hem 
specials 


Stand- 
ard 
shapes 


Plates 


1 

2 


Jan. 1,1925 
do - 


26, 830 
39, 864 
47, 865 
62, 1,50 

50, 375 
6.5, 422 
93, 822 
43, 002 
76, 530 

35, 765 
111,352 

51, .555 
102, 820 

45, 390 
65. 750 
69, 685 
IS, 058 
57, 269 
61,834 
34, 287 
50, 880 
41.0.50 
46, 321 
09, 644 
41,510 
39,800 
78, 155 
18, 386 
67, 395 
60, 768 
49, 550 
17,201 
33, 4,50 

36, 510 
47, 083 
06, 186 


37, 853 


1 


12>, 

ib 

20 

25 

26 

29 

30 

38 a..... 

41 

42 : 

46 

48 

.50 

58. 

59- 

66 

71 

75 

78 

79- 

80 

81 

82 

87- 

89 

90 

91 

92 

97 

98 

101 

103 

Ill 

114 

115 

116 

124 

125 

128 

129 

130 

133 

141 

142 


Feb. 10,1925 31.680 
Feb. 11, 1925 4fi 95fi 


13, 840 
3,321 
2G, 240 
42,941 
64, 853 




6 

8 

11 


Jan. 2, 1925 

.--..do 

Jan. 5,1925 

do 

Jan. 6, 1925 
Jan. 7, 1925 

do 

do- 

Jan. 8. 1925 
Jan. 9, 1925 

do 


769 


....'." 1 


Feb. 13,1025 
Feb. 16,1925 
Feb. 14, 1925 
Feb. 17,1925 


. 14,9.56 
6,565 




12. 








'110,488 


14 






Feb. 18,1925 
Feb. 20,1925 

do 

do --- 

Feb. 23,1925 
Feb. 25.1925 
Feb. 26,1925 
Mar. 2. 1925 
Mar. 3,1925 
Mar. 6,1925 
Mar. 10, 1925 
Mar. 12, 1925 
Mar. 16. 1925 

...do 

Mar. 17,1925 
Mar. 21, 1925 
Mar. 23, 1925 
-A.pr. 2, 1925 
-A.pr. 17, 1925 
Apr. 18.1925 
Apr. 21,1925 
Apr. 23.1925 
Apr. 29.1925 
Apr. 30,1925 
Mav 2, 1925 
May 7, 1925 
May .30, 1925 
June 15,1925 

...-do- 

June 16, 1925 
June 20,1925 
June 22,1925 
June 25,1925 
June 27, 19^5 

...do 

June 30, 1925 
July 1, 1925 
July 2, 1925 


9,843 
?.0,315 
58. 466 
47.414 
33, 408 

3,350 
10, 320 
15, 834 


22, 835 
10, 203 


15 








19 


1,242 
3,811 
8,660 
10, 790 






20 ^ 

23- 

24 

25 


17, 481 

39, 023 

17, 887 

28, 687 

-25, 084 

19, 360 

34, 802 

12, 004 

18, 354 

16, 068 

20,996 

4,217 

3,487 

6,408 

2,464 

11,252 

25, 128 




26 1 do.- 








27 


do 

Jan. 10,1925 

do 

Jan. 12,1925 

do 








28..'.... 

33 

37...... 


410 
18, 456 




32, 746 
10, 382 

44, 710 

45, 557 
20, 826 
35, 085 
36. 334 
77, 823 
43, 469 
58, 902 
25, 049 




41 








43 


Jan. 13,1925 

do 

do- 

Jan. 14,1925 
Jan. 16,1925 

do 

Jan. 17,1925 

do 

Jan. 19, 1925 

do 

Jan. 20, 1925 
Jan. 21,1925 

do- 

Jan. 22,1925 

do 

do 

Jan. 25,1925 
Jan. 24,1925 

do-. 

.Tan. 27,1925 
.Tan. 29,1925 
Jan. 31,1925 

do 

Feb. 2, 1925 
Feb. 6, 1925 
Feb. 9, 1925 








44 








45 








46...... 

52 


12, 009 






54 

56 

57 


62.009 
26, 057 

29,' 281" 
1,104 


::::::: 


i"46,'575 


59...... 

fil- 

62 


35, 350 
3.5, 976 

2,091 
47, 874 
20, 258 
57. 750 
29, 141 

8,295 
16, 359 
39, 530 
28, 796 

8, 600 • 


4,929 

6,333 

37, 101 

38, 987 

40,878 

22, 099 

13,100 

13, 193 

6,469 

6, 434 

2,145 

28,401 

65, 209 

55, 025 

7,848 

17,411 

23, 917 




63 








64 

65 

67 


2,500 
12, 645 






68 








71- 

76 


1,461 


''"77,"755 




78 

87 

89 


4, 230 
34, 082 
32, 763 
23, 030 
47,901 
66, 935 
18, 340 

9,905 


83, 086 
6,883 
5,413 

42,119 

'"i9,'i64' 
44,913 
52, 569 




90 

91 

1-- 

5 

8 


""4i.'675" 
23, 882 
16, 305 





FROM JOHNSTOWN, PA. 











FROM 


LACKA WANNA 


, N. Y. 








3 


Jan. 
Jan. 
Jan. 
Jan. 
Jan. 
Jan. 
Feb. 
Feb. 


2, 1925 
7, 1925 
10, 1925 
12, 1925 
19, 1925 
27, 1925 
7, 1925 
11, 1925 






116, 885 
118,050 
105. 340 
79, 275 

""8i,"285 

"99," 240 


22 

31 

39- 

55 

76 

83 

84 


Feb. 16,1925 
Feb. 19,1925 
Feb. 20,1925 
Feb. 28,1925 
Mar.' 12, 1925 
Mar. 23, 1925 






66,135 


16 










144, 510 


30 










63,440 


38 










166,990 


58 

82 




108, 290 




" 130,' 045' 


52,890 


6 




69,6- 




130, 285 


13 

























9 


Jan. 3, 1925 
Jan. 6, 1925 
Jan. 8, 1925 
Tan. 10,1925 
Jan. 12, 1925 

do--- 

Jan. 15,1925 

do 

do 




77, 462 
112,705 

75, 258 
142, 889 

99,299 

84, 210 


"66,"636 

:::::::: 

: : 

'ii5'245 


18 

27 

28 

36. 

43 

44 


Feb. 12,1925 
Feb. 16,1925 

do 

Feb. 20.1925 
Feb. 21, 1925 

do 






39, 810 


13 






r,856 
6-1,400 




22 








29 




95,480 


34 






121, 456 
142,608 
145, 056 




36 








47 


45 

53- 

60 

02 .. 


Feb. 23, 1925 
Feb. 26,1925 
Mar. 6,1925 
do 






50-....- 


— 


37, 260 
49,910 

104. 142 
91, 339 
9C, 216 

124. 168 
86, 439 
83,089 
3,460 
36.900 

106, 023 

156, 225 




34, 430 


61- 




41, 948 




55- 


Jan. 17,1925 
Jan. 22,1925 
Jan. 23, 1925 

do - 

Jan. 24,1925 

do 

Jan. 26,1925 

do 

Jan. 27,1925 

do 

Feb. ,3, 1925 
Feb. 10,1925 






11,250 


09 

72 




63 

65 

67 

68 

69 

70 


do.- 

do 

do 

Mar. 6,1925 
Mar. 10, 1925 
do 





29, 344 

"36:275' 
47, 678 
149, 346 
116,610 
126, 130 
105, 431 
104, 532 
114,760 
103, 936 


"16:7.56 


73 

74 






»-5 






79 






SO...... 


74 

' 88":::: 


do 






81. 


do- 

do 






,S4 






'J 


Mar. 13, 1925 
Apr. 2, 1925 







.0 




63, 718 







CONCENTRATION OF EIC0N'0:MIC I'OWEK^ 



331 



FROM JOHNSTOWN, PA.— Contiuued 



Page 
No. 


Invoice date 


Bethle- 
hem 
specials 


Stand- 
ard 
shapes 


Plates 


Page 

No. 


Invoice date 


Bethle- 
hem 
specials 


Stand- 

ar.l 
shapes 


Plates 


93' 


Apr. 23,1925 
Apr. 25,1925 

do 

Dec. 31,1924 
May 2,1925 

do 

May 14,1925 
Mav 18,1925 
May 20,1925 
May 23,1925 
May 25, 1925 
do 




88, 303 
71, 625 
64,647 
144, 936 
124, 095 
26, 742 


""23," 830 

"32,600 
76, 570 


117 

118 

119 

120 

121 


June 17, 1925 
June 20,1925 

do 

do 

do 




46, 093 




94 




114,460 


96 

99 . 








114.970 
53; 130 


100 




149, 490 


102 


123 . 


do 






153, 580 


104 


126 

127 

132 

135 

136 


June 22,1925 
June 24,1925 
June 27, 1925 
June 30,1925 
do 






106, 990 


106 




107, 805 
63, 199 

104, 085 
14, 498 






75,504 


107 








57, 890 


108 








60, 190 


109 






76,720 


110 




139 


do -- 




99, 707 




113 


June 13,1925 


1 " 

















FROM BETHLEHEM, PA. 



Julv 2, 1925 

do . 

July 6, 1925 

do 

Julv 8, 1925 

..._:do 

July 10,1925 

do 

July 13,1925 
July 14,1925 

do 

July 22,1925 
do 



July 23,1925 

do 

July 29,1925 
July 30,1925 
Aug. 6, 1925 
Aug. 12,1925 
Aug. 18,1925 

do 

Aug. 19,1925 

;.-..d0 

Aug. 20, 1925 
Aug. 22,1925 
Aug. 24, 1925 

do :. 

Aug. 25,J925 

do 

Aug. 26,1925 
Aug. 27,1925 

do 

Sept. 1, 1926 
Sept. 3, 1925 
Sept. 7. 1925 
Sept. 9,1925 

do 

Sept. 11,1925 

do.. 

do 

Sept. 12,1925 
Sept. 14, 1925 
Sept. 15,1925 
Sept. 16, 1925 
Sept. 18,1925 

do 

Sept. 21, 1925 
Sept. 28, 1925 
Oct. 1, 1925 
Oct. 2, 1925 



44, 234 
6,403 



38,588 
34,157 
23, 433 



16, 299 
43,546 
41, 902 



46, 913 



17,150 
36, 786 



30, 291 
12,953 
29,947 



4,380 
49, 307 
47, 044 



44,292 
31, 750 
36,406 

30," 747" 
21,188 



29, 374 
7,350 
7,606 

25, 802 






5,640 
14,861 
33,024 
33, 825 
25, 675 



35, 705 
1,710 



19, 540 
49, 790 



13,061 
10, 674 



5,900 
4,353 



81, 384 
75, 420 
70, 020 
69, 432 
.63, 648 

2,060 
64,176 
72, 030 
43, 806 

1,390 



21, 990 
40,617 
28,002 
55, 159 
81, 324 
13,825 

6,454 
26, 603 
71, 928 
11,223 
11,184 
23, 457 
84,216 
23, 631 
17,580 
35, 123 
17,929 
94, 301 
39, 902 
32, 710 

9,618 
58,114 
22, 955 

fi, 390 

8,645 
28, 734 
72, 041 
13, 107 
63, 402 



' 37, 363 



' 58, 087 



246 

247 

248 

249 

250 

251 

252.. 1.. 

253 

254 

255 

256 

259 

261 

262 

263 

264 

264-a... 

265 

266 

267 

270 

271 

274 

276 

276 

277-.-. 
278...... 

279 '. 

280 .... 

281 

282 

283 

284 • 

285 

286 

287 

288 

289 

290 

291 

292 

293 

296 

297 

298 

299-' 

300 

301 

.302 

303 



Oct. 6, 
do- 



Oct. 7, 

do.. 

Oct. 8, 
Oct. 9, 
Oct. 13, 

do.. 

.do. 



1925 

1925' 

1925' 
1925 
1925 



Oct. 15, 

do-- 

Oct. 17, 
Oct. 20, 
Oct. 24. 
Oct. 27, 
Oct. 28, 
Nov. 5, 

do... 

Nov. 6, 
Nov. 9, 
Nov. 12, 
Nov. 14, 
Nov. 20, 
Nov. 21, 

do-.. 

----do... 
Nov. 28, 
....do... 

do... 

Nov. 30, 

do--. 

do... 

do... 

Dec. 2, 

do-. 

do... 

Dec. 4, 

do... 

Dec. 8, 
Dec. 9, 
Dec. 10, 
Dec. U, 
Dee. 12, 
Dec. 14, 
Dec. 18, 

do.. 

Dec. 21, 
Dec. 22, 
Dec. 28, 
do.. 



1925 

i925' 
1925 
1925 
1925 
1925 
1925 

1925' 
1925 
1925 
1925 
1925 
1925 



1925 
i925" 

1925" 

1925" 

1925" 
1925 
1925 
1925 
1925 
1925 
1925 

1925" 
1925 
1925 



30, 871 
26, 534 



693 



5,250 

681 

22,400 



22, 0.50 
5,823 
49, 420 
28, 753 
18, 474 
51, 975 



14,100 



62, 720 
26, 512 



41, 424 
38, 474 
65. 835 
10, 039 
5,699 
3,300 



6,161 

28,589 

63, 996 

13, 662 

43, 957 

10, 220 

19,951 

5,483 

6, 507 

34, 300 

2,153 

1,891 

11,455 



23, 977 
23,100 



FROM LACKAWANNA, N. Y. 



July 2, 1925 



3,810 294 Dec. 12,1925 



332 



CONCENTEATION OF EOONOMIC POWER 
FROM JOHNSTOWN, PA. 



Page 
No. 


Invoice date 


Bethle- 
hem 
specials 


Stand- 
ard 
shapes 


Plates 


Page 
No., 


Invoice date 


Bethle- 
hem 
specials 


Stand- 
ard 
shapes 


Plates 


146 


July 2, 1925 
do 






154,370 
154,400 
150,650 
141,670 

'162.' 370 

'i29,"786 

"i55,"286' 

"i66,"266 
124,440 
68,780 


186 

192 

210 

211 


July 16,1925 
July 25,1925 
Aug. 25,1925 
do 






115, 030 


148 










99,640 


149..... 


July 3, 1925 
do 










39, 930 


151 










23, 300 


153 


do..-.'-.-. 

July 6, 1925 

do 

do 

July 7, 1925 
do..,- 




114,938 


232 

233 


Sept. 17, 1925 
do 




68,418 
43,050 




157 






160 




97, 722 
93,822 
49, 470 


238 

239 

244 

245 . 


Sept. 23, 1925 

do 

Oct. 5, 1925 
.. do... 




29,540 


161 

163 




84, 43.0 


'39,060 


164 ... 






15,996 




165 


July 8, 1925 
July 10,1925 

do . 

July 11,1925 
July 14,1925 
July 16,1925 

do 

do... 




57, 315 


257 

258 

260 

268 

269. . 


Oct. 15,1925 
Oct. 16,1925 
Oct. 19,1925 
Nov. 10, 1925 
do . 




20, 530 


172...... 








23, 010 


174 




52, 713 






75, 270 


176 




17, 250 




180 ..- 








46, 930 


183 






272 

273 


Nov. 17, 1925 
do 




78, 716 




184..... 
185 




65,448 
53,415 




17.287 [....,... 













FROM BETHLEHEM, PA. 



Jan. 
Jan. 
Jan. 
Jan. 
Jan. 
Jan. 
Jan. 
Feb 



2, 1926 
4,1926 
6, 1926 
8, 1926 
16, 1926 
23,1926 
29, 1926 ■ 
2, 1926 

.-..do 

Feb. 5, 1926 
do- 



Feb. 
Feb. 
Feb. 
Feb. 
Feb. 
Feb. 
IPfib. 
Feb. 
Mar. 
Mar. 



16, 1926 
17, 1926 
18, 1926 
20, 1926 
22,. 1926 
24, 1926 

25. 1925 

26. 1926 
2, 1926 
4, 1926 



27,693 


10,080 




59 


31, 185 


45, 940 




61. 


25,505 


12, 071 




69 


45, 451 






70 


33,016 


5.045 




82 


32, 746 


6.834 


.. 


85 


42,900 


6,800 




87 






2 30, 855 


104 


18,970 


. 5,044 




105 


70,328 


14, 599 




107 






1 74, 734 


111 


42, 948 


2.081 




121 


36,383 


30, 930 




126 






1 42, 941 


130 .. 


38, 188- 


26 520 




145..-.. 


31,698 


9.892 




151 


40,365 


39.694 




152 


4,485 


56,012 




154 




59,200 
14, 865 




155 

160 


30, 707 


76, 113 


12,960 







Mar. 5, 1926 
Mar. 8,1926 
Mar. 13, 1926 

do 

Mar. 22, 1926 
Mar. 24, 1926 
Mar. 29, 1926 
Apr. 6, 1926 
Apr. 7, 1926 
Apr. 9, 1926 
Apr. 12,1926 
Apr. 17, 1926 
Apr. 20,1926 
Apr. 26,1926 
May 8, 1926 
May 15,1926 
May 17, 1926 
May 24, 1926 
May 27, 1926 
June 23,1926 



57, 220 
54, 192 
11,603 
51,113 
60,675 
33, 653 



38, 535 
56, 837 

74, 747 



35,668 
54,218 
57. 627 
37, 057 
53, 343 
62, 040 



64, 091 



59,900 
7.540 



54,120 
14, 680 
• 3,185 
'36, 480 



32, 592 
7,380 
9,553 



29, 64S 



26,620 
12,444 
790 I 
345 
12, 530 
23, 785 



2 35, 786 



10, 890 



1 17. 835 



1 Shipments from Sparrows Point, Md -Plates not produced at Bethlehem. 
' Shipments from Coatesville, Pa. 

FROM LACKAWANNA, N. Y. 



10 


Jan. 26,1926 
Feb. 4, 1926 
Feb. 5, 1926 ' 

do . 

Feb. 8, 1926 
do - . 






50, 720 
49, 055 
45, 605 

"'62,"560 
""54,":26 

""94,' 375 

"44,' 555 
"73,' 570 

"3i,'995 
"36," 485 


92 

94 


Apr. 1, 1926 
.do 






66, 910 


15 








63, 997 

72, 394 
80, 952 
43, 049 

73, 224 
120, 936 

79, 410 
62, 435 
104,412 
37, 579 




17 






97...... 

106 

108..... 

112 

119 

122 

127 

129 

131 

136 . 


Apr. 5, 1926 
Apr. 8, 1926 
Apr. 10,1926 
Apr. 13,1926 
Apr. 17,1926 
Apr. 19,1926 
Apr. 20,1926 
Apr. 23,1926 
Apr. 26,1926 
.do - - 






19 




90,271 
60, 457 






23 






24 








27 


Feb. 13,1926 
Feb. 15,1926 
Feb. 18, 1926 
Feb. 25,1926 
.. -do 




80, 728 






30 








34 




115, 768 
73,380 






40 








42 






45 


Mar. 1,1926 
.do ... 




116,863 
37, 902 
04, 392 




31,910 


46 




138 

139 

142 

144 

147 

149 

153 

156 

158..-.. 

161 

163 

165 

166 

168 

170 


Apr. 28,1926 
Apr. 29,1926 
May 1, 1926 
May 4,1926 
May 10, 1926 
May 14, 1926 
May 22, 1W6 
May 31, 1926 
June 19, 1926 
June 2J, 1926 
July 12, J926 
July 15, 1926 
July 21,1926 
July 27, 1926 
July 28,1926 




80, 397 




51. 


Mar. 3,1926 

Mar. 4,1926 

Mar. ■ 8, 1926 

.do 






90, 910 


57 






82, 861 
61, 089 




60 




107, 363 






62 






87, 035 


65 


Mar. 12, 1926 
Mar. 15, 1926 
Mar. 17, 1926 

do 

Mar. 18, 1926 
Mar. 20, 1926 
Mar. 21,1926 
Mar. 24, 1926 
Mar. 29, 1926 

do 




70, 930 
103, 119 




92,714 
119. 972 
112,809 
123,500 
78, 060 
161, 163 
60, 85R 
66, 935 
68, 216 
62, 375 




71 






73 






75 

76 




15, 349 
75, 560 
81,942 
47,115 
65, 825 






77 








80- 








83 






86 








88 




45, 674 











FROM JOHNSTOWN, PA. 



6 


Jan. 11,1925 


13, 375 
30, 420 
24, 306 




22-.. 
29.-- 
96... 


.. Feb. 6,1926 
.. Feb. 13,1926 
.. Apr. 1,1926 




..90,560 




6 


do 

do 


38, 200 


7 






40, 920 
















CONCENTRAtlON OF ECONOMIC POWER 
Exhibit 26 



33J 



In the Matter op Bethlehem Steel Corporation et al. Docket No. 962 

UNIFORM valuation OF PRODUCTS BY BETHLEHEM STEEL CO. 

.The following is a partial abstract of invoices rendered by Bethlehem Steel 
Co. against Whitehead & Kales Co., Detroit, Mich., during the first 6 months of 
the year 1P26, showing substantial shipments of standard structural shapes from 
Lackawanna, N. Y., and Bethlehem, Pa.; also plates from Lackawanna, N. Y., 
and Johnstown, Pa. 

The tabulation also shows the prices at which these forms were sold, "freight 
-allowed to Detroit," and that a uniform valuation was placed upon the products 
of the different mills which was the Pittsburgh equivalent of $1.85 and $1.80 
per hundredweight on structural shapes and plates, respectively, the freight rate 
from Pittsburgh being 29 cents per hundredweight. 

STANDARD STRUCTURAL SHAPES 



Exhibit 
No. 


invoice date 


From Lack- 
awanna, 
N. Y. 


From Beth- 
lehem, Pa. 


From Johns- 
town, Pa. 


Price 
delivered 
at Detroit 


24314 


Jan. 25, 1926 .. . 




40,400 
48,600 
47,100 
14,400 




$2.14 


24315 


Jan 26, 1926 






2.14 


24316 


do 


' 




2.14 


24317 


Jan. 28, 1926 - 






2.14 


24319 


Jan. 29, 1926 . . 


94,860 
67,620 
80, 190 
48, 600 
13, 907 




2.14 


24320 


do 






2.14 


24321 


Feb. 2, 1926 .. . ■ ' 






2.14 


24324 


Feb. 5, 1926 . ... 






2.14 


24324-a 


do 






2.14 


24325 


Feb. 8, 1926 


17, 400 
35, 868 
76, 820 




2.14 


24327 


Feb. 9, 1926 






2.14 


24328 


Feb. 10, 1926 ^ - . — 






2.14 


24329 


Feb. 11, 1926 


36,900 
27,540 
36,900 
46, 240 
24,650 




2.14 


24330 


do.- : 






2.14 


24331 


do 






2.14 


24332 


Feb. 12, 1926 






2.14 


24333 


- do 






2. 14 


24335 


Feb. 13, 1926 


39,960 
9, 300 




2. 14 


24337 


Feb. 15, 1926 






2. 14 


24338 


Feb.tie, 1926 . 


34, 700 
26,100 
7,202 
72,000 
29,. 400 




2.14 


24339 


Feb. 18, 1926 






2. 14 


24341 


Feb. 19, 1926 






2.14 


24342 


do....... : ■. 






2.14 


24343 


do....." 






2.14 


24344 


do 


21,600 
71, 106 
67, 800 




2.14 


24346 


Feb.' 20, 1926 






2. 14 


24346 


do 






2.14 


24347 


Feb. 23, 1926 


35, 100 

45, 900 

10, 510 

5,615 




2.14 


24348 


do 






2. 14 


24349 


do ' 






2.14 


24350 


do 






2.14 


24352 


Feb. 27, 1926 


33, 000 
82, 053 
31, 355 




2. 14 


24353 


-do . 






2. 14 


25354 


Mar. 1, 1926 






2.14 


24354 


Mar. 2, 1926... 


102, 960 
34, 048 
40, 680 
35, 000 
26, 426 
12, 891 




2.14 


24356 


Mar. 4, 1926 






2.14 


24362 


Mar. 5, 1926 . 






2.14 


24363 


do..-, ,... 






2.14 


24364 


Mar. 6, 1926 






2.14 


24365 


do 






2.14 


24366 


do.-.. 


5,151 
21, 504 




2. 14 


24367 


Mar. 8, 1926 






2.14 


24368 


do 


10, 425 




2.14 


24369 


Mar. 10, 1926 


74, 832 
10, 921 




2.14 


24371 


Mar. 11, 1926 . .. 






2.14 


24373 


Mar. 13, 1926 :... 


8,330 
40,200 




2.14 


24374 


do 

Mar. 16. 1926 






2.14 


24376 




66, 898 


2.14 


24377 


Mar. 17, 1926. 


55, 200 
22. 848 
19, 9.G 
39, 900 
30, 480 
37, 260 
10, 351 
49, 680 
51, 168 
47,908 




2.14 


24379 


do . . 


"^ 




2.14 


24380 


Mar. 19, 1926 






2.14 


24382 


...do 






2.14 


24383 


do 

do.-.- 






2. 14 


21384 






2. 14 


24385 


Mar. 20, 1926 






2. 14 


24386 




1 


2.14 


24389 


Mar. 24, 1926 


1 


2. 14 


24390 


do 


1 


2. 14 


24394 


Mar. .30, 1926 .-... 


76, 800 
33, COO 
60, 600 




■-. 14 


24396 


Mar. 31, 1926 

do 






2.14 


24398 




2.14 



334 



CONCENTRATION OF ECONOMIC POWER 
STANDARD STRUCTURAL SHAPES— Continued 



Ejfhibit 
No. 


Invoice date 


From Lack- 
awanna, 
N. Y. 


From Beth- From Johns- 
lehem^ Pa. i town. Pa. 


Price 
delivered 
at Detroit 


24400 


Apr. 2, 1926 




29.400 
65, 706 




2 14 


24401 


do 






2 14 


24405 


Apr. 9, 1926 

do.---... , 


11,979 
31. 200 
40, 712 




2.14 


24407 






2. 14 


24408 


do--.- -.. 






2.14 


24410 


Apr. 12, 1926 


43,500 
60,600 
24,600 




2 14 


24411 


do !-.. 




2 14 


24414 


Apr. 15, 1926. 1 




2 14 


24415 


Apr. 19, 1926.- 

do 


89, 700 
! 34, 500 




2.14 


24410 






2 14 


24418 


Apr. 20, 1926 


25,500 




2 14 


24419 


Apr. 20, 1926 


9,909 
11,850 




2 14 


24420 


do 






2.14 


24421 


do 


63, 270 
53, 130 




2.14 


24423 


do 






2.14 


24424 


Apr. 21, 1926.- 




96, 970 


2.14 


24425 


do 




49,200 


2.14 


24427 


Apr. 30, 1926 

May 1, 1926 . 


3,320 
86, 580 
40, 960 
30, 480 

36, 720 
52, 320 

37, 500 
34, 698 




2.14 


24430 






2.14 


24433 






2.14 


24434 


do - 

May 3, 1926 

do- - 






2.14 


24435 






2.14 


24436 






2.14 


24439 


May 5, 1926 

do 

May 7, 1926 






2.14 


24441 






2.14 


24445 


56, 700 
41,250 
11, 850 




2.14 


24446 


--.. do 






2.14 


24447 








2.14 


24448 


May 10, 1926 


16, 974 
53, 158 
43, 050 
3,500 
35, 540 
42. 336 
40,200 
25,500 
27, 048 
20,202 
44, 160 
34, 500 
62, 400 
Ifi, 464 
77, 220 
34,500 
31, 200 


' 


2.14 


24449 


do 

do 

...do 1- 

do.. 

May 14, 1926... 

do 1 

do , 

--.. do 






2.14 


24450 






2.14 


24452 






2.14 


24453 






2.14 


24456 






2.14 


24457 






- 2.14 


24458 






2.14 


24459 






2.14 


24460 


May 15, 1926 






2.14 


24461 


.-.- do 






2.14 


24463 


May 18, 1926 







2.14 


24464 


..do 






2.14 


34465 


do 






2. 14 


24467 


May 19, 1926 . ... 




» 


2.14 


24468 


do ... ... 






2.14 


24469 


- . do 






2.14 


24470 


May 21, 1926 


5.3, 874 




■ 2. 14 


24471 


do 




52, 780 


2. 14 


24472 


May 22, 1926 . 


49, 680 
11, 925 
57, 240 




2. 14 


24473 


do 






2.14 


24474 


do .-.- 

do 






2.14 


24475 


27,000 
13, 860 




2.14 


24476 


do 






2.14 


24478 


May 27, 1926 


26, 082 
62,100 
60,755 
137, 499 
126, 606 
39, 438 
99,900 
58,500 
24,600 
24,600 




2.14 


24479 


do-.- 

May 28, 1926 - - -. 

June 1, 1926 

June 2, 1926 .. .. 






2.14 


24480 






2.14 


24481 






2.14 


24482 




":::::::::::::! 


2.14 


24483 


June 4, 1926 

June 5, 1926 . . . 






2.14 


24485 






2.14 


24486 


June 19, 1926... 

do 1 

1 






2.14 


24490 






2.14 


24491 






2.14 











PLATES 



24375 
24393 
24395 
24397 
24399 
24402 
24403 
24404 
24406 
24429 
24431 
24432 
24438 
24451 
24454 



Mar. 15, 1926. 
Mar. 29, 1926. 
Mar. 30, 1926. 
Mar. 31, 1926. 
Apr. 1, 1926... 
.A.pr. 3, 1926... 
Apr. 6, 1926... 
Apr. 8, 1926... 
Apr. 9, 1926... 
Apr. 29, 1926.. 
Apr. 30, 1926.. 

do 

May 5, 1926... 
May 10, 1926.. 
do 



47, 215 



60, 100 



35, 065 
28,630 
67,220 
10, 210 
86, 970 
61,500 
36, 375 



141,120 



117,780 



40, 350 
153,820 
134, 160 
106, 280 



2.09 
2.09 
2.09 
2.09 
2.09 
2.09 
2.09 
2.09 
2.09 
2.09 
2.09 
2.09 
2.09 
2.09 
2.09 



CONCENTBATION OF EK^ONOMIC POWER, 



335 



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336 



CONCENTRATION OF ECONOMIC POWER 



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CONCEiNTEATION OF ElOONOMIC POWER 



337 



Exhibit 28 

In the Matter of ±sethlehem Steel Corporation et al. Docket No. 962 

The following is an incomplete tabulation of invoices rendered against White- 
head & Kales Co., Detroit, Mich., by the following producers, covering materials 
furnished on certain specific orders during the periods mentioned, which invoices 
show shipments of substantial quantities of exactlv the same character and size 
by both companies: By Cambria Steel Co., year 1917: by Bethleher^ Steel Co., 
years 191^20. 

SHIPPED BY CAMBRIA STEEL CO. 



Exhibit 


Invoice date 


Form of product 


No. 


Plates 


Shapes 


Bars 


24904 


Mar. 2, 1917- 


72,120 
77,300 
27, 830 
151. .380 
77,340 
112, 270 
104, 260 
47, 710 






24905 


do 






24906 


Mar. 26, 1917 : ... . 






24907 


do.- . J . 


10,890 


2,»30 


24908 


Apr. 6, 1917. .-..-. 


24909 


Apr. 7, 1917 




3,316 


24910 


Apr. 30, 1917 ... 




24911 


May 2, 1917 ._. . 




1,470 


24912 


May 3, 1917.-- .:.. . . : 


103,089 


24913 


May 5, 1917 , 


29,450 
59, 550 
89,790 
44,430 
59, 210 
' 4,550 
65, 030 




24914 


...-.do 


3,940 


6,200 


24915 


May 23, 1917 


24916 


May 29, 1917 .... 




25, 420 


24917 


do -- . 




24918 


June 7, 1917 : . 






24919 


do 




12,760 


24920 


June9, 1917 


147, 921 
107, 796 


24921...-. 


do ..!.... 






24922 


June 21, 1917.... .■ , 


44, 470 


2,800 


24923 


June 29, 1917 


42, 475 
49. 215 

"•147," 302" 

40," 746" 


24924 


do , 






24925,. _._ 


June30, 1917 


67,100 


29,950 


24920 


July 9, 1917 


24927 


Jtily 10, 1917.- 


70, 870 


24, 455 


24928 


July 14, 1917 


24929 


.....do 


49,720 

57,520 

540 


1 840 


24930 


July 31, 1917 






24931 








24932 




59,585 
79, 466 
90.649 
75,972 




24933 


Aug. 17, 1917 -. 






24934 


do--_ 






24935 


do 






24936...-. 




3,540 




24937 


Aug. 22, 1917 


92, 175 
64, 216 
64,400 


3,500 


24938 


. . do. . 




24939 


Aug. 25, 1917 




10, 970 
700 


24940 


do.- 




24941 


Aug. 27, 1917 ...-- ...., 




61, 769 




24942 




23, 540 
43,670 
83, 330 


36 170 


24943 


Aug. 31, 1917 .--.■..-. 


5, 790 




24944 






24945 


Sept. 10, 1917... 


115,327 




24946 




131,200 
172, 400 


160 


24947 


Sept. 29, 1917 - 


. 29, 010 
158, 697 
80, 655 




24948 


Oct. 12, 1917 .. ... 


660 


24949 


Oct. 13, 1917 . 






24950 




61, 590 




24951 


Oct. 15, 1917 


211,947 
131,779 
98, 442 
42, 745 




24952 


do. -. - 






24953 


Oct. 18, 1917 .-- ■_ 




13, 470 
370 


24954 




111,310 
69,750 


249S5 


Nov. 23, 1917 


107 


24956 


Nov. 26, 1917 . 


128,649 
52, 789 
56, 049 
52, 045 


1,280 


24957 


Nov. 30, 1917., 






24958 


do.-- .- 


27, 630 




24958 


Dec. 20, 1917 -• 


280 


24960 


Mar. 30. 1918 -.., 


38. 650 











26*905 — 41— No. 13- 



-23 



338 



CONCENTRATION OF ECX)NOMIC POWER 
SHIPPED BY BETHLEHEM STEEL CO. 





Invoice date 




Form of product 




Exhibit 
No. 


Bethle- 
hem 
specials 


Plates 


Stand- 
ard 
shapes 


Bars 


24961 


Jan. 18, 1919 


50, 423 




2.214 
49,300 
10. 50O 
42, 840 
36, 121 
31,260 
8,190 
29,520 
31,200 
76,560 
45,000 
67,680 
08,220 
28,170 
102,080 
2T.00O 
60,396 
42, 030 
112,614 
37, 935 
89,308 
88.866 

• 19,581 
56,940 
8,400 
9.261 
10,360 
60,075 
14,700 
30,900 
18,940 
81, 6.36 
45. 480 
57,204 
32,960 
43. 305 
35. 556 
4,325 
59,760 
101, 8.50 

- 29,939 
79.686 
14, 612 
86; 424 
6.017 
1«, 021 
96,150 
90,750 
61, 381 
147, 595 
99,354 
16,308 
8.702 
90,000 
64,500 
90.915 
8,585 
33,980 
2; 149 
70,560 
11,650 
24.540 
94,194 
80,760 
36.490 
46,205 
11.153 
88. 279 
22 360 
14.942 
97,260 
18, 720 
11,325 
86, 088 
77, 726 
79,980 
21.684 
47.250 




24962 


Feb. 10, 1919 






24963 


Feb. 17, 1919 . 


27, 760 
3,600 
8,677 
17,100 
53,539 
56, 950 
45, 500- 






24964 


Mar. 6, 1919 






24965 


Mar. 25, 1919 






24966 . 


Mar. 26, 1919 . 






24967 


Apr. 8, 1919 .- 




24968 


Apr. 11, 1919 






24969 . .- 


Apr. 15, 1919 -. 






24970 


Apr. 19, 1919 






^971 


Apr. 22, 1919....,.-. 


51,100 






24972 


Apr. 23, 1919 '. 






24973 ... 


Apr. 24, 1919 








24974 


May 2, 1919 . 


35, 295 






24975 


Mav 6, 1919 . 






24976 . 


May 7, 1919 


43. 650 
34,200 
43,800 






24977 


May9, 1919... 






24978 


Mayl0,1919 






24979 


May 17, 1919 . ... 






24980 . 


May 19, 1919 








24981 — 


May 21, 1919 








24982 


May 23, 1919 ^ 








24983 


May 28, 1919 


53.100 






24984 


May 31, 1919 . . . . ... 






24985 


•Tiinp 4, 1919 


34,243 
43. 951 
35,562 






24986 --- 


June 5, 1919 






24987 


June 7, 1919 






24988 


June 10, 1919 






24989 


June 12, 1919 ....... -.. . .. 


46.800 
9,750 
26, 477 






24990 


June 13, 1919 






24991 


June 14, 1919... _ 

June 18, 1919 . 






24992 






24993 


June 19, 1919 . 


3,392 






24994 






24995 


July 1, 1019. ._ . 


26. 225 






24996 






24997 


July 17, 1919...' 


35,100 
42.695 
14,700 






24998 


July 31, 1919 ■ 






24999 


.•Vug. 25, 1919 




25000 


.\ug. 27, 1919 - ' . 






25001 


Aug. 29, 1919 . . 


27, 88ft 






250f2 


Aug. 30, 1919 






25003 


do ." 


24,840 






25004 


Sept. 2, 1919 






25005 


.. . do... . - ..'. - 


38.400 
43,979 






-5006 


Sept. 4, 1919 _ 






:!5007 


Sept. 5, 1919 :. .- 






'J5008 


Sept. 8,1919. 








25009 


Sept. 12, 1919 . - -- 








25010 










25011 


Sept. 16, 1919 — -. 








25012 


Sept. 17, 1919 • ... . 


66,000 
27,320 






25013 


Sept. 18, 1919 .... 






25014 








25015 


Sept. 23, 1919 ... . . 








25016 


Seirt: 26, 1919 ... 








25017 


Sept. 27. 1919 .... . . .. 


40,620 
64,300 
54,577 
27,000 
37. 729 
17, 170 






25018 








1£Q19 


Oct. 6. 1919 








Oct. 10, 1919 , . 






25021 .. 


^ ' 13, 1919 . . 






25022 ' 








2.')023 


Oct. 14,'1919 . 






25024 


Oct. 15, 1919 I. . 








25025 -- 


Oct. 16, 1919 -' ..-..-. 








25026 


Oct. 18, 1919 








25027 


do 


30,043 






25028 


Oct. 20, 1919 :. 






25029 


do 


30, 391 
70, 165 






2fmo 


do : 

Oct. 20, 1919 






25031. - 






25032.., 


Oct. 21, J919 


58,800 
27.223 






25033 


.. -do. 






25034 


Oct 24, 1919 






25036..^... 


ZO : . .... 








25036 


Oct. 25, 1919L . -.. 






1 


25037-. . 


Oct. 28, 1919..^ .. . 

Oct. 29, 1919 ! 1.. 


12,676 






25038.... 




- ; 





CONCENTRATION OF ECONOMIC POWER. 
SHIPPED BY BETHLEHEM STEEL CO.— Continued 



339 





Invoice date , 


Form of product 


Exhibit 
No. 


Bethle- 
hem 
specials 


■ Plates 


Stand- 
ard 
shapes 


Bars 


25039 


Oct. 31, 1919 






69,138 
25, 518 
87,255 
76,600 
. 34,206 
73,740 
50,613 
87,606 
20,664 
60,688 
48, 192 
,- 23; 700 

■ 49, 910 
69,954 
54,000 
41, 642 
54,920 
18,100 
72,696 
58,180 
36, 493 
59,208 
1,908 
57,750 

118, 170 
62, 419 
65,980 
81,000 
16,800 
65,020 
43,320 
78,310 
65,670 
58,396 
13, 210 
73,680 
70,200 
64, 022 
34,499 
63,605- 
93, 780 
59, 765 
62,100 
47,580 
82, 149 
29,400 
77,100 
21,233 
60,000 
79,050 
68,040 
69, 840 

108, 912 

100,800 
81, 360, 
76, 440 
70,560 
36, 475 
71, 815 

137, 025 
86, 640 
40.020 
61,500 




25040 


Nov. 3, 1919 


52,440- 
16, 960 






26041 


Nov. 5, 1919 






25042. 


do - .-.. 






26043 


Nov. 6, 1919 - :... 


11,818 






26044... 


Nov. 7, 1919 






25045 


Nov. 10, 1919 ..- 








25046 


Nov. 11, 1919 








25047. 


Nov. 12, 1919 -. 


64,830 
29,040 
39,000 
72,990 
62,680 
6,280 
18,480 
15,603 






26048 


■ .do 






25049 


do . 


- 




25060 


Nov. 13, 1919 ■- 






25061 


Nov. 19, 1919 .. ..... 






26052 


.do- ... ...... 






26053. 


Nov. 25, 1919 .-.: . 






26054- 


Nov. 26, 1919 






25055. 


Nov. 29, 1919 






26056 


do 


38,577 






25057 . 


Dec. 5, 1919 : 






26068.... 


Dec. 12, 1919- 








25059 


Dec. 18, 1919- 








25060 


Dec. 24, 1919 , -.. 








26061... 


Dec. 30, 1919 . 


51,034 






25062 


.do- - 






25063 


Jan. 8, 1920 




«r 




25064 . 


.do : -,.. 








25065 ... 


Jan. 21, 1920- ,.- 


12,600 






25066 


Jan. 23, 1920 






26067- 


Jan. 30, 1920 :. : 


51,460 






25068 


Feb. 5, 1920- - " 






25069,.. . 


Feb. 18, 1920 -.-. 








2507a. 


Feb. 23, 1920 : 








25071 


Feb. 27, 1920 . .. . 


22,050 
2,893 

22,800 
1,746 






26072 








2.5073 


Mar. 6, 1920 ... . . 


- 




25074 .. 


Mar. 10, 1920.. .- . 

Mar. 12, 1920 




25075... 






25076- . 


Mar. 16, 1920 








26077 


Mar. 31, 1920 ... ... 


72, 480 






25078 


. do : :... 






25079 


Apr. 1, 1920 '. 


12, 460 






26080 


Aor. 7, 1920 






25081. 


May 8, 1920 : ■ . 






- 


25082 


May 14, 1920 - 








25083 .. 


May 17, 1920 ^ 








26084 


June 4, 1920 

June 8, 1920 _■ 


65,700 






26085- 


^ 


' ' 


25086 


June 12, 1920. :...-.. ' 

June 17, 1920 -- 


15, 487 






25087 






26088 


July 9, 1920 


2,345 






26089 


July 13, 1920- 






26090 


July 14, 1920 








25091... . 


July 10,1920 - 








25092 . 


July 21, 1920 . ... 








2S098 


July 27, 1920-.- ., , 








25094- 


July 28, 1920